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Global rules on foreign direct investment (FDI)
Cross-border acquisitions and investments increasingly trigger foreign direct investment (FDI) screening requirements.
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Canada | Publication | November 1, 2023
In February 2023, the Ontario Ministry of Public and Business Service Delivery released a consultation paper on modernizing the Consumer Protection Act, 2002 and its regulations (CPA 2002). As discussed in a prior update, the consultation paper was part of a comprehensive, three-year review of the CPA 2002 commenced by the Ontario government in 2020 and proposed sweeping changes to the province’s primary consumer protection statute and regulations.
On October 23, 2023, following its continued public consultation, the Ontario government introduced for first reading Bill 142, Better for Consumers, Better for Businesses Act, 2023, which, if passed, would enact the Consumer Protection Act, 2023 (CPA 2023 or Act). At the time of publication, Bill 142 was being debated at the second reading.
As anticipated, the new CPA 2023 contains sweeping changes to Ontario’s statutory consumer protection regime that directly impact businesses operating in the province. This update does not address all of CPA 2023’s new and revised feature, but instead highlights key changes related to enforcement, litigation and class action proceedings.
Under s. 102(4)-(5) of the proposed CPA 2023, the maximum fine for an individual convicted of an offence under the Act would increase from $50,000 to $100,000 and the maximum fine for a corporation would increase from $250,000 to $500,000.
Consumers who are successful in a civil action brought concerning a refund pursuant to the CPA 2023 would now be entitled by s. 69(2) of the Act to recover three times the amount of the refund, unless it would be inequitable. Statutes granting successful claimants three times their damages, or “treble damages,” are relatively uncommon in Canada compared to the US.
The proposed CPA 2023 would increase class action litigation risk in at least two ways.
First, under the new Act, the inclusion of prohibited terms in a consumer contract would give rise to a right of action for a refund (and hence, potentially, an award of treble damages). Specifically, s. 14(1) of the proposed CPA 2023 creates a list of expressly prohibited terms, such as clauses mandating arbitration, limiting monetary liability for certain claims or prohibiting the publication of reviews about businesses. Pursuant to s. 54(1), a consumer would generally be entitled to cancel a consumer contract containing any such prohibited terms within one year of entering into the contract, which under s. 59(1), would then trigger an obligation on the business to provide a refund within 15 days of cancellation.
A consumer who cancelled a contract but did not receive a refund in accordance with the Act would be entitled to commence an action pursuant to s. 59(4). As a result, unlike the old CPA 2002, which merely rendered terms contrary to that act void and unenforceable, depending on the circumstances, the CPA 2023 could create significant class action litigation risk for businesses whose consumer contracts may contain prohibited terms.
Second, changes to the Act’s unfair practice provisions may expand the type and volume of consumer protection class actions commenced in Ontario. Notably, s. 8(2) of the new CPA 2023 introduces additional examples of false, misleading or deceptive representations that will qualify as unfair practices contrary to the Act, s. 9(2) adds new examples of unconscionable acts and s. 49(3) extends the time period for a consumer to provide notice of recission or recovery from one year after entering into the consumer contract to the later of one year after entering into the contract and one year after the unfair practice occurs.
The proposed CPA 2023 retains and clarifies the post-claim dispute resolution tools available for businesses faced with complaints from consumers. Specifically, s. 71(1) of the CPA 2023 provides that after a dispute arises over which a consumer may commence an action, the parties may agree, despite s. 14(1) of the Act, to resolve the dispute using any procedure available in law, even if that procedure prevents the consumer from commencing a class action proceeding or publishing a review of the business. When deployed proactively and with appropriate documentation, the post-claim dispute resolution tools under the Act can be an effective measure for mitigating litigation risk and eliminating class action proceedings before they arise.
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