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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 | dicembre 2023
Ontario will soon have new consumer protection legislation that will double fines and increase litigation and class action risk.
As discussed in a prior update, on October 23 the Ontario government introduced Bill 142, Better for Consumers, Better for Business Act, 2023, which, in turn, introduced the new Consumer Protection Act, 2023 (CPA 2023 or Act).
On December 6, Bill 142 received royal assent in the legislature, becoming law. The new CPA 2023 will not come into force, however, until a future date to be named by proclamation of the Lieutenant Governor of Ontario. The final version of the CPA 2023 contains few changes from the proposed CPA 2023 introduced in October 2023. As a result, the Act brings sweeping changes to Ontario’s statutory consumer protection regime that directly affect businesses operating in the province.
Under s. 102(5)-(6) of the 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 for a refund pursuant to the CPA 2023 would now be entitled by s. 69(2) of the Act to recover three times the refund amount, 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.
As noted previously, the CPA 2023 increases litigation and class action risk for businesses in Ontario in two ways.
First, under the new Act, including 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, ss. 14(1)-(2) of the 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 the Act void and unenforceable, the CPA 2023 creates significant litigation risk for businesses whose consumer contracts may contain prohibited terms.
Second, changes to the Act's unfair practice provisions will likely expand the type and volume of actions commenced by consumers, particularly in the class action context. 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, 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 under the CPA 2002 to the later of one year after entering into the contract and one year after the unfair practice occurs.
Notably, one of the few changes made to Bill 142 at the committee stage, prior to the bill receiving royal assent, was introducing s. 107(1) 47, a provision that empowers the government to make regulations establishing and governing rights to commence an action regarding any matter under the Act. Hence, although, as it currently stands, the CPA 2023 creates uncertainty and litigation risk for businesses operating in Ontario’s consumer markets, it appears a more robust regulatory regime governing which types of claims are actionable under the Act, and in what manner, may be forthcoming.
The CPA 2023 retains and clarifies the post-claim dispute resolution tools available to businesses faced with consumer complaints. 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 Act’s post-claim dispute resolution tools can be an effective measure for mitigating risk and preventing class action litigation.
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