MacKinnon v. National Money Mart Co. et al., 2009 BCCA 103

• Jurisdiction: British Columbia
• Court: Court of Appeal (British Columbia)
• Judge: Finch, C.J.B.C., Rowles, Newbury, Tysoe and Neilson, JJ.A.
• Citation: 2009 BCCA 103,(2009), 267 B.C.A.C. 276 (CA)
• Date: 13 March 2009

MacKinnon v. Nat. Money Mart (2009), 267 B.C.A.C. 276 (CA);

    450 W.A.C. 276

MLB headnote and full text

Temp. Cite: [2009] B.C.A.C. TBEd. MR.037

Kurt MacKinnon and Louise Parsons (respondents/plaintiffs) v. National Money Mart Company (appellant/defendant)

(CA034967)

Kurt MacKinnon and Louise Parsons (respondents/plaintiffs) v. National Money Mart Company (appellant/defendant) and Dollar Financial Group Inc. (defendant)

(CA036123)

Kurt MacKinnon and Louise Parsons (respondents/plaintiffs) v. Dollar Financial Group Inc. (appellant/defendant) and National Money Mart Company (respondent/defendant)

(CA036372; 2009 BCCA 103)

Indexed As: MacKinnon v. National Money Mart Co. et al.

British Columbia Court of Appeal

Finch, C.J.B.C., Rowles, Newbury, Tysoe and Neilson, JJ.A.

March 13, 2009.

Summary:

MacKinnon (the plaintiff) brought an action as an intended class proceeding under the Class Proceedings Act against Money Mart et al. (the defendants), alleging that the fees and charges on their pay day loans resulted in a criminal rate of interest. The defendants applied to stay the action on the ground that pursuant to s. 15 of the Commercial Arbitration Act, where the contracts contained arbitration clauses, legal proceedings must be stayed in favour of arbitration. The plaintiff submitted that an arbitration clause was rendered "inoperative" as defined by s. 15, where the action challenging the contracts was brought under the Class Proceedings Act as an intended class proceeding.

The British Columbia Supreme Court, in a judgment reported [2004] B.C.T.C. 136, ruled that the arbitration clauses were inoperative and declined to stay the action. The defendants appealed.

The British Columbia Court of Appeal, in a decision reported (2004), 203 B.C.A.C. 103; 332 W.A.C. 103; 2004 BCCA 473 (MacKinnon 2004), allowed the appeals. The decision on a stay was premature. An arbitration clause would be inoperative only after the court determined that the action would be certified. The stay application was to be considered as part of the application for certification. The court remitted the matter to the case management judge for reconsideration on the application for certification. If the action was certified as a class proceeding, the arbitration clauses would be inoperative. Subsequently MacKinnon's class action was certified, but the stay application was not re-heard at that time. Thereafter, the Supreme Court of Canada issued decisions in Dell Computer and Rogers Wireless, both decided under Quebec law, holding that a class action was a procedural vehicle that did not modify the substantive rights created by an arbitration clause. Money Mart (and a related company joined by the plaintiff, Dollar Financial), again sought to stay the class action under s. 15(2) of the Commercial Arbitration Act and to enforce arbitration clauses in the pay day loan agreements, arguing that Dell and Rogers changed the law in British Columbia (in particular, MacKinnon 2004), such that a class action certification did not render the arbitration clauses inoperable.

The British Columbia Supreme Court, in a decision reported [2008] B.C.T.C. Uned. C28; 2008 BCSC 710, denied the stay, holding that Dell and Rogers did not change the law in British Columbia as set out in MacKinnon 2004, where the court had held that an arbitration agreement was inoperative if the court certified a class action dealing with the dispute. The judge held that even if Dell and Rogers had changed the law, she would not have exercised her discretion to give effect to the change and and stay the action. Money Mart and Dollar Financial appealed the denial of the stay and the certification order itself.

The British Columbia Court of Appeal, in the decision reported below, agreed that Dell and Rogers changed the law in British Columbia such that MacKinnon 2004 should be regarded as overruled. However, the court also concluded that issue estoppel applied to prevent the defendants from taking advantage of that change in the law to obtain their stay of proceedings. The court stated that it would not make any exception to this estoppel in light of "special circumstances", since the interests of justice would not be served by doing so. The court also held that the case management judge did not err in certifying the action as against Money Mart and Dollar Financial pursuant to s. 4 of the Class proceedings Act and would therefore dismiss their appeals respecting the certification order.

Arbitration - Topic 5

General principles - Arbitration v. class action - [See Arbitration - Topic 2504 ].

Arbitration - Topic 102

Right to arbitration - What matters arbitrable - [See Arbitration - Topic 2504 ].

Arbitration - Topic 120

Right to arbitration - Enforcement - Defences - Res judicata or estoppel - [See Arbitration - Topic 2504 ].

Arbitration - Topic 2504

Stay of proceedings - Arbitration clause - Enforcement of - MacKinnon, as representative plaintiff, certified a class action against Money Mart and Dollar Financial (the defendants) respecting illegal interest rates charged pursuant to payday loan contracts - Pursuant to a 2004 British Columbia Court of Appeal decision (MacKinnon 2004), the certification ordered rendered any arbitration clauses in the contracts inoperative, such that those clauses could not provide the basis for a stay of proceedings in favour of arbitration under s. 15(2) of the Commercial Arbitration Act - Thereafter, the Supreme Court of Canada issued decisions in Dell Computer and Rogers Wireless, both decided under Quebec law, holding that a class action was a procedural vehicle that did not modify the substantive rights created by an arbitration clause - Relying on Dell and Rogers, the defendants sought to stay the class action and enforce arbitration clauses - A chambers judge denied the stay, holding that Dell and Rogers did not change the law in British Columbia as set out in MacKinnon (2004) - The judge held that even if Dell and Rogers had changed the law, she would not have exercised her discretion to give effect to the change and stay the action - The defendants appealed - The British Columbia Court of Appeal agreed that Dell and Rogers changed the law in British Columbia such that MacKinnon (2004) should be regarded as overruled (i.e., a class action certification no longer automatically rendered an arbitration clause inoperative) - However, the court also concluded that issue estoppel applied to prevent the defendants from taking advantage of that change in the law - The court stated that it would not make any exception to this estoppel in light of "special circumstances", since the interests of justice would not be served by doing so - See paragraphs 1 to 81.

Arbitration - Topic 2507

Stay of proceedings - When available - [See Arbitration - Topic 2504 ].

Arbitration - Topic 2514.1

Stay of proceedings - Bar to stay - Class proceeding - [See Arbitration - Topic 2504 ].

Estoppel - Topic 386

Estoppel by record (res judicata) - Res judicata as a bar to subsequent proceedings - Issues decided in prior proceedings - [See Arbitration - Topic 2504 ].

Estoppel - Topic 398

Estoppel by record (res judicata) - Res judicata as a bar to subsequent proceedings - Exceptions - Special circumstances - [See Arbitration - Topic 2504 ].

Practice - Topic 210.1

Persons who can sue and be sued - Individuals and corporations - Status or standing - Class or representative actions - Procedure - General (incl. stay of proceedings) - [See Arbitration - Topic 2504 ].

Cases Noticed:

Dell Computer Corp. v. Union des consommateurs et al., [2007] 2 S.C.R. 801; 366 N.R. 1; 2007 SCC 34, appld. [para. 2].

Muroff v. Rogers Wireless Inc., [2007] 2 S.C.R. 921; 365 N.R. 177; 2007 SCC 35, appld. [para. 2].

MacKinnon et al. v. National Money Mart Co. et al. (2004), 203 B.C.A.C. 103; 332 W.A.C. 103; 2004 BCCA 473, reving. [2004] B.C.T.C. 136; 26 B.C.L.R.(4th) 172; 2004 BCSC 136, overruled [para. 7].

Kanitz et al. v. Rogers Cable Inc., [2002] O.T.C. 143; 58 O.R.(3d) 299 (Sup. Ct.), refd to. [para. 9].

Smith v. National Money Mart Co. et al., [2005] O.T.C. 547; 8 B.L.R.(4th) 159 (Sup. Ct.), revd. (2005), 204 O.A.C. 47; 258 D.L.R.(4th) 453; 12 B.L.R.(4th) 29 (C.A.), refd to. [para. 12].

Smith et al. v. National Money Mart Co. et al., [2007] O.T.C. 64 (Sup. Ct.), refd to. [para. 12].

Smith et al. v. National Money Mart Co. et al., [2007] O.J. No. 2160 (Div. Ct.), refd to. [para. 12].

Seidel v. Telus Communications Inc., [2008] B.C.T.C. Uned. 573; 295 D.L.R.(4th) 511; 2008 BCSC 933, revd. (2009), 267 B.C.A.C. 266; 450 W.A.C. 266; 2009 BCCA 104, refd to. [para. 19].

Bisaillon v. Concordia University, [2006] 1 S.C.R. 666; 348 N.R. 201; 2006 SCC 19, appld. [para. 19].

Carrier v. Québec (Ministre de la Santé et des Services Sociaux), [2000] Q.J. No. 3048 (C.A.), refd to. [para. 22].

Gulf Canada Resources Ltd. v. Arochem International Ltd. (1992), 11 B.C.A.C. 145; 22 W.A.C. 145; 66 B.C.L.R.(2d) 113 (C.A.), refd to. [para. 30].

Smith Estate et al. v. National Money Mart Co. et al. (2008), 243 O.A.C. 173; 2008 ONCA 746, refd to. [para. 37].

Frey v. Bell Mobility Inc. - see Frey et al. v. BCE Inc. et al.

Frey et al. v. BCE Inc. et al. (2006), 282 Sask.R. 35 (Q.B.), revd. (2008), 329 Sask.R. 42; 2008 SKQB 79, refd to. [para. 37].

St. Joseph Corp. et al. v. Canada (Attorney General) et al., [2008] O.T.C. Uned. 847; 46 B.L.R.(4th) 314 (Sup. Ct.), refd to. [para. 38].

EDF (Services) Ltd. v. Appleton & Associates et al., [2007] O.T.C. Uned. H80 (Sup. Ct.), refd to. [para. 38].

GPEC International Ltd. v. Canadian Commercial Corp., [2008] F.T.R. Uned. 737; 2008 FC 414, refd to. [para. 38].

Wheeler et al. v. Hwang (2007), 270 Nfld. & P.E.I.R. 271; 822 A.P.R. 271; 2007 NLTD 145, refd to. [para. 38].

Smith Estate et al. v. National Money Mart Co. et al., [2008] O.T.C. Uned. B73 (Sup. Ct.), refd to. [para. 39].

Dalimpex Ltd. v. Janicki et al. (2003), 172 O.A.C. 312; 228 D.L.R.(4th) 179; 64 O.R.(3d) 737 (C.A.), refd to. [para. 49].

Prince George (City) v. McElhanney Engineering Services Ltd. - see Prince George (City) v. Sims (A.L.) & Sons Ltd. et al.

Prince George (City) v. Sims (A.L.) & Sons Ltd. et al. (1995), 61 B.C.A.C. 254; 100 W.A.C. 254; 9 B.C.L.R.(3d) 368 (C.A.), refd to. [para. 53].

Kaverit Steel and Crane Ltd. et al. v. Kone Corp. et al., [1992] 3 W.W.R. 716; 120 A.R. 346; 8 W.A.C. 346; 87 D.L.R.(4th) 129 (C.A.), refd to. [para. 54].

Pan Liberty Navigation Co. et al. v. World Link (H.K.) Resources Ltd. (2005), 211 B.C.A.C. 245; 349 W.A.C. 245; 253 D.L.R.(4th) 461; 2005 BCCA 206, refd to. [para. 56].

No. 363 Dynamic Endeavours Inc. v. 34718 B.C. Ltd. (1993), 31 B.C.A.C. 126; 50 W.A.C. 126; 81 B.C.L.R.(2d) 359 (C.A.), refd to. [para. 56].

Western Canadian Shopping Centres Inc. et al. v. Dutton et al., [2001] 2 S.C.R. 534; 272 N.R. 135; 286 A.R. 201; 253 W.A.C. 201; 2001 SCC 46, refd to. [para. 59].

Bouchard v. Agropur Coopérative, 2006 QCCA 1342, refd to. [para. 59].

Comité d'environnement de La Baie Inc. v. Société d'électrolyse et de chimie Alcan ltée, [1990] R.J.Q. 655; 29 Q.A.C. 251 (C.A.), refd to. [para. 60].

Bosum v. Canada (Attorney General), 2006 QCCS 5794, refd to. [para. 60].

Hollick v. Metropolitan Toronto (Municipality) et al., [2001] 3 S.C.R. 158; 277 N.R. 51; 153 O.A.C. 279; 205 D.L.R.(4th) 19, refd to. [para. 60].

Boutsakis et al. v. Alexis House Café Ltd. et al. (2008), 250 B.C.A.C. 168; 416 W.A.C. 168; 77 B.C.L.R.(4th) 113; 2008 BCCA 13, refd to. [para. 65].

Doleman & Sons v. Ossett Corp., [1912] 3 K.B. 257 (C.A.), refd to. [para. 65].

MacKinnon v. National Money Mart Co. et al. (2006), 224 B.C.A.C. 137; 370 W.A.C. 137; 265 D.L.R.(4th) 214 (C.A.), refd to. [para. 68].

Nanisivik Mines Ltd. et al. v. F.C.R.S. Shipping Ltd. et al. (1994), 167 N.R. 294; 113 D.L.R.(4th) 536 (F.C.A.), refd to. [para. 69].

Ezer v. Yorkton Securities Inc. et al. (2005), 207 B.C.A.C. 65; 341 W.A.C. 65; 2005 BCCA 22, refd to. [para. 71].

Rudder et al. v. Microsoft Corp. (1999), 106 O.T.C. 381; 2 C.P.R.(4th) 474 (Sup. Ct.), refd to. [para. 71].

Danyluk v. Ainsworth Technologies Inc. et al., [2001] 2 S.C.R. 460; 272 N.R. 1; 149 O.A.C. 1; 2001 SCC 44, refd to. [para. 74].

Johanesson v. Canadian Pacific Railway Co., [1922] 2 W.W.R. 341 (Man. K.B.), affd. [1922] 2 W.W.R. 761 (Man. C.A.), refd to. [para. 74].

McIntosh v. Parent, [1924] 4 D.L.R. 420 (Ont. C.A.), refd to. [para. 77].

Western Canada Power Co. v. Bergklint (1916), 54 S.C.R. 285, refd to. [para. 78].

Arnold et al. v. National Westminster Bank plc, [1991] 2 A.C. 93; 142 N.R. 31 (H.L.), refd to. [para. 80].

Hockin et al. v. Bank of British Columbia et al. (1995), 57 B.C.A.C. 255; 94 W.A.C. 255; 123 D.L.R.(4th) 538 (C.A.), refd to. [para. 80].

Canada Cement LaFarge Ltd. et al. v. British Columbia Lightweight Aggregate Ltd. et al., [1983] 1 S.C.R. 452; 47 N.R. 191, refd to. [para. 88].

Statutes Noticed:

Class Proceedings Act, R.S.B.C 1996, c. 50, generally [para. 1 et seq.]; sect. 4(1) [para. 58].

Commercial Arbitration Act, R.S.B.C. 1996, c. 55, sect. 15(2) [para. 7].

Authors and Works Noticed:

Branch, Ward K., Class Actions in Canada (2007 Looseleaf Update), pp. 4-49, 4-50 [para. 60].

Casey, J. Brian, International and Domestic Commercial Arbitration (1993), p. 4-14 [para. 55].

Fortier, L. Yves, Delimiting the Spheres of Judicial and Arbitral Power: "Beware, My Lord, of Jealousy" (2001), 80 Can. Bar Rev. 143, p. 145 [para. 50].

Lange, Donald J., The Doctrine of Res Judicata in Canada (2nd Ed. 2004), pp. 86 [para. 78]; 234 [para. 80].

McEwen, J.K., and Herbst, Ludmila, Commercial Arbitration in Canada: A Guide to Domestic and International Arbitrations (2007), pp. 1-9, 1-10 [para. 47].

Mustill, Michael J., and Boyd, Stewart C., The Law and Practice of Commercial Arbitration in England (2nd Ed. 1989), pp. 464, 465 [para. 55].

Counsel:

F.P. Morrison, M. Jamal and J. Yates, for the appellants, National Money Mart Company and Dollar Financial Group Inc.;

P.R. Bennett and M.W. Mounteer, for the respondents, Kurt MacKinnon and Louis Parsons;

C. Jones and K. Wolfe, for the Attorney General of the Province of British Columbia.

This appeal was heard on January 14-15, 2009, by Finch, C.J.B.C., Rowles, Newbury, Tysoe and Neilson, JJ.A., of the British Columbia Court of Appeal. Newbury, J.A., filed the following written reasons for the court on March 13, 2009.