Marcotte v. Fédération des caisses Desjardins du Québec, (2014) 462 N.R. 296 (SCC)

• Judge: McLachlin, C.J.C., LeBel, Abella, Rothstein, Cromwell, Moldaver and Wagner, JJ.
• Court: Supreme Court (Canada)
• Case Date: February 13, 2014
• Jurisdiction: Canada (Federal)
• Citations: (2014), 462 N.R. 296 (SCC);2014 SCC 57

Marcotte v. Fédération des caisses Desjardins (2014), 462 N.R. 296 (SCC)

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[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2014] N.R. TBEd. SE.006

Réal Marcotte (appellant) v. Fédération des caisses Desjardins du Québec (respondent) and Attorney General of Ontario, Attorney General of Quebec and Président de l'Office de la protection du consommateur (interveners)

(35018; 2014 SCC 57; 2014 CSC 57)

Indexed As: Marcotte v. Fédération des caisses Desjardins du Québec

Supreme Court of Canada

McLachlin, C.J.C., LeBel, Abella, Rothstein, Cromwell, Moldaver and Wagner, JJ.

September 19, 2014.

Summary:

At issue in this class action was whether the Fédération des caisses Desjardins du Québec disclosed conversion charges on purchases in foreign currencies to its credit cardholders in a manner that complied with the Quebec Consumer Protection Act (CPA) (s. 12). Marcotte was the representative plaintiff.

The Quebec Superior Court, in a decision with neutral citation QCCS 2743, Gascon J., found inter alia, that there was no breach of the disclosure requirements in s. 12 of the CPA. Gascon, J., rejected a constitutional argument by Desjardins that the CPA did not apply to it due to the doctrines of interjurisdictional immunity or paramountcy. He concluded that payment by credit card did not fall under the s. 91(18) head of power over bills of exchange in the Constitution Act, 1867. He found, however, that the conversion charges were credit charges under the CPA. Because the conversion charges were not included in the credit rate in breach of ss. 72, 83, 91 and 92 of the CPA, he ordered repayment of all conversion charges imposed during the class period under s. 272 of the CPA. He refused to award punitive damages. Desjardins appealed.

The Quebec Court of Appeal, in a decision with neutral citation 2012 QCCA 1395, allowed the appeal and set aside the order against Desjardins. The court agreed with Gascon, J.'s, conclusion that the doctrines of interjurisdictional immunity and paramountcy did not apply. Marcotte appealed.

The Supreme Court of Canada allowed the appeal in part. The payment by credit card did not fall under exclusive federal jurisdiction over bills of exchange. The application of the CPA to credit cards issued by Desjardins was consistent with the division of powers, and neither the interjurisdictional immunity nor the paramountcy doctrines applied. The court held that the conversion charges were "net capital" under the CPA. Desjardins breached s. 12 of the CPA by imposing a charge that was not disclosed in its contract with consumers, namely the cardholder agreement. The appropriate remedy was reimbursement of the conversion charges. However, the court noted that the claims of some customers were prescribed and there was insufficient evidence on the record to determine the total owned by Desjardins to those class members whose claims were not prescribed. Those matters would have to be determined by the Superior Court at a later date. Desjardins' conduct did not support awarding punitive damages.

Banks and Banking - Topic 712

Duties of banks - General - Duty re credit cards (incl. disclosure requirements) - [See Constitutional Law - Topic 2511 and all Creditors and Debtors - Topic 1408 ].

Constitutional Law - Topic 2511

Determination of validity of statutes or Acts - General principles - Interjurisdictional immunity - At issue in this class action was whether the Fédération des caisses Desjardins du Québec disclosed conversion charges on purchases in foreign currencies to its credit cardholders in a manner that complied with the Quebec Consumer Protection Act (CPA) - Desjardins argued that payment by credit card was analogous to payment by bill of exchange and, as such, Parliament had exclusive regulatory jurisdiction pursuant to s. 91(18) of the Constitution Act, 1867 - The Supreme Court of Canada rejected Desjardins' argument - The court held that payment by credit card did not fall under exclusive federal jurisdiction over bills of exchange - Thus, the application of the CPA to credit cards issued by Desjardins was consistent with the division of powers, and neither the interjurisdictional immunity nor the paramountcy doctrines applied - See paragraphs 18 to 21.

Constitutional Law - Topic 3504

Paramountcy of federal statutes - General principles - Requirement of conflict or repugnancy - [See Constitutional Law - Topic 2511 ].

Constitutional Law - Topic 3614

Paramountcy of federal statutes - Overlapping legislation - Conflict - What constitutes - [See Constitutional Law - Topic 2511 ].

Constitutional Law - Topic 6242

Bills of exchange and promissory notes - Scope of power - [See Constitutional Law - Topic 2511 ].

Consumer Law - Topic 2032

Contracts of credit - General provisions - Disclosure of interest rate and other charges - [See all Creditors and Debtors - Topic 1408 ].

Consumer Law - Topic 2278

Contracts of credit - Consumer's remedies - For nondisclosure of charges and fees - [See all Creditors and Debtors - Topic 1408 ].

Creditors and Debtors - Topic 1408

Credit cards - General - Cardholder agreements (incl. disclosure agreements) - Conversion charges - A class action was authorized respecting repayment of the conversion charges imposed by Fédération des caisses Desjardins du Québec on credit card purchases made in foreign currencies primarily on the basis that the conversion charges violated the disclosure requirements of Quebec's Consumer Protection Act (CPA) - At issue was whether the conversion charges were "net capital" or "credit charges"- Different obligations arose under the CPA depending on the classification - The Supreme Court of Canada, for the reasons given in the companion case of BMO v. Marcotte, held that the conversion charges were "net capital" under the CPA - See paragraph 17.

Creditors and Debtors - Topic 1408

Credit cards - General - Cardholder agreements (incl. disclosure agreements) - Conversion charges - At issue in this class action was whether the Fédération des caisses Desjardins du Québec failed to disclose foreign currency conversion charges to its credit cardholders contrary to Quebec Consumer Protection Act (CPA) (s. 12) - The trial judge found no breach of s. 12 - While the charges were not disclosed in the cardholder agreement, the inclusion of the conversion charges on the back of monthly statements amounted to an external clause to the credit card contract under the Civil Code of Québec - The Supreme Court of Canada disagreed - The trial judge erred in finding that a new contract was formed with every subsequent renewal of a credit card - There was one main framework agreement that was effective from the first usage of the credit card - The replacement of a credit card did not create a new contractual relationship - Therefore, it was not possible for the consumers to have known about the external clause providing the rate of the conversion charge at the time they entered into the cardholder agreement, given that the clause was only available in the first monthly credit card statement, i.e., after the first use of the credit card - As a result, Desjardins breached s. 12 of the CPA by imposing a charge that was not disclosed in its contract with consumers, namely the cardholder agreement - See paragraphs 22 to 28.

Creditors and Debtors - Topic 1408

Credit cards - General - Cardholder agreements (incl. disclosure agreements) - Conversion charges - At issue in this class action was whether the Fédération des caisses Desjardins du Québec failed to disclose foreign currency conversion charges to its credit cardholders contrary to Quebec Consumer Protection Act (CPA) (s. 12) - The trial judge found no breach of s. 12 - While the charges were not disclosed in the cardholder agreement, the conversion charges were noted on the back of monthly statements - The Supreme Court of Canada held that Desjardins breached s. 12 of the CPA by imposing a charge that was not disclosed in its contract with consumers, namely the cardholder agreement - The court held that the appropriate remedy was reimbursement of the conversion charges - However, the claims of some customers were prescribed and there was insufficient evidence on the record to determine the total owned by Desjardins to those class members whose claims were not prescribed - Those matters would have to be determined by the Superior Court at a later date - The court added that Desjardins' conduct did not support awarding punitive damages - See paragraphs 29 to 33.

Damages - Topic 1306.2

Exemplary or punitive damages - Consumer protection legislation - [See third Creditors and Debtors - Topic 1408 ].

Negotiable Instruments - Topic 2502

Bills of exchange - General principles - What constitutes - [See Constitutional Law - Topic 2511 ].

Quebec Obligations - Topic 2505

Effect of contracts - Between contracting parties - External clause - [See second Creditors and Debtors - Topic 1408 ].

Cases Noticed:

Bank of Montreal v. Marcotte et al. (2014), 462 N.R. 202; 2014 SCC 55, appld. [para. 1].

Amex Bank of Canada v. Adams et al. (2014), 462 N.R. 277; 2014 SCC 56, refd to. [para. 1].

Hislop et al. v. Canada (Attorney General), [2007] 1 S.C.R. 429; 358 N.R. 197; 222 O.A.C. 324; 2007 SCC 10, refd to. [para. 20].

Statutes Noticed:

Bills of Exchange Act, R.S.C. 1985, c. B-4, generally [para. 12].

Civil Code of Québec, art. 1435 [para. 25]; art. 2904 [para. 31].

Constitution Act, 1867, sect. 91(18) [para. 18].

Consumer Protection Act, C.Q.L.R., c. P-40.1, sect. 12 [para. 11]; sect. 29, sect. 30 [para. 28]; sect. 72, sect. 83, sect. 91, sect. 92 [para. 9]; sect. 219 [para. 11]; sect. 271, sect. 272 [para. 15].

Authors and Works Noticed:

Crawford, Bradley, The Law of Banking and Payment in Canada (2014 Looseleaf Update, Release 11, vol. 2, p. 13-9 [para. 19].

L'Heureux, Nicole, Fortin, Edith, and Lacoursière, Marc, Droit bancaire (4th Ed. 2004), p. 610 [para. 28].

Lluelles, Didier, and Benôt Moore, Droit des obligations (2nd Ed. 2012), pp. 795, 796 [para. 27].

Ogilvie, M.H., Bank and Customer Law in Canada (2nd Ed. 2013), pp. 404, 405 [para. 19].

Counsel:

Bruce W. Johnston, Philippe H. Trudel, André Lespérance and Andrew E. Cleland, for the appellant;

Raynold Langlois, Q.C., Vincent de l'Étoile and Chantal Chatelain, for the respondent;

Janet E. Minor and Robert A. Donato, for the intervener, the Attorney General of Ontario;

Jean-François Jobin, Francis Demers and Samuel Chayer, for the intervener, the Attorney General of Quebec;

Marc Migneault and Joël Simard, for the intervener, Président de l'Office de la protection du consommateur.

Solicitors of Record:

Trudel & Johnston, Montreal, Quebec; Lauzon Bélanger Lespérance inc., Montreal, Quebec, for the appellant;

Langlois Kronström Desjardins, Montreal, Quebec, for the respondent;

Attorney General of Ontario, Toronto, Ontario, for the intervener, the Attorney General of Ontario;

Bernard, Roy& Associés, Montreal, Quebec, for the intervener, the Attorney General of Quebec;

Allard, Renaud et Associés, Trois-Rivieres, Quebec; Office de la protection du consommateur, Trois-Rivieres, Quebec, for the intervener, Président de l'Office de la protection du consommateur.

This appeal was heard on February 13, 2014, before McLachlin, C.J.C., LeBel, Abella, Rothstein, Cromwell, Moldaver and Wagner, JJ., of the Supreme Court of Canada. The following joint reasons for judgment were delivered for the court on September 19, 2014, by Rothstein and Wagner, JJ.