Court Of Appeal Affirms Punitive Damages Must Be Proportionate To Gravity Of Breach

A recent decision by the Québec Court of Appeal in Vidéotron v Girard, 2018 QCCA 767 affirmed the award of compensatory and punitive damages against Vidéotron for overcharging consumers with fees related to the CRTC's Local Program Improvement Fund ("LPIF"). The Court upheld the Superior Court of Québec's finding that Vidéotron made false or misleading representations — a prohibited business practice under the Consumer Protection Act ("CPA"). The decision amended the interest allocation period and reduced the trial judge's award of punitive damages from $1,000,000 to $200,000.

Background

The respondent, Charles Girard, brought a class action against Vidéotron on behalf of subscribers who had paid LPIF fees imposed on video-on-demand rentals and cable packages. He alleged that these fees had not been disclosed and that they had been illegally billed or incorrectly calculated, thus constituting a prohibited business practice under the CPA. The Superior Court of Québec allowed the class action in part, finding that LPIF fees constituted fees payable under federal law within the meaning of s.227.1 of the CPA.

Vidéotron was ordered to pay compensatory damages of $3,267,581 for pay-per-view rentals and $3,152,042 for cable television packages, as well as $1,000,000 in punitive damages.

Court of Appeal Decision

The appeal judgment relates only to the award for overpayments made by subscribers of cable television packages, the calculation of interest awarded and punitive damages.

On appeal, Vidéotron argued that the trial judge had erred in failing to apply the four criteria developed by the Supreme Court of Canada in Richard v Time Inc., 2012 SCC 8 ("Time") for a claim under s.227 of the CPA.

While the Québec Court of Appeal agreed that the trial judge had relied on the burden of proof in civil matters instead of applying the criteria enumerated in Time, this error did not justify intervention by the Court. Even if the proper criteria had been applied, Vidéotron would have been ordered to reimburse fees paid by its subscribers in excess of the actual cost of their cable television packages.

Once the criteria set out in Time are met, consumers benefit from an irrebuttable presumption of prejudice. Applying the aforementioned criteria, the Court of Appeal found that Vidéotron had breached s.219 and s.227.1 of the CPA and engaged in a prohibited business practice by failing to clearly explain to its customers how LPIF fees were calculated.

The...