The Supreme Court Clarifies The Parameters For Assessing Whether A Commercial Representation Is False Or Misleading: The Average Consumer Is Credulous And Inexperienced

Lavery follows the evolution of consumer law closely. Its specialized expertise in the fields of retailing and class actions has been confirmed many times by stakeholders in the milieu. Lavery makes it its duty to keep the business community informed about these matters by regularly publishing bulletins that deal with judicial and legislative developments that are likely to leave their mark and influence or even transform practices in the milieu. The present bulletin analyzes a recent decision of the highest court in the country that will not fail to make waves in an area that affects all of us, that is advertising.

On February 28, 2012, the Supreme Court issued its judgment in the case of Richard v. Time Inc. et al. and, reversing the Court of Appeal's decision, partially reinstated the judgment of Justice Carol Cohen of the Superior Court who concluded that a commercial representation was false and misleading. According to the highest court in the country, the Court of Appeal erred in ruling that the average consumer has "an average level of intelligence, scepticism and curiosity".

THE FACTS

In this case, Mr. Richard had received a letter from Time (the "Document"), written in English, announcing to him that:

"OUR SWEEPSTAKES RESULTS ARE NOW FINAL: MR JEAN MARC RICHARD HAS WON A CASH PRIZE OF $833,337.00!

WE ARE NOW AUTHORIZED TO PAY $833,337.00 IN CASH TO MR JEAN MARC RICHARD!

A BANK CHEQUE FOR $833,337.00 IS ON ITS WAY TO xxxxST!

YOU WILL FORFEIT THE ENTIRE $833,337.00 IF YOU FAIL TO RESPOND TO THIS NOTICE!"

The Document was signed by a certain Elizabeth Matthews. Convinced that he had won the prize, Mr. Richard ("Richard") returned the reply coupon and subscribed to Time magazine for two years. That gave him the right to receive, free of charge, a camera and a photo album, which were delivered. However, the long-awaited cheque was never received. Confident about his course of action, Richard tried to contact Ms. Matthews at Time to claim his prize. He was told that this person did not exist. Richard claimed his prize in vain. Claiming to have won the contest and to be entitled to the amount of $833,337, he instituted proceedings against Time Inc. and Time Consumer Marketing Inc. ("Time"), seeking a judgment for the amount stated in the Document, that is to say $833,337.

THE SUPERIOR COURT'S JUDGMENT

In the court of first instance1, the judge awarded the claim in part, noting that the Document induced error by means of the false and misleading representations that it contained, such as that it had been signed by a certain person when in reality that person was fictitious, and that Richard had won the contest. The judge ruled that the Document breached several provisions of the Consumer Protection Act ("CPA") and gave Richard the general impression that he had won, despite the presence of fine print indicating that such was not the case and that it was only an invitation to participate. Stating that the Document did not contain any obligation to pay, Justice Cohen nevertheless ordered Time to pay Richard $1,000 in damages for moral injuries and $100,000 of punitive damages.

THE COURT OF APPEAL'S JUDGMENT

On December 15, 2009, the Quebec Court of Appeal2, in a judgment written by Justice Jacques Chamberland, reversed the above-mentioned judgment. According to the Court of Appeal, despite the form of the Document sent to Richard, it was obvious that he had not won and Time had unambiguously disclosed all of the conditions of the contest to him. Justice Chamberland declined to conclude that Time had breached the CPA, even though it was not expressly stated that Richard's number was not the winning number. It was a contest, and in any contest there are winners and losers.

As for the use of the name of a fictitious person, Justice Chamberland was of the opinion that this approach did not infringe the CPA. The Document came from Time and had been transmitted by Time, the contest being theirs. For Justice Chamberland, the fact that Time used a pen name to personalize its mail did not breach the CPA.

However, Justice Chamberland said that he agreed with Justice Cohen (and the consistent case law) who stated that the false or misleading character of a statement is to be assessed "in abstracto", by reference to an average consumer. He stated that it was not necessary to demonstrate that the consumer had really been misled, but only that there was a possibility of that. However, for Justice Chamberland, the average consumer is sensible and realistic, and knows how to distinguish between reality and the representations made to him:

[Translation]

"[41] It seems to me that the average consumer, whatever his language may be, knows that money does not grow on trees. Who would believe that he had won almost one million American dollars in a lottery that he did not know existed until then and for which he had not bought a ticket?

[42] It seems to me that the average consumer would try to understand. He would read the documentation that was sent to him. It seems to me that he would understand quickly that perhaps he will be the winner of US$833,337, but that it is a little early to rejoice: 1) he must return the participation coupon within the prescribed period of time, 2) his number must be the winning number and lastly, 3) he must answer a question of a general nature." [underlining by Justice Chamberland]

Justice Chamberland ruled that the average consumer could read the entire Document, including the fine print. He also assumed that the average consumer is...