Savard, Cotnam, Moore

Appeals from a judgment of the Superior Court authorizing the institution of a class action. Allowed.

The respondents were authorized to institute a class action to sanction the illegal [translation] "refinancing" of a debt for an old automobile through the instalment sale contract for a new vehicle, which is moreover an illegal business practice designed to increase the sale price of an automobile in relation to its original marked price. The respondents argue that section 148 of the Consumer Protection Act (CQLR c. P-40.1) prohibits the refinancing of a vehicle given in exchange since the contract then relates to goods other than those sold the same day, which the appellants contest.  

The grounds of appeal are founded. If retaking possession of goods with negative equity does not violate section 148 of the Consumer Protection Act, there can be no violation of section 224(c) of the Act since the value indicated in the contract refers to both the price of the vehicle and the refinancing of the exchanged vehicle. Thus, section 148 is the only real basis of the class action. The trial judge refused to interpret this provision. Since this issue can de decided on the basis of the record, it is preferrable to rule on it immediately rather than return the case to the Superior Court.

On this point, the issue cannot be decided on the wording of section 148 of the Act alone. Rather, it is its objective that reveals its meaning. The legal commentary is of the view that the objective of section 148 is to determine the imputation of payments and, consequently, the moment when ownership of goods is transferred to the consumer. The objective of this provision indeed appears to be related only to the transfer of ownership, which characterizes instalment sale contracts, and not to the prevention of the overindebtedness of consumers. This interpretation is confirmed by the fact that the principle set out in section 148 has no equivalent elsewhere in the Consumer Protection Act, whereas section 150.32 on the long-term lease of goods, like section 142, requires the permission of the court to retake possession of goods where the consumer has already paid at least one-half of the total payment. If the legislative objective had been to combat overindebtedness, for example, by limiting the payment threshold required to benefit from the protection provided by section 142 of the Act, a provision similar to section 148 should have been put in the division on leasing. Since section 148 does not prohibit the repossession of goods with negative equity, and the value of the goods must be included in the contract under section 134(c), the total amount payable will therefore be greater than just the marked price of the vehicle, without violating the Act. Since this is the sole basis of the class action, it is therefore appropriate to allow the appeal and dismiss the application for authorization.

Legislation interpreted: section 148 of the Consumer Protection Act 

Text of the decision : http://citoyens.soquij.qc.ca