Fasken is a leading international law firm with more than 700 lawyers and 10 offices on four continents. Clients rely on us for practical, innovative and cost-effective legal services. We solve the most complex business and litigation challenges, providing exceptional value and putting clients at the centre of all we do. For additional information, please visit the Firm’s website at fasken.com.
On October 23, 2023, the Ontario government introduced Bill 142, Better for Consumers, Better for Businesses Act, 2023, a bill that, if passed, would repeal the Consumer Protection.
Canada Media, Telecoms, IT, Entertainment
On October 23, 2023, the Ontario government introduced Bill 142, Better for Consumers, Better for Businesses Act, 2023, a bill that, if passed, would repeal the Consumer Protection Act, 2002 (the “2002 Act”) and enact the Consumer Protection Act, 2023 (the “2023 Act”) in its place.
This legislation marks the first comprehensive set of revisions to Ontario's consumer protection legislative and regulatory regime in two decades. It comes on the heels of an extended consultation process that culminated in the government releasing a consultation paper titled “Modernizing Consumer Protection in Ontario” and soliciting feedback in early 2023. One thing that the 2023 Act has not changed from the 2002 Act is that Ontario consumer protection law continues to apply whether the supplier or the consumer is located in Ontario. Ontario consumer law therefore remains a regulatory framework with very broad potential applicability.
This bulletin provides an overview of the most significant changes to Ontario consumer protection law introduced by the 2023 Act. It is important to note, however, that while the 2023 Act does include new rules and prohibitions for suppliers, the legislation also contemplates that certain other important rules and prohibitions will be prescribed by regulation. Suppliers are therefore advised to follow the development of such regulations as they are likely to add significant material details to the 2023 Act.
Although consumers could not waive substantive or procedural rights under the 2002 Act, the government expressed concern during consultations that consumers may not be aware of these protections and may be mislead by vague contractual terms.
The 2023 Act goes further by prohibiting the use of specific contractual terms or acknowledgments that appear to waive important consumer rights or that infringe on consumers' rights to make fair public reviews or comments. One example is that a supplier may not include a term or acknowledgment that has the effect of placing a monetary limit on the amount of any claim made by a consumer for a breach of a deemed condition or warranty under the 2023 Act, or any condition or warranty under the Sale of Goods Act. The 2023 Act also borrows a concept from Alberta's Consumer Protection Act, prohibiting suppliers from preventing consumers from publishing reviews about the supplier or its products. Unlike Alberta's Act, however, the 2023 Act does not explicitly shield consumers from liability for damages or compensation in the event they make such a review.
Under the proposed reforms, any contract that contains terms and/or acknowledgements from a prohibited list would be void and could be cancelled by the consumer in the one year period after it is entered into. The 2023 Act also proposes to ban contractual limits on monetary liability where there has been a breach of deemed warranties and conditions.
Significantly, this means that provisions in contracts entered into before the 2023 Act is brought into force could be deemed void and unenforceable within the legislated one-year window.
Like the 2002 Act, the 2023 Act makes any false, misleading or deceptive representation a presumptively “unfair practice” that would give rise to consumer rights and remedies. Many of the examples of false, misleading or deceptive representations remain unchanged.
There are, however, significant additions to the examples of unfair practices, including:
One of the more significant developments is that the 2023 Act expands the prohibition on “unconscionable representations” to also prohibit unconscionable “acts”. For example, the 2023 Act sets out each of the following in a non-exhaustive list of presumptively unconscionable acts:
Significantly, the 2023 Act includes express provisions regarding the timing of an unfair practice, stating that it may occur before, during or after a consumer contract is entered into and is an unfair practice even if no consumer contract is entered into.
The 2023 Act distinguishes between “continuation” and “amendment” of a consumer contract. A reference to a “continuation” of a consumer contract is a reference to a renewal or extension of a fixed-term consumer contract, and an “amendment” to a consumer contract is a reference to any change to a consumer contract, other than a change that, results in the continuation of the contract.
The full intent and effect of these concepts is not yet clear, since further provisions related to continuation and amendment of consumer contracts is left to (the still-to-be-developed) regulations. The 2023 Act does state, however, that any amendment to, or continuation of, a consumer contract will be void if it is not made in accordance with the regulations, which strongly suggests that regulations will be crafted that will restrict or limit the circumstances in which a supplier may continue or amend a consumer contract. But the particulars of these regulations will be key to understanding this new framework as the 2023 Act, without its regulations, does not appear to require consent to contractual amendments as strictly as the 2002 Act currently does.
One notable update to the enforcement regime in the 2023 Act is the circumstances in which an administrative penalty (“AMP”) of up to C$50,000 may be imposed (an AMP framework was previously introduced for the 2002 Act but never entered into force). An AMP may be imposed to prevent a person from deriving an economic benefit as a result of contravening a provision of the 2023 Act, but also to “promote compliance with the Act and the regulations”, a formulation that presents a broad scope of risk for suppliers.
Also noteworthy is that the 2023 Act imposes absolute liability on suppliers, since an AMP can be imposed even if the person “took all reasonable steps to prevent the contravention” or “the person had an honest and reasonable belief in a mistaken set of facts that, if true, would have rendered the contravention innocent” at the time the contravention occurred.
Finally, maximum fines for offences under the 2023 Act have increased from C$50,000 to C$100,000 for individuals and from C$250,000 to C$500,000 from corporations.
Suppliers doing business in Canada should consider what impact the 2023 Act will have on their operations. Fasken will be tracking the development of Bill 142 and intends to produce further bulletins as the legislative and regulation-making process unfolds. For questions about the content of this bulletin or assistance in preparing forward-looking, compliant consumer contracts (including terms of service), please contact the authors of this bulletin.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
