On September 11, 2009, the Court of Appeal for Ontario released its decision in De Wolf v. Bell ExpressVu Inc., 2009 ONCA 644. In its ruling, the court dismissed the representative plaintiff's class proceeding.
The issue on the summary judgment motion that was the subject matter of the appeal was whether Bell ExpressVu's administration fee charged to television services subscribers who failed to pay their accounts 35 days after the due date was “interest” for the purposes of s. 347 of the Criminal Code. The plaintiff alleged that the administration fee constituted interest pursuant to the Criminal Code, and exceeded 60 per cent per annum, and thus was illegal.
After the class proceeding was certified, Bell ExpressVu brought a summary judgment motion to dismiss the action on the basis that the administration fee did not meet the definition of “interest” in the Criminal Code. Among other arguments, Bell ExpressVu's position was that the administration fee was to recoup certain costs related to subscribers who entered Bell ExpressVu's “collections stream,” and was not “paid or payable for the advancing of credit,” as “interest” is (in part) defined for the purposes of s. 347 of the Criminal Code.
The plaintiff brought a competing summary judgment motion to determine what was effectively “Issue 1” of the common issues certified in the class proceeding. The plaintiff alleged that a subscriber would perceive that being charged the administration fee was effectively permission to continue to delay payment, since Bell ExpressVu did not suspend television services immediately upon charging the administration fee.
At first instance, the motions judge granted summary judgment in favour of the plaintiffs, and declared that the administration fee was “interest” for the purposes of s. 347 of the Criminal Code. He also dismissed Bell ExpressVu's summary judgment motion.
The Ontario Court of Appeal (Justice Paul Rouleau writing for himself, Associate Chief Justice Dennis O'Connor and Justice Stephen Goudge) allowed the appeal and granted summary judgment in favour of Bell ExpressVu, dismissing the class action. The administration fees charged by Bell ExpressVu were found not to constitute interest, and instead, to be fees which are, in substance, a reimbursement to Bell ExpressVu of administration costs and, as such, not a charge “paid or payable for the advancing of credit.”
Applying the reasoning of the Supreme Court of Canada in Garland v. Consumers' Gas Co.,  3 S.C.R. 112, the Court of Appeal drew the distinction between lending institutions whose business it is to lend money or advance credit on the one hand and service providers such as Bell ExpressVu (and Consumers Gas) on the other. Where the relationship between the parties is exclusively one of lending money, additional charges or fees are likely inherently connected with the lending of money or the advancing of credit, regardless of their label. Generally speaking, such fees are likely to fall within the definition of interest in s. 347. However, where the relationship between the parties is principally one of service provider and subscriber, extra charges and fees may be, but are not necessarily, connected to the advancing of credit. The court will look at the true nature of the arrangement and of the charges incurred to determine whether the charges are interest as defined by s. 347 of the Criminal Code.
The Court of Appeal held Bell ExpressVu's administration fee not to be interest for the following reasons: first, it represented a legitimate estimate of the costs incurred by Bell ExpressVu to collect on overdue accounts; second, there was nothing in Bell ExpressVu's practice of waiting until 50 days after the due date (i.e. 15 days after charging the administration fee) to disconnect which changed the character of the administration fee as a charge to recover collection costs; and third, any perception that subscribers may have had to the contrary was irrelevant (and not supported by the evidence) — whether credit is extended is a question of law, a question for which “perceptions” ought to be irrelevant.
Earl Cherniak, QC, and Jason Squire of Lerners LLP and Hugh DesBrisay of Blake, Cassels & Graydon LLP acted for Bell ExpressVu.
Kirk Baert of Koskie Minsky LLP and Laura Young of Doane & Young LLP were counsel for the plaintiff class.