Ontario Class Proceedings Committee

In what is the first class action proceeding to have received funding from the Ontario Class Proceeding Committee, Justice Winkler of the Ontario Court (General Division) has found against the plaintiff (Garland) on the merits of a claim that interest payments charged by the defendant, The Consumers Gas Company Limited (Consumer Gas), violated section 347 of the Criminal Code. Garland has indicated, however, that he intends to appeal the decision.

The case revolves around a formula for dealing with late payments for gas charges. Under the formula, customers who do not pay by the due date incur a late payment penalty (LPP) calculated at five per cent of the unpaid charges for that month. The LPP is a one-time penalty which does not compound or increase over time, and was introduced in 1975 by the Ontario Energy Board, which governs Consumer Gas’ rates and payment policies.

The appellant commenced an action on behalf of a large number of Consumer Gas customers alleging that the LPP violates s 347 of the Criminal Code, because for a significant number of customers the penalty constitutes interest at a rate exceeding 60 per cent per annum.

Justice Winkler held in favour of Consumer Gas on three of four counts: first, that Garland could not establish unjust enrichment; second, that Garland’s proceeding was a collateral attack on an order received by the Ontario Energy Board; and third, that Consumer Gas had a strategy defense available under the OEB that Consumer Gas had to comply with the order. Consumer Gas was unsuccessful, however, in arguing that the regulated industries defense should apply.

Consumer Gas is respresented by Fred Cass, Paul McCallen and Judy Cotte of Aird & Berlis. Garland is represented by Barbara Grossman and Christopher Woodbury of Fraser Milner Casgrain and Michael McGowan and Dorothy Fong of McGowan & Associates. Toronto Hydro, which was granted intervenor status in the proceedings, is represented by Alan Mark and Julie Rosenthal of Goodman Phillips & Vineberg.