System Access Fee Litigation: BC vs Saskatchewan

This post was written prior to our January 2017 merger, under our previous firm name, MacPherson Leslie & Tyerman LLP.

In Ileman v. Rogers Communications, Inc., 2014 BCSC 1002 the Plaintiff sought to certify a class action against several large telecommunications companies operating in B.C. in relation to monthly charges generally known as system access fees (“SAF”). A similar SAF action involving several of the same Defendant companies, and the same standard form contracts, but advanced by different counsel, had previously been certified by the Saskatchewan Courts on a national opt in basis (the “Chatfield” action).[1] However, in B.C., Weatherill J. dismissed the request for certification finding that some of the claims did not meet the cause of action test and, in respect of those causes of action which survived, a class action was not the preferable procedure for advancing those claims.

As in Chatfield, the Illeman Plaintiff did not allege that any of the service contracts were illegal, unenforceable or that the Defendants could not possible ever include such a charge in their contracts. Like Chatfield, Ileman contended the Defendants were unjustly enriched by by charging the SAF in their contracts and misrepresenting the SAFs were used to offset government regulatory costs and wireless spectrum licence fees when in fact the defendants used the fees to recover their own overhead expenses. Unjust enrichment was the sole basis upon which the Chatfield action had been certified. However, Justice Weatherill disagreed with the Saskatchewan Courts that the unjust enrichment claim disclosed a cause of action:

[113]     The Plaintiff has not pled that any of the service agreements are illegal or void, should be set aside or are otherwise unenforceable. Indeed, the Plaintiff pleads the ongoing existence of the service agreements. An allegation that the Defendants’ conduct constitutes a deceptive act or practice under the BPCPA does not amount to a plea that the service agreements pursuant to which the Defendants engaged in that conduct are themselves illegal. The BPCPA is a complete code. A breach of the statute cannot be used to support a common law claim for unjust enrichment or other forms of restitutionary relief: Koubi v. Mazda Canada Inc., 2012 BCCA 310 (CanLII), 2012 BCCA 310 at paras. 63-65; Wakelam at para. 66.

[114]     The system access fees were paid because there was a contractual commitment on the part of subscribers to pay them. There is no plea that there was a failure of consideration. The Plaintiff and the putative class received exactly what they contracted for: cellular telephone service in consideration for the payment of an agreed price.

[115]     If, as the Plaintiff alleges, there was an implied term that the fees would either be remitted to government as a tax/licence fee or used to recover monies that were being remitted to government in that regard, then his claim is for breach of contract, not unjust enrichment.

Unlike Chatfield, Ileman also alleged that the Defendants’ conduct amounted to a “deceptive act or practice” contrary to the Business Practices and Consumer Protection Act, S.B.C. 2004, c. 2 (the “BPCPA”). Illeman sought a declaration that the defendants violated the BPCPA and an injunction against similar conduct in the future. He also claimed a properietary interest in the SAF funds received on behalf of the proposed class. Weatherill J. found that it was at least arguable that the phrase “system access fee”, objectively considered, was capable of leading consumers to believe that the entirety of the fee was required to offset the Defendants’ costs paid to government for their respective spectrum licences. However, only the claim for a declaration and injunction could proceed since the pleading of a proprietary interest was bald and failed to set out sufficient facts to disclose a cause of action.

Weatheril J. went to conclude that a class action was not the preferable procedure emphasizing that the remaining claims seeking an injunction or a declaration under the BPCPA were not suitable for class actions since an injunction or declaration would have the same result if it was brought on an individual basis. As a result, the primary goals of class actions: judicial economy, behaviour modification, and access to justice, would not be advanced.

[1] See 2006 SKQB 328 and 2011 SKCA 136