Ontario Students Succeed in Suing their College for Negligent Misrepresentation

Colleges and universities should take note of recent Ontario court rulings, and exercise  due care in what they print in their course descriptions.   Students are entitled to rely on the Consumer Protection Act (CPA).  They can in principle sue a college or university for damages if a program of study is misrepresented.

Last year, TheCourt reported on a high profile US case, John T. MacDonald Jr., et al. v. Thomas M. Cooley Law School, 2012 U.S. Dist. LEXIS 100785, in which graduates sued this private Michigan law school.   The plaintiffs argued that Cooley’s literature had exaggerated their chances of getting jobs.   The judge ruled against them, on a number of grounds.   The most controversial part of his judgement was that students are not consumers, as the aim of a post-secondary education is increased earnings rather than personal enjoyment, which is a business motive.  

The judge also appeared somewhat disdainful of the plaintiffs, and implied that they should have been aware of the risk they were taking in attending Cooley, “arguably the lowest-ranked law school in the country” (p. 12).

In a subsequent Ontario class action, Ramdath v George Brown College 2012 ONSC 6173, students sued George Brown College.   They alleged that the material describing their course falsely promised that it would provide them with a prized international certification.

At the trial in the Superior Court, the defendant cited the Cooley decision from Michigan.   It argued that the students were pursuing a business motive in gaining this professional certification, and therefore were not protected by the CPA.   The Consumer Protection Act, 2002, S.O. 2002, c. 30, Schedule A does exclude business activities from protection.   S. 1 defines a consumer as “an individual acting for personal, family or household purposes and does not include a person who is acting for business purposes.”   On its plain meaning, this could leave some ambiguity as to whether professional training is a consumer purchase or not.

Mr. Justice Belobaba decisively rejected this argument.   He made use of the latitude that the Supreme Court has allowed for purposive interpretation and the use of extrinsic evidence.  He went through the history of the legislation, and made extensive references to Hansard. 

Students were one group that was repeatedly mentioned in the debates as being vulnerable and in need of protection…. The Minister of Consumer and Business Services made clear that the new CPA was intended to apply to student loans. He noted that various members of the legislature were concerned about college students receiving fraudulent loans, and that the new Act would address those concerns. (paras. 54-55).

Just twenty years after the Supreme Court approved the use of Hansard to infer the intent of legislation in R. v Morgentaler, [1993] 3 SCR 463, this practice is now taken for granted as part of the process of judicial interpretation.   The UK House of Lords had made a similar decision in Pepper v. Hart, [1992] UKHL 3, just a year earlier.   One of the concerns at the time was the added cost burden that would be put on litigators in researching such issues.   Modern access to electronic searches of legislative debates has made that much less burdensome.

George Brown College appealed, and a panel of the Ontario Court of Appeal, 2013 ONCA 468, has unanimously affirmed the lower court ruling.  One of the major issues on the appeal was the question of whether the students qualified as consumers under the Act, and the Court of Appeal had no hesitation in affirming Justice Belobaba’s ruling:

Before reaching his conclusion that the respondents came within the definition of “consumer” under the CPA, the trial judge carried out a careful and thorough review of the legislation’s underlying principles, its statutory history, judicial interpretation of the enactment, and the legislative intent behind it. The trial judge then considered the uncontroverted evidence tendered by the respondents and concluded that they were “typical students who obviously hoped that their education would one day lead to employment.” He did not, as the appellant suggests, reverse the burden of proof and place it on the appellant. The trial judge’s finding that the respondents were consumers within the meaning of the CPA was reasonable in the circumstances. (para. 12)

A second ground of appeal, reminiscent of the Cooley case, was the college’s argument that the students should have been more careful.  Instead of trusting the college’s literature, they should have done their own research to find out the requirements for the certification they sought.   This was also rejected by the court.   At common law, reasonable reliance is required before a claimant can sue for negligent misrepresentation.   However, this is not required under the Consumer Protection Act:

As to the reliance issue, we do not view the CPA as requiring proof of reliance in order to establish that there has been an unfair practice and that there is entitlement to a remedy under the Act. Section 18(1) of the CPA clearly provides that a consumer who enters into an agreement “after or while a person has engaged in an unfair practice” is entitled to any remedy that is available in law, including damages. Proof of reliance is not a prerequisite.  (para. 15).

The trial dealt only with the common issue of liability, and damages will have to be assessed individually.   As the judge noted, the students have completed the program, and therefore rescission is no longer possible.   The “question of comparative value and/or the appropriate damages award are issues that will determined in the next phase of this litigation” (para. 80).  On the principle in Esso Petroleum v. Mardon [1976] QB 801, followed in Queen v. Cognos  [1993] 1 S.C.R. 87, this could extend to damages for the students’ lost income.

One might wonder about the public policy wisdom of extending consumer protection legislation to students.   When students were discussed, it is likely that legislators had in mind protecting them from dishonest profit making schools.   Ontario’s public education institutions face tough fiscal constraints.  However, when one compares relative financial strength, educational institutions are much better able to bear losses than most students.  It is not unreasonable to give the administrators an incentive to ensure that students are treated fairly and receive accurate information about their programs before they register.