COURT OF QUEEN'S BENCH OF MANITOBA

Date: 20130711 Docket: CI 12-01-76868 (Winnipeg Centre) Indexed as: Briones v. National Money Mart Company et al. Cited as: 2013 MBQB 168 COURT OF QU...
Author: Lee Johnston
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Date: 20130711 Docket: CI 12-01-76868 (Winnipeg Centre) Indexed as: Briones v. National Money Mart Company et al. Cited as: 2013 MBQB 168

COURT OF QUEEN'S BENCH OF MANITOBA BETWEEN: JENNY BRIONES (nee BEJARANO), Plaintiff,

- and -

NATIONAL MONEY MART COMPANY, and DOLLAR FINANCIAL GROUP, INC., Defendants.

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

APPEARANCES: Paul R. Bennett, Mathew P. Good and Gavin Wood for the Plaintiff John P. Brown and David J. Kroft for the Defendant National Money Mart Company No one appeared for the Defendant Dollar Financial Group, Inc. Judgment delivered: July 11, 2013

PERLMUTTER A.C.J.Q.B. INTRODUCTION

[ 1]

The defendant National Money Mart Company ("Money Mart") moves for

an order staying or dismissing this action and compelling the plaintiff Jenny Briones to proceed with arbitration and in some cases mediation of her disputes against Money Mart.

Page: 2 [2]

In her statement of claim, Ms Briones seeks, on her own behalf and on

behalf of a proposed class, an accounting and repayment of all cheque-cashing fees received by Money Mart from her and others upon their repayment of shortterm loans which are referred to as "payday loans" or "Fast Cash Advances". Ms Briones also seeks declarations that the cheque-cashing fees paid upon repayment of payday loans are interest under s. 347 of the Criminal Code, R.S.C., 1985, c. C-46, and that the agreements used to provide payday loans, which are referred to as payday loan agreements or "Fast Cash Advance Agreements" (the "FCA Agreements"), are unlawful, fail to comply with The Consumer Protection Act, C.C.S.M., c. C200 (the "CPA"), and constitute harsh

or

unconscionable

transactions

within

the

meaning

of

The

Unconscionable Transactions Relief Act, C.C.S.M., c. U20 (the "UTRA"). Ms Briones also claims on the basis of unjust enrichment, constructive trust, restitution, and conspiracy.

Mr. Briones alleges that the defendant Dollar

Financial Group, Inc. ("Dollar Financial") is jointly and severally liable for any liability of Money Mart. [3]

Money Mart disputes that Ms Briones is entitled to the relief sought and

seeks a stay on the basis of the mediation and arbitration provisions in the FCA Agreements.

Money Mart argues that all of Ms Briones claims against it are

subject to these mediation and arbitration provisions.

With respect to Ms

Briones' claim against Dollar Financial (who is not a party to the FCA Agreements) and to the extent that it is determined that some of the matters in

Page: 3 dispute between Money Mart and Ms Briones are not subject to mediation or arbitration, Money Mart says that these claims ought to either be stayed pending the mediation/arbitration or proceed separately by way of litigation. [4]

It is Ms Briones' position that in addition to her claims against Dollar

Financial, her claims under the CPA and the UTRA are not subject to arbitration. Ms Briones concedes that the claims against Money Mart outside of the CPA and UTRA (unjust enrichment, constructive trust, restitution, and conspiracy) are

subject to the arbitration clause, but argues that the arbitration clause is unconscionable.

In any event, Ms Briones says that it is unreasonable to

separate these claims against Money Mart that are subject to arbitration from those that are not. It is Ms Briones' position that the arbitration ought to give way to the litigation. It is further Ms Briones' position that the mediation clause in the FCA Agreements ought not to be the basis for a stay.

BACKGROUND [5]

Between September 2001 and July 2006, Ms Briones obtained 99 Fast

Cash Advances, and each time she signed a FCA Agreement. Prior to April 2003, the FCA Agreements contained the following arbitration clause: 6. Any claim, dispute or issue whether in contract, tort or otherwise, arising out of or in connection with the Loan or this Loan Agreement or any prior or future Loan agreement between the parties, including any issue regarding related fees, advertising, promotion or any oral or written statement or the absence thereof, default of payment, and/or the relationship between the parties shall, upon election by either party be resolved by binding arbitration in accordance with The Arbitration Act [Manitoba] as amended (the "Act''). No joinder or consolidation of claims with other persons are permitted without the consent of the parties hereto. In the event of a conflict between this arbitration provision and the Act, the terms of this arbitration provision shall govern.

Page: 4 (Affidavit of Sydney Franchuk sworn November 30, 2012, Exhibit "E")

[6]

In April 2003, this arbitration clause was replaced with the following

agreement to mediate and arbitrate: 6) Alternative Dispute Resolution. The parties agree that "Claim" includes any claim, dispute, or controversy arising out of or relating to this agreement or the construction thereof either directly or indirectly, whether in contract or in tort, or for restitution of whatever kind, and whether arising pursuant to a statute or regulation, or otherwise. Mediation - The parties agree that, if any party requests mediation to resolve any claim, then such mediation will be a precondition to any party commencing or continuing any court proceedings of whatever kind. The Claim will be referred to private and confidential mediation before a single mediator jointly appointed by the parties and the cost of the mediator will be paid by Money Mart. The parties may elect to proceed with mediation in person, in writing only, or electronically using an Internet or online mediation service jointly appointed by the parties. Arbitration - In the event the parties are unable to resolve any such Claim [by] mediation, the parties agree to have the claim determined by private and confidential arbitration before a single arbitrator jointly appointed [by] the parties and the cost of the arbitrator will be paid by Money Mart. The parties may elect to proceed with the arbitration in person, in writing only, or electronically using an Internet or online arbitration service jointly appointed by the parties.

(Affidavit of Sydney Franchuk sworn November 30, 2012, Exhibit "F")

[7]

Ms Briones repaid some Fast Cash Advances in cash and she repaid others

using Money Mart's cheque-cashing service. When she used the cheque-cashing service to repay the Fast Cash Advances, she paid the cheque-cashing fees that applied for that separate service. Ms Briones alleges that these cheque-cashing fees were "interest" under s. 347 of the Criminal Code. She argues that as a result, the amount of "interest" she paid on her Fast Cash Advances exceeded the maximum of 60% permitted by s. 347. Therefore, she seeks a return of all

Page: 5 the cheque-cashing fees she has paid. Ms Briones' action was commenced under The Class Proceedings Act, C.C.S.M. c. C130. [8]

Following service of the statement of claim, Money Mart made a formal

demand to mediate and arbitrate this dispute. Ms Briones refused. Money Mart now seeks a stay.

RELEVANT LEGISLATION [9]

The Arbitration Act, C.C.S.M. c. A120, includes the following: Definitions 1(1) In this Act, "arbitration agreement" means, subject to subsections (2) and (3), an agreement or part of an agreement by which two or more persons agree to submit a matter in dispute to arbitration;

Stay 7(1) Subject to subsection (2), if a party to an arbitration agreement commences a proceeding in a court in respect of a matter in dispute to be submitted to arbitration under the agreement, the court shall, on the motion of another party to the arbitration agreement, stay the proceeding. Refusal to stay 7(2) The court may refuse to stay the proceeding in only the following cases: (b) the arbitration agreement is invalid; (c) the subject-matter of the dispute is not capable of being the subject of arbitration under Manitoba law;

No arbitration if stay refused 7(4) If the court refuses to stay the proceeding, (a) no arbitration of the matter in dispute shall be commenced; and (b) an arbitration that has been commenced shall not be continued, and anything done in connection with the arbitration before the court's refusal is without effect.

Page: 6 Partial stay 7(5) The court may stay the proceeding with respect to the matters in dispute dealt with in the arbitration agreement and allow the proceeding to continue with respect to other matters if it finds that, (a) the agreement deals with only some of the matters in dispute in respect of which the proceeding was commenced; and (b) it is reasonable to separate the matters in dispute dealt with in the agreement from the other matters.

Relying on jurisdiction and objections 17(1) An arbitral tribunal may rule on its own jurisdiction to conduct the arbitration and may in that connection rule on objections with respect to the existence or validity of the arbitration agreement. Questions of law 17(2) The arbitral tribunal may determine any question of law that arises during the arbitration. Arbitration agreement part of another agreement 17(3) If the arbitration agreement forms part of another agreement, it shall, for the purpose of a ruling on jurisdiction, be treated as an independent agreement that may survive even if the main agreement is found to be invalid.

Application of law and equity 31 An arbitral tribunal shall decide a matter in dispute in accordance with law, including equity, and may order specific performance, injunctions and other equitable remedies.

[1 O]

The CPA in force prior to April 1, 2007 included the following: Recovery of excess costs of borrowing 25(3) Where a credit granter, in a transaction to which section 13 or 14 applies, receives from the borrower payment of any cost of borrowing in excess of the amount permitted by this Act or by the Interest Act (Canada), the borrower may recover from the credit granter the amount in excess.

[11]

The CPA in force after April 1, 2007 includes the following:

Page: 7 Incorrect disclosure statement 56(1) Subject to the Interest Act (Canada) and to subsections (2) to (5), if a disclosure statement required under Division 2, 3 or 4 of this Part, other than under section 34.2, 35.1 or 38, (a) does not, though required, contain a statement of the interest rate or APR; (b) understates the APR by more than the margin permitted by the regulations; for fixed credit, omits or incorrectly states any of the information ( c) required by clause 34.3(b), (c), (i), or (o) or subclause 34.3(g)(ii); for open credit, omits or incorrectly states any of the information ( d) required by clause 35.2(a), (b), (c), (d), (e), (g) or (n); or (e) for a lease, omits or incorrectly states any of the information required by clause 39(1)(e), (f), (g), (p), or (r); the credit grantor may collect from the borrower only an amount equal to the lesser of the cash price or the amount that remains owing from time to time, plus simple interest at the legal rate. The interest is to be applied and calculated from the date of the document. If the borrower has paid the credit grantor more than the amount determined under this subsection, the credit grantor must refund to the borrower that excess amount.

[12]

The CPA in force at all material times includes: Agreements waiving benefits 96 Every agreement or bargain, oral or written, expressed or implied, that any provision of this Act or the regulations does not apply, or that a benefit or remedy under this Act or the regulations is not available, or that in any way limits or abrogates, or in effect limits, modifies, or abrogates, a benefit or remedy under this Act or the regulations, is void; and moneys paid under or by reason of the agreement or bargain are recoverable in the court.

[13]

The UTRA includes the following: Power of court 2 Where, in respect of money lent, the court finds that, having regard to the risk and to all the circumstances at the time the loan was made, the cost of the loan is excessive or that the transaction is harsh or unconscionable the court may, (a) re-open the transaction and take an account between the creditor and the debtor; (b) notwithstanding any statement or settlement of account or any agreement purporting to close previous dealings and create a new obligation, re-open any account already taken and relieve the debtor from

Page: 8 payment of any sum in excess of the sum adjudged by the court to be fairly due in respect of the principal and the cost of the loan; (c) order the creditor to repay any such excess if it has been paid or allowed on account by the debtor; (d) set aside either wholly or in part, or revise or alter, any security given or agreement made in respect of the money lent, and, if the creditor has parted with the security, order him to indemnify the debtor.

Exercise of powers of court 3 The powers conferred by section 2 may be exercised, (a) in an action or proceeding by a creditor for the recovery of money lent; (b) in an action or proceeding by the debtor notwithstanding any provision or agreement to the contrary, and notwithstanding that the time for repayment of the loan or any instalment thereof has not arrived; in an action or proceeding in which the amount due or to become ( c) due in respect of money lent is in question.

Relief in court 4 In addition to any right that a debtor may have under this or any other Act or otherwise in respect of money lent, he may apply for relief under this Act to a judge of the court.

[14]

Both the CPA and the UTRA define "court" as the Court of Queen's

Bench. [15]

The Court of Queen's Bench Act, C.C.S.M. c. C280, provides ins. 38 as

follows: Stay of proceedings 38 The court, on its own initiative or on motion by a person, whether or not a party, may stay a proceeding on such terms as are considered just.

PARTIES' POSITIONS

[16]

It is Money Mart's position that under s. 7(1) of The Arbitration Act, a

stay is mandatory unless Ms Briones establishes that either the relevant provisions of the CPA or UTRA limit the enforceability of the arbitration clause or the arbitration clause is unconscionable such that the exception in s. 7(2)(b)

Page: 9 of The Arbitration Act applies. It is Money Mart's position that the relevant

CPA and UTRA provisions do not relieve customers of their contractual commitment to arbitration and whether the clause is unconscionable ought to be determined by the arbitrator. Money Mart concedes that the dispute with Dollar Financial is not subject to the arbitration agreement but says that with respect to this dispute and any other matters determined not to be subject to the arbitration agreement, it is reasonable to bifurcate the arbitration and litigation proceedings in accordance with s. 7(5) of The Arbitration Act.

Money Mart

argues that the litigation should either be stayed pending the arbitration or be allowed to proceed separately. [17]

There is no legislation comparable to s. 7 of The Arbitration Act that

applies to mediation. It is Money Mart's position that the principles provided in

Scott v. Avery, [1855-56] V.H.L.C., 809, which make arbitration a condition precedent to commencing an action, are applicable to the mediation clause and that Ms Briones cannot bring this action against Money Mart until she proceeds with mediation. [ 18]

Money Mart argues that it is committed to resolving disputes with its

customers, such as Ms Briones, without litigation and has been successful in doing so. Money Mart argues that the process of mediation it seeks to enforce is the kind of dispute resolution that this court encourages and is consistent with case law in this and other jurisdictions.

Page: 10 [19]

It is Ms Briones' position that on a plain meaning of the CPA and the

UTRA, she has the right to seek relief from this court.

As such, it is her

position that under s. 7(2)(c) of The Arbitration Act this dispute is not capable of being the subject of arbitration.

Ms Briones concedes that those

parts of her claim against Money Mart that are not advanced pursuant to the

CPA and UTRA (unjust enrichment, constructive trust, restitution, and conspiracy) are subject to the arbitration clause. However, she argues that on the face of the evidence, under s. 7(2)(b) of The Arbitration Act, the arbitration clause is unconscionable and thus invalid. In any event, she argues that it is unreasonable to separate the matters in dispute covered by the arbitration clause from those that are not. As such, she says that under s. 7(5) of The Arbitration Act, a partial stay ought not to be granted. [20]

To the extent that the mediation clause is applicable to loan transactions

after its introduction into the FCA Agreements in April 2003, first, Ms Briones argues that by reason of s. 1(1) of The Arbitration Act, it is deemed to be part of the arbitration agreement.

Second, if it can be severed, it lacks

certainty. Third, she argues that the mediation clause does not, as Money Mart argues, create a pre-condition to a cause of action under Scott v. Avery, supra, principles.

grant a stay.

Fourth, it is Ms Briones' position that the court should not

Page: 11

[21]

Ms Briones argues that Money Mart is using these clauses to shield itself

from liability in any proposed class action concerning the legality of the chequecashing fees that it charged in connection with its payday loan transactions.

ISSUE

[22] The central issue is whether as a matter of statutory interpretation the UTRA and the CPA limit the applicability of the arbitration clause and if so its extent and effect on Ms Briones' action.

ANALYSIS UTRA/CPA Claims Against Money Mart

[23]

It is undisputed that Ms Briones signed the FCA Agreements, that they

contained the arbitration agreement, and from April 2003, they also contained the mediation clause.

The onus is on Ms Briones to establish that her

circumstances come within an exception to mandatory arbitration under s. 7(2) of The Arbitration Act (Bloomer Hotel Corp. v. Boehm Hotel Corp., 2009 MBCA 68, 75 C.P.C. (6th) 150 (Man. C.A.), paras. 20, 22). [24]

While (appropriately) a certification motion has not yet been heard, Ms

Briones claims on her own behalf and on behalf of a proposed class.

For the

purpose of Money Mart's stay motion, the class action procedure cannot have the effect of conferring jurisdiction on this court over a case that would otherwise fall within the subject-matter jurisdiction of an arbitrator (Bisaillon v. Concordia

University, [2006] 1 S.C.R. 666, pp. 679, 681). A class action cannot serve as a basis for legal proceedings if the various claims it covers, taken individually,

Page: 12 would not do so (Bisaillon, supra, p. 679; Dell Computer Corp. v. Union des

consommateurs, 2007 SCC 34, [2007] 2 S.C.R. 801, para. 108; MacKinnon v. National Money Mart Co., 2009 BCCA 103, 304 D.L.R. (4th) 331 (B.C.C.A.), para. 69).

The fact the dispute might otherwise be suitable for certification

cannot make the arbitration agreement inoperative.

Notwithstanding the

important policy objectives that underlie class action legislation, as procedural legislation, it does not nullify the parties' choice of a different forum, which is a matter of substantive law (MacKinnon, supra, para. 72).

[25]

The question of whether the UTRA and the CPA override the arbitration

agreement can be entertained by the court in this case, rather than the arbitrator, because it raises an issue of jurisdiction where the relevant facts are essentially undisputed (Rogers Wireless Inc. v. Muroff, 2007 SCC 35, [2007]

2 S.C.R. 921, pp. 925-926; Seidel v. TELUS Communications Inc., 2011 SCC 15, [2011] 1 S.C.R. 531, paras. 4, 29; see also Hopkins v. Ventura Custom Homes Ltd., 2013 MBCA 67, paras. 98-100). [26]

The Arbitration Act is to be read as subject to the UTRA and the CPA.

The determination of whether the UTRA and the CPA override the arbitration agreement is to be made based on the principles and approach of the Supreme Court of Canada outlined in Seidel, supra. [27]

Seidel concerned a dispute between TELUS and one of its customers, Ms

Seidel, arising out of a cell phone contract. This contract, drawn up by TELUS, provided that:

Page: 13 1 ... "[a]ny claim, dispute or controversy" shall be referred to "private and confidential mediation" and thereafter, if unresolved, to "private, confidential and binding arbitration".

Notwithstanding these provisions, Ms Seidel filed a statement of claim in the Supreme Court of British Columbia setting out a variety of complaints including some that invoked rights, benefits or protections under the British Columbia

Business Practices and Consumer Protection Act, S.B.C. 2004, c. 2 ("BPCPA"). Binnie J. prescribed the following approach: 2 The choice to restrict or not to restrict arbitration clauses in consumer contracts is a matter for the legislature. Absent legislative intervention, the courts will generally give effect to the terms of a commercial contract freely entered into, even a contract of adhesion, including an arbitration clause. The important question raised by this appeal, however, is whether the BPCPA manifests a legislative intent to intervene in the marketplace to relieve consumers of their contractual commitment to "private and confidential" mediation/arbitration and, if so, under what circumstances. (See also Hopkins, supra, para. 63.)

[28]

In Seidel, the BPCPA included the following sections:

21 Waiver or release void except as permitted 3 Any waiver or release by a person of the person's rights, benefits or protections under this Act is void except to the extent that the waiver or release is expressly permitted by this Act.

Damages recoverable 171 (1) Subject to subsection (2), if a person, other than a person referred to in paragraphs (a) to (e), has suffered damage or loss due to a contravention of this Act or the regulations, the person who suffered damage or loss may bring an action against a

(a)

supplier,

Page: 14

(b)

reporting agency, [definitions],

as defined in section

106

(c)

collector, as defined in section 113 [definitions}i

(d)

bailiff, collection agent or debt pooler, as defined in section 125 [definitions], or

(e)

a person required to hold a licence under Part 9 [Licences]

who engaged in or acquiesced in the contravention that caused the damage or loss.

Court actions respecting consumer transactions 172 (1) The director or a person other than a supplier, whether or not the person bringing the action has a special interest or any interest under this Act or is affected by a consumer transaction that gives rise to the action, may bring an action in the Supreme Court for one or both of the following:

(a)

a declaration that an act or practice engaged in or about to be engaged in by a supplier in respect of a consumer transaction contravenes this Act or the regulations;

(b)

an interim or permanent injunction restraining a supplier from contravening this Act or the regulations.

If the court grants relief under subsection (1), the (3) court may order one or more of the following: (a)

that the supplier restore to any person any money or other property or thing, in which the person has an interest, that may have been acquired because of a contravention of this Act or the regulations;

(b)

if the action is brought by the director, that the supplier pay to the director the actual costs, or a reasonable proportion of the costs, of the inspection of the supplier conducted under this Act;

(c)

that the supplier advertise to the public in a manner that will assure prompt and reasonable

Page: 15 communication to consumers, and on terms or conditions that the court considers reasonable, particulars of any judgment, declaration, order or injunction granted against the supplier under this section.

[29]

The Supreme Court of Canada concluded that to the extent that Ms

Seidel's claim invoked s. 172 remedies in respect of "rights, benefits or protections" conferred by the BPCPA, her court action must be allowed to proceed notwithstanding the mediation/arbitration clause (para. 5).

Binnie J.

provided the following explanation: 6 The reason for this conclusion is simple. Section 172 provides a mandate for consumer activists or others, whether or not they are personally "affected" in any way by any "consumer transaction". Section 172 contemplates such a person "bringing the action". The action is specified to be brought "in Supreme Court". The clear intention of the legislature is to supplement and multiply the efforts of the director under the BPCPA to implement province-wide standards of fair consumer practices by enlisting the efforts of a whole host of self-appointed private enforcers. In an era of tight government budgets and increasingly sophisticated supplier contracts, this is understandable legislative policy. An action in the Supreme Court will generate a measure of notoriety and, where successful, public denunciation, neither of which would be achieved to nearly the same extent by "private, confidential and binding arbitration". 7 Private arbitral justice, because of its contractual origins, is necessarily limited. As the BPCPA recognizes, some types of relief can only be made available from a superior court. Accordingly, to the extent Ms. Seidel's complaints shelter under s. 172 of the BPCPA (and only to that extent), they cannot be waived by an arbitration clause and her court action may continue, in my opinion ....

32 ... It will be noted that whereas s. 171 damages may only be sought by "the person who suffered damage", a s. 172 claim may be initiated by virtually anyone ("a person other than a supplier, whether or not the person bringing the action has a special interest or any interest under this Act or is affected by a consumer transaction that gives rise to the action"). The fact that such persons do not necessarily act in their personal interest (as they don't need to have any) emphasizes the public interest nature of the s. 172 remedy. Opening the door to private

Page: 16 enforcement in the public interest vastly increases the potential effectiveness of the Act and thereby promotes adherence to the consumer standards set out therein. The legislature clearly intended the Supreme Court to be able to enjoin a supplier guilty of infractions of the BPCPA from practicing the offending conduct against any consumer (orders which only courts can issue), rather than just in relation to a particular complainant (as in a "private" and "confidential" arbitration created by private contract). [Emphasis original]

36 As to the statutory context, s. 172 stands out as a public interest remedy (i.e. it is available whether or not the self-appointed plaintiff "is affected by a consumer transaction that gives rise to the action") as compared with s. 171 (where the plaintiff must be "the person who suffered damage or loss"). The difference in the personal stake (or lack of it) required of a plaintiff is scarcely accidental. Section 171 confers a private cause of action. Section 172 treats the plaintiff as a public interest plaintiff intended to shine a spotlight on allegations of shabby corporate conduct, and the legislative intent thereby manifested should be respected by the court. This appeal falls to be determined on the meaning of s. 172 of the BPCPA, not on general theories of the desirability of commercial arbitration.

[30]

Ms Briones claims that the cost of each payday loan provided by Money

Mart to her was excessive and each payday loan transaction was harsh and unconscionable within the meaning of the UTRA. She argues that her payment of first party cheque-cashing fees constitutes the payment to Money Mart of interest at a criminal rate. Ms Briones claims that the first party cheque-cashing fees paid by her are in excess of the amount fairly due for her payday loans within the meaning of s. 2(b) of the UTRA. She argues that she is entitled to repayment of these fees pursuant to s. 2(c) of the UTRA. It is her position that considering the applicable legislative provisions, she has the right to obtain relief in this court notwithstanding the arbitration and mediation provisions in the FCA Agreements.

Page: 17 [31]

Ms Briones relies upon the following provisions of the UTRA: Power of court 2 Where, in respect of money lent, the court finds that, having regard to the risk and to all the circumstances at the time the loan was made, the cost of the loan is excessive or that the transaction is harsh or unconscionable the court may,

(b) notwithstanding any statement or settlement of account or any agreement purporting to close previous dealings and create a new obligation, re-open any account already taken and relieve the debtor from payment of any sum in excess of the sum adjudged by the court to be fairly due in respect of the principal and the cost of the loan; order the creditor to repay any such excess if it has been paid or ( c) allowed on account by the debtor;

Exercise of powers of court 3 The powers conferred by section 2 may be exercised,

in an action or proceeding by the debtor notwithstanding any (b) provision or agreement to the contrary, and notwithstanding that the time for repayment of the loan or any instalment thereof has not arrived;

Relief in court 4 In addition to any right that a debtor may have under this or any other Act or otherwise in respect of money lent, he may apply for relief under this Act to a judge of the court.

[32]

Ins. 1, "court" is defined as meaning the Court of Queen's Bench.

[33]

Money Mart argues that, by reference to Seidel, the foregoing provisions

of the UTRA and the CPA lack the necessary public interest remedy, legislative intention, and language to exclude arbitration. [34]

The statutory purpose of the UTRA and the CPA is consumer protection.

While not determinative in the circumstances of this case, to the extent that

Page: 18 there is any ambiguity, the terms of these statutes should be interpreted generously in favour of consumers (Seidel, para. 37). [35]

In my view, the UTRA manifests a legislative intent to intervene and

provide consumers with a right to seek relief in this court.

Section 2 confers

specific powers on the Court of Queen's Bench to order a creditor to repay a sum "in excess of the sum adjudged by the court to be fairly due in respect of the principal and the cost of the loan" [emphasis added]. Section 4 provides that the debtor "may apply for relief under this Act to a judge of the court" [emphasis added].

The reference in s. 2 to being "adjudged by the court" and in s. 4

applying for relief to a "judge" cannot be ignored and must have a meaning and function.

Ruth Sullivan, Sullivan on the Construction of Statutes, Fifth Edition,

(LexisNexis: 2008) provides: It is presumed that the legislature avoids superfluous or meaningless words, that it does not pointlessly repeat itself or speak in vain. Every word in a statute is presumed to make sense and to have a specific role to play in advancing the legislative purpose ... ... [E]very word and provision found a statute is supposed to have a meaning and function. For this reason courts should avoid, as much as possible, adopting interpretations that would render any portion of a statute meaningless or pointless or redundant. (p. 210) (See also Communities Economic Development Fund v. Canadian Pickles Corp., [1991] 3 S.C.R. 388, p. 408.)

[36]

Like s. 3 and s. 172 of the BPCPA in Seidel (para. 31), I interpret these

sections of the UTRA to mean that there is a statutory right to bring an action in the Court of Queen's Bench. Section 3(b) of the UTRA provides that the powers conferred by s. 2 may be exercised in an action or proceeding by the debtor

Page: 19 "notwithstanding any provision or agreement to the contrary". I interprets. 3(b) of the UTRA to mean that to the extent the arbitration clause purports to be an agreement contrary to the powers conferred by s. 2 of the UTRA, it does not apply. To the extent that Ms Briones brings her case within s. 2 of the UTRA, the legislative override in s. 3 of the UTRA relieves her of the arbitration clause in the FCA Agreements. The ability to apply to a judge under s. 4 of the UTRA is also consistent with this interpretation. [37]

In my view, the language and intent of these sections are comparable to

s. 172 of the BPCPA at issue in Seidel, which specified that the action may be brought in the British Columbia Supreme Court. By contrast, in Seidel, s. 171 conferred a right to bring an action but did not specify a forum in which the action could be brought. The Supreme Court of Canada upheld the stay of the s. 171 part of the action in favour of arbitration (para. 50). [38]

Money Mart argues that in Seide/the Supreme Court of Canada refused

to stay Ms Seidel's claims under s. 172 of the BPCPA because s. 172 is a public interest remedy as it is available whether or not the self-appointed plaintiff is affected by a consumer transaction that gives rise to the action. The court in Seidel held that the fact that a person who was not directly affected by a

consumer transaction could bring an action under s. 172 of the BPCPA "emphasizes the public interest nature of the s. 172 remedy" (emphasis in original) (para. 32).

However, the court did not conclude that consumer

legislation should be construed to confer a statutory right to bring an action in

Page: 20 court only if the legislation also permits a person who does not have a personal claim to bring such an action. Binnie J. did not find that the statutory right to seek relief in court is dependent on the fact that it can be brought by someone with no personal action. Rather, Binnie J. wrote: 31 ... I interpret Cs. 3 of the BPCPAJ to mean that to the extent the arbitration clause purports to take away a right, benefit or protection conferred by the BPCPA, it will be invalid, and to that extent, Ms. Seidel will retain her individual cause of action under the BPCPA in the Supreme Court of British Columbia. If the arbitration clause is thus rendered invalid, the stay provisions of the CM will not assist TELUS. However, the statutorv right to bring an action in the Supreme Court of British Columbia appears only in s. 172. As explained earlier, Ms. Seidel's statement of claim contains a variety of different assertions and claims invoking different statutes and causes of action. It is only to the extent that she can bring her case within s. 172 of the BPCPA that the legislative override in s. 3 will extricate her from the arbitration clause to which she agreed in the TELUS contract. [Emphasis added]

32 For ease of reference, I reproduce again the language of s. 172. It is headed "Court actions respecting consumer transactions". It is clearly framed to encourage private enforcement in the public interest: [Underlining and emphasis original]

[39]

Like Ms Seidel's "statutory 'right' to take her complaint to the Supreme

Court" (para. 33) under s. 172 of the BPCPA, in the circumstances of this case, I interpret the UTRA as providing Ms Briones the right to apply for relief in this court. The UTRA manifests a "legislative intent to intervene in the marketplace to relieve consumers of their contractual commitment to 'private and confidential' mediation/arbitration" (Seidel, para. 2). [ 40]

In Young v. Dollar Financial Group Inc., 2012 ABQB 601, 356 D.L.R.

(41h) 346, the Alberta Court of Queen's Bench dealt with a similar claim involving

Page: 21 the same form of Money Mart agreement. The plaintiff Mr. Young also refused to participate in mediation or arbitration and Money Mart sought a stay of his action pursuant to the agreements he signed and s. 7(1) of the Arbitration Act (Alberta), R.S.A. 2000, c. A-43.

Section 7 of the Alberta Act was worded

similarly to the Manitoba Arbitration Act The court refused to stay the action based on the Fair Trading Act (Alberta), R.S.A. 2000, c. F-2, and the

Unconscionable Transactions Act (Alberta), R.S.A. 2000, c. U-2 (the "UTA"). Macleod J. provided the following comments regarding the Alberta UTA provisions that are similar to the Manitoba provisions: 46

This legislation provides the Court, as defined in the Act with very broad powers to re-open transactions and order a variety of remedies in cases where the Court determines that the transaction is harsh and unconscionable. It is a unique remedy which arises in a particular fact situation and it is to be noted that in s. 3 the powers conferred on the Court may be exercised in an action or proceeding brought by the debtor "notwithstanding any provision or agreement to the contrary ... ". 47 The legislation is consumer protection legislation designed to protect borrowers from harsh and unconscionable transactions. In my view, the extraordinary remedies and powers conferred on the Court by s. 2 should not be exercised by anybody other than the Court as defined in the Act. If I am wrong in that conclusion it is also my view that neither an arbitration nor a mediation clause can preclude or prevent a debtor from accessing the Court under s. 3(b ).

[ 41]

In my view, the same comments apply to the Manitoba UTRA.

[42]

Similar reasoning also applies to Ms Briones' claim under the CPA.

Ms

Briones claims that Money Mart failed to properly disclose the annual percentage rate (APR) of her payday loans by failing to include the first party chequecashing fee and the APR calculation and failed to properly disclose the cost of borrowing in her payday loan agreements by failing to include the first party

Page: 22 cheque-cashing fees in the total stated to be the cost of borrowing. She claims that this is contrary to the CPA.

As a result, Ms Briones claims that she is

entitled to repayment of these first party cheque-cashing fees pursuant to s. 25(3) of the CPA in respect of payday loans advanced before April 1, 2007, and s. 56(1) of the CPA in respect of payday loans advanced on or after that date. [ 43]

Section 96 of the CPA confers a right to recover "in the court" moneys

paid under or by reason of an agreement that limits the application of the CPA. The word "court" is defined in s. 1(1) to mean the Court of Queen's Bench. The language in s. 96 of the CPA "Every agreement ... , expressed or implied, that any provision of this Act ... does not apply, or that a benefit or remedy under this Act ... is not available, or that in any way limits or abrogates, or in effect limits, modifies, or abrogates, a benefit or remedy under this Act ... is void" is analogous to the non-waiver provision in s. 3 of the BPCPA at issue in Seidel. [ 44]

Money Mart relies on Zwack v. Pocha, 2012 SKQB 371, [2013] 3 W.W.R.

194 (Sask. Q.B.), where the defendant applied for an order staying the proceedings pursuant to the International Commercial Arbitration Act, S.S. 1988-89 c. I-10.2, or in the alternative pursuant to s. 8(1) of the Arbitration Act, 1992, S.S. 1992 c. A-24.1, on the basis of an arbitration clause that

governed the dispute between the parties.

In its application of Seidel to

provisions of the Consumer Protection Act, S.S. 1996, c. C-30.1, which are analogous to the Manitoba UTRA and CPA, the court concluded as follows: 42 As Part II of the CPA lacks a comparable public claim open to "any person" including those who may be affected by the consumer

Page: 23 transaction, it follows that the CPA falls short of manifesting " ... a legislative intent to intervene in the marketplace to relieve consumers of commitment to 'private and confidential' their contractual mediation/arbitration". [45]

The Zwack case, supra, involved a dispute under a sales agreement for a

cottage.

Aside from it not being binding on this court, in my view, Zwack is

distinguishable from the case at bar as there was no consumer activism purpose to the action. Schwann J. wrote: 43 ... The logical conclusion to be drawn from the plaintiffs' claim is that unlike the s. 172 claim in Seidel, the plaintiffs' claim is fundamentally a private law action designed to recover personal financial losses. It lacks a consumer activism gloss or purpose, nor can it be characterized (either in fact or by statutory provision) as an effort to privately enforce the statute's consumer protection standards and mandate. These are significant and distinguishing features. [46]

Money Mart argues that the provisions in the UTRA and the CPA which

refer to the court do not exclude arbitration but rather create concurrent jurisdiction. By analogy, Money Mart relies upon the reasoning in Desputeaux

v. Editions Chouette (1987) Inc., 2003 SCC 17, [2003] 1 S.C.R. 178, where the Supreme Court of Canada concluded that the Court of Appeal for Quebec erred in its conclusion that s. 37 of the Copyright Act, R.S.C. 1985, c. C-42, prevented an arbitrator from ruling on the question of copyright since that provision assigns exclusive jurisdiction to the Federal Court, concurrently with the provincial courts, to hear and determine all proceedings relating to the Act Section 37 provided: 37 The Federal Court has concurrent jurisdiction with provincial courts to hear and determine all proceedings, other than the prosecution of offences under section 42 and 43, for the enforcement of a provision of this Act or of the civil remedies provided by this Act.

Page: 24 [ 4 7]

In arriving at its conclusion, LeBel J. wrote: 46 Section 37 of the Copyright Act gives the Federal Court concurrent jurisdiction in respect of the enforcement of the Act, by assigning shared jurisdiction ratione materiae in respect of copyright to the Federal Court and "provincial courts''. That provision is sufficiently general, in my view, to include arbitration procedures created by a provincial statute. If Parliament had intended to exclude arbitration in copyright matters, it would have clearly done so ... Section 37 is therefore not a bar to referring this case to arbitration ... . (See also para. 42.)

[ 48]

Money Mart argues that to exclude arbitration the UTRA must expressly

say so.

However, LeBel J.'s comments must be read in light of Binnie J.'s

comments in Seidel.

In Seidel, Binnie J. indicated that Desputeaux, supra,

stands "for the enforcement of arbitration clauses

absent legislative language to

the contrarr' [emphasis original] (Seidel, para. 42). In Seidel, the language of s. 172 was sufficient for the court to conclude that, having regard to the nonwaiver section in the BPCPA, Ms Seidel's s. 172 claim should not be stayed. [ 49]

Similarly, Money Mart relies on Murphy

v. Cie Amway Canada, 2011 FC

1341, 401 F.T.R. 18, where the Federal Court of Appeal concluded thats. 36 of the Competition Act, R.S.C. 1985, c. C-34, which conferred a right to bring an action in any "court of competent jurisdiction", did not exclude arbitration (para. 63). However, again, the creation of concurrent jurisdiction is different than the right created under the UTRA and the CPA to bring an action in the Court of Queen's Bench. [50]

Accordingly, Money Mart's motion to stay Ms Briones' claims under the

UTRA and the CPA is dismissed.

Page: 25 Claims Outside the UTRA and the CPA [51]

Ms Briones concedes that her claims against Money Mart outside of the

UTRA and the CPA (unjust enrichment, constructive trust, restitution, and conspiracy) are subject to the arbitration clause, but argues that the arbitration clause is unconscionable and thus invalid under s. 7(2)(b) of The Arbitration Act. In my view, it is within the purview of the arbitrator to determine whether the clause is unconscionable because it entails more than a superficial examination of the documentary proof in the record (Rogers Wireless Inc.,

supra, pp. 925-926). The case at hand is analogous to the circumstances in Rogers Wireless Inc., where Mclachlin CJ., writing for the majority of the Supreme Court of Canada, concluded that answering this question would apparently require a probing factual inquiry and would go far beyond superficial examination

of the

documentary evidence

(pp.

926-927).

(See

also

MacKinnon, paras. 34, 35.) [52]

However, as discussed below, I am exercising my discretion under s. 7(5)

of The Arbitration Act to allow the claim to continue in this court and not grant a partial stay. ClaimAgainstDollarFinandal [53]

Ms Briones alleges that Dollar Financial exercises control over and directs

the management of Money Mart. She claims that Dollar Financial has received royalty payments and fees as a result of the collection of unlawful fees from her

Page: 26 and the proposed class members. Her action against Dollar Financial is framed in unjust enrichment, conspiracy, and joint and several liability. [54]

Dollar Financial is not a party to the arbitration agreement. As such, the

claims against Dollar Financial are not subject to arbitration. (Hammer Pizza

Ltd. v. Domino's Pizza of Canada Ltd., [1997] A.J. No. 67 (QL), para. 7; Javor v. Francoeur, 2003 BCSC 350, 13 B.C.L.R. (4th) 195 (S.C.), paras. 30-31, aff'd 2004 BCCA 134, 25 B.C.L.R. (4th) 114 (C.A.); Shaw Satellite G.P. (c.o.b.

Shaw Direct) v. Pieckenhagen, 2011 ONSC 4360, 337 D.L.R. (4th) 369 (Ont. S.C.), para. 32, aff'd 2012 ONCA 192, 347 D.L.R. (4th) 452, (Ont. C.A.))

Section 7(5) of The Arbitration Act [55]

It is Money Mart's position that it is reasonable to separate those claims

that can be arbitrated from those that are not subject to arbitration. Given my conclusions above, if Money Mart's position is accepted, the claims against Money Mart outside the UTRA and the CPA would proceed to arbitration and the UTRA and CPA claims against Money Mart and the claim against Dollar Financial would either be stayed pending the arbitration or proceed separately. [56]

Money Mart says that, based on Rivergate Properties Inc. v. West St.

Paul (Rural Municipality), 2001 MBQB 325, 161 Man.R. (2d) 50 (Q.B.), and Chrysler Canada Inc. v. Eastwood Chrysler Dodge Ltd., 2010 MBCA 75, 262 Man.R. (2d) 1 (C.A.), s. 7(5) should be applied to permit bifurcated proceedings.

Money Mart says that in Seidel, the court did not find it

Page: 27 unreasonable to allow both the arbitration and the litigation to proceed even though both proceedings involved the same factual and legal issues. [57]

In my view, Rivergate Properties, supra, and Chrysler Canada Inc.

supra, did not conclusively determine how a Manitoba court should exercise its discretion to grant a partial stay under s. 7(5) of The Arbitration Act in circumstances such as these.

It is my view that the approach in Alberta and

Ontario, which have equivalent provisions to s. 7(5) of The Arbitration Act (Manitoba), is applicable to the situation at hand. [58]

In Alberta, this approach is reflected in the following comments of the

Alberta Court of Appeal in New Era Nutrition v. Balance Bar Co., 2004 ABCA 280, 245 D.L.R. (41h) 107 (C.A.), by reference to s. 7(4) of the Arbitration Act (Alberta), which provides that no arbitration can be commenced or continued if the court refuses to stay a proceeding under s. 7 of the Act, and s. 7(5) of the

Act 38 The inclusion of these two subsections in section 7 indicates that the Legislature, despite its desire to promote and fortify the process of arbitration, recognized the significant and substantive problems where litigation proceeds on the same issues in different forums. It did not approve of multiple proceedings on the same matters. (See also Olymel S.E.C. v. Premium Brands Inc., 2005 ABQB 312, 7 B.L.R. (41h) 250 (Alta. Q.B.), paras. 21-25; 3058354 Nova Scotia Co. v. On*Site Equipment Ltd., 2007 ABQB 695, [2008] 5 W.W.R. 183 (Alta. Q.B.), paras. 38, 43, 44; Lamb v. AlanRidge Homes Ltd., 2009 ABQB 170, 309 D.L.R. (4'h) 214 (Alta. Q.B.), paras. 24, 34, 35, appeal dismissed 2009 ABCA 343, 312 D.L.R. (4'h) 719 (Alta. C.A.), appeal denied [2009] SCCA No. 520 (QL); Young, supra, para. 58.)

[59]

In Ontario, the court in Radewych v. Brookfield Homes (Ontario)

Ltd. (2007), 158 A.C.W.S. (3d) 523 (Ont. S.C.J.), [2007] OJ. No. 2483 (QL),

Page: 28 aff'd 2007 ONCA 721, 161 A.C.W.S. (3d) 185 (Ont. C.A.), described the approach to s. 7(5) of the Ontario Arbitration Act; 1991, S.O. 1991, c. 17, as follows: 23 Since only part of the claim of the plaintiffs arises under the agreement, then, in my view, the matter is governed by subsection 7(5) of the Arbitration Ac~ 1991. That subsection reposes a discretion in the court to stay a proceeding with respect to matters dealt with in an arbitration agreement where some matters arise under the agreement and some do not. In my view, it would not be appropriate to grant a partial stay. To do so would potentially delay the resolution of the entire matter, and could produce a significant duplication of resources and potentially inconsistent findings. Such a course would be contrary to the policy reflected in section 138 of the Courts of Justice Act which, simply stated, provides that "as far as possible, multiplicity of legal proceedings shall be avoided". It is preferable, in my view, that all of the various claims, against all of the defendants, be determined in one proceeding.

(See also para. 3, 2007 ONCA 721.)

[60] Similar reasoning was employed in Griffin v. Dell Canada Inc., 2010 ONCA 29, 98 0.R. (3d) 481 (C.A.); leave to appeal refused [2010] S.C.C.A. No. 75 (QL), respecting a standard arbitration clause in Dell's computer sale agreements.

Griffin commenced an action against Dell alleging that Dell sold

defective computers and sought to have the action certified as a class proceeding. The action was brought on behalf of both consumer purchasers and non-consumer business purchasers. The Ontario Court of Appeal held that the consumer claims could not be subject to arbitration because the Consumer

Protection Act; S.O. 2002, c. 30, provided that the Arbitration Act; 1991 did not apply to any consumer dispute or any class proceeding commenced by a consumer.

In considering whether, under the Ontario equivalent to s. 7(5) of

The Arbitration Act; a partial stay should be granted of the claims that were not subject to the Consumer Protection Act; Sharpe J.A. stated:

Page: 29 46 In my view, it would not be reasonable to separate the consumer from the non-consumer claims. We should, therefore, refuse a partial stay and allow all the claims to proceed under the umbrella of the class proceeding. 47 Granting a stay of the non-consumer claims would lead to inefficiency, a potential multiplicity of proceedings, and added cost and delay. This would be contrary to the Courts of Justice Act, s. 138, which provides that "[a]s far as possible, a multiplicity of legal proceedings should be avoided", and contrary to the jurisprudence on the reasonableness of partial stays under s. 7(5) of the Arbitration Act. (See also Frambordeaux Developments Inc v. Romandale Farms ltd. (2007), 162 A.C.W.S. (3d) 711 (Ont. S.C.J.), [2007] 0.J. No. 4917 (QL), paras 34, 38-41; Toronto Community Housing Corp. v. Thyssenkrupp Elevator (Canada) ltd., 2011 ONSC 4914, 19 C.P.C. (ih) 280 (Ont. S.C.).)

[61]

A partial stay of an action should be granted only if it is reasonable to

separate the matters subject to arbitration from the other matters in the litigation. The arbitration must give way to litigation where there are overlapping matters that cannot be reasonably separated. In my view, the claims against Money Mart under the UTRA and the CPA and those against Dollar Financial (which I have concluded are not subject to arbitration) are inextricably linked to Ms Briones' claims against Money Mart outside of the UTRA and the CPA (which are subject to arbitration).

They are based on essentially the same facts.

Having regard to this link, the undesirability and inefficiency of multiple proceedings, and the risk of potential inconsistent results, it is my view that it would be unreasonable to separate these claims and have parallel proceedings in this court and before an arbitrator. [62]

As to Money Mart's argument that Seidel has expressly approved

bifurcated arbitration and litigation proceedings, there was no issue in Seidel as

Page: 30 to whether a partial stay should be granted as the Commercial Arbitration

Act (British Columbia), R.S.B.C. 1996, c. 55, did not have a provision equivalent to s. 7(5) of the Arbitration Acts of Manitoba, Alberta, and Ontario. (See also

Toronto Community Housing Corp. v. Thyssenkrupp Elevator (Canada) Ltd., supra, paras. 302-310.) [63]

As such, I am exercising my discretion to deny a stay of proceedings.

Mediation [64]

Since April 2003, the FCA Agreement has included a mediation clause.

There is no statutory right to a stay to enforce a mediation clause as distinct from an arbitration clause. However, Money Mart argues that this agreement to mediate is a pre-condition to the commencement of court proceedings and is enforceable based on the principled approach articulated in Scott v. Avery. A

"Scott v. Avery Clause" makes participation in arbitration a condition precedent to commencing an action regarding the matter in dispute.

Until this pre-

condition has been satisfied, there is no basis for commencing an action.

No

cause of action exists. [65]

In Deuterium of Canada Ltd. v. Burns and Roe, Inc., (1975] 2 S.C.R.

124, the Supreme Court of Canada explained the principle in Scott v. Avery, as follows: ... The law in this regard was summarized by Lord Wright in Heyman v. Darwins Limited [ [1942] A.C. 356.] at p. 377 where he said: The contract, either instead of or along with a clause submitting differences and disputes to arbitration, may provide that there is no right of action save upon the award of an arbitrator. The parties in such a case made arbitration followed by

Page: 31 an award a condition of any legal right of recovery on the contract. This is a condition of the contract to which the court must give effect, unless the condition has been 'waived', that is, unless the party seeking to set it up has somehow disentitled himself to do so. This proposition has been widely accepted since the case of Scott v. Avery [(1856), 25 L.J. Exch. 308, 5 H.L.C. 811.], and the clauses making arbitration a condition precedent to the bringing of an action have long been classified as "Scott v. Avery Clauses." (pp. 131-132)

[ 66]

A mediation clause is analogous to an agreement to arbitrate (Cable &

Wireless v. IBM United Kingdom Ltd., [2002] EWHC 2059 (Comm.); Computershare Ltd v. Perpetual Registrars Ltd and Ors (No. 2), [2000] VSC

233;

3130231

Manitoba

(c.o.b.

Nor-Man

Construction)

v.

Burntwood Regional Health Authority Inc., 2000 MBQB 106, 98 A.C.W.S. (3d) 106 (Man. Q.B.); Chrysler Canada Inc.). [67]

Staying this action based on the mediation clause necessarily invokes this

court's jurisdiction to stay proceedings under s. 38 of The Court of Queen's

Bench Act. Like Macleod J. in Young (paras. 49, 50), I am of the view that it would make little sense to exercise my jurisdiction to stay the action in favour of mediation given my other conclusions. The same considerations apply.

CONCLUSION [68]

In summary, I am dismissing Money Mart's motion. If costs cannot be

agreed to, I will hear submissions. l'

\ /

-}-~ t

1' '-\_(_

A.C.J.Q.B.

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