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Telus files application to challenge provincial wireless laws at Supreme Court

Telus says aspects of separate provincial consumer protection laws are encroaching on the federal CRTC’s domain.

Digestible version:

  • Telus on Monday filed an application to the Supreme Court of Canada challenging an Ontario court ruling under a now-repealed provincial statute governing wireless services agreements that allows a class of customers to get back prorated amounts after they canceled their prepaid contracts before the end of the month. 
  • The Ontario Court of Appeal ruled in October a class of plaintiffs, represented by Marjorie Nelson — who cancelled her contract with Telus in the middle of October 2017 but was charged the full month — can pursue amounts that they didn’t use in the month, upholding a lower court decision.   
  • While the provincial courts determined that Ontario’s Wireless Services Agreements Act of 2013 (WSAA), which was repealed in 2019, can regulate “basic rules of contract,” Telus argues the statute goes beyond that and rubs against the CRTC’s Wireless Code during the period in question. 
  • The company is also bringing motions to challenge Manitoba, Newfoundland and Labrador and Quebec for similar legislation that they say cuts across federal jurisdiction. 
  • Quebec’s Court of Appeal has yet to release its decision in a similar matter. 

Key quote:

“Such an approach to federal undertakings’ customer contracts cannot be reconciled with the settled constitutional law that Parliament has exclusive jurisdiction over federal undertakings’ contracts with their employees.”

Lawyers for Telus

What this story contributes

Telus is asking the Supreme Court of Canada to allow it to argue that some provinces with extensive laws governing consumer contracts on telecommunications are encroaching on federal jurisdiction, which regulates the telecommunications companies.

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Deeper version

Canada’s third-largest telecommunications company is asking the Supreme Court of Canada to allow it to argue that some provincial consumer protection codes are in conflict with the laws administered by the CRTC, the telecom regulator that regulates the companies. 

Telus filed a leave to appeal application to Canada’s highest court last Monday, challenging a decision by Ontario’s highest court in October that upheld a lower court judgment against the Vancouver-based company that said a class of plaintiffs can pursue refunds for days in the month that they didn’t use the company’s wireless service after cancelling their contracts short of the full month. These customers were on prepaid plans, meaning they paid for the whole month upfront.

The case stems from a Telus customer named Marjorie Nelson, who represents the class and argued that section 17 of Ontario’s Wireless Services Agreements Act (WSAA) gave customers the right to recover money if they cancelled an agreement and didn’t get a refund for the remaining time they didn’t use the company’s services. 

The WSAA came into force in 2014. And despite the legislation in question being repealed under the Doug Ford government in October 2019, Nelson’s own case dates back to October 2017 and the province’s courts made their rulings based on the legislation. The legislation had regulated wireless service providers’ duties before entering customer agreements, changes and renewal of contracts, and rules around when they can charge cancellation fees. 

But Telus argues in its application to the Supreme Court that during the time of the Nelson case, the CRTC did not require Telus to refund prorated amounts under the Wireless Code until after October 1, 2018. That was after Telus filed a review of the CRTC’s May 2016 decision that reversed course and required prorated refunds and asked for an extension of time, which was granted to the 2018 date. Telus says it has since October 1, 2018 issued refunds for cancellations. 

Telus said of the federal Wireless Code that, “It comprehensively regulates, for consumer protection purposes, the terms on which [service providers] provide wireless services to consumers and small businesses, including the content of wireless contracts, their unilateral amendment by WSPs, and their cancellation.”

The Ontario Superior Court ruled that Telus was not shielded from WSAA legislation because the provincial law did not ‘impair an activity that is vital or essential’ to telecom regulation. 

“Telus grossly overstates Parliament’s purpose in empowering the CRTC with the power to regulate a national telecommunications industry….because [Telus] presupposes that Parliament left no role for the provinces and no role for provincial law in such matters as contracts and property in the province,” the Superior Court ruled. “While Parliament may have empowered the CRTC with the power to regulate the telecommunications industry and to establish national standards, Parliament did not envision leaving it to the CRTC to fashion the law of contract.”

The province’s Court of Appeal upheld that decision, hence the Supreme Court challenge. 

Telus said in its application to the Supreme Court that by allowing Nelson’s claims to go through, the court “opened the door to a multiplicity of different legal regimes, varying from province to province, to regulate the same federal services, rather than the CRTC under the [Telecommunications Act].”

As such, while the company is bringing the application on that development, it said it hopes to implicate other provinces, including Manitoba, Newfoundland and Labrador, and Quebec, all of which have consumer protection laws the company said overstep federal jurisdiction. In its decision, the Superior Court limited the class of plaintiffs to those impacted by the Ontario law because Nelson did not bring a case against the laws of those other provinces, which it recognized as having similar legislation.

Most imminent, is a decision by Quebec’s Court of Appeal, which will make a determination on whether Quebec’s own Consumer Protection Act can apply to telecoms that are also subject to federal legislation. In that case, a lower Quebec court ruled that the final word on wireless contracts belong to the CRTC. But the Superior Court overturned the decision, suggesting that the province’s legislation only regulates the legal relationship between company and customer and does not harm telecom operations. 

“Leave to appeal should be granted so that this Court can give guidance to legislative assemblies and lower courts regarding whether, and to what extent, a province may legislate specifically with respect to the conditions of service and rates of federal undertakings,” said Telus in its application. 

The issue of federal paramountcy is also central in a larger telecommunications matter. Right now, telecoms are recommending the CRTC, or another federal body, be given oversight over provincially-owned utility poles, on which telecoms must pay to carry equipment to expand broadband. The reasoning there, the telecom say, is to ensure not only the speed at which home internet is expanded to underserved areas, but to ensure the next-generation of wireless technology, or 5G, is not hobbled by slow and costly permitting issues. 

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