A recent decision of the
The issue in Dufault is what constitutes full and fair disclosure of service charges in a standard-form consumer banking agreement and arises out of the plaintiff being double charged for NSF fees by the defendant
In an earlier sequencing motion under s.4.1 of the amended Class Proceedings Act,
SUMMARY JUDGMENT AND TD BANK'S NSF FEES
In the summary judgment motion, the Court engaged in a full analysis of the matters at issue in the litigation, commenting:
"The issues in this case are in essence questions of law. The facts are not really in dispute. As with other banking fee disclosure actions that were found appropriate for summary judgment, here as well 'the relevant facts are largely uncontested and there are no credibility concerns.'"
In this case, when the plaintiff opened bank accounts with
If you do not have overdraft protection service and you issue a cheque or make a payment without sufficient funds in your account [TD may charge]
On
The plaintiff argued he was charged
After considering the parties' arguments, the Court not only refused to grant
MODERN CONTRACTUAL INTERPRETATION AND STANDARD FORM CONTRACTS
The Court applied modern contractual interpretation to look at the words of the banking agreement used in their ordinary and grammatical meaning consistent with any surrounding circumstances that were known to the parties at the time of the formation of the contract.
The Court determined that in standard-form "take-it-or-leave-it" consumer adhesion contracts, like banking agreements, the surrounding circumstances generally play less of a role in the interpretation process. This is because it would be unreasonable to expect that surrounding circumstances involving industry-specific background rules and regulations, like the Network Rules, are known to the consumer at the time of contracting.
Looking at the ordinary and grammatical meaning of the NSF Provision itself, the Court concluded that
So, what does satisfy full and fair disclosure of service fees in a standard-form consumer banking agreement? The Court suggested
If a cheque, payment or re-presentment of a payment is not approved because of insufficient funds, the Bank may charge a
THE TAKEAWAY IN THE CLASS ACTION CONTEXT
The decision in Dufault brings to mind the old adage, "be careful what you wish for." The Court not only rejected the defendant's motion for summary judgment, but gave rise to the spectre of summary judgment being granted against TD Bank.
"I considered whether this was an appropriate case for a "reverse summary judgment" — whether the court on its own initiative should grant the plaintiff the "breach of contract" and related declarations about the second NSF fee that were pleaded but not advanced by way of a cross-motion for summary judgment. As I began to work on these reasons, I advised counsel that I was considering this possibility and invited and received their written submissions. Counsel for the plaintiff pressed for a reverse summary judgment. The Bank was opposed."
Ultimately,
"But for the fact that the action before me is a proposed class action, I would probably have agreed with counsel for the plaintiff [in granting reverse summary judgment]. On balance, however, I am not persuaded that in the context of a proposed class action where the broader findings made herein will in any event be before me when I hear the certification motion, that any practical purpose is served in granting a reverse summary judgment."
The Court then indicated that the case would proceed to the scheduling of certification.
Dufault provides general helpful commentary on the interpretation and enforceability of standard form contractual provisions in a consumer context. More importantly in a class proceeding context, Dufault provides a warning that although the new Ontario Class Proceedings Act amendments may permit an easier path to preliminary motions such as motions for summary judgment, defendants ought to be careful when bringing them, as adverse results could potentially lead to a significant loss of leverage at an earlier stage in the litigation.
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1 Dufault v.
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