Ontario Court of Appeal Requires Strict Adherence to Requirements for Remote Agreements in Consumer Protection Law

In Weller v Reliance Home Comfort Limited Partnership, 2012 ONCA 360, the Ontario Court of Appeal ruled that suppliers must strictly adhere to the requirements in the Ontario Consumer Protection Act (Act) and its regulations for amending, renewing or extending a “remote agreement” (a consumer agreement entered into when the consumer and supplier are not present together). Section 42(2) of Regulation 17/05 under the Act requires that a supplier’s proposal to amend, renew or extend a remote agreement give the consumer an option to either terminate the agreement or retain the existing agreement unchanged. Over the past few years, Reliance Home Comfort Limited Partnership (Reliance) has had a number of litigation disputes with National House Services (National). The companies are competitors in the Ontario water heater market. Reliance took issue with National’s door-to-door sales strategy, under which National’s sales representatives would act as agents of the customers to terminate those customers’ water heater rental agreements with Reliance. In 2010, a Vice-President from National successfully brought an application to the Ontario Superior Court for a declaration that he could appoint an agent to terminate his agreement with Reliance, since it was not prohibited by statute or by the contract. In response to the Ontario Superior Court decision, Reliance amended the termination clause in its standard rental contracts to give Reliance the discretion to refuse to deal with a customer agent. Reliance’s consumers were provided the option to terminate the agreement, provided that the following conditions were met: (1) the consumer was not in default under the agreement, and (2) the consumer paid the standard removal charges. Scott Weller, who is the husband of National’s parent company’s Senior Vice-President, Finance, brought an application alleging that the amendment does not comply with Section 42(2) because the right to terminate is not unconditional. At trial, the Ontario Superior Court ruled that the conditions were reasonable and therefore complied with Section 42(2). The judge also invoked section 93(2) of the Act, which allows consumers to be bound to agreements that have not been made in accordance with the Act, if it is inequitable for the consumer not to be bound. Although the appeal was dismissed, the Court of Appeal disagreed with the application judge’s interpretation of Section 42(2), and ruled that suppliers must strictly adhere to Section 42(2). Allowing a supplier to attach “reasonable conditions” would add a level of uncertainty to the transaction. However, the Court of Appeal went on to affirm the application judge’s decision to invoke section 93(2) by which he had ruled that it would be inequitable for the consumer not to be bound by the agreement. Summary by: Adam Lis