Unfair Practices

Skymark Finance Corporation v Toraman, 2020 CanLII 51091 (ON SCSM)

[4] For the reasons articulated further below, the issues and my short conclusions, based on the evidence and applying the applicable law and the civil standard of proof (balance of probabilities), follow.

1. Did the salesman engage in unfair practices?

Yes.

2. Is Skymark a bona fide purchaser for value of the contract from Progressive and therefore an innocent party?

No.

3. What is the appropriate remedy?

Rescind the contract.

1. Did the salesman engage in unfair practices?

[48] As explained below, I find that the salesman engaged in unfair practices. They are prohibited by subsection 17(1) of the CPA. Under subsection 17(2), a person who performs even just one act referred to in section 14, 15 or 16 is deemed to be engaging in an unfair practice.[4] In fact, while one act is enough, this case abounds with such practices.

[49] The contract came about largely because of the persistence of a Progressive door-to-door salesman. Unsolicited, he landed on the Toramans’ doorstep and convinced them to buy a water filter.[5] This elusive agent did not testify, and no explanation was given for this fact, thus supporting an adverse inference against the plaintiff.

[50] In my view, the agent’s representations[6] to the Toramans were (i) false, misleading or deceptive and (ii) unconscionable, as elaborated below.

(i) Section 14

[51] Under the CPA, “PART III - UNFAIR PRACTICES”,[7] subsection 14(1) says:

False, misleading or deceptive representation

14 (1) It is an unfair practice for a person to make a false, misleading or deceptive representation.

[52] Subsection 14(2) provides inclusive examples of such representations. Applying subsection 14(2) to the present case, I find that the agent made false, misleading or deceptive representations as follows (emphasis added).

[53] 2. A representation that the person who is to supply the goods or services has sponsorship, approval, status, affiliation or connection the person does not have.

Progressive’s agent represented that the filter was recommended by the City of Toronto. This is false.

[54] 10. A representation that a service, part, replacement or repair is needed or advisable, if it is not.

Progressive’s agent represented that the filter was needed because the City’s water was unsafe. This is false.

[55] 14. A representation using exaggeration, innuendo or ambiguity as to a material fact or failing to state a material fact if such use or failure deceives or tends to deceive.

Progressive’s agent implied that Mr. Toraman needed to buy the filter to safeguard his new baby. This representation deceived the Toramans.

[56] Hence, Progressive’s agent, and therefore Progressive, breached section 14. Thus, Progressive engaged in an unfair practice, which subsection 17(1) prohibits.

(ii) Section 15

[57] Also under the CPA, “PART III - UNFAIR PRACTICES”, section 15(1) says:

Unconscionable representation

15 (1) It is an unfair practice to make an unconscionable representation.

[58] Subsection 15(2) states that the court may take into account what the person making the representation knew or ought to have known. Applying subsection 15(2) to the instant case, and considering the context of the transaction, I find that the agent made an unconscionable representation as follows (emphasis added).

[59] (a) that the consumer is not reasonably able to protect his or her interests because of disability, ignorance, illiteracy, inability to understand the language of an agreement or similar factors;

I accept Mr. Toraman’s testimony that he did not read English well and that he did not understand the terms of the contract. Also, as the parties have agreed, Mrs. Toraman did not speak or read English well. The salesman exploited the Toramans’ patent language and cultural disadvantages. The Toramans’ inability to understand the contract was compounded by its absurdly minuscule print, requiring the eyes of an eagle to be read.

[60] (b) that the price grossly exceeds the price at which similar goods or services are readily available to like consumers;

The price was exorbitant. It was multiple times the price of the same or a similar filter in retail stores like Home Depot or Costco (about $1,200) (Defendants’ Exhibit – Home Depot, Costco, Aquasana, and other price comparisons). [Ex. 5], even considering any added value of delivery, installation and repair services and a ten-year warranty offered by Skymark. Thus, the evidence establishes that the price at which the filter was offered exceeded the market price to the level of unconscionability. In this context, I find that the agent made an unconscionable representation.[8]

[61] (e) that the consumer transaction is excessively one-sided in favour of someone other than the consumer;

The transaction excessively favoured Progressive. It drafted the contract and profited from it. The beleaguered Toramans were saddled with an expensive piece of equipment they neither wanted nor needed.

[62] (f) that the terms of the consumer transaction are so adverse to the consumer as to be inequitable;

I find that the terms of the contract, including the grossly excessive price, to be so adverse to the Toramans as to be inequitable.

[63] (g) that a statement of opinion is misleading and the consumer is likely to rely on it to his or her detriment;

As addressed above regarding section 14, the Toramans were misled. They detrimentally relied on the agent’s misleading statements about their needing the filter, the potability/safety of the city’s water, the alleged recommendation by the City of Toronto and the risk to their baby’s health if they did not use a filter.

[64] (h) that the consumer is being subjected to undue pressure to enter into a consumer transaction.

The Toramans never wanted a water filter. They never looked for one. They never asked for one. The never even thought about it. Why would they? “Back home we drink from the river” recalled Mr. Toraman. When a Progressive agent first popped up on the Toramans’ doorstep, they sent him away. He returned anyway. The Toramans ultimately catapulted to his high-pressure tactics.

[65] Hence, Progressive’s agent, and therefore Progressive, breached section 15. Thus, Progressive engaged in an unfair practice, which subsection 17(1) prohibits.