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College Sued for Negligent Misrepresentation of Program

August 28, 2013 | Selina Pellerin

In July, the Ontario Court of Appeal unanimously upheld a decision of the Superior Court finding that a college negligently misrepresented the benefits of one of its programs.

Background

In the case of Ramdath v. George Brown College, 2013 ONCA 468, former students of George Brown College in Toronto, Ontario, pursued the institution for negligent misrepresentation of the International Business Management Program first offered in September 2007. The course calendars for the academic years of 2007-08 and 2008-09 described the program as follows:

“The International Business Management post-graduate program provides students with the opportunity to complete three industry designations/ certifications in addition to the George Brown College Graduate Certificate.”

The course calendars went on to explain that the three industry designations included certificates in international trade, custom services and international freight forwarding and enumerated the required courses for each designation.

In the academic years of 2007-08 and 2008-09, approximately 120 students enrolled in the program.  Two-thirds were foreign students—from India, China, Japan, South Korea, Thailand, Russia, Turkey, Syria, Brazil and Mexico. The domestic students paid about $3,000 in tuition fees and the foreign students paid nearly $11,000. The students claimed that obtaining the industry designations was the main reason for their enrollment. Unfortunately, they later learned that they would not obtain the designations as the college did not have an agreement with any of the three industry associations that would have allowed it to grant the promoted accreditations.

The trial judge made several preliminary findings: the students were right to assume that upon completion they would graduate with the college certificate and the three industry designations/certifications, and also that they students were “consumers” bringing the action within the purview of consumer protection.

Issues & Analysis
Negligent Misrepresentation

The trial judge found that a special relationship (and consequently, a duty of care) existed between George Brown College and its students.  This conclusion was based on the precedent Olar v. Laurentian University, [2007] O.J. No. 2211, in which it was established that post-secondary institutions owe a duty of care to their students with respect to statements made in promotional materials intended to be used by students to make program and course selections.

The trial judge concluded that George Brown College had made clear representations in its course calendars that completion of the program would give students the three industry designations, provided they passed the final exams.  The trial judge found that these representations untrue, inaccurate, misleading and negligent thus breaching its duty of care towards its students.

Breach of Obligations under the Consumer Protection Act

The Consumer Protection Act prohibits “unfair practices” in the course of consumer transactions. “Unfair practices” are where a person/merchant makes a false, misleading or deceptive representation.  The Act provides the following example of an unfair practice: “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” (s. 14(2)).

The trial judge found that George Brown College engaged in an unfair practice. The college had no authority to grant the promoted designations.  George Brown College thus inaccurately, untruthfully and misleadingly represented that it had “approval…affiliation or connection” with industry associations.  As a result, George Brown College breached its obligations under the Consumer Protection Act.

Remedy

The students involved in the litigation had all completed the program, therefore they were entitled to recover “the amount by which the consumer’s payment under the agreement exceeds the value that the goods or services have to the consumer or to recover damages, or both” (Consumer Protection Act, s. 18(2)). The judge asserted that the question of comparative value would be decided at a later date.

The Ontario Court of Appeal unanimously upheld the decision.

Implications

In Prince Edward Island, consumers have recourse against sellers or businesses who employ unfair business practices under the Business Practices Act. Similarly to the Consumer Protection Act in Ontario, the Business Practices Act in PEI prohibits false, misleading or deceptive representations and entitles a consumer who has been misled to damages.

Consumers in Nova Scotia and New Brunswick do not benefit from a specialized regime for protection against false or misleading representations. However, where businesses in these provinces use unfair practices, a consumer may bring an action under the common law for negligent misrepresentation.

Superior Court decision: Ramdath v. George Brown College, 2012 ONSC 6173

Appeal Court decision: Ramdath v. George Brown College, 2013 ONCA 468