When Announcing a Price Comes at a Cost: The Court of Appeal Rules on Damages in Union des consommateurs v. Air Canada

On April 22, 2025, the Court of Appeal rendered its decision in Union des consommateurs v. Air Canada, 2025 QCCA 480 (“Air Canada”). This decision was highly anticipated, not only because it raised important questions regarding drip pricing and the doctrine of federal paramountcy, but above all because it analyzed the criteria for applying the presumption of fraudulent effect under Quebec’s Consumer Protection Act (“CPA”).

The Media focused primarily on the $10 million award in punitive damages against Air Canada. However, what truly caught our attention was the denial of compensatory damages due to the lack evidence regarding the quantum. This bulletin will focus mainly on this aspect.

Summary

As a reminder, this case involved the practice of drip pricing under section 224 of the CPA. Air Canada allegedly advertised lower prices for plane tickets than those ultimately charged and paid at the end of the purchase process. In a class action, the Union des consommateurs (“Union”) sought to reduce consumers’ obligations by claiming a refund for the difference between the advertised price and the final price paid, excluding taxes covered by the exemption. Union also claimed punitive damages.

At the heart of this case was the application of the four criteria established by the Supreme Court of Canada in Richard v. Time Inc., 2012 SCC 8 ("Time"), which must be met for the irrebuttable presumption triggering remedies under section 272 of the CPA to apply. These criteria are: (1) the merchant or manufacturer failed to fulfill one of the obligations imposed by Title II of the Act; (2) the consumer saw the representation that constituted a prohibited practice; (3) the consumer’s seeing that representation resulted in the formation, amendment or performance of a consumer contract; and (4) a sufficient nexus existed between the content of the representation and the goods or services covered by the contract.

The trial judge had ruled that the fourth criterion was not met, finding insufficient nexus between the prohibited practice (drip pricing) and the formation of the contract (purchase of airline tickets). On this point, the Court of Appeal reiterated that in determining if the criterion of sufficient nexus is met, the Court must conduct its analysis "en faisant abstraction des attributs personnels du consommateur à l’origine de la procédure engagée contre le commerçant". The Court concluded that the trial judge had erred and that all four criteria were satisfied. Therefore, the presumption applied. As a result, Air Canada’s charging a higher price than advertised was deemed to have had a fraudulent effect on class members. Remedies under section 272 of the CPA could thus be claimed, subject to proof of quantum.

Necessity of Proof on Quantum

Although presumptions can facilitate the evidence of causation and prejudice, the burden of proving the actual amount of the damages claimed remains on the claimant. Air Canada argued that the total amount claimed, i.e. $58 million, corresponding to the total price difference, was arbitrary, largely composed of amounts paid to third parties, and that reimbursing such an amount would result in unjust enrichment of the consumers, which is not the objective of this remedy.

The Court of Appeal emphasized that “la démonstration de ces dommages demeure soumise aux règles générales du droit civil québécois”. It is up to the claimant to prove that the reduction of his obligation is appropriate, i.e. that it is certain and quantifiable.

The compensatory component of the claim, whether a reduction of obligation or an award of damages, is intended to repair a loss. Therefore, the damages cannot exceed the actual harm suffered. The Court also noted that automatic damages were not applicable in this case, as it did not fall under the circumstances covered by subsection 271(2) of the CPA.

The Court pointed out the nuances between this case and the authorities cited by Union. It noted, in particular, that the “pratique interdite d’Air Canada relève du domaine précontractuel et l’on ne peut reprocher à Air Canada d’avoir facturé des frais qui n’étaient pas mentionnés aux contrats d’achat des billets d’avion ”. The class members concluded contracts that clearly stated the full price, paid the stated amount, and received the service for which they paid.

The following excerpt from the ruling is particularly noteworthy, clearly stating that the burden of proof requires more than a simple subtraction exercise—it must demonstrate a quantifiable economic loss supported by solid evidence resulting from the prohibited practice:

[100] Le tribunal ne peut quantifier une réparation en l’absence d’une preuve, quelle qu’elle soit, qui démontre d’abord l’existence d’un dommage, selon la prépondérance des probabilités. En circonscrivant ses arguments au calcul de la différence de prix, l’Union des consommateurs néglige de démontrer que les consommateurs ont bel et bien subi une perte économique en raison de la pratique interdite. (Reference omitted)

The Court of Appeal also highlighted the lack of evidence of any profit Air Canada may have made from this practice. It therefore declined to award any amount on that basis.

Punitive Damages

On the question of punitive damages, however, the Court of Appeal found that Air Canada had acted negligently and recklessly in carrying out this practice, choosing to prioritize competitive advantage over consumer protection. It therefore upheld the $10 million award in punitive damages (equivalent to roughly $14.45 per ticket sold), which will be distributed individually through a collective recovery process.

Conclusion and Other Perspectives

In conclusion, even within a class action under the CPA, which provides a flexible, permissive, and consumer-friendly regime, economic harm must still be proven to obtain compensation on the merits. The proof of a quantifiable prejudice must be supported by thorough and convincing evidence of the economic loss suffered. On the other hand, punitive damages may be awarded if authorized by law, even if no compensatory damages are proved.

Courts continue to take a firm stance against deceptive marketing practices, which should alert businesses that engage in such practices to the considerable risks associated thereto. The CPA is not the only law prohibiting drip pricing. The Competition Act (“CA”) also explicitly prohibits this practice. For example, the Competition Bureau recently filed proceedings before the Competition Tribunal against Canada’s Wonderland for advertising online prices lower than those charged. In addition, last September, the Bureau won a case against Cineplex Inc., which was ordered to pay $38.9 million for engaging in drip pricing (this decision is currently under appeal). With the upcoming entry into force of the recent amendments to the CA, private parties will have the possibility to request leave from the Competition Tribunal to initiate proceedings if public interest is demonstrated. It will be interesting to see whether this new procedural vehicle will lead to an increase in lawsuits against deceptive pricing practices.