Unconscionability: the latest SCC caseUber Technologies Inc. v. Heller, 2020 SCC 16 (CanLII)
In Uber Technologies v. Heller  SCJ No.16 a driver for Uber-Eats decided that he wanted to call himself an employee and seek his Employment Standards Act claims against the ex-employer (Uber). The problem was that the driver electronically agreed to one of those online agreements to arbitrate all legal questions in the Netherlands. Thank god Ontario is progressive enough to have class action law so that heroic lawyers can bring a $400 million action against Uber for its unconscionable conduct.
In Uber Technologies v. Heller  SCJ No.16 the SCC ‘renovated’ another foundation stone of the common law: Unconscionability. Brown criticized the majority expansion of unconscionability but he too wallowed in abstraction on this point. (para 55)
It’s always better to show SCC error rather than to assert SCC error. So how has the common law shaped the doctrine of unconscionability before it arrived at the SCC in Uber? This is an involved task but we start with how the SCC treated unconscionability in Uber.
Brown refers to Morrison v. Coast Finance Ltd. td. (1965), 55 D.L.R. (2d) 710. Rather than a concise ratio-analysis, Brown uses Morrison for a general statement about ‘unfair advantage,’ the ‘stronger’ and ‘weaker’ party. It is trite to say that facts matter. Facts in Morrison narrow the ratio to the following:
A '79 year old widow of meagre means' was persuaded to lend approximately $5000 to two men who were relative strangers. She mortgaged her house. The finance company gave the mortgage monies, not to the widow, but rather to the men, who used the monies to buy two cars, from the very same mortgage company!
When the men didn’t repay the widow she didn’t have the money to repay the mortgage. She sought to set aside the mortgage.
But why should a mortgage from a third party financier be set aside because two men took advantage of the vulnerable widow?
The mortgage itself was deemed to be valid. So why should the mortgage company suffer for the ‘unconscionable’ conduct of the men who borrowed from the widow?
Here’s why the Morrison v. Coast Finance transaction was unconscionable
The mortgage company and the car seller who sold the cars to the men, were related entities. The mortgage company was really an auto-finance company. Rather than simply issue the mortgage monies to the widow and have nothing to do with the lending as between the widow and the men, the manager of the finance company had the widow endorse the mortgage monies over to the men who then immediately handed the monies back to the same manager who was also the car salesman.
The finance-manager-car-salesman went further. He had promissory notes and collateral sales agreements written up to be signed by the men in favour of the widow. These specific actions had nothing to do with the mortgage and amounted to an admission that the finance company car-seller knew that the widow – a stranger to the car-sale – in fact was vulnerable and needed protection.
On these specific collection of facts, unconscionability was established and the mortgage set aside.
Compare Morrison with the Uber driver who uses the Uber application to pick up and deliver food (Uber Eats).
How precisely has the Uber driver been taken advantage of by Uber (in the Morrison v Coast sense)?
- Did Uber take monies from the Uber driver? No.
- Did Uber induce the driver to borrow? No.
- Did Uber turn the driver’s monies to its own advantage? No.
- Did the Uber driver gain from use of the Uber contract? Yes.
- Did the Morrison widow gain from the contract? No.
According to the SCC, Uber took away the drivers right to contest the contract by having $14,000 in security for costs and by having the case dealt with in the Netherlands.
In Morrison, a confluence of facts, the necessary elements of which included: a manifestly vulnerable person, a manifest deprivation from that vulnerable person, by the wrongdoer, produced unconscionability. The court of equity has been setting aside contracts, in almost exactly this fashion, for two hundred years.
Now the SCC sheds all of the ordinary badges of unconscionability and defaults to an insipid strawman of vulnerability which will pull in approximately 50% of the general population and approximately 50% of their everyday transactions.
I have said nothing about the effect of this decision (that Cote recognizes) upon the digital economy.
That’s the new SCC view of unconscionability.