Jul 22, 2020

Unconscionability: the SCC has dispensed with the need for a weak-minded plaintiff making a grossly improvident bargain

Uber Technologies Inc. v. Heller, 2020 SCC 16 (CanLII)

Quicklaw records about 3000 cases using the word ‘unconscionability’.

There were 8 cases between 1966 and 1976 (about the time the supreme court of Canada got into the policy-making business). Judges in this early era seemed not to need ‘unconscionability’ as an everyday hammer in their toolkit. The leading case from that period is:

Black v Wilcox (1977) 12 O.R.(2d) 759 (CA) (40 citations)

Black was a 45 year old farmer and alcoholic. He leased his farm to the defendant Wilcox an ‘intelligent and knowledgeable farmer’. There was a mortgage of $3000 on the farm. The court valued the farm at approximately $20,000. Using fear of possible foreclosure, Wilcox apparently convinced the intoxicated Black to sell Wilcox his farm for $5200.

The Court of Appeal stated:

A bargain which was grossly improvident to the plaintiff has been established and a presumption arises that the transaction was unconscionable which can only be rebutted by the introduction of evidence on the part of the defendant that the transaction was just, fair and reasonable. In the present case there has been a complete failure on the part of the defendant to rebut the presumption of unconscionability which arises from the evidence.

Perell J., who decided Heller v. Uber at first instance, uses Black v. Wilcox at para 68, to set out the standard requirements for unconscionability. As is regularly the case with the SCC majority, they don't bother dealing with minority critiques. Its the prerogative of policy-makers to ignore criticism.

Of course Black v Wilcox is nowhere to be found at the SCC. Why didn't they confront the fact that they were dramatically expanding the doctrine of unconscionability? Why wasn't there a hard and particularized analysis of the disadvantaged plaintiff with comparison to truly disadvantaged plaintiffs in real unconscionability cases? Why wasn't there a careful analogy of the grossly improvident bargain?

Better to simply bury the expansion in the gauzy language of abstraction.

The mutation of the doctrine of unconscionability from Black to Uber can be seen by the fact that in Uber there is no grossly improvident bargain, as Perell J. points out. Heller has given away nothing. Heller was not a disabled plaintiff in the sense of all preceding Canadian case law.

Abella and Rowe analogize Heller’s giving away of the right to have your statutory employment claim litigated in Ontario, as equivalent to Black giving away his farm, as Waters giving away his farm, as Morrison giving away a mortgage. In other words, the ‘grossly improvident bargain’ requirement has been dispensed with.

The really problematic point in Uber is the fact that Heller has nothing to give away if he is an independent contractor. He did not even give away his ‘right’ to litigate in Ontario as he has no ‘employee’ right. Only after an Ontario court establishes that he was an ‘employee’ does it crystalize that Heller had anything to give away so as to become a victim.

What a stretch of logic must be employed by the SCC in order to overcome the contract.

The economist’s thought:

Economists think about unintended consequences. In the days of Waters v. Donnelly or Black v. Wilcox, a singular unconscionability judgment was of no moment. Justice was served for an actual victim, and the general rules upholding contracts remained in place upon which the modern economy was built.

But Uber v. Heller, a $400M class action will have macroeconomic effect. The decision, in effect cripples a linchpin technology-use that has propelled anemic economic growth in Canada. Judicial decisions involving bankrupting level judgment now destroy companies. Isn't it ironic that Abella will have gravely injured a company actually generating massive employment on the premise that those people are injured because they are not deemed to be 'employees.'

To paraphrase Schumpeter: economic progress in Canada now proceeds in perennial gales of judicial destruction.