Pearce v. 4 Pillars Consulting Group Inc.

On October 29th, the British Columbia Supreme Court certified a class action suit against 4 Pillars Consulting Group Inc. and Full Circle Debt Solutions Inc. Justice Mayer decided that all allegations made against the defendants were proper allegations to be certified, meaning that they qualify as class proceedings that can proceed to trial. It should be noted that the defendants are entitled a right to appeal Justice Mayer’s decision to the British Columbia Court of Appeal. They have 30 days following the issuance of the decision to initiate the appeal.

In both proceedings, it is alleged that the business models of the defendants provided debt restructuring services in breach of both the Business Practices and Consumer Protection Act, S.B.C. 2004, c. 2 [BPCPA] and its regulation, the Debt Collection and Repayment Regulation, B.C. Reg. 295/2004 [DCRR], and the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 [BIA].

While the certification decision does not substantively determine any legal issues, CAIRP legal counsel has noted that the existence of these legal proceedings raises the spectre that it may ultimately be determined that LITs who have worked with 4 Pillars or Full Circle were party to a scheme that unlawfully breached s.66.13(2) of the BIA. This could mean they face exposure to claims for damages for conspiracy or, to the extent they received any financial compensation from 4 Pillars or Full Circle, for restitution.

Relying on assessments and other information from a debt consultant to satisfy statutory LIT duties constitutes “relying on a non-LIT to provide s. 66.13(2) services”. Further, accepting this work from a debt consultant itself amounts to accepting an economic benefit, that being the cost avoided by the LIT of not doing their own proper and thorough assessment of the debtor’s affairs.

Collaborating with debt consultants also contravenes the Consumer Proposals Section 8 of the CAIRP Standards of Professional Practice. The OSB has advised they are taking concrete steps to address this kind of non-compliance.

In consideration, CAIRP members should ensure they do not rely on any non-LIT in respect of the services described in s. 66.13(2) of the BIA, and that they do not accept any economic benefits from any non-LIT in respect of being retained as an administrator under Part III Division II of the BIA.

CAIRP will continue to carefully monitor this case as it proceeds.