Quebec, Ottawa could be sued for failing to act on private colleges that left students sidelined

A Montreal law firm is seeking the go-ahead to sue Quebec's Ministry of Higher Education and Immigration Canada for millions of dollars in damages on behalf of more than 500 international students.

Most of the students are from India and have been unable to get their tuition fees back after three private colleges — M College in Montreal, CDE College in Sherbrooke and CCSQ College, which had campuses in Longueuil and Sherbrooke — abruptly closed.

All three schools were run by the same owners, who filed for creditor protection in January 2022.

"The Quebec government should have stepped in earlier," said lawyer Alain Tardif, a partner at McCarthy Tétrault, which was appointed by the court to represent the students' interests in the creditor-protection process and is now working on the lawsuit.

A hearing in Quebec Superior Court is set for Monday, March 27 at the Montreal courthouse. The law firm argues the provincial and federal governments are at least partially responsible for the students being unable to recoup their money. 

Thousands paid, and no money back

A year before the colleges shut down, the Quebec government had investigated both M College and CDE College for what it called "questionable" recruitment practices.

As reported by CBC News, some of the college's owners were also the subject of an investigation by Quebec's anti-corruption unit for financial irregularities at the Lester B. Pearson School Board, where they had worked previously.

Knowing this, Tardif believes the province should have never have issued the colleges' licences — or should have withdrawn them as soon as that information came to light. If the ministry had done so, he said, the students would probably not be in this situation now.

Between 500 and 600 students requested a refund from the colleges before the owners filed for creditor protection, Tardif said.

They had paid between $10,000 and $15,000 and asked for a reimbursement when they were refused — or unable to get — a study permit due to the pandemic. Others withdrew from online classes when it became clear they would not be able to study in Canada.

Although the private colleges were sold to a new owner last year, there is almost no money left over from the sale to compensate these students.

"Currently, there is nothing on the table," said Tardif.

The law firm said there is a contradiction between provincial legislation and what students are asked for by Immigration Canada. 

Under Quebec law, colleges are not allowed to ask for prepayment of any fees until the beginning of the school year, said Tardif. But on the federal government's website, it says students need to show they can afford tuition.

"So students, in order to get their visa, prepaid their studies, not knowing this was not legal in Quebec and they are stuck today waiting for a reimbursement," said Tardif, who estimates damages to be more than $14 million dollars. "For us, the federal government — you induced those students to do something they should not have done."

Quebec's Ministry of Higher Education declined to comment, citing the upcoming court proceedings. 

In its response, Immigration Canada said students are not required to pay for their tuition in advance. To obtain a study permit, they are required to prove they have enough money to pay for their tuition fees, living expenses and transportation to come to Canada, said Nancy Caron, a spokesperson for IRCC. 

That proof can include a Canadian bank account in their name if they have transferred money to Canada, proof of a student loan from a bank or a bank statement from the past four months, said Caron.

If the court grants McCarthy Tétrault the power to sue the governments, it is ready to launch proceedings immediately. Tardif believes they could get a trial date by the end of the summer.

Many families in India saved for years to let their child to study in Canada, as CBC reported last year. Without refunds, many have been put in a precarious financial situation.

"The horror stories that we heard a year and a half ago have not disappeared," said Tardif, who said he fields emails from desperate students almost daily. "This tragedy must end."

Fraud trial delayed

Some of the former owners of the private colleges, meanwhile, have had their fraud trials delayed.

Caroline Mastantuono and members of her family operated the three private colleges as well as Rising Phoenix International, a student recruitment agency.

Before starting the recruitment firm and colleges, Caroline was the head of the Lester B. Pearson School Board's international department, which recruited students from abroad. She was fired from that position in 2016 and a provincial audit unearthed a litany of "irregularities" with the school board's international program.

Caroline and her daughter, Christina, who had worked alongside her mother at the school board, have been charged with fraud for acts allegedly committed at the school board between 2014 and 2016.

They both deny any wrongdoing and have contested the charges against them.

Their fraud trial was set to be heard this month, but the defence argued for — and was granted — a postponement until spring 2024. 

Jonathan Gordon, who represents Christina Mastantuono, said the request for an adjournment of the trial had nothing to do with the credit protection proceedings. 

"The request was due to a personal issue of one of the defence lawyers, which rendered them unavailable for the trial," Gordon said in an email.