Hope for student refunds dries up after lawsuit attempt dismissed

A bid to help hundreds of international students recover millions of dollars in lost tuition fees has failed.

The students, who are mostly from India, had paid as much as $15,000 each to study at three non-subsidized private colleges — M College in Montreal, CDE College in Sherbrooke and CCSQ College, which had campuses in Longueuil and Sherbrooke.

The same owners ran all three colleges under the name Rising Phoenix International.

But in January 2022, the colleges abruptly closed and the company filed for creditor protection.

Montreal-based law firm McCarthy Tétrault was appointed by the court to represent the students' interests in the creditor protection process.

Although the private colleges were sold to a new owner, there was almost no money left over from the sale to reimburse the students.

McCarthy Tétrault alleged that faulty conduct by both the province of Quebec and the federal government contributed to the students losing their money.

In March, the law firm asked a judge for the power to sue the province's Ministry of Higher Education as well as Immigration, Refugees and Citizenship Canada.

The application was dismissed by Quebec Superior Court Judge David R. Collier at the end of April.

In his ruling, Collier said while the court had "sympathy" for the students' situation, it did not have the jurisdiction under the restructuring proceedings to grant the request.

If the students decide to sue the governments, Collier said it should be done through civil proceedings.

Naseer Mehdi Khan, chair of the Montreal-based India Canada Organization, said that is unlikely to happen because most of the students live in India.

"It's a waste of time and money," said Khan.

Many of the students' families saved for years or mortgaged their land to try and send their children abroad to study. Khan said they are still trying to cope with that financial blow.

"It's a big loss," he said.

Compensation options dwindling

The students' received a further blow when the accounting firm overseeing Rising Phoenix International's restructuring process was unable to work out a plan of arrangement with the remaining creditors.

Without a deal, a decision was made to terminate the creditor protection proceedings in May. Last week, the owners, Caroline, Joseph and Christina Mastantuono filed a notice of intention to file for bankruptcy.

Amanpreet Kaur was one of the students who was waiting for a refund.

She is under no illusion now — her money is gone.

"Nothing is going to come back," said Kaur.

She had enrolled in business administration at M College of Canada in 2020, but was unable to get a study permit, which was delayed after the college was investigated by the province for questionable recruitment practices.

Kaur took a few months of online courses, but when her permit still hadn't been approved in the spring of 2021, she decided to withdraw. The college told her she was entitled to only a $7,300 refund, less than half of what she had paid.

Eventually, Kaur was accepted at a different private college in Ontario and she graduated there last December. But it hasn't taken the sting out of losing her parents' hard-earned savings.

"They paid my fees twice," said Kaur, who is from Ludhiana, a large city in India's northern state of Punjab. "It's kind of a waste."

Students sour on Quebec

The colleges closing has left a "black mark" on Quebec as an option for South Asian students, Khan said.

The High Commission of India to Canada posted an advisory warning on its website warning prospective students to make sure their school is recognized as a designated learning institution.

However, as Kaur points out, M College was on that list when she applied, so she doesn't think it offers students much protection.

She said the province never should have granted the owners of Rising Phoenix permits for the colleges in the first place.

As reported by CBC News, Quebec's anti-corruption unit was investigating some of the college's owners for financial irregularities at the Lester B. Pearson School Board, where they had worked previously. Caroline Mastantuono was the head of the school board's international student program before being fired in 2016.

"I don't have any faith in government anymore," said Kaur.

In an email, Bryan St-Louis, a spokesperson for the Ministry of Higher Education, confirmed the province holds a bond in the form of a guarantee policy of $100,000 for M College and $100,000 for CDE College.

Once the legal proceedings have been finalized, St-Louis said students from these two colleges will be able to file a claim for reimbursement with the ministry.

But the money is unlikely to go very far. McCarthy Tétrault was seeking damages of more than $17 million.