Advanced Civil Law Obligations
Summary
I – THE CIVIL LAW TRADITION ..........................................................................................................................3
II – GOOD FAITH ......................................................................................................................................................7
INTRODUCTION TO THE CONCEPT OF GOOD FAITH ....................................................................................................7
Overview of Cases ................................................................................................................................................7
National Bank of Canada v. Soucisse ..................................................................................................................7
National Bank of Canada v. Houle ......................................................................................................................8
Bank of Montreal v. Bail ......................................................................................................................................9
Aselford Martin v. A.L. Raymond Ltee ............................................................................................................... 10
Subaru Auto Canada v. Caravane et Auto de Cap ............................................................................................. 10
Remedy for Breach of Good Faith .................................................................................................................... 11
Karim, “The Rule Of Good Faith in article 1375 CCQ” ................................................................................... 12
OBLIGATION TO INFORM AND TO ADVISE ................................................................................................................ 17
Regie v. Janin Construction ............................................................................................................................... 17
Bolduc v. Decelles .............................................................................................................................................. 19
Trust Royal v. Veilleux ....................................................................................................................................... 20
OBLIGATION OF COOPERATION ............................................................................................................................... 21
Where does this duty come from? ...................................................................................................................... 21
What is the content of the duty? I.e. How does it manifest itself? ..................................................................... 21
What kinds of Ks will it apply to? ...................................................................................................................... 21
How far can we take the duty to cooperate?  Can we ground imprevision in a duty to cooperate? .............. 21
Diesse, “Le devoir de cooperation comme principe directeur du contrat” ....................................................... 22
Provigo Distribution v. Supermarch A.R.G. ...................................................................................................... 23
Martin, “Pour une reception de…imprevision…” ............................................................................................. 24
Stoeffel-Munck, “Regards sur la theorie de l’imprevision”............................................................................... 24
III – THIRD PARTIES’ RIGHTS ........................................................................................................................... 26
General Motors v. Kravitz.................................................................................................................................. 27
Houle – Third Parties ........................................................................................................................................ 29
D. Jutras, « Le Tiers Trompe : A Propos de l’affaire Bail Ltee » ...................................................................... 29
Caisse Populaire v. Michaud ............................................................................................................................. 31
IV – UNJUST ENRICHMENT ................................................................................................................................ 33
Viger v. Giguere Inc. .......................................................................................................................................... 35
Loungnarath v. Centre Hospitalier des Laurentides .......................................................................................... 36
Trottier v. Trottier .............................................................................................................................................. 37
V – REMEDIES ......................................................................................................................................................... 39
ASSESSMENT OF K-UAL DAMAGES: SPECIFIC PERFORMANCE AND PERFORMANCE BY EQUIVALENCE ................... 39
Jukier, “The Emergence of Specific Performance” ........................................................................................... 40
Construction Belcourt c. Golden Griddle Pancake House................................................................................. 42
Cooperative Insurance v. Argyll Stores Ltd. ...................................................................................................... 43
Aubrais v. Laval (Ville de) ................................................................................................................................. 44
LOSS OF CHANCE ..................................................................................................................................................... 44
Laferriere v. Lawson .......................................................................................................................................... 46
Cour de cassation............................................................................................................................................... 47
Cour de cassation, 7 juin 1989, page 303 .......................................................................................................... 47
ASSESSMENT OF EXTRA-CONTRACTUAL DAMAGES: MORAL DAMAGES ................................................................ 48
Benedek, “NP Damages: Defined, Assessed and Capped” .............................................................................. 49
L’Hopital St-Ferdinand...................................................................................................................................... 51
Augustus v. Gossett ............................................................................................................................................ 52
Jukier, “Non-Pecuniary Damages in Defamation Cases” ................................................................................. 54
Parizeau v. Lafferty ............................................................................................................................................ 57
VI – THE RELATIONSHIP BETWEEN PRIVATE LAW AND PUBLC LAW – FUNDAMENTAL RIGHTS
AND CIVIL LIABILITY .......................................................................................................................................... 59
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Beliveau St-Jaques v. F.E.E.S.P. ........................................................................................................................ 61
Aubry v. Vice-Versa ........................................................................................................................................... 62
Arthur v. Gravel ................................................................................................................................................. 63
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I – THE CIVIL LAW TRADITION
What is the “civil law”?
Refers to the Romano-Germanic legal tradition of continental Europe, as contrasted to the common law of
Anglo countries
Historical basis of all civil law  dvlpd from Roman legal system through its revival in Europe in the 11 th-13th
C. It was then codified in many jurisdictions.
Origins of legal systems are often explanatory of the differences/similarities btwn contemporary legal systems
Origin of the Civil Law  Roman law
Rome, 4th C B.C. to 6th C A.D. – developed a sophisticated system of private law. Person called IUDEX had
decision-making but sought legal opinions from JURISCONSULTS, trained persons who provided expertise
~533 A.C.  Emperor Justinian ordered a compilation of law to be made  JUSTINIAN’S DIGESTS consist
of quotations by the best and most well-known juriscounsults (a form of codification).
Roman Empire ultimately fell but the Digests were revived in Continental Europe in the 11 th-13th C 
REVIVIAL, RECEPTION, REDISCOVERY
o Creation of the University (in N. Italy)  Students went there to study law. They studied (interpreted,
expanded, and applied) the Digests. Graduates of law school then returned to their Native European
countries and further dvlpd the legal ideas which they studied. Thus, the shared background of these
first law students consolidated the civil law tradition of Europe. The countries of Europe now had a
shared jus commune or droit commun.
What is unique about the civil law tradition?  Methodology, Codification, Values.
BUT…note how these three are changing. Is the civil law as unique and uniform as it once was?
Two propositions (re. the uniqueness of the civil law):
1. There is no such thing as the “civil law tradition”  the civil law is jurisdictionally specific
o Form: compare French and German civil codes
o Substance: though all Civil codes may provide substantive law on the same set of issues, that
substantive law is not necessarily the same  Imprevision, Loss of Chance [SH: it reflects social and
political culture – e.g. there is a doctrine of imprevision in Germany b/c of certain historical events that
caused great disruption to Ks – devaluation of the marc is one]
o Glendon article: “[t]here is probably as much diversity in the responses of civil law systems to various
legal issues as there is between the civil and common law traditions.”
2. That which is unique about the civil law has changed or is in flux.
o Values in the code have changed (Glendon: shift away from the 19 th C liberal values on which
German and French codes were grounded) (QC: GF)
 Value OF the code has changed – fundamental reference point in the legal order? A social
constitution? The jus commune? Perhaps not  shift in values = more role for publicly
regulated private relations (e.g. landlord tenant law). Statutes now often supplant code. [See
Brisson article]
o Methodology: more judge-made law  judges, not Code, as starting point (GF, unjust enrichment,
third parties). Counter to this: judges are grounding new doctrines in the Code (or trying to)
o Codification process: Glendon – more eclecticism  codifiers will often look to other non-civilian
jurisdictions as influences for legal development (e.g. trust, specific performance). [Value of the code
here also - Brisson]
Methodology: Two fundamental methodological (formal?) elements
Civil law is systematic, organized and planned in advance. It has a taxonomic structure
o This is a consequence of how the CL developed  Planned and developed in the academic/theoretical
context (the Uni) [vs. developing casuistically in the courts]
o Law based on TEXT as opposed to CASE. Corollary: judges do not make the law; they apply the law.
o Brierly: “architectonic perfection”
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This has an impact on the methodology of the civil law  de-emphasis on fact and concrete situations,
emphasis on generalization and systematization.
A code is meant to be enabling and permissive legislation.
o CL, unlike KL, didn’t develop in the commercial context. It developed academically in a normative
way, and the idea of the “code” was to create a code of conduct that would govern how people live
their lives.
o Brierly: evidence of this “enabling” nature is the distinction btwn imperative and suppletive rules.
Suppletive rules provide parties with a model of organization in relation to the matter at hand, which is
open to variation or exclusion by agreement.
o
-
Codification:
Codification is the ultimate development of law in most jurisdictions. BUT…
A civil law jurisdiction can exist without a code and the existence of a code doesn’t make a jurisdiction civil.
Similarities btwn civil codes of various jurisdictions:
o Historical origin – all draw on the Romanist jus commune
o Substantive law may differ but all codes cover the same general topics  Persons in the various phases
of private life – i.e. in relations to other persons, things, acts and transactions (Brierly)
o Coherent structural arrangement and style of expression that seek to achieve a formal rationality in the
law (Brierly)
Differences btwn civil codes of various jurisdictions:
o France vs. Germany  the two most influential codes. Most jurisdictions have emulated one or the
other
 France – Broad, general principles drafted with little detail. Accessible to people and easy to
understand
 Germany – Provisions are detailed and constructed with technical provision. It is not a
“handbook for the citizen but a system for the highly trained experts”.
o Differences in substantive law  e.g. France and QC – loss of chance. QC/Fr and Ger – imprevision
Values underlying the French Civil Code (and hence the CCLC)
o Individual Autonomy – one is his own instrument of self-gov’t and can create his own subjective law.
o Freedom of Contract – this flows from individual autonomy
o Private Property
o **Note how these values have come into conflict with contemporary societal values  e.g. Freedom
of K and GF  In QC, the Code has been amended to reflect these new values (e.g. a new K-ual
morality). Can we really say that these 3 values underlie the new CCQ?
Why is a civil code special?
o It is not just a statute – it is THE fundamental reference point in the legal order (Brierly). A social
constitution of sorts.
o The code is drafted to reflect this special status  The abstract, general and flexible nature of the
provisions ensures the relative permanence and stability of the norms embodied therein. The code is
based on animating themes, general principles and transcendent norms which can be adapted to suit
contemporary values (see below).
o **SH: Is the code really as “special” as it used to be? The growth of the state = the importance of
specific regulatory statutes.
The Nature of Codal Provisions
o The provisions are drafted in an abstract and general way so as to ensure the relative stability and
permanence of the civil code
o Portalis (the most famous French codifier): “We have equally avoided the dangerous ambition to
regulate and foresee everything…The function of law is to fix in broad outline the general maxims of
justice, to establish principles rich in implications, and not to descend into the details of the questions
that can arise in each subject.”
o Brierly: the legal norm should be expressed at a level of abstraction that enables it to serve over a wide
series of particular instances. It is a meaningful generality that aspires to accommodate future facts in
all their infinite diversity.
o Brierly: “a nice line must be traced between what is to be left unstated, and for which general legal
culture should suffice, and what is to be made explicit in the law.”
The Role of the Judge
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o
Summary
If provisions are abstract and general, they must be interpreted  this is the role of the judge. Judicial
function in civil law is sometimes erroneously perceived to be no more than a mechanical application
of the deductive method of reasoning (Brierly). BUT…codification proceeds on the premise that it is
desirable to leave the evolution of the law to judges and commentators, by allowing them to interpret
the general principles in the light of changing social conditions (Brierly, and Portalis – French code is
premised on an impt role for the judge – p. 19).
In QC, not only do judges have an important role in interpreting the general principles in light of social
conditions, they have also been a force in shaping those very principles – e.g. jurisprudentially created
doctrines of GF and UJE; both subsequently codified.
How is the Civil Code interpreted?  Dore v. Verdun
The Code as the jus commune or droit commun
What does this mean?  Brierly. Is it true that the code continues to fill this “vocation”?  Brisson
Preliminary Provision: The Civil Code of Quebec, in harmony with the Charter of human rights and freedoms
and the general principles of law, governs persons, relations between persons, and property. The Civil Code
comprises a body of rules which, in all matters within the letter, spirit or object of its provisions, lays down the
jus commune, expressly or by implication. In these matters the Code is the foundation of all other laws,
although other laws may complement the Code or make exceptions to it.
Brierly, “QC’s Common Laws: How many are there?” (1989), page 39
Brierly believes that the Code constitutes a legislated droit commun.
The Code is droit commun in both its own right and in its relation to other enactments.
o In its own right: it defines and sets out the most fundamental categories and concepts that provide the
cadre of QC legal thought in the private law. It is the functional equivalent of the English common
law.
o In relation to other enactments: it is the fundamental reference point from which other legislation
proceeds. IT is more extensive than any other single enactment, however significant that enactment
may be in economic or sociological terms.
While the vocation of the Civil Code as the droit commun is a primary one, it is not absolute
o There is no entrenchment of its provisions. Other enactments can complement or derogate from it.
They may do so for technical reasons (e.g. the imposition of a penal sanction) or political reasons (e.g.
the QC Charter – it is vested with a special solemnity and technically “entrenched”).
o Its provisions are not always imperative. The Code is an enabling and permissive piece of legislation,
an instrument for maximizing the scope of self-regulation. Parts of it are just “models” that can be
departed from.
o The Civil Code may provide for the continuing incorporation of other expressions of droit commun
drawn from other normative systems (e.g. Canadian federal law)
There is a multiplicity of droits communs in QC’s civil law. But this is not problematic, b/c the droit commun
is no more than a technique by which to acknowledge the existence of a particular set of “sources of law” that
are applicable. “The expressions of the droit commun (or the norms it contains) may be contemporary or derive
from a more remote time, may be explicitly articulated or only implicitly acknowledged, and may flow from a
national system of law or derive from other points of reference. Their diversity reflects an important aspect of
the concept of law itself, namely that it must strive to be open rather than closed. A receptive rather than a
narrow conception of law is thus very much part, and a welcome part, of QC’s civil law tradition even in the
presence of an enactment as comprehensive and systematic as the Civil Code.”
Brisson, “Le Code civil, droit commun?” (1992), page 44
Can we still assert that the Code serves as the droit commun? Brisson is critical of Brierly’s contention that the
code is the droit commun. Brisson: The preliminary provision is an alteration of the truth or a “white lie” of
the law.
The “code as droit commun” can be understood in two ways  wide and narrow.
o Wide: Code as a conceptual resource. Code helps us to apply other laws and is the substantial link
with other laws. The Preliminary Provision appears to embody such an interpretation: “…the Code is
the foundation of all other laws”.
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o
-
-
Narrow: The residual jus commun lives in the code. One refers to the Code when only where no
Statute seems to apply or provide an adequate solution.
There are three factors that favour this latter (narrow) interpretation/understanding of the “code as jus commun”
1. The federal system – The constitutional division of powers is such that many areas of private law are
carved out and allocated to the federal Parliament – e.g. interest, bankruptcy, copyright. As a result, federal
legislation influenced in large part by the common law encroaches on the circle of the Code’s activity (i.e.
private law) and eats away at the jus commun.
2. The proliferation and growing importance of provincial statutes – the Code is further undermined by
the proliferation of specific provincial statutes since the 1960s. Much of the modernization of QC law
occurred outside the context of the Code. The Code is now just “one text among others”. We cannot really
say that the Code is the “foundation” of these other laws (as prelim provision suggests). In many cases,
these laws are contrary to fundamental Codal principles – e.g. the Auto Insurance legislation does not jive
with the regime of fault-based responsibility in the Code.
3. Provisions of the Code which are inspired by outside statutes – this is an interesting phenomenon in the
new CCQ. Substantive Codal provisions are copied from other statutes. For instance, some of the
provisions in Book I are copied from the QC Charter. [SH: Counter to this  the S.C.C. in Believeau has
decided that the Charter just informs the Code and provides content to it – seems that Code is the central
document and Charter just provides a modern understanding of what constitutes fault]
Jukier: If the Code is no longer the jus commun, is QC still a civil law jurisdiction?  YES. Codification,
history, type of reasoning, importance of doctrine, existence of general legal norms which need to be fleshed
out. The Code remains important.
Add to Brisson’s argument  judges are creating doctrines which are being subsequently codified (UJE, GF, third
parties). This undermines code as jus commune. Counter: the judges are grounding these doctrines in codal
provisions  Brisson might say that they are doing so on the face of it  My response: code is a set of principles
that need to be adapted and fleshed out to match demands of evolving society – judges should liberally and broadly
interpret provisions to facilitate this; Portalis envisioned quite a large role for the judge in this respect
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II – GOOD FAITH
Overarching question  How far can we take the doctrine of Good Faith?
Issues:
1) How far are we willing to undermine autonomy of the will in the name of contractual justice and
morality? (L’HD mentions this in Houle – note that she required “marked departures from good faith” 
See Karim, page 58 – included bad business deal; duty to cooperate – is it being taken too far (is this
beyond a “marked departure from good faith”? Subaru shows courts willingness to limit the GF doctrine,
based in part on a concern for K-ual stability and in part on concern for weaker parties.)
2) Jurisprudentially created doctrines – compatible with the civilian “mentalite”?
Introduction to the Concept of Good Faith
Overview of Cases
Soucisse (1981)  obligation of GF is added
Houle (1990)  GF is not just lack of BF – reasonableness. Override obligation that is already there
Bail (1992)  There is an obligation to inform at the pre-contractual phase
Aselford
Subaru
Art. 6
Art. 7
Art. 1375
Art. 1401
Art. 1407
Art. 1416
Every person is bound to exercise his civil rights in good faith.
No right may be exercised with the intent of injuring another or in an excessive and unreasonable
manner which is contrary to the requirements of good faith.
The parties shall conduct themselves in good faith both at the time the obligation is created and at the
time it is performed or extinguished.
Error on the party of one party induced by fraud committed by the other party or with his knowledge
vitiates consent whenever, but for that error, the party would not have contracted or would have
contracted on different terms.
A person whose consent is vitiated has the right to apply for annulment of the contract; in the case of
error occasioned by fraud, of fear or of lesion, he may, in addition to annulment, also claim damages
or, where he prefers that the contract be maintained, apply for a reduction of his obligation
equivalent to the damages he would be justified in claiming.
Any contract which does not meet the necessary conditions of its formation may be annulled.
National Bank of Canada v. Soucisse
National Bank of Canada v. Soucisse et autres [1981]. S.C.C.
Facts:
- Respondents are the heirs of Dr. Groulx who signed one promissory note (for $1400) and 2 letters of suretyship
guaranteeing repayment to Appellant bank of Maurice Robitaille’s current and future debts
- When Dr. G died, suretyship passed on to his heirs under Art. 1937 CCLC; Bank only informed heirs of
promissory note obligation; heirs were not made aware of suretyship or possibility of revocation
- Advances were made by bank to Maurice Robitaille’s company before ($15,000) and after ($107,000) the death
of the surety.
- Bank is suing heirs (under inherited suretyship) for these debts
Issue:
Should the heirs be made to repay advances made after the death by a creditor (the Bank) who was aware of the
death when the heirs, who were completely unaware of the suretyship, were unable to revoke it?
Holding:
S.C.: Allowed Bank’s action in entirety (debts before and after death)
C.A.: Reversed decision – allowed action only for debts after death
S.C.C.: Appeal dismissed. Affirmed C.A. decision (different reasons)
Ratio:
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C.A. found that the “obligation of coverage” (ob to cover future debts) is not a true suretyship and so not passed
to heirs under 1937 [SH: Obligation of coverage only originates when debt arises, therefore obligation arose
after Dr. G’s death and is not transmitted to heirs?]
[S.C.C.]
- Bank had an obligation as soon as it learned of the death to disclose to the heirs of the surety that these
suretyships existed and were revocable – this obligation results from the principle that agreements must be
performed in good faith
- Obligation of good faith is an implicit clause of the contract under 1024. IN this case, obligation of good faith
translates into an obligation to disclose
- Bank did not act in good faith because it failed to inform heirs and it gave them partial and misleading
information. Therefore bank is at fault.
- Because it was at fault, the Bank could not carry out its action. Respondents could plead a fin de non-recevoir
based on the fact that “no complaint can be based on, nor advantage derived from, one’s own action,
negligence, imprudence or incapacity, much less fault, to the detriment of another.”
Rule:
There is an obligation of good faith in all Ks. It is grounded in Article 1024 (equity). The obligation of good faith
translates into a different in obligation in all cases. (here  the obligation to disclose). [Note that here K is
silent…an obligation is ADDED]
-
National Bank of Canada v. Houle
National Bank of Canada v. Houle, [1990] S.C.C.
Facts:
- Respondent (Houle Bros.) were shareholders in their family company
- Company had a credit line with Appellant Bank – security for loan consisted of letters of surety signed by
Respondent shareholders and a trust deed on all the company’s assets. The loan was a DEMAND loan, thus
bank had a K-ual right to recall with NO notice.
- 20 days after signing of trust deed, Appellant bank decided to recall loan. It was aware of the impending
negotiations of sale of the company to new shareholders.
- Bank informed company of loan recall and took possession of the assets three hours later
- Respondents closed sale of company but received $700,000 less than expected. They are claiming this amount
from the Appellant bank.
Issues:
Did the bank abuse its contractual right? If so, can the Respondents as third parties to the contract, ground an action
in contractual liability?
Held:
Recall of loan without a reasonable delay amounted to an abuse of bank’s contractual right to recall loan with no
notice.
Respondents must ground action in extra-contractual liability. There is fault, damage and causality therefore bank
must compensate $700,000 plus interest
Ratio:
- The doctrine of abuse of contractual rights is part of Quebec civil law.
- The criteria for the abuse of contractual rights is not malice or bad faith. A contractual party has an implicit
obligation to undertake the “reasonable exercise” of a contractual right. The support for this is 1053 (the
standard for extra-contractual liability is “reasonableness”) and 1024 CCLC (an implicit obligation of
contractual parties to exercise rights in accordance with rules of equity and fair play)
- The abuse of a contractual right gives rise to contractual liability; but, third parties to the contract have no right
of action in contractual liability.
- The bank did not abuse its contractual right to recall the loan (it had reasonable explanation for doing so)
however it abused its contractual right to realize securities after the demand for payment was not met. The
contractual right was abused because the right was exercised unreasonably (without sufficient delay) when the
bank knew of the impending sale of the company.
- The Respondents are third parties to the contract. It is not appropriate to lift the corporate veil. The
Respondents must make a claim in extra-contractual liability. The banks impulsive and detrimental
repossession and sale of the company’s assets after such a short and unreasonable delay, while fully aware of
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the respondents’ imminent sale of their shares, was a fault entailing its liability for the ensuing direct and
immediate damage caused to the shareholders.
Rule:
Abuse of a K-ual right is a breach of the implied K-ual obligation of good faith. Criteria for abuse of K-ual right is
not malice or bad faith but “reasonableness”. Implied obligation to exercise K-ual right in a reasonable manner.
Now codified in Article 7 CCQ.
What does Houle tell us?
- [1] Entrenches doctrine of abuse of rights in CONTRACT  Even if there is an explicit right in the K, cannot
be exercised in an abusive way  if it is, is a breach of the CONTRACT. (can sue contractually, third parties
can sue delictually).
- [2] Establishes that test of abusive exercise of a right is not malice but reasonableness.
- [3] Acknowledges that this clashes with autonomy of the will.
- [Note difference btwn Houle and Soucisse  Soucisse: court adds an obligation; Houle: court changes K –
affects a right that a party has under its K].
Bank of Montreal v. Bail
Bank of Montreal v. Bail, [1992] S.C.C.
Facts:
- Hydro QC contracted with Bail to build James Bay substation. Bail contracted with a sub-contractor - Laprise.
Laprise went bankrupt and bank stepped into Laprise's shoes.
- Hydro QC had access to some geotechnical report (1977 report) and failed to inform Bail of the soil conditions
therein outlined. Knowledge of the soil conditions would have resulted in Laprise renegotiating the K or
changing the course of work.
- As result of the work it had to do on the difficult soil conditions, Laprise went bankrupt.
- Bank of Montreal administrated Laprise's bankruptcy and sued Hydro Quebec for its failure to disclose the
information about the soil conditions.
- [The breach is in K btwn Bail and Hydro QC…so Bank must sue extra-contractually]
Issues:
- Was Hydro QC wrong in anything it did? Did it abstain from sharing information that it ought to have shared?
(When is a K-ing party going to be held liable for not sharing information).
- If Yes, can the bank (a third party) sue extra-contractually? (look at this later)
Ratio: (Delict Q only)
- Bank is invoking HQ's obligation to inform as set out in the K between HQ and Bail as a basis for the action in
delict.
- The obligation to inform is now well established in Quebec law. It is possible to outline a general theory of the
obligation to inform based on the duty of GF in the realm of Ks. [Jukier: the obligation to inform is part of the
obligation of good faith - now codified in Art. 1375 C.C.Q.]
- Ghestin has stated the nature and parameters of the obligation to inform: Where one party has knowledge
which it knows is of decisive imptce to the other party and the other party cannot inform itself or legitimately
relies on the informed party for that info, there is an obligation to inform.
- Advent of the obligation to inform in is related to a shift taking place in the civil law - it is becoming more
attentive to inequalities/vulnerabilities in terms of information.
- The obligation to inform MUST not be defined so broadly as to obviate the fundamental obligation which rests
on everyone to obtain information and to take care in conducting his/her affairs.
- Note that the obligation to inform may be different depending on whether it arises in a pre-contractual or
contractual relationship - (1) criteria used to determine whether information is a deciding factor in the precontractual phase differs from criteria used in contractual phase; (2) violation of pre-contractual obligation to
inform gives rise to delictual, not contractual liability.
- Obligation to inform applies to a contract of enterprise. There are 3 factors unique to Ks of enterprise that have
a bearing on the obligation to inform: (1) allocation of risk; (2) relative expertise of the parties; (3) continuing
formation of the K. An onerous obligation to inform was imposed on HQ b/c it had assumed liability wrt
accuracy of data; it had greater expertise than Bail and Laprise; the K was in continuing formation (there were a
whole bunch of change orders issued).
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-
HQ's obligation to inform was owed contractually to Bail and extra-contractually to Laprise - duty to act
reasonably toward the subcontractors.
- HQ did not fulfill its obligation to inform. By leaving Bail and Laprise completely in the dark about the quality
of the information it had provided to them, by constantly shifting the blame onto the subcontractor's shoulders
and by arguing urgency and its goodwill in agreeing to the changes to the work, HQ was literally able to induce
Bail and Laprise to carry out a design for which they had not executed.
RULE:
There is a K-ual and pre K-ual obligation to inform which is part of the obligation of good faith in Art. 1375 CCQ.
Where one party has knowledge which it knows is of decisive imptce to the other party and the other party cannot
inform itself or legitimately relies on the informed party for that info, there is an obligation to inform.
Aselford Martin v. A.L. Raymond Ltee
Aselford Martin v. A.L. Raymond Ltee, [1990] C.S., page 102
Facts:
- Raymond sold a shopping centre to Aselford. Aselford assumed the mortgages and agreed to pay the remainder
of the price to R in monthly installments.
- A clause of the K  Transport de loyers (Assignment of rentals clause): R could collect the tenants’ rents IF
Aselford was in default OR even in absence of default.
- A tried to remove one of the tenants from the shopping centre. R felt that this put the repayment of the loan at
risk, and invoked the assignment of rentals clause.
- R argued that the attempt to remove one of the tenants constituted a breach of K or, in the alternative, that the K
allowed for the assignment of rents even in the absence of default of payments.
Issue: Can a creditor invoke an assignment of rentals clause in the absence of default? [Was R acting in GF when
exercising his rights under the K?]
Held: NO
Ratio:
- Assignment of rentals clause is often used in hypothecs. It is an obligation which is accessory to the principal
obligation. The creditor can realize this guarantee only upon the default of the debtor, or if the debtor is
deteriorating the building which is serving as the security.
- Freedom of K is not absolute
- If all of the principal obligations have been respected it is not just or logical that a creditor could arbitrarily, at
his will and without a valid motive invoke a collateral guarantee.
- Court cites Art. 1024: Obligations of the K include those flowing from equity. Equity gives the judge a
discretionary power to correct the most serious inequities in contracts
- The invocation of the assignment of rentals clause in the absence of default (which the K allows) is abusive and
arbitrary and violates the fundamental rules of equity as enunciated in Art. 1024
Comments
- NO INEQUALITY OF BARGAINING POWER – these were two equal parties in a commercial context;
Aselford agreed to this clause despite how unfair it was
- Case would now be resolved under 1437 – Abusive Clauses – note that there is no requirement of inequality of
bargaining power; only need a K of adhesion or consumer K (K in this case is adhesion). SH: may be able to
use GF to sanction clauses which are abusive but do not appear in Ks of adhesion or consumer Ks (1437 doesn’t
“fill the field” like lesion does  it is permissive and not preventive like 1405)
- Like Houle – overriding an express K-ual clause
Subaru Auto Canada v. Caravane et Auto de Cap
Subaru Auto Canada v. Caravane (D) et Auto de Cap Inc (P), [1996] C.A.
Facts:
- Ptf was a Subaru car dealer. K provided that it is renewed annually unless one of the parties gave written notice
prior to October 1 of its intention to terminate.
- Sept 30 – Subaru gave notice of its intention to terminate. October 3 – Subaru sent written notice that the
agreement would end on December 31. The dealer insisted that notice was not given according to the
requirements of the K, and that the dft honour the K for the next year. The dft refused. Ptf sued for breach of
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K. Dft claimed (1) that the agreement did not require written notice and (2) abuse of right
Issue: Was the ptf dealer abusing its rights by insisting on the strict observance of its K-ual right to receive written
notice before October 1 [when it knew of dft’s intention on Sept 30]?
Held: No
Ratio:
- Ptf defends himself well. The loss of his car dealership will result in the loss of a family’s livelihood. The dft’s
position is equivalent to asking us to state that one abuses his rights by demanding that the other party respect
the K.
- The theory of abuse of contractual rights permits a court to exercise control over contractual relations; the risk
that such control will introduce uncertainty into contracts is real. Courts must be on guard – L’HD in Houle
stated that the abuse of rights should only be applied to sanction MARKED DEPARTURES FROM GF. The K
constitutes the law of the parties and is the expression of their wills. We must consider the impacts of our
inverventions not only on the present situation before us, but also on commercial practice (stability of Ks!)
- IN this case, the ptf did not exercise its K-ual rights in an abusive manner by insisting on receiving written
notice as stipulated in the K. One cannot say that a party insisting on the formal requirements of the K is
abusing his contractual rights. The ptf had a serious and legitimate interest in requiring the dft to respect the
terms of his K; the ptf did not exercise his rights with a view to harming the dft, or in an excessive or
unreasonable manner.
Rule:
There is no abuse of rights where one party has a serious and legitimate interest in insisting on the strict observance
of the K-ual terms (i.e. that he be allowed to exercise a right or that the other party be required to meet its
obligations). See concern with stability of contracts- must keep in mind that only marked departures from GF will
be sanctioned.
Comments:
- This is an example of courts LIMITING the GF doctrine.
- Why does the court limit it in this case? (1) The ptf has a legitimate interest in insisting on the strict observance
of his rights (his family’s livelihood is at stake); (2) the party insisting on the strict observance of rights is the
WEAKER PARTY (compare to Houle and Aselford  bank and vendor insisting on strict observance of
rights). There is no requirement of “inequality of bargaining power” in the GF doctrine, but perhaps courts will
consider GF as part of a larger goal of restoring contractual justice, and thus use (or not use) the GF doctrine as
a means to protect weaker parties.
Remedy for Breach of Good Faith
Execution  Breach of contractual obligation = damages
Negotiation  Breach of obligation to inform  Damages OR Nullity
[Note that Nullity  Unjust Enrichment (Art. 1422?)]
Nullity – 3 possibilities
1) FRAUD (Baudouin & Jobin)
o Art. 1407: Where consent is vitiated, can apply for annulment.
o Art. 1399: Consent may be vitiated by fear, error or lesion.
o Art. 1401(2): Fraud of party or with his knowledge vitiates consent. Fraud may result from silence or
concealment.
o Where breach of duty to inform = “dol par reticence”  vitiates consent and can get nullity. Problem
– fraud requires BAD FAITH, not merely LACK OF GOOD FAITH.
2) ERROR:
o Art. 1401 + Art. 1407.
o Problem: economic error – in many cases, the breach of the duty to inform will lead to an error as to
the value of the K (how much is the K worth?). Economic error does NOT vitiate consent  1405:
Except in cases expressly provided by law, lesion vitiates consent only in respect of minors and
persons of full age under protective supervision
3) AUTONOMOUS REMEDY (Karim):
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Nothing in the Code suggests that the grounds listed in 1400 to 1406 are the only means by which
consent may be vitiated.
Art. 1416: Any contract which does not meet the necessary conditions of its formations may be
annulled.
Art. 1399: Consent may be given only in a free and enlightened manner
A breach of the obligation to inform leads to unenlightened consent  A necessary condition of the K
has not been fulfilled, therefore the K can be annulled pursuant to Art. 1416.
Karim: must be serious lack of GF by debtor and this lack of GF must be a determinative factor in
completing the K or accepting the principal clauses.
Damages – 2 possibilities  Contractual or Extra-Contractual
Note that a damages claim may arise where (1) a negotiating party entered into the K on the information and doesn’t
want it annulled; (2) the parties never entered into the K – one party strung the other along and then backed out
1) CONTRACTUAL (Karim)
o The negotiating parties had a “promise to contract” (Art. 1396) – a promise to K IS a K with the
following obligations: (1) furnish information that is necessary for the other party make an
enlightened decision (2) refrain from giving the other party false hope that a contract will materialize
o Problem – A “promise to K” usually has concrete terms associated with it (e.g. an agreed upon
purchase price). There is insufficient “substance” to constitute a “promise to K”.
2) EXTRA-CONTRACTUAL (Ghestin, Gonthier, Jukier)
o Gonthier in Bail: The authors are divided as to whether pre-contractual and contractual obligations to
inform may be considered comparable. Ghestin  primary distinction btwn these is that the violation
of a pre-contractual obligation to inform gives rise to delictual, not contractual liability.
o Note that the heads of damage which Karim enumerates point to extra-contractual damages (i.e. cost of
negotiations, cost of travel, cost of studies as well as other costs directly related to the negotiations)
Karim, “The Rule Of Good Faith in article 1375 CCQ”
V. Karim, The Rule of Good Faith in article 1375 CCQ: its extent and the sanctions which flow from it
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GF governs formation of obligation as well as at the time of its execution and extinction.
Redundance of the concept is significant (6, 7, 1375)
Requirement of GF is a source of obligations not only btwn contracting parties – also in regard to third parties
(i.e. third party can bring Ex-Kual action for breach of good faith [SH: fault required?]).
Intention of legislator – assure equity and re-establish K-ual justice
1. Notion of Good Faith
- Art. 2805: GF is always presumed, unless the law expressly requires that it be proved  This means that the
party claiming a lack of GF must prove it; Presumption can be reversed by preponderant and convincing
evidence.
- Requirement of GF is not new law – recognized by doctrine and jurisprudence before arts. 6, 7, 1375
- Negotiations, execution, extinction  GF at each stage
- GF is a fluid notion – no def’n in the CCQ. Must apply definitions and criteria elaborated and applied by the
courts before the CCQ, most particularly those which arose in cases of “abuse of right”
- B/c no def’n  court has much discretionary power to evaluate the extent and limits of GF
- Define GF as opposite of BF (which is the exercise of a right with a view to harming another or in an excessive
and unreasonable manner going against the requirements of GF.
- Legislator opted, in 1375 for an OBJECTIVE CONCEPTION of GF – i.e. determination is based on criteria
recognized in a democratic and civilized society and not based on an individual’s understanding of the
requirements of GF. Apply criteria of reasonable person who abides by a collective moral or social standard.
- GF and abuse of rights are two completely distinct notions though they may overlap.
- Abuse of Rights appears principally in three types of situations: (1) abuse of right of ownership (976), (2) …;
(3) abuse of rights in contractual matters – e.g. abusive clauses (Arts. 1435-1437 and 1623 CCQ)
- Court, when appreciating the conduct of a person can hold count of the nature and quality of the contractual
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relations btwn the parties, the type of convention, the expertise of the parties in the subject of the K and of the
factual unfolding of their relations.
Sum: good faith consists of behaviour dictated by good sense, equity and principles of natural justice. A party
is not permitted to act according to its own interests, even if its behaviour is inside of its right, without holding
account of the interests of the other party.
2.
Application of Good Faith
o Necessary to add obligations which result from 1375 CCQ
o Notion of GF entails several corollary obligations such as the obligation to inform, of loyalty and
of cooperation and confidentiality.
2.1. GF at the time of the creation of the Obligation
2.1.1.
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Good Faith and Enlightened Consent
2.1.1.1. Obligation to Inform
In K law, primary source of obs is the K…but some obs exist before the K is even formed  GF in 1375 for
e.g.
Those who enter into a K must, in the pre-Kual phase have at their disposition all pertinent information which
permits them to make a decision to contract and to negotiate the conditions of the K. Wrt this, 2 obligations
flow from the obligation of good faith  ob to inform co-contracting party; ob to self-inform.
Ob to inform  Must inform co-Kant according to the requirements of GF  Determine breach of such
obligation by applying criteria elaborated in Bail:
o The knowledge, real or presumed, f the information by the debtor of the ob to inform
o Whether info in Q is determinative
o The impossibility of the creditor of the obligation to inform of informing himself
o The legitimate reliance of the creditor on the debtor of the ob to inform.
Every party who enters into negotiations is held to an obligation to negotiate in good faith  be loyal,
cooperate with the other party, and furnish information necessary for other party to give enlightened consent
Breach of the obligation to inform, even if it doesn’t constitute fraud, induces the other party in error. Silence
and omissions in the explanations could lead the court to annul the K or an ambiguous clause when the absence
of information on the part of the co-contractant creates a false impression which prevents him from giving
informed consent required by the K in Q.
o The breach of an obligation to inform does not lead to nullity of the K if this breach doesn’t fulfill
all the conditions of “dol par reticence”. The breach can constitute however proof of error invoked
by the party who wants to cancel the K.
o In certain cases, it will also be plausible to conclude that the contract was not formed b/c of the
absence of informed and enlightened consent on the part of the party having a right to the
information. The conduct of the debtor of the obligation must be determinant of the consent given
by the creditor.
The fact that a contracting party introduced into the K some clauses which are for its own profit (e.g. noncompetition clauses) does not permit court to conclude bad faith. Depends on all facts surrounding the clause
and how reasonable it is. The fact that one of the parties realized profits from the contract doesn’t necessarily
constitute a violation of obligation of GF.
2.1.1.2. Obligation to Self-Inform [what is basis of obligation?]
An enlightened consent implies the satisfactory execution of two obs  to inform and to self-inform
Constitutes a limit on the ob to inform
Art. 1400(2): inexcusable error does not constitute a defect of consent [SH: is this the basis of the obligation to
self-inform (or one of the bases)?]
Willful blindness cannot be tolerated as a means of annulling the K
The ob to self inform not only serves to circumscribe the obligation to inform, but also to determine if the other
party truly breached its obligation to inform.
Failure to self-inform constitutes a “fin de non-recevoir”
Obligation also known by the words “willful blindness”  all persons have obligation to inform themselves and
also to take precautions necessary to the end of protecting their rights and those of third parties. Have ob not to
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close their eyes.
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2.1.2. Good Faith In Negotiations
At time of negotiation, the parties, other than being held to the obligation to inform must equally respect the
obligations of LOYALTY, CONFIDENTIALITY, COOPERATION which flow from the ob of GF
Information that is exchanged must be used twds goal of signing K; cannot negotiate merely with view to
acquiring privileged information. Persons in negotiation must have the intention of concluding the projected K.
Contrary to GF to enter into negotiations w/o the intention of concluding and signing the K.
Ob of GF in negotiations includes two obligations  may not appropriate confidential information which is
exchanged; obligation to bring end to negotiations
2.1.3. The Sanction for breaching the obligation of GF
2.1.3.1. The violation of the obligation of GF and FRAUD.
Some authors are of the opinion that the ob to inform is linked to FRAUD; more particularly; fraud by silence
(see art. 1401 CCQ). They reason that the failure to furnish essential information at the time of formation of the
K is a fraudulent silence. The notion of error caused by fraud constitutes a legal base on which the judge can
sanction a breach of the obligation of good faith in the context of negotiations (the breach of ob to inform in
particular), and all silence on an element that is essential to the K could justify the nullity of the K.
BUT…this opinion doesn’t always conform to the reality. Fraud requires voluntary acts and an element of
intentionality. The breach of obligation of GF does not always have an element of malevolent intention since it
is based on a standard of REASONABLENESS. (Need only be reasonable, not in BAD faith). Silence is not
always intentional.
It is thus necessary to establish a distinction btwn the breach of the obligation of GF and fraud, and to
sanction the breach on the basis of a different legal basis than that of fraud.
Karim suggests that it is possible to sanction the breach of an obligation to inform on the basis of the concept of
defect of consent founded on error (1400 CCQ). The breach of GF can facilitate the poof of error and its
determinant character. The failure of the contracting party to fulfill his obligation to inform can lead the judge
to qualify as excusable an error committed by the creditor of this obligation which, without the failure,
would probably have been inexcusable. Breach of obligation of GF constitutes a “fin de non-recevoir” to the
defence of inexcusable error.
2.1.3.2. The breach of the obligation of GF and Economic Error
Absence of GF at the time of negotiations cannot lead to annulment of the K on the basis of economic error
since that would have the effect of “lesion”, which is clearly prohibited by 1405 CCQ. [Note – must be causal
link btwn breach of ob to inform and the economic value of the K]
The rule in 1375 can have an autonomous sanction (of nullity or damages?), even if the facts are insufficient to
conclude the existence of one of the defects of consent in Arts. 1400 to 1406 CCQ and even if the error
committed bears on the economic value of the object of the K (economic error) [SH: only use this autonomous
sanction where cannot characterize as fraud or where error is economic in nature?]
o Art. 1399 CCQ: Consent may be given only in a free and enlightened manner.
 Thus, the conditions of the formation of the K are not filled when one party gives unenlightened consent on the basis of the other party’s breach of the obligation of GF
[what is this??]
o Art. 1416 CCQ: Any K which does not meet the necessary conditions of its formation may be
annulled. Art. 1375 makes GF a condition of the formation of the K.
When the facts establish sufficient proof to conclude the existence of a dol having provoked the economic error
in the mind of the contractant, the sanction is provided by 1407 CCQ. If the proof suggests that the facts are
insufficient to conclude dol, the error as to the economic value of the thing cannot be sanctioned by Art. 1401
CCQ. The court can however, impose a sanction in virtue of articles 1375 and 1416 if it arrives at the
conclusion that the co-contractant breached his obligation of GF at the time of K-ual negotiations.
Is this bringing in lesion through the back door and undermining the stability of Ks?
o Karim: refusing to sanction a contravention of the ob to inform on the basis that it will re-establish
lesion as a cause of nullity of K or undermine stability encourages IMMORALITY AND K-UAL
INJUSTICE.
SH: To what extent must the breach of GF be determinative of consent or of consent to the particular terms of
the K?  Clear that it must be so where it is fraud…but what about when using error (case that says it must be
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determinative) and what about his autonomous sanction?
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2.1.3.3. The nature of the responsibility of the debtor of the obligation of GF
Is the sanction for the breach of ob of GF contractual or ex-Kual. Where there is a K, cannot choose (1458).
Thus, breach of GF at time of extinction or execution = contractual liability. But what about breach at time of
negotiations?  Where a K is signed (looking for nullity), must be K-ual. Where no K is ever signed (e.g. one
party never had intention to sign, just wanted info)  K or X-K?
Karim proposes concept of AVANT-K: that is, a promise to contract having for its object negotiation and
collaboration in GF with a view to concluding a contract  Breach of GF in this “promise to contract” =
contractual liability
There would be contractual damages if the damages suffered resulted from reprehensible behaviour of the other
party – a breach of loyalty, engaging in negotiations with the sole goal of getting business secrets and without
any intention of concluding the contract…etc.
The quantum of damages are limited to that which is necessary to put the party back into the situation in which
he would have found himself if he had not entered into the negotiations  i.e. cost of negotiation (time lost,
cost of traveling and lodging, studies, fees paid to advisers). The idea is not to give the party what he would
have gotten if the negotiations had resulted in a K.
2.2 GF in the execution phase
 This obligation cannot be contracted out of because 1375 is a public order article making it illegal to attempt to
contract out of it.
 The creditor can however renounce his right to seek remedy under 1375 after the K has been formed.

2.2.1 Obligation to inform in the execution phase
 Obligation varies from K to K depending on the division of risk and the expertise of the parties.
 Obligation includes: the obl to inform, the obl to be diligent, the obl to warn in a reasonable time frame and the obl
to give a reasonable time delay before exercising a right to a guarantee.
 All these obl must be executed in gf (social norms and reasonable person behaviour)
 Breach of the obligation to inform can result in the informed party not being able to exercise certain rights under
the K (fin de nonrecevoir)

2.2.2 Obligation of co-operation in the execution phase
 This obligation is one that allows a K to have its full effect during execution – the parties must exhibit a behavoiur
that permits the attainment of the common goals of the K while assuring that the other party attains its personal
goals and without annoying/inhibiting the other.

2.2.3. The notion of gf and Abuse of Rights (execution phase)
 Occurs when one party exercises his rights under the K without valid reason with the goal of annoying (nuire) the
other party (BCN v. Houle)
 What is reasonable behaviour re: the delay required for the exercise of a guarantee varies with each case and needs
to be examine don a case by case basis.
 Art 7 provides that no on emay exercise his rights in an excessive or unreasonable manner.
 A person who negligently or consciously refuses to limit the damage that the exercise of his rights causes would
not be in gf.
 If a creditor behaves in such a manner as to let the debtor believe that he has been released of his debt then he is
estopped (fin de nonrecevoir) from claiming payment.
 When one party refuses or neglects tio fulfill or substantially fulfill his obligations he is contravening 1375 and the
other party need not fulfill his part of the K.
 GF during execution of the K therefore entails loyalty and co-operation to facilitate the execution of the K.
2.3 GF at the extinction of the K
 A party can only terminate a K by the methods of terminating prevue in the K: given a delay too short is a fault
that does not conform to GF
 Resiliation of a K need not only be done in conformity with the appropriate clauses in the K but in such manner so
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as not to injure the other party (eg. Employment K or K of exclusive distribution).

2.3.1. The application of GF at the extinction of a K by the courts
 GF at extinction is a public order article and cannot be contracted out of.
 Ex of application of GF at the extinction: Insurance K where the insurer allowed the insured to believe that the
insured providing a list of stolen items was sufficient to invoke a claim when it is also necessary to submit a
declaration (CcQ 2470). The insurer cannot then come back and claim that there was no valid claim due to the
absence of a declaration if the insurer did not inform the insured that it was necessary.
 A bank cannot claim the actif of a debtor without giving him sufficient time to remedy the default in payment
UNLESS the bank can show that if it had provided such delay it would have lost its guarantee OR if the furnishing
of such delay would not have aided the debtor in paying the debt. In such cases no sanctions are imposed.
 In banking cases both the normal practice (usage) and the historical relation of the parties is important

2.3.2.The application of GF at the extinction of the K of employment
2.3.2.1. The Obligation of Loyalty at the extinction phase
 Obligation of loyalty and GF are often confused in contracts of employment – and the employee who has breached
his obligation of loyalty is often found to have breached his obligation of GF.
 Both obligations are based on morality but are distinct. The obligation for loyalty does not flow necessarily from
the obligation of GF. It has its own provision 2808. 1375 simply reinforces 2808 and provides that society norms
of gf are applicable.
 An injunction can result when an employee who was supposed to give 3 mo notice gives notice of 1 hour before
walking over to the competition due to breach of loyalty (and GF).
2.3.2.2 The right to contract resiliation
 When an employee is let go – GF must also be present and non-abusive
 There is bad faith if the employee being released is treated in a humiliating or degrading manner – this could give
rise to exemplary damages.
 If there is simply breach of GF (no bad faith) then damages due to the loss of the job are all that can be awarded..
 Not all abrupt releases of employees are against GF – the employee must show that the employer abused his right
to release him under the K.
Conclusion:
3 sanctions are imposed for the breach of GF
1. Damages: When there is total or partial lack of GF causing direct damages
2. Fin de non-recevoir: Can be invoked when a defendant has been led to believe that his debt was released and is
now being claimed by the appellant.
3. Injunction: This is an exceptional remedy. It is available when the court needs to ensure that a co-contractant
respect a K (eg. Defendant – former employee is in competition with appellant company contrary to former K of
employment)
Much remains to be answered in the field of GF at the formation/pre-K phase of a K.
 Courts must decide whether 1375 can stand alone as a grounds for vitiating consent separate from the
enumerated causes for vitiating consent (1400-1406)
 Courts must retrace a demarcation line between the traditional causes of vitiating consent and what can be
considered non – enlightened consent due to GF.
Courts must decide what merits nullity and what behaviour merits damages.
2.2. GF in the execution of the contract
2.2.1. Obligation to Inform
2.2.2. Obligation of Cooperation
2.2.3. Obligation of GF and Abuse of Right
2.3. GF at the extinction of the contract
2.3.1. The application of the rule of GF by the courts
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2.3.2. The application of the rule of GF in contracts of work (?)
2.3.2.1. The Obligation of Loyalty
2.3.2.2. The Right to Resiliate (?) the K
Obligation to Inform and to Advise
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1992: Bail extended the doctrine of GF to the pre-contractual phase – DUTY TO INFORM.
Pre-contractual duty of GF codified in Art. 1375 CCQ: Parties shall conduct themselves in GF at time that
obligation is created.
Duty to inform is not new  traditionally existed in the professional context, i.e. duty to inform where one
assumes that the contracting party in the professional capacity has a duty to inform the other (e.g. doctor,
architect, engineer)
After Bail, there is a general pre-Kual duty to inform which has its source in Art. 1375 and applies to all types
of Ks.
When does the duty to inform arise?
Bail (Gonthier citing Ghestin)  3 conditions:
1) Knowledge of the information, real or presumed, by the debtor of the obligation
2) Information is of decisive importance to the co-cocontractant. [Determinative nature]
3) The co-contractant CANNOT inform itself OR relies legitimately on the debtor [corollary of this 
creditor has obligation to self-inform]
**Re Criteria 1)  [Janin appears to suggest that there is an obligation to go out get informed even if you don’t
have the relative expertise  SH: le Tourneau – obligation of debtor to self-inform]
The Duty to Self Inform:
According to Bail, obligation to inform only arises where co-contractant cannot inform himself or relies
legitimately on the debtor. The corollary of this is that there is a duty to self-inform to the extent possible.
Le Tourneau: makes it clear that there is an obligation on part of debtor to self-inform (e.g. interrogate the
professional in order to obtain information)
Article 1400(2): An inexcusable error doesn’t constitute a defect of consent.
How substantial is this duty to inform?  Jukier: seems to be a very small duty
o Karim: it is really a question of “aveuglement volontaire” (willful blindness)
o Bolduc v. Decelles: court finds no inexcusable error even though she didn’t read the document
and the name of the financial instrument was right on the front – reason: complexity of document
and legitimate reliance on the informant.
The Duty to Advise:
This takes the duty to inform one step further. Involves more than giving objective info – requires debtor to
advise creditor of all routes and of which route would be best (i.e. what is in best interests); in some cases
that “best route” would not be contracting at all.
Some professionals have an explicit duty to advise – e.g lawyers and doctors – though this obligation usually
arises out of statute or Code of Ethics. Does a “duty to advise” exist outside of such narrow confines? Is there
a generalized duty to advise and if so how far does it go?  Duty to Cooperate (SH)
While a general duty to advise has not been explicitly elaborated in the jurisprudence, it comes out in Bolduc
and in Trust Royal
Regie v. Janin Construction
Regie v. Janin Construction, [1999] C.A., page 115
Facts:
- Janin contracted with the Regie (a public body) to construct infrastructure.
- The project was initially to be concluded in September 1987, but the Regie did not award the contract until
December 1987 and Janin completed the work in August 1988.
- Janin claimed costs for the delay in awarding the contract, additional work required, and supplementary costs as
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a result of unforeseen soil and rock conditions. The Regie counterclaimed for the delay in the completion of the
project.
- The contract contained clauses permitting modifications in the price where the contractor encountered
conditions significantly different from those expected. It also exempted the Regie from any responsibility
relating to the geotechnical information provided to Janin.
- Each time difficulties were encountered, Janin followed the contractual procedure for notifying the Regie and
expected the price to be modified.
- The trial judge found the geotechnical clause inapplicable as it was exorbitant and outrageous. The trial judge
found that the Regie failed to provide all the necessary information to Janin, and that seven-week delay was
attributable to the Regie
Issue:
1) Breach of the duty to inform?
2) Is the clause which absolves Regie of responsibility in case of errors in the geotechnical information valid?
Held:
1) Yes. 2) No.
Ratio:
Obligation to Inform
- There is an obligation to inform which has its source in the general obligation of GF.
- Cites Bail: the civil law is now more attentive to informational inequality and it imposes an obligation to
inform in cases where one party is in an informationally vulnerable position.
- Cites Bail for the 3 elements of the duty to inform (as stated above)
- Cites Bail for the 3 factors unique to a contract of enterprise which affect the obligation to inform:
o Allocation of risks: In general, the entrepreneur bears the risks in a construction scenario, but
acceptance of risks by the entrepreneur has as corollary the obligation of the other party (contractor) not
to contribute by action or inaction to misrepresent the risk (i.e. contractor knows the conditions better
and must pass on accurate info). The duty of the entrepreneur is lessened when the contract contains
certain guarantees with respect to representations made by the tenderer
o Relative expertise of the parties: in big projects, the tenderer has the expertise. The entrepreneur must
verify the information which he is given but need not redo in detail the work (i.e. info gathering) done by
the tenderer. In this case, the Regie is the party with the greater expertise b/c it had access to soil
conditions experts, etc. Janin was justified in relying upon this expertise. The breach of the obligation to
inform here is traceable to the Regie’s decision not to perform surveys that should have been done.
o Continuous formation of the K: Where it is foreseeable that modifications will be made in the course
of the K’s execution, the obligation to inform continues and retains the characteristics of a pre-Kual
obligation to inform.
The Exoneration Clause
- was unilaterally imposed by the tenderer
- The clause was not reconcilable with the contractual obligation to inform assumed by the Regie
- Court cites Arts. 1379 (def’n of contract of adhesion) and Art. 1437 (abusive clauses).
- The notion of adhesion has always been seen within the paradigm of protecting the weak. But certain factors
have changed the domain: principles of adhesion contracts could be applied to situations where the parties
are of equal strength.
- What really distinguishes the contract of adhesion is the determination, by one of the parties or a third party, the
content of the contract, i.e. the absence of the possibility to negotiate.
- Government contracts usually fit the definition.
- It seems unreasonable and against good faith to take away the effect of the obligation to inform, even if the
price-revision clause is there.
Rule:
Obligation to inform in the pre-Kual phase may exist even where there is no actual “informational asymmetry”
between the parties.
Cannot contract out of the duty to inform in the pre-Kual setting. Cannot exclude your liability for good faith.
Clauses which do so will be abusive, provided they are in a K of adhesion (do not need unequal bargaining power).
Comments:
- Case similar to Bail but 2 “twists”:
1) Regie has duty to inform but is not expert;
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o
Gonthier justified dvlpt of duty to inform in pre-K setting on the basis that the civil law is increasingly
attentive to inequalities of information. Is this a case of such “information inequality”? The Regie is not
a soil expert. Janin has greater soil expertise. The court in this case suggests that the duty to inform
requires a contractor (“master of work”) who has no specific expertise to become informed such that it
can inform its sub-contractors. The Regie obtained information and experts and thus was held to a
continuing duty to obtain such information. Moreover, there is an obligation on the part of the creditor
to SELF-INFORM. Is it reasonable in these circumstances to permit Janin, who has soil expertise, to
legitimately rely on the party with no inherent expertise?
o Jukier: the duty should be applied differently in different situations.
2) Exclusion of liability clause  Can you K out of the pre-Kual duty to inform?
o The court admits that the basis of the adhesion K provisions is to protect weaker parties and then says
that the protections afforded to adherents can apply to parties of “force comparable”. Since this is a K of
adhesion, the exoneration clause is an abusive clause (1437) b/c it is abusive and contrary to the dictates
of good faith to exclude your liability for GF. Jukier doesn’t like this rule b/c will result in (1) lots of
litigation re. what is a K of adhesion; (2) will result in protection of parties that don’t need protection
o Other possibilities to get rid of exclusion clause?
 Annul K and exclusion clause would follow [problems – which defect of consent? Could
not get damages]
 Obligation of GF is of public order nature [Art 6: “is bound to exercise his civil rights in
GF”, Art. 1375: The parties “shall”. Karim – 1375 is a provision of public order]. Art.
9: Cannot derogate from provisions of public order
Bolduc v. Decelles
Bolduc v. Decelles, [1996] Chambre Civile, page 123
Facts:
- Decelles is a financial planner
- Ptf went to a workshop given by him and then approached him, desiring to subscribe to a “REER collectif
conventionnel”. They discussed it late into the night and the ptf and her husband signed the documents without
reading them. They ended up signing a “REER/avantage fiscal”, which is different than a “collectif
conventionnel” which offers better financial advantages.
- Later, ptf wanted to reduce her monthly payments and discovered that the product she had purchased was not
the one she had asked for.
- Ptf claims that Decelles breached is obligation to inform and that as a result, she didn’t give her free enlightened
consent to the K she signed. Wants K annulled.
Issue: Did Decelles breach obligation to inform? Can the agreement signed be annulled?
Held: Yes
Ratio:
- Ptfs want to annul K for reason of error as to the nature of the K (article 1400 C.C.Q.)
- Decelles didn’t explain the differences btwn the two financial instruments [i.e. (1) big penalty if don’t pay
monthly installments; (2) lesser tax savings; (3) 40% commission]. He basically tried to sell them the
document that he wanted to sell them (i.e. with bigger commission)
- Thus, the Ks are null because the ptf didn’t give enlightened and free consent (art. 1399 CCQ). They are also
null b/c he did not fulfill his obligation to inform which finds its source in the general obligation of GF (Art.
1375 CCQ).
- Contracts can be rendered null in two ways:
- [1] Ptfs, as result of conduct of dft (i.e. breach of obligation to inform) didn’t give free and enlightened consent
(1399(1) CCQ). 1399 presupposes the obligation to inform. Obligation to inform finds its source in the general
obligation of GF (1375 CCQ). It’s possible that the omission to inform (i.e. contravention of 1375) is enough to
lead to nullity of the K [but court decides that it doesn’t need to go there b/c can annul on basis of error]
- [2] Error  1399(2) consent can be vitiated by error. Breach of obligation to inform resulted in error as to the
nature of the contract and this error is determinative (she never would have entered into the K). There was no
inexcusable error on the part of the ptfs (Art. 1400 CCQ) because the contracts were complex. True that ptfs
didn’t read the contract but they had [legitimate] confidence in Decelles to give them the full information. The
document was such that it would discourage one from reading it. There is error  K is annulled  ptfs have
right to restitution (1422 CCQ)
- Decelles also committed a dol par reticence (fraud by silence). But 1401 requires that fraud be committed by
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the co-contractant. Bolduc entered into the K with the company and not with Decelles. D is a third party.
- SH - but the court appears to give damages which one cannot do where there is only error!
Rule: Duty to self-inform is not a substantial obligation – very small duty. It is possible that breach of obligation to
inform may give rise to nullity without error or fraud (i.e. autonomous remedy – annul based on 1399)
Comments:
- Suggests that duty to self-inform is a very small duty – in this case, parties didn’t read AND the name of the
financial instrument is right on the front. Perhaps Karim is right  “willful blindness” is all that is necessary.
[Counter argument: must consider duty to inform in the context of the relative bargaining power and
information inequality]
- Case looks like a duty to advise case though court doesn’t use those words. Court seems to be holding D to a
duty to advise B of what her choices are and which is the most advantageous route.
- Court suggests that can use Art. 1399 to annul directly – this suggests that there might an autonomous remedy
of nullity for the breach of the obligation to inform (per Karim)….but actually uses error (1407) to do the
annulment. SH – what is the necessary element of formation for 1416 – 1375 or 1399?
- Court could have just used error…but it recognizes that the error is caused by the lack of the duty to inform and
advise (under general rubric of GF). Jukier is glad the court used the duty to inform/advise b/c it advanced the
law in this area
Trust Royal v. Veilleux
Trust Royal v. Veilleux, [2000] C.A., page 129
Facts:
Appeal by the defendant Royal Trust from an order requiring it to pay the plaintiff Veilleux $39,200.
Veilleux was the liquidator of the estate of his sister Paulette, who died suddenly on March 31, 1992.
1988 – Paulette took out hypothec with aplt (lasts 3 years). She also took out life insurance on the balance of
the hypothec such that if she died, her heirs would not inherit the balance of the hypothec
1991 – Bank sent notice confirming terms of renewal – no mention of life insurance. She renewed hypothec
but did nothing about the life insurance. Trial judge believed that life insurance was automatically renewed
with hypothec.
1992 – bank sent Paulette a statement indicating that the loan was not insured and that she should call right
away
She died three months later without renewing.
Trial judge found that Royal Trust had to take the necessary means to assure that Paulette renewed the insurance
or that she clearly showed an intention not to renew the insurance. He sated that Royal Trust did not meet its
obligation to inform and advise and that this error engaged its responsibility.
Issue: Breach of obligation to inform and advise?
Held: Yes, but rspdt’s conduct broke chain of causation. Appeal allowed and action dismissed.
Ratio:
Royal Trust failed in its obligation to inform and advise Paulette.
Its obligation required that it raise with Paulette the question of renewal of the insurance at the time of the
renewal of the mortgage. It was negligent. [Aplt breached the obligation to act in the best interests of its client
with prudence and diligence. It has this obligation b/c it presents itself as financial services advisor. Renewal
of life insurance was a simple formality and clearly in the interests of both parties (commission of insurer and
Paulette would be protected)].
However, Paulette did nothing after receiving the statement in January 1992. She could no longer believe in the
automatic renewal of the insurance. The warning was unequivocal. She had to act to obtain the insurance. Her
negligence eliminated the consequences of Royal Trust’s negligence and broke the causal link between the
negligence and the damage suffered
Rule: There is a general obligation to advise and inform in the pre-Kual phase [must advise client of what is in his
best interests], and this obligation need not overlap with traditional defects of consent in Art. 1399 [there is clearly
no fraud or error here]
Comments:
SH: suggests that a generalized obligation to advise exists in QC (i.e. a duty to advise the client as to her best
interests, one that doesn’t exist in statute).
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Jukier: case doesn’t fit in with traditional defects of consent – it is the farthest from fraud that one can get.
Bank had nothing to lose or gain therefore would be difficult to impute intention not to withhold information.
Also, Paulette is not really in error
THEREFORE, case suggests that a general obligation to advise and inform in the pre-Kual phase is actually
necessary and doesn’t always overlap with traditional defects of consent in Art. 1399.
This case suggests that duty to advise = duty to inform client of what is in her best interests. But must you
inform client of what is in her best interests.
Obligation of Cooperation
Royal Trust v. Veilleux suggests that there is a duty to advise a client of what is in her best interests (i.e. not just
inform her of the objective facts)  But must I advise a co-contractant of something that is in their best interests but
not in mine?  This raises the Duty of Cooperation
Where does this duty come from?
-
Diesse  Source of the obligation to cooperate is GOOD FAITH.
Court in Provigo reinforces this  makes specific reference to “obligation de bon foi”
What is the content of the duty? I.e. How does it manifest itself?
-
Diesse: Duty to cooperate requires that party do more than just avoid harm/detriment (negative obligations). It
involves working together for a common interest and providing a BENEFIT to the other party (positive
obligations).
Jukier: do not harm the other party, assist the other party in performance, act loyally and honestly,
continuously share information.
What if, in being loyal or giving assistance, a party is hurting its own interests? This doesn’t insulate a
party from being held liable for breach. This is the case in Provigo – by being loyal to the franchisee, Provigo
is hurting its own interests. But note that the obligation of cooperation is not preventing Provigo from doing
something (i.e. opening the discount stores); rather it requires that when Provigo does do something, it takes the
interests of its co-contractant into account. [e.g. allowing franchisee to have an “everyday low price” scheme
and not forcing it to purchase 90% of its stock from Provigo at a high price]
What kinds of Ks will it apply to?
-
Jukier: WE don’t have sufficient jurisprudence to answer this Q definitively. But the obligation seems to make
sense only in the context of a “relational contract”, i.e. a “long term K involving successive performance” in
the civil law. A franchise agreement is such a K.
How far can we take the duty to cooperate?  Can we ground imprevision in a duty to cooperate?
-
-
There is no doctrine of imprevision in the civil law (Canada Starch, Martin). Courts cannot revise K or excuse
a party from performance on basis of extreme hardship, only superior force (1470, 1693 CCQ  superior force
= an unforeseeable and irresistible event)
Can we ground imprevision in duty to cooperate (i.e. GF)?
Martin  YES: It is not equitable that one party can require the execution of a K on its terms when the
economy of the K was profoundly upset by circumstances that were completely unforeseeable. He believes that
strict and rigid adherence to sanctity of contract principle might undermine the stability of contractual
relationships especially between parties to long-term contracts, and speaks to the importance of viewing Ks as
a functional tools rather than a juridical beings. He advocates a doctrine of imprevision in the civil law. By
what route?  4 possibilities  Includes GF/the obligation to cooperate. [This is a better alternative to
adopting a doctrine of imprevision that resembles common law frustration because it is BASED ON
CIVILIAN REASONING and concepts]
Stoefell-Mucnk  YES: the natural extension of the duty to cooperate is to oblige the parties to re-negotiate
the K in light of circumstances which arise.
Should we move in this direction? Or is this taking the duty of GF too far?
o YES: compatible with civilian reasoning; other civilian jurisdictions have grounded a doctrine of
imprevision in GF (Germany). Applying imprevision actually increases K-ual stability b/c it
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fosters the continuance of long-term contracts (Martin, also German example – courts have used
the doctrine in moderation and only where absolutely necessary; has actually enhanced Kual stab)
o NO: undermines stability and certainty of K-ual relations; undermines autonomy of the will [SH:
we have already gotten this far…]
How does the duty of GF/cooperation translate into a doctrine of imprevision?
o Ob of GF requires parties to cooperate  parties thus have obligation to re-negotiate if there are
unforeseen circumstances which make performance very difficult. [compare to KL – When K is
frustrated, the parties are excused from performance)
What is the remedy? (if party doesn’t re-negotiate)
1) Damages: Breach of K-ual obligation to re-negotiate on reasonable terms  leads to damages that split the
loss
2) Send the parties away to renegotiate the K (this has happened in French cases according to S-M)
3) Re-negotiate the parties’ contract for them – This is not acceptable. Your most fundamental right is NOT
to contract (S-M). We have to stop short of actually imposing a re-negotiated agreement on the parties.
Diesse, “Le devoir de cooperation comme principe directeur du contrat”
F. Diesse, “Le devoir de coopération commun principe directeur du contrat” (1990) 43 Arch. Phil. Droit 259.
GENERAL ARGUMENT: The duty to co-operate in context of K has always been a legal std., but a std. that, under the
classical view of K, we’ve put in the shadow of a strict or adversarial notion of contract – i.e. Classical view  we
tend to think that Ks are conflictual instruments and that the success of one party necessarily involves the
impoverishment of the other. We are returning/re-discovering a more fundamental logic of contract which will be
co-operation and not conflict, where co-operation is a common goal between parties to a K.
Jukier: the article suggests that we need a whole psychological “about face” to occur in order to accept the duty to
cooperate. We must change our whole conception of what a K is – from an instrument of conflict to an instrument
of collaboration and cooperation.
SOURCES OF THIS DUTY TO CO-OPERATE: May be explicit in the terms of the K. If it is not express in K, the legal
duty is an implicit obligation which will be implied by court on basis of considerations like fairness, usefulness,
business efficacy, or good faith (hereinafter GF) which are all objective bases of duty to c-operate.
WHAT IS THE CONTENT OF THE DUTY TO COOPERATE? To co-operate is more than just to act faithfully or
honestly. It is more than just avoiding causing an injury to the other party or refraining from acting to the detriment
of other party. There is a positive aspect behind this duty which is working together for a common or convergent
interest or more generally the duty has to do with the fact of providing a benefit to the other party not just avoiding
causing a detriment.
BASIC ELEMENTS OF DUTY TO CO-OPERATE:
[1] Interdependence linked to solidarity between two parties:
Interdependence is important in context of K whose development in future. The longer the term of the contract,
the more uncertainty, the more need for solidarity of parties.
[2] Respect for the interests of the other parties:
This is the basic notion of fairness and is the basic ingredient of duty to co-operate
[3] Reciprocity in terms of proper performance of K, which is needed to have the gain which is intended through
the fact of contracting.
Diesse gives the example where in collaboration between author and translator to have a good translation for
performing K of translation there is a clear and important need for co-operation
Some Ks can’t go without co-operation between parties in process of performance. There cannot just be parallel
performance by every party of his obligations. There is a need to work together to get positive results parties
were seeking.
FUNCTIONS OF DUTY TO CO-OPERATE:
… [missing stuff here]
Evolution or/and adaptation of K: To promote better techniques or better methods of K negotiation/K
management/K adaptation to changing circumstances. The duty to co-operate has dynamic function to force
and to teach the parties the ways of promoting efficiency of their contractual relation in context of changing
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circumstances. They must learn better techniques of K (re)negotiation, adaptation, management. It is crucial
in context of long-term K otherwise you will just get failure of long-term Ks. Duty to co-operate is a
recipe for Contractual success in context in never-ending change of circumstances.
Jukier: What is the “about-face” that is necessary  K should not be seen as conflicting rights rather
complementary rights (even though parties’ interests may be different). Courts must recognize that a K is really a
form of PARTNERSHIP. The obligation to cooperate goes beyond just acting in the mutual interest of both parties
(i.e. this helps me and it doesn’t harm you)  it requires both parties to act in a way that facilitates the other parties’
performance of their obligations  it may require one party to act to the benefit of one party and the detriment of
itself (SH: i.e. provided that detriment is less substantial than the benefit?)
Provigo Distribution v. Supermarch A.R.G.
Provigo Distribution Inc. v. Supermarche A.R.G., [1998] C.A.
Facts:
Appeal by the dft Provigo from a judgment ordering it to pay $3,762,335 to the plaintiffs.
Ptf supermarkets formed the Gagnon Group, which owned four grocery stores, three in Granby and one in
Cowansville.
Early 80s - Gagnon signed franchise agreements with the defendant (a wholesaler at the time) for the purpose of
using its banner for its stores. Three impt elements of franchise K: (1) 90% of stock must be exclusively
supplied by Provigo at its prices; (2) Franchisee had to use marketing scheme imposed by Provigo (i.e. couldn’t
use “everyday low price” scheme); (3) No non-competition clause.
1981 - the defendant started stores called Heritage, which had an “everyday low price” market scheme.
At the end of the 1980s, the food market was very competitive. Gagnon group couldn’t compete with Heritage
prices and sued, claiming that this disloyal competition constituted an abuse of right.
The judge below based the fault of the defendant on the existence of a lack of loyalty in its competition, in that
it forced the plaintiffs to maintain high prices, changed its commercial strategy from wholesaler to retailer, and
refused to give to the plaintiffs certain marketing tools which would have allowed them to fight the competition
more effectively
Issue: Is Provigo liable? [Effectively  Is there a duty to cooperate?]
Held: Yes
Ratio:
Judge reviews characteristics of a franchise K  successive execution, content non-negotiable.
Even if, as in this case, there is no obligation to abstain from competition during the agreement and following
its expiration, it is still necessary to consider implicit obligations which result from nature, equity, usage and
law (1434 CCQ)
Responsibility of the aplt is contractual and thus the damages claimed by the ptf must be direct and
foreseeable (1613 CCQ)
Fault  Responsibility is not based on fiduciary duty (KL concept) but rather on an implicit obligation which
exists in every contract by virtue of GF (1375 CCQ - the new “contractual morality” in Quebec). In this case,
the franchise K created a partnership btwn the ptfs and the dfts. By the terms of such a K, there is a
fundamental obligation on the part of the dfts to collaborate and provide technical and commercial
assistance. The dft breached this obligation when it competed with the Gagnon Group without providing it
with the tools necessary to face this competition and reduce the impact of the strategy on its business. [It is not
the opening of the discount stores which constitutes the fault – it is the fact that Provigo didn’t provide tools
for Gagnon to survive in face of the competition – e.g. allowing it to have a new “everyday low price” policy,
modifications to the K, offer to participate in the discount stores, offer of compensation, coupons, allow Gagnon
to get >10% of its goods from another supplier]
Causation  The causal connection between the wrong of the defendant in Granby and the reduction of profits
of the Cowansville store was not established. Causal connection was established with respect to the Granby
Stores, where the defendant took the offensive with respect to its own store and failed to give the support
expected by the plaintiffs.
RULE: In certain Ks (long term successive performance Ks such as K of franchise), there is an implicit duty to
cooperate (i.e. to be loyal, to collaborate and provide technical assistance to the other party) which is grounded in
the obligation of GF (1375 CCQ). Responsibility is contractual – must be fault, damages and causation (see 1607
CCQ)
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Comments:
Clearly need fault, causation and damages
Student problem raised interesting issue  Is economic harm necessary? If action doesn’t have direct econ
impact but to the knowledge of the contracting party the action will affect the co-contractant in an adverse way
(and does affect in this say), does it constitute a breach of the ob to cooperate?
Baudouin & Jobin  Existence of duty to cooperate depends on two factors: the pursuit by the parties of a
common goal shown by their intention to collaborate and the frequency of the relations between the parties (SH:
the nature of the K – K of successive performance?). [Definitely exists in franchise Ks and Ks of insurance]
Questions:
SH: Why isn’t this an abuse of rights case?  The abuse of the right to freely compete
SH: Obligation to cooperate seems to be about more than preventing harm! In provigo case, there was clear
harm to the ptfs. But Diesse seems to suggest it’s also a positive obligation to benefit the other party. Even if
the ptfs weren’t losing profit, could they still argue that Provigo is not breaching its duty to cooperate by not
allowing it to implement the “everyday low price” scheme where that scheme would make them MORE
PROFITABLE?
Martin, “Pour une reception de…imprevision…”
S. Martin, “Pour une reception de la theorie de l’imprevision en droit positif quebecois”, page 163
Two fundamental and opposing principles: sanctity of contracts (pacta sunt servanda) vs. contractual review based
on hardship experienced by one party (rebus sic stantibus).
The author notes that the strict and rigid adherence to sanctity of contract principle might undermine the
stability of contractual relationships especially between parties to long-term contracts. In today’s world of
frequent and unexpected economic shocks, the rigid adherence to pacta sunt servanta might do more harm than
good. There is a need for greater flexibility that would allow the judges to readjust contractual terms and make them
better conform to the original equality of the parties’ prestations.
Today’s civil law: CCQ 1470: can’t get out of the obligation unless force majeure: only an “unforeseeable and
irresistible event” will excuse performance (not just mere hardship as in CML)  There is no imprevision in the
civil law of QC.
The author proposes four potential ways through which to introduce this greater flexibility into Quebec civil law.
(i.e. to allow to terminate or modify the contract based on hardship, not just impossibility)
1) Interpretation of the contract. CCQ 1434 implied obligation of equity. Read into the contract the
(implicit) hardship clause. The parties implicitly consented only subject to such a clause existing.
Problem: the parties might have decided to allocate risks at the conclusion of the contract by not including
the hardship clause intentionally.
2) Good Faith Principle. CCQ 1375 Connected with “duty to cooperate” here. (i.e. if you know the other
party is in trouble, you won’t insist that the K be enforced)
3) Subjective cause (cause of contract). New circumstances change the cause of the original agreement (the
reason why you entered into the K is no longer there). CCQ 1385, 1410, 1411.
4) The broadening of the force majeur concept in civil law from the “material” impossibility to “economic”
impossibility. At what point does the economic “sacrifice” become unbearable (not necessarily
impossible)?
Purpose: to reintegrate the contract into its “functional” environment/context from its purely juridical “being.”
Stoeffel-Munck, “Regards sur la theorie de l’imprevision”
P. Stoeffel-Munck, “Regards sure la theorie de l’imprevision…”, page 175
The principle of co-operation has to do with doctrine in French administrative law re: doctrine of imprevision
(unforseeability). Doctrine of Administrative law gives excuse for non-performance of K in cases of
impracticability (economic) due to an abnormal change of circumstances. As for the basis of this principle of co-
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operation, he suggests that this principle is a deduction from the more general principle of good faith. Major
characteristic of Civil law systems to refer to good faith rather than in Common law.
THREE IMPLICATIONS OF CO-OPERATION:
1) Through this principle, a party to a K may be obliged to first renounce the exercise of a Contractual right or a
Contractual power which is no longer useful or whose expected utility initial purpose as this appeared. The first
spatial obligation issuing from co-operation is to renounce the strict performance of the K and not to insist on
respect for exercise of contractual right
2) The principle of co-operation could oblige party of K to renegotiate the whole contract or just a specific term
with or without the assistance of a third party; the negotiation would be an alternative to the termination of the
K or to a judicial revision of the K
3) The principle of co-operation may signify that a party would be obliged to compensate the other party for the
consequences of a non-co-operative behaviour; especially if this party insists on the strict performance of a K or
if this party refuses to renegotiate the contract, the legal consequence could be that he would be liable for
compensating the other party for the consequences of his non-co-operating behaviour
Stoffel also warns us of very serious reluctance toward this principle or some extension of it and he remarks that this
resistance is greater in civil law as compared to commercial law in Civil law. Civil law and commercial law
distinction is greater in Civil law.
Resistance to this principle is on philosophical or moral foundations, the principle of which is the reference is the
autonomy of the will which is a basic fundamental principle against a clear or large reception of principle of cooperation; Stoffel says that lawyers which have moral considerations of guiding principles will resist principle of cooperation; principle of co-operation has to do with economic considerations rather than moral considerations.
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III – THIRD PARTIES’ RIGHTS
2 issues:
1) K btwn A and B  What effects can it have on C? [Kravitz]
2) K btwn A and B  Can C hold either party liable for damages flowing from breach? [Bail,
Michaud]
**These questions have been given a distinct treatment in the civil law, one that is illustrative of the civil law
tradition
Civil Code Provisions
 Issue 1) Benefit to third party
A contract has effect only between the contracting parties; it does not affect third persons,
1440 CCQ
except where provided by law [ 1442, 1444]
1441 CCQ
1442 CCQ
1443 CCQ
1444 CCQ
1445 CCQ
1446 CCQ
1447 CCQ
[Principle of relativity; closest equivalent of CML privity. Same theory but different
justifications. Civil law – autonomy of the will. CML – lack of consideration.]
Upon the death of one of the parties, the rights and obligations arising from a K pass to his heirs,
if the nature of the K permits it.
The rights of the parties to a contract pass to their successors by particular title if they are
accessory to property which passes to them or are directly related to it.
[rule from Kravitz codified]
No person may bind anyone but himself and his heirs by a K made in his own name, but he may
promise in his own name that a third person will undertake to perform an obligation, and in that
case he is liable to reparation for injury to the other contracting party if the third person does not
undertake to perform the obligation as promised.
[“Promesse de porte-fort”. A contracts with B to the effect that C, not a party to the K, will
perform an obligation in favour of B. If C doesn’t perform – B can’t sue C but can sue A]
A person may make a stipulation in a contract for the benefit of a third person.
The stipulation gives the third person beneficiary the right to exact performance of the promised
obligation directly from the promisor.
[stipulation pour autrui  A (stipulator) Ks with B (promisor) to effect that B will benefit C
(a non-party beneficiary). Not possible in CML b/c no consideration flowing from third party.
This is a TRUE EXCEPTION to the principle of relativity in 1440 CCQ]
A third person beneficiary need not exist nor be determinate when the stipulation is made; he
need only be determinable at that time and exist when the promisor is to perform the obligation
for his benefit.
[= can use Art. 1444 to make stipulations in favour of unborn child]
The stipulation may be revoked as long as the third person beneficiary has not advised the
stipulator or the promisor of his will to accept it
Only the stipulator may revoke a stipulation; neither his heirs nor his creditors may do so.
If the promisor has an interest in maintaining the stipulation, however, the stipulator may not
revoke it w/o his consent.
Stipulation pour autrui (1444 CCQ):
true exception to principle of relativity
Note that an exclusion of liability clause or a warranty can = a benefit for third party
C has direct contractual action against promisor in K (= can sue for non-performance even where no fault)
Examples:
o Stipulations in favour of unborn child
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o
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Summary
Insurance Ks  Car insurance K btwn A and B  Any person who drives B’s car with
permission is covered by the insurance K
Parties in shipping K (A & B) can exclude the liability of loaders and unloaders (Cs)
Pre-Kravitz, only one true exception to principle of relativity  stipulation pour autrui
There were other means by which third parties became involved but these were not true exceptions  promesse
de porte-fort; trustees of bankruptcy, heirs, legatees [but this not exception – just stepping into shoes of K-ing
party and essentially changing from third party to K-ing party.
Kravitz created a third exception  1442 CCQ
General Motors v. Kravitz
General Motors v. Kravitz, [1979] S.C.C., page 183
Facts :
GM sells car to dealer Plamondon (K1) who sells it to Kravitz (K2)
The car is a lemon – it is full of latent defects
Issue : Can Kravitz exercise a direct remedy against G.M. based on the legal warranty against latent defects
resulting from the sale btwn G.M. and Plamondon? [Can warranty benefit subsequent purchaser of the thing sold?]
Held : Yes
Ratio :
Rule set out in 1029 (1440 CCQ) is not absolute; it is subject to exceptions – so many that it has almost no
useful meaning. [unique in civil law tradition – CML can be no exceptions b/c of consideration]
While it is generally true that a K binds only the K-ing parties, this doesn’t mean that a K can never benefit a
successor by particular title [SH : someone who buys something]. Indeed, it seems to have always been
recognized that some rights are so closely related to a thing that they can benefit only its owner.
The warranty against latent defects is cleary an accessory of the thing sold [cites many French authorities] and
thus th seller is liable not only to his immediate purchaser, but also to the subsequent purchaser of the thing. « I
think that we must acknowledge the existence of a direct remedy in warranty by a subsequent purchaser against
the original seller. A claim in warranty against latent defects is not one that is personal to the purchaser; the
purchaser is entitled to it as the owner of the thing. »
[Civilian tradition : this solution is in keeping with the relevant articles of the CC and with the principles on
which they are based. It was already recognized at the time of Domat and Potheir, and it would seem strange to
depart from it now on the sole account of a literal and stringent interpretation of the texts which is definitely out
of place in matters of civil law. Principle of relativity is not as aboslute in the civil law as it is in other legal
systems.]
Sub-purchaser becomes creditor of warranty against latent defects  thus has claim to cancellation of the [first]
sale (redhibitory action) the payment of damages. Cancellation of sale  sub-purchaser must return the car and
will get reimbursed but only the the value of the wholesale price. Damages paid by first seller to sub-purchaser
= difference btwn retail price and wholesale price.
Rule : The rights of the parties to a contract pass to their successors by particular title if they are accessory to
property which passes to them or are directly related to it (1442 CCQ). A warranty against latent defects is an
accessory of the thing. Thus, a sub-purchaser may have an action against the original seller, on the basis of the
warranty against latent defects, which would entitle him to cancellation of sale and damages.
SH: Would any warranty be considered an accessory or directly related to the thing sold? Would
conventional warranty allow one to have the K set aside?
Comments:
Rule enunciated (accessory theory) is now codified as a second exception to the principle of relativity.
Pratte could have implied a stipulation pour autrui but didn’t – suggests that if no express benefit is stipulated,
cannot fall within Art. 1444.
Why does Kravitz want to sue GM contractually? (1) Much lower burden of proof – obligaiton of warranty vs.
Obligation of means [ex-K, must prove fault]; (2) He wants the K to be set aside (redibitory action – resolve K
of sale in context of latent defects)
o Note that not all K-ual actions = need not prove fault. Depends on the intensity of the
obligation. Obligation of means = must prove that other party didn’t act reasonably in
circumstances. Obligation of result = must only prove inexecution of obligation (burden then
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shifts to other party to escape by force majeure). Obligation of warranty = there is no excuse (no
defense) – e.g. warranty against latent defects.
Why does Kravitz sue GM and not the dealer? Not an issue of presumption of knowledge (judge says that
dealer is professional seller thus presumed to know). Real reason is deep pockets – manufacturer is much more
stable dft and less likely to go bankrupt
JUS COMMUNE? This is another example of the code following jurisprudence. Recall Brisson  is there any
jus commune anymore? Is this the civilian tradition?
Note comments re role of code and civilian interp  literal and stringent interpretation of text is out of place in
matters of civil law
What constitutes an accessory of a thing sold?
o Jukier : can be tangible and intangible  e.g. if you sell a milk truck, sell route also
o Pratte says that warranty against latent defects is such an accessory [accessory sold with product
(1718). Warranty is accessory. Thus, warranty is sold with car.] This seems illogical in light of
Art. 1726 CCQ : The seller is bound to warrant the buyer that the property and its accessories are,
at the time of the sale, free of latent defects.... [Replace “accessories” with “warranty against
latent defects”]
 Issue 2) Third party sue for breach
Every person has a duty to abide by the rules of conduct which lie upon him, according to the
1457 CCQ
circumstances, usage or law, so as not to cause injury to another.
Where he fails…he is responsible for the injury he causes and is liable for reparation.
-
Can third party sue for breach of an obligation in K btwn A and B?
Yes, but must sue extra-contractually (Houle)  1457 CCQ
2 issues arise 
1) How do we determine whether there has been breach?
o Pigeon in Alliance : take facts outside of K-ual context and determine if there is ex-K liability
indepedent of the existence of the K
o Jutras rejects this approach : Often the dft and the third party are only in contact b/c of the
contract. His approach (and that which he attributes to the S.C.C. in Bail)  Determine whether a
party to the K acted towards a third party as a reasonable person placed in the same circumstances
would act. One of these circumstances – the K! Ask : what are the legal obligations (not K-ual)
that exist as a result of the existence of the K? Use the standard of the REASONABLE
CONTRACTANT.
o L’HD in Houle : Breach doesn’t constitue « fault » but is a juridical fact which can serve as
evidence in establishing fault.
2) How does the civil law limit the radius of liability? (i.e. given that anyone could suffer some damages as
result of a breach? [CML – uses duty of care; where there is no proximity – no duty of care – liability does
not extend]
o Michaud : see vociferous rejection of the common law approach [not clear that actually rejecting
duty of care] – it has no applicability in the civil law
o Jutras : There exists only ONE rule to behave as a reasonable person with respect to
everyone and it is applicable in the context of the reasonable contractant.
o Cannot limit through fault analysis  CML – Would action reasonably cause damage to this
person? Civil law – Would action reasonably cause damage (period)? Court in Michaud:
Foreseeable that faulty financial statement would cause damage; doesn’t matter that it was not
foreseeable that Le Bel would use the statements to get a loan from the bank.
o LIMIT THROUGH CAUSATION  SH: look for things that break the chain of causation.
Michaud: the bank would have lent the money even if the faults were not there – the faults were
not determinative; the bank was faulty (could have revealed faults) and this fault broke chain.
Jukier: courts manipulate the principle of causation to get to an endpoint equivalent to that in
CML
Third Parties and Good Faith
Fundamental difference btwn Michaud/Alliance and Houle  latter cases – breach of explicit obligation. Bail
and Houle – liability to third parties arises as a result of breach of an implied obligation of GF. These latter
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decisions suggest how far-reaching the obligation of GF has been extended. Jukier: Delictually liable to strangers
for doing something that their K states explicitly that they may do. Most K-ing parties would be surprised at this.
Houle – Third Parties
Houle v. CNB
Aplt bank breached obligation of GF in K btwn aplt bank and co. Rspdts were shareholders of the co (i.e third
parties to the K)
Thus, cannot anchor their claim on terms of a K btwn the bank and the company
Issue : Can they get damages for breach of GF in K to which they were third parties?
Held : Yes
Ratio :
It is undisputed that a K-ing party may also incur delictual liability twds a third party who is outside the
contractual sphere.
Mere inexecution of a contractual obligation does not constitue a “fault” but can be one of the juridicial facts
which establish an ex-K fault. There must still be a legal obligation, apart from the K, between the contracting
party and the third party claiming delictual liability. [SH : I think that L’HD is syaing that the breach is not
enough to ground ex-K liability  need to go to 1053 and decide if there is fault, damages, causation]
Fault : [L’HD seems to be doing a duty of care analysis here – this is wrong  look to Jutras]. Here, given the
bank’s knowledge of the imiment sale, it had a duty to act in a prudent and diligent manner in order to avoid
prejudice to the shareholders. This duty doesn’t arise from the K but from the law (art. 1053). It wasn’t prudent
and diligent – didn’t give reasonable delay. It would be ovbious to anyone in the circumstances that the
consequences of acting in this way would bring a drastic reduction in the value of the shares.
Damage : 1607 CCQ – the creditor is entitled to damages for bodily, moral or material injury which is an
immediate and direct consequence of the debtor’s default. In this case, teh potential sale value of the shares was
damaged. The SHs were direct victims of the loss. The harm flowing from the imminent sale of the shares
resulted in direct damage to the SHs, besides and independently of any damage suffered by the co as result of its
contractual relationship [SH : Direct = independent of damage suffered by party to K]
Causation (SH : 1613?) : There was a direct relationship btwn the fault and the damge; the actions of the bank
directly caused the respondents’ loss.
Rule :
[Principle of relativity in 1440 is not a defense to ex-K liability towards third parties where such liability arises out
of K-ual relationship]. K-ing party may incur extra-contractual (Art. 1457) liability twds a third party who is outside
the contractual sphere. Breach doesn’t constitue « fault » but can be one of the juridical facts which establish such
fault.
D. Jutras, « Le Tiers Trompe : A Propos de l’affaire Bail Ltee »
D. Jutras, « Le Tiers Trompe : A Propos de l’affaire Bail Ltee », page 198
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When the damage to a third is generated by the execution of a K between two others we are looking at he
relative effect of contract.
Ordinarily only co-contractants can claim damages resulting form the execution of a K.
The third party can use two strategies to circumvent this problem:
(A) He can pretend that he is not really a third party (He must attempt to enlarge the contractual circle)
(B) He can claim in delict (Moving form the contractual circle to the triangle.)
Enlarging the contractual circle:
Civil law recognizes “false third parties” – those who can directly claim an action in K from a K that they are
not signatory to but that they benefit from (CcQ 1440-1450)
The most well-known example is that of the guarantee of the original vendor to the ultimate owner (GM v.
Kravitz (1979)). Sometimes this is explained as the transmission of an accessory right of a thing (today 1442
CcQ).
1442 cannot be used for a direct action in K for a subcontractor as in Bail as there was no transmission of
property.
French law has gone even further and speaks of groups of contracts. Canadian courts do not recognize this.
This concept has recently been rejected in France. Even if this concept were accepted it does not help all third
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parties – only those linked by a chain of Ks (eg. subcontractor-contractor-construction co.)
It is useful for the third to have recourse in quasi-delict (not K) as there is no need to know under which K (in a
chain of Ks) he is suing and hence exclusion clauses play no role.
The fault is therefore outside the circle of contracts and is considered independently.
The contractual relationship (master-contractor) and the extra-contractual relationship (master- subcontractor)
are distinct and the image of a triangle not a circle is more appropriate.
The Triangle
- The third party can invoke the existence of the contract and its in-execution as juridical facts.
- The question that poses itself is: Is the third party actually making a claim in contract or is it a quasi-delict
related to the inexecution of the K?
1.
-
-
2.
-
-
3.
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The contract as starting point:
Contractual rights and legal rights are not the same.
Unless we are ready to affirm that in concluding a K we are contracting with the world, the right that is the
basis for the claim of the third party does not arise from a contractual right. The SCC has rejected the
notion that the right of a third is a right in contract in both Houle and Bail. All contractual faults are not
necessarily delicts or quasi-delicts.
A fault in the execution of a K does not result in a delict. For this to be true there would need to be general
legal obligation to execute every obligation under a contract with diligence – such is not the case.
When the execution of a K generates benefits for a third, can the third party claim that he has a legal right to its
execution? – there is no answer here because if a contract is stipulated to benefit a third, the third is not really
outside of the contract and his recourse is contractual.
The Exclusion of the K from the analysis
The code creates some autonomous obligations that exist with or without the existence of a contract such as the
duty to take care. Some of these duties are based on firm jurisprudence such as the duty of a manufacturer to
consider the potential users of the product that he puts on the market.
Such autonomous obligations circumvent the relative effect of contract.
Mostly we must take recourse back to the general duty of care to act as a reasonable person. Often the
defendant and the third party are only in contact because of the existence of the K and to exclude the K
from the analysis makes us lose sight of their respective obligations.
The existence of the K is necessary therefore as a context when considering the general duty of care of 1457.
The contract as a factual context-the SC approach:
The question that is asked by the SCC is whether the party to the contract acted towards the third party as a
reasonable person placed in the same circumstances would act.
The contract is seen simply as a context in which the norm of reasonable conduct must be assessed.
Parties to a contract have the obligation to conduct themselves in a reasonable manner with respect to third
parties even if these relations are only a result of the contract itself.
This obligation is a result of the existence of the contract but is distinct from the contractual obligations
themselves.
One must separate the contractual obligations that exist due to the contract itself from the legal obligations that
exist as a result of the existence of the contract.
In Bail this point was confused somewhat when the court stated that : all delictual fault that the Bank could hold
against Hydro Q was founded on the contractual obligations between Bail and Hydro Q.
In fact the obligation to inform could only have been extra-contractual if it was autonomous from the K.
The Court should have asked whether the divulging of info to the contractor constituted a satisfactory execution
of the legal obligation of Hydro Q to inform the third party (subcontractor).
The case (Bail) still provides the solution that the norms of conduct impose on the co-contractants the obligation
to take the legitimate rights of the third party into account in the execution of their contract.
As a general result the contracting parties must conduct themselves as reasonable contractants.
Because in civil law duty of care and standard of care are ONE, most difficult questions (such as victimes par
ricohet, remoteness etc.) are seen as issues of causation.
There exists only ONE rule to behave as a reasonable person with respect to everyone and it is applicable
in the context of the reasonable contractant.
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However:
Type of loss and how the extra-contractual right is enforced:
- In extra-contractual obligations if the defendant committed a fault it is not important whether the damage is
bodily, moral or material in nature (1457) BUT….it is the case that when a contractant defaults in his execution
of a contract and the result is a pure economic loss that the defaulting contractant invokes the relative effect of
contract (privity) and therefore the absence of a legal obligation towards the third party.
Type of act (=omission)and how the extracontractual right is enforced:
- Authors and judges generally affirm that acts and omissions should be treated on the same footing in civil
responsibility. The third party however does not appear able to complain of the inexecution of an obligation
stipulated for his benefit. Omission therefore appears only to be remediable when it is in its pure form not when
it is in the context of a third party to a contract.
Reliance:
- In Bail the subcontractor was incited to rely on HydroQ’s assessment of the soil. In Houle the length of the
relationship between the Bank and Houle (50 years) incited a similar reliance.
- It’s this legitimate reliance which founds the basis for the obligations of the contractant to the third party. This
being said – it is not always legitimate to place reliance on a third party. At times the existence of an exclusion
clause in the K itself – that is known to the third party- renders such reliance illegitimate. It is necessary to
search through the conduct of the contractant to find that he incited the third to rely. There is an element of
unilateral engagement here. Such unilateral K’s had fallen out of favor in civil law (Kim: ???they did? I thought
in civil law a promise + reliance = obligation and in common law promise+reliance =/= obligation??) Must we
resurrect unilateral promises in examining the behaviour of a contractant who is legitimizing the reliance of a
third?
Considering these three factors (problems with economic loss, omissions and reliance) it may well be easier to
conclude that there is a legal obligation towards a third party in the event of a chain of contracts (subcontractorcontractor-master). This brings us back to the idea of a circle of contracts.
Caisse Populaire v. Michaud
Caisse Populaire de Charlesbourg v. Leandre Michaud, [1990] C.A., page 203
Facts:
Michaud = accounting company
LeBel asks his brother (who works at Michaud) to prepare a financial statement for him based on the documents
that he provides. He states that the financial statement will be used for APCHQ to obtain a construction permit
to build a house.
LeBel’s brother prepares a statement and attaches a statement of verification that alleges that the figures were
checked by taking a “sondage” of the documents.
On the strength of this financial statement LeBel gets various loans from Caisse Pop. Some of the loans are
guaranteed by 4 immoveable properties that he owns whereas others are not. LeBel declared bankruptcy and
1.4M$ of debt that was not in the financial statement (contingent debts in the form of personal guarantees for
corporations in which he held an interest) was revealed.
Caisse Pop is pursuing LeBel and Michaud by claiming that the unsecured debts were obtained on the strength
of the false financial statements. (Note: If fraud on the part of LeBel can be shown then by art 178(1)(e) of the
Loi sur la faillite his bankruptcy does not excuse these debts and they persist after the bankruptcy)
Held: Michaud not responsible (in delict). LeBel responsible for the unsecured debts due Caisse Pop despite his
bankruptcy due to Loi sur la Faillite.
Ratio:
[Baudouin]:
There is no contractual link between Caisse Pop and Michaud (accountants), only between LeBel and Michaud
so the claim must be pursued in delict (1053) not in contract.
Le Bel
LeBel made false misrepresentations regarding his financial situation and as a result of art 178(1)(e) of the Loi
sur la faillite, his bankruptcy does not excuse the debts obtained on the strength of these misrepresentations
(they persist after the bankruptcy). Proof reveals LeBel’s bad faith making him personally responsible for these
debts (not those secured on the strength of the guarantee of the immoveable).
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Michaud (accountants)
To find civil responsibility of Michaud, the three elements of civil responsibility must be shown: fault, damage,
and a causal link between them. (The responsibility can only be delictual because there is no K link between the
accountants and Caisse Pop). I reject the argument that the statement was only prepared for another party ( the
APCHQ) and hence all other use of the document could not entrain the civil responsibility of Michaud. When
an accounting firm prepares financial statements it must accept the consequences of the representations it made
– independent of the use of the document.
Fault: The accountant should have and could have known of the contingent debt that LeBel owed because he
was aware that LeBel had interests in several companies and that such interests do not normally come w/o a
guarantee of some sort.. A reasonable accountant would have pushed his investigation further. He did not and
was negligent in not doing so and then attaching a statement of verification that was ambiguous as to whether
the debt had been adequately checked. (Such ambiguity is not permissable when trying to claim that the
statement was NOT verified.)
Damages: Debts that were secured using the 4 immoveables have been paid in kind with the immoveables – no
damages. Only unsecured debts (30k$) can be seen as damage.
Causation: Chain of causation was broken (2 possible ways): (1) The director of credit services of Caisse Pop
testified that the existence of the contingent debts would not necessarily have lead him to deny the loans. The
errors of Michaud were therefore not determinative in the lending of the $ to LeBel. No causation – no
responsibility. (2) Bank itself had the expertise and could have easily revealed the errors in the financial
statement (also did not ask questions)
POINT: Court uses principle of causation to limit radius of liability. Clear that scope of liability cannot be limited
using fault analysis.
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IV – UNJUST ENRICHMENT
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Until 1994, UJE had no explicit reference point. CCLC was completely silent but the doctrine arose out of the
court’s decision in Viger (another example of a jurisprudentially created source of obligations which
subsequently receives sanction in the Code)
Civil Code Provisions
A person who is enriched at the expense of another shall, to the extent of his enrichment,
1493 CCQ
indemnify the other for his correlative impoverishment, if there is no justification for the
enrichment or the impoverishment.
E or I is justified where it results from the performance of an obligation, from the failure of the
1494 CCQ
person impoverished to exercise a right of which he may avail himself or could have availed
himself against the person enriched, or from an act performed by the person impoverished for
his personal and exclusive interest or at his own risk and peril, or with a constant liberal
intention.
[Possible justifications  a K, failure to exercise right which he may have or could have had
(principle of subsidiarity), act performed with donative intent or at own risk and peril]
An indemnity is due only if the enrichment continues to exist on the day of the demand
1495 CCQ
Both the value of the E and that of the I are assessed on the day of the demand; however, where
the circumstances indicate the BF of the person enriched, the enrichment may be assessed at the
time the person was enriched.
[indemnity only due if enrichment exists on day of demand; where person enriched was in BF
(SH: transferred enrichment somewhere else on purpose), enrichment may be assessed at the
time the person was enriched]
Where the person enriched disposes of his enrichment gratuitously with no intention of
1496 CCQ
defrauding the person impoverished, the action of the person impoverished may be taken against
the third person beneficiary if the latter could have known of the impoverishment.
UJE is ubiquitous: applies to a myriad of situations (family, common law spouses, commercial to personal setting)
What does UJE seek to do? Readjust patrimonies of parties where one party is UNJUSTIFIABLY ENRICHED.
Does not award expectation interest (profit) or reliance interest (how much you were ‘out’), but restitution interests
(CML term – lesser of I and E)
Conditions for UJE
1) An Enrichment (1493 CCQ)  Was patrimony increased?
Must exist on day of action (1495 CCQ)
Can be positive enrichment (e.g. added value to land) or loss that is avoided/expense not expended (e.g.
employee works over time w/o comp = employer doesn’t have to hire another person)
Loungmarath: Enrichment made impossible by public order legislation (RAMQ pays docs; hospital doesn’t).
Fact that doc not paid didn’t make hospital one cent richer b/c no ob to pay
2) An Impoverishment (1493 CCQ)  Was patrimony decreased?
Can be positive (spending money or resources) or negative (doing something and not getting paid for it)
Issue: is being deprived of a gift an impoverishment?
3) Correlation btwn enrichment and impoverishment (1493 CCQ)
Can be direct correlation (Trottier – work of son enriched father’s farm)
Can be indirect correlation (Viger: “The theory of UJE doesn’t require that the enrichment pass directly
from the patrimony of the impoverished to that of the enriched party.” In that case, there is correlation
only b/c of the indirect line connecting to the third party town)
Can be NO correlation (Loungmarath – correlation was btwn RAMQ and ptf; example of woman working
overtime for co where KL spouse worked)
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Correlation explains interest protected – restitution interest. Only readjust patrimonies to extent that E and I
correlate = award the lesser of E or I
Giguere
never paid
Viger (benefited)
K1
City K2
4) Absence of Justification (established 1493 CCQ; defined 1494 CCQ)
Justification for enrichment = no remedy
Possible justifications (1494 CCQ)  valid K, legal obligation, natural obligation (Re Ross), legislation
(Loungmarath), fact that impoverished person acted in his own interest or at his own risk, act prompted by
“intention liberale”
One difficult area  intention liberale (donative intent) is a justification that will bar action [e.g. Jukier drives
her old mother to the doctor every week].
o Doing things w/ donative intent or acting at your own risk and peril vs. doing things w/ hope of
recompense – the latter isn’t a bar to an action  court must draw line based on evidence
o Trottier: If you interpret justifications of intention liberale/acting at own risk and peril too
restrictively, UJE will never operate w/in family context. Thus, court must look at perspective of
impoverished party AND enriched party  What did enriched party say or suggest? [Did father
show by his actions that he felt any obligation to compensate his son?]
5)
-
Absence of evasion of the law (another justification – 1494 CCQ)
UJE action cannot be substituted for failing to exercise a right you already have (but neglected)
E.g. cannot sue in UJE on a K that has prescribed (this would be “evading the law”)
This is just another justification: E and I justified by failure of Imped party to take action in time
E.g. Loungmarath  Doc could have gone to arbitration with Regie but that right was prescribed, and this
barred his claim
6)
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Absence of any other remedy (part of justification – 1494 CCQ)
Sometimes overlaps with 5)
Can only use UJE where there is no other remedy. UJE is a subsidiary remedy.
Issue: How does court determine whether there is no other remedy?
o Viger  court doesn’t have to calculate the success of other possible actions but a party will be
barred from taking a claim where another remedy is “apparent”
o Loungmarath (slightly different)  Judge appears to make his own assessment as to the potential
success of the arbitration against RAMQ (even though right already prescribed)
o SH: I would adopt approach in Viger – court in Loung didn’t have to speak to subsidiarity b/c
right of arbitration had prescribed. Also, difficult to determine chance of success – would have to
try case w/in a case.
**Some authors criticize Beetz’s decision in Viger  G had an action against the city (1457 CCQ – city didn’t
go through the proper procedure). G disposed of this action and this should be bar to action in UJE
-
Remedy = lesser of the impoverishment or enrichment
Basis for this remedy  only adjust patrimonies to extent that E and I correlate
The Issue of Fault
Fault of impoverished party is a justification for UJE and blocks the action [what is the source for this?]
Lecene Marenaud: She questions whether fault should be part of the inquiry. It can be very harsh on the
impoverished party. Isn’t UJE supposed to be objective, non-judgmental, non-fault-based remedy that simply
restores the equilibrium btwn the parties’ patrimonies? Fault is inconsistent with such an objective.
Fault in the cases:
o Viger: C.S. held that G’s misfortune resulted from his own fault (he entered into a null K).
S.C.C. doesn’t agree  the K is not “intrinsically null”(i.e. not illegal, just null for want of
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formalities). Real reason why G couldn’t be paid is b/c agreement btwn V and town stipulating
gratuity in favour of V was illegal and resulted in the E and I – G had nothing to do with this.
Jukier: intrinsically null = no fault  this is problematic. 1416: If K doesn’t meet conditions of
formation, it is null (period).
Jukier: if courts are looking at fault, why don’t they look equally at the fault of the enriched
party? Viger wasn’t at fault, but the court doesn’t seem to care.
SH: Why wasn’t the city enriched in Viger (it no longer had to pay Giguere – an expense that
doesn’t need to be expended?)
How is the correlation indirect?
If G-Town K was valid, would there be a claim?
If V-Town K was valid, would there be a claim?
Court seems to say that the nullity of the V-Town K is the real cause of the UJE (SH: but what if
it was valid but K btwn G and Town was null?) – would he still go after V or after the town?
Viger v. Giguere Inc.
Cie Immobiliere v. L. Giguere Inc., [1977] S.C.C., page 207
Facts:
Viger is a wholly-owned subsidiary of the Cooperative
Cooperative planned to build a dairy processing plant
Municipalities of P1 and P2 both wanted the Cooperative to locate the plant in their territory
Cooperative decided on P2 mostly b/c P2 undertook an obligation to sell Viger leveled and improved land for
the price of vacant unimproved land (i.e. undertook to level it) [Municipality bought lots, leveled them, and sold
them to Viger for price of unleveled lots]
P2 awarded the leveling K to Giguere
P2 sold Viger land that it bought from a citizen
Agreement to undertake leveling was null b/c violated Municipal Aid Prohibition Act. Leveling K btwn
Giguere and municipality was also null b/c violated Municipal Works Act. Giguere had already done all the
leveling work. Municipality asked Viger to pay for it but it refused.
Issue: Was the C.A. correct in concluding that Viger was unjustly enriched at Giguere’s expense?
Held: Yes
Ratio:
There is a theory of UJE in QC law
It is undeniably incorporated into the law of QC
Where does it come from?  Roman law, French law, case law in QC has implicitly but effectively applied it.
Legislative support for the theory in arts. 1041, 1042 C.C. or in arts. 1057 and 2613 as well as from numerous
provisions of the C.C. which are only special applications of it. “The Civil Code does not contain the whole
of civil law. It is based on principles that are not all expressed there, which it is up to case law and
doctrine to develop”
Conditions:
1) An enrichment
2) An impoverishment
3) A correlation btwn the enrichment and the impoverishment
4) Absence of justification
5) Absence of evasion of the law
6) Absence of any other remedy
When all these conditions are met, remedy = lesser of impoverishment or enrichment
Application of the theory:
Enrichment: Viger was enriched since it obtained for the price of a vacant lot a lot improved to its
specifications  thus, enriched by the value of the work necessary to improve the lot. [Note that the court
seems to suggest that Viger might not have been enriched if he had not had title to the leveled lands – b/c they
would not be in his patrimony and therefore his patrimony couldn’t have increased]
Impoverishment: Giguere’s impoverishment is equally certain. His patrimony was reduced
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Correlation: There is correlation. It was the same work, carried out by Giguere, that caused both events.
Justification: V says there is justification in the Ks by which he acquired the lots  These Ks, concluded
directly with the owners of the lots, gave Viger title to the lots in their existing (improved) condition. Court
says that it is true that when the enrichment occurs as the result of a K concluded btwn the enriched party and a
third party, this K is justification for enrichment. BUT…the Ks by which V acquired the lots from their owners
do not constitute a justification for the enrichment, even though they give a valid title to the lots and the
improvements that G made to them: (1) these Ks do not have the cost of the improvements as their object; (2)
they are not the real cause of V’s enrichment and G’s improverishment. The cause of the E and I is the promise
of aid made by the municipality to V, a promise which is void (illegal actually). Must distinguish btwn the
transfer of the lots to V (including the improvements) and the obligation to pay the cost of these improvements
b/c the parties expressly intended to treat these two things separately. It is unjust and unlawful that a third party
should have to bear the cost of an illegality of which it is innocent. It is unjust and unlawful that a third party
should have to bear the cost of an illegality of which it is innocent.
Absence of other remedies: There may be another remedy available but court doesn’t think it needs to
calculate the possibility of success of an action by the impoverished party against a party other than the enriched
party. “It would at least be necessary, for it to be so, that this other remedy be more apparent than it is in this
case.”
RULE: Adopted theory of UJE in QC law (based it on Roman and French law and a pile of CCLC provisions) now
codified in Art. 1493 CCQ) and laid out the conditions for it. Civil law: “The Code does not contain the whole of
the Civil law”. Direct correlation not necessary; indirect is sufficient. Subsidiary remedy: don’t’ enter into
analysis of chances of success; only bar action where another remedy is apparent. Fault: entering into null K
doesn’t constitute fault of impoverished party where that K is only “intrinsically null”.
[I don’t get the justification part – did he get the land directly from Jam and Marcoux or did he get it from the City
which got it from Jam and Marcoux?]
Loungnarath v. Centre Hospitalier des Laurentides
Loungnarath v. Centre Hospitalier des Laurentides, [1996] C.A., page 217
Facts:
- Aplt is surgeon at Rspdt hospital
- The parties signed a K for services which provided for a certain mode of remuneration. Under that K, the aplt
rendered services valuing $10,730.
- In Oct 1988, the aplt learned that his K had not been countersigned by the minister, and thus that it was not
valid.
- Aplt submitted his invoices to RAMQ, but received a letter saying that they would not be paid b/c the K btwn
aplt and the hospital was not properly counter-signed
- Aplt took action in UJE.
- Trial judge: Loi sur l’assurance-maladie provides that the remuneration of doctors is the responsibility of
RAMQ and not hospitals, and RAMQ [the patients] is the beneficiary of the services rendered. Thus, the
enrichment of the hospital was justified legislatively.
Issue:
Does aplt have a claim in UJE? (i.e. does his claim fulfill all the conditions of a UJE action?)
Held:
No
Reasoning:
- Cites Viger wrt the conditions of an action in UJE
- Impoverishment – rspdt concedes that the aplt was impoverished b/c he rendered services w/o being paid
- Enrichment
o Rspdts not enriched by the performance of the services without payment b/c the relevant
legislation provides that it is not their responsibility to pay doctors (i.e. hospital not better off b/c
wasn’t obligated to pay in the first place)
o If anyone is enriched by the non-payment to the aplt, it is RAMQ
o An enrichment cannot be a valid part of a UJE action if that enrichment is impossible in law
o Only enrichment that aplt pleaded in his action was that resulting from non-payment for services
rendered. He did not include in his claim that enrichment which resulted from the fact that the
hospital did not have to find another surgeon or transfer patients to other hospitals.
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Absence of Justification
o Fact that rspdts were enriched by the non-payment to the aplt is justified because the law which
provides that RAMQ and not the hospitals pay the doctors is of public order. This law permits the
rspdts to receive free services from the aplt because it provides that the latter will be remunerated by
RAMQ.
- Absence of Other Recourse
o UJE action is of a subsidiary character; it can be admitted only in the absence of all other recourses;
it must be refused when the impoverished disposed of another recourse. In this case, aplt disposed
of recourse to arbitration, which has prescribed.
o Aplt claimed that it couldn’t have had recourse to arbitration given that the K was null; he claimed
that his chances of success were useless since RAMQ was visibly opposed (?). Judge – this belief is
unfounded. [Judge seems to say that the K was valid…at some point and that the aplt could have
asked questions of RAMQ and the hospital. He was not well informed. He could have had recourse
to arbitration had he been informed and taken the necessary steps. He cannot today correct his error
by instituting an action in UJE.] [Judge seems to enter into analysis of what success of action would
be]
[Fish]:
- Rspdts derived a quantifiable benefit by the fact that aplt provided his services BUT that is not the enrichment
invoked by the aplt – he claimed that rspdts were enriched b/c he received no payment for the services.
- Rspdts had no legal right or any legal or moral obligation to pay for services in default of payment by Regie.
Also, RAMQ’s refusal to pay impoverished the aplt but didn’t enrich the aplt as it was not one cent richer as a
result.
[LeBel]:
- The rspdts were ENRICHED in the meaning given to those terms by jurisprudence (Viger)
- Concept of enrichment is not limited to immediately quantifiable monetary gains but extends to diverse
advantages which benefit a party. That is the situation here – the Dr. assured his availability for several months
and permitted the hospitals to fulfill their obligations to their clients. This was enrichment but the other
conditions were not met, and the action must thus fail.
Comments:
- Jukier: ultimate basis of decision is that there was another action against the RAMQ (i.e. arbitration). Unlike
in Viger, the judge chooses to assess what the chances of success might be.
- Re. enrichment: even if hospital was enriched b/c didn’t have to spend time hiring new docs, this enrichment
has little monetary value.
Trottier v. Trottier
Trottier v. Trottier, [1992] C.A., page 223
Facts:
- A kid dropped out of school voluntarily to work on the family farm – he did it for room and board.
- His father sold the farm to his youngest child and the dropout was out on his ass – after 14 years.
- The dropout is seeking the amount he would have been paid at the regular farm worker’s rate for his labour $160 000 – from his father’s succession.
- The CA found that 5/6 of the conditions were present but there was a justification for the kid’s impoverishment
– his hope to be rewarded or advantaged.
Issue:
Did the trial judge err in looking at whether the impoverishment was justified?
Held: Yes
Ratio (Nichol):
- Beetz in Viger looked at whether the enrichment was justified – that is what the trial judge should have looked
at.
- If we look at absence of justification for impoverishments, it will be very difficult for claimants to succeed. If a
service was done for free out of donative intent, it justifies the impoverishment. If the service was done in the
hope of getting paid without an express promise (like gambling), the impoverishment is justified.
- In this case, since the kid was not motivated by donative intent, the enrichment was not justified.
- Since all of the other UE factors are present, the kid’s claim succeeds.
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RULE: If you interpret justifications of intention liberale/acting at own risk and peril too restrictively, UJE will
never operate w/in family context. Thus, court must look at perspective of impoverished party AND enriched party
 What did enriched party say or suggest? [Did father show by his actions that he felt any obligation to
compensate his son?]
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V – REMEDIES
Assessment of K-ual Damages: Specific Performance and Performance by
Equivalence
Civil Code Provisions
Where the debtor fails to perform his obligation, the creditor may, without prejudice to his right
1590 CCQ
to the performance of the obligation in whole or in part by equivalence,
1) force specific performance of the obligation
2) ….
A creditor may, in cases which admit of it, demand that the debtor be forced to make specific
1601 CCQ
performance of the obligation.
Origins and evolution of SP
- The injunction (i.e. the remedy which implements SP) was imported from KL
- KL – restrictive treatment of SP  awarded only where damages are not adequate remedy
- Three possible effects when foreign legal systems are transplanted
1) Rejection – reject b/c foreign (e.g. Art. 1040 CCLC in Roynat)
2) Acceptance – incorporate lock-stock-and-barrel and apply principles mutatis mutandis
3) Integration and Harmonization – integrate into civilian way of thinking; search for specifically civilian
justification and approach
- Initial approach to SP by QC Courts  Acceptance (restrictive approach like KL)
- Jukier: new trend emerged after Proprietes Cite Concordia (less restrictive, increased harmonization with
civilian mentality and methodology)
- Varnet Software Corp [1994]: It is not because the injunction is historically a KL procedural remedy that the
restrictive approach of KL should also be followed
SP should be a major remedy in the civil law  CCQ, civil law K-ual theory
- Art. 1590: Creditor is given the RIGHT to demand SP (KL – RIGHT is to damages); not framed as secondary
or discretionary remedy – listed first
- SP is consistent with underlying theory of K-ual obligations – will theory, consensualism and respect for
“parole donnee” are at the root of the civil law. The ultimate way to uphold the will of the parties is to insist on
the performance of the obligation. [Jukier, cited in GG]
- [Creditor vs. Debtor: civil law looks at remedy issue through eyes of the creditor; creditor has choice as to how
to enforce will. CML – looks from perspective of debtor]
- [Also a better remedy – get injunction right away; dmgs take time]
Should be a wide ambit for SP, but remedy is not without limitations
- Art. 1601: Creditor can choose to demand SP in “cases which admit of it”
- What are “cases” which admit of it”?  3 issues:
1) Nemo Praecise, Obligation to do vs. not to do
2) Problems of Supervision
3) Hardship
- These are three reasons why KL courts will decline to order SP even where damages are not an adequate
remedy. What is the approach of QC courts?
Nemo Praecise
- You cannot order someone to do something if this would require physical force
- Traditional approach to NP rule: courts will not enforce obligations TO DO but will enforce obligations NOT
TO DO. The former violates the NP rule
- Jukier thinks that this dichotomy is artificial for two reasons: (1) there is just as much liberty being infringed in
ordering someone not to do something as in ordering someone to do something; (2) Almost any obligation can
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be couched in both positive and negative terms. Judge in Aubrais agrees: “…le Tribunal note le caractere
artificiel…de la distinction…Dans les deux cas, la liberte de la personne est forcee.”
The NP rule is also problematic where it is applied to corporations. Courts have recognized this.
o Golden Griddle: NP rule doesn’t extend to an order which compels the performance of an
obligation by a moral person “who by their magnitude transcend the will of one person”. A
distinction must be made btwn Ks for personal services and commercial Ks. The courts are
willing to grant an injunction to order a corporation to continue its business operations
o This is also enunciated in Proprietes and Aubrais
o Jukier: be careful not to make artificial distinction btwn corporate entity and individual –
sometimes the corp is just a front for individual activity (must pierce corp veil and view debtors as
individuals)
Supervision
- CML courts – worry about waste of court resources expended re-litigating issues of compliance with SP order.
Becomes specifically complicated where the ambit of the order is unclear  e.g. “stay open”. Argument is that
the debtor will perform in a “half-ass” way. The problem is more pronounced in relational Ks (ongoing) than
discrete ones
- Courts in civil law have found a way around this
o Golden Griddle:
1) Problem of supervision is not a concern as long as court can frame the order with sufficient
precision
2) Reputation and self-interest: Argument that debtor will carry out order in a minimal way doesn’t
hold water where its reputation and prestige is at stake. [GG wouldn’t want to destroy the
reputation of its other restaurants]
Hardship
- Hardship argument is determinative in Argyll Stores  court will not allow creditor to get a windfall gain from
award of SP; though debtor has put himself in the situation, purpose of law is not to punish wrongdoing; cannot
be in the public interest for the courts to require someone to carry on business at a loss if there is a plausible
alternative [damages]
- Applying such an approach in the civil law is problematic b/c (1) civil law looks at remedy through eyes of
creditor (1590), not debtor; (2) loss that dft suffers is a result of a K he voluntarily entered into and chose to
breach.
- Golden Griddle: Though the dft will have to spend a lot of money to reopen the restaurant, this was a
consequence which was readily foreseeable at the time the lease was signed. “It is specious to suggest that
courts should refrain from enforcing Ks if the dft will lose money as a consequence.”
- GG suggests that will only consider hardship where third parties’ rights are adversely affected.
SP and Good Faith
- Must the right of the creditor to demand SP be exercised in GF? Might demanding SP might be an abuse of
right in circumstances where such a demand would cause undue hardship to the other party?
- Does it make a difference that the right being abused is a codal one and not a contractual one?
- Jukier cites case: we must read all of the civil law under the rubric of GF, and thus codal articles can be
exercised abusively
- Can therefore argue that right in Art. 1590 must be exercised reasonably and in GF
Jukier, “The Emergence of Specific Performance”
Rosalie Jukier, "The Emergence of Specific Performance as a Major Remedy in Quebec Law" (1987)
Introduction
CCLC Article 1065 says a creditor may demand specific performance (SP) "in cases which admit of it."
The 1897 CCP allowed prohibitive injunctions, to specifically enforce obligations NOT to do things, but there was
no procedural remedy to enforce a positive obligation to do something until 1965, when the new CCP introduced the
mandatory injunction in Article 751. The two cases involving the plaintiff Propriétés Cité Concordia (PCC)
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illuminated the breadth of the remedy of SP in cases of positive obligations and the meaning of the phrase "in
cases which admit of it."
Facts
In Feb 1997, PCC leased two premises in its La Cité complex to the Royal Bank. Both leases contained a
clause that said the Bank would stay open during normal business hours. The occupancy of the complex was lower
than expected, so the Bank wanted to reduce its hours. PCC petitioned for an injunction to order the Bank to stay
open 9-5 with minimum staff of three people. In the first case, in 1980, the Quebec Superior Court (QCSC)
dismissed this motion, saying there was a contractual breach but SP wasn't an appropriate remedy since to be
effective they would have to make the Bank offer lots of personnel and services, and this would take too much
supervision from the Court. This is a traditional approach for QC, but a new trend is emerging.
A. The Traditionally Restricted Ambit of SP
In theory, SP is the classic civil law remedy. It's the principal remedy in France, and in Quebec doctrine
says it's on par with damages, but in practise courts have applied it restrictively, especially where it involves an
obligation to DO something.
1. The Influence of the Common Law Approach to SP
QC judges have been inclined to view the CCP injunction as a remedy borrowed from the Common Law,
so they apply it restrictively the way Common Law courts do. Many QC decisions have adopted the Common
Law position that SP will not lie where damages are an effective remedy. Jukier says this judicial attitude
should have no place in QC because it challenges the theoretical availability of SP as an equal remedy in
Civil Law, and it challenges the principle that the creditor gets to choose his remedy. The judiciary is finally
acknowledging this contradiction, in Societe Coinamatic v. Armstrong (1984 QCCA) and Restaurant Jasmo v.
Drouin (1986 QCSC). There's a trend away from Common Law style application of SP, but recent jurisprudence
hasn't been uniform.
2. The Nemo Praecise Rule
There's a rule in Civil Law against forcing a person to do an act by physical violence or constraint, because
he'll only do a half-ass job anyway, and because it contravenes individual liberty. But where the constraint lies on
the debtor's property, instead of his person, the rule is not infringed. In France, SP is granted for all obligations
except artistic activities and personal services. The SCC said in Nault v. Canadian Consumer Co. (1981) that a
judgment can't order SP for a contract of sale of an uncertain or indeterminate thing. QC courts have said SP is only
appropriate where the debtor could get a third party to do the required act.
3. The Dichotomy Between the Enforcement of Obligations To Do and Obligations Not To Do
The judiciary has created this illogical and artificial dichotomy, because of the 1897 CCP and the nemo
praecise rule. Jukier says it's unjustifiable because the nemo rule should apply equally to obligations to do and not
to do, since both involve just as much personal action, and because it's often difficult to classify what's a positive
and what's a negative obligation, as evidenced by inconsistent case law.
4. Problems of Supervision
It's harder to supervise an order to DO something. In the Common Law, SP will usually be refused where
it would require a complex series of acts or the maintenance of an ongoing relationship. This played a large role in
the first PCC case, above. But recent Common Law authorities don't see supervision as such a big problem
anymore. Some say the real question is whether there is a sufficient definition of what has to be done to comply with
the court order. This liberal attitude is catching on in QC.
5. Civil Imprisonment
Doctrine argues against SP because failure to perform the SP order can lead to imprisonment for contempt
of court, and there should be no imprisonment for civil matters, since the 1965 CCP was enacted. Jukier says this is
bunk because the imprisonment IS for the contempt of court, which IS criminal, not for the failure to perform, which
is civil. And anyways that argument never stopped courts from granting prohibitive injunctions, so why should
mandatory injunctions be any different?
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B. Emerging Jurisprudential Trends
1. The PCC 2 Decisions
The second case was about that same operating clause; the Royal Bank wanted to close. But this time, the
QCSC and QCCA granted the mandatory injunction to keep it open, just one year after they had held the opposite.
The Bank made the following arguments:
(i)
The operations were of too personal a nature to be susceptible of SP;
(ii)
The Court couldn't force the Bank to incur a deficit;
(iii)
The Court couldn't supervise the proper execution of SP.
Hurtubise J. responded:
(i)
The Bank's a Corporation, so the nemo praecise rule is not infringed;
(ii)
The Court didn't really answer this, but Jukier thinks the argument's bunk because a DF shouldn't be
allowed to just fulfil its contractual obligations when they're profitable;
(iii)
The obligation to resume operations was sufficiently clear and precise.
2. The Effect of the Second PCC Decisions
Hurtubise J. spoke out definitively against the reliance by QC courts on the restrictive Common Law
position relating to SP. The judiciary had been ignoring the legislator's intent, in the 1965 CCP, by keeping the
restrictive approach.
CONCLUSION
Three factors have expanded the availability of SP:
(i)
Rejection of the Common Law attitude;
(ii)
Erosion of the distinction between obligations to do and not to do;
(iii)
Recognition that forcing SP on a corporate body doesn't infringe the nemo praecise rule.
Jukier hopes this trend will continue, because the creditor should get to choose his remedy, and SP will often be a
better remedy for the creditor, because damages can take a long time to come through, whereas an injunction can
have immediate results. Also, commercial parties just want to continue operations, not get compensation. Finally,
SP is better because it enforces the Autonomous Will of the Parties, which is supposed to be the foundation of the
Civil Law of contracts.
Construction Belcourt c. Golden Griddle Pancake House
Cie de Construction Belcourt Ltee c. Golden Griddle Pancake House Ltd., [1988] C.S., page 238
Facts:
- Dft, a restaurant franchisor, entered into lease with ptf, the owner of a shopping centre
- Lease contained a “continuous operation provision” which provided that the ptf was obliged to continue
(actively and diligently and to an appropriate standard) its business operation for the duration of the lease.
Penalty for breach of this provision was stipulated in the lease – permanent injunctive relief.
- Volume of business generated was insufficient so the dft closed its restaurant.
- Ptf sought permanent injunction to compel dft to reopen the restaurant and operate it in a complete and
continuous fashion as required under the lease.
- Dft sought cancellation of lease on grounds of misrep. Alternatively, he claimed that this is not a situation
which admits of a permanent injunction, b/c such a remedy would result in hardship for the dft without
commensurate benefit for the ptf
Issues:
1. is dft entitled to cancellation of lease on grounds of misrep?
2. Is this a situation “which admits of” specific performance?
Held: No. Yes.
Reasoning [Issue 2]:
- Injunction is an equitable remedy. Violation constitutes contempt of court
- A stipulation in an agreement by the debtor that creditor may obtain injunctive relief does not automatically
create a right to such a remedy BUT…
- Art. 1065 CCLC: provides creditor with right, at his option, to remedy of SP. This is subject to the
qualification that the situation must be one of the “cases which admit of it”. [Court cites doctrine which
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supports remedy of S.P. as rule, not exception. Jukier: if foundation of K-ual obligations is automony of the
will, then such will dictates that the obligations actually be performed]
Determination of whether situation is one which “admits of” S.P.
- Court must have regard to the nature of the act, the personality and capacity of the debtor and the enforceability
of the proposed order.
- NP rule – one cannot be compelled to act. This rule does not extend to an order which compels the
performance of an obligation by a corporation. A distinction must be made btwn Ks for personal services and
commercial Ks. The courts are willing to grant an injunction to order a corporation to continue its
business operations (must be continuous operation provision?)
- Hardship and personal consequences are irrelevant [But court then seems to contradict itself]
- Court must look at balance of hardship: A mandatory injunction may be submitted to the rule of “balance of
hardship” – applicable when the injunction is oppressive and unreasonable relative to the benefits that will
result from it. Hardship of dft is not a problem. Only hardship of third party. In this case, the issue of an
injunction will not adversely affect 3rd parties’ rights. Though the dft will have to spend a lot of money to
reopen the restaurant, this was a consequence which was readily foreseeable at the time the lease was signed.
“It is specious to suggest that courts should refrain from enforcing Ks if the dft will lose money as a
consequence.”
- Court must determine if order can be appropriately framed, Where the act or series of acts can be readily
defined and subsequently assessed, a court should not hesitate to issue the order. Q to ask: Could a court
offered appropriate evidence ascertain beyond a reasonable doubt if the terms of the order have been respected?
Court also rejects argument that GG will do a half-ass job – its prestige and self-interest is at stake and it will
not readily destroy the value of its trademark and franchises by operating a GG restaurant in a shoddy manner.
RULE: NP rule doesn’t extend to corporations. Hardship is irrelevant unless it is the hardship of a third party. Re.
supervision, court shouldn’t hesitate to issue order where series of acts can be readily defined and subsequently
assessed.
Cooperative Insurance v. Argyll Stores Ltd.
Co-operative Insurance v. Argyll Stores Ltd, [1997] H.L, (Common law), page 245
Facts:
- Ptfs owned shopping cetnre and granted dfts a 35-year lease to operate a supermarket
- The lease contained a covenant whereby the premises were to be kept open for retail trade during the usual
hours of business in the locality. The shop was the largest in the centre and the main attraction
- Dfts fell on hard times, and closed the store.
- Ptfs brought an action against them seeking SP of the covenant and/or damages
Issue:
Is ptf entitled to SP?
Held: No.
Reasoning:
- It is a settled and invariable practice of this court never to grant mandatory injunctions requiring persons to
carry on business.
- SP performance is an exceptional remedy. It is only awarded at the discretion of the judge, and the general
principle is that it will not be awarded where damages are an adequate remedy. The reasons which underlie the
established practice justify a refusal of SP even where damages are NOT an adequate remedy.
- Reasons for not ordering someone to carry on a business:
1) It would require constant supervision by the courts
2) Imprecision in the terms of the order – if the terms of the court’s order cannot be precisely drawn = lots of
wasteful litigation over compliance
3) Injustice which results when ptf is allowed to enrich himself at the dft’s expense (i.e. loss of dft which
results from performance > loss to ptf if K is breached)
- In this case, the dft’s obligation in the clause was not sufficiently precise to be capable of SP and the judge had
been entitled to exercise his discretion as he had done.
RULE: In KL, SP is a discretionary and exceptional remedy which will only be awarded where damages are an
adequate remedy. Even where damages are not an adequate remedy, judge will not order SP where to do so order a
person to carry on business.
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Aubrais v. Laval (Ville de)
Didier Aubrais c. Ville de Laval, [1996] C.S.
Facts: In May 1994, Aubrais applied to be a police officer. He passed the physical and psychiatric tests and got
hired [a promise to hire actually]. Six months later, the police force found out he had made a suicide attempt in
January 1994. They said this compromised the trust on which the promise of employment rested, so they fired him.
An interlocutory injunction allowed him to complete his training at the police institute.
Issues:
(i) Is his failure to tell them about the suicide attempt grounds for annulment of the contract?
(ii) Is SP an appropriate recourse in the circumstances?
Holding: (i) No. (ii) Yes.
Ratio (re: Issue 2): 1590 CCQ says the creditor gets to choose his remedy, but 1601 says SP is only applicable "in
cases which permit of it." In the traditional position, the creditor only gets damages where an obligation to do
something is involved, but there's reason to believe jurisprudence has changed this. The nemo praecise rule would
only obstruct SP where the personal participation of the debtor would imply a physical constraint against the
person. SP doesn't require a big personal intervention in the police force; they just have to give Aubrais the chance
to keep his job. Finally, SP is much more appropriate because it's the only way to completely repair the harm
Aubrais suffered because of the DF's breach of contract.
SH: court goes on about intuitu personae nature of obligations and Ks of employment There is
place to recognize the intituitu personae character of the contract to promise to hire signed by the
parties. The functions of police require a link of confidence btwn the employer and
employee…but court says that the size of the police force diminishes the intuitu personae
character of the promise to hire.
Loss of Chance
Civil Code Provisions
1457 CCQ
1458 CCQ
1607 CCQ
1611 CCQ
2804 CCQ
Every person has a duty to abide by the rule of conduct which lie upon him, according ot the
circumstances, usage or law, so as not to cause injury to another.
Where he fails in this duty, he is responsible for any injury he causes to another person and is
liable for the injury, whether it be bodily, moral or material in nature.
Every person has a duty to honour his contractual undertakings.
Where he fails in this duty, he is liable for any bodily, moral or material injury he causes to the
other contracting party and is liable to reparation for the injury.
The creditor is entitled to damages for bodily, moral or material injury which is an immediate
and direct consequence of the debtor’s fault.
The damages due to the creditor compensate for the amount of the loss he has sustained and the
profit of which he has been deprived.
Future injury which is certain and able to be assessed is taken into account in awarding
damages.
Evidence is sufficient if it renders the existence of a fact more probable than its non-existence,
unless the law requires more convincing proof.
[Proof of causation must be made on balance of probabilities – compare to France  certainty]
Medical cases  Must show on balance of probabilities (art. 2804) that doctor’s fault caused damage (1457, 1607).
Burden of proof is on the plaintiff. This creates difficulties: (1) where science cannot identify the origin of the
cause OR; (2) where there are several causes and there is controversy as to which is the real cause (L v. L – breast
cancer or the omission of the doctor to treat it)
Loss of chance as damage – classic loss of chance cases
- Cases in which chance (actual outcome) remains forever hypothetical
- E.g: A agrees to buy B a lottery ticket and A forgets.
- E.g.: Lawyer misses prescription period and client’s right to sue disappears. The lawyer’s fault destroyed the
chance to pursue the claim.
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E.g.: A agrees to drive B to a beauty pageant and gets in an accident. B loses her chance to win the beauty
contest.
France: the loss of chance is the damage. Where fault causes the lost chance, ptf can recover damages which
correspond to the probability of a favourable outcome.
Quebec: Gonthier suggests that the only true loss of chance case is the lottery ticket example. Fault of A
causes damage to B (the loss of a chance) and damages = (Total * odds of winning). Other “classic loss of
chance cases”  court determines, on a balance of probabilities, whether the chance would have materialized
but for the fault. E.g. 60% chance that, based on merits, the client would have won his case = client gets 100%
damages.
QC courts deal with “classic loss of chance cases” using ordinary principles of causation.
NEED FAULT, DAMAGE AND CAUSATION in all cases.
Loss of chance and causation – loss of chance in the medical context
- Chance has materialized; outcome is no longer hypothetical (e.g. loss, death, injury, sickness)
- QC: the “all or nothing” rule  where doctor’s fault is, on a balance of probabilities (50% + 1), the cause of
the damage, the ptf gets 100% damages (and we are not in a loss of chance situation)
- France: courts require causal certainty. Thus, where damages are not a certain result of the doctor’s omission,
the courts will apply a loss of chance analysis. Where the chance of recovery or survival is “real or serious”
(i.e. recovery more likely than death), the plaintiff will recover damages in relation to the chance itself (i.e.
damages will be partial).
o Not clear what exactly amounts to “real and serious” – 30% but not 1%?
- S.C.C. clearly rejected the application of a loss of chance analysis to medical responsibility in the civil law.
Primary reason: it undermines the principles of civil liability in QC civil law; cannot allow the ptf to bypass the
usual requirement of proving cause. Whatever the policy, we must work w/in the confines of the civil law.
[SH: more necessary in France b/c requirement of causal certainty is harsh]
Loss of chance – policy and legal arguments for and against
Argument: We ought to allow partial recovery against doctors who have made patient forego a treatment that may
have been beneficial, even where that fault was not the cause of the injury (on BOP)
1) The doctor did something wrong and should be punished
2) Inequality of scientific knowledge – daunting for ptf to bear burden of proof in complicated medical
scenarios. Partial compensation could mitigate against these rigors
3) Fairness to patient – partial compensation as a means to recognize that patient has suffered
4) Partial recovery accounts for the fact that statistical values don’t reflect the possibility of recovery of the
patient himself [Even if there is only a 1% chance of recovering from breast cancer, D might have been
within that 1%]
Counter-argument:
1) Doctors will start to practice “defensive medicine”
2) SH: Civil liability compensates for injury (i.e. from viewpoint of ptf) and not for fault. One cannot be
partially dead or partially sick.
3) Civil liability is not about punishment but about compensation. Besides, the market will punish the doctor
(he will lose his reputation) as will the professional order.
4) Practical result of admitting loss of chance is to elevate intensity of doc’s obligation, from one of means to
one of result [doctors who acted reasonably will be required to compensate]
5) Undermines cardinal principle of civil liability – in order to recover, fault must be the cause of the damage
o Khoury: “Loss of chance may denature the traditional requirements of causation and evidence
and even lead to a complete revolution in the rules of civil liability in two ways.” Allows judge to
bypass the causation requirement and afford partial compensation in cases in which causation is
not proven.
6) Not as necessary in QC where there is no requirement of causal certainty.
Example:
- A car negligently slams into the truck carrying your horse to the races. Purse is $10,000.
- 1 – Horse hurts leg, competes and loses  not LOC case b/c chance has materialized (in loss)  Award 100%
damages if can prove, on BOP, that crash caused loss.
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2- Horse never makes it to the race b/c of the crash  fault CAUSED loss of chance. QC courts – assess
probability that horse would have won – if >50%, award 100% damages; if <50%, award no damages. Fr
courts – award damages in proportion to probability of victory.
Laferriere v. Lawson
Laferriere v. Lawson, [1991] S.C.C., page 257
Facts:
- Rspdt is testamentary executor of D, who died of breast cancer
- D consulted aplt doctor about an abnormal lump in her breast
- Doc performed biopsy and removed the lump which was found to be cancerous but did not inform D of the
cancerous condition or arrange follow-up treatment.
- D’s health later deteriorated; she was diagnosed as having general cancer
- D brought an action against aplt and then died
- Trial judge dismissed action. C.A. found that aplt’s fault resulted in the loss of a real and serious chance to
benefit from proper medical care. [one judge – extent of damage is to be determined according to the likelihood
of success of proper medical care – i.e. partial compensation]
Issue: Can an action succeed even where it is not proven that the patient’s face would have been different absent
the doctor’s fault? [Is loss of chance admissible in cases of medical responsibility?]
Held: No
Ratio:
- Claim for anguish and frustration must be accepted – aplt’s fault was directly related to the unnecessary
psychological stress which D faced upon learning that she had gone four years without knowing of her
cancerous condition and w/o undergoing proper treatment.
- Loss of chance analysis recommended by the respondent is inappropriate, at least in cases where death or
sickness has already occurred. In such cases, classical principles of causation suffice, and further, are essential
in order for individual responsibility to attach
- [Reviews loss of chance in France and Belgium]
- [Reviews doctrine and case law from Quebec – classic cases and medical context]
Critical Analysis of Loss of Chance
- Classical applications where loss of chance is a type of damage or a method of evaluating damage:
o France and Belgium – consensus is that damages are recoverable when the lost chance is itself
considered the damage. Limits – chance must be “Real and serious (likely or probable) and the
probability of the chance being realized must be taken into account in quantifying the damages.
o Gonthier: some classic cases (e.g. lottery ticket) are more probability based than others (e.g.
chance of winning legal appeal or benefiting form support of a child). Latter cases: Fr and Bg –
judges focus on chance and compensate in accordance with dgr of probability. QC – judge will
focus on the actual result of the loss of chance (e.g. determine merits of a legal appeal and award
damages accordingly).
o Gonthier explains differences btwn France/Belgium and QC on the basis that courts of the former
require causal certainty (the only thing that is certain is the loss of chance; the contingent damage
is not). QC courts are satisfied with proof of causation on the BOP = loss of chance situations are
theoretically less troublesome in the QC context. Where only need to show causation on BOP, it
is not necessary to rely on the artificial notion of an intermediate damage called the “lost chance”.
The judge will attempt to assess the actual or final damage, i.e. the chance realized (if >50%
chance that it will occur = can get 100% damages for loss).
o The only true loss of chance situation in QC is the lottery ticket case – in that case, the
determination is totally statistical. The judge has not factual context in which to evaluate the
likely result other than the realm of pure statistical chance. It is open to the judge to evaluate the
damages according to the loss alone. Gonthier: “to transform this exceptional case into the
theoretical basis for recovery in all loss of chance situations would be unnecessarily abstract…”
- Loss of chance in the medical context:
o Lost chance can be analyzed in two ways:
o France and Belgium: the chance itself is considered and described as a chance of recovery or
survival. The chance must be “real and serious”, or chances where recovery or improvement is
more likely than death or illness. The damages are awarded in relation to the chance itself and
therefore only partial. Only appropriate in cases involving faults of omissions (faults of
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commission – look at actual damage). By focusing on the lost chance rather than the actual
damage which the chance represents, the judge is effectively permitted to translate his or her
doubts as to the causal link btwn the fault and the final damage into a reduced award for the
patient.
o Quebec: courts are more inclined to examine the damage which has already occurred, and to
consider whether that damage was caused by the doc’s fault or by other identifiable factors. If the
fault was causal (SH: contributing cause over 50%), then full damages are awarded.
o Gonthier favours the QC approach for 3 reasons:
1) no basis for treating acts and omissions differently
2) this type of analysis must be viewed w/ extreme caution in cases where there are serious doubts as to
the dft’s causal role in the face of other identifiable causal factors
3) medical context – damage has usually occurred (i.e. sickness or death); the chance is not suspended or
crystallized as is the case in the classical loss of chance cases. It can and should be analyzed by means
of the generally applicable rules regarding causation.
- Gonthier Qs the independent recognition of a lost chance in all but the exceptional classical cases (e.g. lottery
ticket). Medical context – rejects loss of chance analysis
- In cases where treatment would probably (though not certainly) have produced a positive result, the patient will
be able to recover under both of the methods (difference: partial damages according to probability vs. full
damages). Causation analysis: where treatment has 50% + 1 chance of cure = doctor is responsible and patient
recovers 100% [court doesn’t consider whether that person would have been within that probability]. Also must
remember that even where the omission to treat doesn’t cause the death or sickness, it might be a cause of lesser
damages (e.g. shortened life, greater pain)
RULE: The theory of loss of chance, at least as it is understood in France and Belgium, should not be introduced
into the civil law of Quebec in matters of medical responsibility. Loss of chance cases outside of the medical
context (e.g. prescribed right to sue, benefit of child support) are analyzed using regular principles of causation
(>50% chance of succeeding = full damages awarded). Only true loss of chance case is lottery ticket. Loss of
chance cannot be a substitute for causation, which must be proven.
Cour de cassation
Cour de cassation, 7 juin 1989, page 303
Facts: Patient had an operation; he got facial paralysis; he could have had a second treatment but the doc didn’t
advise him early enough. Patient sues surgeon for not informing her of the need for emergency surgery. Court of
appeal awards patient for loss of chance of recovery b/c timely intervention presented reasonable probability of
recovery. Following decision, patient’s condition worsens. Court of Appeal rejects her demand for more damages.
Issue: Can ptf obtain further damages b/c her actual injury has worsened?
Holding: Yes, increased damages possible because loss of chance linked to gravity of actual injury.
Note by J-P Courturier: Necessary link between the loss of chance and the final injury (‘real state’ of patient).
Loss of chance used whenever causal link cannot be proven. Even though lost chance and actual injury are
distinct, independent damages, loss of chance only has legal recourse due to actual injury (lost chance to avoid
injury). Thus, lost chance of recovery from medical condition is compensated according to fluctuations that
condition.
Jukier: French court didn’t go through analysis re whether she would have died anyway. She had some probability
of recovery = award partial damages in proportion. The patient has not fulfilled his ob in law of proving that the
doc’s omissions are what caused the outcome. Using loss of chance to avoid proof of causation.
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Assessment of Extra-Contractual Damages: Moral Damages
The Law in QC (1457, 1607, St-Ferdinand, Augustus)
1) Wrongdoers are liable to reparation for moral injury (1457 CCQ). Such moral damages can only be
recovered if they are an immediate and direct consequence of the debtor’s default (1607 CCQ)
2) Determine right to claim moral damages using objective (conceptual) approach (SF)
a. Injury = right to claim, regardless of ability to perceive or benefit
b. L’HD  consistent with civil law principles of civil liability – COMPENSATION (Jukier takes
issue: goal of comp is to restore, and cannot restore happiness to one who cannot perceive it; also
cannot speak of compensation and moral damages in the same breath – there is no medium of
exchange for happiness)
c. Departure from objective approach where heirs are claiming moral damages on behalf of person
who didn’t suffer before death (Augustus)
3) Evaluate quantum of moral damages using the three approaches (objective, subjective and functional) (SF).
Victim must be compensated in a personalized manner for his loss (SF) – consistent with Art. 1611 CCQ
a. 1611 CCQ: The damages due compensate for the amount of loss he has sustained
b. Reality in QC courts, as in CML courts – no functional analysis is done. Use cap as starting point
and compare ptf’s injury to worst case scenario. Sliding scale or comparative approach – this is
more consistent with an objective conceptual approach says Jukier.
c. Cannot exceed cap = $100,000 in 1978 dollars
What are moral damages?
- Extra-patrimonial loss. Include pain and suffering, loss of amenities, loss of enjoyment of life, harm to
reputation, disgraces and physical deformities, frustrations. Any psychological feelings that result from an
injury.
Conceptual Approach
- Ptf compensated for loss of valuable personal assets. Each body part has an objective value. Lose a foot = get
$x worth of moral damages; the “tariff system”
- Advantages:
o Consistency, predictability, fairness (people w/ same injuries get same $)
o Compatible with civil law system of civil liability. Goal and fn of the system is
COMPENSATION  dmgs awarded for the very fact that there IS an injury
o Allows an unaware ptf the right to claim damages
 SH: yes, but may get very little given that fn-al and subjective approaches are used
to evaluate quantum
- Criticisms:
o Jukier: incompatible with principle of compensation  goal of compensation is to restore
what has been lost. We cannot restore happiness or dignity to a person who cannot perceive
happiness or dignity. Do damages exist if they are not experienced? 1611: damages for loss
“he has sustained” not damages for “the amount of the loss”.
o It makes no sense to speak of moral damages and “compensation” in the same breath. Dickson in
Andrews recognized that compensation of moral damages is impossible and arbitrary; there is no
medium of exchange for happiness.
o Moral damages cannot be objectively obsessed – cannot consider the loss of a body part w/o
considering that person’s enjoyment of the body part. [SH: but this goes to criticizing ob
approach as means to evaluate dmgs and not as means to determining if action exists]
o Comodification and objectification of the human body
- Jukier suggests that the actual motivation for this approach is to prevent giving windfall to a wrongdoer who
committed the wrong against someone who can’t perceive (or to someone who put person in coma vs. just
making him paralyzed). Problem with this justification – looking at it through wrong lens (that of wrongdoer
and not of victim)
Subjective Approach
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Evaluate moral injury in terms of human happiness, etc. lost by THIS person
Advantages: compensating for damages that exist and are experienced
Criticisms: unaware victims cannot recover – this is harsh
Functional Approach
- Subjective and conceptual approaches both try to compensate  Dickson in Andrews recognized that
compensation of moral damages is not really possible and they cannot be properly evaluated. I.e. there is no
medium of exchange for happiness and there is no way to restore it. Stop trying to compensate.
- Fn-al approach = award money for solace. Give $ as means for victim to secure other pleasures and enjoyments
that may mitigate their unhappiness and emotional suffering and make their life more endurable. Is also a
subjective approach (in the sense that it personalizes damages)
- Advantages: doesn’t commercialize the value of the human being; takes into account the circumstances
- Disadvantages: unaware ptf cannot recover b/c has no capacity to appreciate substituted pleasures
- How to determine award: ptf brings evidence of what accommodations it can use and how much they cost.
- Cdn courts pay lip-service to functional approach but don’t go through above analysis  use cap as starting
point and compare.
SH: Even under a functional approach, the ptfs in SF could have recovered? They could not perceive their loss of
dignity but they certainly would be able to benefit from certain rudimentary pleasures (e.g. more food, etc.). We
said that unaware ptf cannot recover b/c he has no capacity to appreciate substituted pleasures. But what if he has
capacity to appreciate substitute pleasures but no capacity to feel the damage in the first place? (= no damage).
Why wouldn’t the ptfs in SF have been able to recover under a subjective approach? Court determines that they
experienced frustration.
Benedek, “NP Damages: Defined, Assessed and Capped”
Donna Benedek, Non-Pecuniary Damages: Defined, Assessed and Capped
What are NP or “moral damages”?
- Common law: NP loss is an intangible loss which is incommensurate with money, or lacks market value
o 3 subcategories of NP loss: pain and suffering; loss of amenities; loss of expectation of life
- Civil law:
o Moral damages: extrapatrimonial loss; an attack on one’s physical integrity which has no effect on
one’s patrimony, i.e. no negative impact on the person’s ability to work and produce gains and
profits.
o Include sufferance, harm or injury caused to one’s reputation and honor, disgraces and physical
deformities, suppression of pleasures and satisfactions of life, frustrations of all kinds.
o OBJECTIVE VS. SUBJECTIVE approach: much controversy existed as to which should be
adopted in the civil law.
o QC (Public Curator) v. St Ferdinand: (settled the controversy) Preference should be given to the
objective characterization of moral prejudice – the right to compensation for moral prejudice is not
conditional on the victim’s ability to profit or benefit from monetary compensation.
o Justifications for compensating expat prejudice:
 Compensation - It is better to allocate a sum of money than to provide no
compensation; provision of indemnification reflects the importance assigned to
physical integrity since, in our society, money is the measure of value.
 Corrective justice
The inherent difficulty in assessing NP damages
- NP or moral losses are difficult to assess  WHY?
o B/c complete restitution is impossible – dft cannot a restore a limb; pain and suffering cannot be
erased. Nor can these be easily valued in monetary terms.
- S.C. in Andrews: the evaluation of NP damages is more of a policy and philosophical exercise than a logical or
legal one. Consequently, the award must be fair and reasonable, but it must also be essentially ARBITRARY.
- 3 approaches used to justify NP damages and evaluate the loss  Conceptual, Personal and Functional
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Three Approaches to justifying and evaluating NP damages which have been used in the common law
1. Conceptual
o The ptf is compensated for the loss of valuable personal assets – e.g. freedom from pain and
suffering; damage-free body. Each asset has an objective value. A “tariff system” – a sum for each
part of the body and for the extent of damage to each part
o Unaware victims: same amt of compensation is awarded whether or not the ptf is unconscious.
o Criticism: relies on the assumption that each part of the body has an objective monetary value.
2. Personal
o The ptf is compensated for his actual personal unhappiness. Must assess in monetary terms the ptf’s
past, present and future loss of pleasure and happiness.
3. Functional  est in Andrews Trilogy
o The ptf is compensated according to how much money is required for reasonable solace for his
misfortune. Solace is taken to mean physical arrangements which can make his life more endurable.
Money is awarded b/c it will serve a useful function. Does not compensate what has been lost but
rather what can be used to provide solace for this loss. Victim must provide evidence of the purpose
which the award would serve
o Criticism: despite the adoption of this approach in theory, the concrete quantification in the trilogy
more closely resembles the conceptual view.
Are these approaches compatible with Civil Law?
- Conceptual approach is incompatible with QC civil law and has been unanimously rejected by doctrine and
jurisprudence – it results in the depersonalization of the process of evaluation, b/c no consideration is given to
the unique situation of the victim
- Functional Approach
o It carries with it certain burdens: cost of gathering evidence for cost of replacement; inequity for
some victims where award is reduced in proportion to the extent to which the injuries restrain the
possibility to replace pleasures with those lost, absence of award to unconscious victim (b/c fulfills
no function)
o No consensus amongst authors
 Compatible: Gardner, Jutras – supports a subjective approach to the evaluation of
NP dmgs
 Incompatible: Baudouin – inconsistent w/ the civil law tradition; NP dmgs in civil
law seek to objectively compensate a legitimate interest which has been harmed. A
functional approach would refuse to compensate where an award would not be
functional (e.g. coma victim)
o Jurisprudence  Hopital St. Ferdinand (L’HD for the SCC)
 Objective conception of the loss (and justification for the damages awards); other
approaches can be used jointly to evaluate damages
 L’HD: primary fn of the rules of civil liability is to compensate for prejudice. This
objective requires that there be compensation for the loss suffered or the opportunity
for profit lost b/c of the wrongful conduct, regardless of whether the victim is
capable of enjoying substitute pleasures. The victim’s condition or capacity to
perceive are, therefore, irrelevant in relation to the right to compensation for
moral prejudice.
 Use objective approach to determine if there is right to compensation BUT the
assessment of damage is done using the three approaches jointly – conceptual,
personal, functional.
- Article 1611 CCQ: (?)
Impact of the Approaches for the NP Awards of Unaware patients
- Common law: Under a strict application of the functional approach, an award for NP damages cannot
justifiably be given to an unaware ptf (b/c cannot make any functional use of it). However, in most cases courts
have given small NP damage awards for loss of amenities to unaware ptfs.
- QC Civil Law: the unaware ptf, in civil law ideology, can obtain an award for NP damages, b/c losses are to be
conceived objectively. Money will be given even if it cannot provide solace nor satisfaction.
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The Upper Limit on NP Damages
- Andrews: A cap of $100,000 (in 1978 dollars) should be applied in the case of NP damages in personal injury
cases
- Justifications for a cap:
o Extravagant awards will create an immense social burden
o NP damages is an area susceptible to excessive claims (b/c assessment is arbitrary, expressions of
sympathy for victim, desire to punish wrongdoer, ability of dft to pay damages)  U.S. – awards
for NP damages have climbed.
o Increase in extravagant awards does not concur with requirement of reasonableness, which is the
appropriate gage for all damages.
o Cost of high awards is carried by large portions of the public through liability insurance
o The victim has already been compensated for pecuniary loss.
o Cap is necessary to obtain the objectives of consistency, predictability, and fairness btwn ptfs.
- Compatibility of the Cap with civil law:
o While QC courts have rejected the functional approach, they have applied the $100,000 cap.
o SH: cases appear to use the cap as a starting point and to compare the severity of the ptf’s injury
to those suffered by the Trilogy ptfs. Cap is then reduced (though never increased) accordingly.
Jutras – courts should be focusing on the subjective consequences for each victim rather than
comparing their injuries to the Trilogy ptfs
o Augustus v. Gosset – discussion of the cap in obiter
- Reactions to the Cap  Some Criticisms
o Trilogy ptfs are used as basis for comparison (i.e. to determine if a ptf should be awarded the
limit), but these comparisons are based on one form of NP damages, loss of amenities. Pain and
suffering and loss of expectation of life were not the focus. Thus, a ptf who doesn’t have as severe
loss of amenities but has very substantial pain and suffering, may unjustly receive only a fraction
of the cap.
o How is the cap to be applied? Is it a measure of the most severe case conceivable or an amt which
can be procured by all victims whose injuries extend beyond the moderate?
o Cap clashes with functional approach: the award should be sufficient to provide the victim with
accommodations that will make life easier to bear. The upper limit might not be sufficient.
L’Hopital St-Ferdinand
Curator v. SNE de L’Hopital St-Ferdinand, [1996] S.C.C., page 324
Facts:
- Unionized employees at a hospital for the mentally disabled participated in illegal strikes lasting 33 days.
- As a result, the patients were deprived of care and services normally provided by the employee
- Public Curator brought a class action against the Union on behalf of all the patients in the hospital. They
claimed compensatory relief for interference with their right to security, inviolability and dignity, as well as
exemplary damages under the second paragraph of s. 49 of the Charter.
- The trial judge concluded that the moral prejudice suffered by the patients was DISCOMFORT and
FRUSTRATION, and awarded compensatory but not exemplary damages.
- The C.A. upheld the compensatory damage award, and also awarded exemplary damages
Issues:
1. What is the justification for the RIGHT to compensation for moral damage?
2. How should moral damages be evaluated?
Court:
- L’HD reviews some case law on the functional approach to NP damages in the common law
1. Justification for the Right to Compensation for Moral Damage
- 1457 CCQ: recognizes a liability to reparation for bodily, moral and material injuries.
- Moral prejudice includes loss of enjoyment of life; esthetic prejudice; physical and psychological pain and
suffering; inconvenience; loss of amenities; sexual prejudice.
- [L’HD compares Subjective and Objective conceptions of prejudice]. Current case law and literature supports
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the objective conception, i.e. the reason that damages are awarded is because of the very fact that there IS a
moral prejudice. The right to compensation for moral prejudice is not conditional on the victim’s ability to
profit or benefit from monetary compensation. This characterization of moral prejudice is more consistent
with the fundamental principles of civil liability in QC b/c the primary function of civil liability is to
COMPENSATE FOR PREJUDICE.
- The objective conception is also more consistent with the civil law rule whereby the right of action that
accompanies the moral prejudice resulting from pain and suffering experienced by the victim before death, is
transmissible to the heirs. A subjective conception would be incompatible with this rule b/c the deceased victim
is obviously not capable of enjoying substitute benefits which a damages award may secure.
2. Method of calculating moral damages:
- IN QC civil law, the three approaches to calculating the amount necessary to compensate for moral prejudice –
conceptual, personal, and functional approaches – apply JOINTLY, and thereby encourage a personalized
evaluation of the moral prejudice. The victim must be compensated in a personalized manner for the loss
suffered (1611 C.C.Q.)
- Conceptual – components of a human have an objective value. Personal – Determine the compensation that
specifically corresponds to the loss suffered by the victim [should only be applied in a case of average or low
degree of prejudice and not where the moral prejudice is serious and calls for the payment of the largest amount
of moral damages]. Functional – calculate the value of the physical arrangements which can make the injured
person’s life more endurable.
Rule:
Augustus v. Gossett
Augustus v. Gosset, [1996] S.C.C., page 340
Facts:
- Aplt’s son was shot dead by rspdt police officer
- Aplt brought action for solatium doloris (solace for grief suffered as result of death of a loved one) and, as her
son’s heir, for damages for his loss of life or life expectancy under ss. 1 and 49 of the QC Charter.
Issue:
1) Is aplt entitled to claim compensatory damages under head of solatium doloris pursuant to 1053?
2) Is aplt entitled as her son’s heir for damages for loss of life or life expectancy?
Held:
1) YES 2) NO.
Ratio:
Solatium Doloris:
- Civil law tradition has never denied that an indirect victim can obtain compensation for the moral prejudice
resulting from a person’s death. Any prejudice, whether moral or material, even if difficult to assess, is
compensable if proven.
- Compensation for solatium doloris or injury to feelings is clearly consistent with the civil law’s full recognition
of damages. [SH: distinguish SD from pecuniary consequences of grief such as deterioration of health]
- Principles that can be used to evaluate the quantum of a moral damages award for SD: Court recognizes
that the grief over a dead child cannot be compensated adequately, but some criteria must be developed in order
to preserve the objectivity of the process. The determination must be governed by moderation and
predictability.
- Court should consider the following factors, inter alia: the circumstances of the death, the ages of the
deceased and the parent, the nature and quality of the relationship between the deceased and the parent, the
parent’s personality and ability to manage the emotional consequences of the death, and the effect of the death
on the parents life in light of the presence of other children or the possibility of having others. “Since monetary
compensation of any nature will not mitigate the parent’s grief, the figure will necessarily be arbitrary to a great
extent.
Loss of Life or of Life Expectancy:
- Aplt is asking court to consider the death of any person to be a basis for the right to compensation regardless of
whether the deceased was aware of his or her death.
- Pre-Charter cases have held that an action for damages for loss of life or shortening of life cannot be transmitted
to heirs where victim dies immediately or survives a few hours w/o regaining consciousness before dying.
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Even post-Charter, the right to life terminates at the time of death. Courts have refused to consider loss of life a
compensable prejudice. Policy considerations that support this position: it is basically impossible to quantify
life – would require the court to evaluate the worth of a person’s life (more valuable if smarter or not
handicapped?) – this is clearly inconsistent with the idea that every individual’s life is of equal value.
- Also, no prejudice results from death – it is equivalent to an inability to feel any prejudice whatsoever.
- “…loss of life or life expectancy, by its very nature, constitutes a unique prejudice which, in my view, justifies
departing from the civil liability rule of restitutio in integrum”
- “In light of the basically remedial function of the civil liability system, it is hard to justify compensating a
prejudice the very nature of which will systematically ensure that the victim is unable to gain any benefit
therefrom.”
- Shortening of life vs. Loss life life  these two heads of damage are indissociable where the victim dies
instantaneously owing to the wrongful act or survives without regaining consciousness before dying.
RULE: Solatium doloris is compensable in the civil law and is consistent with the civil law’s full recognition of
moral damages. Evaluating quantum of SD should be done with view to objectivity and predictability. Factors to
consider include circumstances around the death, relationship of parent to child, and existence of other kids or
ability to have others. Damages for loss of life cannot be transmitted to heirs; right to life terminates at time of
death (Rationale: courts cannot value life, victim cannot gain any benefit). Moral damages resulting from death are
not transmissible where victim died almost immediately, or did not regain consciousness before death.
Comments:
- L’HD appears to contradict her holding in SF. She departs from the objective approach to
determining right to moral damages by finding that right to life terminates at death on basis
that cannot benefit from award. She says that it is a justifiable departure. Is it?
SH: Would they give damages for loss of life if victim had suffered immensely before death?
No. I don’t think so. Court says that right to life terminates at death and cannot be inherited. But
heirs could sue for moral damages suffered before death (i.e. pain and suffering and
psychological effects of a shortened life)
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Summary
Assessment of Extra-Contractual Damages: Moral Damages (continued) –
Defamation as an example
There is a cap on moral damages in personal injury cases (after Trilogy) = $100,000 in 1978 dollars.
Justifications for the cap:
1) Assessment of moral damages is inherently arbitrary (Dickson: damages are not about law; they
are about policy) so might as well set limit
2) Cap results in consistency, predictability and fairness btwn ptfs
3) Social burden of high moral damage awards (U.S. = defensive med, high insurance)
4) Ptf’s pecuniary damages have been fully compensated
 This is problematic  1457 recognizes moral damages as an independent and legitimate
head of damages. Fact that one has been compensated for pecuniary damages doesn’t
mitigate his moral damages
The case of defamation is interesting b/c:
1) In most cases, moral damages form the bulk (if not all) of the damages award
2) A “cadre civiliste” – very distinct approach to defamation  based on fault; truth is not an absolute
defense. What would a reasonable person reading this statement understand it to mean?
3) Defamation is at the intersection of the civil law (1457) and fundamental rights (Art. 4)
4) Two fundamental rights are pitted against each other (freedom of expression; right to safeguard of
reputation, dignity and honour)
Defamation cases  There is NO CAP (Snyder in CVL, Hill in CML – huge damage awards were given)
Justifications for no cap in such cases:
1) Personal injury cases – the award of NP damages is predicated upon full compensation for pecuniary loss
whereas in defamation cases, bulk of damages are moral. This is problematic argument
a. No limit on pecuniary damages in defamation actions
b. There are personal injury cases in which NP cap has been applied even where victim hasn’t been
granted any pecuniary damages.
c. Justification for cap in personal injury cases is problematic to start with – civil law recognizes
moral damages as autonomous and legit head of damages.
d. In defamation cases – increasingly awards of punitive damages are granted – can argue that ptfs
receive so much in way of exemplary dmgs that there should be cap on moral damages.
2) Cap could be seen as cost of “license to defame” (C.A. in Lafferty).
Justifications FOR CAP on moral damages in defamation:
1) Calculation of moral damage awds in defamation is just as arbitrary (cannot truly compensate for loss of
honour and dignity)
2) Defamation injuries are temporary; they diminish over time (C.S. in Parizeau). Note that some would
argue they are not so temporary (Cory in Hill)
3) Social Burden
a. Chilling effect on free speech
b. Amt of moral damage awards is on the rise (Hill, Lafferty)
4) Defamed victims have alternative (and perhaps more effective) means of redress  Injunctions, publication
of judgment, retraction and reply.
**Note that whether or not there was an apology or retraction goes to quantification of damages. But judge can
order judgment published in place of some damages award (cannot order apology b/c this would violate the
nemo praecise rule).
5) Courts evaluate damages using a conceptual approach (i.e. the “sliding scale”) – this suggests that severity
of the injury is what matters in calculating moral damages. Thus, defamation victims should generally get
less than severely physically injured persons.
Jukier, “Non-Pecuniary Damages in Defamation Cases”
Rosalie Jukier, “Non-pecuniary Damages in Defamation Cases”, page 356
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Snyder case (S.C.C.)  victim of defamation sued and received moral damages amounting to $350,000
Lamer’s dissent – we need a cap on moral damages for defamation and it should be lower than the Trilogy cap
(personal injury)
1.
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Summary
Limitations upon NP Damages in Defamation Cases
a. Should there be a ceiling?
b. Should the ceiling be lowered than that established in the Trilogy?
Basic argument against applying the Trilogy’s upper limit to defamation cases: in personal injury cases, the
award of NP damages is predicated upon there being full compensation for pecuniary loss.
o This argument is unfounded: (1) there is no limit on pecuniary damages in defamation actions –
QC courts often compensate defamation victims for their pecuniary losses (e.g. loss of clientele,
income, employment, etc.); (2) There are personal injury cases in which the Trilogy cap has been
applied even though the victim was granted no pecuniary damages at all.
Note other arguments against cap in defamation cases (KL): no pressing social concern such as the one
underlying the cap in the Trilogy cases (i.e. NP damage awards getting out of control); Also, if defamer knows
in advance what he would have to pay, he might see it as the max cost of a license to defame.
As long as there is a ceiling on moral damages in personal injury cases, there should also be one in defamation
cases.
o Rationale for ceiling in personal injury cases – ARBITARINESS. Moral damage awards in
defamation cases are just as arbitrary.
In fact, moral damage awards for defamation victims should be lower than moral damage awards in personal
injury cases.
1) Competing interests (not present in personal injury cases)  Balancing protection of reputation with
freedom of speech. High awards will have a “chilling effect” on freedom of speech
2) Temporary loss: Defamation injury is a temporary loss; it diminishes with time (people forget) and unlike
personal injuries, is not a life-long condition
3) Alternative remedies: e.g. court may order the dft to publish the court’s judgment (part of pecuniary
damages?)
4) Courts evaluate damages using the CONCEPTUAL APPROACH: courts claim that they are using the
FN-al approach but they never actually consider what would make life more endurable for the ptf. In both
personal injury cases and defamation cases, the courts apply a “sliding scale” approach to the
quantification of damages based on the seriousness of the injuries. If severity of injures is what matters
(for amt of damages), then defamation victims should, as a general rule, receive lower moral damages than
personal injury victims.
Lamer’s reasons (Benedek article): Large awards for moral damages = greater likelihood that compensation
will be a source of enrichment to ptf at detriment of dft  the principle in the civil law is to COMPENSATE
and not to PUNISH. (Must note that in KL cases – tort of defamation requires intentionality – may therefore be
more of a justification for large awards in order to incorporate punishment)
2. Evaluating NP Damages in Defamation Cases
What factors do and should the court be considering when evaluating the quantum of damages?
a. The position of the defamed plaintiff
QC courts often consider the social status of the defamed ptf – public figures usually get higher damages.
Justification for this: don’t want to dissuade capable people from entering public life.
Private individuals with a respected and influential social position may also get higher damages
Jukier: accepts that “the higher reputation the greater the damages” BUT argues that courts should not put so
much emphasis on whether or not the defamed ptf was a public official
o U.S. case law – a public official has HIGHER BURDEN in defamation cases b/c (1) has realistic
opportunity to publicly rebut statements; (2) public officials have chosen to be in the public eye
and put themselves at risk of being defamed. (Sullivan)
o S. 4 QC Charter protects the reputation of “every person”
b. Extent of the dissemination of the defamatory statements
Extent and duration of the publication of defamatory statements (e.g. circulation of the newspaper) often
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correlates directly with the amount of damages recovered.
Jukier; not sufficient to look at extent of publication as a statistical factor in isolation  must examine in
CONTEXT
i. The actual effect of the publication
o Is the statement published in an area in which the person lived and worked?
o A restrictively circulated publication in a small town may have a very large impact (b/c of the
“grape-vine”)
ii. The importance of wide publicity to the particular ptf
o Certain ptfs will be more affected by the publicity of defamatory statements than others 
Consider ptf’s line of work – lawyer, mayor, etc.
iii. The source of the defamation
o Consider: reputation of the journalist and the newspaper – is it known for seriousness and
accuracy?; readership of the publication; popularity and influence of radio show announcers; the
type of person issuing the defamatory remarks – more damaging if issued by a fellow professional
than by a layman
c. The presence of a retraction or apology
Most QC cases state that existence of retraction or apology can serve to significantly diminish the amount of
damages AND that repetition of defamatory remarks = greater damages
Jukier: must consider in context  Where was the retraction published? (same publication with same
circulation with same readership in same section?) Was the retraction genuine and in good faith? When was
the retraction made? (immediately following statement or much later?)
Note also that retraction may NOT have a mitigating effect on damages – may aggravate the situation by
reminding the public of a defamatory statement that was forgotten
Note that it is not clear whether the refusal to retract is relevant to the evaluation of compensatory or punitive
damages – Jukier: issue of retraction should only be relevant in assessing punitive damages if it goes to show
bad faith and intent to ruin a person’s reputation
d.
o
o
o
o
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Summary
Conduct of the parties
i. Conduct of the defendant
i.e. good or bad faith? Intention or unintentional character of the defamatory statements made?
QC jurisprudence is confused as to whether bad faith and intention are factors affecting
compensatory moral damages or punitive damages
Jukier: The intention of the dft to harm the reputation of the ptf should not be a factor relevant to
the setting of compensatory moral damages unless it is helpful in determining the gravity of moral
damages suffered (e.g. bad faith = particularly inflammatory language = greater damage)
ii. Conduct of the plaintiff
Must consider (1) Did ptf contribute to his own damages? (e.g. his own attitudes, behaviour, etc.
were part of the reason he was defamed; he provoked); (2) Did ptf mitigate his damages?
e. Gravity of the defamatory statement
Must consider the truth of the statement  the further it gets from the truth- the greater the effect on the award
of damages.
Jukier: be cautious  statement may be close to the truth but still very damaging; statement may be so
exaggerated that no one will believe them (= very little damage)
f. Punitive damages
s. 49(2) Charter empowers courts to grant punitive damages where there is “unlawful and intentional
interference” with a right or freedom
Most cases in which punitive damages have been assessed thus involve malicious and intentional acts of
defamation. Some cases/authors say that mere lack of diligence or judgment or reckless carelessness is enough
(i.e. dft knew of the immediate negative consequences of his act). Jukier disagrees: Purpose of punitive
damages is to punish the dft and prevent recurrence of other intentional acts of defamation. Punishing mere
inadvertence fulfills neither of these functions
3.
Alternative Remedies
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a.
b.
c.
Summary
Injunctions
Publication of Judgment
Retraction and Reply
CONCLUSION:
-
Benedek
The Inconsistency Btwn the Awards in Personal Injury and in Defamation Cases
- NP damages in personal injury cases are capped, while those in defamation cases are not
- This seems unjust: defamed ptf can reestablish his reputation while victim of serious injury cannot replace what
he is lost. Prejudice suffered is temporary vs. permanent.
Parizeau v. Lafferty
Parizeau v. Lafferty, Harwood and Partners Ltd. , [2003] C.A., page 372
Facts:
- Action by Parizeau and Bouchard against Lafferty, Hardwood & Partners and Lafferty for damages for libel.
- In 1993, Parizeau was the president of the Parti Quebecois and Leader of Opposition to the National
Assembly. Bouchard was the Leader of the Bloc Quebecois and deputy to the House of Commons.
- Lafferty, a financial analyst, managed Lafferty, Harwood, an investment counselor that published a bulletin for
its 275 clients, businesspeople who paid $10,000 a year to receive it. The bulletin was supposed to be
confidential.
- In January 1993, Bourassa, the Premier of Quebec, had to be treated for cancer in the United States. Lafferty
wrote a political analysis in the January 1993 bulletin. He said that the fact that Bourassa was taking treatment
would create a political vacuum that the nationalists led by Parizeau were anxious to take advantage of. He said
that Parizeau and Bouchard aimed their appeal entirely at nationalism, a classic form of demagoguery and was
no different from what Hitler did.
- A journalist published portions of the bulletin. In the following days, editorials in important newspapers
condemned Lafferty’s statements. Lafferty reiterated the same statements in a letter to his clients, of which he
gave a copy to the media.
- Parizeau and Bouchard claimed that Lafferty exceeded the limit of what was acceptable as political criticism
and violated their right to dignity, honour and reputation.
Issues:
1) Were Lafferty’s statement’s defamatory?
2) If YES, does the defence of “commentaire loyal” apply?
3) What are the damages?
Held:
1) YES 2) NO 3) $10,000 moral damages; $10,000 exemplary damages (each)
Ratio:
Cour Superieure
Ratio:
- Defamation: communications that make public lose esteem of /confidence in person or incite disagreeable
feelings in their regard. Implies unjust attack on reputation by nasty stuff or hate / disregard / ridicule we expose
them to.
- To give rise to damages author must have committed fault (1) with intention to harm or in bad faith; OR (2) w/o
intention but harmed reputation by negligence, impertinence . . .
- Not only publication of false statements includes also true statements made with sole goal to hurt victim.
- Role of media is to inform truthfully + critique w/in reasonable limits.
- Test = reasonable person.
- Defence of loyal commentary: 3 criteria:
(1) existence of public interest in subject matter of expression
(2) honest intention to serve just cause
(3) reasonably upheld conclusion re facts reported.
Conclusion:
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Summary
Df’s propositions re Pf are lies + defamation.
Df could not give concrete examples to justify comparisons, contrarily evidence shows Pf’s are attached to
democracy.
- Examine what reasonable reader would have gotten out of article – not good.
- Just b/c one is in politics, does not mean no longer have right to honour, dignity + reputation. Limits of
political criticism were exceeded.
- Defence 3rd criteria is not met. Df knew very little about Hitler or Df’s programs. Lafferty didn’t do any
research, verification or investigation before making the comments.
Damages:
275 clients were all large firms with internal circulation.
Gravity of attacks. Lafferty refused to retract the statements and reiterated them. This warrants exemplary
damages.
BUT….the evidence didn’t show that Parizeau and Bouchard were affected for a long time by the statements –
the injury was temporary.
Court of Appeal
(Letarte J – for majority)
Still guilty: damages increased substantially (75K$ moral & 25K$ exemplary)
Reaffirms that the reasonablness of the statements is still a necessary part of the law
In Prud’homme :HD and LeBel outline the difference between defamation in cil and col: in cil defamation is
governed by a regime based on the notion of fault and must be judged using the standard of a reaosnable person
[Jukier : what would a reasonable person think of these statements?]
The unreasonable character of the defamatory statements is an element that serves to show the lack of respect
for rules of conduct that a reasonable and diligent person would have.
Damages
Though CA shouldn’t interfere with CS awards, in this case there is a serious problem : the awards at CS were
so low that they seem equivalent to the cost of a licence to defame. The damages were wholly out of proportion
with the circumstances, and with the gravity of the situation.
It is difficult to determine the effects of the diffusion of this information – the original document was sent to
other countries so despite the condemnation in the national papers of Canada this may not have mitigated the
effect as much as the trial judge thinks
Also, the aplts never retracted. In fact, they distributed a latter reiterating the defamatory statements.
Re punitive damages cites the same 5 criteria and art 1621
DISSENT (Pelletier J)
Analysis should be based on fault. in cil, according to the SCC, the onus is on the P to demonstrate not only
that there is slander but that there is fault, in the context and circumstances of the accusation. In this case, the
burden was left on the D, which is not correct.
To conclude here that this was an abuse of freedom of expression contradicts the norm established by this court
in Hervieux-Payette. In comparison, the statements analyzed in that case are at least as virulent
Would uphold the appeal and dismiss all damages
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Summary
VI – THE RELATIONSHIP BETWEEN PRIVATE LAW AND PUBLC LAW
– Fundamental Rights and Civil Liability
Civil Code Provisions
Every person is the holder of personality rights, such as the right to life, the right to the inviolability
3 CCQ
and integrity of his person, and the right to the respect of his name, reputation and privacy.
Every person is inviolable and entitled to the integrity of his person.
10 CCQ
35 CCQ
Every person has a right to the respect of his reputation and privacy. No one may invade the
privacy of a person without the consent of the person unless authorized by law.
The following acts, in particular, may be considered invasions of the privacy of a person:
36 CCQ
…
(3) appropriating or using his image or voice while he is in private premises;
…
(5) using his name, image, likeness or voice for a purpose other than the legitimate information of
the public
(6) using his correspondence, manuscripts or other personal documents
1457 CCQ Every person has a duty to abide by the rules of conduct which lie upon him, according to the
circumstances, usage or law [this includes the Charter], so as not to cause injury to another.
Where he fails in his duty, he is responsible for any injury he causes to another person and is liable to
reparation for the injury, whether it be bodily, moral or material in nature.
Charter Provisions
Every human being has a right to life, and to personal security, inviolability and freedom.
Art. 1
Every person is the possessor of the fundamental freedoms, including freedom of conscience,
Art. 3
freedom of religion, freedom of opinion, freedom of expression, freedom of peaceful assembly and
freedom of association.
Every person has a right to the safeguard of his dignity, honour and reputation.
Art. 4
Every person has a right to respect for his private life.
Art. 5
In exercising his fundamental freedoms and rights, a person shall maintain a proper regard for
Art. 9.1
democratic values, public order and the general well-being of the citizens of Quebec.
In this respect, the scope of the freedoms and rights, and the limits to their exercise, may be fixed by
law. [BALANCING PROVISION]
Every person has a right to full and equal recognition and exercise of his human rights and freedoms,
Art. 10
without distinction, exclusion or preference based on race, colour, sex, pregnancy, sexual orientation,
civil status, age except as provided by law, religion, political convictions, language, ethnic or
national origin, social condition or a handicap
Every person has the right to information, to the extent provided for by law.
Art. 44
(1) Any unlawful interference with any right or freedom recognized by this Charter entitles the
Art. 49
victim to obtain the cessation of such interference and compensation for the moral or material
prejudice resulting therefrom.
(2) In case of unlawful and intentional interference, the tribunal may, in addition, condemn the
person guilty of it to punitive damages.
Protection of fundamental rights pre-Charter:
Caron (1978): Art. 1053 was the “charter of rights”. By repairing harm for wrongdoing, it provided the only
mechanism for protection of rights in QC society
Jukier: 1053 was successful in the protection of some rights (such as physical integrity, right to reputation
[defamation], right of association), but it was insufficient to protect fundamental liberties such as privacy and
equality. We desperately needed a Charter.
ISSUE: What is the relationship between the Code (jus commune) and the Charter?
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Summary
Charter is quasi-constitutional. It is not entrenched but is given primacy over other laws (Art.. 52) and is to be
given a “large interpretation” (Art. 50)
After Beliveau, it is clear that not all parts of the Charter take primacy (S. 49 doesn’t have primacy over Art.
1457)
Beliveau: the Charter is not an autonomous regime or at least does not provide an autonomous remedy or
sanction. Charter is effectively civil liability. Thus, where there is a civil immunity clause, you are not
allowed to pursue a Charter action. The Charter is just “law” pursuant to 1457 and informs the standard of
conduct in civil responsibility.
Popovici: the Charter does contain an autonomous sanction or remedy – S. 49 gives one a right to ask that the
activity cease, and maybe even a right to ask for nominal damages.
Law re. Infringements of Charter Rights
 TAKE AN ACTION (SUE)
o What to sue under given that there is duplication in Charter and CCQ (e.g. 1457 or 49? 5 or 35?
o Popovici: this duplication creates confusion
o Aubry: violation of Charter right gives rise to action under S. 49(1)
o Beliveau: since Charter merely informs the standard of conduct in Art. 1457, suggests that action
should be taken under Art. 1457.
o SH: S.C.C. has clearly enunciated that the Charter is not an autonomous regime. Cannot sue under
both. Thus, must choose one. [Choose Charter if want exemplary damages]
 NEED FAULT, CAUSATION AND DAMAGES (1457, Aubry)
o Action, whether taken under 49(1) or 1457 is subject to the civil law principles of recovery – thus,
need fault, damage and causation.
 FAULT
o Gonthier in Beliveau: “It is…clear that the violation of a right protected by the Charter is equivalent
to a civil fault.” We can reject this view b/c (1) it was said in obiter; (2) it would justify ridiculous
results (firefighters who interrupt a political meeting to evacuate a burning building do not commit a
fault – Lamer in Aubry).
o Lamer in Aubry: only unjustifiable infringements constitute a fault.
o L’HD in Aubry: says there is fault requirement but doesn’t necessarily enter into fault analysis.
o Baudouin in Arthur: doesn’t clearly go through fault analysis but there is language that links the
analysis to one of “reasonableness”
o Popovici: Cannot confuse concept of fault w/ violation of Charter. Such violation is WRONG
(illicit) but not necessarily faulty.
o Fault analysis  Reasonableness, diligence, justifiability given existence of other rights (Art. 9.1
Charter requires us to balance rights and consider the PUBLIC INTEREST)
 DAMAGES
o Clear after Aubry that proof of damages necessary
o L’HD’s judgment could be used to suggest that damages need not be very concrete
o Popovici: suggests that the very fact of violation of right is a damage and that though one may not
have a compensable injury, he has right to ask that the violation stop and even to get nominal
damages.
 REMEDY
o FAULT + DAMAGES + CAUSATION = entitled to reparation (1457, 49).
o Can get compensatory (moral, bodily and material) damages under 1457 or 49 but not both (Beliveau)
o Can get exemplary damages (1621 CCQ – can only award punitive damages where provided for by
law  S. 49(2) Charter). Must be an INTENTIONAL INTERFERENCE.
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Summary
Beliveau St-Jaques v. F.E.E.S.P.
Beliveau St-Jacques v. FEESP, [1996] S.C.C., page 381
Facts
-
Woman was sexually harassed in the workplace. She made Workers comp claim and it was rejected. She
appealed and in the meantime launched a civil liability suit. Her Workers Comp claim was subsequently
accepted.
- She is suing in civil liability for moral damages and exemplary damages (to be obtained in addition to the
compensation (for bodily injury and loss of income) that she has already received from Workers comp.
- S. 438 of the Workers Comp leg precludes recourse to civil liability actions taken against the employer.
- s. 49 of the Charter entitles one whose rights have been interfered with to obtain compensation for moral and
material prejudice as well as exemplary damages.
Issue:
May the victim of an industrial accident who receives compensation under Workers Comp also bring a civil liability
action based on the QC Charter?
Held:
No. Appeal dismissed. The remedy in S. 49(1) and S. 49(2) are civil liability remedies.
Ratio:
- Before the advent of the Charter, art. 1053 CCLC could provide the basis for liability for the violation of
fundamental rights that are now protected
- S. 49 just formalizes conduct that would normally fall under 1457; it is not a separate autonomous regime but
rather is a specific application of 1457; it defines what wrongful behaviour is. (i.e. 1457: Every person has a
duty to abide by the rules of conduct which lie upon him, according to…law, so as not to cause injury to
another. The Charter is such “law”). It is clear that a violation of a right protected by the Charter is a civil fault
(SH: 1457 fault)
- S. 49(1) provides that the victim is entitled to “compensation for the moral or material prejudice resulting
therefrom” – Compensation must conform with the principle of restitutio in integrum, thus for a given fact
situation, the Charter cannot authorize double compensation. The Charter does NOT create a parallel
compensation scheme. Also, nothing in the Charter relieves the victim of the burden of proving a causal
connection btwn the interference and the prejudice suffered. In this respect, the Charter does NOT add to the
general law.
Remedy of exemplary damages:
- S. 49 provides a remedy of exemplary damages in addition to the compensatory remedy. Gonthier argues that
this is a civil liability remedy; cannot be dissociated from the principles of civil liability. An action in
exemplary damages can only be incidental to a principal action seeking compensation for moral or material
prejudice (the words “in addition”). [compare to L'HD who argues that S. 49 is something separate altogether
b/c civil liability is all about COMPENSATION].
Reconciling workers comp and s. 49
- S. 438 of the workers comp leg provides employers with immunity from civil action. S. 438 has the effect of
validly barring the victim of an employment injury from bringing an action for damages under the Charter. If S.
49 of the charter allowed the victim to claim additional damages, the compromise underlying workers comp (no
fault in exchange for fixed-sum partial compensation) would be undermined.
- It is true that, as a result of this, there will be a disparity btwn comp received by workers who are sexually
harassed and those who are sexually harassed outside of the workplace (b/c former will not get any exemplary
damages).
[Dissent - L'HD]:
- L'HD argues that the immunity provided for by S. 438 is not complete. She distinguishes exemplary damages
from civil liability b/c they are not a traditional part of QC law (Civil liability is about compensation). Thus,
when S. 438 precludes recourse to civil liability - it just precludes recourse to S. 49 compensation (not
exemplary damages).
Point:
Judges agree that Charter does not provide its own separate remedy - it is a specific and formalized application of
Art. 1457. Thus, violations of fundamental rights are redressed in the arena of civil liability [compare to KL].
Majority says that exemplary damages are part of civil liability; thus, where legislation precludes recourse to civil
liability, it also precludes recourse to these. Dissent disagrees.
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Aubry v. Vice-Versa
Aubry v. Vice-Versa, [1998] S.C.C., page 416
Facts:
- A photographer took Aubry’s picture in downtown Montreal and published it in the Vice-Versa magazine
without her consent. 722 copies of the issue with the picture were sold. The mag circulated at school and her
friends teased her about it.
- Aubry brought action for compensatory and exemplary damages
- Trial judge allowed the action in part. C.A. upheld the decision
Issue:
1) Were aplts at fault? 2) Were there damages [and a causal link btwn fault and damages]?
Held:
1) YES. 2) YES (dissent).
Ratio:
- The infringement of a Charter right gives rise under S. 49(1) to an action for moral and material prejudice.
Such an action is subject to the civil law principles of recovery. Thus, must establish fault, damage and causal
connection.
Fault:
- The right to one’s image is an element of the right to privacy (S. 5) and has an extra-patrimonial and
patrimonial aspect. Art. 36 CCQ confirms this interpretation
- There is an infringement of a person’s right to his image, and thus FAULT, as soon as the image is published
w/o consent and the person can be identified [SH: and where infringement is not justified by some other
competing right].
- S. 9.1 Charter: In exercising his…rights, a person shall maintain a proper regard for democratic values, public
order and the general well-being of the citizens of QC. S. 9.1 requires the court to balance right to privacy
with competing rights, i.e. freedom of expression (S. 3). The public’s interest in being informed places limits
on the right to privacy. [L’HD describes instances in which the public interest would prevail – person appears
in an incidental manner in a photograph of a public place; person in a group photographed in a public place,
etc.].
- In this case, the aplts are liable a priori since the photograph was published and the rspdt was identifiable. The
public’s interest in seeing this photograph/artistic expression does not justify the infringement of the right to
privacy that its publication entails.
Causation/Damages
- The damages are the logical, direct and immediate consequence of the fault.
- The infringement of a right guaranteed by the Charter is itself insufficient to establish that damage has been
sustained. Damages must be proven. In this case, the evidence of moral damages is limited, but trial judge
found them and this court will not overturn that.
- There is a possibility that the infringement of one’s right to his/her image can give right to patrimonial damages
(for commercial or promotional exploitation)  profit sharing or regular fees paid to models.
[Dissent (in part)]:
- Mere infringement of a right or freedom does not necessarily constitute fault. Only unjustifiable infringements
constitute fault.
- S. 9.1 of the Charter is not like S. 1 of the Canadian Charter. Provision merely indicates that the rights are not
absolute; it is not a limit on the authority of the gov’t but rather suggests the manner in which the scope of the
fundamental freedoms and rights is to be interpreted. S. 9.1 requires the rights to be balanced in light of other
rights and freedoms.
- [Discusses right to one’s image]. The rights of the aplts and rspdts must be harmonized in the facts of the case.
The concept of the public interest (i.e. freedom of expression and public’s right to information – s. 44) plays
such role in matters involving a right to one’s image and to one’s honour and reputation.
- The content of the public interest depends on the nature of the information conveyed by the image and on the
situation of the parties involved. In this case, the public interest does not justify the aplt’s fault. The aplt could
easily have obtained the rspdt’s consent but did not do so. A reasonable person would have been more diligent.
- Damages: Law of civil liability in QC requires proof of prejudice. Rspdt has not shown that she suffered
prejudice. What would have constituted an “injury” in this case?  she felt humiliated; becoming well-known
and losing her anonymity.
Rule:
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Infringement of right gives rise under S. 49(1) to an action for bodily, moral, material prejudice. Is subject to
principles of civil responsibility thus must prove fault, damages and causation. L’HD for the majority appears to
pay lipservice to fault analysis and even to damages. Dissent makes it clear that fault is a requirement and goes
through fault analysis (justifiable? Prudence and diligence?).
Arthur v. Gravel
Arthur v. Gravel, [1991] C.A., page 434
Facts:
- Gravel (ptf) was a deputy in the National Assembly. He had once worked in maintenance at a psychiatric
hospital.
- Arthur hosted a radio program in which he referred to Gravel as a “mopologiste” and discussed an incident in
which Gravel hired a tunnel supervisor who was wanted by police.
- Gravel asked for a retraction. Arthur provided further explanation on the radio.
Issue: Was Arthur at fault?
Held: No
Ratio:
- Majority adopts the distinction (drawn by the trial judge) btwn “defamation” and an “insult”. The former is
“l’allegation ou imputation d’un fait qui porte atteinte a l’honneur”. The latter is “l’expression outrageante,
terme de mepris ou invective qui ne renferme l’imputation d’aucun fait”. Majority finds that Gravel was not
defamed and that he cannot complain about the insults which Arthur addressed at him
- One has no right to impute to a public figure, any more than to a private citizen, a fact which tarnishes his
honour, dignity or reputation. One who does so commits a fault. But truth or public interest can be a defence.
- The words used by Arthur did not suggest that Gravel was a patient in a psychiatric hospital. While Arthur did
say that “Gravel furnished and paid [the tunnel supervisor]” any listener with minimum knowledge would know
that he did not mean “out of his own pockets”. Even without his explanation (in response to Gravel’s request
for retraction), the statements were not defamatory.
- It is true that Arthur made comments which expressed a negative opinion of Gravel as a deputy (i.e.
“mopologiste” and “insignifiant”) but these verbal “caricatures” were a reasonable exercise of freedom of
expression guaranteed by the Charter. Such criticism must be allowed, in a society such as ours, wrt persons in
public life. These criticisms are like political cartoons that we see daily in our newspapers. The media, by
making fun of our elected officials are not committing a fault.
[Dissent]:
- Arthur’s criticism of the actions that Gravel took wrt the tunnel supervisor did not constitute a civil fault – just
political criticism which should be expected in a democracy.
- But the participation of a person in public life does not mean that people can just attack his private life when the
facts have no relationship with the accomplishment of his duties.
- One must take his victim as he finds him with his sensitivity and his personality.
- There was fault  repetition of “mopologiste” (a pejorative term which exposed him to ridicule) was purely
gratuitous; it wasn’t a criticism of a political man but rather a term used to personally ridicule. The tone used
was aggressive, mean and looking to ridicule. The information about gravel’s past career as a janitor had no
place in the substance of the news commentary about the tunnel.
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