Supreme Court of Canada
Senez v. Montreal Real Estate Board, [1980] 2 S.C.R. 555
Date: 1980-07-18
Thomas Bernard Jacques Senez Appellant;
and
Montreal Real Estate Board Respondent.
1980: April 29 and 30; 1980: July 18.
Present: Martland, Ritchie, Dickson, Beetz and Mclntyre JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR QUEBEC
Prescription—Member of Real Estate Board improperly expelled—Contractual or delictual action—Damages resulting from single cause of action—By-laws—Natural justice—Corporations—Civil Code, arts. 356, 361, 1024, 1057, 2242, 2260(4), 2261(2)—Companies Act, R.S.Q. 1941, c. 276, s. 214, now R.S.Q. 1977 c. C-38, s. 218—Real Estate Brokerage Act, R.S.Q. 1964, c. 267, am. 1966-67 (Que.), c. 75, now R.S.Q. 1977, c. C-73.
Appellant, a real estate broker, was an associate member of the Montreal Real Estate Board (respondent). In September 1967, and then in February 1968, he was respectively suspended and then expelled from the ranks of the Board. In November 1971, he brought an action against respondent, seeking first of all to have his suspension and expulsion quashed and to be reinstated as a member of the Board, and secondly claiming damages for loss of income and for professional, personal and social humiliation, physical and mental suffering and so on. The Superior Court of Quebec allowed the first action, finding that respondent’s directors had contravened certain sections of the Board’s by-law and violated the principles of natural justice; it quashed the suspension and expulsion and ordered that appellant be reinstated. There was no appeal from this part of the judgment. With regard to the second action, the Court dismissed it, considering that it was of the nature of an offence or quasi‑offence and as such prescribed, since more than two years had passed between the date of expulsion and the institution of proceedings. There was an appeal from this part of the judgment and the Court of Appeal, from the bench, dismissed the appeal. In view of their findings on prescription, neither the Superior Court nor the Court of Appeal undertook to liquidate the damages. Appellant obtained leave from this Court to appeal from the Court of Appeal decision, but only on the following question: Were the damages claimed entirely prescribed?
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Held: The appeal is allowed and the record is returned to the Superior Court to determine the amount of the damages.
The question asked includes two others: (I) Were the damages claimed prescribed? (II) If not, were some of them prescribed?
(I) In order to characterize the breaches found to have been committed by respondent, it is necessary to determine the nature of the rules and by-laws infringed in the context of the relations between a corporation like the Board and its members. Because of the provisions of the Civil Code relating to Corporations, as well as the specific legislative provisions in accordance with which a body like the Board was incorporated—these provisions are derived from English law—and because of the Board’s own by-laws, respondent does not belong to the category of political corporations or to that of professional corporations as such, but more closely resembles the type of voluntarily formed group which, in English law, is known as “voluntary associations”. The by-laws of such corporations are the equivalent of provisions of a contractual nature, and the breach by the corporation of its own by-laws is the equivalent of a breach of its contractual obligations to its members. Similarly, the rules of natural justice, when applied to contractual relations, do not change their contractual nature. Consequently, appellant’s action is of a contractual nature and is prescribed after thirty years.
(II) If the damages claimed result from a single cause of action which is the breach of a contractual obligation, the damages will be characterized as contractual damages and will only be prescribed after thirty years. If they result from several separate and independent causes of action, they must be regarded as contractual or delectual depending on whether they originate in the breach of a contract or in an offence or quasi-offence, and they will be prescribed accordingly. In the case at bar, the damages claimed for injury to the professional, personal or social reputation, for humiliation, mental and even physical suffering, result from a single cause of action, the improper suspension and expulsion. They are therefore not prescribed, any more than damages for loss of income are. On the other hand, damages suffered as a result of alleged bomb threats, bodily harm and attempts to intimidate are prescribed, because they result from typical offences which are separate causes of action from the suspension and expulsion.
Gagné v. Ouellet, [1958] R.L. 102; Beaudry v. Club St-Antoine (1901), 19 C.S. 452; Club de la Garnison de Québec v. Lavergne (1918), 27 K.B. 37 affirming
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(1917), 51 C.S. 349; Monette v. Société St- Jean-Baptiste de Valleyfield (1886), 30 L.C.J. 150; Union St-Joseph de Montréal v. Lapierre (1880), 4 S.C.R. 164; Vancouver Real Estate Board v. Moscrop Realty Ltd., [1961] S.C.R. 418, (1960), 23 D.L.R. (2d) 21; Wyman and Moscrop Realty Limited v. Vancouver Real Estate Board (1959), 27 W.W.R. 476; Philipzyk v. Edmonton Real Estate Board Co-operative Listing Bureau Ltd. (1975), 55 D.L.R. (3d) 424; Seafarers’ International Union v. Stern, [1961] S.C.R. 682; White v. Kuzych, [1951] A.C. 585; Orchard v. Tunney, [1957] S.C.R. 436; International Association of Longshoremen, Local 375 v. Dussault [1947], 1 D.L.R. 5; Ville de Montréal v. De Montigny (1910), 20 Q.B. 49; Vézina v. Corporation de la Ville de Mégantic (1935), 39 R.P. 223; Pilon v. Samson, [1951] R.P. 321; Corporation du village de Danville v. Lamarche, [1953] Q.B. 579; Larichelière v. Hôpital Sainte Jeanne d’Arc de Montréal, [1958] R.P. 194; Corporation du Gaz Naturel du Québec v. Frank, [1961] Q.B. 792; Ruel v. Banque Provinciale du Canada, [1971] C.A. 343; Lido Construction Inc. v. Crédit Sorel Inc., [1977] C.S. 926, referred to.
APPEAL from a decision of the Court of Appeal of Quebec affirming a judgment of the Superior Court. Appeal allowed.
Robert Décary, for the appellant.
John J. Pepper, Q.C., for the respondent.
English version of the judgment of the Court delivered by
BEETZ J.—Appellant, a real estate broker and an associate member of the Montreal Real Estate Board (the Board), was irregularly suspended by the Board in September 1967 and irregularly expelled in February 1968. The issue is whether his action in damages, served on the Board in November 1971, is prescribed.
The trial judge, in an elaborate judgment, set forth in detail the circumstances giving rise to the case. It will not be necessary to state them here in order to decide the appeal. Indeed, certain of these circumstances have acquired a measure of notoriety. It will suffice to note that the matter arose out of the purchase of land located in Ville La Salle by the Quebec Liquor Board, as it was known at the time. The newspaper La Presse denounced the purchase price in January 1966 as being too high.
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A commission of inquiry, headed by A.I. Smith J., was instituted by the government and submitted a report. The Board, for its part, set up an Ethics Committee to conduct its own inquiry. Appellant, who, had held options on this land, but who had not participated in the sale and received no commission, asked that the matter be cleared up and requested a hearing. He was invited to appear before the Ethics Committee of the Board. His appearance was postponed, which caused him considerable irritation. He then wrote a letter, which the trial judge described as a “violent attack”, accusing a trust company and a director of the Board of collusion, and sent a copy of the letter to the newspapers. This letter was followed by several others. After a series of developments, this behaviour was held by the Board to be reprehensible and it first suspended appellant, then expelled him.
The action brought against the Board by appellant actually comprises two distinct recourses.
The first is, in the opinion of the trial judge, in the nature of a proceeding in certiorari: appellant sought to have his suspension and expulsion quashed, and asked to be reinstated as a member of the Board with all the rights, privileges and prerogatives he formerly enjoyed.
The second recourse is a claim in damages, which itself comprises two principal parts: first, appellant sought compensation for loss of income; he then sought to be compensated, inter alia, [TRANSLATION] “for professional, personal and social humiliation, physical and mental suffering …” which he alleged he had sustained. In his inscription in appeal to the Court of Appeal, he stated that this second item included the injury done to his [TRANSLATION] “professional, social and personal reputation”.
The trial judge allowed the first recourse and dismissed the second.
On the first, he found that the directors of the Board had contravened certain sections of the Board’s by-law relating to the expulsion procedure, as for example by forming themselves into an ethics committee, thereby depriving appellant of
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any right of appeal or review; he further held that the directors of the Board had violated the principles of natural justice by making no specific accusation, by prejudging the matter and by leaving appellant no time to defend himself. He accordingly quashed the suspension and expulsion of appellant and ordered that he be reinstated.
This part of the Superior Court judgment now has the force of res judicata. The Board initially appealed, but discontinued its appeal, and in August 1976, offered to admit appellant as an active member because, for reasons that will be examined below, it was no longer possible to reinstate him as an associate member. The Court was told at the hearing that appellant declined this offer, which he considered did not comply with the Superior Court judgment.
As to the claim in damages, the Superior Court held that it was prescribed in light of art. 2261(2) of the Civil Code:
The following actions are prescribed by two years:
…
2. For damages resulting from offences or quasi-offences, whenever other provisions do not apply.
The trial judge made the following observations in this regard:
[TRANSLATION] The damages concerned are claimed pursuant to the articles of the Civil Code, arts. 1053 et seq., governing offences and quasi-offences. The acts which have given rise to the action in damages are plaintiffs improper suspension and expulsion by the Montreal Real Estate Board.
…It was necessary for plaintiff to legally institute his action for damages within two years from commission of the offences or quasi-offences alleged… He has allowed over three years to elapse before doing so.
Appellant took this portion of the Superior Court judgment before the Court of Appeal which disposed of it as follows:
CONSIDERING that the judgment appealed from correctly held that the action of the Plaintiff-Appellant was prescribed, doth
DISMISS the present appeal, with costs.
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In view of their findings on prescription, neither the Superior Court nor the Court of Appeal undertook to liquidate the damages that may have been sustained by appellant.
Appellant obtained leave from this Court to appeal from the Court of Appeal decision on the following point:
[TRANSLATION] Were the damages claimed entirely prescribed?
This question comprises two sub-questions: (I) Are the damages claimed prescribed? (II) If not, are some of them prescribed?
I—Are the damages claimed prescribed?
Appellant contended that this question should be answered in the negative, and he put forward several submissions in support of his position and in opposition to the decision of the Court of Appeal and the judgment of the Superior Court. I shall only discuss one of these submissions which, in my opinion, is well founded and conclusive: the legal basis of appellant’s action against the Board is the latter’s breach of contractual obligations.
Unless the action in question is one of a commercial nature subject to five-yearly prescription under art. 2260(4) of the Civil Code, which clearly is not the case, such an action is prescribed after thirty years, under art. 2242:
All things, rights and actions the prescription of which is not otherwise regulated by law, are prescribed by thirty years, without the party prescribing being bound to produce any title, and notwithstanding any exception pleading bad faith.
It should be noted at once that no procedural obstacle exists to this contention. It is true that in paragraph 5 of his statement of claim, appellant, who prepared his pleadings himself and pleaded his own case in the Superior Court and in the Court of Appeal, stated [TRANSLATION] “that this action is based in part on articles 1053, 1054, 1057 and 1058 of the Civil Code”. However, in paragraph 102 he also referred expressly to art. 2242, and alleged that his action cannot be regarded as prescribed. In this Court, counsel for the appellant asked for leave to amend the statement
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of claim if necessary, and to plead expressly that the action is one in contract which is subject to a thirty-year prescription. Counsel for the respondent did not object to this motion, which I would in any case allow without hesitation if I felt it was necessary, which I do not.
The Superior Court identified as follows the acts alleged for which it blamed the Board:
[TRANSLATION] By-laws 56 to 66 of the Montreal Real Estate Board, applicable in September 1967 and January 1968…(titled “Breach of By-laws, Code of Ethics, and so on”)… were not complied with in plaintiffs case. The generally applicable rules of natural justice also were not observed.
The Superior Court and the Court of Appeal assumed, without saying why, that the breaches of these rules and by-laws amounted to an offence or a quasi-offence.
But this is not evident.
In order to characterize the breaches which the Superior Court found were committed by the Board, it is necessary to determine the nature of the rules and by-laws infringed in the context of the relations between a corporation like the Board and its members.
First, the provisions of the Title of Corporations of the Civil Code, such as art. 361, apply:
Every corporation has a right to make, for its internal government, for the order of its proceedings and for the management of its affairs, by-laws and regulations which its members are bound to obey, provided they are legally and regularly passed.
However, as these provisions are of an extremely general nature, it is also particularly important to examine the specific legislative provisions in accordance with which a body like the Board was incorporated, as well as the main by-laws of this corporation.
Certain preliminary observations must nonetheless be made regarding the Title of Corporations.
There is no similar title in the Code Napoléon. The corporation was not unknown to French law,
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but it was apparently felt that this subject should properly be classified under administrative law.
It need hardly be mentioned that in Quebec administrative law is of English origin.
Furthermore, French law had not developed incorporation in all its forms for purely civil or commercial purposes for quite the same use as English law.
Finally, and this is the Board’s case, in Quebec, corporations fall under a number of different statutes, which are distinct from the Civil Code and which, for the most part, owe very little to French civil law.
It is accordingly not surprising that first the codifiers, and then the courts, have relied principally on English sources and authors, especially in connection with the creation of a legal or civil entity and its relationships with its members, rather than with the other members of society. Article 356 of the Civil Code is an illustration of this. It follows that while the civil law must be applied in the case at bar in so far as the rules of prescription as such are concerned, such as its commencement, interruption, suspension and, depending on whether the matter is one of contract or tort, its duration, reference may nonetheless be had to sources external to the civil law to decide whether the links between the Board and its members are of a contractual nature.
The Board is a company which, having no share capital, was incorporated pursuant to Part III of the Companies Act, R.S.Q., 1941, c. 276, now R.S.Q., 1977, c. C-38, s. 218, and in particular s. 214 of that Act, the first paragraph of which read as follows:
The Lieutenant-Governor may, by letters patent under the Great Seal, grant a charter to any number of persons, not less than three, who apply therefor, for objects of a national, patriotic, religious, philanthropic, charitable, scientific, artistic, social, professional, athletic or sporting character, or the like, but without pecuniary gain.
The purposes of the Board are as follows:
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To establish and maintain the dignity and responsibility of the profession of a real estate agent; to generally improve the real estate business…(Official Gazette of Quebec, April 3, 1954, vol. 86, No. 14, at p. 1175.)
The By-laws of the Board state that its objects are: (1) to unite those engaged in the real estate business in Greater Montreal; (2) to provide a unified medium for real estate owners and those engaged in the real estate business generally whereby their collective and individual interests may be safeguarded; (3) to promote qualification and maintain the high standards of conduct among its members in their dealings with one another and with the public; (4) to protect and promote the welfare of real estate and real estate ownership and to encourage home ownership; (5) to ensure, by the rules and regulations, the highest standard of competence in the real estate business and to assist those seeking to enter the real estate field in qualifying themselves.
The Board has four classes of members, active members, affiliate members, associate members and honorary members. (Only the active member and associate member classes are important for the purposes of the case at bar.)
Active members are individuals, partnerships or corporations who are engaged in the real estate business in one of the following ways: buying, selling, exchanging, renting or leasing, managing and appraising, negotiating mortgage loans, for others and for remuneration.
Associate members are
…individuals who are employed by active or affiliate members. All such individuals who are salesmen in the employ of an active member must hold such licence as is required by law, and must become associate members of the Board and remain associate members during the period of their employment by such active member. Active members shall notify the Board of the names of all employees who are salesmen and the names of such new employees as they become employed, and shall be responsible for the payment of the annual fees and dues of such associate members.
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Associate members must take a course and pass an examination given by the Board, and undertake to comply with the by-laws, the Code of Ethics and all other regulations enacted by the Board.
Only active members are entitled to vote at general meetings, but members of the other classes may participate and sit on various Board committees.
The Schedule of Entrance Fees and Annual Dues provides that the dues
shall include, at the discretion of the Directors, dues required to maintain membership in the Canadian Association of Real Estate Boards and the Corporation of Real Estate Brokers of the Province of Quebec, or any comparable body, association, federation, etc.
One of the most attractive services offered by the Board is that of the “Multiple Listing Service”. According to the Schedule of Entrance Fees and Annual Dues, this service is provided to those of the active members who pay entrance fees and additional annual dues. The importance of this service is indicated by the testimony of Larry Faust, of the firm Immeubles Larry Faust Cie Ltée (Faust). He stated that three-quarters of his business’ sales result from the Multiple Listing Service and without it he would be obliged to close down.
Faust was an active member of the Board, and it was through his employment with him that appellant qualified as an associate member.
As a consequence of his suspension and expulsion from the Board, appellant necessarily lost his employment with Faust, which could not retain him in its employ without contravening the Board’s by-laws and exposing itself to expulsion. For the same reason, appellant was also prevented from entering the service of any other active member of the Board. He lost the access he would have had to the Multiple Listing Service through the intermediary of an active member. Finally, as he alleged, he was automatically excluded from the various associations of which he could only be a member through the Board, such as the Corpo-
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ration of Real Estate Brokers of the Province of Quebec, the Real Estate Institute of Canada, the Canadian Real Estate Association, the International Real Estate Federation of Paris and the Canadian Institute of Realtors; he alleged that the last exclusion deprived him of the right of using the title F.R.I., which made him a qualified appraiser.
However, it is important to note that the Board is in no way a professional corporation authorized to regulate and administer real estate brokerage. Under the Real Estate Brokerage Act, R.S.Q. 1964, c. 267, now R.S.Q. 1977, c. C-73, as amended in 1967 by An Act to amend the Real Estate Brokerage Act, 1966-67, 15-16 Eliz. II, c. 75, these functions belong exclusively to the Lieutenant-Governor in Council and to the Quebec Real Estate Brokerage Branch, an administrative agency which was at the time part of the Provincial Secretary’s Department. Under this Act, and apart from certain exceptions, no one may act as a real estate broker or salesman without a permit issued by the Commission to persons who have the qualifications prescribed by the Lieutenant-Governor in Council by by-law, and who provide a broker’s or salesman’s security. A salesman’s permit may only be obtained if the individual is employed by a broker who holds a permit or by a registered builder.
As a result of his suspension and expulsion from the Board and his dismissal from the Faust firm, appellant was apparently prevented from legally operating as a salesman, since he was no longer employed by a broker who held a permit, but from a strictly legal though not necessarily practical point of view he could have resumed the practice of his profession, either by obtaining a broker’s permit or by entering as a salesman the employ of another broker who was not a member of the Board.
Appellant further alleged that he obtained a broker’s permit in 1970, and that this permit was renewed for 1971 and 1972, but that this brokerage office did not succeed for lack of liquid assets. It was apparently because he held a brokers’s
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permit in his own right that in 1976 the Board offered, as he requested in his statement, to make him an active and not an associate member; he was no longer employed by an active member.
The foregoing indicates that the Board does not belong to the category of political corporations or to that of professional corporations as such, which the legislator for reasons of public interest may invest with monopolies, on which he may confer privileges or to which he may delegate a true legislative authority, which may be effective not only against their members but with respect to the public—such as, for example, the power to prescribe a tariff of professional fees. The Board more closely resembles the type of voluntarily formed groups which, in English law, is known as “voluntary associations”, such as social clubs, philanthropic, sports or even professional bodies, but the by-laws of which affect only members and apply only to them [TRANSLATION] “in a manner based on agreement and of a private nature”: Gagné v. Ouellet (at p. 107).
In the second volume of the Traité de Droit Civil du Québec, the author Gérard Trudel, correctly in my opinion, equates the by-laws of such corporations to provisions of a contractual nature. At pp. 482 and 483 he writes:
[TRANSLATION] In general, only the members of the corporation are subject to the by‑laws and their consequences; they exist and have their authority merely by virtue of the application of a sort of contractural agreement; they are a type of adhesion contract…
Insubordination by a member equates to a breach of his contractual obligations to the corporation.
It could also be said that a breach by the corporation of its own by-laws equates to a breach of its contractual obligations to its members.
When an individual decides to join a corporation like the Board, he accepts its constitution and the by-laws then in force, and he undertakes an obligation to observe them. In accepting the constitution, he also undertakes in advance to comply with the
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by-laws that shall subsequently be duly adopted by a majority of members entitled to vote, even if he disagrees with such changes. Additionally, he may generally resign, and by remaining he accepts the new by-laws. The corporation may claim from him arrears of the dues fixed by a by-law. Would such a claim not be of a contractual nature? What other basis could it have in these circumstances? In my view, the obligation of the corporation to provide the agreed services and to observe its own by-laws, with respect to the expulsion of a member as in other respects, is similarly of a contractual nature.
Might it be objected that the basis of these obligations is the law, and in particular the provision of art. 361 of the Civil Code to the effect that the members of a corporation are bound to obey its by-laws and regulations, provided they are legally and regularly made?
I do not believe this to be the case. For the members of this type of corporation, this provision merely states the rule that an individual is required to abide by his contracts. Further, the provision does not apply expressly to the corporation itself, which is nonetheless required to comply with its own by-laws. Finally, these obligations cannot result from the operation of law alone within the meaning of art. 1057 of the Civil Code, as that article applies to obligations which arise
without the intervention of any act, and independently of the will of the person obliged or of him in whose favour the obligation is imposed;
The adoption by the Board of its by-laws, and the undertaking to observe them by a member, are acts of the persons obliged and of the individual in whose favour the obligation is imposed.
Finally, could it be argued that while the obligation to comply with its own by-laws is in the nature of an agreement, that is not true for the obligation to observe the rules of natural justice? Such a division appears to me to be entirely artificial. It is true that the rules of natural justice are primarily of judicial origin, and they can in that sense be said to have their source in the law. However, the
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obligation which results could not be said to have its source in law solely (art. 1057 of the Civil Code). These rules do not change in nature when applied to contractual relations. Like the rules of contract, they represent supplementary law. If the agreement or the by-laws which have the nature of an agreement are silent on this point, then art. 1024 of the Civil Code is to be applied:
The obligation of a contract extends not only to what is expressed in it, but also to all the consequences which, by equity, usage or law, are incident to the contract, according to its nature.
Relying solely on the enactments and on principle, therefore, I conclude that the rules and by-laws infringed by the Board are contractual in nature. The relatively rare precedents that are to be found on this or similar points tend in general to confirm this conclusion.
In Beaudry v. Club St-Antoine, the Court of Review invalidated the by-law of a club which, in order to compel certain classes of its life members to contribute to its debts, imposed an additional charge on them. The Court of Review cited Anglo-American doctrine and English cases, and as the basis for its decision, fully endorsed the theory that the by-laws of a club are of a contractual nature.
In a well-known case, Club de la Garnison de Québec v. Lavergne, affirming Lavergne v. Club de la Garnison, Lavergne, who had been expelled from the Garnison Club, a social club, had his expulsion cancelled on the ground, inter alia, that it was contrary to the club’s by-law. At page 43, the Court of Appeal relied on an English decision and an English author, Weirtheimer, Law relating to clubs, 4th ed. Additionally, and though it was not necessary to decide whether the matter was one of contract or tort, the passages cited by the Court of Appeal place a clear emphasis on the contractual nature of the club’s by-laws. The Superior Court, the judgment of which was affirmed
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by the Court of Appeal on other grounds, stated squarely, at p. 353,
[TRANSLATION] that by becoming a member of the club, plaintiff became a party to the written contract or by-laws of the said club, binding him as well as all the other members.
This club, which had already existed as an association under the same name with a constitution and by-laws, was subsequently incorporated by a special Act of the Legislature, the Act to incorporate the Association known as: “The Quebec Garrison Club”, S.Q. 1880, 43‑44 Vict., c. 84, s. 2 of which continued the constitution, rules and regulations of the Association. The courts did not consider that this legislative provision altered the contractual nature of the Association’s by-laws.
In an earlier case, Monette v. Société St-Jean-Baptiste de Valleyfield, the contractual nature of the by-laws of the Société was also mentioned. Because of the way in which the case was drafted or reported, it is difficult to know whether that reference was based on the submissions made by the parties or an obiter of the Court, but no other theory was discussed.
Finally, in a decision of this Court preceding all the others, Union St-Joseph de Montréal v. Lapierre, Taschereau J., at p. 179, and Gwynne J. at pp. 182 and 183, apply the contractual theory, but it is true that the corporation in question was a mutual insurance society, in which the members had a patrimonial interest represented by their contributions.
As this aspect of the matter is not governed solely by civil law and is also affected by corporate law, we cannot pass over two cases which relate to matters in other provinces, but which are practically identical to the case at bar. They are, first, a decision of this Court, Vancouver Real Estate Board v. Moscrop Realty Ltd., in which an action
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for damages for the unlawful expulsion of an active member was allowed against a corporation similar to the Board. The by-laws of the “Board” were not complied with, and it was conceded in the Court of Appeal, in the course of an interlocutory proceeding, that the claim was based on the breach of a contractual obligation, Wyman and Moscrop Realty Limited v. Vancouver Real Estate Board, at p. 477. As may be seen from the final decision of the Court of Appeal, Wyman v. Vancouver Real Estate Board, at p. 22, the “Vancouver Real Estate Board” was incorporated pursuant to the Societies Act, R.S.B.C. 1948, c. 311, the provisions of which closely resemble those of Part III of the Companies Act under which the Board was established.
Vancouver Real Estate Board, supra, was followed by the Appellate Division of the Supreme Court of Alberta in Philipzyk v. Edmonton Real Estate Board Co-operative Listing Bureau Ltd., concerning the improper expulsion of an associate member of the “Board”, which had been established pursuant to The Co-operative Associations Act, R.S.A. 1970, c. 67. This legislation differs in part from Part III of the Companies Act, in that it provides that members of the Corporation hold a share of stock which may be repurchased by the “Board” if the member is expelled. The Appellate Division relied heavily on the contractual theory.
The Court was also referred to several cases of expulsion from labour unions. The precedents in this area are more numerous. I have not referred to them: most of these cases deal with unions subject to very special provisions, which for example may participate in legal proceedings without enjoying legal personality, or exercise their powers in the context of a closed shop: Seafarers’ International Union v. Stern. I doubt that these cases can be applied other than by a somewhat remote analogy. However, it should be emphasized, to the extent that they can be applied, that in general they embody the theory that the relations between
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a union and its members are contractual in nature: White v. Kuzych and Orchard v. Tunney. Only one decision of this Court appears to go in the opposite direction. This is International Association of Longshoremen, Local 375 v. Dussault, an English translation of which has been published. An action in damages was allowed against the union for the dismissal of certain of its members. The Court characterized the remedy as a remedy in tort. The case is an isolated one, prior to White v. Kuzych, supra, and Orchard v. Tunney, supra, in which it is not mentioned. It cannot be regarded as based on special points of Quebec law, but it is possible that it can be explained by special aspects of procedure and the fact that the plaintiffs based their action on art. 1053 of the Civil Code: the plaintiffs’ statement of claim contained an express allegation of malice and bad faith.
In my opinion the first question should be answered in the negative: the damages claimed are not prescribed.
II—Are some of the damages claimed prescribed?
This question was hardly dealt with in the pleadings and in the parties’ submissions.
It arises from the fact that appellant has claimed damages not only for loss of income but also, inter alia, for injury to his reputation.
It is important to reproduce here exactly what appellant is claiming under this second head of damages.
One of the conclusions of his statement of claim reads as follows:
as damages, compensation, for the humiliations, professional, personal and social, for the privations social and otherwise, the physical and mental sufferings and aggravations, the bomb threats and other threats, the attempts to intimidate and the attempts to bodily harm, the harassment and the worry endured by his wife and himself, an additional sum of…
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In his inscription in appeal in the Court of Appeal, he alleged that the trial judge dismissed his claim for damages
[TRANSLATION] not taking into account the almost irreparable harm done to his professional, social and personal reputation, and not taking into account the humiliation, privation and mental and physical suffering inflicted on, endured, by plaintiffs wife and plaintiff himself.
Finally, his inscription in appeal to the Court of Appeal also contained the following passage:
[TRANSLATION] These effects are ALL THE DAMAGES CAUSED, humiliation, privation, suffering, injury to professional, social and personal reputation, harm done to plaintiff-appellant, to his wife…
Opinion seems to be divided in the Quebec courts as to the nature of this type of damages. Some appear to think that such damages, in particular that resulting from injury to reputation, are necessarily delictual or quasi-delictual. If that were the case, this part of appellant’s claim would be prescribed.
The problem raised by this distinction often arose in Quebec at the period when delictual or quasi-delictual actions could be brought before a jury, whereas claims in damages for the breach of non-commercial contracts could not be. A plaintiff who claimed damages for breach of a civil contract and for injury to his reputation, or for any other loss of this kind, was often met by a dilatory exception which, if it was allowed, obliged him to choose between these two actions, since it was held that they could not be brought in the same type of proceeding.
In Ville de Montréal v. De Montigny, the Court of Appeal, reversing a judgment given by the Superior Court without reasons, denied respondent a trial by jury with respect to a claim in damages for breach of a contract of service. The statement of claim included the allegation that respondent had been humiliated by the fact that, as he did not receive his expected salary, he had
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had to occupy a more modest social position. The Court held that the action was entirely in contract.
In Vézina v. Corporation de la Ville de Mégantic, Vézina claimed from the City, as a result of his dismissal, the sum of $15,000, namely $13,000 for breach of contract and loss of salary and $2,000 for [TRANSLATION] “damages inflicted on his person, his reputation and his honour”. Surveyer J. of the Superior Court dismissed the City’s dilatory exception, relying inter alia on the following reasons:
[TRANSLATION] Whereas plaintiffs action is based on a single cause: the cancellation of his contract of employment by defendant corporation;
Whereas whatever the nature of the damages claimed as a result of this breach of contract, they do not cease to be contractual damages;
Whereas whatever may be the legal consequences of this breach of contract, no part of the claim for damages is capable of being heard by a jury: Cité de Montréal v. de Montigny, 11 R. de P. 273; 20 Q.B. 49.
In Pilon v. Samson, two doctors had concluded one contract in which one doctor sold to the other a joint half of real property, and another contract relating to division of the use of this real property and to a monthly contribution to a common fund. By his action, plaintiff sought to have these two contracts rescinded because defendant had not complied with the agreed obligations. He also sought damages. Finally, the statement of claim contained the following allegation:
[TRANSLATION] 22. Plaintiff further suffered damages to his reputation, his work and his patients as a result of the breach by defendant of his obligations, and the words and actions and the unlawful and damaging conduct of defendant or his employees, acting in the performance of their duties, or persons for whom defendant was legally responsible, damages which plaintiff for the purposes of this action reduces to the sum of five thousand dollars ($5,000).
Gagné J., expressing the unanimous opinion of the Court of Appeal, commented on this allegation as follows, at pp. 325 and 326:
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[TRANSLATION] …it would appear impossible legally to maintain that the facts alleged in paragraph 22 can be the basis of a trial by jury. There is no doubt that none of the parties could seek to obtain such a trial for damage to his reputation, and so on, as a result of the breach of his obligations by defendant. This is not a delictual matter, but clearly a matter of a departure from contractual obligations which have no commercial aspect.
There remain the words and actions and the unlawful and damaging conduct of defendant or his employees.
Plaintiff stated in his submission that only the words and actions of defendant relating to his obligations and to plaintiff’s rights under the contracts were in question. It would have been preferable to say this in the statement of claim, although it is implied by the wording of paragraph 22.
In any case, no specific amount is claimed for the damage allegedly caused by these words and actions by defendant, which are said to be delictual in nature. In order to be entitled to a trial by jury, the sum claimed by the action must exceed $1,000, as a result, clearly, of one of the reasons mentioned in art. 421 C.C.P.
The Court of Appeal, reversing the judgment of the Superior Court, dismissed the dilatory exception made by defendant because an amount exceeding $1,000, for delictual damages is not claimed in paragraph 22.
The report of Corporation du village de Danville v. Lamarche is brief to say the least, and even inaccurate. The complete text of this case discloses that it was a claim by the chief of police and of the firemen in the village. He had been hired for three years, but the contract provided that he could be dismissed earlier provided a certain sum of money was paid to him. He was dismissed and claimed this amount. However, he claimed additional compensation of $6,000 for the following reasons:
[TRANSLATION] The proceedings of defendant mentioned above, the defamatory misstatements made in its resolutions, the news of plaintiffs unjustified dismissal, in the circumstances related above, received wide publicity in the Danville region, and indeed throughout the province, and as a result plaintiff suffered considerable
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damages to his property, honour and reputation, damages which amount to at least $6,000.
Marchand, Bissonnette and Rinfret JJ.A. were of the opinion that this claim was separate from the other, and that it was delictual in nature because it was based on an allegation of defamation. St-Jacques and Barclay JJ.A., dissenting, were not able to distinguish this case from Pilon v. Samson, supra.
In Larichelière v. Hôpital Sainte Jeanne d’Arc de Montréal, a doctor who was dismissed from the hospital’s medical board in breach of a prior agreement sought to be reinstated and to be awarded damages. The damages claimed included damages for injury to the reputation and prestige of plaintiff, because of the publicity given to his dismissal, but it was not alleged that this publicity constituted a wrongful act distinct from the dismissal; it was related to the unlawful dismissal. Brossard J., then a judge of the Superior Court, made a thorough analysis of the question. He dismissed the dilatory exception by the hospital on the ground that the cause of action, so far as it related to damages, was essentially the fact of the dismissal. However, the case involved other complications resulting from the form of certain allegations, which need not be discussed here.
In Corporation du Gaz Naturel du Québec v. Frank, the Court of Appeal, reversing the Superior Court, allowed a dilatory exception: the plaintiff claimed damages for unlawful dismissal and other damages because his employer’s manager had struck him in the head.
In Ruel v. Banque Provinciale du Canada, a case only reported in summary form, the question was also one of dismissal and damage to reputation, but the dismissal was held to be justified and lawful, and it was further held that the Bank had not wrongfully participated in the gossip and rumour that allegedly injured plaintiffs reputation.
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Finally, in Lido Construction Inc. v. Crédit Sorel Inc., a judgment also reported in summary form, the Superior Court appears to have dismissed a claim for damages for injury to reputation because the action was based on contractual liability. However, this is probably an obiter dictum, because it was held that damages to reputation had not been established.
In short, there appears to be general agreement on the principle, although in some specific cases, such as Corporation du village de Danville, supra, application of the principle has resulted in difficulties of interpretation. In my opinion, the principle is most concisely stated by Surveyer J. in Vézina, supra; this is the principle applied by the Court of Appeal in Pilon, supra, and by the Superior Court in Larichelière, supra. If the damages claimed result from a single cause of action, which is the breach of a contractual obligation, the damages will be characterized as contractual damages and will only be prescribed after thirty years. If they result from several separate and independent causes of action, as was clearly the case in Corporation du Gaz Naturel du Québec, supra, they must be regarded as contractual or delictual depending on whether they originate in the breach of a contract or in an offence or quasi-offence, and they will be prescribed accordingly.
Applying these principles to the case at bar, I would say that the damages which appellant is claiming for injury to his professional, personal or social reputation, for humiliation, mental and even physical suffering, result from a single cause of action, his improper suspension and expulsion from the Board. They are associated with this suspension and expulsion, and do not result from any defamation or other separate offence. Accordingly, in my opinion the damages are not prescribed and appellant is entitled to them if they are established. Furthermore, such damages, especially the damages to professional reputation, may only be another way of designating a reduction or cessation of income caused, for example, by the loss of certain clients.
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On the other hand if, as appellant alleged, he suffered loss as a result of “bomb threats and other threats, the attempts to intimidate and the attempts to inflict bodily harm”, in my opinion such damage is prescribed. This damage results from typical offences, which are separate causes of action and distinct from his suspension and expulsion by the Board.
So far as the damages which may have been suffered by appellant’s wife are concerned, I think it is clear and therefore almost superfluous to note that appellant cannot claim these for her, quite apart from the question of prescription.
I would allow the appeal, set aside the judgment of the Court of Appeal and that part of the judgment at trial which dismissed the appellant’s claim in damages, and return the case to the Superior Court for the determination of the amount of the damages which the appellant may have sustained as a result of his suspension and expulsion from the Montreal Real Estate Board. The appellant is entitled to his costs in this Court and in the Court of Appeal. The costs relating to the claim in damages will be determined by the Superior Court.
Appeal allowed with costs and record returned to the Superior Court to determine the amount of the damages.
Solicitor for the appellant: Robert Décary (Counsel), Hull, Quebec.
Solicitors for the respondent: Campbell, Pepper, Laffoley, Montreal.
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