SUPREME
COURT OF CANADA
Between:
Harry
Dikranian
Appellant
and
Attorney General
of Quebec
Respondent
Official English Translation
Coram:
McLachlin C.J. and Bastarache, Binnie, LeBel, Deschamps, Abella and Charron JJ.
Reasons for
Judgment:
(paras. 1 to 55)
Dissenting
Reasons:
(paras. 56 to 70)
|
Bastarache J. (McLachlin C.J. and Binnie, LeBel, Abella
and Charron JJ. concurring)
Deschamps J.
|
______________________________
Dikranian v. Quebec (Attorney General), [2005] 3
S.C.R. 530, 2005 SCC 73
Harry Dikranian Appellant
v.
Attorney General of Quebec Respondent
Indexed as: Dikranian v.
Quebec (Attorney General)
Neutral citation: 2005 SCC 73.
File No.: 30243.
2005: March 10; 2005: December 2.
Present: McLachlin C.J. and Bastarache, Binnie, LeBel,
Deschamps, Abella and Charron JJ.
on appeal from the court of appeal for quebec
Contracts — Student loans — Loan repayment terms —
Vested rights — Clause of student loan contract incorporating by reference
legislative provisions relating to exemption from paying interest during
specified period — Legislative amendments reducing and then eliminating
interest exemption period — Whether student having vested right with respect to
duration of exemption period applicable to payment of interest — Whether
legislative amendments having effect of limiting rights conferred on student in
contract with financial institution — An Act respecting financial assistance
for students, R.S.Q., c. A‑13.3, s. 23 — An Act to amend the
Act respecting financial assistance for students and the General and Vocational
Colleges Act, S.Q. 1996, c. 79, s. 5 — An Act to amend the Act
respecting financial assistance for students, S.Q. 1997, c. 90,
ss. 4, 5, 13.
In Quebec, the repayment terms for student loans are
set out in the Act respecting financial assistance for students. The
appellant obtained student loans between 1990 and 1996 and completed his
studies in January 1998. According to the loan certificate signed by the
appellant with his financial institution in 1996, the appellant had to begin
repaying the principal and paying the interest on the loan upon the expiration
of the exemption period. However, as a result of amendments to the Act
respecting financial assistance for students that came into force in 1997
and 1998, the financial institution charged the appellant interest on his loan
that, under the certificate, was supposed to have been paid by the government.
The appellant was authorized to institute a class action against the government
seeking reimbursement of the interest paid. The Superior Court and the
majority of the Court of Appeal dismissed the action, concluding that the 1997
and 1998 legislative amendments covered all student loans contracted before and
after the amendments came into force.
Held (Deschamps J.
dissenting): The appeal should be allowed.
Per McLachlin C.J.
and Bastarache, Binnie, LeBel, Abella and Charron JJ.: In 1996, the appellant
and the financial institution signed a loan certificate provided by the
government, thereby turning the certificate into a contract and crystallizing
the parties’ rights and obligations, including the interest payment terms. The
appellant thus had a vested right with respect to the duration of the exemption
period applicable when the contract was signed, since his legal situation (1)
was tangible and concrete, and (2) was constituted at the time of the new
statute’s commencement. It is presumed, in the absence of a clear indication
in a statute to the contrary in light of the entire context, that the
legislature did not intend to violate the principle against interference with
vested rights. [32] [36‑37] [43] [49] [54]
In the instant case, this vested right was not
affected by the 1997 amending legislation. That legislation does not contain
any transitional provision that might justify a conclusion that the legislature
clearly intended to apply the new provisions so as to limit the rights of borrowers.
Just because the government argues for the immediate and future application of
the legislation does not mean it is authorized to interfere with rights
conferred on the appellant in his contract. Moreover, the 1997 legislation
does not refer to contracts that have already been entered into and therefore
cannot apply to them. Finally, there is no evidence in the record that
justifies imputing to the legislature an intention to interfere with vested
rights. [44] [54]
Nor does s. 13 of the 1998 amending legislation,
according to which the provisions of the statute apply to “juridical situations
in progress” at the time of their coming into force, clearly state the
legislature’s intention to change the terms of contracts of loan that had
already been entered into. Section 13 does not provide that the
amendments apply to contracts or “contractual situations”. Furthermore, the
appellant’s rights and obligations were no longer “in progress”, since they had
been definitively concluded under the terms and conditions of the contract. In
the general context of the plan, the expression “juridical situations in
progress” applies to a student who has received a loan certificate but not yet
signed it (nor has the financial institution done so). In light of the ambiguity
of s. 13, it is necessary to apply the principle against interference with
vested rights. [45‑50]
The administrative grounds raised by the government do
not justify disregarding the express wording of the private contract. It is
perfectly normal for some students who completed their studies on the same date
to be treated differently if they obtained their student loans at different
times and signed different loan agreements on an informed basis. It is the
very foundation of the individualized contractual right that leads to this
result. [52]
Per Deschamps J.
(dissenting): In declaring, in s. 13, that the 1998 amending legislation
applied to “juridical situations in progress”, the Quebec legislature clearly
indicated that the statute applied with immediate effect to the exemption
period for the payment of interest by the appellant to his financial
institution. This expression applies not only to situations that are still
being formed, but also to the effects of a given juridical situation. The Act
respecting financial assistance for students thus applies to the contract
between the appellant and his financial institution. An interpretation that
denies that a juridical situation is still “in progress” when it has been
formed, has not been extinguished and is producing effects is not consistent
with the theory on which the legislature relied. Finally, the doctrine of
vested rights should not be relied on to decide the instant case. Common law
concepts that place a strong emphasis on this doctrine do not apply where an
approach based on the immediate application of legislation and the concept of
juridical situations in progress is adopted. [56‑58] [64]
Cases Cited
By Bastarache J.
Applied: Épiciers
Unis Métro‑Richelieu Inc., division “Éconogros” v. Collin, [2004] 3 S.C.R. 257, 2004 SCC 59; referred to: Venne v.
Quebec (Commission de protection du territoire agricole), [1989] 1 S.C.R.
880; Attorney General of Quebec v. Expropriation Tribunal, [1986] 1
S.C.R. 732; Gustavson Drilling (1964) Ltd. v. Minister of National Revenue,
[1977] 1 S.C.R. 271; Upper Canada College v. Smith (1920), 61 S.C.R.
413; Acme Village School District (Board of Trustees of) v. Steele‑Smith,
[1933] S.C.R. 47; Spooner Oils Ltd. v. Turner Valley Gas Conservation Board,
[1933] S.C.R. 629; Bell ExpressVu Limited Partnership v. Rex, [2002] 2
S.C.R. 559, 2002 SCC 42; Scott v. College of Physicians and Surgeons of
Saskatchewan (1992), 95 D.L.R. (4th) 706; Abbott v. Minister for Lands,
[1895] A.C. 425; Massey‑Ferguson Finance Co. of Canada v. Kluz,
[1974] S.C.R. 474; Marchand v. Duval, [1973] C.A. 635; Holomis v.
Dubuc (1974), 56 D.L.R. (3d) 351; Ishida v. Itterman, [1975] 2
W.W.R. 142; Township of Nepean v. Leikin (1971), 16 D.L.R. (3d) 113; Location
Triathlon Inc. v. Boucher‑Forget, [1994] R.J.Q. 1666.
By Deschamps J. (dissenting)
Épiciers Unis Métro‑Richelieu Inc., division
“Éconogros” v. Collin, [2004] 3 S.C.R. 257, 2004
SCC 59; Montréal (Ville) v. 9013‑5286 Québec inc., [2002] Q.J.
No. 2631 (QL); Medovarski v. Canada (Minister of Citizenship and
Immigration), [2005] 2 S.C.R. 539, 2005 SCC 51.
Statutes and Regulations Cited
.Act respecting financial
assistance for students, R.S.Q., c. A‑13.3, ss. 15, 23, 24,
27, 28, 29, 40, 41, 62.
Act respecting the
implementation of the reform of the Civil Code,
S.Q. 1992, c. 57, ss. 2, 3, 4.
Act to amend the Act respecting
financial assistance for students, S.Q. 1997,
c. 90, ss. 4, 5, 13.
Act to amend the Act respecting
financial assistance for students and the General and Vocational Colleges Act, S.Q. 1996, c. 79, s. 5.
Civil Code of Québec, S.Q. 1991, c. 64, art. 625, 1372, 1385, 1387, 1457.
Consumer Protection Act, R.S.Q., c. P‑40.1.
Interpretation Act, R.S.Q., c. I‑16, s. 12.
Regulation respecting financial
assistance for students, R.R.Q., c. A‑13.3,
r. 1, 56.
Authors Cited
Côté, Pierre‑André. The
Interpretation of Legislation in Canada, 3rd ed. Scarborough, Ont.:
Carswell, 2000.
Côté, Pierre‑André, et
Daniel Jutras. Le droit transitoire civil: Sources annotées.
Cowansville, Qué.: Yvon Blais, 1994.
Driedger, Elmer A. Construction
of Statutes, 2nd ed. Toronto: Butterworths, 1983.
Droit civil québécois, t. 8. Comité de rédaction, Denys‑Claude Lamontagne et autres.
Montréal: Publications Dacfo, 1993 (feuilles mobiles mises à jour mai 2003).
Mazeaud, Henri, Léon et Jean, et
François Chabas. Leçons de droit civil, t. 1, vol. 1, Introduction
à l’étude du droit, 11e éd. par François Chabas. Paris:
Montchrestien, 1996.
Roubier, Paul. Le droit
transitoire: conflits des lois dans le temps, 2e éd.
Cowansville, Qué.: Yvon Blais, 1993.
Sullivan, Ruth. Sullivan and
Driedger on the Construction of Statutes, 4th ed. Markham, Ont.:
Butterworths, 2002.
APPEAL from a judgment of the Quebec Court of Appeal
(Beauregard, Rothman and Forget JJ.A.), [2004] Q.J. No. 303 (QL),
affirming a judgment of Journet J., [2002] R.J.Q. 969, [2001] Q.J. No.
6159 (QL), dismissing the appellant’s action. Appeal allowed, Deschamps J.
dissenting.
Leon J. Greenberg and
Guy St‑Germain, for the appellant.
Mario Normandin, for
the respondent.
English version of the judgment of McLachlin C.J. and
Bastarache, Binnie, LeBel, Abella and Charron JJ. delivered by
Bastarache J. —
1. Introduction
1
The class action giving rise to this appeal was instituted by
Mr. Dikranian on behalf of approximately 70,000 students; it concerns
the recovery of interest paid on student loans granted under the former Act
respecting financial assistance for students, R.S.Q., c. A‑13.3
(“AFAS”), and the Regulation respecting financial assistance for
students, R.R.Q., c. A‑13.3, r. 1 (“RFAS”).
2
The problem in the case at bar stems from the fact that the loans were
made under private contracts between individual financial institutions and
students while the repayment terms have been set by the government in the AFAS
and the RFAS. The Minister of Education (“Minister”) has imposed these
terms by incorporating them into a loan certificate that must be obtained to
enter into a contract of loan, to which the Minister is not a direct party.
3
The instant case results from two amendments to the AFAS and
the RFAS — one in 1997 and the other in 1998 — that reduced the
period during which students are exempt from making interest payments and
repayments on the principal. It must first be established whether, considering
that the first amendment contained no transitional provisions, that amendment
applied to loans that had already been granted. It will then be necessary to
determine the meaning and scope of the transitional provision in the second
legislative amendment, according to which the new provisions apply to
“juridical situations in progress”.
4
The student aid plan in place prior to the AFAS was based on
administrative contracts (see the Web site of Quebec’s Aide financière aux
études, www.afe.gouv.qc.ca/english); under that plan, the government set the
terms of the contract and could amend them as it saw fit at any time. Under
the current plan, however, a certificate is issued in which the Minister
guarantees the loan should the student default on it (AFAS, ss. 27,
28 and 29) (see Appendix) and pays the interest during the exemption period (AFAS,
s. 24) (see Appendix). After the certificate is issued, the student
enters into a private contract with a financial institution. Although the
government dictates some of the terms of the contract by incorporating them in
the certificate it issues, it is not a party to the contract. The government
neither grants the loan nor approves it. The government makes parallel
commitments in accordance with the AFAS. The issue here is whether, in
the instant case, the changes to these legal obligations have had the effect of
limiting the rights conferred on the student in his or her contract with the
financial institution.
5
This means that there is no need for me to consider the exact nature of
the legal relationship between the government and the student. The substantive
issue is whether the National Assembly can alter the private law relationship
between the financial institution and the student and, if so, whether the
legislative amendments of 1997 and 1998 satisfy the conditions under which it
may do so.
2. Origin
of the Case
6
Student loans in Quebec are governed by the AFAS and the RFAS.
The Minister issues, to a student who is entitled to it under the RFAS,
a loan certificate authorizing the student to contract a loan with a financial
institution recognized by the Minister within 90 days. The government
pays the interest (AFAS, s. 24) and guarantees the repayment of the
principal. Before 1997, the legislation exempted students who had completed
their studies from paying interest on their loans for a period specified in the
loan certificate.
7
On July 1, 1997 (the day the first amending statute came into
force), the National Assembly reduced the period during which student borrowers
were exempt from making interest payments and repayments on the principal by
one month: An Act to amend the Act respecting financial assistance for
students and the General and Vocational Colleges Act, S.Q. 1996,
c. 79 (“Amending Act, 1997”), s. 5. For students who, like
the appellant, completed their studies during the winter trimester, the date on
which interest payments and repayments on the principal were to begin was
brought forward from January 1, 1999 to December 1, 1998.
Effective May 1, 1998 (the day the second amending statute came into
force), students had to begin paying the interest as soon as they completed
their studies: An Act to amend the Act respecting financial assistance
for students, S.Q. 1997, c. 90 (“Amending Act, 1998”), ss. 4
and 5.
8
The appellant obtained student loans between 1990 and 1996. He signed
the last loan certificate with his financial institution, the Royal Bank of
Canada, on November 15, 1996. The certificate issued by the Minister
stated that the appellant could borrow an additional $4,255, which, after the
amounts were consolidated, increased the total of his student loans from
$22,510 to $26,765. The appellant completed his studies on about
January 31, 1998, in the winter trimester. According to
clause 10 of the loan certificate, he had to begin repaying the principal
and paying the interest on the loan upon the expiration of the exemption
period, that is, on January 1, 1999.
9
Around July 21, 1998, the appellant inquired about the
repayment of his loan. A Royal Bank representative informed him verbally that
interest on the loan had been debited since June 1, 1998 and that the
principal would be repayable as of December 1, 1998, in accordance with
the directives issued by Aide financière aux étudiants. As a result of the
1997 and 1998 legislative amendments, the appellant was being charged interest
on his loan that, under the certificate signed in 1996, was supposed to have
been paid by the Minister.
10
On August 7, 1998, the appellant repaid the principal of the loan
and paid, without prejudice, $308.53 for the interest accrued from June 1
to August 6, 1998.
11
The appellant was authorized to institute, on behalf of himself and
other students forming a specific group, a class action against the respondent,
the Attorney General of Quebec, seeking reimbursement of the interest paid on
the loans that had been granted (Dikranian v. Québec (Ministère de
l’Éducation), [1999] Q.J. No. 2086 (QL) (Sup. Ct.), per Lévesque J.).
He argued that Quebec’s Ministère de l’Éducation had to pay that interest in
accordance with the loan certificate issued before the legislative amendments
were passed.
3. Judicial
History
12
On December 13, 2001, Journet J. of the Superior Court
dismissed the appellant’s action. On January 27, 2004, a
majority of the Court of Appeal dismissed his appeal, Rothman J.A.
dissenting.
3.1 Superior
Court ([2002] R.J.Q. 969)
13
Journet J. began by rejecting the appellant’s arguments based
on the provisions of the Civil Code of Québec, S.Q. 1991,
c. 64 (“C.C.Q.”), concerning contracts of adhesion as well as his
arguments relating to the Consumer Protection Act, R.S.Q., c. P‑40.1.
He found that the rights and obligations of the financial institution and the
student were governed by the statute and the regulation, and not by the loan
certificate. The rights and obligations were not imposed by one of the parties
to the contract, as is the case with a contract of adhesion. They simply
flowed from the exercise of statutory or regulatory powers. In his view, a
mandatory provision of a statute or regulation cannot be nullified pursuant to
the C.C.Q. on the ground that, because it is incorporated into a
contract, it is contractual in nature. This would be [translation] “to confuse and distort concepts of nullity that
were incompatible with each other — the rules of nullity applicable to
contracts on the one hand and the rules of nullity and invalidity applicable to
statutes and regulations on the other” (para. 76). Journet J. was of
the opinion that the loan certificate was not in itself a contract but rather a
juridical act issued pursuant to an enactment governing the rights and
obligations of the parties referred to therein.
14
Journet J. then addressed the question of the retroactivity of the
legislation. In his view, the issue was the immediate applicability of the
legislation, not its retroactive application. He noted that the two amending
statutes did not state that their provisions would take effect before they came
into force. He added the following:
[translation]
Section 13 of the 1997 statute states that the new provisions of
the Act are applicable to the juridical situations in progress at the time of
their coming into force. This statutory provision shows that the legislature
intended the new legislation to apply immediately to all existing and future
loans.
The Court does not see how it could conclude that
the two new statutes created different juridical situations for loans made
before and after their enactment. In the absence of a provision to the
contrary, every statute must apply immediately, both to contracts entered into
before and to those entered into after it comes into force.
The Court notes that there cannot be multiple sets
of repayment terms for students completing their studies in the same trimester
unless specific legislative provisions so indicate.
The Court must favour an interpretation that
results in the uniform application of one legislative scheme rather than a
multiplicity of schemes.
The interpretation suggested by [the appellant] for
dealing with the temporal effect of the 1996 and 1997 statutes on the [AFAS]
leads to unfair and different treatment of students who are nonetheless in the
same situation, that is, who complete their studies in the same trimester and
with the same loan amount to repay. If we accept the argument of [the
appellant], only some of these students, he being one of them, would have to
pay less interest on their loans and would thus obtain benefits not granted to
others. [Emphasis deleted; paras. 88‑92.]
15
Finally, on the issue of vested rights, Journet J. noted that none
of the students concerned, the appellant included, had completed their studies
at the time the two statutes giving rise to the conflicting interpretations
were enacted. The appellant had accordingly not taken advantage of the
exemptions provided for in the original statute as of the time when the new
provisions were enacted. He could not therefore claim to have vested rights.
3.2 Court
of Appeal ([2004] Q.J. No. 303 (QL))
16
The appellant appealed from this judgment but was unsuccessful.
3.2.1 Forget J.A.
17
Forget J.A., Beauregard J.A. concurring, was of the opinion that
the appeal should be dismissed. His brief reasons for judgment read as
follows:
[translation]
With due respect for the opinion of Rothman J.A., I am of the view that
the trial judgment was correct.
While the relationship between the student and the
financial institution can be characterized as contractual, the same cannot be
said of the relationship between the student and the government under the Act
respecting financial assistance for students, which implements a public
program to facilitate access to education.
The amendments introduced by the 1996 and 1997
statutes applied immediately and governed active loans.
I would dismiss the appeal with costs.
[paras. 48‑51]
3.2.2 Rothman J.A.
18
Rothman J.A. accepted the appellant’s arguments. To begin with, he
found that the loan certificate imposed obligations on the appellant that were
clearly contractual in nature. He wrote the following:
While it is true, as the trial judge indicates, that the financial
assistance programs created under the Act are worthy social programs designed
to encourage equal accessibility to education for all Quebec students, the
program of student loans contemplated in the Act did nevertheless impose
contractual obligations upon students who obtained these loans, contractual
obligations which included conditions as to the repayment of the capital of the
loans as well as conditions concerning the payment of interest. One of the
conditions in this contract stipulated the period of the loans during which the
student was to be exempt from the payment of interest.
The certificate of loan, issued by the Department
and signed by the student as well as the financial institution, is in the form
of a contract and the clauses setting out the conditions of the loan contain
numerous references to “this contract”. Any reasonable borrower or lender
reading the document would consider himself bound by a contract.
And while it is true that the Department did not
itself sign the document, it was the Department that issued it to the student
and it was the Department that had stipulated the conditions of repayment of
capital and the exempt period for the payment of interest by the student. The
Department was, moreover, itself contractually involved in the loan made to the
student in that it guaranteed the repayment of the capital of the loan as well
as the payment of interest to the financial institution, including the payment
of interest for the period during which the student was exempt from interest
payment.
In sum, while the programs created under the Act
can fairly be characterized as social and educational, the obligations and the
rights of students under their loan agreements with the lenders were
substantially contractual.
I do not wish to suggest, of course, that the Financial
Assistance for Education Expenses Act did not govern the relationship
between the lending banks and the students and the relationship between the
Banks and the Government.
. . .
But that being said, once it has been concluded
that the contractual rights and obligations of a student borrower and a lender
bank satisfy the requirements of the statute and the regulations, we must
logically look to the contract concluded and the law that then existed to
determine the rights and obligations of the borrowing student.
Unless the subsequent amendments to the law are
expressly stipulated to be retroactive or are retroactive by necessary
implication, I can see no basis for applying provisions in the amendments in
conflict with the rights of the parties under their contract and the law which
was applicable when it was concluded . . . . On signing the
contract of loan, the student had no reason to believe that the Government
might, by simple legislative amendment, rewrite his contract with the bank and
modify his interest obligation. Nor, in the absence of an intention, expressed
or tacit, to impair the rights of the student under his loan contract, do I see
any basis for interpreting the amendments in a manner that would have that
effect. [paras. 21‑27]
19
Rothman J.A. pointed out that the 1997 and 1998 amendments, if
applicable, would have had the effect of retroactively reducing the interest
exemption period provided in the appellant’s loan certificate. Yet this would
have offended the principle against the retroactivity of legislation. He
stated: “I can see no necessary implication that would require this
interpretation” (para. 33). He added the following:
Nor can I easily accept that the phrase “[. . .
juridical situations in progress . . .]” was intended to make the 1997 and 1998
amendments applicable so as to reduce the interest exemption period provided in
the previously existing statute and in the contract signed by the borrowing
student and the lending bank. In my respectful opinion, once the loan was
approved by the Department and the contract of loan was signed by the student
and the bank, appellant's obligation to pay interest and his exemption from the
payment of interest were not “[juridical situations in progress]”. They were
rights and obligations which were no longer “in progress”. They were
crystallized, finalized and definitively concluded under the terms and
conditions of the contract.
There is no suggestion in the law or the contract
that the obligations of the student or the bank as regards the payment of
interest by the student or the duration of the exemption period were subject to
discussion or change. These were matters definitively concluded in the
contract insofar as appellant and the Bank were concerned. Appellant had no
right to demand that the exemption period be extended and the Bank had no right
to demand that the exemption be reduced. The Government had no right to demand
that its guarantee in favour of the bank be reduced. What “[juridical
situations]” remained “[in progress]”? Absolutely none. [paras. 34‑35]
20
Rothman J.A. then noted that, in the absence of an express or tacit
intention to do so, a new law should not be read as impairing vested
rights. He wrote:
In the 1998 amendment, Sec. 13 provided that
the amending provisions would apply to “[. . . juridical situations in progress
at the time of their coming into force].”
While it is true that when the 1998 amendment came
into force, appellant had not yet ended the period of exemption provided in his
contract, I find it hard to imagine that the Legislature intended, in adopting
the 1998 amendment, to change the interest exemption period of a contract
of loan that had previously been concluded merely on the basis that the period
of exemption had not yet expired.
When appellant undertook the loan, he did so under
specific conditions for repayment of capital and payment of interest. There
was no suggestion in the certificate of loan issued by the Department or in the
contract that these conditions might be changed at any time. Nor is an
interest exemption period, by its nature, of a kind that would be subject to
periodic change. Appellant had every right to expect that his obligations for
the repayment of capital and the payment of interest were those set out in the
contract and that these conditions would be respected. Appellant fulfilled his
obligations in repaying the loan and paying the interest on the loan under the
terms required under his contract.
In the absence of very clear terms in the amending
statutes establishing that the Legislature intended to impair
appellant's rights under his existing contract, I can see no reason why
the Government should not respect the rights and obligations existing under
that contract. If that means the payment of interest by the Government for the
period of exemption in the contract, so be it. That was the basis on which the
certificate was issued and the contract was signed.
I would find it very difficult to interpret the
words “[. . . juridical situations in progress . . .]” as evidence of an
intention on the part of the Legislature to vary the terms of a loan contract
that was concluded prior to the coming into force of the new law.
[paras. 39‑43]
4. Analysis
21
Simply put, the Court must answer the following
questions: whether the version of the AFAS in force on
November 15, 1996, when the certificate was signed, governs the
interest exemption period applicable upon the completion of studies; and
whether the new legislative provisions altered the terms of the contract of
loan that had been entered into before they came into force.
22
As a preliminary matter, I would like to make it clear that the plan set
up by the AFAS and the RFAS is a complete one. This appeal does
not concern the application of either the Act respecting the implementation
of the reform of the Civil Code, S.Q. 1992, c. 57 (“Implementation
Act”), or the transitional provisions set out in that Act. Nor is it
either helpful or necessary to refer to the rules relating to consumer
protection.
4.1 Legal Nature of the Relationship Between
the Parties
4.1.1 Contractual Relationship
23
The starting point for this analysis is the observation that there is a
private law contract between the student and the financial institution, and the
terms of the contract leave no doubt in this regard (arts. 1372, 1385 and
1387 C.C.Q.). The two parties signed the loan certificate and made
specific undertakings. There is no question that the contractual relationship
between the student and the financial institution has a special feature, as the
Minister, who is not a signatory, has unilaterally undertaken to guarantee the
loan and pay the interest for a certain time.
24
It appears that the AFAS implicitly recognizes the contractual
relationship established between the student and the financial institution.
The version of s. 15 that was in force at the time of the events that led
to the dispute provided as follows:
15. The Minister shall issue, to a student
who is entitled to it and who is enrolled or deemed to be enrolled within the
meaning of the regulation, a loan certificate authorizing him to contract
a loan with a financial institution recognized by the Minister. The modalities
of presentation of the certificate and payment of the loan shall be determined
by regulation.
Before the
amendments, the verb “contract” was also used in ss. 40, 41 and 62 of the AFAS
and in s. 56 of the RFAS.
25
In short, any reasonable borrower or lender reading the document would
consider himself or herself bound by a contract, as Rothman J.A. stated. It
also appears that all the parties involved in this case recognize the
contractual relationship between the student and the financial institution.
4.1.2 Contract of Loan: Loan
Certificate
26
The contract of loan signed by the student and the financial institution
on November 15, 1996 contains the following clauses:
This contract is signed in accordance with the prescriptions of the Act
respecting financial assistance for students (R.S.Q., c. A‑13.3),
the Regulation thereunder (A‑13.3, r. 1) and the prescriptions of
the Loan Guaranty Program for the Purchase of a Microcomputer, if applicable.
Without restricting the scope of the above, the parties also agree to
the following:
LOAN UNDER THE ACT RESPECTING FINANCIAL ASSISTANCE FOR STUDENTS
5. The student is exempt from payment of interest on the principal
loaned by the financial institution, under the Act respecting financial
assistance for students, for the exemption period defined in section 23 of
the Act, which is cited in clause 10 of this contract.
. . .
10. Exemption period “means the period beginning on the date on which
the borrower obtains a first loan or on which he becomes a full‑time
student again after having ceased to be so, and ending
1o on 1 April, for a borrower
who completes or abandons his full‑time studies during or at the end of
the preceding summer trimester;
2o on 1 August, for a borrower
who completes or abandons his full‑time studies during or at the end of
the preceding autumn trimester;
3o on 1 January, for a borrower
who completes or abandons his full‑time studies during or at the end of
the preceding winter trimester” (R.S.Q., c. A‑13.3,
s. 23).
Under the
contract of loan, the appellant, who completed his studies on
January 31, 1998 (winter trimester), was therefore obliged to repay
the principal and assume the interest payments on his loan as of the expiration
of the exemption period, that is, on January 1, 1999.
27
The reference to the AFAS has the effect of incorporating the relevant
provisions of the AFAS. Moreover, this reference relates specifically
to the juridical situation that existed when the certificate was signed, that
is, before the legislative amendments. Rothman J.A. shared this view:
But that being said, once it has been concluded
that the contractual rights and obligations of a student borrower and a lender
bank satisfy the requirements of the statute and the regulations, we must
logically look to the contract concluded and the law that then existed to
determine the rights and obligations of the borrowing student. [para. 26]
28
Thus, the substantive issue is whether the rights conferred by the
contract of loan can be unilaterally modified by the legislature, which is not
a signatory to the contract.
4.2 Vested Rights
29
Before considering the question of vested rights, I would like to note
that a distinction must be drawn between the principle of vested rights and the
principle against retroactivity. This issue is of great importance here. The
Attorney General of Quebec submits that the principle of the retroactivity of
legislation is not in issue and asks the Court to apply the principle of the
retrospectivity of legislation that was recently reiterated in Épiciers Unis
Métro‑Richelieu Inc., division “Éconogros” v. Collin, [2004]
3 S.C.R. 257, 2004 SCC 59. However, it should be noted
right away that Épiciers Unis dealt with the application of the Implementation
Act, ss. 2 and 3 of which indicate that “the recent reform of the Civil
Code is based not on the principles established at common law, principles
which give great importance to vested rights. Rather, it is a system
essentially based on the ideas of the French jurist Paul Roubier, a system
which clearly dispenses with the notion of vested rights” (P.‑A. Côté,
The Interpretation of Legislation in Canada (3rd ed. 2000), at
p. 118). This appeal does not concern a dispute resulting from the coming
into force of the C.C.Q. We must therefore apply the Interpretation
Act, R.S.Q., c. I‑16, which gives effect to the principle of
“acquired rights” in s. 12.
4.2.1 Distinctions
Between Vested Rights and Retroactivity
30
Vested rights result from the crystallization of a party’s rights and
obligations and the possibility of enforcing them in the future.
Professor Côté writes that, “[w]ithout being retroactive, a statute can
affect vested rights; correspondingly, a statute can have a retroactive effect
and yet not interfere with vested rights” (p. 156). In general, it will
be purely prospective statutes that will threaten the future exercise of rights
that were vested before their commencement: Côté, at p. 137.
31
Although the courts have in the past analysed the same question from the
perspective of either the presumption against interference with vested rights
or the presumption against retroactive legislation, there remains, as the
submissions of the parties in the instant case demonstrate, a clear distinction
between these two rules of construction: Venne v. Quebec (Commission de
protection du territoire agricole), [1989] 1 S.C.R. 880, at
p. 906; Attorney General of Quebec v. Expropriation Tribunal,
[1986] 1 S.C.R. 732, at pp. 741 and 744; Gustavson Drilling
(1964) Ltd. v. Minister of National Revenue, [1977] 1 S.C.R. 271,
at pp. 279 and 282.
4.2.2 Statement of Principle
32
The principle against interference with vested rights has long been
accepted in Canadian law. It is one of the many intentions attributed to
Parliament and the provincial legislatures. As E. A. Driedger states in Construction
of Statutes (2nd ed. 1983), at p. 183, these presumptions
were designed as protection against interference by the state with the
liberty or property of the subject. Hence, it was “presumed”, in the absence of
a clear indication in the statute to the contrary, that Parliament did not
intend prejudicially to affect the liberty or property of the subject.
This had
already been accepted by Duff J. in Upper Canada College v. Smith
(1920), 61 S.C.R. 413, at p. 417:
. . . speaking generally it would not only be widely
inconvenient but “a flagrant violation of natural justice” to deprive people of
rights acquired by transactions perfectly valid and regular according to the
law of the time.
(See also Acme
Village School District (Board of Trustees of) v. Steele‑Smith,
[1933] S.C.R. 47, at p. 51; R. Sullivan, Sullivan and
Driedger on the Construction of Statutes (4th ed. 2002), at
pp. 569‑70.)
33
The leading case on this presumption is Spooner Oils Ltd. v. Turner
Valley Gas Conservation Board, [1933] S.C.R. 629, at p. 638,
where this Court stated the principle in the following terms:
A legislative enactment is not to be read as prejudicially affecting
accrued rights, or “an existing status” (Main v. Stark [(1890),
15 App. Cas. 384, at 388]), unless the language in which it is
expressed requires such a construction. The rule is described by Coke as a
“law of Parliament” (2 Inst. 292), meaning, no doubt, that it is a
rule based on the practice of Parliament; the underlying assumption being that,
when Parliament intends prejudicially to affect such rights or such a status,
it declares its intention expressly, unless, at all events, that intention is
plainly manifested by unavoidable inference.
34
The principle has since been codified in interpretation statutes.
The Interpretation Act is no exception:
12. The repeal of an act or of regulations made under its
authority shall not affect rights acquired . . . and the
acquired rights may be exercised . . . notwithstanding such
repeal.
4.2.2.1 Rule of Construction
35
In the past, this Court has stressed that the presumption against
interference with vested rights could be applied only if the relevant
legislation were ambiguous, that is, reasonably susceptible of two constructions
(see Gustavson Drilling, at p. 282; Acme Village School District,
at p. 51; Venne, at p. 907).
36
This statement must be qualified somewhat in light of this Court’s
recent decisions. As Professor Sullivan says, care must be taken not to
get caught up in the last vestiges of the literal approach to interpreting
legislation:
In so far as this language echoes the plain meaning rule, it is
misleading. The values embodied in the presumption against interfering with
vested rights, namely avoiding unfairness and observing the rule of law, inform
interpretation in every case, not just those in which the court purports to
find ambiguity. The first effort of the court must be to determine what the
legislature intended, and . . . for this purpose it must rely on
all the principles of statutory interpretation, including the
presumptions. [p. 576]
Since the
adoption of the modern approach to statutory interpretation, this Court has
stated time and time again that the “entire context” of a provision must be
considered to determine if the provision is reasonably capable of multiple
interpretations (see, for example, Bell ExpressVu Limited Partnership v. Rex,
[2002] 2 S.C.R. 559, 2002 SCC 42, at para. 29).
4.2.2.2 Criteria for
Recognizing Vested Rights
37
Few authors have tried to define the concept of “vested rights”. The
appellant cites Professor Côté in support of his arguments. Côté
maintains that an individual must meet two criteria to have a vested
right: (1) the individual’s legal (juridical) situation must be
tangible and concrete rather than general and abstract; and (2) this legal
situation must have been sufficiently constituted at the time of the new
statute’s commencement (Côté, at pp. 160‑61). This analytical
approach was used by, inter alia, the Saskatchewan Court of Appeal
in Scott v. College of Physicians and Surgeons of Saskatchewan (1992), 95 D.L.R.
(4th) 706, at p. 727.
38
I am satisfied from a review of the case law of this Court and the
courts of the other provinces that the analytical framework proposed by the
appellant is the correct one.
39
A court cannot therefore find that a vested right exists if the
juridical situation under consideration is not tangible, concrete and
distinctive. The mere possibility of availing oneself of a specific statute is
not a basis for arguing that a vested right exists: Côté, at
p. 161. As Dickson J. (as he then was) clearly stated in Gustavson
Drilling, at p. 283, the mere right existing in the members of the
community or any class of them at the date of the repeal of a statute to take
advantage of the repealed statute is not a right accrued (see also Abbott v.
Minister for Lands, [1895] A.C. 425, at p. 431; Attorney
General of Quebec, at p. 743; Massey‑Ferguson Finance Co. of
Canada v. Kluz, [1974] S.C.R. 474; Scott, at pp. 727‑28).
In other words, the right must be vested in a specific individual.
40
But there is more. The situation must also have materialized (Côté, at
p. 163). When does a right become sufficiently concrete? This will vary
depending on the juridical situation in question. I will come back to this
point later. Suffice it to say for now that, just as the hopes or expectations
of a person’s heirs become rights the instant the person dies (see, for
example, Marchand v. Duval, [1973] C.A. 635, at p. 637, and
art. 625 C.C.Q.), and just as a tort or delict instantaneously
gives rise to the right to compensation (see, for example, Holomis v. Dubuc (1974),
56 D.L.R. (3d) 351 (B.C.S.C.); Ishida v. Itterman, [1975]
2 W.W.R. 142 (B.C.S.C.); and arts. 1372 and 1457 C.C.Q.),
rights and obligations resulting from a contract are usually created at the
same time as the contract itself (see Côté, at p. 163).
4.2.3 Application to the Legislation at Issue
41
The government submits that the two amending statutes applied
immediately and therefore necessarily had the effect of changing the repayment
terms, since those terms concerned the future effects of the contract.
According to the government, this result is justified by the rule relating to
the retrospective application of legislation. It argues that repayment in
accordance with the terms set out in the contract was merely an expectation. A
contextual analysis favours this result, it submits, since the plan applies
each year to a large number of students who, out of fairness, must be subject to
the same repayment terms. The government adds that administering loans on an
individual basis would be problematic. Also, it would directly undermine the
integrity of the plan, which must be uniform, and this is another indication
that the legislature could not have intended that loans be administered on an
individual basis.
42
The appellant submits that his situation is a tangible one governed by a
private contract the administration of which is the responsibility of a
financial institution, not the government. He points out that the certificate
was amended in 1997 to require him to comply with the repayment terms that
would be in effect at the time he had to begin repaying the loan. The
appellant thus argues that the two statutes modifying the legal obligations
that are assumed and must in all cases be performed by the parties are
retroactive. However, since retroactivity is not specified, it cannot be
imposed.
4.2.3.1 Amending Act, 1997
43
The basic fact remains that the appellant and the financial institution
signed a loan certificate provided by the Minister, thereby turning the
certificate into a contract and crystallizing the parties’ rights and
obligations.
44
The Amending Act, 1997, which shortened the interest exemption
period by one month, does not contain any transitional provision that might
reveal the legislature’s intent. In short, there is nothing to justify a
conclusion that the legislature clearly and unambiguously intended to apply the
new provisions so as to limit the rights of borrowers. Moreover, it seems
obvious to me that just because the government argues for the immediate and
future application of the Amending Act, 1997 does not mean it is
authorized to interfere with rights conferred on the appellant in his
contract. The Amending Act, 1997 does not refer to contracts that have
already been entered into and therefore cannot apply to them. Moreover, I can
find no evidence in the record that justifies imputing to the legislature an
intention to interfere with vested rights. Nevertheless, let us continue with
the review of the amending statutes.
4.2.3.2 Amending Act, 1998
45
In the Amending Act, 1998, the legislature provided for
transitional measures in s. 13. It is the second paragraph of this
section that interests us:
13. The provisions introduced by sections 2 and 3 of this
Act are applicable in respect of the years of allocation subsequent to their
coming into force.
The other provisions introduced by this Act and the
first regulations made thereunder are applicable to the juridical situations
in progress at the time of their coming into force.
The issue is
therefore what the expression “juridical situations in progress” means.
The majority of the Court of Appeal, as well as Journet J. of the Superior
Court, found that the expression covered all student loans contracted before
and after the coming into force of the new legislation. I do not agree.
46
First of all, it is necessary to determine the true scope of this
section: does it clearly state the legislature’s intention to change
the terms of contracts of loan entered into prior to May 1, 1998? I
do not think so.
47
It will be helpful at this point to set out the legal steps for
obtaining a student loan. The following passage is from the appellant’s factum
(at para. 101):
We would submit that there are two legal steps
required for the obtaining of a Student Loan: first, the issuance of the
Loan Certificate by the Minister and second, the signing of the Loan
Certificate by the student and the Financial Institution to conclude a contract.
The first step, by which the student obtains his Loan Certificate, creates the
student’s right to proceed to the second step and receive his Student Loan
in accordance with the specific terms and conditions indicated on the Loan
Certificate. If a change in the law were to modify the terms and conditions of
student loans, this change (in the absence of clear legislative language) would
not apply to modify or amend Loan Certificates already issued, as long as the
student who had received it, signed it within the stipulated delay
(90 days as per section 60 of the Regulation respecting financial
assistance for education expenses, R.R.Q., c. A‑13.3, R‑1).
In other words, by the mere receipt of his Loan Certificate, a student would
have a right to sign the Loan Certificate and obtain his Student Loan in
accordance with the terms and conditions of the Loan Certificate,
notwithstanding a change in the governing law.
In my opinion,
the appellant is correct to submit that, in the general context of the plan,
the expression “juridical situations in progress” applies to a student who has
received a loan certificate but not yet signed it (nor has the financial
institution done so).
48
Section 13 does not provide that the amendments apply to contracts
or “contractual situations”. Yet it appears that in the past the Quebec
legislature has drawn a distinction between “legal (juridical) situations which
exist” and contractual situations which exist”, as it used both
expressions in the Implementation Act (in the Implementation Act,
the equivalent used for the words “en cours” was “which exist”, while in
the Amending Act, 1998 the equivalent used for the same words was “in
progress”). Section 3 of the Implementation Act contains the
expression “legal situations which exist”:
3. The new legislation is applicable to legal
situations which exist when it comes into force.
Any hitherto unfulfilled conditions for the creation
or extinction of situations in the course of being created or extinguished are
therefore governed by the new legislation; it also governs the future effects
of existing legal situations.
Section 4
of the same statute contains the expression “contractual situations which
exist”:
4. In contractual situations which exist
when the new legislation comes into force, the former legislation subsists
where supplementary rules are used to determine the extent and scope of the
rights and obligations of the parties and the effects of the contract.
However, the provisions of the new legislation apply
to the exercise of the rights and the performance of the obligations, and to
their proof, transfer, alteration or extinction.
We need not,
in the instant case, define these expressions in the context of the Implementation
Act, which, as I mentioned above, is based on the ideas of P. Roubier
(see P.‑A. Côté and D. Jutras, Le droit transitoire civil:
Sources annotées (1994)). It is nonetheless significant that both
expressions have been used by the Quebec legislature, which means that they
must refer to different realities.
49
In the case at bar, a contract was signed and entered into before new
provisions came into force. The contract continued to produce its effects
notwithstanding those provisions. The rights and obligations resulting from
the contract were fixed and crystallized as soon as the contract was entered
into (see P. Roubier, Le droit transitoire: conflits des lois dans
le temps (2nd ed. 1993), at pp. 315‑16; H., L. and
J. Mazeaud and F. Chabas, Leçons de droit civil, t. 1,
vol. 1, Introduction à l’étude du droit (11th ed. 1996),
No. 147). Naturally, this included the repayment terms, which are
essential clauses in any contract of loan. On this point, I adopt the
following words of Rothman J.A.:
Nor can I easily accept that the phrase “[. . .
juridical situations in progress . . .]” was intended to make the 1997 and 1998
amendments applicable so as to reduce the interest exemption period provided in
the previously existing statute and in the contract signed by the borrowing
student and the lending bank. In my respectful opinion, once the loan was
approved by the Department and the contract of loan was signed by the student
and the bank, appellant's obligation to pay interest and his exemption from the
payment of interest were not “[juridical situations in progress]”. They were
rights and obligations which were no longer “in progress”. They were
crystallized, finalized and definitively concluded under the terms and
conditions of the contract. [para. 34]
50
In light of the ambiguity of s. 13 of the Amending Act, 1998,
we must apply the principle against interference with vested rights.
51
The cases dealing with purely statutory rights that an individual did
not exercise prior to a legislative amendment are of no help here (see Gustavson
Drilling; Attorney General of Quebec; Venne). In the instant
case, the right was provided for in legislation but was later incorporated into
a private contract (between the student and the financial institution) in which
the parties freely, and on an informed basis, defined their rights and
obligations. It was the contract (not the legislation) that created rights and
obligations for the parties as soon as it was formed (see Côté, at p. 163;
Épiciers Unis, at para. 48; Township of Nepean v. Leikin (1971),
16 D.L.R. (3d) 113 (Ont. C.A.); Location Triathlon Inc. v.
Boucher‑Forget, [1994] R.J.Q. 1666 (Sup. Ct.)). The right not
to pay more interest than the contract specified was also acquired at that
time.
52
With regard to the administrative grounds raised by the government,
particularly the need for consistent and equal treatment of students who
complete their studies at the same time, they cannot lead the Court to
disregard the express wording of the private contract. On this point,
Rothman J.A. wrote the following:
With great respect, I do not think this is a
question of treating students uniformly nor even treating all students
equitably. It is rather a question of respecting the difference in contractual
rights and obligations concluded prior to the amendments. I can see nothing
equitable in impairing the contractual rights and obligations that were
concluded prior to the amendments on the basis that all students should be
treated uniformly in their conditions of loan repayment. There is nothing
equitable in treating students less favourably than they were entitled to be
treated under their contracts and under the law that was applicable when the
contracts were concluded. [para. 46]
It is
perfectly normal for some students who completed their studies on the same date
to be treated differently if they obtained their student loans at different
times and signed different loan agreements on an informed basis. It is the
very foundation of the individualized contractual right that leads to this
result. In determining the scope of the obligations of the parties to the
contract, there is no reason to disregard the date the contract was entered
into in favour of the date studies were completed; the government expressed its
intention in the loan certificate.
5. Conclusion
53
The Quebec legislature’s involvement in student loans clearly makes such
loans one component of a social program designed to improve access to
education. However, it is impossible to disregard the fact that the
legislature intended its program to be based on private contractual
obligations, even though several terms of the contract were to be imposed on
students. The contract of loan between the student and the financial
institution, which arises out of the loan certificate issued by the Minister,
creates rights and obligations as soon as the contract is entered into. This
explains the need not to interfere with vested rights.
54
I would therefore allow the appellant’s action: (1) student
borrowers with student loans that were active on July 1, 1997 have a
vested right with respect to the duration of the exemption period applicable
when the contracts were signed, as this right was not affected by the Amending
Act, 1997; and (2) students with loans that were active on
May 1, 1998 have a vested right with respect to the duration of the
exemption period applicable when the contracts were signed, as this right was
not affected by the Amending Act, 1998. The case is remanded to the
Superior Court to determine the method for making claims, the amounts owed by
Quebec and the payment procedures.
55
For these reasons, the appeal is allowed and the judgments of the Court
of Appeal and the Superior Court are set aside, with costs throughout.
English version of the reasons delivered by
56
Deschamps J.
(dissenting) — In declaring, in s. 13, that the Act to amend
the Act respecting financial assistance for students,
S.Q. 1997, c. 90 (“AFAS”), applied to juridical
situations in progress, the Quebec legislature clearly indicated that the
statute applied with immediate effect to the exemption period for the payment
of interest by the appellant to his financial institution.
57
As this Court held in Épiciers Unis Métro‑Richelieu Inc.,
division “Éconogros” v. Collin, [2004] 3 S.C.R. 257,
2004 SCC 59, common law concepts that place a strong emphasis on
vested rights do not apply where an approach based on the immediate application
of legislation and the concept of juridical situations in progress is adopted.
Thus, the doctrine of vested rights should not be relied on to decide the
instant case.
58
Bastarache J. is of the opinion that the expression “juridical
situations in progress” applies only to situations that are still being formed
(para. 47) and that the effects of the contract continue to be governed by
the legislation in force when the contract was entered into (para. 49). I
myself believe that the expression includes both situations that are being
formed and the effects of a given juridical situation.
59
In using the expression “situations juridiques en cours” (in
English “juridical situations in progress” in the AFAS, but “legal
situations which exist” in the context of the transitional law relating to the
implementation of the Civil Code of Québec), the Quebec legislature drew
inspiration from jurist Paul Roubier’s work on transitional law (Droit
civil québécois (loose‑leaf), vol. 8, at para. DT1 555,
“Conflit de loi dans le temps”). Since transitional law is precisely what we
are concerned with in the instant case, I consider it relevant to refer to his
writings to determine the scope of the expression (P. Roubier, Le droit
transitoire: conflits des lois dans le temps (2nd ed. 1993)):
[translation]
The term “legal [juridical] situation” was chosen intentionally
as being the most encompassing. We consider it better than “vested rights”
because it is not subjective in nature . . . we also consider it
better than “legal relationship” . . . which implies a direct
relationship between two persons, whereas a legal situation can be
unilateral and can be set up against any person whomsoever.
. . .
To understand the difficulties that may result from
the temporal effect of a statute, one need only note that legal situations generally
do not come about all at once; they develop over time, such that the new
statute may come into effect at a certain point in this development
. . . .
However, this is where an essential distinction must
be drawn as regards the development of the successive moments of a legal
situation: there is a dynamic phase, which is the moment when the
situation is created (and also when it is extinguished), and there is a static
phase, which is the period when the situation produces its effects.
[Emphasis added; pp. 181‑82.]
60
If we rely on Roubier’s use of the expression “legal situation”,
this concept encompasses at once the formation of the situation, its extinction
and its effects. In light of this work, there is no reason to conclude that,
when the legislature used the words “juridical situations in progress”, it
intended to refer to juridical situations in the process of being formed but
not to juridical situations in the process of producing effects.
61
P.‑A. Côté and D. Jutras (Le droit transitoire civil:
Sources annotées (1994)), commenting on Roubier’s theory, also include
in the expression “legal situations which exist” not only to the dynamic phase,
that is, the formation and extinction of a juridical situation, but also to the
static phase, that is, its effects:
[translation] In
Roubier’s system, once a rule has been tied to a given legal situation, a
distinction must be drawn based on whether the rule relates to the situation’s
creation or extinction or determines its effects. There are two phases in the
development of legal situations: the dynamic phase, which corresponds to their
formation and extinction, and the static phase, which corresponds to their
effects. This distinction between the dynamic (formation and extinction) phase
and the static (effects) phase of a legal situation is echoed in the
second paragraph of sections 2 and 3 of the Implementation Act.
[para. 1.048]
62
It is true that these comments relate to the Act respecting the
implementation of the reform of the Civil Code, S.Q. 1992, c. 57
(“Implementation Act”), and that we do not have to interpret that
statute here. However, we cannot disregard the fact that the same legislature,
in the same decade, used the same expression for a concept that originated in
the same legal works.
63
The Quebec Court of Appeal has also held that the expression “legal
situation” includes effects:
[translation] Even where
it is created unilaterally and there is no immediate legal relationship, the
concept of “legal situation” applies to the existence of legal effects
from the moment the situation arises. [Emphasis added.]
(Montréal (Ville) v. 9013‑5286 Québec inc., [2002]
Q.J. No. 2361 (QL), at para. 18)
64
Thus, when a loan certificate is issued to a student, a juridical
situation (a situation that produces legal effects) is created. This situation
does not cease to be “in progress” when the student and the financial
institution together sign the certificate, transforming it into a contract of
loan. To adopt the approach suggested by Bastarache J. would mean that
the legislature has split the concept into two parts: the formation of the
contract and its effects (para. 47). I cannot accept this
interpretation. An interpretation that denies that a juridical situation is
still “in progress” when it has been formed, has not been extinguished and is
producing effects is not consistent with the theory on which the legislature
relied.
65
In the case at bar, the obligation to pay interest flowed from the
contract, and the interest exemption period was clearly in progress. Since the
duration of this exemption period was legislated, it could be modified by
legislation of immediate application.
66
It is also strange to limit the scope of the expression by referring to
s. 4 of the Implementation Act. This section establishes a
specific rule for contractual situations governed by the Civil Code
of Québec, S.Q. 1991, c. 64. In such situations, new legislation
applies only “to the exercise of the rights and the performance of the
obligations, and to their proof, transfer, alteration or extinction”. The
section does not say that effects are excluded from the expression
“legal situations which exist”. Moreover, the Implementation Act
deals with the dynamic and static phases in the same way, regardless of whether
the situation is a contractual situation or any other legal situation. It is
thus clear that effects are included in the legal situation concept.
67
Furthermore, an interpretation according to which the transitional
provision applies to “a student who has received a loan certificate but not yet
signed it (nor has the financial institution done so)” is so narrow that I
cannot convince myself that the legislature could have intended to limit the
scope of the AFAS in this way. In Medovarski v. Canada (Minister of
Citizenship and Immigration), [2005] 2. S.C.R. 539,
2005 SCC 51, at para. 43, the Court rejected an interpretation
that limited the application of new legislation to a very limited number of
cases. I believe that the same principle of interpretation applies in the
instant case.
68
In Épiciers Unis Métro‑Richelieu, the Court did not
hesitate to recognize the retrospectivity of a provision of the Civil Code
of Québec. Retrospective effect is but one aspect of the concept of the
immediate effect of legislation. In The Interpretation of Legislation in
Canada (3rd ed. 2000), at p. 154, Professor P.‑A. Côté
says the following on this subject:
Where a new statute is declared applicable, for the
future, to situations underway, we say it has immediate effect. This notion is
used here to describe a situation not only where the facts contemplated by the
rule are underway at the moment the law is modified (what Héron calls the
general effect of the new statute), but also to describe situations where it is
the legal effects of the rule which are underway (what Héron calls the
retrospective effect of the statute).
It is in fact
the retrospective aspect of the legislation that is in issue in the instant
case. The exemption period has been modified for the future.
69
The concept of the immediate effect of legislation has been recognized
by the commentators and by the courts. In its terse majority judgment in the
case at bar, the Court of Appeal merely applied a concept it was familiar
with. The legislature is free to enact statutory provisions that may seem
harsh. It is not the place of the courts to interfere in the legislative
process.
70
For these reasons, I am of the opinion that the decision of the majority
of the Court of Appeal was correct. I would dismiss the appeal.
APPENDIX
An Act
respecting financial assistance for students, R.S.Q., c. A-13.3
15. The Minister shall issue, to a student
who is entitled to it and who is enrolled or deemed to be enrolled within the
meaning of the regulation, a loan certificate authorizing him to contract a
loan with a financial institution recognized by the Minister. The modalities
of presentation of the certificate and payment of the loan shall be determined
by regulation.
23. For the purposes of this subdivision,
“period of exemption” means the period beginning on the date on which the
borrower obtains a first loan, or on which he becomes a full-time student again
after having ceased to be so, and ending
(1) on 1 April, for a borrower who completes
or abandons his full-time studies during or at the end of the preceding summer
trimester;
(2) on 1 August, for a borrower who completes
or abandons his full-time studies during or at the end of the preceding autumn
trimester;
(3) on 1 January, for a borrower who completes
or abandons his full-time studies during or at the end of the preceding winter
trimester.
24. The Minister shall pay to any financial
institution which has made an authorized loan the interest on the balance of
such loan at the rate fixed by regulation, as long as the borrower is a
full-time student and during his period of exemption.
. . .
27. In the event of the death of a borrower,
the Minister shall reimburse the amount of the loan to the financial
institution.
28. The Minister shall reimburse to any
financial institution the losses in principal and interest resulting from an
authorized loan.
29. The Minister is subrogated by operation
of law in the rights of a financial institution to which he makes a repayment
under section 27 or 28.
40. After having been notified in accordance
with the provisions of paragraph 1 of section 39, or after having
been otherwise informed of a change which may affect the amount of financial
assistance to be granted to a student, the Minister shall reconsider the duly
completed file of the student and render his decision.
However, in no case may the decision reduce the
amount of or cancel a loan which has already been contracted.
41. The Minister may, where an application is
produced after the time prescribed or where the provisions of paragraph 2
of section 39 have been contravened, refuse an application, reduce the
amount of or cancel the financial assistance, or demand the reimbursement of
any financial assistance already paid in the form of a bursary.
However, in no case may the Minister reduce the
amount of or cancel a loan which has already been contracted.
62. Any loan contracted under the Student
Loans and Scholarships Act shall be deemed to have been contracted under the
provisions of this Act.
. . .
An Act to
amend the Act respecting financial assistance for students and the General and
Vocational Colleges Act, S.Q. 1996, c. 79
5. Section 23 of the said Act is amended
(1) by replacing the word “April” in paragraph 1 by the word
“March”;
(2) by replacing the word “August” in paragraph 2 by the word
“July”;
(3) by replacing the word “January” in
paragraph 3 by the word “December”.
An Act to
amend the Act respecting financial assistance for students, S.Q. 1997,
c. 90
4. Section 23 of the said Act is replaced by the
following section:
“23. For the purposes of this subdivision,
“period of exemption” means the period beginning on the date on which the
borrower obtains a first loan or on which the borrower resumes being a
full-time student, and ending on the date determined in accordance with the
regulations.”
5. Section 24 of the said Act is amended
(1) by replacing the words “his period of
exemption” in the third and fourth lines of the first paragraph by the words
“the additional period ending on the date determined by the regulation”;
(2) by inserting the words “and provided the person
is in a precarious financial situation within the meaning of the regulation” after
the word “Minister” in the first line of subparagraph 2 of the second
paragraph.
13. The provisions introduced by sections 2 and 3 of this
Act are applicable in respect of the years of allocation subsequent to their
coming into force.
The other provisions introduced by this Act and the
first regulations made thereunder are applicable to the juridical situations in
progress at the time of their coming into force.
Appeal allowed with costs, Deschamps J.
dissenting.
Solicitors for the appellant: Sternthal Katznelson
Montigny, Montréal.
Solicitors for the respondent: Bernard, Roy &
Associés, Montréal.