SUPREME COURT OF
CANADA
Citation: Ferme Vi-Ber inc. v. Financière agricole du Québec, 2016
SCC 34, [2016] 1 S.C.R. 1032
|
Appeal heard:
December 10, 2015
Judgment rendered:
July 29, 2016
Docket:
36205
|
Between:
Ferme Vi-Ber inc.
Appellant
and
La Financière agricole du Québec
Respondent
And Between:
Simon Cloutier et al.
Appellants
and
La Financière agricole du Québec
Respondent
Official English Translation
Coram: McLachlin C.J.
and Abella, Cromwell, Karakatsanis, Wagner, Gascon and Côté JJ.
Joint Reasons for Judgment:
(paras. 1 to 95)
Reasons Dissenting in Part:
(paras. 96 to 136)
|
Wagner and Gascon JJ. (McLachlin
C.J. and Abella, Cromwell and Karakatsanis JJ. concurring)
Côté J.
|
Ferme Vi‑Ber inc. v. Financière agricole du Québec, 2016
SCC 34, [2016] 1 S.C.R. 1032
Ferme Vi‑Ber inc. Appellant
v.
La Financière agricole du
Québec Respondent
‑ and ‑
Simon
Cloutier, Denis Trépanier, Société coopérative agricole des Bois‑Francs,
Coopérative agricole Covilac, Coop Purdel, Société coopérative agricole La
Seigneurie, Coopérative agricole Unicoop, 9012‑2151 Québec inc., Sogéporc
inc., Gabriel Turgeon inc., Société en commandite Pascoporc, Groupe Dynaco,
coopérative agroalimentaire, Coopérative agroalimentaire Comax, R. Rousseau
& Fils, S.E.C., Ferme Olympique, S.E.C., Moulées Désy, S.E.C., Inter Agro
inc., Techni‑porc inc., Élevage La Bretanne inc., 9038‑7747 Québec
inc., Ferme Lor‑re inc., Ginette Marchesseault, Ferme Casimir inc.,
C&G Paquette inc., Entreprises B. Paquette inc., Porcheries du Button ltée,
Élevages du Bas Ste‑Anne inc., Ferme Suporsonique, Gène‑Alliance
inc., 9076‑1776 Québec inc., Cultures Excel inc., Francine Sauvageau
inc., Ferme Jétizack inc., Cultures Quinto inc., Élevages Hébertville S.E.N.C.,
Jean‑Marc Henri inc., Ferme Porcéréale inc. (formerly known as Maraîchers
de St‑Gilles (1991) S.E.N.C.), Ferme Gosford enr. S.E.N.C., Ferme André
Breton inc., Ferme S. & M. Ménard inc., Ferme Luc Loranger inc., Méloporc
inc., Ferme Frangis S.E.N.C., Ferme R.M. Côté & Fils (2000) inc., Ferme
Porcine Marnie S.E.N.C., F. Ménard inc., Élevages Jacques Joyal inc., Ferme La
Ronchonnerie inc., Ferme Mafran inc., Coopérative agricole Profid’Or, Isoporc
inc., Ferme Gervais Gosselin inc., R. Robitaille et Fils inc., Groupe CDLM
inc., Ferme Gaudreau inc., 9039‑2648 Québec inc., Ferme Denis Robitaille
inc., Élevages du Haut‑Richelieu inc., Viaporc inc., Porc S.B. inc.,
Ferme G. Rompré inc., 9084‑9183 Québec inc., Porcs N&M inc., Ferme
Porclair S.E.N.C., Ferme R.D.S. inc., Élevages L.D. ltée, Porc P.G. S.E.N.C.,
Ferme M.Y. Turgeon inc., Coopérative agricole de St‑Bernard, Élevage Y.
Ducharme inc., Production A. Couture (no 1) ltée, Production A.
Couture (no 2) ltée, Production A. Couture (no 3) ltée,
Production A. Couture (no 4) ltée, Production A. Couture (no
5) ltée, Production A. Couture (no 6) ltée, Production René Lait
inc., Alfred Couture Limitée, Ferme B.E.L. Porcs ltée, Porcs M.L. inc., Ferme
Vallières & Gosselin inc., Meunerie St‑Elzéar ltée, Élevages
Labrecque inc., Joly‑Grains inc., Joly‑Porcs inc., Site de la
Colline inc., Site des Érables inc., Ferme Serge inc., Ferme Jolivoir inc.,
Aliments Breton inc., Ferme C.B. inc., Fermili inc., Luma Genetic Inc.
(formerly known as Génétiporc inc.), Entreprises Magnum inc., Trans‑Porcité
inc., Lait‑Porcité inc., Ferme C.M. S.E.N.C., Ferme Porc Saint S.E.N.C.,
Entreprises Rémy Laterreur inc., Rémy Laterreur, Élevages Explorateurs inc.,
Ferme Palene inc., Ferme André Hénault S.E.N.C., Germain Lapointe, Ferme
Jenlica inc., Immeubles Clément Dubois inc., Fermes Roda inc., Fermes Richard
inc., Ferme Jocko S.E.N.C., Ferme D.J. Frappier inc., Entreprises Paul
Claessens inc., Ferme H. et M. Potvin S.E.N.C., Ferme Jean‑Paul Palardy
inc., Entreprises Denis Lacoste inc., Chantal D’Amour, Ferme Bonneterre inc.,
Ferme D’Anjou & Fils inc., M.B.M. Daigle S.E.N.C., Ferme Réjean Turgeon
inc., Ferme Jymdom inc., Ferme Jules Côté et Fils inc., Ferme D.M.L. inc.,
Ranch St‑Sylvestre inc., John Houley inc., Ferme Belgica inc., Ferme
Bovipro S.E.N.C., Jacques Desrosiers, Éric Desrosiers, Ferme B&L Desrosiers
S.E.N.C., 9078‑1170 Québec inc., Fermes St‑Henri, S.E.C., Ferme Ray‑Loi,
S.E.C., Fermes St‑Apollinaire, S.E.C., Élevages St‑Félix, S.E.C.,
Élevages St‑Patrice, S.E.C. and Ferme Beaumontoise, S.E.C. Appellants
v.
La Financière agricole du
Québec Respondent
Indexed as: Ferme Vi‑Ber inc. v. Financière agricole du
Québec
2016 SCC 34
File No.: 36205.
2015: December 10; 2016: July 29.
Present: McLachlin C.J.
and Abella, Cromwell, Karakatsanis, Wagner, Gascon and Côté JJ.
on
appeal from the court of appeal for quebec
Agriculture
— Farm income stabilization — Compensation — Calculation method — Legal
framework applicable to Quebec’s Programme d’assurance stabilisation des
revenus agricoles — Participants in program contesting method for calculating
compensation payments that was adopted by La Financière agricole du Québec to
take federal government grants to farmers into account — Whether program is
contract and, if so, whether it is subject to rules applicable to contract of
insurance within meaning of Civil Code of Québec — Whether La Financière, in
determining compensation payable to participants under program, acted in
conformity with its rights and obligations by linking amounts at issue
collectively — Programme d’assurance stabilisation des revenus agricoles, 2001,
133 G.O. 1, 1336, s. 88(3).
La Financière agricole du Québec (“La Financière”) is a legal person
established in the public interest under the Act respecting
La Financière agricole du Québec. Its mission is to support and
encourage the development of the agricultural and agro‑food sector within
the perspective of sustainable development. For that purpose, it has set up
income protection, insurance and farm financing programs. The appellants are
Quebec farm producers that participated voluntarily in the Programme d’assurance
stabilisation des revenus agricoles (“ASRA Program”) administered by La
Financière. The ASRA Program protects participants from having their income
drop below a level defined by La Financière for 10 agricultural products or
classes of products designated as “insurable”. That level is reached where the
“net annual income” of an average benchmark farm for an insured product is less
than the “stabilized net annual income”, which corresponds to a percentage of
the average annual regular salary of a skilled worker in Quebec. In short, the
purpose of the ASRA Program is to guarantee that an average farm producer never
earns less than a predetermined percentage of the average income of a skilled
worker. Each producer participating in this voluntary program must pay a fixed
contribution per unit of a designated product, agree to participate for a
minimum of five years and insure all of their annual production for each
designated product. La Financière makes a contribution to the program’s fund —
the Fonds d’assurance stabilisation des revenus agricoles, of which it is the
trustee — equal to twice the contributions paid by each participant. The
amounts in the fund are used to finance the payment of compensation to
participants.
The
appellants contested certain decisions made by La Financière in determining
their compensation payments for 2007. Those decisions were related to the
calculation method chosen by La Financière, in determining the compensation
payable under the program, to take account of additional income received as
farm financial assistance from the federal government. Both the parties and the
courts below used the word “linkage” to characterize the process of taking such
income into account, which is provided for in s. 88(3) of the ASRA Program.
Amounts so received are linked either “collectively” — on the basis of the
amounts the average benchmark farm would have received — or “individually” — on
the basis of the amounts each ASRA Program participant actually received from
the various governments. La Financière deducts the amounts so “linked” from the
compensation. The appellants argued that the ASRA Program was a contract of
insurance and that La Financière had, by collectively linking certain amounts
received as financial assistance, improperly incorporated additional income
into its calculations so as to reduce their compensation under the program in
violation of the terms of the contract, which had to be interpreted on the
basis of their reasonable expectations as insured persons.
The
appellants applied to the Superior Court, which allowed their action,
characterizing the ASRA Program as a contract of insurance and ordering La
Financière to pay them substantial additional compensation for 2007. The Court
of Appeal set aside that judgment, finding that the ASRA Program was not a
contract of insurance and that the impugned decisions were reasonable.
Held
(Côté J. dissenting in part): The appeal should be dismissed.
Per
McLachlin C.J. and Abella, Cromwell, Karakatsanis, Wagner and Gascon JJ.:
Despite the broad discretion conferred on La
Financière by the Act respecting La Financière agricole du Québec
and the ASRA Program, the program cannot be considered simply a government
program that is governed by public law. As can be seen from a review of its
structure and how it functions, it is different from two classic examples of
social programs that fall under public law: social insurance programs and agricultural subsidies. Unlike a social
insurance program, it applies to only one sector and is neither universal
nor compulsory, and its benefits are not calculated using simple formulas
applicable to broad classes of persons and situations. It includes several
contract‑style clauses for terminating the contract for predetermined
reasons, which create acquired rights for the current year. Moreover, La
Financière’s considerable management autonomy is limited by the need to comply
with the contractual conditions that bind it and the participants. These
characteristics, together with the contributions required from participants,
also distinguish the ASRA Program from simple agricultural subsidy programs
granted on an ex gratia basis and without consideration.
This program in fact has the
characteristics of an administrative contract, that is, a contract to which a public authority is a party,
and all the rules needed to guide the actions of the parties can be found in
private law. However, administrative contracts are distinguishable from
contracts between private parties, since parity between the parties does not
always exist. Where the government’s contractual relations are concerned,
therefore, the public interest must be considered in interpreting those
relations and may weigh in favour of a broader discretion in implementing the
government scheme, especially where that scheme has a social objective. These
are not principles of public law, but considerations related to the object of
the contract that may influence the interpretation of the scope of the
contractual powers of the public authority in question. The government’s
discretion nonetheless has its limits. In
the context of an administrative contract, those limits do not derive from the
public law duty of procedural fairness but are instead based on good faith and
contractual fairness, which flow, in Quebec law, from the application of arts.
6, 7, 1375 and 1434 of the Civil Code of Québec (“C.C.Q.”).
Furthermore,
the ASRA Program is an innominate administrative contract that does not have
the three main characteristics of a contract of insurance set out in art. 2389
C.C.Q., namely (i) an obligation on the client to pay a premium or
assessment; (ii) the occurrence of a risk; and (iii) an obligation on
the insurer to make a payment to the client if the insured risk occurs. It
cannot therefore be subject to the rule of interpretation based on the
reasonable expectations of the insured that applies to a contract of insurance
and, in Quebec law, applies solely in its minimum dimension, that is, to
resolve any ambiguity in the terms of the contract in favour of the insured.
For
the purpose of determining whether it was open to La Financière to collectively
link the amounts received under the federal assistance programs at issue in
this case, it is the rules of contractual interpretation set out in
arts. 1425 to 1432 C.C.Q. that apply. Section 88(3) of the
ASRA Program does not specify how compensation received under government
assistance programs is to be linked. It states only that, for this purpose, La
Financière must consider “[a]ny amounts to which a participant is entitled”
under such programs. When properly interpreted in light of the contract as
a whole (art. 1427 C.C.Q.) and La Financière’s past practices (art. 1426
C.C.Q.), s. 88(3) of the ASRA Program does not require that amounts
be linked individually but, on the contrary, gives La Financière the discretion
to decide what linkage method to employ.
The
general structure of the program and the contract as a whole support the
conclusion that collective linkage is normally required. In fact, a reading of
s. 88(3) of the ASRA Program in the context of the program as a whole,
which is based on the collective concept of a benchmark farm, leads to the
conclusion that collective linkage must be preferred. Section 88(3) is in
Division XI, the title of which refers to the collective concept of “Farm
Models”. Moreover, ss. 86 and 92 of the ASRA Program clearly state that
the net annual income used to calculate the compensation, which includes
amounts received from government sources, is that of a “specialized benchmark
farm for each of the products or classes of products”.
Although
La Financière has sometimes linked amounts individually in the past, it appears
from the evidence that decisions to do so were usually based on the number of
participants that received the amounts in question and not on the fact that
government assistance had been paid directly to producers. As a result, neither
the contract as a whole nor past practice supports a conclusion that La
Financière was under a statutory or contractual obligation to link the amounts
individually in this case.
Although
La Financière had the discretion to link the amounts collectively, it was
required to exercise that discretion in accordance with the requirements of
good faith and contractual fairness. The decision to link the amounts
collectively in this case was made following extensive consultations with representatives
of farm producers and after impact simulation studies had shown that most of
the program’s participants would benefit from that decision. By linking them
collectively, La Financière also favoured the smallest producers. This
situation was consistent with La Financière’s mission. Finally, the decision to
link the amounts collectively was compatible with the specific features of the
federal programs at issue. La Financière thus exercised its powers in
accordance with the requirements of good faith and contractual fairness. It
was open to La Financière in fixing the compensation payable to the appellants
to choose to link the amounts they had received under the relevant federal
financial assistance programs collectively, which means that the appellants are
not entitled to the amounts they claim.
Per
Côté J. (dissenting in part): The only determinative issue in this case is
one of contractual interpretation. Regardless of whether the contract is
characterized as a contract of insurance or as an innominate contract that
falls under both public law and private law, the result is the same. It is true
that the appellants participated voluntarily in the ASRA Program, but insofar
as that program involves a contract of adhesion imposed by La Financière,
that is, a contract that is not negotiated with participants, the
characterization makes no difference. If there is any ambiguity, it must be
resolved in favour of the adhering party in accordance with art. 1432 C.C.Q.
The rule of interpretation of reasonable expectations adds nothing to the
existing rules of interpretation.
The
reason why producers participate in the ASRA Program is simple: they expect to
receive the full compensation they are owed in return for paying their
contributions. When La Financière deprives them of all or part of the
compensation to which they are entitled, judicial intervention is warranted.
The common intention of the parties, the overall scheme of the ASRA Program and
past practices confirm that La Financière contravened the program in
deciding to subtract excessively high amounts of notional income from the
amounts to which participants were otherwise entitled.
It
sometimes happens that during the year individual participants receive
additional amounts to which they are personally entitled from other government
agencies. The program expressly authorizes La Financière to take such
amounts into account in its calculations to ensure that participants do not
receive double compensation for a single loss. However, although
s. 88(3) of the ASRA Program does authorize La Financière to ensure
that participants do not receive double compensation, it does not permit La
Financière to attribute notional amounts to some participants in order to
overcompensate other participants for policy reasons.
In
this case, not only did the chosen linkage method not make it possible to avoid
double compensation, it also prevented many participants from receiving the
full compensation to which they were entitled under the ASRA Program. While
it is true that La Financière’s mission is broad, that mission does not
authorize it to subvert the purpose of s. 88(3) by assuming a discretion it
does not have.
Once
the ASRA Program had been adopted, La Financière had to comply with the
rules of the game it had itself established. In the case of amounts received
directly from other granting organizations that can be considered to be annual
receipts, s. 88(3) provides that, in calculating annual receipts,
La Financière must take into account “[a]ny amounts to which a participant
is entitled on the basis of the volume of marketed products and secondary
products”. La Financière may not therefore penalize a participant for amounts
to which he or she is not entitled owing to the inherent limits of those other
programs. By referring to a “participant”, s. 88(3) requires
La Financière to take into account the amounts that were actually
received. The definition set out in s. 2 refers to an individual
participant in the ASRA Program, not to a “benchmark farm”, and the same is
true of the definition of “annual receipts”. If La Financière disregards the
inherent limits of those programs and if the amounts attributed to participants
bear no relation to the amounts they actually received, it is in breach of its
contractual obligations.
The
evidence shows that, where amounts have been granted directly to a producer
under another program in the past, La Financière has never used a linkage
method — whether collective or individual — that had the effect of negating the
compensation to which participants were entitled by attributing amounts that
disregarded the inherent limits of those programs. La Financière’s choice
in the cases at issue is therefore also inconsistent with its past practices.
What
is problematic in this case is that La Financière’s action had the effect of
overcompensating certain participants to the detriment of the others, that it
disregarded the impact of the caps under the federal programs on the insurance
coverage of participants and that the amounts it ultimately attributed bore no
relation to the amounts that had actually been received, not that it chose a
particular linkage method. This was the conclusion reached by the trial judge,
and there is no reason to intervene in this regard.
The
producers’ appeal should be allowed, but the trial judge’s award should be
reduced by subtracting from it an amount equal to the contributions the
producers would have had to pay in exchange for higher compensation.
Cases
Cited
By
Wagner and Gascon JJ.
Referred
to: Law v. Canada (Minister of Employment and Immigration), [1999] 1
S.C.R. 497; Peters v. Canada (Attorney General), 2009 FC 400; Martin
Service Station Ltd. v. Minister of National Revenue, [1977] 2 S.C.R. 996; Confédération
des syndicats nationaux v. Canada (Attorney General), 2008 SCC 68, [2008] 3
S.C.R. 511; Trépanier v. Financière agricole du Québec, 2011 QCCS 1802; Jacobs
v. Agricultural Stabilization Board, [1982] 1 S.C.R. 125; George A.
Demeyere Tobacco Farms Ltd. v. Continental Insurance Co. (1984), 46 O.R. (2d)
423; Brissette v. Financière agricole, 2006 QCCS 1620; Canada (Attorney
General) v. Mavi, 2011 SCC 30, [2011] 2 S.C.R. 504; Glykis v. Hydro‑Québec,
2004 SCC 60, [2004] 3 S.C.R. 285; Financière agricole du Québec v. Forand,
2009 QCCQ 10263; Martel Building Ltd. v. Canada, 2000 SCC 60, [2000] 2 S.C.R.
860; Colautti Brothers Marble Tile & Carpet (1985) Inc. v. Windsor
(City) (1996), 36 M.P.L.R. (2d) 258; Rollo Bay Holdings Ltd. v. Prince
Edward Island Agricultural Development Corp. (1993), 110 D.L.R. (4th)
132; Financière agricole du Québec v. Coddington, 2013 QCCQ 6238; Lafortune
v. Financière agricole du Québec, 2016 SCC 35, [2016] 1 S.C.R. 1091; Brissette
Estate v. Westbury Life Insurance Co., [1992] 3 S.C.R. 87; Jesuit
Fathers of Upper Canada v. Guardian Insurance Co. of Canada, 2006 SCC 21,
[2006] 1 S.C.R. 744; Reid Crowther & Partners Ltd. v. Simcoe & Erie
General Insurance Co., [1993] 1 S.C.R. 252; National Bank of Greece
(Canada) v. Katsikonouris, [1990] 2 S.C.R. 1029; Excellence (L’), compagnie
d’assurance‑vie v. Desjardins, 2005 QCCA 1035, [2005] R.R.A. 1085; Affiliated
FM Insurance Co. v. Hafner Inc., 2006 QCCA 465; Souscripteurs du Lloyd’s
v. Alimentation Denis & Mario Guillemette inc., 2012 QCCA 1376; Consolidated‑Bathurst
Export Ltd. v. Mutual Boiler and Machinery Insurance Co., [1980] 1 S.C.R. 888;
Industrielle, Compagnie d’Assurance sur la Vie v. Bolduc, [1979] 1 S.C.R.
481.
Statutes
and Regulations Cited
Act
respecting La Financière agricole du Québec, CQLR, c. L‑0.1, ss. 1,
3, 19, 22.
Agricultural
Products Insurance Act, 1996, S.O. 1996, c. 17, sch. C.
Agricultural
Stabilization Act, R.S.C. 1970, c. A‑9.
Canada
Pension Plan, R.S.C. 1985, c. C‑8 .
Civil
Code of Québec, arts. 6, 7, 1375, 1425 to 1432, 1426, 1427, 1434, 2389,
2408 to 2413, 2466 to 2468, 2470 to 2474.
Employment
Insurance Act, S.C. 1996, c. 23 .
Immigration
and Refugee Protection Act, S.C. 2001, c. 27 .
Programme d’assurance récolte, (2002) 134
G.O. 1, 261, ss. 10, 15, 27, 35 to 37, 38, 42.
Programme d’assurance stabilisation des revenus agricoles, (2001) 133 G.O. 1, 1336, ss. 1, 2 “adhérent”, “recettes
annuelles”, 6, 7, 13, 16(3), 18, 19, 21, 22, 78, 80, 86, 87, 88 [am. (2009)
141 G.O. 1, 51, s. 21], 89, 92, 101, 103.
Unemployment
Insurance Act, 1971, S.C. 1970‑71‑72, c. 48 [repl. 1996,
c. 23].
Authors
Cited
Bergeron,
Jean‑Guy. Les contrats d’assurance (terrestre):
lignes et entre-lignes, t. 1. Sherbrooke:
SEM Inc., 1989.
Dussault,
René, and Louis Borgeat. Administrative Law: A Treatise, vol. 1, 2nd ed.
Translated by Murray Rankin. Toronto: Carswell, 1985.
Garant, Patrice, avec la collaboration de Philippe Garant et Jérôme
Garant. Droit administratif, 6e éd. Cowansville, Que.: Yvon
Blais, 2010.
Issalys, Pierre, et Denis Lemieux. L’action gouvernementale: Précis
de droit des institutions administratives, 3e éd. Cowansville,
Que.: Yvon Blais, 2009.
Lluelles, Didier. Précis des assurances terrestres, 5e
éd. Montréal: Thémis, 2009.
Lluelles, Didier, et Benoît Moore. Droit des obligations, 2e
éd. Montréal: Thémis, 2012.
Thouin, Marie‑Chantal. “La théorie de l’attente
raisonnable de l’assuré” (1997), 64 Assurances 545.
APPEAL
from a judgment of the Quebec Court of Appeal (Hilton, Gagnon and Savard
JJ.A.), 2014 QCCA 1886, [2014] AZ‑51115390, [2014] J.Q. no 11218
(QL), setting aside a decision of Monast J., 2012 QCCS 284, [2012] AZ‑50827524,
[2012] J.Q. no 701 (QL), 2012 CarswellQue 666 (WL Can.). Appeal dismissed,
Côté J. dissenting in part.
Bruno
Lepage, Madeleine Lemieux and Dominique‑Anne Roy, for
the appellants.
Matthieu
Brassard, Jean‑Pierre Émond and Valérie Blanchet, for
the respondent.
English
version of the judgment of McLachlin C.J. and Abella, Cromwell, Karakatsanis,
Wagner and Gascon JJ. delivered by
Wagner and Gascon JJ. —
I.
Overview
[1]
At issue in this appeal is the application of
private law to the implementation of certain government financial support
programs. More specifically, the Court must identify the rules governing the
interpretation of the rights and obligations of the parties to the Programme
d’assurance stabilisation des revenus agricoles, (2001) 133 G.O. 1, 1336
(“ASRA Program”), administered by the respondent, La Financière agricole
du Québec (“La Financière”).
[2]
The appellants are Quebec farm producers that
participated voluntarily in the ASRA Program. Under that program,
La Financière undertook, in return for contributions from producers, to
protect them from the income fluctuations associated with the agricultural
market. The appellants contested certain decisions made by La Financière
in determining their compensation payments for 2007. Those decisions were
related to the calculation method chosen by La Financière, in determining
the compensation payable under the program, to take account of additional
income received as farm financial assistance from the federal government. The
appellants argued that the ASRA Program was a contract of insurance and that
La Financière had improperly incorporated that additional income into its
calculations so as to reduce their compensation under the program, in violation
of the terms of the contract, which had to be interpreted on the basis of their
reasonable expectations as insured persons.
[3]
The producers applied to the Superior Court,
which allowed their action, characterizing the ASRA Program as a contract of
insurance and ordering La Financière to pay them substantial additional
compensation for 2007. The Court of Appeal set aside that judgment, finding
that the ASRA Program was not a contract of insurance and that the impugned
decisions were reasonable.
[4]
We would dismiss the appeal. The ASRA
Program is not a contract of insurance but simply an innominate contract under
the civil law. It cannot be subject to the rule of interpretation based on the
reasonable expectations of the insured that applies to a contract of insurance
as defined in the Civil Code of Québec (“C.C.Q.”). While it is
true that the contract must be interpreted having regard to the public interest
and to La Financière’s social objective, it is nonetheless governed
exclusively by private law, not by public law. For the purpose of determining
the compensation payable to its participants, the ASRA Program gives
La Financière a discretion to determine how to calculate any other income
they have received from government sources. La Financière exercised that
discretion in accordance with the requirements of good faith and contractual
fairness, which means that the appellants are not entitled to the amounts they
claim.
II.
Background
[5]
La Financière is a legal person established
in the public interest under the Act respecting La Financière agricole
du Québec, CQLR, c. L‑0.1 (“AFAQ”). Its mission is to
“support and encourage the development of the agricultural and agro‑food
sector within the perspective of sustainable development” (s. 3 AFAQ).
For that purpose, it has set up income protection, insurance and farm financing
programs.
[6]
Among other things, La Financière offers a
crop insurance service that compensates participants for losses caused, for
example, by unfavourable and unpredictable weather conditions. This Programme
d’assurance récolte, which is published in the Gazette officielle du
Québec, (2002) 134
G.O. 1, 261, has equivalents in several other
Canadian provinces. In Ontario, for instance, there is the Agricultural
Products Insurance Act, 1996, S.O. 1996, c. 17, sch. C.
La Financière also offers the ASRA Program, which provides financial
support to producers. This appeal concerns the interpretation of the rights and
obligations of the parties to the ASRA Program, which had no equivalent
elsewhere in Canada at the time the dispute in this case arose. The 137
appellants are farm producers that participated voluntarily in the program. The
ASRA Program is published in the Gazette officielle du Québec. It
replaced the Farm Income Stabilization Insurance Scheme in 2001; the
latter had been created in 1975 and was administered first by the Commission
administrative des régimes d’assurance‑stabilisation des revenus
agricoles until 1979, and then by the Régie des assurances agricoles du Québec
until 2001, the year La Financière was established (s. 1 AFAQ).
[7]
The ASRA Program protects participants from
having their income drop below a level defined by La Financière for 10
agricultural products or classes of products designated as [translation] “insurable”. That level is
reached where the “net annual income” of an average benchmark farm for an
insured product is less than the “stabilized net annual income”, which
corresponds to a percentage of the average annual regular salary of a skilled
worker in Quebec (s. 89 ASRA Program). What this means is that the higher
the net annual income of the benchmark farm is, the lower the compensation will
be. In essence, the purpose of the program is to guarantee that an average farm
producer never earns less than a predetermined percentage of the average income
of a skilled worker.
[8]
In exchange, each producer participating in this
voluntary program must pay a fixed contribution per unit of a designated
product (s. 78 ASRA Program). Producers must agree to participate for a
minimum of five years (s. 16(3)) and must insure all of their annual
production for each designated product (s. 18). La Financière makes a
contribution to the program’s fund — the Fonds d’assurance stabilisation des
revenus agricoles, of which it is the trustee (s. 6) — equal to twice the
contributions paid by each participant (s. 80). The amounts in the fund
are used to finance the payment of compensation to participants (s. 7),
and, unless an agreement is entered into or an alternative program is
implemented, any surplus or deficit must be apportioned among the participants
in proportion to their contributions (s. 13). No amendment made by
La Financière to the terms of the ASRA Program, except one relating to the
contribution rate, may take effect until the insurance year after the amendment
comes into force (s. 21 para. 2).
[9]
The first paragraph of s. 87 of the program
provides that [translation] “[t]he
net annual income [of a benchmark farm] corresponds to the annual receipts
minus cash disbursements and depreciation.” The annual receipts of a benchmark
farm are described in s. 88 of the ASRA Program. Section 88(3), as it
read at the time this dispute arose, read as follows concerning amounts granted
by government agencies:
[translation]
3° Any amounts to which a
participant is entitled on the basis of the volume of marketed products and
secondary products and that are granted by government agencies in the form of
price compensation for the insurable product or under a government farm
business risk management program.
Thus, in calculating the annual
receipts of the average benchmark farm, La Financière takes account of
other income from federal and provincial government contributions under a risk
management program or in the form of price compensation for insurable products.
The parties use — as did the courts below — the word [translation] “linkage” to characterize the process of taking
such income into account. From the compensation to be paid under the ASRA
Program, La Financière therefore deducts the “linked” amounts in order to
take account of any other income that might have an effect on the financial
needs of the average benchmark farm, which is the reference standard for the
program.
[10]
Amounts so received are linked either
“collectively” — on the basis of the amounts the average benchmark farm would
have received — or “individually” — on the basis of the amounts each ASRA
Program participant actually received from the various governments. The higher
the linked amounts, the lower the compensation received under the program,
since increases in the benchmark farm’s income that result from the linkage
process translate directly into a decrease in the compensation paid to each
participant under the program. Whether government assistance should be linked
collectively or individually is at the heart of the dispute between the
appellants and La Financière.
[11]
La Financière often acts as an intermediary
in administering federal or provincial grants to Quebec farm producers. For
that purpose, it has entered into a number of agreements with the federal
government to distribute amounts that the federal government pays directly to
producers in other provinces. At times, La Financière also integrates
amounts paid by the federal government directly into the ASRA Program’s fund.
[12]
In May and July 2007, the federal government
announced the payment of grants to Canadian farmers (including ASRA Program
participants) under two programs: the Cost of Production Benefit (“COPB”)
program and the AgriInvest Kickstart (“Kickstart”) program. Under these two
assistance programs, grants were made to producers, who were not required to
make contributions.
[13]
Amounts paid under the two programs were
calculated as a percentage of each producer’s allowable net sales (“ANS”),
although both programs had ANS caps above which producers received nothing. The
caps were $450,000 for the COPB program and $3 million for Kickstart. They
corresponded to maximum payments per producer of $12,240 for the COPB program
and $96,000 for Kickstart. All ASRA Program participants were eligible to
receive amounts under those programs, but the largest producers received only
the maximum amounts.
[14]
In managing the ASRA Program, La Financière
decided to link amounts received under the COPB and Kickstart programs collectively.
It fixed the compensation for 2007 on the basis of what the benchmark farm
would have received under those two programs. The ANS of the hypothetical
benchmark farm used to collectively link the amounts were less than the maximum
allowed by the federal government. However, in collectively linking the
amounts, La Financière calculated the average income the benchmark farm
would have earned per unit of designated product and then multiplied this by
each participant’s number of units of the designated product. These
calculations led La Financière to attribute to some of the largest
producers, including the appellants, amounts of federal assistance greater than
the amounts they had actually received. As a result, the compensation paid to
these producers under the ASRA Program was reduced by more than would have been
the case had La Financière linked the amounts individually on the basis of
what each of them had actually received.
[15]
The 137 appellants were unhappy about being
disadvantaged in this way, and in January 2008 they asked La Financière to
review its decision and link the amounts in question individually. Their
request was denied on the ground that a review could not be sought for
decisions relating to the [translation]
“terms of the programs administered by La Financière”.
[16]
In November 2008, La Financière
amended the ASRA Program to specify that amounts received under other financial
assistance programs would now be linked collectively [translation] “unless La Financière agricole considers
it appropriate” to link them individually (s. 88(3) added by (2009) 141
G.O. 1, 51, s. 21).
[17]
Following a fruitless exchange of letters with
La Financière, the appellants instituted proceedings in the Superior Court
in two cases that were ultimately joined for hearing. They argued that the
ASRA Program had to be characterized as a contract of insurance within the
meaning of the Civil Code of Québec. In their submission, this
characterization engaged the principle of interpretation based on the [translation] “reasonable expectations of
the insured”, sometimes also called the doctrine of “legitimate expectations of
the insured”, according to which any ambiguity, or even any unambiguous
provision of a contract of insurance, must be interpreted in a manner
consistent with the expectations of the insured. They submitted that, in light
of past practice, it was reasonable for them to expect La Financière to
link the amounts paid by the federal government individually. The decision to
do so collectively was therefore, in their view, [translation] “arbitrary, discriminatory and improper”
because of its negative effect on the compensation paid to many participants.
That decision resulted in the amendment of the contract in the course of an
insurance year, which the program did not permit, and deprived the appellants
of amounts to which they were entitled.
[18]
In their conclusions, the appellants asked the
court to declare that La Financière [translation]
“must, under the ASRA Program, deduct any amounts to which each participant is
entitled under a federal program on an individual basis”. They also asked that
the calculation that resulted from linking the COPB and Kickstart amounts be
declared to be invalid in respect of all ASRA Program participants (who
numbered 16,747 at the time). Each of them claimed the amount it would have
received for 2007 had the amounts been linked individually, a total of over
$14 million.
[19]
La Financière countered that the ASRA
Program is not a contract of insurance, adding that the AFAQ gives it a
broad discretion to determine the amount of the assistance granted to producers
and to establish the conditions applicable to such assistance, including the
method to be employed in linking the amounts it must take into account in
granting compensation. Linking them collectively was in its view consistent
with the nature of the ASRA Program, which is based on a benchmark farm and not
on data specific to each participant. La Financière also argued that the
chosen method had been advantageous to a clear majority of participating
producers. It explained that it had in the past linked amounts individually
only in cases in which a single group of ASRA Program participants had received
amounts to be linked, and that it had done so in such cases to avoid
attributing income to all the participants that some of them had not received.
La Financière added that it had exercised its power to decide on the
method to employ in linking amounts on a case‑by‑case basis having
regard to its mission and to the impact of each contribution on the
participants as a whole.
III.
Judicial History
A.
Superior Court, 2012 QCCS 284
[20]
The trial judge found that the ASRA Program was
a contract of insurance, explaining that La Financière insured a risk in
exchange for the payment of a contribution. She noted that La Financière
had the power to decide what data would be taken into account in calculating
the compensation that was payable, but that any unilateral amendment of the
terms of the ASRA Program by La Financière could apply only to the year
following the amendment and only after having been published in the Gazette
officielle du Québec.
[21]
The trial judge observed that, before being
amended in November 2008, s. 88(3) had referred expressly to [translation] “amounts to which a
participant is entitled”. There was therefore nothing preventing
La Financière from linking the amounts individually in this case. The
November 2008 amendments required that La Financière determine the
amounts to which a participant was entitled on the basis of the characteristics
of the benchmark farm (collective linkage) unless La Financière considered
it appropriate to add the amounts actually received to the annual receipts
(individual linkage). In the trial judge’s view, that amendment [translation] “suggests that the
intention was to change either the law or the parties’ status” (para. 157
(CanLII)).
[22]
Further, the trial judge concluded on the basis
of the evidence that, in the past, La Financière had collectively linked
amounts paid under programs involving [translation]
“a single contribution paid directly to its insurance fund [that of the ASRA
Program]”, but had linked the amounts of “direct payments to producers”
individually by subtracting from the compensation payable to each participant
any amounts it had received from the federal government (paras. 133‑34).
The financial assistance provided under the two federal programs at issue took
the form of direct payments to producers. La Financière’s past practice
had therefore created “legitimate expectations among the participants”, which
means that La Financière could not in the course of a year decide to change
the applicable rules and collectively link amounts paid directly to producers
(para. 158).
[23]
The trial judge found that La Financière
had a “discretion” to decide what method to employ in linking amounts, but that
this discretion had to be exercised [translation]
“in accordance with the terms of the program . . . and in a
reasonable manner”, which was not the case here (paras. 161‑62). By
collectively linking the amounts in issue, La Financière had “indirectly
reduced the insurance coverage” to a significant degree (para. 164). The
extent of the resulting distortions and the fact that the appellants were
accordingly penalized led the trial judge to conclude that La Financière
had exercised its discretion unreasonably and had acted in an arbitrary,
discriminatory and improper manner.
[24]
The trial judge therefore allowed the action,
declared the calculation of the compensation paid for 2007 — but only to the
appellants — to be invalid, and ordered La Financière to pay the
compensation the appellants would have received had the amounts been linked
individually, with costs.
B.
Court of Appeal, 2014 QCCA 1886
[25]
Savard J.A., writing for the Court of
Appeal, began her analysis by observing that participation in the ASRA Program
was voluntary and that the program had all the characteristics of a contract.
However, she was of the view that the program was not a contract of insurance
within the meaning of art. 2389 C.C.Q. She noted, inter alia,
that La Financière’s primary activity was not speculating on risk but
promoting the agricultural and agri‑food sector. The economic risk
covered by the ASRA Program did not depend on each participant’s financial
situation, but was always present and was certain over a long period of time
(para. 69 (CanLII)). In Savard J.A.’s view, the ASRA Program was more
of an income protection program, as the government provided farm producers with
financial support to counter losses that were inherent in their sector. She
described the program as a sui generis administrative contract that had
both public law and private law aspects.
[26]
In Savard J.A.’s opinion, s. 88(3) of
the ASRA Program did not require La Financière to link amounts
individually, but authorized it to take the specific features of each program
into account in deciding what calculation method to use. The fact that the
words [translation] “a
participant” had been used in that provision at the relevant time was not
conclusive. The purpose of the ASRA Program, which complemented other
government assistance programs, meant that La Financière had to be able to
determine on a case‑by‑case basis how best to act in the interest
of all participants.
[27]
Savard J.A. then analyzed the
reasonableness of La Financière’s decision. She found that the trial judge
had erred in essentially basing her analysis on the impact of the chosen
linkage method on the participants who were disadvantaged by it, and in not
considering the purpose of the AFAQ and the interests of all the
participants. The decision to link the amounts collectively was not
unreasonable. It was based in part on the fact that the federal programs
applied both to products that were insured by the ASRA Program and to products
that the ASRA Program did not insure. Linking the amounts collectively made it
possible to take only payments related to insured products into account.
Another reason why La Financière took a collective approach here was to
avoid negating the caps established under the federal assistance programs,
which was a factor it could include in its analysis. As well, unlike the programs
for which amounts had been linked individually in the past, the two federal
programs at issue here involved the payment of amounts to every ASRA Program
participant. All these characteristics were taken into account in the decision
to link the amounts collectively in the circumstances of this case.
[28]
In light of this conclusion, Savard J.A.
did not address La Financière’s argument that the action could not be
allowed without declaring the linkage calculation to be invalid in respect of
all participants. The court therefore allowed the appeal, without costs in view
of the parties’ relationship and the nature of the questions that had been
raised.
IV.
Issue
[29]
The central issue in this appeal is whether
La Financière, in determining the compensation payable to the appellants
under the ASRA Program for 2007, acted in conformity with its rights and
obligations by linking the amounts in question collectively. To decide this
issue, it will be essential to begin by outlining the legal framework
applicable to the ASRA Program and determining whether the program constitutes
a contract and, if so, whether it is a contract of insurance within the meaning
of the Civil Code of Québec. We will consider this last subject first.
Our analysis in that regard will enable us to define the legal framework
applicable to the ASRA Program and identify the nature of the relationship
between La Financière and the participants.
V.
Analysis
A.
Is the ASRA Program a Contract and, if So, Is It
Subject to the Rules Applicable to Contracts of Insurance?
(1)
Is the ASRA Program a Contract?
[30]
To decide whether the rules of private law or
public law apply to the ASRA Program, we must first determine whether the
program is a contract.
[31]
Despite the broad discretion conferred on
La Financière by the legislation and the ASRA Program (s. 19 AFAQ
and s. 87 para. 3 ASRA Program), and even though La Financière
finances the compensation paid under the program partly out of public funds
(s. 80), the program cannot be considered simply a government program that
is governed by public law. The ASRA Program has several features that justify
considering it to be a contract. This is clear from a review of its structure
and how it functions, which differentiate it from two classic examples of
social programs that fall under public law: “social insurance” programs and
agricultural subsidies.
[32]
It is true that a government program may include
the [translation] “basic elements
of a contract of insurance” but not its “contractual form”, so that it is in
reality a “social insurance” program: P. Issalys and D. Lemieux, L’action
gouvernementale: Précis de droit des institutions administratives (3rd ed.
2009), at p. 819; R. Dussault and L. Borgeat, Administrative
Law: A Treatise (2nd ed. 1985), vol. 1, at pp. 135‑36.
Professors Issalys and Lemieux define the social insurance program as follows:
[translation] The early years of modern
social security were marked by the creation of social insurance mechanisms.
According to this technique, the elements of the legal relationship of
insurance, as set out in article 2389 of the Civil
Code of Québec, were adopted, but modified to serve the needs of social
policy. It can therefore be defined as a statutory mechanism under which a
class of persons subject to the mechanism are required to pay premiums to an
insurer vested with public authority in exchange for the payment of benefits
under the mechanism to those persons or to other recipients on the occurrence
of a specified risk. [p. 818]
[33]
It is also well established that a true social
insurance program is not contractual in nature. For example, the Canada
Pension Plan, R.S.C. 1985, c. C‑8 , was described by this
Court as “compulsory social insurance” in Law v. Canada (Minister of
Employment and Immigration), [1999] 1 S.C.R. 497, at
para. 8. That plan is governed by public law in the sense that it is
managed by an administrative tribunal and that the recourse available to a
dissatisfied person to whom the plan applies is to seek judicial review of the
tribunal’s decision: see, for example, Peters v. Canada (Attorney
General), 2009 FC 400. The same is true of the scheme established
by the Unemployment Insurance Act, 1971, S.C. 1970‑71‑72,
c. 48 (since replaced by the Employment Insurance Act,
S.C. 1996, c. 23 ), which this Court characterized as “a scheme
of compulsory public insurance which was never expected to function on a strict
actuarial basis”: Martin Service Station Ltd. v. Minister of National
Revenue, [1977] 2 S.C.R. 996, at p. 1005. The Court has also
legally characterized the employment insurance premium as a “regulatory
charge”, which it defined as “a form of special levy connected with a
government program”: Confédération des syndicats nationaux v. Canada
(Attorney General), 2008 SCC 68, [2008] 3 S.C.R. 511,
at paras. 71‑72.
[34]
Social insurance programs generally share the
following characteristics: they apply to more than one sector, they are
universal and compulsory and their benefits are calculated using simple
formulas because of [translation]
“the mandatory coverage of broad classes of persons and situations [that]
requires that . . . operations be simplified” (Issalys and Lemieux, at
p. 819; see also D. Lluelles, Précis des assurances terrestres
(5th ed. 2009), at pp. 9‑10; J.‑G. Bergeron, Les
contrats d’assurance (terrestre) (1989), t. 1, at p. 52). As well,
they almost always include an internal administrative remedy (generally known
as a “proceeding for review”) against decisions granting or denying indemnities
or benefits: Issalys and Lemieux, at p. 903.
[35]
It is therefore primarily or even exclusively
public law that governs both the characterization of social insurance programs
and the determination of the appropriate remedy for a dissatisfied person who
wishes to contest a decision made in the context of such a program.
[36]
The ASRA Program differs from a social insurance
program. Unlike most such programs, it applies to only one sector and is
neither universal nor compulsory, and its benefits are not calculated using
simple formulas applicable to broad classes of persons and situations. In
addition, disputes arising out of the application of the ASRA Program are not
submitted to an administrative tribunal for adjudication.
[37]
The ASRA Program also includes several contract‑style
clauses. Section 19 provides that [translation]
“[f]ailure to meet the conditions for eligibility throughout the participation
period shall result in the resolution of the participant’s contract
for the current year.” Section 101 of the program states that participants
can also be excluded, in which case they must pay a penalty as provided for in
s. 103:
[translation]
101. La Financière
agricole shall exclude a participant from the Program in respect of an
insurable product if the participant:
1° refuses to pay any contribution
that is due;
2° refuses to submit to an
inventory, an area measurement or a sampling or count of a stored or marketed
crop; or
3° applies for an exclusion in writing.
[38]
Regarding the penalties that result from
exclusion, the first paragraph of s. 103 of the ASRA Program provides
that, [translation] “[w]here a
farming business has been excluded, La Financière agricole shall keep
every amount received as a contribution in respect of the product for which the
exclusion has been applied.” The second paragraph of s. 103 adds that “[a]
farming business that has been excluded shall pay contract resolution fees
corresponding to 25% of the contribution it paid for the last year in which it
complied with the insurable minimum.”
[39]
Finally, any amendments to the program that are
not related to the contribution rate may not come into force until the year
after they are made (s. 21 ASRA Program). Participants can therefore
decide to opt out of the program for the following year if amendments proposed
by La Financière are not acceptable to them.
[40]
These mechanisms for terminating the contract
for predetermined reasons, which create acquired rights for the current year,
fall under contract law much more than public law. Moreover, Geoffroy J.
of the Superior Court reached a similar conclusion in Trépanier v.
Financière agricole du Québec, 2011 QCCS 1802, a case that closely
resembled the case at bar. Geoffroy J. commented as follows in analyzing
La Financière’s powers under the ASRA Program:
[translation] Although
La Financière agricole must report to the government on its management
(s. 43), it can adapt its programs (ss. 20 and 22) without having to
seek any form of prior administrative authorization. One reason for this
autonomy is that the government and the Union des producteurs agricoles (UPA)
are represented on the agency’s board of directors (s. 6 of the Act).
However, the
defendant’s power is not absolute, and its programs must include the terms and
conditions needed to ensure sound management of the funds it is responsible for
administering. It is essential that the defendant’s clients be made aware of
the contractual conditions that are binding on them as participants in the
[ASRA] [P]rogram, and that is what was done in this case. [Emphasis added;
paras. 59‑60 (CanLII).]
[41]
In our view, the characteristics of the ASRA
Program referred to by Geoffroy J. — in particular La Financière’s
considerable management autonomy, limited as it is by the need to comply with
the “contractual conditions” that bind La Financière and the participants
— support the proposition that this program is by nature a contractual
mechanism rather than a social insurance program governed by public law.
[42]
These same characteristics also distinguish the
ASRA Program from simple agricultural subsidy programs like the one considered
by this Court in Jacobs v. Agricultural Stabilization Board, [1982]
1 S.C.R. 125. In that case, farm producers contested, inter alia,
the imposition by the Agricultural Stabilization Board of ceilings on the
amounts that could be granted as subsidies under the Agricultural
Stabilization Act, R.S.C. 1970, c. A‑9. Laskin C.J.
applied the public law rules of procedural fairness to the Board’s decisions
establishing the conditions for granting subsidies, relying in particular on
the fact that there “is no entitlement to subsidy until a scheme is propounded
by the Governor in Council and until action is taken under the scheme by
inviting the presentation of claims for subsidy” (Jacobs, at
p. 137). Laskin C.J. added that subsidies were granted without any
requirement of consideration, on an “ex gratia” basis
(p. 138).
[43]
Given the contributions required from
participants, the contract resolution clauses and the existence of acquired
rights during an insurance year, the ASRA Program clearly differs from one
under which an “ex gratia” agricultural subsidy is paid without
consideration. Indeed, it was these very characteristics that led the Ontario High
Court of Justice to find Ontario’s statutory crop insurance scheme to be a
contract (of insurance) and not simply an agricultural support program: George A. Demeyere
Tobacco Farms Ltd. v. Continental Insurance Co. (1984), 46 O.R. (2d)
423. The crop insurance scheme provided by La Financière is also governed
by contract law: Brissette v. Financière agricole, 2006 QCCS 1620.
As we will explain below, there are clearly fundamental differences between a
crop insurance scheme and the ASRA Program, and these differences support the
proposition that the ASRA Program is not a contract of insurance within the
meaning of the Civil Code of Québec. Nevertheless, it would be rather
strange if one insurance program offered by La Financière were governed by
private law while another were subject to a fundamentally different set of
rules, those of public law.
[44]
The ASRA Program can also be distinguished from
certain other schemes that are subject to public law rules. One example can be
seen in Canada (Attorney General) v. Mavi, 2011 SCC 30,
[2011] 2 S.C.R. 504, in which the issue was the legal status of an
undertaking made by a person sponsoring a relative for immigration purposes to
support the sponsored relative and to reimburse the government for any amount
received by the latter as social assistance. In that case, the sponsor’s
undertaking was required by statute, and any person wishing to sponsor a
relative had to undertake to support the relative (para. 48). This was one
reason why this Court found that the undertaking made by sponsors to the
government was subject to public law, not to private law (para. 49). In
the instant case, in contrast, participation in the ASRA Program is voluntary.
As well, in Mavi, the undertaking signed by sponsors was incidental to
the public law scheme established by the Immigration and Refugee Protection
Act, S.C. 2001, c. 27 , and had no purpose other than enabling
relatives to immigrate as members of the family class under that public law
scheme. The ASRA Program is not incidental to any statutory public law scheme.
[45]
Thus, the ASRA Program is not a public law
scheme but a contract. In reaching this conclusion, we wish to be clear that
our reasons relate only to the scheme under consideration in this case. The
determination of whether a scheme falls primarily under public law or under
private law is a contextual exercise from which no extrapolation is possible.
In other circumstances, it will, for example, be possible to hold, as in Mavi,
that a contract entered into under a governmental scheme can be subject
primarily, or even exclusively, to public law.
[46]
We therefore agree with the Court of Appeal (at
para. 71) that the ASRA Program has the characteristics of an [translation] “administrative contract”,
that is, a contract to which a public authority is a party: P. Garant,
with P. Garant and J. Garant, Droit administratif
(6th ed. 2010), at p. 349. However, unlike the Court of Appeal, which
found that the ASRA Program falls within both areas of law, that is, public law
and private law (paras. 54 and 57), we are of the view that the rules that
apply to this program are those of private law. Once it has been determined
that the ASRA Program is a contract, we fail to see how it could be subject,
even in part, to judicial review on the basis of administrative law principles
or to other public law principles. All the rules needed to guide the actions of
the parties under the ASRA Program can be found in private law. The courts have
often applied this principle in the context of commercial relations between the
government and a private party, even where the content of the contract is
dictated largely by statute or regulation, which is not the case here: see, for
example, Glykis v. Hydro‑Québec, 2004 SCC 60, [2004]
3 S.C.R. 285, at paras. 18 and 30. In our view, the courts have
been right in the past to apply the rules of contract law to the ASRA Program,
including those relating to defects of consent and to the scope of the
obligations of the program’s participants: see, for example, Financière
agricole du Québec v. Forand, 2009 QCCQ 10263.
[47]
This being said, administrative contracts are
still distinguishable from contracts between private parties, since parity
between the parties does not always exist. As Professor Garant explains:
[translation] In our law, the essential
difference between a private sector contract and an administrative contract is
not one of basic legal classification. Both types of contract are in fact
governed by the rules of the Civil Code of Québec. . . .
However, what the public interest purpose means for one of them, in contrast
with the other, is that it may be subject to rules that depart from the general
law, which will vary in light of the requirements of the general interest and
may differ from one service to another. It is above all in this sense that an
administrative contract involves privileges and constraints in comparison with
a private contract; the influence of the public service is always felt; there
is never absolute parity between the parties, since one represents the general
interest of the community and the other represents a private
interest. . . .
. . .
. . .
It is thus clear that the public interest is of great importance in the
government’s contracting process. This principle must guide the formation
and performance of the contract and also serve as a rule of interpretation.
[Footnote omitted; pp. 349‑51.]
[48]
Thus, the government’s contractual relations are
governed by a specific set of rules, and the public interest must be considered
in interpreting such relations. When interpreting the scope of the government’s
powers as a party to a contract in order to determine, for example, whether the
language of the contract confers a discretion on the government, the principle
of the public interest may weigh in favour of a broader discretion in
implementing the scheme. This will be especially true in cases in which the
contractual scheme in question has a social objective. These are not principles
of public law, but considerations related to the object of the contract that
may influence the interpretation of the scope of the contractual powers of the
public authority in question. Along the same lines, the Court has recognized in
the public tendering context that, although the tender process is in the
contractual realm, the government has broad powers that enable it to “include
stipulations and restrictions and to reserve privileges to itself”: Martel
Building Ltd. v. Canada, 2000 SCC 60, [2000] 2 S.C.R. 860, at
para. 89, quoting Colautti Brothers Marble Tile & Carpet (1985)
Inc. v. Windsor (City) (1996), 36 M.P.L.R. (2d) 258 (Ont. Ct. (Gen. Div.)),
at para. 6. There are of course distinctions to be made between the ASRA
Program and a call for tenders. We will not comment on the role of public law
in the regulation of the tendering process. Nevertheless, the contract law
principle identified in Martel Building applies in the case at bar. In
interpreting the scope of the powers conferred on La Financière by its
contract with ASRA Program participants, the public interest and
La Financière’s social purpose are considerations that must be taken into
account.
[49]
The government’s discretion nonetheless has its
limits. In the context of an administrative contract like the one at issue in
this case, those limits do not derive from the public law duty of procedural
fairness but are instead based on good faith and contractual fairness, as is
explained, once again, by Professor Garant:
[translation] . . . awarding or
amending a contract is a purely administrative matter that does not require the
application of any of the principles of natural justice, procedural fairness
and legitimate expectations. The duty of good faith will of course be
sanctioned by the courts, as will the government’s duty to treat other
contracting parties fairly. But what is in issue here is contractual fairness,
not procedural fairness in the public law sense. [Footnote omitted;
p. 354.]
[50]
The Court applied similar principles in the
tendering context in Martel Building, explaining that such contracts
placed the government under an implied obligation to “treat all bidders fairly
and equally” (para. 88). This principle can be readily adapted to the
context of this appeal. La Financière must treat the other contracting
parties fairly and exercise its discretion in good faith. The source of the
contractual obligation to treat ASRA Program participants fairly is the same as
in Martel Building, namely “the presumed intentions of the parties”
(para. 88). It must be presumed that the parties to the ASRA Program
intended to include in it an obligation of contractual fairness, which “is
consistent with the goal of protecting and promoting the integrity of the
[legal] process [at issue], and benefits all participants” (para. 88). In
Quebec law, this amounts to an application of the rule provided for in
art. 1434 C.C.Q. that “[a] contract validly formed binds the
parties who have entered into it not only as to what they have expressed in it
but also as to what is incident to it . . . in conformity with
. . . equity”. As for the obligation to act in good faith, it flows
from arts. 6, 7 and 1375 C.C.Q.
[51]
In sum, like the contract itself, the fairness
of the exercise of that discretion must be assessed in light of the public
interest and La Financière’s social purpose. Contract law will nonetheless
apply to make La Financière accountable for the financial impact of its
decisions if they fail to satisfy the requirements of good faith and
contractual fairness. This is the legal framework that must guide the analysis
of La Financière’s actions in this case. Before analyzing those actions
having regard to that contractual legal framework, we must first determine whether
the rules specific to the contract of insurance apply to it.
(2)
Is the ASRA Program Subject to the Rules
Applicable to the Contract of Insurance?
[52]
The appellants argue that the ASRA Program is a
contract of insurance within the meaning of art. 2389 C.C.Q. They
submit that farm insurance is based on the principles of mutuality and risk
applicable to the contract of insurance and can therefore be distinguished from
other financial assistance programs, such as those that involve the granting of
subsidies. This means that the rule of interpretation based on the reasonable
expectations of the insured must be applied in interpreting s. 88(3) of
the ASRA Program.
[53]
La Financière counters this position by
arguing that what the ASRA Program covers is not a risk, but a contingency,
given that there are no uncertain events for participants, but a recurring
situation that leads to the application of the program on a regular or even
permanent basis for certain products. La Financière also notes that
participants cannot receive a personalized indemnity, since the amounts to
which they are entitled are calculated not on the basis of losses incurred by
their businesses, but on the basis of the model of a benchmark farm.
[54]
In this Court, the parties’ arguments on this
point focused on a comparison between the ASRA Program and the Programme
d’assurance récolte also offered by La Financière. The Programme
d’assurance récolte, like equivalent crop insurance programs in the other
provinces, has been treated by the courts as a contract of insurance that is
subject to all the rules that apply to such contracts: Brissette; Demeyere;
Rollo Bay Holdings Ltd. v. Prince Edward Island Agricultural Development
Corp. (1993), 110 D.L.R. (4th) 132 (P.E.I.S.C. (App. Div.)). The
respondent argues that the ASRA Program is sufficiently different from a crop
insurance program to warrant different legal treatment, whereas the appellants
argue that the same rules of interpretation apply to both programs.
[55]
In our view, the ASRA Program is not a contract
of insurance and cannot be subject to the rules applicable to such contracts.
It does not have the three main characteristics of a contract of insurance
set out in art. 2389 C.C.Q., namely (i) an obligation on the
client to pay a premium or assessment; (ii) the occurrence of a risk; and
(iii) an obligation on the insurer to make a payment to the client if the
insured risk occurs. The reasons for this conclusion are as follows.
[56]
First, it is agreed that ASRA Program
participants have an obligation to pay a premium or assessment. This is not
changed by the fact that the government provides most of the funding for the
program through La Financière. That being said, it may happen, where the
“risk” (net annual income of the benchmark farm less than the stabilized net
annual income) does not occur for a certain period and the amounts paid into
the fund are sufficient to ensure its sustainability, that no contributions are
made in respect of a designated product. For example, no contribution was
required from ASRA Program participants in 2003 in respect of “potatoes”.
Moreover, the program provides that any surplus must be redistributed among
participants in proportion to their contributions (s. 13). This means that
one of the characteristics referred to in art. 2389 C.C.Q. is
lacking here, since, according to the principle of mutuality, the contract of
insurance concept presupposes that the client continues to be a debtor in
respect of the premium even if the risk does not occur: Lluelles, at
p. 25.
[57]
Second, the implementation of the ASRA Program
does not depend on the occurrence of a risk within the meaning of
art. 2389 C.C.Q. What is described here as a risk is actually based
on the net annual income of the benchmark farm, which La Financière
calculates itself in exercising its broad discretion. La Financière
therefore exerts control over the occurrence of the “risk” when it adjusts and
fixes the net annual income on the basis of statistical studies or of [translation] “other data it deems
relevant” (s. 87 para. 3 ASRA Program). In this sense, the occurrence
of the “risk” under the program depends on the will of La Financière. Yet
it is well established that the occurrence of the risk under a contract of
insurance must be [translation]
“an event that is uncertain and does not depend exclusively on the will of the
parties”: Lluelles, at p. 186.
[58]
Lastly, it is almost certain that the stabilized
net annual income will ultimately be higher than the net annual income. The
evidence shows that, over a 30‑year period — from 1979 to 2009 —
La Financière paid compensation every year for certain products, one
example being “feeder cattle”. Moreover, s. 92 of the ASRA Program
provides that La Financière may make [translation]
“advance payments on the compensation to be paid” on the basis of “forecasts”
of the amounts that will be paid in the future. It can be seen from the cases
that La Financière avails itself of that power: Forand, at
paras. 12‑13 (CanLII); Financière
agricole du Québec v. Coddington, 2013 QCCQ 6238, at paras. 5‑6 (CanLII). This means that the “risk” is foreseeable not
only as regards its occurrence, but also often as regards the time of its
occurrence. As Professor Lluelles states, [translation]
“if the promised payment is based not on the occurrence of a risk but on the
occurrence of an event that is certain in terms of its occurrence, its
prematurity or its severity, the contract in question is not one of insurance”
(p. 25 (footnote omitted)).
[59]
Furthermore, several provisions of the Civil
Code of Québec relating to the contract of insurance are foreign to the
essential elements of the ASRA Program. For example, there is no question of
the insured giving notice of the “loss”, which first becomes known to
La Financière when it determines that the stabilized net annual income is
higher than the net annual income of the benchmark farm for a covered product.
The obligations under arts. 2470 to 2474 C.C.Q. concerning notice
of the “loss” by the insured cannot therefore apply to the ASRA Program. Nor is
it possible to speak of a “material change in the risk” caused by the insured
within the meaning of arts. 2466 to 2468 C.C.Q. or of “initial
representations” of the insured in the context of arts. 2408 to 2413 C.C.Q.
These are concepts that are central to the regulation of insurance.
[60]
In this regard, the ASRA Program differs from
the Programme d’assurance récolte, which accords very well with several
provisions applicable to the contract of insurance. The crop insurance program
protects participants from [translation]
“uncontrollable” climatic events (s. 27). Under that program, indemnities
are calculated on an individual basis (s. 38), unlike the compensation
provided for in the ASRA Program, which is instead calculated on the basis of a
hypothetical benchmark farm. The crop insurance program requires the existence
of an individual loss of which the insured must give notice in accordance with
arts. 2470 to 2474 C.C.Q. (ss. 35 to 37). Sections 10 and
15 of the Programme d’assurance récolte refer to the initial
representations of the insured, while s. 42 refers to the concept of a
material change in the risk caused by the insured. Whereas the Programme
d’assurance récolte is compatible with arts. 2408 to 2413 and 2466 to
2468 C.C.Q., the ASRA Program is not.
[61]
It is true that the terminology of contracts of
insurance is sometimes used in the ASRA Program. For example, s. 78 refers
to an [translation] “insurable
product”, para. 2 of s. 21 to an “insurance year” and s. 22 to
an “insurance certificate”. In our view, the use of that terminology is not
conclusive, however. When properly analyzed, the ASRA Program cannot be
characterized as a contract of insurance. It is therefore not subject to the
rules specific to such contracts.
[62]
Since the ASRA Program is not a contract of
insurance, it follows that the rule of interpretation based on the reasonable
expectations of the insured does not apply. We nonetheless consider it
appropriate to clarify the extent to which that rule applies in Quebec law,
given that the parties to this appeal and the companion appeal, Lafortune v.
Financière agricole du Québec, 2016 SCC 35, [2016] 1 S.C.R. 1091,
present different views and refer to a debate about the rule among the
commentators and the courts. In both appeals, ASRA Program participants argue
that the reasonable expectations rule applies in its [translation] “maximum dimension” and that
La Financière’s powers are limited by their expectations regardless of
whether the contract is ambiguous. La Financière counters that the rule
must apply only in its “minimum dimension”, that is, only where there is
ambiguity.
[63]
The scope of this rule, which originates in U.S.
insurance law, was explained by Cory J., dissenting, but not on this
point, in Brissette Estate v. Westbury Life Insurance Co., [1992]
3 S.C.R. 87, at p. 102. He mentioned that this rule of
interpretation was applied in the United States in three ways: (1) to
resolve any ambiguity in the terms of the contract in favour of the insured in
order to satisfy his or her reasonable expectation; (2) to give the
insured a right to all the coverage he or she was entitled to expect, unless
there was an “unequivocal plain and clear manifestation of the company’s intent
to exclude coverage”; or (3) to give the insured such coverage even in
cases in which “painstaking study of the policy provisions would have negated
those expectations” (p. 103). The first and third of these scenarios
correspond, respectively, to what some authors have called the “minimum” and
“maximum” dimensions of the doctrine: D. Lluelles and B. Moore, Droit
des obligations (2nd ed. 2012), at pp. 922‑23; M.‑C. Thouin,
“La théorie de l’attente raisonnable de l’assuré” (1997), 64 Assurances
545, at p. 551. However, none of them allows the meaning of a clear
provision to be disregarded in favour of the expectations of the insured,
except, in the third case, insofar as the interpretation of the provision
requires “painstaking study” to determine its true meaning.
[64]
The Court has accepted the first formulation
(the minimum dimension) of the reasonable expectations rule in a number of
cases, holding that, in Canada, the rule applies only in the event of
ambiguity: Jesuit Fathers of Upper Canada v. Guardian Insurance Co. of
Canada, 2006 SCC 21, [2006] 1 S.C.R. 744, at paras. 27
and 29; Reid Crowther & Partners Ltd. v. Simcoe &
Erie General Insurance Co., [1993] 1 S.C.R. 252, at p. 269; National
Bank of Greece (Canada) v. Katsikonouris, [1990]
2 S.C.R. 1029, at p. 1043. The Quebec Court of Appeal has
consistently reached the same conclusion: Excellence (L’), compagnie
d’assurance‑vie v. Desjardins, 2005 QCCA 1035, [2005] R.R.A.
1085, at para. 11; Affiliated FM Insurance Co. v. Hafner Inc.,
2006 QCCA 465, at para. 47 (CanLII); Souscripteurs
du Lloyd’s v. Alimentation Denis & Mario Guillemette inc.,
2012 QCCA 1376, at para. 38 (CanLII).
[65]
We are of the view that in Quebec law, the
reasonable expectations rule must apply solely in its minimum dimension, that
is, only where there is ambiguity. The Civil Code of Québec contains a
series of rules for resolving difficulties in the interpretation of contracts.
The reasonable expectations rule can certainly be added to those rules of
interpretation for contracts of insurance, but only for the interpretation of
an ambiguous clause and for the purpose of identifying the common intention of
the parties (art. 1425 C.C.Q.).
[66]
This being said, in the case at bar, because the
ASRA Program is an innominate administrative contract that does not have the
characteristics of a contract of insurance, the rules of contractual
interpretation set out in arts. 1425 to 1432 C.C.Q. must be applied
to determine the outcome of the appeal. We must refer to those rules to resolve
the central issue, that is, whether it was open to La Financière to
collectively link the amounts received under the two federal assistance
programs in respect of which the appellants brought their action.
B.
Was it Open to La Financière to
Collectively Link the Amounts Received From the Federal Government Under the
COPB and Kickstart Programs?
(1)
Interpretation of Section 88(3) of the ASRA
Program
[67]
Section 88(3) of the ASRA Program does not
specify how compensation received under government assistance programs is to be
linked. It states only that, for this purpose, La Financière must consider
[translation] “[a]ny amounts to
which a participant is entitled” under such programs.
[68]
The appellants argue that the words “a
participant” [translation]
“refe[r] to each participant considered individually and not . . . to
a hypothetical participant on the benchmark farm” (A.F., at para. 63). They add that s. 88(3)
must be read in conjunction with s. 2 of the ASRA Program, in which
“participant” (adhérent) is defined as [translation] “a farming business . . . that participates in
the Program”. In the appellants’ opinion, s. 88(3) therefore requires
individual linkage. Our colleague agrees with them. In her view, the wording of
s. 88(3) means that La Financière cannot take account of amounts to
which the participant is not entitled.
[69]
La Financière
replies that s. 88(3) must be interpreted in light of the program as a
whole, which is based on the average benchmark farm, and that collective
linkage should therefore be the rule.
[70]
To begin, we cannot agree with the appellants’
main argument that the words [translation]
“amounts to which a participant is entitled” mean that La Financière must
always link the amounts individually. It is common ground that
La Financière has used both collective and individual linkage in the past.
In reality, as will be seen below, individual linkage has been the exception
rather than the rule. Each time La Financière has linked amounts
collectively, it has inevitably penalized participants for amounts to which
they were not entitled, as it has in such cases attributed to all participants
amounts that were calculated on the basis of what the benchmark farm would have
received. An interpretation requiring that amounts be linked individually in
every case would conflict with that past practice and would as a result call
into question most of the decisions made by La Financière over the past 15
years. It would also put s. 88(3) in conflict with the whole of the ASRA
Program, which is based on the collective concept of a benchmark farm. In our
opinion, s. 88(3) cannot be interpreted so literally.
[71]
Nor, from this point of view, is the concept of
double compensation to which our colleague refers (at paras. 115‑21)
a conclusive interpretive guide for the resolution of this appeal. If the
purpose of s. 88(3) of the ASRA Program were to avoid double compensation
solely from the perspective of each participant, amounts would have to be linked
individually in every case, as the linked amounts would always have to be
identical to what each participant received. The evidence shows that this is
quite simply not the case. The fact that La Financière has most often
linked amounts collectively shows that its purpose has not been to avoid double
compensation solely from the perspective of each participant considered
individually. The purpose of s. 88(3) is also to account for other income
that could have an impact on the financial needs of the average benchmark farm.
That is one purpose that La Financière has pursued, as it was free to do.
[72]
In our opinion, to determine what meaning should
be attributed to this provision of the ASRA Program, it is instead necessary to
consider the rules of interpretation set out in the Civil Code of Québec.
The application of those rules leads to the conclusion that the contract does
not require that amounts be linked individually in cases such as this one but,
on the contrary, gives La Financière the discretion to decide what linkage
method to employ.
[73]
Two rules of interpretation are particularly
relevant to the identification of the common intention of the parties to the
ASRA Program. One of them, set out in art. 1427 C.C.Q., is that
each clause of a contract must be interpreted in light of the others so that
each is given the meaning that flows from the contract as a whole. To interpret
s. 88(3) literally would be to disregard this first rule. The other rule,
in art. 1426 C.C.Q., is that, when a court interprets a contract,
the interpretation which has already been given to it by the parties or which
it may have received, and usage in such matters, are all to be taken into
account. Favouring individual linkage would be contrary to this second rule.
[74]
Although a reading of s. 88(3) of the ASRA
Program in the context of the program as a whole does not eliminate the
possibility of linking amounts individually, it does lead to the conclusion
that collective linkage must be preferred, as Savard J.A. rightly observed
(para. 83). Section 88(3) is in Division XI, entitled [translation] “Farm Models”, which is a
collective concept. Moreover, ss. 86 and 92 of the ASRA Program clearly
state that the net annual income used to calculate the compensation, which
includes amounts received from government sources, is that of a “specialized
benchmark farm for each of the products or classes of products”.
[75]
The general structure of the program and the
contract as a whole thus support the conclusion that collective linkage is
normally required. However, given that La Financière has sometimes linked
amounts individually in the past, it will be helpful to consider that past
practice in order to determine its scope and any influence it has had in terms
of usage. This analysis reveals the limits placed on individual linkage by
La Financière.
[76]
On this point, the trial judge found that
La Financière had in the past linked amounts individually where, as in
this case, government assistance had been paid directly to producers. She found
that La Financière had linked compensation collectively only where a
government agency had paid a single sum to La Financière’s ASRA Program
fund (paras. 133‑34). While it is true that the trial judge was
relying on these facts to justify her application of the rule based on the
reasonable expectations of the insured, which we are excluding here, past
practice remains relevant to the interpretation of the content of the contract
because of art. 1426 C.C.Q.
[77]
With respect, we find that the trial judge made
a palpable and overriding error in concluding that in light of past practice,
there was a clear correlation between direct payments and individual linkage.
The evidence does not establish that amounts paid directly to producers have
always been linked individually. Furthermore, the evidence shows that several
other considerations have affected the choice of linkage method in the past,
the most important being the number of ASRA Program participants that received
the amounts to be linked.
[78]
In support of her conclusion that amounts had
been linked individually [translation]
“in the case of direct payments to producers”, the trial judge listed
five programs with the acronyms TISP, FIPP, BSE‑7, GOPP and CAIS
(para. 134). She referred in this regard to a table prepared by
La Financière that showed the past programs and the linkage method used
for each of them. It can be seen from the table that FIPP and BSE‑7 were
a single program, which means that there have only been four programs in the
past in respect of which amounts were linked individually. The table also
indicates that, for two of those four programs (TISP/BSE‑4 and FIPP/BSE‑7),
the linkage of amounts was mixed: collective for some products and individual
for others. This was confirmed by the testimony of two representatives of
La Financière, André Houle and Alain Pouliot. Finally, these
two representatives also testified that amounts paid under the CSRA, a
provincial program shown in the table prepared by La Financière,
which were linked collectively, had been paid in the form of direct payments to
producers in accounts opened for individual participants.
[79]
This evidence shows that there was no systematic
correlation between direct payments to producers and individual linkage.
La Financière has already had recourse to collective linkage for several
amounts that had been granted directly to producers. It is clear that this has
sometimes had the effect of attributing to certain producers income that they
had not received.
[80]
La Financière adds that there are other
considerations that explain decisions made in the past to link amounts
individually. The main one is that amounts from programs that benefited a small
number of participants were linked individually. The evidence thus shows that
it was on this basis that La Financière individually linked amounts
received under GOPP and CAIS, the only two programs for which amounts were
linked on a strictly individual basis. The evidence also shows that the number
of participants that received money was a decisive factor in the choice of
individual linkage for certain products in the case of TISP/BSE‑4 and
FIPP/BSE‑7. This was at the very least the case for “Lambs” under
FIPP/BSE‑7. Mr. Houle’s testimony suggests that it was also the case
more generally under those two programs.
[81]
It thus appears that the decision to link
amounts individually was usually based on the number of participants that
received the amounts in question. If by chance only a few participants received
a particular government benefit, it would have been unfair to link the amounts
collectively, as notional income amounts would have been attributed to many
participants who had in fact received nothing at all. In such cases, it was a
matter not of there being a difference between the notional amounts and amounts
that had actually been received, but of income being attributed where none had
even been received.
[82]
The evidence therefore establishes that there
has never been any correlation in the past between direct payments to producers
and individual linkage. It follows that past practice has not been consistent
enough to support a conclusion that individual linkage was the appropriate
method in this case.
[83]
We are therefore of the view that
La Financière was under no statutory or contractual obligation to link the
amounts individually in this case. Under s. 88(3), La Financière had
a discretion in respect of the choice of linkage method. Neither the contract
as a whole nor past practice supports a conclusion that one or the other of the
two linkage methods had to be employed. In the absence of a provision
circumscribing La Financière’s powers, s. 88(3), as it read at the
relevant time, must be found to have given La Financière the choice of
linking the amounts collectively or individually having regard to what was fair
in the circumstances and to La Financière’s mission. In s. 88(3),
La Financière has retained the broad discretion it has under ss. 19
and 22 AFAQ. The amendments made to s. 88(3) in November 2008 are
not conclusive in this regard. The clarification made in those amendments, to
the effect that La Financière will link amounts collectively unless it
deems it appropriate to choose another method, corresponds precisely to the
proper interpretation of the previous version of s. 88(3), which simply
read [translation] “amounts to which
a participant is entitled”. The amendments did not change the terms of the
contract; they simply confirmed the meaning of the former version.
[84]
Given this conclusion, there is no need to apply
the contra proferentem rule of interpretation, which requires that any
difficulties in interpreting a contract of adhesion be resolved in favour of
the adhering party (art. 1432 C.C.Q.). That rule is an interpretive
mechanism of last resort. In Consolidated‑Bathurst Export Ltd. v.
Mutual Boiler and Machinery Insurance Co., [1980] 1 S.C.R. 888,
at pp. 899‑900, the Court confirmed that, in Quebec law, the other
rules of contractual interpretation (like the rule that each clause of a
contract is interpreted in light of the others so that each is given the
meaning derived from the act as a whole) take precedence over that of contra
proferentem (see also Industrielle, Compagnie d’Assurance sur la Vie v.
Bolduc, [1979] 1 S.C.R. 481, at p. 493).
[85]
Moreover, the contra proferentem rule
would be difficult to apply in the instant case, given that the ASRA Program
covers 16,747 participants, only some of whom, like the 137 appellants, were
allegedly disadvantaged by La Financière’s decision to link the amounts
collectively. It would therefore be quite incongruous to seek to interpret the
contract in favour of the adhering party given that the many participants in
the program have widely varying and sometimes also conflicting interests.
(2)
La Financière’s Exercise of Its Discretion
[86]
That being said, although La Financière had
the discretion to link the amounts collectively, it was required to exercise
that discretion in accordance with the requirements of good faith and
contractual fairness. In our view, the Court of Appeal was right to conclude
that La Financière did so here.
[87]
The decision to link the amounts collectively
was made following extensive consultations with representatives of farm
producers. Thus, on June 6, 2007, representatives of La Financière
met with members of the Table sur la sécurité du revenu of the Union des
producteurs agricoles (“UPA”) to discuss the COPB and Kickstart programs and
the appropriate linkage method. We note that the Table sur la sécurité du
revenu, an internal UPA committee made up of all presidents of specialized
federations whose products are covered by the ASRA Program and of several other
presidents of specialized and regional federations, is the body that
La Financière generally approaches in order to hold discussions with
representatives of farm producers. At the end of that meeting on June 6,
2007, everyone was in agreement that amounts received under the COPB and
Kickstart programs would be linked collectively on the basis of the
characteristics of the specialized benchmark farm. La Financière’s board
of directors, which was chaired by the UPA’s president and 5 of the 11 members
of which represented that organization, subsequently approved that decision to
link the amounts collectively.
[88]
Furthermore, La Financière had conducted
impact simulation studies that showed that most of the program’s participants
would benefit from its decision to link the amounts collectively. It did not
save money in linking them collectively. According to the evidence in the
record, linking the amounts collectively cost some $1,620,472 more in this case
than linking them individually would have done.
[89]
The evidence also shows that, in the past,
individual linkage has been chosen when a small number of ASRA Program
participants received the amounts to be linked. In this case, however, this
factor favoured collective linkage, given that all ASRA Program participants
were eligible to receive amounts under the two federal programs, COPB and
Kickstart.
[90]
In addition, the evidence shows that another
consideration played a major role in La Financière’s decision. In this
case, unlike with the vast majority of past programs, benefits under the COPB
and Kickstart programs were calculated on the basis of overall sales, which
included sales of products that were not covered by the ASRA Program. By
linking those amounts collectively, La Financière could therefore break
down the amounts received by the benchmark farm by product and exclude any
amounts allocated for products that were not covered by the ASRA Program. It
thus avoided penalizing all the participants in that it did not take into
account income generated by products that were not covered but were still part
of their agricultural operations. Less compensation received under the ASRA
Program was deducted if only income from the 10 designated products or classes
of products was taken into account. The evidence shows that such an exercise
would have been impossible had the amounts been linked individually, because
La Financière did not have detailed information about each participant’s
products for which amounts had been granted under the COPB and Kickstart
programs, whereas that information was available in respect of the benchmark
farm.
[91]
La Financière’s choice to link the amounts
collectively was quite compatible with the nature of the ASRA Program, which is
structured around the concept of the average benchmark farm. By linking them
collectively, La Financière favoured the smallest producers, whose
allowable net sales were, like those of the benchmark farm, below the caps
imposed under the two federal programs. This situation was consistent with
La Financière’s mission, namely to “support and encourage the development
of the agricultural and agro‑food sector within the perspective of
sustainable development” (s. 3 AFAQ).
[92]
It is true that La Financière’s decision to
link the amounts collectively had an adverse effect on the appellants, as the
trial judge observed with supporting figures (paras. 68‑80). For
example, the appellant Ferme Vi‑Ber inc. received $12,240
and $51,391.30 from the federal government under the COPB and Kickstart
programs. Because the amounts were linked collectively, the company was
attributed income of $47,363.34 and $96,300.65, respectively, under those two
programs. As with the other 136 appellants, these were substantial differences
as a result of which Ferme Vi‑Ber inc. received less compensation than it
would have received had the amounts been linked individually. However, this is
not enough to support a finding that the decision to link the amounts
collectively was unfair or that La Financière did not act in good faith.
The ASRA Program is an ongoing program. Producers that are disadvantaged today
could very well be advantaged by other decisions in the future. For example,
the appellants could be advantaged by a situation in which amounts are linked individually,
such as the one alleged to be unfair in Trépanier, which
Geoffroy J. of the Superior Court refused to find to be invalid
(paras. 65-66).
[93]
La Financière acted in good faith and took
the necessary steps to weigh the impact on participants of the decision to link
the amounts collectively in order to ensure that the decision was fair. It is
clear that the specific features of each program and the impact on all the
participants help determine which linkage method is appropriate. That impact is
dependent on a host of variables, including year‑to‑year
fluctuations in allowable net sales, the timing of the establishment of a
farming business, an outbreak of disease at a particular time and the
production sector that is involved. In the case at bar, La Financière also
states that it reduced the contribution rate of hog and piglet producers to
minimize the impact of the chosen linkage method for that sector. Indeed, it
asked the trial judge to consider this in any award of damages (trial judge’s
reasons, at paras. 105‑6). This clearly shows why, where there is a
reasonable explanation for the choice that was made and where there is no
evidence of bad faith in the entity’s actions, the courts should avoid
interfering too hastily in such complex matters.
[94]
We conclude that La Financière exercised
its contractual powers in accordance with the requirements of good faith and
contractual fairness. That being so, it was open to La Financière in
fixing the compensation payable to the appellants to choose to link the amounts
they had received under the two federal financial assistance programs
collectively.
VI.
Disposition
[95]
We would therefore dismiss the appeal. Like the
Court of Appeal, we would not award costs in light of the relationship between
the parties.
English version of the reasons delivered by
[96]
Côté J. (dissenting in part) — Although I agree with my colleagues
on the nature of the Programme d’assurance stabilisation des revenus
agricoles, (2001) 133 G.O. 1, 1336 (“ASRA Program”), and also agree that it
is not necessary to apply public law principles to decide the case, I am of the
view that the only determinative issue in this case is one of contractual
interpretation.
[97]
The reason why producers participate in the ASRA
Program is simple: they expect no more and no less than to receive the full
compensation they are owed in return for paying their contributions. When
La Financière agricole du Québec (“La Financière”) deprives them of
all or part of the compensation to which they are entitled, contrary to the
express provisions of the contract it has itself imposed on them, judicial
intervention is warranted.
[98]
The common intention of the parties, the overall
scheme of the ASRA Program and past practices confirm that La Financière
contravened the program in deciding to subtract excessively high amounts
of notional income from the amounts to which participants were otherwise
entitled. It did this not to ensure that participants did not receive double
compensation for a single loss, but to redistribute the amounts that were received.
The amounts attributed to participants bore no relation to the amounts to which
they were entitled under federal programs. La Financière itself admits it
knew that, in employing the calculation method it did, it was disregarding the
caps specified in those programs.
[99]
Regardless of whether the contract is
characterized as a contract of insurance or as an innominate contract that
falls under both public law and private law, the result is the same. It is true
that the appellants participated voluntarily in the ASRA Program, but insofar
as that program involves a contract of adhesion imposed by La Financière,
that is, a contract that is not negotiated with participants, I find that the
characterization makes no difference. If there is any ambiguity, it must be
resolved in favour of the adhering party in accordance with art. 1432 of
the Civil Code of Québec (“C.C.Q.”). The rule of interpretation
of reasonable expectations adds nothing to the existing rules of
interpretation.
[100]
In my opinion, the appeal should therefore be
allowed, but only in part.
I.
Background
[101]
The appellants are all participants in the ASRA
Program administered by La Financière. The purpose of the program is to
guarantee them a positive net annual income for certain products (s. 1).
When the market price of a covered product is lower than production costs, a
participant is entitled to compensation from the Fonds d’assurance
stabilisation des revenus agricoles (“Fund”). Participants pay a third of the
total contributions to the Fund, and La Financière pays two thirds
(s. 80). The amount of a participant’s contribution may be reviewed
annually (s. 6).
[102]
The compensation to which a participant is
entitled is determined on the basis of the participant’s volume of insurable
products. It does not depend on the participant’s particular financial
situation but is instead based on the performance of a [translation] “specialized benchmark farm” for each of the
products. It corresponds to the difference between the benchmark farm’s net
annual income and stabilized annual income multiplied by the participant’s
volume of insurable products, that is, the number of units of products marketed
by the participant:
[translation] The net annual income
essentially corresponds to the earnings of the specialized benchmark farm, a
description of which in relation to each insurable product is set out in
Table 4 of section 86. The net annual income is determined by
La Financière agricole on the basis of an economic study of a specialized
benchmark farm for each product (or secondary product) covered by the Asra
Program (s. 87). For each unit of an insurable product, it corresponds to
annual receipts minus cash disbursements and depreciation, which are determined
as specified in the Asra Program (ss. 86 to 88 and 91).
. . .
The stabilized net
annual income is also determined for each unit of a product covered by the
Asra Program after consultation with the representatives of farming businesses
(ss. 2 and 89). Technically, it is calculated as a percentage (ranging
between 70% and 90%, depending on the product) of the “average annual regular
salary of a skilled worker” (or a portion of that salary ranging between 0.38
and 1.35), which was fixed at $42,461 in 2000 (and indexed
thereafter). [Emphasis in original; footnote omitted.]
(Court of
Appeal’s reasons, 2014 QCCA 1886, at paras. 24‑26 (CanLII))
[103]
It sometimes happens that during the year, as in
this case, additional amounts from other government agencies are paid to
individual participants, as opposed to a situation where a global amount is
paid to La Financière. These are amounts to which participants are
personally entitled. The ASRA Program expressly authorizes La Financière
to take such amounts into account in its calculations to ensure that
participants do not receive double compensation for a single loss (s. 88).
The problem here is whether La Financière can, in performing its
calculations, totally disregard the amounts that were actually received or
whether it can consider notional amounts where the amounts were granted to
participants individually.
[104]
In 2007, the federal government established two
programs to provide assistance to Canadian farming businesses: the Cost of
Production Benefit (“COPB”) program and the AgriInvest Kickstart (“Kickstart”)
program. At issue in this case is the linkage between those programs and the
ASRA Program. Under the programs in question, amounts were paid directly to
producers and were allocated to each producer individually, although
La Financière was responsible for administering them in Quebec. Each
program imposed a cap on allowable net sales (“ANS”) above which participants
could not be compensated. The maximum amounts of ANS were set at $450,000
($12,240 per producer) for the COPB program and $3 million ($96,000 per
producer) for the Kickstart program.
[105]
La Financière decided to take this direct
federal assistance into account by considering the amounts the benchmark farm
would theoretically have received for each product. It dealt with those amounts
as if they constituted a global sum that had been paid to it and that it could
redistribute as it saw fit. The federal assistance was taken into account in
calculating the benchmark farm’s stabilized income in light of the
characteristics of that farm, including its ANS. The resulting figure was then
multiplied, for each participant, by the number of units of insurable product.
[106]
The parties characterized this approach as [translation] “collective linkage”. Under
it, the caps imposed by these programs on the insurance coverage of ASRA
Program participants were completely disregarded. The evidence shows that the
effect of this “linkage” method was to subtract from the compensation otherwise
owed to many participants amounts higher than what they had actually received
in federal benefits.
[107]
In some cases, there was a huge difference between
the amounts participants actually received and the amounts that were attributed
to them. For example, Ferme Vi‑Ber received a COPB benefit of $12,240 but
had $47,363.34 subtracted from the compensation owed to it under the ASRA
Program. In the case of Alfred Couture Limitée, there was an even greater
difference between the amount it actually received and the COPB amount that was
attributed to it. Even though its assistance under the COPB program was
capped at $12,240, La Financière attributed $94,170.38 to it.
Similar differences could be seen in relation to the Kickstart program. Thus,
Ferme Vi‑Ber received a Kickstart benefit of $51,391.30 in its AgriInvest
account, but La Financière attributed $96,300.65 to it. The amount
attributed to Inter Agro inc., $800,146.49, was completely out of proportion to
the $96,000.00 it received: trial judge’s reasons, 2012 QCCS 284, at
paras. 70 and 78 (CanLII).
[108]
The appellants contest the linkage method
applied by La Financière and the resulting reduction in their compensation.
They argue that La Financière not only disregarded s. 88(3) of the
ASRA Program, but also diverted it from its purpose, which is simply to avoid
double compensation, not to deprive them of compensation they are otherwise
owed.
[109]
In my view, the appellants are right.
II.
Analysis
[110]
Over time, the federal government has multiplied
its initiatives designed, inter alia, to better respond to the
realities of the agricultural sector. Each of these initiatives has its own
characteristics and could result in double compensation if it is not properly
taken into account, which is why s. 88(3) of the ASRA Program was adopted:
[translation]
88. The following items shall be taken into account in calculating
annual receipts:
. . .
3° Any amounts to which a
participant is entitled on the basis of the volume
of marketed products and secondary products and that are granted by government
agencies in the form of price compensation for the insurable product or under a
government farm business risk management program.
[111]
I agree that La Financière must, in
administering the ASRA Program, be able to adjust its stabilization insurance
initiatives on the basis of the various measures that are adopted by other
government agencies on an ad hoc or recurring basis. However, it must do
so in accordance with the provisions of the ASRA Program, including
s. 88(3).
[112]
As La Financière itself admits, there are
limits on its ability to adjust to the initiatives of other granting
organizations and to take into account the amounts to which participants are
entitled under other programs. Once the ASRA Program had been adopted,
La Financière had to comply with the rules of the game it had itself
established. Although the limits are not numerous, they do exist. It goes
without saying that La Financière must in all circumstances treat the
participants fairly and act in good faith, but it must also comply with the
ASRA Program’s express provisions.
[113]
In the case of amounts received directly from
other granting organizations that can be considered to be annual receipts,
La Financière’s discretion is expressly limited. Section 88(3) of the
ASRA Program provides that, in calculating annual receipts, La Financière
must take into account [translation]
“[a]ny amounts to which a participant is entitled on the basis of the
volume of marketed products and secondary products”.
[114]
In this case, La Financière’s conduct is
problematic from two points of view: the purpose of s. 88(3) and its
wording.
A.
Purpose of Section 88(3): To Avoid Double
Compensation
[115]
In its factum and at the hearing in this Court,
La Financière acknowledged that the purpose of s. 88(3) is to avoid
double compensation for a single loss. Its representatives also acknowledged
this in their testimony. When, as in this case, the federal government grants
and pays a specific amount directly to a participant, the linkage must be based
on that amount.
[116]
By applying s. 88(3) to attribute
excessively high notional amounts to some participants, La Financière
diverted that provision from its purpose. La Financière used s. 88(3)
not to avoid double compensation but to arbitrarily reduce the compensation to
which many participants would otherwise have been entitled under the ASRA
Program.
[117]
Although s. 88(3) authorizes
La Financière to ensure that participants do not receive double
compensation, it does not permit La Financière to attribute notional
amounts to some participants in order to overcompensate other participants
for policy reasons. In other words, La Financière deprived some
participants of the compensation they were owed in order to add to the
compensation paid to others. Thus, not only did the chosen linkage method
not make it possible to avoid double compensation, it also prevented many
participants from receiving the full compensation to which they were entitled
under the ASRA Program. That full compensation is the very reason why
participants choose to participate in that program.
[118]
That decision is particularly troubling for
participants, who, since they are unable to negotiate the terms of the ASRA
Program, must be able to rely on the program’s provisions to determine whether
it is in their interest to participate. While it is true that
La Financière’s mission is broad, that mission does not authorize it to
subvert the purpose of the ASRA Program by assuming a discretion it does not
have. La Financière’s mission does not authorize it to penalize its
participants for participating in other programs.
[119]
To maintain, as my colleagues do, that the only
purpose of s. 88(3) is “to account for other income that could have an
impact on the financial needs of the average benchmark farm” (para. 71)
amounts to giving La Financière an absolute discretion that the words of
s. 88(3) do not authorize. This line of reasoning implies that
La Financière can disregard the inherent limits of federal programs in
order to redistribute amounts, even notional ones.
[120]
La Financière admits, at para. 14 of its factum, that the purpose of s. 88(3) is to avoid
double compensation in respect of the amounts to which farming businesses that
participate in the ASRA Program are entitled:
[translation] Given that farming
businesses that participate in ASRA can also benefit from federal farm
income support programs, the Respondent is required to take amounts to which
a participant would be entitled under those programs into account in order to
avoid double compensation. This follows from s. 88, s. 86 second
para. and the definition of “annual receipts” set out in s. 2 of
ASRA, which are quoted above. [Emphasis added.]
[121]
The proposition that the double compensation to
which the parties refer is not the double compensation of an individual
participant also contradicts the trial judge’s conclusion concerning the
purpose of s. 88(3): paras. 21, 54 and 98. My colleagues identify no
palpable or overriding error in this regard.
B.
Stipulations of the Contract
[122]
It is true that the ASRA Program is primarily
collective in nature, since its goal is to pay compensation for decreases in
the income of insured businesses that is based on receipts and expenses
calculated using a benchmark farm model. In other words, it does not
necessarily cover each participant’s individual losses. It is also true that
La Financière has some discretion as regards the data it can take into
account for the general purposes of its calculations. Section 87 provides
that La Financière can adjust and fix the [translation]
“net annual income on the basis of statistical studies or of any other data it
deems relevant”. However, that section does not authorize it to disregard the
provisions of the ASRA Program, including the specific provision on how amounts
received from other government agencies are to be taken into account.
[123]
Section 88(3) gives La Financière the
power to take into account [translation]
“amounts to which a participant is entitled” under a program of another
granting organization. This means that La Financière cannot be penalized
by a participant’s decision not to participate in such a program. On the other
hand, La Financière may not penalize a participant for amounts to which he
or she is not entitled owing to the inherent limits of those other programs.
For example, it cannot take into account amounts to which a participant is not
entitled owing to caps imposed by such programs. Whatever linkage method is
chosen, La Financière must take the characteristics of the programs into
account when amounts are granted under them to its participants on an
individual basis. If it disregards the inherent limits of those programs and if
the amounts attributed to participants bear no relation to the amounts they
actually received, it is in breach of its contractual obligations.
[124]
In the past, as to the Canadian Agricultural
Income Stabilization program (“CAIS program”), the only other program that
imposed caps, La Financière linked amounts individually. Section 88(4),
which deals with the consideration of amounts obtained under the CAIS program,
also refers to amounts to which a participant is entitled:
[translation]
88. The
following items shall be taken into account in calculating annual receipts:
. . .
4° An amount that represents
the amount to which the participant is entitled, for the insurance year or part
of the insurance year, on the basis of deemed participation at a coverage level
of 100% in the Canadian Agricultural Income Stabilization (CAIS) program
divided by two thirds.
However, the amount to which the
participant is entitled for the purposes of this calculation may not exceed two
thirds of the difference between the participant’s production margin and the
participant’s CAIS program reference margin.
[125]
More importantly, by referring to a
“participant”, s. 88(3) requires La Financière to take into account
the amounts that were actually received. The term “participant” (adhérent)
is defined in s. 2 of the ASRA Program as [translation]
“a farming business, or any group of farming businesses that is recognized as
eligible by the Program, that participates in the Program”. This definition
refers to an individual participant in the ASRA Program, not to a “benchmark
farm”, just as the definition of “annual receipts” (recettes annuelles),
also in s. 2, refers to [translation]
“compensation, subsidies or grants obtained during the year from
government agencies”, not to notionally attributed amounts that bear no
relation to the amounts paid directly to the participant.
[126]
In this case, La Financière did not take
the impact of the caps under the COPB and Kickstart programs into account,
because the benchmark farm’s ANS were lower than those caps. If it had taken
those caps into account, the difference between the amounts that were actually
received and the attributed amounts would have been considerably smaller.
Instead, it subtracted amounts in respect of some producers that represented up
to 700.95 percent (Inter Agro inc.) of the amounts to which they were otherwise
entitled under the ASRA Program. La Financière disregarded the amounts
that had actually been received.
[127]
The evidence also shows that, where amounts have
been granted directly to a producer under another program in the past,
La Financière has never used a linkage method — whether collective or
individual — that had the effect of negating the compensation to which
participants were entitled by attributing amounts that disregarded the inherent
limits of those programs. La Financière’s choice in the appellants’ cases
is therefore also inconsistent with its past practices.
[128]
This was the conclusion reached by the trial
judge, and I see no reason to intervene in this regard:
[translation] La Financière agricole argues that it
has a discretion to decide what method to use in linking amounts. It is right.
However, its discretion must be exercised in accordance with the terms of the
program (or the conditions of the contract) and in a reasonable manner.
In this case, the
linkage method chosen by La Financière agricole was not reasonable,
because it was not consistent with the terms of the program that was in force
in 2007 and because it was not fair.
. . .
By using the
benchmark farm model to collectively link the assistance provided by the
federal government under the COPB and AgriInvest Kickstart programs,
La Financière agricole transposed the effect of the cap on ANS to the
insurable volume and thereby indirectly reduced the insurance coverage.
Producers whose ANS exceeded $450,000 under COPB and $3 million under
AgriInvest Kickstart were penalized, as their compensation was significantly
reduced.
La Financière
agricole also attributed to participants that had received Kickstart benefits
under the AgriInvest program the value of the contributions they would have had
to pay to obtain the equivalent of those grants in ASRA compensation even
though no contributions were required from them under the federal program.
The court is of the
opinion that La Financière agricole did not exercise its discretion
reasonably when it decided to link the amounts collectively. It should have
linked them individually, because the collective approach created distortions
that were too great and that unfairly penalized many participants.
Those distortions
were foreseeable. The representatives of La Financière agricole who
testified before the court admitted that the decision to link the amounts
collectively was one of policy and that La Financière agricole had made
the choice to favour certain producers to the detriment of others. In doing so,
it breached its contractual and statutory obligations to the plaintiffs. It
acted arbitrarily.
Some producers
benefited from having the amounts linked collectively, as the reduction in
their compensation was lower than the amounts they had received, but for
others, the reduction was greater than the amounts they had received.
In the former case,
participants benefited from double compensation, while in the latter, the
participants were not fully compensated for the insured loss despite the terms
of the contract.
When
all is said and done, the linkage method chosen by La Financière agricole
had the effect of creating two classes of participants, which is
discriminatory. Moreover, in many cases, it did not contribute to avoiding
double compensation, while in others, it prevented participants from receiving
the compensation provided for in the contract, which is improper. [Emphasis
added; paras. 161‑70.]
[129]
What is problematic in this case is that
La Financière’s action had the effect of overcompensating certain
participants to the detriment of the others, that it disregarded the impact of
the caps under the federal programs on the insurance coverage of participants
and that the amounts it ultimately attributed bore no relation to the amounts
that had actually been received, not that it chose a particular linkage method.
[130]
Finally, the federal programs in question in
this case can be distinguished from most such programs that have existed in the
past, given that they involve amounts granted directly to producers and not a
global amount. My intention is therefore to call into question not, as my
colleagues suggest, most of the decisions made by La Financière over the
past 15 years, but only the decision it made in this case.
[131]
Before concluding, I should say a few words
about the amendment La Financière made to s. 88(3) in November 2008,
namely the addition of the following paragraph ((2009) 141 G.O. 1, 51,
s. 21):
[translation]
Those amounts shall be determined on the basis of the characteristics of the
benchmark farm described in Table 4 unless La Financière agricole
considers it appropriate to add the amounts actually received by each
participant to the annual receipts, having regard to the specific terms of
payment for each government initiative.
[132]
According to the rules of interpretation, it
must be presumed that that amendment served a useful purpose and gave
La Financière a discretion it did not previously have: art. 1425 C.C.Q.
If, however, as La Financière argues, the amendment was made simply to
clarify the meaning of s. 88(3), this would confirm that there was an
ambiguity. Any ambiguity that may have existed before the amendment was made
must be resolved in favour of the adhering party, since this is a contract of
adhesion: art. 1432 C.C.Q.
[133]
Although it is true that the ASRA Program has
16,747 participants and that the interests of the participants may vary, they
all expect to receive the fair compensation they are owed. As well, it would
not be reasonable for all of them to expect to be favoured to the detriment of
the others. In this case, to interpret the contract in favour of the “adhering
party” simply means to interpret it such that La Financière cannot use
notional amounts to deprive a participant of all or part of the compensation to
which it is entitled.
III.
Conclusion
[134]
For these reasons, I would therefore allow the
appeal in part.
[135]
In my view, the trial judge’s award should be
reduced by subtracting from it, as suggested by La Financière, an amount
equal to the contributions the appellants would have had to pay in exchange for
higher compensation.
[136]
It would indeed be unfair for the compensation
to be increased without taking into account the amount of the related
contributions the participants would ordinarily have been required to pay had
it not been for La Financière’s decision. The evidence adduced on this
point is uncontradicted, and it indicates that, if the amounts had been linked
individually, the appellants would, once the additional contributions were
subtracted, have been entitled to $7,489,323.59, not $14,901,559.55.
Appeal
dismissed, Côté J.
dissenting in part.
Solicitors for the appellants: Beauvais Truchon, Québec;
Paradis, Lemieux, Francis, Bedford, Quebec.
Solicitor for the
respondent: La Financière agricole du Québec, Lévis.