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Contracts - Vested Statutory Rights

. Dikranian v. Quebec (Attorney General)

In Dikranian v. Quebec (Attorney General) (SCC, 2022) the Supreme Court of Canada considered, in a student loan situation, whether a statutory change which altered interest-free periods, attracted the application of the doctrine of vested rights:

4.2 Vested Rights

29 Before considering the question of vested rights, I would like to note that a distinction must be drawn between the principle of vested rights and the principle against retroactivity. This issue is of great importance here. The Attorney General of Quebec submits that the principle of the retroactivity of legislation is not in issue and asks the Court to apply the principle of the retrospectivity of legislation that was recently reiterated in Épiciers Unis Métro‑Richelieu Inc., division “Éconogros” v. Collin, [2004] 3 S.C.R. 257, 2004 SCC 59. However, it should be noted right away that Épiciers Unis dealt with the application of the Implementation Act, ss. 2 and 3 of which indicate that “the recent reform of the Civil Code is based not on the principles established at common law, principles which give great importance to vested rights. Rather, it is a system essentially based on the ideas of the French jurist Paul Roubier, a system which clearly dispenses with the notion of vested rights” (P.‑A. Côté, The Interpretation of Legislation in Canada (3rd ed. 2000), at p. 118). This appeal does not concern a dispute resulting from the coming into force of the C.C.Q. We must therefore apply the Interpretation Act, R.S.Q., c. I‑16, which gives effect to the principle of “acquired rights” in s. 12.

4.2.1 Distinctions Between Vested Rights and Retroactivity

30 Vested rights result from the crystallization of a party’s rights and obligations and the possibility of enforcing them in the future. Professor Côté writes that, “[w]ithout being retroactive, a statute can affect vested rights; correspondingly, a statute can have a retroactive effect and yet not interfere with vested rights” (p. 156). In general, it will be purely prospective statutes that will threaten the future exercise of rights that were vested before their commencement: Côté, at p. 137.

31 Although the courts have in the past analysed the same question from the perspective of either the presumption against interference with vested rights or the presumption against retroactive legislation, there remains, as the submissions of the parties in the instant case demonstrate, a clear distinction between these two rules of construction: Venne v. Quebec (Commission de protection du territoire agricole), 1989 CanLII 84 (SCC), [1989] 1 S.C.R. 880, at p. 906; Attorney General of Quebec v. Expropriation Tribunal, 1986 CanLII 13 (SCC), [1986] 1 S.C.R. 732, at pp. 741 and 744; Gustavson Drilling (1964) Ltd. v. Minister of National Revenue, 1975 CanLII 4 (SCC), [1977] 1 S.C.R. 271, at pp. 279 and 282.

4.2.2 Statement of Principle

32 The principle against interference with vested rights has long been accepted in Canadian law. It is one of the many intentions attributed to Parliament and the provincial legislatures. As E. A. Driedger states in Construction of Statutes (2nd ed. 1983), at p. 183, these presumptions

were designed as protection against interference by the state with the liberty or property of the subject. Hence, it was “presumed”, in the absence of a clear indication in the statute to the contrary, that Parliament did not intend prejudicially to affect the liberty or property of the subject.

This had already been accepted by Duff J. in Upper Canada College v. Smith (1920), 1920 CanLII 8 (SCC), 61 S.C.R. 413, at p. 417:

. . . speaking generally it would not only be widely inconvenient but “a flagrant violation of natural justice” to deprive people of rights acquired by transactions perfectly valid and regular according to the law of the time.

(See also Acme Village School District (Board of Trustees of) v. Steele‑Smith, 1932 CanLII 40 (SCC), [1933] S.C.R. 47, at p. 51; R. Sullivan, Sullivan and Driedger on the Construction of Statutes (4th ed. 2002), at pp. 569‑70.)

33 The leading case on this presumption is Spooner Oils Ltd. v. Turner Valley Gas Conservation Board, 1933 CanLII 86 (SCC), [1933] S.C.R. 629, at p. 638, where this Court stated the principle in the following terms:

A legislative enactment is not to be read as prejudicially affecting accrued rights, or “an existing status” (Main v. Stark [(1890), 15 App. Cas. 384, at 388]), unless the language in which it is expressed requires such a construction. The rule is described by Coke as a “law of Parliament” (2 Inst. 292), meaning, no doubt, that it is a rule based on the practice of Parliament; the underlying assumption being that, when Parliament intends prejudicially to affect such rights or such a status, it declares its intention expressly, unless, at all events, that intention is plainly manifested by unavoidable inference.

34 The principle has since been codified in interpretation statutes. The Interpretation Act is no exception:

12. The repeal of an act or of regulations made under its authority shall not affect rights acquired . . . and the acquired rights may be exercised . . . notwithstanding such repeal.

4.2.2.1 Rule of Construction

35 In the past, this Court has stressed that the presumption against interference with vested rights could be applied only if the relevant legislation were ambiguous, that is, reasonably susceptible of two constructions (see Gustavson Drilling, at p. 282; Acme Village School District, at p. 51; Venne, at p. 907).

36 This statement must be qualified somewhat in light of this Court’s recent decisions. As Professor Sullivan says, care must be taken not to get caught up in the last vestiges of the literal approach to interpreting legislation:

In so far as this language echoes the plain meaning rule, it is misleading. The values embodied in the presumption against interfering with vested rights, namely avoiding unfairness and observing the rule of law, inform interpretation in every case, not just those in which the court purports to find ambiguity. The first effort of the court must be to determine what the legislature intended, and . . . for this purpose it must rely on all the principles of statutory interpretation, including the presumptions. [p. 576]

Since the adoption of the modern approach to statutory interpretation, this Court has stated time and time again that the “entire context” of a provision must be considered to determine if the provision is reasonably capable of multiple interpretations (see, for example, Bell ExpressVu Limited Partnership v. Rex, [2002] 2 S.C.R. 559, 2002 SCC 42, at para. 29).

4.2.2.2 Criteria for Recognizing Vested Rights

37 Few authors have tried to define the concept of “vested rights”. The appellant cites Professor Côté in support of his arguments. Côté maintains that an individual must meet two criteria to have a vested right: (1) the individual’s legal (juridical) situation must be tangible and concrete rather than general and abstract; and (2) this legal situation must have been sufficiently constituted at the time of the new statute’s commencement (Côté, at pp. 160‑61). This analytical approach was used by, inter alia, the Saskatchewan Court of Appeal in Scott v. College of Physicians and Surgeons of Saskatchewan (1992), 1992 CanLII 2751 (SK CA), 95 D.L.R. (4th) 706, at p. 727.

38 I am satisfied from a review of the case law of this Court and the courts of the other provinces that the analytical framework proposed by the appellant is the correct one.

39 A court cannot therefore find that a vested right exists if the juridical situation under consideration is not tangible, concrete and distinctive. The mere possibility of availing oneself of a specific statute is not a basis for arguing that a vested right exists: Côté, at p. 161. As Dickson J. (as he then was) clearly stated in Gustavson Drilling, at p. 283, the mere right existing in the members of the community or any class of them at the date of the repeal of a statute to take advantage of the repealed statute is not a right accrued (see also Abbott v. Minister for Lands, [1895] A.C. 425, at p. 431; Attorney General of Quebec, at p. 743; Massey‑Ferguson Finance Co. of Canada v. Kluz, 1973 CanLII 150 (SCC), [1974] S.C.R. 474; Scott, at pp. 727‑28). In other words, the right must be vested in a specific individual.

40 But there is more. The situation must also have materialized (Côté, at p. 163). When does a right become sufficiently concrete? This will vary depending on the juridical situation in question. I will come back to this point later. Suffice it to say for now that, just as the hopes or expectations of a person’s heirs become rights the instant the person dies (see, for example, Marchand v. Duval, [1973] C.A. 635, at p. 637, and art. 625 C.C.Q.), and just as a tort or delict instantaneously gives rise to the right to compensation (see, for example, Holomis v. Dubuc (1974), 1974 CanLII 1254 (BC SC), 56 D.L.R. (3d) 351 (B.C.S.C.); Ishida v. Itterman, 1974 CanLII 1787 (BC SC), [1975] 2 W.W.R. 142 (B.C.S.C.); and arts. 1372 and 1457 C.C.Q.), rights and obligations resulting from a contract are usually created at the same time as the contract itself (see Côté, at p. 163).