Simon's Megalomaniacal Legal Resources

Statutes and Regulations - Waiving Statutory Protection

There is a old common law rule that has taken on much more importance with the extensive development of public welfare statutes. The idea is simple, that private parties can contract out of statutory protections that favour one of them. Many public welfare statutes now provide for 'non-waiver' provisions that override this common law history, without which the superior economic power of one party would render the statutory protections ineffectual [eg. Residential Tenancies Act, RSO 2006, c.17, s.3(1)].

. Union Gas Limited v. Norwich (Township)

In Union Gas Limited v. Norwich (Township) (Ont CA, 2018) the Court of Appeal confirmed that, absent a statutory prohibition or public policy, that private parties could contract out of benefits conferred by statute (here a contract that relieved a utility company of a statutory 100% share of project costs):

[22] In my view the application judge erred in his analysis and in the result. First, I address his conclusion that the Act overrides the provisions of the Franchise Agreement.

[23] The foundation of this conclusion is the application judge’s interpretation of Seidel [SS: Seidel v. Telus Communications Inc., 2011 SCC 15] as standing for a general principle that “no mere contract inter partes can take away that which the law has conferred”. There is no such general principle, and the application judge was not correct in his interpretation of what was said, or quoted from, in Seidel.

[24] In Seidel the court considered whether a provision in a cell phone service agreement requiring arbitration of claims was enforceable when B.C. consumer protection legislation expressly prohibited contracting out of its terms. In the course of the minority judgment, and before turning to the modern approach to arbitration, LeBel and Deschamps JJ. described the courts’ traditional hostility towards arbitration, as contrary to public policy, because it was seen to challenge the jurisdiction of the courts. It was in this context that they quoted a passage from the 1918 decision in Brand which stated in part:

The true ground for holding that the jurisdiction of the courts cannot be ousted by an agreement between parties is that the courts derive their jurisdiction either from the statute or common law, and no mere contract inter partes can take away that which the law has conferred.

[25] The traditional view that parties could not, by contracting for arbitration, “oust” the jurisdiction of the courts, has been overtaken by modern authorities, including Seidel itself, recognizing that arbitration clauses will be enforced absent legislative language to the contrary (at para. 42).

[26] The application judge took a part of the quotation noted above out of context as authority that parties cannot contract out of statutory provisions. As discussed below, the law is to the contrary.

[27] In Ontario (Human Rights Commission) v. Etobicoke (Borough), 1982 CanLII 15 (SCC), [1982] 1 S.C.R. 202, at para. 19, the Supreme Court endorsed the principle that parties can contract out of benefits conferred by statute, unless it would be contrary to public policy or prohibited by the statute itself. In that case, a provision of a collective agreement that was contrary to the Ontario Human Rights Code, R.S.O. 1970, c. 318, s. 4(6), was unenforceable. Similarly, in Seidel a provision requiring the arbitration of disputes was unenforceable against consumers because of the relevant B.C. consumer protection legislation. See also Fleming v. Massey, 2016 ONCA 70, 128 O.R. (3d) 401, leave to appeal to SCC refused, 2016 CarswellOnt 9353, in which this court stated that courts should exercise “extreme caution in interfering with the freedom to contract on the grounds of public policy” before concluding that employers and workers could not contract out of the workers’ compensation regime absent a contrary legislative indication (at para. 34).

. Fleming v. Massey

In Fleming v. Massey (Ont CA, 2016), the issue was whether private parties could contractually waive protections granted one of them under the Workplace Safety and Insurance Act, which protections ensured workers compensation for workplace injuries. In this case the court expresses the view that the 'old' common law rule (that parties may contract out or waive statutory protections) should, in several statutory areas (eg. worker's insurance legislation, human rights legislation and others), be reversed on public policy grounds so that an express statutory provision should be required to allow such waiver [paras 29-33].