In many modern cases, the problem stems from a contract that is made in contravention of a statute
First Issue:
Is the contract illegal (for contravening the statute)
Bigger Issue:
If it is illegal, what is the result?
4.a. When a Contract is Rendered Void by Statute
Kingshot v. Brunskill
Ratio:
The Court cannot read into the regulations exemptions which might appear to the Court to be justifiable in a given set of circumstances
Facts:
Plaintiff is farmer, who grows apples on the side
The defendant grows apples and buys apples off other farmers, grades them, and sells them
The Farm Products Grades and Sales Act states farmers cannot sell produce unless it has been "graded, packed and marked in accordance with the provisions of the Act and these regulations"
The plaintiff harvests his apples and roughly sorts them
Def. agrees to purchase all the apples at a set cost
Def. refuses to pay, Plaintiff sues for full price of all apples.
Defendant pleads the sale of apple was prohibited by statute and illegal
Issue:
Can the plaintiff recover the amount owed on a contract that contravenes a statute?
Decision:
For defendant, Court begrudgingly can't find a way to make this just because he doesn’t have the balls that Denning does.
Reasons:
The Minister of agriculture can make regulations
Minister makes regulations which state no one can sell produce unless it goes through and satisfies the regulatory process
Anyone who contravenes the provisions is guilty of an offense (it is illegal)
"There is no provision in the regulations that would exempt the [farmer] from compliance with the regulations. The Court cannot read into the regulations exemptions which might appear to the Court to be justifiable in a given set of circumstances"
Doherty v Southgate (Township)
Ratio:
Lead Case
If the statute does not contain a clause voiding contracts that contravene its provisions, the contract will be enforceable so long as there would be no changes to the content of the contract had the statute been followed.
Policy:
Legislature doesn’t waste its breath
If the contract can be voided due to any statutory breach it would allow the plaintiff to wait until they see if the contract is beneficial before deciding whether to void it or not. This removes the risk, which is a fundamental aspect of contracts;
Contract stipulated Southgate would rezone the land
Southgate failed to do this
Doherty sues for breach of contract
Southgate argues contract void because the public notice required by statute wasn't given
Issue:
Will the contract been rendered unenforceable because it contravenes the Municipal Act of Ontario?
Decision:
For Plaintiff, not every statutory breach results in a contract being void or unenforceable
Reasons:
Quoting Waddams, "If every statutory illegality, however trivial, in the course of performance of a contract, invalidated the agreement, the result would be an unjust and haphazard allocation of loss without regard to any rational principles"
"I think public policy favours that contracts should not be rendered unenforceable merely because of technical deficiencies
Three reasons the contract in this case isn't rendered void
There is nothing in the statute under consideration that states a contract made in contravention of that statute is unenforceable
There is evidence to show that even if public notice had been given the contract would have gone ahead the exact same (pre-existing public support was shown)
Would it change the contract if the statute been followed? If yes, then voided.
Southgate is just trying to take advantage of its own failure in order to avoid going through with the zoning amendment. If needed Doherty would likely give more time for Southgate to give notice.
The court here has shifted from strictly obeying statutes and is trying to examine whether following the statute would have any different outcome on the contract
Class Notes:
What is the punishment available from the statute?
Can the plaintiff bring action on the statute?
No
If contract is void then enforcement of public law is happening in private law
