Compagnie Trust Royal v. Veilleux, [2000] R.R.A. 53 (C.A.)

Compagnie Trust Royal v. Veilleux, [2000] R.R.A. 53 (C.A.)

• 
  Although the trial judge found that the Company failed in its duty to inform, the Court of Appeal reversed that finding, holding that a letter she received 5 months before her death, informing her that her loan was renewed, but that it was not accompanied by life insurance, discharged that duty.
  
• 
  Thus, although the company failed in its duty to inform her sooner, she was negligent in not responding once she found out. Thus, her own negligence broke the chain of causation between the first fault and the damage.
  

• 
  Although the succession doesn’t win the case, there is a discussion about duties to inform. However, the whole discussion is conducted without reference to any codal article of good faith.
  
• 
  throughout the entire negotiation process about renewing the loan, there was not mention made whatsoever about the insurance policy. However, the following year, when the deceased was sent an annual statement of her loan account, it was written on the statement that the loan was not accompanied by an insurance policy, and to call right away. She never did. Thus, although the company should have told her sooner, should have advised her to renew before the policy expired, as they did with the loan, the chain of causation was broken by her own negligence.
  

• 
  this case raised the issue of duty to advise. The court characterized the k b/w the Trust and Veilleux as a k of service. “L’appelante s’engage ainsi à l’informer ses clients des divers services financiers qu’elle offre et à les conseiller adéquatement. Elle est ainsi tenue d’agir au mieux des intérêts de ses clients, avec prudence et diligence, elle n’est toutefois pas tenue à une obligation de résultat”.
  

• 
  “L’appelante manquait alors à son obligation d’agir au mieux des intérêtes de sa cliente, avec prudence et diligence.”
  
• 
  “L’appelante se présente comme un conseiller en matière de services financiers; elle doit agir avec prudence et diligence. Cette obligation commande, à tout le moins, qu’elle soulève auprès de ses clients la question du renouvellement de l’assurance-vie au moment du renouvellement de leur prêt hypothécaire. En l’espèce, elle ne l’a pas fait; elle est en faute.”
  

In cases where there is no statutory duty or duty arising from mandate, recall Gonthier’s criteria in Bail:

• 
  Actual or presumed knowledge of the information on the part of the party which owes the obligation to inform
  
• 
  The information in question is of decisive importance
  
• 
  It is impossible for the party to whom the obligation is owed to inform itself, or the creditor is legitimately relying on the debtor of the obligation
  

Questions to think about: What’s left of the duty to self-inform after cases like Bolduc, where the parties don’t even read to K, and Janin Construction, where arguably the more sophisticated party doesn’t verify the info?

• 
  recall as noted by Letourneau that the terminology of duty to inform and advise is often used interchangeably, but to be accurate a duty to advise is really a stronger obligation which involves giving an informed opinion about the option most favorable to the client (as in Bolduc) over and above merely presenting all the options (or risks) or information (Bail, Janin).
  
• 
  France has gone further in requiring duties to advise than Quebec has, absent statutory obligation or through mandate. For example, there have been cases of duties to advise involving computer salespeople in France.
  

CLASS 5 Good Faith (Continued): Obligation of Cooperation

Oct. 3 - Introduction

Art. 6, 7, 1375, 1470 (2), 1693, 2805 C.c.Q.

Obligation de Cooperation

• 
  Commands a positive respect, more than simple abstention
  
• 
  Depends on two factors: the pursuit by the parties of a common goal shown by their intention to collaborate and the frequency of the relations between the parties
  
• 
  See Bail
  
• 
  There is such an obligation for sure in contracts of insurance where the insured has co-operate with the insurer with respect to the declaration of risks and claims and also between franchisers and franchisees (Provigo)
  

• 
  We’ve seen how the duty of good faith has manifested itself in terms of judicially imposed obligations in K, and we’ve seen it in the non-applicability of parties.
  
• 
  We’ve seen the duty to inform in pre-K stages of a contractual relationship.
  
• 
  And last class – duty to advise, which is one step up from the duty to inform. And it’s particularly stronger in cases where statutes have a duty to advise (professionals – certainly no doubt that they, banks, and financial advisors not only have duty to inform but also to advise).
  

• 
  This is the part that says that during the life of the K, there should be a duty to cooperate between the contracting parties.
  
• 
  Diesse article points out that there is a whole psychological about-face if you’re going to accept the duty to cooperate.
  
• 
  How far removed is this from commercial reality? What has happened to the bargaining and the negotiation of contracts since then?
  

• 
  We tend to think of K in classical terms – impoverishment of party in order to increase wealth for another.
  
• 
  The about-face that must take place (and that many say has already taken place): a K is not about conflicting rights, but rather complimentary rights. Although the interests of the parties to a K are different, not in conflict.
  
• 
  Diesse goes way back and classifies the K as a form of partnership – when parties are in a K, they’re partners and must therefore work together to make the best of the partnership. The idea that a K requires its two partners to work together in their mutual interest is very different from the classical individualistic notion of a K.
  
• 
  This means that you have to facilitate the other party’s execution of the K. Take into account their interests, and respect them, and act accordingly.
  
• 
  This is a very drastic change in mentality: is this the new conception of the K?
  

• 
  Some people do argue that the extent of this duty to collaborate is limited by the extent of the duty to cooperate involved. But the doctrine does not unanimously limit it to franchise agreements. But it will apply to a relational type of contract.
  

• 
  Can the duty to cooperate be a potential root to bringing in the doctrine of imprévision?
  
• 
  Will this duty to cooperate require parties to renegotiate in light of changing circumstances. The issue is: when the equilibrium of the K is upset due to some extrinsic and unforeseen event, can it require the parties to renegotiate the K in order to reestablish the equilibrium?
  
• 
  This is loosely linked to the common law notion of frustration – whether or not changing circumstance should have effect of enforceability of a K.
  

• 
  But in extreme circumstances such as peanut drought, incredible fact pattern of Churchill falls, should we have an ability to go in and change contracts so as to reestablish an economic equilibrium?
  
• 
  Martin: Part of “schizophrenia” of CCQ: mental block when it comes to imprévision and lesion, but goes at lightening speed when it comes to good faith and abusive clauses. It’s a very strange tension within the law.
  
• 
  So this is a DRASTIC inconsistency – lenient in one area, but significantly less so in others.
  

• 
  Even those who advocate strongly for imprévsision, say that we shouldn’t let the judge decide when to apply it. Why? Because there is still this mentality that civil law judges shouldn’t re-write contracts.
  
• 
  He says that a party could be held liable in damages for not renegotiating, but judges shouldn’t go in and split the loss so that each party loses equitably.