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Agriculture - Farms - Income programs - Price supports and guarantees

Thursday, August 18, 2016 @ 8:00 PM  

Appeal by Lafortune and other hog and piglet producers from a judgment of the Quebec Court of Appeal affirming a decision of the Quebec Superior Court dismissing their action against La Financière agricole du Québec (La Financière). The Court was called upon to identify the rules governing the rights and obligations of parties to the Programme d’assurance stabilisation des revenus agricoles (ASRA) Program, administered by La Financière. The appellants were Quebec producers that participated in the ASRA Program. Under that program, La Financière undertook, in return for contributions from participants, to support them with compensation payments. The appellants contested the value of the compensation they had received from La Financière under the ASRA Program for the years 2006 to 2008. They equated the program with a contract of insurance and argued that the compensation they had received was neither sufficient nor consistent with their reasonable expectations as parties to such a contract. In their view, the process that had been followed and the statistical and accounting methods that had been used in the economic study carried out to calculate their compensation payments for the years in question had yielded an unfair result. The Superior Court dismissed the appellants’ claim. It held that the ASRA Program was not a contract of insurance within the meaning of the Civil Code of Québec, that La Financière’s decisions were fair and that it had employed appropriate methods in making them. The Court of Appeal upheld that judgment.

HELD: Appeal dismissed. The ASRA Program was not a contract of insurance within the meaning of arts. 2389 C.C.Q. and following. It was instead simply an innominate contract that was subject to the general rules of private law. The rules governing the interpretation of the ASRA Program were the same ones that applied to any other contract, and in particular those set out in arts. 1425-1432 C.C.Q. Furthermore, for the purpose of determining whether the decisions made by La Financière in performing its obligations and exercising its contractual powers were lawful, the applicable standards were good faith and contractual fairness. In any event, had the ASRA Program been characterized as a contract of insurance, that would have had no bearing on the outcome of the appeal. The rule based on the reasonable expectations of the insured applied solely in its “minimum” dimension and could be used to interpret a provision only if there was an ambiguity. There was no need for a contractual interpretation exercise in this appeal, as the provisions relevant to the case were unambiguous. They clearly gave La Financière the power to have recourse to a statistical study, as it did in this case, or to base its decision on any other data deemed to be relevant. The appellants did not allege any specific error that might warrant the intervention of the Court with regard to the trial judge’s general finding that the study had been carried out competently and employed appropriate methods, and that this meant that the requirements relating to good faith had been met.