Ferme Vi-Ber inc. Appellant v. La Financière agricole du Québec, 2016 SCC 34

SUPREME COURT OF CANADA Citation: Ferme Vi-Ber inc. v. Financière agricole du Québec, 2016 SCC 34, [2016] 1 S.C.R. 1032 Appeal heard: December 10, 2015 Judgment rendered: July 29, 2016 Docket: 36205 Between: Ferme Vi-Ber inc. Appellant and La Financière agricole du Québec Respondent And Between: Simon Cloutier et al. Appellants and La Financière agricole du Québec Respondent Official English Translation Coram: McLachlin C.J. and Abella, Cromwell, Karakatsanis, Wagner, Gascon and Côté JJ. Joint Reasons for Judgment: (paras. 1 to 95) Reasons Dissenting in Part: (paras. 96 to 136) Wagner and Gascon JJ. (McLachlin C.J. and Abella, Cromwell and Karakatsanis JJ. concurring) Côté J.

Ferme Vi-Ber inc. v. Financière agricole du Québec, 2016 SCC 34, [2016] 1 S.C.R. 1032 Ferme Vi-Ber inc. Appellant v. La Financière agricole du Québec Respondent - and - Simon Cloutier, Denis Trépanier, Société coopérative agricole des Bois-Francs, Coopérative agricole Covilac, Coop Purdel, Société coopérative agricole La Seigneurie, Coopérative agricole Unicoop, 9012-2151 Québec inc., Sogéporc inc., Gabriel Turgeon inc., Société en commandite Pascoporc, Groupe Dynaco, coopérative agroalimentaire, Coopérative agroalimentaire Comax, R.

Rousseau & Fils, S.E.C., Ferme Olympique, S.E.C., Moulées Désy, S.E.C., Inter Agro inc., Techni-porc inc., Élevage La Bretanne inc., 9038-7747 Québec inc., Ferme Lor-re inc., Ginette Marchesseault, Ferme Casimir inc., C&G Paquette inc., Entreprises B. Paquette inc., Porcheries du Button ltée, Élevages du Bas Ste-Anne inc., Ferme Suporsonique, Gène-Alliance inc., 9076-1776 Québec inc., Cultures Excel inc., Francine Sauvageau inc., Ferme Jétizack inc., Cultures Quinto inc., Élevages Hébertville S.E.N.C., Jean-Marc Henri inc., Ferme Porcéréale inc. (formerly known as Maraîchers de St-Gilles

(1991) S.E.N.C.), Ferme Gosford enr. S.E.N.C., Ferme André Breton inc., Ferme S. & M. Ménard inc., Ferme Luc Loranger inc., Méloporc inc., Ferme Frangis S.E.N.C., Ferme R.M. Côté & Fils (2000) inc., Ferme Porcine Marnie S.E.N.C., F. Ménard inc., Élevages Jacques Joyal inc., Ferme La Ronchonnerie inc., Ferme Mafran inc., Coopérative agricole Profid’Or, Isoporc inc., Ferme Gervais Gosselin inc., R. Robitaille et Fils inc., Groupe CDLM inc., Ferme Gaudreau inc., 9039-2648 Québec inc., Ferme Denis Robitaille inc., Élevages du Haut-Richelieu inc., Viaporc inc., Porc S.B. inc., Ferme G.

Rompré inc., 9084-9183 Québec inc., Porcs N&M inc., Ferme Porclair S.E.N.C., Ferme R.D.S. inc., Élevages L.D. ltée, Porc P.G. S.E.N.C., Ferme M.Y. Turgeon inc., Coopérative agricole de St-Bernard, Élevage Y. Ducharme inc., Production A. Couture (n o 1) ltée, Production A. Couture (n o 2) ltée, Production A. Couture (n o 3) ltée, Production A. Couture (n o 4) ltée, Production A. Couture (n o 5) ltée, Production A. Couture (n o 6) ltée, Production René Lait inc., Alfred Couture Limitée, Ferme B.E.L.

Porcs ltée, Porcs M.L. inc., Ferme Vallières & Gosselin inc., Meunerie St-Elzéar ltée, Élevages Labrecque inc., Joly-Grains inc., Joly-Porcs inc., Site de la Colline inc., Site des Érables inc., Ferme Serge inc., Ferme Jolivoir inc., Aliments Breton inc., Ferme C.B. inc., Fermili inc., Luma Genetic Inc. (formerly known as Génétiporc inc.), Entreprises Magnum inc., Trans-Porcité inc., Lait-Porcité inc., Ferme C.M.

S.E.N.C., Ferme Porc Saint S.E.N.C., Entreprises Rémy Laterreur inc., Rémy Laterreur, Élevages Explorateurs inc., Ferme Palene inc., Ferme André Hénault S.E.N.C., Germain Lapointe, Ferme Jenlica inc., Immeubles Clément Dubois inc., Fermes Roda inc., Fermes Richard inc., Ferme Jocko S.E.N.C., Ferme D.J. Frappier inc., Entreprises Paul Claessens inc., Ferme H. et M. Potvin S.E.N.C., Ferme Jean-Paul Palardy inc., Entreprises Denis Lacoste inc., Chantal D’Amour, Ferme Bonneterre inc., Ferme D’Anjou & Fils inc., M.B.M.

Daigle S.E.N.C., Ferme Réjean Turgeon inc., Ferme Jymdom inc., Ferme Jules Côté et Fils inc., Ferme D.M.L. inc., Ranch St-Sylvestre inc., John Houley inc., Ferme Belgica inc., Ferme Bovipro S.E.N.C., Jacques Desrosiers, Éric Desrosiers, Ferme B&L Desrosiers S.E.N.C., 9078-1170 Québec inc., Fermes St-Henri, S.E.C., Ferme Ray-Loi, S.E.C., Fermes St-Apollinaire, S.E.C., Élevages St-Félix, S.E.C., Élevages St-Patrice, S.E.C. and Ferme Beaumontoise, S.E.C. Appellants v. La Financière agricole du Québec Respondent Indexed as: Ferme Vi-Ber inc. v.

Financière agricole du Québec 2016 SCC 34 File No.: 36205. 2015: December 10; 2016: July 29.

Present: McLachlin C.J. and Abella, Cromwell, Karakatsanis, Wagner, Gascon and Côté JJ. on appeal from the court of appeal for quebec Agriculture — Farm income stabilization — Compensation — Calculation method — Legal framework applicable to Quebec’s Programme d’assurance stabilisation des revenus agricoles — Participants in program contesting method for calculating compensation payments that was adopted by La Financière agricole du Québec to take federal government grants to farmers into account — Whether program is contract and, if so, whether it is subject to rules applicable to contract of insurance within meaning of Civil Code of Québec — Whether La Financière, in determining compensation payable to participants under program, acted in conformity with its rights and obligations by linking amounts at issue collectively — Programme d’assurance stabilisation des revenus agricoles, 2001, 133 G.O. 1, 1336, s. 88(3).

La Financière agricole du Québec (“La Financière”) is a legal person established in the public interest under the Act respecting La Financière agricole du Québec . Its mission is to support and encourage the development of the agricultural and agro-food

sector within the perspective of sustainable development. For that purpose, it has set up income protection, insurance and farm financing programs. The appellants are Quebec farm producers that participated voluntarily in the Programme d’assurance stabilisation des revenus agricoles (“ASRA Program”) administered by La Financière. The ASRA Program protects participants from having their income drop below a level defined by La Financière for 10 agricultural products or classes of products designated as “insurable”.

That level is reached where the “net annual income” of an average benchmark farm for an insured product is less than the “stabilized net annual income”, which corresponds to a percentage of the average annual regular salary of a skilled worker in Quebec. In short, the purpose of the ASRA Program is to guarantee that an average farm producer never earns less than a predetermined percentage of the average income of a skilled worker.

Each producer participating in this voluntary program must pay a fixed contribution per unit of a designated product, agree to participate for a minimum of five years and insure all of their annual production for each designated product. La Financière makes a contribution to the program’s fund — the Fonds d’assurance stabilisation des revenus agricoles, of which it is the trustee — equal to twice the contributions paid by each participant. The amounts in the fund are used to finance the payment of compensation to participants.

The appellants contested certain decisions made by La Financière in determining their compensation payments for 2007. Those decisions were related to the calculation method chosen by La Financière, in determining the compensation payable under the program, to take account of additional income received as farm financial assistance from the federal government. Both the parties and the courts below used the word “linkage” to characterize the process of taking such income into account, which is provided for in s. 88(3) of the ASRA Program.

Amounts so received are linked either “collectively” — on the basis of the amounts the average benchmark farm would have received — or “individually” — on the basis of the amounts each ASRA Program participant actually received from the various governments. La Financière deducts the amounts so “linked” from the compensation.

The appellants argued that the ASRA Program was a contract of insurance and that La Financière had, by collectively linking certain amounts received as financial assistance, improperly incorporated additional income into its calculations so as to reduce their compensation under the program in violation of the terms of the contract, which had to be interpreted on the basis of their reasonable expectations as insured persons.

The appellants applied to the Superior Court, which allowed their action, characterizing the ASRA Program as a contract of insurance and ordering La Financière to pay them substantial additional compensation for 2007. The Court of Appeal set aside that judgment, finding that the ASRA Program was not a contract of insurance and that the impugned decisions were reasonable. Held (Côté J. dissenting in part): The appeal should be dismissed.

Per McLachlin C.J. and Abella, Cromwell, Karakatsanis, Wagner and Gascon JJ.: Despite the broad discretion conferred on La Financière by the Act respecting La Financière agricole du Québec and the ASRA Program, the program cannot be considered simply a government program that is governed by public law. As can be seen from a review of its structure and how it functions, it is different from two classic examples of social programs that fall under public law: social insurance programs and agricultural subsidies.

Unlike a social insurance program, it applies to only one sector and is neither universal nor compulsory, and its benefits are not calculated using simple formulas applicable to broad classes of persons and situations. It includes several contract-style clauses for terminating the contract for predetermined reasons, which create acquired rights for the current year. Moreover, La Financière’s considerable management autonomy is limited by the need to comply with the contractual conditions that bind it and the participants.

These characteristics, together with the contributions required from participants, also distinguish the ASRA Program from simple agricultural subsidy programs granted on an ex gratia basis and without consideration. This program in fact has the characteristics of an administrative contract, that is , a contract to which a public authority is a party, and all the rules needed to guide the actions of the parties can be found in private law. However, administrative contracts are distinguishable from contracts between private parties, since parity between the parties does not always exist.

Where the government’s contractual relations are concerned, therefore, the public interest must be considered in interpreting those relations and may weigh in favour of a broader discretion in implementing the government scheme, especially where that scheme has a social objective. These are not principles of public law, but considerations related to the object of the contract that may influence the

interpretation of the scope of the contractual powers of the public authority in question. The government’s discretion nonetheless has its limits . In the context of an administrative contract, those limits do not derive from the public law duty of procedural fairness but are instead based on good faith and contractual fairness, which flow, in Quebec law, from the application of arts. 6, 7, 1375 and 1434 of the Civil Code of Québec (“ C.C.Q. ”). Furthermore, the ASRA Program is an innominate administrative contract that does not have the three main characteristics of a contract of insurance set out in art. 2389 C.C.Q. , namely (

i) an obligation on the client to pay a premium or assessment; (ii) the occurrence of a risk; and (iii) an obligation on the insurer to make a payment to the client if the insured risk occurs. It cannot therefore be subject to the rule of

interpretation based on the reasonable expectations of the insured that applies to a contract of insurance and, in Quebec law, applies solely in its minimum dimension, that is, to resolve any ambiguity in the terms of the contract in favour of the insured. For the purpose of determining whether it was open to La Financière to collectively link the amounts received under the federal assistance programs at issue in this case, it is the rules of contractual

interpretation set out in arts. 1425 to 1432 C.C.Q. that apply. Section 88(3) of the ASRA Program does not specify how compensation received under government assistance programs is to be linked. It states only that, for this purpose, La Financière must consider “[a]ny amounts to which a participant is entitled” under such programs.

When properly interpreted in light of the contract as a whole (art. 1427 C.C.Q .) and La Financière’s past practices (art. 1426 C.C.Q .), s. 88(3) of the ASRA Program does not require that amounts be linked individually but, on the contrary, gives La Financière the discretion to decide what linkage method to employ. The general structure of the program and the contract as a whole support the conclusion that collective linkage is normally required.

In fact, a reading of s. 88(3) of the ASRA Program in the context of the program as a whole, which is based on the collective concept of a benchmark farm, leads to the conclusion that collective linkage must be preferred. Section 88(3) is in Division XI, the title of which refers to the collective concept of “Farm Models”. Moreover, ss. 86 and 92 of the ASRA Program clearly state that the net annual income used to calculate the compensation, which includes amounts received from government sources, is that of a “specialized benchmark farm for each of the products or classes of products”.

Although La Financière has sometimes linked amounts individually in the past, it appears from the evidence that decisions todo so were usually based on the number of participants that received the amounts in question and not on the fact that governmentassistance had been paid directly to producers. As a result, neither the contract as a whole nor past practice supports a conclusion that LaFinancière was under a statutory or contractual obligation to link the amounts individually in this case.

Although La Financière had the discretion to link the amounts collectively, it was required to exercise that discretion inaccordance with the requirements of good faith and contractual fairness. The decision to link the amounts collectively in this case wasmade following extensive consultations with representatives of farm producers and after impact simulation studies had shown that mostof the program’s participants would benefit from that decision. By linking them collectively, La Financière also favoured the smallestproducers. This situation was consistent with La Financière’s mission.

Finally, the decision to link the amounts collectively wascompatible with the specific features of the federal programs at issue. La Financière thus exercised its powers in accordance with therequirements of good faith and contractual fairness. It was open to La Financière in fixing the compensation payable to the appellants tochoose to link the amounts they had received under the relevant federal financial assistance programs collectively, which means that theappellants are not entitled to the amounts they claim. Per Côté J. (dissenting in part): The only determinative issue in this case is one of contractual

interpretation. Regardless ofwhether the contract is characterized as a contract of insurance or as an innominate contract that falls under both public law and privatelaw, the result is the same. It is true that the appellants participated voluntarily in the ASRA Program, but insofar as that programinvolves a contract of adhesion imposed by La Financière, that is, a contract that is not negotiated with participants, the characterizationmakes no difference. If there is any ambiguity, it must be resolved in favour of the adhering party in accordance with art. 1432 C.C.Q.The rule of

interpretation of reasonable expectations adds nothing to the existing rules of

interpretation. The reason why producers participate in the ASRA Program is simple: they expect to receive the full compensation they areowed in return for paying their contributions. When La Financière deprives them of all or part of the compensation to which they areentitled, judicial intervention is warranted. The common intention of the parties, the overall scheme of the ASRA Program and pastpractices confirm that La Financière contravened the program in deciding to subtract excessively high amounts of notional income fromthe amounts to which participants were otherwise entitled.

It sometimes happens that during the year individual participants receive additional amounts to which they are personallyentitled from other government agencies. The program expressly authorizes La Financière to take such amounts into account in itscalculations to ensure that participants do not receive double compensation for a single loss.

However, although s. 88(3) of the ASRAProgram does authorize La Financière to ensure that participants do not receive double compensation, it does not permit La Financière toattribute notional amounts to some participants in order to overcompensate other participants for policy reasons. In this case, not only did the chosen linkage method not make it possible to avoid double compensation, it also preventedmany participants from receiving the full compensation to which they were entitled under the ASRA Program.

While it is true thatLa Financière’s mission is broad, that mission does not authorize it to subvert the purpose of s. 88(3) by assuming a discretion it does nothave.

Once the ASRA Program had been adopted, La Financière had to comply with the rules of the game it had itself established.In the case of amounts received directly from other granting organizations that can be considered to be annual receipts, s. 88(3) providesthat, in calculating annual receipts, La Financière must take into account “[a]ny amounts to which a participant is entitled on the basis ofthe volume of marketed products and secondary products”. La Financière may not therefore penalize a participant for amounts to whichhe or she is not entitled owing to the inherent limits of those other programs.

By referring to a “participant”, s. 88(3) requiresLa Financière to take into account the amounts that were actually received. The definition set out in s. 2 refers to an individual participantin the ASRA Program, not to a “benchmark farm”, and the same is true of the definition of “annual receipts”. If La Financière disregardsthe inherent limits of those programs and if the amounts attributed to participants bear no relation to the amounts they actually received,it is in breach of its contractual obligations.

The evidence shows that, where amounts have been granted directly to a producer under another program in the past,La Financière has never used a linkage method — whether collective or individual — that had the effect of negating the compensation towhich participants were entitled by attributing amounts that disregarded the inherent limits of those programs. La Financière’s choice inthe cases at issue is therefore also inconsistent with its past practices.

What is problematic in this case is that La Financière’s action had the effect of overcompensating certain participants to thedetriment of the others, that it disregarded the impact of the caps under the federal programs on the insurance coverage of participantsand that the amounts it ultimately attributed bore no relation to the amounts that had actually been received, not that it chose a particularlinkage method. This was the conclusion reached by the trial judge, and there is no reason to intervene in this regard.

The producers’ appeal should be allowed, but the trial judge’s award should be reduced by subtracting from it an amountequal to the contributions the producers would have had to pay in exchange for higher compensation. Cases Cited By Wagner and Gascon JJ. Referred to: Law v. Canada (Minister of Employment and Immigration), (SCC), [1999] 1 S.C.R. 497;Peters v. Canada (Attorney General), 2009 FC 400; Martin Service Station Ltd. v. Minister of National Revenue, (SCC), [1977] 2 S.C.R. 996; Confédération des syndicats nationaux v. Canada (Attorney General), 2008 SCC 68, [2008] 3 S.C.R. 511;Trépanier v.

Financière agricole du Québec, 2011 QCCS 1802; Jacobs v. Agricultural Stabilization Board, (SCC),[1982] 1 S.C.R. 125; George A. Demeyere Tobacco Farms Ltd. v. Continental Insurance Co. (1984), (ON SC), 46O.R. (2d) 423; Brissette v. Financière agricole, 2006 QCCS 1620; Canada (Attorney General) v. Mavi, 2011 SCC 30, [2011] 2 S.C.R.504; Glykis v. Hydro-Québec, 2004 SCC 60, [2004] 3 S.C.R. 285; Financière agricole du Québec v. Forand, 2009 QCCQ 10263; MartelBuilding Ltd. v. Canada, 2000 SCC 60, [2000] 2 S.C.R. 860; Colautti Brothers Marble Tile & Carpet

(1985) Inc. v. Windsor (City)

(1996), 36 M.P.L.R. (2d) 258; Rollo Bay Holdings Ltd. v. Prince Edward Island Agricultural Development Corp. (1993), (PE SCAD), 110 D.L.R. (4th) 132; Financière agricole du Québec v. Coddington, 2013 QCCQ 6238; Lafortune v. Financièreagricole du Québec, 2016 SCC 35, [2016] 1 S.C.R. 1091; Brissette Estate v. Westbury Life Insurance Co., (SCC),[1992] 3 S.C.R. 87; Jesuit Fathers of Upper Canada v. Guardian Insurance Co. of Canada, 2006 SCC 21, [2006] 1 S.C.R. 744; ReidCrowther & Partners Ltd. v. Simcoe & Erie General Insurance Co., (SCC), [1993] 1 S.C.R. 252; National Bank ofGreece (Canada) v.

Katsikonouris, (SCC), [1990] 2 S.C.R. 1029; Excellence (L’), compagnie d’assurance-vie v.Desjardins, 2005 QCCA 1035, [2005] R.R.A. 1085; Affiliated FM Insurance Co. v. Hafner Inc., 2006 QCCA 465; Souscripteurs duLloyd’s v. Alimentation Denis & Mario Guillemette inc., 2012 QCCA 1376; Consolidated-Bathurst Export Ltd. v. Mutual Boiler andMachinery Insurance Co., (SCC), [1980] 1 S.C.R. 888; Industrielle, Compagnie d’Assurance sur la Vie v. Bolduc, (SCC), [1979] 1 S.C.R. 481. Statutes and Regulations Cited Act respecting La Financière agricole du Québec, CQLR, c. L-0.1, ss. 1, 3, 19, 22.

Agricultural Products Insurance Act, 1996, S.O. 1996, c. 17, sch. C. Agricultural Stabilization Act, R.S.C. 1970, c. A-9. Canada Pension Plan, R.S.C. 1985, c. C-8. Civil Code of Québec, arts. 6, 7, 1375, 1425 to 1432, 1426, 1427, 1434, 2389, 2408 to 2413, 2466 to 2468, 2470 to 2474. Employment Insurance Act, S.C. 1996, c. 23. Immigration and Refugee Protection Act, S.C. 2001, c. 27. Programme d’assurance récolte, (2002) 134 G.O. 1, 261, ss. 10, 15, 27, 35 to 37, 38, 42.

Programme d’assurance stabilisation des revenus agricoles, (2001) 133 G.O. 1, 1336, ss. 1, 2 “adhérent”, “recettes annuelles”, 6, 7, 13,16(3), 18, 19, 21, 22, 78, 80, 86, 87, 88 [am. (2009) 141 G.O. 1, 51, s. 21], 89, 92, 101, 103. Unemployment Insurance Act, 1971, S.C. 1970-71-72, c. 48 [repl. 1996, c. 23]. Authors Cited Bergeron, Jean-Guy. Les contrats d’assurance (terrestre): lignes et entre-lignes, t. 1. Sherbrooke: SEM Inc., 1989. Dussault, René, and Louis Borgeat. Administrative Law: A Treatise, vol. 1, 2nd ed. Translated by Murray Rankin. Toronto: Carswell,1985.

Garant, Patrice, avec la collaboration de Philippe Garant et Jérôme Garant. Droit administratif, 6e éd. Cowansville, Que.: Yvon Blais,2010. Issalys, Pierre, et Denis Lemieux. L’action gouvernementale: Précis de droit des institutions administratives, 3e éd. Cowansville, Que.:Yvon Blais, 2009. Lluelles, Didier. Précis des assurances terrestres, 5e éd. Montréal: Thémis, 2009. Lluelles, Didier, et Benoît Moore. Droit des obligations, 2e éd. Montréal: Thémis, 2012. Thouin, Marie-Chantal. “La théorie de l’attente raisonnable de l’assuré” (1997), 64 Assurances 545.

APPEAL from a judgment of the Quebec Court of Appeal (Hilton, Gagnon and Savard JJ.A.), 2014 QCCA 1886, [2014] AZ-51115390, [2014] J.Q. no 11218 (QL), setting aside a decision of Monast J., 2012 QCCS 284, [2012] AZ-50827524, [2012] J.Q. no 701 (QL), 2012 CarswellQue 666 (WL Can.). Appeal dismissed, Côté J. dissenting in part. Bruno Lepage, Madeleine Lemieux and Dominique-Anne Roy, for the appellants. Matthieu Brassard, Jean-Pierre Émond and Valérie Blanchet, for the respondent.

English version of the judgment of McLachlin C.J. and Abella, Cromwell, Karakatsanis, Wagner and Gascon JJ. deliveredby Wagner and Gascon JJ. — I. Overview [1] At issue in this appeal is the application of private law to the implementation of certain government financialsupport programs. More specifically, the Court must identify the rules governing the

interpretation of the rights and obligations of theparties to the Programme d’assurance stabilisation des revenus agricoles, (2001) 133 G.O. 1, 1336 (“ASRA Program”), administered bythe respondent, La Financière agricole du Québec (“La Financière”). [2] The appellants are Quebec farm producers that participated voluntarily in the ASRA Program. Under that program,

La Financière undertook, in return for contributions from producers, to protect them from the income fluctuations associated with the agricultural market. The appellants contested certain decisions made by La Financière in determining their compensation payments for 2007. Those decisions were related to the calculation method chosen by La Financière, in determining the compensation payable under the program, to take account of additional income received as farm financial assistance from the federal government.

The appellants argued that the ASRA Program was a contract of insurance and that La Financière had improperly incorporated that additional income into its calculations so as to reduce their compensation under the program, in violation of the terms of the contract, which had to be interpreted on the basis of their reasonable expectations as insured persons. [ 3 ] The producers applied to the Superior Court, which allowed their action, characterizing the ASRA Program as a contract of insurance and ordering La Financière to pay them substantial additional compensation for 2007.

The Court of Appeal set aside that judgment, finding that the ASRA Program was not a contract of insurance and that the impugned decisions were reasonable. [ 4 ] We would dismiss the appeal. The ASRA Program is not a contract of insurance but simply an innominate contract under the civil law. It cannot be subject to the rule of

interpretation based on the reasonable expectations of the insured that applies to a contract of insurance as defined in the Civil Code of Québec (“ C.C.Q. ”). While it is true that the contract must be interpreted having regard to the public interest and to La Financière’s social objective, it is nonetheless governed exclusively by private law, not by public law. For the purpose of determining the compensation payable to its participants, the ASRA Program gives La Financière a discretion to determine how to calculate any other income they have received from government sources.

La Financière exercised that discretion in accordance with the requirements of good faith and contractual fairness, which means that the appellants are not entitled to the amounts they claim. II. Background [ 5 ] La Financière is a legal person established in the public interest under the Act respecting La Financière agricole du Québec , CQLR, c. L-0.1 (“ AFAQ ”). Its mission is to “support and encourage the development of the agricultural and agro-food sector within the perspective of sustainable development” ( s. 3 AFAQ ).

For that purpose, it has set up income protection, insurance and farm financing programs. [ 6 ] Among other things, La Financière offers a crop insurance service that compensates participants for losses caused, for example, by unfavourable and unpredictable weather conditions. This Programme d’assurance récolte , which is published in the Gazette officielle du Québec , (2002) 134 G.O. 1, 261, has equivalents in several other Canadian provinces. In Ontario, for instance, there is the Agricultural Products Insurance Act, 1996 , S.O. 1996, c. 17, sch. C.

La Financière also offers the ASRA Program, which provides financial support to producers. This appeal concerns the

interpretation of the rights and obligations of the parties to the ASRA Program, which had no equivalent elsewhere in Canada at the time the dispute in this case arose. The 137 appellants are farm producers that participated voluntarily in the program. The ASRA Program is published in the Gazette officielle du Québec .

It replaced the Farm Income Stabilization Insurance Scheme in 2001; the latter had been created in 1975 and was administered first by the Commission administrative des régimes d’assurance-stabilisation des revenus agricoles until 1979, and then by the Régie des assurances agricoles du Québec until 2001, the year La Financière was established ( s. 1 AFAQ ). [ 7 ] The ASRA Program protects participants from having their income drop below a level defined by La Financière for 10 agricultural products or classes of products designated as [ translation ] “insurable”.

That level is reached where the “net annual income” of an average benchmark farm for an insured product is less than the “stabilized net annual income”, which corresponds to a percentage of the average annual regular salary of a skilled worker in Quebec (s. 89 ASRA Program). What this means is that the higher the net annual income of the benchmark farm is, the lower the compensation will be.

In essence, the purpose of the program is to guarantee that an average farm producer never earns less than a predetermined percentage of the average income of a skilled worker. [ 8 ] In exchange, each producer participating in this voluntary program must pay a fixed contribution per unit of a designated product (s. 78 ASRA Program). Producers must agree to participate for a minimum of five years (s. 16(3)) and must insure all of their annual production for each designated product (s. 18).

La Financière makes a contribution to the program’s fund — the Fonds d’assurance stabilisation des revenus agricoles, of which it is the trustee (s. 6) — equal to twice the contributions paid by each participant (s. 80). The amounts in the fund are used to finance the payment of compensation to participants (s. 7), and, unless an agreement is entered into or an alternative program is implemented, any surplus or deficit must be apportioned among the participants in proportion to their contributions (s. 13).

No amendment made by La Financière to the terms of the ASRA Program, except one relating to the contribution rate, may take effect until the insurance year after the amendment comes into force (s. 21 para. 2). [ 9 ] The first paragraph of s. 87 of the program provides that [ translation ] “[t]he net annual income [of a benchmark farm] corresponds to the annual receipts minus cash disbursements and depreciation.” The annual receipts of a benchmark farm are described in s. 88 of the ASRA Program.

Section 88(3), as it read at the time this dispute arose, read as follows concerning amounts granted by government agencies: [ translation ] 3° Any amounts to which a participant is entitled on the basis of the volume of marketed products and secondary products and that are granted by government agencies in the form of price compensation for the insurable product or under a government farm business risk management program.

Thus, in calculating the annual receipts of the average benchmark farm, La Financière takes account of other income from federal and provincial government contributions under a risk management program or in the form of price compensation for insurable products. The parties use — as did the courts below — the word [ translation ] “linkage” to characterize the process of taking such income into account.

From the compensation to be paid under the ASRA Program, La Financière therefore deducts the “linked” amounts in order to take account of any other income that might have an effect on the financial needs of the average benchmark farm, which is the reference standard for the program. [ 10 ] Amounts so received are linked either “collectively” — on the basis of the amounts the average benchmark farm

would have received — or “individually” — on the basis of the amounts each ASRA Program participant actually received from the various governments. The higher the linked amounts, the lower the compensation received under the program, since increases in the benchmark farm’s income that result from the linkage process translate directly into a decrease in the compensation paid to each participant under the program.

Whether government assistance should be linked collectively or individually is at the heart of the dispute between the appellants and La Financière. [ 11 ] La Financière often acts as an intermediary in administering federal or provincial grants to Quebec farm producers. For that purpose, it has entered into a number of agreements with the federal government to distribute amounts that the federal government pays directly to producers in other provinces.

At times, La Financière also integrates amounts paid by the federal government directly into the ASRA Program’s fund. [ 12 ] In May and July 2007, the federal government announced the payment of grants to Canadian farmers (including ASRA Program participants) under two programs: the Cost of Production Benefit (“COPB”) program and the AgriInvest Kickstart (“Kickstart”) program.

Under these two assistance programs, grants were made to producers, who were not required to make contributions. [ 13 ] Amounts paid under the two programs were calculated as a percentage of each producer’s allowable net sales (“ANS”), although both programs had ANS caps above which producers received nothing. The caps were $450,000 for the COPB program and $3 million for Kickstart. They corresponded to maximum payments per producer of $12,240 for the COPB program and $96,000 for Kickstart.

All ASRA Program participants were eligible to receive amounts under those programs, but the largest producers received only the maximum amounts. [ 14 ] In managing the ASRA Program, La Financière decided to link amounts received under the COPB and Kickstart programs collectively. It fixed the compensation for 2007 on the basis of what the benchmark farm would have received under those two programs. The ANS of the hypothetical benchmark farm used to collectively link the amounts were less than the maximum allowed by the federal government.

However, in collectively linking the amounts, La Financière calculated the average income the benchmark farm would have earned per unit of designated product and then multiplied this by each participant’s number of units of the designated product. These calculations led La Financière to attribute to some of the largest producers, including the appellants, amounts of federal assistance greater than the amounts they had actually received.

As a result, the compensation paid to these producers under the ASRA Program was reduced by more than would have been the case had La Financière linked the amounts individually on the basis of what each of them had actually received. [ 15 ] The 137 appellants were unhappy about being disadvantaged in this way, and in January 2008 they asked La Financière to review its decision and link the amounts in question individually.

Their request was denied on the ground that a review could not be sought for decisions relating to the [ translation ] “terms of the programs administered by La Financière”. [ 16 ] In November 2008, La Financière amended the ASRA Program to specify that amounts received under other financial assistance programs would now be linked collectively [ translation ] “unless La Financière agricole considers it appropriate” to link them individually (s. 88(3) added by (2009) 141 G.O. 1, 51, s. 21). [ 17 ] Following a fruitless exchange of letters with La Financière, the appellants instituted proceedings in the Superior Court in two cases that were ultimately joined for hearing.

They argued that the ASRA Program had to be characterized as a contract of insurance within the meaning of the Civil Code of Québec . In their submission, this characterization engaged the principle of

interpretation based on the [ translation ] “reasonable expectations of the insured”, sometimes also called the doctrine of “legitimate expectations of the insured”, according to which any ambiguity, or even any unambiguous provision of a contract of insurance, must be interpreted in a manner consistent with the expectations of the insured. They submitted that, in light of past practice, it was reasonable for them to expect La Financière to link the amounts paid by the federal government individually.

The decision to do so collectively was therefore, in their view, [ translation ] “arbitrary, discriminatory and improper” because of its negative effect on the compensation paid to many participants.

That decision resulted in the amendment of the contract in the course of an insurance year, which the program did not permit, and deprived the appellants of amounts to which they were entitled. [ 18 ] In their conclusions, the appellants asked the court to declare that La Financière [ translation ] “must, under the ASRA Program, deduct any amounts to which each participant is entitled under a federal program on an individual basis”.

They also asked that the calculation that resulted from linking the COPB and Kickstart amounts be declared to be invalid in respect of all ASRA Program participants (who numbered 16,747 at the time).

Each of them claimed the amount it would have received for 2007 had the amounts been linked individually, a total of over $14 million. [ 19 ] La Financière countered that the ASRA Program is not a contract of insurance, adding that the AFAQ gives it a broad discretion to determine the amount of the assistance granted to producers and to establish the conditions applicable to such assistance, including the method to be employed in linking the amounts it must take into account in granting compensation.

Linking them collectively was in its view consistent with the nature of the ASRA Program, which is based on a benchmark farm and not on data specific to each participant. La Financière also argued that the chosen method had been advantageous to a clear majority of participating producers. It explained that it had in the past linked amounts individually only in cases in which a single group of ASRA Program participants had received amounts to be linked, and that it had done so in such cases to avoid attributing income to all the participants that some of them had not received.

La Financière added that it had exercised its power to decide on the method to employ in linking amounts on a case-by-case basis having regard to its mission and to the impact of each contribution on the participants as a whole. III. Judicial History A. Superior Court, 2012 QCCS 284 [ 20 ] The trial judge found that the ASRA Program was a contract of insurance, explaining that La Financière insured a risk in exchange for the payment of a contribution.

She noted that La Financière had the power to decide what data would be taken into account in calculating the compensation that was payable, but that any unilateral amendment of the terms of the ASRA Program by

La Financière could apply only to the year following the amendment and only after having been published in the Gazette officielle duQuébec. [21] The trial judge observed that, before being amended in November 2008, s. 88(3) had referred expressly to[translation] “amounts to which a participant is entitled”. There was therefore nothing preventing La Financière from linking the amountsindividually in this case.

The November 2008 amendments required that La Financière determine the amounts to which a participant wasentitled on the basis of the characteristics of the benchmark farm (collective linkage) unless La Financière considered it appropriate toadd the amounts actually received to the annual receipts (individual linkage).

In the trial judge’s view, that amendment [translation]“suggests that the intention was to change either the law or the parties’ status” (para. 157 ). [22] Further, the trial judge concluded on the basis of the evidence that, in the past, La Financière had collectively linkedamounts paid under programs involving [translation] “a single contribution paid directly to its insurance fund [that of the ASRAProgram]”, but had linked the amounts of “direct payments to producers” individually by subtracting from the compensation payable toeach participant any amounts it had received from the federal government (paras. 133-34).

The financial assistance provided under thetwo federal programs at issue took the form of direct payments to producers.

La Financière’s past practice had therefore created“legitimate expectations among the participants”, which means that La Financière could not in the course of a year decide to change theapplicable rules and collectively link amounts paid directly to producers (para. 158). [23] The trial judge found that La Financière had a “discretion” to decide what method to employ in linking amounts, butthat this discretion had to be exercised [translation] “in accordance with the terms of the program . . . and in a reasonable manner”, whichwas not the case here (paras. 161-62).

By collectively linking the amounts in issue, La Financière had “indirectly reduced the insurancecoverage” to a significant degree (para. 164).

The extent of the resulting distortions and the fact that the appellants were accordinglypenalized led the trial judge to conclude that La Financière had exercised its discretion unreasonably and had acted in an arbitrary,discriminatory and improper manner. [24] The trial judge therefore allowed the action, declared the calculation of the compensation paid for 2007 — but onlyto the appellants — to be invalid, and ordered La Financière to pay the compensation the appellants would have received had theamounts been linked individually, with costs. B.

Court of Appeal, 2014 QCCA 1886 [25] Savard J.A., writing for the Court of Appeal, began her analysis by observing that participation in the ASRAProgram was voluntary and that the program had all the characteristics of a contract. However, she was of the view that the program wasnot a contract of insurance within the meaning of art. 2389 C.C.Q. She noted, inter alia, that La Financière’s primary activity was notspeculating on risk but promoting the agricultural and agri-food sector.

The economic risk covered by the ASRA Program did notdepend on each participant’s financial situation, but was always present and was certain over a long period of time (para. 69 ). InSavard J.A.’s view, the ASRA Program was more of an income protection program, as the government provided farm producers withfinancial support to counter losses that were inherent in their sector.

She described the program as a sui generis administrative contractthat had both public law and private law aspects. [26] In Savard J.A.’s opinion, s. 88(3) of the ASRA Program did not require La Financière to link amounts individually,but authorized it to take the specific features of each program into account in deciding what calculation method to use. The fact that thewords [translation] “a participant” had been used in that provision at the relevant time was not conclusive.

The purpose of the ASRAProgram, which complemented other government assistance programs, meant that La Financière had to be able to determine on acase-by-case basis how best to act in the interest of all participants. [27] Savard J.A. then analyzed the reasonableness of La Financière’s decision. She found that the trial judge had erred inessentially basing her analysis on the impact of the chosen linkage method on the participants who were disadvantaged by it, and in notconsidering the purpose of the AFAQ and the interests of all the participants. The decision to link the amounts collectively was notunreasonable.

It was based in part on the fact that the federal programs applied both to products that were insured by the ASRA Programand to products that the ASRA Program did not insure. Linking the amounts collectively made it possible to take only payments relatedto insured products into account. Another reason why La Financière took a collective approach here was to avoid negating the capsestablished under the federal assistance programs, which was a factor it could include in its analysis.

As well, unlike the programs forwhich amounts had been linked individually in the past, the two federal programs at issue here involved the payment of amounts to everyASRA Program participant. All these characteristics were taken into account in the decision to link the amounts collectively in thecircumstances of this case. [28] In light of this conclusion, Savard J.A. did not address La Financière’s argument that the action could not be allowedwithout declaring the linkage calculation to be invalid in respect of all participants.

The court therefore allowed the appeal, without costsin view of the parties’ relationship and the nature of the questions that had been raised. IV.

Issue [29] The central issue in this appeal is whether La Financière, in determining the compensation payable to the appellantsunder the ASRA Program for 2007, acted in conformity with its rights and obligations by linking the amounts in question collectively.To decide this issue, it will be essential to begin by outlining the legal framework applicable to the ASRA Program and determiningwhether the program constitutes a contract and, if so, whether it is a contract of insurance within the meaning of the Civil Code ofQuébec. We will consider this last subject first.

Our analysis in that regard will enable us to define the legal framework applicable to theASRA Program and identify the nature of the relationship between La Financière and the participants. V. Analysis A. Is the ASRA Program a Contract and, if So, Is It Subject to the Rules Applicable to Contracts of Insurance?

(1) Is the ASRA Program a Contract? [30] To decide whether the rules of private law or public law apply to the ASRA Program, we must first determinewhether the program is a contract. [31] Despite the broad discretion conferred on La Financière by the legislation and the ASRA Program (s. 19 AFAQ ands. 87 para. 3 ASRA Program), and even though La Financière finances the compensation paid under the program partly out of publicfunds (s. 80), the program cannot be considered simply a government program that is governed by public law. The ASRA Program hasseveral features that justify considering it to be a contract.

This is clear from a review of its structure and how it functions, whichdifferentiate it from two classic examples of social programs that fall under public law: “social insurance” programs and agriculturalsubsidies. [32] It is true that a government program may include the [translation] “basic elements of a contract of insurance” but notits “contractual form”, so that it is in reality a “social insurance” program: P. Issalys and D. Lemieux, L’action gouvernementale: Précisde droit des institutions administratives (3rd ed. 2009), at p. 819; R. Dussault and L.

Borgeat, Administrative Law: A Treatise (2nd ed.1985), vol. 1, at pp. 135-36. Professors Issalys and Lemieux define the social insurance program as follows: [translation] The early years of modern social security were marked by the creation of social insurance mechanisms. According to thistechnique, the elements of the legal relationship of insurance, as set out in

article 2389 of the Civil Code of Québec, were adopted, butmodified to serve the needs of social policy. It can therefore be defined as a statutory mechanism under which a class of persons subjectto the mechanism are required to pay premiums to an insurer vested with public authority in exchange for the payment of benefits underthe mechanism to those persons or to other recipients on the occurrence of a specified risk. [p. 818] [33] It is also well established that a true social insurance program is not contractual in nature. For example, the CanadaPension Plan, R.S.C. 1985, c.

C-8, was described by this Court as “compulsory social insurance” in Law v. Canada (Minister ofEmployment and Immigration), (SCC), [1999] 1 S.C.R. 497, at para. 8. That plan is governed by public law in thesense that it is managed by an administrative tribunal and that the recourse available to a dissatisfied person to whom the plan applies isto seek judicial review of the tribunal’s decision: see, for example, Peters v. Canada (Attorney General), 2009 FC 400.

The same is trueof the scheme established by the Unemployment Insurance Act, 1971, S.C. 1970-71-72, c. 48 (since replaced by the EmploymentInsurance Act, S.C. 1996, c. 23), which this Court characterized as “a scheme of compulsory public insurance which was never expectedto function on a strict actuarial basis”: Martin Service Station Ltd. v. Minister of National Revenue, (SCC), [1977]2 S.C.R. 996, at p. 1005.

The Court has also legally characterized the employment insurance premium as a “regulatory charge”, which itdefined as “a form of special levy connected with a government program”: Confédération des syndicats nationaux v.

Canada (AttorneyGeneral), 2008 SCC 68, [2008] 3 S.C.R. 511, at paras. 71-72. [34] Social insurance programs generally share the following characteristics: they apply to more than one sector, they areuniversal and compulsory and their benefits are calculated using simple formulas because of [translation] “the mandatory coverage ofbroad classes of persons and situations [that] requires that . . . operations be simplified” (Issalys and Lemieux, at p. 819; see alsoD. Lluelles, Précis des assurances terrestres (5th ed. 2009), at pp. 9-10; J.-G. Bergeron, Les contrats d’assurance (terrestre) (1989), t. 1,at p. 52).

As well, they almost always include an internal administrative remedy (generally known as a “proceeding for review”) againstdecisions granting or denying indemnities or benefits: Issalys and Lemieux, at p. 903. [35] It is therefore primarily or even exclusively public law that governs both the characterization of social insuranceprograms and the determination of the appropriate remedy for a dissatisfied person who wishes to contest a decision made in the contextof such a program. [36] The ASRA Program differs from a social insurance program.

Unlike most such programs, it applies to only onesector and is neither universal nor compulsory, and its benefits are not calculated using simple formulas applicable to broad classes ofpersons and situations. In addition, disputes arising out of the application of the ASRA Program are not submitted to an administrativetribunal for adjudication. [37] The ASRA Program also includes several contract-style clauses.

Section 19 provides that [translation] “[f]ailure tomeet the conditions for eligibility throughout the participation period shall result in the resolution of the participant’s contract for thecurrent year.”

Section 101 of the program states that participants can also be excluded, in which case they must pay a penalty as providedfor in s. 103: [translation] 101.

La Financière agricole shall exclude a participant from the Program in respect of an insurable product if the participant: 1° refuses to pay any contribution that is due; 2° refuses to submit to an inventory, an area measurement or a sampling or count of a stored or marketed crop; or 3° applies for an exclusion in writing. [38] Regarding the penalties that result from exclusion, the first paragraph of s. 103 of the ASRA Program provides that,[translation] “[w]here a farming business has been excluded, La Financière agricole shall keep every amount received as a contribution inrespect of the product for which the exclusion has been applied.” The second paragraph of s. 103 adds that “[a] farming business that hasbeen excluded shall pay contract resolution fees corresponding to 25% of the contribution it paid for the last year in which it compliedwith the insurable minimum.” [39] Finally, any amendments to the program that are not related to the contribution rate may not come into force until theyear after they are made (s. 21 ASRA Program).

Participants can therefore decide to opt out of the program for the following year if

amendments proposed by La Financière are not acceptable to them. [40] These mechanisms for terminating the contract for predetermined reasons, which create acquired rights for thecurrent year, fall under contract law much more than public law. Moreover, Geoffroy J. of the Superior Court reached a similarconclusion in Trépanier v. Financière agricole du Québec, 2011 QCCS 1802, a case that closely resembled the case at bar.

Geoffroy J.commented as follows in analyzing La Financière’s powers under the ASRA Program: [translation] Although La Financière agricole must report to the government on its management (s. 43), it can adapt its programs (ss. 20and 22) without having to seek any form of prior administrative authorization. One reason for this autonomy is that the government andthe Union des producteurs agricoles (UPA) are represented on the agency’s board of directors (s. 6 of the Act).

However, the defendant’s power is not absolute, and its programs must include the terms and conditions needed to ensure soundmanagement of the funds it is responsible for administering.

It is essential that the defendant’s clients be made aware of the contractualconditions that are binding on them as participants in the [ASRA] [P]rogram, and that is what was done in this case. [Emphasis added;paras. 59-60 .] [41] In our view, the characteristics of the ASRA Program referred to by Geoffroy J. — in particular La Financière’sconsiderable management autonomy, limited as it is by the need to comply with the “contractual conditions” that bind La Financière andthe participants — support the proposition that this program is by nature a contractual mechanism rather than a social insurance programgoverned by public law. [42] These same characteristics also distinguish the ASRA Program from simple agricultural subsidy programs like theone considered by this Court in Jacobs v.

Agricultural Stabilization Board, (SCC), [1982] 1 S.C.R. 125. In that case,farm producers contested, inter alia, the imposition by the Agricultural Stabilization Board of ceilings on the amounts that could begranted as subsidies under the Agricultural Stabilization Act, R.S.C. 1970, c. A-9.

Laskin C.J. applied the public law rules of proceduralfairness to the Board’s decisions establishing the conditions for granting subsidies, relying in particular on the fact that there “is noentitlement to subsidy until a scheme is propounded by the Governor in Council and until action is taken under the scheme by invitingthe presentation of claims for subsidy” (Jacobs, at p. 137).

Laskin C.J. added that subsidies were granted without any requirement ofconsideration, on an “ex gratia” basis (p. 138). [43] Given the contributions required from participants, the contract resolution clauses and the existence of acquiredrights during an insurance year, the ASRA Program clearly differs from one under which an “ex gratia” agricultural subsidy is paidwithout consideration. Indeed, it was these very characteristics that led the Ontario High Court of Justice to find Ontario’s statutory cropinsurance scheme to be a contract (of insurance) and not simply an agricultural support program: George A.

Demeyere Tobacco FarmsLtd. v. Continental Insurance Co. (1984), (ON SC), 46 O.R. (2d) 423. The crop insurance scheme provided byLa Financière is also governed by contract law: Brissette v. Financière agricole, 2006 QCCS 1620. As we will explain below, there areclearly fundamental differences between a crop insurance scheme and the ASRA Program, and these differences support the propositionthat the ASRA Program is not a contract of insurance within the meaning of the Civil Code of Québec.

Nevertheless, it would be ratherstrange if one insurance program offered by La Financière were governed by private law while another were subject to a fundamentallydifferent set of rules, those of public law. [44] The ASRA Program can also be distinguished from certain other schemes that are subject to public law rules. Oneexample can be seen in Canada (Attorney General) v.

Mavi, 2011 SCC 30, [2011] 2 S.C.R. 504, in which the issue was the legal status ofan undertaking made by a person sponsoring a relative for immigration purposes to support the sponsored relative and to reimburse thegovernment for any amount received by the latter as social assistance. In that case, the sponsor’s undertaking was required by statute, andany person wishing to sponsor a relative had to undertake to support the relative (para. 48). This was one reason why this Court foundthat the undertaking made by sponsors to the government was subject to public law, not to private law (para. 49).

In the instant case, incontrast, participation in the ASRA Program is voluntary. As well, in Mavi, the undertaking signed by sponsors was incidental to thepublic law scheme established by the Immigration and Refugee Protection Act, S.C. 2001, c. 27, and had no purpose other than enablingrelatives to immigrate as members of the family class under that public law scheme. The ASRA Program is not incidental to anystatutory public law scheme. [45] Thus, the ASRA Program is not a public law scheme but a contract.

In reaching this conclusion, we wish to be clearthat our reasons relate only to the scheme under consideration in this case. The determination of whether a scheme falls primarily underpublic law or under private law is a contextual exercise from which no extrapolation is possible.

In other circumstances, it will, forexample, be possible to hold, as in Mavi, that a contract entered into under a governmental scheme can be subject primarily, or evenexclusively, to public law. [46] We therefore agree with the Court of Appeal (at para. 71) that the ASRA Program has the characteristics of an[translation] “administrative contract”, that is, a contract to which a public authority is a party: P. Garant, with P. Garant and J. Garant,Droit administratif (6th ed. 2010), at p. 349.

However, unlike the Court of Appeal, which found that the ASRA Program falls withinboth areas of law, that is, public law and private law (paras. 54 and 57), we are of the view that the rules that apply to this program arethose of private law. Once it has been determined that the ASRA Program is a contract, we fail to see how it could be subject, even inpart, to judicial review on the basis of administrative law principles or to other public law principles. All the rules needed to guide theactions of the parties under the ASRA Program can be found in private law.

The courts have often applied this principle in the context ofcommercial relations between the government and a private party, even where the content of the contract is dictated largely by statute orregulation, which is not the case here: see, for example, Glykis v.

Hydro-Québec, 2004 SCC 60, [2004] 3 S.C.R. 285, at paras. 18 and 30.In our view, the courts have been right in the past to apply the rules of contract law to the ASRA Program, including those relating todefects of consent and to the scope of the obligations of the program’s participants: see, for example, Financière agricole du Québec v.Forand, 2009 QCCQ 10263. [47] This being said, administrative contracts are still distinguishable from contracts between private parties, since paritybetween the parties does not always exist. As Professor Garant explains:

[translation] In our law, the essential difference between a private sector contract and an administrative contract is not one of basic legalclassification. Both types of contract are in fact governed by the rules of the Civil Code of Québec. . . . However, what the public interestpurpose means for one of them, in contrast with the other, is that it may be subject to rules that depart from the general law, which willvary in light of the requirements of the general interest and may differ from one service to another.

It is above all in this sense that anadministrative contract involves privileges and constraints in comparison with a private contract; the influence of the public service isalways felt; there is never absolute parity between the parties, since one represents the general interest of the community and the otherrepresents a private interest. . . . . . . . . . It is thus clear that the public interest is of great importance in the government’s contracting process. This principle must guide theformation and performance of the contract and also serve as a rule of

interpretation. [Footnote omitted; pp. 349-51.] [48] Thus, the government’s contractual relations are governed by a specific set of rules, and the public interest must beconsidered in interpreting such relations. When interpreting the scope of the government’s powers as a party to a contract in order todetermine, for example, whether the language of the contract confers a discretion on the government, the principle of the public interestmay weigh in favour of a broader discretion in implementing the scheme. This will be especially true in cases in which the contractualscheme in question has a social objective.

These are not principles of public law, but considerations related to the object of the contractthat may influence the

interpretation of the scope of the contractual powers of the public authority in question. Along the same lines, theCourt has recognized in the public tendering context that, although the tender process is in the contractual realm, the government hasbroad powers that enable it to “include stipulations and restrictions and to reserve privileges to itself”: Martel Building Ltd. v. Canada,2000 SCC 60, [2000] 2 S.C.R. 860, at para. 89, quoting Colautti Brothers Marble Tile & Carpet

(1985) Inc. v. Windsor (City) (1996), 36M.P.L.R. (2d) 258 (Ont. Ct. (Gen. Div.)), at para. 6. There are of course distinctions to be made between the ASRA Program and a callfor tenders. We will not comment on the role of public law in the regulation of the tendering process. Nevertheless, the contract lawprinciple identified in Martel Building applies in the case at bar.

In interpreting the scope of the powers conferred on La Financière by itscontract with ASRA Program participants, the public interest and La Financière’s social purpose are considerations that must be takeninto account. [49] The government’s discretion nonetheless has its limits.

In the context of an administrative contract like the one atissue in this case, those limits do not derive from the public law duty of procedural fairness but are instead based on good faith andcontractual fairness, as is explained, once again, by Professor Garant: [translation] . . . awarding or amending a contract is a purely administrative matter that does not require the application of any of theprinciples of natural justice, procedural fairness and legitimate expectations.

The duty of good faith will of course be sanctioned by thecourts, as will the government’s duty to treat other contracting parties fairly. But what is in issue here is contractual fairness, notprocedural fairness in the public law sense. [Footnote omitted; p. 354.] [50] The Court applied similar principles in the tendering context in Martel Building, explaining that such contractsplaced the government under an implied obligation to “treat all bidders fairly and equally” (para. 88). This principle can be readilyadapted to the context of this appeal.

La Financière must treat the other contracting parties fairly and exercise its discretion in good faith.The source of the contractual obligation to treat ASRA Program participants fairly is the same as in Martel Building, namely “thepresumed intentions of the parties” (para. 88). It must be presumed that the parties to the ASRA Program intended to include in it anobligation of contractual fairness, which “is consistent with the goal of protecting and promoting the integrity of the [legal] process [atissue], and benefits all participants” (para. 88).

In Quebec law, this amounts to an application of the rule provided for in art. 1434 C.C.Q.that “[a] contract validly formed binds the parties who have entered into it not only as to what they have expressed in it but also as towhat is incident to it . . . in conformity with . . . equity”. As for the obligation to act in good faith, it flows from arts. 6, 7 and 1375C.C.Q. [51] In sum, like the contract itself, the fairness of the exercise of that discretion must be assessed in light of the publicinterest and La Financière’s social purpose.

Contract law will nonetheless apply to make La Financière accountable for the financialimpact of its decisions if they fail to satisfy the requirements of good faith and contractual fairness. This is the legal framework that mustguide the analysis of La Financière’s actions in this case. Before analyzing those actions having regard to that contractual legalframework, we must first determine whether the rules specific to the contract of insurance apply to it.

(2) Is the ASRA Program Subject to the Rules Applicable to the Contract of Insurance? [52] The appellants argue that the ASRA Program is a contract of insurance within the meaning of art. 2389 C.C.Q. Theysubmit that farm insurance is based on the principles of mutuality and risk applicable to the contract of insurance and can therefore bedistinguished from other financial assistance programs, such as those that involve the granting of subsidies.

This means that the rule ofinterpretation based on the reasonable expectations of the insured must be applied in interpreting s. 88(3) of the ASRA Program. [53] La Financière counters this position by arguing that what the ASRA Program covers is not a risk, but a contingency,given that there are no uncertain events for participants, but a recurring situation that leads to the application of the program on a regularor even permanent basis for certain products.

La Financière also notes that participants cannot receive a personalized indemnity, sincethe amounts to which they are entitled are calculated not on the basis of losses incurred by their businesses, but on the basis of the modelof a benchmark farm. [54] In this Court, the parties’ arguments on this point focused on a comparison between the ASRA Program and theProgramme d’assurance récolte also offered by La Financière.

The Programme d’assurance récolte, like equivalent crop insuranceprograms in the other provinces, has been treated by the courts as a contract of insurance that is subject to all the rules that apply to suchcontracts: Brissette; Demeyere; Rollo Bay Holdings Ltd. v. Prince Edward Island Agricultural Development Corp. (1993), (PE SCAD), 110 D.L.R. (4th) 132 (P.E.I.S.C. (App. Div.)). The respondent argues that the ASRA Program is sufficiently differentfrom a crop insurance program to warrant different legal treatment, whereas the appellants argue that the same rules of

interpretation

apply to both programs. [55] In our view, the ASRA Program is not a contract of insurance and cannot be subject to the rules applicable to suchcontracts. It does not have the three main characteristics of a contract of insurance set out in art. 2389 C.C.Q., namely (

i) an obligation onthe client to pay a premium or assessment; (ii) the occurrence of a risk; and (iii) an obligation on the insurer to make a payment to theclient if the insured risk occurs. The reasons for this conclusion are as follows. [56] First, it is agreed that ASRA Program participants have an obligation to pay a premium or assessment. This is notchanged by the fact that the government provides most of the funding for the program through La Financière.

That being said, it mayhappen, where the “risk” (net annual income of the benchmark farm less than the stabilized net annual income) does not occur for acertain period and the amounts paid into the fund are sufficient to ensure its sustainability, that no contributions are made in respect of adesignated product.

For example, no contribution was required from ASRA Program participants in 2003 in respect of “potatoes”.Moreover, the program provides that any surplus must be redistributed among participants in proportion to their contributions (s. 13).This means that one of the characteristics referred to in art. 2389 C.C.Q. is lacking here, since, according to the principle of mutuality,the contract of insurance concept presupposes that the client continues to be a debtor in respect of the premium even if the risk does notoccur: Lluelles, at p. 25. [57] Second, the implementation of the ASRA Program does not depend on the occurrence of a risk within the meaningof art. 2389 C.C.Q.

What is described here as a risk is actually based on the net annual income of the benchmark farm, whichLa Financière calculates itself in exercising its broad discretion. La Financière therefore exerts control over the occurrence of the “risk”when it adjusts and fixes the net annual income on the basis of statistical studies or of [translation] “other data it deems relevant” (s. 87para. 3 ASRA Program). In this sense, the occurrence of the “risk” under the program depends on the will of La Financière.

Yet it is wellestablished that the occurrence of the risk under a contract of insurance must be [translation] “an event that is uncertain and does notdepend exclusively on the will of the parties”: Lluelles, at p. 186. [58] Lastly, it is almost certain that the stabilized net annual income will ultimately be higher than the net annual income.The evidence shows that, over a 30-year period — from 1979 to 2009 — La Financière paid compensation every year for certainproducts, one example being “feeder cattle”.

Moreover, s. 92 of the ASRA Program provides that La Financière may make [translation]“advance payments on the compensation to be paid” on the basis of “forecasts” of the amounts that will be paid in the future. It can beseen from the cases that La Financière avails itself of that power: Forand, at paras. 12-13 ; Financière agricole du Québec v.Coddington, 2013 QCCQ 6238, at paras. 5-6 . This means that the “risk” is foreseeable not only as regards its occurrence, butalso often as regards the time of its occurrence.

As Professor Lluelles states, [translation] “if the promised payment is based not on theoccurrence of a risk but on the occurrence of an event that is certain in terms of its occurrence, its prematurity or its severity, the contractin question is not one of insurance” (p. 25 (footnote omitted)). [59] Furthermore, several provisions of the Civil Code of Québec relating to the contract of insurance are foreign to theessential elements of the ASRA Program.

For example, there is no question of the insured giving notice of the “loss”, which firstbecomes known to La Financière when it determines that the stabilized net annual income is higher than the net annual income of thebenchmark farm for a covered product. The obligations under arts. 2470 to 2474 C.C.Q. concerning notice of the “loss” by the insuredcannot therefore apply to the ASRA Program. Nor is it possible to speak of a “material change in the risk” caused by the insured withinthe meaning of arts. 2466 to 2468 C.C.Q. or of “initial representations” of the insured in the context of arts. 2408 to 2413 C.C.Q.

Theseare concepts that are central to the regulation of insurance. [60] In this regard, the ASRA Program differs from the Programme d’assurance récolte, which accords very well withseveral provisions applicable to the contract of insurance. The crop insurance program protects participants from [translation]“uncontrollable” climatic events (s. 27). Under that program, indemnities are calculated on an individual basis (s. 38), unlike thecompensation provided for in the ASRA Program, which is instead calculated on the basis of a hypothetical benchmark farm.

The cropinsurance program requires the existence of an individual loss of which the insured must give notice in accordance with arts. 2470 to2474 C.C.Q. (ss. 35 to 37). Sections 10 and 15 of the Programme d’assurance récolte refer to the initial representations of the insured,while s. 42 refers to the concept of a material change in the risk caused by the insured. Whereas the Programme d’assurance récolte iscompatible with arts. 2408 to 2413 and 2466 to 2468 C.C.Q., the ASRA Program is not. [61] It is true that the terminology of contracts of insurance is sometimes used in the ASRA Program.

For example, s. 78refers to an [translation] “insurable product”, para. 2 of s. 21 to an “insurance year” and s. 22 to an “insurance certificate”. In our view,the use of that terminology is not conclusive, however. When properly analyzed, the ASRA Program cannot be characterized as acontract of insurance. It is therefore not subject to the rules specific to such contracts. [62] Since the ASRA Program is not a contract of insurance, it follows that the rule of

interpretation based on thereasonable expectations of the insured does not apply. We nonetheless consider it appropriate to clarify the extent to which that ruleapplies in Quebec law, given that the parties to this appeal and the companion appeal, Lafortune v.

Financière agricole du Québec,2016 SCC 35, [2016] 1 S.C.R. 1091, present different views and refer to a debate about the rule among the commentators and the courts.In both appeals, ASRA Program participants argue that the reasonable expectations rule applies in its [translation] “maximumdimension” and that La Financière’s powers are limited by their expectations regardless of whether the contract is ambiguous.La Financière counters that the rule must apply only in its “minimum dimension”, that is, only where there is ambiguity. [63] The scope of this rule, which originates in U.S. insurance law, was explained by Cory J., dissenting, but not on thispoint, in Brissette Estate v.

Westbury Life Insurance Co., (SCC), [1992] 3 S.C.R. 87, at p. 102. He mentioned that thisrule of

interpretation was applied in the United States in three ways: (1) to resolve any ambiguity in the terms of the contract in favour ofthe insured in order to satisfy his or her reasonable expectation; (2) to give the insured a right to all the coverage he or she was entitled toexpect, unless there was an “unequivocal plain and clear manifestation of the company’s intent to exclude coverage”; or (3) to give theinsured such coverage even in cases in which “painstaking study of the policy provisions would have negated those expectations”(p. 103).

The first and third of these scenarios correspond, respectively, to what some authors have called the “minimum” and“maximum” dimensions of the doctrine: D. Lluelles and B. Moore, Droit des obligations (2nd ed. 2012), at pp. 922-23; M.-C. Thouin,

“La théorie de l’attente raisonnable de l’assuré” (1997), 64 Assurances 545, at p. 551. However, none of them allows the meaning of aclear provision to be disregarded in favour of the expectations of the insured, except, in the third case, insofar as the

interpretation of theprovision requires “painstaking study” to determine its true meaning. [64] The Court has accepted the first formulation (the minimum dimension) of the reasonable expectations rule in anumber of cases, holding that, in Canada, the rule applies only in the event of ambiguity: Jesuit Fathers of Upper Canada v. GuardianInsurance Co. of Canada, 2006 SCC 21, [2006] 1 S.C.R. 744, at paras. 27 and 29; Reid Crowther & Partners Ltd. v. Simcoe & ErieGeneral Insurance Co., (SCC), [1993] 1 S.C.R. 252, at p. 269; National Bank of Greece (Canada) v. Katsikonouris, (SCC), [1990] 2 S.C.R. 1029, at p. 1043.

The Quebec Court of Appeal has consistently reached the same conclusion:Excellence (L’), compagnie d’assurance-vie v. Desjardins, 2005 QCCA 1035, [2005] R.R.A. 1085, at para. 11; Affiliated FM InsuranceCo. v. Hafner Inc., 2006 QCCA 465, at para. 47 ; Souscripteurs du Lloyd’s v. Alimentation Denis & Mario Guillemette inc.,2012 QCCA 1376, at para. 38 . [65] We are of the view that in Quebec law, the reasonable expectations rule must apply solely in its minimumdimension, that is, only where there is ambiguity.

The Civil Code of Québec contains a series of rules for resolving difficulties in theinterpretation of contracts. The reasonable expectations rule can certainly be added to those rules of

interpretation for contracts ofinsurance, but only for the

interpretation of an ambiguous clause and for the purpose of identifying the common intention of the parties(art. 1425 C.C.Q.). [66] This being said, in the case at bar, because the ASRA Program is an innominate administrative contract that does nothave the characteristics of a contract of insurance, the rules of contractual

interpretation set out in arts. 1425 to 1432 C.C.Q. must beapplied to determine the outcome of the appeal. We must refer to those rules to resolve the central issue, that is, whether it was open toLa Financière to collectively link the amounts received under the two federal assistance programs in respect of which the appellantsbrought their action. B. Was it Open to La Financière to Collectively Link the Amounts Received From the Federal Government Under the COPB andKickstart Programs?

(1) Interpretation of Section 88(3) of the ASRA Program [67] Section 88(3) of the ASRA Program does not specify how compensation received under government assistanceprograms is to be linked. It states only that, for this purpose, La Financière must consider [translation] “[a]ny amounts to which aparticipant is entitled” under such programs. [68] The appellants argue that the words “a participant” [translation] “refe[r] to each participant considered individuallyand not . . . to a hypothetical participant on the benchmark farm” (A.F., at para. 63).

They add that s. 88(3) must be read in conjunctionwith s. 2 of the ASRA Program, in which “participant” (adhérent) is defined as [translation] “a farming business . . . that participates inthe Program”. In the appellants’ opinion, s. 88(3) therefore requires individual linkage. Our colleague agrees with them.

In her view, thewording of s. 88(3) means that La Financière cannot take account of amounts to which the participant is not entitled. [69] La Financière replies that s. 88(3) must be interpreted in light of the program as a whole, which is based on theaverage benchmark farm, and that collective linkage should therefore be the rule. [70] To begin, we cannot agree with the appellants’ main argument that the words [translation] “amounts to which aparticipant is entitled” mean that La Financière must always link the amounts individually.

It is common ground that La Financière hasused both collective and individual linkage in the past. In reality, as will be seen below, individual linkage has been the exception ratherthan the rule. Each time La Financière has linked amounts collectively, it has inevitably penalized participants for amounts to which theywere not entitled, as it has in such cases attributed to all participants amounts that were calculated on the basis of what the benchmarkfarm would have received. An

interpretation requiring that amounts be linked individually in every case would conflict with that pastpractice and would as a result call into question most of the decisions made by La Financière over the past 15 years. It would also puts. 88(3) in conflict with the whole of the ASRA Program, which is based on the collective concept of a benchmark farm. In our opinion,s. 88(3) cannot be interprete

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