Dikranian v. Quebec (Attorney General)

Dikranian v. Quebec (Attorney General)
Collection
Supreme Court Judgments
Date
2005-12-02
Neutral citation
2005 SCC 73
Report
[2005] 3 SCR 530
Case number
30243
Judges
McLachlin, Beverley; Bastarache, Michel; Binnie, William Ian Corneil; LeBel, Louis; Deschamps, Marie; Abella, Rosalie Silberman; Charron, Louise
On appeal from
Quebec
Subjects
Contract
Notes
SCC Case Information: 30243
Decision Content
SUPREME COURT OF CANADA
Citation: Dikranian v. Quebec (Attorney General), [2005] 3 S.C.R. 530, 2005 SCC 73
Date: 20051202
Docket: 30243
Between:
Harry Dikranian
Appellant
and
Attorney General of Quebec
Respondent
Official English Translation
Coram: McLachlin C.J. and Bastarache, Binnie, LeBel, Deschamps, Abella and Charron JJ.
Reasons for Judgment:
(paras. 1 to 55)
Dissenting Reasons:
(paras. 56 to 70)
Bastarache J. (McLachlin C.J. and Binnie, LeBel, Abella and Charron JJ. concurring)
Deschamps J.
______________________________
Dikranian v. Quebec (Attorney General), [2005] 3 S.C.R. 530, 2005 SCC 73
Harry Dikranian Appellant
v.
Attorney General of Quebec Respondent
Indexed as: Dikranian v. Quebec (Attorney General)
Neutral citation: 2005 SCC 73.
File No.: 30243.
2005: March 10; 2005: December 2.
Present: McLachlin C.J. and Bastarache, Binnie, LeBel, Deschamps, Abella and Charron JJ.
on appeal from the court of appeal for quebec
Contracts — Student loans — Loan repayment terms — Vested rights — Clause of student loan contract incorporating by reference legislative provisions relating to exemption from paying interest during specified period — Legislative amendments reducing and then eliminating interest exemption period — Whether student having vested right with respect to duration of exemption period applicable to payment of interest — Whether legislative amendments having effect of limiting rights conferred on student in contract with financial institution — An Act respecting financial assistance for students, R.S.Q., c. A‑13.3, s. 23 — An Act to amend the Act respecting financial assistance for students and the General and Vocational Colleges Act, S.Q. 1996, c. 79, s. 5 — An Act to amend the Act respecting financial assistance for students, S.Q. 1997, c. 90, ss. 4, 5, 13.
In Quebec, the repayment terms for student loans are set out in the Act respecting financial assistance for students. The appellant obtained student loans between 1990 and 1996 and completed his studies in January 1998. According to the loan certificate signed by the appellant with his financial institution in 1996, the appellant had to begin repaying the principal and paying the interest on the loan upon the expiration of the exemption period. However, as a result of amendments to the Act respecting financial assistance for students that came into force in 1997 and 1998, the financial institution charged the appellant interest on his loan that, under the certificate, was supposed to have been paid by the government. The appellant was authorized to institute a class action against the government seeking reimbursement of the interest paid. The Superior Court and the majority of the Court of Appeal dismissed the action, concluding that the 1997 and 1998 legislative amendments covered all student loans contracted before and after the amendments came into force.
Held (Deschamps J. dissenting): The appeal should be allowed.
Per McLachlin C.J. and Bastarache, Binnie, LeBel, Abella and Charron JJ.: In 1996, the appellant and the financial institution signed a loan certificate provided by the government, thereby turning the certificate into a contract and crystallizing the parties’ rights and obligations, including the interest payment terms. The appellant thus had a vested right with respect to the duration of the exemption period applicable when the contract was signed, since his legal situation (1) was tangible and concrete, and (2) was constituted at the time of the new statute’s commencement. It is presumed, in the absence of a clear indication in a statute to the contrary in light of the entire context, that the legislature did not intend to violate the principle against interference with vested rights. [32] [36‑37] [43] [49] [54]
In the instant case, this vested right was not affected by the 1997 amending legislation. That legislation does not contain any transitional provision that might justify a conclusion that the legislature clearly intended to apply the new provisions so as to limit the rights of borrowers. Just because the government argues for the immediate and future application of the legislation does not mean it is authorized to interfere with rights conferred on the appellant in his contract. Moreover, the 1997 legislation does not refer to contracts that have already been entered into and therefore cannot apply to them. Finally, there is no evidence in the record that justifies imputing to the legislature an intention to interfere with vested rights. [44] [54]
Nor does s. 13 of the 1998 amending legislation, according to which the provisions of the statute apply to “juridical situations in progress” at the time of their coming into force, clearly state the legislature’s intention to change the terms of contracts of loan that had already been entered into. Section 13 does not provide that the amendments apply to contracts or “contractual situations”. Furthermore, the appellant’s rights and obligations were no longer “in progress”, since they had been definitively concluded under the terms and conditions of the contract. In the general context of the plan, the expression “juridical situations in progress” applies to a student who has received a loan certificate but not yet signed it (nor has the financial institution done so). In light of the ambiguity of s. 13, it is necessary to apply the principle against interference with vested rights. [45‑50]
The administrative grounds raised by the government do not justify disregarding the express wording of the private contract. It is perfectly normal for some students who completed their studies on the same date to be treated differently if they obtained their student loans at different times and signed different loan agreements on an informed basis. It is the very foundation of the individualized contractual right that leads to this result. [52]
Per Deschamps J. (dissenting): In declaring, in s. 13, that the 1998 amending legislation applied to “juridical situations in progress”, the Quebec legislature clearly indicated that the statute applied with immediate effect to the exemption period for the payment of interest by the appellant to his financial institution. This expression applies not only to situations that are still being formed, but also to the effects of a given juridical situation. The Act respecting financial assistance for students thus applies to the contract between the appellant and his financial institution. An interpretation that denies that a juridical situation is still “in progress” when it has been formed, has not been extinguished and is producing effects is not consistent with the theory on which the legislature relied. Finally, the doctrine of vested rights should not be relied on to decide the instant case. Common law concepts that place a strong emphasis on this doctrine do not apply where an approach based on the immediate application of legislation and the concept of juridical situations in progress is adopted. [56‑58] [64]
Cases Cited
By Bastarache J.
Applied: Épiciers Unis Métro‑Richelieu Inc., division “Éconogros” v. Collin, [2004] 3 S.C.R. 257, 2004 SCC 59; referred to: Venne v. Quebec (Commission de protection du territoire agricole), [1989] 1 S.C.R. 880; Attorney General of Quebec v. Expropriation Tribunal, [1986] 1 S.C.R. 732; Gustavson Drilling (1964) Ltd. v. Minister of National Revenue, [1977] 1 S.C.R. 271; Upper Canada College v. Smith (1920), 61 S.C.R. 413; Acme Village School District (Board of Trustees of) v. Steele‑Smith, [1933] S.C.R. 47; Spooner Oils Ltd. v. Turner Valley Gas Conservation Board, [1933] S.C.R. 629; Bell ExpressVu Limited Partnership v. Rex, [2002] 2 S.C.R. 559, 2002 SCC 42; Scott v. College of Physicians and Surgeons of Saskatchewan (1992), 95 D.L.R. (4th) 706; Abbott v. Minister for Lands, [1895] A.C. 425; Massey‑Ferguson Finance Co. of Canada v. Kluz, [1974] S.C.R. 474; Marchand v. Duval, [1973] C.A. 635; Holomis v. Dubuc (1974), 56 D.L.R. (3d) 351; Ishida v. Itterman, [1975] 2 W.W.R. 142; Township of Nepean v. Leikin (1971), 16 D.L.R. (3d) 113; Location Triathlon Inc. v. Boucher‑Forget, [1994] R.J.Q. 1666.
By Deschamps J. (dissenting)
Épiciers Unis Métro‑Richelieu Inc., division “Éconogros” v. Collin, [2004] 3 S.C.R. 257, 2004 SCC 59; Montréal (Ville) v. 9013‑5286 Québec inc., [2002] Q.J. No. 2631 (QL); Medovarski v. Canada (Minister of Citizenship and Immigration), [2005] 2 S.C.R. 539, 2005 SCC 51.
Statutes and Regulations Cited
.Act respecting financial assistance for students, R.S.Q., c. A‑13.3, ss. 15, 23, 24, 27, 28, 29, 40, 41, 62.
Act respecting the implementation of the reform of the Civil Code, S.Q. 1992, c. 57, ss. 2, 3, 4.
Act to amend the Act respecting financial assistance for students, S.Q. 1997, c. 90, ss. 4, 5, 13.
Act to amend the Act respecting financial assistance for students and the General and Vocational Colleges Act, S.Q. 1996, c. 79, s. 5.
Civil Code of Québec, S.Q. 1991, c. 64, art. 625, 1372, 1385, 1387, 1457.
Consumer Protection Act, R.S.Q., c. P‑40.1.
Interpretation Act, R.S.Q., c. I‑16, s. 12.
Regulation respecting financial assistance for students, R.R.Q., c. A‑13.3, r. 1, 56.
Authors Cited
Côté, Pierre‑André. The Interpretation of Legislation in Canada, 3rd ed. Scarborough, Ont.: Carswell, 2000.
Côté, Pierre‑André, et Daniel Jutras. Le droit transitoire civil: Sources annotées. Cowansville, Qué.: Yvon Blais, 1994.
Driedger, Elmer A. Construction of Statutes, 2nd ed. Toronto: Butterworths, 1983.
Droit civil québécois, t. 8. Comité de rédaction, Denys‑Claude Lamontagne et autres. Montréal: Publications Dacfo, 1993 (feuilles mobiles mises à jour mai 2003).
Mazeaud, Henri, Léon et Jean, et François Chabas. Leçons de droit civil, t. 1, vol. 1, Introduction à l’étude du droit, 11e éd. par François Chabas. Paris: Montchrestien, 1996.
Roubier, Paul. Le droit transitoire: conflits des lois dans le temps, 2e éd. Cowansville, Qué.: Yvon Blais, 1993.
Sullivan, Ruth. Sullivan and Driedger on the Construction of Statutes, 4th ed. Markham, Ont.: Butterworths, 2002.
APPEAL from a judgment of the Quebec Court of Appeal (Beauregard, Rothman and Forget JJ.A.), [2004] Q.J. No. 303 (QL), affirming a judgment of Journet J., [2002] R.J.Q. 969, [2001] Q.J. No. 6159 (QL), dismissing the appellant’s action. Appeal allowed, Deschamps J. dissenting.
Leon J. Greenberg and Guy St‑Germain, for the appellant.
Mario Normandin, for the respondent.
English version of the judgment of McLachlin C.J. and Bastarache, Binnie, LeBel, Abella and Charron JJ. delivered by
Bastarache J. —
1. Introduction
1 The class action giving rise to this appeal was instituted by Mr. Dikranian on behalf of approximately 70,000 students; it concerns the recovery of interest paid on student loans granted under the former Act respecting financial assistance for students, R.S.Q., c. A‑13.3 (“AFAS”), and the Regulation respecting financial assistance for students, R.R.Q., c. A‑13.3, r. 1 (“RFAS”).
2 The problem in the case at bar stems from the fact that the loans were made under private contracts between individual financial institutions and students while the repayment terms have been set by the government in the AFAS and the RFAS. The Minister of Education (“Minister”) has imposed these terms by incorporating them into a loan certificate that must be obtained to enter into a contract of loan, to which the Minister is not a direct party.
3 The instant case results from two amendments to the AFAS and the RFAS — one in 1997 and the other in 1998 — that reduced the period during which students are exempt from making interest payments and repayments on the principal. It must first be established whether, considering that the first amendment contained no transitional provisions, that amendment applied to loans that had already been granted. It will then be necessary to determine the meaning and scope of the transitional provision in the second legislative amendment, according to which the new provisions apply to “juridical situations in progress”.
4 The student aid plan in place prior to the AFAS was based on administrative contracts (see the Web site of Quebec’s Aide financière aux études, www.afe.gouv.qc.ca/english); under that plan, the government set the terms of the contract and could amend them as it saw fit at any time. Under the current plan, however, a certificate is issued in which the Minister guarantees the loan should the student default on it (AFAS, ss. 27, 28 and 29) (see Appendix) and pays the interest during the exemption period (AFAS, s. 24) (see Appendix). After the certificate is issued, the student enters into a private contract with a financial institution. Although the government dictates some of the terms of the contract by incorporating them in the certificate it issues, it is not a party to the contract. The government neither grants the loan nor approves it. The government makes parallel commitments in accordance with the AFAS. The issue here is whether, in the instant case, the changes to these legal obligations have had the effect of limiting the rights conferred on the student in his or her contract with the financial institution.
5 This means that there is no need for me to consider the exact nature of the legal relationship between the government and the student. The substantive issue is whether the National Assembly can alter the private law relationship between the financial institution and the student and, if so, whether the legislative amendments of 1997 and 1998 satisfy the conditions under which it may do so.
2. Origin of the Case
6 Student loans in Quebec are governed by the AFAS and the RFAS. The Minister issues, to a student who is entitled to it under the RFAS, a loan certificate authorizing the student to contract a loan with a financial institution recognized by the Minister within 90 days. The government pays the interest (AFAS, s. 24) and guarantees the repayment of the principal. Before 1997, the legislation exempted students who had completed their studies from paying interest on their loans for a period specified in the loan certificate.
7 On July 1, 1997 (the day the first amending statute came into force), the National Assembly reduced the period during which student borrowers were exempt from making interest payments and repayments on the principal by one month: An Act to amend the Act respecting financial assistance for students and the General and Vocational Colleges Act, S.Q. 1996, c. 79 (“Amending Act, 1997”), s. 5. For students who, like the appellant, completed their studies during the winter trimester, the date on which interest payments and repayments on the principal were to begin was brought forward from January 1, 1999 to December 1, 1998. Effective May 1, 1998 (the day the second amending statute came into force), students had to begin paying the interest as soon as they completed their studies: An Act to amend the Act respecting financial assistance for students, S.Q. 1997, c. 90 (“Amending Act, 1998”), ss. 4 and 5.
8 The appellant obtained student loans between 1990 and 1996. He signed the last loan certificate with his financial institution, the Royal Bank of Canada, on November 15, 1996. The certificate issued by the Minister stated that the appellant could borrow an additional $4,255, which, after the amounts were consolidated, increased the total of his student loans from $22,510 to $26,765. The appellant completed his studies on about January 31, 1998, in the winter trimester. According to clause 10 of the loan certificate, he had to begin repaying the principal and paying the interest on the loan upon the expiration of the exemption period, that is, on January 1, 1999.
9 Around July 21, 1998, the appellant inquired about the repayment of his loan. A Royal Bank representative informed him verbally that interest on the loan had been debited since June 1, 1998 and that the principal would be repayable as of December 1, 1998, in accordance with the directives issued by Aide financière aux étudiants. As a result of the 1997 and 1998 legislative amendments, the appellant was being charged interest on his loan that, under the certificate signed in 1996, was supposed to have been paid by the Minister.
10 On August 7, 1998, the appellant repaid the principal of the loan and paid, without prejudice, $308.53 for the interest accrued from June 1 to August 6, 1998.
11 The appellant was authorized to institute, on behalf of himself and other students forming a specific group, a class action against the respondent, the Attorney General of Quebec, seeking reimbursement of the interest paid on the loans that had been granted (Dikranian v. Québec (Ministère de l’Éducation), [1999] Q.J. No. 2086 (QL) (Sup. Ct.), per Lévesque J.). He argued that Quebec’s Ministère de l’Éducation had to pay that interest in accordance with the loan certificate issued before the legislative amendments were passed.
3. Judicial History
12 On December 13, 2001, Journet J. of the Superior Court dismissed the appellant’s action. On January 27, 2004, a majority of the Court of Appeal dismissed his appeal, Rothman J.A. dissenting.
3.1 Superior Court ([2002] R.J.Q. 969)
13 Journet J. began by rejecting the appellant’s arguments based on the provisions of the Civil Code of Québec, S.Q. 1991, c. 64 (“C.C.Q.”), concerning contracts of adhesion as well as his arguments relating to the Consumer Protection Act, R.S.Q., c. P‑40.1. He found that the rights and obligations of the financial institution and the student were governed by the statute and the regulation, and not by the loan certificate. The rights and obligations were not imposed by one of the parties to the contract, as is the case with a contract of adhesion. They simply flowed from the exercise of statutory or regulatory powers. In his view, a mandatory provision of a statute or regulation cannot be nullified pursuant to the C.C.Q. on the ground that, because it is incorporated into a contract, it is contractual in nature. This would be [translation] “to confuse and distort concepts of nullity that were incompatible with each other — the rules of nullity applicable to contracts on the one hand and the rules of nullity and invalidity applicable to statutes and regulations on the other” (para. 76). Journet J. was of the opinion that the loan certificate was not in itself a contract but rather a juridical act issued pursuant to an enactment governing the rights and obligations of the parties referred to therein.
14 Journet J. then addressed the question of the retroactivity of the legislation. In his view, the issue was the immediate applicability of the legislation, not its retroactive application. He noted that the two amending statutes did not state that their provisions would take effect before they came into force. He added the following:
[translation] Section 13 of the 1997 statute states that the new provisions of the Act are applicable to the juridical situations in progress at the time of their coming into force. This statutory provision shows that the legislature intended the new legislation to apply immediately to all existing and future loans.
The Court does not see how it could conclude that the two new statutes created different juridical situations for loans made before and after their enactment. In the absence of a provision to the contrary, every statute must apply immediately, both to contracts entered into before and to those entered into after it comes into force.
The Court notes that there cannot be multiple sets of repayment terms for students completing their studies in the same trimester unless specific legislative provisions so indicate.
The Court must favour an interpretation that results in the uniform application of one legislative scheme rather than a multiplicity of schemes.
The interpretation suggested by [the appellant] for dealing with the temporal effect of the 1996 and 1997 statutes on the [AFAS] leads to unfair and different treatment of students who are nonetheless in the same situation, that is, who complete their studies in the same trimester and with the same loan amount to repay. If we accept the argument of [the appellant], only some of these students, he being one of them, would have to pay less interest on their loans and would thus obtain benefits not granted to others. [Emphasis deleted; paras. 88‑92.]
15 Finally, on the issue of vested rights, Journet J. noted that none of the students concerned, the appellant included, had completed their studies at the time the two statutes giving rise to the conflicting interpretations were enacted. The appellant had accordingly not taken advantage of the exemptions provided for in the original statute as of the time when the new provisions were enacted. He could not therefore claim to have vested rights.
3.2 Court of Appeal ([2004] Q.J. No. 303 (QL))
16 The appellant appealed from this judgment but was unsuccessful.
3.2.1 Forget J.A.
17 Forget J.A., Beauregard J.A. concurring, was of the opinion that the appeal should be dismissed. His brief reasons for judgment read as follows:
[translation] With due respect for the opinion of Rothman J.A., I am of the view that the trial judgment was correct.
While the relationship between the student and the financial institution can be characterized as contractual, the same cannot be said of the relationship between the student and the government under the Act respecting financial assistance for students, which implements a public program to facilitate access to education.
The amendments introduced by the 1996 and 1997 statutes applied immediately and governed active loans.
I would dismiss the appeal with costs. [paras. 48‑51]
3.2.2 Rothman J.A.
18 Rothman J.A. accepted the appellant’s arguments. To begin with, he found that the loan certificate imposed obligations on the appellant that were clearly contractual in nature. He wrote the following:
While it is true, as the trial judge indicates, that the financial assistance programs created under the Act are worthy social programs designed to encourage equal accessibility to education for all Quebec students, the program of student loans contemplated in the Act did nevertheless impose contractual obligations upon students who obtained these loans, contractual obligations which included conditions as to the repayment of the capital of the loans as well as conditions concerning the payment of interest. One of the conditions in this contract stipulated the period of the loans during which the student was to be exempt from the payment of interest.
The certificate of loan, issued by the Department and signed by the student as well as the financial institution, is in the form of a contract and the clauses setting out the conditions of the loan contain numerous references to “this contract”. Any reasonable borrower or lender reading the document would consider himself bound by a contract.
And while it is true that the Department did not itself sign the document, it was the Department that issued it to the student and it was the Department that had stipulated the conditions of repayment of capital and the exempt period for the payment of interest by the student. The Department was, moreover, itself contractually involved in the loan made to the student in that it guaranteed the repayment of the capital of the loan as well as the payment of interest to the financial institution, including the payment of interest for the period during which the student was exempt from interest payment.
In sum, while the programs created under the Act can fairly be characterized as social and educational, the obligations and the rights of students under their loan agreements with the lenders were substantially contractual.
I do not wish to suggest, of course, that the Financial Assistance for Education Expenses Act did not govern the relationship between the lending banks and the students and the relationship between the Banks and the Government.
. . .
But that being said, once it has been concluded that the contractual rights and obligations of a student borrower and a lender bank satisfy the requirements of the statute and the regulations, we must logically look to the contract concluded and the law that then existed to determine the rights and obligations of the borrowing student.
Unless the subsequent amendments to the law are expressly stipulated to be retroactive or are retroactive by necessary implication, I can see no basis for applying provisions in the amendments in conflict with the rights of the parties under their contract and the law which was applicable when it was concluded . . . . On signing the contract of loan, the student had no reason to believe that the Government might, by simple legislative amendment, rewrite his contract with the bank and modify his interest obligation. Nor, in the absence of an intention, expressed or tacit, to impair the rights of the student under his loan contract, do I see any basis for interpreting the amendments in a manner that would have that effect. [paras. 21‑27]
19 Rothman J.A. pointed out that the 1997 and 1998 amendments, if applicable, would have had the effect of retroactively reducing the interest exemption period provided in the appellant’s loan certificate. Yet this would have offended the principle against the retroactivity of legislation. He stated: “I can see no necessary implication that would require this interpretation” (para. 33). He added the following:
Nor can I easily accept that the phrase “[. . . juridical situations in progress . . .]” was intended to make the 1997 and 1998 amendments applicable so as to reduce the interest exemption period provided in the previously existing statute and in the contract signed by the borrowing student and the lending bank. In my respectful opinion, once the loan was approved by the Department and the contract of loan was signed by the student and the bank, appellant's obligation to pay interest and his exemption from the payment of interest were not “[juridical situations in progress]”. They were rights and obligations which were no longer “in progress”. They were crystallized, finalized and definitively concluded under the terms and conditions of the contract.
There is no suggestion in the law or the contract that the obligations of the student or the bank as regards the payment of interest by the student or the duration of the exemption period were subject to discussion or change. These were matters definitively concluded in the contract insofar as appellant and the Bank were concerned. Appellant had no right to demand that the exemption period be extended and the Bank had no right to demand that the exemption be reduced. The Government had no right to demand that its guarantee in favour of the bank be reduced. What “[juridical situations]” remained “[in progress]”? Absolutely none. [paras. 34‑35]
20 Rothman J.A. then noted that, in the absence of an express or tacit intention to do so, a new law should not be read as impairing vested rights. He wrote:
In the 1998 amendment, Sec. 13 provided that the amending provisions would apply to “[. . . juridical situations in progress at the time of their coming into force].”
While it is true that when the 1998 amendment came into force, appellant had not yet ended the period of exemption provided in his contract, I find it hard to imagine that the Legislature intended, in adopting the 1998 amendment, to change the interest exemption period of a contract of loan that had previously been concluded merely on the basis that the period of exemption had not yet expired.
When appellant undertook the loan, he did so under specific conditions for repayment of capital and payment of interest. There was no suggestion in the certificate of loan issued by the Department or in the contract that these conditions might be changed at any time. Nor is an interest exemption period, by its nature, of a kind that would be subject to periodic change. Appellant had every right to expect that his obligations for the repayment of capital and the payment of interest were those set out in the contract and that these conditions would be respected. Appellant fulfilled his obligations in repaying the loan and paying the interest on the loan under the terms required under his contract.
In the absence of very clear terms in the amending statutes establishing that the Legislature intended to impair appellant's rights under his existing contract, I can see no reason why the Government should not respect the rights and obligations existing under that contract. If that means the payment of interest by the Government for the period of exemption in the contract, so be it. That was the basis on which the certificate was issued and the contract was signed.
I would find it very difficult to interpret the words “[. . . juridical situations in progress . . .]” as evidence of an intention on the part of the Legislature to vary the terms of a loan contract that was concluded prior to the coming into force of the new law. [paras. 39‑43]
4. Analysis
21 Simply put, the Court must answer the following questions: whether the version of the AFAS in force on November 15, 1996, when the certificate was signed, governs the interest exemption period applicable upon the completion of studies; and whether the new legislative provisions altered the terms of the contract of loan that had been entered into before they came into force.
22 As a preliminary matter, I would like to make it clear that the plan set up by the AFAS and the RFAS is a complete one. This appeal does not concern the application of either the Act respecting the implementation of the reform of the Civil Code, S.Q. 1992, c. 57 (“Implementation Act”), or the transitional provisions set out in that Act. Nor is it either helpful or necessary to refer to the rules relating to consumer protection.
4.1 Legal Nature of the Relationship Between the Parties
4.1.1 Contractual Relationship
23 The starting point for this analysis is the observation that there is a private law contract between the student and the financial institution, and the terms of the contract leave no doubt in this regard (arts. 1372, 1385 and 1387 C.C.Q.). The two parties signed the loan certificate and made specific undertakings. There is no question that the contractual relationship between the student and the financial institution has a special feature, as the Minister, who is not a signatory, has unilaterally undertaken to guarantee the loan and pay the interest for a certain time.
24 It appears that the AFAS implicitly recognizes the contractual relationship established between the student and the financial institution. The version of s. 15 that was in force at the time of the events that led to the dispute provided as follows:
15. The Minister shall issue, to a student who is entitled to it and who is enrolled or deemed to be enrolled within the meaning of the regulation, a loan certificate authorizing him to contract a loan with a financial institution recognized by the Minister. The modalities of presentation of the certificate and payment of the loan shall be determined by regulation.
Before the amendments, the verb “contract” was also used in ss. 40, 41 and 62 of the AFAS and in s. 56 of the RFAS.
25 In short, any reasonable borrower or lender reading the document would consider himself or herself bound by a contract, as Rothman J.A. stated. It also appears that all the parties involved in this case recognize the contractual relationship between the student and the financial institution.
4.1.2 Contract of Loan: Loan Certificate
26 The contract of loan signed by the student and the financial institution on November 15, 1996 contains the following clauses:
This contract is signed in accordance with the prescriptions of the Act respecting financial assistance for students (R.S.Q., c. A‑13.3), the Regulation thereunder (A‑13.3, r. 1) and the prescriptions of the Loan Guaranty Program for the Purchase of a Microcomputer, if applicable.
Without restricting the scope of the above, the parties also agree to the following:
LOAN UNDER THE ACT RESPECTING FINANCIAL ASSISTANCE FOR STUDENTS
5. The student is exempt from payment of interest on the principal loaned by the financial institution, under the Act respecting financial assistance for students, for the exemption period defined in section 23 of the Act, which is cited in clause 10 of this contract.
. . .
10. Exemption period “means the period beginning on the date on which the borrower obtains a first loan or on which he becomes a full‑time student again after having ceased to be so, and ending
1o on 1 April, for a borrower who completes or abandons his full‑time studies during or at the end of the preceding summer trimester;
2o on 1 August, for a borrower who completes or abandons his full‑time studies during or at the end of the preceding autumn trimester;
3o on 1 January, for a borrower who completes or abandons his full‑time studies during or at the end of the preceding winter trimester” (R.S.Q., c. A‑13.3, s. 23).
Under the contract of loan, the appellant, who completed his studies on January 31, 1998 (winter trimester), was therefore obliged to repay the principal and assume the interest payments on his loan as of the expiration of the exemption period, that is, on January 1, 1999.
27 The reference to the AFAS has the effect of incorporating the relevant provisions of the AFAS. Moreover, this reference relates specifically to the juridical situation that existed when the certificate was signed, that is, before the legislative amendments. Rothman J.A. shared this view:
But that being said, once it has been concluded that the contractual rights and obligations of a student borrower and a lender bank satisfy the requirements of the statute and the regulations, we must logically look to the contract concluded and the law that then existed to determine the rights and obligations of the borrowing student. [para. 26]
28 Thus, the substantive issue is whether the rights conferred by the contract of loan can be unilaterally modified by the legislature, which is not a signatory to the contract.
4.2 Vested Rights
29 Before considering the question of vested rights, I would like to note that a distinction must be drawn between the principle of vested rights and the principle against retroactivity. This issue is of great importance here. The Attorney General of Quebec submits that the principle of the retroactivity of legislation is not in issue and asks the Court to apply the principle of the retrospectivity of legislation that was recently reiterated in Épiciers Unis Métro‑Richelieu Inc., division “Éconogros” v. Collin, [2004] 3 S.C.R. 257, 2004 SCC 59. However, it should be noted right away that Épiciers Unis dealt with the application of the Implementation Act, ss. 2 and 3 of which indicate that “the recent reform of the Civil Code is based not on the principles established at common law, principles which give great importance to vested rights. Rather, it is a system essentially based on the ideas of the French jurist Paul Roubier, a system which clearly dispenses with the notion of vested rights” (P.‑A. Côté, The Interpretation of Legislation in Canada (3rd ed. 2000), at p. 118). This appeal does not concern a dispute resulting from the coming into force of the C.C.Q. We must therefore apply the Interpretation Act, R.S.Q., c. I‑16, which gives effect to the principle of “acquired rights” in s. 12.
4.2.1 Distinctions Between Vested Rights and Retroactivity
30 Vested rights result from the crystallization of a party’s rights and obligations and the possibility of enforcing them in the future. Professor Côté writes that, “[w]ithout being retroactive, a statute can affect vested rights; correspondingly, a statute can have a retroactive effect and yet not interfere with vested rights” (p. 156). In general, it will be purely prospective statutes that will threaten the future exercise of rights that were vested before their commencement: Côté, at p. 137.
31 Although the courts have in the past analysed the same question from the perspective of either the presumption against interference with vested rights or the presumption against retroactive legislation, there remains, as the submissions of the parties in the instant case demonstrate, a clear distinction between these two rules of construction: Venne v. Quebec (Commission de protection du territoire agricole), [1989] 1 S.C.R. 880, at p. 906; Attorney General of Quebec v. Expropriation Tribunal, [1986] 1 S.C.R. 732, at pp. 741 and 744; Gustavson Drilling (1964) Ltd. v. Minister of National Revenue, [1977] 1 S.C.R. 271, at pp. 279 and 282.
4.2.2 Statement of Principle
32 The principle against interference with vested rights has long been accepted in Canadian law. It is one of the many intentions attributed to Parliament and the provincial legislatures. As E. A. Driedger states in Construction of Statutes (2nd ed. 1983), at p. 183, these presumptions
were designed as protection against interference by the state with the liberty or property of the subject. Hence, it was “presumed”, in the absence of a clear indication in the statute to the contrary, that Parliament did not intend prejudicially to affect the liberty or property of the subject.
This had already been accepted by Duff J. in Upper Canada College v. Smith (1920), 61 S.C.R. 413, at p. 417:
. . . speaking generally it would not only be widely inconvenient but “a flagrant violation of natural justice” to deprive people of rights acquired by transactions perfectly valid and regular according to the law of the time.
(See also Acme Village School District (Board of Trustees of) v. Steele‑Smith, [1933] S.C.R. 47, at p. 51; R. Sullivan, Sullivan and Driedger on the Construction of Statutes (4th ed. 2002), at pp. 569‑70.)
33 The leading case on this presumption is Spooner Oils Ltd. v. Turner Valley Gas Conservation Board, [1933] S.C.R. 629, at p. 638, where this Court stated the principle in the following terms:
A legislative enactment is not to be read as prejudicially affecting accrued rights, or “an existing status” (Main v. Stark [(1890), 15 App. Cas. 384, at 388]), unless the language in which it is expressed requires such a construction. The rule is described by Coke as a “law of Parliament” (2 Inst. 292), meaning, no doubt, that it is a rule based on the practice of Parliament; the underlying assumption being that, when Parliament intends prejudicially to affect such rights or such a status, it declares its intention expressly, unless, at all events, that intention is plainly manifested by unavoidable inference.
34 The principle has since been codified in interpretation statutes. The Interpretation Act is no exception:
12. The repeal of an act or of regulations made under its authority shall not affect rights acquired . . . and the acquired rights may be exercised . . . notwithstanding such repeal.
4.2.2.1 Rule of Construction
35 In the past, this Court has stressed that the presumption against interference with vested rights could be applied only if the relevant legislation were ambiguous, that is, reasonably susceptible of two constructions (see Gustavson Drilling, at p. 282; Acme Village School District, at p. 51; Venne, at p. 907).
36 This statement must be qualified somewhat in light of this Court’s recent decisions. As Professor Sullivan says, care must be taken not to get caught up in the last vestiges of the literal approach to interpreting legislation:
In so far as this langu