To ensure the respect of legality by commercial corporations, the doctrine of abuse of rights is of practical use. Thus, if the corporate personality is resorted to for improper purposes, courts will not hesitate to set it aside and examine the actual facts behind legal fiction. Cases of criminal activities, public order and equity will justify such an approach.
The exercise by company directors of the rights entrusted to them by law is also subject to the doctrine. Directors who use their position for their self-aggrandizement are exposed to judicial reprimand : most of the classic duties imposed on corporate executives fall within the sphere of application of the doctrine.
Abuse of rights of a corporate nature thus offers an interesting application of the doctrine in the field of commercial law.
This paper was originally given at the Congrès Henri Capitant to an audience composed mainly of Continental jurists. It deals with abuse of power in the context both of crime and of criminal process.
The relative extension of the concept as a criminal qualification and the clear sanctions provided by the Code are contrasted with the permis-sivity of the law relating to the occurence in the criminal process, of different instances of abuse.
The purpose of this article is to study the rules governing the phenomenon of mandatories abusing their powers, under Quebec Civil Code. It also reviews the rules proposed by the Civil Code Revision Office in its 1971 and 1976 Reports on the contract of Mandate and in its 1976 Report on administration of property of others. It shows that on many issues the Office has chosen a rather conservative approach and decided to stick to time-proven rules. It also flags the areas where the Office advocates new rules, with appropriate comments.
The article is divided in two parts, the first one dealing with the scope of abuse of powers, the second with its effects. Part one asks « When does a mandatory abuse his powers ? » and answers by distinguishing between the wrongful exercise of mandatory's actual powers and the exercise, right or wrong, of non-existant powers. Part two then asks « What are the effects of abuses of powers ? » and deals on one hand with the liability towards third parties of both mandators and mandatories, and on the other hand with the liability of mandatories towards their mandators.
The interest of part one lies mainly with the distinction it makes between two types of abuses of powers and with the analysis of the remarkable contribution of the Report on administration of the property of others into the field of Mandate. Part two derives its interest from the study of rules aimed at protecting third parties against abuses of powers of mandatories, and from testing the relevance of distinguishing between two types of abuses of powers.
One conclusion, among others, emerges from this article. Mandators are fully liable towards third parties when mandatories abuse their powers by using them wrongfully. Conversely mandators are not liable when mandatories abuse their powers by using non-existant powers, although this principle suffers exceptions numerous enough to constitute a genuine regime of protections for third parties against self-empowered mandatories. The article suggests however that Quebec Law could go one step further by improving protection of third parties under the existing notion of apparent mandate, especially for those dealing with companies.
In theory, recourse to the grievance arbitration would appear to be an efficient means of controlling the abuse of powers (i.e. violations of the collective agreement) by the employer. Indeed, experience has borne out the truth of this affirmation. Mainly due to the management rights principle however, there still remain several important lacunae in this regard.
On the one hand, by invoking the so-called management rights principle as a favorite means for circumscribing the arbitrator's jurisdiction, the Supreme Court of Canada has greatly diminished the efficacy of the arbitration process. This has occured primarily through the quashing of arbitration decisions either on the basis of error of law or else by limiting the arbitrator's discretion in disciplinary cases.
On the other hand, it would be just as harmful to the efficiency of the arbitration process if arbitrators themselves were to abuse the management rights principle in interpreting and applying collective agreements. In general, arbitrators have proved to be highly conscious of this problem. By the same token, arbitrators have been faced with the problem of whether or not to discipline acts of insubordination even though employees may have been provoked by an abuse of authority on the part of the employer.
All in all, arbitrators, by their attitude, appear to manifest a desire of ensuring the efficient functioning of the arbitration process, without acting to the detriment of management rights. In this regard, the Supreme Court of Canada, with the notable exception of Chief Justice Laskin, would seem to be fighting a rear-guard action by continually emphasizing management rights.
In order to determine the nature of the abuse of power of the legal representatives in Quebec family law, one must identify the different cases of legal representation and study the powers of the different representatives.
Tutorship is the mechanism for the protection of the non emancipated minor. As a rule, the tutor represents his pupil in civil acts; but in some cases he has no power to act, in other cases he must get the judge's authorization, while in a third category of cases he must comply with special formalities. Consequently, there can be absence of power, misappropriation of power, bad utilization of power or dereliction of duty.
Curatorship is used for different kinds of interdicted persons. The powers and liabilities of the curator to an interdicted person are generally the same as those of the tutor.
The legal mandate of the married woman is the power to represent her husband for the current needs of the household and the maintenance of the children. In this case, the abuse mainly takes the form of an excess of power.
The effects of the abuse of power must primarily be considered in the relations between the represented person and his legal representative; we must ask ourselves if the legal representative is liable for damages, if his acts can be annulled and if there can be withdrawal from office. There are also effects to be considered in the relationship between the legal representative and the third persons, as well as in the relationship between the represented person and the third parties.
In the exercise of their functions, administrative authorities may happen to abuse their powers. The courts may then interfere.
Judicial review of administrative action may be styled « objective » or « subjective ». In the first case, one ascertains whether the action under review keeps within the law. In the second, the test refers to the aims of the enabling legislation. Of course, the efficency of the latter type of review depends on the scope of the discretion delegated to the administrative authority : as the scope of discretion widens, opportunities for review narrow down. Moreover, review may be made difficult where the administrative authority is not compelled by law to give reasons for its decisions and also where the aims sought by the delegating legislature are not crystal clear.
Courts may set aside administrative decisions based on irrelevant grounds or taken in bad faith. In other words, want of public interest justifies judicial intervention, even in the face of privative clauses.
Courts may also consider the reasonableness of administrative action, and quash rulings which are discriminatory or arrived at without justification.
Until recently, the rule in Quebec was that an immoveable could not be the object of a commercial operation. For many years, this anachronic rule had major effects on a number of key sectors of the law. Although unanimously criticised by academics, it was still largely applied by the courts.
In 1965, a new trend appeared with the key decision of Colonia Development v. Belliveau, according to which the Court of Appeal departed for the first time from the traditional pattern, applying a new test wholly based on the purpose of the parties in entering into the agreement and refraining, by the same way, from holding that contracts in respect to immoveables were perse a civil matter. Three recent decisions of the Court of Appeal confirmed this precedent and applied it to situations involving different aspects of immoveable transactions.
These decisions repeatedly adopted the purpose test definitely prefering the subjective approach to commercial activities over the objective one. This settled another important controversy between academics.
After a general review of the situation since the Colonia Development case, the article spots a new dark area in the field and tries to draw a new line between civil and commercial transactions, especially when an immoveable is concerned.
A testator can increase or diminish the extent as well as the duration of the powers provided an executor by the Civil Code of Quebec. However, regardless of how positive the formula that he uses may be, he cannot grant absolute and arbitrary powers. That is true whether one considers the executor the agent of the deceased or of the legatees. In effect, it is the purpose of the administration of a testamentary estate which dictates the solution. Since that purpose is to carry out the will of the deceased, the first duty of the executor is to attempt to assure the legatee or the heir the largest possible patrimony. In any case, the executor would not be freed from the control which a request for his dismissal represents unless he should be a residuary legatee. A clause which would have that as its purpose would be considered null and void as contrary to public order and good morals.
Moreover, the duration of the administration of an estate can never be prolonged once the administration has been completed even if the testator had foreseen an administration of a longer duration. The only difference the formula used by the testator could make (the possibility of prolounging longer than necessary the administation of the estate) would be to influence the burden of proof which, in one case, would fall on the executor and, in the other, on the heirs or legatees.
This article deals with the relationships between the exercise of administrative discretion and the implementation of a policy. Chapter I defines administrative discretion as a power to make a choice in a particular case. This choice may be technical or political but in both instances relates to the implementation of a policy. The exercise of discretion is also situated within a system under the Rule of Law using H.L.A. Hart's concepts of primary and secondary rules.
Chapter II deals with the exercise of discretion in relation to policy. First, if refers to K.C. Davis' model of confining, structuring and checking discretion. To confine discretion is to set the limits within which it should be exercised. To structure it is define the manner by which it is to be exercised notably in opening the decision-making process. To check discretion is to subject the decision to another authority.
The next three sections of this chapter are concerned with legislative, regulatory and administrative policy. The first section studies legislative expressions of policy and their impact on the exercise of discretion. Secondly, the question of the choice between regulation and administrative discretion is analysed as is the control over that choice and the nature of regulation over it is decided to adopt it. Finally, the impact of an administrative discretion is seen when attacked by the citizen on the grounds that it fetters discretion, constitutes bias or when relied upon by the citizen. It is seen that in most cases, the administrator may structure his discretionary power in a manner respected by the courts.
In May 1977, the Supreme Court of Canada gave an authoritative judgment on the interpretation of article 1688 of the Civil Code dealing with the liability of the builder and the architect. In Davie Shipbuilding Ltd v. Cargill Grain Company Ltd and The Foundation Company of Canada Ltd, the court established a new method of rebutting the presumption of liability resulting from the article. Indeed, the Supreme Court found that where the owner intervened during the construction and was more qualified than the contractors in charge of the work to judge its quality, he could not invoke the presumption resulting from article 1688 C.C. and was responsible for any loss.
The case is not an easy one — questions of law and facts are not simple in this dispute involving more than eleven million dollars.