Help

Supreme Court Judgments

Decision Information

Decision Content

Supreme Court of Canada

Contract—Verbal agreements—Newspaper distributing company—Unilateral termination by companies owning newspapers—Moneys withheld by distributor—Damages incurred by distributor—Time for giving notice of termination—Mandate—Was termination justified?—Civil Code, art. 1736.

Appellant, which operated a newspaper distributing service, had concluded verbal agreements for an unspecified time with respondent companies, controlled and managed by the publisher Pierre Péladeau, also a respondent. The latter wrote appellant’s president a letter informing him of his intention to establish his own distribution company, and suggesting certain dates for termination of their contractual relationship. Appellant informed respondent that it required a minimum notice of 60 days and would withhold the moneys which it owed respondent companies pending a settlement or the decision of a court as to the amount of damages caused by this breach of the contracts. Counsel for respondent subsequently informed appellant that from then on it would make the arrangements necessary to do its own distribution. Appellant then brought an action for damages against each of the six respondent companies, joining Péladeau as defendant in each action. Respondent companies for their part jointly instituted two actions against appellant, claiming in one, together with conservatory attachment, the sum withheld by appellant, and in the other an accounting. The Court allowed appellant’s actions against the companies only, set at thirteen weeks the term of the notice which should have been given for termination of the contracts, rescinded the contracts for all legal purposes, and ordered respondent companies to pay the resulting damages, settling compensation as to the moneys withheld. The claim by the companies was allowed in part only, for an amount which, as there was no evidence of damage resulting from the breach of the particular contract relating thereto, could not be made

[Page 1154]

subject to compensation. The action for an accounting was dismissed. The Court of Appeal reversed the decision of the Superior Court. Hence the appeal to this Court.

Held: The appeals should be dismissed.

As, according to the manner in which the agreement was executed, a great deal of latitude was left to the distributor, appellant, the contract between the parties was not a contract for lease and hire of services but a mandate, and more specifically, the distributor was a factor within the meaning of art. 1736 of the Civil Code. The breach, made final by the letter from respondent’s counsel, was fully justified by appellant’s determination to no longer perform its obligations and to withhold the moneys it was required to pay. Accordingly the precise nature of those contracts, as well as the question of the notice to which appellant would otherwise have been entitled, became matters of purely academic interest.

APPEALS from judgments of the Court of Queen’s Bench, Appeal Side, province of Quebec[1], reversing judgments of the Superior Court. Appeals dismissed.

J.P. Ste-Marie, Q.C., for the appellant.

P.W. Gauthier, Q.C., for the respondent.

The judgment of the Court was delivered by

THE CHIEF JUSTICE—Appellant operates a newspaper distributing service in Montreal and the surrounding area. In August 1965, it was, and had been for several years, engaged in, among other things, distributing various newspapers owned by the respondent companies. Verbal agreements for an unspecified time existed between appellant and these companies, which were controlled or managed by the publisher Pierre Péladeau, also a respondent.

On August 17, 1965 Péladeau wrote appellant’s president a letter in which he informed him of his intention to establish his own distribution company and suggested certain dates for termination of their contractual relationship. Péladeau observed that these dates were flexible and he was willing to consider the objections of appellant’s president if the latter would

[Page 1155]

prefer to have them moved forward or postponed. Appellant replied to this letter through its solicitor, Me Ste-Marie, who on August 18 wrote Péladeau a letter informing him that appellant required a minimum notice of 60 days and would withhold the moneys which it owed respondent companies pending a settlement or the decision of a court as to the amount of damages caused by this breach of the contracts of distribution. The moneys thus withheld were subsequently determined to be in the amount of $85,336.12. On the following day, August 19, 1965, Péladeau’s solicitor wrote to appellant’s solicitor a letter claiming this amount and informing him that in view of the attitude of “Les Distributions Éclair Ltée” his client had no choice but to immediately make the arrangements necessary to do its own distribution. From the latter date onwards Péladeau did in fact handle himself the distribution of the publications of respondent companies.

Following these events eight legal actions were instituted. Appellant brought an action for damages against each of the six respondent companies, joining Péladeau as defendant in each action. In support of these actions it alleged essentially that Péladeau’s letter of August 17, 1965 constituted a unilateral breach of the contracts of distribution, and that it was consequently entitled to compensation equal to the income from 26 weeks’ operation less, in each case, however, the amount withheld which it owed on the sale of each publication. The respondent companies for their part jointly instituted two actions against appellant, claiming in one the said sum of $85,336.12 and in the other an accounting for the period subsequent to August 12, 1965. A writ of conservatory attachment in the hands of appellant’s solicitor, who had at that time the custody of the money withheld, was joined to the first of these two actions.

Mr. Justice Challies, before whom all these actions eventually came following the retirement of the judge who had presided at the trial,

[Page 1156]

held on a consideration of the record of the case that the distribution agreements between the parties were in the nature of a contract for lease and hire of services, and that the letter written on August 17, 1965 by Péladeau was an unwarranted breach of those verbal agreements, and he set at three months or thirteen weeks the term of the notice which should have been given for termination. The Court allowed the actions brought by appellant, ordered the respondent companies to pay the damages resulting from the breach, settled compensation as to the moneys withheld by appellant, and rescinded for all legal purposes the contracts binding the latter to respondent companies. In one of these actions no sum was awarded for damages, as evidence was lacking. The six actions were dismissed without costs in respect of defendant Péladeau. As for the claim of respondent companies, it was allowed in part for the sum of $16,850.14, derived from the sales of “Le Journal de Montreal”, which sum the Court was unable, as there was no evidence of damages resulting from the breach of this particular contract, to make subject to compensation. The writ of conservatory attachment, however, was quashed and the action for an accounting was dismissed.

In each case respondents appealed and their position was upheld by the Court of Appeal.

The judgment of the Court was delivered by Chief Justice Tremblay, who stated the reasons of the Court, concurred in by all its members and applicable to each appeal. I note at the outset that, seeing that according to the manner in which the agreement was executed, a great deal of latitude was left to the distributor—the appellant—in the sale of the publications, that inter alia it was he who decided on the number of copies to be printed and put on sale, that it was he who, with the help of his own vendors, decided on distribution outlets and collected the proceeds of the sale of the publisher’s publications, the Court held that the contract between the parties was not a contract for lease and hire of services but a mandate, and more specifically, that the distributor was a factor within the

[Page 1157]

meaning of art. 1736 of the Civil Code. After a detailed analysis of the correspondence exchanged, the Court held further that contrary to the views of the trial judge the unlawful breach of the distribution agreements was not the letter written to appellant by Péladeau on August 17, but that the breach, made final by the letter from respondent companies’ solicitor dated August 19, was perfectly justified by appellant’s determination to no longer perform its obligations and to withhold the moneys it was required to pay, as appears from the letter written by its solicitor on August 18. So, allowing the appeals, the Court dismissed the six actions instituted by appellant, allowed respondent companies’ action for moneys owing and action for an accounting, and declared the conservatory attachment to be good and valid; the whole with costs in each case.

Hence the eight appeals by appellant to this Court.

I respectfully agree with the opinion and conclusions stated in the Court of Appeal. I see nothing that may usefully be added to the reasons given by Chief Justice Tremblay, except perhaps to point out that once we accept the view that the definitive breach of contractual relations was fully justified by appellant’s determination to no longer perform its obligations and withhold the moneys which it was required by the contracts to remit, the precise nature of those contracts as well as the question of the term of the notice to which appellant would otherwise have been entitled become matters of purely academic interest.

I would dismiss all these appeals with costs limited to a single appeal but with all the disbursements in each appeal.

Appeals dismissed with costs limited to a single appeal.

Solicitors for the plaintiff, appellant: Ste-Marie & Giroux, Montreal.

[Page 1158]

Solicitors for the defendants, respondents: Ogilvy, Cope, Porteous, Hansard, Marler, Montgomery & Renault, Montreal.

 



[1] [1972] Que. A.C. 566.

 

Lexum

For 20 years now, the Lexum site has been the main public source for Supreme Court decisions.


>

Decisia

 

Efficient access to your decisions

Decisia is an online service for courts, boards and tribunals aiming to provide easy and professional access to their decisions from their own website.

Learn More