The Doctrine of Public Policy in Canadian Contract Law

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10 I Annual Review of Civil Litigation place. . [On Janson v. Driefontein Consolidated Mines. . . Lord Halsbuty indeed appeared to decide that the categories of public policy are closed, and that the principle could not be invoked anew unless the case could be brought within some principle of public policy already recognized by the law. I do not find, however, that this view received the express assent of the other members of the House; and it seems to me, with respect, too rigid. On the other hand, it fortifies the serious warning that. . . the doctrine should only be invoked in clear cases in which the harm to the public is substantially incontestable, and does not depend upon the idiosyncratic inferences ofafew judicial minds. I think that this should be regarded as the true guide.47 [emphasis added] Lord Wright went further than Lord Atkin, and endorsed the more restrictive approach associated with Lord Halsbury. He held that: [i]n one sense every rule of law, either common law or equity, which has been laid down by the Courts, in that course of judicial legislation which has evolved the law of this country, has been based on considerations of public interest or policy. In that sense Sir George Jesse! M.R. referred to the paramount public policy that people should fulfil their contracts. But public policy in the narrower sense means that there are considerations of public interest which require the Courts to depart from their primary function of enforcing contracts, and exceptionally to refuse to enforce them. Public policy in this sense is disabling. It is important to determine first of all on what principles a judge should exercise this peculiar and exceptional jurisdiction when a question of public policy is raised. What is, I think, now clear is that public policy is not a branch of law to be extended. . . Public policy, like any other branch of the common law, is governed by the judicial use of precedents. . . It is true that it has been observed that certain rules of public policy have to be moulded to suit new conditions of a changing world: but that is true of the principles of common law generally. I find it difficult to conceive that in these days any new head of public policy could be discovered.. . 414 [emphasis added] The conservative view of public policy evidenced in Jansonand Fendergreatly influenced the leading Canadian judgment on the doctrine, Re Millar Estate." The principal question in Millar was whether a provision in a will, 47 Ibid. at 10-12. 48 Ibid. at 38-40. 49 (1937), [1938] 1 S.C.R. 1, 1937 CarswellOnt 108 [Millar'. It also influenced the Australian courts. See Wilkinson v. Osborne (1915), 21 C.L.R. 89 (H.C.A.) at 96-97, stating that "a Court has not a roving commission to declare contracts bad as being against public policy according to its own conception of what is expedient for or would be beneficial or conducive to the welfare of the State. . . In my opinion the "public policy" which a Court is entitled to apply as a test of validity to a contract is in relation to some definite and governing principle which the community as a whole has already adopted either formally by law or tacitly by its general course of corporate life, and which the Courts of the country can therefore recognize and enforce. The Court is not a legislator: it cannot initiate the principle; it can only state or formulate it if it already exists."
The Doctrine of Public Policy in Canadian Contract Law I 11 which required that the residue be gifted to the mother who in the 10 years following the testator's death had given birth to the greatest number of children in Toronto, should be declared void for violating public policy. Duff C.J., who delivered judgment for the majority of the Supreme Court of Canada, held that the provision was not invalid. He prefaced his reasons by describing the doctrine in the following terms: [i]t is convenient to notice first of all the manner in which the principle of law operates, by force of which a contract or disposition of property is held to be invalidated as being obnoxious to the public good on some ground or principle comprehended within the general phrase 'against public policy'. . . It is the duty of the courts to give effect to contracts and testamentary dispositions according to the settled rules and principles of law, since we are under a reign of law; but there are cases in which rules of law cannot have their normal operation because the law itself recognizes some paramount consideration of public policy which over-rides the interest and what otherwise would be the rights and powers of the individual. It is, in our opinion, important not to forget that it is in this way, in derogation of the rights and powers of private persons, as they would otherwise be ascertained by principles of law, that the principle of public policy operates.5° [emphasis added] Duff C.J. then referred to the seeming dispute between Lords Atkin and Wright in Fender regarding the degree to which new categories of public policy could be recognized by the courts, and indicated that, although he was not expressing a final opinion upon the subject, he inclined to the view of Lord Wright that public policy should not be extended beyond its recognized categories.5' However, Duff C.J. then proceeded to state that: .taking the most liberal view of the jurisdiction of the courts, there are at least two conditions which must be fulfilled to justify a refusal by the courts on grounds of public policy to give effect to a rule of law according to its proper application in the usual course in respect of a disposition of property. First. . . 'it may be stated that such prohibition is imposed in the interest of the safety of the state, or the economic or social well-being of the state and its people as a whole. It is therefore necessary, when the enforcement of a contract is challenged, to ascertain the existence and exact limits of the principle of public policy contended for, and then to consider whether the particular contract falls within those limits.' Secondly. . . 'the doctrine should be invoked only in clear cases, in which the harm to the public is substantially incontestable, and does not depend upon the idiosyncratic inferences of a few judicial minds. . :52 [emphasis added] 50 Mid. at paras. 4-5. 51 Ibid. at para. 14. 52 Mid. at para. 15.
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The Doctrine of Public Policy in Canadian Contract Law

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