The Doctrine of Public Policy in Canadian Contract Law

The Doctrine of Public Policy in Canadian Contract Law 1 23
taking a more lenient approach to alternative dispute resolution agreements
which are alleged to be inconsistent with public policy. "3
The final head of public policy traditionally included within this category
is concerned with contracts that involve maintenance or champerty.14 Although
maintenance and champerty were at one time criminal, their status in this respect
was ended when Parliament abolished common law crimes in 1954. Nevertheless,
both maintenance and champerty remain torts at common law,"5 and
champerty ;is still expressly forbidden under provincial legislation in Ontario' 6
(although this has been held merely to codify the common law).117 In light of
their status as torts, the invalidation of contracts which stipulate maintenance
or champerty is prima facie attributable to common law illegality rather than
the doctrine of public policy as described earlier in this paper. Nevertheless,
"[t]he fundamental aim of the law of champerty and maintenance has always
been to protect the administration of justice from abuse.""8 It is therefore
submitted that the rationale for proscribing such conduct is predominantly
attributable to public policy. The spectre of maintenance and champerty may
arise in several different contractual settings, including the assignment of tortious
causes of action," 9 and contingency fee arrangements. With respect to the
latter, the Ontario Court of Appeal in McIntrye Estate v. Ontario (A.G.)12°
113 See, e.g., J. W. Abernethy Management & Consulting Ltd. v. 705589 Alberta Ltd., 2005
ABCA 103 (C.A.) at paras. 31-37, holding that a mediation agreement whereby the
parties agreed to participate in a judicial dispute resolution process (pursuant to which
the judge would impose a resolution of all outstanding issues if a settlement was not
reached) was not prohibited on policy grounds, in part because of the benefits which
"JDR" had for the justice system.
114 Maintenance and champerty have been defined as follows: "[m]aintenance is directed
against those who, for an improper motive, often described as wanton or officious
intermeddling, become involved with disputes (litigation) of others in which the maintainer
has no interest whatsoever and where the assistance he or she renders to one or
the other parties is without justification or excuse. Champerty is an egregious form of
maintenance in which there is the added element that the maintainer shares in the profits
of the litigation. Importantly, without maintenance there can be no champerty. . The
courts have made clear that a person's motive is a proper consideration and, indeed,
determinative of the question whether conduct or an arrangement constitutes maintenance
or champerty. It is only when a person has an improper motive which motive may
include, but is not limited to, "officious intermeddling" or "stirring up strife," that a
person will be found to be a maintainer": Mclntrye Estate v. Ontario (Attorney General)
(2002), 61 O.R. (3d) 257, [2002] O.J. No. 3417 (C.A.) at paras. 26-27.
115 See, e.g., McIntrye Estate v. Ontario (Attorney Genearl) (2002), 61 O.R. (3d) 257,
[2002] O.J. No. 3417 (C.A.) at para. 25.
116 See, in Ontario, the Champerty Act, R.S.O., 1897, c. 327.
117 McIntrye Estate v. Ontario (Attorney General) (2002), 61 O.R. (3d) 257, [2002] O.J.
No. 3417 (C.A.) at para. 46.
118 Ibid. at para. 32.
119 Frederickson v. Insurance Corp. of British Columbia (1986), 3 B.C.L.R. (2d) 145 (C.A.),
affirmed [1988] 1 S.C.R. 1089.
120 (2002), 61 O.R. (3d) 257, [2002] O.J. No. 3417 (C.A.) [McIntyre].