Québec – award still capable of being executed despite order not mentioning amounts owing by respondent

In Gestion PMOD Inc. v. 9e Bit (2015) Inc., 2019 QCCS 1154, Mr. Justice Steve J. Reimnitz homologated an award despite one of the dispositive orders omitting mention of the exact amounts due by respondent.  Contrary to the opposite result in Carpenter v. Soudure Plastique Québec Inc. 2019 QCCS 321 in which the court refused to homologate an order which did not liquidate damages, Reimnitiz J. held that the award was capable of being executed. The award referred to an exhibit listing the amounts due as well as respondent’s admission that they were due.

Gestion PMOD Inc. (“PMOD”) and 9e Bit (2015) Inc. (“9e Bit”) had entered into a September 11, 2015 asset-purchase agreement (“Contract”).  Disagreements arose and PMOD instituted an action before the Québec Superior Court.  On application by 9e Bit, Reimnitz J. in an earlier decision, Gestion PMOD Inc. v. 9e Bit (2015) Inc. (9218-9216 Québec Inc.), 2017 QCCS 2542, referred PMOD and 9e Bit to arbitration in accordance with the arbitration agreement contained in their Contract.

Following that arbitral process and a hearing on the merits, the arbitrator issued a February 6, 2019 award (“Award”).  PMOD applied to have the Award homologated under articles 547 and 645 of Québec’s Code of Civil Procedure, CQLR c C-25.01 (“C.C.P.”) but 9e Bit resisted.  It claimed that the Award was not capable of being executed, referring in particular to one of the orders in the Award:

informal translation – “GRANT plaintiff’s action and condemn defendant to make the monthly payments due since November 30, 2016 up to January 30, 2019 with interest at the preferential rate provided at article 1.1 of the Contract plus 35 per annum calculated from the due date of each payment …

PMOD countered, pointing out that the amounts had been set out in an exhibit and had been admitted by 9e Bit.  The exhibit and 9e Bit’s admission had been confirmed in the Award.

Reimnitz J. referred to 9101-0983 Québec Inc. v. 9051-4076 Québec Inc., 2012 QCCS 724 and Hachette Distribution Services (Canada) Inc. v. 2295822 Canada Inc., 2018 QCCS 1213 as reference points for reiterating the court’s limited role when homologating awards and underlining that homologation was not judicial review.

Reimnitz J. distinguished the facts in the matter before him from those before Madam Justice Silvana Conte in the recent Carpenter v. Soudure Plastique Québec inc., 2019 QCCS 321.  See the earlier Arbitration Matters note “Québec – non-respect of delays in arbitration agreement insufficient to annul award”.

In Carpenter v. Soudure Plastique Québec Inc., Conte J. refused to homologate part of the award because that part of its dispositive section contained an order not capable of being executed, violating article 328 C.C.P.   In particular, the order required respondent to make payments but did not specify the amounts.  The amounts ordered were those which had yet to be liquidated and were related to sales made after the date of the award.  In contrast, in Reimnitz J.’s case, the amounts had been liquidated before the arbitration and stated in an exhibit admitted by 9e Bit.  Reimnitz J. agreed that the award before Conte J. required one to identify which sales had occurred after the hearing and involved exercising discretion to make the calculation.

While article 328 C.C.P. requires that a “judgment awarding damages must liquidate the damages”, Reimnitz J. saw no grounds to refuse to homologate the Award in his case.  The meaning of “liquidate” in article 328 C.C.P. cannot give rise to an unreasonable interpretation of the Award.  He held that other parts of the dispositive referred to the exhibit containing the monthly payments, as well as the rate at which interest is calculated.

Reimnitz J. observed that 9e Bit could have applied to the arbitrator under article 634 C.C.P. within 30 days of the Award to ask him to correct any clerical error or interpret a specific passage but had chosen not to do so.  Reimnetz J. observed that, instead of seeking that correction or interpretation, 9e Bit had ‘preferred to do nothing’ and contest the homologation. 

Reimnitz J. referred to an earlier decision of Mr. Justice Jean-Guy Dubois in Gestion PMOD Inc. v. 9e Bit (2015) Inc., 2018 QCCS 3594 involving the same parties and the same arbitration.  He noted Dubois J.’s comments that 9e Bit was playing ‘cat and mouse’.  See the earlier Arbitration NoteQuébec court telephones its own choice of potential candidates during court hearing to appoint arbitrator”.

Reimnitz J. observed that there was a certain type of ‘stubbornness’ on the part of 9e Bit to follow the process ordered earlier by the Superior Court and to read and apply the Award.  He acknowledged that one should avoid homologating an award whose executory force depends on proof of facts to be established at a later date and to thereby avoid giving rise to a subsequent contestation.  Reimnitz J. held that such was not the case before him.