Québec – court dismisses litigation seeking injunctive relief in favour of arbitration for specific performance – #005

The Québec Superior Court in Truong v. Syndicat des copropriétaires Appartements Miraflor, 2017 QCCS 3673 dismissed a court litigation in favour of arbitration even if the litigation appeared to invoke injunctive powers reserved for the Superior Court.  Notwithstanding that Plaintiff as a court litigant sought provisional measures in the form of injunctive relief, Mr. Justice Mark G. Peacock ruled that Plaintiff could ask the arbitrator for specific performance of the same obligations which it sought to enforce by way of injunction.   

The litigants, a condo owner and the condo association, disputed their respective rights and obligations over corrective work to be performed on private and public spaces in the condo building. They were bound by a prior, written undertaking to arbitrate which Peacock J. examined and held to be a valid undertaking. Even though Plaintiff sought injunctive relief in its court litigation, Peacock J. agreed with Defendant that the injunctive relief could equally be viewed as merely enforcing the terms of the parties’ contract by way of specific performance. 

Peacock J. analyzed article 940.4 of the former Code of Civil Procedure which expressly reminded arbitration parties that the Superior Court preserved its inherent jurisdiction to issue injunctive relief: 

“Article 940.4 A judge or the court may grant provisional measures before or during arbitration proceedings on the motion of one of the parties.” 

That old Code of Civil Procedure has now been abrogated but the rule remains valid in article 643 of the new Code of Civil Procedure (“C.C.P.”): 

“Article 643 The court, on an application, may grant provisional measures or safeguard orders before or during arbitration proceedings.  

To grant Defendant’s motion to dismiss, Peacock J. relied on two earlier Court of Appeal decisions, Nearctic Nickel Mines Inc. v. Canadian Royalties Inc., 2012 QCCA 385, reasons in English, and Service Bérubé ltée v. General Motors du Canada Ltée, 2011 QCCA 567.  The reasoning allowed him to reaffirm that in Québec an order of specific performance can be issued by an arbitrator appointed in a commercial matter and that such an order is not necessarily of the same nature as the injunctive relief reserved for the exclusive jurisdiction of the Superior Court. In both those cases, Neartec following the groundwork laid by the earlier Service Bérubé ltée, the Court of Appeal held that an arbitrator appointed according to the provisions of a commercial agreement could issue orders of specific performance without violating the provisions of Code of Civil Procedure on provisional measures.   

The reasoning in Neartec specifically noted that the analysis of the powers granted to an arbitrator by the parties’ arbitration agreement “should be made through a generous and liberal vision which is more in line with the modern interpretation of conventional arbitration” and referred to approach favoured by the Supreme Court of Canada in Desputeaux v. Editions Chouette, [2003] 1 S.C.R. 178, 2003 SCC 17. 

Québec civil law expressly provides for specific performance of obligations as a recourse in the Civil Code of Québec: 

“1590 An obligation confers on the creditor the right to demand that the obligation be performed in full, properly and without delay. 

Where the debtor fails to perform his obligation without justification on his part and he is in default, the creditor may, without prejudice to his right to the performance of the obligation in whole or in part by equivalence, 

(1)   force specific performance of the obligation; 

(2)   obtain, in the case of a contractual obligation, the resolution or resiliation of the contract or the reduction of his own correlative obligation; 

(3)   take any other measure provided by law to enforce his right to the performance of the obligation.” 

 The role of specific performance appears elsewhere in the C.C.Q. subject to certain conditions being present.   

“1601 A creditor may, in cases which admit of it, demand that the debtor be forced to make specific performance of the obligation.” 

The creditor of the right to specific performance of the obligation can request the resolution or resiliation of the contract.  “1604. Where the creditor does not avail himself of the right to force the specific performance of the contractual obligation of the debtor in cases which admit of it, he is entitled either to the resolution of the contract, or to its resiliation in the case of a contract of successive performance. 

However and notwithstanding any stipulation to the contrary, he is not entitled to resolution or resiliation of the contract if the default of the debtor is of minor importance, unless, in the case of an obligation of successive performance, the default occurs repeatedly, but he is then entitled to a proportional reduction of his correlative obligation. 

All the relevant circumstances are taken into consideration in assessing the proportional reduction of the correlative obligation. If the obligation cannot be reduced, the creditor is entitled to damages only.” 

It can also seek the application of a penalty clause provided it does not seek both the penalty and the performance. 

“1622 A penal clause is one by which the parties assess the damages in advance, stipulating that the debtor will suffer a penalty if he fails to perform his obligation. 

A creditor has the right to avail himself of a penal clause instead of enforcing, in cases which admit of it, the specific performance of the obligation; but in no case may he exact both the performance and the penalty, unless the penalty has been stipulated for mere delay in the performance of the obligation.”