Québec – precedents on attornment re-read in light of newer rules requiring compliance to judicial contract – #434

In Bergeron v. 2528-1023 Québec inc., 2021 QCCS 539, Mr. Justice Babak Barin underlined (i) the importance of alternative dispute resolution and (ii) the principles applicable to submission/attornment to the court’s jurisdiction.  Barin J. first drew attention to the primacy given by Code of Civil Procedure, CQLR c C-25.01 to alternative dispute resolution and then commented on the general principles and particular factual elements related to parties attorning to a court’s jurisdiction. Barin J. reconsidered earlier case law which issued before recent court rules updates which now oblige litigants, at the onset of the litigation, to identify their intention to raise declinatory exceptions. His comments suggest that earlier case law must be re-read in light of newer rules requiring parties to commit earlier and clearly to their procedural decisions and to abide by their “judicial contract”. Barin J.’s comments on attornment may assist litigants to determine whether a party has or has not waived the benefit of their agreement to arbitrate. 

On October 8, 2016, Plaintiffs ordered a 2017 Thor Compass 23TB recreational vehicle (“RV”) from 2528-1023 Québec Inc. (“2528 Inc.”) whose business involved the sale of recreational vehicles.  Ford of Canada Inc. (“Ford”) manufactured the RV in Ontario and Thor Industries Inc. (“Thor”), based in Delaware, U.S., retrofitted it.

During the January 11, 2017 delivery drive from Ontario to Québec, a warning light for the RV’s pollution reduction system went off and 2528 Inc.’s driver brought the RV in for a diagnosis at Fraser Ford Sales Coburg Inc. (“Fraser”).  Following a brief verification, reset intervention and road test, Fraser returned the RV to 2528 Inc.’s driver who continued on to Québec.  Fraser sent its $99.60 bill to Ford because the new RV was still under warranty.

Plaintiffs purchased the RV on February 9, 2017, took possession April 21, 2017 and, after some equipment additions, used the RV on May 12, 2017 on its maiden voyage into the U.S.  After only 400 kms, the same warning light triggered, ending the trip with a pollution reduction system failure which Barin J. noted “lead to an odyssey of subsequent problems”.  In regard to the latter problems, Barin J. omitted further detail, observing that there was “no need to give a detailed account of these problems at this point, as they are not relevant to the case before me”.

Fraser raised a declinatory exception based on articles 41, 167, 190 and 491 of Code of Civil Procedure, CQLR c C-25.01 (“C.C.P.”) as well as an alternative conclusion seeking to separate the warranty action from the principal action.  In regard to the declinatory exception, Barin J. summarized Fraser’s grounds as follows:

[15] In an application dated 7 October 2019 brought before me pursuant to articles 41, 167, 190 and 491 C.C.P. more than a year later, Fraser raises the absence of the territorial competence of the Quebec courts, urging the superior court to decline international jurisdiction because Fraser is not domiciled in Quebec, does not have a place of business or carry on business in this province, and finally, because all of the relevant facts took place in Ontario. Fraser argues in addition that it has not in any way accepted or acquiesced to the competence of the Quebec courts”.

In his reasons, Barin J. provided meaningful comments relevant to parties engaged in both litigation and arbitration regarding the importance of alternative dispute resolution general principle and particular factual elements related to attorning to a court’s jurisdiction. 

(i) Alternative dispute resolution – As introduction to his reasons, Barin J. offered the following observations.

[1] Beyond all else, this case calls for resolution pursuant to the first article of the [Code of Civil Procedure, CQLR c C-25.01] (C.C.P. or Code). The principle of the autonomy of the parties highlighted and encouraged in the C.C.P. transcends all boundaries. “To prevent a potential dispute or resolve an existing one, the parties concerned, by mutual agreement, may opt for a private dispute prevention and resolution process.” Parties certainly can undertake to amicably resolve their disputes or put an end to their differences by, for example, mediation, regardless of the law applicable to their relationship and irrespective of the jurisdiction in which they find themselves.

[2] In addition to being luculent, the language of the third paragraph of article 1 of the Code is mandatory. Parties must consider private prevention and resolution processes before referring their disputes to the courts. This dispute prevention and resolution philosophy is consistently and persistently repeated in key provisions of the Code, such as in article 19 addressing proportionality and in article 148 dealing with case protocols.

[3] The Code is designed to provide, in the public interest, means to prevent and resolve disputes and avoid litigation through appropriate, efficient and fair-minded processes that encourage the persons involved – clients and their lawyers for example or self-represented individuals – to play an active role.

[4] Despite the clear favoritism, or bias one may say, of the Code for amicable case resolution and simple, prompt, proportionate and economical access to justice, the legal representatives of 6 parties (two plaintiffs, three defendants and another entity called in warranty) in this case are before me arguing private international law rules and exceptions relating to an RV, a recreational vehicle. There is no doubt that the competence of the Quebec Superior Court-question they are raising is an important and interesting one. That is not the issue and certainly not the purpose of the comments I have made above”.

(ii) Submitting to jurisdiction – At paras 31-71, Barin J. addressed the application of article 3148 para. 1(5) of the Civil Code of Québec, CQLR c CCQ-1991 (“C.C.Q.”) which speaks to those situations in which, for actions of a patrimonial nature, a Defendant has “submitted to” the jurisdiction of the courts of Québec.

Barin J. referred to Barer v. Knight Brothers LLC, 2019 SCC 13 (CanLII), [2019] 1 SCR 573 as a source which “the majority identifies examples of acts and procedural steps that have been considered by case law as amounting to submission” at para. 60.

[60] Some acts are consistently viewed as amounting to submission. Explicitly recognizing that the foreign tribunal had jurisdiction, in a transaction for example (LVH Corporation (Las Vegas Hilton) v. Lalonde, 2003 CanLII 27646 (Que. Sup. Ct.), at paras. 24-25), is one such act. Defending the action on its merits without contesting the court’s jurisdiction also constitutes submission (Kadar v. Reichman (Succession), 2014 QCCA 1180, 1 E.T.R. (4th) 9, at paras. 40-42; Lagassé v. McElligott, 1992 CanLII 3580 (QC CA), [1993] R.D.J. 323 (C.A.), at paras. 14-15; Mutual Trust, at p. 348; D’Alessandro v. Mastrocola, 2007 QCCS 4164, at para. 8 (CanLII); Canadian Logistics Systems Limited v. 129726 Canada inc., 1997 CanLII 6840 (C.Q.), at para. 3). In such cases, the defendant’s conduct unequivocally signals to the court and the plaintiff that there is acceptance of the forum’s jurisdiction. Conversely, it is also uncontentious that some courses of action are sufficient to indicate that a defendant has not submitted to the plaintiff’s choice of forum. Simply refraining from appearing before the court in question is one (Zimmermann inc. v. Barer, 2014 QCCS 3404, at para. 71 (CanLII); Labs of Virginia Inc. v. Clintrials Bioresearch Ltd., 2003 CanLII 33227 (QC CS), [2003] R.J.Q. 1876 (Sup. Ct.), at para. 39). Appearing merely to contest jurisdiction in a timely manner is another (Goldstein (2012), at para. 3148 580; Talpis, at p. 113)”.

Barin J. summarizes additional distinctions made by the Supreme Court in Barer v. Knight Brothers LLC which can apply by analogy to parties disputing waiver of the benefit of an agreement to arbitrate.

[36] Similarly, the Court indicates that certain procedural steps such as filing a counter or crossclaim, applying to court to have an action transferred from one judicial district to another, implicating a third party to take up a defendant’s defence, participating to a significant extent in the proceedings without contesting the authority’s jurisdiction or presenting “substantive arguments that could, if accepted, definitively resolve the matter on its merits”[15] would amount to submitting to jurisdiction”.

Barin J.’s further observations suggest that perhaps that the case law developed to date might need to read in light of “the current applicable procedural regime where the parties are expected to deliver early on in their case protocols broad and rather skeleton summaries of the defences they envisage raising later in the proceedings”.  Barin J.’s reasons refer to procedural requirements which require defendants to comply with strict deadlines to agree on the case protocols set out in articles 148 and 151 C.C.P.  See the urbitral notes below for the full text of both articles.

See para. 41 for example in which he signals that earlier cases reflecting a lenient approach to steps taken by defendants, such as Shamji v. Tajdin, 2006 QCCA 314, were decided before new procedural requirements were contemplated.

Barin J. noted that parties now are well-versed with the ‘new’ approaches.  Parties which complete what appear to be simple forms for use at the court, ought to know that saying ‘no’ to declinatory exceptions means waiving certain procedural objections.

[44] Put differently, unlike in Shamji, by crossing the “NON” box with respect to the possibility of filing future preliminary exceptions, Fraser renounced to such filing going forward. That renunciation was not only explicit but also a well-informed one as it was given by Fraser’s legal advisors”.

Barin J. underlined the key role a case protocol has in civil litigation and parties wishing to assert or preserve access to their agreement to arbitrate should pay attention.

[47] Article 148 C.C.P., therefore, cannot be clearer. The parties are required to cooperate to as a first step to either resolve their differences amicably or agree and be bound by a case protocol that will take them forward until the hearing of the merits of the proceedings.

[48] The case protocol represents the meeting of the minds between the parties to follow a road map leading to the resolution of their disputes. It also demonstrates, as required by the Code, that in doing so they are observing the principle of proportionality.

[49] That principle requires, among other things, that their pleadings, including their choice of an oral or a written defence, and the means of proof that they intend to use are proportionate, in terms of costs and time involved, to the nature and complexity of the matter and purpose of their proceedings.

[50] One, if not the most important, feature of the case protocol since 2016 is to ensure predictability and fair treatment of the parties. A defendant needs to know principally why and what case is being brought against it, and the plaintiff in turn needs to know, among other things, when and how its case will be adjudicated”.

At para. 53, Barin J. noted the primacy given in the case protocol to declinatory exceptions.  While his comments addressed the role of such exceptions in matters involving international and extra-provincial matters, they still have application for waiver of an agreement to arbitrate.

[53] It is consequently not fortuitous that the first item to be addressed by the parties in article 148 C.C.P. is the identification of any preliminary exceptions, such as the possibility of filing of a challenge against the competence of the Quebec courts, for example, pursuant to article 3148 C.C.Q.

Barin J. stressed that a case protocol is “a judicial contract” which binds the parties, absent public order rules.

[57] In my respectful view, the most appropriate moment to raise an objection with respect to the competence of the Quebec courts is either before or at the time of negotiating and concluding the case protocol.

[58] The case protocol explicitly covers preliminary exceptions, and it is, when accepted by or established in conjunction with the court, absent exceptional circumstances, binding on the parties, who are each required, and not just expected, to comply with it. In my view, the case protocol is the linchpin of an efficient, proportional, predictable and fair administration of justice. Considering it under any other loop risks trivializing the spirit and philosophy of the Code and subverting its directions”.

In the balance of his reasons, Barin J. identifies key procedural steps and opportunities which Fraser ought to have raised the jurisdictional issue or, by taking other steps, appeared to ignore the opportunity to do so.

The result of the declinatory application before Barin J. rested on the particular facts and procedural history of the file but Barin J.’s comments will apply to disputes involving applications to stay proceedings in favour of arbitration and to arguments involving the applicant’s waiver of the benefit of an agreement to arbitrate.

urbitral notes – First, articles 148 and 150 C.C.P. read as follows.

Article 148 C.C.P. The parties are required to co-operate to either arrive at a settlement or establish a case protocol. In the case protocol, the parties set out their agreements and undertakings and the issues in dispute, indicate the consideration given to private dispute prevention and resolution processes, describe the steps to be taken to ensure the orderly conduct of the proceeding, assess the time completing these steps could require and the foreseeable legal costs, and set the deadlines to be met within the strict time limit for trial readiness.

The case protocol covers such aspects as

(1)   preliminary exceptions and safeguard measures;

(2)   the advisability of holding a settlement conference;

(3)   pre-trial written or oral examinations, their necessity and, if any are to be conducted, their anticipated number and length;

(4)   the advisability of seeking one or more expert opinions, the nature of the opinion or opinions to be sought and the reasons why the parties do not intend to jointly seek expert opinion, if that is the case;

(5)   the defence, whether it will be oral or written and, if written, the time limit for filing it;

(6)   the procedure and time limit for pre-trial discovery and disclosure;

(7)   foreseeable incidental applications;

(8)   the extension of the time limit for trial readiness, if an extension proves necessary; and

(9)   the methods of notification the parties intend to use.

If warranted by the complexity of the case or by special circumstances, the parties may agree on a complementary protocol to provide for points that cannot be determined at the case protocol stage or identify certain points on which they were unable to reach an agreement”.

Article 150 C.C.P. Within 20 days after the case protocol is filed, the court examines it in light of the directives given by the chief justice or chief judge to ensure that the guiding principles of procedure are observed. The case protocol is presumed to be accepted unless the parties are called, within that same 20-day period, to a case management conference, which must be held within 30 days after the notice calling the conference.

The case protocol accepted by or established in conjunction with the court is binding on the parties, who are each required to comply with it under pain, among other sanctions, of paying the legal costs incurred by any of the parties or by third persons as a result of their failure to comply. The parties cannot amend the case protocol without the approval of the court unless the amendment pertains to the agreed time limits or facilitates the conduct of the proceeding, and is not inconsistent with specific decisions of the court; the parties are required to file all amendments to the case protocol with the court office”.

Second, regarding Barin J.’s review of the role of an action in warranty, see GreCon Dimter inc. v. J. R. Normand inc., 2005 SCC 46 (CanLII), [2005] 2 SCR 401.

Étiquettes