Québec – request for conciliation under statutory dispute resolution process qualifies as demand for arbitration – #507

In Therrien Couture Joli-Coeur v. Chouinard, 2021 QCCQ 4944, Mr. Justice Enrico Forlini dismissed Client’s challenges against homologation of an award which issued in favour of the Law Firm, determining that Client’s request for conciliation had initiated arbitration of Law Firm’s accounts.  Though Client and Law Firm had no written agreement to arbitrate, the dispute resolution process set out in the Regulation respecting the conciliation and arbitration procedure for the accounts of advocates, CQLR c B-1, r 17 qualified as a consensual process and Client’s conciliation request effectively initiated the arbitration.  In regard to the alleged breach of natural justice by Law Firm’s delivery of documents the day of the hearing, Forlini J. held that Client could not object to a procedure which had been determined by the Council well in advance of the hearing and in regard to which Client did not object or request an adjournment of the hearing.

Plaintiff law firm (“Law Firm”) applied under article 646 of the Code of Civil Procedure, CQLR c C-25.01 (“C.C.P.”) to homologate a February 19, 2020 award (“Award”) which issued in its favour by a council of arbitration (“Council”).  That Council had been constituted by the process set out in the Regulation respecting the conciliation and arbitration procedure for the accounts of advocates, CQLR c B-1, r 17 (“Regulation”), a regulation which issued under the Act respecting the Barreau du Québec, CQLR c B-1 which, itself, issued pursuant to the Professional Code, CQLR c C-26.

In response to Law Firm’s application to homologate, defendant client (“Client”) applied April 27, 2021 under article 648 C.C.P. to annul the Award.  Client subsequently withdrew that application given that the application for annulment had been filed well beyond the three (3) month period in which to do so.

Conciliation and arbitration – Client requested on March 3, 20187 that the dispute over Law Firm’s invoice proceed to conciliation under the Regulation.  As conciliation failed to resolve the dispute, the parties proceeded to arbitration before a Council which, after hearing the parties, issued its Award.

Consensual nature of statutory arbitration – At para. 43, Forlini J. referred to Conseil d’arbitrage des comptes des avocats du Barreau du Québec v. De Grandpré Chait, 2016 QCCA 363 as source authority for the statement that the client-attorney account arbitration process classifies as a consensual process.

Though not mentioned directly in Forlini J.’s reasons, the leading decision, Conseil d’arbitrage des comptes des avocats du Barreau du Québec v. Marquis, 2011 QCCA 133, is mentioned at para. 13/footnote 3 of Conseil d’arbitrage des comptes des avocats du Barreau du Québec v. De Grandpré Chait, 2016 QCCA 363.  That 2011 Court of Appeal decision held that the dispute resolution process created by statute may still be consensual if it allows a party to renounce to it once the dispute arises. For the client-attorney account arbitration process, the Regulation provides that a client may renounce to the arbitration if it does not apply for arbitration within forty-five (45) days of the account being delivered. 

(For more on Conseil d’arbitrage des comptes des avocats du Barreau du Québec v. Marquis, 2011 QCCA 133 and cases which applied, see the earlier Arbitration Matters note “Québec – arbitration imposed by statute remains consensual if opportunity available to renounce – #204” regarding Boisvert v. Selvaggi, 2019 QCCS 1673 and the urbitral notes below.)

Homologation – Forlini J. reproduced articles 528, 645 and 646 C.C.P. in his reasons at paras 15-18.  While the latter two (2) are often noted, article 528 C.C.P. appears less frequently but merits reproducing here as Forlini J. did introduce his analysis with reference to it.

Article 528 C.C.P. Homologation is approval by a court of a juridical act in the nature of a decision or of an agreement. It gives the homologated act the same force and effect as a judgment of the court.

The homologating court only examines the legality of the act; it cannot rule on its advisability or merits unless a specific provision empowers it to do so”.

(For an earlier Arbitration Matters note distinguishing the court’s jurisdiction with homologation of a transaction under article 2631 of Civil Code of Québec, CQLR c CCQ-1991 (“C.C.Q.”) the and homologation of an award, see “Québec – parties can give court role to examine merits of settlement but not to examine merits of identical consent award – #358” regarding Gestion S. Cantin Inc. v. Emblème Canneberge Inc., 2020 QCCS 2259.)

Client’s grounds to refuse homologation – Forlini J. identified two (2) grounds on which Client resisted homologation: failure to respect procedural fairness and absence of agreement to arbitrate. Forlini J. referred to the interpretation given by Mr. Justice Pierre J. Dalphond, Article 648 Le grand collectif – Code de procédure civile : Commentaires et annotations, Volume 2 (Articles 391 à 836), 5e édition, L. Chamberland (dir.), 2020 2020 EYB2020GCO661.  Forlini J. agreed that a party resisting homologation could invoke the same grounds against homologation as it might have invoked when seeking annulment, despite the lapse of three (3) months.  The difference between the two (2) uses of the same grounds lead to a refusal to homologate in the first and annulment in the second.

Forlini J. held that Client could still contest the homologation of the Award on grounds set out in article 646 C.C.P. even if those grounds, also set out in article 648 C.C.P., ought to have been invoked within three (3) months from the receipt of the Award.  Forlini J. then considered each of Client’s grounds.

(i) failure to respect procedural fairness – Client argued that Law Firm had produced an eight hundred (800) page document set the date of the hearing and that Client did not have ample time to examine it and comment.

Forlini J. dismissed this ground.  He noted that the Council was authorized under article 22 of the Regulation to establish its own procedure and, having done so, had instructed the parties to arrive at the hearing with their documentation.  The parties were instructed to provide four (4) copies the day of the hearing and not to send any materials to the registry prior to the hearing.

Law Firm had advised Client and Council that it would hear no witnesses and have twelve (12) documents and its document set included twelve (12) tabs as advised. Forlini J. listed those documents at para. 33.  Forlini J. observed that, for the most part, Client had knowledge of the documents. Forlini J. added that Client did not object to their filing at the hearing and did not seek an adjournment, noting that Client had not thought to do so as she was not an attorney.  Forlini J. further noted that Client raised the ground only upon receipt of the Award.

Forlini J. concluded that he saw no breach of procedural fairness.   The procedure had been announced and followed and Client had not been prevented from making her case.

[informal translation] ‘A party cannot complain about having been unable to comment on evidence if it had not requested to do so or to had not requested an adjournment to examine the evidence’.

(ii) absence of agreement to arbitrate – Client argued that the parties had not entered into an agreement to arbitrate and therefore article 646 al. 1(5) C.C.P. applied.  That provision stipulated that the court could refuse to homologate an award upon proof that “the award pertains to a dispute not referred to in or covered by the arbitration agreement, or contains a conclusion on matters beyond the scope of the agreement, in which case only the irregular provision is not homologated if it can be dissociated from the rest”.

Forlini J. disagreed.  He noted that the Regulation governed the dispute resolution and that article 7 of the Regulation stipulated that arbitration followed a failed conciliation attempt.  The Award recorded the process initiated by Client’s own request for conciliation on March 13, 2019 and Client did not rebut that evidence before the Council or Forlini J.  Though Client had not requested arbitration, the process initiated lead to it. 

Forlini J. also dismissed Client’s argument that the dispute resolved in the Award did not form part of the process she initiated with her request for conciliation. Referring to Conseil d’arbitrage des comptes des avocats du Barreau du Québec v. De Grandpré Chait, 2016 QCCA 363 paras 18 and 21, Forlini J. reiterated that a Council’s mandate under the Regulation is broad.

Because Client had failed to prove grounds to refuse homologation, Forlini J. held that he had no jurisdiction to call into question whether the Award was appropriate or to review it and Client’s objections did not fall within the terms of article 646 C.C.P.

(iii) provisional execution – Law Firm requested that Forlini J. also order provisional execution of his decision homologating the Award but Forlini J. declined to do so.  He noted that Law Firm had not established that, without such measure, it would be exposed to serious prejudice if it had to wait for the appeal period to expire.

urbitral notes – First, the Court of Appeal in Conseil d’arbitrage des comptes des avocats du Barreau du Québec v. Marquis, 2011 QCCA 133 had considered a pair of awards issued by different Councils constituted for different disputes over attorneys’ accounts.  The unanimous Court of Appeal decision, authored by Mr. Justice Pierre J. Dalphond, distinguished between (i) consensual arbitration subject to annulment proceedings on limited grounds familiar to those practising in international commercial arbitration and (ii) administrative proceedings subject to judicial review. 

In particular, the Court of Appeal distinguished when and whether arbitration created by statute would be consensual or not.   The Court identified two (2) non-court dispute resolution methods available to parties involved in a dispute: the parties’ consensual submission to a third party under article 2638 C.C.Q. and the submission by statute to the exclusive authority of a third party.  The first is private law.  The second is administrative law.  The Court held that access to the courts differed for each. 

The Court held that the dispute resolution process created by statute may still be consensual if it allows a party to renounce to it once the dispute arises.  In the arbitration of attorneys’ accounts, the Regulation provides that the client may renounce to the arbitration if it does not apply for arbitration within forty-five (45) days of the account being delivered.  Clients may wish to do so if they resist having their dispute determined by a Council composed of other attorneys who also charge fees in the same manner as the defendant attorney in the client’s case. The attorney may also apply to the Barreau for authorization to file litigation or, after the expiry of the forty-five (45) day delay, initiate litigation to recover on the account.  The client’s and the attorney’s opportunity to renounce was not identical.  Nonetheless, for the Court, the opportunity to renounce to the arbitration imposed by statute qualified the arbitration as consensual. 

The agreement to arbitrate imposed by statute might appear to be an adhesion contract, defined at article 1379 C.C.Q. as a contract in which the essential stipulations were imposed or drawn up by one of the parties, on its behalf or upon its instructions, and were not negotiable.  Despite being perceived or even qualified as an adhesion contract, the agreement remained consensual due to the opportunity to renounce to it. 

Second, for decisions dealing with the same legislation establishing an arbitration process to resolve disputes over attorneys’ accounts, see the earlier Arbitration Matters notes:

(i) “Québec – arbitration imposed by statute remains consensual if opportunity available to renounce – #204” regarding Boisvert v. Selvaggi, 2019 QCCS 1673. Mr. Justice Kirkland Casgrain dismissed an attempt at judicial review of an award issuing from arbitration imposed by statute.  Relying on the reasoning and result in Conseil d’arbitrage des comptes des avocats du Barreau du Québec v. Marquis, 2011 QCCA 133, Casgrain J. held that such arbitrations remain consensual if the legislation allows opportunity to renounce to its application.  Being consensual, such arbitrations were subject not to judicial review but to annulment proceedings based on limited grounds familiar to practitioners practising international commercial arbitration.

(ii) “Québec – lawyer’s action dismissed as premature for pre-empting client’s right to opt for conciliation and arbitration – #433” regarding Landry v. Gagné, 2021 QCCA 128. Québec’s Court of Appeal upheld the dismissal of a lawyer’s action which pre-empted the client’s right to require conciliation and, if need be, arbitration of a dispute over an account by way of process set out by Regulation respecting the conciliation and arbitration procedure for the accounts of advocates, CQLR c B-1, r 17.  While the process is asymmetrical in that only the client can opt not to engage in it, the Québec Court of Appeal in Conseil d’arbitrage des comptes des avocats du Barreau du Québec v. Marquis, 2011 QCCA 133 determined that the process qualified as a consensual arbitration and not a statutory and therefore exempt from judicial review.

(iii) Québec – court upholds tribunal’s dismissal of jurisdictional challenge based on alleged settlement – #033” regarding  Demers v. Conseil d’arbitrage des comptes d’avocats du Barreau du Québec, 2017 QCCS 1084. Madam Justice Lucie Fournier held that a consensual arbitration tribunal had the jurisdiction to consider the existence and effect, if any, of any alleged settlement in deciding its own jurisdiction.  Fournier J. also held that a non-party to a settlement could not rely on the terms of the settlement to resist arbitration of a dispute involving her.

Third, on a related note to the right given to only a client to opt out of the arbitration of accounts, see the earlier Arbitration Matters note “B.C. – arbitration remains mandatory despite option given to only one party to waive arbitration – #503” regarding Malcolm Drilling Company Inc. v. The Graham-Aecon Joint Venture, 2021 BCSC 1136. Madam Justice Shelley C. Fitzpatrick issued a stay of proceedings despite plaintiff’s objection that only defendant had a peremptory right to refuse arbitration in response to plaintiff’s request to arbitrate. Fitzpatrick J. held that arbitration was mandatory if (i) either party requested it and (ii) arbitration was requested by plaintiff and defendant did not exercise its peremptory right to “waive” arbitration. Fitzpatrick J. also cautioned against an uncritical application of the “dated” approach to jurisdictional issues taken by decisions released prior to Seidel v. TELUS Communications Inc., 2011 SCC 15 (CanLII), [2011] 1 SCR 531, noting that “the persuasiveness of those decisions must be viewed with some skepticism given the more modern approach to arbitration”.

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