Construction Law and Public Tenders
L.A. Hébert ltée c. Ville de Lorraine, 2023 QCCS 1020
The Superior Court ruled on how a clause in the call for tenders specifications requiring an authorization from the Autorité des marchés publics (“AMP”) should be interpreted. In its decision, the Court stated that it cannot consider the wording of the clause alone, however clear it may be. Rather, it must validate its clarity on the basis of the specifications in their entirety and the applicable legal framework.
The Court concluded that the Act respecting contracting by public bodies[1](the “Act”), which sets out the conditions under which AMP authorization is needed, only requires AMP authorization for contracts valued at more than $5 million. In this case, the plaintiff and successful tenderer had submitted tenders below this threshold. In addition, the Act provides that cities must seek permission to require AMP authorization for projects under $5 million, which the City—the defendant in this case—did not do.
In the circumstances, the Court found that the clause, although seemingly clear, was inconsistent with existing laws, and that the City was justified in awarding the contract to the lowest bidder rather than to the plaintiff, despite the fact that the lowest bidder did not hold an authorization from the AMP.
This decision is a good example of how having in-depth knowledge of the applicable legal framework is the key to identifying and exercising rights judiciously.
Class Actions
Hazan c. Micron Technology Inc., 2023 QCCA 132
In this case, the Court of Appeal reiterated that, at the stage of applying for authorization to institute a class action, “some evidence” may, in certain circumstances, be required to satisfy the “arguable case” criteria set out in article 575 para. 2 of the Code of Civil Procedure (“CCP”), even if the allegations are assumed to be true. This decision is therefore consistent with the principles established in Infineon[2].
Requiring “some evidence” at the authorization stage does not amount to a trial on the merits. Rather, it is part of the filtering mechanism that application judges are required to apply.
It should be noted that a little later in 2023, the Court of Appeal handed down another ruling [3] on the subject, in which it stated, without expressly dismissing the decision in Hazan, that [TRANSLATION] “should the facts alleged be sufficiently clear, precise and specific, the plaintiff will not be required to provide ‘some evidence’ in support of its allegations”. It will be interesting to see how case law develops in the wake of these two seemingly divergent rulings.
Hébert c. 149667 Canada inc. (Centre Hi-Fi), 2023 QCCS 1679
In this case, the defendants argued, as a preliminary exception, that the application for authorization was inadmissible and unfounded on the following three grounds:
- The plaintiff’s action is time-barred;
- A Superior Court judgment has the authority of res judicata, given that in 2016, the Superior Court rendered a judgment dismissing a class action against the same defendants, which, as in this case, was based on the application of section 256 of the Consumer Protection Act. However, that decision was based solely on procedural grounds; it did not address the merits of the dispute nor the legal syllogism of the action; and
- The action is abusive, as it seeks to reopen a debate that has already been settled.
The Court concluded that the case should proceed to the authorization stage, except as concerned the defendant, The Brick, whose application for dismissal was allowed. The Court considered that a class action cannot be dismissed on the grounds that a single class member’s claim is time-barred, when the majority of the other class members’ individual claims are not. Moreover, a judgment dismissing an application for authorization on procedural grounds, without ruling on the merits of such application, does not have the authority of res judicata with respect to a second application, except as concerns the procedural issue that has already been ruled on.
Professional Secrecy
Commission scolaire de la Jonquière c. Intact Compagnie d'assurances, 2023 QCCA 124
This case is an example of the potential conflicts that can arise from liability insurance policies where an insurer’s duty to defend clashes with its duty to indemnify.
The Court reiterated the importance of keeping the two “heads”—the one responsible for defending insureds and the one responsible for indemnifying them—separate, in order to give full effect to the insurance contract and avoid the risk of conflicts of interest.
Information, such as professional fee accounts, legal opinions and correspondence, communicated to the “head” responsible for defending insureds is protected by professional secrecy and must not be communicated to the “head” responsible for indemnifying insureds, unless such professional secrecy has been expressly waived.
Charland c. Théaudière, 2023 QCCS 225
In this case, the defendants wished to know the identity of the person who would be paying the plaintiff’s legal fees.
However, the Court found that the lawyers’ accounts for fees—including the gross amount of fees—were prima facie subject to professional secrecy and were therefore presumed to be privileged. This principle also extended to the identity of the person paying the fees.
This presumption could be rebutted in two ways:
- By showing that the information sought would not reveal anything with respect to services rendered, or advice or opinions given, and as such there was no reasonable possibility that the disclosure of the accounts for fees would reveal, directly or indirectly, confidential solicitor-client communications to an informed observer;
- If it could be demonstrated that this information was not related to the merits of the case and that its disclosure would not cause the client any harm.
In its analysis of the first argument, the Court considered that, where an action is pending, it is far more likely that an informed observer will be able to discern confidential information—particularly concerning the opposing party’s litigation strategy—from the mere amount of the fees invoiced.
With regard to the second argument, any attempt to mount a defence based on information sought in the account for fees would be considered to be related to the merits of the case and potentially harmful for the client.
That being so, the presumption that the plaintiff’s accounts for fees were protected by professional secrecy was not ruled out in this case.
Arbitration or Expert Eetermination Clause?
Cayer c. 9372-2858 Québec inc., 2023 QCCS 3294
In this case, the Court had to determine whether the clause to contest the closing financial statements contained in a share purchase and sale agreement qualified as an arbitration clause within the meaning of article 2638 of the Civil Code of Québec (“CCQ”), or whether it was simply an expert determination clause. The distinction is important because if an agreement does contain an expert determination mechanism or clause, then article 622 of the CCP does not apply and the declinatory exception must be dismissed, as the Superior Court retains jurisdiction.
The Court reiterated the five (non-exhaustive) criteria that the Supreme Court set out in Sport Maska [4] to determine the role that the parties intended to give to third parties tasked with settling their dispute: (1) the language used by the parties; (2) the degree of similarity between the selected process and the judicial process; (3) that the third party’s decision is final and binding; (4) whether the third party must decide between opposing arguments or instead rely on personal knowledge or experience; and (5) whether the agreement complies with the mandatory provisions of the laws governing arbitration.
In this case, the declinatory exception was rejected in view of the fact that the clause stated that the expert’s decision will be final and without appeal, [TRANSLATION] “except where there is gross error or gross fault”, suggesting that the parties did not intend to exclude the courts altogether.
The wording of the clause and the role that the parties intended to give to such third parties are crucial elements. Where parties agree to a dispute resolution process that is not final, the court cannot decline jurisdiction.
Contract Interpretation
9208-1124 Québec inc. c. Dubé, 2023 QCCA 1040
The Court of Appeal reiterated the standard of review that applies where an appeal concerns the interpretation of a contract, referring to the rules of contract interpretation and the scope of article 1432 of the CCQ.
Relying on the decision of the Supreme Court of Canada in Ledcor Construction Ltd., [5] the Court stated that, except in cases where the courts are called upon to review a standard form contract, the interpretation of which has precedential value, and where there is no significant factual matrix that is specific to the particular parties, the interpretation of a contract remains a question of mixed fact and law, subject to a standard of review that is of palpable and overriding error.
Despite the absence of a palpable and overriding error, the Court addressed the appellant’s second ground of appeal, in which the appelant argued that, under article 1432 of the CCQ, a contract must be interpreted in favour of the person who contracted the obligation and against the person who stipulated it.
However, the Court pointed out that this rule is an interpretive mechanism of last resort, to be applied only after all other rules of interpretation have been analyzed, and only when an “irreducible doubt” remains in the judge’s mind as to the parties’ common intention.
Conclusion
In addition to being recognized as a continuing professional development activity by the Barreau du Québec, this Fasken Institute presentation was a great opportunity to brush up on existing knowledge of the state of law in any of the areas presented above. If you are interested in watching or reviewing this Fasken Institute Review of Important Decisions in 2023, please complete the following form: I would like to receive the recording of the Fasken Institute (available in French only).
Fasken’s Litigation and Dispute Resolution group remains available to answer any questions you may have regarding the decisions that were presented.
[3] Homsy c. Google, 2023 QCCA 1220.
[4] Sport Maska Inc. v. Zittrer, [1988] 1 SCR 564.
[5] Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37.
