In the decision in 9058-4004 Québec inc. c. 9337-9907 Québec inc.1 rendered on October 21, 2022, the court granted compensation to a subcontractor for its extrajudicial fees further to a general contractor’s unfounded contestation of its claim as part of a hypothecary action. The facts In May 2019, Portes de garage Citadelle Ltée (“Citadelle”) and general contractor 9337-9907 Québec inc. (“AllConstructions”) concluded a contract for the provision of services and materials needed to install unloading docks in a building under construction. On May 16, 2019, notice of the contract was given to the building owner, 9058-4004 Québec inc. (“Transport Pouliot”). The first two phases of Citadelle’s work were completed between June and August 2019. In late September 2019, AllConstructions allegedly vacated the worksite after a dispute with Transport Pouliot. The third phase of Citadelle’s work was completed in October 2019. On November 25, 2019, Citadelle sent a statement of account to AllConstructions and registered a legal hypothec on the building two days later. On December 23, 2019, after registering a prior notice of the exercise of a hypothecary right, AllConstructions brought a hypothecary action against Transport Pouliot in the Superior Court, claiming the sums it was owed. For its part, Citadelle brought a hypothecary action against the owner, Transport Pouliot, and instituted legal proceedings against AllConstructions in April 2020. It is important to note that during the proceedings, AllConstructions admitted that it had received payment from Transport Pouliot for the sums invoiced by Citadelle. To justify its refusal to pay its subcontractor Citadelle, AllConstructions argued summarily that the services and materials provided were inadequate and did not meet standards. Despite its weak position and the lack of compelling evidence, AllConstructions maintained its argument. Citadelle had no choice but to pursue its legal proceedings and apply to have AllConstructions’ action declared abusive in order to recover its extrajudicial fees. AllConstructions’ abuse of procedure Citadelle claimed that AllConstructions’ defence was unfounded, frivolous and intended to delay. AllConstructions only had testimonial evidence to support its allegations, and it failed to file any expert opinions or exhibits. The contract did not contain a “pay when paid” clause, and AllConstructions admitted in the proceedings that it had received payment from Transport Pouliot for the sums invoiced by Citadelle. AllConstructions claimed that it had serious arguments to make in response to the application to have its action declared abusive. It stated that the work performed by Citadelle was inadequate and that the materials and services provided were not up to standards. It maintained its position, despite the fact that it had vacated the worksite a month before Citadelle’s work was completed and, therefore, could not have verified the actual quality of the work performed. In March 2022, AllConstructions ultimately abandoned its contestation of Citadelle’s claim a few days before the trial and nearly a year and a half after the proceedings began. The judge allowed Citadelle’s application to have AllConstructions’ action declared abusive. AllConstructions’ defence was unfounded, frivolous and intended to delay. It had no solid factual or legal basis. The allegation that Citadelle failed to comply with standards in the performance of its contract is mere speculation, as AllConstructions left the worksite in September 2019. Citadelle incurred unnecessary extrajudicial fees as a result of AllConstructions’ unfounded contestation of its claim. The judge awarded Citadelle a sum of $9,000.00 as compensation for the legal fees that it had paid. What it means A general contractor that cannot justify a deduction from its subcontractor’s claims after the work is completed but does so anyway risks having its contestation declared abusive. Jurisprudence has established that abuse of procedure may consist of légèreté blâmable [blameworthy conduct]2 or témérité [recklessness] resulting from allegations that do not stand up to careful analysis or are exaggerated beyond the scope of the dispute between the parties.3 A manifestly unfounded action is a civil fault that may be subject to legal proceedings and sanctions in accordance with article 51 of the Code of Civil Procedure.4 A party that considers itself the victim of abusive proceedings may, in addition to applying to have the proceedings declared abusive, claim the reimbursement of reasonable legal fees it has paid.5 This is precisely what Citadelle did and what it obtained. AllConstructions irresponsibly managed its dispute with its subcontractor. It made arguments based only on unverified assumptions, even though the evidence set out in the application was relatively solid and complete. As a victim of abuse of procedure, Citadelle was granted a reimbursement of its legal fees in addition to the sums that it was owed by AllConstructions. Court file No. 760-22-011912-204 Royal Lepage commercial inc. c. 109650 Canada ltd., 2007 QCCA 915 El-Hachem c. Décary, 2012 QCCA 2071 2741-8854 Québec inc. c. Restaurant King Ouest, 2018 QCCA 1807 (CanLII) Only extrajudicial fees deemed reasonable are reimbursed in full. The factors considered in establishing a total reasonable amount are summarized in paragraph 32 of the case at hand and are cited from Groupe Van Houtte inc. c. Développements industriels et commerciaux de Montréal inc., 2010 QCCA 1970, and Iris Le Groupe visuel (1990) inc. c. 9105-1862 Québec inc., 2021 QCCA 1208
Marc-André Bouchard Lawyer
- Québec, 2018
Marc-André Bouchard is a member of the Litigation group. He regularly represents professionals, contractors, project owners and insurers in the construction and infrastructure sector in litigation and dispute resolution matters. He also acts for insurance companies and businesses in commercial, contractual and professional liability matters.
As a litigator, he represents his clients before the Quebec courts in civil and commercial litigation, and as such, has had the opportunity to collaborate in cases involving large-scale trials that required complex evidence management with a large quantity of documents.
Mr. Bouchard has developed unparalleled expertise in the analysis of blueprints and specifications and has a solid understanding of the environment surrounding this industry. He is regularly asked to collaborate on complex issues involving numerous technical details and a range of challenges. As part of his practice, Mr. Bouchard is called upon to give legal opinions on various issues and to guide and represent clients throughout negotiations.
He distinguishes himself by his ability to make technical terms accessible and always ensures that his legal advice takes financial factors and other risks that may affect the mandates entrusted to him into consideration. In the context of disputes between several parties, Mr. Bouchard always analyzes alternative dispute resolution methods in a manner that benefits the represented client.
A skilled negotiator, Mr. Bouchard also provides commercial claim recovery services to businesses in all sectors. In addition to offering an efficient turnkey service, he is able to plead when necessary.
Mr. Bouchard joined the Lavery team as a student in May 2016, after which he completed his articling with the firm.
- LL.B., Université Laval, 2016
That is what material suppliers want to know when general contractors with which they have contracted default on payment, particularly in bankruptcy cases. It is common practice for clients to require that the general contractor provide a surety bond to cover a significant breach of this nature. Generally speaking, the purpose of a surety bond contract to cover payment for labour and materials is to guarantee that the workers, suppliers and subcontractors used by the general contractor are paid.1 In order to benefit from the protection provided by the surety bond, a claimant must disclose its contract to the surety, usually within 60 days from the date on which the claimant commences work or on which the materials are delivered. When a claimant has not been paid or anticipates not being paid, it must send the surety a notice of claim within the time specified in the contract, which is generally 120 days from the date on which the services were completed or the materials were delivered. THE DECISION IN PANFAB On June 26, 2018, the Court of Appeal again examined the principle that requires disclosure to the surety in order to obtain payment for labour and materials, in Industries Panfab inc. v. Axa Assurances inc., 2018 QCCA 1066. In 2010, the Local Housing Bureau (the “Bureau”) retained Groupe Geyser inc. (“Geyser”) to construct three buildings in Longueuil with a total of 180 units. As stipulated in the construction contract, Geyser obtained a surety bond from Axa Insurance (“Axa”) to guarantee payment for labour and materials. Geyser subcontracted with Les Revêtements RMDL (“RMDL”) for the exterior cladding of the three buildings it was constructing. RMDL then signed a $330,000 contract with Industries Panfab inc. (“Panfab”) for it to supply metal sheathing boards. A few days before making its first delivery, Panfab informed Geyser, Axa and the Bureau of its contract to supply RMDL. A few months after the first delivery, RMDL ordered additional sheathing boards that were not part of RMDL’s initial order from Panfab. Panfab made an additional disclosure to the surety and upped the total cost of its contract. Panfab made two additional disclosures, in each of which it stated the new, higher total cost of its contract. Panfab’s total invoice for all of the materials came to $446,328.24, but it received only $321,121.84. Its claim was therefore for $125,206.40. RMDL declared bankruptcy in 2012 and, given the situation, Panfab sought to claim under the surety bond for payment for its materials. Decision at trial At trial, the Court found that Axa’s surety bond contract contained a stipulation for the benefit of third parties, based on which Panfab could characterize itself as a creditor under the contract and thus benefit from the guarantee provided by the surety bond. However, the Court concluded that there was only one contract between the parties and that the increase in the value of the contract had been disclosed more than 60 days after the first delivery of materials. In fact, it characterized the amount claimed as an overpayment and limited the amount that it ordered Geyser and Axa to pay to $54,830.66, since the effect of a judgment for the overpayment would have been to alter the terms of the surety bond contract and add to the respondents’ contractual obligations.2 Appeal In this specific case, the Court of Appeal found that the obligation of Geyser and Axa to jointly and severally pay the amount claimed for the materials to be used in the construction arose at the point when Panfab characterized itself as a creditor by making its first disclosure. The Court of Appeal held that the surety bond contract did not require that the value of the contract for the supply of materials be disclosed. The mandatory information to be provided was the type of work, the nature of the contract, and the name of the subcontractor. Panfab disclosed its contract with RMDL, the subcontractor, within the 60 days allowed and thus complied with the time requirements. The obligation to pay Panfab arose at that point. Given that the surety bond contract did not require that the value of the contract be stated in the notice of disclosure, the Court was of the opinion that Panfab had demonstrated good faith and transparency in informing Geyser and Axa of the changes to the value of its contract with RMDL, by providing amended notices of disclosure. The claim could therefore not be limited on the ground that Panfab had stated the value of its contract in its notice of disclosure, when there was nothing that required it to do so. The Court of Appeal therefore reiterated the principle that there is only one contract and thus only one notice of disclosure, notwithstanding the fact that Panfab sent the surety amended notices.3 An order for reimbursement for the full amount to be paid does not alter the terms of the surety bond contract. The Court therefore concluded that the trial judge had erred by holding that the amended notices of disclosure sent by Panfab were time-barred and were necessary in order for the total claim to be allowed. The Court of Appeal took the opportunity to reiterate the scope of the duty to inform on the part of a materials supplier or subcontractor. Geyser submitted that Panfab had breached its duty to inform and that its breach was the reason for the shortfall in the amounts withheld for paying all of the subcontractors and suppliers. The Court did not accept that argument; it relied on Banque canadienne nationale v. Soucisse (1981),4 which set out the foundation for a creditor’s duty to inform, and on article 2345 C.C.Q., reiterating that a creditor is required to provide any useful information to the surety at the request of the surety. In this case, Geyser and Axa had never asked Panfab for additional information under that article. To summarize, Panfab clarifies the already settled law regarding notices of disclosure to sureties, as stated in Fireman’s Fund (1989)5 and Tapis Ouellet inc. (1991), in particular: when a contract for the supply of materials is shown to exist between the parties and the materials have been incorporated into a construction project, the subcontractor may claim the amounts owed under the surety bond contract after sending a notice of disclosure that meets the requirements set out in that contract. It must be kept in mind that any surety bond contract may contain specific clauses and that reference must be made to those clauses. That is why the Court in Panfab concluded that the information relating to the value of the contract was not mandatory in the notice to the surety, since, in that case, the surety bond contract did not require that the value of the contract be included in the notice of disclosure. Vigilance is therefore the order of the day when it comes to the terms of surety bond contracts. MONDOUX, Hélène, François BEAUCHAMP, “Les cautionnements de contrats de construction” in Collection de droits 2017-2018, École du Barreau du Québec, vol. 7, Contrats, sûretés, publicité des droits et droit international privé, Cowansville, Éditions Yvon Blais, 2017, p. 59. Industries Panfab inc. v. Axa Assurances inc., 2018 QCCA 1066, para. 14. Ibid. para. 22. National Bank of Canada v. Soucisse,  2 S.C.R. 339. Fireman’s Fund du Canada, cie d’assurances v. Frenette et frères Itée, 1989 CanLII 815 (QC CA).
Tabled on December 1, 2017 by Lise Thériault, the Minister responsible for Consumer Protection and Housing, the main purpose of Bill 162 is to give effect to certain recommendations contained in the final report of the Commission of inquiry on the awarding and management of public contracts in the construction industry. Amendments to the Building Act Firstly, the Bill amends the definition of "officer" contained in the Building Act so as to include any shareholder of a partnership or corporation holding 10% or more of the voting rights attached to its shares, particularly for purposes of the assessment by the Régie du bâtiment du Québec (the "Board") of an undertaking’s integrity. The notion of "guarantor" is added to the Building Act to describe a natural person who, by applying for a licence on behalf of a partnership or legal person, or by holding such a licence himself or herself, becomes responsible for managing the activities for which the licence is being issued. In addition, the Board's powers of inquiry, verification and inspection are expanded. Finally, the Act provides for immunity from civil proceedings and protection from reprisals for any person who communicates information in good faith to the Board regarding any act or omission which he or she believes constitutes a violation or offence under the Building Act. Certain penal provisions have also been added for the purpose of sanctioning any person who takes reprisals in response to the disclosure of such information, or who submits false or misleading information to the Board. Additions to the Building Act Secondly, a conviction for certain offences, which already previously warranted restricted access to public contracts, will now lead to a refusal by the Board to issue a licence, and may result in the cancellation or suspension of an existing licence. Furthermore, where such a conviction leads to a person's imprisonment pursuant to a sentence, a licence can only be issued to the person once five years have passed following the end of the said term of imprisonment. The Board will be required to cancel a licence where the licence holder, or any officer of an undertaking holding a licence, is convicted of an offence or any indictable offence referred to in the Building Act, where the said person was already convicted of such an offence or indictable offence within the five preceding years. The Board is given new grounds pertaining to the integrity of undertakings to refuse to issue, suspend or cancel a licence, particularly where the corporate structure of the entity enables it to evade the application of the Building Act. In this regard, the Board is obliged, by regulation, to require any contractor to provide either a performance bond or security for wages, materials and services for the purpose of ensuring construction work continues, or the payment of creditors, in the event of the cancellation or suspension (in certain cases) of a licence. Lastly, a new penal offence for the use of "prête-noms" (nominees) is being added, and the prescription period in penal matters is being extended from one year to three years from the date on which the prosecutor had knowledge of the offence, without however exceeding seven years from the date of commission of the offence. Conclusion This Bill, which notably implements four recommendations of the Charbonneau Commission, will be worth watching when parliamentary proceedings resume in the National Assembly on February 6, 2018.
In our newsletter No. 8, we discussed advance medical directives, which are restricted to three specific clinical situations and allow a person to consent to or refuse in advance five specific types of care in the event that the person in question becomes incapable of consenting to them. In addition to advance medical directives, the Act respecting end-of-life care provides a framework for two other types of end-of-life care, that is: medical aid in dying and continuous palliative sedation. However, advance medical directives do not allow one to consent in advance to the administration of medical aid in dying or to continuous palliative sedation. These types of end-of-life care are provided in a very precise context, which is the subject of this newsletter. What is medical aid in dying ? The law defines medical aid in dying as “care consisting in the administration by a physician of medications or substances to an endof- life patient, at the patient’s request, in order to relieve their suffering by hastening death.”1 Not everyone is allowed to request medical aid in dying. Such a request is dealt with according a stringent process. Who may request medical aid in dying? Only a person who meets all the following conditions may obtain medical aid in dying in Québec: being an insured person within the meaning of the Health Insurance Act (chapter A-29); being of full age and capable of giving consent to care; being at the end of life; suffering from a serious and incurable illness; being in an advanced state of irreversible decline in capability; and experiencing constant and unbearable physical or psychological suffering which cannot be relieved in a manner the patient deems tolerable.2 How to request medical aid in dying? The request for medical aid in dying is made by filling out a form prescribed by the Minister. Patients must request medical aid in dying themselves. The form must be signed and dated by the patient in the presence of and countersigned by a health or social services professional. In addition, two independent witnesses of full age must be present at the signature and countersign the form (i.e. a potential heir may not be considered as being independent). The form must then be given to the patient’s attending physician. If the patient cannot date and sign the form because he3 does not know how to write or is physically incapable of doing so, an authorized third person who is not a member of the team responsible for caring for the patient may do so in the patient’s presence. The authorized third party must not have a potential interest in the estate of the patient. Persons who request medical aid in dying may withdraw their request at any time and by any means. What are the prior requirements for a physician before administering medical aid in dying? Ten full days (excluding the day on which the request was made) must elapse between the request for medical aid in dying and it being administered, unless the life condition requires otherwise. Before administering medical aid in dying, the physician must make sure that the patient consents. He must also: make sure that the patient satisfies all the conditions to be eligible for medical aid in dying (see the “Who may request medical aid in dying?” section) ascertain with the patient that the request is made in a free and informed manner ascertain that the request is not made as a result of external pressure ascertain that the patient is informed of the prognosis for the illness, as well as other therapeutic possibilities and their consequences verify the persistence of suffering and that the patient’s wish to obtain medical aid in dying remains unchanged verify with the care team members who have regular contact with the patient that he consents to receive medical aid in dying make sure that the patient has had the opportunity to discuss the request with the persons he wished to contact make sure that the request has been made using the prescribed form, which has been signed and dated by the person making the request or the authorized third party before two independent witnesses who have also signed and dated make sure that the patient has been advised that he could at any time and by any mean withdraw his request for medical aid in dying In addition to making sure that the request complies with all the above conditions, the physician must also obtain the written opinion of a second physician confirming that the patient is eligible to receive medical aid in dying. The physician consulted must be independent of both the patient requesting medical aid in dying and the physician seeking the second medical opinion. The physician must consult the patient’s record and examine the patient. Once the verification of all of the above criteria is done and the second medical opinion is obtained, the physician will provide medical aid in dying after the expiry of the period of 10 full days referred to above. Continuous palliative sedation The Act respecting end-of-life care also governs continuous palliative sedation. Palliative care means the total and active care delivered by an interdisciplinary team to patients suffering from a disease with reserved prognosis, in order to relieve their suffering, without delaying or hastening death. Reserved prognosis refers to a disease at an advanced stage jeopardizing survival within a period of less than two years or terminal illness leading to probable death in the near future. Continuous palliative sedation is palliative care consisting in administering drugs or substances to an end-of-life patient for the purpose of relieving his suffering by rendering him unconscious in a continuous manner until he dies.4 Consent to continuous palliative sedation is given by using the form prescribed by the Minister according to a procedure which is similar to that applicable to medical aid in dying. The physician must therefore obtain a free and informed consent from the patient. This consent must be given by a person capable of consenting to care or, if that person is incapable, by a person authorized by law or pursuant to a protection mandate. The patient or his representative must be informed of the prognosis for the illness, the irreversible nature of the sedation and the anticipated duration of the sedation. The physician must also make sure that the decision does not result from external pressure. The patient or his representative must be informed of the patient’s right to refuse or put off the procedure and the consequences of either of his choices. Conclusion It is important to understand that the entire end-of-life process is conducted with the greatest respect for the patient who made the request and that the patient must be treated with understanding, compassion, courtesy and fairness, with respect for his dignity, autonomy, needs and safety. Open and honest communication is also favoured by the members of the medical team in order to provide the patient with quality end-of-life care, which is adapted to his needs for the duration of the process. An Act respecting end-of-life care, RSQ c S-32.0001, sec. 3 para. 6. An Act respecting end-of-life care, RSQ c S-32.0001, sec. 26. The masculine gender is used in this text solely for the sake of concision. An Act respecting end-of-life care, RSQ c S-32.0001, sec. 3 para. 4 and 5.
Lavery is pleased to announce the arrival of two new lawyers at its Québec City office. Florence Forest joins the Litigation and Conflict Resolution group where she will practise in the areas of civil, professional and hospital liability and insurance law. She represents members of various professions against whom allegations of malpractice are made, and also represents insurance companies in major litigation cases. Florence is actively involved in her community, as a member of a circle of young leaders who work to promote the Théâtre du Nouveau Monde and to make the theatre more accessible, to ensure that it is carried on by the next generation. She graduated in the second cohort of “l’Effet A” and proudly carries the standard for increasing the numbers of ambitious women in all spheres of society, particularly in business and law. Marc-André Bouchard joined the Lavery team as a student in May 2016 and began his articles in July 2017. He was admitted to the Bar on January 22 of this year and joins our Litigation and Conflict Resolution group. Marc-André is active in his community, primarily through his work as a volunteer football and basketball coach with secondary school students at Séminaire Saint-François. He has also given his time to a not-for-profit organization in the Québec City region to promote sports among elementary school students.