In the recent decision in Hashem c. Canada Life Assurance Company,1 rendered on January 12, Justice Karyne Beaudry of the Court of Québec reiterates the importance of doctors respecting their ethical obligations and preserving their professional independence when issuing a medical certificate in support of a disability insurance claim. Context of the insurance claim In this case, the plaintiff, Rayan Hashem (“Mr. Hashem”), representing himself, was claiming $67,133.28 in disability insurance benefits from the defendant, The Canada Life Assurance Company (“Canada Life”), under two credit insurance contracts issued for Royal Bank of Canada clients: one for a mortgage loan and the other for his line of credit. Mr. Hashem was also claiming $10,000 in moral damages due to Canada Life’s refusal to pay the benefits he believed were owed to him. On January 4, 2019, Mr. Hashem’s treating physician, Dr. Samuel Issid, diagnosed his patient with an adjustment disorder with depressive mood following an episode of psychological harassment at work. He concluded that there was a total incapacity for work for an indefinite period of time. Mr. Hashem then submitted an initial claim for disability insurance benefits, which was accepted by Canada Life. Upon expiry of the 60-day waiting period stipulated in the insurance contracts, Canada Life paid him benefits. As of June 2019, Mr. Hashem’s health condition was improving. Dr. Issid believed that returning to his job as a sales representative at Meubles Léon was impossible, but that he could do another job. On July 29, 2019, Dr. Issid noted that Mr. Hashem could gradually return to work starting that day. In his medical note dated August 7, 2019, he indicated that Mr. Hashem’s adjustment disorder was resolved. On August 6, 2019, Canada Life notified Mr. Hashem that the disability benefit payments would cease as of September 2019. From August 2019 to November 2019, Mr. Hashem performed paid transportation work for Uber. On October 4, 2019, Mr. Hashem consulted Dr. Issid again because he felt he was experiencing a relapse of his adjustment disorder. Dr. Issid found that he was indeed affected by an adjustment disorder with depressive mood, but believed he could do something else elsewhere and requested an expert opinion from the CNESST.  Dr. Issid did not prescribe medical leave, and Mr. Hashem continued to drive for Uber after this medical consultation. He stopped doing this job in November 2019, because “the job was not suitable for him” [translation], as he stated during the hearing. It was not until January 22, 2020, that Mr. Hashem consulted Dr. Issid again, still for his adjustment disorder. On that date, Dr. Issid noted the following: Not seen since October. Holds Uber taxi licence, studying to be a real estate broker. Lazy person, has not worked and wants two more weeks of pay at the expense of the CSST. Expert opinion already requested in October; I can’t help him and I don’t want to see him again for this case. [translation] Beginning in March 2020, Dr. Issid suspended his medical practice until September 2020 due to the COVID-19 pandemic. On April 8, 2020, Mr. Hashem consulted Dr. Yves I-Bing Cheng. The purpose of the consultation was to obtain “a medical document to reactivate his file and be able to claim insurance” [translation]. Dr. Cheng stated in his medical note that he could not sign such a document, as he had not been involved in Mr. Hashem’s case. He also noted that Mr. Hashem had seen Dr. Issid three times since August 2019 and that he could have spoken to him about it on those occasions. On September 24, 2020, Mr. Hashem returned to see Dr. Issid, who, at his request, filled out the Canada Life Disability Benefit Claim Form. On it, Dr. Issid indicated that Mr. Hashem became disabled on December 14, 2018, and that his condition initially improved, only to deteriorate later due to COVID-19. Mr. Hashem submitted this form to Canada Life to support his new claim for disability benefits. At the hearing, the Court gave little credence to this form completed by Dr. Issid: first, Justice Beaudry noted that Dr. Issid had found that Mr. Hashem’s disorder was resolved in August 2019, and secondly, she noted that Dr. Issid did not see Mr. Hashem again between February and September 2020. She was of the opinion that the diagnosis seemed to be based more on assumptions than on clinical observations. She found that the form was completed at Mr. Hashem’s insistence. On February 10, 2021, Canada Life informed Mr. Hashem that it refused to pay further disability benefits because he did not meet the definition of total disability under the policies, in particular because he had not provided satisfactory evidence of his disability. On March 26, 2021, Mr. Hashem submitted another claim for benefits, this time supported by medical forms completed by Dr. Yves I-Bing Cheng. In them, Dr. Cheng indicated that Mr. Hashem had been totally disabled since December 14, 2018, due to an adjustment disorder with anxious-depressive mood, and that no date for his return to work was planned. Dr. Cheng mentioned the following in his medical note on the same day: I filled out the insurance form with the patient, point by point, to make sure that everything complied with the patient’s wishes. [translation] This new claim was also rejected by Canada Life. The Court found that the information recorded on the form completed by Dr. Cheng had little to no credibility. It is important to note that neither of Mr. Hashem’s treating physicians testified at the hearing to contextualize or explain their diagnoses. No expert report was submitted for the plaintiff. In its defense, Canada Life produced the expert opinion of a psychiatrist, Dr. Paul-André Lafleur, who testified at the hearing. Justice Beaudry notes that Dr. Lafleur had been practicing psychiatry for 40 years, that his testimony was clear, and that his findings were supported by facts that he himself observed during an interview conducted with Mr. Hashem, or that emerged from extracts of his medical records or from the CNESST. Dr. Lafleur concluded that Mr. Hashem’s medical condition between August 2019 and December 2022 did not render him incapable of holding a sales representative position, although he acknowledged that he could not hold this position with his former employer. Justice Beaudry found Mr. Hashem’s testimony to be not very credible and noted that Mr. Hashem had a subjective perception of his inability to work. He refused to take any position other than the one he held at Meubles Léon before his claim to Canada Life. Based on the evidence, Justice Beaudry found that Mr. Hashem had not demonstrated that he was entitled to disability insurance benefits as of October 4, 2019. Given his skills and abilities in the field of sales, he could hold a sales representative position elsewhere than with his former employer. Canada Life was therefore justified in rejecting his claims for disability benefits in September 2020 and March 2021. Credibility of the insured’s medical evidence Although the doctors consulted in the context of the new benefit claims maintained the diagnosis of adjustment disorder as of October 4, 2019, the Court emphasizes that this diagnosis alone was not sufficient to establish the existence of a disability meeting the contract’s criteria, especially since this diagnosis was supported by inconsistent and unreliable medical evidence. The mere fact that a doctor has filled out a claim form does not automatically entitle the insured to compensation: the definition set out in the contract remains applicable and the criteria must be met.2 The ethical obligations of a doctor and the consequences of writing an unfounded medical certificate In this case, the Court reminds doctors of the importance of supporting their medical certificates with objective clinical observations and avoiding simply endorsing the requests of their patients. Medical certificates issued at the insistence of patients, or by giving in to their pressure, are considered false certificates.3 The ethical obligations of doctors prohibit them from issuing such certificates and, more generally, from providing information they know to be inaccurate,4 in particular in the aim of allowing a patient to obtain a benefit to which they are not entitled.5 Conclusion  Medical certificates must be founded exclusively on medical grounds arising from an actual assessment of the patient’s condition.6 They must not be founded on extraneous or irrelevant considerations.7 In addition to damaging the credibility of the medical profession, issuing false certificates has significant repercussions in the workplace and generates considerable financial costs for employers, insurers, and the government.8 Key points to remember In disability insurance matters, the terms and definitions of the insurance contract are paramount and are the main elements that must guide the interpretation and determination of the insured’s disability status. Medical certificates and claim forms are only elements used in determining the insured’s state of disability and are not proof of disability in and of themselves. A medical diagnosis is not automatically a sign of disability. It is important for functional limitations to be identified. Having a qualified expert who is able to comment on the insured’s medical condition at the hearing can make a big difference in the outcome of litigation. Hashem c. Canada Life Assurance Company, 2026 QCCQ 41. G.G. c. SSQ, société d’assurance-vie, 2017 QCCQ 9442, par. 19 COLLÈGE DES MÉDECINS DU QUÉBEC, ORDRE DES CONSEILLERS EN RESSOURCES HUMAINES AGRÉÉS, ORDRE DES INFIRMIÈRES ET INFIRMIERS DU QUÉBEC, Certificats médicaux et travail, (Medical Certificates and Work), June 2025, p. 14, online: https://cms.cmq.org/files/documents/Guides/gui-certificats-medicaux-travail.pdf Code of ethics of physicians , CQLR, c. M-9, r. 17, s. 7 and 85. Ibid. , s. 97-98. Médecins (Ordre professionnel des) c. Larouche, 2018 CanLII 6869 (QC CDCM), para. 184. Médecins (Ordre professionnel des) c. Léonard, 2025 QCCDMD 27 (CanLII), para. 169. Op. cit. note 3.

On November 15, 2024,1 in Bouchelaghem v. Université Laval,2 Superior Court Mr. Robert Dufresne granted an application for dismissal on the grounds of res judicata and abuse. His judgment is a reminder of the importance of the presumption of judgments’ validity and stability, principles linked to the authority of res judicata. To put Mr. Justice Dufresne’s decision in context, it is important to explain plaintiff’s first recourse, which led to an initial judgment by Mr. Justice Bernard Tremblay, J.S.C., granting an initial application for dismissal.3 First recourse The plaintiff was as a doctoral student outside Canada and the United States. In July 2019, she began a residency program in family medicine. On November 24, 2020, the program’s Promotion Committee for the Faculty of Medicine decided to exclude the plaintiff from the program due to her results in the residencies completed to that date.4 On December 2, 2020, Plaintiff appealed this exclusion before the Faculty of Medicine’s Appeals Committee.5 On February 4, 2021, this committee held a hearing that ended with the Promotion Committee’s decision being upheld.6 On February 8, 2021, the Dean of the Faculty of Medicine communicated the Appeal Committee’s decision to the plaintiff.7 That same day, the plaintiff contacted the Dean to complain about the Appeal Committee’s decision.8 On February 18, 2021, the Dean reiterated to the plaintiff the contents of the Appeal Committee’s decision and informed her that the decision was final.9 All internal remedies had been exhausted. On May 17, 2022, the plaintiff filed an application against Université Laval for annulment of the final decision rendered on February 8, 2021, by the Appeal Committee, titled Demande introductive d'instance associée [à un] pourvoi en contrôle judiciaire (“Originating application associated with an appeal for judicial review”). In this 442-paragraph proceeding, she sought reinstatement in the family medicine residency program, plus damages. While a challenge to an exclusion decision must be made within a reasonable time,10 usually 30 days according to jurisprudence, the plaintiff initiated her appeal almost 15 months after her exclusion from the residency program. On September 28, 2022, the University therefore filed an application to dismiss her case, on the grounds that the delay in initiating it was unreasonable and that the plaintiff did not cite any valid exceptional circumstances in her proceedings to justify this delay.  On May 15, 2023, Mr. Justice Tremblay, J.S.C., concluded that the plaintiff’s recourse qualified as an application for judicial review and that it had been filed late.11 For these reasons, he declared the recourse inadmissible and dismissed it in its entirety, since he also considered that the damages claimed by the plaintiff arose directly from her exclusion from the residency program.12 Dissatisfied with Mr. Justice Tremblay’s decision, the plaintiff served the University with a Demande de permission d’en appeler d’un jugement mettant fin à l’instance (“Application for leave to appeal a judgment ending the proceeding”). On September 19, 2023, Ms. Justice Gagné, J.C.A., dismissed the plaintiff’s application for leave to appeal,13 thereby confirming the finality of the initial decision and giving res judicata to Mr. Justice Tremblay’s ruling. Second recourse On January 30, 2024, the plaintiff initiated a new action against Université Laval, this time titled Demande introductive d'instance en dommages et intérêts (“Originating application for damages”), in which she claimed a total amount of nearly $9.5 million from the University. This 213-paragraph proceeding largely repeated the allegations made in the first recourse, generally accusing the same parties of the same faults. However, the plaintiff had removed all allegations relating to the application for judicial review and the justification for her delay in pursuing a recourse, choosing instead to group her complaints against each representative or member of the University. The University filed a Demande en irrecevabilité pour cause de chose jugée et en rejet pour abus (“Application for dismissal on the grounds of res judicata and abuse”)against this new recourse, considering that the plaintiff was attempting to revive a dispute that had already been decided by the Quebec courts, and that she had already availed herself of her right of appeal. In response to the University’s application for dismissal, the plaintiff amended her originating application to add thirteen (13) defendants, namely the individuals targeted by her allegations.  The hearing on the defendants’ application for dismissal on the grounds of res judicata and abusetook place on October 9 and November 7, 2024, before Mr. Justice Dufresne. The law The principle of res judicata is codified in article 2848 of the Civil Code of Québec. To establish the legal presumption of validity of judgments (res judicata), two conditions must be met: Triple identity must be established to ensure that the same cause, between the same parties applying for the same purpose, has already been decided.  The judgment in a contentious matter must be rendered by a competent court and must be final.14 Before beginning his analysis of the triple identity, Mr. Justice Dufresne first examined this second criterion. He noted that the judgment in a contentious matter was rendered by a court of competent jurisdiction, since Mr. Justice Tremblay was seized of the application for dismissal. He also concluded that the judgment had become final as more than thirty days had elapsed since its pronouncement and permission to appeal had been refused. The second criterion is therefore satisfied.15 Mr. Justice Dufresne then proceeded to analyze the triple identity criterion. He found it had been established that the parties were legally identical in both recourses. Hundreds of allegations were compared between the first and second recourses, as were dozens of exhibits produced in support of both proceedings.16 He also noted that the plaintiff formulated the same complaints in both recourses, although the way of describing those to whom they were addressed was somewhat different. He put it this way: “[24] The faults, failures and complaints raised before Mr. Justice Tremblay, J.S.C., against the defendants are the same as those raised in the present case. Those responsible are identified. Whether they are identified as managers, employees or civil servants, does not change the fact that, legally, the defendant is the same in both recourses." As recognized in jurisprudence, adding defendants to a recourse does not prevent the court from finding that the parties are identical, since this identity does not have to be perfect.17 As for identity of cause, Mr. Justice Dufresne noted that although the vocabulary is sometimes different, the complaints of bad faith, falsification of documents, illicit and illegal application of standards, violation of certain fundamental rights, and discrimination are repeated or renewed from one proceeding to the next. In both recourses, the plaintiff raises the same issues (which she confirmed when examined by the judge on this subject during her closing arguments).18 The second recourse again sought compensation for the harm resulting from the plaintiff’s exclusion from her residency program. Mr. Justice Tremblay had already ruled that the plaintiff’s damages stem from her exclusion from the program. He had already concluded, in his judgment of May 15, 2023, that the entire recourse is inadmissible.19 Finally, on the question of identity of purpose, Mr. Justice Dufresne wondered whether the new recourse would expose the court to contradict an earlier decision. He soon discovered that this was indeed the case; allowing the plaintiff’s recourse would require rejecting the conclusions of the previous judgment.20 The abusive nature of the recourse Mr. Justice Dufresne then considered whether the plaintiff’s recourse was abusive. He considered this to be the case, since the plaintiff was repeating the allegations of a recourse that had already been dismissed. He concluded that she has not acted in good faith and that she was trying to harm the people she holds responsible for her exclusion: “[41] These modifications, by adding defendants and increasing the amount claimed, constitute an excessive and unreasonable use of proceedings. This only serves to harm these people, whom the plaintiff holds culpably responsible for her exclusion from the Program. This is a misappropriation of the ends of justice, whereby the plaintiff is attempting to take justice into her own hands to make these people pay for their faults. Moreover, the plaintiff appears to meet many of the criteria for being declared quarrelsome.” [Our translation] In closing, Mr. Justice Dufresne reminds us that article 51 C.C.P. allows the Court to act, even of its own motion, when a party engages in vexatious or quarrelsome behaviour. He considers that the plaintiff meets several criteria that would allow her to be declared quarrelsome. He mentions having examined these criteria and having considered doing so, but given that the plaintiff did not have the opportunity to present her arguments on the question of quarrelsomeness at the hearing, he concludes that he could not act in violation of the audi alteram partem principle. He grants the University’s application for dismissal on the grounds of res judicata and abuseand dismissed the plaintiff’s recourse in its entirety. Conclusion The principle of res judicata, codified in article 2848 of the Civil Code of Québec, is a pillar of our legal system. Once a court has rendered a final decision, that judgment cannot be called into question again. In the Bouchelaghem case, Mr. Justice Dufresne had to examine numerous allegations and exhibits, and he came to the conclusion that despite the different wording of the allegations and the addition of thirteen parties as defendants, the nature of the plaintiff’s second recourse remains in practice identical to the first. This judgment is a reminder that excessive and unreasonable use of proceedings, with the aim of harming the opposing party, can lead to a party being declared quarrelsome and having to pay additional costs, at the initiative of the judge hearing the case, even without an application from the party subject to the complaints. The plaintiff applied for leave to appeal Mr. Justice Dufresne’s judgment. On February 12, 2025, Mr. Justice Michel Beaupré of the Quebec Court of Appeal dismissed this application.21 The case was pleaded on October 9 and November 7, 2024. 2024 QCSC 4232. The plaintiff filed an application for permission to appeal this decision on December 30, 2024. The hearing is scheduled for February 11, 2025. Bouchelaghem v. Université Laval, 2023 QCSC 4483. Bouchelaghem v. Université Laval, 2023 QCSC 4483 para. 8. Id., para. 9. Id., para. 10. Id., para. 10. Id., para. 149. Id., para. 151. An application for judicial review must be filed within a reasonable time, in accordance with article 529 para.3 C.C.P. Bouchelaghem, supra note 3, para. 116 and para. 162 to 165. Id., para. 120 to 125. Bouchelaghem v. Université Laval, 2023 QCCA 1443. Bouchelaghem v. Université Laval, supra note 2, para. 16. Id. Bouchelaghem v. Université Laval, supra, note 2, para. 23. Bouchelaghem v. Université Laval, supra, note 2, para. 8. Bouchelaghem v. Université Laval, supra, note 2, para. 27-28. This was also noted by Ms. Justice Gagné, J.C.A., in her judgment dismissing the application for leave to appeal, supra, note 13, para. 6. Bouchelaghem v. Université Laval, supra, note 2, para. 36. Bouchelaghem c. Université Laval, 2025 QCCA 144.

Recently,1 Justice Isabelle Germain of Quebec’s Superior Court ruled on a case involving insurance fraud in the matter of Paul-Hus v. Sun Life Canada, compagnie d’assurance-vie2. This ruling illustrates that applicants must answer the insurer’s questions honestly; should an applicant try to mislead the insurer, he will have to face the consequences. In this case, the plaintiff Daniel Paul-Hus (Paul-Hus) claimed an amount of $150,000 from Sun Life Canada by way of benefits as set out in the serious illness insurance policy taken out by his company (of which he was the sole shareholder and director) in 2015, along with $50,000 for the trouble and inconvenience caused by Sun Life’s refusal to honour its contractual undertakings. Paul-Hus claimed that he suffered from amyotrophic lateral sclerosis (ALS) diagnosed on February 1, 2018. The claim form was submitted by him on August 16, 2018. Sun Life refused his claim since an assessment of his medical records revealed that his prior medical history was inconsistent with the information he had provided during a telephone interview on March 17, 2015. Sun Life considered the contract null and void due to Paul-Hus’s false declarations while filling out the questionnaire he was required to complete when taking out the policy. Essentially, it was Sun Life’s position that Paul-Hus had not answered certain questions correctly in the questionnaire and that, if he had, the insurer would not have issued the serious illness policy. It was brought into evidence that, during the telephone interview of March 17, 2015, Paul-Hus had to answer questions on his lifestyle habits, his current health condition and his prior medical history. Some of the questions in Sun Life’s medical questionnaire sought to ascertain whether Paul-Hus felt weakness in his arm and whether a doctor had ever recommended any tests or if he was awaiting any test results. These questions were answered in the negative by Paul-Hus. However, a review of the file reveals that these answers were inaccurate. The insurance policy was issued on March 17, 2015, while the evidence indicated that Paul-Hus had consulted his neurologist a few weeks before, on February 24, 2015, due to weakness in his left hand, the symptoms having appeared progressively since August 2013. At that time, additional tests were prescribed (cervical and brain imaging, magnetic resonance imaging and numerous blood tests). Nonetheless, in his Originating Application, Paul-Hus asserts that, at the time the policy was issued, he had not noticed or suspected any symptoms of disease and contends that, according to the doctors, the disease had developed suddenly. In her judgment, Justice Germain reiterated the principles governing declarations of risk in the insurance sector, pointing out that false declarations can result in the nullification of the contract.3 However, in this case, the policy had been in force for over two years at the time of the claim for indemnification, so that the insurer was required to prove fraud in order to nullify the contract4 (Paul-Hus’s intention to hide his true health condition). Justice Germain found that Sun Life had discharged the burden of demonstrating Paul-Hus’s fraudulent dealings. In addition to his medical records, Sun Life produced a recording of the telephone interview held on March 17, 2015, as well as a transcription of the interview. In the Court’s view, it was clear that Paul-Hus was under neurological investigation due to weakness in his left arm at the time he was completing the questionnaire. Although in his testimony at trial,5 he claimed not to know that this information could have had an impact on the insurer’s decision, Justice Germain did not side with this version. For Justice Germain, the evidence presented by the insurer demonstrated that it had been Paul-Hus’s intention to deceive Sun Life. This being said, in accordance with the requirements of article 2408 C.C.Q., Sun Life had to demonstrate not only that it would not have covered this risk had it been aware of the new information resulting from the claim, based on its own underwriting standards, but that any reasonable insurer would have refused to issue the serious illness insurance policy under the circumstances. Sun Life also discharged this burden and completed this “evidence of materiality” by presenting the testimony of an underwriting expert. Finally, and in addition to the above, Paul-Hus claimed that he had been diagnosed with amyotrophic lateral sclerosis (ALS), which he was unable to support with evidence. Under cross-examination, Paul-Hus admitted that he had never received any such diagnosis. Instead, he suffered from a lower motoneuron disease, which did not qualify as a “serious illness” under the policy. In conclusion, in the Court’s opinion, the policyholder knowingly misled the insurer and falsified his risk assessment in order to obtain coverage. Moreover, given that Paul-Hus was not insurable for serious illness coverage in the eyes of a reasonable insurer, the Court concluded that the contract should be nullified ab initio and terminated. This decision reminds us of how important it is for policyholders to answer insurers’ questionnaires honestly when making their initial declaration of risk : [TRANSLATION] [55] In the Court’s opinion, Paul-Hus failed to answer the questionnaire sincerely. He did not act as would have a reasonable insured. He was aware of the importance of giving honest answers to the questions asked during the telephone interview. An insurance contract is one requiring the utmost good faith, particularly as far as the assessment of risk is concerned. It is of interest that in this matter, Paul-Hus gave his testimony at the hearing by way of videoconference, which Justice Germain comments as follows: [TRANSLATION] [49] One notes that, while giving his testimony via videoconference at the hearing, Paul-Hus referred to a document, which would be obtained and filed by Sun Life. The document is Sun Life’s letter of refusal of December 28, 2018, which he annotated with the words “good faith” and “answered no in all good faith I was not awaiting anything no results”. It seems odd, to say the least, that he should make the effort to write down these words as a reminder and should feel the need to repeat them several times during his testimony and when cross-examined.   [50] However, it is not enough to repeat that one acted in good faith to justify such omissions. Paul-Hus appealed Justice Germain’s decision. Sun Life filed a Motion to Dismiss the appeal, which was dismissed on January 15th, 20246. We will therefore have to wait and see what happens before the Court of appeal.  To sum up… Insurance contracts are essentially characterized by the risks they cover and by what risks the insurer is willing to tolerate for a given premium. The Civil Code of Québec recognizes two specific instances in which the actual declaration of risk is fundamental: the initial declaration of risk before the contract is drawn up7 and any increase in the risk level during the term of the contract.8 The declaration of risk is essential to the insurer when it comes to accurately determining the extent of the risk and the premium that will be charged if the insurer agrees to provide coverage. As a general rule, the policyholder’s utmost good faith should be in evidence during the initial declaration stage given that this declaration paves the way for the prospective contractual relationship and its various terms and conditions. A policyholder will be deemed to have properly met their obligation “if the representations are such as a normally provident insured would make, if they were made without material concealment and if the facts are substantially as represented.”9 Since Policyholders are responsible for informing the insurer about any relevant factors that might change its risk assessment, i.e., a positive disclosure requirement, it stands to reason that the Civil Code sets out consequences in the event that this requirement is not fulfilled by the policyholder. A policyholder who makes false statements can therefore see his insurance contract nullified ab initio.10 In other words, the contract would be deemed to have never existed because the basis on which it rests, the initial declaration of risk, was flawed. It should also be noted that nullification will only be relative and that the insurer may elect not to assert it. Consequently, the Court, after having heard the evidence, cannot rule ex officio that the contract is null and void. The insurer has two (2) years after the effective date of the contract to request nullification ab initio based on false statements or unwillingness to fully disclose risk.11 Set against that backdrop, the insurer’s burden of proof amounts to demonstrating that the policyholder made false statements or concealed relevant facts. Insurance fraud Once the two (2) year window of opportunity has closed, the insurer faces an additional burden of proof: it must also demonstrate that the policyholder committed fraud.12 Fraud is distinguished from false declarations or concealment. Among other things, it results from the misrepresentation or omission of a fact in the knowledge that, if the truth were disclosed, the insurer would not issue the policy under the negotiated conditions. Therefore, the policyholder must have intentionally deceived the insurer in order to obtain an advantage that would not have otherwise been obtained. Insurers, therefore, have a heavy burden of proof if the two-year threshold has been crossed. This is because fraud cannot be presumed; it must be established on the balance of probabilities. Burden of proof Whether or not the two (2) year period is still running, the insurer must (1) demonstrate that it would not have entered into the contract based on its own underwriting criteria; and (2) that a reasonable insurer in the same circumstances (i.e., dealing with false declarations, concealment or fraud) would have also declined to issue coverage.13 To recap, before the expiry of the two (2) year period, insurers seeking a contract’s nullification ab initio must prove that: The policyholder made false declarations or concealed information when making the initial declaration of risk. The insurer would not have entered into the contract based on its own underwriting criteria if it had been apprised of the concealed information. A reasonable insurer in the same circumstances would have also declined to take on the risk. After the expiry of the two (2) year period following the effective date of the policy, insurers requesting the contract’s nullification ab initio must prove that: The policyholder made false declarations or concealed information when making the initial declaration of risk AND intended to deceive the insurer. The insurer would not have entered into the contract based on its own underwriting criteria if it had been apprised of the concealed information. A reasonable insurer in the same circumstances would have also declined to take on the risk. Judgment handed down on October 3, 2023; the hearing was held on May 25 and 26, 2023. 2023 QCCS 3890; this ruling was appealed from (200-09-010693-239) and the appeal was dismissed on January 16, 2025 (2025 QCCA 41). Art. 2410 C.C.Q. Art. 2424 C.C.Q. Via videoconference.  Paul-Hus v. Sun Life Canada, compagnie d'assurance-vie, 2024 QCCA 46 Arts. 2408 and 2409 C.C.Q. Arts. 2466 et seq. C.C.Q. Art. 2409 C.C.Q. If the false statement deals exclusively with the policyholder’s age, the contract cannot be declared null and void (art. 2410 C.C.Q.) unless the policyholder’s actual age is outside the insurable range established by the insurer (art. 2411 C.C.Q.). Art. 2424 C.C.Q. Civil Code, art. 2424, para. 1 C.C.Q. CGU compagnie d’assurance du Canada v. Paul, 2005 QCCA 315, para. 2 and art. 2408 C.C.Q.

On July 15, 2022, Justice François Lebel of the Court of Québec rendered a decision1 confirming that, in the case of the sale of immovable property, a clear and unambiguous exclusion clause, whereby the warranty is waived at the buyer’s risk, results in a break in the chain of title preventing the buyer from taking any legal action under such warranty against the seller and previous sellers. Justice Lebel thus declared the originating application against the defendants Marshall and Bergeron inadmissible and dismissed the call in warranty. This decision is consistent with the recent decision of the Court of Appeal of Quebec in Blais,2 rendered in May 2022, which clarified the state of the law on the consequence of waiving a legal warranty where successive sales are involved. The facts In March 2009, the defendant Bergeron sold an income property (hereinafter the “Property”) to the defendants, the Marshalls, with a legal warranty of quality. In May 2012, the Marshalls in turn sold the Property to the defendants Hamel and Drouin, still with a legal warranty of quality. In December 2016, the defendants Hamel and Drouin resold the Property to the plaintiff, but this time [translation] “without legal warranty of quality, at the buyer’s risk, but with warranty of ownership”. In the fall of 2020, the plaintiff had work done to repair the drain tile system. It was at that point that it discovered the presence of petroleum hydrocarbons in the soil under the Property’s foundation, rendering the soil unsuitable for residential use. According to an expert report, the alleged contamination stemmed from a heating oil tank once located in a shed behind the Property. The tank was apparently removed before the sale in December 2016. The plaintiff was seeking a reduction in the sale price and to have the defendants Hamel and Drouin, as well as the two previous sellers, the defendants Marshall and Bergeron, held solidarily liable. The plaintiff referred to the warranty of quality provided for in articles 1726 and following of the Civil Code of Québec (C.C.Q.) and the warranty against public law restrictions provided for in article 1725 C.C.Q. The plaintiff also claimed to be the victim of fraud on the part of the defendants Hamel and Drouin. After being called in warranty by the defendants Hamel and Drouin, the Marshalls moved to dismiss the substantive claim and the action in warranty. They claimed that the sale of the Property between the defendants Drouin and Hamel and the plaintiff was made at the buyer’s risk and that such a clause in a subsequent deed of sale irrevocably breaks the chain of title, thereby preventing the plaintiff from taking any legal action against the seller and previous sellers. The law and the importance of a clear clause According to article 1442 C.C.Q., which codifies the principles arising from the decision in Kravitz,3 buyers may seek to have the sellers previous to their own seller held liable. However, for such an action to be deemed valid, it must be established that: The defect existed at the time that the previous sellers owned the immovable; and The right to the legal warranty was transferred to the plaintiff through subsequent sales. Indeed, the buyer of an immovable may take legal action directly against a previous seller in accordance with article 1442 C.C.Q. However, this article presupposes that the right to the legal warranty was passed on from one owner to the next, right down to the current buyer seeking to file a claim for latent defects. In other words, the legal warranty must have been transferred to each owner through the chain of title. In Blais, the Court of Appeal confirmed that an unambiguous warranty exclusion clause results in a break in the chain of title. Such a clause prevents the buyer of an immovable from taking legal action directly against the former owners who sold the immovable with a legal warranty. Given the decision in Blais, it is now clear that such a clause waiving the legal warranty closes the door to any direct recourse against a seller’s predecessors, even if such predecessors sold the immovable with a legal warranty.4 In these circumstances, a buyer who acquires an immovable at their own risk will be deprived of their right to take legal action directly against the previous sellers, insofar as the warranty exclusion clause in the deed of sale is clear and unambiguous. In this case, Justice Lebel considered that the wording of the warranty exclusion clause in the deed of sale, which was binding on the plaintiff, was clear and unambiguous, and that a sale at the buyer’s “risk” excludes both the warranty of quality and the warranty of ownership, which covers the public law restrictions of article 1725 C.C.Q. Justice Lebel indicated that there was a break in the chain of title resulting from the sale at the buyer’s risk and that the plaintiff could not claim that it was still entitled to take legal action directly against any sellers other than the defendants Hamel and Drouin. He therefore ruled in favour of the defendants Marshall and Bergeron and declared the originating application against them inadmissible. Key takeaways A warranty exclusion clause in a deed of sale will only be deemed valid if it is clear and unambiguous. The mention that a sale is made “at the buyer’s risk” completely eliminates the warranty of quality provided for in article 1726 C.C.Q. and the warranty of ownership provided for in article 1725 C.C.Q. A deed of sale containing a valid warranty exclusion clause AND a mention that the sale is made “at the buyer’s risk” precludes any recourse by the buyer against the seller, but also against previous sellers. With the current state of the Quebec real estate market, the decision in Hamel, which ties in with the Court of Appeal’s teachings in Blais, certainly clarifies how case law established in recent years should be applied, in particular as concerns the effect of a warranty exclusion clause on successive sales. The members of our Litigation and Dispute Resolution group are available to advise you and answer your questions. 9348-4376 Québec inc. c. Hamel, 2022 QCCQ 5217 Blais c. Laforce, 2022 QCCA 858. General Motors Products of Canada Ltd v. Kravitz, [1979] 1 S.C.R. 790 Supra note 1, paras. 6 and 8.