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Last September, the AMF published its draft Regulation respecting complaint processing and dispute resolution in the financial sector (the “Draft Regulation”). The consultation period for it ended on December 8, 2021. The AMF is currently reviewing the many comments it received. The Draft Regulation1 aims to harmonize and improve complaint processing in the financial sector by providing for new mechanisms to ensure prompt and efficient complaint processing, among other things. In the insurance industry, only firms and insurers are currently required to adopt and apply a complaint processing and dispute resolution policy. The Draft Regulation will make these obligations apply to independent partnerships and representatives. It also introduces new requirements and restrictions as well as monetary penalties for not including mandatory content in communications to a complainant, for example. Here are some of the Draft Regulation’s new provisions: Broadening of the definition of “complaint” to: Any dissatisfaction or reproach; That cannot be remedied immediately and for which a final response is expected; In respect of a service or product offered by a financial institution or financial intermediary; That is communicated by a person who is a member of the clientele of the institution or intermediary. The Draft Regulation does not contain a requirement that a complaint must be made in writing.2 It does make it mandatory for financial institutions and financial intermediaries to implement a complaint drafting assistance service.3 It also requires that a note be left in each record to indicate whether a complainant requested this service. Prohibition on the use of the term “ombudsman” in any representation or communication intended for the public to refer to the complaint process or to the persons assigned to its implementation.4 Specific requirements as concerns the mandatory content of a complaint processing policy, an acknowledgment of receipt and final response to a complainant, a complaint record and a complaints register.   For each complaint received, the complaint record must include the following information: The complaint Whether the complainant requested the complaint drafting assistance service The complainant’s initial communication A copy of the acknowledgment of receipt sent to the complainant Any document or information used in analyzing the complaint, including any communication with the complainant A copy of the final response provided to the complainant New time limits: Within 10 days of receiving a complaint, the insurer must notify the complainant in writing that they must also file the complaint with any other financial institution, financial intermediary or credit assessment agent involved, and the insurer must provide the complainant with their contact information.5 The complainant must be given 20 days to assess and respond to an offer to resolve the complaint, with sufficient time for the complainant to seek advice for the purpose of making an informed decision.6 If the complainant accepts the offer, the insurer has 30 days to respond.7 Financial institutions and financial intermediaries have a strict 60-day time limit to provide the complainant with a final response.8 There is a new 15-day time limit to send the complaint record to the AMF.9 There is a streamlined process for complaints that are resolved within 10 days of being recorded in the complaints register: The final response serves as an acknowledgment of receipt and must contain the following information: The complaint record identification code The date on which the complaint was received by the insurer or insurance representative The name and contact information of the employee responsible for processing the complaint referred to in section 7 of the Draft Regulation or in the Sound Commercial Practices Guideline A summary of the complaint received The conclusion of the analysis, including reasons, and the outcome of the complaint A reference to the complainant’s right to have the complaint record examined by the AMF The signature of the complaints officer A statement to the effect that the complainant has accepted the offer to resolve the complaint New monetary administrative penalties The Draft Regulation also provides for monetary administrative penalties ranging from $1,000 to $5,000 for failure to comply with certain requirements and prohibitions of the Draft Regulation. For example, the following will be subject to a monetary administrative penalty of $5,000: Attaching a condition to an offer to prevent the complainant from fully exercising their rights. Using the term “ombudsman” or any other similar title in any representation or communication intended for the public to refer to the complaint process or the persons assigned to its implementation to suggest that such persons are not acting on behalf of the financial institution or financial intermediary. In the latter case, a monetary administrative penalty may be imposed even where no complaint is involved, because the prohibition covers “any representation or communication intended for the public.” Insurers and financial intermediaries should review their communications as soon as possible, and especially the summary of their complaint processing policy appearing on their website. It concerns all entities regulated by the AMF, but the bulletin more specifically addresses financial institutions and financial intermediaries in the insurance industry. As currently indicated on the AMF’s website. Draft Regulation, s. 11. Id., s. 26, para. 2. Id., s. 15. Id., s. 13. Id. Id., s. 12, para. 4. Id., s. 25.

On April 6, 2021, the Court of Appeal, per Justice Mark Schrager, rendered an interesting decision in Bank of Nova Scotia c. Davidovit (2021 QCCA 551). The Bank of Nova Scotia (the “Bank”) had granted a commercial loan to a company, of which Aaron Davidovit (“Davidovit” or the “Surety”) was the principal, for the operation of a gym. Under a clause contained in the personal guarantee (suretyship) signed by Davidovit, he was to reimburse all costs and expenses incurred by the Bank to collect amounts owed to it by the principal debtor or Surety, including, but not limited to, legal fees on a solicitor/client basis (the “Clause”). The Bank was claiming $31,145.22 in extrajudicial fees and legal costs from Davidovit, while the amount claimed from the Surety in capital and interest amounted to $35,004.49. The trial judgment The trial judge, the Honourable Frédéric Bachand, concluded that the contract of suretyship was a contract of adhesion within the meaning of article 1379 of the Civil Code of Québec (the “C.C.Q.”) and agreed with Davidovit’s arguments that the Clause was invalid because it was excessively and unreasonably detrimental to the adhering party and contrary to the requirements of good faith, in violation of article 1437 C.C.Q. Justice Bachand emphasizes two main problems with the Clause: (i) it was unilateral, thus giving a disproportionate advantage to the Bank while the Surety did not benefit from such an advantage; (ii) it could restrict access to justice in that it could deter the Surety (who was already vulnerable vis-a-vis his opponent) from contesting the Bank’s claim, the Clause thus doing little to promote the rule of law.  Appeal decision The Court of Appeal reversed Justice Bachand’s judgment on the invalidity of the Clause, but confirmed Davidovit’s personal condemnation as Surety. Firstly, the Court of Appeal pointed out that a unilateral clause is not in itself abusive. All of a borrower’s obligations under a loan agreement or a surety’s obligations under a contract of suretyship are unilateral, but that this fact alone cannot determine whether a clause is abusive. The logic applied by the trial judge would lead to the conclusion that the repayment of a balance due at the end of a loan is abusive, because it is unilateral. Secondly, the fact that one party finds itself at a disadvantage is also not reason to conclude that a clause is abusive. Section 23 of the Quebec Charter of Human Rights and Freedoms, raised by Justice Bachand in dealing with equality of arms in a judicial process, did not apply in this case, despite the fact that a bank may appear to have more means to initiate legal proceedings than a surety does. Thirdly, just because the law provides for a monetary sanction, such as payment of legal fees or other damages (e.g. in application of article 54 or 342 of the Code of Civil Procedure) for an abusive situation (e.g. a frivolous defence of a surety), this does not mean that contracting parties cannot agree to provide for such payment. The judges of the Court of Appeal held that, on the contrary, a clause for the reimbursement of extrajudicial costs and fees allows for legitimate claims to be pursued before the courts against principal debtors and sureties who refuse to pay. Justice Schrager also took the liberty of commenting on the trial judge’s conclusion regarding the qualification of the contract of suretyship as a contract of adhesion. However, considering that neither party questioned this qualification, the Court of Appeal did not formally rule on this aspect, but pointed out that the mere fact that the terms of a contract appear on a preprinted form does not necessarily mean that it constitutes a contract of adhesion, although a preprinted form may be an indication that the terms imposed are not negotiable. The reasonableness of the amount claimed under the Clause Although valid, the Clause must still be subject to control by the courts to ensure that the amount claimed for extrajudicial costs and fees is not abusive and is claimed in good faith. The Court found that the reimbursement of more than $31,000 in legal fees where the principal claim amounts to just over $35,000 is unreasonable and disproportionate. Given 1) the complexity of the case, 2) the amount of the claim against the Surety, 3) that the burden of demonstrating the reasonableness of the costs was on the Bank, 4) that claims for reimbursement of extrajudicial costs and fees must be exercised reasonably and in good faith (in accordance with articles, 6, 7 and 1375 C.C.Q.), the Court of Appeal reduced the claim and arbitrarily established it at $12,000. Conclusion Clauses for the reimbursement of extrajudicial fees have a certain acceptability in society, particularly in the commercial sphere. Even in a contract of adhesion, they are not necessarily abusive and invalid, but their application is subject to control by the courts so that they are exercised reasonably and in good faith.

The Tax Court of Canada (the “Court”) recently upheld the deductibility of carrying charges incurred in connection with an issuance of shares.  In so doing, the court upheld the tax benefits arising from a common financing practice. In addition, the Court reiterated the principle in tax matters according to which, save in exceptional cases, the legal relationships established by one or more taxpayers must be respected. In this case1, Laurentian Bank (the “Bank”) issued shares from its share capital to the Caisse de dépôt et placement du Québec (“CDPQ”) and the Fonds de solidarité des travailleurs du Québec (“FSTQ”) totalling $120M, through a private placement.  In addition to assuming a portion of the costs incurred by CDPQ and FSTQ in connection with this issuance of shares, the Bank agreed to pay each of the investors, as professional fees for services rendered in connection therewith, an amount corresponding to 4% of the total amount of their investment.  The Canada Revenue Agency challenged the Bank’s deduction, over 5 years, of the total amount of $4.8M paid to CDPQ and FSTQ, in particular on the grounds that no services had been rendered to the Bank by the two investors and that the expense was unreasonable. The Court ruled in favour of the Bank and allowed it to deduct the amount of $4.8M in computing its income on the basis of paragraph 20(1)(e) of the Income Tax Act, namely, in 20% increments over five fiscal years. Not only did the Court recognize the merits of the Bank’s arguments as to the fact that it had incurred an expense for services obtained from the CDPQ and the FSTQ, but the Court also confirmed that the expense was reasonable under the circumstances. In this decision, the Court recognized the favourable tax consequences for an issuer of shares arising from a common practice in the field of financing through share issuance. It also appears that the reasons for the Court’s decision could be applied to other costs incurred in the context of financing activities and thus allow entities incurring such costs to obtain a significant tax advantage.   It is therefore to the advantage of corporations issuing shares or borrowing to carefully analyze and negotiate the financing agreements they are considering in order to maximize their tax benefits. Our taxation team can assist you in setting up a share issuance that is both successful and optimal from a tax standpoint.   Banque Laurentienne du Canada c. La Reine, 2020 CCI 73

The impact of COVID-19 is particularly strong on start-ups in need of short-term financing and venture capitalists, whose contribution is essential to support the growth of these companies and who must make investment decisions in a context of widespread uncertainty. Like others, we have noticed the slowdown in investment activity and that many start-ups are now finding it difficult to close rounds of financing or even get time or attention from potential investors. In this context of uncertainty, we advise entrepreneurs who anticipate the need to soon close a round of financing to consider the following items: Current investors First and foremost, it is vital to consider the rights of your business’s current investors, contained in corporate documents and agreements between the investors and the corporation, as they could impact your round of financing’s feasibility. For example, if a valuation was obtained a few months ago and it is presently impossible to find a new investor to offer to purchase the corporation’s shares at an equal or higher valuation, the consequences of proceeding “down round” will have to be considered. In some circumstances, the success of a new round of financing may even depend entirely on existing investors’ support and consent. It is also possible that, under certain conditions, existing investors may be willing to take a share of the risk faced by the corporation by participating in a new round of financing, thus eliminating the need of seeking funding from new investors. Lastly, especially if one of the current investors is a venture capital fund or an active investor, it is likely that the corporation has agreed to specific milestones with that investor that could add to the difficulty of operating the business during a pandemic (for example, aggressive sales or production growth targets). But it is possible that your investor will be understanding and accept to review these milestones and associated timelines, which could lead to a positive impact on the corporation’s burn rate and give it  more leeway to weather the crisis. In all cases, we recommend transparency between the corporation and its investors, adopting a “partnership approach” and, above all, not to try to hide the corporation’s situation in its communications with its investors. Potential investors If there is no other option than seeking funding from new financial partners, it will be crucial to know the current situation of any targeted potential investor. As the current pandemic situation affects everyone, understanding the constraints faced by a potential investor is key in order to optimize the search for financing and the pitch process.  For example, if the potential investor has a specific investment thesis or policy, the investor may be even more thesis-driven and show less flexibility than before. Conversely, the investment thesis may be undergoing a re-evaluation. In addition, many potential investors will be impacted by the type of clients they serve. For example, a fund manager whose clients are government institutions may still have as much capital to deploy in the current context as before Covid-19, unlike a fund manager whose clients are high-net-worth individuals who face uncertainty and liquidity problems themselves and put pressure on the fund manager to take a more conservative stance. So, more than ever, you need to target your approach and make sure your potential investor is available to enter into a transaction in the near future. Assistance programs The various levels of government and some Crown corporations have released several assistance programs. In the context of a funding round, Export Development Canada (“EDC”) and the Business Development Bank of Canada (“BDC”) both announced co-investment assistance programs to provide access to additional financing for start-ups that already have a certain level of support from private investors. These programs are a good opportunity for entrepreneurs who need to complete or initiate a round of financing, who are not eligible for certain other government assistance programs, and who are not generating enough cashflow to finance their activities through credit facilities on conditions that are viable for their business. The program announced by EDC proposes a co-investment by EDC of an amount equivalent to that considered in an eligible round of financing, up to a maximum of $5,000,000. As for the program announced by the BDC, the BDC Capital Bridge Financing Program also provides assistance in the form of co-investment in an amount equivalent to the amount the company receives from qualified investors: BDC will offer financing as convertible notes whose default terms include a 20% discount rate on the price per share of the next round of financing and a term of three years. BDC may, however, decide to deviate from these terms and invest under the same conditions as the investors leading the round of financing. The company receiving the investment must be Canadian and have raised $500,000 in external capital in the past. It must also have a proven business model and an existing customer base prior to the impact of COVID-19. The business must have been “specifically impacted by COVID-19.” Unlike some other government assistance programs, this one does not have a fixed scale relative to this criterion. Businesses can demonstrate how the current situation affects them through qualitative and quantitative indicators (e.g. disruptions in their supply or distribution chains, difficulties in getting paid). The important thing will be to show that the lack of cashflow and the difficulty of concluding a round of financing are related to the impact of COVID-19 and not to a situation inherent to the company. The round of financing for which co-investment is being sought must have started after February 1, 2020. The round of financing must be for a minimum amount of $250,000 (prior to investment by BDC) and the overall round of financing must ensure 18 months of runway before additional funding is required by the company. For example, a business with a monthly operational burn rate of $30,000 and $300,000 in financing would meet this criterion since (1) the round, prior to BDC investment, is over $250,000, and (2) the overall round of financing, including co-investment by BDC, would be $600,000 and would ensure 20 months of runway, based on its current burn rate. There are no fixed criteria for determining who is an “eligible investor.” We understand, however, that the investor must be a private firm that has demonstrated its capacity as a lead investor for the funding round in question its ability to conduct the due diligence process. The investor does not have to be Canadian but must be sufficiently known and credible in Canada. We consider this convertible note financing offer to have three main advantages in the current environment: It increases the total “post-financing” value of the business in the form of additional cash, and the size of the funding round without increasing the principal investor’s risk, thus making the investment more attractive. It avoids immediate valuation issues for the company, allowing the lead investor to maintain control over the valuation process through the funding round. It is relatively simple, quick and inexpensive, and should not make the transaction process more complicated or burdensom for the lead investor. In short, these co-investment-based assistance programs are appealing as they can be presented to an investor by a company with financing needs whose planned or ongoing funding round is currently at a standstill due to the situation created by COVID-19. The programs may also be interesting elements to consider for an investor who wishes to have a co-investor or who would like the round of financing to reach a certain threshold to ensure that the company being invested in has sufficient runway after the investment, especially in the current context where it is difficult to predict subsequent rounds of financing. However, the parties wishing to benefit from such programs will have to ensure that their situation meets each program’s criteria and that they evaluate the financing terms offered as part of the assistance program in the context of the transaction. Conclusion Start-ups currently in need of financing should first discuss with their existing investors to try to find room for manoeuvre and assess the possibility of quickly obtaining financing, part of which could come from one of the assistance programs available. In all cases, it will be necessary to measure the impact that additional funding from new investors could have on the rights and obligations that exist between the corporation and its current investors and to ensure that it does not trigger any particular rights or recourse or create ambiguities, contradictions or even events of default. For more information in this regard or to find out about other measures that could help your business, do not hesitate to contact the Lavery team. Our team is following current developments related to COVID-19 very closely in order to best support our clients and business partners. We invite you to visit the web page that centralizes all of the tools and information produced by our professionals.

The rapid spread of COVID-19 and the introduction of strict government measures are limiting or changing many businesses’ operations. These measures impose unusual restrictions that make it more difficult to meet certain contractual obligations. In such a situation, many companies will want to assess the possibility of modifying certain undertakings and terms of their contracts in order to get through the pandemic and resume their business activities post-crisis. To that end, we have gathered a few thoughts on how to look into negotiating a temporary agreement, some legal principles that can be applied to begin discussions and negotiations, and some other elements to consider in a negotiation approach, which we share with you below. How to do it and where to begin: some ideas It is relevant to review all your contracts and sort them to determine which are essential for your business operations and which have the most significant financial impact.  Think about the other contracting party as well, who may also be affected by the pandemic. Has the other party defaulted of performing its correlative obligations to you, or is your inability to meet your obligations causing it prejudice in any way?  Most of the obligations included in a contract cannot be changed unilaterally. However, contracting parties must still perform their respective obligations in good faith. The occurrence of an exceptional situation such as COVID-19 is likely to force each of the parties to act more flexibly in order to comply with their duty of good faith. It is possible to validate whether some of these contracts, by their very nature, are still relevant or whether they will remain relevant once the curve flattens and economic activity recovers. For less relevant contracts, you can check whether they include provisions allowing for unilateral termination, by the mutual agreement of the parties or by a particular mechanism. Otherwise, you could then consider initiating a discussion with the other contracting party to negotiate certain terms of the agreement in order to mitigate negative impacts, if any, during the pandemic.  For each contract that must be maintained, you can list all the obligations that you are unlikely to be able to meet, in whole or in part, as well as those that your contracting party might not be able to meet, in order to open the door to an out-of-court  negotiation of certain provisions for the coming months. In your analysis, you should pay particular attention to the following clauses: Default: What constitutes a default under the terms of the contract? What are the consequences of defaulting? Does a default under this contract constitute a default under another contract? Does the contract provide for a time period to cure a default? On what conditions? Time limit: Does the contract set specific time limits for the performance of certain obligations? Which ones? Does the contract provide for the possibility of postponing the time limit for its performance? Should a notice be sent to this effect? Does it expire soon? Exclusivity: Is the contract exclusive? Can this exclusivity be overridden? Under what circumstances and on what conditions? Force majeure: Does the contract include a superior force clause (most commonly called a “force majeure”) forgiving a party’s inability to perform its obligations? What happens to each party’s obligations, especially financial obligations, in a context of superior force? Although the Civil Code of Québec defines such a notion, the contract can always provide its own definition. A case of superior force usually requires the presence of an unforeseeable, irresistible event external to the party invoking it. Continuous information: Does the contract provide for the obligation to keep the other contracting party informed when certain events occur? If so, which ones? Is COVID-19 or any other pandemic included? Negotiation: Does the contract provides for the parties the possibility to renegotiate certain terms ? Which ones? When? On what conditions? Payment: Does the contract set out time limits for payments to the other contracting party or for making any other kind of payment, depending on the nature of the contract? Does it provide for additional time limits to proceed to the payments? What is the impact of delaying or not making a payment? Financial performance: Does the contract establish financial performance criteria (e.g. compliance with certain financial ratios)? How often? What are the consequences of not meeting these financial criteria? Penalties: Does the contract contain penalties for late payment of certain amounts or for failure to meet certain contractual obligations? When is this penalty due? What amount can it reach? Liability: Is the liability of the contracting parties unlimited under the terms of the contract or does the contract instead provide for limits on the amount that may be claimed?(maximum/minimum amount)? Is there a predetermined time limit to make a claim? Does the contract provide for a notice to be sent to this effect? Dispute resolution: Does the contract provide for a dispute resolution process? Mediation or arbitration? Under which conditions can these mechanisms be applied? List all the impacts that result from a breach of obligations (e.g., penalties, notice of default, interest), and make a list of viable proposals that you can submit to the other contracting party as an alternative. What legal principles can you use to negotiate a temporary agreement with your contracting party or a postponement of your obligations?  Certain provisions or legal principles may make it possible to terminate a contract or may serve as arguments for a temporary agreement or a postponement of your obligations. Here are a few examples. (This list is non-exhaustive, of course.) Force majeure Some parties to a contract will want to invoke the concept of superior force to terminate or temporarily suspend the effects of the contract. Although this concept is interesting, it applies only to very specific situations and its application is not generalized. As previously mentioned, the Civil Code of Québec1 provides that superior force is an unforeseeable and irresistible event that must not arise from the actions of the contracting parties. Depending on the nature of the obligations covered, a contracting party may be released from its obligations or have its successive obligations suspended during the superior force period. The contract may also provide for other parameters and circumscribe the terms of what may constitute a case of superior force between the parties. The right to invoke superior force requires a case-by-case assessment of each contract and of the relationship between the parties. In any event, a party that is unable to perform its obligations, in whole or in part, must take all steps at its disposal to minimize its damage. You will find more information on the concept of superior force and its application in the bulletin The Impact of COVID-19 on Contracts.  Right to terminate Certain contractual provisions may allow for resiliation (termination) by either party, on specific terms or for specific reasons. Some contracts will provide for a termination mechanism at either party’s discretion or further to their mutual consent.  In the absence of such clauses in the contract, it remains essential to characterize the nature of the contract, since legislative provisions could allow its resiliation. That is also the case of a contract of enterprise or a contract for services, which the client may unilaterally resiliate as permitted by sections 2125 and following of the Civil Code of Québec, subject to certain limits, of course. Before deciding to unilaterally resiliate a contract, it is important to consult your legal advisor in order to properly determine the nature of the contract, validate its terms and conditions with respect to resiliation and determine the possible impacts of such resiliation (e.g., penalties, prejudice to the other party, etc.). Obligation of good faith in contractual performance The obligation of good faith imposes certain contractual duties, including those of loyalty and cooperation. The duty of loyalty entails certain prohibitions such as not increasing the burden on a contracting party, not compromising the contractual relationship, and not engaging in excessive and unreasonable2 behaviour. The duty of cooperation, on the other hand, is more positive in nature and aims for assistance and collaboration between the contracting parties to encourage contract performance. Thus, beyond the contractual relationship between the parties, the obligation of good faith allows for a genuine collaborative relationship, a partnership, even, between the parties. A party being a victim of its contracting party’s actions, which are not in accordance with its obligation of good faith under the terms of the contract or which are implicitly derived from those terms, may be in a favourable position to claim damages. Thus, if a party experiences difficulties in performing its obligations because of an event beyond its control, it is entitled to expect the other contracting party to show good faith in the performance of the contract and to act reasonably. Abuse of rights  A party’s exercise of its contractual rights may, in certain situations, constitute an abuse of rights. For example, a party that is in default of its payment obligations under the contract, due to the closure of its business as required by government authorities, may trigger the application of a contract default clause by the other party. Such other partycould proceed with the immediate resiliation of the contract upon simply providing notice. While the terms of the contract may be clear, the other party’s haste in resiliating the contract may constitute an abuse of rights. Indeed, the nature of the relationship between the parties, the duration of the business relationship and the facts that led to the default have an impact on the way a party may exercise its rights under the contract. The exercise of rights provided for in the contract in such a way as to create devastating or catastrophic effects for one of the contracting parties could constitute an abuse of rights in the performance of the contract. Mediation The contract may provide for dispute resolution processes such as mediation or arbitration. To the extent that a dispute arises between the contracting parties and that the contract provides for recourse to alternative dispute resolution mechanisms, it will be possible or even mandatory to submit the dispute to a process such as mediation before a third party, which will attempt to help the parties find an acceptable common ground. In the event of non-performance by a contractual party, this may be a very good option, insofar as the contract contains a provision providing for recourse to such mechanisms, of course. How can a temporary agreement be negotiated, and are there elements that can be put forward as part of the discussions? Given the exceptional current situation, it may also be appropriate for the contractual parties to communicate and verify the impacts of the pandemic on the contractual performance. In this way, the parties may jointly conclude that there are particular difficulties in performing certain obligations under the contract. In such a case, propose solutions or present scenarios that aim to minimize the negative impacts for your respective businesses. Rely on the mutual aid factor to meet certain obligations and/or suspend others (performance, manufacture, delivery, time limits, forbearance, etc.). It is possible to suggest performing certain obligations in consideration for the performance of your contracting partner’s correlative obligations. Where feasible, consider partial payments, deferred payments, staggered payments over time or a reimbursement based on a percentage of revenues or sales once operations resume after the pandemic. If it is possible, offer additional guarantees to the other contracting party (e.g. collateral security, personal suretyship, third party guarantee). Validate whether your insurance covers the cessation of your operations, business interruption, delays in the performance of your obligations, or financial losses arising from some of your contracts, to enable you to propose viable alternatives.  Determine which suppliers or partners are willing to conclude a temporary arrangement and those who refuse or are less open to it. You can then to try to optimize your agreements with the more conciliatory partners, allowing you to continue performing certain obligations with your more reluctant contracting parties. Innovate! Think about alternatives that might not have been possible, or that you might not have considered before the pandemic, that allow you to optimize your business practices or relationships. In short, think outside the box. A few thoughts before undertaking a negotiation  Do not restrict your thinking to the period of restriction on non-essential activities which is, at the time of writing, until May 4, 2020.  Think instead about the weeks and months that will be required to re-establish your business relationships and resume normal business operations, while performing your ongoing obligations and any deferrals negotiated during the pandemic; The inability to adapt, or the maintenance of a hard line, will bring some businesses to the brink and force them to consider various insolvency processes. You must be in a position to show your contracting parties why a position that is too firm or inflexible will not, in the long term, be satisfactory or serve the parties’ interests, in addition to being detrimental to those parties who are likely to require flexibility in the performance of their contractual obligations. You need to be able to identify the considerations specific to your business and business model, and determine the elements that may influence your decisions, such as the nature of the relationship with the other contracting party, particularly if it is a long-standing customer or supplier, whether it is a relationship that will continue into the future or if it is a one-time contract that is non-recurring, and what impacts and reputational risk your actions may entail. Beyond legal principles, the long-term business relationship must be prioritized and protected. This argument should not be underestimated. The objective of most Quebec businesses is to find satisfactory common ground for the parties involved, while trying to minimize the impacts on both sides. The watchword the parties should keep in mind is “flexibility.” During these times when solidarity is in order, it seems to us that it would be wise for each party to make the effort to reach a duly negotiated temporary agreement. We are sharing these options to provide you with ideas on how to approach the negotiation of ongoing contracts, knowing that each contract, relationship and situation are  unique. For more information, our corporate law team remains at your disposal to accompany you during the pandemic. #WeWillGetThroughThis   Section 1470 para. 2 C.C.Q. Didier Luelles, La bonne foi dans l'exécution des contrats et la problématique des sanctions, Canadian Bar Review, Vol. 83, 2004, pp. 189-190.

Most companies have seen their business operations seriously affected by the COVID-19 pandemic and the various government measures taken to mitigate its impact on the population. Companies have to contend with various issues in the short, medium and long term, such as the closure of many companies’, clients’ and suppliers’ places of business, restricted opening hours, and working from home. Businesses need to maintain the relationship of trust they have built with their lender a business partner with whom it pays to be proactive, show transparency and uphold best practices during these difficult times. Although each situation requires an individual analysis, it is in the borrower’s best interest to draw up an accurate picture of the company’s situation for the lender. The information that should be shared with the lender includes: A description of the plan implemented for clients, suppliers and employees to mitigate the effects of COVID-19 and ensure that operations continue as efficiently as possible; A description of the plan implemented for employees to ensure their health and safety while working; Whether the company’s services and activities are considered essential; The availability and use of government programs developed for businesses and their employees; The possibility of allocating work to other places of business and other efforts to mitigate the impact; Short, medium and long term financial projections, it being understood that even though these projections may be difficult to establish in the circumstances, they will equip the borrower for discussions with its lender and will enable it to anticipate its credit facility drawdown requirements, including any need to increase them; Representations, warranties and covenants in credit agreements that could be compromised. This communication must be ongoing. Considering the fast evolution of the COVID-19 crisis and the proliferation of governmental and other measures, it is important to keep the lender informed as the company’s situation changes. The lender will obviously appreciate getting the most accurate picture of the company under the circumstances, which will allow it to assess the situation and develop customized solutions with the company. The relationship of trust between borrower and lender is, more than ever, an asset in these difficult times. It is proving to be a positive vector of stability for our companies, which will have to overcome the effects of COVID-19. The professionals of our Debt Financing and Banking team can assist borrowers in analyzing the credit agreements they have entered into with their lenders and in developing a communication strategy that is appropriate and effective in the circumstances.

On October 5, 2017, Québec's Minister of Finance, Carlos J. Leitão, has tabled Bill 141 in Québec's National Assembly. The Bill, which is 470 pages long and includes some 750 sections, is entitled An Act mainly to improve the regulation of the financial sector, the protection of deposits of money and the operation of financial institutions. It proposes a major overhaul of the rules governing the operation of deposit-taking institutions and insurance companies, as well as the distribution of financial products and services (“FPS”) in the province. The Bill proposes amendments to the following laws: Act respecting insurance (repealed) Professional Code Act respecting trust companies and savings companies (replaced) Act respecting financial services cooperatives Act respecting the Mouvement Desjardins (repealed) Deposit Insurance Act (renamed Deposit Institutions and Deposit Protection Act) Derivatives Act Money-Services Businesses Act Automobile Insurance Act Act respecting the Autorité des marchés financiers (renamed Act respecting the regulation of the financial sector) Act respecting the distribution of financial products and services Real Estate Brokerage Act Insurers Act (enacted) Securities Act Based on the Minister's speech unveiling the Bill, the following is a summary of the 13 main categories of measures provided for in that draft legislation: Insurance — The Insurers Act is proposed as a replacement for the Act respecting insurance. It contains provisions governing the supervision and control of insurance business and of the activities of authorized (former permit holding) Québec insurers, as well asprovisions governing the constitution, operation and dissolution of Québec-incorporated insurers. The new Insurers Act also updates the rules applicable to the insurance activities of self-regulatory organizations (“SROs”), including professional orders. Financial services cooperatives — The Bill amends the Act respecting financial services cooperatives (essentially, credit unions which are members of the Groupe Coopératif Desjardins) to specify, among other things, rules relating to the organization and functioning of such cooperatives. The Bill adds a chapter concerning the Groupe coopératif Desjardins in replacement of the Act respecting the Mouvement Desjardins, which will be repealed. Deposit insurance — The Bill amends the Deposit Insurance Act and puts in place a new framework to supervise and control the deposit-taking business and authorized deposit-taking institutions in Québec. It includes provisions allowing for the resolution of problems arising from the failure of such an institution when affiliated to a cooperative group. The title of that Act is also changed to reflect the amendments made to it. Trust companies — The Act respecting trust companies and savings companies is replaced by a new legislation bearing the same title, but which redefines the regulatory framework governing those kinds of companies and their business. This framework is consistent with the new legislation to be applied to insurance companies and deposit-taking institutions. Real estate brokerage — The Act respecting real estate brokerage is to be amended to, among other things, define the concept of real estate brokerage contract, and to transfer to the Autorité des marches financiers (“AMF”) the supervision and control of mortgage brokers in the province. Financial products and services — The Bill amends The Act respecting the distribution of financial products and services to transfer to the AMF and the Financial Markets Administrative Tribunal ("FMAT") the SRO responsibilities currently entrusted to the Chambre de la sécurité financière and the Chambre de l’assurance de dommages. It also proposes a set of amendments aimed at facilitating the online offering and distribution of FPS. Act respecting the AMF — The Bill amends the Act respecting the Autorité des marchés financiers by introducing provisions to protect whistleblowers who denounce regulatory breaches of third parties to the AMF, to establish a committee tasked with taking submissions from consumers of FPS, and to structure the FMAT in a way similar to other provincial administrative tribunals, such as the Administrative Tribunal of Québec. The Act respecting the AMF is to be renamed an Act respecting the regulation of the financial sector. Funeral expenses insurance — The Bill amends the Civil Code of Québec to permit funeral expense insurance contracts to be entered into. It also modifies the Act respecting prearranged funeral services and sepultures, to provide for a more proper regulation of such contracts. Automobile insurance — The Bill amends the Automobile Insurance Act to specify how information relating to the acquisition or renewal of automobile insurance is to be filed. Money services — The Bill amends the Money-Services Businesses Act to provide for periodic checks (every three years) to be conducted on money-services businesses by the competent local police. Derivatives — The Bill adds derivatives trading platforms to the entities regulated under the Derivatives Act. Securities — The Bill amends the Securities Act to, among other things, replace the definition of "non-redeemable investment fund", prescribe restrictions on sharing commissions for certain dealers, and provide for the suspension of prescription when an application for authorization of an action for damages is filed under that Act. Legislation administered by the AMF — Finally, the Bill amends the laws administered by the AMF (listed in Schedule I to the Act respecting the Autorité des marchés financiers) to prescribe the duration of freeze orders obtainable under those laws and to prescribe the terms of administration and distribution of amounts remitted to the AMF pursuant to a disgorgement order issued thereunder. Bill 141 thus proposes wide-ranging reforms. It embodies measures which: amount to a major overhaul of certain financial laws (Desjardins’ financial services cooperatives, trust companies, deposit insurance); aim at providing a legal basis for operations that are either currently unregulated or unauthorized by law (e.g., the offering or distribution of FPS online); incorporate certain supranational standards into Québec's regulatory framework (e.g., resolution / orderly winding up of unstable systemically important financial institutions); redeploy the exercise of regulatory, supervisory and enforcement / disciplinary functions in the financial sector; and enact numerous new specific rules, particularly in the field of insurance (reciprocal insurance unions; exemption from authorization (permits) respecting suppliers of insurance-like extended warranty products; commercial practices; etc.). The scope is far-reaching for our clients operating in the Québec financial sector, and those who wish to efficiently seize the opportunities offered by the new rules that will govern the Québec's financial marketplace. They would now want: to learn more about the measures of the Bill and the way they may affect them, to position themselves competitively or adjust their ongoing projects in preparation for what is to come; to consult to knowledgeably define new strategies and be able to effectively implement them, in compliance with the new rules; to participate, separately or jointly with others stakeholders, to the consultations that the Minister of Finance has announced would be held on the Bill by a parliamentary committee, to present their views and propose enhancements to its provisions.

TABLE OF CONTENTS Latest developments in the Canadian infrastructure market Ontario introduces a balanced budget which includes $30 billion in infrastructure investments Nova Scotia introduces its second balanced budget and increases investments in highways New LNG production capacity in Montréal resulting from a strategic partnership between Gaz Métro and Investissement Québec SNC-Lavalin purchases British engineering firm WS Atkins The Canadian parliament introduces a bill authorizing the establishment of the Canada Infrastructure Bank The Canadian government launches the process for recruiting the management team of the Canada Infrastructure Bank . Rumours concerning the sale of the Toronto Pearson airport intensify Waterloo launches a call for tenders for a PPP transit centre Infrastructure Ontario issues request for qualification for the Rutherford Station project The AMT grants a contract to Chinese firm CRRC . The U.S. transport Secretary, Elaine Chao, unveils the Trump Administration’s infrastructure plan Call for financial proposals for the Québec Nicolas-Riou community wind project Pattern and Samsung close the financing of the North Kent Wind project Metrolinx adds Alstom as supplier for the light-rail project in the Toronto area Brookfield to launch a new infrastructure mega fund in 2018 Concert Infrastructure Fund closes its fourth round of funding Ontario closes its second offering of Hydro One shares. Blackstone lance un fonds d’infrastructures de 40 G$ US Offshore wind projects to launch soon in Canada? Governments of Canada and Nunavut announce funding for 9 community infrastructure projects benefitting 19 communities . Innergex completes the acquisition of three wind projects in France The privatization of Canadian airports: Why, how and what is at stake? Canada Infrastructure Bank Act: highlights   Latest developments in the Canadian infrastructure market Ontario introduces a balanced budget which includes $30 billion in infrastructure investments The government of Ontario introduced a balanced budget for 2017, which increases by $30 billion the investments pertaining to the 13-year infrastructure plan. The most significant investments relate to transportation projects across the province, with a focus on public transport. Major infrastructure investments totalling $156 billion over the next decade include: $56 billion for public transport; $26 billion for highways; in excess of $20 billion for hospitals, including $9 billion for the construction of new major hospital projects; nearly $16 billion in capital grants for school boards. The new public transit systems previously announced will be built using Ontario’s Alternative Financing and Procurement (“AFP”) approach, including: Eglinton Crosstown LRT, Finch West LRT, Hamilton LRT, Hurontario LRT (Mississauga), ION Stage 1 LRT (Waterloo), Confederation Line (Ottawa), Ottawa LRT Phase 2, York Viva (vivaNext), and several GO stations. Furthermore, design and planning work is currently underway for operating a new high-speed rail system running from Toronto to Windsor. Lastly, some road projects that use the AFP approach are at various stages of completion. They include Highway 401 expansion to Regional Road 25, Highway 407 East Phase 2 (under construction); and Highway 427 expansion (under construction). Nova Scotia introduces its second balanced budget and increases investments in highways The government of Nova Scotia introduced its second consecutive balanced budget which includes a $136.2 million surplus. The 2017 budget includes a supplementary $390 million investment over the next seven years to twin three highway segments in the province. The highway projects are as follows: twinning the 38 km section of Highway 104 from Sutherlands River to Antigonish; twinning the 22 km section of Highway 103 from Tantallon to Hubbards; twinning the 9.5 km section of Highway 101 from Three Mile Plains to Falmouth, including the Windsor causeway; construction of the divided Burnside Expressway. No new toll will be implemented to finance these projects. The tolls on Highway 104 (Cobequid Pass) will be removed. The budget also reaffirmed the undertaking to redevelop the QEII Health Sciences Centre, possibly on a public-private partnership (“PPP”). basis. Nova Scotia has two other operational PPP projects: the Central Nova Scotia Correctional Facility and the East Coast Forensic Hospital. New LNG production capacity in Montréal resulting from a strategic partnership between Gaz Métro and Investissement Québec On April 24, 2017, Sophie Brochu, President and CEO of Gaz Métro, and Pierre Gabriel Côté, President and CEO of Investissement Québec announced that the new liquefied natural gas (“LNG”) production capacity of Gaz Métro GNL, a subsidiary of Gaz Métro and Investissement Québec, is now available at the Gaz Métro liquefaction plant located in Montréal.. Announced in September 2014, the project aimed to equip the plant with new loading facilities and a new liquefaction train that would triple the total annual LNG production and deliveries. The Gaz Métro liquefaction plant — the only one of its kind in Eastern Canada — now boasts a total annual production capacity of over nine billion cubic feet of LNG. It is thus able to meet the growing demand from a variety of markets for LNG, a competitive and cleaner energy source than petroleum-based products The provision of LNG constitutes an advantage for all the companies that do not benefit from proximity to a pipeline network. It is worth noting that Gaz Métro LNG already supplies Stornoway’s Renard mine, the heavy trucks of several transportation companies such as Groupe Robert, Transport Jacques Auger and Transport YN.-Gonthier, and the ferry F.-A.-Gauthier operated by Société des traversiers du Québec. For its part, Groupe Desgagnés has also ordered four ships that can run on LNG. Lastly, ArcelorMittal has announced an LNG pilot project at its Port-Cartier pelletizing plant. The LNG comes from Gaz Métro’s liquefaction plant in the East of Montréal, in operation for 45 years. It is stored in the plant’s cryogenic tanks. The plant has two loading docks for filling tanker trucks, which supply refuelling stations or service customers directly. LNG can then be distributed to customers within a radius of over 1,000 km from the liquefaction, storage and regasification (LSR) plant or quickly vaporized and injected in the gas network to meet balancing needs during winter peaks. SNC-Lavalin purchases British engineering firm WS Atkins SNC-Lavalin completed the acquisition of British engineering firm WS Atkins for a consideration of $3.6 billion, $1.9 billion of which was financed by the Caisse de dépôt et placement du Québec (“CDPQ”). With this acquisition, the Québec engineering firm hopes to generate annual revenues of $12.1 billion. Founded in 1938, WS Atkins is a consulting firm specializing in design, engineering and project management which generated revenues of £1.86 billion in 2016. Based in the United Kingdom, the firm has 18,000 employees and maintains offices in Europe, North America, the Middle East and Asia. It is the largest engineering firm of the United Kingdom, the 4th largest specialized in engineering and architecture in Europe and one of the 10 firms most present in the Middle East and the U.S. Its clients include companies such as Airbus, BP, EDF, Rolls Royce and Hitachi as well as many governments, including England, the United States, Denmark and even China (China Harbourg Engineering). SNC-Lavalin completed the purchase of the entire share capital of the company for a cash consideration of $3.6 billion, that is, £20.80 per share, which gives WS Atkins an enterprise value of $4.2 billion. The $1.9 billion financing from CDPQ includes a private placement of $400 million in equity and a $1.5 billion loan secured by the shares and proceeds of tolls of SNC-Lavalin from Highway 407 in Toronto. The remainder of the financing will be obtained through $1.2 billion in warrants, a draw in the amount of £350 billion on its existing credit facility and a £350,000 unsecured term loan from a North American bank syndicate. SNC-Lavalin will henceforth have 53,000 employees worldwide (compared to its current workforce of 35,000 employees), which will make it one of the largest engineering firms in the world. The Québec multinational wishes to expand into Europe, where its market share has reached a ceiling of 5.3%. The Canadian parliament introduces a bill authorizing the establishment of the Canada Infrastructure Bank On April 11, 2017, the House of Commons proceeded with the first reading of Bill C-44 pertaining to the Canada Infrastructure Bank (“CIB”). The Bill establishes the Infrastructure Bank of Canada as a Crown corporation which will invest and seek to attract private sector investments in revenue-generating infrastructure projects in Canada. All bills must undergo three readings in the House. The House debates the bill on its second reading and votes on the third reading. If the House passes the bill, it is then sent to the Senate and undergoes a similar protocol. In order to come into force, the bill must be approved by both the House and the Senate. The Minister of Finance, Bill Morneau, declared in March that the CIB would become operational by late 2017. The Canadian government launches the process for recruiting the management team of the Canada Infrastructure Bank The Canadian government launched the process for recruiting the management team of the Canada Infrastructure Bank (“CIB”). In a press release dated May 8, 2017, the Canadian government mentioned that it would first choose a chairman of the board. The board of directors and CEO will be chosen later. The Government expects the CIB to be fully operational by late 2017. The Canada Infrastructure Bank will invest up to $35 billion in federal money in infrastructure projects as part of the Government’s 12-year, $180 billion investment plan. According to the Government’s press release, the head office of the CIB will be located in Toronto and the new institution should have Crown corporation status. The Bank will collaborate with provincial, territorial, municipal, aboriginal and private investment partners to encourage pension funds and other institutional investors to invest in revenue generating infrastructure projects. The Bill establishing the CIB is now at second reading in the House of Commons. Rumours concerning the sale of the Toronto Pearson airport intensify InfraAmericas reports some rumours – unconfirmed by Transport Canada – according to which the assets of the Toronto Pearson International Airport are up for sale. However, Canadian pension funds acquiring a minority interest would seem to be a more likely scenario It is to be noted that following the report of the federal Minister of Finance’s Advisory Council on Economic Growth, published in October 2016, which proposed the privatization of airports in the cities of Toronto, Vancouver, Montréal, Calgary, Edmonton, Ottawa, Winnipeg and Halifax, the federal government engaged Credit Suisse in 2016 to study the cost-benefit of privatizing Canada’s eight largest airports. The federal government has been analysing this possibility for over a year but has yet to announce its position on the issue. Waterloo launches a call for tenders for a PPP transit centre On April 28, the Region of Waterloo launched a call for tenders for establishing a new multi-modal transport hub in downtown Kitchener, in Ontario. The King Victoria Transit Hub infrastructure should be divided into two lots, the first one including a transit hall, 100 parking spaces, a public area and a transit area and the second one, GO and Via rail platforms located in the Metrolinx rail corridor Interested parties are required to submit their qualifications for the project no later than June 30, 2017. The municipality plans to announce its choice of up to three teams on August 31, 2017 Infrastructure Ontario issues request for qualification for the Rutherford Station project On May 2, 2017, Infrastructure Ontario (“IO”) issued a request for Qualification (“RFQ”) for selecting private sector promoters to design, build and finance the Rutherford Station project, which includes the expansion of the rail corridor and parking infrastructure at the facility. The project is part of the IO and Metrolinx Regional Express Rail joint project, which aims to improve transit infrastructure throughout the Greater Toronto and Hamilton areas. Other projects recently launched under this program include the Cooksville Station, Union Station and the Stouffville Station. The RFQ should be issued this fall. The RFQ is IO’s first PPP operation this year. According to the 2016 fall report of the Crown corporation, approximately nine PPPs should be entered into during calendar year 2017. The AMT grants a contract to Chinese firm CRRC The Agence métropolitaine de transport (“AMT”) opted to have Chinese company CRRC build 24 commuter train vehicles instead of Bombardier Transport. The Chinese state corporation has been making a breakthrough in North America since 2014, having won rolling stock contracts in Boston, Chicago and Philadelphia, for which Bombardier was also bidding. However, the AMT contract is CRRC’s first major contract in Canada. According to Les Affaires, CRRC proposed to build for $69 million the 24 two-story vehicles, for which the AMT had budgeted $103 million. CRRC likely benefitted from the decision of the AMT to lower from 25% to 15% the Canadian content requirement in order to attract more bidders. The first commuter train vehicles must be delivered to the AMT in 24 months, that is, in spring 2019. It is to be noted that in 2009, Zhuzhou Electric Locomotive, a subsidiary of CRRC, had wanted to participate in the call for tenders for the cars of the Montréal metro, which had been refused. The contract has finally been granted to a consortium formed by Bombardier and Alstom. The U.S. transport Secretary, Elaine Chao, unveils the Trump Administration’s infrastructure plan During various interventions, particularly in a May 15, 2017 speech at the U.S. Chamber of Commerce and on May 17 in a testimony before the U.S. Senate Committee on Environment and Public Works, the U.S. transport Secretary, Elaine Chao, declared that the Trump Administration intends to release its infrastructure plan in the next several weeks. Ms. Chao declared that the plan would concentrate on “principles” rather than on specific projects. The plan is expected to include $200 billion in direct federal funding, which would allow the raising of US$1 trillion (thousand billion) in investments in infrastructure over the next decade. She did not explain the process through which states could obtain federal funds, but noted that the Administration sought to associate public and private financings for future projects. The Secretary said that 16 different departments, including the Treasury, the Department of Labor and the Department of Defense are looking beyond the transportation sector to explore opportunities for private investment in energy, water and broadband Internet and even veterans hospitals. Although recognizing that there is no “one size fits all” solution to meet the infrastructure needs of the U.S., she declared that the authorization process required to be reformed for the Administration to carry out its plan. She particularly noted that the Federal Highway Administration established a working group whose mission is to explore means to streamline the process for approving infrastructure projects. “Private-public partnerships will be one of numerous financing options that the Administration would consider” said Elaine Chao. According to Ms. Chao, “It is not the location of the project that’s determinative in a VFM (Value for money) but the availability of economies of scale and opportunities for private sector innovation and efficiency”. In other words, she states that the issue is not whether projects must be financed by tolls but rather whether the potential for financial partnership between the federal government, the states, the local communities and the private sector would provide the taxpayers with better value than the conventional way of carrying out projects. Call for financial proposals for the Québec Nicolas-Riou community wind project EDF Énergies nouvelles (“EDF EN”) launched a call for financial proposals aimed at commercial banks and institutional investors for financing the Nicolas-Riou wind project in Québec. It must be noted that the Nicolas-Riou wind project is a community project carried out through a partnership between EDF EN Canada, the Bas-Saint-Laurent RCMs, the Maliseet of Viger First Nation and the Régie intermunicipale de l’énergie – Gaspésie-Îles-de-la-Madeleine. EDF EN Canada holds 50% of the project. Located in the Bas-Saint-Laurent region, on private and public lands, the Nicolas-Riou project will be comprised of 65 Vestas wind turbine generators for a total installed capacity of 224.25 MW. It will benefit from a 25-year power purchase agreement with Hydro-Québec. The approximate cost of the project is estimated to be $500 million. Nicolas-Riou is one of the three wind projects granted by Hydro-Québec as part of the December 18, 2013 450 MW community call for tenders. It is the eighth wind project obtained by EDF EN in Québec following the 2008, 2010 and 2013 calls for tenders. It is also the fourth project held by EDF EN in partnership with RCMs. The project is currently in the construction phase – entirely selffinanced by the sponsors – and the beginning of commercial operations is scheduled for December 2017. The financing sought will therefore only apply to the operations phase. The form of the financing sought is not specified as of yet: commercial bank debt, institutional long-term loan or hybrid structure, all options are on the table. Pattern and Samsung close the financing of the North Kent Wind project Pattern Development and Samsung closed on the $300 million financing for the 100 MW North Kent Wind project in Ontario in May 2017.  The syndicate of lenders include BMO, CIBC, KDB, KfW, the National Bank of Canada and Sumitomo Mitsui. According to the information published by InfraAmericas, the financing is of the construction plus 12 years type and bears interest at a rate of CDOR (Canadian Dollar Offered Rate) plus 162.5 base points. The project is currently in the construction phase, and operations should begin during the first quarter of 2018. North Kent was one of the renewable projects which Samsung carries out with the government of Ontario under the Green Energy Investment Agreement (“GEIA”). Metrolinx adds Alstom as a supplier for the light-rail project in the Toronto area In a press release dated May 12, 2017, Metrolinx indicated that it had determined that Alstom has the required competence for acting as an alternate supplier to provide light rail cars for the Eglinton LRT and Finch West LRT. Alstom has been contracted to supply 61 light rail vehicles at a price of approximately $529 million. It must be noted that Metrolinx and Bombardier are going through litigation respecting the delivery schedule of the vehicles. The dispute resolution process could take from 8 to 12 months and Metrolinx wanted to have an alternate solution in the event that Bombardier would be unable to fulfill its contractual obligations Eglinton LRT is a $5.3 billion project that should be commissioned in 2021. In 2010, Metrolinx had entered into a contract with Bombardier for the delivery of 182 vehicles, including 76 for Eglinton LRT and 23 for Finch West LRT. Alstom will build 17 vehicles for the Finch West LRT project and, if necessary, 44 for Eglinton LRT. If Alstom’s vehicles are not necessary for Eglinton LRT, they will be reassigned to the Hurontario LRT project. Brookfield to launch a new infrastructure mega-fund in 2018 According to available information, Brookfield Asset Management plans to launch a new infrastructure fund in 2018, which may exceed $20 billion according to some analysts. It must be noted that in July 2016, Brookfield closed the Brookfield Infrastructure Fund III (“BIF III”) at US$14 billion with commitments from more than 120 investors. BIP III would be currently over 45% deployed. The increasing size of infrastructure funds over the last few years reflects the growing interest in infrastructure assets worldwide. More investment opportunities may arise as the U.S. market is assessing how private capital can play a role in improving infrastructure assets such as airports, toll roads and bridges. The largest infrastructure fund raised to this day remains Global Infrastructure Partners III, which closed at US$15.8 billion in January 2017. Concert Infrastructure Fund closes its fourth round of funding On May 15, 2017, Vancouver-based Concert Infrastructure Fund announced the completion of a fourth round of funding for an amount of $150 million, entirely raised from existing shareholders. This new financing raises the total capital of the fund to $505 million. It must be noted that Concert Infrastructure Fund was launched in 2010 and mainly focuses on direct, long-term investments in Canadian infrastructure assets, with an emphasis on social infrastructure and public-private partnerships. The unitholders of the Fund include ten union pension funds. The Fund holds portfolio investments with a total value of $2.2 billion. Ontario closes its second offering of Hydro One shares According to an announcement dated May 17, Ontario closed a second offering of Hydro One shares and raised $2.79 billion. The province sold 120 million common shares at a price of $23.25 per share. Ontario now owns 49.4% of the common shares issued and outstanding of Hydro One. RBC Capital Markets and CIBC Capital Markets were the lead underwriters in the context of this transaction. The province expects to raise a total of approximately $9 billion by progressively selling up to 60% of Hydro One. The provincial government intends to use $4 billion from the proceeds to finance infrastructure projects through a fund named Trillium Trust. The balance of the proceeds, that is, $5 billion, would be used to repay the existing debt of Hydro One. It is to be noted that Ontario made its first sale of 12.1% of its shares of Hydro One on the public market in April 2016. Blackstone launches a US$40 billion infrastructure fund The Blackstone investment bank intends to take advantage of the Trump Administration’s infrastructure plan and will invest US$20 billion in a fund focused on infrastructure with the Public Investment Fund of Saudi Arabia (“PIF”). With a focus on the U.S. market, Blackstone and PIF wish to build a US$100 billion portfolio in equity and debt investments. Blackstone then intends to increase the capital of the fund by approximately $20 billion by raising this amount from other investors. Offshore wind projects to launch soon in Canada? Copenhagen Infrastructure II and Canadian developer Beothuk Energy have signed a joint venture agreement to carry out wind projects off Canadian coasts. The first project under development is the 180 MW St. George Bay project, located 18 km off the shore of Newfoundland. If the new joint venture succeeds in financing the project, it may become the first offshore wind project in Canada./p> The estimated value of the St. George Bay project during construction is $555 million. According to Beothuk Energy, its pricetag may double to $1.1 billion after commissioning. The sponsors expect to obtain regulatory approvals by the fourth quarter of 2017. A power purchase agreement is expected for 2018. Construction should begin in 2019. The project is expected to use 8 MW Siemens turbines. Other projects under development include Burgeo Banks (1,000 MW), Prince Edward Island (200 MW), New Brunswick (500 MW), St. Ann’s Bay (500 MW) and Yarmouth (1,000 MW). Governments of Canada and Nunavut announce funding for 9 community infrastructure projects benefitting 19 communities The governments of Canada and Nunavut will grant joint funding of over $230 million to nine infrastructure improvement projects across the territory. A total of 19 communities will benefit from these projects for the improvement of solid waste management and water and wastewater systems throughout the territory. Federal funding is provided through the Clean Water and Wastewater Fund (“CWWF”) and the Small Communities Fund (“SCF”). These projects are in addition to the CWWF projects announced in September 2016 as part of the bilateral agreement signed by Canada and Nunavut and the SCF projects announced in February 2016 and February 2017. Innergex completes the acquisition of three wind projects in France On May 24, 2017, Innergex Renewable Energy Inc. (TSX: INE) announced that it had completed the acquisition of three wind projects in France with a total aggregate installed capacity of 119.5 MW from Velocita Energy Developments (France) Limited (a subsidiary of Riverstone Holdings LLC). Innergex holds a 69.55% interest in these projects and Desjardins Group Pension Plan holds the remaining 30.45% On May 26, 2017, Innergex further announced that two of these wind farms, namely, Vaite (38.9 MW) and Rougemont-1 (36.1 MW), which were recently acquired, have begun commercial operation. All the power produced by these wind farms will be sold under fixed-price power purchase contracts entered into with Électricité de France (“EDF”) for an initial term of 15 years, which provide that part of the price will be adjusted annually based on inflation-related indexes. Following the commissioning of these two projects, Innergex now holds 12 operating wind farms in France, just over one year after its first acquisition.   The privatization of Canadian airports: Why, how and what is at stake? On October 20, 2016, the Advisory Council on Economic Growth published its report entitled “The path to prosperity - resetting Canada’s growth trajectory” in which it recommends the privatization of the Toronto, Vancouver, Montréal, Calgary, Edmonton, Ottawa, Winnipeg and Halifax airports. This proposal aims to ensure the financing necessary to meet the maintenance, repair and improvement needs of airport infrastructure within the next ten years. Other reports on the same subject, particularly that of the Institute for Governance of Private and Public Organizations (“IGOPP”), published in 2014 and entitled “The Governance of Canadian Airports”, acknowledge that the current status of airports and their capitalization method does not adequately meet their needs. We will therefore first review the objective of such a privatization, then the legal mechanism to achieve it and, lastly, the potential positive and negative impacts of such an operation. The objectives The main objective behind the privatization concept is the transfer, from the public sector to the private sector of the economic burden of maintaining and operating these infrastructures. Furthermore, the amounts raised by the government following the privatization process can be reinvested in other infrastructure projects, a principle commonly called “asset recycling”. In Canada, in a report dated February 7, 2017, the C.D. Howe Institute estimated that the potential proceeds from privatizing Canadian airports would be between $7 and $16 billion. However, privatizing also entails several risks if the anticipated economic results fail to materialize and that the private sector is struggling to maintain and operate these infrastructures. The legal and corporate status of airports in Canada Most airports in Canada, except some small regional airports, are managed by airport authorities (“AA”), which are not-for-profit organizations, without share capital, incorporated pursuant to Part II of the Canada Corporations Act 1.The AA are the tenants of airports lands and buildings pursuant to 60-year emphyteutic leases with a 20-year renewal option. In this way, the Canadian government remains the owner of the airports and the infrastructure thus acquired during the lease by the AAs must be transferred to the Government at the expiry of the lease for a symbolic consideration of one dollar. Pursuant to section 8 of the Airport Transfer (Miscellaneous Matters) Act 2,AAs do not pay income tax but pay rent to the Government and part of the municipal taxes 3. Possible means for privatization There are many degrees of privatization of an airport infrastructure. It may be a full privatization pursuant to which the private sector entirely replaces the public authority. It then owns and manages the infrastructure. Other structures may also be considered, under which the public authority retains ownership of the infrastructure while partnering with the private sector through a management contract, a concession or a joint venture. There are many possibilities. In Canada, airport privatization would first be achieved by the “corporatization” of the AA, namely, the addition of a share capital to increase their available liquidities. This “corporatization” could be made using one of the following methods, namely: (i) the federal government could pass a special law providing for the conversion of AAs into business corporations governed by the Canada Business Corporations Act 4,or (ii) it could pass a special law transferring the assets, debts and employees of the AA to a business corporation created in parallel. These modifications to the structure of AAs would also have consequences on the rights and interests currently held by some creditors pursuant to already incurred financial debts: particularly financial institutions and bond holders. For instance, under the Master Trust Indentures, which are agreements governing the bond financings entered into by some AAs, the holders of the outstanding bonds would be required to consent to this privatization by passing a special resolution. Whether the process involves changes in structure or the transfer of assets, it would modify the corporate status of the AAs and, accordingly, require creditor approval. Furthermore, respecting air regulations, Canada is subject to the international standards governing air transport. These standards are independent from the nature or control of the airports. In fact, whether public or private, airports are required to comply with specific policies under international agreements in respect of landing, overflight and clearance charges. These international requirements impose responsibilities on the Government, even where air infrastructures are privatized. The Government remains responsible even if it no longer owns the airports. This situation results in full or partial privatizations being governed by regulations. These regulations, which are mandatory to ensure compliance of the country with international standards, reduce the management freedom which a private corporation which owns an airport would otherwise have and accordingly, impact its business model and profitability. Economic issues The privatization of an airport requires an indepth economic analysis and a rigorous implementation process to ensure its viability. In this respect, the Chicago Midway Airport provides us with an example of a failed privatization attempt. This airport participated in a privatization pilot program, namely, the Airport Privatization Pilot Program. While the transaction was to become the U.S. standard in matters of privatization, it failed due to the capital markets breakdown following the financial crisis of 2008. The City of Chicago had, at the time, spent in excess of US$13 million in the privatization process and the bidder paid a US$126 million penalty. In 2013, after relaunching the call for tenders, the City of Chicago ended up withdrawing its candidacy for the privatization pilot program due to the lack of interest of the private sector. In an article published in 2006, entitled “Airport Privatization: Ownership Structures and Financial Performance of European Commercial Airports”, Hans-Arthur Vogel describes the challenge of privatization as follows: increase airport performance, while they no longer have the financial benefits associated to the moral backing of the public sector. He concludes that public-private partnership constitutes the structure which is most likely to ensure profitability. This conclusion is in line with the 2014 report of the Canada Minister of Transport entitled “Pathways: Connecting Canada’s Transportation System to the World – Tome 1” which promotes the implementation of protection against insolvency, concurrently with private sector investments. Conclusion The privatization of airports is an idea that has been around for a long time: many European airports operate under various private holding schemes. One example is the privatization of Heathrow airport in 1986 and that of the Frankfurt airport in 1997 or, more recently (October 2016), that of the Nice airport. Nevertheless, it is clear that the situation of Canadian airports is somewhat particular. The presence of an existing operational structure requires a two-step process: discarding the former structure and implementing a new one. Experiences elsewhere in the world in that respect will be very useful to Canadian authorities for making the decisions that are the most appropriate for the Canadian market.   Canada Infrastructure Bank Act : highlights On November 1, 2016, in the wake of the announcement by the Trudeau government of major infrastructure investments, Minister of Finance Bill Morneau announced the establishment of the new Canada Infrastructure Bank (“CIB” or the “Bank”), planned for the following year. In May 2017, the designated minister, namely, the Minister of Infrastructure, Amarjeet Sohi, ultimately selected Toronto for hosting the future Infrastructure Bank, despite the Couillard government’s sustained efforts to bring the Bank to Montréal. In this context, an analysis of Bill C-44 on the Canada Infrastructure Bank Act, at first reading, is relevant to understand the true mission of the Bank, its rules of governance, management and powers. Mission The primary mission of the Bank is to invest in infrastructure, particularly using innovative financial vehicles, but also to seek to attract investment from private sector investors and institutional investors in infrastructure projects in Canada and, more generally, to promote overall economic development and support the viability of the infrastructure sector across Canada. That mission first requires the Bank to receive and structure proposals for projects and negotiate with promoters. Secondly, the Bank must act as an expertise centre for infrastructure projects, which means that it will have to provide opinions to the government on projects, as well as collect and assess data on the state of infrastructure in Canada. Governance The Bank will have a board of directors composed of 8 to 12 directors, appointed by the minister, possibly after consulting the provinces. The directors will be appointed to hold office during pleasure for renewable 4-year terms. However, the chairperson is appointed with no specific term of office. The government may terminate the appointment of a director or the board may do so, subject to the government’s approval. Moreover, under this bill, the designated minister may set up committees partly composed of members of the board of the Bank to advise him or to whom he may delegate particular powers. Management and control of the Bank As most Crown corporations, the Infrastructure Bank must submit annually a corporate plan to the designated minister for the purpose of government approval. In the same manner, it must submit annually to the designated minister an operating budget and a capital budget for the next financial year. This budget must be approved by the Treasury Board, subject to the approval of the Minister of Finance. Powers The Bank has many powers in order to protect the investments it makes. The investments of the Bank may be made under several forms; it can invest in the share capital of a business, lend money to a business, acquire derivatives, acquire and hold a security interest or acquire or dispose of rights or interests in movable or immovable property or entities. However, the Bank cannot provide loan guarantees except where the guarantees are approved by the Minister of Finance. Furthermore, the Minister of Finance is particularly authorized to pay to the Bank amounts of not more than $35 billion in the aggregate, approve loan guarantees and make loans from the Bank’s treasury. Every five years thereafter, the designated minister must cause a review of the provisions and operation of the Canada Infrastructure Bank Act for this report to be then filed with each House of Parliament. The future Infrastructure Bank will therefore have extended powers to match its ambitions: ensuring the sustainability and renewal of infrastructure in Canada while stimulating economic growth.   RSC 1970, c C-32. S.C. 1992, c. 5. An act respecting Aéroports de Montréal, L.Q. 1991, ch. 106. R.S.C. 1985, c. C-44.

The March 22, 2017 Budget of the Government of Canada, through its “Innovation and Skills Plan” (http://www.budget.gc.ca/2017/docs/plan/budget-2017-en.pdf) mentions that Canadian academic and research leadership in artificial intelligence will be translated into a more innovative economy and increased economic growth. The 2017 Budget proposes to provide renewed and enhanced funding of $35 million over five years, beginning in 2017–2018 to the Canadian Institute for Advanced Research (CIFAR) which connects Canadian researchers with collaborative research networks led by eminent Canadian and international researchers on topics including artificial intelligence and deep learning. These measures are in addition to a number of interesting tax measures that support the artificial intelligence sector at both the federal and provincial levels. In Canada and in Québec, the Scientific Research and Experimental Development (SR&ED) Program provides a twofold benefit: SR&ED expenses are deductible from income for tax purposes and a SR&ED investment tax credit (ITC) for SR&ED is available to reduce income tax. In some cases, the remaining ITC can be refunded. In Québec, a refundable tax credit is also available for the development of e-business, where a corporation mainly operates in the field of computer system design or that of software edition and its activities are carried out in an establishment located in Québec. This 2017 Budget aims to improve the competitive and strategic advantage of Canada in the field of artificial intelligence, and, therefore, that of Montréal, a city already enjoying an international reputation in this field. It recognises that artificial intelligence, despite the debates over ethical issues that currently stir up passions within the international community, could help generate strong economic growth, by improving the way in which we produce goods, deliver services and tackle all kinds of social challenges. The Budget also adds that artificial intelligence “opens up possibilities across many sectors, from agriculture to financial services, creating opportunities for companies of all sizes, whether technology start-ups or Canada’s largest financial institutions”. This influence of Canada on the international scene cannot be achieved without government supporting research programs and our universities contributing their expertise. This Budget is therefore a step in the right direction to ensure that all the activities related to artificial intelligence, from R&D to marketing, as well as design and distributions, remain here in Canada. The 2017 budget provides $125 million to launch a Pan-Canadian Artificial Intelligence Strategy for research and talent to promote collaboration between Canada’s main centres of expertise and reinforce Canada’s position as a leading destination for companies seeking to invest in artificial intelligence and innovation. Lavery Legal Lab on Artificial Intelligence (L3AI) We anticipate that within a few years, all companies, businesses and organizations, in every sector and industry, will use some form of artificial intelligence in their day-to-day operations to improve productivity or efficiency, ensure better quality control, conquer new markets and customers, implement new marketing strategies, as well as improve processes, automation and marketing or the profitability of operations. For this reason, Lavery created the Lavery Legal Lab on Artificial Intelligence (L3AI) to analyze and monitor recent and anticipated developments in artificial intelligence from a legal perspective. Our Lab is interested in all projects pertaining to artificial intelligence (AI) and their legal peculiarities, particularly the various branches and applications of artificial intelligence which will rapidly appear in companies and industries. The development of artificial intelligence, through a broad spectrum of branches and applications, will also have an impact on many legal sectors and practices, from intellectual property to protection of personal information, including corporate and business integrity and all fields of business law. In our following publications, the members of our Lavery Legal Lab on Artificial Intelligence (L3AI) will more specifically analyze certain applications of artificial intelligence in various sectors and industries.

Equity crowdfunding will soon have a new framework in which to operate in Canada and this is excellent news for investors and startups alike. On November 5, 2015, the Canadian Securities Administrators announced that regulatory authorities in Manitoba, Ontario, Quebec, New Brunswick and Nova Scotia published the final version of Multilateral Instrument 45-108 - Crowdfunding (the “Equity Crowdfunding Prospectus Exemption”), which is expected to come into force on January 25, 2016. Crowdfunding will no longer be limited to advance purchases of goods and services in Canada, as the new Equity Crowdfunding Prospectus Exemption will allow startups to raise capital by issuing and selling securities to the public, using online funding portals, without having to file a prospectus. An offering document that meets regulatory requirements will nonetheless have to be prepared and published on the electronic funding portal. The document must contain certain particular information on the corporation, its officers, and the terms of the offering. ISSUER ELIGIBILITY CRITERIA Under the Equity Crowdfunding Prospectus Exemption, eligible issuers may raise a maximum of $1,500,000 per 12-month period. The main eligibility criteria for an issuer are namely that it be incorporated under Canadian laws and headquartered in Canada, that a majority of its directors reside in Canada, and that the issuer is not an investment fund. SUBSCRIPTION LIMITS FOR EACH INVESTOR Subscription limits for investors will vary depending on whether an investor is an accredited investor (as defined in the securities regulations) or not. In Ontario only, another category of investors, “permitted clients” (as defined in the securities regulations), is subject to its own specific investment limits. Investments by non-accredited investors will be limited to $2,500 per private placement (up to an annual maximum of $10,000, only in Ontario). Investments by accredited investors will also be limited, albeit to a greater amount of $25,000 per investment (up to an annual maximum of $50,000, only in Ontario). In Ontario, investors who are classified as permitted clients will not be limited in the amount of capital that they can invest. LEAD INVESTOR INCENTIVES It is no coincidence that accredited investors qualify for higher investment limits. The intention is to encourage them to act as lead investors who can set the pace for less experienced, non-accredited investors, by providing skills and expertise in management for the benefit of all investors. The emergence of lead investors is also encouraged by the fact that issuers will be able to distribute their securities under other prospectus exemptions during the crowdfunding distribution period with different prices, terms and conditions from those being distributed under the Equity Crowdfunding Prospectus Exemption. This type of model has already proven advantageous in the United States, where equity crowdfunding syndicates have been developed. Such syndicates, which are made up of angel investors and venture capital funds, allow small investors to invest their money in tandem with more experienced investors. CONTINUOUS DISCLOSURE Issuers who issue securities pursuant to the Equity Crowdfunding Prospectus Exemption will also be subject to certain continuous disclosure obligations, including the obligation provide the relevant securities commissions with financial statements and to make such financial statements available to investors within 120 days of their financial year end. The extent of such continuous disclosure obligations will vary in accordance with the total amount of funds raised by the issuer pursuant to one or more prospectus exemptions, from its date of formation to the end of its last financial year, based on the following thresholds: $249,999 or less: no requirement Between $250,000 and $749,999: financial statements accompanied by an examiner’s report or an auditor’s report $750,000 or more: financial statements accompanied by an auditor’s report In all cases, if the issuer is already a reporting issuer as defined by securities regulations, it will still be subject to any continuous disclosure obligations that already applied. CONCLUSION The Equity Crowdfunding Prospectus Exemption will open up markets to investors big and small, and allow them to build valuable relationships with startups early on. It will be interesting to see if the Equity Crowdfunding Prospectus Exemption will generate sufficient lead investors for equity crowdfunding syndicates to be put into place, as they have been in the United States.

Corporations that are in need of liquidities can, simply put, not afford to wait until the end of the fiscal year to receive payment of refundable tax credits. For this reason, some lenders offer to advance funds to eligible taxpaying corporations (hereinafter “Taxpayers”) in the form of a loan, while taking security on their future tax credits as collateral (“Advance Tax Credit Financing”). Below, we outline key aspects of Advance Tax Credit Financing, with particular regard to tax credits for scientific research and development, as well as those for film or video production and post-production services. TAX CREDIT ASSISTANCE IN QUEBEC Taxpayers carrying out certain designated economic activities may qualify for government support, particularly in the form of refundable tax credits. Such areas of activity include scientific research and development, market diversification in the manufacturing industry, e-business solutions, design, publishing, film production and post-production, and more. An important distinction must be made between non-refundable and refundable tax credits. Whereas non-refundable tax credits reduce or limit income tax payable, and will be limited by the amount of tax effectively owing by the Taxpayer in question, refundable tax credits can be granted to the Taxpayer even if it has no income tax payable. Hence, a Taxpayer entitled to a refundable tax credit can receive more funds from the government than the amount of tax it has paid.1 In order to qualify for tax credits, including refundable tax credits, a Taxpayer will be required to comply with certain basic criteria over the course of its fiscal year. However, in many cases, it will be possible to apply to Revenue Quebec and/or the Canada Revenue Agency for an Advance Ruling prior to relying on the tax credit, in order to determine whether or not the Taxpayer will qualify at the year’s end. Assuming that the eligibility criteria have been met, once the Taxpayer’s taxation year has passed (generally within six months of its end), the Taxpayer files the relevant tax credit forms with the relevant tax authority, along with its income tax return. SCIENTIFIC RESEARCH AND DEVELOPMENT (“R&D”) Both the Canadian and Quebec governments offer refundable tax credits for R&D. In order to qualify, the research activity in question must relate to either basic and applied research or to experimental development. Further, the Taxpayer will be entitled to claim the cost of support work that supports it directly. For example, for the Quebec tax credit, this will include engineering work, data collection, design, operations research and testing. In an R&D context, a Taxpayer will be eligible for tax credits for salaries and wages paid in the course of conducting its activities. For Quebec alone, such credits can account for as much as 35%, at the federal level, and 30% at the Quebec level, of wages and salaries, and can apply against payments made to contractors and subcontractors subject to certain thresholds. In addition, Taxpayers may receive tax credits of up to 28% for pre-competitive research in private partnerships, university research, or for fees and dues paid to a research consortium of which the Taxpayer is a member. Lastly, although both governments exercise some degree of control over the areas of activity that qualify for tax credits, they are hardly restrictive, as neither requires that the projects developed continue their activities in Quebec or Canada upon completion of their R&D phase, when they are ready to move into production. FILM & VIDEO PRODUCTION SERVICES Much like the tax credits for R&D, refundable tax credits may be issued both federally and provincially for film or video production services. Indeed, the federal Film or Video Production Services Tax Credit (“PSTC”) will provide a credit equivalent to 16% of qualified “Canadian labour expenditures”.2 The Québec Tax Credit for Film Production Services (“QPSTC”) provides a base refundable tax credit at a rate of 20% of eligible production costs, including qualified labour costs, which are roughly equivalent to qualified Canadian labour expenditures under the PTSC, as adapted to Quebec, but also provides credits for the costs of qualified properties and the costs of acquiring or renting properties. Furthermore, the QPSTC provides an additional 16% tax credit for eligible expenditures that relate to computer-aided animation and special effects, for a total tax credit of 36% for such expenses. The 2015-2016 provincial budget extended these tax incentives in certain circumstances. In order to qualify for the PSTC and QPSTC, both governments clearly define the eligibility criteria. Apart from requirements regarding the corporations applying for the credit, in both jurisdictions, productions are subject to similar minimal aggregate expenditure requirements. These expenditures encompass every phase of production from the screenplay to postproduction and compression for distribution. In Quebec, a television series or a pilot program must have minimum aggregate expenditures of $100,000 per episode of 30 minutes or less. For episodes exceeding 30 minutes in length, the minimum is $200,000, and for films, it is a minimum of $1,000,000.3 Furthermore, the production must not fall into one of the categories of excluded productions, such as talk shows, sporting events or reality television.4 As mentioned above, productions that use computer-aided animation and special effects will benefit from an additional 16% tax credit, which will be applicable to the production phase of special effects, including principal photography in front of a backdrop for chroma keying (i.e. a green screen). TAKING SECURITY – ADVANCE TAX CREDIT FINANCING Although the Financial Administration Act5 clearly states that Crown (i.e. Her Majesty in right of Canada) debts are not assignable6, which would seemingly hinder federal tax credits from being offered as security, both the Quebec Taxation Act7 and the Canadian Income Tax Act8 provide that corporations may assign or hypothecate the right to claim amounts payable under each respective Act. Provincial: Section 1055.2, Taxation Act Despite any inconsistent provision of any law, a corporation may assign or hypothecate the right to claim an amount payable to it under this Act. The assignment or hypothec is not binding on the State and, as a result, the following rules apply: (a) the Minister retains discretion to pay or not to pay the amount to the assignee or creditor; (b) the assignment or hypothec does not create any liability of the State to the assignee or creditor; and (c) the rights of the assignee or creditor are subject to the rights conferred on the State by section 31 of the Tax Administration Act (chapter A-6.002) and any right to compensation of which the State may avail itself. Federal: Section 220, Income Tax Act [...] (6) Notwithstanding section 67 of the Financial Administration Act and any other provision of a law of Canada or a province, a corporation may assign any amount payable to it under this Act. (7) An assignment referred to in subsection 220(6) is not binding on Her Majesty in right of Canada and, without limiting the generality of the foregoing, (a) the Minister is not required to pay to the assignee the assigned amount; (b) the assignment does not create any liability of Her Majesty in right of Canada to the assignee; and (c) the rights of the assignee are subject to all equitable and statutory rights of set-off in favour of Her Majesty in right of Canada. [Emphasis added] As these tax credits are refundable, they hold value irrespective of the Taxpayer’s revenues for the taxation year and they may, to a certain extent, be offered up as collateral to lenders. However, as we will see, owing to the discretion retained by the Minister and the fact that the value of the tax credits is contingent on a number of other variables, securing collateral on tax credits is a delicate matter. Indeed, further complicating the equation is the fact that both the Taxation Act and the Income Tax Act specifically state that the assignment or hypothec is not binding on the State and thus the Minister retains the discretion to pay or not to pay the tax credits directly to the creditor. Taking effective security on tax credits is obviously a rather intricate business practice, which will require lenders to retain specialized counsel, as the requisite security documents will call for specific measures to be put in place. For example, documents will include those allowing a lender to speak directly to the Minister in order to keep up-to-date on tax credit payment amounts, projected payment dates and those ensuring payments are made to the lender as assignee of the Taxpayer. Among other covenants, when financing tax credits for Film Production Services in Quebec, the borrower (the “Producer”) will, for example, undertake to remain eligible for the tax credit in question, and will also provide the lender with a power of attorney to receive, sign, execute, deliver and file any and all necessary documentation with SODEC, or to otherwise communicate with SODEC regarding any matters pertaining to the Producer. Furthermore, the Producer will release SODEC from the obligation to maintain its confidentiality and allow it to provide the lender with any relevant information it should require. In this manner, the lender will gain a certain degree of control over the Producer’s eligibility for the tax credit. In addition, hypothecs will be taken on the universality of claims as well as on specific incorporeal property (which will include rights to the script and movie), thereby providing recourse to the lender whether the credits are issued to the Producer, or whether they remain owing. However, one must also take into account that the receivables generated may be too far into the future from a cash-flow perspective to provide adequate collateral, or that the main intellectual property rights may not be owned by, but simply licensed to, the Producer. Additional guarantees may also be offered up to lenders financing Taxpayers based on their eligibility for future tax credits. Indeed, Investissement Québec, a government agent, has put in place a number of programs that either issue loans or guarantee loans for advances on refundable tax credits. In most cases, in order to apply, the borrower will be asked to provide an eligibility certificate from Revenue Québec, verifying that it qualifies for the tax credit in question. When available, the additional security provided by Investissement Québec as guarantor may reduce the lending institution’s risk, and possibly reduce borrowing costs. With regard to the movie and television businesses, a few Canadian banks and a number of specialized lenders are engaged in the practice of financing film and television tax credits. In all cases, whether financing movies, television or R&D, financiers will ask for opinions from legal counsel, who must be well versed in local laws, but also in the workings of intra-provincial and, if needed, foreign legislation regarding this very particular type of financing 1 In essence, if a Taxpayer incurs eligible expenditures investing in research and development, but generates no taxable income for the fiscal year, as is often the case in the early stages of a business development project, the Taxpayer will not have any taxes owing at the end of the year, but will nonetheless be entitled to receive funds from government in the form of refundable tax credits as it will be deemed to have paid taxes. The refundable tax credit will be based on a percentage of the eligible expenditures incurred in the fiscal year. 2 Canadian labour expenditures, as defined at paragraph 125.5(1) of the Income Tax Act, (R.S.C. (1985), c. 1.), will include only such salaries and wages paid to individuals who were resident in Canada at the time the payments were made. 3 An Act Respecting the Sectoral Parameters of Certain Fiscal Measures, C.Q.L.R., c. P-5.1, Div II, s. 5.4. 4 Id., s. 5.6. 5 R.S.C. (1985), c. F-11. 6 Id., s. 67(a). 7 C.Q.L.R., c. I-3, s. 1055.2. 8 Cited above, note 2, s. 220.

This publication was authored by Luc Thibaudeau, former partner of Lavery and now judge in the Civil Division of the Court of Québec, District of Longueuil. Lavery closely monitors new developments in consumer law and is committed to keeping the business community informed of the latest developments in this area of the law by regularly publishing newsletters dealing with new case law or legislative changes which may impact, influence, even transform practices in this area. The issue of accuracy in the advertising of prices by merchants is one which has received considerable attention. Quebec courts have recently considered this issue, particularly with respect to the advertised price for the use of Interac services, and in cases where erroneous prices were advertised on transactional websites. In these cases, the courts: reasserted the strict requirements of the Consumer Protection Act1 regarding the advertising of prices, holding that where a merchant intends to charge additional fees for the use of a method of payment, it must include these fees in the advertised price for the product or service being sold; sometimes allowed, sometimes barred the defence by which merchants pleaded their mistake in the advertising of erroneous prices on their websites. Interestingly, where the courts have found against merchants, it was not the first time an error was made by the merchant in the posting of the price of a product. Debit Card User Fees Must Be Included in the Merchant’s Advertised Price On May 8, 2015, in Stratos Pizzeria (1992) Inc. v. Galarneau,2 the Superior Court held that debit card user fees must be included in the merchants’ advertised prices. The court favored a strict interpretation of subsection 224(c) C.P.A. stating that it prevents the merchant from adding any charges (at the time of payment) that were not included in the advertised sale price. This case involved a franchisor and its franchisee which provided a pizza home delivery service. In February 2014, the franchisee received a notice of non-compliance from the Office de la protection du consommateur (“OPC”) informing it that it was in breach of the C.P.A. because customers were being charged an extra $0.75 if they opted to pay for their order by using Interac. This extra charge appeared on the menu. The OPC was of the view that these charges had to be included in the advertised price in accordance with subsection 224(c) C.P.A. Since the franchisor and franchisee were unable to agree with the OPC, they filed a motion for declaratory judgment asking the court to rule on this disputed interpretation of subsection 224(c). They alleged that Interac was a separate service that was provided by the merchant and was not part of its main obligation, which was to provide the food to the customer. The merchant also argued that since customers were informed of this fee before making their order, it could not be viewed as a higher price than that advertised. The judge rejected these arguments and, consequently, the motion for declaratory judgment. He found that the franchisee was not offering a separate service to its customers by providing them with the option to pay by Interac, but simply a method of payment. The judge quoted the ratio from the decision in Union des consommateurs c. Air Canada3 and reiterated that the addition of subsection 224 (c) C.P.A. in 2010 evidences the legislator’s wish to compel merchants to announce to consumers at the outset the total cost of goods and services so as to [translation] “allow them to adequately compare the prices of the goods they are purchasing”.4 It was therefore insufficient to merely state on the advertising menus and flyers that extra charges would be added to the total invoice when consumers pay by Interac. COMMENTS This decision confirms that the legislator’s goal in adopting subsection 224(c) C.P.A. in 2010 was to strengthen consumer protection. Thus, it is important for merchants to clearly understand the strict requirements of price advertising. If the merchant wishes to add additional charges such as debit card fees, it is not enough to display them on flyers or on the front page of a menu to meet the requirements of subsection 224(c) C.P.A. Nor will these requirements be met if the consumer agrees to pay the additional fees before making his order. Where a merchant intends to charge fees for the use of a specific method of payment, it may need to display two price columns in its menu — i.e. including and not including debit card fees — for each item. In practice, this may confuse consumers rather than better inform them, especially in situations where they are purchasing several items at once, since debit card fees only apply once to the total amount of the invoice and not as a function of each item ordered. In the recent decision of Marcotte v. Bank of Montreal5 dealing with conversion charges billed by credit card issuers, it seems that the Supreme Court favoured a more practical application of the C.P.A. to the disclosure of fees by agreeing that conversion charges should be viewed as a consideration for a separate service.6 The Stratos case clearly shows that one of the main purposes of the C.P.A. has always been to disclose to the fullest extent possible the charges applied in consumer contracts. This purpose is achieved through the application of several provisions requiring the full communication of all the fees that may be claimed from the consumer, including the credit charges, whether in the advertising material or in contracts. Thus, in the case of Directeur des poursuites criminelles et pénales v. 9170-2274 Québec Inc.,7 the Court of Québec advocated this strict approach in a case dealing with the disclosure of the terms of credit in advertisements. In that case, a car dealer was thought to have violated sections 247 C.P.A. and 84 of the Regulation respecting the Application of the C.P.A. by failing to state the total amount of the credit charges and the consumer’s total obligation in the contract. In its defence, it argued that it relied on an ad posted on the vehicle manufacturer’s website and pleaded section 287, para. 2, C.P.A., which provides that the merchant can be acquitted “if it is established that [it] had reasonable grounds to rely on information given by the [...] manufacturer.”8 Although the dealer was in good faith, its defence was dismissed. Due diligence would have required that it carefully read the small print in the ad on the terms of credit and that it verify with a qualified person as to whether or not the disclosed information was compliant with the provisions of the C.P.A. The case against the director of the dealer was dismissed on the grounds that such director had no knowledge of the offence. Errors in Advertised Prices in Contracts Concluded via the Internet While the rules on accuracy in advertised prices are quite strict, there are still some situations in which the courts will allow merchants to allege a mistake in the advertised price. The decision of the Court of Québec, small claims division, in Faucher c. Costco Wholesale Canada Ltd9 is a good example. The defendant’s website erroneously announced that the price of a laptop computer was $2.00. Having placed an order for 10 computers which was refused, the consumer claimed their true value as damages, alleging a breach of subsection 224(c) C.P.A. To justify its refusal to honour the plaintiff’s order, the merchant relied on the following clause appearing on its website: [Translation] We reserve the right to cancel, terminate or not process an order (including an accepted order) if the price or any other material information on this website is inaccurate. If we do not process an order for this reason, we will advise you that the order has been canceled and undertake either not to charge you for the amount of the order, or to credit you for the order, depending on the payment method used […] The defendant also alleged that the ridiculously low purchase price was clearly due to an advertising error. The judge found that the aforementioned clause entitled [translation] “Amendments, Typos and Errors” which allowed the merchant to cancel or not process an order was accessible through hyperlinks on the merchant’s website. Relying on the decision of the Supreme Court of Canada in Dell Computer Corp v. Union des consommateurs,10 the judge held that this clause was not an external clause to the contract and was valid, thus enforceable against the plaintiff. Given the merchant’s intention not to be bound in the event of the consumer’s acceptance of the terms advertised on its website, the ad was not an offer to contract under article 1388 of the Civil Code of Québec.11 The plaintiff could thus not compel the conclusion of the contract by its acceptance of the terms advertised on the merchant’s website. Furthermore, the judge found, in view of the unrealistic price of the computers, that the defendant had committed an obvious error which vitiated its consent within the meaning of article 1400, para. 1, C.C.Q. Therefore, this error could not be characterized as inexcusable. The judge examined the effect of the second paragraph of section 54.1 C.P.A. in respect of a “distance contract”, which reads as follows: A merchant is deemed to have made an offer to enter into a distance contract if the merchant’s proposal comprises all the essential elements of the intended contract, regardless of whether there is an indication of the merchant’s willingness to be bound in the event the proposal is accepted and even if there is an indication to the contrary. The judge did not apply the second part of this paragraph, but found rather that the plaintiff-consumer had visited the defendant’s website on his own without any solicitation by the merchant. Therefore, it was he who made the offer to contract, while the merchant had only made a proposal. Since the plaintiff’s offer was rejected, no sale was concluded. Regarding the prohibited commercial practices under the C.P.A., the judge, citing Lelièvre c. Magasin La clé de sol Inc.,12 found that section 219 C.P.A. did not apply because the merchant had not intended to mislead consumers. The erroneous price had appeared inadvertently during the programming of the website. Moreover, the plaintiff-consumer knew or ought to have known that the price was wrong since it was evidently lower than actual prices advertised for other similar products sold by the merchant. The consumer had therefore not been misled and his action was dismissed. The court also held that subsection 224(c) did not apply in this case because the merchant had not intended to induce the consumer to purchase computers for a price of $2 each, since it would realistically never have offered these computers at that price. In the case of Lelièvre referred to above, the facts were similar to those in the Costco case except that the clause allowing for refusal to honour an order in case of errors or inaccuracies only appeared on the merchant’s website after the contract was concluded. The judge, in the Lelièvre case therefore found that a contract had been concluded, but held that the merchant had committed an error and therefore set aside the contract. In the case of Néron v. Vacances Sunwing, the court reached the same conclusion as in the Costco decision, namely that the advertised price was so ridiculously low that the consumer ought to have known that it was not the real price.13 In the Néron case, the plaintiff had purchased a trip for two on the merchant’s website which was advertised for a price that was about six times cheaper than the actual value of the trip. The merchant realized and contacted the consumer the same day to explain to him that the advertised price on the website was a mistake. The merchant gave the consumer two options, either to pay the difference between the actual cost of the trip and the deposit already paid, while also getting a travel credit of $300/person, or to cancel the reservation and obtain the reimbursement of the deposit. Since Ms. Néron accepted neither of these options, Sunwing unilaterally canceled the contract and reimbursed her. Sued by Ms. Néron, who claimed damages for the cancellation of the contract, Sunwing alleged that it had made an error in good faith on the nature of the contract. Sunwing explained that its consent had been vitiated because it would never have agreed to sell the trip for the advertised price if it had known of technological error at the time the price was advertised. As in the Costco case, the judge found that the error [translation] “could not be characterized as inexcusable within the meaning of article 1400, para. 2, C.C.Q.”14 and thus that Sunwing did not have to offer Ms. Néron the trip for the advertised price. Considering the application of the C.P.A., the judge reiterated what was said in the Costco case, namely that the purpose of subsection 224(c) C.P.A. is to [translation] “prevent a merchant from deliberately advertising a price to generate consumer interest and, once interested, to try to get them to buy at a higher price.”15 About one year after the decision in Néron, the courts considered substantially the same facts in the cases of Comtois v. Vacances Sunwing Inc.16 and Meyer v. Vacances Sunwing Inc.17 and issued relatively identical judgments in these two cases. However, in both these cases, while the court found that the merchant did in fact make a mistake, this time it characterized it as inexcusable. Indeed, the repetition of the mistake in the advertised price was found to demonstrate gross negligence on the part of the merchant, enabling the mistake to be characterized as inexcusable under article 1400, para. 2, C.C.Q. The court explained that [translation] “[the] consumer is justified in presuming that a product has gone through a serious price verification process before being offered for online sale to thousands of people.”18 The court therefore ordered the merchant and the agency through which the consumer purchased the trip, solidarily, to pay the difference between the advertised price and the actual price of the trip. In Rochefort v. Vacances Sunwing Inc.,19 a decision rendered exactly one month after those of Comtois and Meyer, and based on very similar facts, the court again found that the merchant had made an inexcusable error because of the inaccurate price advertised on its website. However, in contrast to the order rendered against the merchant and the agency in Comtois and Meyer, in this case, the court ordered the merchant to pay the amount of $1,000 per plaintiff in moral damages because the [translation] “Court cannot order the defendant to pay the plaintiffs for the cost of a trip which they will not be making.”20 Finally, in the case of Charest-Corriveau v. Sears Canada Inc.,21 the court refused to excuse the error of a merchant who had mistakenly posted a price of $12.99 on its website for a game module, whereas the actual price was $129.99. In a succinctly worded decision, the judge, considering the severity of the law, ordered Sears to pay the plaintiff damages equal to the difference between the advertised price and the price subsequently requested, which represented a lost value to the plaintiff. Acknowledging the merchant’s good faith and the nature of the error which was due to a misplaced decimal comma, the court refused to award any further damages. COMMENTS The decision in the Costco case clearly shows that a certain degree of knowledge must sometimes be imputed to consumers, even if they are generally deemed to be “credulous and inexperienced”.22 One can also conclude from this decision and the others rendered contemporaneously that the average consumer may easily notice some information while reading an advertisement or surfing the web, even if they “take no more than ordinary care to observe that which is staring them in the face.”23 These decisions also teach us that despite the strict requirements of the C.P.A., courts may not favour a literal application thereof where same would enable a consumer to profit from a merchant’s obvious mistake. Indeed, section 54.1 C.P.A. expressly provides that the merchant is deemed to make an offer to enter into a contract where the offer comprises all the essential elements of the intended contract, even if there is an indication that the merchant is not willing to be bound in the event of the consumer’s acceptance. Despite this, it still seems possible to plead that it is in fact the consumer that is making an offer to contract by visiting the merchant’s website on his own initiative. Though, in the Sears decision, the court kept to the strict application of the C.P.A., not accepting the defence of an error made in good faith. In Lelièvre and Costco, neither merchant was guilty of misrepresentation as neither had the intention to mislead consumers. Nevertheless, the Court of Appeal, citing Professor Nicole l’Heureux in the case of 9070-2945 Québec Inc. v. Patenaude,24 clearly stated that [translation] “the intention to mislead of the person making the representation is not a factor that the court should take into consideration.”25 To clarify the confusion, it may be useful to recall the following words of Justice Marc Beauregard of the Court of Appeal which, although written in 1981, are still clearly relevant today: [Translation] The purpose of the Consumer Protection Act is to protect consumers from practices that are considered abusive and not to give consumers the means for getting out of their obligations by pleading technicalities.26 Finally, while the courts have sometimes strayed from their pro-consumer approach, such as in Costco and Lelièvre, merchants should still remain vigilant in the posting and advertising of prices. In many cases, the Price Accuracy Policy will enable the consumer to demand compensation from the merchant where a higher price than the advertised price is charged at the cash register. The law remains the law. As the Sears case reminds us: dura lex, sed lex. Furthermore, the Sunwing decisions commented on above remind us that there is no forgiveness for repeat offenders. 1 Consumer Protection Act, CQLR, c. P-40.1 (“C.P.A.”). 2 2015 QCCS 2353 (“Stratos”). 3 Union des consommateurs c. Air Canada, 2014 QCCA 523. 4 Ibid, para. 53. 5 2014 SCC 55, para. 52-55. 6 Ibid, para. 56. 7 2015 QCCQ 6294. 8 Ibid, para. 18 (our emphasis). 9 2015 QCCQ 3366 (“Costco”). 10 2007 SCC 34. 11 CQLR, c. C -1991 (C.C.Q.). 12 2011 QCCQ 5774 (“Lelièvre”). 13 2014 QCCQ 1615 (“Néron”). 14 Ibid, para. 12. 15 Ibid, para. 14 (our emphasis). 16 2015 QCCQ 2684 (“Comtois”). 17 2015 QCCQ 3675 (“Meyer”). 18 Supra, note 16, par 66. 19 2015 QCCQ 3141 (“Rochefort”). 20 Ibid, para. 23.. 21 2015 QCCQ 6417 (“Sears”). 22 Richard v. Time, [2012] S.C.R. 265, 298, para. 72 (SCC). 23 Mattel, Inc. v. 3894207 Canada Inc., [2006] 1 S.C.R. 772, para. 58 (SCC). 24 2007 QCCA 447, para. 42-44 and references cited. 25 Ibid, para. 43. 26 Crédit Ford du Canada ltée c. Gatien, [1981] C.A. 638, 644.

 This publication was authored by Luc Thibaudeau, former partner of Lavery and now judge in the Civil Division of the Court of Québec, District of Longueuil. Lavery closely monitors the development of class actions dealing with consumer law and is committed to keeping the business community informed of the latest developments in this area of the law by regularly publishing newsletters dealing with new case law or legislative changes which may impact, influence, even transform the practices in this area. The courts of Quebec recently dealt with two issues of interest in the context of two class actions instituted by consumers. The courts: interpreted sections 271 and 272 of the Consumer Protection Act (C.P.A.)1, ruling that a violation of the provisions of the C.P.A. does not systematically give rise to the remedies provided under these two sections, and thereby limiting the remedies available to consumers; and noted that they are flexible in their interpretation of the requirements for authorizing a class action under article 1003 of the Code of Civil Procedure (C.C.P.)2, in particular, in circumstances where it is evident that a significant number of consumers may be members of the group, there is less of a need for the plaintiff to take steps to specifically identify the members as the merchant likely possesses all the relevant information that the court will need to identify the potential members of that group. Breach of an obligation arising from the C.P.A. and possible remedies pursuant to sections 271 or 272 In March 2015, the Superior Court of Québec clarified the scope of sections 271 and 272 C.P.A. in the case of Lacasse v. Banque de Nouvelle-Écosse3. The applicant was seeking the authorization to institute a class action on behalf of all the consumers who had a motor vehicle financed by the Bank of Nova Scotia (the “Bank”) in Quebec since November 22, 2010. The remedy in respect of which the authorization was sought aimed to obtain the reimbursement of the death and disability insurance premiums paid, as well as punitive damages on the grounds that the Bank had failed to treat such insurance premium as a credit charge and, accordingly, had not calculated the credit rate in the contract in accordance with sections 70 (b), 71 and 72 C.P.A. and 54.1 of its implementing regulation. The applicant maintained that this constituted a breach of section 272 C.P.A. While acknowledging that the contract did not disclose the credit rate as a percentage, the Bank argued that this constituted a requirement as to form, that instead section 271 applied, and that the Bank could thus raise in defence the fact that the consumer had suffered no prejudice. Ms. Justice Danielle Mayrand agreed with the Bank and dismissed the motion on the grounds that the applicant had suffered no prejudice. She noted that [TRA NSLATIO N] “section 271 sanctions the failure to comply with requirements as to form at the time of the formation of the consumer contract (for which the consumer may demand the nullity)”4 while section 272 C.P.A. applies to [TRA NSLATIO N] “substantive obligations governing the behaviour of the merchant, irrevocably deems the actions stemming from the behavior to cause a prejudice to the consumer, and authorizes much harsher sanctions such as punitive damages.”5The judge concludes that the applicant had failed to demonstrate that the Bank had contravened section 272 C.P.A.; the omission to calculate and disclose the credit rate in the contract is a breach of paragraph 2 of section 271 C.P.A. which governs the form of a contract of credit. Furthermore, the applicant had not proved that she had suffered a prejudice related to the failure to disclose the credit rate in the contract. In the circumstances of the case, since the interest rate applicable to the amount of the premium was 0%, the failure to disclose the credit rate had no effect on the amount the applicant paid. The applicant had entered into the insurance contract with full knowledge and could neither maintain that she was misled by such omission nor maintain that she would not have entered into the contract if the credit rate had been properly disclosed. COMMENTS While the Court of Appeal recently noted that different facts give rise to each of the remedies under sections 271 and 272 C.P.A. and that their mutually exclusive nature gives to the consumer the choice as to which remedy to pursue,6 the Court in Lacasse limits the scope of this choice, reminding us that not all breaches by a merchant constitute the violation of a substantive obligation giving rise to the remedies under section 272 C.P.A. Merchants who enter into contracts with consumers must remain mindful of the consequences of remedies based on section 271 and 272 C.P.A., such as compensatory and punitive damages, but must also know that the nature of the alleged breach sets up their remedy, and that defences under section 271 C.P.A. are available, as said section does not create an irrevocable presumption of prejudice. Criteria for instituting a class action in the context of the C.P.A. In the case of Martel v. Kia Canada Inc.,7 the main goal of the appellant was to purchase an economy car. Nevertheless, her dealer recommended preventive maintenance on account of the rigorous climate of Quebec in addition to the maintenance described in the “Normal Maintenance Program” set out in the owner’s manual she had been provided with when purchasing the vehicle. The appellant performed the preventative maintenance for the purpose of keeping the manufacturer’s warranty in good standing, but she considered that she had purchased the vehicle on the basis of misleading information and filed a motion to be authorized to institute a class action. The trial judge dismissed her motion on the ground that she had failed to demonstrate that all conditions of article 1003 (a), (c) and (d) C.C.P. were satisfied. As to article 1003 (c) and (d), the judge reproached her for not having attempted to search for other consumers who had suffered a similar prejudice and could have been included in the group. The court found that she had not demonstrated the existence of a group whose members would have similar issues to raise before the courts and whom she was nonetheless seeking to represent. The Court of Appeal of Quebec allowed the appeal and repeated what had been said in Fortier v. Meubles Léon8, that is, that the legal and evidentiary thresholds to get past the authorization stage before the Quebec courts are rather low. The Court of Appeal relied on the principles set out by the Supreme Court of Canada in the cases of Infineon9 and Vivendi10, according to which [TRANSLATION] “The judge’s function at the authorization stage is one of screening motions to ensure that defendants do not have to defend against untenable claims on the merits”11, meaning that the applicant has demonstrated serious colour of right and that he or she has a defendable case. Therefore, the burden at the authorization stage is not one of proof but rather only of demonstration. Furthermore, all the members of the group are not required to view the prejudice suffered in the same way. The assessment of the prejudice for authorization purposes is objective and not subjective in respect of each consumer involved in the action. Thus, the appellant was not required to demonstrate that the decision to purchase the vehicle or not was based in any way on the fact that the frequency of preventive maintenance was an important criteria for her, but also for other consumers of this same vehicle. The Court of Appeal also relied on this occasion on a principle derived from the case of Lévesque v. Vidéotron12 suggesting that the higher the number of consumers in a similar situation the more it is proper to draw some inferences, more particularly to presume that the merchant who is sued [TRANSLATION] “possesses the data necessary to estimate the number of consumers affected by the action and that [the merchant] is in the best position to identify them”13. COMMENTS This decision of the Court of Appeal follows the trend from the last few years whereby the requirements of article 1003 C.C.P., reviewed at the stage of the class action authorization, must be analysed in a flexible and liberal manner. Thus, it seems that in certain cases, an applicant who seeks authorization to institute a class action will not be required to show that he or she took steps to identify consumers who dealt with the merchant in similar circumstances. 1 Consumer Protection Act, CQLR c. P-40.1. 2 Code of Civil Procedure, CQLR, c. C-25. 3 2015 QCCS 890. 4 Lacasse v. Banque de Nouvelle-Écosse, 2015 QCCS 890, par. 22. 5 Id., par. 25. 6 Dion v. Compagnie de services de financement Primus, 2015 QCCA 333. 7 2015 QCCA 1033. 8 Fortier v. Meubles Léon, 2014 QCCA 195, par. 65-70; cited in Lacasse c. Banque Nationale de Nouvelle-Écosse, préc., note 3. 9 Infineon Technologies AG v. Option consommateurs, 2013 CSC 59, par. 59-61. 10 Vivendi Canada Inc. v. Dell’Aniello, 2014 CSC 1. 11 Prec., note 10, par. 37. 12 Lévesque c. Vidéotron s.e.n.c., 2015 QCCA 205, par. 27. 13 Prec., note 7, par. 35.