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  • Sales without legal warranty at the buyers’ risk: Clarity is key

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

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  • Bill C-18 (Online News Act): Canada looking to create a level playing field for news media

    Earlier this month, Canadian Heritage Minister Pablo Rodriguez introduced Bill C-18 (Online News Act) in Parliament. This bill, which was largely inspired by similar legislation in Australia, aims to reduce bargaining imbalances between online platforms and Canadian news outlets in terms of how these “digital news intermediaries” allow news content to be accessed and shared on their platforms. If passed, the Online News Act would, among other things, require these digital platforms such as Google and Facebook to enter into fair commercial agreements with news organizations for the use and dissemination of news related content on their platforms. Bill C-18, which was introduced on April 5, 2022, has a very broad scope, and covers all Canadian journalistic organizations, regardless of the type of media (online, print, etc.), if they meet certain eligibility criteria. With respect to the “digital news intermediaries” on which the journalistic content is shared, Bill C-18 specifically targets online communication platforms such as search engines or social media networks through which news content is made available to Canadian users and which, due to their size, have a significant bargaining imbalance with news media organizations. The bill proposes certain criteria by which this situation of bargaining imbalance can be determined, including the size of the digital platform, whether the platform operates in a market that provides a strategic advantage over news organizations and whether the platform occupies a prominent position within its market. These are clearly very subjective criteria which make it difficult to precisely identify these “digital news intermediaries.” Bill C-18 also currently provides that the intermediaries themselves will be required to notify the Canadian Radio-television and Telecommunications Commission (“CRTC”) of the fact that the Act applies to them. The mandatory negotiation process is really the heart of Bill C-18. If passed in its current form, digital platform operators will be required to negotiate in good faith with Canadian media organizations to reach fair revenue sharing agreements. If the parties fail to reach an agreement at the end of the negotiation and mediation process provided for in the legislation, a panel of three arbitrators may be called upon to select the final offer made by one of the parties. For the purposes of enforceability, the arbitration panel’s decision is then deemed, to constitute an agreement entered into by the parties. Finally, Bill C-18 provides digital platforms the possibility of applying to the CRTC for an exemption from mandatory arbitration provided that their revenue sharing agreements meet the following criteria: Provide fair compensation to the news businesses for news content that is made available on their platforms; Ensure that an appropriate portion of the compensation would be used by the news businesses to support the production of local, regional and national news content; Do not allow corporate influence to undermine the freedom of expression and journalistic independence enjoyed by news outlets; Contribute to the sustainability of Canada’s digital news marketplace; Ensure support for independent local news businesses, and ensure that a significant portion of independent local news businesses benefit from the deals; and Reflect the diversity of the Canadian news marketplace, including diversity with respect to language, racialized groups, Indigenous communities, local news and business models. A bill of this scope will certainly be studied very closely by the members of Parliament, and it would not be surprising if significant amendments were made during this process. We believe that some clarifications would be welcome, particularly as to the precise identity of businesses that will be considered “digital information intermediaries” for the purposes of the Online News Act.

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  • The Supreme Court of Canada’s Decision in Prelco: The Application of Limitation of Liability Clauses in Case of a Breach of a Fundamental Obligation of a Contract

    Introduction Non-liability clauses are often included in many types of contracts. In principle, they are valid and used to limit (limitation of liability clause) or eliminate (exoneration clause) the liability of a party with respect to its obligations contained in a contract. The recent unanimous decision of the Supreme Court of Canada confirms that under Quebec law, parties may limit or exclude their liability in a contract by mutual agreement. However, a party may have such a clause declared inoperative by invoking the doctrine of breach of a fundamental obligation of the contract. In this case, the Supreme Court of Canada confirmed the validity of the clause at issue and circumscribed the limits of the application of the doctrine. The Supreme Court of Canada’s decision The facts The dispute relates to a contract signed between 6362222 Canada inc. (“Createch”), a consulting firm specializing in the improvement and implementation of integrated management systems, and Prelco inc. (“Prelco”), a manufacturing company specializing in the fabrication and transformation of flat glass. Under the terms of the contract that the parties concluded in 2008, Createch was to provide software and professional services to help Prelco implement an integrated management system. Createch prepared a draft contract and Prelco did not ask for any changes to the proposed conditions. A clause entitled Llimited Liability was included in the contract, which stipulated that Createch’s liability to Prelco for damages attributed to any cause whatsoever would be limited to amounts paid to Createch, and that Createch could not be held liable for any damages resulting from the loss of data, profits or revenues or from the use of products or for any other special, consequential or indirect damages. When the system was implemented, numerous problems arose and Prelco decided to terminate its contractual relationship with Createch. Prelco brought an action for damages against Createch for the reimbursement of an overpayment, costs incurred to restore the system, claims from its customers and loss of profits. Createch filed a cross-application for the unpaid balance for the project. At trial, the Superior Court of Québec concluded that the limitation of liability clause was inoperative under the doctrine of breach of fundamental obligation, because Createch had breached its fundamental obligation by failing to take Prelco’s operating needs into account when implementing the integrated management system. The Court of Appeal of Québec confirmed the trial judge’s decision and held that the doctrine of breach of fundamental obligation can annul the effect of an exoneration or limitation of liability clause by the mere fact that a breach relates to a fundamental obligation. The Supreme Court of Canada’s reasons The Supreme Court of Canada allowed the appeal and set aside the decisions of the lower courts. Per Chief Justice Wagner and Justice Kasirer, the Supreme Court held that the limitation of liability clause in the parties’ contract was valid, despite the fact that Createch had breached its fundamental obligation. The Supreme Court addressed the two legal bases for the existence of the doctrine of breach of fundamental obligation: the validity of the clause having regard to public order and he validity of the clause having regard to the requirement relating to the cause of the obligation. In this case, the Court determined that public order could not render the limitation of liability clause inoperative as the contract at issue was one by mutual agreement and the parties were free to share the risks associated with a contractual breach between them, even if the breach involved a fundamental obligation. As for the validity of the limitation of liability clause, the Court determined that it was not a no obligation clause that would exclude the reciprocity of obligations. Createch had significant obligations to Prelco, and Prelco could keep the integrated management system, obtain damages for unsatisfactory services and be compensated for necessary costs for specific performance by replacement, but no higher than what had been paid to Createch. A limitation of liability clause does not therefore deprive the contractual obligation of its objective cause and does not exclude all sanctions. The Court explains: “[86] Thus, art. 1371 C.C.Q. applies to contract clauses that negate or exclude all of the debtor’s obligations and, in so doing, deprive the correlative obligation of its cause. Where a contract includes such clauses, it can be said that the reciprocal nature of the contractual relationship is called into question (arts. 1371, 1378 para. 1, 1380 para. 1, 1381 para. 1 and 1458 C.C.Q.). To apply a more exacting criterion would amount to annulling or revising a contract on assessing the equivalence rather than the existence of the debtor’s prestation and, as a result, to indirectly introducing the concept of lesion, which is narrowly delimited in the Code.”1 Prelco remains bound by the limitation of liability clause in this case. The Supreme Court of Canada is of the view that the trial judge and the Court of Appeal erred in law in declaring the limitation of liability clause inoperative. It allowed Createch’s appeal. Conclusion This Supreme Court of Canada decision confirms the importance of the principles of autonomy of contracting parties and freedom of contract between sophisticated legal persons in Quebec law. The doctrine of breach of fundamental obligation does not permit the circumvention of the principle of freedom of contract: It cannot be said that an obligation is deprived of its cause when a sanction for nonperformance of obligations fundamental to the contract is provided for in a limitation of liability clause. [1] 6362222 Canada inc. v. Prelco inc., 2021 SCC 39, para. 86..

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  • Adoption of Bill 64: what do public bodies need to know?

    Bill 64, also known as the Act to modernize legislative provisions as regards the protection of personal information, was adopted on September 21, 2021, by the National Assembly of Québec. This new bill amends some 20 laws relating to the protection of personal information, including the Act respecting Access to documents held by public bodies and the Protection of personal information ("Access Act"), the Act respecting the protection of personal information in the private sector (“ARPIPS”) and the Act to establish a legal framework for information technology (“AELFIT”). While these changes will affect both public bodies and private businesses, this article focuses exclusively on the new requirements for public bodies covered by the Access Act.  We have prepared an amended version of the Access Act in order to reflect the exact changes brought about by Bill 64. 1. Strengthening consent mechanisms and increasing individual control over personal information By way of Bill 64, some important changes were made to the notion of consent when disclosing personal information to public bodies. From now on, any time an individual’s consent is required by the Access Act, public bodies must ensure that the concerned individual’s consent is given separately from any other disclosed information (s. 53.1). Furthermore, any consent to the collection of sensitive personal information (e.g., health or financial information that gives rise to a reasonable expectation of privacy) will have to be expressly obtained from the data subject (s. 59). The amended Access Act now also provides that minors under the age of 14 must have a parent or a guardian consent to the collection of their personal information. For minors over the age of 14, consent can be given either directly by the minor or by their parent or guardian (s. 53.1). The right to data portability is one of the new rights enforced by Bill 64. These added provisions to the Access Act allow data subjects to obtain data that a public body holds on them in a structured and commonly used technological format and to demand that this data be released to a third party (s. 84). Whenever a public body renders a decision based exclusively on automated processing of personal information, the affected individual must be informed of this process. If the decision produces legal effects or otherwise affects the individual concerned, upon request, the public body must also disclose to the individual (i) the personal information used in reaching the decision, (ii) the reasons and main factors leading to the decision, and (iii) the individual’s right to have this personal information rectified (s. 65.2).  Furthermore, public bodies that use technology to identify, locate or profile an individual must now inform the affected individual of the use of such technology and the means that are available to them in order to disable such functions (s. 65.0.1). 2. New personal data protection mechanisms Public bodies will now be required to conduct a privacy impact assessment whenever they seek to implement or update any information system that involves the collection, use, disclosure, retention or destruction of personal data (s. 63.5). This obligation will effectively compel public bodies to consider the privacy and personal information protection risks involved in a certain project at its outset. In fact, the Access Act now states that every public body must create an access to information committee, whose responsibilities will include offering their observations in such circumstances. 3. Promoting transparency and accountability for public bodies The changes brought about by Bill 64 also aim to increase the transparency of processes employed by public bodies in collecting and using personal data, as well as placing an emphasis on accountability. As such, public bodies will now have to publish on their websites the rules that govern their handling of personal data in clear and simple language (s. 63.3). These rules may take the form of a policy, directive or guide and must set out the various responsibilities of staff members with respect to personal information. Training and awareness programs for staff should also be listed. Any public body that collects personal information through technological means will likewise be required to publish a privacy policy on their website. The policy will have to be drafted in clear and simple language (s. 63.4). The government may eventually adopt regulations to specify the required content of such privacy policies. Moving forward, public bodies will also have to inform data subjects of any personal data transfer outside of the province of Quebec (s. 65). Any such transfer will also need to undergo a privacy impact assessment, which will include an analysis of the legal framework applicable in the State where the personal information will be transferred (s. 70.1). Furthermore, any transfer of personal data outside of Quebec must be subject to a written agreement that takes into account, in particular, the results of the privacy impact assessment and, if applicable, the agreed-upon terms to mitigate the risks identified in the assessment (s. 70.1). A public body that wishes to entrust a person or body outside of Quebec with the task of collecting, using, communicating or retaining personal information on its behalf will have to undertake a similar exercise (s. 70.1 (3)). 4. Managing confidentiality incidents Where a public body has reason to believe that a confidentiality incident (which is defined in Bill 64 as the access, use, disclosure or loss of personal information) has occurred, public bodies will be required to take reasonable steps to mitigate the injury caused to the affected individuals and to reduce the risk of further confidentiality incidents occurring in the future (s. 63.7). In addition, where the confidentiality incident poses a risk of serious harm to the affected individuals, these individuals and the Commission d’accès à l’information (“CAI”) must be notified (unless doing so would interfere with an investigation to prevent, detect or suppress crime or violations of law) (s. 63.7). Public bodies must now also keep a register of confidentiality incidents (s. 63.10), a copy of which must be sent to the CAI upon request. 5. Increased powers for the CAI Bill 64 also grants the CAI an arsenal of new powers aiming to ensure that public bodies, as well as private companies, comply with privacy laws. For example, in the event of a confidentiality incident, the CAI may order any public body to take appropriate action to protect the rights of affected individuals, after allowing the public body to make representations (s. 127.2). Furthermore, the CAI now has the power to impose substantial administrative monetary penalties, the value of which may reach up to $150,000 for public bodies (s. 159). In the event of repeat offences, fines will be doubled (s. 164.1). 6. Coming into force The amendments made by Bill 64 will come into force in several stages. Most of the new provisions of the Access Act [DM1] will come into force two years after the date of assent, which was granted on September 22, 2021. However, some specific provisions will take effect one year after that date, including: The requirements regarding actions to be taken in response to confidentiality incidents (s. 63.7) and the powers of the CAI upon disclosure by an organization of a confidentiality incident (s. 137.2); and The exception to disclosure without consent for research purposes (s. 67.2.1). Conclusion The clock is now ticking for public bodies to implement the necessary changes in order to comply with the new privacy requirements outlined in Bill 64, which received official assent on September 22, 2021. We invite you to consult our privacy specialists to help ensure proper compliance with the new requirements of the updated Access Act. The Lavery team would be more than pleased to answer any questions you may have regarding the upcoming changes and the potential impacts on your org

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  • Amendments to Privacy Laws: What Businesses Need to Know

    Bill 64, also known as the Act to modernize legislative provisions respecting the protection of personal information, was adopted on September 21, 2021, by the National Assembly of Québec. It amends some 20 laws relating to the protection of personal information, including the Act respecting access to documents held by public bodies ("Access Act"), the Act respecting the protection of personal information in the private sector ("Private Sector Act") and the Act respecting the legal framework for information technology. While the changes will affect both public bodies and private businesses, this publication will focus on providing an overview of the new requirements for private businesses covered by the Private Sector Act. We have prepared an amended version of the Private Sector Act in order to reflect the exact changes brought about by Bill 64. Essentially, the amended Private Sector Act aims to give individuals greater control over their personal information and promote the protection of personal information by making businesses more accountable and introducing new mechanisms to ensure compliance with Québec’s privacy rules. The following is a summary of the main amendments adopted by the legislator and the new requirements imposed on businesses in this area. It is important to note that, for the most part, the new privacy regime will come into effect in two years. 1. Increasing transparency and individual control over personal information The new Private Sector Act establishes the right of individuals to access information about themselves collected by businesses in a structured and commonly used technological format. Data subjects will now also be able to require a business to disclose such information to a third party, as long as the information was not “created or inferred” by the business (s. 27). This right is commonly referred to as the “right to data portability.” Businesses now have an obligation to destroy personal information once the purposes for which it was collected or used have been fulfilled. Alternatively, businesses may anonymize personal information in accordance with generally accepted best practices in order to use it for meaningful and legitimate purposes (s. 23). However, it is important that the identity of concerned individuals can never again be inferred from the retained information. This is a significant change for private businesses which, under the current law, can still retain personal information that has lapsed. In addition, Bill 64 provides individuals with a right to “de-indexation.” In other words, businesses will now have to de-index any hyperlink that leads to an individual’s personal information where dissemination of such personal information goes against the law or a court order (s. 28.1). Additionally, whenever a business uses personal information to render a decision based exclusively on an automated processing of such information, it must inform the concerned individual of the process at the latest when the decision is made (s. 12.1). The individual must likewise be made aware of their right to have the information rectified (s. 12.1). Bill 64 provides that the release and use of nominative lists by a private company for commercial or philanthropic prospecting purposes are now subject to the consent of concerned data subjects. Furthermore, in an effort to increase transparency, businesses will now be required to publish their rules of governance with respect to personal information in simple and clear terms on their website (s. 3.2). These rules may take the form of a policy, directive or guide and must, among other things, set out the various responsibilities of staff members with respect to personal information. In addition, businesses that collect personal information through technology will also be required to adopt and publish a privacy policy in plain language on their website when they collect personal information (s. 8.2). The amended Private Sector Act further provides that businesses that refuse access to information requests, in addition to giving reasons for their refusal and indicating the relevant sections of the Act, must now assist applicants in understanding why their request was denied when asked to (s. 34). 2. Promoting privacy and corporate accountability Bill 64 aims to make businesses more accountable for the protection of personal information, as exemplified by the new requirement for businesses to appoint a Chief Privacy Officer within their organization. By default, the role will fall upon the most senior person in the organization (s. 3.1). In addition, businesses will be required to conduct privacy impact assessments (“PIA”) for any information system acquisition, development or redesign project involving the collection, use, disclosure, retention or destruction of personal information (s. 3.3). This obligation forces businesses to consider the privacy and personal information protection risks involved in a project at its outset. The PIA must be proportionate to the sensitivity of the information involved, the purpose for which it is to be used, its quantity, distribution and medium (s. 3.3). Businesses will likewise be required to conduct a PIA when they intend to disclose personal information outside Québec. In these cases, the purpose of the PIA will be to determine whether the information will be adequately protected in accordance with generally accepted privacy principles (s. 17). The extra-provincial release of personal information must also be subject to a written agreement that takes into account, among other things, the results of the PIA and, if applicable, the terms and conditions agreed to in order to mitigate identified risks (s. 17(2)). The disclosure of personal information by businesses for study, research or statistical purposes is also subject to a PIA (s. 21). The law is substantially modified in this regard, in that a third party wishing to use personal information for such purposes must submit a written request to the Commission d'accès à l'information (“CAI”), attach a detailed description of their research activities and disclose a list of all persons and organizations to which it has made similar requests (s. 21.01.1 and 21.01.02). Businesses may also disclose personal information to a third party, without the consent of the individual, in the course of performing a service or for the purposes of a business contract. The mandate must be set out in a written contract, which must include the privacy safeguards to be followed by the agent or service provider (s. 18.3). The release of personal information without the consent of concerned individuals as part of a commercial transaction between private companies is subject to certain specific requirements (s. 18.4). The amended Private Sector Act now defines a business transaction as “the sale or lease of all or part of an enterprise or its assets, a change in its legal structure by merger or otherwise, the obtaining of a loan or other form of financing by it, or the taking of a security interest to secure an obligation of the enterprise” (s. 18.4). Bill 64 enshrines the concept of “privacy by default,” which means that businesses that collect personal information by offering a technological product or service to the public with various privacy settings must ensure that these settings provide the highest level of privacy by default, without any intervention on behalf of their users (s. 9.1). This does not apply to cookies. Where a business has reason to believe that a privacy incident has occurred, it must take reasonable steps to reduce the risk of harm and the reoccurrence of similar incidents (s. 3.5). A privacy incident is defined as “the access, use, disclosure or loss of personal information” (s. 3.6). In addition, businesses are required to notify concerned individuals and the CAI for each incident that presents a serious risk of harm, which is assessed in light of the sensitivity of the concerned information, the apprehended consequences of its use and the likelihood that it will be used for a harmful purpose (s. 3.7). Companies will furthermore be required to keep a confidentiality incident log that must be made available to the CAI upon request (s. 3.8). 3. Strengthening the consent regime Bill 64 modifies the Private Sector Act to ensure that any consent provided for in the Act is clear, free and informed and given for specific purposes. This means that consent must be requested for each of the purposes of the collection, in simple and clear terms and in a clearly distinct manner, to avoid consent being obtained through complex terms of use that are difficult for individuals to understand (art. 14). The amended Private Sector Act now provides that minors under the age of 14 must have a parent or a guardian consent to the collection of their personal information. For minors over the age of 14, consent can be given either directly by the minor or by their parent or guardian (s. 14). Within an organization, consent to the disclosure of sensitive personal information (e.g., health or other intimate information) must be expressly given by individuals (s. 12). 4. Ensuring better compliance The Private Sector Act has likewise been amended by adding new mechanisms to ensure that businesses subject to the Private Sector Act comply with its requirements. Firstly, the CAI is given the power to impose hefty dissuasive administrative monetary penalties on offenders, which can be as high as $10,000,000 or 2% of the company's worldwide turnover (s. 90.12). In the event of a repeat offence, the fine will be doubled (s. 92.1). In addition, when a confidentiality incident occurs within a company, the CAI may order it to take measures to protect the rights of affected individuals, after allowing the company to make observations (s. 81.3). Secondly, new criminal offences are added to the Private Sector Act, which may also lead to the imposition of severe fines. For offending companies, such fines can reach up to $25,000,000 or 4% of their worldwide turnover (s. 91). Finally, Bill 64 creates a new private right of action. Essentially, it provides that when an unlawful infringement of a right conferred by the Private Sector Act or by articles 35 to 40 of the Civil Code of Québec results in prejudice and the infringement is intentional or the result of gross negligence, the courts may award punitive damages of at least $1,000 (s. 93.1). 5. Coming into force The amendments made by Bill 64 will come into force in several stages. Most of the new provisions of the Private Sector Act will come into force two years after the date of assent, which was granted on September 22, 2021. However, some specific provisions will take effect one year after that date, including: The requirement for businesses to designate a Chief Privacy Officer (s. 3.1); The obligation to report privacy incidents (s. 3.5 to 3.8); The exception for disclosure of personal information in the course of a commercial transaction (s. 18.4); and The exception to disclosure of personal information for study or research purposes (s. 21 to 21.0.2). Finally, the provision enshrining the right to portability of personal information (s. 27) will come into force three years after the date of official assent. The Lavery team would be more than pleased to answer any questions you may have regarding the upcoming changes and the potential impact of Bill 64 on your business. The information and comments contained in this document do not constitute legal advice. They are intended solely for the use of the reader, who assumes full responsibility for its content, for their own purposes.

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  • How to Negotiate Temporary Agreements or Contracts in Times of Crisis?

    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.

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  • The Impact of COVID-19 on Contracts

    With the ongoing COVID-19 pandemic, governments and agencies are implementing an increasing number of measures of all kinds. The state of emergency is giving rise to a multitude of legal concerns, in particular contractual ones. The temporary closure of many businesses, public places and borders and the resulting economic uncertainty is leading businesses to question their contractual obligations, which may have become difficult to meet. In such a context, can debtors fail to meet their obligations without being held liable? The answer to this question can be found either in the text of the contract binding the parties or in the Civil Code of Québec (hereinafter “C.C.Q.”). Many contracts do in fact provide for exemption mechanisms. They set out which of the parties will bear the risks associated with events beyond their control. In the absence of contractual provisions to that effect, the rules set out in the C.C.Q. apply. The Civil Code of Québec and superior force Article 1693 C.C.Q. provides that the debtor of an obligation is released from said obligation when it cannot be performed by reason of superior force. However, the burden of proof of superior force is on the debtor. In Quebec law, superior force is defined as an unforeseeable and irresistible event that is external to the party subject to the obligation. It makes the performance of an obligation impossible1. Thus, in certain circumstances, natural phenomena, such as earthquakes, floods and others, or human acts, such as a state of emergency declared by a government, illness or death, may be considered superior force. Determining whether an event in a particular context constitutes superior force must be done by taking into account all relevant factors. For an event to qualify as superior force, it must meet the following three conditions or criteria. It must be: Unforeseeable Irresistible Exterior An event is unforeseeable when the parties to a contract, acting as reasonably prudent and diligent persons, could not foresee it at the time that the contract was concluded. There is no need for the event to be a new phenomenon. For example, ice storms in Quebec are not unusual. In 1998, however, the ice storm led to an unforeseeable situation. The magnitude of the 1998 ice storm was such that it was sometimes described as superior force.  An event is irresistible when (i) any person placed in the same circumstances cannot reasonably avoid it and (ii) it makes the performance of an obligation impossible. Thus, if the performance of an obligation remains possible, but is simply more difficult, more perilous or more expensive, the event having caused the complication cannot be considered superior force. For an event to be considered exterior, the debtor must have no control over it and must not be responsible for causing it. The debtor must even be able to demonstrate that it has taken all reasonable steps to mitigate its consequences. On the basis of these criteria, the current state of emergency in Quebec may be deemed to be a situation of superior force for some debtors. The analysis must be made on a case-by-case basis and consider the specific obligations of each debtor. For example, the production stoppage ordered by the Government of Quebec, imposing the suspension of workplace activities other than priority activities as of March 25, 2020, makes it absolutely impossible for certain businesses to perform the obligations covered by this decree. For others, the state of emergency may have financial consequences, but these do not make their obligations impossible to perform. While the ongoing crisis can be considered an unforeseeable event for the purposes of a contract concluded years ago, this can hardly be the case for a contract concluded in the last few days, when the disease was already endemic or the pandemic had been announced by the health authorities. In the event of superior force, a debtor is released from the obligation(s) affected by the superior force2. Depending on the importance of these obligations, the release may, in certain cases, lead either to the termination of the contract in its entirety, or to the suspension of the performance of certain obligations. Thus, suspension should only occur when the obligations are to be performed successively and the impossibility of performance is only temporary. A debtor who is released from an obligation by reason of superior force may not demand consideration from the other contracting party3. Superior force cannot be used as a means of exemption for a debtor who is subject, under the terms of the contract, to an obligation qualified as an obligation “of warranty4”. The debtor must then perform the obligation and assume all risks related to the occurrence of an unforeseeable and irresistible event over which it has no control. A debtor faced with the current difficulties arising from the global COVID-19 pandemic must, in all cases, take steps to minimize the damage. For example, it must try to find new suppliers or subcontractors before claiming that it is unable to fulfil its obligations. Contracts may provide for different conditions Parties to a contract may include provisions in the contract governing the consequences of uncontrollable situations, such as superior force, and thus deviate from what is provided for in the C.C.Q. In practice, many contracts contain a broader or more restrictive definition of events that may constitute superior force. For example, strikes and fires will generally not be considered cases of superior force within the meaning of the C.C.Q., but may be under the terms of a contractual provision. Likewise, a party may, at the time that a contract is concluded, undertake to fulfil its obligations even if it is subject to a situation of superior force. In so doing, it waives the right to invoke such grounds for exemption in advance. The parties may also provide for steps to be taken in order to benefit from a contractual provision governing superior force, such as the sending of a notice within a stipulated time limit. The usual provision dealing with superior force requires the party invoking it to send a notice to the other party justifying its use of the provision. Failure to send such notice within the prescribed time limit may result in the affected party being barred from availing itself of the superior force provision. It is therefore particularly important for a party to pay close attention to the formalities and other requirements set out in the contract when invoking such a provision. A contract may additionally contain a provision that determines what effects the occurrence of an event considered as superior force will have. For example, the parties may agree that superior force will result in the termination, suspension or modification of an obligation, such as the proportional adjustment of a minimum volume to be delivered. Finally, the parties to a contract may set out the consequences of unforeseen and external situations that do not, strictly speaking, make the performance of an obligation impossible. For instance, the parties may anticipate the risk of an unexpected increase in the cost of an input by means of a hardship clause. A matter of sound foresight, such a clause may have significant consequences in the current situation, even if it does not specifically address superior force. Conclusion A superior force situation and the exercise of the rights that may result from it must be analyzed with the following in mind: A case-by-case analysis is required for each situation. Other legal concepts may apply depending on the circumstances, such as the duty of good faith of the parties to a contract, the duty to minimize damage, and the duty to demonstrate the absence of an alternative. Business risks or reputation risks may apply to both the party wishing to invoke superior force and the party against whom it is invoked. A review of the terms and conditions of the parties’ insurance policies, which may provide compensation for financial losses, may also be appropriate.   Article 1470 C.C.Q. Article 1693 C.C.Q. Article 1694 C.C.Q. This is opposed to obligations qualified as “of result” or “of means,” for which the debtor may be released by reason of superior force.

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  • Can an Expert Report be Inadmissible for Bias as a Preliminary Stage? The Superior Court of Quebec decides

    The Code of Civil Procedure gives a party the ability to apply for the dismissal of an expert report as soon as it is disclosed by the adverse party. This process is governed by the courts. In the decision in Safran Nacelles v. Learjet inc.1, rendered in August 2019, the Superior Court granted an application to dismiss an expert report and excluded it even before the trial was held, after finding that its author did not have the requisite impartiality to enlighten the court. Facts In 2007, Bombardier Inc. (hereinafter “Bombardier”) retained the services of the plaintiffs, Safran Nacelles and Safran Landing Systems (hereinafter jointly referred to as “Safran”). Safran became a supplier of Bombardier in connection with the Learjet 85 program. In October 2015, Bombardier stated that it was forced to abandon its program, citing poor sales as the reason for doing so. However, Safran felt that the contracts, which were binding on the parties, had been terminated without cause and claimed damages. In 2018, in the context of the proceedings instituted by Safran, Bombardier filed an expert report in the court record which determined the reasons for the abandonment of the Learjet 85 program. In particular, the expert analyzed the market trends, reviewed Learjet sales, and compared them with the sales of competing products. However, the expert had been an employee of Bombardier since 2007 and was even the head of the market analysts team at Bombardier. Thus, his work had served as the basis for Bombardier’s decision to terminate the program. Decision Justice Thomas M. Davis, of the Superior Court, dismissed Bombardier’s expert report after stating the requirements of objectivity, impartiality and thoroughness associated with the expert’s work2. He also noted that the purpose of the expert’s report is to enable the trial judge to assess the technical, scientific or specialized aspects involved in the proceeding before him or her. The expertise should extend beyond matters within the knowledge and experience of the judge, without however taking the form of a legal opinion or pleading3. Where expert evidence does not meet these criteria, it can be rejected at the preliminary stage, but only in cases where the inadmissibility of the evidence is clear. While judge Davis acknowledged the great experience of Bombardier’s expert, he noted that this experience was acquired in the context of his job4. Furthermore, the judge also noted that the expert’s work was key to Bombardier’s decision to terminate the Learjet 85 program5. The expert was involved in the program, participated in presentations made to Bombardier’s suppliers, and would undoubtedly have to testify at trial as a witness to the facts. The judge concluded that he was [translation] "the main supplier of the information that enabled Bombardier's management to make its decision"6, making him an advocate for Bombardier’s position, and therefore biased. Noteworthy points of decision Since the current Code of Civil Procedure came into force on January 1, 2016, the debate on the admissibility of expert reports should normally take place prior to trial. Article 241 of the Code of Civil Procedure provides that a party may, at that stage, apply for the dismissal of the report on grounds of irregularity, substantial error or bias. However, whether an expert is biased is sometimes an issue that is difficult to resolve prior to trial. Both judges and lawyers have a tendency to leave this issue to the assessment of the judge on the merits and deal with it as a question of probative value. Therefore, there are few examples of situations, in the course of proceedings, that justify the dismissal of an expert report on grounds of bias. Judge Davis’s decision in the case of Safran Nacelles v. Learjet inc. is one of the most instructive. It is all the more interesting as it was rendered solely on the issue of bias, in the absence of any other form of irregularity in the report. For judge Davis, it was not the expert’s job with the defendant Bombardier that led to the dismissal of his report, but rather, the fact that his conclusions formed the very basis of the decision that was being attacked by Safran, i.e. the main issue in the debate between the parties. The judge’s reasons were consistent with two other decisions of the Superior Court in which the substantial involvement of the experts in the facts at issue justified the dismissal of their reports on grounds of bias7. The question of the admissibility of expert reports must be reviewed on a case by case basis. Our team can advise you on this issue and assist you in choosing an appropriate expert.   2019 QCCS 3269. Id., para. 23. Id., para. 25. Id., para. 28. Id., para. 29. Id., para. 30. Procureure générale du Québec c. L’Unique Assurances générales, 2018 QCCS 2511; Roy v. Québec (Procureure générale), 2016 QCCS 1829.

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  • Cyberattack: Superior Court dismisses application for authorization to institute a class action against Yahoo! Inc.

    The Superior Court of Québec dismissed an application for authorization to institute a class action against Yahoo! Inc.1 (hereinafter “Yahoo!”) seeking damages as a result of cyberattacks that compromised the confidentiality of user data. Context In September 2016, Yahoo! issued a press release announcing that nearly 500 million users were reportedly victims of a cyberattack in 2014. In December 2016, the company informed its users of another cyberattack that it claims took place in 2013. In February 2017, users were informed that the use of cookies apparently allowed a third party to access information contained in their accounts between 2015 and 2016. While a class action was brought in Ontario in December 2016, an application for authorization to institute a class action was filed in Québec the following month seeking compensation for users who were victims of one or more of these cyberattacks. The decision No arguable case After limiting the class to Québec residents whose information was lost and/or stolen between 2013 and 2019, the Court addressed the test set forth in paragraph 2 of article 575 of the Code of Civil Procedure. According to this criterion, the plaintiff must demonstrate that the alleged facts appear to justify the conclusions sought. The Court must distinguish factual allegations from arguments, opinions, unsupported inferences and hypotheses, as well as assertions that are implausible or false. This analysis is carried out in light of the plaintiff’s cause of action. In this case, the plaintiff had a Yahoo! email account. She alleged having suffered harm because her account may have been hacked during the 2013 cyberattack, although the nature of the compromised information is not yet known. She added that she suffered additional harm due to the “imminent” and “certainly impending” threat of identity theft and fraud resulting from the sale of her information on the black market and its use by criminals. She was also embarrassed because some of her friends received spam emails from her account in her name. As a result, she must now take steps to protect her personal and financial information. Building on the principles set out in the Sofio2 and Mustapha3 decisions, the Court reiterated that the demonstration of an alleged fault does not presuppose the existence of prejudice and that the latter must be serious and prolonged. Embarrassment and temporary inconveniences of an ordinary nature do not constitute compensable damages. Contrary to the allegations in the application, the Court considered that the plaintiff’s answers during her examination demonstrated that she has no reason to believe that she was a victim of identity theft or fraud, since she did not identify any suspicious charges and did not receive a poor credit report. In addition, she continued to use her Yahoo! account and admitted that she did not purchase any identity protection services, such as credit monitoring. Thus, the only prejudice the plaintiff suffered is the fact that she had to change her passwords for all of the accounts associated with her Yahoo! email address and the embarrassment she suffered because of the spam emails that were sent to her friends. On this point, the Court noted that none of the spam emails were filed into the Court record and that none of the recipients of the spam emails suffered harm. Consequently, the Court concluded that the plaintiff had not demonstrated the existence of an arguable cause. The Court distinguished the facts in this case from those in Zuckerman4 and Belley5, in which the plaintiffs had incurred expenses to protect their information or had been victims of fraud or identity theft. Inadequate representation Adequate representation implies that the representative plaintiff has a valid personal cause of action. However, a civil liability action requires the demonstration of a legal basis for the claim of damages, which was not achieved in this case. To summarize: It is not enough to claim the existence of a fault: damage must result therefrom. The notion of “compensable harm” must go beyond mere annoyance. Conclusion Legal action brought as a result of data breaches has increased exponentially in recent years. Cybercrime has become the second most common type of financial fraud. Any company that retains client data should be aware of the risks associated with cyberattacks and the potential lawsuits. To minimize risks, several measures can be implemented, such as adopting a response plan for cyberattacks, training employees and regularly updating security measures. For example, the PCI DSS (Payment Card Industry Data Security Standard) provides a detailed framework that allows companies to implement secure transaction processes. It is recommended that companies consult an IT specialist or hire an internal expert for guidance. It is also recommended that companies contact their insurers to verify their insurance policy coverage and, if necessary, obtain cyber risk insurance coverage. For class action practitioners, this decision once again demonstrates the importance of bearing in mind the impact that the examination of the representative plaintiff could have on the outcome of a case.   Bourbonnière v. Yahoo! Inc., 2019 QCCS 2624. Sofio c. Organisme canadien de réglementation du commerce des valeurs mobilières (OCRCVM), 2015 QCCA 1820. Mustapha v. Culligan of Canada Ltd., 2008 SCC 27. Zukerman v. Target Corporation, 2015 QCCA 1809. Belley v. TD Auto Finance Services Inc./Services de financement auto TD inc., 2015 QCCS 168/2015 QCCA 1255.

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  • A New Look at Interlocutory Injunctions

    The year 2018 has been an important one for case law regarding injunctions: the Supreme Court of Canada and the Court of Appeal of Quebec each rendered decisions that redefined certain parameters for the issuing of a interlocutory injunction. R. v. Canadian Broadcasting Corp. On February 9, 2018, the Supreme Court of Canada rendered a unanimous decision in R. v. Canadian Broadcasting Corp.1 The most significant aspect of this decision is that the Court redefines the serious issue to be tried criterion when it comes to a mandatory interlocutory injunction, which is an injunction that orders the defendant to do something, as opposed to a prohibitive injunction, which orders the defendant to refrain from doing something. An accused was found guilty of first degree murder of a minor, following which the Canadian Broadcasting Corporation (“CBC”) published information on its website that revealed the identity of the victim. A ban prohibiting the publishing, broadcasting, or transmission in any way of any information that could identify the victim was ordered under section 486.4(2.2) of the Criminal Code, at the Crown’s request. CBC refused to remove the information from its website, and the Crown filed an application to have CBC declared guilty of criminal contempt and to obtain an interlocutory injunction ordering the removal of the information from CBC’s website. The first judge dismissed the Crown’s application, concluding that it had not met its burden with regard to the criteria for obtaining a mandatory interlocutory injunction. The Court of Appeal allowed the appeal and granted the injunction. The Supreme Court explains that, when it comes to mandatory interlocutory injunctions, the applicant must demonstrate more than the serious issue to be tried, as established by the decision RJR—MacDonald Inc. v. Canada (Attorney General).2 The threshold to be applied is a “strong prima facie case,” which requires the applicant to establish “[...] a strong likelihood on the law and the evidence presented that, at trial, the applicant will be ultimately successful in proving the allegations set out in the originating notice”.3 The two other criteria for issuing an interlocutory injunction (irreparable harm and balance of convenience) remain the same. The Court specifies that the modified test only applies to mandatory interlocutory injunctions, explaining that an interlocutory injunction framed in prohibitive language may nevertheless require the defendant to take positive action. For example, ordering that CBC stop transmitting the information that established the identity of the victim would require positive action on the part of CBC, that is, to take measures to remove the information from its website. The Court emphasizes the importance of looking past the form and the wording used, in order to determine the real essence of the order sought. Pointing out the discretionary nature of the decision to issue an interlocutory injunction and the duty of deference with regard to intervention on the part of appeal courts, the Court allows the appeal and restores the decision of the chambers judge, concluding that the Crown had not demonstrated a strong prima facie case of criminal contempt. In fact, since section 486.4(2.2) of the Criminal Code could be reasonably interpreted as only prohibiting publications transmitted after the publication ban, the Crown could not establish that it had a strong likelihood to succeed at trial. Groupe CRH Canada inc. c. Beauregard          On June 21, 2018, the Court of Appeal rendered a decision in Groupe CRH Canada inc. c. Beauregard,4 which will surely often be cited, since it redefines the relationship that exists between the three criteria for the issuance of an interlocutory injunction. The respondents, waterfront residents near Chemin de la Butte-aux-Renards (the “Road”), commenced legal proceedings to seek an interlocutory and permanent injunction and damages to stop truck traffic on the Road. The Road was the only access road that enables trucks to obtain supplies from the stone quarry operated by the appellant CRH Canada Group Inc. (“CRH”), and from manufacturing facilities for products related to asphalting, which belonged to the appellant Bau-Val Inc. (“Bau-Val”). The impleaded party, KPH Turcot, was awarded the design-build contract for the Turcot project and would receive its supplies from the CRH quarry, which led to increased traffic on the Road since the spring of 2016. The Superior Court issued an interlocutory injunction prohibiting the operation of trucks in the evenings and at night (from 5:30 p.m. to 6:29 a.m.), limiting the operation of trucks on weekends to three Saturdays per year, and restricting the operation of trucks during the day. Among the grounds of appeal raised, the appellants claimed that the chambers judge did not consider the balance of convenience after having concluded that the respondents met the prima facie case criterion. First, the Court clarifies the fact that there is no true distinction to make between determining if there is a serious issue to be tried and a prima facie case: it is essentially sufficient for the application to be neither frivolous nor vexatious. It should be noted that the Court does not refer to the decision R. v. Canadian Broadcasting Corp. decision rendered a few months earlier, which redefined this criterion for mandatory interlocutory injunctions. This could probably be explained by the fact that the Court of Appeal had before it an application to issue a prohibitive interlocutory injunction for which it must have been of the opinion that the new criterion established by the Supreme Court of Canada did not apply. With regard to the second criterion, the Court recalls the wording used in article 511 of the Code of Civil Procedure, which codifies interlocutory injunctions: prejudice must be serious or irreparable, which means to that an injunction can be issued even if the prejudice can be compensated monetarily, if and so long as the prejudice is “serious.” The most significant aspect of this decision is the analysis carried out by the Court with regard to the balance of convenience criterion. The Court comes to the firm conclusion that a judge who has before him an application for interlocutory injunction must analyze the balance of convenience criterion, even if the applicant demonstrates a strong prima facie case. This conclusion seems to contradict a number of precedents, including the landmark case of James Bay Development Corporation v. Chief Robert Kanatewat,5 which was to the effect that the balance of convenience should not be analyzed if the applicant demonstrates a strong prima facie case. [14]      At the interlocutory injunction stage these rights are apparently either (a) clear, or (b) doubtful, or (c) non-existent: (a) If it appears clear, at the interlocutory stage, that the Petitioners have the rights which they invoke then the interlocutory injunction should be granted if considered necessary in accordance with the provisions of the second paragraph of Article 752 C.P. (b) However, if at this stage the existence of the rights invoked by the Petitioners appears doubtful then the Court should consider the balance of convenience and inconvenience in deciding whether an interlocutory injunction should be granted. (c) Finally if it appears, at the interlocutory stage, that the rights claimed are non-existent then the interlocutory injunction should be refused. The Court indicates that even if there were a violation of an objective legislative standard of public order, the criterion of the balance of convenience must still be analyzed and could be used as an argument against the application of the standard. It is clear that this change made by the Court is a major one: henceforth, the applicant is never exempt from demonstrating that the balance of convenience criterion is in the his favour, even if said applicant demonstrates a strong prima facie case. The Court provides two cases in which judges may discontinue their analyses of the prima facie case criterion: [our translation] “(a) when the applicant does not meet the preliminary condition of the  "prima facie case" or the "serious issue to be tried", such that the application may be denied for this reason; and (b) when the case is based on a pure question of law” (para. 77). Finally, the Court briefly mentions that, in Quebec, it is possible for judges to discontinue their analyses based on the prima facie case criterion for cases in which the interlocutory injunction is aimed at enforcing contractual obligations. The Court does not elaborate more on this obiter, which can be applied in Quebec, where specific performance is the default remedy for not performing a contractual obligation, and not an exception, as it is in common law. On the basis of its analysis of the balance of convenience, the Court partially allows CRH’s appeal, quashing the injunction which limited the operation of trucks during the day on weekdays. With regard to Bau-Val, as the first judge acknowledged that the traffic generated was minimal, the  injunction was quashed.  Conclusion Litigants parties must be familiar with these two decisions that redefine the criteria required for issuing an interlocutory injunction.   2018 SCC 5 1994 CanLII 117 (SCC). The Court’s reasons were delivered by the Honourable Justice Brown. para. 17 2018 QCCA 1063 (CanLII) [1975] C.A. 166

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  • Churchill Falls (Labrador) Corp. v. Hydro-Québec | The Supreme Court rules in favour of Hydro-Québec: the interaction between good faith and the scheme of the contract

    Introduction Although 24 years of jurisprudence have gone by since its codification in article 1375 of the Civil Code of Québec, the notion of good faith remains a vague concept whose incidence on the performance of contracts is still unclear.  Although it is increasingly evident that good faith is not a mere interpretive concept without substantial meaning, the most fundamental uncertainty remains— or rather, remained, until the Supreme Court of Canada rendered the decision that is the subject of this bulletin. This uncertainty has to do with knowing to what extent the general obligation of good faith can change the content of a contract duly entered into by the parties. In other words, could the judge, on the basis of article 1375 CCQ, intervene in the contract, the “law for the parties,” to remodel it according to the judge’s understanding of good faith? Context In this matter, the plaintiff, Churchill Falls, argued that the other contracting party, Hydro-Québec, had an obligation to renegotiate the price in a contract under which the latter had undertaken to purchase most of the electricity produced by the Churchill Falls power plant at a fixed price for a period of 65 years. According to Churchill Falls, this obligation to renegotiate the price was a matter of good faith and was required of Hydro-Québec due to the changes in the electricity market that meant that the fixed price in the contract had become too low compared to the prices paid on this market. The Court thus had to decide whether it could, on the basis of the notion of good faith, add an obligation to renegotiate the price to the fixed price contract. Decision The Supreme Court of Canada responded to this question in the negative, as had the Superior Court and Court of Appeal of Quebec. To do this, it analyzed and rejected each of the arguments submitted by Churchill Falls. We will briefly examine these arguments and the way in which the Supreme Court rejected them. The contract is not a joint venture contract Churchill Falls initially claimed that the contract that it had signed with Hydro-Québec was a joint venture contract, which, by its very nature, implies an equitable sharing of risks and profits, and therefore entails an obligation to renegotiate the price in order to better share the profits generated from the sale of electricity. The legal nature of a joint venture contract is disputed since some authors, looking to Quebec jurisprudence, are of the opinion that it consists of an undeclared partnership, while others defend the existence in Quebec law of a sui generis contract of joint venture.  Without getting into this debate, the majority of the Court was of the opinion that the contract in question fulfilled neither the criteria of an undeclared partnership contract, nor those of a sui generis contract of joint venture. In fact, regarding the undeclared partnership, the evidence showed no common intention to form a partnership (animus societatis) nor any combining of resources. Regarding the sui generis contract of joint venture, the majority of the Court identified from authors who defend this unnamed legal form the determining factor of “an intention to jointly assume the responsibility involved in carrying out the proposed project.” However, the contract in question clearly defined and divided the responsibility of each party to the contract in such a way that no intention to share responsibility for the project could be deduced. The contract is not a relational contract Churchill Falls then claimed that the contract that it had signed with Hydro-Québec was a relational contract that, by its very nature, entailed a stricter obligation of good faith, including, given the change in circumstances, the obligation for the parties to renegotiate the price in order to better share the profits from the sale of electricity. The majority of the Court rejected this argument because they were of the opinion that the contract in question was not a relational contract. They did not rule on the second part of this argument, regarding the scope of a good faith obligation if it were a relational contract. Regarding the definition of relational contracts, the position of the majority of the Court sets a precedent. In fact, while jurisprudence and authors have defined the relational contract in a variety of somewhat eclectic ways, the majority of the Court accepted only the definition proposed in 1998 by Professor Belley: “a relational contract can roughly be defined as a contract that sets out the rules for a close cooperation that the parties wish to maintain over the long term.” In essence, relational contracts provide for economic coordination as opposed to setting out a series of defined prestations. It is a corollary to the emphasis on the parties’ relationship that their respective prestations are not defined in much detail. The contract in question here clearly quantified and defined each party’s prestations, so that no important prestations were left undefined. According to the majority of the Court, this shows that the parties intended the project to proceed according to the words of the contract at face value, not on the basis of their ability to agree and cooperate from day to day to fill any gaps in the contract: “The Power Contract sets out a series of defined and detailed prestations as opposed to providing for flexible economic coordination. It is not therefore a relational contract.” No implied obligation to renegotiate the price Churchill Falls (CFLCo) also claimed that an implied obligation to collaborate and renegotiate the price is incident to the contract according to its nature, under art. 1434 CCQ. The majority of the Court dismissed this argument. On this subject also, the position of the majority of the Court sets a precedent. In fact, to a certain degree, the judges strengthened and shed light on the concept of implied contractual obligations under article 1434 CCQ. According to them, an implied duty may be incident to a contract according to the nature of the contract if the duty is consistent with the general scheme of the contract and if the contract’s coherency seems to require such a duty. However, such an implied clause must not merely add duties to the contract that might enhance it, but must fill a gap in the terms of the contract such that it can be presumed that the clause reflects the parties’ intention, which is inferred from their choice to enter into a given type of contract. The majority of the Court noted that in this case, there is nothing to suggest that the parties’ prestations would be incomprehensible and would have no basis or meaningful effect in the absence of an implied duty according to which Hydro-Québec must either exceed the usual requirements of good faith in cooperating with CFLCo or redistribute windfall profits: “The Contract governs the financing of the Plant and the sale of electricity produced there, and also strictly regulates the quantity of electricity to be provided by CFLCo and the price to be paid by Hydro-Québec. The meaningful effect of the sale for the parties is clearly identifiable: Hydro-Québec obtains electricity, while CFLCo receives the price paid for it. The fact that the price might not be in line with market prices does not destroy the very logic behind the sale or deprive it of any meaningful effect. Furthermore, the benefits each party derives from the sale are related to the other prestations associated with the construction of the Plant. There is no gap or omission in the scheme of the Contract that requires this Court to read an implied duty into the Contract in order to make it coherent.” The limits of good faith and the rejection of the doctrine of unforeseeability Finally, Churchill Falls argued that independently from the nature of the contract, Hydro-Québec was nonetheless obliged to renegotiate because, in Quebec civil law, the concepts of good faith and equity condition the exercise of the rights created by any type of contract. It argued that these concepts prevent Hydro-Québec from relying on the words of the Contract, because to do so in circumstances in which the Contract effectively provides for disproportionate prestations would be contrary to its duty to act in good faith and in accordance with equity. And given that the prestations owed by the parties have been disproportionate since the changes in the market occurred, it argued that Hydro-Québec has been violating its duties related to good faith since then by refusing to renegotiate the Contract.  In this regard, the majority of the Court began by categorically affirming that the doctrine of unforeseeability, which Churchill Falls seemed to rely on indirectly, was not part of Quebec civil law. The majority of the Court noted that Churchill Falls was seeking to use the concepts of good faith and equity in a manner that goes beyond the limits of the doctrine of unforeseeability even though the Quebec legislature has refused to incorporate that doctrine into the province’s civil law. They added that, “If unforeseeability itself has been rejected, a protection analogous to it that would be linked only to changes in circumstances without regard for the core conditions of the doctrine as recognized in other civil law jurisdictions could not become the rule in Quebec law.” The majority of the Court rejected equity as a basis for a possible obligation to renegotiate the price, because “its effect would then be to indirectly introduce either lesion or unforeseeability into our law in every case.” They added that the equity provided in article 1434 as a source of implied obligations “is not so malleable that it can be detached from the will of the parties and their common intention as revealed in and established by a thorough analysis of the whole of the relevant evidence.” In fact, the evidence revealed that both parties to the contract were experienced, and they negotiated its clauses at length and intended one of them to bear the risk of fluctuations in electricity prices. The majority of the Court also rejected the argument of good faith as a basis for a possible obligation to renegotiate the price. Their analysis in this regard is based on the following two assumptions, which clarify the concept of good faith. Firstly, according to them, good faith is a standard associated with the parties’ conduct; it cannot be used to impose obligations that are completely unrelated to their conduct. In other words, for good faith to be invoked with success, unreasonable conduct by one of the parties must be shown. In this case, Hydro-Québec did nothing but demand the performance of the contract as it had been agreed upon. The second assumption is that good faith serves to maintain the relevance of the prestations that form the basis of the contract even if the words of the contract do not specifically prohibit the parties from doing something that would impede its fulfilment. The majority of the Court adds that, “if the main prestations of a contract are renegotiated and modified, they will rarely remain relevant.” In other words, “Because good faith takes its form from the terms of the contract, it cannot serve to undermine the contract’s paradigm. But in the view of the Superior Court and the Court of Appeal, that is exactly what CFLCo is arguing for in this case: CFLCo is demanding that Hydro-Québec renounce its access to a source of electricity production at a stable cost, that is, to the principal benefit it derives from the Contract.” Commentary This decision sheds a very useful light on the relationship between good faith and the contents or scheme of a contract. Closing the door to the general application of the doctrine of unforeseeability, the Court instead favoured the binding force of contracts and contractual stability. Contrary to the claims of Churchill Falls, the obligation to act in good faith cannot oblige the parties to renegotiate the fundamental terms of the contract, but aims rather to enable the performance of the prestations under the contract. However, although in principle it is legitimate to demand adherence to a contract, a party’s rigidity must not reach the point of abuse of rights, in which case it could be sanctioned for its conduct and held responsible if there is resulting damage. Moreover, various judicial instruments can help palliate the unforeseeable. If the unforeseen situation is severe enough to be qualified as superior force under the Civil Code, in that it prevents a party to the contract from fulfilling its obligations, said party could be released from them. The parties are also free to define the concept of superior force in their relationship through a contractual clause. Similarly, the parties can limit the risks associated with the unforeseeable in long-term contracts through adjustment clauses, which can take several forms (indexing clauses, revaluation clauses, renegotiation clauses, etc.). This could be especially useful in a fixed-price contract where the risks are usually attributed to the service provider ahead of time. However, as the matter of Churchill Falls clearly shows, a party that has agreed by contract to assume a risk without providing for such adjustment mechanisms will have to assume the consequences.  

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  • Wellington-Type Motion And Reserve Of Rights Letter

    On July 9, 2018, the Superior Court once again examined the principles applicable to Wellington-type motions in connection with a matter opposing two contractors against their liability insurers in a legal proceeding initiated by the Société des traversiers du Québec (hereafter “STQ”). The contractors were, among other things challenging the application of some exclusions, alleging that the denunciation of said exclusions as ground to deny coverage were raised too late. The Facts During a storm, an STQ platform on which the contractors were working was damaged. The sheet pilings provided by the STQ and installed by the contractors detached from the platform and fell into the river. Initially, the adjusters mandated by the insurers denied coverage by referring to the exclusions concerning damage to the property owned, leased or occupied by the contractors. In its proceedings, STQ was summarily alleging the contractors' faulty work and non-compliance of the work with the welding plans and specifications. The contractors filed a Wellington-type motion in order to force their insurers to take up their defence. A few days afterwards, the STQ modified its proceedings to specify the defects that were affecting the contractors’ work. It also filed two expert reports in support of its allegations. It was only during the contestation of the Wellington-type motion that the insurers finally raised the application of the exclusions concerning the damages to a part of the building on which the contractors were called to work on because of faulty work.  The decision From the outset, the Court reiterates that an insurer owes a defense to an insured when the allegations of the proceedings entail a mere possibility of coverage under the policy. At this stage, the judge does not have to inquire as to whether the insured’s responsibility will be merited, but must simply determine whether there is a possibility of coverage. In light of the allegations of STQ’s Amended application, the Court concludes that the exclusions initially raised by the insurance adjusters did not apply, since the contractors were never the owners, lessees or even borrowers of the sheet pilings. As for the exclusions concerning the contractors' faulty work, the Court concludes to their application to the extent that the STQ allegations are considered as proven. The contactors also argued that these exclusions were submitted late. Indeed, it is acknowledged that an insurer cannot invoke an exclusion which is submitted late or kept in reserve in the event of the failure of another means of defence.1 According to the contractors, the insurers should not have been allowed to invoke the exclusions relating to faulty work at the stage when the Wellington-type motion was already filed, without having previously raised the application of said exclusions. In response, the insurers argued that, while the STQ’s initial Application included general allegations regarding the contractors' faulty work, they were justified in raising these new exclusions after the modification made by STQ which crystallized and clarified the complaints made against the contractors. Incidentally, the insurers emphasized that they had also reserved their rights to invoke any other exception of the insurance policy in their initial coverage letter. In the end, the Court sided with the insurers and rejected the Wellington-type motion filed by the contractors. The Court, “considering the development of the allegations in the Application” and the recent addition of the allegations clarifying and crystallizing the complaints, concluded that the insurers were not in default of having raised in a timely manner the exclusions on which the denial was now based. Conclusion Wellington-type motions continue to be a hot topic. The importance of the reservation of rights and denial letters should also be reiterated. As indicated by the Court, there may be instances where developments in the allegations made against an insured will allow for the application of exclusions heretofore not invoked. Nevertheless, it remains that any potentially applicable exclusion must be invoked as soon as possible and it is also suitable to include, in the reservation of rights letters and the coverage letters, the right to invoke any other condition, limitation and exclusions set out in the policy should new developments or facts be brought to the attention of the insurer.   The Continental Insurance Company v. Tracy Plate Shop Inc., 1987 CanLII 211 (QCCA)

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  • Civil liability and personal injury: A harsh decision for a winter sports centre

    The Court of Québec released an interesting judgment in December in a case involving civil liability and personal injury.1 On February 23, 2013, Plaintiff, Ms. Bourgault, went to Village Vacances Valcartier (“VVV”) to take part in a snow rafting activity. During a descent, she was twice thrown toward the rear of the inflatable boat. The violent impacts caused her to break a vertebra. She sued VVV for damages arising out of the incident. On that day, 6,660 customers slid down the VVV slopes. The conditions were described as perfect, and the trails well maintained. The evidence also was that only two accidents were reported out of the 168,312 people who went to the centre during the 2012-2013 winter season: one on the same day as the plaintiff and the other the following day. Both accidents occurred on the same trail. The terms and conditions printed on the back of the ticket stated that the customer agreed to abide by VVV’s rules of conduct and acknowledged and accepted the risks inherent in sliding, and assumed full liability for any property or bodily damage. Plaintiff had not noticed or seen the signs and instructions.2 She did know that snow rafting involved going over humps and that the route taken might be rougher3 than others. In its analysis, the Court underlined the principles that apply here:4 The victim must prove fault on the part of the defendant and its employees in the operation of the centre, in particular regarding the safety of the users, on a balance of probabilities. The victim must also prove the nature of her damages and the causation between the damages and the fault; The mere occurrence of an accident in the course of an activity does not automatically result in a reversal of the burden of proof; The operator of the centre has a duty of supervision and vigilance, which is an obligation of means. It must act reasonably to ensure customers’ safety and avoid foreseeable accidents. Its trails must have no traps, taking into account reasonable foreseeability; The operator of the centre is not the insurer of customers who suffer an accident while engaging in the recreational or sports activity in question; It is considered to be tacit acceptance of the risks inherent in engaging in the recreational or sports activity in question; However, acceptance of the risks does not extend to exceptional or unreasonable risks that are not foreseeable or that go beyond what is inherent in engaging in the recreational or sports activity; To conclude that there was acceptance of the risks, there must have been a clear risk, express or implied knowledge of the risk, and sufficient information regarding the activity and its inherent risks to enable the participant to make a free and informed choice, and it must be possible to identify the acceptance (formal or tacit) of the risk by the victim. In the case of exacerbated risk, or if an unforeseen risk materializes, the initial acceptance cannot be a defence; Notwithstanding the theory of the acceptance of risks, the operator may be liable if it is established that it did not act diligently and exposed the user to undue risks; The extent of the acceptance of the risks is related to the user’s level of experience and skill and to all of the circumstances and specific warnings given to the user, by whatever means may have been used (signs, etc.). The Court also reiterated the principles relating to the rules governing presumptions of fact, which must be serious, specific and consistent, based on the facts introduced into evidence.5 The Court acknowledged that serious prima facie evidence was presented by VVV regarding the adequacy of the measures in place to ensure the safety of the participants and for the maintenance and supervision of the trails, both for the 2012-2013 winter seasons and for the day of the accident.6 In the opinion of the Court, however, there were certain details that clouded the picture, and it was of the view that the safety instructions were virtually non-existent or vague. The Court also stated that it was troubled by that fact that the only other two accidents recorded took place on the same trail, within a short period of time, in spite of the alleged maintenance.7 It further noted the inconsistency between the plaintiff’s and defendant’s evidence regarding the exact location of the humps that were the source of the accident. The testimony referred to violent bouncing beyond the experience that VVV sought to provide its customers. The Court concluded that there was plainly an irregularity on the trail in question.8 As for the reason that might explain the irregularity, the Court agreed that it was a riddle wrapped in a mystery inside an enigma.9 However, it concluded that the presumptions were sufficient to establish that the raft hit bumps twice, the passengers came off their seats, Plaintiff lost hold of her cord, and she fell into the bottom of the boat and was injured. In the opinion of the Court, the boat should not have lifted off the ground and that is probably a result of a flaw in the design of the humps on the slope.10 With respect to the acceptance of the risks and the limitation of liability, in particular regarding what was printed on the back of the ticket, the Court stated that it could not be argued that Plaintiff had accepted risks of every nature related to the activity. In the opinion of the Court, if the safety instructions had mentioned that violent impacts would take place that could cause injuries, the Plaintiff would not have gone down the slope.11 It also held that Plaintiff had released VVV from liability in relation to the accident. The Court referred to section 1474 of the C.C.Q., which prohibits such exclusion or limitation of liability for bodily or moral injury.12 Finally, the Court made a distinction between activities where the participant is in motion and chooses his or her own direction (for example, downhill skiing or riding on inner tubes, flying saucers or sleds) and activities like snow rafting that do not call for any special ability or require a route to be chosen, in which the participant is virtually immobile.13 In that case, the operator’s obligation of means is more stringent when it comes to the configuration and maintenance of the site. The case has not been appealed. It will certainly be a precedent to be considered for personal injury cases that involve recreational and sports activities.   Bourgault c. Village vacances Valcartier inc., 2017 QCCQ 16300. The other witnesses also had not: paras. 20, 34, 41, and 51 of the decision. Par. 45 of the decision. Par. 99 of the decision. Par. 100-101 of the decision. Par. 103-104 of the decision. Par. 111 of the decision. Par. 107-122 of the decision. Par. 123 of the decision.  Par. 124-125 of the decision. Par. 138 à 140 of the decision. Par. 127-129 of the decision. Par. 142 of the decision.

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