2013 QCCA 234, 2013 QCCA 234

Oppenheim c. 2963-0456 Québec inc. 2013 QCCA 234 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-021645-114 (500-05-008333-930) MINUTES OF THE HEARING DATE: February 5, 2013 CORAM: THE HONOURABLE PIERRE J. DALPHOND, J.A. JULIE DUTIL, J.A. CLÉMENT GASCON, J.A. APPELLANTS ATTORNEY MARK OPPENHEIM V.W. BROAD UNDERWRITERS AGENCIES LTD V.W. BROAD AND OTHER SYNDICATE 370 VW BROAD SYNDICATE DOMINIC ADAMS Mtre Nicholas Krnjevic ROBINSON, SHEPPARD, SHAPIRO RESPONDENT ATTORNEYS 2963-0456 QUÉBEC INC. Mtre Éric Oliver MUNICONSEIL AVOCATS INC. Mtre Richard Biron BIRON, SPAIN

IMPLEADED PARTY ATTORNEY(

S) PERFORMANCE GUARANTEES (QUÉBEC) INC. On appeal from a judgment rendered on March 29, 2011 by the Honourable Justice Richard Nadeau of the Superior Court, district of Montreal.

NATURE OF THE APPEAL : Surety Clerk: Linda Chau Courtroom: Pierre-Basile-Mignault HEARING 9 h 33 Beginning of the hearing. 9 h 33 Submission by Mtre Krnjevic. 11 h 00 Suspension of the hearing. 11 h 29 Resumption of the hearing. 11 h 30 Continuation of submission by Mtre Krnjevic. 12 h 30 Suspension of the hearing. 14 h 09 Resumption of the hearing. 14 h 10 Submission by Mtre Oliver. 15 h 41 Reply by Mtre Krnjevic. 15 h 47 Suspension of the hearing. 16 h 16 Resumption of the hearing. BY THE COURT : The appeal is granted in part with costs. Judgment – see page 4. 16 h 20 End of the hearing. Linda Chau Clerk

BY THE COURT JUDGMENT [ 1 ] The Court is of the view that the documents called “cut throughs“ issued by the appellants in 1990 were "sureties" under the laws of Quebec, namely art. 1929 and following of the Civil Code of Lower Canada . [ 2 ] The trial judge then did not err in concluding that the legal principles to be applied were those of surety and not of insurance coverage. [ 3 ] The appellants were guarantors of the financial obligations of Performance Guarantees (Québec) inc. to provide the cash required to complete the movie "Agaguk" should there be overages. [ 4 ] The trial judge concluded that there were overages amounting to $4,222,000.

This number finds support in the evidence, including reports from an accounting expert and an insurance adjuster hired by the appellants, saved for the amount of unpaid deduction at source of $ 388,488 that have not been proven to be payable on the balance of probabilities (see para. 182 of the judgment). [ 5 ] As for the lack of status or interest of the respondent, this argument was not only raised so late that the appellants should be foreclosed to argue it, but it is also unfounded.

The respondent became, at one point, the general manager of the limited partnership and its sole limited partner; it follows that it has legal interest to put forward any and all claims of the partnership as beneficiary of the sureties / bonds issued by the appellants. [ 6 ] Finally, the respondent has shown that amounts were paid on behalf of the partnership by third parties in order to complete the movie after the failure of Performance Guarantees (Québec) Inc. to provide the amounts necessary to cover the overages.

The judge was satisfied that the respondent is accountable to repay these amounts to these third parties. [ 7 ] In conclusion, the appellants now have to live up to their obligations, as guarantors [1] . FOR THESE REASONS, THE COURT : [ 8 ] GRANTS the appeal, in part; [ 9 ] REDUCES the amount mentioned at para. 211 of the Superior Court judgment from $ 4,222,000 to $ 3,833,512; [ 10 ] THE WHOLE without costs.

PIERRE J. DALPHOND, J.A. JULIE DUTIL, J.A. CLÉMENT GASCON, J.A. [1] According to

Article 1945 C.C.L.C ., "When several persons become sureties of the same debtor for the same debt, each of them is bound for the debt". Pursuant to

Article 1946 C.C.L.C ., a surety can only request the benefit of division absent a renunciation and after having obtained a judgment of division. The wording of the "cut-throughs" indicate that the appellants renounced to this benefit. Their proceedings show that they never sought a judgment of division from the court.