2020 QCCQ 824, 2020 QCCQ 824

9331-3138 Québec inc. c. Gestetner 2020 QCCQ 824 COURT OF QUÉBEC CANADA PROVINCE OF QUÉBEC DISTRICT OF MONTREAL TOWN OF MONTREAL Civil Division No: 500-22-236990-175 DATE: January 21, 2020 ______________________________________________________________________ PRESIDED BY THE HONOURABLE DAVID L. CAMERON, J.C.Q. ______________________________________________________________________ 9331-3138 QUÉBEC INC. D B A ET AA REALTIES Plaintiff v.

JACK GESTETNER Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] The Defendant makes an application for revocation of the judgment rendered against him in this matter by the Special Clerk on January 29, 2018. The judgment, rendered by default to answer, condemns the Defendant to pay the Plaintiff the sum of $ 64,000 with interest and costs. The application [ 2 ] The application, based on

article 346 CCP, sets out the allegation that the Defendant was prevented from answering the summons attached to the originating application because he was unaware that it had been delivered to his home: he speculates that it was thrown out or misplaced by one of his family members. [ 3 ] The application also sets out grounds of defense to the action. [ 4 ] The application to revoke was heard and proof on the issue mentioned above was closed on July 12, 2018. [ 5 ] An amended version of the application was made on June 26, 2018, the change not being material to the present debate.

The motion to rectify [ 6 ] The Plaintiff, styled as “9331-3138 Quebec Inc.” in the proceedings up to that point, brought a motion to rectify the judgment so that the Plaintiff would be styled “9331-3831” the latter designation being the true name of the entity suing. The allegations and evidence provided established clearly that the designation was flawed because of a clerical error, and that there could be no doubt that the Plaintiff was truly 9331-3831 Québec Inc.

The consumer proposal [ 7 ] Although the hearing of the application for revocation proceded on the issues relating to the alleged “surprise”, partway through the hearing the attorney for the Defendant informed the Court that he had learned that his client had, it would seem, filed a consumer proposal pursuant to the Bankruptcy and Insolvency Act prior to judgment being rendered by the special clerk. He produced as exhibit PR-1 the essential forms constituting the bankruptcy file, form 49, form 47, form 48, form 65 and blank voting and proof of claim forms to the attention of creditors.

None of this material had been made known to the Plaintiff at any time before. It also would appear that neither the Court office or the special clerk had received a notice to stay proceedings The continuance of the case [ 8 ] The case was to be continued to another date, with an order of stay of execution in the interim. In a case management conference held July 17, the Defendant mentioned that he would be seeking a judgment placing the parties back to the position they were in prior to the default judgment based on the suspension of proceedings resulting from the consumer proposal.

The Court asked the attorney to provide additional material on this question. A letter was received dated July 16, 2018 from the attorney in which he made the argument that

section 16.2(1) of the Bankruptcy and Insolvency Act operates a stay of proceedings. He also pointed out that the consumer proposal was deemed accepted as of July 3, 2017 because no requests had been filed to hold a meeting of creditors and that the trustee had not yet been discharged.

[ 9 ] The attorney for the Plaintiff mentioned that he wished to provided new evidence on the issue of the alleged “surprise” and that he would be making a motion for abuse of proceedings in light of this new evidence. [ 10 ] The hearing was continued on October 31, 2018. At that hearing, the Plaintiff’s attorney filed a motion to reopen the proof on the merits of the revocation and various matters were addressed concerning the joinder of issue on this new evidence relating to the alleged knowledge of the Defendant of the proceedings.

There were questions as to out of court examinations, objections on undertakings, and the like. [ 11 ] On an additional case management held on December 13 2018, a timetable leading to the ultimate hearing was agreed to and the Court stated that a hearing would take place in three parts: the revocation of judgement, the correction of the judgment and the application for abuse of proceedings. [ 12 ] On February 27, 2019 the date of that hearing was set for September 13, 2019. [ 13 ] On March 22 the Defendant’s attorney ceased representing.

The Defendant did not notify to the Plaintiff’s attorney continued as a self-representing party. He did not attend the hearing of September 13. The Plaintiff’s position at the hearing [ 14 ] At the hearing the attorney for the Defendant advised that he would not proceed on an application for abuse of procedure. [ 15 ] The Plaintiff’s submission at the hearing is that the Defendant, having not replied to the notice to appoint a new attorney or to self-represent, should be considered as in default and that the application for revocation, should simply be dismissed. [ 16 ] On a closer look, however at

article 192 of the new Code of Civil Procedure, a person who does not appoint another lawyer and does not respond to the notice is not subject to any particular sanction: 142 If, before a case is taken under advisement, the lawyer of one of the parties withdraws, dies or becomes disqualified from practising as a lawyer, a formal notice must be given to the party to appoint another lawyer or send the other parties a notice of intention to self-represent. The party must answer the formal notice within 10 days after its notification. No pleading may be filed or judgment rendered during that time.

If the party does not appoint a new lawyer, the proceeding continues as though the party were not represented. If the party does not comply with the case protocol or the rules of representation, any other party, if a plaintiff in the case, may request that the case be set down for judgment, or, if a defendant in the case, that the application be dismissed.

A party represented by a lawyer is deemed to have been informed of another party’s lawyer’s death, disqualification or appointment to a public office that is incompatible with practice as a lawyer, without notification of the death, disqualification or appointment being necessary. [ 17 ] Indeed, in the case of a physical person who is capable of acting, the code does not require him to be represented.

So long as he complies with the case protocol, he is not subject to a dismissal, if plaintiff, or to a default judgment, if defendant. [ 18 ] Here, the party was simply absent, and could therefore not adduce any further evidence or make argument. But the case for the revocation was not, subject to a dismissal simply because of his passivity. The case protocol or its equivalent, in the form of a timetable agreed to in case-management, did not call for him to do anything at that stage of the case, which was a continuation for new evidence brought by the Plaintiff.

That new evidence did not come forward and the motion for abuse was not asserted. [ 19 ] Left with the file in the state it was in before the continuance, the Court cannot ignore that evidence was made as to the status of the bankruptcy proceedings at an earlier stage of the case. The suspension, pursuant to

section 69.2(1) of the Bankruptcy and Insolvency Act [1] , of proceedings such as the one instituted in the present case with the originating application is an automatic effect of the proposal, notwithstanding the lack of a notice to the creditor in the present case. [ 20 ] The modality of the notice is convenient and useful, but non compliance with it in the case of a particular creditor is not fatal to the principle of suspension.

What is the appropriate remedy? [ 21 ] The Court’s decision on the revocation depends upon the resolution of the following paradox: the consumer proposal had the effect in law of suspending any proceedings before courts, including the action in the present file, where a judgement had not yet been rendered. The default judgement should therefore have not been rendered; the file was at a standstill. By the same token, the proceedings presently before the Court to revoke the judgement should, logically, also be impossible, because the file is suspended.

There must be a way to deal with the situation despite this paradox. [ 22 ] In a similar case, Centre de réception le Madison inc. c.

Di Frusca [2] the Court of Quebec nevertheless revoked a judgment that had been rendered after the suspension caused by proceedings pursuant to the Bankruptcy and Insolvency Act restoring the file to its state just prior to the suspension. [ 23 ] In that case, a notice of suspension had been sent by the Trustee to creditors mentioning one, but not the other, of two consumer debtors, a couple, who had made a joint consumer proposal. [ 24 ] Default judgement was rendered in the file against the debtor who had not been mentioned in the notice, Madame Di Frusca.

The judge revoked the judgment and placed the parties back to their pre-judgment situation.

[ 25 ] In the present file, the Court has decided to follow the same approach. Pursuant to

article 69.2 (1) of the Bankruptcy and Insolvency Act , the proceedings should have been considered by the Special Clerk as suspended and, unless an order of the Superior Court had lifted the suspension, no judgement ought to have been rendered.

The judgement rendered by default by the Special Clerk should be considered a nullity. [ 26 ] There is no other remedy the Court itself can use to remit the parties to their previous status, except revocation, and, in the absence of a special and more particular means in the procedural repertoire, the Court is justified in acting by analogy to the conventional revocation procedure to deal with the problem. The process might not, strictly speaking, be a revocation because the judgement was not rendered because of one of the usual elements of revocation, such as fraud or surprise.

The judgement can be more properly seen as a nullity. [ 27 ] If revocation is not the procedure intended for a nullity, the Court should use an analogous procedure, because of

article 10, in fine , of the Code of Civil Procedure which compels the Court to act even when the appropriate procedural mechanism is not provided for specifically. [ 28 ] It is also preferable for the Court to act to place the parties back to their pre-judgement status, rather than to have the judgement left open to nullification by the Superior Court, acting in its supervisory role, or to allow it to simply remain on record, without any possible effect. [ 29 ] If, at the time prior to judgment, it would have been possible for the Plaintiff to obtain an order from the Superior Court to lift the suspension, under the provisions of the federal insolvency legislation, the Plaintiff could, presumably, move now to exercise its rights accordingly.

BY THESE REASONS, THE COURT: TAKES NOTICE of the nullity of the judgement rendered by default in the present file on January 29, 2018; REVOKES the said judgment for all purposes; RESTORES the file to its state prior to the said judgment; THE WHOLE, WITHOUT LEGAL COSTS. __________________________________ David L. Cameron, J.C.Q. Me Howard M. Greenfield Greenfield & Associates Attorney for the Plaintiff Jack Gestetner Self-represented Dates of hearing : July 12, 2018 October 31, 2018 September 13, 2019 [1] Stay of proceedings — consumer proposals • 69.2

(1) Subject to subsections (2) to (4) and sections 69.4 and 69.5 , on the filing of a consumer proposal under subsection 66.13(2) or of an amendment to a consumer proposal under subsection 66.37(1) in respect of a consumer debtor, no creditor has any remedy against the debtor or the debtor’s property, or shall commence or continue any action, execution or other proceedings, for the recovery of a claim provable in bankruptcy until o (

a) the consumer proposal or the amended consumer proposal, as the case may be, has been withdrawn, refused, annulled or deemed annulled; or o (

b) the administrator has been discharged.