2014 QCCA 1197, 2014 QCCA 1197

New TT Hellenic Postbank, s.a. c. Bombardier inc. 2014 QCCA 1197 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-024209-140 ( 500-17-078501-130 ) MINUTES OF THE HEARING DATE: June 10, 2014 CORAM: THE HONOURABLE ALLAN R. HILTON, J.A. FRANÇOIS DOYON, J.A. GENEVIÈVE MARCOTTE, J.A. APPELLANT ATTORNEY(

S) NEW TT HELLENIC POSTBANK, S.A. Mtre Karim Renno Mtre Julien Lussier Irving Mitchell Kalichman SENCRL/LLP RESPONDENT ATTORNEY(

S) BOMBARDIER INC. Mtre Michel Sylvestre Mtre Catherine Martel Mtre Rachel Bendayan Norton Rose Fulbright Canada S.E.N.C.R.L.,s.r.l. IMPLEADED PARTIES ATTORNEY(

S) THE GENERAL DIRECTORATE FOR DEFENSE ARMAMENTS AND INVESTMENTS OF THE HELLENIC MINISTRY OF NATIONAL DEFENSE NATIONAL BANK OF CANADA Mtre Basile Angelopoulos Angelopoulos, Kiriazis Mtre Éric Bédard Woods s.e.n.c.r.l. On appeal from a judgment rendered on January 8, 2014, by the Honourable Mr. Justice Mark Schrager, of the Superior Court , District of Montreal. NATURE OF THE APPEAL : Safeguard order - Jurisdiction Clerk: Marcelle Desmarais Courtroom: Antonio-Lamer HEARING Continuation of June 6, 2014 hearing. Judgment – See page 4.

Marcelle Desmarais Clerk BY THE COURT JUDGMENT [ 1 ] The judgment of the Superior Court under appeal, rendered by the Hon. Mr.

Justice Mark Schrager on January 8, 2014 and corrected on January 13, 2014, issued a safeguard order in the following terms: [61] GRANTS the Plaintiff Bombardier Inc.'s Motion for a safeguard order in part, to remain in force until March 14, 2014 at 4:30 p.m. unless further extended by order of this Court; [62] ENJOINS the Mise en cause National Bank of Canada from paying out any monies to any person pursuant to the Counter- Guarantee issued by it on January 29, 1999, originally in favour of ANZ Grindlays Bank Limited, referenced as L/G204892A/00011; [63] AUTHORIZES the Plaintiff, Bombardier Inc. to serve this order outside legal hours and on non-juridical days, including via facsimile; [64] DISPENSES the Plaintiff Bombardier Inc. from posting security for costs; [65] ORDERS the provisional execution of this safeguard order notwithstanding appeal thereof; [66] ORDERS the parties and their attorneys to negotiate, sign and file in the Court record a

schedule of proceedings within 30 days; [67] ORDERS Plaintiff to file within 15 days, a motion before the Co-ordinating judge of the Commercial Division of the Superior Court requesting that the present file be transferred to the said Commercial Division; [68] CONTINUES the matter before the undersigned judge sitting in Room 16.12 on March 14, 2014, for the hearing of any interlocutory motions of which the Court may be properly seized on such date. [69] THE WHOLE with costs to follow suit. [1] [ 2 ] Schrager, J. described the complex facts giving rise to the litigation in the Superior Court as follows: [ 3 ] In 1998, Bombardier and the Co-Defendant General Directorate for Defense Armaments and Investments/Hellenic Ministry of National Defense (hereinafter "the Greek Government") entered into a contract for the purchase by the latter from Bombardier of water bomber aircraft.

At the same time, a second contract ("the Offsets Contract") obliged Bombardier to provide work to Greek subcontractors for the manufacture and supply of the aircraft. Both contracts are governed by Greek law. [ 4 ] The obligations of Bombardier under the Offsets Contract were underscored by a liquidated damages clause secured by a bank letter of guarantee in the amount of $27 Million (which has since been reduced to approximately $13 Million)1 and which Bombardier caused to be issued by ANZ Grindlays Bank LTD. (which has for unexplained reasons been succeeded by the Co-Defendant TT Bank).

TT Bank is apparently controlled by the Greek Government. The bank guarantee issued by TT Bank is secured by a counter-letter issued by Bombardier's Montréal banker, the National Bank. [ 5 ] Disputes arose between Bombardier and the Greek Government over the Offsets Contract which, pursuant to the contract, were submitted to arbitration in 2008. A hearing took place in June 2012. The arbitration panel was bound to render its decision by December 31, 2013, which it did. [ 6 ] It should be noted that the principal issue before the arbitration panel was the validity of the Offsets Contract.

In its decision rendered on December 30 or 31, 2013, the arbitration panel declared the Offsets Contract null ab initio. [ 7 ] In April 2012, the Greek Government threatened to demand payment under the letter of guarantee but was dissuaded and undertook in writing on April 20, 2012 not to demand payment while the arbitration was pending.

In this regard, see Exhibit P-10. [ 8 ] However, in June 2013, the same issue was raised and this time the arbitration panel (on August 13, 2013) ordered the Greek Government not to demand payment under the bank guarantee while the arbitration was pending. [ 9 ] Nevertheless, on August 5, 2013, TT Bank advised that the Greek Government had demanded payment under the guarantee.

The demand was signed by the same individual who signed the undertaking in 2012 not to demand payment. [ 10 ] Bombardier obtained a legal opinion from a Greek lawyer, professor Calavros, which has been filed in this Court record, to the effect that the payment demand was abusive under Greek law.

[ 11 ] The foregoing demand for payment led to the order of the arbitration panel of August 13, 2013 referred to above. [ 12 ] It is also noteworthy that the demand for payment was initially refused by TT Bank as not conforming to documents since it requested that approximately $3 Million of the payment be directed to the Pension Fund of the Hellenic Air Force Mutual Benefit Fund which is not a beneficiary of the letter of guarantee. [ 13 ] Despite the order of the arbitrators, a new demand for payment was made by the Greek Government which incited Bombardier to seek (on August 13, 2013) and obtain (on August 16, 2013) from the Quebec Superior Court an order of provisional injunction issued under the hand of our colleague André Prévost, J.S.C.

His judgment ordered both banks not to pay and ordered the Greek Government not to demand payment under the letter of guarantee. [ 14 ] On August 16, 2013, TT Bank applied for an injunction in Greece which it obtained on August 22, 2013 and which order was subsequently continued. [ 15 ] Given this order of a Greek court, Bombardier did not seek to continue the Prévost injunction and it was allowed to lapse after 10 days. [ 16 ] On December 5, 2013, the arbitral tribunal indicated that its decision was ready and had been submitted for verification and approval to the International Chamber of Commerce. [ 17 ] On December 16, 2013, the injunction in Greece which had been provisionally issued was refused at the interlocutory stage for the reason that the parties were solvent and any payment made could be recovered.

Ironically, before the undersigned, all parties, including TT Bank, were adamant that recovery from the Greek Government through the courts in Greece was at best a lengthy, if not, an impossible process. [ 18 ] On December 18, 2013, the Greek Government presented a new demand for payment to TT Bank under the letter of guarantee. [ 19 ] Bombardier responded by obtaining a renewal of the Prévost provisional injunction from Thomas Davis, J.S.C., on December 20, 2013.

Lawyers from TT Bank and the Greek Government were notified and were present at the hearing before Justice Davis. [ 20 ] After December 18, 2013, the Greek Government put TT Bank on notice that if it did not pay under the letter of guarantee, its assets would be subject to confiscation and its officers liable to criminal prosecution.

Thus, and despite the Davis injunction, TT Bank paid the Greek government approximately $13 Million on December 23 or 24, 2013 and demanded payment from National Bank under the counter-guarantee. [ 21 ] On December 30 or 31, 2013, the award of the arbitration panel was delivered declaring the Offsets Contract null ab initio .

The panel explicitly left open for "procedural reasons" what would happen to the letter of guarantee, i.e. whether it would be returned or declared null, presumably because the banks were not parties to the arbitration. [ 22 ] Despite the original drafting of its conclusions before this Court, and given that the Greek Government has already demanded and received payment and given that TT Bank already paid the Greek government and already demanded payment from National Bank, Bombardier seeks only to enjoin National Bank from paying the counter-letter of guarantee. [ 23 ] National Bank has not contested. [ 24 ] The Greek Government had no substantive submissions before the undersigned. [ 25 ] TT Bank contests jurisdiction, as it did before Mr.

Justice Prévost and Mr. Justice Davis, but TT Bank also pleaded to the merits of the safeguard order sought by Bombardier. [3] During the course of his reasons, Schrager, J. rejected the appellant's oral contention that the Superior Court lacked jurisdiction to entertain the motion for a safeguard order. Previous submissions to the same effect had earlier been rejected by Prévost, J. and Davis, J. in the context of Bombardier's applications for provisional interlocutory injunctions that were granted.

Schrager, J. further stated the following in what appears to be a case-management context: [59] Given the recent evolution of the file, i.e. the arbitral award being issued and the TT Bank's payment, Bombardier's conclusions on the merits must be fine-tuned by amendment. In order to allow this to happen and to allow other interlocutory proceedings, I will continue the file before me with a view to continuing the safeguard until trial on the merits, so, as to avoid the necessity of a colleague having to take cognizance of the matter and avoiding for the parties repeating their efforts.

The purpose is not to retry what has been decided herein. [Emphasis added.] [4] The appellant takes the last sentence of the paragraph [59] as meaning that Schrager, J. has concluded that the Superior Court has jurisdiction over Bombardier's injunction proceedings on the merits to enjoin the National Bank from paying the appellant the counter- guarantee to which he referred in paragraph [62] of his order. [2] It was for this reason, its counsel suggested, that St-Pierre, J. granted leave to appeal. [3] [5] As a preliminary matter, Bombardier argues that leave was improvidently granted and accordingly that the appeal, in effect, should be quashed. [4] It contends in this respect that an appeal only lies from the conclusions of a judgment, and not from the rejection of an oral ground of contestation: [1] Les conclusions d'un jugement en constituent la seule

partie appelable. Ici l'appelante ne recherche aucunement d'autres

conclusions que celles prononcées. Elle demande à la Cour d'ajouter une conclusion déclaratoire qui viendrait corriger un motif dujugement. L'appel ne peut être accueilli sur cette base. [2] On ne peut interjeter appel d'une opinion du juge de première instance qui ne se retrouve aucunement dans le dispositif (DelGuidice c.

Honda Canada inc. 2007 QCCA 922 , [2007] R.J.Q. 1496 (C.A.) au paragr. 22).[5] [6] Applied to the circumstances of this case, Bombardier argues that the conclusions of the judgment of Schrager, J. do notadjudicate a declinatory exception, whether to the safeguard order or the proceedings on the merits.

Nevertheless, the only issue forwhich the appellant sought leave and that St-Pierre authorized to be determined was that of jurisdiction. [7] In her judgment granting leave, St-Pierre, J. further ordered the continuation of proceedings in the Superior Court.[6] Since then,Bombardier has further amended its proceedings introductive of suit to add allegations that can have a bearing on the jurisdictionalquestion.

It is not for this Court to consider the effect of any such amendments at this stage – an appeal is not a moving target thatamounts to the continuation of the trial proceedings except with three judges sitting rather than one. [8] Given the nature of these amendments, and the necessity to determine the jurisdictional issue on the merits by the appellantformally asserting a declinatory exception, the Court advised counsel at the hearing that it would enter the order that follows withoutaddressing the jurisdictional issue at the interlocutory stage.

For the purposes of issuing the said order, the Court assumes, withoutdeciding, that leave was properly granted. FOR THESE REASONS, THE COURT: [9] DISMISSES the appeal, without costs, and without prejudice to the appellant's right to expeditiously assert a properly framedwritten declinatory exception to the respondent's claim on the merits; [10] RETURNS the file to the Superior Court for the further continuation of proceedings and in particular to have a judge other thanSchrager, J. adjudicate the appellant's declinatory exception. ALLAN R. HILTON, J.A. FRANÇOIS DOYON, J.A. GENEVIÈVE MARCOTTE, J.A.