2018 QCCQ 5020, 2018 QCCQ 5020

Cai c. 9104-2523 Québec inc. 2018 QCCQ 5020 COURT OF QUEBEC (Practice Division) CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL No: 500-22-248191-184 DATE: July 5, 2018 ______________________________________________________________________ BEFORE THE HONOURABLE ENRICO FORLINI, J.C.Q. ______________________________________________________________________ JIAN CAI Plaintiff v. 9104-2523 QUÉBEC INC. And 9211-5401 QUÉBEC INC.

And MONDEV CONSTRUCTION Defendants ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] The defendants 9104-2523 Québec Inc., 9211-5401 Québec Inc. and Mondev Construction (hereinafter collectively ‘’Mondev Construction’’) petition the Court to homologate a transaction agreement entered into with plaintiff Jian Cai. [ 2 ] Mrs. Cai contests the Application for Homologation on the grounds that she did not validly consent to the settlement agreement.

Moreover, she argues that Mondev Construction has failed to execute its obligations arising under the settlement agreement. Question in Dispute Is the transaction agreement entered into between the parties a transaction agreement within the meaning of the Civil Code of Québec (“ C.C.Q .”)? Context [ 3 ] In October 2015, Mrs. Cai commenced a lawsuit against Mondev Construction before the Court of Québec, Small Claims Division, in which she claimed damages of $15,000. [1] [ 4 ] Mrs. Cai’s claim against Mondev Construction is based on an alleged breach of the warranty against latent defects.

In her lawsuit, she alleges that on October 23, 2013, she purchased a condominium unit and an outdoor parking space from Mondev Construction. She paid $275,000, which includes $250,000 for the apartment and $25,000 for the parking space. [ 5 ] She notably alleges that Mondev Construction breached the warranty against latent defects in that she discovered upon taking possession of the condominium unit that (

i) the area (square footage) of the unit was less than what had been promised and (ii) that the parking space did not correspond to the parking space that she had bargained for because it was not of “legal parking size”. While she alleges that she suffered greater than $15,000 in damages as a result of the aforementioned defects, she reduces her claim to $15,000 and seeks this amount in damages from Mondev Construction. [ 6 ] Mondev Construction contested the Lawsuit. It argued that the square footage of the unit that Mrs.

Cai purchased corresponds to the property described in the certificate of location referenced in the deed of sale. [ 7 ] As for the parking space, it argues that Mrs. Cai received exactly what she was promised in the documents she signed. [ 8 ] The matter first came before the Court on February 13, 2017. The trial did not proceed on that date because Mrs. Cai did not have in her possession a copy of the deed of sale, which the Court viewed as essential to her claim. [ 9 ] The Lawsuit was rescheduled for June 12, 2017.

At the beginning of the trial, the parties informed the Court that they had reached an out of court settlement and signed a settlement agreement.

[ 10 ] According to the Settlement Agreement signed on June 12, 2017 [2] , Mondev Construction agreed to buy back from Mrs. Cai the parking space for $25,000, and in return, Mrs.

Cai agreed to abandon all claims against Mondev Construction regarding the condo unit. [ 11 ] According to the minutes of this hearing, the Court issued the following order: TAKES note of the settlement agreement reached between the parties, which the parties seek to preserve confidential; ORDERS the filing of the settlement agreement under confidential seal, up to and until the parties petition the Court to homologate the settlement agreement if applicable; RESERVES the right of the parties to petition the Court to obtain a homologation of the settlement agreement; REMAINS seized of the matter solely for the purpose of the hearing a petition by one of the parties to homologate the settlement agreement. [ 12 ] From that date forward, Mrs.

Cai sent the Court numerous emails in which she asked the Court to hear her Lawsuit alleging that Mondev Construction had not fulfilled its obligations under the Settlement Agreement, notably in that it never paid her $25,000 for the parking space. [ 13 ] A new hearing was scheduled for June 11, 2018. [ 14 ] At this hearing, Mondev Construction denied that it was in breach of its obligations arising under the Settlement Agreement and asked the Court to homologate the agreement. [ 15 ] The Court informed the parties that the Court of Québec, Small Claims Division, could not homologate the Settlement Agreement since it no longer had jurisdiction to do so because the claim resulting from the Settlement Agreement exceeded the jurisdictional threshold of the Small Claims Division. [3] [ 16 ] Accordingly, the Court issued the following case management order on June 11, 2018: REFERS this matter to the Court of Québec, Civil Division; CONTINUES the hearing to June 26, 2018, in room 2.02 at 9:30 before the undersigned judge; ORDERS the defendants to file with the Court their Application for Homologation of the settlement Agreement and to send a copy of this application by email to Mrs.

Cai, no later than June 21, 2018. [ 17 ] On June 22, 2018, Mondev Construction served its Application for Homologation. [ 18 ] The Application for Homologation was heard by the Court on June 28, 2018 [4] . Analysis and Decision Is the transaction agreement entered into between the parties a transaction agreement within the meaning of the Civil Code of Québec ? [ 19 ] Mondev Construction’s Application for Homologation is governed by articles 2631, 2633 and 2634 C.C.Q. as well as articles 527 and 528 of the Québec Code of Civil Procedure ( C.C.P .) which provide: Civil Code of Québec 2631.

Transaction is a contract by which the parties prevent a future contestation, put an end to a lawsuit or settle difficulties arising in the execution of a judgment, by way of mutual concessions or reservations. A transaction is indivisible as to its subject. 2633. A transaction has, between the parties, the authority of res judicata . A transaction is not subject to forced execution until it is homologated. 2634. Error of law is not a cause for annulling a transaction. Apart from such exception, a transaction may be annulled for the same causes as contracts in general. Code of Civil Procedure 527.

An application for authorization, approval or homologation is, when there is a dispute, presented before the court on the date specified in the attached notice of presentation. The presentation date cannot be less than five days after notification of the application. 528. Homologation is approval by a court of a juridical act in the nature of a decision or of an agreement. It gives the homologated act the same force and effect as a judgment of the court. The homologating court only examines the legality of the act; it cannot rule on its advisability or merits unless a specific provision empowers it to do so.

[ 20 ] According to the Québec Court of Appeal, a judge who is tasked with homologating a transaction agreement must review the agreement and determine whether it contains the following essential components of what constitutes a transaction: [32] Le juge saisi de l’homologation d’une entente est tenu de s’assurer que les éléments constitutifs d’une transaction sont réunis : (1) une situation litigieuse, (2) une renonciation au recours juridictionnel et (3) des concessions ou réserves réciproques. De plus, il doit s’assurer que son contenu n’est pas contraire à l’ordre public. [5] [ 21 ] As

article 528 paragraph 2 C.C.P. makes clear, the homologating court may only examine the legality of the act.

It cannot rule on its advisability or merits unless a specific prevision empowers it to do so, which provision is absent in the present case. [6] [ 22 ] In ruling on Mondev Construction’s Application for Homologation, the Court’s role is thus fairly limited: it must simply review the Settlement Agreement and decide whether this agreement contains the essential components of a transaction agreement. [ 23 ] A review of the Settlement Agreement and the circumstances surrounding its conclusion convinces the Court that the three essential components of a transaction agreement are indeed met. [ 24 ] Firstly, the filing of Mrs.

Cai’s Lawsuit in October 2015 clearly meets the first component, i.e . the existence a litigious situation. [ 25 ] Secondly, the Settlement Agreement contains the following provisions: 1) Plaintiff agrees to drop and give quittance to Defendant for any and all charges against it. … 4) Plaintiff agrees to drop any and all other claims regarding the condo unit including but not limited to its square footage, repair and all other deficiencies. [ 26 ] Through these provisions, Mrs. Cai waives her right to commence a future lawsuit against Mondev Construction.

Therefore, the second component is also present. [ 27 ] As for the third component, Mrs. Cai’s Lawsuit alleged the existence of latent defects and breaches of the deed of sale on numerous fronts, including insufficient square footage of the unit, the sale of an ‘’a illegal parking space’’, and improper modifications to a bathroom and closets. [ 28 ] Although Mrs. Cai claims that these defects caused her significant prejudice which exceed $25,000, she nonetheless voluntarily reduced the amount of her claim to $15,000 as she was entitled to do so under

article 538 C.C.P. [ 29 ] According to the Settlement Agreement [7] , Mondev Construction agreed to buy back from Mrs. Cai the parking space for $25,000 in full and final settlement of her claim, payable upon execution of all documents required to effectuate the transfer of title to the parking space. In consideration for this payment, Mrs.

Cai agreed to drop all her claims against Mondev Construction regarding the condo unit. [ 30 ] The Court finds that the terms of the Settlement Agreement as well as the context in which it was entered into establishes that the parties made mutual concessions in entering into this settlement. Hence, the third component is also met. [ 31 ] Finally, there is no evidence, nor was it argued by Mrs. Cai, that the Settlement Agreement is against public order. [ 32 ] In conclusion, the Court finds that the Settlement Agreement includes the essential components of a transaction agreement as required by

article 2631 C.C.Q . and the case law. [ 33 ] Mrs. Cai nonetheless argues that the Court should not homologate the Settlement Agreement because

i) she never validly consented to the agreement; ii) Mondev Construction has not fulfilled its obligations under the agreement. The Court will review below each of these grounds of contestation. Lack of Consent [ 34 ] In examining the legality of the agreement under

article 528 C.C.P. , the court is empowered to determine whether the parties to the agreement gave valid consent when they entered into it. [ 35 ]

Article 2634 C.C.Q. provides that a transaction agreement may be annulled for the same grounds as contracts in general. [ 36 ] The person who claims that the transaction agreement should be annulled for lack of consent has the burden of establishing the facts which justify it annulment. [8] [ 37 ] A person’s consent to a transaction agreement may be vitiated by error, fear or lesion. [9] [ 38 ] Mrs.

Cai alleges that she never consented to clauses 1 and 4 of the Settlement Agreement because her consent was vitiated by fear. [10] Specifically, she claims that Mondev Construction threatened her into executing the agreement. She further alleges that Mondev Construction’s lawyer also threatened her while waiting to be heard on the Application for Homologation. [ 39 ] These assertions are without merit. Mrs. Cai’s testimony is confused and vague on the issue of lack of consent and the alleged threats.

These claims simply lack the credibility and the reliability required to establish a lack of consent. [ 40 ] She also claims that while she signed the Settlement Agreement, she did not read it, nor did she understand its scope and

meaning. The agreement is a very simple and straightforward document contained in one single page. If it is true that she did not read it before signing it and therefore did not comprehend its scope, this constitutes an inexcusable error and does not qualify as a lack of consent. [11] Mondev Construction Breached its Obligations Under the Agreement [ 41 ] Mrs. Cai also argues that the Court should not homologate the Settlement Agreement on the grounds that Mondev Construction has failed to honour its obligations arising under the agreement. She accuses Mondev Construction of deception and disloyal tactics.

These assertions are not supported by the meager evidence adduced by Mrs. Cai. [ 42 ] In any event, as the Court of Appeal has stated on more than one occasion, it is not open to a party who contests an Application for Homologation of a transaction to argue that the opposing party has not fulfilled its obligations stipulated in the agreement. [12] Conclusion [ 43 ] In conclusion, the Settlement Agreement reached between the parties includes all the essential components of a transaction agreement. Moreover, Mrs. Cai has not proven on the balance of probability that her consent to the agreement was vitiated.

Finally, she has not raised any other valid reason which would warrant a refusal of Mondev Construction’s Application for Homologation of the Settlement Agreement. FOR THESE REASONS, THE COURT: [ 44 ] GRANTS the Application for Homologation; [ 45 ] HOMOLOGATES the transaction agreement entered into between the parties on June 12, 2017 (R-2); [ 46 ] ORDERS Jian Cai to sign the original of the deed of transfer of rights of her outdoor parking space (R-4) at the offices of Me Jacques Dorais, at the latest on August 6, 2018; [ 47 ] WITH LEGAL COSTS. __________________________________ ENRICO FORLINI, J.C.Q. Mrs.

Jian Cai Representing herself Me Yorgo Constantopoulos Zaurrini Avocats Defendants’ lawyer Date of hearing: June 28, 2018