2023 QCCA 1603, 2023 QCCA 1603

Mohawk Council of Kanesatake c. Sylvestre 2023 QCCA 1603 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No.: 500-09-700122-229 (500-17-111745-207) DATE: December 20, 2023 CORAM: THE HONOURABLE JULIE DUTIL, J.A. GENEVIÈVE COTNAM, J.A.

BENOÎT MOORE, J.A. mohawk council of kanesatake APPELLANT – Applicant v. louis-victor sylvestre Gordon edwards 1648-4404 québec inc. jean demers paul boissonnault marc chénier RESPONDENTS – Respondents JUDGMENT [ 1 ] The appellant appeals from a judgment of the Superior Court, rendered on September 7, 2022, by the Honourable Dominique Poulin, sitting in the District of Montreal, dismissing the appellant’s Amended Application for Declaratory Judgment . [1] BACKGROUND [ 2 ] In 2001, the Mohawk Council of Kanesatake [2] retained the legal services of Mtre Louis-Victor Sylvestre to challenge a decision rendered by the Commission de protection du territoire agricole du Québec approving a mining project in Oka.

It also retained Gordon Edwards, 1648-4404 Québec inc., Jean Demers, Paul Boissonnault and Marc Chénier as experts in that case. [ 3 ] The appellant, whose financial situation was difficult at the time, was unable to pay those legal expenses, thereby forcing the respondents to obtain judgments by default against the Council (“Judgments”) on October 26, 2004. [3] [ 4 ] In January 2005, PricewaterhouseCoopers, acting as a third-party manager for the appellant, offered to settle the matter by paying the equivalent of 25% of the Judgments’ amounts in exchange for a release.

The respondents rejected that offer. [ 5 ] Between August 2005 and March 2007, the respondents made several attempts to seize the appellant’s assets. Some seizures were successful while others were not. The appellant acknowledges that these proceedings interrupted prescription for that period. However, the record remains unclear as to the point in time at which prescription began to run again.

In December 2008, the appellant adopted a resolution by which it specifically renounced the benefit of the elapsed prescriptive period against the judgment rendered in favour of Mtre Sylvestre. [ 6 ] On June 28, 2016, the respondents conducted post-judgment examinations of two representatives of the appellant including Grand Chief Simon who confirmed that the Council did not own any assets outside of the reserve. [ 7 ] On October 24, 2016, a notice of execution was filed in the court record.

This notice was respectively served on: - the Caisse Populaire de Kahnawake, (“Caisse”) on November 17, 2016; - the Agence du revenu du Québec (“ARQ”) on November 17, 2016; - the Canada Revenue Agency (“CRA”) on November 18, 2016; - the appellant on November 23, 2016; [ 8 ] On November 21, 2016, the Caisse declared that all the sums belonging to the appellant that were in its possession were exempt from seizure pursuant to the provisions of the Indian Act . The next day, the Caisse obtained a partial release from the seizure.

[ 9 ] Respectively on November 23, 2016, and on January 12, 2017, the ARQ and the CRA filed a negative declaration that any amount owed to the appellant by the government under a tax law could not be seized.

They both obtained a release from the seizure on January 27, 2017. [ 10 ] On December 18, 2017, Justice Claude Auclair, J.S.C., annulled those three seizures, without prejudice to the respondents’ rights under the terms of the Judgments rendered in 2004 and notwithstanding the debate as to whether prescription was interrupted. [4] [ 11 ] As mentioned previously, the notice of execution was also served on the appellant on November 23, 2016.

While the notice authorized the bailiff to seize any movable property in the debtor’s possession, the bailiff did not attempt to seize any assets as he concluded that the provisions of the Indian Act precluded the seizure of property located on the reserve. [ 12 ] The bailiff returned to the premises on February 14, 2017 and met with Grand Chief Simon who confirmed that the appellant did not own any assets outside of the reserve.

The bailiff then prepared minutes indicating that he was suspending the proceedings undertaken under the notice of execution to seize any assets belonging to the appellant as “Serge Simon, le Grand Chef, et Nicholas Dodd, l’avocat, déclarent qu’ils n’ont rien à l’extérieur de la réserve.” These minutes were not served on the appellant. [ 13 ] Nevertheless, the following day, the appellant’s attorneys informed the respondents’ lawyer that they had discovered that their client owned a parcel of land in Joliette which was apparently given under a stipulation of unseizability.

The respondents did not proceed to seize the property and chose instead to register a legal hypothec against it. [ 14 ] On March 23, 2017, the appellant filed an application for declaratory judgment confirming that the Joliette property did not form part of its patrimony as it was acting as a fiduciary for the members of the community of Kanesatake and Kahnawake, or, alternatively, declaring that it was exempt from seizure.

That application was subsequently stayed pending judgment on the issue of prescription. [ 15 ] In 2020, the appellant filed a second application for declaratory judgment seeking a judicial confirmation that the prescriptive period had expired. THE JUDGMENT [ 16 ] The trial judge found that while the three seizures in the hands of third persons that were later annulled by judgment did not interrupt the prescriptive period, the notice of execution that was filed and served in order to seize any asset belonging to the appellant did so.

It was deemed to be an unsuccessful seizure, which cannot be equated with a dismissed application within the meaning of

article 2894 of the Civil Code of Quebec (“ C.C.Q. ”). [ 17 ] Furthermore, the fact that the appellant refers in its books and financial statements to the amounts due according to the Judgments does not constitute an acknowledgement of rights that would interrupt prescription as provided by

article 2898 C.C.Q. ISSUES IN DISPUTE [ 18 ] The appellant raises three arguments in appeal: 1- Did the trial judge err in law when she concluded that notice of execution which leads to an unsuccessful seizure constitutes a “judicial application” within the meaning of

article 2892 C.C.Q. ? 2- Did the trial judge err in law when she concluded that the bailiff did not need to record in minutes the fact that no seizure could be performed? 3- Did the trial judge err in law by dismissing the appellant’s objection to the bailiff’s testimony and by giving legal effect to that testimony? [ 19 ] The respondents raise two additional issues: 1- Did the seizures in the hands of third persons interrupt prescription even if they were later annulled? 2- Did the mention of the amounts due following the Judgments in the financial statements constitute an acknowledgement of a right that interrupted prescription?

ANALYSIS [ 20 ] Extinctive prescription allows a person to be released from an obligation by the lapse of time. The right will be extinguished owing to its non-use. [5] In the present case, the appellant contends that it should be released from the obligations arising from the Judgments. [ 21 ] Rights resulting from a judgment are extinguished after 10 years if they are not exercised [6] unless prescription is otherwise interrupted or suspended.

Article 2892 C.C.Q. provides that the filing of a judicial application before the expiry of the prescriptive period will cause a civil interruption of prescription.

For this purpose, a seizure is to be regarded as a judicial application. [ 22 ] However, should the application be dismissed, discontinued or perempted, prescription is not interrupted. [ 23 ] Therefore, the main issue in this matter is to decide whether prescription was interrupted by the filing and service of the notice of execution. [ 24 ] The trial judge concluded that the seizures in the hands of third persons , that were later annulled, did not interrupt prescription.

In Investissements Pliska inc [7] the Court decided that an unsuccessful seizure could not be deemed to have been dismissed within the meaning of

article 2894 C.C.Q. since no judicial decision was rendered. In Pliska , the garnishee had obtained a release from the seizure

and none of the parties had sought the annulment of the seizure. Therefore, prescription was interrupted by the filing and service of the notice of execution. [ 25 ] However, in the present case, releases from seizures in the hands of third persons, namely the Caisse, the ARQ and the CRA, were issued and the seizures were subsequently annulled by the Superior Court by consent of the parties.

Hence, the judge correctly held that those applications were dismissed and did not interrupt prescription. [ 26 ] The situation is different when it comes to the notice of execution filed to seize the assets in the possession of the appellant. This notice was served, but the bailiff never proceeded to seize any assets as he was convinced that there were no seizable assets on the reserve. For that reason, he did not draft minutes confirming that the seizure was unsuccessful nor serve minutes of a nulla bona to the debtor in order to record his decision.

He ultimately suspended the execution proceedings. [ 27 ] The trial judge concluded that the notice of execution interrupted prescription even if the seizures were unsuccessful. [ 28 ] The appellant takes the opposite view, claiming that mere service of a notice of execution does not constitute a civil interruption of prescription. A successful seizure will obviously have this effect unless it is subsequently annulled. In the case of an unsuccessful seizure, however, the appellant contends that the bailiff is required to prepare minutes confirming that no seizable assets were found.

Because no such minutes were prepared in the present case, the appellant was denied the opportunity of seeking annulment of the seizure application. The appellant therefore submits that service of the notice of execution and the subsequent unsuccessful attempt to seize its assets cannot have interrupted prescription. [ 29 ] The Code of Civil Procedure (“ C.C.P. ”) does not specifically require that the bailiff record minutes stating that a seizure was unsuccessful owing to the absence of seizable assets.

Article 707 C.C.P. simply provides that the bailiff must record minutes describing the property seized when assets belonging to the debtor are placed under judicial control. The debtor may then oppose the seizure to regain full possession of its assets for one of the reasons enumerated in

article 735 C.C.P . Another person may also oppose the seizure and revendicate the seized property. [ 30 ]

Article 707 C.C.P. also mentions that “[ i ] n case of a seizure of movable property, the minutes must also contain a list and the market value of the movable property left to the debtor if the value of the property seized in insufficient to pay the claim of the seizing creditor ”.

Both the debtor and the creditor can then ask that the decision made by the bailiff under the exemption from seizure rules be reviewed. [8] [ 31 ] This does not preclude the bailiff from preparing minutes of a nulla bona if requested by the creditor. [9] However, the absence of minutes reflecting the fact that no assets were seized because of the exemption provided by the Indian Act , did not cause any harm to the appellant. The seizure was unsuccessful.

Even in the absence of minutes of a nulla bona , the appellant was well aware of the fact as the bailiff had not seized any property when he served the notice of execution and following his discussion with Grand Chief Simon. In the specific context of the Indian Act , it would have apparently been moot for the bailiff to list all the assets on the reserve that were unseizable. [ 32 ] The appellant could not oppose the seizure since the bailiff never proceeded to seize any of the assets that were exempt from seizure. No property was ever placed under judicial control.

All of the assets were still in the appellant’s possession. Therefore, unless the seizure was affected by an irregularity resulting in a serious prejudice, the appellant had no grounds to seek the annulment of a seizure which was simply unsuccessful.

The appellant does not argue that the seizure should be dismissed as abusive. [ 33 ] Consequently, under the special circumstances of this case, the situation should be considered as an unsuccessful seizure, which interrupted prescription as the respondents clearly expressed their intention to obtain payment of the sums that are owed to them by the appellant. [ 34 ] Finally, the judge correctly held that the recording of the debts incurred as a result of the Judgments in the appellant’s financial statements does not constitute an acknowledgment of a right within the meaning of

article 2898 C.C.Q. [ 35 ] The respondents’ right to the amounts owed by the appellant has already been recognized by the Judgments.

Furthermore, the evidence establishes that the appellant was required to record this debt in its financial statements in order to comply with “Canadian public sector accounting standards” and “generally accepted accounting principles”. [10] It cannot be said, under these circumstances, that this information was included in the financial statements with the clear intent of renouncing the benefit of the elapsed prescriptive period. [ 36 ] Therefore, the Court is of the opinion that the respondents’ claim against the appellant for the execution of the Judgments is not prescribed.

FOR THESE REASONS, THE COURT: [ 37 ] DISMISSES the appeal with legal costs. JULIE DUTIL, J.A. GENEVIÈVE COTNAM, J.A. BENOÎT MOORE, J.A.

Mtre Nicholas Dodd m tre Marie-Alice D’Aoust m tre Wade Macaulay DIONNE SCHULZE For the Appellant Mtre Éric Lalanne M tre Marilyn Tetrault-Beaudoin DE GRANDPRÉ CHAIT For the Respondents Hearing date: October 31, 2023