2015 QCCQ 7404, 2015 QCCQ 7404

Long c. Agence du revenu du Québec 2015 QCCQ 7404 COUR OF QUÉBEC Small Claims CANADA PROVINCE OF QUEBEC DISTRICT OF GATINEAU LOCALITY OF GATINEAU Civil Division N° : 550-32-020248-123 DATE : August 24, 2015 ______________________________________________________________________ PRESENT: THE HONOURABLE JEAN FAULLEM, J.C.Q. ______________________________________________________________________ DAVID LONG and PASCALE LARRIVÉE Plaintiffs v.

AGENCE DU REVENU DU QUÉBEC Defendant ______________________________________________________________________ JF 1075 JUDGMENT ______________________________________________________________________ [ 1 ] The plaintiffs are claiming from the defendant the sum of $7000.00 as reimbursement for part of the professional fees incurred to appeal from the notices of assessment issued personally to plaintiff Pascale Larrivée for the years 2000 and 2001, and as compensation for the trouble they experienced, particularly the breakdown of their marriage.

I- QUESTION IN DISPUTE [ 2 ] Did the defendant, the Agence du revenu du Québec, acted in bad faith or abused its rights in conducting the case, thus giving rise to the awarding of damages to the plaintiffs? II- CONTEXT [ 3 ] This claim originated in the fact that Ms. Larrivée was assessed by the Agence du revenu du Québec ( ARQ ), which at the time was referred to as the Deputy Minister of Revenue of Québec, for taxation years 2000 and 2001, in relation to childcare expenses. [ 4 ] Ms. Larrivée contested the notices of assessment issued by the ARQ and mandated Mtre.

Chantal Donaldson to appeal, before the Court of Québec, from the Deputy Minister of Revenue’s decision not to allow her childcare expenses. [ 5 ] On February 26, 2010, my colleague Serge Laurin J.C.Q. rendered a judgment in which he ruled in favour of Ms. Larrivée and condemned the ARQ to pay the costs. [ 6 ] As provided for by law, the ARQ paid the costs ordered by Laurin J. directly to Mtre.

Donaldson. [ 7 ] The plaintiffs alleged that the representatives of the ARQ acted in a malicious and abusive manner toward them and that, as such, the ARQ must, in particular, reimburse them for the attorney’s fees they paid Mtre. Donaldson. [ 8 ] Since Mtre. Donaldson’s professional fees are over $7000.00, the plaintiffs agreed to reduce their claim to that amount so that

they could avail themselves of the simplified procedure of the Small Claims Division of the Court of Québec. III- ANALYSIS [ 9 ] To win their case, the plaintiffs must show that the ARQ committed a fault in the handling of their case. [ 10 ] More specifically, the plaintiffs must prove that they were treated unfairly by the representatives of the ARQ, in a way that differed from what they had the right to expect from a conscientious person acting in the same capacity. In addition, the plaintiffs must show that the injury they suffered was the direct and immediate result of the alleged wrongful conduct. [ 11 ]

Article 1457 of the Civil Code of Québec (CCQ) provides as follows concerning the civil liability of a natural or legal person. The ARQ is subject to that provision, in accordance with

article 1365 C.C.Q.:

Article 1457. Every person has a duty to abide by the rules of conduct incumbent on him, according to the circumstances, usage or law, so as not to cause injury to another. Where he is endowed with reason and fails in this duty, he is liable for any injury he causes to another by such fault and is bound to make reparation for the injury, whether it be bodily, moral or material in nature.

He is also bound, in certain cases, to make reparation for injury caused to another by the act or fault of another person or by the act of things in his custody. [ 12 ] It should be pointed out that, as mentioned by the Court of Appeal in Martineau v.

Le Sous-ministre du revenu du Québec , [TRANSLATION] “issuing an assessment, even an erroneous one, does not constitute a fault”. [1] [ 13 ] In addition, since most of the damages claimed by the plaintiffs consist of extrajudicial attorney’s fees, that is, fees other than the ones included in the expenses allowed by Laurin J., the plaintiffs must also show that the ARQ abused the right to take legal action. [ 14 ] The awarding of extrajudicial fees to the party claiming them is an exceptional measure. It is granted only on an exceptional basis. [ 15 ] In Pierre Gilbert v.

Le Sous-ministre du revenu du Québec , [2] Jacques Paquet J.C.Q. pointed out that extrajudicial fees are granted only in very specific cases. In that case, the Deputy Minister of Revenue of Québec issued a new assessment during a legal contestation that had already begun, which made the plaintiff’s legal proceedings moot. Consequently, Mr. Gilbert asked to be reimbursed for the extrajudicial fees he had paid for the proceedings that had become null and void. Paquet J., who subscribed to the conclusions of Rochon J.A. in Viel v.

Les Entreprises Immobilières du Terroir Ltée. , [3] stated the following: [TRANSLATION] [20] Extrajudicial fees cannot be awarded. The plaintiff did not show that the defendant abused the right to take legal action in this case. In that regard, the Court refers to the Court of Appeal ruling in Viel , in which Rochon J. wrote the following: 77. With respect, the principle of civil liability leads me to answer the question in the negative.

In principle, barring exceptional circumstances, the fees paid by one party to its attorney cannot, in my opinion, be considered direct damage that sanctions an abuse on the merits. There is no adequate causation between the fault (abuse on the merits) and the damage. Adequate causation corresponds to the event or events having a logical, direct and immediate relation with the origin of the injury. Only abuse of the right to take legal action can be sanctioned by the awarding of such damages.

I believe it would be a mistake to turn an abuse on the merits into an abuse of the right to take legal action once a legal proceeding is instituted…. [ 16 ] In addition, as pointed out by Jean-Yves Lalonde J. in Carignan v. Langlois , [4] which also refers to Viel : [TRANSLATION] [26] It is now clearly stablished that abuse of the right to take legal action is a fault committed in the course of a legal proceeding. This would be the case when a party institutes proceedings in bad faith, or initiates multiple legal proceedings with the intent to injure the other party.

A party that institutes a proceeding while aware that it has no right to assert is acting in bad faith. [27] There can be no abuse where an individual, acting in good faith and having a cause that is not destined to fail, causes injury to others by going to court to assert his or her rights. One must avoid concluding that abuse has occurred if the cause of action put forward by a party seems somewhat fragile, without necessarily being abusive.

Thus, to conclude that abuse has occurred, there must be indications of bad faith or recklessness. [ 17 ] In the Court of Appeal ruling in Royal Lepage Commercial Inc. v. 109650 Canada Ltd , [5] the notion of abuse was analyzed at length. The Court of Appeal was of the opinion that application of that principle leads to the following conclusion:

[TRANSLATION] [56] In addition, throughout the 10-day trial, the trial judge never gave any indication that could imply abuse of right. On the contrary, she requested written arguments and presided over two days of arguments. She then spent a long time deliberating on the case. If the appellant’s case had no reasonable basis, why would the judge have requested written notes? Why would the respondent have spent no less than thirty pages on it?... [59] There is also no indication that the appellant abused her procedural rights in conducting the case.

In fact, she tried to assert the rights she believed she had, without initiating multiple proceedings. She even tried to conduct an out-of-court examination of a key witness. [ 18 ] Lastly, under articles 2803 and 2804 of the Civil Code of Québec , a person seeking to assert a right must prove preponderantly the facts on which the claim is based. [ 19 ] Through her representatives, Ms. Larrivée initiated proceedings to object to and contest the notices of assessment concerned in this case, in accordance with law. The ARQ then acted as it would have in any other case. [ 20 ] Firstly, regarding Ms.

Larrivée’s notice of objection, the representatives of the ARQ assessed it without crossing the boundaries of what constitutes acceptable behaviour on their part, as we will see later on. The ARQ also responded to the many complaints filed by Ms. Larrivée and her spouse at the time, Mr. Long. [ 21 ] Secondly, regarding the legal proceedings, the ARQ defended itself, as provided for in the Code of Civil Procedure , by filing a defence to Ms. Larrivée’s motion to institute proceedings. There is no indication that the representatives of the ARQ abused the legal system in order to cause injury to Ms.

Larrivée. [ 22 ] On the contrary, it will be noted that the ARQ did not object to the requests for postponement made by Ms. Larrivée’s attorney, or to the application for the extension of the deadline for inscription of the case for proof and hearing on the merits. There are no factual elements showing that the ARQ abused its rights in any way with respect to the legal proceeding. The plaintiffs were unable to prove preponderantly that the representatives of the ARQ filed a defence in bad faith to the legal proceeding initiated by Ms.

Larrivée, or that they filed multiple legal proceedings with the intent to injure Ms. Larrivée. [ 23 ] In addition, as shown in the judgment of Laurin J., the decision to cancel the notices of assessment is based on the

interpretation of the legislative provisions applicable in matters of childcare expenses and means of proof. [ 24 ] Laurin J. even had to refer to the rules of

interpretation in the Civil Code of Québec , [6] as well as

definitions from various dictionaries, in order to interpret the word [TRANSLATION] “enterprise”, used in the context of a deduction for childcare expenses. [ 25 ] Thus, it appears that the questions submitted to Laurin J. were in no way frivolous, and that there is no evidence of abuse or bad faith on the part of the ARQ representatives in the course of this case. In fact, during the four days required for the hearing of the trial, Ms.

Larrivée’s attorney never raised the question of improper use of procedure by the representatives of the ARQ. [ 26 ] It is true that, in paragraph 8 of his decision, Laurin J. mentioned that the Deputy Minister of Revenue had no justification for refusing to consider secondary evidence for childcare expenses. In addition, in paragraph 10 of the judgment, Laurin J. mentioned the following: [TRANSLATION] The Court also observes that the Deputy Minister of Revenue changed his position following the complaints filed by Ms. Larrivée and Mr.

Long with the ministère du Revenu and following discussions with the Minister’s liaison officer for the Outaouais region, and that the change was not evidenced by an amended notice of assessment. [ 27 ] However, being mistaken about a rule of procedure and changing one’s position during the analysis of a tax file does not, in and of itself, constitute abuse of right or bad faith on the part of the ARQ. [ 28 ] In their September 9, 2014 re-amended application, the plaintiffs alleged that, during the proof and hearing of the case, Laurin J. mentioned that he did not understand why the ARQ had not tried to settle the case amicably.

The plaintiffs acknowledged that Laurin J. did not mention any fabrication of evidence on the part of the ARQ, but they alleged that the judge’s comments showed that the ARQ had a malicious attitude. However, the plaintiffs did not file the transcript of the stenographic notes of the hearing, and were unable to indicate at which point in the hearing the comments would have been made.

As mentioned earlier, it is up to the plaintiffs to prove their claims, which they were unable to do in this instance. [ 29 ] On the sole basis of Laurin J.’s judgment, the Court cannot conclude that the ARQ acted in bad faith toward the plaintiffs, or that it abused its rights, either before the legal proceedings were instituted or during the proceedings. [ 30 ] Consequently, the plaintiffs were unable to prove preponderantly that the ARQ representatives committed a fault in the handling of Ms. Larrivée’s case or that the ARQ abused the right to defend itself from the legal action.

[ 31 ] THEREFORE, THE COURT: [ 32 ] DISMISSES the legal claim of the plaintiffs, without cost. __________________________________ JEAN FAULLEM J.C.Q. Date of hearing: March 18, 2015