2022 QCCQ 5246, 2022 QCCQ 5246

3235149 Canada Inc. c. Total Quality Logistics 2022 QCCQ 5246 COURT OF QUÉBEC CANADA PROVINCE OF QUÉBEC DISTRICT OF MONTREAL TOWN OF MONTREAL Civil Division No: 500-22-271809-223 DATE: August 4, 2022. ______________________________________________________________________ PRESIDED BY THE HONOURABLE DAVID L. CAMERON, J.C.Q. ______________________________________________________________________ 3235149 CANADA INC. Plaintiff v.

TOTAL QUALITY LOGISTICS, LLC Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] The Plaintiff, 3235149 Canada Inc., a Canadian company specializing in transportation, whose main office is located in Vaudreuil- Dorion in the Province of Québec, sues for unpaid invoices totaling approximately 25,000 $. [ 2 ] The Defendant, Total Quality Logistics, LLC, is an American limited liability company, a broker licensed in a US jurisdiction, authorizing it to engage an operation in interstate or foreign commerce, arranging for transportation of freight (except household goods).

It brings a declinatory exception, against the action, invoking choice of forum clauses stipulated by the parties in certain written agreements. [ 3 ] The Defendant’s main office is located in Cincinnati, Clermont County, in the state of Ohio, USA. The Defendant alleges that it does not have any establishment in Québec, nor any property within the province of Québec. [ 4 ] The document known as the Broker/Carrier Agreement [1] contains the following clause: 15.

GOVERNING LAW: […] The Parties consent to the jurisdiction of the state court located in Clermont County, Ohio, waive any objection to the jurisdiction of that court, and agree that any dispute between the Parties, including, without limitation, those arising under or related to this Agreement, shall be brought in that court, which shall have exclusive jurisdiction over such dispute. […] [ 5 ] The Defendant asserts, as well, a contractual document called the Canadian Addendum, which contains a similar provision and actually incorporates the Broker/Carrier Agreement by reference [2] : 6.

MISCELLANEOUS This Agreement supersedes any and all prior or contemporaneous understandings and agreements between the parties with respect to the subject matter of this Agreement and is, along with the BROKER/CARRIER AGREEMENT, which is expressly incorporated, the complete and exclusive agreement between the parties.

Unless pre-empted by federal transportation laws or any treaties between Canada and the United States this Agreement shall be interpreted and construed in accordance with the laws of Ohio regardless of any applicable conflicts of laws rules and venue shall be exclusively in Clermont County, Ohio. [ 6 ] The Defendant asserts, therefore, that given these clauses, the Court of Québec has no jurisdiction and should, therefore, dismiss the action pursuant to

article 167 C.C.P. [ 7 ] Neither party raised the issue whether these contractual clauses should be considered as part of an adhesion contract. This would be relevant to the application of

article 42 C.C.P. The Court raised the issue, and it was discussed during the hearing. [ 8 ] The Plaintiff opposes the declinatory exception chiefly for the dual grounds that the exception was raised tardily, in light of time limits imposed by the C.C.P, and that the procedural conduct of the Defendant in the proceedings constituted an implicit recognition of the jurisdiction of the Court of Québec. [ 9 ] Turning to the rather complex rules concerning the time restrictions on preliminary exceptions, it would first be important to refer to the recent guidance of the Court of Appeal in Ormuco inc. c.

Ernst & Young [3] , an appeal from a decision of the Superior Court, district of Montreal, which dismissed a declinatory exception that raised the lack of jurisdiction of the Québec authorities to hear a case having international features. [ 10 ] Firstly, it is important to realise that choice of forum clauses that designate the court of a foreign authority pertain to that part of jurisdiction known as the international jurisdiction of Québec authorities, as opposed to their jurisdiction over subject matter and that of a territorial nature [4] :

[15] Bref, les clauses d’élection de for désignant les tribunaux d’un ressort étranger affectent la compétence internationale des autorités québécoises et non leur compétence d’attribution ni leur compétence territoriale. [ 11 ] Secondly,

article 491 C.C.P. states expressly that a declinatory exception depending upon international jurisdiction is made in the same way as other preliminary exceptions: 491. An application urging a Québec court to decline international jurisdiction, stay its ruling or dismiss an application for lack of international jurisdiction is made in the same way as any preliminary exception. When ruling on its international jurisdiction, the court considers the guiding principles of procedure in addition to the provisions of the Civil Code. 491.

La demande pour que le tribunal québécois décline sa compétence internationale, sursoie à statuer ou rejette la demande pour cause d’absence de compétence internationale est proposée, comme tout moyen préliminaire.

Outre les dispositions du Code civil, le tribunal qui décide de sa compétence internationale prend en considération les principes directeurs de la procédure. [ 12 ] This disposition provides for the Court taking into consideration the guiding principles of procedure, in addition to the provisions of the Civil Code. [ 13 ] This leads to a consideration of the time limits applicable to preliminary exceptions, specifically those provided at articles 166 and 167 C.C.P. [ 14 ] We see that the reckoning of the time limits is linked to the time limit for filing the case protocol or the time limit specified by the parties in the case protocol: 166.

A party that has preliminary exceptions to raise must disclose them in writing to the other party in sufficient time and file the written disclosure with the court office. The party must do so before the time limit for filing the case protocol or on the date specified in the case protocol, or at least three days before the date set by the court for the case management conference on the case protocol, or, if no case protocol is required, at least three days before the originating application is to be presented before the court.

If an exception to dismiss an application or a defence is raised, the three-day time limit is extended to 10 days. The disclosure and filing required by the first paragraph may only be effected at another time in cases determined by law or with the authorization of the court if serious reasons so warrant. 166. La

partie qui a des moyens préliminaires à faire valoir doit les dénoncer par écrit à l’autre

partie en temps utile et déposer cet écrit au greffe. Elle doit le faire avant la date prévue pour le dépôt du protocole de l’instance ou à la date prévue au protocole ou au plus tard trois jours avant la date fixée par le tribunal pour la tenue de la conférence de gestion sur le protocole. Si aucun protocole n’est requis, elle doit le faire au moins trois jours avant la présentation au tribunal de la demande introductive d’instance. Lorsque l’irrecevabilité de la demande ou de la défense est invoquée, ces délais de trois jours sont portés à 10 jours.

Elle ne peut le faire à un autre moment que dans les cas prévus par la loi ou avec l’autorisation du tribunal si des motifs sérieux le justifient. [ 15 ] The only limitation on the mandatory nature of the time limit, which limitation must be read restrictively, depends upon “cases determined by law or with the authorization of the Court, if serious reasons so warrant”. [ 16 ] In considering

article 167 C.C.P., it becomes clear that, in cases of choice of forum, the party raising the lack of jurisdiction cannot seek the transfer of the case to a foreign jurisdiction, the only available remedy being the dismissal of the action. [ 17 ] Considering the principles that we have paraphrased from the Court of Appeal’s judgment, it would be appropriate to sum up by simply quoting a brief passage from the judgment [ 22] Il se dégage donc du premier élément de l’article 491 C.p.c. et de l’article 166 C.p.c. l’idée que l’exception soulevant l’incompétence internationale du tribunal saisi doit être soulevée promptement, sous réserve des deux exceptions mentionnées à l’article 166 al. 3 C.p.c.

Celles-ci pourraient notamment trouver application dans l’hypothèse où le moyen déclinatoire soulevé par la

partie défenderesse reposerait sur des considérations d’ordre public. Ce n’est cependant pas le cas en l’espèce : puisqu’elle ne tient qu’à la

volonté des parties, l’incompétence internationale découlant d’une clause d’élection de for n’est manifestement pas fondée sur l’ordre public. [23] L’analyse qui précède conduit à conclure, à priori du moins, qu’un moyen déclinatoire invoquant une clause d’élection désignant de manière exclusive les tribunaux d’un ressort étranger est régi par l’article 166 al. 2 C.p.c. [ 18 ] The Court of Appeal also considered the impact of Supreme Court’s decision in GreCon Dimter inc. c. J.R. Normand inc [5] .

In connection, then, with the impact of the guiding principles of procedure, the Court of Appeal did not accept an argument that had been raised by the Appellant to the effect that failure to respect the time limits provided at

article 166 al.2 C.C.P. would not result automatically in the disposal of a declinatory exception, but that such tardiness would, at best, be one relevant factor in deciding whether the party raising the exception has recognised the international jurisdiction of the Québec authorities. [ 19 ] In rejecting this argument, the Court of Appeal made it clear that the time limits are strictly procedural rules, which respond to imperatives linked to the duties of cooperation, transparency and proportionality that form part of the guiding principles [6] : [31] Bref, il y a lieu de conclure que les dispositions de l’article 166 al. 2 C.p.c. demeurent pleinement applicables lorsque le moyen déclinatoire est fondé sur une clause d’élection de for. [ 20 ] Taking a close look at the time limits in the matter presently under discussion, service of the introductive proceeding was made by “ poste recommandée FedEx ” [7] .

An answer was filed by the Defendant’s lawyer on April 19, 2022. The parties then signed and produced in the Court record their case protocol on May 16, 2022. [ 21 ] The case protocol uses the form provided by the Court of Québec. Under the heading “ First Phases in the Conduct of the Proceedings and Incidental Applications ” under the subcategory “ Presentation of preliminary exceptions to the application (arts. 166 ff. C.C.P) “, the box for TIME LIMIT (on or before) is left blank and the square under the heading “NA [not applicable]” is marked with an “ X ”.

Under box 4, “Brief statement of grounds of oral defence (mandatory) (articles 154 and 170

(2) C.C.P.), the following text appears: Defendant denies the allegations contained in the judicial application. Defendant was not notified via formal notice of the amount owing to Plaintiff.

The amount claimed in Plaintiff’s claim is not accurate for the reasons that will be stated in a complimentary statement to be filed by no later than June 15, 2022, as well as supporting exhibits. [ 22 ] In the box just beside, the deadline for this is given as June 15, 2022. [ 23 ] No written defence is contemplated as appears from the “ X ” in the box under the heading “NA” for box 6. [ 24 ] It is a case without pretrial examinations and without any contemplated expert opinion.

The parties confirmed that the deadline for notification and filing of the application for setting down for trial and judgment correspond to the strict time limit, on or before September 30, 2022. [ 25 ] This case protocol was the time and place where the Defendant should have given notice of its intention to file a preliminary exception based on the choice of forum clauses. [ 26 ] Clearly, it did not have such an intention, and this was confirmed by checking “NA” in box 3. [ 27 ] The brief statement of grounds of oral defence category is stated in the Court’s form as mandatory at the initial stage, even when there is a preliminary exception to come.

In the Defendant’s statement, apart from a general denial, a defence of failure to give a formal notice is raised and a general allusion is made to the amount of the claim being inaccurate as it will be stated in “a complementary statement” as well as supporting exhibits. [ 28 ] It bears mentioning that the case is a simple action on account for amounts owing to a broker in connecting with transport contracts evidenced by bills of lading. [ 29 ] Evidently, the compliance with the obligation to state grounds of defence was minimal, but nevertheless substantive.

Within the time limit promised, the Defendant provided a complementary statement of oral defence. In this more elaborate document the Defendant raises the Broker/Carrier Agreement and Canadian Addendum [Exhibit D-1] referring to “offsets” owed to it. [ 30 ] Further “offsets” are raised in a series of paragraphs, an admission to one of the invoices is given at paragraph 5 and further offsets are claimed and denials of specific allegations of the Plaintiff originating application are made. The proceedings ends with paragraph 10 : 10.

The present Complementary Statement of Oral Defence is filed under reserve of Defendant’s rights to present its Application for Referral to the Competent Court. [ 31 ] No specification is made as to whether this referral would related to subject matter or territorial jurisdiction. As stated above, lack of international jurisdiction could not give rise to a referral, only to a dismissal. [ 32 ] This proceeding dated June 15, 2022, and filed June 16, 2022, contains the first glimmer of a notification that there will be a preliminary exception, without specifying its underlying basis.

At this stage, one month had lapsed since the signing of the protocol, but more importantly, the Defendant had engaged substantively in a joinder of issue dealing in succession with several of the invoices, sometimes admitting, but mostly raising “offsets” in connection with them.

[ 33 ] In other words, there was a serious and substantive defence to the quantum. [ 34 ] The Defendant asserts that the stipulations in the protocol for further grounds of defence and the inclusion, one month later, in the further grounds of defence of a reservation for a preliminary motion based on forum should be treated has tantamount to the preliminary motion having been raised in the protocol itself. [ 35 ] This is, by no means, a frivolous argument, but it is not sufficient to carry the day.

The protocol form is quite clear in that it provides for immediate disclosure, in the first few boxes, of this type of preliminary exception. This is consistent logically with the notion that an exception based on lack of international jurisdiction must be brought promptly, if not at the first opportunity. [ 36 ] The fact that the court’s form requires, at least a

summary statement of a defence, it would be possible to make a defence subject to the right to bring the preliminary exception, so long as the intention to bring a preliminary exception, further along in the process, is clearly stated at the outset. [ 37 ] Therefore, the preliminary exception, now made, based on the choice of forum clauses apparently agreed to by the parties, was brought outside the applicable time limit as it was only served on June 16, 2022, the day after the signing of the complementary statement of oral defence. [ 38 ] The second issue raised by the Plaintiff in opposition to the preliminary exception is that based on the Defendant’s acceptance of the Court’s jurisdiction. [ 39 ] The situation is different from that examined by the Court of Appeal in its obiter dictum in Ormuco inc . c.

Ernst & Young [8] . In that case, the only steps taken by the Defendant were the filing of the reply, in which document the Defendant had taken care to reserve its right to contest the jurisdiction of the Superior Court and the subsequent filing of a notice of substitution of an attorney. Discussions had taken place in view of adopting a protocol and they had been carried out without prejudice and did not result in any agreement. [ 40 ] In the present case, not only was the protocol agreed to, it also reflected a decision to proceed with the case, with no preliminary exceptions of any kind.

The agreement dealt with their being no expert opinion. The Defendant fully engaged in spelling out a defence, which may have appeared to be simply a question of form in the protocol, but which was fully fleshed out in the subsequent document. [ 41 ] This is clearly a case where time and energy had been spent in the furtherance of the proceedings before the Court of Québec. Although the Plaintiff has remained passive, the case has advanced to a point where it could be inscribed without any other steps, unless the Plaintiff has concerns about further particulars of defence or issues of documentary disclosure.

Therefore, the second ground raised by the Plaintiff is also valid. The Defendant has submitted to the jurisdiction of the Court. BY THESE REASONS, THE COURT: DISMISSES the Defendant’s preliminary exception to dismiss. WITH LEGAL COSTS to follow suit. ______________________ David L. Cameron, J.C.Q. Me Giuseppe Joseph Ionata Attorney of Plaintiff Me Audrey Nolin Sotiriadis THERRIEN COUTURE JOLI-COEUR S.E.N.C.R.L. Attorney of Defendant Date of hearing: July 6, 2022.