2018 QCCA 87, 2018 QCCA 87

Gestion de patrimoine ASF inc. c. Jeansonne Avocats inc. 2018 QCCA 87 COUR D’APPEL CANADA PROVINCE DE QUÉBEC GREFFE DE MONTRÉAL N° : 500-09-026637-173 (500-22-236128-172) DATE : Le 19 janvier 2018 CORAM : LES HONORABLES LOUIS ROCHETTE, J.C.A. ALLAN R. HILTON, J.C.A. CLAUDE C. GAGNON, J.C.A. GESTION DE PATRIMOINE ASF INC. et MICHEL-OLIVIER MARCOUX APPELANTS – défendeurs c. JEANSONNE AVOCATS INC.

INTIMÉE – demanderesse ARRÊT [ 1 ] Les appelants se pourvoient contre un jugement rendu le 9 février 2017 par la Cour du Québec, district de Montréal (l’honorable Nathalie Chalifour), qui a rejeté leur moyen d’irrecevabilité à l’encontre de la demande de l’intimée en réclamation de dommages-intérêts. [ 2 ] Pour les motifs du juge Hilton, auxquels souscrivent les juges Rochette et Gagnon, LA COUR : [ 3 ] REJETTE l’appel; [ 4 ] LE TOUT , avec frais de justice. LOUIS ROCHETTE, J.C.A. ALLAN R. HILTON, J.C.A. CLAUDE C. GAGNON, J.C.A.

M e Serge Petit DPG avocats Pour les appelants M e Tuan Khai Alain Nguyen M e François Fournier Jeansonne avocats inc. Pour l’intimée Date d’audience : Le 29 septembre 2017

REASONS OF HILTON, J.A. [ 5 ] The respondent’s action in the Court of Quebec is framed as being one in extra contractual civil liability engendered by the conduct of the appellants Gestion de Patrimoine ASF inc. (“ASF”) and Michel-Olivier Marcoux (“Marcoux”) in having fraudulently precipitated the bankruptcy of Avantages Services Financiers inc. (“Avantages Services”) and Michel Marcoux (together, the “Bankrupts”). [1] This appeal considers whether a judge of the Court of Quebec was correct in dismissing the appellants’ exception to dismiss in which they claim that the respondent’s recourse required prior approval of the Superior Court in accordance with the Bankruptcy Act , [2] and whether the appellants’ amended conclusions in appeal change the outcome. [ 6 ] A brief outline of the facts giving rise to the claim and subsequent developments is essential to an understanding of the competing positions and the judgment under appeal. [ 7 ] Between 2011 and 2014, the respondent law firm of Jeansonne Avocats inc. acted on behalf of the Bankrupts in several mandates.

On August 12, 2014, prior to their assignment in bankruptcy on August 30 that year, the Bankrupts submitted a request to the office of the Syndic of the Quebec Bar for conciliation of the legal fees then owing to Jeansonne. The conciliation process proved unsuccessful. Accordingly, an arbitration council was convened to determine the validity of the Bankrupts’ objection to the accounts.

That process led to a lengthy decision the arbitration council rendered on November 25, 2016 holding that the Bankrupts owed Jeansonne $68,380.30 plus interest and costs for unpaid accounts. [ 8 ] Jeansonne instituted its action against the appellants shortly thereafter.

It claims, in effect, that the creation of ASF, whose sole shareholder is Marcoux, allowed Avantages Services to file a fraudulent assignment in bankruptcy with a view to frustrating its recovery of the amount owing to it as determined by the Bar arbitration process and related expenses ($85,653.80), less $653.81 to bring the amount claimed of $84,999.99 within the jurisdiction of the Court of Quebec. The essence of these contentions is set out in the following paragraphs of Jeansonne’s recourse as follows: […] 4.

Gestion de patrimoine ASF inc. est la continuation d’Avantages Services Financiers inc., occupant les mêmes bureaux que cette dernière occupait, œuvrant dans le même domaine que celle-ci, employant les mêmes personnes et étant affiliée au même courtier; 5. La majorité, voire la totalité, de la clientèle de Gestion de patrimoine ASF inc. est composée de clients qui étaient des clients d’Avantages Services Financiers inc. jusqu’au 16 septembre 2014, date de constitution de Gestion de patrimoine ASF inc., pièce P-1; […] 13.

Peu avant sa faillite, Avantages Services Financiers inc. a transféré tout son achalandage et tous ses actifs à la défenderesse Gestion de patrimoine ASF inc.; 14. La création et la mise en opération de Gestion de patrimoine ASF inc. sont en réalité un stratagème visant à permettre à Avantages Services Financiers inc. de faire cession de ses biens de manière frauduleuse en contravention des droits de ses créanciers, dont la demanderesse fait partie; 15. Gestion de patrimoine ASF inc., est un instrument mis en place par M. Michel Marcoux, M.

Michel-Olivier Marcoux et Avantages Services Financiers inc. afin de frustrer la demanderesse des sommes qui lui sont dues; 16. Le défendeur Michel-Olivier Marcoux, ayant contribué, à

titre personnel, à la mise en place de ce stratagème de faillite frauduleuse, doit également être tenu responsable des dommages subis par la demanderesse; [ 9 ] Invoking art. 168(2) C.C.P. , the appellants responded with an exception to dismiss. They alleged that in reality Jeansonne’s recourse is a disguised Paulian action (art. 1631 C.C.Q. ) by which it contests the transfer of the clientele and assets of Avantages Services to ASF. As such, the appellants argue that the recourse belongs to the Trustee of the Bankrupts and thus required Jeansonne to first obtain an order from the Superior Court pursuant to s. 38(1) of the Act . [3] That provision provides as follows: 38

(1) Where a creditor requests the trustee to take any proceeding that in his opinion would be for the benefit of the estate of a bankrupt and the trustee refuses or neglects to take the proceeding, the creditor may obtain from the court an order authorizing him to take the proceeding in his own name and at his own expense and risk, on notice being given the other creditors of the contemplated proceeding, and on such other terms and conditions as the court may direct. 38

(1) Lorsqu’un créancier demande au syndic d’intenter des procédures qui, à son avis, seraient à l’avantage de l’actif du failli, et que le syndic refuse ou néglige d’intenter ces procédures, le créancier peut obtenir du tribunal une ordonnance l’autorisant à intenter des procédures en son propre nom et à ses propres frais et risques, en donnant aux autres créanciers avis des procédures projetées, et selon les autres modalités que peut ordonner le tribunal. [ 10 ] After reviewing the facts and the competing positions of the parties, the trial judge concluded that the respondent’s recourse was distinct from one that might belong to the Trustee and thus could properly proceed.

Her reasoning is best encapsulated in the following paragraphs of her judgment:

[15] En l’espèce, le recours institué par JA comporte tous les éléments d’un recours en dommages en vertu de l’

article 1457 du Code civil du Québec et n’est pas un recours en inopposabilité. [16] La démarche de JA est légitime et s’inscrit dans un cadre juridique bien défini. Encore une fois, le Tribunal insiste qu’il n’a pas à analyser le fond de l’affaire et doit seulement constater qu’un recours en dommages a effectivement été institué et que le syndic n’a aucun droit prioritaire à faire valoir ce recours. [17] Faire droit à la demande d’ASF et de M.

Marcoux équivaudrait à forcer JA à modifier son recours pour le transformer en recours en inopposabilité. [18] Or, c’est au créancier d’une obligation, en cas de défaut de son débiteur, de choisir le recours qui lui sied. Il ne revient pas au Tribunal d’imposer une voie procédurale plutôt qu’une autre mais bien seulement de déterminer si un recours tel qu’entrepris est recevable ou non. [ 11 ] The appellants sought and obtained leave to appeal from a judge of this Court.

The operative conclusions of their declaration of appeal filed with their motion seek an order suspending the proceedings in the instant case until such time as the respondent obtains leave from the Superior Court pursuant to s. 38 of the Bankruptcy Act and notice has been given of the proposed proceedings to the other creditors of the bankruptcy of Avantages Services. [ 12 ] At the hearing of the appeal, the appellants’ counsel provided the Court with copies of unrelated proceedings in the bankruptcy file of the Bankrupts initiated by third parties.

Such proceedings are described as being in the nature of a Paulian action (arts. 1631-1636 C.C.Q .).

They show that the Registrar authorized such third parties who had instituted civil proceedings against the Bankrupts prior to the date of their bankruptcy claiming extensive damages to continue them “au lieu et à la place du Syndic”. [4] They all include specific allegations and conclusions in the nature of a Paulian recourse. [ 13 ] For example, the amended conclusions in the recourse initiated against the Bankrupts by Pierre Normandin, which are closely similar to those in the two other proceedings, contain the following: ACCUEILLIR la demande d’inopposabilité du demandeur Pierre Normandin contre les défendeurs Gestion de Patrimoine ASF inc. et Michel Olivier Marcoux; DÉCLARER inopposable à l’égard du demandeur Pierre Normandin le transfert de la clientèle de Michel Marcoux et d’Avantages, Services Financiers inc. vers les défendeurs Gestion de Patrimoine ASF inc. et Michel Olivier Marcoux, lequel transfert a eu lieu à une date non déterminée en 2014; AUTORISER le demandeur Pierre Normandin à percevoir somme de 567 024,31 $, plus tous intérêts applicables et ceux réclamés par les présentes à même les biens de la société Gestion de patrimoine ASF inc. et de Michel Olivier Marcoux; […] [ 14 ] At the hearing of this Court, counsel was also authorized to amend the conclusions the appellants were seeking in this case as follows: ORDONNE la suspension de l’instance dans le dossier numéro 500-22-236128-172 jusqu’à ce que l’intimée se soit jointe aux recours en inopposabilité déjà entrepris contre les appelants dans les dossiers numéros 500-17-072322-129, 500-17-081067-145 et 500-17-076897- 134; DÉCLARE que l’instance dans le dossier numéro 500-22-236128-172 sera terminée dès que l’intimée se sera jointe aux recours ci- dessus décrits. [ 15 ] In my opinion the trial judge was right to have dismissed the appellants’ exception to dismiss as initially framed. [ 16 ] First, the Supreme Court of Canada endorsed a very cautious approach to such motions in Canada (A.G.) v.

CSN , [5] and said this:

[1] Judicial resources must be husbanded to ensure that the courts function properly and that litigants have access to a justice system that meets the highest possible standards. With this in mind, lawmakers have given the courts tools to be used, even at a preliminary stage, to put an end to actions that are bound to fail. In Quebec, for example, art. 165 of the Code of Civil Procedure , CQLR, c. C-25 (" C.C.P. "), is one of the mechanisms devised to further this objective. The courts must be cautious in exercising this power, however.

Although the proper administration of justice requires that the courts’ resources not be expended on actions that are bound to fail, the cardinal principle of access to justice requires that the power be used sparingly, where it is clear that an action has no reasonable chance of success . (Emphasis added) [1] La saine administration des ressources judiciaires représente une condition essentielle pour assurer le bon fonctionnement du système judiciaire et l’accès des justiciables à une justice de qualité.

Pour garantir cette administration, les législateurs ont doté les tribunaux d’outils leur permettant de mettre fin à des recours voués à l’échec, et ce, même à un stade préliminaire. Au Québec, à

titre d’exemple, l’ art. 65 du Code de procédure civile , RLRQ, ch. C-25 (« C.p.c. »), fait

partie des moyens mis en place pour réaliser cet objectif. Cependant, l’exercice de ce pouvoir impose la prudence aux tribunaux.

En effet, si la saine administration de la justice commande que les recours voués à l’échec n’accaparent pas les ressources des tribunaux, le principe cardinal de l’accès à la justice exige en revanche que ce pouvoir soit utilisé avec parcimonie, lorsqu’il est manifeste qu’une demande n’a aucune chance raisonnable de succès . [Soulignage ajouté.] [ 17 ] Next, the fact that other parties who had instituted proceedings against the Bankrupts prior to the bankruptcy obtained leave from the Registrar to continue their proceedings pursuant to s. 38 of the Bankruptcy Act on their own behalf is not dispositive of the appeal.

In any event, Jeansonne’s proceedings are not directed against the Bankrupts, but rather, against parties who it contends fraudulently precipitated the bankruptcy, and by so doing rendered any claim in bankruptcy it may otherwise have to be worthless. [ 18 ] Second, although Jeansonne undoubtedly has a provable claim in the bankruptcy of the Bankrupts based on unpaid legal fees, this does not in and of itself exclude the exercise of a civil recourse against third parties who it alleges fraudulently frustrated the recovery of that claim from the Bankrupts. [ 19 ] To that end, the judgment of the Manitoba Court of Appeal in Reznick v.

Ziterman , [6] although not directly applicable, nevertheless illustrates the point that the existence of a claim in bankruptcy against one debtor does not necessarily preclude a related claim against a third party debtor whose alleged liability arises from a different source. In that case, the plaintiffs sued their lawyer in professional negligence and later added the lawyer’s professional liability insurer as a party.

When the lawyer subsequently filed an assignment in bankruptcy, the plaintiff applied for an order that the stay of proceedings provisions in ss. 69 and 69.3 of the Act did not apply to the insurer and that proceedings could be continued against it irrespective of the bankruptcy.

The Court of Appeal affirmed the judgment of the trial judge granting the plaintiff’s application, [7] thus allowing the continuation of the proceedings, irrespective of the bankruptcy of the principal debtor who had become bankrupt. [ 20 ] Third, Jeansonne’s recourse, when taken as a whole, is not clearly one in the nature of a Paulian action. There is a single allegation in paragraph 13 quoted above that is consistent with such a recourse, but when looked on its entirety, the thrust of the allegations and the clear text of the conclusions are those in extra-contractual liability.

Its recourse is not being exercised against its principal debtor, but against third party defendants who are alleged to have impaired its recovery of same from that debtor. Jeansonne does not invoke the fault of the Bankrupts in support of its claim, but rather that of the appellants. [ 21 ] In speaking of the attributes of a Paulian recourse in Réserve de bois Morin et Blanchette v.

Tremblay , [8] the Court notes that "L’objectif de ce recours n’est pas de faire annuler l’acte attaqué, mais il vise plutôt à permettre au créancier d’exercer ses droits sur le bien l’objet de l’acte attaqué comme si celui-ci n’avait pas eu lieu." [9] Jeansonne’s claim seeking recovery of damages, if granted, would be executory against any of the assets of the appellants, and not those specific to the fraudulent conduct of which it complains.

In any event, it is difficult to envisage how the clientele of the Bankrupts and the leased premises they occupied that were transferred to the appellants can possibly be characterized as being a "bien l’objet de l’acte attaqué" that could ever be susceptible to compulsory execution. [ 22 ] The amended conclusions the appellants ask the Court to adopt are therefore no better than those seeking the outright dismissal of Jeansonne’s recourse.

It is surely not for the appellants to determine the procedural manner in which that recourse is asserted when it differs from their recourses. [ 23 ] Accordingly, I would affirm the judgment of the Court of Quebec and dismiss the appeal with legal costs. ALLAN R. HILTON, J.A.