2023 SCC 29, 2023 SCC 29

SUPREME COURT OF CANADA Citation: Sharp v. Autorité des marchés financiers, 2023 SCC 29 Appeal Heard: January 18, 2023 Judgment Rendered: November 17, 2023 Docket: 39920

Between: Frederick Langford Sharp Appellant and Autorité des marchés financiers Respondent - and – Attorney General of Quebec, Shawn Van Damme, Vincenzo Antonio Carnovale, Pasquale Antonio Rocca and Ontario Securities Commission Interveners And Between: Shawn Van Damme, Vincenzo Antonio Carnovale and Pasquale Antonio Rocca Appellants and Autorité des marchés financiers Respondent - and - Attorney General of Quebec, Frederick Langford Sharp and Ontario Securities Commission Interveners Official English Translation: Reasons of Côté J.

Coram: Wagner C.J. and Karakatsanis, Côté, Brown, * Rowe, Martin, Kasirer, Jamal and O’Bonsawin JJ. Joint Reasons for Judgment: (paras. 1 to 138) Wagner C.J. and Jamal J. (Karakatsanis, Rowe, Martin, Kasirer and O’Bonsawin JJ. concurring)

Dissenting Reasons : (paras. 139 to 212) Côté J. Note: This document is subject to editorial revision before its reproduction in final form in the Canada Supreme Court Reports . * Brown J. did not participate in the final disposition of the judgment. Frederick Langford Sharp Appellant v. Autorité des marchés financiers Respondent and Attorney General of Quebec, Shawn Van Damme, Vincenzo Antonio Carnovale, Pasquale Antonio Rocca and Ontario Securities Commission Interveners - and - Shawn Van Damme, Vincenzo Antonio Carnovale and Pasquale Antonio Rocca Appellants v.

Autorité des marchés financiers Respondent and Attorney General of Quebec, Frederick Langford Sharp and Ontario Securities Commission Interveners Indexed as: Sharp v. Autorité des marchés financiers 2023 SCC 29 File No.: 39920. 2023: January 18; 2023: November 17. Present: Wagner C.J. and Karakatsanis, Côté, Brown, * Rowe, Martin, Kasirer, Jamal and O’Bonsawin JJ.

on appeal from the court of appeal for quebec Constitutional law — Extraterritoriality — Jurisdiction — Constitutional applicability of Quebec regulatory scheme to out-of-province residents — Quebec administrative tribunal claiming jurisdiction over out-of-province defendants in securities enforcement proceeding — Whether tribunal properly assumed jurisdiction — Civil Code of Québec , preliminary provision — Act respecting the Autorité des marchés financiers, CQLR, c. A-33.2, s. 93 — Securities Act, CQLR, c. V-1.1 .

Four British Columbia residents (the “defendants”) are alleged by the administrative agency that regulates Quebec’s financial sector, the Autorité des marchés financiers (“AMF”), to have engaged in a transnational “pump-and-dump” securities manipulation scheme. The defendants allegedly acted in concert to (1) acquire the shares of a shell company, (2) give it a legitimate face, (3) promote its business, (4) sell their shares for a profit, and (5) distribute this profit among themselves.

The AMF also alleged that the scheme had several ties to Quebec sufficient to apply Quebec’s securities regulatory scheme to the defendants: the shell company was a reporting issuer in Quebec with a Montréal business address; its director was a Quebec resident when the scheme was implemented; its promotional activities were accessible to Quebec residents; and, ultimately, Quebec investors lost money. The AMF brought an originating pleading before Quebec’s Financial Markets Administrative Tribunal (“FMAT”) alleging that the defendants contravened the Quebec Securities Act .

It asked the FMAT to make various orders against the defendants. The defendants filed motions for a declinatory exception challenging the FMAT’s jurisdiction over them as out-of-province defendants. The FMAT dismissed the defendants’ motions. It ruled that it had jurisdiction over them under s. 93 of the Act respecting the Autorité des marchés financiers , which grants the FMAT jurisdiction to make determinations under the Securities Act , in light of the Court’s decision in Unifund Assurance Co. v.

Insurance Corp. of British Columbia , 2003 SCC 40 , [2003] 2 S.C.R. 63 , which held that a provincial regulatory scheme constitutionally applies to an out-of-province defendant when there is a “sufficient connection” or a “real and substantial connection” between the province and the defendant. The Superior Court of Quebec dismissed the defendants’ applications for judicial review and held that the FMAT properly assumed jurisdiction. The court stated that the FMAT correctly recognized the limits of its extraterritorial reach by applying the “real and substantial connection” test set out in Club Resorts Ltd. v.

Van Breda , 2012 SCC 17 , [2012] 1 S.C.R. 572 , and that the FMAT correctly applied the Unifund test for the constitutional applicability of provincial legislation. The majority of the Court of Appeal of Quebec dismissed the defendants’ appeals.

It concluded that the real and substantial connection test in Unifund addresses the constitutional applicability of the Quebec securities scheme to non-residents who allegedly engaged in a securities manipulation scheme with connections to Quebec, and that the FMAT correctly concluded there is a real and substantial connection between Quebec and the defendants and properly assumed jurisdiction.

The majority also ruled that although the Civil Code of Québec (“ C.C.Q . ”) acts as suppletive law for many matters, including certain aspects of public law, the private international law rules in Book Ten of the C.C.Q. do not apply when no private rights are at issue. The concurring judge would have held that the FMAT has jurisdiction over the out-of- province defendants under the rules of private international law in Title Three of Book Ten of the C.C.Q. , either by analogy under art. 3148 para. 1(3) C.C.Q. , or, alternatively, under art. 3136 C.C.Q. Held (Côté J. dissenting) : The appeal should be dismissed.

Per Wagner C.J. and Karakatsanis, Rowe, Martin, Kasirer, Jamal and O’Bonsawin JJ.: The FMAT has jurisdiction over the defendants under the Quebec securities scheme, which constitutionally applies to them. The FMAT has jurisdiction to make determinations under the Securities Act , including when there is a “real and substantial” connection, also described as a “sufficient connection”, between Quebec and out-of-province defendants.

The allegations that the defendants used Quebec as the face of their securities manipulation and injured Quebec investors establish such a connection to give the FMAT jurisdiction over the defendants. The Quebec legislature has exercised its prescriptive legislative jurisdiction — its power to enact binding rules applicable to out-of-province parties with a real and substantial connection to Quebec. Those rules are engaged in the circumstances of the instant case. As a result, the FMAT also has adjudicatory jurisdiction, or the authority to hear this matter involving the defendants.

Under Quebec civil law, all interpretive exercises of laws governing persons, relations between persons, and property must begin with the C.C.Q. , although special legislation can derogate from the C.C.Q. when the legislature expresses its intention to do so. As its preliminary provision announces, the C.C.Q. lays down the jus commune , or the law of general application, of Quebec in all matters within the letter, spirit, or object of its provisions. It has a suppletive role and can fill gaps in special statutes to the extent that legislation is silent on a given matter, thus preventing a legal vacuum.

The proper interpretive methodology in determining the relationship between the C.C.Q. and special statutes governing persons, relations between persons, and property is to start with the jus commune in the C.C.Q. , and then to ask whether the special statute complements or derogates from the jus commune . The C.C.Q. does not simply lay down rules of private law on a narrow compass. The preliminary provision of the C.C.Q. provides that the C.C.Q . lays down the jus commune , and the C.C.Q. contains rules of public law and is an important source of administrative law in Quebec.

As a result, the proper way to determine whether the C.C.Q. applies does not involve characterizing the right at issue as either a private law or public law matter. Book Ten of the C.C.Q ., which codifies the rules of private international law in Quebec, therefore applies as the jus commune beyond matters of private law to all matters within the letter, spirit, or object of the C.C.Q. ’s provisions, and it applies to administrative tribunals like the FMAT regardless of whether private rights are at issue, unless otherwise provided by law.

Furthermore, Title Three of Book Ten applies not just in cases of conflict of jurisdiction; it applies more broadly to determine the “International Jurisdiction of Québec Authorities”. The application of the interpretive methodology regarding the relationship between the C.C.Q. and special statutes in the instant case leads to the conclusion that the C.C.Q. does not grant the FMAT jurisdiction over the defendants. The FMAT’s jurisdiction does not arise from art. 3148 para 1(3) or from art. 3136 C.C.Q .

Article 3148 para. 1(3) C.C.Q . does not apply directly because the proceeding before the FMAT does not involve a personal action of a patrimonial nature, which implies the assertion of rights that by their very essence have a monetary value and are transmissible as property. Rather, the AMF has brought an action before the FMAT in the public interest, rather than in a strictly personal capacity. Its action aims to prevent future harm to the Quebec securities market and is neither restorative nor punitive.

It does not involve a person taking legal action against another based on personal rights that are transmissible as property. In addition, art. 3148 para. 1(3) C.C.Q. cannot be applied by analogy because there is no tenable analogy

between a personal action of a patrimonial nature, which seeks the enforcement of a debt under private law, and a regulatory prosecution by the state, which seeks public interest remedies rather than simply private reparation. Such proceedings are of a fundamentally different legal character. As for art. 3136 C.C.Q. , it does not provide a basis for the FMAT’s jurisdiction for two reasons. First, the AMF did not seek to rely on it — the Court has previously confirmed that it may be applied only if one of the parties raises it.

Second, for it to apply, a Quebec authority must otherwise have no jurisdiction to hear a dispute. The FMAT, however, does have jurisdiction under the special jurisdictional rules of the Quebec securities scheme. The FMAT has jurisdiction under two special statutes: the Quebec Securities Act and the Act respecting the Autorité des marchés financiers , now known as the Act respecting the regulation of the financial sector .

Section 93 of the Act respecting the Autorité des marchés financiers provides that the FMAT’s function is to make determinations regarding matters brought under the Act respecting the Autorité des marchés financiers and other Acts listed in the provision, including the Securities Act . It thus grants the FMAT jurisdiction over the adjudication of matters brought under the Securities Act .

Section 94 grants the FMAT jurisdiction to take any measure to ensure compliance with any of the Acts referred to in s. 93 . Sections 265 , 273.1 , and 273.3 of the Securities Act empower the FMAT to act in a broad range of circumstances. These provisions must be read in conjunction with the Act respecting the Autorité des marchés financiers , which explicitly provides for the FMAT’s jurisdiction to make determinations over matters brought under the two Acts.

Neither the Securities Act nor the Act respecting the Autorité des marchés financiers expressly provide for the FMAT to assert jurisdiction over out-of-province parties, or otherwise limits the territorial reach of the Quebec securities scheme over interprovincial or international transactions. To evaluate whether these statutes may be applied in such circumstances, the Quebec securities scheme must be interpreted to determine its territorial reach.

This involves consideration of the Court’s decision in Unifund , which holds that the permissible territorial application of provincial legislation is determined by assessing the sufficiency of the connection among the enacting jurisdiction, the subject matter of the legislation, and the individual or entity sought to be regulated, subject to the principles of order and fairness. The “real and substantial connection” test in Unifund is the accepted test for discerning the presumptively intended reach of federal legislation as well as the constitutionally permissible application of provincial legislation.

It is concerned with the constitutional applicability of legislation and not with its constitutional validity. Moreover, it functions as a principle of statutory

interpretation: it limits, or reads down, the territorial reach of otherwise broadly framed provincial legislation, consistent with the territorial restrictions on provincial legislative power in ss. 91 and 92 of the Constitution Act, 1867 , by insisting on a “sufficient connection” between the legislation and the out-of-province defendant. It also relates to prescriptive legislative jurisdiction, rather than adjudicatory jurisdiction. Furthermore, it is distinct from the “real and substantial connection” tests that the Court has developed elsewhere in the domain of conflicts of laws.

The “real and substantial connection” test is a family of tests and requires different considerations in each of the varying contexts in which its formula is employed. For example, the “real and substantial connection” test set out in Van Breda applies in the context of tort claims at common law and does not apply in Quebec. Interpreted in light of the Unifund test, the Quebec securities scheme provides for jurisdiction over out-of-province parties with a “sufficient connection” or “real and substantial connection” with Quebec.

The “sufficient connection” analysis must recognize the transnational nature of modern securities regulation and the public interest in addressing international market manipulation. Securities regulation raises unique considerations that highlight the need for transnational enforcement. In the instant case, there is a sufficient connection between Quebec and the out-of-province defendants. The defendants allegedly used Quebec as the face of their alleged pump-and-dump scheme. They participated in marketing or financing efforts and partly targeted Quebec residents.

The shell company through which the defendants operated their scheme was a reporting issuer in Quebec, and its director was a Quebec resident. It would defeat the purpose of the cross-border nature of modern securities regulation to allow the defendants to escape the reach of Quebec’s regulatory oversight. Applying the Quebec regulatory regime is fair to the defendants: their entrance into Quebec’s market was not accidental or irrelevant, but rather was an integral part of their securities manipulation operation.

Moreover, applying the Quebec regulatory scheme does not offend the principle of order or the related concept of interprovincial comity. Because contemporary securities manipulation and fraud are often transnational and extend across provincial and national borders, courts and tribunals must take a flexible and purposive approach when applying the principles of order and fairness in the securities context. Per Côté J. (dissenting): The appeals should be allowed.

A t this stage of the proceedings, this case raises no issue regarding the constitutional applicability of the Securities Act but rather concerns the FMAT’s adjudicative jurisdiction. The limits of that jurisdiction must be analyzed in light of the rules of private international law set out in Title Three of Book Ten of the C.C.Q. The application of those provisions in this case leads to the conclusion that the FMAT does not have adjudicative jurisdiction over the defendants and therefore cannot hear the matter .

The majority’s approach conflates the concepts of adjudicative jurisdiction of a court or tribunal and constitutional applicability of legislation, as it deals interchangeably with the constitutional applicability of the Securities Act under the Unifund framework and the FMAT’s jurisdiction under the rules of private international law. Both concepts involve the existence of a real and substantial connection.

In the constitutional context, the real and substantial connection test affirms the constitutionally imposed territorial limits that underlie the requirement of legitimacy in the exercise of the state’s power of adjudication . Thus, the applicability of provincial legislation to a defendant domiciled outside the province in question depends on there being a sufficient connection between the enacting jurisdiction and the out-of-province individual or entity.

Although this test relates more specifically to the connection between a province and an action, the purpose of the Unifund analysis is essentially to determine whether there is a viable cause of action on the merits . Conversely, from a private international law perspective, the real and substantial connection test relates to the exercise of the state’s power of adjudication. The rules of private international law in force in a province are what confer adjudicative jurisdiction on a decision maker. In Quebec, these rules are set out in Book Ten of the C.C.Q.

To be able to assume jurisdiction over a dispute, a provincial court or tribunal must have adjudicative jurisdiction under provincial legislation, which must itself have been validly enacted by the province in the exercise of its legislative jurisdiction. The jurisdiction of courts and tribunals of the Canadian provinces, the appropriateness of exercising that jurisdiction and the law that should apply to a dispute are all different concepts.

The adjudicative jurisdiction of a court or tribunal has two components: jurisdiction ratione materiae (subject-matter jurisdiction) and jurisdiction ratione personae (territorial jurisdiction). The subject-matter jurisdiction of a court or tribunal is that given to it to hear a case by reason of its subject matter , whereas territorial jurisdiction is assessed on the basis of a geographical connection . To have jurisdiction to hear a dispute, a court or tribunal must have the necessary subject-matter jurisdiction and territorial jurisdiction .

In this case, the objection raised by the defendants in their motions for declinatory exception relates not to the FMAT’s lack ofsubject-matter jurisdiction but rather to its lack of territorial jurisdiction over them. The appeals therefore relate not to the extraterritorialapplicability of the Securities Act but rather to the FMAT’s territorial jurisdiction under private international law. The rules of private international law set out in the C.C.Q. apply to all proceedings that may be heard by Quebec authoritiespursuant to the jurisdiction conferred on the province by the Constitution.

Accordingly, the rules in Title Three of Book Ten of theC.C.Q. must be considered in this case unless a special law complements, makes exceptions to or derogates from them.

Article 3076C.C.Q. in fact provides that Book Ten applies subject to those rules of law in force in Quebec which are applicable by reason of theirparticular object. Those rules might include the Securities Act and the Act respecting the Autorité des marchés financiers, but thesestatutes do not themselves make exceptions to, derogate from or complement the C.C.Q.’s rules of private international law when itcomes to the administrative proceedings brought by the AMF. It is clear from reading the provisions of these statutes that the legislatureintended them to be supplemented by the C.C.Q.’s provisions on the international jurisdiction of Quebec authorities.

Section 93 of theAct respecting the Autorité des marchés financiers establishes the FMAT’s subject-matter jurisdiction in administrative proceedingsinstituted by the AMF under the Securities Act; it does not give the FMAT territorial jurisdiction. As for s. 94 of the Act respecting theAutorité des marchés financiers, it is not concerned in any way with territorial jurisdiction but relates rather to the measures that theFMAT may take once it is established that it has jurisdiction ratione personae to deal with a matter. This is also the case of ss. 265,273.1, and 273.3 of the Securities Act.

The FMAT can take the measures contemplated in those provisions only where it has jurisdictionunder the rules of private international law set out in the C.C.Q. The issue of the FMAT’s adjudicative jurisdiction must therefore be decided by applying the rules on internationaljurisdiction set out in Title Three of Book Ten of the C.C.Q., that is, arts. 3134 to 3154. The C.C.Q. contains a well-developed set ofrules and principles of private international law and codifies the “sufficient connection” test. However, no provision of the C.C.Q. canground the FMAT’s jurisdiction in the proceedings brought by the AMF.

There is agreement with the majority that no analogy can bedrawn between a personal action of a patrimonial nature and the proceedings brought by the AMF.

Article 3148 para. 1(3) C.C.Q.therefore cannot confer jurisdiction on the FMAT. As for art. 3136 C.C.Q., it recognizes the “forum of necessity” doctrine, which canserve as an exceptional basis for the jurisdiction of Quebec authorities. However, it can be applied only if one of the parties raises it,which the AMF did not do in this case. The AMF did not demonstrate that proceedings abroad had proved impossible or that it could notreasonably require the institution of proceedings abroad.

Nor did it explain why it had not applied to the authorities having jurisdiction,in accordance with the provisions of the Securities Act concerning interjurisdictional cooperation. As a result, the AMF cannot rely onart. 3136. Where the C.C.Q. does not establish the territorial jurisdiction of a court or tribunal and the legislature has not otherwiseconferred territorial jurisdiction on it through special legislation, that must be the end of the analysis.

Unifund cannot serve as a safetynet, because it concerns an entirely different situation: it applies once it is established that a court or tribunal has jurisdiction to deal witha matter. It cannot give the FMAT territorial jurisdiction over the defendants, who are domiciled outside Quebec, in a manner thatderogates from the well-developed set of rules in the C.C.Q. The Unifund test is therefore of no assistance to the AMF and cannotground the FMAT’s adjudicative jurisdiction over the defendants in this case. Cases Cited By Wagner C.J. and Jamal J. Overruled: Donaldson v.

Autorité des marchés financiers, 2020 QCCA 401; applied: Unifund Assurance Co. v. InsuranceCorp. of British Columbia, 2003 SCC 40, [2003] 2 S.C.R. 63; Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC65, [2019] 4 S.C.R. 653; considered: Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012] 1 S.C.R. 572; referred to: Spar AerospaceLtd. v. American Mobile Satellite Corp., 2002 SCC 78, [2002] 4 S.C.R. 205; Air Canada v. McDonnell Douglas Corp., (SCC), [1989] 1 S.C.R. 1554; McCabe v. British Columbia (Securities Commission), 2016 BCCA 7, 394 D.L.R. (4th) 197; Canada PostCorp. v.

Canadian Union of Postal Workers, 2019 SCC 67, [2019] 4 S.C.R. 900; Society of Composers, Authors and Music Publishers ofCanada v. Entertainment Software Association, 2022 SCC 30; Fédération des producteurs acéricoles du Québec v. Regroupement pourla commercialisation des produits de l’érable inc., 2006 SCC 50, [2006] 2 S.C.R. 591; Gilles E. Néron Communication Marketing Inc. v.Chambre des notaires du Québec, 2004 SCC 53, [2004] 3 S.C.R. 95; Finney v. Barreau du Québec, 2004 SCC 36, [2004] 2 S.C.R. 17;Prud’homme v. Prud’homme, 2002 SCC 85, [2002] 4 S.C.R. 663; Doré v.

Verdun (City), (SCC), [1997] 2 S.C.R. 862;Montréal (City) v. Octane Stratégie inc., 2019 SCC 57, [2019] 4 S.C.R. 138; Peoples Department Stores Inc. (Trustee of) v. Wise, 2004SCC 68, [2004] 3 S.C.R. 461; Lefebvre (Trustee of), 2004 SCC 63, [2004] 3 S.C.R. 326; Quebec (Commission des normes du travail) v.Asphalte Desjardins inc., 2014 SCC 51, [2014] 2 S.C.R. 514; Béliveau St-Jacques v. Fédération des employées et employés de servicespublics inc., (SCC), [1996] 2 S.C.R. 345; Quebec (Public Curator) v.

Syndicat national des employés de l’hôpitalSt-Ferdinand, (SCC), [1996] 3 S.C.R. 211; Compagnie d’immeubles Yale ltée v. Kirkland (Ville de), (QC CQ), [1996] R.J.Q. 502; Dionne v. Commission scolaire des Patriotes, 2014 SCC 33, [2014] 1 S.C.R. 765; Lalonde v. Sun LifeAssurance Co. of Canada, (SCC), [1992] 3 S.C.R. 261; City of Ottawa v. Town of Eastview, (SCC),[1941] S.C.R. 448; Gignac v. Gauvin, 2009 QCCS 524, 73 C.C.P.B. 47; Dell Computer Corp. v. Union des consommateurs, 2007 SCC34, [2007] 2 S.C.R. 801; Barer v. Knight Brothers LLC, 2019 SCC 13, [2019] 1 S.C.R. 573; Ormuco inc. v.

Ernst & Young, 2022 QCCA405; Mines d’or Visible inc. v. Zara Resources Inc., 2013 QCBDR 95; Financière Manuvie v. Proteau, 2013 QCBDR 137;Newfoundland and Labrador (Attorney General) v. Uashaunnuat (Innu of Uashat and of Mani-Utenam), 2020 SCC 4, [2020] 1 S.C.R.15; St. Lawrence Cement Inc. v. Barrette, 2008 SCC 64, [2008] 3 S.C.R. 392; Kosoian v. Société de transport de Montréal, 2019 SCC59, [2019] 4 S.C.R. 335; Autorité des marchés financiers v. Dominion Investments (Nassau) Ltd. (Dominion Investments Ltd.), 2008QCBDRVM 4; GreCon Dimter inc. v. J.R.

Normand inc., 2005 SCC 46, [2005] 2 S.C.R. 401; Lamborghini (Canada) inc. v. AutomobiliLamborghini S.P.A., (QC CA), [1997] R.J.Q. 58; Anvil Mining Ltd. v. Association canadienne contre l’impunité,2012 QCCA 117; Otsuka Pharmaceutical Company Limited v. Pohoresky, 2022 QCCA 1230; Droit de la famille — 1830, 2018 QCCA24; Droit de la famille — 143017, 2014 QCCA 2188; Ontario College of Pharmacists v. 1724665 Ontario Inc., 2013 ONCA 381, 363D.L.R. (4th) 724; Berger v. Saskatchewan (Financial and Consumer Affairs Authority), 2019 SKCA 89; Torudag v.

British Columbia(Securities Commission), 2011 BCCA 458, 343 D.L.R. (4th) 743; Society of Composers, Authors and Music Publishers of Canada v.Canadian Assn. of Internet Providers, 2004 SCC 45, [2004] 2 S.C.R. 427; British Columbia v. Imperial Tobacco Canada Ltd., 2005 SCC49, [2005] 2 S.C.R. 473; R. v. Hape, 2007 SCC 26, [2007] 2 S.C.R. 292; British Columbia v. Imperial Tobacco Canada Ltd., 2004

BCCA 269, 239 D.L.R. (4th) 412, aff’d 2005 SCC 49, [2005] 2 S.C.R. 473; Morguard Investments Ltd. v. De Savoye, (SCC), [1990] 3 S.C.R. 1077; Beals v. Saldanha, 2003 SCC 72, [2003] 3 S.C.R. 416; Libman v. The Queen, (SCC),[1985] 2 S.C.R. 178; Hunt v. T&N plc, (SCC), [1993] 4 S.C.R. 289; Global Securities Corp. v. British Columbia(Securities Commission), 2000 SCC 21, [2000] 1 S.C.R. 494. By Côté J. (dissenting) Unifund Assurance Co. v. Insurance Corp. of British Columbia, 2003 SCC 40, [2003] 2 S.C.R. 63; Newfoundland andLabrador (Attorney General) v.

Uashaunnuat (Innu of Uashat and of Mani-Utenam), 2020 SCC 4, [2020] 1 S.C.R. 15; TransaxTechnologies inc. v. Red Baron Corp. Ltd, 2016 QCCA 1432; Spar Aerospace Ltd. v. American Mobile Satellite Corp., 2002 SCC 78,[2002] 4 S.C.R. 205; Air Canada v. McDonnell Douglas Corp., (SCC), [1989] 1 S.C.R. 1554; Rosdev Investments Inc. v.Allstate Insurance Co. of Canada, (QC CS), [1994] R.J.Q. 2966; Club Resorts Ltd. v. Van Breda, 2012 SCC 17,[2012] 1 S.C.R. 572; Lamborghini (Canada) inc. v. Automobili Lamborghini S.P.A., (QC CA), [1997] R.J.Q. 58;Morguard Investments Ltd. v. De Savoye, (SCC), [1990] 3 S.C.R. 1077; Hunt v.

T&N plc, (SCC),[1993] 4 S.C.R. 289; Tolofson v. Jensen, (SCC), [1994] 3 S.C.R. 1022; United States of America v. Harden, (SCC), [1963] S.C.R. 366; Canada Post Corp. v. Lépine, 2009 SCC 16, [2009] 1 S.C.R. 549; Barer v. Knight Brothers LLC,2019 SCC 13, [2019] 1 S.C.R. 573; Compagnie d’immeubles Yale ltée v. Kirkland (Ville de), (QC CQ), [1996] R.J.Q.502; Perron-Malenfant v. Malenfant (Trustee of), (SCC), [1999] 3 S.C.R. 375; Lapointe Rosenstein MarchandMelançon LLP v. Cassels Brock & Blackwell LLP, 2016 SCC 30, [2016] 1 S.C.R. 851; Autorité des marchés financiers v. Fournier, 2012QCCA 1179; Donaldson v.

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Montréal: Thémis, 2021. Duclos, Cinthia. La protection des épargnants dans l'industrie des services d’investissement: une analyse de l’influence des défaillances organisationnelles sous l’angle du Swiss Cheese Model . Montréal: Yvon Blais, 2021. Duclos, Cinthia, avec la collaboration de Raymonde Crête et Audrey Létourneau. “Les autorités d’encadrement”, dans Raymond Crête et autres, dir., Courtiers et conseillers financiers: Encadrement des services de placement . Cowansville, Que.: Yvon Blais, 2011, 117. Edinger, Elizabeth, and Vaughan Black. “A New Approach to Extraterritoriality: Unifund Assurance Co. v.

I.C.B.C. ” (2004), 40 Can. Bus. L.J. 161. Emanuelli, Claude. Droit international privé québécois , 3 e éd. Montréal: Wilson & Lafleur, 2011. Emanuelli, Claude. Étude comparative sur le droit international privé au Canada . Montréal: Wilson & Lafleur, 2019. Ferland, Patrick, et Guillaume Laganière. “Le droit international privé”, dans Collection de droit de l’École du Barreau du Québec 2023-2024, vol. 7, Contrats, sûretés, publicité des droits et droit international privé . Montréal: Yvon Blais, 2023, 271. Garant, Patrice, avec la collaboration de Philippe Garant et Jérôme Garant. Droit administratif , 7 e éd.

Montréal: Yvon Blais, 2017. Glenn, H. Patrick. “ Droit international privé ” , dans La réforme du Code civil , t. 3, Priorités et hypothèques, preuve et prescription, publicité des droits, droit international privé, dispositions transitoires . Textes réunis par le Barreau du Québec et la Chambre des notaires du Québec. Sainte-Foy, Que.: Presses de l’Université Laval, 1993, 669. Glenn, H. Patrick. “La Disposition préliminaire du Code civil du Québec , le droit commun et les principes généraux du droit” (2005), 46 C. de D. 339. Goldstein, Gérald.

Droit international privé , vol. 2, Compétence internationale des autorités québécoises et effets des décisions étrangères (Art. 3134 à 3168 C.c.Q.) , dans Commentaires sur le Code civil du Québec ( DCQ ). Cowansville, Que.: Yvon Blais, 2012. Goldstein, Gérald, et Ethel Groffier. Droit international privé , t. I, Théorie générale . Cowansville, Que.: Yvon Blais, 1998. Guillemard, Sylvette. “Règles générales de compétence des tribunaux québécois”, dans JurisClasseur Québec — Collection Droit civil — Droit international privé , par Pierre-Claude Lafond, dir.

Montréal: LexisNexis, 2012, fascicule 8 (mis à jour 24 juin 2021). Guillemard, Sylvette, et Van Anh Ly. Éléments de droit international privé québécois . Montréal: Thomson Reuters, 2019. Hogg, Peter W., and Wade K. Wright. Constitutional Law of Canada , 5th ed. Supp. Toronto: Thomson Reuters, 2023 (updated 2023, release 1). Hume, Nathan. “Four Flaws: Reflections on the Canadian Approach to Private International Law” (2006), 44 Can. Y.B. Int’l L. 161. Kain, Brandon, and Byron Shaw. “Mapping the Serbonian Bog: The Territorial Limits of Secondary Market Securities Act Claims Under the Canadian Constitution —

Part 1” (2012), 53 Can. Bus. L.J. 63. Lemieux, Charlotte. “Éléments d’interprétation en droit civil” (1994), 24 R.D.U.S. 221. Lemieux, Denis. “The Role of the Civil Code of Québec in Administrative Law” (2005), 18 C.J.A.L.P. 143. Macdonald, Roderick A. “Encoding Canadian Civil Law”, in Mélanges Paul-André Crépeau . Cowansville, Que.:Yvon Blais, 1997, 579. Mayrand, Albert. Dictionnaire de maximes et locutions latines utilisées en droit , 4 e éd. Cowansville, Que.: Yvon Blais, 2007, “ specialia generalibus derogant ”.

McEvoy, John P. “Forum of necessity in Quebec Private International Law: C.c.Q. art. 3136 ” (2005), 35 R.G.D. 61 . Quebec. Ministère de la Justice. Commentaires du ministre de la Justice , t. I, Le Code civil du Québec — Un mouvement de société . Québec: Publications du Québec, 1993. Quebec. Ministère de la Justice. Commentaires du ministre de la Justice , t. II, Le Code civil du Québec — Un mouvement de société . Québec: Publications du Québec, 1993.

Rousseau, Stéphane. “L’application de la législation sur les valeurs mobilières au Québec: une étude du rôle du Tribunal administratif des marchés financiers” (2017), 76 R. du B. 1.

Saumier, Geneviève. “The Recognition of Foreign Judgments in Quebec — The Mirror Crack’d?” (2002), 81 Can. Bar Rev. 677. Sullivan, Ruth. The Construction of Statutes , 7th ed. Toronto: LexisNexis, 2022. Walker, Janet. Canadian Conflict of Laws , 7th ed. Toronto: LexisNexis, 2023 (loose-leaf updated September 2023, release 101). Walsh, Catherine. “The International Jurisdiction of Québec Authorities in Personal Actions: An Overview” (2012), 71 R. du B. 249. APPEALS from a judgment of the Quebec Court of Appeal (Marcotte, Mainville and Moore JJ.A.), 2021 QCCA 1364 , 90 Admin.

L.R. (6th) 25, [2021] AZ-51794411, [2021] Q.J. No. 10996 (QL), 2021 CarswellQue 14741 (WL) , affirming a decision of Collier J., 2019 QCCS 94 , [2019] AZ-51562732, [2019] Q.J. No. 175 (QL), 2019 CarswellQue 257 (WL), dismissing applications for judicial review of a decision of the Financial Markets Administrative Tribunal, 2017 QCTMF 114 , 2017 LNQCTMF 114 (QL), 2017 CarswellQue 21707 (WL). Appeals dismissed, Côté J. dissenting. Sean Griffin and Daniel Baum , for the appellant/intervener Frederick Langford Sharp . Patrick Ferland and Sébastien C.

Caron , for the appellants/interveners Shawn Van Damme, Vincenzo Antonio Carnovale and Pasquale Antonio Rocca. Stéphanie Jolin and Jean-Nicolas Boutin Wilkins , for the respondent. Stéphanie Quirion-Cantin and Stéphane Rochette , for the intervener the Attorney General of Quebec. Katrina Gustafson and Alexandra Matushenko , for the intervener the Ontario Securities Commission. The judgment of Wagner C.J. and Karakatsanis, Rowe, Martin, Kasirer, Jamal and O’Bonsawin JJ. was delivered by The Chief Justice and Jamal J. — I.

Overview [ 1 ] At issue in these appeals is whether a provincial administrative tribunal has jurisdiction over out-of-province defendants in a securities enforcement proceeding in Quebec. The appeals also raise the relationship between the Civil Code of Québec (“ C.C.Q. ”) and special statutes under Quebec law. [ 2 ] The Financial Markets Administrative Tribunal (“FMAT”), a Quebec administrative tribunal, claims jurisdiction over the appellants, four British Columbia residents who are alleged to have contravened the Quebec Securities Act , CQLR, c.

V-1.1 , by engaging in a transnational “pump-and-dump” securities manipulation scheme with links to Quebec. In a pump-and-dump scheme, promoters boost the price of a stock by releasing false or misleading statements and then profit by selling their holdings in that stock at inflated prices. The scheme is alleged to have injured investors, including investors in Quebec. [ 3 ] The appellants challenged the FMAT’s jurisdiction over them as out-of-province defendants.

However, the FMAT ruled that it has jurisdiction over the out-of-province appellants under s. 93 of the Act respecting the Autorité des marchés financiers , CQLR, c. A-33.2 , [1] which grants the FMAT jurisdiction to make determinations under the Securities Act . The FMAT interpreted and applied this jurisdictional provision in light of this Court’s decision in Unifund Assurance Co. v.

Insurance Corp. of British Columbia , 2003 SCC 40 , [2003] 2 S.C.R. 63, which held that a provincial regulatory scheme constitutionally applies to an out-of-province defendant when there is a “real and substantial connection”, also described as a “sufficient connection”, between the province and the defendant ( Unifund , at paras. 55-56). The FMAT highlighted several factors that, in its view, created such a connection between Quebec and the appellants’ alleged contraventions. [ 4 ] The Superior Court of Quebec dismissed applications for judicial review from the FMAT’s decision.

On appeal, the Court of Appeal of Quebec affirmed the FMAT’s jurisdiction, but the court divided on the appropriate legal basis for doing so. Speaking for the majority, Marcotte J.A. ruled that the FMAT correctly found a real and substantial connection between Quebec and the appellants under the test in Unifund .

In separate reasons concurring in the result, Mainville J.A. would have grounded the FMAT’s jurisdiction under Title Three of Book Ten of the C.C.Q. , which establishes rules for the “International Jurisdiction of Québec Authorities”, in particular under art. 3148 para. 1(3) C.C.Q. — which gives Quebec jurisdiction over personal actions of a patrimonial nature in which a fault was committed in Quebec, an injurious act or omission occurred in Quebec, or injury was suffered in Quebec — or art. 3136 C.C.Q. — which allows a Quebec authority to hear a dispute even though it has no other basis for jurisdiction if the dispute has a sufficient connection with Quebec and taking proceedings abroad is impossible or cannot reasonably be required. [ 5 ] For the reasons that follow, we conclude that the FMAT has jurisdiction over the appellants under the Securities Act and the Act respecting the Autorité des marchés financiers . [ 6 ] The C.C.Q. is the starting point in any interpretive exercise involving the C.C.Q. and special laws.

The preliminary provision of the C.C.Q. provides that the C.C.Q. is the jus commune and the foundation of all other laws in Quebec, and that other laws may complement or make exceptions to the C.C.Q. [ 7 ] In this case, the character of the proceedings and the conclusions sought before the FMAT could suggest, at first blush, a regulatory matter that does not concern the C.C.Q. The dispute involves a public regulator seeking prohibitions and administrative penalties under a legislative scheme designed to protect the public interest in the securities markets.

One might indeed expect jurisdiction over this regulatory scheme to stand outside the scope of Quebec’s law of general application established by the C.C.Q. , which mainly governs “persons, relations between persons, and property” (preliminary provision). But securities law, as enacted by the Quebec Securities Act , is of a hybrid character. On the one hand, the Securities Act has enforcement and administrative law rules in place to protect the public interest that give the legislation a fundamentally regulatory orientation. On the other hand, the Securities

Act also has a title bearing on civil actions (Title VIII). While the FMAT’s jurisdiction bears principally on the regulatory orientation ofthe Securities Act, its authority established by the Act respecting the Autorité des marchés financiers extends to the title on civil actionsin the Securities Act, except where excluded by law.

Given this hybrid character of securities regulation, the better view is that Book Tenof the C.C.Q., as part of Quebec’s jus commune, is the appropriate starting point for analyzing the “International Jurisdiction of QuébecAuthorities” in this field, including the FMAT. [8] This calls for a review of the general and special rules in the C.C.Q. to determine whether the FMAT hasjurisdiction over the out-of-province defendants in this case. We conclude that the C.C.Q.’s rules on private international law areapplicable.

However, here they provide no basis for jurisdiction over the out-of-province defendants, whether under art. 3134 C.C.Q.,which sets out the residual rule based on domicile in Quebec, art. 3148 C.C.Q., which specifies the cases in which Quebec authoritieshave jurisdiction over personal actions of a patrimonial nature, or art. 3136 C.C.Q., which allows a Quebec authority to hear a disputedespite having no jurisdiction provided the dispute has a sufficient connection with Quebec and taking proceedings abroad is impossibleor cannot reasonably be required. [9] Even so, we conclude that the FMAT has jurisdiction over the appellants under Quebec securities legislation.

TheAct respecting the Autorité des marchés financiers provides the FMAT with jurisdiction to make determinations under the Securities Act,including when there is a “real and substantial connection” between Quebec and out-of-province defendants. In our view, the allegationsthat the appellants used Quebec as the “face” of their securities manipulation and injured Quebec investors establish such a connection togive the FMAT jurisdiction over the appellants. [10] Put another way, the Quebec securities legislation constitutionally applies to the appellants.

The Quebec legislaturehas exercised its prescriptive legislative jurisdiction — its power to enact binding rules applicable to out-of-province parties with a realand substantial connection to Quebec. Those rules are engaged in the circumstances of this case. As a result, the FMAT also hasadjudicatory jurisdiction, or the authority to hear this matter involving the appellants. [11] We would thus affirm the FMAT’s jurisdiction and dismiss the appeals. II. Background [12] The respondent Autorité des marchés financiers (“AMF”) is an administrative agency that regulates Quebec’sfinancial sector.

It brought an originating pleading before the FMAT alleging that the appellants, who are four British Columbiaresidents, contravened the Quebec Securities Act by participating in a transnational pump-and-dump scheme with links to Quebec thatinjured investors. [13] The AMF alleged that the appellants committed contraventions of Quebec’s Securities Act by improperly orfraudulently influencing the market price or the value of securities (s. 195.2), and by knowingly participating in securities transactionsthat created an artificial security price (s. 199.1).

The AMF asked the FMAT to order the appellants to cease engaging in securitiestransactions (s. 265) and to prohibit them from acting as directors or officers of an issuer, dealer, adviser, or investment fund manager forfive years (s. 273.3). The AMF also asked the FMAT to impose administrative penalties on the appellants (s. 273.1). [14] The FMAT’s function includes making determinations regarding matters relating to the Act respecting the Autoritédes marchés financiers as well as under a range of Quebec legislation, including the Securities Act.

The FMAT [translation] “is anindependent administrative tribunal specializing in securities that performs decision-making functions” (S. Rousseau, “L’application dela législation sur les valeurs mobilières au Québec: une étude du rôle du Tribunal administratif des marchés financiers” (2017), 76 R. duB. 1, at p. 14). The FMAT exercises its discretion “in the public interest” (Act respecting the Autorité des marchés financiers, s. 93). [15] The appellants filed motions for a declinatory exception challenging the FMAT’s jurisdiction over them as out-of-province defendants.

On such a motion, the decision maker does not consider the merits of the case, but assumes the facts alleged to betrue and asks whether these facts would bring the matter within its jurisdictional competence. The decision maker also refrains fromevaluating the parties’ evidence, unless the facts alleged are specifically contested (Spar Aerospace Ltd. v. American Mobile SatelliteCorp., 2002 SCC 78, [2002] 4 S.C.R. 205, at paras. 31-32; Air Canada v. McDonnell Douglas Corp., (SCC), [1989] 1S.C.R. 1554, at p. 1558).

In this case, the facts alleged are uncontested, and thus are assumed to be true for the purposes of thejurisdictional challenges. [16] None of the appellants specifically alleges that they were improperly served.

The FMAT held a special hearing, whichthe appellants did not attend, at which it authorized the AMF to serve the appellants Frederick Langford Sharp, Vincenzo AntonioCarnovale, and Pasquale Antonio Rocca with the AMF’s originating pleading and notice of hearing by publication of a press release onthe AMF’s website. [17] The AMF alleged that the appellants’ securities manipulation scheme had several links to Quebec.

The appellants’alleged activities revolved around the promotion of a shell company named Solo International, Inc., which was incorporated in Nevada inthe United States in April 2010 to offer interior design services, and whose shares traded in the over-the-counter (“OTC”) market in NewYork. In October 2011, Michel Plante, a Quebec resident, acquired three million shares in Solo and became its majority shareholder,taking control of both Solo and its Quebec subsidiary.

Because Solo was traded on the OTC market and was directed or administered inor from Quebec after July 31, 2012, Solo was a reporting issuer and subject to continuous disclosure and other obligations under theQuebec Securities Act (s. 68; Regulation 51-105 respecting Issuers Quoted in the U.S. Over-the-Counter Markets, CQLR, c. V-1.1, r.24.1, s. 3). It is also alleged to have had a place of business in Montréal. [18] Although Plante had no experience in the mining industry, in late 2011 Solo bought mining claims in Quebec throughits subsidiary, with financing from offshore entities linked to the appellants.

Most of Solo’s original shares were transferred to offshoreentities linked to the appellants. [19] The AMF alleged that Solo engaged in two pump-and-dump operations. In the first “pump” operation, which occurredin January and February 2012, Solo published six press releases, some of which were issued in Montréal, advertising Solo’s mining

exploration activities in Quebec. The appellant Shawn Van Damme helped write these press releases and partly financed the publicitycampaign through one of his offshore entities. These promotional efforts led Solo’s stock price to increase, even though Solo had notadvanced its mining activities. The appellants, acting through their offshore entities, then sold, or “dumped”, over 2.7 million Solo sharesfor a profit of about $400,000. [20] In the second “pump” operation, which occurred on November 14, 2012, eight promoters marketed Solo’s shares,even though Solo remained essentially inoperative.

The appellants Van Damme, Carnovale, and Rocca financed this promotional effortthrough their offshore entities. The appellants, again acting through their offshore entities, then sold, or “dumped”, over 43 million Soloshares for a profit of more than $2.2 million. [21] According to the AMF, the appellants’ pump-and-dump scheme proceeded in five steps. The appellants acted inconcert to (1) acquire the shares of Solo, (2) give Solo a legitimate “face”, (3) promote Solo’s business, (4) sell their shares for a profit,and (5) distribute this profit among themselves.

The AMF alleged that each appellant was involved in one or more of these steps and thatthe scheme had several ties to Quebec sufficient to apply Quebec’s securities regulatory scheme to them: Solo was a reporting issuer inQuebec with a Montréal business address; Plante, who directed Solo, was a Quebec resident when the scheme was implemented; Solo’spromotional activities were accessible to Quebec residents; and, ultimately, 15 Quebec investors lost a total of $5,000. III. Decisions Below A.

Financial Markets Administrative Tribunal, 2017 QCTMF 114 (Jean-Pierre Cristel) [22] The FMAT ruled that it had jurisdiction over the appellants under s. 93 of the Act respecting the Autorité des marchésfinanciers, which grants the FMAT jurisdiction to make determinations under the Quebec Securities Act. The FMAT cited and appliedthe British Columbia Court of Appeal’s decision in McCabe v.

British Columbia (Securities Commission), 2016 BCCA 7, 394 D.L.R.(4th) 197, at paras. 34-37 and 47, on the “sufficient connection” required to apply provincial securities legislation in an enforcementproceeding with transnational elements, which in turn had cited and applied this Court’s decision in Unifund. There was a real andsubstantial connection between the appellants’ alleged securities contraventions and Quebec because the appellants participated andprofited from a pump-and-dump scheme with several links to Quebec:

(1) Solo was a reporting issuer in Quebec with a business office inMontréal,

(2) Solo’s president, Plante, was a Quebec resident, and

(3) Solo’s misleading press releases and online promotions wereprovided to Quebec investors, some of whom were defrauded. The FMAT said that even though the appellants were out-of-provinceresidents and allegedly participated in the scheme through offshore entities, it could not ignore the contemporary reality of global andinterconnected markets.

This reality enhances the opportunities for market manipulation linked to more than one jurisdiction, andchallenges regulators in detecting and investigating securities offences. [23] The FMAT also dismissed the appellants’ argument that Quebec is forum non conveniens under art. 3135 C.C.Q. Itfound insufficient evidence to conclude that another forum would be better placed to decide the matter and determined that it would notbe in the public interest to decline jurisdiction. The FMAT thus dismissed the appellants’ motions for a declinatory exception. B.

Superior Court of Quebec, 2019 QCCS 94 (Collier J.) [24] The Superior Court of Quebec dismissed the appellants’ applications for judicial review and held that the FMATproperly assumed jurisdiction. The court ruled that since the FMAT’s decision was both reasonable and correct, it did not need todetermine the applicable standard of review (para. 30 ). [25] The court stated (at para. 36) that the FMAT correctly recognized the limits of its extraterritorial reach by applyingthe “real and substantial connection” test, which the court noted was addressed in Club Resorts Ltd. v.

Van Breda, 2012 SCC 17, [2012]1 S.C.R. 572. The court also ruled that the FMAT correctly applied the Unifund test for the constitutional applicability of provinciallegislation (paras. 39-43). The FMAT recognized the limits of its territorial reach and was correct in finding a real and substantialconnection between Quebec and the facts alleged against the appellants. [26] The court also stated that the private international law rules in the C.C.Q. reinforced its conclusion (para. 44). Thepublication of misleading press releases could constitute a fault in Quebec that injured Quebec investors.

Under art. 3148 para. 1(3)C.C.Q., the fault or injury would provide Quebec authorities with jurisdiction in matters of a personal and patrimonial nature. While thecourt was of the view that the matter lay within the “public regulatory sphere” (para. 44), the alleged fault and injury in Quebec,including harm to the Quebec securities market by undermining investor confidence, supported the real and substantial connectionbetween Quebec and the appellants. C. Court of Appeal of Quebec, 2021 QCCA 1364, 90 Admin. L.R. (6th) 25 (Marcotte and Moore JJ.A., Mainville J.A.Concurring)

(1) Majority [27] Writing for the majority of the Court of Appeal of Quebec, Marcotte J.A. dismissed the appeal and affirmed theFMAT’s jurisdiction over the appellants. The majority identified the standard of review as correctness (paras. 45-47). The question ofwhether the FMAT has jurisdiction over the appellants raises a constitutional issue. The test in Unifund addresses the constitutionalapplicability of the Quebec securities scheme to non-residents who allegedly engaged in a securities manipulation scheme withconnections to Quebec.

The majority added that insofar as the appellants assert for the first time on appeal that the FMAT failed toconsider the private international law rules of the C.C.Q., the applicability of those rules raises an issue of central importance to the legalsystem, and is therefore also reviewable for correctness (para. 48). [28] The majority noted that although none of the applicable provisions of the Quebec securities scheme expressly placeslimits upon territorial reach, all are presumed to apply within the province (para. 56).

In the majority’s view, there is no extraterritorialjurisdiction of the FMAT at issue (para. 57). The only issue is whether the FMAT has territorial jurisdiction over the out-of-provinceappellants for alleged conduct sufficiently connected to Quebec (paras. 87-88).

[ 29 ] The majority rejected the appellants’ argument that the private international law rules in Book Ten of the C.C.Q. exhaustively determine whether a Quebec authority such as the FMAT has jurisdiction over out-of-province parties (paras. 65-92). The majority ruled that although the C.C.Q. acts as suppletive law for many matters, including certain aspects of public law, the private international law rules in Book Ten of the C.C.Q. do not apply when no private rights are at issue (para. 70).

Book Ten of the C.C.Q. does not determine jurisdiction in matters of public or criminal law where the primary basis of jurisdiction is neither personal nor real but territorial, such as in this case (para. 71). The majority saw no conflict of jurisdiction or any conflict of laws that would require the application of private international law rules to this case (paras. 63 and 78).

Instead, the FMAT simply seeks to exercise its jurisdiction to make determinations under the Securities Act , pursuant to the Act respecting the Autorité des marchés financiers (para. 78). [ 30 ] The majority ruled (at paras. 94-117) that the FMAT correctly concluded there is a real and substantial connection between Quebec and the appellants under the sufficient connection test in Unifund .

The appellants used Quebec as the “face” of their pump-and-dump scheme, a large part of which occurred in Quebec through misleading press releases allowing them to manipulate the stock price of a Quebec-based corporation holding mining claims in the province (paras. 113-14). Given these allegations and in view of the modern reality of global and interconnected securities markets, the greater opportunities for market manipulation in such a context, and the public interest, the FMAT properly assumed jurisdiction (paras. 115-16).

(2) Concurrence [ 31 ] Mainville J.A. concurred with the majority in the result, but he disagreed with the majority’s conclusion that the private international law rules in Title Three of Book Ten of the C.C.Q. for the international jurisdiction of Quebec authorities are neither relevant nor applicable (para. 120).

Those rules apply to “Québec Authorities”, which include administrative tribunals such as the FMAT, and apply whether or not there is a conflict of jurisdiction (paras. 135-37). [ 32 ] Mainville J.A. stated that Unifund highlighted that the “sufficient connection” test for the constitutional applicability of a provincial law is not necessarily subsumed in the common law “real and substantial connection” test for the court of a province to take jurisdiction over a dispute, which is a rule of private international law (para. 125).

He noted that this case raises both (1) the question of the constitutional applicability of the Securities Act , and (2) whether the FMAT has jurisdiction over the out-of-province appellants under the rules of private international law, which is addressed mainly, if not exclusively, by Title Three of Book Ten of the C.C.Q. (para. 126). [ 33 ] In Mainville J.A.’s view, the FMAT has jurisdiction over the appellants under art. 3148 para. 1(3) C.C.Q. , which provides that Quebec authorities have jurisdiction in personal actions of a patrimonial nature when a fault was committed in Quebec, an injurious act or omission occurred in Quebec, or injury was suffered in Quebec (para. 144).

He determined that this provision applies by analogy because this action resembles a personal action of a patrimonial nature.

The fault requirement would be met by the allegation that misleading press releases were published in Quebec and the injury requirement would be met by the allegations that investors incurred harm in Quebec. [ 34 ] Alternatively, Mainville J.A. would have affirmed the FMAT’s jurisdiction over the appellants under art. 3136 C.C.Q. , which provides that even though a Quebec authority has no jurisdiction to hear a dispute, it may nevertheless hear it provided the dispute has a sufficient connection with Quebec and if proceedings abroad prove impossible or cannot be reasonably required (paras. 152-56).

In Mainville J.A.’s view, this case meets the sufficient connection requirement of both art. 3136 C.C.Q. and the Constitution because of the connections between the pump-and-dump scheme and Quebec (para. 156). The second condition of art. 3136 C.C.Q. is also met, because there was no evidence that authorities of another state could make a decision in this case (paras. 157-59). IV. Issues [ 35 ] The main issues in these appeals are (1) the standard of review of the FMAT’s decision that it has jurisdiction over the appellants and (2) whether the FMAT properly assumed jurisdiction. V. Analysis A.

The Standard of Review [ 36 ] The parties agree that under the framework established by this Court in Canada (Minister of Citizenship and Immigration) v.

Vavilov , 2019 SCC 65 , [2019] 4 S.C.R. 653, the standard of review of the FMAT’s decision is correctness. [ 37 ] Although presumptively the standard of review when a court reviews the merits of an administrative decision is reasonableness, this presumption is rebutted when the legislature explicitly prescribes the applicable standard of review or when the rule of law requires that the standard of correctness be applied ( Vavilov , at paras. 16-17 ; Canada Post Corp. v. Canadian Union of Postal Workers , 2019 SCC 67 , [2019] 4 S.C.R. 900, at para. 27 ).

The rule of law is implicated in cases involving constitutional questions, general questions of law of central importance to the legal system as a whole, and questions related to the jurisdictional boundaries between two or more administrative bodies ( Vavilov , at para. 17 ). The standard of correctness also applies “when courts and administrative bodies have concurrent first instance jurisdiction over a legal issue in a statute” ( Society of Composers, Authors and Music Publishers of Canada v.

Entertainment Software Association , 2022 SCC 30 , at para. 28 ). [ 38 ] Here, the FMAT’s jurisdiction over the out-of-province appellants raises a constitutional issue regarding the territorial reach of provincial legislation. The FMAT addressed its jurisdiction by examining whether the securities scheme constitutionally applies to the appellants under the test in Unifund , which asks whether there is a “sufficient connection” between Quebec and the appellants to support the application of Quebec’s securities regulatory scheme (paras. 55-56).

This constitutional question is reviewable for correctness under the Vavilov framework. [2] [ 39 ] Even assuming, as the appellants contend, that the question of the FMAT’s jurisdiction over out-of-province parties is to be resolved by applying Title Three of Book Ten of the C.C.Q. — an argument raised for the first time before the Quebec Court of

Appeal — that question is still reviewable for correctness because it raises a general question of law of central importance to the legalsystem as a whole. Whether the C.C.Q. grants the FMAT jurisdiction over out-of-province parties in the circumstances involves themethodology for determining the relationship between the C.C.Q. as the jus commune, or general law, and special statutes in Quebec.This is a general question of law that requires a uniform and consistent answer because it has implications for many other statutes(Vavilov, at paras. 59-62). We address that issue next. B.

The Relationship Between the C.C.Q. and Special Statutes [40] The majority and concurring reasons in the Quebec Court of Appeal reflect different methodologies for determiningwhen the C.C.Q. establishes the international jurisdiction of an administrative tribunal over out-of-province defendants. More generally,they articulate different conceptions of the relationship between the C.C.Q., as the jus commune, and special statutes targeting particularsubjects relating to private international law.

The majority reasoned that the question before the court concerns the constitutionalapplicability of the Quebec securities scheme to out-of-province parties, rather than private international law, and thus the FMAT’sjurisdiction should be determined by applying the real and substantial connection test in Unifund (paras. 63 and 90-91).

The majority alsoconcluded that the private international law rules of Title Three of Book Ten of the C.C.Q. do not apply to determine the FMAT’sjurisdiction because (1) no private rights are at issue before the FMAT (paras. 70-71), and (2) there is no conflict of jurisdiction or anyconflict of law that calls for applying private international law rules (para. 78).

By contrast, the concurrence concluded that (1) the rulesin Title Three of Book Ten of the C.C.Q. apply to all “Québec Authorities”, including administrative tribunals such as the FMAT inrespect of actions pertaining to Quebec’s constitutional jurisdiction over property and civil rights (paras. 135-36), (2) whether or not thereis a conflict of jurisdiction (para. 137), and (3) whether or not an action pertains to matters in the C.C.Q. (para. 142). [41] This

section addresses this methodological debate by considering the relationship between the C.C.Q. and specialstatutes. As will be elaborated, the C.C.Q., as stated in the preliminary provision, “lays down the jus commune”, or law of generalapplication, “in all matters within the letter, spirit or object of its provisions” which mainly govern “persons, relations between persons,and property”. For these matters, the C.C.Q. is the “foundation of all other laws”.

Accordingly, for such matters, interpretive exercisesmust begin with the C.C.Q., although special legislation can derogate from the C.C.Q. when the legislature expresses its intention to doso and, of course, some of the law of general application may be found outside the C.C.Q. in general principles of law.

Contrary to theconclusion of the majority of the Court of Appeal, provisions of Title Three of Book Ten of the C.C.Q. can, in principle, apply to anadministrative tribunal like the FMAT, even if no private right is in issue and even if no conflict of jurisdiction arises, as long as theseparameters of the jus commune alluded to in the preliminary provision are met.

However, as we elaborate in later sections, while theC.C.Q. does not grant the FMAT jurisdiction over the out-of-province appellants in this case, the jurisdictional provisions of the specialsecurities scheme, properly interpreted in light of Unifund, do grant jurisdiction because the appellants, and their alleged contraventions,have a sufficient connection to Quebec.

(1) The Preliminary Provision of the C.C.Q. [42] The starting point for understanding the relationship between the C.C.Q. and special statutes is the preliminaryprovision of the C.C.Q.: The Civil Code of Québec, in harmony with . . . the Charter of human rights and freedoms . . . and the general principles of law, governspersons, relations between persons, and property. The Civil Code comprises a body of rules which, in all matters within the letter, spirit or object of its provisions, lays down the juscommune, expressly or by implication.

In these matters, the Code is the foundation of all other laws, although other laws may complement the Code or make exceptions to it.[3] [43] Several aspects of the preliminary provision elucidate the relationship between the C.C.Q. and special statutes. (

a) The C.C.Q. Lays Down the Jus Commune [44] First, the preliminary provision announces that the C.C.Q. “lays down the jus commune”, or the law of generalapplication, of Quebec “in all matters within the letter, spirit or object of its provisions”, which mainly govern “persons, relationsbetween persons, and property” (see also Fédération des producteurs acéricoles du Québec v. Regroupement pour la commercialisationdes produits de l’érable inc., 2006 SCC 50, [2006] 2 S.C.R. 591, at para. 10; Gilles E. Néron Communication Marketing Inc. v.

Chambredes notaires du Québec, 2004 SCC 53, [2004] 3 S.C.R. 95, at para. 56; Finney v. Barreau du Québec, 2004 SCC 36, [2004] 2 S.C.R. 17,at para. 26; see also J.-M. Brisson, “Le Code civil, droit commun?”, in Le nouveau Code civil: interprétation et application — Lesjournées Maximilien-Caron 1992 (1993), 292, at pp. 308-15). Thus, the C.C.Q. does not simply lay down rules of private law on anarrow compass (Prud’homme v. Prud’homme, 2002 SCC 85, [2002] 4 S.C.R. 663, at para. 28). (

b) The C.C.Q. Has a Suppletive Role [45] Second, as the jus commune, the C.C.Q. “is the foundation of all other laws, although other laws may complement the[C.C.Q.] or make exceptions to it”. The C.C.Q. has a suppletive role and can fill gaps in special statutes to the extent that legislation issilent on a given matter, thus preventing a legal vacuum (Fédération des producteurs, at paras. 10 and 29; see also Doré v. Verdun (City), (SCC), [1997] 2 S.C.R. 862, at para. 18; Montréal (City) v. Octane Stratégie inc., 2019 SCC 57, [2019] 4 S.C.R. 138,at para. 36; A.-F.

Bisson, “La Disposition préliminaire du Code civil du Québec” (1999), 44 McGill L.J. 539, at p. 558; H. P. Glenn, “LaDisposition préliminaire du Code civil du Québec, le droit commun et les principes généraux du droit” (2005), 46 C. de D. 339, atp. 349). The suppletive nature of the C.C.Q. flows from its foundational character, as confirmed by the preliminary provision. Aselucidated by the Ministère de la Justice, Commentaires du ministre de la Justice, vol.

I, Le Code civil du Québec — Un mouvement desociété (1993), at p. 1, one objective of the second paragraph of the preliminary provision [translation] “is to promote a dynamicinterpretation of the Civil Code and encourage the use of its provisions to interpret and apply other legislation and fill any gaps in that

legislation, where it relates to matters or makes use of concepts or institutions that come under the Civil Code.” [46] For example, the C.C.Q. plays a suppletive role in the domains of corporate law (Peoples Department Stores Inc.(Trustee of) v. Wise, 2004 SCC 68, [2004] 3 S.C.R. 461, at paras. 29 and 54), insolvency law (Lefebvre (Trustee of), 2004 SCC 63,[2004] 3 S.C.R. 326, at para. 16), and employment law (Quebec (Commission des normes du travail) v. Asphalte Desjardins inc., 2014SCC 51, [2014] 2 S.C.R. 514, at paras. 28-32), among other areas.

Such suppletive rules apply absent a legislative intention to excludethem (J. E. C. Brierley, “Quebec’s ‘Common Laws’ (Droits Communs): How Many Are There?”, in E. Caparros et al., eds., MélangesLouis-Philippe Pigeon (1989), 109, at p. 126; R. A. Macdonald, “Encoding Canadian Civil Law”, in Mélanges Paul-André Crépeau(1997), 579, at pp. 595-96 and 599). (

c) All Interpretive Exercises of Laws Governing Persons, Relations Between Persons, and Property Must Begin With the C.C.Q. [47] Third, as the jus commune and the foundation of all other Quebec laws, the C.C.Q. is the primary source of Quebeccivil law and serves as the starting point in any interpretive exercise involving a special statute in matters within the letter, spirit, orobject of the C.C.Q.’s provisions.

The preliminary provision of the C.C.Q. established “the new position assigned to the Civil Code inthe hierarchy of the sources of law in matters within the legislative jurisdiction of the Quebec National Assembly” (Finney, at para. 26;see also D. Lemieux, “The Role of the Civil Code of Québec in Administrative Law” (2005), 18 C.J.A.L.P. 143, at p. 147; Commentairesdu ministre de la Justice, vol. I, at p. 1 ([translation] “its privileged position in our legislative system as a whole”)). [48] Writing on the Civil Code of Lower Canada, Professors John E. C. Brierley and Roderick A.

Macdonald haveobserved that, “[f]rom the dual perspective of the actual operation of the Code as a living structure of written legal rules and of its ownunderlying logic, the Code is intellectually pre-eminent” (Quebec Civil Law: An Introduction to Quebec Private Law (1993), at pp. 134-35). They add that “[b]y virtue of its vocation to state the general law, [the Code] claims the centre ground of the Civil law. By virtue ofits being written, it provides a textual referent by which or through which all other sources of law are understood to pass” (p. 135).

Giventhis primacy, “other sources (including other legislative sources such as statutes) are viewed as vehicles of

interpretation, and allinterpretive exercises must necessarily begin with the Code” (p. 135). [49] This Court has regularly applied this methodology. For example, in Finney, this Court explained that “examination ofthe liability of governments begins with the application of the rules of liability established by the Civil Code of Québec” (para. 27). InGilles E.

Néron Communication Marketing, this Court indicated that under the Quebec law of civil liability for defamation, “[t]hestarting point is not the common law but the Civil Code of Québec, which is the basic general law in Quebec, as provided for in thepreliminary provision of the Civil Code” (para. 56). Similarly, Professor Macdonald has explained that “a civil code ordains the modes oflegal analysis and

interpretation” (p. 599). For his part, Professor Brierley has observed that “[t]he Civil Code is . . . droit commun inrelation to other enactment[s] because it is the fundamental reference point from which such other legislation proceeds” (p. 123). (

d) The Preliminary Provision of the C.C.Q. Has Normative Force [50] Fourth, given that the preliminary provision establishes the hierarchy of sources in Quebec civil law and the C.C.Q.has a suppletive role, the preliminary provision has normative force of law (Prud’homme, at para. 30, citing Doré). It is not a merepreamble; rather, it has the force of law of an enactment and establishes the C.C.Q.’s foundational role in Quebec civil law (Bisson, atp. 552; Lemieux (2005), at p. 147).

(2) Special Laws May Complement or Derogate From the C.C.Q. [51] The preliminary provision of the C.C.Q. states that other laws “may complement the [C.C.Q.] or make exceptions toit”. It is sometimes difficult to distinguish between special laws that complement the C.C.Q. and those that derogate from or makeexceptions to it (C.

Lemieux, “Éléments d’interprétation en droit civil” (1994), 24 R.D.U.S. 221, at p. 234). [52] As Professors Pierre-André Côté and Mathieu Devinat have noted, this Court has recognized many examples in whichthe C.C.Q. complements the legal regimes established by special statutes, such as by providing rules on prescription (Doré, at paras. 18and 20); civil liability based on a breach of the Quebec Charter of human rights and freedoms, CQLR, c. C-12 (Béliveau St-Jacques v.Fédération des employées et employés de services publics inc., (SCC), [1996] 2 S.C.R. 345, at pp. 403-6); andevidence (Quebec (Public Curator) v.

Syndicat national des employés de l’hôpital St-Ferdinand, (SCC), [1996] 3S.C.R. 211, at pp. 228-29) (see P.-A. Côté and M. Devinat, Interprétation des lois (5th ed. 2021), at p. 388, fn. 256). In such cases, theC.C.Q. [translation] “is not only a conceptual reservoir for special statutes, but also their normative complement” (Côté and Devinat, atp. 388). [53] In addition, a special statute may derogate from the C.C.Q., either expressly or by implication (see Octane, atpara. 39; Brierley, at p. 125).

The C.C.Q. will apply as suppletive law unless special legislation clearly derogates from it (Lemieux(2005), at p. 148). This reflects [translation] “a general principle of predominance of special legislation” (Côté and Devinat, at p. 410);that is, specialia generalibus derogant, which means that special legislation derogates from contrary general legislation (A. Mayrand,Dictionnaire de maximes et locutions latines utilisées en droit (4th ed. 2007), at p. 572; see also Doré, at para. 41).

As Professor H.Patrick Glenn noted, [translation] “[l]ike all suppletive general law, [the C.C.Q.] therefore yields to sources that are more specific, moreimperative, which is also contemplated by the [Preliminary] Provision” (p. 349). [54] For example, a special statute may derogate from the C.C.Q. if the legislature provides sufficiently detailed andspecific statutory language suggesting that it did not intend the general provisions of the C.C.Q. to override the special statute(Compagnie d’immeubles Yale ltée v.

Kirkland (Ville de), (QC CQ), [1996] R.J.Q. 502 (C.Q.), at p. 507; Dionne v.Commission scolaire des Patriotes, 2014 SCC 33, [2014] 1 S.C.R. 765, at para. 37). Similarly, if the special statute provides a completerule on a matter, and is neither silent nor insufficient on an essential element, the special statute applies instead of the general law in theC.C.Q., unless the legislature provides otherwise (Lalonde v. Sun Life Assurance Co. of Canada, (SCC), [1992] 3 S.C.R.261, at pp. 278-79, citing City of Ottawa v.

Town of Eastview, (SCC), [1941] S.C.R. 448, at p. 462; see also Gignac v.Gauvin, 2009 QCCS 524, 73 C.C.P.B. 47, at para. 54).

(3) The Court of Appeal Erred in Its Methodology for Determining When the C.C.Q. Applies [55] The proper interpretive methodology in determining the relationship between the C.C.Q. and a special statute is tostart with the jus commune in the C.C.Q., and then to ask whether the special statute complements or derogates from the jus commune(see generally Doré, at paras. 15-21; see also paras. 40-41; Brierley, at p. 125-26). Often, the answer to this question will be obvious andwill not require an extensive

interpretation exercise. In this case, the majority erred with respect to each of the two reasons it gave forconcluding that the C.C.Q. does not apply in the circumstances, even though, as will be explained, the court was correct that the FMAThas jurisdiction over the out-of-province appellants under the special statutes. (

a) Book Ten of the C.C.Q. Can Apply to Administrative Tribunals Even if Private Rights Are Not at Issue [56] First, the majority concluded that although the private international law rules of Title Three of Book Ten of theC.C.Q. apply to all Quebec authorities, including judicial and administrative tribunals, they do not determine the FMAT’s jurisdictionbecause no “private rights” (para. 70) are at issue in a proceeding before the FMAT.

While the majority rightly recognized that theC.C.Q. acts as suppletive law in a wide range of circumstances, “including certain aspects of public law” (para. 70), they narrowed thecompass of the jus commune by implying that private rights must be in issue. The majority’s methodology erroneously suggested thatwhether Book Ten of the C.C.Q. applies depends on characterizing the issue before the court, seemingly limiting its scope to matters ofprivate law.

However, the jus commune, including Book Ten, is not limited to matters of private rights, but rather extends to “all matterswithin the letter, spirit or object” of the C.C.Q.’s provisions. [57] In reaching its conclusion, the majority noted that the respondent had cited the Quebec Court of Appeal’s decision inDonaldson v. Autorité des marchés financiers, 2020 QCCA 401, in support of its position that the C.C.Q. does not apply to proceedingsbefore the FMAT.

In Donaldson, the Court of Appeal held that the three-year prescription period under art. 2925 C.C.Q. did not apply toadministrative proceedings brought by the AMF before the FMAT to impose an administrative monetary penalty under s. 273.1 of theSecurities Act for contravention of the Act or a regulation made under its authority. One reason the court in Donaldson ruled that theC.C.Q. did not apply is because the C.C.Q. establishes the jus commune over only those matters falling under private law (paras. 43-44).

The court in Donaldson distinguished between private law matters, which fall under the purview of the C.C.Q., and public lawmatters, which do not. With respect, insofar as this approach creates a divide between public and private law not reflected in the letter,spirit, or object of the C.C

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