Casperdiny IFB Capital Inc. for itself for an 86% interest (“Casperdiny”) v. Casperdiny IFB Capital Inc. in trust, 2016 QCCQ 8854

T.T. Katz inc. c. Asta Corporation inc. JC00G0 2016 QCCQ 8854 COURT OF QUEBEC CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL TOWN OF MONTREAL Civil Division No: 500-22-156156-096 DATE: July 29, 2016 ______________________________________________________________________ PRESIDED BY THE HONOURABLE DAVID L. CAMERON, J.C.Q. ______________________________________________________________________ T.T. KATZ INC. Plaintiff v. ASTA CORPORATION INC. and IMMOPARC HOLDINGS TWO CANADIAN PROPERTIES and CASPERDINY IFB CAPITAL INC.

Defendants ______________________________________________________________________ JUDGMENT ON THE DEFENDANT’S APPLICATIONS TO DISMISS PLAINTIFF’S ACTION ______________________________________________________________________ [ 1 ] The Court is seized of two Applications to dismiss based on articles 51, 168 and 169 of the Code of civil procedure (“CCP”). One Application is on behalf of Casperdiny IFB Capital Inc. and Asta Corporation Inc. and the other by Immoparc Holdings Two Canadian Properties. [ 2 ] Through the action, initiated in February 2009, the Plaintiff, T.T.

Katz Inc. (“Katz”), a firm of land surveyors, seeks recovery of an account for professional services rendered in March 2006 by Katz for the preparation of certificates of location, in respect of three lots on which are built three buildings known as 3450 3475 3460 Drummond Street in Montreal. The initial “Demande introductive d’instance” was modified on April 25, 2016 with a view to avoiding the exceptions to dismiss as is foreseen in

article 168 CCP. [ 3 ] It gives the narrative of how Katz' services were retained in a project that involved a conversion of an existing immovable into a form of co-ownership.

Katz alleges that the owners of the immoveable would be (“seraient”) the Defendants Immoparc Holdings Two Canadian Properties (“Immoparc”), Casperdiny IFB Capital Inc. (“Casperdiny Capital”), and that the conversion project was directed (“dirigé”) by the Defendant Asta Corporation Inc. (“Asta”), whose services were retained pursuant to a Project Management Agreement (P-1). [ 4 ] This agreement sets out the roles and responsibilities of the project manager and the co-contracting parties, Casperdiny et al. [ 5 ] More particularly, the Project Management Agreement is written as being made between: Casperdiny IFB Capital Inc. for itself for an 86% interest (“Casperdiny”) and Casperdiny IFB Capital Inc. in trust for a Corporation to be created for a 14% interest (“ChauvelCo”), acting on behalf of MST Newco an entity to be created (“Newco”)

and Asta Corporation Inc. (“Asta”) [ 6 ] The narrative goes on to explain that the services of Katz were retained through the intermediary of Asta; firstly, in January 2005, to replace one of the lots, lot 1338668 into a vertical divided co-ownership, and secondly, on the 16 th of January 2006, to proceed to the preparation of certificates of location for the three lots. [ 7 ] Exhibit P-2 is a letter by which Robert Katz, Prof Eng., Quebec Land Surveyor confirms, to Sandra Tran of Asta Corporation, […] your mandate to our office to prepare an Official Replacement Of Condominium for the above captioned property, as per your instructions on this date. [ 8 ] Exhibit P-8 is a letter, also by Robert Katz, dated January 16, 2006, to Dave Richards of ASTA Corporation, providing an estimate of fees […] to prepare two Certificates of Location, one for Tower A/B combined and one for Tower C, for the above captioned properties. [the caption reads: Tower A/B 3450-60 Drummond Street, Tower C 3475 Mountain Street] [ 9 ] Paragraphs 5.1 and 5.2, read together with the exhibits, allege that the fees for the surveying and cadastral work for the first contract of services were billed on June 16, 2005, and paid in full by the Defendants.

Exhibit P-7 demonstrates that Casperdiny Realty paid for part of the bill on September 7, 2005 and ASTA paid the balance on December 12, 2005. [ 10 ] With respect to the second contract for professional services, the allegation is that Katz prepared three certificates of location in March 2006, issued three separate bills addressed to Dave Richards ASTA Corporation, i.e. one for each of the three towers. [ 11 ] Default of payment is alleged with respect to the three Defendants, ASTA, Immoparc and Casperdiny Capital.

The present state of the proceedings [ 12 ] When the action was first presented, the grounds of defence were submitted as follows in the “Gestion de temps” document signed April 15, 2009 by the parties’ attorneys: La demanderesse a été négligente dans l’exécution de son mandat le tout tel qu’allégué au dossier 500-17-040876-081 et n’a donc aucun droit de réclamer ses honoraires professionnels. Les défenderesses invoquent également la compensation, à

titre subsidiaire, des sommes dus [sic] par la demanderesse vu les dommages subis résultant de sa négligence. [ 13 ] At that point, there was no defence based on an absence of legal relationship: All of the Defendants were invoking, subsidiary, compensation of the damages to be awarded in their favour in the Superior Court case (500-17-040876-081) with sums due by them. This defence was of course not of any effect for Asta, who was not a Plaintiff in the Superior Court case. It should be mentioned, as well, that the third Defendant in the Superior Court case is named “Casperdiny IFB Realty Inc.

Note also that the first two Defendants are Robert Katz and T.T. Katz Counsel Group Inc. [ 14 ] At the same hearing, the Defendants made a Motion to suspend pursuant to

article 273 of the CCP, in force at that time, because of the case already pending before the Superior Court. [ 15 ] It is interesting to note therefore that it is a different Casperdiny company suing different Katz entities for damages arising from that firm's alleged professional negligence in the preparation and filing of plans required for the project referred to in the Introductory Motion. [ 16 ] The presiding judge postponed the Motion sine die .

The minute of the hearing contains the following: Le procureur de la demanderesse confirme qu’en ce qui concerne l’audition du présent dossier, aucune date ne sera demandée tant que le Tribunal n’aura pas statué sur la requête en suspension des procédures suivant l’article 273 C.p.c., cette requête étant par ailleurs continuée sine die afin de permettre aux parties de procéder aux interrogatoires qui doivent être tenus dans le dossier actuellement pendant devant la Cour supérieure. [ 17 ] After this postponement sine die , nothing occurred in the file until after the Superior Court had rendered its decision, on October 28, 2015.

The motion to suspend was never heard, but the file was suspended de facto . [ 18 ] After the judgement in the Superior Court action, favourable to the parties suing the “Katz” entities, the two separate Applications to dismiss were brought on April 5, 2016 and the modifications to the Introductory Motion were made April 25, 2016.

The grounds for dismissal [ 19 ] Both Applications to dismiss raise, in different words, the issue that the Superior Court judgement constitutes res judicata in respect of the claim for professional fees presently before the Court of Quebec. [ 20 ] The Motion by the Defendant Casperdiny Capital and Asta also alleges (at paragraph 25) that " […] the Plaintiff's vexatious refusal to abandon the Katz action" gives rise to a claim for the professional fees incurred to defend the action from November 30, 2015, the date on which the Superior Court judgment became final and non-appealable.

[ 21 ] Aston also asserts that the originating motion fails to allege any legal relationship between the Plaintiff and Asta. [ 22 ] The Application by the Defendant Immoparc describes the impact of the Superior judgment as establishing that the Plaintiff cannot claim fees for the “preparation of useless certificates of location” and it raises the additional ground that “there is clearly no lien de droit between the Plaintiff and Immoparc Two Canadian properties”. [ 23 ] The Court will deal first with the res judicata argument raised on behalf of all of the Defendants.

Res judicata [ 24 ] The question to be answered on this point is whether the conclusions of the Superior Court judgment determine, in a manner that is binding on this Court, that the fees charged by Katz for the certificates of location are not due. [ 25 ] The de facto suspension of our file in 2009 pending the subsequent developments does not, in and of itself, establish that the three identities, of cause, object and of parties, exist with respect to the two cases. [ 26 ] This suspension, that was initiated with the Court's approval but that carried on from time to time for several years without the Court being seized again of the motion to suspend, does give an indication that the parties believed, and the Court considered it plausible, that the judgment of the Superior had the potential of resolving issues related to the case.

There was the perception, at least, that a suspension was necessary to avoid the possibility of conflicting judgments of the two courts. [ 27 ] We will examine the three identities in turn. Cause [ 28 ] The cause as it appears in the Superior Court judgment is the contractual fault of Robert Katz and T.T. Katz Counsel Group Inc. in the performance of the first contract of services, referred to in the present case, (P-2) as an "Official Replacement of Condominium". This corresponds to what is referred to in the Superior Court judgment as the "vertical cadastral operation".

The fault is to not have informed the client that a government authorization was necessary and to have gone ahead with the filing of the plans prematurely without obtaining this authorization. This made it impossible to obtain a prior authorisation, since the prohibited operation was already initiated, and led to the need for a more onerous solution, that of the private member's bill. [ 29 ] The Superior Court concluded that Katz was at fault.

Object [ 30 ] The object of the action was the reparation of prejudice resulting from that fault under two heads: firstly the costs incurred to obtain government action on the file, through the agency of legal professionals, culminating in the obtaining of the private-member's bill that rectified the title defect and, secondly carrying costs of the property during the period of alleged delay of the project. [ 31 ] The judgement allows damages on the first head, but not on the second.

Parties [ 32 ] The parties were the two owners of the immovable, Immoparc Holdings Two Canadian Properties (the same Immoparc as in the present proceedings) and Casperdiny IFB Realty Inc. ("Realty") (of which the "Capsperdiny" in the present proceedings is the primary shareholder, according to allegations of the present application) [ 33 ] There were other defendants, namely the notaries involved in the project, but their presence is not relevant for our purposes. The action was dismissed in regard to them. [ 34 ] Asta was not a party. The procedure surrounding that is quite interesting.

Katz, once sued, sought to implead Asta. The motion in forced intervention or, alternatively to call in warranty, was successfully attacked by a motion to dismiss. The issue centered on the status of Asta as a mandatary of the Defendants named in the action. [ 35 ] The motion to dismiss was allowed by judgement from the bench [1] .

The main considerations can be summarized as follows: - there is no need to join Asta, the Defendant's mandatary, as a party to avoid contradictory judgements because the mandator is responsible for the fault of the mandatary. - the mandators (the Defendants Casperdiny Realty and Immoparc) do not allege that the mandatary (Asta) exceeded its mandate. - even if there were contributory fault on the part of the mandatary (Asta) the damages would be imputable to the mandator. - There is therefore no prejudice to the Defendant (Katz) if Asta is not made a party to the proceedings. [ 36 ] On appeal [2] , this approach was confirmed: [1] Vu l’engagement réitéré devant la Cour par le procureur des intimées suivant lequel la relation juridique entre Asta Corporation

inc. et les intimées est un contrat de mandat; vu, en conséquence, que tout faute d’Asta Corporation inc. est opposable aux intimées; [2] POUR CES MOTIFS, LA COUR : [3] REJETTE l’appel, avec dépens. [ 37 ] In essence, even if Katz were successful in proving fault on the part of Asta, this would simply reduce the liability to the Defendants who answer, as mandators for the fault of the mandatary.

Thus, the allegation of fault was an issue the case, but the presence of Asta was not necessary for it to be determined. [ 38 ] The Superior Court judgment [3] determined that Asta was not at fault and did not contribute to the damages. [ 39 ] In the Court's understanding, the Superior Court judgement, while it determines that Mr Katz and the Katz company are responsible for the prejudice caused by their fault in respect of the Authorization, does not have the effect of res judicata on the issue of the possibility for Katz to recover the fees of for the three certificates of location. [ 40 ] Leaving aside for a moment the question of "lien de droit" as it concerns Asta and Casperdiny AFB Capital, the two cases do not have identity of cause and object. [ 41 ] Firstly, the fees for the first contract for professional services - that involving the cadastral changes - were never put in question.

The judgement concludes that the surveyors committed a fault in the execution of the contract, but the prejudice, repaired by damages, was the cost of making good the cadastral operation by means of legislation to cover the defect related to the failure to obtain the prior authorisation. Once made whole with that award of damages, the owners have no other claim about the services relating to that bill, at least none that was raised in the case.

It is perhaps academic, because it is not part of the Superior Court case, but, if they had been exonerated from paying that bill, would they not have obtained a windfall, by having obtained the benefit of services for free? The prejudice was not the failure to provide the services; it was to have provided them faultily giving rise to a quantifiable prejudice that can be repaired. [ 42 ] Therefore, if there were chose jugée , it might work in favour of Katz on that issue. [ 43 ] But the contract of services in the present file was, according to the allegations, a separate matter.

The certificates of location relate to the same immovable as the one involved in the vertical cadastre, but, according to the allegations, they were prepared pursuant to a subsequent contract of professional services. The Superior Court judgment makes no determination about this contract. [ 44 ] Casperdiny Capital agues that the certificates of location mention that the property is partly situated within a culturally- protected area of a classified property, but that they fail to mention the necessity of obtaining an authorization from the Quebec ministry of culture and communications.

This, Casperdiny Capital points out, is an error. [ 45 ] But it is a leap of faith to conclude that since this error is reflected in the certificate of location, that the certificate of location is necessarily useless and of no value. That would depend on why it was required and for whose use it was intended.

It would be open for the trial judge to consider its value, despite the error that is reflected in the omission to obtain the authorisation or the failure to advise the clients of its necessity. [ 46 ] The certificates of location are technical descriptions of the lots comprising the immovable and the dimensions and characteristics of the building, details as to servitudes etc.

The Plaintiff produced in support of its action two letters (P-9 and P-10) written by Katz in 2007 to various parties, presumably parties who had become interested in the property and its development, authorizing them to use and to rely upon the certificates for sale and/or financing purposes. [ 47 ] It would be the role of the judge presiding at the trial on the merits to consider whether the error determined by the judgement of the Superior Court to have been committed has any impact on the fee that would otherwise be owed and to consider any other evidence relevant to the issue before deciding the issue.

The action cannot be dismissed at the present stage.

Legal relationships [ 48 ] In the Application to dismiss of Casperdiny Capital and Asta, it is asserted that The Katz Action (meaning the present action) and the Realty Action (meaning the action in Superior Court) pertain to the same mandate granted to Katz on behalf of Immoparc and Casperdiny. [ 49 ] The drafting of paragraph 4 of the Application implies that there is no real distinction between the two Casperdiny entities. [ 50 ] To emphasize the argument of res judicata and to make it apply to the benefit of Asta, a statement is made about identity of parties: 22.

Indeed, since Katz’s cause of action requires solely an analysis of Katz’s performance or not of the Services, any distinction between Realty, Capital and Asta is superfluous and has no bearing on the outcome of the Katz Action. [ 51 ] But, an exception to dismiss is raised on behalf of Asta, through the assertion that the Katz action fails to allege any legal relationship between the Plaintiff and Asta. [ 52 ] This appears, at first blush, to be a valid point: if Asta is just a mandatary of the owners, it should not have liability for the bill. [ 53 ] But the evidence might also show that for the certificates, a different contract than the vertical cadastration, the relationship was different.

The certificates might have been required for various parties. The Mandate / Use

section of the Certificates (P-3) mentions: […]

This Certificate of Location was issued at the request of Dave Richards of Asta Corporation for Immoparc Holdings Two Ltd and Regentor IC Holdings Inc. for the purpose of a sale and/or/ mortgage and cannot be used or invoked for any other purposes or by a third party without the written authorization of the undersigned and should not be used to determine property limits. [ 54 ] In the first contract, a variety of entities paid for the fees: Casperdiny Realty, Asta Corporation Inc.

To the extent that Asta was acting on behalf of principals whose identity was not disclosed at the time of the formation of the contract, corporations to be formed, such as Newco and ChauvelCo , or Regenter IC Holdings Inc ., may have liability for the bills.

This is not what was being dealt with in the Superior Court case which related to Asta’s potential contributory fault, imputable to the Plaintiffs in that case, who asserted their role as mandators. [ 55 ] The allegations in the present action deal with commercial responsibility to pay fees, which may or may not correspond exactly to the professional relationship that was the subject matter of the Superior Court case. [ 56 ] The allegations of Katz’ Introductory Motion are sufficiently broad to encompass various possibilities, englobing Asta, and no particulars were requested.

An oral Defence was stated that made no allusion to the issue. [ 57 ] It would be more prudent, and more in keeping with the values of proportionality, to allow the trial to proceed against Asta as well, as an alternate or solidary defendant as the case may be, than to prejudge the issue at this stage. This is partly due to the fact that the trial will be a fairly short affair, requiring one or two days of court time. It could be set to proceed within a few months of the inscription.

The present motion, on the other hand, has used up about a half day of hearing and an appeal that could be the result of maintaining the motion could en up consuming a significant resources for a considerable time. [ 58 ] Immoparc, one of the Plaintiffs in the Superior Court case, raises absence of lien de droit, asserting that the Project Management Agreement is alleged as the basis for the action and Immoparc is not part of that agreement, did not receive invoices, and that the confirmation of the mandate was confirmed by the Plaintiffs to Asta exclusively. [ 59 ] Yet, Immoparc was one of the Plaintiffs against the Katz Defendants in the Superior Court Action and the judgment states the basis of the action in paragraph 1 in such a way that it is clear that Immoparc alleges fault in the services rendered to it as a client. [ 60 ] That would mean that Asta may be liable as having not disclosed Immoparc as its mandatary or that Immoparc may be liable because of a relationship of client – professional that Immoparc alleged as arising from a contract services with it. [ 61 ] It would be more prudent for a judge who has heard all the evidence, including that pertaining to the professional and commercial relationships, to decide to whom among the three Defendants the account should have been remitted for payment or for refusal to pay, as the case may be. [ 62 ] But the issues on the present application were quite interesting and the Court thanks the attorneys for their able representation.

FOR THESE REASONS, THE COURT: DISMISSES the Application to dismiss of Casperdiny IFB Capital Inc. and Asta Corporation Inc.; DISMISSES the Application of Immoparc Holdings Two Canadian Properties; LEGAL COSTS reserved to the trial judge. __________________________________ DAVID L. CAMERON, J.C.Q. Me Numa McGrath Valiquette CLYDE & CIE CANADA, s.e.n.c.r.l. Attorneys for the Plaintiff Me Nicolas Mancini FASKEN MARTINEAU Attorneys for the Defendants Asta Corporation and Casperdiny IFB Capital Inc. Me Jean-G. Robert LETTE & ASSOCIÉS, s.e.n.c.r.l.

Attorneys of the Defendant Immoparc Holdings Two Canadian Properties Date of hearing: May 31, 2016