2024 QCCS 66, 2024 QCCS 66

Auston Transfer & Processing c. Shredderhotline.com 2024 QCCS 66 SUPERIOR COURT CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL No.: 500-17-117826-217 DATE: January 10, 2024 _____________________________________________________________________ PRESIDED BY THE HONOURABLE SHAUN E. FINN, J.S.C. _____________________________________________________________________ AUSTON TRANSFER & PROCESSING LLC and AUSTON CONTRACTING INC. Plaintiffs v.

SHREDDERHOTLINE.COM and DAN SCOTT BURDA Defendants _____________________________________________________________________ JUDGMENT _____________________________________________________________________ OVERVIEW ............................................................................................................................... 2 ANALYSIS ................................................................................................................................. 3 1.

Context ............................................................................................................................... 3 2. Does the Court have Jurisdiction? ................................................................................ 7 2.1 The Relevant Legislation .......................................................................................... 8 2.2 The Nature of the Dispute ........................................................................................ 9 3.

Was the Conduct of the Defendants an Abuse of Procedure or a Substantial Breach? 10 3.1 Positions of the Parties ........................................................................................... 10 3.2 Discussion ................................................................................................................. 10 3.2.1 Is the Defence an Abuse of Process? .......................................................... 12 3.2.2 Is the Conduct of the Defendants an Abuse of Procedure? ...................... 13 4.

Should the Defendants Pay Some or all of the Plaintiffs’ Legal Fees? ................. 15 4.1 The nature and Complexity of the Proceeding ................................................... 16 4.2 The Amounts at Issue ............................................................................................. 16 4.3 The Connection Between the Abuse of Procedure and the Damages Claimed 17 4.4 The Time Invested by Applicant’s Counsel to Obtain Justice .......................... 17 4.5 The Amount of Legal Fees to be Paid by the Defendants ................................ 17 5.

Should the Defendants Pay Punitive Damages? ...................................................... 17 FOR THESE REASONS, THE COURT: ................................................................................ 19

OVERVIEW [ 1 ] Shredderhotline.com purported to sell an industrial tire shredder to Auston Transfer & Processing, LLC and Auston Contracting, Inc. (collectively, “ Auston ”). At the time of the purported sale, Shredderhotline.com was a registered Illinois corporation with its head office in that state. Auston alleges Shredderhotline.com and its registered agent, Dan Scott Burda, made false and misleading representations regarding the shredder and instituted legal proceedings in the United States District Court.

Alleging the Defendants had failed to answer the summons or respond in any way, Auston brought a motion for a default judgment. A default judgment order was issued by the United States District Court shortly thereafter. [ 2 ] As Mr. Burda is currently a resident of Quebec, Auston filed an originating application with this Court to have it recognize and enforce the default judgment order rendered in the United States.

The Defendants contested this application until one business day before the scheduled hearing, at which point defence counsel informed Auston and the Court that an unqualified acquiescence would be produced. [ 3 ] Auston alleges the behaviour of the Defendants was manifestly unfounded, frivolous, and dilatory, and that it demonstrated an excessive and unreasonable use of civil procedure. Accordingly, Auston asks that the Defendants be declared abusive and be made to pay Auston’s legal fees and punitive damages.

Alternatively, Auston alleges the behaviour of the Defendants resulted in serious breaches in the conduct of the proceeding. ANALYSIS [ 4 ] Auston’s application for a declaration of abuse of procedure gives rise to the following issues: 1. Does the Court have jurisdiction? 2. If so, was there an abuse of procedure within the meaning of

article 51 of the Code of Civil Procedure (“ C.C.P. ”) or a serious breach within the meaning of

article 342 C.C.P.? 3. If so, is Auston entitled to some or all of its legal fees? 4. If so, is Auston also entitled to punitive damages? [ 5 ] For the reasons elaborated below, the Court concludes that: 1. It does have jurisdiction to decide Auston’s application; 2. There was an abuse of procedure within the meaning of

article 51 C.C.P.; 3. Auston is entitled to receive half of the legal fees it incurred; and 4. Punitive damages should not be awarded. 1. Context [ 6 ] On December 30, 2019, Auston filed a complaint against the Defendants (the “ U.S. Complaint ”). According to the first paragraph of the U.S. Complaint: [1] NATURE OF THE ACTION 1.

This case involves the breach of an agreement by [the Defendants] to sell and deliver an Eidal Shredder 7272 with conveyor system which is an industrial tire shredder, to Plaintiffs […] for use in their scrap tire processing and recycling business, as well as Defendants […] obtaining payment by wire transfer of $280,000.00 [USD] for the purported Eidal Shredder 7272 by false and misleading representations when they either knew that they did not have the shredder, knew they were not able to sell or deliver the shredder to the [Plaintiffs] or never intended to deliver it. […] [ 7 ] The U.S.

Complaint further states why it was brought in the United States District Court, Northern District of Illinois, Eastern Division (the “ U.S. Court ”). [ 8 ] On January 12, 2021, Auston filed a Motion for Judgment by Default and asked the U.S.

Court to enter a default judgment against the Defendanst for their “failure to appear and plead or otherwise defend in a timely manner.” [2] Indeed, as Auston further alleged, “[n]o appearance or responsive pleading has to date been filed by [the Defendants] and the time required for Defendants to appear and file responsive pleadings pursuant to Rule 12 of the Federal Rules of Civil Procedure has expired.” [3] [ 9 ] Eight days later, on January 20, 2021, the U.S. Court rendered a Default Judgment Order (the “ U.S.

Judgment ”). [4] [ 10 ] On August 4, 2021, Auston served an Originating Application in Recognition and Enforcement of a Foreign Judgment (the “ Application in Recognition and Enforcement ”) on the Defendants.

[ 11 ] On November 1 st , 2021, Raymond Chabot Inc. (“ RCI ”) issued a Notice of Bankruptcy and of Impending Automatic Discharge of Bankrupt, and Request of a First Meeting of Creditors. [5] One week thereafter, on November 8, 2021, RCI also issued a notice of stay of proceedings, notably with respect to docket number 500-17-117826-217. [6] [ 12 ] On June 7, 2022, Auston filed an Application to Lift the Stay of Proceeding. [7] This application was granted on June 27, 2022. [ 13 ] On October 5, 2022, the case protocol submitted by Shredderhotline.com and Mr.

Burda proposed the examination of a representative of Auston Transfer & Processing, LLC for a period of 9.5 hours and the examination of a representative of Auston Contracting, Inc. for a period of 13 hours. These proposed examinations were refused by the Court during a case management conference: [8] […] CONSIDÉRANT que les moyens de défense orale invoqués par les défendeurs, sont fondés sur les articles 3155 et 3156 C.c.Q. et touchent la signification irrégulière des procédures intentées en Illinois; CONSIDÉRANT que la

partie défenderesse n’a pas démontré la pertinence de procéder à un interrogatoire des représentants de la

partie demanderesse dans le contexte des faits allégués en demande et de ses moyens de défense; POUR CES MOTIFS, LE TRIBUNAL : REFUSE d’entériner la proposition de protocole déposée par la

partie défenderesse à la case 50 pour la tenue des interrogatoires des représentants de la

partie demanderesse; […] [ 14 ] In the joint request for setting down for proof and judgment, the Defendants communicated 27 exhibits. [ 15 ] On May 26, 2023 – one business day before the scheduled hearing on the Application in Recognition and Enforcement – an unqualified acquiescence was filed pursuant to

article 217 C.C.P., stating: “[l]a

partie défenderesse Dan Scott Burda acquiesce sans reserve à la demande des parties demanderesses et en avise Me Souhail Nejjar, avocat des parties demanderesses” (the “ Acquiescence ”). [9] [ 16 ] In response to the Acquiescence, Auston indicated its intention to bring an application for abuse of procedure. [10] Defence counsel subsequently informed the Court that: “[n]ous avons discuté avec notre client de la demande en abus qu’entendent présenter nos confrères et nous avons comme instructions de s’en remettre à la décision du Tribunal. […].” [11] [ 17 ] Auston proceeded to notify an Application for the Declaration of an Abuse of Procedure, which it amended on September 8, 2023 (the “ Application in Abuse of Procedure ”). [12] According to this application: 1.

Aux termes de la présente et pour les motifs qui suivent, les Demanderesses soumettent que la défense des Défendeurs et leur comportement dans l[e] cadre de la présente instance justifie leur condamnation à

titre de dommages-intérêts punitifs et d’honoraires extrajudiciaires et débours encourus par les Demanderesses en ce que :

a) la défense des Défendeurs est manifestement mal fondée, frivole et dilatoire; et

b) le comportement des Défendeurs tout au long de l’instance dénote d’un usage excessif et déraisonnable de la procédure; […] 22. […] [E]n raison de la contestation infondée et abusive des Défendeurs de la Demande ainsi que leur comportement dilatoire et tout aussi abusif tout au long de l’instance, les Demanderesses ont subi un important préjudice en engageant un montant substantiel à

titre d’honoraires extrajudiciaires lequel aurait été évité n’eut été le comportement blâmable des Défendeurs; 23. Ainsi, les Demanderesses sont en droit de demander la condamnation des Défendeurs au paiement des honoraires extrajudiciaires encourus à ce jour, lesquelles s’élèvent à 46 919,89 $, à parfaire […]; 23.1 Bien que ces factures contiennent également des entrées de temps relatives à la gestion du dossier de faillite des Défendeurs, la réclamation susmentionnée ne porte que sur les entrées de temps portant sur la présente instance; 24.

Aussi, pour ces mêmes motifs, les Demanderesses sont bien fondées de demander que le comportement blâmable des Défendeurs soit sanctionné par une condamnation à des dommages punitifs au montant de 20 000 $; 25. La présente demande est bien fondée en faits et en droit et n’est, au surplus, pas contestée par les Défendeurs […]; […] [Underlining in original] [ 18 ] On May 29, 2023, the Court postponed the hearings on the Application in Recognition and Enforcement and the Application in Abuse of Procedure to September 15, 2023.

Among other things, the Court made the following rulings and observations: […] LE TRIBUNAL : Étant donné que l’audition sur la demande en abus de procédure sera reportée à une autre date et que me Caron demande à la Cour de cesser d’occuper, le Tribunal ne voit pas de raison de ne pas accorder cette demande et AUTORISE le cabinet CaLex Légal inc. À CESSER D’OCCUPER pour les défendeurs au présent dossier.

En ce qui concerne la demande des demanderesses en déclaration d’abus de procédures : […] Par ailleurs, l’audition devant le soussigné a permis de comprendre que certaines procédures ayant été rédigés par les procureurs des demanderesses ne découlaient pas d’un abus de procédures. Et en ce sens, la demande en déclaration d’abus de procédures doit être

révisées afin de déterminer le quantum précis qui serait, selon les demanderesses, lié à un abus de la part des défendeurs ou encore à un manquement, en vertu de l’article 342 CPC.

LE TRIBUNAL : REMET la cause pour une durée de trois heures […] en signalant au procureur des demanderesses que dans la mesure où il y a un acquiescement à jugement et que la demande pour abus est de moins de 85 000 $, la question de la juridiction de la Cour supérieure pour entendre cette demande pourrait se soulever. […] [ 19 ] A hearing on the Application in Recognition and Enforcement and the Application in Abuse of Procedure was held on September 15, 2023. Shredderhotline.com was unrepresented by counsel and Mr. Burda was self-represented. [ 20 ] On September 18, 2023, Mr.

Burda sent the following e-mail to the Court: SWORN STATEMENT OF DAN BURDA i kindly request that the Plaintiffs provide “Iron Clad” proof, that is not falsified documents, that would confirm that a physical service of Dan Burda was not made until long after the judgment was rendered in the US Courts. As i firmly swear and confirm that i ( Dan Burda ) was not properly served under the Laws of the United States.

During that entire time i resided at [...] in Mont-Royal Quebec [...] At no time was i in the United States during this entire litigation period to be able to accept personal service As we all know Shredderhotlline was electronically served during new covid rules. [ 21 ] No original or electronic copy of these assertions, duly sworn before a commissioner of oaths, was subsequently communicated. [ 22 ] In a related judgment, the Court recognized and enforced the U.S. Judgment. 2.

Does the Court have Jurisdiction? [ 23 ] As jurisdiction was explicitly raised by the Court on September 15, 2023, it is necessary to resolve this issue on a preliminary basis. Indeed, if the Court does not have jurisdiction, it cannot decide the Application in Abuse of Procedure. [ 24 ] Jurisdiction is assessed in two steps: first, the court must analyse the relevant legislation; second, it must determine the nature of the dispute. [13] As noted by the Court of Appeal in Gagnon c. Amazon.com inc .: [14] [La Cour supérieure] exerce par ailleurs une compétence générale provenant de la common law à

titre de tribunal de droit commun, laquelle ne peut être écartée que par le biais d’une disposition législative claire. […] La détermination du tribunal compétent comporte donc deux étapes, soit 1) l’examen des dispositions législatives pertinentes, et 2) la détermination de la nature du litige dans son contexte factuel et non selon la qualification formelle donnée par les parties.

Cette deuxième étape implique l’examen de « la nature essentielle de la demande » en fonction d’« une appréciation réaliste du résultat concret visé par le demandeur ». [underlining added; references omitted] 2.1 The Relevant Legislation [ 25 ] Here, the relevant legislation consists of articles 33 and 35 C.C.P., which set out the original general jurisdiction of the Superior Court and the statutory jurisdiction of the Court of Quebec: 33. The Superior Court is the court of original general jurisdiction.

It has jurisdiction in first instance to hear and determine any application not formally and exclusively assigned by law to another court or to an adjudicative body. It has exclusive jurisdiction to hear and determine class actions and applications for an injunction. *** 35.

The Court of Québec has exclusive jurisdiction to hear and determine applications in which the value of the subject matter of the dispute or the amount claimed, including in lease resiliation matters, is less than $75,000 and concurrent jurisdiction with the Superior Court, at the plaintiff’s option, where that value or amount is equal to or exceeds $75,000 but is less than $100,000, exclusive of interest ; it also hears and determines applications ancillary to such an application, including those for the specific performance of a contractual obligation.

However, it does not have either one of those jurisdictions in cases where jurisdiction is formally and exclusively assigned to another court or adjudicative body, or in family matters other than adoption. The plaintiff’s option continues to prevail if the chosen court retains jurisdiction under the second paragraph. […] [Underlining added] [ 26 ] To these provisions must also be added the first paragraph of

article 51 C.C.P.: “[t]he courts may, at any time, on an application and even on their own initiative, declare that a judicial application or a pleading is abusive.”

2.2 The Nature of the Dispute [ 27 ] The awards sought by Auston are $ 46,919.89 in legal fees and $ 20,000 in punitive damages. [15] Although these awards fall below the monetary threshold of

article 35 C.C.P., pursuant to

article 51 C.C.P., an application for a declaration of abuse of procedure is necessarily brought in relation to a pre-existing judicial application or pleading.

In this case, the relevant judicial application or pleading is the defence asserted by the Defendants to the Application in Recognition and Enforcement of a Foreign Judgment, as well as their conduct within this specific procedural context. [ 28 ] To the extent the Court has jurisdiction to hear and decide the pre-existing judicial application or pleading, the interplay of articles 33, 35, and 51 C.C.P. mean that it also has jurisdiction to declare an abuse of procedure and to render various awards on that basis.

But what if a party has already acquiesced to that pre-existing judicial application or pleading? [ 29 ] In the related judgment rendered with respect to the Application in Recognition and Enforcement, it was determined that the Acquiescence filed by defence counsel was not dispositive: Little was said during the hearing as to the precise scope and legal consequences of the Acquiescence, which states: “[ l]a

partie défenderesse Dan Scott Burda acquiesce sans reserve à la demande des parties demanderesses et en avise Me Souhail Nejjar, avocat des parties demanderesses.” [16] The Acquiescence – executed electronically by Mr. Burda and defence counsel – clearly affirms that Mr. Burda acquiesces to the Application on an unqualified basis. It is unclear, however, whether he also acquiesces on behalf of the other Defendant, Shredderhotline.com, in his capacity as its representative.

Likewise, defence counsel’s e-mail to the Court merely suggests, without explicitly affirming, that the Acquiescence is on behalf of both Defendants […].

Given the ambiguity of the Acquiescence, the e-mail of September 18, 2023, the public order implications of an application to recognize and enforce a foreign decision, and the risk of conflicting judgments, the Court concludes it should proceed with an analysis of the relevant substantive and procedural requirements and render a uniform judgment. [Bolding added; underlining in original; references omitted] [ 30 ] As the Court had jurisdiction to decide the Application in Recognition and Enforcement notwithstanding the Acquiescence, it also has jurisdiction to decide the Application in Abuse of Procedure.

Simply put, the Acquiescence did not expunge the pre-existing judicial application or pleading, or otherwise strip the Court of its underlying competence. [ 31 ] Moreover, defence counsel indicated in writing that, insofar as the Application in Abuse of Procedure was concerned, “[…] nous avons comme instructions de s’en remettre à la décision du Tribunal.” [17] In these circumstances, the Court concludes the Defendants have renounced their right to plead or benefit from a declinatory exception. [18] To conclude otherwise would frustrate the principle of proportionality. [19] 3.

Was the Conduct of the Defendants an Abuse of Procedure or a Substantial Breach? 3.1 Positions of the Parties [ 32 ] Auston argues the defence and general procedural conduct of the Defendants constitute an abuse of procedure under

article 51 C.C.P. or, subsidiarily, substantial breaches in the conduct of the proceeding under

article 342 C.C.P. Auston further argues it is entitled to 100 % of the legal fees it incurred as a result and to punitive damages. [ 33 ] Despite the statement by defence counsel that the Defendants would submit themselves to the discretion of the Court, [20] Mr. Burda now claims to contest the Application in Abuse of Procedure. As Shredderhotline.com is unrepresented by counsel, [21] the Court deems this contestation to be limited to Mr. Burda only. According to him, as he and Shredderhotline.com are bankrupt, he informed defence counsel to agree to the Acquiescence. Mr.

Burda asserts there was no intention to “stall the process.” Rather, the procedural decisions taken by him were “through ignorance and stupidity” and “he was not aware of what was going on.” 3.2 Discussion [ 34 ] Pursuant to

article 9 C.C.P., it is a mission of the courts to ensure “[…] proper case management in keeping with the principles and objectives of procedure.” Among these principles is that of proportionality, according to which parties must “ […] ensure that their actions, their pleadings, including their choice of an oral or a written defence , and the means of proof they use are proportionate , in terms of the cost and time involved, to the nature and complexity of the matter and the purpose of the application.” [22] [ 35 ] Proper case management and the principle of proportionality underpin

article 51 C.C.P., which enables courts to declare an abuse of procedure when appropriate: 51. The courts may, at any time, on an application and even on their own initiative, declare that a judicial application or a pleading is abusive. Regardless of intent, the abuse of procedure may consist in a judicial application or pleading that is clearly unfounded, frivolous or intended to delay or in conduct that is vexatious or quarrelsome. It may also consist in a use of procedure that is excessive or unreasonable or that causes prejudice to another person, or attempts to defeat the ends of justice, particularly if it operates to restrict

another person’s freedom of expression in public debate. [Underlining added] [ 36 ] In her commentary on

article 51 C.C.P., the former Minister of Justice and Attorney-General of Quebec notes that courts are prudent when deciding whether to declare an abuse of procedure. Such a declaration should not infringe a party’s right to make full answer and defence. Nevertheless, it is not necessary under

article 51 C.C.P. to allege and demonstrate the bad intentions of that same party: [23] [Cet article] vise l’abus de procédure tant en première instance qu’en appel, et il a rendu applicable aux tribunaux de première instance la règle qui permettait à la Cour d’appel d’intervenir d’office. Le pouvoir de sanctionner les abus s’inscrit dans la mission des tribunaux d’assurer une saine gestion des instances et il constitue une application du principe de proportionnalité. Les actes doivent, quant à leur coût et au temps exigé pour les traiter, être proportionnées à leur nature et à leur finalité.

Il ressort de la jurisprudence que les tribunaux sont très prudents dans l’exercice de ce pouvoir afin de ne pas brimer l’exercice des droits et de préserver notamment celui à une défense pleine et entière, mais il est aussi nécessaire, dans l’intérêt même de la justice, de réprimer ou de limiter les abus de la procédure.

L’article est une application en matière de procédure civile des principes posés par les articles 6 et 7 du Code civil , lesquels permettent de considérer que si l’abus peut résulter d’une intention de nuire, donc répréhensible, il peut aussi résulter de l’exercice déraisonnable ou excessif d’un droit qui rompt l’équilibre des droits entre les parties ou qui détourne le droit, ou ici la procédure, de sa fin sociale intrinsèque, l’administration de la justice telle que la disposition préliminaire du Code de procédure civile la circonscrit. […] Afin de contrer la tendance jurisprudentielle d’exiger de rechercher l’intention d’abuser de la procédure et de ne percevoir l’abus que s’il y a un geste répréhensible indiquant une volonté de nuire, il a semblé opportun, pour maintenir la portée que le législateur a voulu donner en 2009 aux dispositions sur l’abus de procédure, d’indiquer clairement qu’ il peut y avoir abus « sans égard à l’intention » d’abuser , comme cela ressort des articles 6 et 7 du Code civil . [Underlining added] [ 37 ] In Biron c. 150 Marchand Holdings inc. , the Court of Appeal observes that

article 51 C.C.P. sets a high bar. In effect, an abusive procedure is one that is either manifestly unfounded, designed to silence the adverse party, or used in an excessive and unreasonable manner to harm another: [24] L’article 51 C.p.c . couvre une panoplie de situations et le spectre de ces situations est large, mais, dans tous les cas, la barre est haut placée et elle doit le demeurer au risque de banaliser ce qu’est une procédure abusive et de constituer un frein à l’accès à la justice. Les procédures manifestement mal fondées et celles qui ne visent qu’à faire taire l’autre

partie doivent être sanctionnées. Il en va de même de la

partie qui utilise la procédure de manière excessive ou déraisonnable ou de manière à nuire à autrui. Mais, je le répète, la barre de l’abus de procédure doit demeurer haut placée. [Underlining added] [ 38 ] According to

article 52 C.C.P., “[i]f a party summarily establishes that a judicial application or pleading may constitute an abuse of procedure, the onus is on the initiator of the application or pleading to show that it is not excessive or unreasonable and is justified in law.” [ 39 ] Apart from abuse of procedure,

article 342 C.C.P. also enables courts to identify and sanction “[…] substantial breaches noted in the conduct of the proceeding […].” Although distinguishable from abuse of procedure – which does not require the intervention or input of the parties –

article 342 C.C.P. is animated by the same principles and objectives. [25] 3.2.1 Is the Defence an Abuse of Process? [ 40 ] In this case, Auston seeks a declaration of abuse of procedure because of: (

i) the defence asserted by the Defendants; and (ii) their general procedural conduct. [ 41 ] Insofar as the defence is concerned, the Application in Abuse of Procedure alleges that “[…] la défense des Défendeurs est manifestement mal fondée, frivole et dilatoire.” [26] It also refers to “[…] la contestation infondée et abusive des Défendeurs […].” [27] [ 42 ] These allegations are insufficient to justify a declaration of abuse of procedure. While the Court did conclude the U.S. Judgment should be recognized and enforced, the assertion of an unfounded defence is not enough to meet the high bar of

article 51 C.C.P. To do so, Auston would need to summarily establish that the defence was manifestly unfounded, which is not the case. On their face, the issues raised by the Defendants are not without any possibility of success: [28] Les parties défenderesses n’ont jamais reçu signification de la demande ayant mené au jugement rendu par la United States District Court […] vu le contexte particulier de la COVID-19 et la signification irrégulière effectuée par courriel à monsieur Dan Scott Burda. En vertu de l’

article 3156 C.c.Q. , la décision rendue par cette Cour ne peut être reconnue au Québec puisqu’elle n’a pas été signifiée de manière régulière. En vertu de l’

article 3155 al. 3 C.c.Q. , la décision a été rendue en violation des principes essentiels de la procédure et ne peut donc être reconnue au Québec. La demande de reconnaissance de la décision rendue aux États-Unis est donc mal fondée. [ 43 ] The fact the Court had to conduct an analysis pursuant to articles 3155 , 3168 , and 3156 of the Civil Code of Quebec , as well as

article 508 C.C.P., is a further indication the defence was not manifestly unfounded within the meaning of

article 51 C.C.P. Prudence and the need to respect the right of a party to make full answer and defence militate in favour of restraint. 3.2.2 Is the Conduct of the Defendants an Abuse of Procedure? [ 44 ] Insofar as the conduct of the Defendants is concerned, Auston alleges the following: • Although the Defendants informed Auston of their intention to declare bankruptcy in the coming days, notices to this effect were issued almost two months later; [29] • Mr.

Burda adopted obstructive tactics in the context of the bankruptcy proceedings, notably by refusing to answer question; [30] • Although the Defendants initially indicated their intention to contest the lifting of the stay granted with respect to the Application in Recognition and Enforcement, they reversed course on the very day of the hearing, generating unnecessary costs for Auston; [31] • While the Application in Recognition and Enforcement did not require the examination of representatives of the parties, the Defendants insisted, in their proposed case protocol, on examining two representatives of Auston for several hours each; [32] • A case management conference could only be scheduled over two months later, at which time the Court refused to allow the Defendants to conduct the proposed examinations.

This had the effect of delaying even further the hearing on the Application in Recognition and Enforcement; [33] • The Defendants also relinquished their stated intention to examine Mr.

O’Leary, whom they had previously qualified as a necessary, indeed essential, witness; [34] • In the joint request for setting down for proof and judgment, the Defendants communicated 27 exhibits that had nothing to do with the Application in Recognition and Enforcement; [35] and • One business day before the hearing initially scheduled for the Application in Recognition and Enforcement, defence counsel announced the Acquiescence. [ 45 ] To this list can also be added Mr.

Burda’s attempt to challenge the Acquiescence, both during and after [36] the hearing, and to contest the Application in Abuse of Procedure (despite defence counsel’s explicit confirmation that the Defendants would submit themselves to the Court’s discretion). [ 46 ] The Court concludes Auston’s allegations – which are supported by the court record and various exhibits – are sufficient to summarily establish a pattern of excessive, dilatory conduct that unnecessarily complicated and prolonged the proceeding.

On three occasions, the Defendants changed their position at the last moment. [37] The Defendants’ approach to the proposed case protocol and the joint request for setting down for proof and judgment appears contrary to the principles and objectives of procedure, most notably the principle of proportionality. Furthermore, the Defendants’ conduct appears to have been prejudicial to Auston. [ 47 ] Auston having summarily established an abuse of procedure, it was incumbent on the Defendants to show that their conduct was not excessive or unreasonable and that it was justified in law. Yet they failed to do so.

Being unrepresented, Shredderhotline.com made no representations whatsoever. Having submitted to the discretion of the Court, Mr. Burda was also foreclosed from making representations. Even if one were to accept his oral submissions, however, they do not satisfy the onus of

article 52 C.C.P. That Mr. Burda did not fully understand the decisions taken on his behalf and did not intend to delay the proceeding are not enough to defeat a declaration of abuse of procedure. As the second paragraph of

article 51 C.C.P. makes plain, “[r]egardless of intent , the abuse of procedure may consist […] in a use of procedure that is excessive or unreasonable or that causes prejudice to another person […]” [underlining added]. [ 48 ] Given the Court’s finding that a declaration of abuse of procedure is justified in the circumstances, it is unnecessary to consider

article 342 C.C.P. However, if it had, the Court would have concluded the Defendants committed substantial breaches in the conduct of the proceeding. 4. Should the Defendants Pay Some or all of the Plaintiffs’ Legal Fees? [ 49 ]

Article 54 C.C.P. provides that on ruling a party abusive, the court may order it “[…] to pay, in addition to legal costs, damages for any injury suffered by another party, including to cover the professional fees and disbursements incurred by that other party, or award punitive damages if warranted by the circumstances” [underlining added].

As the wording of this provision indicates, the payment of legal costs, compensatory damages, and/or punitive damages are a possible, but not a necessary, outcome. [ 50 ] When it comes to awarding legal fees more specifically, there must be a causal link between the abuse of procedure and the amount sought. As the Court of Appeal observes in Syndicat de la copropriété de l'Île Bellevue Phase I c. Propriétés Belcourt inc ., “[…] [l]’article 54 C.p.c. ne donne pas un droit automatique au remboursement du plein montant des honoraires et débours engagés par l’autre partie.

Il est clair que ce montant doit représenter des dommages : il est payable en raison d’un abus de procédures […].” [38] In other words, “ […] il doit y avoir un lien de causalité entre la faute et les dommages.” [39] [ 51 ] The applicant must also prove the reasonableness of the professional fess that it incurred. As the Court of Appeal notes in Golzarian c. Association des policières et policiers provinciaux du Québec , “[l]a

partie qui réclame une telle condamnation a tout avantage à produire les comptes détaillés de ses avocats, ce qui permet à la Cour d’évaluer la justesse et le caractère raisonnable des services fournis et des montants facturés et réclamés.” [40] [ 52 ] Finally, accordingly to the case law of this Court, four criteria must be considered when determining the amount of legal fees awarded to the applicant: (

a) the nature and complexity of the proceeding; (

b) the amounts at issue; (

c) the connection between the abuse

of procedure and the damages claimed; and (

d) the time invested by the applicant’s counsel to obtain justice. [41] [ 53 ] In this case, Auston’s counsel has provided the Court with the invoices that were issued in the context of the Canadian proceeding [42] and a supporting sworn declaration. [43] These invoices and sworn declaration prove, on a balance of probabilities, that there is a causal link between some of the amounts invoiced and the abuse of procedure.

Moreover, the invoices are detailed, unredacted, and highlighted to show which entries correspond directly with the Application in Recognition and Enforcement (as opposed to the bankruptcy proceeding). They are also reasonable given the entries and hours billed. [ 54 ] Consequently, the Court concludes it is appropriate for the Defendants to pay some of the legal fees incurred by Auston.

To determine precisely how much should be paid by the Defendants, however, it is necessary to consider the four criteria listed above. 4.1 The nature and Complexity of the Proceeding [ 55 ] The Application for Recognition and Enforcement is neither highly complex nor a rubber-stamping exercise. It requires the consideration of various factors and elements of evidence. The Court agrees with Auston that it was unnecessary to delve into the merits of the U.S. litigation or proceed with the lengthy examination of corporate representatives. 4.2 The Amounts at Issue [ 56 ] According to the U.S.

Judgment: […] [I]t is ORDERED, ADJUDGED, AND DECREED that judgment is hereby entered in favor of Plaintiffs […] against Defendant[s] […]. 1. Judgment is entered against Defendant[s] […] in Count I in the amount of $879,745.26 plus reasonable attorneys’ fees and paralegal fees and costs in the amount of $13,557.70 for a total judgment on Count I in the amount of $893,302.96 . 2. Judgment is entered against Defendant SHREDDERHORLINE.COM COMPANY in Count II in the amount of $293,248.42 plus costs. 3.

Judgment is entered against Defendants […] in Count III in the amount of $293,248.42 in compensatory damages, plus reasonable attorneys’ fees and paralegal fees and costs in the amount of $13,557.70 plus punitive damages in the sum of $586,496.84 for a total judgment on Count III in the amount of $893,302.96 . [Bolding in original] [ 57 ] It follows that the amounts at issue are significant for both Auston and the Defendants. 4.3 The Connection Between the Abuse of Procedure and the Damages Claimed [ 58 ] The Court is of the view Auston would have incurred fewer legal fees had the Defendants not engaged in abuse of procedure.

Some court appearances, court preparation, document review, and exchanges could have been simplified or avoided altogether. This does not mean, however, that all the legal fees claimed by Auston in relation to the Application in Recognition and Enforcement stem from the excessive, dilatory conduct of the Defendants. 4.4 The Time Invested by Applicant’s Counsel to Obtain Justice [ 59 ] The Application in Recognition and Enforcement was filed on August 4, 2021 and heard on September 15, 2023: a period of over two years.

But for the abuse of procedure, the hearing may well have taken place months earlier. 4.5 The Amount of Legal Fees to be Paid by the Defendants [ 60 ] The Court is not prepared to characterize the assertion of a defence and the insistence on an adversarial hearing as an abuse of procedure giving rise to compensatory damages. While the Court agrees the announcement of the Acquiescence was untimely and that Mr. Burda’s oral submissions were inappropriate, it does not conclude the Acquiescence itself proves that all the Defendants’ prior procedural conduct was disproportionate, although some of it clearly was.

Accordingly, it will award Auston half the legal fees it incurred with respect to the Application in Recognition and Enforcement: namely, $ 23,459.95. 5. Should the Defendants Pay Punitive Damages? [ 61 ] As the Court of Appeal notes in Droit de la famille — 191415 , “[…] dans le cadre de l’octroi de dommages-intérêts punitifs [en vertu de l’article 54 C.p.c., le] tribunal doit prendre en considération les « circonstances appropriées » édictées par l’article 1621 al. 2 C.c.Q. ” [44] According to

article 1621 C.C.P. : 1621. Where the awarding of punitive damages is provided for by law, the amount of such damages may not exceed what is sufficient to fulfil their preventive purpose. Punitive damages are assessed in the light of all the appropriate circumstances , in particular the gravity of the debtor’s fault, his patrimonial situation, the extent of the reparation for which he is already liable to the creditor and, where such is the case, the fact that the payment of the reparatory damages is wholly or partly assumed by a third person. [Underlining added]

[ 62 ] Despite the nomenclature, “punitive” damages are not intended to punish, but rather to deter wrongdoers and denounce reprehensible conduct. In Richard v. Time Inc ., the Supreme Court of Canada enunciates the objectives of punitive damages in Quebec: [45]

Article 1621 C.C.Q. itself requires that the general objectives of punitive damages be taken into account. It indicates that punitive damages are essentially preventive. Under it, the ultimate objective of an award of punitive damages must always be to prevent the repetition of undesirable conduct. This Court has held that the preventive purpose of punitive damages is fulfilled if such damages are awarded where an individual has engaged in conduct the repetition of which must be prevented, or that must be denounced, in the specific circumstances of the case in question.

Where a court chooses to punish a wrongdoer for misconduct, its decision indicates to the wrongdoer that he or she will face consequences both for that instance of misconduct and for any repetition of it. An award of punitive damages is based primarily on the principle of deterrence and is intended to discourage the repetition of similar conduct both by the wrongdoer and in society. The award thus serves the purpose of specific and general deterrence.

In addition, the principle of denunciation may justify an award where the trier of fact wants to emphasize that the act is particularly reprehensible in the opinion of the justice system. This denunciatory function also helps ensure that the preventive purpose of punitive damages is fulfilled effectively. [Underlining added; references omitted] [ 63 ] Here, the Court is of the view that the twin goals of deterrence and denunciation have already been achieved by declaring the Defendants abusive and ordering them to pay half the legal fees incurred by Auston.

The Court is not convinced an additional award of punitive damages would produce greater deterrence or denunciation. It would most likely have the effect of punishing the Defendants, something inconsistent with the stated purpose of

article 1621 C.C.Q. [ 64 ] Furthermore, Auston did not address how the punitive damages sought should be “assessed in the light of all the appropriate circumstances.” Among these circumstances is the “debtor’s patrimonial situation” and “the extent of the reparation for which he is already liable to the creditor.” As the court record and the Application in Abuse of Procedure show, the Defendants have been involved in bankruptcy proceedings. The U.S. Judgment has now also been recognized and enforced by the Court. Given this context, an award of punitive damages would not be justified.

FOR THESE REASONS, THE COURT: [ 65 ] GRANTS the Demande en déclaration d’abus de procédure modifiée , in part; [ 66 ] DECLARES the procedural conduct of Defendants Shredderhotline.com and Mr. Dan Scott Burda an abuse of procedure; [ 67 ] Solidarily CONDEMNS Defendants Shredderhotline.com and Mr. Dan Scott Burda to pay Plaintiffs Auston Transfer & Processing, LLC and Auston Contracting, Inc. an amount of $ 23,459.95, plus interest at the legal rate as of the present judgment; [ 68 ] ALL OF WHICH , with legal costs against Defendants Shredderhotline.com and Mr.

Dan Scott Burda. __________________________________HONOURABLE SHAUN E. FINN, j.S.C. Mtre Souhail Nejjar Miller Thomson SENCRL / LLP Counsel for the Plaintiffs SHEDDERHOTLINE.COM Not represented by counsel DAN SCOTT BURDA Self-represented Hearing date: September 15, 2023