2023 QCCA 165, 2023 QCCA 165

Wang c. Interactive Brokers Canada Inc. 2023 QCCA 165 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No.: 500-09-030104-228 ( 500-17-118476-210 ) MINUTES OF HEARING DATE: February 2, 2023 CORAM: THE HONOURABLE STEPHEN W. HAMILTON, J.A. STÉPHANE SANSFAÇON, J.A. PETER KALICHMAN, J.A. APPELLANTS COUNSEL Xing Wang Genghong Zhao Mtre Olivier Laurendeau ( Laurendeau, Rasic ) Absent Mtre Thomas Voglimacci Stephanopoli Absent RESPONDENT COUNSEL Interactive Brokers Canada Inc.

Mtre Daniel Grodinsky Mtre Filipe Costa ( Borden Ladner Gervais ) Absent On appeal from a judgment rendered on May 31, 2022 by the Honourable Gregory Moore of the Superior Court , District of Montreal . NATURE OF THE APPEAL: Judgment rendered in the course of a proceeding – Application to extend the time limit for filing a defence dismissed. Clerk at the hearing : Annabelle M-Trudel Courtroom: Pierre-Basile-Mignault

HEARING Continuation of the hearing held on February 1 st , 2023. The parties were excused from appearing in Court. BY THE COURT: Judgment – see page 4. Annabelle M-Trudel, Clerk at the hearing JUDGMENT [ 1 ] The Appellants appeal an interlocutory judgment of the Superior Court, district of Montreal (the Honourable Mr.

Justice Gregory Moore), rendered May 31, 2022, which dismissed the Appellants’ application to be relieved of the consequences of their failure to file a defence. [1] * * * [ 2 ] On November 8, 2021, the Respondent, claiming that the Appellants had breached a brokerage agreement and owed some $2,000,000, served upon Appellants a Judicial Application Originating a Proceeding .

This application followed one that had been filed in Ontario but had been dismissed because of a choice of jurisdiction clause in the brokerage agreement. [ 3 ] The Appellants filed their answer on December 9, 2021, after the Respondent had filed an application to have the case set down for judgment by default due to the Appellants’ failure to respond. On January 21, 2022, they drafted their first case protocol, which contained a brief description of their defence.

On January 28, 2022, they amended the proposed case protocol, added further details to their defence and counterclaim and provided the Respondent with the proposed case protocol the same day. The details of the defence and counterclaim were set out in the wrong

section of the case protocol. [ 4 ] On February 1, 2022, the Respondent asked the Court for a case management conference after the negotiations between the parties regarding the case protocol had failed to result in an agreement. On three occasions, the Appellants informed the Respondent that they would be out of the country and unavailable from February to April or May 2022.

It is evident from reading the Notice of Case Management Conference filed by the Respondent that communication between the parties was difficult due to the Appellants’ unwillingness to adequately inform the Respondent of the reasons for their unavailability. [ 5 ] A case management conference was held on February 9, 2022 and the Appellants did not participate. Christiane Alary, J.S.C. ratified the Respondent’s proposed case protocol during the hearing and set the deadlines for the Appellants to provide their

summary grounds of oral defence (March 2, 2022) and file their cross-application (March 11, 2022). [2] Justice Alary also ordered the Appellants to attend their pre-trial examination via videoconference on April 1, 2022. The deadlines were declared peremptory. [ 6 ] The Appellants’ statement of oral grounds of defence, dated April 13, 2022, was filed late, on May 4, 2022, following an earlier failed attempt to do so.

The grounds of defence and the reasons for their counterclaims set out in that document were essentially the same as those expressed in their proposed case protocol served on the Respondent three months earlier. In the meantime, on April 20, 2022, the Respondent filed an application to have the case set down for judgment by default. On May 3, 2022, André Wery, J.S.C. granted the application, stating the following: The Court believes that defendant, Mister Wang, does not take this case seriously and that he is giving unacceptable excuses to avoid proceedings.

The Court also believes that plaintiff has given the defendants every chance to proceed with their defence and/or their counterclaim. [3] [ 7 ] After finally seeking legal representation, the Appellants filed a request to be relieved of the consequences of their failure to file a defence within the time limit set in the case protocol, to revoke any existing judgment by default and to extend the time limit for filing a request to set the case down for trial and judgment. [ 8 ] In the judgment under appeal, the judge noted that the parties could not agree on a case protocol, that the Appellants did not attend the case management conference in February 2022 and did not respect “any of the peremptory deadlines set by Justice Alary” during said conference, that the Appellants “wish to file an eighteen-page statement of their oral grounds defence, as well as a cross- application for $10M, and six or seven expert reports” that would require the parties to “start from zero with a much more complex case than announced in the original application” and that the Appellants’ situation “results principally from their decision not to hire a

lawyer”, even after they were advised to do so. * * * [ 9 ]

Article 84 C.C.P . provides that a time limit described by the Code as a strict time limit cannot be extended unless the court is convinced that it was impossible in fact for the party concerned to act sooner. Any other time limit may be extended. When the court extends a time limit, it may relieve a party from the consequences of failing to comply with the original time limit.

The time limit prescribed by the C.C.P . to file a defence does not qualify as a strict time limit and the defendant can ask to be relieved of his default to meet that time limit without having to convince the judge that it was impossible for him to act sooner. In Salama c. Second Cup Ltd . , this Court explained that a judge may relieve a party of the failure to file a defence within the delay set out in the case protocol if doing so is deemed necessary.

In making this assessment, the judge should consider “ [le] temps écoulé, [le] comportement des parties, [le] caractère apparemment sérieux des moyens de défense et [le] préjudice qui serait causé aux parties ”. [4] This analytical framework, which was first developed in cases dealing with strict time limits, [5] is not to be applied “ de façon rigide ”. [6] Regarding the consequences of the decision whether or not to grant the relief sought, this Court wrote: [7] Le jugement de première instance a comme conséquence de priver les appelants du droit à faire valoir leurs moyens de défense.

Bien que le juge dispose d’un pouvoir discrétionnaire pour examiner l’opportunité de relever une

partie de son défaut, il doit faire preuve d’une grande prudence, particulièrement lorsqu’il est possible de remédier aux conséquences de l’erreur de l’avocat sans injustice pour la

partie adverse. [7] [ 10 ] The decision made under

article 84 C.C.P . is discretionary. Therefore, this Court’s ability to intervene is limited since “[u]ne décision discrétionnaire d’un tribunal de première instance ne peut être infirmée en appel que si elle est abusive, déraisonnable ou non judiciaire, c'est-à-dire fondée sur des considérations erronées”. [8] * * * [ 11 ] In his reasons in the judgment under appeal, the judge rightly gave considerable weight to the Appellants’ behaviour. It is undeniable that the Appellants were not diligent during the early stages of the proceedings.

They did not answer the summons within the time limit set by the Code of Civil Procedure , and the case protocols they sent the Respondent, even though they contained a description of their defence and counterclaim, were neither filled out appropriately nor submitted to the court. In addition, the Appellants did not take any steps to warn the court of their anticipated absence for the case management hearing and did not respect Justice Alary’s orders as to the time limits for providing their

summary grounds of oral defence and for filing their cross-application. The Appellants admit that they should have hired legal representation earlier and should not have assumed that telling the Respondent that they were unavailable from February to April or May was sufficient.

It appears that the Appellants realized their mistakes and tried to remedy them after they were made aware of Justice Alary’s decision. [ 12 ] The Court is sympathetic to the Respondent’s situation and there is no doubt that the Appellants, as they now recognize, failed to treat the proceedings and the deadlines that the judges had set down, with sufficient seriousness.

The Code of Civil Procedure provides the courts with tools for dealing with such conduct, including the possibility of awarding compensation for substantial breaches in the conduct of the proceeding (article 342 C.C.P .). [ 13 ] However, in the judgment under appeal, the judge does not appear to have given any weight to the seriousness of the Appellants’ defence, even though he refers to “the right of a party to be heard and to present a full defence”. His reasons give the impression that he considered himself to be bound by the “peremptory deadlines” set by Justice Alary.

He writes that permitting the Appellants to file a defence was not in the interests of justice because it would “require the parties to start from zero with a much more complex case than announced in the original application”, thereby ignoring the fact that Appellants’ grounds of defence had been disclosed to Respondent as far back as January 21 and 28.

With all due respect, this reasoning fails to take account of the Appellants’ right to be heard and the prejudice they would suffer from a judgment by default, especially since they had made it clear from the start that they not only intended to contest the Respondent’s claim (of over two million dollars), raising arguments that appear to be serious, but also to present a counterclaim for their own losses. [ 14 ] Moreover, the judge’s affirmation that the Appellants “can still participate” in a trial by default, while technically correct, does not consider the nature of this participation.

As the Appellants point out, it would be limited to cross-examining the Respondent’s witnesses. [9] Considering the seriousness of the defence and the amount of the projected counterclaim, such limited participation is insufficient. The judge considered the prejudice for the Respondent but failed to recognize the impact of the decision on the Appellants’ rights.

With all due respect, in our view, the judge, who was not bound by the “peremptory deadlines” set by Justice Alary, erred in considering only the factors that benefited the Respondent’s position, but not the ones that benefited the Appellants’, in particular the seriousness of their defence and the prejudice that would result from his decision.

A reasonable application of the factors mentioned by this Court should have led the judge to grant the Appellants’ request to be relieved of the consequences of their failure to file their defence within the time limit set by Justice Alary. [ 15 ] Because of the Appellants’ failure to comply with the procedure established by the Code of Civil Procedure and with the orders rendered by Justice Alary, costs will be awarded to the Respondent both in first instance and on appeal. FOR THESE REASONS, THE COURT: [ 16 ] ALLOWS the appeal;

[ 17 ] REVERSES the judgment under appeal; [ 18 ] GRANTS the application; [ 19 ] RELIEVES the Appellants of their failure to file their defence and of the consequences of their failure to file their defence; [ 20 ] ORDERS the parties to establish a new case protocol and, in the event of disagreement concerning the content of the said protocol, ORDERS the parties to participate in a case management conference; [ 21 ] THE WHOLE with legal costs in both instances in favour of the Respondent. STEPHEN W. HAMILTON, J.A. STÉPHANE SANSFAÇON, J.A. PETER KALICHMAN, J.A.