2011 QCCQ 5738, 2011 QCCQ 5738

Citadelle, coopérative de producteurs de sirop d'érable c. 416 Candies Inc. 2011 QCCQ 5738 COURT OF QUEBEC CANADA PROVINCE OF QUEBEC DISTRICT OF ARTHABASKA LOCALITY OF VICTORIAVILLE “Civil Division” No.: 415-22-005282-110 DATE: June 2, 2011 ______________________________________________________________________ THE HONOURABLE PIERRE LABBÉ, J.C.Q., PRESIDING ______________________________________________________________________ CITADELLE, MAPLE SYRUP PRODUCERS’ COOPERATIVE, Plaintiff v. 416 CANDIES INC. and CYNTHIA GELLER, Defendants ______________________________________________________________________ JUDGMENT on declinatory exception ______________________________________________________________________ [ 1 ] The defendants have raised a declinatory exception to obtain a declaration that the courts of Quebec do not have jurisdiction to hear this case, which falls under the jurisdiction of the courts of Ontario.

The plaintiff objects to this exception and seeks to have it dismissed. [ 2 ] On March 2, 2011, the plaintiff brought a suit to claim $23,711.18 from the defendants for payment of merchandise sold and delivered and $5,553.88 for liquidated damages. [ 3 ] The plaintiff is a company that specializes in maple product processing and packaging. The defendant, 416 Candies Inc. (“Candies”), is a company that imports and sells various candies and confectionery. [ 4 ] The defendant Cynthia Geller is president of the defendant.

She is being sued as surety. [ 5 ] On September 23, 2010, in Toronto, Cynthia Geller signed, for and on behalf of Candies, a credit application on the plaintiff’s form, entitled “Credit application form for instalment plan (terms and conditions)” (P-1). This document contains a number of terms and conditions. Clause 12 is relevant and should be quoted: 12. Choice of Judicial District of Quebec The Client accepts that any filed suit regarding this contact and/or sold merchandises and/or the fulfilment obligations ensuing from this contract, both parties reside in the judicial district of Quebec.

The Client abandons any right that he could have under the jurisdiction of the court of any districts of this province. [ 6 ] This document was returned to the plaintiff on October 7, 2010, by facsimile, at Plessisville, according to the affidavit of Ms.

Deshaies. [ 7 ] After receipt of this document, the plaintiff sold the defendant maple products, according to the invoices filed as Exhibit P-2, namely: ▪ Invoice 20226 dated October 18, 2010, for $748.52, sent to Candies in Toronto; the place of delivery indicated was Mississauga, Ontario. ▪ Invoice 20243 dated October 18, 2010, for $868.39, sent to Candies in Toronto; the place of delivery was Halifax, Nova Scotia. ▪ Invoice 20264 dated October 19, 2010, for $14,568.86, sent to Candies in Toronto; the place of delivery was Mississauga, Ontario.

▪ Invoice 20309 dated October 19, 2010, for $6,829.76, sent to Candies in Toronto; the place of delivery was Edmonton, Alberta. [ 8 ] The defendant makes the following allegations in its notice of disclosure of the declinatory exception, supported by the affidavit of Cynthia Geller: [ translation]

(1) The head office of Candies is at 81 Kincort Street in Toronto, province of Ontario, and the co-defendant Cynthia Geller is domiciled at 79 Ridge Hill Drive in Toronto, Ontario.

(2) Candies does not have any establishments in Quebec and Cynthia Geller does not have a residence in Quebec.

(3) The contract filed as Exhibit P-1 was entered into at Toronto, Ontario.

(4) The obligations arising from the contract, including the delivery of goods, were reportedly performed in Mississauga, Ontario.

(5) No fault was committed in Quebec, no damage was suffered in Quebec, and no injurious act occurred in Quebec.

(6) The defendants do not consent and have never consented to having this action submitted to a Quebec authority. [ 9 ] Alternatively, the defendants argue the doctrine of forum non conveniens on the following grounds: [ translation] ▪ the defendants and witnesses reside in Ontario; ▪ contract P-1 was formed in Ontario; ▪ the defendants’ goods are in Ontario; ▪ the applicable law is the law of Ontario, in accordance with Quebec civil law; ▪ any judgment rendered in Quebec would have to be ratified by the courts of Ontario. [ 10 ] For its part, the plaintiff maintains that the contract, which is the credit application document filed as Exhibit P-1, was made in Plessisville, in the judicial district of Arthabaska, because the defendant received it in Plessisville; it invokes articles 1386 and 1387 of the Civil Code of Québec , which read as follows: 1386.

The exchange of consents is accomplished by the express or tacit manifestation of the will of a person to accept an offer to contract made to him by another person. 1387. A contract is formed when and where acceptance is received by the offeror, regardless of the method of communication used, and even though the parties have agreed to reserve agreement as to secondary terms. [Emphasis added.] ANALYSIS [ 11 ] The defendants base their declinatory exception on articles 159 and 163 of the Code of Civil Procedure and on articles 3135 and 3148 C.C.Q. , which read as follows: 159.

Unless otherwise agreed by the parties in accordance with

article 151.1, preliminary exceptions and the conclusions sought must be disclosed in writing to the opposite party before the date of presentation of the action or application, failing which the court may refuse the presentation of preliminary exceptions . 163. A defendant, summoned before a court other than that before which the suit should have been instituted, may ask that the suit be referred to the competent court within the legislative authority of Québec, or that the suit be dismissed if there is no such court . 3135.

Even though a Québec authority has jurisdiction to hear a dispute, it may exceptionally and on an application by a party, decline jurisdiction if it considers that the authorities of another country are in a better position to decide . 3148.

In personal actions of a patrimonial nature, a Québec authority has jurisdiction where (1) the defendant has his domicile or his residence in Québec ; (2) the defendant is a legal person, is not domiciled in Québec but has an establishment in Québec, and the dispute relates to its activities in Québec ; (3) a fault was committed in Québec, damage was suffered in Québec, an injurious act occurred in Québec or one of the obligations arising from a contract was to be performed in Québec ; (4) the parties have by agreement submitted to it all existing or future disputes between themselves arising out of a specified legal relationship ; (5) the defendant submits to its jurisdiction .

However, a Québec authority has no jurisdiction where the parties, by agreement, have chosen to submit all existing or future disputesbetween themselves relating to a specified legal relationship to a foreign authority or to an arbitrator, unless the defendant submits to thejurisdiction of the Québec authority. [12] That the credit application constitutes the contract between the parties is not in dispute. [13] Since the plaintiff’s remedy is a personal action of a patrimonial nature,

article 3148 C.C.Q. determines the jurisdictionalconnecting criterion. It is understood that the province of Ontario is a foreign forum for the purposes of private international law. [14] That subparagraphs 1, 2 and 5 of the first paragraph of

article 3148 do not apply is not in dispute. [15] As for subparagraph 3 of the first paragraph, the plaintiff maintains that non-payment of its invoices constitutes damagesuffered in Quebec since the invoices give the address of its establishment in Thetford Mines, which, according to the plaintiff, is theplace of payment. [16] For their part, the defendants maintain that, since the contract does not refer to the place of delivery,

article 1734 C.C.Q.should be relied on in substitution: 1734. The buyer is bound to take delivery of the property sold, and to pay the price thereof at the time and place of delivery. He is alsobound to pay any expenses related to the deed of sale. [17] They add that the invoices state the places of delivery as Mississauga, Halifax, and Edmonton, respectively, all cities locatedoutside Quebec.

Therefore, payment was to be made in those places, and that is where the damage resulting from the failure to pay wassuffered. [18] On this point, it is useful to cite the following excerpt from Décarie, J. in Bank of Montreal v. Hydro Aluminum WellsInc.:[1] [translation] [13] BMO argues that Dominion suffered damage in Quebec. This damage arises from non-payment of invoices sent to Wells. Thedamage was suffered in Quebec, because Dominion has its place of business and its bank account there. [14] To support its claims, BMO cites the following decisions: Gestion M.P.F.

Inc. v. 9024-3247 Québec Inc.; MNC MultinationalConsultants Inc./Consultants multi-national Inc. v. Dover Corporation and Larwex Entreprises Inc. v. Daniel. These three decisions areto the same effect and may be summarized by the following comment made by Jean Crépeau, J. in MNC Multinational ConsultantsInc./Consultants multi-national Inc.: [translation]

(35) On July 2, 1997, in Gestion M.P.F. Inc. v. Philip Environmental Corporation, No. 505-05-002963-962, Jocelyn Verrier, J. alsoaccepted the proposition that non-payment of a claim constitutes an injurious act that occurred in Quebec.

(36) Indeed, while the fault was committed in New York, it was in Quebec that the plaintiff suffered damage, namely its impoverishmentdue to non-payment for its services. This is sufficient to give the Superior Court of Quebec jurisdiction to hear this action. (p. 6) [15] This trend in case law, however, is no longer current. Our Court of Appeal has twice decided that the impoverishment of a companywith a place of business in Quebec following non-payment of a debt payable elsewhere than in Quebec is not the damage contemplatedin

article 3148 C.C.Q. [16] In Quebecor Printing Memphis Inc. v. Regenair Inc., Marc Beauregard, J.A., writing for the majority, expressed himself as follows: [translation] On the other hand, Quebecor’s refusal to perform its obligation to pay in Memphis cannot be held to be an injurious act that occurred inQuebec, and the fact that Regenair, whose head office is in Quebec, does not receive payment of its claim, which is payable in Memphis,does not make this damage suffered in Quebec. If Regenair was right, the courts of Quebec would automatically have jurisdiction if the plaintiff is a Quebec resident, and the otherheads of jurisdiction contemplated in

article 3148 of the Civil Code of Québec would be of no effect. (p. 968) [17] Again recently, in Foster v. Kaycan Ltd.,[2] our Court of Appeal, this time unanimously, ruled in the same way: CONSIDERING that the mere fact that Respondent has its head office in Montreal and that any monetary loss would presumably berecorded in Montreal, is not attributive of jurisdiction within the meaning of

article 3148 paragraph 3 C.C.Q. (Quebecor PrintingMemphis Inc. c. Regenair Inc. (QC CA), [2001] R.J.Q. 966 (C.A.).

(p.3) [18] In conclusion, the damage suffered in Quebec by Dominion and arising from non-payment of the merchandise delivered isinsufficient to declare that the Quebec authority has jurisdiction to hear the case. [Citations omitted] [Emphasis added.] [19] The Court feels itself bound by the case law of the Court of Appeal and finds that the third subparagraph of the firstparagraph of

article 3148 C.C.Q. does not apply. [20] The plaintiff maintains that subparagraph 4 of the first paragraph of

article 3148 applies; first, because

article 68 C.C.P.stipulates the place where the contract was made as a factor of jurisdiction and, second, because Clause 12 of the contract stipulates it. [21] The defendants assert that

article 3148 C.C.Q. takes precedence over

article 68 C.C.P. in matters of private international law. [22] It is worth citing the introductory paragraph of this provision: 68. Subject to the provisions of this

Chapter and the provisions of Book X of the Civil Code, and notwithstanding any agreement to thecontrary, a purely personal action may be instituted: … [Emphasis added.] [23] This provision expressly mentions that it applies subject to the provisions of Book X of the Civil Code of Québec, whichdeals with private international law, which book includes, inter alia,

article 3148 C.C.Q. [24] In Gestion M.P.F.,[3] Jocelyn Verrier, J. wrote: [translation] This

article is new law and replaces

article 68 C.C.P. with regard to the international jurisdiction of Quebec authorities, as stated by JeanFrappier, J. in Almiria Capital Corp -and- Diversified Small Business Fund Limited Partnership no. 4 v. Hygieia Holdings (Canada) Inc.-and- Hygieia Healthcare Holdings Limited. In Roland Bérubé et autres v. Corporation Burnac, Madam Justice France Thibault states that the purposes of articles 3148 C.C.Q. and68 C.C.P. are different. On page 352 of this decision, it states that: [translation] ... The purposes of articles 3148 C.C.Q. and 63 (sic) C.C.P. are different.

While one determines the jurisdiction of Quebec authorities, theother establishes the district in which an action must be brought. The legislator amended

article 68 C.C.P. concerning the “judicial district” in which an action may be brought to include “Subject to... theprovisions of Book X of the Civil Code”. [Citations omitted.] [25] Therefore,

article 68 C.C.P. concerning territorial jurisdiction in domestic law does not apply. [26] What about the second exception based on Clause 12 of the contract? [27] This clause, whose drafting is perhaps not a model of its kind, means that the parties elect domicile in the judicial district ofQuebec City for any dispute related to the contract and exclude any other judicial district in the province of Quebec. [28] The defendants claim that this clause is not a choice of forum clause but a simple election of domicile without consequence. [29] The defendants have filed several judgments regarding the second paragraph of

article 3148 holding that the exclusion of thejurisdiction of Quebec courts must be clear and mandatory. [30] Thus, in GreCon Dimter inc.,[4] the Supreme Court of Canada wrote: 27 One last type of exception to the autonomy of the parties relates to the wording of arbitration or choice of forum clauses. Whetherthe jurisdiction of the Quebec authorities is ousted in a specific case will be decided on the basis of the wording of the jurisdiction clauseadopted by the parties: H. P. Glenn, “Droit international privé”, in La réforme du Code civil (1993), t. 3, 669, at p. 756.

The clause mustbe mandatory and must clearly and precisely confer exclusive jurisdiction on the foreign authority: Eagle River International Ltd.(Syndic de), (QC CS), [1999] R.J.Q. 1497 (Sup. Ct.), at pp. 1501-2; Intergaz inc. v. Atlas Copco Canada inc., [1997]Q.J. No. 3942 (QL) (Sup. Ct.), at para. 10; Équipements Eustache Lamontagne ltée v. Équipements Belarus du Canada ltée, (QC CS), [1994] R.D.J. 599 (Sup. Ct.), at p. 607. There must also be a meeting of minds between the parties; otherwise the

clause is invalid: see Dobexco Foods International inc . v. Van Barneveld Gouda Bv . 35 The central point that emerges from the preceding analysis is the recognition of the primacy of the autonomy of the parties. Recognizing this primacy leaves considerable room for freedom of contract, subject to the limits imposed by the law or by the rules of public order, although it is worth noting here that the instant case raises no issues relating to the latter rules.

It can be inferred from the language used by the legislature, the legislative context and the general scheme of Book Ten of the Civil Code that the autonomy of the parties has played a predominant role in the development of the rules governing the jurisdiction of the Quebec courts. The legislature reaffirmed and extended the application of this principle at the time of the reform of the Civil Code : Talpis and Castel, at p. 9.

The existence of this fundamental principle, which underlies art. 3148 , para. 2 C.C.Q. , underscores the need to interpret that provision broadly, even if the result is to limit the scope of art. 3139 C.C.Q.

Article 3148, para. 2 C.C.Q. is more than a simple paragraph of limited scope; in matters relating to conflicts of jurisdiction, it constitutes the cornerstone of a legislative policy of respect for the autonomy of the parties. The courts should defer to a choice of forum clause where the parties have clearly stated that they intend to submit any disputes between them, on an exclusive basis, to a foreign authority . [Emphasis added.] [ 31 ] In a recent decision, STMicroelectronics Inc. v . Matrox Graphics Inc. , [5] the Quebec Court of Appeal attempted to find a clear meaning in a clause that seemed to confer jurisdiction on the U.S. courts in Texas by resorting to the rules of

interpretation provided in articles 1425 C.C.Q and following .

The following paragraphs from that decision are relevant: [ translation] [114] That said, I concede that the proposition of STM, which sees Clause 19 as a choice of forum clause, is not meaningless, to the extent that the clause provides that the buyer “ will submit to the personal jurisdiction of the competent courts of the State of Texas and of the United States sitting in Dallas County, Texas, in any controversy or claim arising out of the sale contract ” (italics added): Can this phrase not be seen to express the parties’ intention to compel the buyer to submit to the jurisdiction of the courts of Texas for the purpose of any action arising from the contract, which would include Matrox’s action and action in warranty?

From that perspective, it would be normal for the last part of the clause to contemplate only the service of the originating proceeding on Matrox, which is not domiciled in Texas, not on STM. Also, to the extent that the first sentence of Clause 19 provides for the application of Texas law to the contract, it is not illogical for the purpose of the second sentence to be to ensure that all disputes stemming from the contract be judged by the courts most familiar with that law.

Contrary to the attornment clauses discussed previously, the obligation for the buyer to submit to the courts of Texas in any claim arising out of the sales contract could therefore be seen as a complete, irrevocable, and exclusive designation in favour of the foreign forum. [115] Moreover, I note that the wording in the relevant part of Clause 19 is similar to that in the clause at issue in BC Rail Partnership (see supra at para. [98]), which found it to be valid and enforceable.

However, there are also certain similarities between Clause 19 and the clause at issue in Eagle River International , supra , which was deemed insufficient by the Superior Court and the Court of Appeal. [116] How then do one go about resolving the ambiguity resulting from these two apparently plausible

interpretations of the same text? [117] Unfortunately,

article 1426 C.C.Q. , which provides taking into account the nature of the contract, the circumstances in which it was formed, the

interpretation which has already been given to it by the parties or which it may have received, and usage, is of no help to us here. [118] In fact, the nature of the contract is compatible with both hypotheses put forward by the parties. The other provisions of the contract (which, according to

article 1427 C.C.Q. , must be taken into account) do not themselves provide any interpretive clues. [119] The circumstances in which the contract was formed are such that they shed hardly any light on the meaning to be ascribed to the clause, which was never discussed by the parties. We find ourselves here in the situation described by authors Pineau and Gaudet when they spoke of minimal common intention, which is sufficient to bind the parties, but not to give a full

interpretation of the wording on which they agreed. These circumstances, however, should perhaps encourage us to adopt a measure of caution or to show a certain interpretative restraint: when faced with an ambiguous text which the parties did not discuss and to which one of them implicitly consented, perhaps it is better to favour a narrow rather than a generous

interpretation in order to reduce the parties' intent to the lowest common denominator. [120] Nor can any inspiration be drawn from the way in which the parties interpreted the clause, because this dispute is the first between them; it is also the first in which their divergent

interpretations of Clause 19 have clashed. [121] Finally, no usage has been established here that could enable us to rule in favour of one

interpretation over the other. [122] Additionally, articles 1429 and 1430 C.C.Q. are of no use in the circumstances. [123] In short, there is not much context here and, to discover the parties' intent (particularly that of the stipulator STM), it is therefore necessary to rely essentially on the wording of the clause. But, as we saw earlier, the wording is not clear and lends itself a priori to both

interpretations proposed by the parties. [124] As a result, it may be concluded that the wording of Clause 19 does not have the mandatory nature or the degree of clarity and precision required to confer, according to the Supreme Court in GreCon Dimter, exclusive jurisdiction on the foreign authority . [125] Moreover, given the impossibility of resolving the dilemma through the usual interpretative techniques, it is necessary to turn to

article 1432 C .C.Q . and apply the contra proferentem rule, which, in the absence of any other means, is the only way to rule on the matter: since STM stipulated the clause, it must be interpreted against that company and, consequently, Matrox's

interpretation —an

interpretation that is reasonable and in keeping with the wording of the clause and with its invoice— must be accepted here .

[Citations omitted.] [Emphasis added.] [ 32 ] In view of the similarity of the language in the second paragraph of

article 3148 C.C.Q. and that in subparagraph 4 of the first paragraph, it is reasonable to construe the latter provision in light of case law under the second paragraph, namely that the clause must be mandatory and must clearly and precisely confer exclusive jurisdiction on the Quebec courts.

In short, it must reflect the parties' intentions. [ 33 ] In a judgment on a clause conferring jurisdiction on the Quebec courts, Guy Cournoyer, J. of the Superior Court recently wrote the following: [6] [129] Valensa has presented a perspective, which obscures a very simple fact: it was required to deliver the research results in Québec. [130] Further, the Court agrees with the respondent in this motion that the relationship between Acasti/Neptune and Valensa followed a continuum and that the motion by Valensa should be analysed from this perspective.

The Introductory Motion allegations and the material filed support this conclusion. [131] Artificial distinctions, which are not grounded on the agreed common intention of the parties with respect to forum, should be rejected. [132] The common intention of the parties is clearly spelled out in a broadly worded clause in the last agreement: Any action or proceeding against the Parties relating [in] any way to this Agreement may be brought and enforced in the courts of the Province of Québec, Canada and the Parties irrevocably submit to the jurisdiction of such courts in respect to any such action, dispute or proceeding concerning the enforcement, breach,

interpretation or validity of this Agreement. [Emphasis added.] [133] The expression "relating in any way" is further evidence that the relationship between the parties (Acasti, Neptune and Valensa) is to be viewed as part of a continuum. This reality is the genesis of the totality of the transaction between the parties.

The use of the expression “may be brought” does alter the fact that the Parties therefore irrevocably submitted to the jurisdiction of Québec court. [134] Having succeeded in establishing that the parties have elected to submit to Québec's jurisdiction, the "real and substantial connection" criterion is also met. [Citations omitted] [ 34 ] The motion for leave to appeal this judgment was dismissed by the Quebec Court of Appeal. [7] [ 35 ] With respect for the contrary view, the Court does not consider that Clause 12 of the contract contains this expression of the parties' intention to confer, clearly and in mandatory terms, exclusive jurisdiction on Quebec courts.

This clause appears to have been designed and drafted to govern disputes that are the natural province of Quebec courts by seeking to assign territorial jurisdiction exclusively to the judicial district of Quebec City. The Court considers that the plaintiff itself waived the application of this ambiguous clause by instituting proceedings in the judicial district of Arthabaska and not the judicial district of Quebec City. [ 36 ] The onus was on the plaintiff to demonstrate that Quebec courts had jurisdiction because of any of the criteria established in the first paragraph of

article 3148 C.C.Q. Based on, inter alia , the decision of the Quebec Court of Appeal in Classic Fabrics Corp. v . B. Rawe Gmbh & Co ., [8] Décarie J. of the Superior Court wrote in Bank of Montreal , supra : [9] [ translation] Before addressing each of the issues, it is important to note that, when a defendant objects to the jurisdiction of a Quebec court, it is up to the plaintiff to allege and prove the jurisdictional facts. Any doubt on the matter must be construed against the plaintiff. [Reference omitted] [ 37 ] For these reasons, the Court finds that the declinatory exception of the defendants is valid because none of the criteria stipulated in

article 3148 C.C.Q. apply and therefore, the dispute does not fall under the jurisdiction of the Quebec courts. FOR THESE REASONS, THE COURT : [ 38 ] ALLOWS the declinatory exception of the defendants; [ 39 ] DISMISSES the motion to institute proceedings for lack of jurisdiction; [ 40 ] WITH COSTS . __________________________________ PIERRE LABBÉ, J.C.Q. Mtre Vincent Leblond

Boudreau & Associés, sencrl For the plaintiff Mtre Vicky Berthiaume Kaufman Laramée L.L.P. For the defendants Date of hearing: April 27, 2011