2018 QCCA 1362, 2018 QCCA 1362

Chambre des notaires du Québec c. Compagnie d'assurances FCT ltée 2018 QCCA 1362 COURT OF APPEAL CANADA PROVINCE OF QUEBEC GREFFE DE MONTRÉAL N°: 500-09-027033-174 (500-17-064726-113) DATE: August 28, 2018 CORAM: THE HONOURABLE MARK SCHRAGER, J.A. ROBERT M. MAINVILLE, J.A. SUZANNE GAGNÉ, J.A. CHAMBRE DES NOTAIRES DU QUÉBEC APPELLANT – INCIDENTAL RESPONDENT – Plaintiff/cross-defendant and BARREAU DU QUÉBEC APPELLANT — INCIDENTAL RESPONDENT — Applicant v.

FCT INSURANCE COMPANY LTD FIRST CANADIAN TITLE COMPANY LIMITED RESPONDENTS / INCIDENTAL APPELLANTS — defendants and CHICAGO TITLE INSURANCE COMPANY FNF CANADA COMPANY RESPONDENTS — defendants / cross-applicants and OFFICE DES PROFESSIONS DU QUÉBEC STÉPHANIE VALLÉE, in her capacity as Minister of Justice PIERRE ARCAND, in his capacity as Minister of Energy and Natural Resources AUTORITÉ DES MARCHÉS FINANCIERS LAND REGISTRAR ORDRE DES ARPENTEURS-GÉOMÈTRES IMPLEADED PARTIES – Impleaded parties JUDGMENT [ 1 ] The Chambre des notaires du Québec (the “ Chambre des notaires ”) and the Barreau du Québec (the “ Barreau ”) (collectively the “ appellants ”) appeal from a judgment dated July 24, 2017, rendered by the Superior Court of the District of Montreal (the Honourable Chantal Chatelain) ( 2017 QCCS 3388 ), dismissing their application for a declaratory judgment and permanent injunction concerning the respondent companies’ hypothec processing centres, that is, those of the FCT Insurance Company Ltd. and the First Canadian Title Company Limited (collectively the “ FCT Group ”) and those of the Chicago Title Insurance Company and the FNF Canada Company (collectively the “ Chicago Group ”). [ 2 ] When refinancing a hypothecary loan, many financial institutions require insurance covering the validity of the property titles for the hypothecated property and compensating for losses they would suffer in the event of defects in title or if the hypothec does not apply to the titles.

These title insurance policies appeared in the United States and spread to Canada. They penetrated the Quebec market during the 1990s. Author François Brochu describes title insurance as follows: [1] [ translation ] Apart from two texts published in 1957 and 1974, title insurance has only recently begun to make inroads in Quebec. This type of insurance is an American invention, created in 1876 in Philadelphia to protect purchasers from losses or damages that might arise from title defects.

It now exists in every American state, except for Iowa, and an increasing number of countries, including Canada and Australia. Contrary to other types of insurance that usually protect policyholders from risks arising from future events, title insurance indemnifies insured from financial losses that result from title defects that existed when the policy was purchased.

In other words, the insurer undertakes to correct the policyholder’s existing title defects and to settle compliance issues, such as those drawing their source from an encroachment, so long as these irregularities are disclosed by a third party during the term of the policy. The insurer assumes the fees and disbursements required to defend the insured’s title irrespective of fault. Title insurance is therefore distinguished from “classic”

damage insurance by the fact that the insured pays a single premium to be protected from the consequences of past events that could affect his or her building while he or she remains its owner. In Canada, title insurance is offered by a few companies with head offices in the United States and by the Ontario Bar. [Citations omitted.] [ 3 ] The companies issuing such policies in Quebec include the Chicago Group and the FCT Group. These companies are not limited to the insurance field.

Where financial lending institutions require the purchase of title insurance when refinancing a hypothecary loan, these companies also offer hypothec management services. [ 4 ] These file management services trouble the appellants. They criticize the FCT and Chicago Groups for performing acts that are the exclusive prerogative of notaries and advocates. [ 5 ] The main criticism concerns the preparation of hypothecs, deeds of hypothecary subrogation, discharges, and discharges with subrogation.

The Chambre des notaires and the Barreau also argue that hypothecary loan records management centres verify property titles, give legal opinions and consultations and, more generally, control the whole process of preparing and drawing up juridical acts to guarantee the hypothecary refinancing loans. [ 6 ] The FCT Group also brings an incidental appeal against the judgment. It claims $50,000 from the Chambre des notaires as punishment under art. 342 of the Code of Civil Procedure (” C.C.P. ”) for what they argue are substantial breaches in the conduct of the proceedings.

RELEVANT LEGISLATIVE PROVISIONS [ 7 ] To better understand the dispute, the main relevant legislative provisions should be reproduced at the outset. [ 8 ] The Civil Code of Québec : 1655. Subrogation may not be made by a debtor in favour of anyone except his lender and it takes effect without the consent of the creditor. In order for subrogation to be valid in this case, the loan instrument and the acquittanceshall each be made in the form of a notarial act en minute or by a private writing drawn up before two witnesses who sign it.

In addition, a statement shall be made in the loan instrument that the loan is granted for the purpose of paying the debt, and, in the acquittance, that the debt is paid out of the loan. 2693. An immovable hypothec must, on pain of absolute nullity, be granted by notarial act en minute . 2694. An immovable hypothec is valid only so far as the constituting act describes in a precise manner the hypothecated property. 1655. La subrogation consentie par le débiteur ne peut l’être qu’au profit de son prêteur et elle s’opère sans le consentement du créancier.

Il faut, pour que cette subrogation soit valable, que l’acte de prêt et la quittance soient faits par acte notarié en minute ou par acte sous seing privé établi en présence de deux témoins qui le signent. En outre, il doit être déclaré, dans l’acte de prêt, que l’emprunt est fait pour acquitter la dette, et, dans la quittance, que le paiement est fait à même l’emprunt. 2693. L’hypothèque immobilière doit, à peine de nullité absolue, être constituée par acte notarié en minute. 2694. L’hypothèque immobilière n’est valable qu’autant que l’acte constitutif désigne de façon précise le bien hypothéqué. 2813.

An authentic act is one that has been received or attested by a competent public officer in accordance with the laws of Québec or of Canada, with the formalities required by law.

An act whose material appearance satisfies such requirements is presumed to be authentic. 2813. L’acte authentique est celui qui a été reçu ou attesté par un officier public compétent selon les lois du Québec ou du Canada, avec les formalités requises par la loi. L’acte dont l’apparence matérielle respecte ces exigences est présumé authentique.

2814. The following documents in particular are authentic if they conform to the requirements of the law: … (6) notarial acts; … 2814. Sont authentiques, notamment les documents suivants, s’ils respectent les exigences de la loi: […] 6° L’acte notarié; […] 2818. The recital, in an authentic act, of the facts which the public officer had the task of observing or recording makes proof against all persons. 2818. Les énonciations, dans l’acte authentique, des faits que l’officier public avait mission de constater ou d’inscrire, font preuve à l’égard de tous. 2819.

To be authentic, a notarial act shall be signed by all the parties; it then makes proof against all persons of the juridical act which it sets forth and of those declarations of the parties which directly relate to the act. … 2819. L’acte notarié, pour être authentique, doit être signé par toutes les parties; il fait alors preuve, à l’égard de tous, de l’acte juridique qu’il renferme et des déclarations des parties qui s’y rapportent directement. […] 2988. A notary who executes

an act giving rise to the registration of a right in or the removal of a right from the land register, or the reduction of an entry, certifies, merely by signing the document, that he has verified the identity, quality and capacity of the parties, and that the document represents the will expressed by the parties. 2988.

Le notaire qui reçoit un acte donnant lieu à l’inscription ou à la suppression d’un droit sur le registre foncier, ou à la réduction d’une inscription, atteste, par sa seule signature, qu’il a vérifié l’identité, la qualité et la capacité des parties, et que le document traduit la volonté exprimée par elles. 2991.

A private writing giving rise to the registration of a right in or the removal of a right from the land register, or the reduction of an entry, must indicate the date and place it is drawn up and be accompanied by a certificate of a notary or advocate certifying that he has verified the identity, quality and capacity of the parties and the validity of the act as to form, and that the document represents the will expressed by the parties. 2991.

L’acte sous seing privé donnant lieu à l’inscription ou à la suppression d’un droit sur le registre foncier, ou à la réduction d’une inscription, doit indiquer la date et le lieu où il a été dressé; il y est joint l’attestation par un notaire ou un avocat qu’il a vérifié l’identité, la qualité et la capacité des parties, la validité de l’acte quant à sa forme et que le document traduit la volonté exprimée par les parties. [ 9 ] The Notaries Act : [2]

10. A notary is a public officer and takes

part in the administration of justice. A notary is also a legal adviser. The mission of a notary, in his or her capacity as a public officer, is to execute acts which the parties wish or are required to endow with the authenticity attaching to acts of public authority, to provide such acts with a fixed date, and to keep all acts executed en minute in his or her notarial records and issue copies of or extracts from them. 10. Le notaire est un officier public et collabore à l’administration de la justice. Il est également un conseiller juridique.

En sa qualité d’officier public, le notaire a pour mission de recevoir les actes auxquels les parties doivent ou veulent faire donner le caractère d’authenticité qui s’attache aux actes de l’autorité publique, d’en assurer la date et, s’il s’agit d’actes reçus en minute, d’en conserver le dépôt dans un greffe et d’en donner communication en délivrant des copies ou extraits de ces actes. 11. In his or her role as a public officer, a notary is duty-bound to act impartially and to advise all parties to

an act which the parties wish or are required to endow with authenticity. 11. Dans le cadre de sa mission d’officier public, le notaire a le devoir d’agir avec impartialité et de conseiller toutes les parties à un acte auquel elles doivent ou veulent faire donner le caractère d’authenticité. 15. Subject to the provisions of

section 16, no person other than a notary may, on behalf of another person, (1) execute acts which, under the Civil Code or any other legislative provisions, require execution in notarial form; (2) draw up acts under private signature relating to immovables and requiring registration in the land register or the cancellation of such registration; … (5) give legal advice or opinions; … (7) represent clients in any non-contentious proceeding, prepare, draw up or present any related application on their behalf or uncontested applications … for registration in the land register … or the correction, reduction or cancellation of a registration in either of those registers ….

Sous réserve des dispositions de l’article 16, nul autre qu’un notaire ne peut, pour le compte d’autrui: 1° recevoir les actes qui, suivant le Code civil ou une autre loi, doivent être reçus sous forme notariée; 2° dresser des actes sous seing privé se rapportant à des immeubles et requérant leur inscription au registre foncier ou la radiation d’une telle inscription; […] 5° donner des avis ou des consultations d’ordre juridique; […] 7° représenter des clients dans toute procédure non contentieuse, préparer, rédiger ou présenter pour ceux-ci les demandes s’y rapportant de même que les demandes non contestées […] en inscription sur le registre foncier […] ou en rectification, en réduction ou en radiation d’une inscription sur l’un ou l’autre de ces registres […]

16. No provision of

section 15 may be interpreted as limiting or restricting … (2) the rights conferred upon advocates by the Act respecting the Barreau du Québec (chapter B-1 ); 16. Aucune des dispositions de l’article 15 ne doit être interprétée comme limitant ou restreignant: […] 2° les droits conférés aux avocats par la Loi sur le Barreau (chapitre B-1 ); […] 31. No person may, in contravention of the provisions of this Act, perform

an act or use a title reserved for notaries unless the person is a member of the Order. 31. Nul ne peut, contrairement aux dispositions de la présente loi, poser un acte ou utiliser un

titre réservé au notaire s’il n’est membre de l’Ordre. 34. A notarial act is executed en minute or en brevet . 34. Un acte notarié est reçu en minute ou en brevet. 35.

An act en minute is

an act that a notary must deposit and preserve in his or her notarial records, and from which authentic copies or extracts may be issued. … 35. L’acte en minute est celui que le notaire doit verser dans un greffe pour qu’il y soit conservé et qu’il en soit délivré des copies ou des extraits authentiques. […] 38.

An act en brevet is

an act, in the form of one or more originals, that a notary executes and may deliver to the parties. No authentic copy of or extract from

an act en brevet may be issued. Powers of attorney, authorizations, acquittances and other ordinary acts may be executed en brevet . 38. L’acte en brevet est celui que le notaire reçoit en original simple ou multiple et qu’il peut remettre aux parties. Aucune copie ou extrait authentique ne peut en être délivré. Peuvent être reçus en brevet les procurations, autorisations, quittances et autres actes simples. 43. A notary shall, by all reasonable means, verify the identity, quality and capacity of each party to a notarial act to be signed before the notary. Where one of the parties signs before a notary other than the officiating notary pursuant to the second paragraph of

section 50, it is incumbent upon that other notary to verify the identity, quality and capacity of the party concerned. 43. Le notaire doit, par tout moyen raisonnable, vérifier l’identité, la qualité et la capacité des parties à un acte notarié dont il reçoit la signature. Lorsque, en application du deuxième alinéa de l’article 50, la signature de l’une des parties est reçue par un autre notaire que le notaire instrumentant, il appartient à cet autre notaire de vérifier l’identité, la qualité et la capacité de la

partie concernée.

50. A notarial act shall be closed by the signatures affixed in the presence of the officiating notary by the parties and the witnesses required in the matter, and by the signature of the officiating notary, which must be affixed on the day and at the place of signing by the last of the parties to do so.

Any party to a notarial act may sign it in the presence of a notary other than the officiating notary, provided that the last signature is affixed before the officiating notary. … In such cases, after the party signs, the notary must enter and sign an attestation, immediately below the party’s signature, that the signature was affixed before him or her, indicating the date on which it was affixed. … 50.

L’acte notarié est clos par la signature des parties et des témoins requis suivant le cas, en présence du notaire instrumentant et par la signature de ce dernier, qui doit être apposée le même jour et au même lieu où la dernière des parties à signer l’a fait. La signature de toute

partie à un acte notarié peut être donnée en présence d’un autre notaire que le notaire instrumentant pourvu que ce dernier reçoive la dernière signature; […] Dans ces cas, après signature de la

partie et immédiatement au- dessous, le notaire qui l’a reçue doit inscrire et signer une attestation de la réception de cette signature devant lui et de la date à laquelle elle a été reçue. […] 51. Before it is signed, a notarial act must be read aloud to each of the parties by the notary or by a third person appointed by the notary. The act need not be read to parties who have themselves read the act or where the parties declare to the notary that they have taken cognizance of it and exempt the notary from reading it. Mention of the declarations and exemption must be made in the act, above the signatures.

The inclusion in the act of the words “After due reading hereof” constitutes a simple presumption that the act has been read in accordance with the provisions of this Act. 51. L’acte notarié doit, avant signature, être lu à haute voix à chacune des parties par le notaire ou par un tiers commis par lui. Cette lecture n’est pas requise à l’égard des parties qui ont elles-mêmes lu l’acte ou lorsque les parties ont déclaré au notaire en avoir pris connaissance et en ont exempté ce dernier. Mention de ces déclarations et de cette exemption doit être faite dans l’acte, avant les signatures.

La mention «lecture faite» dans l’acte est une présomption simple que l’acte a été lu conformément aux dispositions de la présente loi. 52.

A notarial act shall specify the date of the act, the name, official quality and place of the professional domicile of the notary who executes the act, the name, quality and address of each party and a designation of the powers of attorney or mandates produced, the presence, name, quality and address of any witness required, the place where the act is executed, the number of the minute given to the act, the notarial records in which the act will be deposited or the fact that the act is executed en brevet , and the fact that the act has been read or, where applicable, the mention required by

section 51. 52. L’acte notarié spécifie: la date de l’acte, le nom, la qualité officielle et le lieu du domicile professionnel du notaire qui le reçoit, le nom, la qualité et l’adresse des parties, avec désignation des procurations ou mandats produits; la présence, le nom, la qualité et l’adresse des témoins requis; le lieu où l’acte est reçu; le numéro de la minute attribué à l’acte, le greffe où l’acte sera versé; le fait que l’acte est reçu en brevet, si tel est le cas; la lecture de l’acte ou, le cas échéant, la mention exigée dans les cas prévus à l’article 51.

53. A notarial act must contain the signatures of the parties or their declaration that they are unable to sign, the signatures of the witnesses and the official signature of the notary or notaries. The official signature of any notary, other than the officiating notary, before whom a party signs shall constitute a sufficient designation. Where a party signs a notarial act in the presence of a notary other than the officiating notary, and the notary signs an attestation entered in the act pursuant to the second paragraph of

section 50, the party is deemed for the purposes of the act to have appeared before the officiating notary. 53. L’acte notarié doit contenir la signature des parties ou leur déclaration qu’elles ne peuvent signer, la signature des témoins et la signature officielle du ou des notaires. La signature officielle de tout notaire, autre que le notaire instrumentant, qui reçoit la signature d’une des parties, constitue une désignation suffisante. Lorsqu’une

partie a signé un acte notarié en présence d’un notaire autre que le notaire instrumentant et que le notaire y a inscrit et signé l’attestation conformément au deuxième alinéa de l’article 50, elle est réputée avoir comparu devant le notaire instrumentant pour les fins de cet acte. [ 10 ] The Act respecting the Barreau du Québec : [3] 128.

(1) The following acts, performed for others, shall be the exclusive prerogative of the practising advocate or solicitor: (

a) to give legal advice and consultations on legal matters; … ( 2) The following acts, performed for others, shall be the exclusive prerogative of the practising advocate and not of the solicitor: … (

b) to prepare and draw up a will or codicil or a discharge or any contract or document, except leases, affecting immovable property and requiring registration or cancellation of a registration in Québec; … 128. 1. Sont du ressort exclusif de l’avocat en exercice ou du conseiller en loi les actes suivants exécutés pour le compte d’autrui:

a) donner des consultations et avis d’ordre juridique; […] 2. Sont du ressort exclusif de l’avocat en exercice et non du conseiller en loi les actes suivants exécutés pour le compte d’autrui: […]

b) préparer et rédiger un testament, un codicille ou une quittance et tout contrat ou document, sauf les baux, affectant des immeubles et requérant l’inscription ou la radiation d’une inscription au Québec; […] 129. None of the provisions of

section 128 shall limit or restrict: … (

e) the right of a practising notary to perform the acts therein set forth …. 129. Aucune des dispositions de l’article 128 ne limite ou restreint: […]

e) le droit du notaire en exercice de poser les actes qui y sont énumérés […].

133. Any person other than a member of the Bar practises the profession of advocate illegally within the meaning of

section 132 and in each of the following cases, who: (

a) usurps the functions of an advocate; (

b) acts or claims to act as such; (

c) acts in such manner as to lead to the belief that he is authorized to fulfil the functions of or to act as an advocate. 133. Exerce illégalement la profession d’avocat au sens de l’article 132 et dans chacun des cas suivants, toute personne autre qu’un membre du Barreau qui:

a) usurpe les fonctions d’avocat;

b) en fait ou prétend en faire les actes;

c) agit de manière à donner lieu de croire qu’elle est autorisée à remplir les fonctions d’avocat ou à en faire les actes. 135. Any person other than a member of the Bar who acts as intermediary between a third person and an advocate shall be presumed to usurp the functions of an advocate within the meaning of

section 133, who: (

a) makes or promises or causes to be made or promised to a third person any reduction in the charges of such advocate, or (

b) persuades an advocate to forego any part of his charges, or (

c) procures, promises or agrees to procure for such third person professional services, without any liability on his part towards the advocate for his charges …, … 135. Est présumée usurper les fonctions d’avocat au sens de l’article 133 une personne autre qu’un membre du Barreau, agissant comme intermédiaire entre une tierce personne et un avocat, qui:

a) fait ou promet, ou fait faire ou promettre à une tierce personne une réduction des frais de cet avocat, ou

b) obtient d’un avocat qu’il abandonne une

partie de ses frais, ou

c) procure, promet ou convient de procurer à cette tierce personne des services professionnels, sans aucune responsabilité de sa part envers l’avocat pour ses frais, […] […] THE TRIAL JUDGMENT [ 11 ] Following a lengthy analysis, the trial judge concluded that the acts alleged against the Chicago and FCT Groups are not the prerogative of notaries and advocates. [ 12 ] The judge described the services offered by the Chicago Group and the FCT Group in detail. Because these are findings of fact that are at the heart of the questions of law at issue, this description should be reproduced in extenso .

This will also enable a better understanding of the context of the file: [4] [ translation ] [45] This is what the Court accepts from the evidence concerning the typical process of each of these title insurance companies. 1. Chicago Group [46] Mtre Nathalie Dragon, notary, is employed by the FNF [Canada Company]. She supervises operations regarding files where the hypothecary loan is refinanced through the Chicago Group. She is assisted by two to five paralegals in this work.

[47] Mtre Dragon explained the progress of a file when a lending institution asks the Chicago Group to obtain title insurance and to provide related services where the refinancing involves the preparation of a deed of hypothec: (

a) the lending institution and the borrower negotiate the terms and conditions of the loan, without involving the Chicago Group in any way; (

b) once the application to refinance is approved by the lending institution, the latter requests the issue of a title insurance policy and the provision of related services that include the preparation and processing of the file; (

c) the lending institution sends all the information required to process the file by computer, through a dedicated portal or computer platform.

It may send: • its instructions; • the template for the deed of hypothecary loan that it intends to use, which is in principle identical to the one also available on the website of the CNQ [Chambre de notaires du Québec]; • the information regarding the identification of the parties (names, addresses, and so on); • the borrower’s marital status; • the description of the property contemplated; and • the amount of the loans and the conditions pertaining thereto, including the interest rate, terms for reimbursement, payment of taxes, and penalties in the event of a default. (

d) the Chicago Group validates the information sent by the lending institution. In this respect, it may correct a piece of information relating to the property’s cadastral description if the designation sent by the lending institution is incomplete or contains an error. If required, the Chicago Group may also communicate with the borrower to verify or complete the nominative information that concerns the borrower, including marital status; (

e) the Chicago Group verifies existing charges on the property and performs a

summary verification of the property’s title. It notifies the lending institution if it detects a difficulty that will limit the possibility of purchasing a title insurance policy and informs it of the means to avoid this difficulty, if possible; (

f) if the criteria to purchase title insurance are met, the Chicago Group confirms the issue of the insurance policy; (

g) the Chicago Group automatically generates the draft deed of hypothec by merging the standard mortgage form and the information relating to the transaction transmitted by computer earlier by the lending institution; (

h) the Chicago Group then sends the file by computer to an outside notary who will have to complete the requisite formalities and executes the deed. The notary takes possession of his or her instructions and the documents through the computer platform; (

i) exceptionally, in less than 5% of cases, in addition to the officiating notary, the Chicago Group calls on an alternate notary to receive the borrower’s signature; (

j) the officiating notary receives the following documents from the Chicago Group, through its computer platform: • the notary’s mandate; • the lending institution’s hypothecary loan form on which the blank spaces have been pre-filled by the Chicago Group using automation; • the hypothecary loan statement (statement of account sent by the lender); • the relevant excerpt from the land register; • a memorandum addressed to the borrowers explaining the Chicago Group’s involvement in the process; and • as the case may be, a delegation of signing authority allowing an employee of the notary to sign the deed of hypothec for and on behalf of the lender; (

k) the officiating notary receives a limited mandate: he or she need not perform a title verification, analyze the substance of the deed, or strike prior hypothecary charges affecting the property; (

l) hypothecary disbursements (that is, the transfer of funds intended for the hypothecary creditor or the borrower) do not go through the notary’s trust account, as the Chicago Group generally takes care of notifying the lender to make any necessary disbursements, once the deed of hypothec is signed; (

m) the notary then executes the hypothec. Following the Chicago Group’s approval, it is authorized to amend the deed, for example to correct the description of the property and the information about the parties or the borrower’s civil status for example, but only if these amendments do not alter the terms stipulated by the lender; and (

n) lastly, the officiating notary registers the deed of hypothec and sends a copy of the relevant documents to the Chicago Group, which finalizes the file with the lending institution.

[48 ] With respect to obtaining discharges and the cancellation of prior hypothecs affecting the property , the Chicago Group generates the cancellation act using automation by merging a standard form and the information provided by the lending institution. [49] Then, the institution giving the discharge or a person holding power of attorney to this end signs the cancellation act.

The act is then sent to an outside notary to attest the signatures and publish the act in the land register. [50] When publication in the land register is confirmed, the outside notary sends a copy of the cancellation act and proof of publication to the Chicago Group. [51] As for the refinancing files involving a subrogatory deed of loan and a discharge with subrogation , the progress of the file is markedly different.

The subrogatory deed of loan involves the transfer of a hypothec from one lending institution to another, without increasing the amount of the guaranty and without needing to create a new hypothec. [52] With respect to a subrogatory deed of loan , the file progresses as follows: (

a) a subrogatory deed of loan is generated in the same way as a deed of hypothec, that is, by the automated merging of the standard subrogatory deed of loan form provided by the lending institution and the information entered by the lending institution in the Chicago Group’s computer platform; (

b) before merging, the Chicago Group validates the information entered by the lending institution as to form and content; (

c) once the subrogatory deed of loan is generated and printed, the deed is sent to an outside notary to let him or her attest the signature of the borrower; (

d) the deed is then returned to the Chicago Group, which returns it to an officiating outside notary to attest the last signature, i.e., the lender’s. An employee of Chicago Group signs for and on behalf of the lender pursuant to a power of attorney granted by the lender for this purpose; (

e) the outside officiating notary ensures the closing of the deed (receipt en minute ) and returns it to the Chicago Group for the purpose of publication; and (

f) the Chicago Group then publishes the subrogatory deed of loan with the discharge with subrogation. [53] As for the discharge with subrogation , it is not notarized but established by private writing before a witness. In such cases, Mtre Dragon ensures the preparation of the discharge and the file progresses according to the following steps: (

a) the discharge with subrogation is generated in the same way as the deed of subrogation, that is, by the automated merging of the information entered by the lending institution into the computer platform and the discharge template; (

b) the Chicago Group validates the information entered by the lending institution as to form and content; (

c) once the discharge with subrogation is generated and printed, Mtre Dragon verifies the act and attests the signature of the initial lender on the discharge with subrogation; and (

d) she then publishes the deed of subrogatory loan and the discharge with subrogation together. 2. FCT Group [54] With regard to the FCT Group, files progress in about the same way as they do at the Chicago Group, except for the following: (

a) the mandate to perform the

summary verification of the property title is entrusted to an outside notarial firm, Boucher & Associés; (

b) the officiating notary in most cases is a notary with the firm of Boucher & Associés; and (

c) the FCT Group resorts to alternate notaries in about only 1.6% of cases. [55] Finally, in all cases, the Chicago and FCT Groups directly mandate the officiating notary or the alternate notary, as the case may be. [56] The Chicago and FCT Groups also pay the fees and costs of the notary directly from the overall fees charged to lending institutions to obtain title insurance and provide related services.

The Chicago and FCT Groups are not involved in the discussions or negotiations involving the lending institution and the borrower with regard to the sharing or covering of those costs. [Emphasis in original; references omitted] [ 13 ] As a preliminary matter, the judge dismissed the Chicago and FCT Groups’ argument that the conditions for a declaratory judgment were not met, including the claim that the remedy chosen was motivated by considerations of corporate protectionism.

In light of the evidence before her, the judge found that the main motivation for bringing the proceeding was to find a useful answer to a legal issue that presented a real difficulty to be resolved in the execution of the Chambre des notaires and the Barreau’s mission to protect the public. [5] [ 14 ] The judge then identified the rule of construction that she had to follow for the purpose of her analysis. Relying on Pauzé v.

Gauvin , [6] rendered in 1953, among others, the judge interpreted the scope of the reserved professional acts restrictively, [7] stating that [ translation ] “if a doubt remains as to the meaning or scope of the provision under consideration, the doubt will weigh in favour of the person who is alleged to have performed

an act reserved for the members of a professional order”. [8]

[ 15 ] The judge then considered the criticisms laid by the Chambre des notaires and the Barreau one by one in light of this restrictive rule of construction, that is, the execution of acts, the preparation and drawing up of hypothecary deeds, subrogatory hypothecs, discharges and discharges with subrogation, the verification of titles, the limitations on the mandate of the officiating notary, the appointment of an alternate notary, the disbursement of funds, and legal opinions. Here are her conclusions on each of these criticisms.

The execution of hypothecary deeds [ 16 ] Applying the statutory restrictive rule of construction to s. 15(1) of the Notaries Act , which reserves to notaries the right to “execute acts which, under the Civil Code or any other legislative provision, require execution in notarial form”, the judge concluded that the words “execute acts” does not include their drawing up. Since the notary may execute the signature of a person in respect of

an act that the notary in question has not personally drawn up, she found that the expression “execute” under 15(1) of the Notaries Act did not have the same meaning as the expression “prepare and draw up”. [9] The preparation and drawing up of hypothecary deeds [ 17 ] As for s. 15(2) of the Notaries Act and s. 128(2) (

b) of the Act respecting the Barreau du Québec , which reserve for notaries and advocates the right to prepare and draw up for another person contracts or documents, except leases, affecting property and requiring the registration or cancellation of a registration, the judge did not rule on their scope because she was of the opinion that neither the Chicago Group nor the FCT Group prepared or drew up hypothecary deeds since they merely filled in blank spaces in template forms received from financial institutions, which is an “administrative and routine task that, most of the time, is automated to merge the information respecting a specific transaction with the form”. [10] [ 18 ] The judge relied on the New Brunswick Court of Appeal judgment in Law Society of New Brunswick v.

FCT Insurance Company [11] and cited the conclusions of the New Brunswick Court of the Queen’s Bench in that case [12] in support of her own conclusion that there was no preparation or drawing up of hypothecary deeds: [13] [ translation ] [182] First, according to the applicable New Brunswick legislative scheme, the Court of the Queen’s Bench found that the services provided by FCT were authorized under the Act respecting the Law Society of New Brunswick . This conclusion is largely irrelevant in this case considering the different legislative schemes of the two provinces.

But, more importantly, the Court of the Queen’s Bench continued its analysis and nevertheless found that the activities of FCT were generally completing stereotyped forms, not practising law: [97] If I am not correct in concluding that the Law Society Act does not prohibit the services provided by the Plaintiffs, I am not convinced that FCT or FCTCL are practicing law. I agree with the reasoning of the United States Court of Appeal decision in Merrick ( Supra ) where the court made a distinction between primary and incidental services.

The services provided by FCT and FCTCL are incidental to its authorized businesses. In the Merrick case the Defendant was a trust company authorized to carry on a fiduciary business and completed trust agreements. The services and worked provided by FCT and FCTCL are incidental to their authorized business of title insurance. It generally comprises filling out and completing standard and stereotyped forms.

The forms are similar to those completed by real estate agents for sale and lease of property, those completed by insurance agents relating to insurance, those completed by bankers relating to loans, those completed by car salesmen in relation to purchase and financing the acquisition of automobiles, those completed by vendors of equipment and chattels or credit card applications and agreements . [Emphasis added by trial judge.] [ 19 ] The judge therefore concluded her analysis of ss. 15(1) and 15(2) of the Notaries Act and s. 128(2) (

b) of the Act respecting the Barreau du Québec [14] as follows: [ translation ] [184] In much the same way [as in New Brunswick], in Quebec, the task of electronically filling in blank spaces cannot be what the legislator had in mind when it chose to reserve for notaries the task of officiating acts that, according to the law, must be executed in notarial form, or when it reserved for notaries and advocates the task of preparing or drawing up the juridical acts at issue here for another person. [185] The claim by the [Chambre des notaires] and the [Barreau] that notaries are exempt from analyzing and verifying the completed forms they receive is, moreover, inaccurate . [186] Notaries remain bound to verify the information in the act, to provide the requisite explanations and advice to the borrower, and to execute the act in accordance with the law. [Emphasis added; citations omitted] Discharges and discharges with subrogation [ 20 ] The judge then tackled the arguments concerning discharges and discharges with subrogation.

Once again, the Chambre des notaires and the Barreau relied on s. 128(2) (

b) of the Act respecting the Barreau du Québec and s. 15(2) of the Notaries Act . [ 21 ] The judge accepted the description of the process concerning these discharges made in the Chicago Group’s written submissions, which she took as her own. Because this issue also deals with findings of fact on questions that are essential to resolving the dispute, this description should be reproduced in extenso : [15] [ translation ]

[197] In its written submissions, the Chicago Group describes the process for the preparation of discharges as follows: [ translation ] 72. When a borrower is refinanced by a new lender, the process of preparing discharges (other than those with subrogation) and releases is the following: (

a) FNF fills in the blank spaces in a standard template, including the essential particulars identified on the website of the [Chambre des notaires], in accordance with the lender’s instructions; (

b) FNF’s notary carries out an initial verification of consistency between the data entered in the template and the land register; (

c) FNF sends the pre-completed document to the initial lender with a cheque to reimburse the debt; (

d) Following the verifications carried out by the lender, the latter signs the document and returns it to FNF, who in turn sends it to an outside notary to be attested; (

e) For attestation purposes, the outside notary has the same information as that in the file that does not involve FNF, namely, power of attorney and a resolution from the lender, the signatory’s business card, and sworn statements of the witnesses to the signature; (

f) The outside notary attests the deed of cancellation, then sends it for publication through the electronic land register portal; (

g) When publication is confirmed, the outside notary sends a copy of the act and the proof of publication to FNF. 73. When refinancing with the same lender, the process for the deeds of cancellation (other than in a subrogatory context) is materially the same, except that an employee of FNF is in that case authorized to sign the form on behalf of the lender, according to a power of attorney and a resolution from this lender.

The signed deed of cancellation is then sent to the outside notary to be attested and registered. [198] With respect to the discharges with subrogation, Chicago Group added that the notary who attests the discharge is usually Mtre Dragon, the notary in FNF’s employ. [199] The FCT Group has a similar process. [ 22 ] The judge concluded that this was not a breach of the Notaries Act or the Act respecting the Barreau du Québec since (

a) acts of cancellation are very simple forms provided by the lending institutions or easily available online; (

b) the Chicago Group and the FCT Group merely generate the discharge by merging the template form with the information entered into the computer platform by the lending institution using automation; and (

c) the discharges are attested and then registered by the notaries. [16] Verification of titles [ 23 ] The Chambre des notaires and the Barreau allege that the Chicago and FCT Groups perform title verifications and give opinions on the titles to the lending institutions with whom they have business relationships. [ 24 ] The judge described the factual framework of these activities, and it is useful to reproduce her findings of fact in this respect hereunder: [17] [ translation ] [210] Within the Chicago Group, the FNF paralegals working under Mtre Dragon perform this

summary property title verification. [211] Within the FCT Group, this

summary verification is entrusted to an outside notarial firm, Boucher & Associés. [212] In actual fact, if a problem relating to a title is found during this

summary verification, title insurance companies inform the lender by sending a fax or identifying the nature of the problem found and the possible solutions to meet the underwriting criteria. [213] In the form sent by the Chicago Group, the lender must check the box that corresponds to the chosen solution. In the case of the FCT Group, the notice that a problem affecting the insurability of the transaction was discovered and the possible solutions is sent by a notary from the firm of Boucher & Associés. [214] The nature of the problem that may be discovered through a

summary verification varies, but might for example be the existence of a previous hypothec that has not been cancelled, the existence of a declaration of family residence, the existence of a notice of sale for taxes, ongoing divorce proceedings, the death of one of the owners, and so on. [215] Overall, it is up to the lender or the borrower to settle the issue, usually with the help of an outside notary. The lender must then inform the Chicago Group or the FCT Group, as the case may be, for the file to resume its course.

In all cases, the lender may simply cancel its application for title insurance, which puts an end to the file. [References omitted.] [ 25 ] From the evidence, the judge found that the

summary title verifications performed by the Chicago and FCT Groups were not carried out on behalf of the lending institutions, but for their own purposes relating to the issue of title insurance policies. [18] She added that [ translation ] “the mere verification of titles, without an opinion being given in this respect, does not fall under the exclusive practice of the notary or advocate”. [19]

Mandate limitations and notarial liability [ 26 ] The mandates given to the notaries are limited. The trial judge’s findings of fact on the limitations placed on the mandates are as follows: [20] [ translation ] [224] Chicago Group confirmed that the mandates of the officiating notary and the alternate notary are limited. The FNF’s mandate form to the notary provides this in the following terms: 1- LIMITATION OF MANDATE Your mandate is limited to the following: • reading the act and providing the requisite explanations, pursuant to your professional obligations.

To this end, you must ensure that you exercise your duty to advise, the whole pursuant to the legislation in effect; • attesting the signature of the debtors/grantors, the [ lender ]’s representative and the stakeholders, as the case may be; • verifying the identity of each of the parties, making copies of the identity papers, completing and signing the form provided for that purpose, if necessary; • [ text found only in the officiating notary’s mandate ] putting the act en minute and sending the necessary copies to the land register office for publication within five (5) working days of the execution of the act. • [text found only in the alternate notary’s mandate] signing the act and doing all that is necessary for the purpose of applying s. 50 of the Notaries Act . • [text found only in the alternate notary’s mandate] Returning the original act and the documents to us as soon as practicable.

Accordingly, FNF Canada acknowledges that it has not mandated you to perform an examination of titles, analyze the substance of the act or cancel hypothecary charges or other rights charging the property, unless otherwise specified. This limitation of mandate does not constitute, in whole or in part, a discharge of your professional liability in respect of your duty to advise and other duties set out under the Code of ethics or any other relevant legislation .

A copy of the index of immovables is appended to the file. [225] However, the Chicago Group denies that its practices include a limitation of the notary’s liability other than that which coincides with the limitations of the mandate. [226] As for FCT Group, the limitations placed on the mandate are described as follows: [ translation ] However, FCT Title Services does not mandate you to draw up and analyze the hypothecary deed or verify the provisions included in the act.

Furthermore, FCT Title services does not mandate you to search for and verify the titles and does not mandate you to prepare the discharge of the existing debtor(s), if any, or to publish it. [227] Thus, FCT Group also confirms the limitation of the mandate and the limitation on the notary’s liability in accordance with the scope of the mandate. [Emphasis of the trial judge; references omitted] [ 27 ] According to the judge, by thus limiting the mandate for notaries, the Chicago and FCT Groups avoided violating any provision of the Notaries Act or the Act respecting the Barreau du Québec . [21] Alternate notaries [ 28 ] In about 5% of cases, the Chicago Group resorts to alternate notaries that it mandates directly to attest the signature of the borrower, while a second notary, the officiating notary, is mandated to attest the final signature, which is that of the lending institution’s representative, and to close the hypothecary deed. [ 29 ] Despite submissions to the contrary by the Chambre des notaires and the Barreau, the trial judge concluded that this way of doing things did not violate any provisions of the Notaries Act . [22] Hypothecary disbursements and remittance of borrowed funds. [ 30 ] The Chambre des notaires and the Barreau further alleged that the Chicago and FCT Groups receive amounts borrowed from the hypothecary loan directly from lending institutions and make the disbursements without these funds passing through the trust account of the officiating notary. [ 31 ] The judge did not accept this criticism since this practice does not infringe any of the provisions of the Notaries Act or the Act respecting the Barreau du Québec . [23] Legal opinions [ 32 ] The Chambre des notaires and the Barreau du Québec further submit that the Chicago Group and the FCT Group give legal

opinions to financial institutions, contrary to s. 15(5) of the Notaries Act and s. 128(1) (

a) of the Act respecting the Barreau du Québec . [ 33 ] The judge acknowledged that when the title analysis is negative, the Chicago Group and the FCT Group inform the lending institutions of the reasons why they cannot issue a title insurance policy and of the options available to them to meet the underwriting criteria. [24] [ 34 ] Relying on this Court’s judgment in Charlebois c. Barreau du Québec , [25] the judge concluded that this was not a [ translation ] “legal opinion” but [ translation ] “legal information”, two notions that, in her view, should not be confused.

She further concluded that these activities are performed on behalf of their clients, the financial institutions, but for the needs of the Chicago Group and the FCT Group related to issuing title insurance policies. [26] FCT Group’s cross-application [ 35 ] Finally, the judge dismissed the FCT Group’s cross-application relying on art. 342 C.C.P. on the ground that [ translation ] “no criticism may be made against the Chambre des notaires and the Barreau du Québec for their decision to bring these proceedings or their behaviour during the conduct of the proceedings”. [27] She added that, in any event, the FCT Group had failed to prove the value of the professional fees it claimed or to provide any useful information in this respect. [28] GROUNDS OF APPEAL [ 36 ] The grounds of appeal raised by the Chambre des notaires and the Barreau may be reworded as follows, to reflect the order of these reasons: (

a) the judge erred as to the statutory rule of construction applicable to statutes concerning the exclusive practice of a profession; (

b) she erred in limiting her analysis of s. 15(1) of the Notaries Act concerning the execution of notarial acts, failing to take into consideration the Civil Code provisions concerning immovable hypothecs; (

c) she erred in her

interpretation and application of s. 128(2) (

b) of the Act respecting the Barreau du Québec and s. 15(2) of the Notaries Act reserving for advocates and notaries the right to prepare and draw up a discharge, contract or document affecting an immovable on behalf of another person and requiring registration or cancellation of registration on the land register; (

d) she also erred in finding that the Chicago Group and the FCT Group did not give legal opinions, contrary to s. 128(1)(

a) of the Act respecting the Québec Bar and s. 15(5) of the Notaries Act ; (

e) finally, she erred in her

interpretation of ss. 50 and 53 of the Notaries Act by concluding that the Chicago Group and the FCT Group were entitled to mandate alternate notaries. [ 37 ] The FCT Group raises two grounds in support of its incidental appeal: (

f) the judge erred in fact and in law in finding that the Chambre des notaires did not commit any significant breach in the conduct of the proceeding, within the meaning of art. 342 C.C.P .; (

g) the judge should have exercised her discretion to set compensation pursuant to art. 342 C.C.P. even in the absence of evidence as to the value of the professional fees incurred; this second ground depends on the result of the first. ANALYSIS (

a) The applicable statutory rule of construction [ 38 ] The Chambre des notaires and the Barreau argue that the trial judge erred in adopting a restrictive rule of construction of laws concerning the exclusive practice of a profession. [ 39 ] The judge applied this rule relying on the statements made over sixty years ago by Taschereau J. in Pauzé c. Gauvin . [29] That case concerned an engineer’s claim for fees for services relating to the preparation of plans and specifications and the supervision of work to build a property.

The debtor argued the nullity of the contract for services, given the provisions of the statute governing architects, which provided that “[a]ny person who, although not being registered as a member of the said Association, takes or makes use of any such name, title or designation, or acts as an architect or furnishes, for remuneration, plans or specifications to construct or remodel buildings , either directly or indirectly, shall be liable to a fine …” [30] [emphasis added]. [ 40 ] Every judge on that bench was of the opinion that the clauses of the contract for services at issue, which concerned the provision of plans and specifications, were in breach of this statute and could not bind the parties because they were contrary to public order.

All the judges were also of the opinion that the statute at issue did not confer upon architects the exclusive right to supervise the construction of property, but only that to provide plans and specifications. The judges were divided, however, on the question of whether the clauses of the contract for services concerning the supervision of the work were ancillary to those relating to the provision of plans and specifications.

Judges Taschereau, Fauteux and Cartwright JJ. were of the view that the clauses of the contract concerning the supervision of the work could be severed from those concerning the provision of plans and specifications, while Rand and Kellock JJ. were of the opposing view. Thus, the majority conclusion was to refuse to remunerate the engineer for the plans and specifications, but to grant his claim for fees for supervising the work. [ 41 ] This was the context in which Taschereau J. remarked that statutes creating professional monopolies should be applied strictly: [31] [ translation ]

Statutes that create such statutorily sanctioned professional monopolies, which control access and protect their accredited members who fulfil set conditions from competition, must be applied strictly, however.

Anything that is not clearly prohibited may be carried out with impunity by anyone who is not a member of these closed associations. [ 42 ] These remarks must, however, be read with those also made by Taschereau J. concerning the public order nature of statutes conferring a monopoly on certain professionals, since such statutes serve the public interest. [32] [ translation ] This is not the first time the courts have heard such a dispute or have had to decide that this Architects Act is a public order statute.

I am in complete agreement with this case law and with the opinions of the dissenting judges in this case. The

Preamble of the Act creating the Corporation specifically invokes public interest to justify its enactment by the Legislature. Obviously, the intention was correctly to procure truly competent skilled tradesmen for the public, which quite rightly requires that buildings be properly built. [ 43 ] Thus, the rule of construction that emerges from Pauzé c. Gauvin is not merely that statutes conferring an exclusive right to practise on a professional must always be interpreted restrictively, but rather that the

interpretation of such statutes, when their provisions are ambiguous, cannot broaden the exclusive right to practise beyond what is required to achieve the purpose of the statute, that is, the protection of the public. This is an important nuance. [ 44 ] This is in fact the rule that emerges from s. 26 of the Professional Code : [33] 26. The members of an order shall not be granted the exclusive right to practise a profession except by

an Act; that right must not be granted except in cases where the acts done by these persons are of such a nature and the freedom to act they have by reason of the nature of their ordinary working conditions are such that for the protection of the public they cannot be done by persons not having the training and qualifications required to be members of the order . (Emphasis added) 26.

Le droit exclusif d’exercer une profession ne peut être conféré aux membres d’un ordre que par une loi; un tel droit ne doit être conféré que dans les cas où la nature des actes posés par ces personnes et la latitude dont elles disposent en raison de la nature de leur milieu de travail habituel sont telles qu’en vue de la protection du public, ces actes ne peuvent être posés par des personnes ne possédant pas la formation et la qualification requises pour être membres de cet ordre . [Soulignement ajouté] [ 45 ] This rule falls well within the framework of the so-called “modern” rule of legislative

interpretation: [34] Today there is only one principle or approach, namely, the words of

an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament. [ 46 ] Therefore, a statute conferring a reserved act on a profession must therefore be interpreted in such a way that it is in keeping with the spirit, objective, and intention of such statute, namely, the protection of the public.

Thus, while the reserved professional act must not be extended beyond what is necessary to protect the public, it must also be interpreted in such a way that the purpose of the reserved act, the protection of the public, is effectively achieved. [ 47 ] In Fortin v. Chrétien , Gonthier J. clearly stated the principle: [35] [21] Public order consists of certain social prohibitions restricting the contractual freedom of the parties. Those prohibitions point to the fact that there are general interests that go beyond individual interests and that the parties must respect (art. 9 C.C.Q .).

The test for distinguishing between laws of public order and other types of laws is to be found in the fact that the legislature is concerned with the public, as opposed to merely private, interest. I share the opinion of the Court of Appeal that the provisions of the Act respecting the Barreau du Québec relating to the practice of the profession of advocate are provisions of public order, in that they are designed to protect the general interest.

Academic opinion is unanimous in this regard . … 22 The courts have also considered this issue. 1941, c. 272, was enacted to protect the general interest and ensure that truly skilled professionals are made available to the public so that buildings are properly constructed. That position was reiterated in Garcia Transport Ltée v. Royal Trust Co ., [1992] 2 S.C.R. [1992] 2 R.C.S [S.C.R]. 499.

At p. 524, L’Heureux - Dubé J., for the Court, noted that the courts have consistently held that laws establishing professional standards are of public order, even though, in one aspect, they protect a limited group within society. … [Emphasis added] [ 48 ] Recently, Brown J. in Barreau du Québec v. Quebec (Attorney General) made similar remarks: [36] [ 29 ] It is generally the exclusive prerogative of lawyers to provide legal services for others. That monopoly is guaranteed in Quebec by the Act respecting the Barreau du Québec , which regulates the practice of the profession of advocate.

These “special rules governing the practice of the legal profession” are justified by the importance of the acts performed by advocates, by the vulnerability of the litigants who entrust their rights to them, and by the need to preserve the relationship of trust between advocates and their clients ( Fortin , at para. 17). These objectives should be borne in mind when interpreting exceptions to the recognized general monopoly on practice of advocates . [Emphasis added] [ 49 ] Thus, the professional acts or services that a statute stipulates as being the exclusive practice of a profession serve to protect the

public. When a provision in such

an act is ambiguous, it must not be interpreted so as to unduly broaden the scope of the exclusive practice of acts and services, because that would not serve the protection of the public; [37] however, the scope of the provision must not be unduly restrained and the protection of the public thus imperilled. [38] Overall, the protection of the public must be the main guide in interpreting a legislative provision conferring

an act or service exclusively on a specific profession. [ 50 ] The restrictive rule of construction used by the trial judge must therefore be set aside in favour of the more nuanced rule expressed above. (

b) The execution of notarial acts [ 51 ] The main ground of appeal raised by the Chambre des notaires and the Barreau rests on the exclusive right of notaries to execute acts that require execution in notarial form under the Civil Code of Québec (” C.C.Q .“),which in their opinion includes the exclusive right to draw up these acts. To this end, the appellants argue that the “notarial act” contemplated in art. 2693 C.C.Q . must be distinguished from the act which a notary “executes” within the meaning of art. 2988 C.C.Q .; specifically,

an act that is executed need not be drawn up by a notary, whereas a “notarial act” must be drawn up by a notary. [ 52 ] The trial judge rightly decided not to accept these arguments. [ 53 ]

Article 2693 C.C.Q . provides that a movable hypothec must be granted by notarial act en minute . Subsection 15(1) of the Notaries Act further adds that no person other than a notary may execute acts which under the Civil Code require execution in notarial form. Author Louis Payette explains this formalism as follows: [39] [ translation ] An immovable hypothec must, on pain of absolute nullity, be granted by notarial act en minute (art. 2693).

This requirement is generally explained by the seriousness of the grantor’s undertaking, the importance of a man of the law explaining it to the grantor, and by the nature of the agreement entered into.

This formalism is tied to an old civil tradition and, according to very old scholarly commentary, reflects a concern for the protection of third parties and debtors by preventing fraud, which would be easier to commit if hypothecs could be [ translation ] “made” in deeds by a private writing. [Citations omitted.] [ 54 ] This role was entrusted to notaries following a long historical evolution peculiar to the civil law. [40] L’Heureux-Dubé and Gonthier JJ. refer to the work of author Pierre Ciotola to explain that the purpose of notarial form is to ensure that a public officer (the notary) guarantees that the necessary contractual formalities are accomplished and that the parties properly understand the meaning and effects of the hypothecary agreement: [41] ...

Article 2693 C.C.Q . requires, on pain of absolute nullity, that an immovable hypothec be granted by notarial act en minute . Professor Ciotola says that [TRANSLATION] “[t]he notary acts both as a public officer, the guarantor of the accomplishment of the contractual formalities, and as advisor, the guarantor of the parties’ comprehension of the meaning and effects of the agreement.” (P.

Ciotola, Droit des sûretés (3rd ed. 1999), at p. 401) The importance of that agreement would explain the requirement of notarial form, and it is the grantor of the hypothec that [TRANSLATION] “the law is intended to protect by imposing these formal requirements” (Payette, supra , at p. 295). … [ 55 ] Executing a hypothecary deed, however, does not necessarily involve drawing it up, since the drawing up of such deeds also falls under the exclusive prerogative of advocates, as provided in s. 128(2) (

b) of the Act respecting the Barreau du Québec . It is therefore possible to distinguish between the execution and the drawing up of a hypothecary deed. Many law firms, for example, draw up a number of property acts that are subsequently executed in notarial form by a notary.

This well-known reality in the legal community was in fact recognized by the director of professional inspection with the Chambre des notaires, Mtre Jean-Pierre Bertrand, who, in a memorandum dated November 11, 2003, on the execution of hypothecary deeds by FCT Group-mandated notaries, concluded that this practice was no different from financing, trust, or other acts prepared by legal firms but executed by notaries: [42] [ translation ] It appears that according to the provisions of the Notaries Act , the Code of ethics and the Règlement sur la tenue des dossiers et des études des notaires , notaries who execute deeds for hypothecary loans for FCT in the context described above do not violate any regulatory provisions.

This way of doing things is no different from the financing, trust, or other acts prepared by large legal firms but executed by notaries whose main function is limited to executing the act in question en minute . [ 56 ]

Article 2693 C.C.Q ., read in conjunction with art. 2988 C.C.Q . and s. 15(1) of the Notaries Act , does not require that the deed of hypothec be drawn up by a notary, but merely that the essential formalities of this act (such as the identity of the parties and the signature and date of the act) be attested by a notary and that the scope of the act be explained to the parties by this professional.

The law thereby ensures that the act makes proof, against all persons, of the juridical act it sets forth and of those declarations of the parties directly relating thereto and of the facts that the notary had the task of observing or recording: arts. 2818 and 2819 C.C.Q . [ 57 ] This clearly appears from art. 2988 C.C.Q., which provides that the notary who executes

an act giving rise to the registration of a right on the land register “certifies, merely by signing the document, that he has verified the identity, quality and capacity of the parties, and that the document represents the will expressed by the parties”.

That also appears from ss. 10 and 11 of the Notaries Act , which state that in his or her capacity as public officer, the mission of the notary “is to execute acts which the parties wish or are required to endow with the authenticity attaching to acts of public authority, to provide such acts with a fixed date, and to keep all acts executed en minute in his or her notarial records and issue copies or extracts from them” and that “in his or her role as a public officer, a notary is duty-bound to act impartially and to advise all parties to

an act which the parties wish or are required to endow with authenticity”.

[ 58 ] In fact, ss. 43 , 50 , 51 , 52 , and 53 of the Notaries Act are to the same effect, requiring that the notary comply with certain criteria respecting the form of the notarial act and that he or she verify the identity of the parties, witness the signatures, read the act aloud and ensure that the date of the act is specified as well as the relevant information concerning himself or herself and any witnesses required. [ 59 ] Thus, no provision of the C.C.Q . or the Notaries Act specifies or requires that the act be drawn up by a notary for it to be executed in notarial form.

Rather, the opposite conclusion emerges from the relevant statutory provisions, especially when we take into consideration s. 128(2) (

b) of the Act respecting the Barreau du Québec , which states that it is the exclusive prerogative of the practising advocate to prepare and draw up for others contracts affecting immovable property and requiring registration in Quebec.

In fact, deeds of hypothec are usually drawn up by the legal departments of financial institutions using the standardized templates of the institution in question and are then sent to the officiating notary to be executed in notarial form. [ 60 ] The Chambre des notaires and the Barreau argue, in the alternative, that the process implemented by the Chicago and FCT Groups prevent the officiating notary from counselling the lending institutions who are party to the hypothecary deed or to properly counsel the grantors of the hypothec, and that consequently, the notary cannot guarantee the parties’ proper understanding of the meaning and effects of the hypothecary agreement. [ 61 ] It is true that the financial institutions dealing with the Chicago and FCT Groups are not counselled by the officiating notary on the meaning of the hypothecary deed.

In this regard, the manner in which the officiating notary acts in such cases varies little from his or her actions when dealing directly with most large financial institutions. In the latter case, the officiating notary often has no more interaction with the representatives of the financial institutions than when the hypothec is routed through the Chicago Group or the FCT Group’s hypothecary loan records management centres.

There is nothing abnormal or unusual in this way of doing things because, as provided in s. 51 of the Notaries Act , the notarial act “need not be read to parties who have themselves read the act”, which clearly covers financial institutions that personally provide the officiating notary with the template hypothecary deed form. [ 62 ] As for the officiating notary’s duty to inform the grantor, the evidence reveals that the fees paid are minimal, that is, in the order of $100 per transaction, [43] which might suggest that notaries do not have a sufficient financial incentive to properly explain the ins and outs of the intended hypothecary deed.

However, the record does not reveal that the notaries in question do not fulfil their duty to inform. On the contrary, the evidence reveals that the officiating notary exercises the duty to inform the grantor the same way, whether the hypothecary deed file is one that is provided directly to the notary by a financial institution or one supplied by the Chicago Group or FCT Group’s hypothecary loan records management centres. [44] [ 63 ] In any event, this issue is a matter of notarial ethics, and not the exclusive practice of the profession. (

c) The right to prepare and draw up a contract or document affecting an immovable on behalf of another person, or requiring the registration or cancellation of the registration on the land register [ 64 ] Subsection 15(2) of the Notaries Act reserves for notaries the right to “draw up acts [on behalf of another person] under private signature relating to immovables and requiring registration in the land register or the cancellation of such registration”. Section 128(2) (

b) of the Act respecting the Barreau du Québec declares that the preparation and drawing up for others of “a discharge or any contract or document, except leases, affecting immovable property and requiring registration or cancellation of a registration in Québec” shall be the exclusive prerogative of the practising advocate.

The Chambre des notaires and the Barreau argue that the activities of the hypothecary loan records management centres of the Chicago Group and FCT Group violate these provisions. [ 65 ] The trial judge did not rule on the scope of these provisions, finding instead that the activities of the Chicago Group and the FCT Group were administrative rather than legal and consisted merely of using a computer to fill in the blanks in template forms.

She relied on the conclusion of the New Brunswick Court of Queen’s Bench whereby these activities are analogous to those of real estate agents selling or renting a property, insurance agents selling insurance, bankers granting loans, car salespersons selling and financing a vehicle, or vendors selling goods on credit. [45] [ 66 ] Respectfully, these analogies do not apply in Quebec. Neither the Notaries Act nor the Act respecting the Barreau du Québec gives advocates or notaries a general monopoly over the preparation and drawing up of contracts for others.

The exclusive right of advocates and notaries in Quebec extends only to the preparation and drawing up for others of contracts that are of particular importance to Quebec’s civil law regime, that is, wills and contracts or documents, except leases, affecting immovable property that can be registered with the Quebec land register.

Thus, the analogy with insurance agents, bankers, car salespersons, or vendors on credit is misleading. [ 67 ] As for real estate agents, under the Real Estate Brokerage Act [46] and the Regulation respecting contracts and forms , [47] they are explicitly authorized to engage in brokering transactions for the purchase, sale, promise to purchase, or sale of a property, which allows them to prepare promises to purchase and to sell and other similar documents without infringing on acts that are the reserved practice of advocates and notaries.

In fact, the provisions of the Real Estate Brokerage Act must be read with s. 129 (

b) of the Act respecting the Barreau du Québec and s. 16(1) of the Notaries Act , which state that the acts that are the reserved practice of advocates and notaries do not limit or restrict the “rights specifically defined and granted to any person by any public or private law”.

Thus, in Quebec at least, the analogy with real estate agents is completely irrelevant. [ 68 ] In the Quebec civil law tradition, both the Act respecting the Barreau du Québec and the Notaries Act provide that the protection of the public requires that contracts concerning immovable transactions registered in the Quebec land register be prepared and drawn up for others by Quebec advocates or notaries. This is a consequence of the specific characteristics of the Quebec property regime, among other things.

The civil law rules of property law can be clearly distinguished from other land property transfer systems, like the system under the common law or the so-called “Torrens” system, which appears to be replacing it. [48] [ 69 ] Therefore, the objective of ensuring the protection of the public and maintaining the integrity of Quebec land tenure is what explains the fact that the preparation and drawing up for others of a discharge, a contract or document affecting an immovable and requiring registration or the cancellation of such registration in Quebec is reserved for advocates and notaries.

This is the angle from which the activities of the Chicago Group and the FCT Group must be analyzed to determine whether their activities are compatible with the public interest that the legislature wished to protect when it conferred this exclusive right upon advocates and notaries.

[ 70 ] From the outset, it should be noted that it is common ground that the hypothecary deeds and the subrogatory hypothecary loan agreements at issue come from the intended financial institutions and are standard contracts drawn up by the advocates or notaries working for these institutions Therefore the drawing up of these acts is not the issue in the dispute between the parties, but rather, the entry of additional specific information (names, lot numbers, interest rates, and so on) in these standard contract templates. [ 71 ] In this respect, the trial judge concluded, as a question of fact, that the Chicago Group and the FCT Group provide a computerized data processing service that basically consists of completing template hypothecary deed forms [49] or subrogatory hypothecary loan agreements [50] with the information provided by the financial institutions concerning the name, marital status, address, the designation of the intended property, the amount guaranteed by hypothec, the interest rate, the terms of reimbursement, the payment of taxes, and the penalties in the event of default. [ 72 ] These two groups, however, do not merely merge information on a computer platform.

According to the trial judge’s findings of fact, both the Chicago Group and the FCT Group: [51] (

a) validate the information sent by the financial institutions; (

b) correct the information regarding the lot designation of the property, if the information sent by the financial institution in this respect is incomplete or wrong; (

c) verify and fill in the nominative information concerning the borrower; (

d) verify and fill in the information concerning the borrower’s marital status. [ 73 ] In the context of this case, and given the evidence before us, we are of the view that these verifications do not constitute services that fall under the exclusive prerogative of practising advocates pursuant to s. 128(2) (

b) of the Act respecting the Barreau du Québec “to prepare and draw up [for others] ... a discharge or any contract or document ... affecting immovable property and requiring registration or the cancellation of a registration in Québec” or the exclusive purview of notaries under s. 15(2) of the Notaries Act , that is, to “draw up [on behalf of another person] acts under private signature relating to immovables and requiring registration in the land register or the cancellation of such registration”. [ 74 ] It is in fact rare for an advocate or notary to prepare and draw up acts relating to immovables ab initio , since almost all significant land transactions are guided by templates and forms available from different sources.

Advocates and notaries almost always prepare and draw up acts relating to immovables with the assistance of these templates and forms. This practice has long been accepted under the law. As early as 1875, the legislature indicated that [52] "[n]otaries are not bound to write themselves the deeds which they receive; they may employ another person, or use printed or written blanks".

Although it has since evolved, this provision can still be found in s. 45 of the Notaries Act : “The use of forms reproduced by any technical means is authorized provided that the forms have the same characteristics as typewritten or printed acts”. [ 75 ] The task reserved for advocates and notaries by the legislature is certainly not the entry of information about the parties, the property, and the terms of the loan in these templates or forms, but rather the verification of this information and the identification of legal issues that might arise from this verification.

Indeed, office employees, not jurists, are usually the ones who enter this information in hypothecary deeds or other similar documents. If the legislature, with the protection of the public in mind, requires that advocates or notaries prepare and draw up acts relating to immovables, it does so to allow professionals whom the legislature has deemed competent to validate the information relevant to the transaction and identify any legal issues arising further to the validation, not to reserve office tasks for these profe

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