2013 QCCA 2112, 2013 QCCA 2112

E. Hofmann Plastics Inc. c. Tribec Metals Ltd. 2013 QCCA 2112 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-023655-137 (500-17-076846-131) DATE: December 10, 2013 CORAM : THE HONORABLE FRANÇOIS PELLETIER, J.A. YVES-MARIE MORISSETTE, J.A. JACQUES A. LÉGER, J.A. E. HOFMANN PLASTICS INC. APPELLANT – defendant v. TRIBEC METALS LTD RESPONDENT – plaintiff JUDGMENT [ 1 ] The appellant is appealing an interlocutory decision on jurisdiction, which was rendered on May 17, 2013 by the Superior Court of Quebec, civil division, district of Montréal (the Honourable Mr. Justice Martin Castonguay).

Castonguay J. found that the Superior Court had jurisdiction to decide the matter on the merits and rejected the appellant’s motion to dismiss the suit instituted against it. [ 2 ] The parties had a business relationship lasting nearly 20 years that ended abruptly after the appellant (headquartered in Ontario) noticed that it was billed for more goods than it had received from the respondent (headquartered in Quebec). Suspecting that this discrepancy was not an isolated event, the appellant refused to pay its outstanding invoices and ceased future orders.

The respondent then instituted proceedings in the Superior Court in Montreal to reclaim the unpaid invoices and damages resulting from the abrupt termination of the business relationship. Shortly thereafter, the appellant unsuccessfully presented a preliminary motion to dismiss on the ground that the Superior Court lacked jurisdiction. [ 3 ] The appellant raises two grounds of appeal. Firstly, it contends that the first instance judge erred in finding that the Superior Court had jurisdiction on the basis of a fault committed or damages suffered in Quebec.

Secondly, it argues that even if a fault were committed or damages were suffered in Quebec, the judge should not have extended jurisdiction to the issue of unpaid invoices, which would otherwise come under the authority of Ontario courts. [ 4 ] It is worth recalling that an appellate court will only intervene if an appellant points to an error of law or a palpable and overriding error of fact or mixed fact and law. [1] Moreover, matters coming under a first instance judge’s discretion will also command a measure of deference. [ 5 ] The Court is of the opinion that the judge’s conclusions are well founded both in law and fact and that appellant has not met its burden of showing any such error or improper exercise of discretion that would justify intervening. * * * [ 6 ] As for the question dealing with the alleged fault committed in Quebec, the judge’s conclusion falls squarely within the circumstances contemplated by article 3148(3) C.C.Q.

He writes as follows: [23] Dans la présente affaire, Tribec reproche à Hofmann de ne pas lui avoir donné un avis suffisant, tout tel avis devant lui être donné au Québec, et que le résultat consiste en une perte de profits sur des produits fabriqués au Québec. […] [26] Par ses amendements, Tribec ayant établi prima facie que la faute a été commise au Québec, de même que la perte de profits, a contrario d’une simple opération de vente de produits à Hofmann en Ontario, le Tribunal conclut que le facteur de rattachement prévu à l’ article 3148 (3) C.c.Q. s’applique à la présente affaire. [2] [ 7 ] Furthermore, contrary to what the appellant argues, it is of no consequence that the alleged fault was not based on a written contract between the parties.

Indeed, in the context of longstanding contractual relationships, as is the present case, good faith requires some form of notice before terminating, [3] which the appellant did not provide.

[8] This omission alone is sufficient to ground jurisdiction because the obligation to provide notice was to be performed at therespondent’s head office in Montreal. In our view, the trial judge correctly applied the principle articulated by the Supreme Court in AirCanada v McDonnell.[4] [9] While the alleged fault is sufficient, we are also of the view that the judge correctly concluded that the damages flowingtherefrom constitute an additional connecting factor.

This conclusion was not only supported by our Court’s decision in InfineonTechnologies A.G. v Option consommateurs[5] at the time, it has since been reaffirmed by the Supreme Court’s decision in the samecase, rendered after the trial judge’s decision.[6] As Wagner and LeBel, jj. write: [45] Damage suffered in Quebec is an independent factor under art. 3148(3): the damage does not need to be tied to the locus of theinjury or of the fault, unlike in the case of art. 3168, to give one example.

Any one of the four individual factors listed in art. 3148(3)would constitute a sufficient connection with the province to ground jurisdiction (see Royal Bank of Canada v. Capital Factors Inc.,[2004] Q.J. No. 11841 (QL) (C.A.), at para. 2; Spar Aerospace Ltd. v. American Mobile Satellite Corp., 2002 SCC 78 , 2002SCC 78, [2002] 4 S.C.R. 205, at para. 56). In terms of the type of damage covered by art. 3148(3), there is no principled reason toexclude purely economic damage from its scope.

The plain language of art. 3148(3) does not preclude economic damage from serving asa connecting factor, nor is the recovery of a purely economic loss prohibited in Quebec civil law (see C. Emanuelli, Droit internationalprivé québécois (3rd ed. 2011), at pp. 116-18). It is clear from the Quebec jurisprudence that economic damage can serve as a connectingfactor under art. 3148(3) (see, e.g., Sterling Combustion inc. v. Roco Industrie inc., 2005 QCCA 662 , 2005 QCCA 662; Option consommateurs v.

British Airways PLC, 2010 QCCS 140 , 2010 QCCS 140 ). [46] Quebecor Printing, a case the appellants rely on, should not be read so broadly as to systematically exclude a purely economicloss as a type of damage to which art. 3148(3) applies. Rather, that case indicates that where financial damage is merely recorded inQuebec, that fact is not sufficient to ground jurisdiction under art. 3148(3).

To satisfy the requirement of art. 3148(3), the damage mustbe suffered in Quebec. * * * [10] As to the second ground dealing with the joinder of causes of action, the appellant contends that article 3148(3) requires thateach cause of action bear a connecting factor. On this basis, the appellant argues that absent a connecting factor for the unpaid invoices,article 66 C.C.P. cannot be used to shoehorn another cause of action into the dispute. [11] In our view, the appellant’s

interpretation of article 3148(3) is unsupported. This

article confers jurisdiction on Quebecauthorities, but it does not serve to exclude causes of action whose jurisdiction may be founded on another legislative provision.

Putotherwise, 3148(3) opens the door to jurisdiction, but it does not close it ahead of other causes of action which might have a separatejurisdictional foundation. [12] In the instant case, the question is then not, as the appellant puts it, whether article 3148(3) requires all causes of action to beara connecting factor; rather, the question is whether the joinder of causes of action is permitted in the context of international jurisdiction.We think it is.

Two considerations militate in favour of this view. [13] Firstly, the historical evolution of Quebec’s private international law supports exercising jurisdiction in the instant case. Prior tothe entry into force of the C.C.Q. in 1994, the question of international jurisdiction was decided pursuant to

article 68 C.C.P., whichrequired that the whole cause of action originate in Quebec. Now article 3148(3) C.C.Q. establishes jurisdiction on the basis of one keyelement of the cause originating in Quebec (fault, damage, injurious act, or an obligation arising from a contract). The appellant’sassertion that 3148(3) requires both causes of action to originate in Quebec ignores this legislative evolution from

article 68 C.C.P. toarticle 3148(3) C.C.Q. Moreover, the minister’s comments tell us that part of 3148(3)’s raison d’être is to avoid the complications thatarose from the application of

article 68 C.C.P. in the context of international jurisdiction: “Le troisième point ne reprend pas l’expressiondu droit antérieur ‘toute la cause d’action’, puisque l’application de cette règle était la source de nombreuses difficultés.”[7] Requiringarticle 3148(3) to apply to both causes of action would reintroduce complications similar to those that resulted from the application ofarticle 68 C.C.P., such as an unnecessary division of the dispute to be spread out over two jurisdictions. The legislator has chosen toavoid such scenarios. [14] Secondly,

article 3132 C.C.Q. expressly incorporates procedural law, and as a result

article 66 C.C.P., into Quebec’s privateinternational law. It states: “Procedure is governed by the law of the court seized of the matter.” Moreover, under

article 3078 C.C.Q.,the court seized of the matter determines whether a provision is procedural or substantive in nature. As the Supreme Court held inTolofson v Jensen,[8] this determination requires in turn an examination of the purpose and function of the rule in question.

The Courtwent on to say that “the purpose of substantive/procedural classification is to determine which rules will make the machinery of theforum court run smoothly as distinguished from those determinative of the rights of both parties.”[9] [15] In the case at hand, the joinder of causes of action serves to streamline the judicial procedure that the respondent has instituted.Extending jurisdiction to the unpaid invoices does not affect the substantive rights of the appellant, since it would otherwise most likelyface the same action only in Ontario courts.

As a result, the joinder of actions should be understood as a procedural rule that is part ofQuebec’s private international law via 3132 C.C.Q. [16] The appellant also raised at the hearing the issue that if jurisdiction were conferred via

article 66 C.C.P., nothing would preventa plaintiff from presenting as many as 100 causes of action, among which only one may have a connecting factor. [17] This issue should not be of great concern, as

article 66 C.C.P. itself requires that there be a sufficient nexus between the causesof action. As our Court held in Cegeco Design & Constuction ltée c. Commission de la construction du Québec: While

Article 66 C.P.C. permits the joinder in the same suit of different causes of action under the conditions mentioned in that Article, itcertainly does not permit the joinder of wholly unrelated claims against different debtors having no common source and no connection ofany kind other than the fact that each of the debtors, individually, may owe money to the creditor. When

Article 66 C.P.C. speaks of"...several causes of action...", it does not mean several unrelated causes of action against different defendants.[10]

[ 18 ] Moreover,

article 3135 C.C.Q. would still allow a Quebec authority to decline jurisdiction on the basis of forum non conveniens. For the same reason that jurisdiction should be assumed via

article 66 C.C.P., it should also be declined where a Quebec authority faces a deluge of actions that have little or no connection to the forum: simply put, the issue is, at least partly, an efficient use of judicial resources. It makes little sense for a Quebec authority to hear a case where all of the material elements are located in another jurisdiction that is clearly better suited to hear the matter.

Contrary to the appellant’s submission, joining causes of action in the instant case does not open the floodgates to actions bearing no connection to this forum. [ 19 ] Articles 3135 C.C.Q. and 66 C.C.P. therefore provide checks on the excessive exercise of jurisdiction through the joinder of causes of action. [ 20 ] In our view, not only should the joinder of causes of action be permissible in the context of international jurisdiction, but also that the first instance judge was right to allow it in the present case: [28] En effet, les deux éléments de l’action sont intimement liés puisque découlant du même reproche formulé par Hofmann envers Tribec et il ne serait pas dans l’intérêt de la justice que le même débat soit entendu tant au Québec qu’en Ontario. [11] [ 21 ] In deciding thus, his conclusion leads to an efficient use of judicial resources and therefore should be maintained.

FOR THESE REASONS , the COURT: DISMISSES the appeal, with costs. FRANÇOIS PELLETIER, J.A. YVES-MARIE MORISSETTE, J.A. JACQUES A. LÉGER, J.A. Mtre Nicolas Roche HEENAN BLAIKIE For the appellant Mtre Véronique Belley SPEIGEL, SOHMER, INC. For the respondent Hearing date: November 18, 2013