2013 QCCA 1009, 2013 QCCA 1009

Caï c. Yang 2013 QCCA 1009 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-022654-123 (500-22-184736-117) MINUTES OF THE HEARING DATE: June 6, 2013 CORAM: THE HONOURABLE FRANÇOIS DOYON, J.A. NICHOLAS KASIRER , J.A. JACQUES A. LÉGER, J.A. APPELLANT ATTORNEY DANJIE CAI And H&C CANADA INC. Mtre Roger Pilon (absent) RESPONDENT ATTORNEY ZHILI YANG Mtre Harry Karaviti s (absent) ALEPIN GAUTHIER AVOCATS INC. On appeal from a judgment rendered on May 1 st , 2012 by the Honourable Judge Sylvie Lachapelle, of the Court of Quebec, District of Montreal.

NATURE OF THE APPEAL : Revocation of judgment Clerk: Elena Captari Courtroom: Pierre-Basile-Mignault HEARING 15 h 01 : Beginning of the hearing. BY THE COURT : Judgment –see next page. 15 h 01 : End of the hearing.

Elena Captari Clerk BY THE COURT JUDGMENT [ 1 ] With leave from a judge of this Court, Danjie Caï and H & C Canada Inc. appeal from a judgment of the Court of Quebec, District of Montreal (the Honourable Judge Sylvie Lachapelle, presiding), rendered on May 1, 2012, which dismissed their motion for revocation of judgment. [ 2 ] At the hearing, the appellants sought to revoke a default judgment of the Court of Quebec, rendered against them on December 5, 2011 by Special Clerk Danièle Besner, which condemned them, solidarily, to pay $44,072.33 to Zhili Yang in connection with an agreement to sell a business.

Lachapelle, J.C.Q. dismissed the motion for revocation on the basis that, inter alia , it was filed late. [ 3 ] The principal ground of appeal is that Ms. Caï's failure to seek revocation in a timely manner resulted from her inability to understand French, the language of the motion to institute proceedings and the judgment of the Special Clerk. This amounted to an impossibility to act sooner, says Ms. Caï, which relieves her from failing to file the motion for revocation within the 15-day time limit provided for in

article 494 C.C.P. *** [ 4 ] On or about September 21, 2010, Ms. Yang agreed to purchase the Cadeaux Triple "A" gift shop from H & C Canada Inc., represented by Ms. Caï who is the company's sole shareholder and director. The contract was prepared in Chinese and a certified English translation was filed in the Court of Quebec. Ms. Yang paid a deposit pursuant to the agreement and was to pay the balance due on December 31, 2010, upon closing of the sale. [ 5 ] Sometime thereafter, Ms. Yang began working in the gift shop and, soon enough, relations between the parties soured. On December 21, 2010, Ms.

Yang sent a demand letter to H & C Canada Inc. and Ms. Caï in which she claimed the contract was null

because Ms. Caï had misrepresented the financial health of the business. In that letter, Ms. Yang sought reimbursement of the down payment made on the gift shop and further damages for lost business opportunity. Ms. Yang's lawyer at the time closed the demand letter as follows: "In default of which, we will advise our client to defend aggressively her interest and to undertake all necessary legal proceedings thereof. PLEASE DO GOVERN YOURSELF ACCORDINGLY". [ 6 ] Answering by email for H & C Canada Inc. on or about December 30, 2010, Ms.

Caï responded as follows (transcribed as written): "[w]e recently received a letter from you, we do not understand what your client talking about, maybe you can remind your client that the price has to pay if someone wants to violate an agreement, and fortunately we have a justice system". [ 7 ] A period of unsuccessful negotiations ensued. [ 8 ] On July 27, 2011, Ms. Yang sent a further demand letter to Ms. Caï, prepared in English by another lawyer and served by a bailiff. This letter alleged once again that Ms.

Caï had misrepresented the value of the business at the time of the agreement thereby rendering it null. The lawyer wrote seeking reimbursement of the sums advanced by his client by August 12, 2011, "failing which, we have been instructed to exercise, against you and all other potentially responsible parties, all of the rights and recourses available to our client without any further notice or delay". [ 9 ] On September 1, 2011, Ms. Yang served a motion to institute proceedings on Ms.

Caï and H & C Canada Inc., prepared in French, which reiterated the substance of the demand letters and asked the court, in its conclusions, to condemn the two defendants, solidarily, to pay $44,072.33. [ 10 ] When Ms. Caï and H & C Canada Inc. failed to appear, the Special Clerk seized of the matter in the Court of Quebec initially declared the file incomplete, and invited Ms. Yang to file a detailed affidavit in which she would explain the remedy sought against the two co-defendants. [ 11 ] Ms.

Yang filed a detailed affidavit, in French, on November 30, 2011, which included two paragraphs explaining that the co- defendants should be held solidarily liable because Ms. Caï acted both personally and as representative of the company. The affidavit was not served on Ms. Caï. [ 12 ] On December 5, 2011, the Special Clerk rendered judgment against the appellants by default, holding them solidarily liable for the whole amount claimed, with interest and the additional indemnity provided for by law. Written in French, the judgment was served on Ms. Caï on December 12, 2011. [ 13 ] On December 21, 2011, Ms.

Yang registered a legal hypothec in the amount of $45,086.60 on Ms. Caï’s home. The registration notice of the hypothec, written in French, was served on Ms. Caï two days later. [ 14 ] On January 27, 2011, Ms. Caï and H & C Canada Inc. filed a motion for revocation of the judgment of the Special Clerk. [ 15 ] As revocatory grounds ( le rescindant ), Ms. Caï argued that she failed to appear because she was unable to read the French- language motion to institute proceedings or the default judgment of the Clerk and, as a result, did not understand that she had to appear or even that she was being sued personally.

Ms. Caï further alleged that the decision to prepare French-language proceedings was done to take advantage of her lack of understanding of French. She said this meant it was impossible for her to act and she should be relieved of her default. As a final revocatory ground, she argued that the judgment of the Special Clerk was null because Ms. Yang’s detailed affidavit alleged new facts not found in the motion to institute proceedings. This amounted to grounds to revoke under article 483(1) C.C.P. in that the plaintiff failed to follow the proper procedure. [ 16 ] As rescissory grounds ( le rescisoire ), Ms.

Caï argued that Ms. Yang’s action should be dismissed because she had made no misrepresentation at the time of the agreement and that, accordingly, the sale was valid. Moreover there was no basis in law for holding her personally liable. *** [ 17 ] Ruling on the reception of the motion pursuant to

article 484 C.C.P., the motions judge held that Ms. Caï’s proceedings seeking revocation of the default judgment of the Special Clerk should be dismissed. [ 18 ] The motion was filed outside the 15-day peremptory time limit imposed by

article 484 C.C.P. The judge was of the view that Ms. Caï’s alleged lack of knowledge of French was not a basis for her impossibility to act within the time limit. [ 19 ] Moreover, the motion did not show sufficient grounds for revocation. Her revocatory grounds based on her lack of knowledge of French were not credible: Ms. Caï knew full well that legal proceedings would be brought against her and the company on the basis of the previously received English-language notices of default. The judge was of the view that the appellants were grossly negligent, as of the time Ms.

Caï received the French-language documents, not to have had them translated or to have sought out the advice of a lawyer. [ 20 ] Finally, the motions judge decided in respect of article 483(1) C.C.P. that Ms. Caï’s argument that the Special Clerk erred in holding her to be solidarily liable with the company was not a procedural ground giving rise to revocation. This is an alleged substantive error for which the appropriate recourse would be an appeal, not revocation of the judgment. *** [ 21 ] Ms.

Caï and H & C Canada Inc. raise two principal arguments in support of their appeal from the judgment dismissing the motion for revocation, to be addressed in turn.

I Did the motions judge err when she dismissed the motion for revocation notwithstanding the fact that the appellants are unable to understand French? [ 22 ]

Article 484 C.C.P. requires that a motion of revocation be filed within 15 days from the time the party in default learned of the judgment. The Code provides that the time limit is peremptory, unless the party shows "that, in fact, it was impossible for him to act sooner/qu’elle a été, en fait, dans l’impossibilité d’agir plus tôt" (art 484, para. 3 C.C.P.). [ 23 ] The default judgment rendered by the Special Clerk condemning Ms. Caï and H & C Canada Inc. was served on Ms. Caï on December 12, 2011.

She and H & C Canada Inc. filed their motion in revocation on January 25, 2012, well outside the 15-day time limit. [ 24 ] In her affidavit, Ms. Caï claims that her lateness is explained by the fact that she was unable to understand the judgment, just as she had been unable to understand the motion to institute proceedings, because they were written in French. She alleged further that because the backing of the documents sent to her in French mentioned the law firm representing Ms. Yang, she did not understand the nature of the materials.

She says she only properly became aware of the judgment when her bank informed her, on January 17, 2012, that a legal hypothec had been registered against her home. [ 25 ] The appellants thus claim Ms.

Caï's lack of knowledge of French meant it was impossible, in fact, for them to act sooner and that they should accordingly be excused for the late filing of the motion for revocation. [ 26 ] They add that the allegations in their motion for revocation should be taken as true at this stage of the proceedings, and that the judge erred in deciding that her explanation was not credible. [ 27 ] Did the judge err in dismissing Ms.

Caï's argument that her lack of knowledge of the French language was not an excuse for the late filing of the motion for revocation? [ 28 ] The Court is of the view that the judge made no such mistake. [ 29 ] The demand letter sent to Ms. Caï on July 27, 2011, in English, made it plain that Ms. Yang considered H & C Canada Inc. to be in default and that legal action would be taken by Ms. Yang to recover the down payment on the sale if the amount was not repaid by August 12, 2011. [ 30 ] When Ms.

Caï received the French-language motion to institute proceedings on August 25, 2011, from the same lawyer who sent the demand letter, she already knew that H & C Canada was likely to be sued. It was grossly negligent of her not to obtain legal advice or to seek out a translation.

Whether or not she could read the document, it was plainly addressed to her and it named her and the company on its title page and in its conclusions. [ 31 ] The same may be said of the judgment served upon her on December 12, 2011. [ 32 ] As a legal person, H & C Canada Inc. could not appear in court except if it was represented by a lawyer, according to subparagraph (

a) of

article 61, paragraph 1 C.C.P. Had Ms. Caï, as sole representative of the company, consulted a lawyer, the appellants would have immediately learned that a legal claim had been made against the company and Ms. Caï personally and that they had been held in default. It was negligent not to have sought out legal counsel on a timely basis. [1] [ 33 ] Furthermore, it is no answer to say that, because Ms. Caï did not speak French, she had no way of understanding that she was being sued personally. [ 34 ] The demand letter of July 27, 2011 was addressed to her, even if it mentioned the company in its subject-line. Ms.

Caï cannot say that she was taken by surprise by the lawsuit given the content of the demand letter. That letter explicitly put her on notice that she would be sued personally if Ms.

Yang was not reimbursed: You are therefore summoned to reimburse our client the amount of $CAN43,832.36 with a certified cheque payable to Alephin Gauthier in trust , by August 12, 2011 at 5 pm failing which, we have been instructed to exercise, against you and all other potentially responsible parties, all of the rights and recourses available to our client without any further notice or delay. [ 35 ] Moreover the first demand letter she received on December 21, 2010, also written in English, is plainly addressed to both the company and Ms. Caï. [ 36 ] Was the judge wrong to have declared that Ms.

Caï's allegation that she did not understanding the proceedings was not credible? [ 37 ] Again, the judge made no such mistake. [ 38 ] While she was bound to take the facts alleged in Ms. Caï’s motion as true, the judge was entitled as well to consider the whole of the file as presented before her, including the exhibits, before deciding on whether to receive the motion. [2] In this case, the exhibits included the demand letters, both written in English, which had alerted H & C Canada Inc. and Ms. Caï to the potential lawsuit. [ 39 ] Even if one accepts as true Ms.

Caï’s inability to read French, the exhibits convinced the judge that Ms. Caï should have understood the imperative to have the legal documents she received translated or presented to a lawyer. It should also be noted that paragraph 15 of her affidavit suggests that Ms.

Caï understood her company was being sued. [ 40 ] The purpose of the formality of reception of a motion for revocation is to allow the receiving judge to dismiss, at the earliest possible stage, motions for revocation that have no chance of success on the face of the record, in particular by reason of inexcusable lateness or futility. [3] The judge was of the view that there was no reason to excuse the late motion and the appellants have shown no grounds for disturbing the judgment.

[ 41 ] In short, the appellants' negligence is a bar to claiming that it was impossible for them to have acted sooner in seeking revocation of the judgment. [ 42 ] As a final note on this point, there is no evidence to support the allegation that Ms. Yang chose to serve documents in French upon Ms. Caï with a view to taking advantage of her inability to understand that language. The circumstances here can be readily distinguished from Nationwide Advertising Service Inc . v. Lafrance [4] in which the plaintiff appeared to have wrongfully exploited the defendant’s ignorance of French.

In that case, Mayrand, J.A. made specific mention of the fact that the defendant had been taken by "surprise" within the meaning of

article 482 C.C.P. by the French-language proceedings. [5] No blameworthy conduct can be imputed to Ms. Yang on the basis of the record before the motions judge, nor was the element of surprise present given the content of the English- language demand letters sent to Ms. Caï. Given that she had been alerted to the fact, in English, that lawsuits were imminent, it cannot be said that receiving French-language proceedings served to deprive Ms.

Caï of her right to be heard in the circumstances. [6] II Did the motions judge err when she denied revocation notwithstanding the fact that the motion to institute proceedings did not allege Ms. Caï’s personal liability? [ 43 ] The appellants argue that the Special Clerk could not condemn Ms. Caï personally in the absence of proper allegations of fact in Ms. Yang’s motion to institute proceedings. They argue that the amendments to Ms. Yang’s detailed affidavit at the request of the Special Clerk could not remedy this defect.

As a result, say the appellants, the judgment of the Special Clerk suffered from a procedural defect and should be declared null pursuant to article 483(1) C.C.P. [ 44 ] The appellants are again mistaken. [ 45 ] The argument they seek to raise does not reflect a procedural error, but amounts to an attack of the judgment on the merits.

On this point, the motions judge wrote the following: [30] Si comme le prétendent les requérantes, Caï a été condamnée personnellement par la greffière spéciale alors qu'elle n'aurait pas dû l'être, ce n'est pas parce qu'il y aurait eu erreur de procédure, mais plutôt parce qu'il y aurait eu erreur sur le fond. [31] En effet, le nom de Caï apparaît à la requête introductive d'instance en plus de celui de la compagnie H&C. Yang recherche par ses conclusions la condamnation tant de Caï personnellement que d'H&C.

De plus, la requête a été signifiée à Caï personnellement. [32] La situation aurait été différente si le nom de Caï n'avait pas été ajouté dans l'intitulé des procédures et si aucune conclusion ne la concernait. [33] La requête initiale ne précisait pas en quoi la co-défenderesse Caï devait être condamnée personnellement, mais pour pallier à cette omission, la greffière spéciale a requis un affidavit détaillé, lequel a été fourni et ensuite le jugement par défaut a été rendu.

Pour le Tribunal, il n'y a pas de preuve d'un vice de procédure. [34] Aussi, c'est parce que la greffière spéciale était satisfaite des allégués additionnels de l'affidavit qu'elle a accordé la requête introductive d'instance selon ses conclusions par jugement par défaut. [35] Or, sans conclure que ce soit le cas dans ce dossier, lorsqu'il y a erreur sur le fond, le recours n'est pas la rétractation de jugement, mais plutôt l'appel. [36] Ainsi, pour le Tribunal, non seulement la procédure prescrite a-t-elle été suivie, mais il y avait un autre recours utile, de telle sorte que le Tribunal conclut qu'il ne s'agit pas d'un cas d'application de l'article 483(1) C.p.C. et rejette cet argument. [ 46 ] The appellants have failed to show a reviewable error made by the judge on this point.

As to Ms. Caï's personal liability, the avenue of remedy would ordinarily be an appeal, not the revocation of the default judgment. FOR THESE REASONS , the Court: [ 47 ] DISMISSES the appeal, with costs. FRANÇOIS DOYON, J.A. NICHOLAS KASIRER, J.A.

JACQUES A. LÉGER, J.A.