Provisional and control measures Quebec Code of Civil Procedure (2014)

Me William Brock Ad.E Davies Ward Phillips & Vineberg 514.841.6438 wbrock@dwpv.com October 1, 2015

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Material Changes to Chapter 1: Injunctive Relief

Article 509 CCP 2014

An injunction is an order of the Superior Court directing a person or, in the case of a legal person, a partnership or an association or another group not endowed with juridical personality, its officers or representatives to refrain from or cease doing something or to perform a specified act.

A judgment granting an injunction is served on the parties and the other persons identified in the judgment.

• Injunctions can also be granted by Arbitrators (articles 636 to 641 CCP 2014).

• Injunctions need to be served by Bailiffs (Article 139 (4) CCP 2014).

Material Changes to Chapter 1: Injunctive Relief

Article 106 CCP 2014

A sworn statement, whatever its medium, must set out the facts and other evidence clearly and only contain facts or evidence that are relevant and the truth of which can be attested to by the person making the statement. A reference to the paragraphs in the pleadings is sufficient to identify the facts that are sworn to. Repeating the wording of pleadings may constitute an abuse of procedure.

Evidence by sworn statement is permitted when the defence is oral. It is required in the case of an interlocutory injunction, a seizure before judgment or a judicial review but does not preclude the giving of evidence by witnesses.

Material Changes to Chapter 1: Injunctive Relief

Other material changes:

• Article 7 CCP 2014: Preservation of rights in a private dispute prevention and resolution process.

• Article 612 CCP 2014: Stay of proceedings in a mediation process.

• Article 148 (last paragraph) CCP 2014: Complementary case protocol.

• Articles 82 to 84 CCP 2014: Sittings of courts and time limits.

Material Changes to Chapter 1: Injunctive Relief

511. An interlocutory injunction may be granted if the applicant appears to have a right to it and it is judged necessary to prevent serious or irreparable prejudice to the applicant or to avoid creating a factual or legal situation that would render the judgment on the merits ineffective.

The court may grant an interlocutory injunction subject to a suretyship being provided to cover the costs and any resulting prejudice.

It may suspend or renew an interlocutory injunction for the time and subject to the conditions it determines.

755. Unless, for good reason, the court or the judge granting an interlocutory injunction decides otherwise, the applicant must be ordered to give security, in a prescribed amount, to pay the costs and damages which may result therefrom. The certificate of the clerk that the security has been given must be attached to the order before it is served.

A judge may at any time increase or reduce the amount of such security.

CCP 2002 CCP 2014

Material Changes to Chapter 1: Injunctive Relief

Different penalties for legal and natural persons:

• A person found in contempt of court, may be fined $10 000 for a natural person and $100 000 for a legal person, a partnership or an association (art. 515, 58, 62 CCP 2014).

• Under the current CPC 2002 a person guilty of contempt of court may only be condemned to a fine not exceeding $50,000 (art. 761 CPC 2002).

Industries V-Tech inc. (Industries Play-Tech inc.) c. Cast Steel Products (Canada) Ltd.

• Departure from previous decisions holding that the criteria for a provisional order and the criteria for a safeguard order are the same.

Cast Steel Products (Canada) Ltd. c. Tremblay, 2015 QCCS 3507, para. 32 (Dugré J.): [L]e concept d’urgence nécessaire pour l’émission d’une ordonnance de sauvegarde fondée sur l’art. 754.2 C.p.c. diffère nécessairement et fondamentalement de la notion d’urgence pour l’émission d’une injonction provisoire puisque l’objet de chacune de ces ordonnances est différent. Dans le cas d’une demande d’ordonnance d’injonction provisoire, il est urgent d’agir afin d’éviter que la partie requérante ne subisse un préjudice irréparable imminent ou qu’une situation irrémédiable ne soit créée, tandis que dans le cas d’une demande d’ordonnance fondée sur l’art. 754.2 C.p.c., il est nécessaire pour le tribunal d’agir afin de sauvegarder les droits de toutes les parties pendant qu’elles attendent d’être entendues au stade interlocutoire.

Industries V-Tech inc. (Industries Play-Tech inc.) c. Cast Steel Products (Canada) Ltd.

Decision granting leave to appeal (Hogue JCA)

• Industries V-Tech inc. (Industries Play-Tech inc.) c. Cast Steel Products (Canada) Ltd., 2015 QCCA 1471, para. 14: Tremblay et V-Tech invoquent diverses erreurs du premier juge tant de droit que de fait. Après avoir pris connaissance des moyens qu’ils allèguent, je suis d’avis que les fins de la justice requièrent que la permission soit accordée, notamment en regard du critère de l’urgence à satisfaire dans le cadre d’une demande d’ordonnance de sauvegarde.

Arbitrations and Injunctions Article 638 CCP 2014

The arbitrator may, on a party's request, take any provisional measure or any measure to safeguard the parties' rights for the time and subject to the conditions the arbitrator determines and, if necessary, require that a suretyship be provided to cover costs and the reperation of any prejudice that may result from such a measure. Such a decision is binding on the parties but one of them may, if necessary, ask the court to homologate the decision to give it the same force and effect as a judgment of court.

Arbitrations and Injunctions Article 639 CCP 2014

In an urgent situation, even before a request for a provisional or safeguard measure is notified to the other party, the arbitrator may issue a provisional order for a period which may in no case exceed 20 days. The arbitrator requires the party that requested the order to provide a suretyship unless, in the arbitrator's opinion, it is inappropriate or of no use.

The provisional order must be notified to the other party as soon as it is issued, with all the evidence attached. It is binding on the parties and cannot be homologated by the court.

UNICITRAL Model Law on International Commercial Arbitration

Article 17. Power of arbitral tribunal to order interim measures

(1) Unless otherwise agreed by the parties, the arbitral tribunal may, at the

request of a party, grant interim measures.

(2) An interim measure is any temporary measure, whether in the form of

an award or in another form, by which, at any time prior to the issuance of

the award by which the dispute is finally decided, the arbitral tribunal orders

a party to:

(a) Maintain or restore the status quo pending determination of the

dispute;

(b) Take action that would prevent, or refrain from taking action that

is likely to cause, current or imminent harm or prejudice to the arbitral

process itself;

(c) Provide a means of preserving assets out of which a subsequent

award may be satisfied; or

(d) Preserve evidence that may be relevant and material to the resolution

of the dispute.

UNICITRAL Model Law on International Commercial Arbitration

Article 17 A. Conditions for granting interim measures

(1) The party requesting an interim measure under article 17(2)(a), (b) and

(c) shall satisfy the arbitral tribunal that:

(a) Harm not adequately reparable by an award of damages is likely

to result if the measure is not ordered, and such harm substantially outweighs

the harm that is likely to result to the party against whom the measure is

directed if the measure is granted; and

(b) There is a reasonable possibility that the requesting party will

succeed on the merits of the claim. The determination on this possibility

shall not affect the discretion of the arbitral tribunal in making any subsequent

determination.

(2) With regard to a request for an interim measure under article 17(2)(d),

the requirements in paragraphs (1)(a) and (b) of this article shall apply only

to the extent the arbitral tribunal considers appropriate.

Material Changes To Chapter 2: Seizure Before Judgment and Sequestration

• Authorization of the court is necessary to seize a technological medium before judgment (articles 517, 727 and 728 CCP. 2014).

• No more seizure of a motor vehicule which has caused damage (article 517 CCP 2014, article 734 (3) CPC 2002).

• Article 519 partially modifies the rule of who is to be the custodian in family law matters.

• A “writ” is now a “notice of execution” (art. 520 CCP 2014, art. 735 CPC 2002).

• No mention that the writ - now a “notice of execution” - must order that the defendant appear to answer to the motion (art. 736 of the CPC 2002).

• Pursuant to article 740 CPC 2002 “the motion to institute proceedings has not been served on the defendant with the writ of seizure […] is contested in the ordinary manner, but it must be heard and decided by preference”. The CCP 2014 does not specify how a motion to institute proceedings that was not served with the writ of seizure should be contested or whether “it should be heard by preference” (art. 521 CCP 2014).

Material Changes to Chapter 2: Seizure Before Judgment and Sequestration

• 738 CPC 2002 states: “[t]he burden is on the seizing party to prove the allegations of his affidavit”, which is not repeated in article 522 CCP 2014. The defendant must still prove the allegations contained in his affidavit pursuant to article 2803 of the C.c.Q.

• The bailiff can refuse a guarantee, and the defendant may ask the Court to decide in the event of a refusal (art. 523 CCP 2014, art. 739 CPC 2002). In determining whether the amount is sufficient, the bailiff will consider the amount claimed and the value of the seized property (art. 523 CCP 2014).

• The removal of the word “only” in respect of the type of security that can be given (art. 523 CCP 2014, art. 739 CPC 2002).

Material Changes to Chapter 2: Seizure Before Judgment and Sequestration

• The debtor may obtain release of the seizure by paying the “judgment amount, including execution costs” rather than a “sufficient guarantee” (art. 710 CCP 2014, art. 739 CCP 2014). The notion of “judgment amount, including execution cost” refers to the notion of payment pursuant to article 1564 of the C.c.Q.

• The debtor may replace the seized property with the approval of the bailiff (art. 710 CCP 2014).

• The bailiff, rather than the court, attests to the release of the seizure (art. 710 CCP 2014, art. 730 CPC 2002).

• The judicial sequestration must target “disputed property” (art. 524 CCP 2014, 742 CPC 2002).

Material changes to Chapter 3 : Authorization, Approval and

Homologation

Article 527 CCP 2014

An application for authorization, approval or homologation is, when there is a dispute, presented before the court on the date specified in the attached notice of presentation. The presentation date cannot be less than five days after notification of the application.

Article 528 CCP 2014

Homologation is approval by a court of a juridical act in the nature of a decision or of an agreement. It gives the homologated act the same force and effect as a judgment of the court.

The homologating court only examines the legality of the act; it cannot rule on its advisability or merits unless a specific provision empowers it to do so.

Material Changes to Chapter 4: Judicial Review

Article 529 CCP 2014

In a judicial review, the Superior Court may, depending on the subject matter,

(1) declare inapplicable, invalid or inoperative a provision of an Act of the Parliament of Québec or the Parliament of Canada, a regulation made under such a law, an order in council, a minister’s order or any other rule of law;

(2) evoke, on a party’s application, a case pending before a court, or review or quash a judgment rendered by a court or a decision made by a person or body under the authority of the Parliament of Québec, if the court, body or person acted without jurisdiction or in excess of jurisdiction, or if the procedure followed was affected by some serious irregularity;

Material changes to Chapter 3: Judicial review

(3) direct a person holding an office within a public body, a legal person, a partnership or an association or another group not endowed with juridical personality to perform an act which they are by law required to perform, provided the act is not of a purely private nature; or

(4) dismiss a person who, without right, is occupying or exercising a public office or an office within a public body, a legal person, a partnership or an association or another group not endowed with juridical personality.

Except in the case of lack or excess of jurisdiction, judicial review is available only if the judgment or the decision cannot be appealed or contested.

An application for judicial review must be served within a reasonable time after the act or the fact on which it is based.

Material Changes to Chapter 4: Judicial Review

• Article 529 CCP 2014 now encompasses articles 33, 838, 844 of the CPC 2002 The notion of “judicial review” now includes: (i) mandamus, (ii) quo warranto, (iii) judicial review, and (iv) action in nullity.

• CCP 2014 does not mention that a mandamus or quo warranto may be filed by “any person interested”. It appears the plaintiff must show a “sufficient interest” (art. 85 CCP 2014, art. 55 CPC 2002).

• An application for judicial review must be served within a reasonable time (30 days according to the jurisprudence).

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Mareva Injunctions • Mareva Injunctions, normally obtained ex-parte, can be

used to freeze all of a defendant's assets, including on a worldwide basis.

• They are normally obtained ex-parte on a provisional basis, based on an application containing detailed affidavits and documentary evidence, including investigative reports.

• They are available in most common law jurisdictions and can be enforced internationally.

• Can be obtained against non-resident Defendants, or in regards to assets outside of Quebec.

Mareva Injunctions How to Obtain/Maintain a Mareva Injunction:

The following criteria must be met: • Existence of a prima facie right. • Existence of irreparable harm - Without the injunction, Plaintiff will be unable to execute a judgment in his favour because the Defendant is likely to place his assets out of reach. Often used in cases involving fraud.

• Balance of convenience. • Urgency.

Mareva Injunctions How to Obtain/Maintain a Mareva Injunction: • Plaintiff must make "full and frank disclosure" of all relevant

facts, including, and especially, those that do not assist the Plaintiff’s case.

• Such disclosure must be properly evidenced, including by clear allegations, a transcript of the ex parte hearing and the procès-verbal.

• These injunctions are usually subject to a “come back” hearing – within 10 days.

• Failure to comply with the rule of "full and frank disclosure" can result in dismissal of the Mareva Injunction and sanctions against the Plaintiff and Counsel.

Mareva Injunctions Why is a Mareva Injunction Useful? • It can freeze Plaintiff’s assets worldwide.

• It can allow the Plaintiff to ascertain the Defendant’s assets by obtaining an affidavit of assets within a short delay.

• It can allow the Plaintiff to control the Defendant’s spending during the proceedings by controlling his legal and living expenses.

• It can allow for notification of third parties holding or having control over assets.

• It can allow for enforcement or ancillary proceedings in other jurisdictions.

Mareva Injunctions When is a Mareva Injunction Useful? • To prevent the dissipation of assets.

• In transnational contexts.

• In cases where the nature, value or location of the Defendant’s assets is unknown, or where assets are outside Quebec.

• In cases where the Defendant has assets in Quebec regardless of whether the Defendant resides in Quebec.

Mareva Injunctions Mareva Injunctions vs. Seizure Before

Judgment • They are not mutually exclusive.

• Seizure before judgment may provide better protection of certain assets in Quebec.

• Seizure before judgment ensures that third parties who hold the Defendant’s assets are involved in the process and are subject to Court orders.

• Seizure before judgment makes the recovery of assets in case of victory easier for the Plaintiff.

Mareva Injunctions Seizure Before Judgment

(art. 516 CCP 2014) Provisional and Interlocutory Injunction

(art. 509 et. seq. CCP 2014)

Property is placed in the control of justice pending suit (arts. 516, and 702 al. 3 CCP 2014);

Action is in personem, property remains in the control of the Defendants;

Property is entrusted to a guardian (arts. 516 and 712 CCP 2014);

Property remains in the hands of Defendants;

Third parties (i.e. garnishees) are subject to the orders of the Court (art. 702 and 712 seq. CCP 2014);

There is no order against third parties;

Garnishees are obliged to make a declaration under oath before the clerk of the Court (arts.628 and 630 C.C.Q.);

There is no obligation to disclose what assets are held;

Garnishees may be questioned by the seizing creditor and the debtor, and be ordered to provided to provide documents (art. 632 C.C.Q.)

There is no power to question third parties on the assets of the Defendants they hold or their debts to the Defendants;

Plaintiffs have right against Garnishees who fail to declare amounts owed to Defendants (art. 634 C.C.Q.)

There is no prima facie right against third parties for failing to abide by the Court order;

Plaintiff can use the seized assets to satisfy a judgement, by judicial sale or otherwise.

Plaintiffs must take fresh steps to execute an eventual judgment in their favour (arts. 565 et. seq. C.C.Q.)

Mareva Injunctions Implementation of Mareva Injunctions

• Disclosure of Defendant's assets by way of affidavit.

• Examination of Defendant on his declaration of assets.

• Notification of third parties, including financial institutions, of the existence of the injunctions (can be done both in Quebec and elsewhere).

• Control of expenses (both living expenses and legal fees).

Mareva Injunctions What is Norwich Pharmacal Relief? • Court order for disclosure of information by third

parties against whom no wrongdoing is alleged.

• This discretionary remedy can be obtained ex parte even before proceedings against the wrongdoer are instituted and can be accompanied by a non-disclosure order.

• See: Fers et métaux américains, s.e.c.c. Picard, 2013 QCCA 2255.

Mareva Injunctions What is an Anton Piller Order? • Court order requiring a Defendant to permit a limited number of

persons to enter relevant premises to search for evidence, property or other material falling within categories set out by the Court and to remove the material found so that it can be safeguarded.

• The goal is to safeguard evidence needed to prove the Plaintiff’s case, but can also be used to find information with respect to the existence or location of the Defendant’s assets.

• Heavy burden of proof lies on the Plaintiff in order to obtain such relief.

• Proper execution can be a minefield.