Upon application by the liquidator of G’s succession, Madam Justice Aline U.K. Quach in Charron v. Charron, 2021 QCCS 2043 granted the liquidator leave to intervene in shareholder A’s motion to nominate a mediator regarding a dispute he had with shareholder C. Though the dispute appeared to only involve A and C who held common shares, Quach J. held that their dispute might impact the value of G’s preferred shares administered by the liquidator. As such, Quach J. determined that the liquidator had a sufficient, probable, direct and personal interest in the matter in dispute. The shareholders’ agreement contained a stepped dispute resolution process, involving mediation as a first step followed, if need be, by arbitration.
Plaintiff A and Defendant C, brothers, and their father G owned shares in three (3) corporations (“Hotels”). The shareholders agreements (“Agreements”) which provided for the Hotels’ buyback of a shareholder’s shares in certain circumstances. The father passed away May 29, 2016 and his shares were acquired by corporations which became equal shareholders with Plaintiff and Defendant in the Hotels.
Plaintiff and Defendant disagreed over the interpretation or application of several provisions in the Agreements. The Agreements contained a dispute resolution process which provided first for mediation and, in the absence of a resolution, arbitration of any disputes.
On September 12, 2020, Plaintiff served Defendant with a motion to nominate a mediator (“Mediator Motion”). The liquidator of GC’s succession (“Liquidator”) learned of the Mediator Motion and applied to the Superior Court for leave to intervene under article 184 of Québec’s Code of Civil Procedure, CQLR c C-25.01 (“C.C.P.”). For a sampling of the duties of a liquidator in Québec, see articles 783-822 of the Civil Code of Québec, CQLR c CCQ-1991 (“C.C.Q.”).
“Article 184 C.C.P. Intervention is either voluntary or forced.
Intervention is voluntary when a person who has an interest in a proceeding but is not a party or whose participation in a proceeding is necessary in order to authorize, assist or represent an incapable party intervenes in the proceeding as a party. It is also voluntary when a person wishes to intervene for the sole purpose of participating in argument during the trial.
Intervention is forced when a party impleads a third person so that the dispute may be fully resolved or so that the judgment may be set up against that third person. It is also forced when a party intends to exercise a recourse in warranty against the third person.
Article 185 C.C.P. Voluntary intervention is termed aggressive when the third person seeks to be acknowledged as having, against the parties or one of them, a right which is in dispute. It is termed conservatory when the third person wishes to be substituted for one of the parties in order to represent it, or to be joined with one of the parties in order to assist it or support its claims. A third person is said to intervene as a friend of the court when seeking only to participate in argument during the trial.
A third person who intervenes for aggressive or conservatory purposes becomes a party to the proceeding”.
Quach J. noted that the Liquidator, referred to in her reasons as ‘Intervenor’ (“Intervenant”), sought to intervene voluntarily in order to protect the rights of the father’s succession (estate) (“Succession”) and, to do so, sought to intervene on the Mediator Motion and participation in the nomination of a mediator. Quach J. therefore qualified the intervention as voluntary and aggressive, according to the meaning those terms have in the C.C.Q.
With reference to Michaud v. Groupe vidéotron Ltée, 2003 CanLII 5258 (QC CA) and Bédard Martin v. Axa Assurances inc., 2016 QCCS 3612, Quach J. noted that, at the stage of an application to intervene, the court need determine if a proposed intervenor has a sufficient and probable interest in the matter in dispute and that the interest be direct and personal. Quach J. added that academic opinion and case law precedent confirm that, until a succession is liquidated, a liquidator must represent a succession before the courts and can intervene in any action involving the assets the liquidator administers. See Jacques Beaulne, Droit des successions, 5e édition, 2016, Wilson & Lafleur, par. 1437-1438 and Desjardins v. Desjardins, 2008 QCCS 4577. In the latter decision, the court recognized the interest of the liquidator responsible for preferred shares to intervene in a dispute between heirs holding common shares in corporations established by their father.
Quach J. noted that that Agreements defined the shareholders as being each of the sons and the father and that Agreements bound [informal translation] ‘the parties, their heirs, assignees, successors and liquidators and other legal representatives’.
Quach J. further noted that the Agreements expressly confirmed the shareholders’ agreement that disputes be subject to mediation and nothing in the Agreements distinguished between categories of shareholders. Quach J. concluded that the shareholders included the father now represented by the Liquidator and that the latter had the required interest to intervene in the Mediator Motion.
In addition to the above, Quach J. added that the Liquidator’s duty as administrator of the property of another entailed the right to inform himself of decisions affecting the property administered and he had the obligation to intervene in order to protect the Succession’s interests.
Quach J. concluded that she shared the Intervenor’s position that the dispute over the nomination of a mediator might impact the value of the shares he administered and the Hotels’ ability to buy back and pay for those shares. The action filed in court did not specify the exact nature of the dispute between Plaintiff and Defendant but did allege that it touched on the companies’ main activities.
Quach J. granted the Liquidator the right to intervene on the Mediator Motion.
urbitral notes – First, for earlier Arbitration Matters notes on mediation in Québec, see:
(i) “Québec – no legal principle to support applying competence-competence for mediation – #415” regarding 9369-1426 Québec inc. (Restaurant Bâton Rouge) v. Allianz Global Risks US Insurance Company, 2021 QCCS 47. In a proposed class action involving claims under an insurance policy for indemnification for business interruption due to COVID-19 measures, Mr. Justice Gary D.D. Morrison referred the parties to mediation and arbitration and dismissed the application for authorization. While Québec law did not state that parties to an insurance contract can submit their disputes to arbitration, it also does not stipulate that they cannot. The Code of Civil Procedure, CQLR c C-25.01’s class action provisions are procedural and do not modify substantive law or create jurisdiction for the courts over disputes which parties have lawfully excluded. Having relied in part on proportionality to refer the parties, Morrison J. declined to comment on whether his order would “require each individual insured to proceed by way of the lengthy and costly dispute resolution process, which may discourage many from exercising their rights”. Morrison J. also held that competence-competence does not arise in referral to mediation “as there exists no legal principle in support of such an approach”.
(ii) “Québec – use of confidential mediation exchanges permitted to prove fraud vitiating settlement consent – #330” regarding Viconte inc. v. Transcontinental inc., 2020 QCCQ 1475. Madam Justice Céline Gervais recognized that that the exception to settlement privilege applies to permit a party to adduce confidential exchanges made in a mediation to prove the existence or scope of a transaction but she saw no principle under which that exception did not also apply if a party challenged the validity of a transaction and not its existence or scope. The party resisting homologation of a settlement sought to prove that the other party had given false information or allowed it to be retained, thereby vitiating consent and justifying annulment of the settlement. Gervais J. cautioned that her decision was only a preliminary one and did not consider the difficulty a party may have at trial to prove its allegations.
(iii) “Québec – post-mediation dispute over existence/terms of agreement permits disclosure of confidential exchanges – #329” regarding Bisaillon v. Bouvier, 2020 QCCA 115. Québec’s Court of Appeal applied the exception to confidentiality of mediation, confirmed in Union Carbide Canada Inc. v. Bombardier Inc., 2014 SCC 35,  1 SCR 800, allowing disclosure of confidential exchanges necessary to prove (i) that an agreement resulted from mediation or (ii) the scope of the agreement which the parties acknowledged making. The parties could but did not tailor their mediation to eliminate that exception. Absent a clear, express statement of their intention to prevent subsequent disclosure, the exception applied to permit disclosure. The mediator’s summary of the agreement was only a simple writing, reflected his understanding of the agreement’s terms and did not bind the parties unless signed by them. Update: leave to appeal granted August 6, 2020 in Association de médiation familiale du Québec v. Isabelle Bisaillon, et al., 2020 CanLII 52976 (SCC); hearing completed, under advisement.