Québec – parties urged to mediate/arbitrate to ‘avoid bogging down’ in ‘complex and costly judicial procedures’ – #279

In Équipements de gardien de but Michel Lefebvre inc. v. Sport Maska inc., 2020 QCCS 44, Mr. Justice Frédéric Bachand dismissed an application for a provisional injunction but, in doing so, prompted the parties to seize the opportunity, already consented to in their contract, to undertake mediation and arbitration ‘to avoid bogging themselves down in complex and costly judicial procedures’.  Bachand J. also urged the parties to engage in less formal exchanges of information which may allow them to find a faster solution to their dispute.

Équipements de gardien de but Michel Lefebvre Inc. and Michel Lefebvre (“Plaintiffs”), operated for several years as designers and manufacturers of goalie equipment for both professional and amateur hockey players.  Until December 31, 2019, Plaintiffs and Sport Maska Inc. (“Sport Maska”) were bound a contract of license, manufacture, design and technical consultation (“Contract”). 

By their Contract, Plaintiffs and Sport Maska agreed that Sport Maska would have access to certain confidential information belonging to Plaintiffs and defined in the Contract at article 2.1.4.  Sport Maska recognized the importance to Plaintiffs of that information and undertook certain obligations in regard to handling and using it, each of which survived termination of the Contract.

The dispute stemmed from Plaintiffs learning in December 2019 that Sport Maska had commenced marketing of goalie pads which they considered to be practically identical to the ones they made for a number of professional players.  The similarity was so strong, in Plaintiffs’ opinion, that they argued that the pads could only have been made by Sport Maska with the benefit of information belonging to Plaintiffs and in breach of the Contract.

Plaintiffs applied, unsuccessfully, for a provisional injunction under article 510 of Québec’s Code of Civil Procedure, CQLR c C-25.01 (“C.C.P.”).

Article 510 C.C.Q.  A party may ask for an interlocutory injunction in the course of a proceeding or even before the filing of the originating application if the latter cannot be filed in a timely manner. An application for an interlocutory injunction is served on the other party with a notice of its presentation.

In an urgent case, the court may grant a provisional injunction, even before service. A provisional injunction cannot be granted for a period exceeding 10 days without the parties’ consent.

See Groupe CRH Canada inc. v. Beauregard, 2018 QCCA 1063 paras 23-34 for a recent, authoritative statement of the applicable criteria and leading cases.

Bachand J. applied those criteria and, on the summary evidence available, dismissed the application.  He acknowledged the fact that Sport Maska had access to sensitive information necessary for the manufacture of the products but drew a line between access and a breach of the obligation of good faith.  Codified by article 2805 of the Civil Code of Québec, CQLR c CCQ-1991 (“C.C.Q.”), good faith is presumed in Québec civil law.

Article 2805 C.C.Q. Good faith is always presumed, unless the law expressly requires that it be proved.

Without more before him, Bachand J. could not agree that the facts were sufficient for Plaintiffs to demonstrate an apparent right.  He did acknowledge that, in the future, Plaintiffs might collect additional elements of evidence and re-apply during the course of the litigation.  That potential did not serve to complete the evidence before him at this early stage.

In closing, Bachand J. did urge the parties to consider the mediation and arbitration provisions in their Contract.

[25] En terminant, je me permets de rappeler aux parties que la convention P-5 contient des dispositions relatives à la médiation et à l’arbitrage qui reflètent très clairement leur intention de résoudre tout litige en découlant de manière extrajudiciaire. Il appartient évidemment aux parties de décider d’invoquer ces clauses, mais elles auraient sans doute intérêt à réfléchir très sérieusement à l’opportunité de se prévaloir des mécanismes dont elles ont convenu afin d’éviter de s’enliser dans des procédures judiciaires complexes et coûteuses.

‘[25] (unofficial translation) In closing, I allow myself to remind the parties that the Contract P-5 contains provisions regarding mediation and arbitration which clearly reflect their intention to resolve all dispute flowing from it by way of extrajudicial means.  It obviously belongs to the parties to decide to trigger those clauses but they have no doubt interest in seriously reflecting on the opportunity to prevail themselves of the mechanisms which they had agreed to in order to avoid bogging themselves down in complex and costly judicial procedures.’

Bachand J. also supported the opportunity which lay in the exchange of information offered by Sport Maska which may itself help resolve the dispute.

[26] Il convient également de rappeler les obligations de bonne foi, de transparence, de coopération et de loyauté qui incombent aux parties aux termes des articles 19 et 20 C.p.c. Hier après-midi, la défenderesse s’est dite ouverte à mettre à la disposition des demandeurs un exemplaire des jambières qu’elle commercialise depuis peu. On ne peut qu’encourager un tel échange d’informations entre les parties, en espérant que cela leur permettra de résoudre rapidement leur différend.

‘[26] (unofficial translation) It’s opportune also to recall the obligations of good faith, transparency, cooperation and loyalty which rest on the parties in light of articles 19 and 20 C.C.P.  Yesterday afternoon, defendant said it was open to putting at plaintiffs’ disposition a sample of the goalie pads which it has recently been marketing.  We cannot but encourage such an exchange of information between the parties, in the hope that doing so will allow them to resolve faster their dispute.’

urbitral note – First, Bachand J. openly prompted the parties to consider use of mediation and arbitration, in lieu of the ‘complex and costly judicial procedures’, and reminded them that they had already agreed to those provisions in their Contract.

Second, Bachand J. urged the parties to follow up on the opportunity to informally exchange information rather than engage in a more adversarial process.  Doing so would demonstrate compliance with the approach urged in the two (2) C.C.P. articles he mentioned and which animate much of the procedural decisions made by consent by arbitral parties:

Article 19 C.C.P. Subject to the duty of the courts to ensure proper case management and the orderly conduct of proceedings, the parties control the course of their case insofar as they comply with the principles, objectives and rules of procedure and the prescribed time limits.

They must be careful to confine the case to what is necessary to resolve the dispute, and must refrain from acting with the intent to cause prejudice to another person or behaving in an excessive or unreasonable manner, contrary to the requirements of good faith.

They may, at any stage of the proceeding, without necessarily stopping its progress, agree to settle their dispute through a private dispute prevention and resolution process or judicial conciliation; they may also otherwise terminate the proceeding at any time.

Article 20 C.C.P. The parties are duty-bound to co-operate and, in particular, to keep one another informed at all times of the facts and particulars conducive to a fair debate and make sure that relevant evidence is preserved.

They must, among other things, at the time prescribed by this Code or determined in the case protocol, inform one another of the facts on which their contentions are based and of the evidence they intend to produce.