Acknowledging Plaintiffs’ eventual challenges at trial with a lapsed prescription (limitation) period, Mr. Justice Martin Castonguay in Truong v. Brunelle, 2020 QCCS 55 refused to dismiss procedures stemming from a June 23, 2009 arbitral award. Filed June 25, 2019, Plaintiffs’ litigation sought both homologation and damages stemming from non-compliance with aspects of the award, but the motion to dismiss eventually focused on only the damage action. Castonguay J. held that Plaintiffs’ attorneys’ failure to finalize and file relevant pleadings justified exercising discretion to allow their case to proceed. His reasoning applies equally to late applications to homologate awards.
Plaintiffs had contracted with Defendant for a new home construction and, subsequent to taking possession, disputed certain work done in regard to the construction. Plaintiffs engaged in the procedure set out in Québec’s Regulation respecting the guarantee plan for new residential buildings, CQLR c B-1.1, r 8 (“Regulation”) adopted under Québec’s Building Act, CQLR c B-1.1. That Regulation provided for inspection and conciliation by a third party mandated under the Regulation and, failing resolution, arbitration.
Plaintiffs successfully arbitrated their dispute which resulted in a June 23, 2009 award (“Award”). That Award provided that Defendant would undertake corrective work in regard to specific items identified in the Award no later than August 31, 2009 and, failing completion by that date, the Co-Defendant program administrator mandated under the Regulation would see to its completion.
The corrective work identified in the Award was never undertaken by Defendant. Following several exchanges with the program administrator, work began on October 29, 2012. Disputes arose as of January 2013 between Plaintiffs and the program administrator regarding the quality of the work undertaken. Despite exchange of a March 15, 2013 expert report and April 17, 2013 and June 28, 2013 demand letters, the work was not completed, or at least to Plaintiffs’ satisfaction.
Plaintiffs mandated an attorney to prepare an application to the court to homologate the Award. A first draft prepared was dated September 5, 2013. This application was never finalized.
Unsatisfied with the delays occasioned by that initial attorney’s work at the time, Plaintiffs mandated a second attorney on November 1, 2013. Castonguay J. noted in his reasons at para. 14 that Plaintiffs alleged that the second attorney never completed the draft application for homologation or served or filed a final version. Castonguay J. further notes that Plaintiffs allege that the second attorney lied to them and affirmed that, in answer to Plaintiffs’ request on the status of their file in March 2016, that he should have news in the summer and would keep them informed if he received news from the court.
Plaintiffs allege that they learned only on May 3, 2019 by consulting the court dockets that there was no application by them to homologate the Award. Plaintiffs filed litigation on June 25, 2019. Their procedures involved two (2) claims: homologation of the Award; claim for damages against Defendant and the Co-Defendant program administrator.
The Co-Defendant program administrator applied under article 168 of Québec`s Code of Civil Procedure, CQLR c C-25.01 (“C.C.P.”) to have the procedures dismissed. Co-Defendant initially sought to have the homologation procedure dismissed by virtue of extinctive prescription (limitation period) under articles 2875 and 2921 et seq. of Québec’s Civil Code of Québec, CQLR c CCQ-1991 (“C.C.Q.”). It later dropped this ground. It recognized that such applications were subject to ten (10) year prescription and Plaintiffs’ application fell inside that delay to the day.
Co-Defendant maintained its opposition to the damage claim, asserting that the damage action fell beyond the three (3) period set by article 2925 C.C.Q.
Having observed that he was to assume that the facts alleged were true and cautious to respect a litigant’s right to be heard, Castonguay J. drew on Fanous v. Gauthier, 2018 QCCA 293 para. 14 and Constant v. Larouche, 2019 QCCA 2084 paras 16-17 for the criteria applicable to dismissing a proceeding before a full merits hearing. Using the August 3, 2009 date imposed in the Award coupled with the eventual date by which the Co-Defendant agreed to act following Defendant’s failure to do so, Castonguay J. readily agreed that the three (3) year extinctive prescription period had expired long ago.
Persuaded that Plaintiffs had indicated a few reasons to justify their impossibility to act within the delays set by extinctive prescription, Castonguay J. determined that Plaintiffs’ situation justified rejecting the motion to dismiss. The decision to do so remained subject to the decision at trial by a judge seized with a more robust evidentiary record.
To close his reasons, Castonguay J. provided a few words of caution to Plaintiffs about the uncertainty of the case ahead of them:
“ Cela étant, il faut également que les demandeurs soient conscients, que s’ils ne sont pas capables de se décharger de ce fardeau, la tenue d’un procès, peut entraîner de lourdes conséquences économiques, tant pour eux que pour l’APCHQ, avec la possibilité pour celle-ci de demander au Tribunal, à l’issue d’un procès, à ce que les demandeurs eux-mêmes assument ces coûts”.
“[informal translation]  That being so, Plaintiffs must also be aware that, if they are unable to meet this burden [to demonstrate their impossibility to act], the conduct of a trial may entail heavy economical consequences, as much for them as for the APCHQ, with the possibility that latter requesting the court at the end of the trial that Plaintiffs themselves bear APCHQ’s costs”.
urbitral notes – First, Castonguay J. was only called to exercise his discretion in regard to Plaintiffs not meeting the shorter three (3) year prescription for their damage action. Despite this focus, the same principles would apply for the longer ten (10) year prescription period applicable to the motion to homologate. Castonguay J. acknowledged that Plaintiffs had far exceeded the shorter of the two (2) periods but exercised his discretion to permit Plaintiffs to try their case in court at trial. He gave little insight as to whether he would have been as or less accommodating if Plaintiffs’ had exceeded the much longer ten (10) period.
See Arbitration Matters notes on related prescription/limitation period issues: “Award treated as “judgment” subject to ten (10) year prescription (limitation) period” and “Québec court upholds dismissal of application to homologate and enforce final award due to lapse of time”.
Second, for a recent Arbitration Matters note on three (3) cases applying the consequences of pursuing arbitration – or the failure to undertake arbitration to dispute a decision – read more at “Québec courts assert consequences of not undertaking/participating in mandatory legislated arbitration”.
Third, see also “Québec Court of Appeal endorses arbitration and litigation as independent recourses for different claims related to new residential home disputes”. That Arbitration Matters note concerns the Québec Court of Appeal decision in 3223701 Canada inc. v. Darkallah, 2018 QCCA 937. In that decision, the Court distinguished between statutory arbitration and court litigation for disputes stemming from the construction and sale of new residential homes in Québec. The remedy sought by plaintiffs in the Superior Court was beyond those available under the Regulation and an arbitration under the Regulation could not have resulted in cancellation of the contract of sale and related damages. The Regulation’s expedited procedure is to repair defective work which complements the C.C.Q. recourse for latent defects.