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mardi 26 juin 2012

When burdened with an excessive number of procedures, the possibility to demand an advance to cover the cost of a defense becomes available

par Ashley Kandestin, stagiaire en droit
DeGrandpré, Chait

In Ben & Florentine Restaurants inc. c. 7255764 Canada Ltd., 2012 QCCA 1019, Justice Nicolas Kasirer upheld an interlocutory judgment rendered by Justice Hélène Le Bel ordering the plaintiff, a franchisor operating a chain of restaurants, to furnish the defendant, its ex-franchisee, an advance payment of $35 000 under article 54.3 (5) of the Code of Civil Procedure (“CCP”).

In civil matters, applications for an advance costs award (provisions pour frais) are seldom granted but are rather reserved for those “rare and exceptional” cases that are special enough to warrant this preferential measure. The party applying for the order must first and foremost prove that without the advance, an inability to afford the litigation would follow. But beyond this access to justice concern, an applicant must also demonstrate that the “issues raised transcend the litigant’s individual interests[1]”. This principle was established by the Supreme Court of Canada[2], and subsequently followed by the Court of Appeal, most notably in St-Arnaud c. C.L[3], a case that makes clear the tribunal’s view that it is not up to the judiciary to create a system of legal aid by ordering one party to assume the costs of his opponent each and every time it is possible to demonstrate a serious need for the pre-emptive remedy.

The Court of Appeal has, however, identified an exception to this principle in matters of abuse of procedure, in Hétu c. Notre-Dame-de-Lourdes (Municipalité de)[4]. In 2005, before articles 54.1 to 54.6 CCP came into force, Justice Pierre Dalphond quashed the decision of Justice Louis Lacoursière to deny the remedy to a defendant who was bogged down by a number of suits taken against him by a municipality and who consequently became unable to afford his defense. Under the powers conferred upon him by article 46 CCP, Justice Dalphond awarded the advance of the defendant’s legal fees after being satisfied that (1) a state impecuniosity existed and that (2) the plaintiff’s suit was prima facie abusive. Abuse of procedure, for Justice Dalphond, fell under the umbrella of “rare and exceptional” cases.

This case was later codified in article 54.3 (5) CCP, which reads as follows:

“54.3 If the court notes an improper use of procedure, it may dismiss the action or other pleading, strike out a submission or require that it be amended, terminate or refuse to allow an examination, or annul a writ of summons served on a witness.

In such a case or where there appears to have been an improper use of procedure, the court may, if it considers it appropriate,

(5) order the initiator of the action or pleading to pay to the other party, under pain of dismissal of the action or pleading, a provision for the costs of the proceeding, if justified by the circumstances and if the court notes that without such assistance the party's financial situation would prevent it from effectively arguing its case.”

Article 54.3 (5) CCP has since been analyzed by the Court of Appeal, most recently in the Ben & Florentine case. In a litigation involving the resiliation of a franchise agreement, a series of proceedings -- namely injunctions, safeguard orders and seizures - were taken against the ex-franchisee who allegedly carried on business in violation of the non-competition clause contained in the agreement. The first instance judge viewed Ben & Florentine’s real purpose as a way to “burden the respondents with expenses, with the eventual goal of running them out of business[5]”. Because it was decided that the franchisee had valid arguments to present as regards to the non-competition clause, an advance payment was ordered to cover the franchisee’s legal fees.

Ben & Florentine argued that the judge failed to presume their good faith. In noting that the determination of abuse under 54.1 CCP is one of fact, Justice Kasirer dismissed the appeal. The facts presented before the judge allowed her to reasonably conclude that Ben & Florentine did exercise their rights in an abusive manner, giving her the ability to reverse the presumption of good faith, which is not absolute:

“[10] The cases decided under article 54.1 C.C.P. make plain that for a court to declare proceedings to be improper, the conduct of the person bringing them must be blameworthy. This determination is one of fact. Accordingly, it is deserving of deference on appeal and, absent a palpable and overriding error in that determination or an error in principle impugning it, this Court should refrain from disturbing such a finding.
[11] Petitioner had failed to show the basis of such an error here. The judge made no such mistake in her appreciation of the previous proceedings that had been successful, in whole or in part, before the motion of which she was seized. […]
[12] The fact that, in law, a person has a right to take proceedings does not insulate those proceedings from being characterized as abusive. This is plain from the idea, made manifest in article 54.1 C.C.P., that where a party takes an otherwise legitimate action for an ulterior and blameworthy motive, a court can characterize the whole as a subversion of the ends of justice (or as the French text provides, a "détournement des fins de la justice"). That measure is a finding of fact and one to which the motions judge arrived at in paragraph [25] of her reasons.
[13] The judge did not fail to presume the petitioner in good faith but recounted specifically why it was evident that certain of the proceedings were taken in bad faith. Good faith is presumed, to be sure, but that presumption is not an absolute one.”
The integral text is available here.

[1] Little Sisters Book and Art Emporium v. Canada (Commissioner of Customs and Revenue), [2007] 1 S.C.R. 38, 2007 SCC 2
[2] British Columbia (Minister of Forests) v. Okanagan Indian Band, [2003] 3 S.C.R. 371, 2003 SCC 71
[3] 2007 QCCS 20
[4] 2005 QCCA 199
[5] Ben & Florentine Restaurants inc. c. 7255764 Canada Ltd. para 5.

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