par
Sarah D. Pinsonnault
Articles du même auteur
18 Déc 2014

The Mere Likelihood of Being Required to Testify in an Action is Insufficient to Warrant Being Impleaded as a Party to the Proceedings

Par Sarah D. Pinsonnault, avocate

By Sarah D. Pinsonnault
The forced intervention of a third party to an action is governed by
article 216 C.C.P. which requires, inter
alia
, that the presence of this party be necessary for “a complete solution
of the question involved in the action”. In Istore
Inc
. c. Paradies Shops, l.l.c.,
2014 QCCS 5995, the Impleaded Party (“PeachMac”) succeeded in being removed as
a party to the proceedings, as it was revealed that its presence was not
necessary to ensure a complete resolution of the dispute between the main
parties. The Court found that even if a representative of PeachMac would most
likely be called to testify during the trial, this did not render its presence
necessary as a party to the action.

Context

The Plaintiff (“iStore”), a licenced Apple retailer looking to expand
its business activities into the United States, entered into discussions with the
Defendant (“Paradies”), who is also a retailer of these products but primarily
conducts its business in US airports. During the course of these talks,
confidential and proprietary information was exchanged and a non-disclosure
agreement was therefore concluded. These discussions however failed to lead to
any commercial agreement between the parties and Paradies ultimately entered
into a business relationship with PeachMac, another licenced reseller of Apple products
located in the state of Georgia.

iStore claims that Paradies was in breach of the non-disclosure
agreement in that it communicated confidential information to PeachMac. In
light of this, iStore instituted a motion for the issuance of an interlocutory
and permanent injunction, both against Paradies and iStore, to not only prevent
Paradies from using this confidential information, but to also enjoin Paradies from
enforcing any agreement concluded with PeachMac that involves the use of this
information.

Paradies and PeachMac both responded with motions for declinatory
exception, in large part because the alleged breach of contract occurred in the
state of Georgia, thus depriving Quebec courts of any jurisdiction over the
matter pursuant to article 3148 C.C.Q.

PeachMac also sought to be removed from the action because, contrary to
what is prescribed at article 216 C.C.P., it argued that its presence was not necessary for a
complete solution of the matter in dispute.


Decision

Firstly, with regard to PeachMac’s motion, the presiding judge, Superior
Court Justice Thomas M. Davis, was of the opinion that of all the connecting
factors established in article 3148 C.C.Q., only the « damage suffered in
Quebec » factor found at paragraph (3) merited consideration. However, in
citing extracts from the Infineon Technologies AG v. Option consommateurs, 2013
SCC 59
decision, he
reminded us that when the damage is in the form of a simple recording of loss
in the records of the plaintiff’s patrimony, which happens to be located in Quebec,
this is insufficient to confer jurisdiction. Instead, one must look to see if
the situs of the actual bodily, moral
or material damage resulting from the immediate and direct fault of the other
party occurred in Quebec.

In the case at bar, the presumable damage to be suffered by iStore would
be the loss of potential sales of its products in US airports due to
Paradies alleged breach of contract:

“[31]
The damages, which are “the immediate and
direct consequence of the debtor’s default
” will be suffered in the United
States, although they might be accounted for in Quebec, as the business
opportunity about which the protected information was exchanged was solely a
United States opportunity.

[…]        
[39]
In the present matter, as the Court has stated, the loss of the business
opportunity will occur in the United States. The actual damages, if any, will
be suffered in the United States, though accounted for in Quebec.” (reference
omitted)
Consequently, on this issue, Justice Davis concluded as follows:

“[40]
Therefore, the Court concludes that none of the factors set out in article 3148
C.C.Q. are present and that the courts of Quebec have no jurisdiction over
PeachMac on the basis of article 3148.”
Secondly, regarding the forced impleading of PeachMac, Justice Davis agreed
that its presence was not necessary to ensure a complete resolution of the
dispute between iStore and Paradies:

“[47] The dispute relates to the breach of the [non-disclosure]
agreement, to which PeachMac in not a party. While it is quite likely that
PeachMac representatives will be required to testify, this does not lead to the
conclusion that its presence as a party is required.

[48] Even recognizing the power of the Quebec
courts to issue injunctions which are extra-territorial in scope, the Court
maintains this view. iStore has not asked for any direct relief against
PeachMac. There are conclusions, which stand to affect PeachMac indirectly:

ORDER Paradies to terminate all discussions and/or agreements with all
competitors of iStore pertaining to any arrangements similar to the proposed
arrangement between Paradies and iStore;

ORDER Paradies not to enforce any Agreement entered into with PeachMac that
involves the use of Plaintiff confidential information.
However, these conclusions do not lead to
PeachMac’s presence being required as an impleaded party, only as a witness. It
will have to explain its role and that evidence will no doubt be useful to this
Court in its disposition of the matter, but PeachMac need not be required to
assume the burden of being a party to play the appropriate role in the dispute
between iStore and Paradies
.” (reference omitted; emphasis added) 
PeachMac’s motion for declinatory exception was therefore granted in that Quebec courts were found to have no jurisdiction over PeachMac with regard to iStore’s motion.

To read this decision in its entirety, along with the other issues addressed therein, click here

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