Publication

INTRODUCTION

On June 8, 2002, the Quebec National Assembly adopted the Act to reform the Code of Civil Procedure (S.Q. 2002, chapter 7, Bill 54), which introduces extensive changes to the rules of civil procedure. As a result of this major reform, the gist of which will come into force on January 1st, 2003, some 300 articles are amended, repealed or added to the current Code of Civil Procedure (C.C.P.).

In the pages that follow, we will summarize the changes that we believe may be of interest to companies and will try to assess their impact. We will not attempt to cover all the new rules. The changes concerning class actions are dealt with in a separate bulletin.

GUIDING PRINCIPLES

New Articles 4.1, 4.2 and 4.3 of the C.C.P. introduce four guiding principles that promise to have a major impact: (i) the requirement to act in good faith, (ii) proportionality, (iii) conciliation and (iv) the parties having control of their case but the court intervening to ensure proper case management.

The requirement to act in good faith in the context of civil proceedings will hopefully serve to curb abuse, increase efficiency and reduce costs.

The principle of proportionality will compel the parties and the court to ensure that the proceedings they choose are proportionate to the nature and ultimate purpose of the action or application and to the complexity of the dispute. In accordance with this principle, the court could, for example, refuse to authorize proceedings that a party would otherwise be entitled to take, because the object of the dispute does not justify them. This new provision should help to ensure that costs will be commensurate with the object of the dispute.

Each of the above principles will undoubtedly be interpreted in conjunction with the other.

Some lawyers fear that the new provisions will in fact complicate procedure and increase costs by giving rise to new arguments and grounds of contestation based on systematic allegations of abuse and bad faith, possibly even causing additional damage suits to be brought. Under the current Code, a party or its attorney wishing to allege abuse of procedure on the part of another is held to very strict criteria. If the courts were to lower the bar based on the new provisions, the number of claims for abuse of procedure, whether real or imaginary, would likely go up. Considering the spirit of the reform, we anticipate that the courts will be able to avoid such pitfalls and will interpret the relevant provisions in a way that produces the results sought by the legislator without undesirable secondary consequences.

Under new Article 4.3 of the C.C.P., courts and judges may attempt to reconcile the parties. This principle is not really new, since the rules of practice already include similar provisions. Technically, the parties' consent is still required and conciliation will not be compulsory, except in certain cases.

The principle of the parties having control of their case will apply within the bounds allowed by the procedural rules and the time limits provided for in the C.C.P. Despite this statement of principle, in practice, the parties will have less control over certain aspects of their case than they do now, as we will see further on. The court will see to the orderly progress of the proceedings and will intervene to ensure proper case management if the parties cannot agree on the way a case is advancing.

"FAST TRACK"

One of the keystones of the reform is the application to all cases of the 180 day time limit that currently exists for the simplified procedure. In principle, all cases will therefore have to be inscribed or scheduled for proof and hearing within the aforesaid time limit. This is unquestionably one of the most significant changes of the reform and is in keeping with the legislator's broad objective of speeding up the judicial process.

The 180 day time limit is peremptory but may be extended with the court's permission, provided the complexity of the case or special circumstances warrant it. The application to extend the 180 day time limit may not be filed prior to the 150th day following institution of the action. This measure was introduced to force the parties to demonstrate that they have been diligent in prosecuting their case during that time and, in practice, means that an extension should not be taken for granted.

In fact, this change may not have as dramatic an effect as one might think, since some 80% of cases are already subject to the simplified procedure and the 180 day time limit. Clearly, there will be a lesser impact for companies, most of whose cases are already subject to these rules, and a greater impact for others. We foresee the following consequences for cases that so far have not been subject to the above rules:

The measure will likely alter the balance between the plaintiff's and defendant's positions, at least in complex cases. The plaintiff will have the prescription period (three years in most cases) in which to gather evidence, build a case and compile expert opinions. In principle, the defendant will have much less time for the same process. Companies will thus have to anticipate claims that may be made against them, assess these claims, do the necessary work (including hiring an expert, if necessary) right away and get their attorneys involved sooner.

The total cost of handling a case may not increase significantly, and may even decrease, under the new rules. However, the cost will have to be absorbed more quickly. Corporate legal departments can thus expect to have to increase their budgets for the first few years of the reform.

Lawyers handling complex cases may not necessarily be able to continue accepting the same number of cases as in the past, at least for a certain initial period of time.

Companies will have to allocate the resources necessary to duly comply with the procedural requirements within the prescribed time limit, for example, in regard to the filing of documents or the delivery of undertakings given in connection with examinations on discovery. This is likely to become a significant burden in complex cases.

SPECIAL CASE MANAGEMENT

The chief justice may order special case management where required by the special nature or complexity of the proceeding or in cases where the 180 day time limit is extended. This means that a single judge will be in charge of the case, rule on all Incidental matters, preside over the pre-trial conference and hear the case on the merits.

The question is whether special case management is subject to the 180 day rule referred to above. One might assume so, even though the C.C.P. does not make any mention of this. We expect the courts to answer this question in the very near future.

SPLITTING OF ACTION

Splitting an action means to proceed in several stages. For example, a claim for damages may be split into two stages, one to determine liability and the other to determine the damages, if any.

The circumstances in which an action may be split are extended:  splitting an action is no longer limited to civil liability cases and may be ordered in any matter. Moreover, it is no longer an exceptional measure.

If used properly, this measure could reduce the costs and inconvenience associated with civil trials.

EXAMINATION ON DISCOVERY

The rules concerning examinations on discovery have been modified to reflect the principle of proportionality referred to earlier. Thus, it will no longer be possible to proceed with an examination on discovery in cases where the amount at stake is less than $25,000. Moreover, the court can restrict the number and length of examinations on discovery and terminate an examination that is excessive, vexatious or useless. These provisions may put an end to or limit abuses of the discovery process which have become all too commonplace.

COURT OF QUÉBEC AND SMALL CLAIMS

Since last June, the Court of Québec has jurisdiction where the value in dispute is less than $70,000 and not $30,000 as was the case previously.

The jurisdiction of the Small Claims Division has been raised from $3,000 to $7,000. Moreover, a small claim no longer has to arise from a contractual or legal obligation:  the jurisdiction of the Small Claims Division includes both claims resulting from the law and claims that may affect future rights. Companies will thus have to be prepared to deal with a larger number of small claims.

APPEAL

The threshold amount for an appeal as of right has been increased. This will limit the number of appeals brought before the Quebec Court of Appeal, because an appeal lies only in cases where the value of the object of the dispute in appeal is $50,000 or more (as opposed to the current threshold amount of $20,000).

A judge of the Court of Appeal may, on his or her own initiative or at the request of a party, hold a proceeding management conference with the goal of better defining the matters really at issue, simplifying proceedings and shortening the hearing. The judge may, among other things, limit the pleadings and other documents to be filed, fix time limits that are different from those provided for in the C.C.P., lift the requirement to file a factum and allow the parties to proceed on the basis of an argumentation plan, and determine a hearing date. These measures are designed to allow the procedural scheme to be adapted to the nature and complexity of the case and are based on rules that already exist in regard to interlocutory rulings, which have proven to be efficient.

TRANSITIONAL PROVISIONS

 Most of the changes will not apply to actions instituted prior to January 1, 2003. The increased jurisdictional limits applicable to the Court of Québec and the Small Claims Division took effect on June 8, 2002.

CONCLUSIONS

The reform may indeed serve to speed up the judicial process and provide further assurance that the cost of litigation will be in line with the amounts at stake, but it will also force companies to proceed quickly and allocate money and resources to legal disputes within a shorter time frame. Companies will also have to act ever more swiftly and prudently in identifying and dealing with potential or future claims.

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