Author: Félix Tessier 

The six-month delay for inscription under article 173 C.C.P. and the presumption of discontinuance in case of failure to comply with this strict time limit (177 C.C.P.), are well known and punctuate almost all disputes with inevitable motions to extend the time limit. However, the question arises as to whether this time limit, which runs from the time the court accepts or establishes the case protocol, is applicable to proceedings in the Commercial Division of the Superior Court that are not subject to the filing of a case protocol. The Court of Appeal recently analyzed this issue in Aviva Insurance Company of Canada c. City of Montréal, 2023 QCCA 692.

The facts and the judgment of the Superior Court

In this case, Aviva had provided completion bonds to the City of Montreal on behalf of a construction contractor doing work for the City. Aviva was also granted a hypothec over the contractor’s claims. Following the contractor’s bankruptcy, Aviva exercised its right to the contractor’s claims and asked the City to be paid for its work, but the City refused to pay. Aviva sued the City for these amounts and other damages, instituting its action in Commercial Division in the matter of the contractor’s bankruptcy proceedings.

The Superior Court ordered the parties to conclude a case protocol, which was subsequently accepted by the Court. In completing the case protocol, both parties considered that they were subject to the six-month delay for inscription which, given the suspension of delays in connection with the Covid-19 pandemic, was due to expire on January 4, 2021.

The proceedings continued, and the Court was involved in adjusting certain deadlines and procedural steps, at one point remaining seized of the case. The Court also took note of the extension of a the time limit for inscription beyond January 4, 2021. As of that date, however, no request for an extension of the time limit for inscription had been made. At a case management hearing held a few months later, the City sought a declaration that Aviva was deemed, as provided for in article 177 C.C.P., to have discontinued its action in view of its failure to inscribe before the expiry of the six-month time limit. The judge of Superior Court agreed.

The Court of appeal ruling

The Court of Appeal overturned this decision of the Superior Court. The Court pointed out that the Commercial Division is governed by specific and flexible rules, the formalism imposed by the Code of Civil Procedure being often impracticable in commercial matters[1].

The Directives de la Cour supérieure pour le district de Montréal provide that an application in oppression is subject to the filing of a case protocol and a request for setting down for trial and judgment (in accordance with articles 173 and 174 C.p.c.). However, the other applications in the Commercial Division are not subject to the filing of a case protocol and are instead inscribed on the roll for a hearing on the merits by means of a “Demande commune de dossier complet – Matière commerciale”[2].

In the Court’s view, the presumption of discontinuance set out in article 177 C.C.P. can only apply in the Commercial Division, in principle, to oppression cases:

[21] The deemed discontinuance under Article 177 C.C.P. can only apply where the plaintiff is late filing a “request to have the case set down for trial and judgment / demande pour que l’affaire soit inscrite pour instruction et jugement” pursuant to Article 173 C.C.P. Moreover, that delay is calculated from the date that the case protocol was filed or, if the parties had the obligation to file a case protocol but failed to do so, from the date of service. Because the Directives only require the parties to sign a case protocol and file a “Demande d’inscription pour instruction et jugement par declaration commune” in oppression cases, the result is that, under the Directives, Article 177 C.C.P. could only apply in the Commercial Division in oppression cases.

But what about cases where the Directives do not provide for the filing of a case protocol, but where the Court nevertheless decides to impose one, as in the Aviva case? By imposing on the parties in this case the obligation to enter into a case protocol, did the Superior Court render applicable the provisions of articles 173 and 177 C.C.P.?

The Court answered this question negatively. Stressing that it would have been preferable for the judge to express himself specifically on this issue, the Court concluded that the mere obligation to conclude a case protocol does not automatically entail the application of the requirements relating to the time limit for inscription and the deemed discontinuance. The Court pointed out that the judge had taken over the management of the case with a view to bringing it to a hearing on the merits, making it unnecessary to apply the six-month time limit. In this context, his order did not also have the effect of subjecting the proceedings to the provisions of articles 173 and 177 C.C.P., and the sanction of deemed discontinuance of article 177 C.C.P. could not apply. The Court emphasized that if the judge had wished to depart from the specific rules of the Commercial Division and require the inscription within six months, he would have done so expressly, considering the importance of the consequences flowing from a failure to do so.

While this ruling confirms the procedural flexibility offered to practitioners of the Commercial Division, litigators must nonetheless remain cautious and remember that the mandatory six-month time limit for inscription remains applicable to oppression cases, and could be applicable to any other case if expressly ordered by a judge of the Commercial Division.

[1] These specific rules are set out, subject to the applicable specific statute, where applicable, in the Regulation of the Superior Court of Québec in civil matters, sections 63 to 67 and in the Directives de la Cour supérieure pour le district de Montréal (the “Directives”).

[2] Sections 212.4, 212.5 and 215.3 of the Directives, according to the version adopted on September 1, 2019, applicable at the time of first-instance proceedings. A new version of the Directives was adopted on January 1, 2023, with sections 129 to 131 providing for essentially the same thing.