Law in Quebec

News about Quebec legal developments


  • Securities class actions harder to launch after Supreme Court ruling

    A ruling by the Supreme Court of Canada that dismissed a proposed securities class action against a Montreal pharmaceutical company will likely make it more difficult for investors to launch these kinds of lawsuits in the future, say class action and securities lawyers.

    In a ruling that marked the first time the nation’s highest court examined a case involving secondary securities market liability regimes, the SCC held that in order for plaintiffs to be able to proceed with a securities class action they must provide courts with “sufficient evidence” to show a “realistic chance” of success.

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  • New trial ordered for murderer following insufficiently clear jury instructions

    A new trial has been ordered for a 51-year old Quebec City man convicted of first degree murder after the Quebec Court of Appeal held that the trial judge did not provide with sufficiently clear instructions to the jury over the reliability of a confession made in a “Mr. Big” police sting operation.

    In a case that applied the new framework established last year by the Supreme Court of Canada over the admissibility of confessions elicited during “Mr. Big” operations, the Quebec Court of Appeal ruled that the confession made by Alain Perreault during the police sting was admissible because its probative value outweighed its prejudicial effects. But the appeal court found the trial judge should have instructed the jury the context in which the admission was made to address concerns about the reliability and prejudice that arise from these confessions. “Mr. Big” operations are elaborate stings where undercover agents recruit suspects into fictitious criminal organizations to gain their trust and extract a confession, particularly in cold cases.

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  • Muslim non-profit organization obtains status as religious institution

    A Muslim non-profit organization that sought to obtain the status of a religious institution in order to obtain an exemption from paying municipal and school property taxes won its case after Quebec Superior Court overturned a ruling by Quebec’s administrative tribunal.

    In a ruling that reversed a recent trend by Quebec adjudicators who interpreted the notion of religious institutions narrowly and restrictively, Quebec Superior Court Justice Carol Cohen held that it should instead benefit from a broad and liberal interpretation. While the expression religious institution is not defined by Quebec law, Justice Cohen heeded guidance from Quebec jurisprudence as well the recent Supreme Court of Canada’s ruling in Loyola High School v Quebec (Attorney General) 2015 SCC 12, and held that that a religious institution exists when an organized group of persons establish or create an organization to facilitate the pursuit and realization for religious purposes.

    “The Fondation case resembles a lot to the Loyola High School, a non-profit corporation that is involved in private education, the only difference being the Muslim faith of its founders,” said Justice Cohen in Fondation Internationale Azzahra inc. v. Cour du Québec 2015 QCCS 1307.

    Quebec municipalities. Religious. Property tax exemptionsMuch is at stake. Under the Quebec Act respecting municipal taxation (Act), religious institutions are exempt from paying municipal or school property taxes. There are 3,804 religious institutions in Quebec, including 1,132 in Montreal that were exempted from paying $92 million in municipal and school property taxes in 2014. But the Quebec government has been clamping down in recent years against organizations that allegedly abuse their status as religious institutions to avoid paying municipal and school property taxes, and has launched legal proceedings against them before the Quebec Administrative Tribunal.

    “This is an important ruling because the appreciation of what constitutes a religious institution and religious activities was increasingly being interpreted in a more limited and restrictive fashion by adjudicators and the courts,” explained Sébastien Dorion, a Montreal lawyer with Dunton Rainville who successfully plead the case. “This ruling sets the record straight and restores the broad and liberal interpretation that existed before the new restrictive interpretation began to take hold.”

    The case deals with Fondation Internationale Azzahra, a Montreal charitable and Islamic religious foundation established in 1989. It owns and operates a mosque, a Muslim cemetery, Islamic schools, and conducts charitable, philanthropic, community and cultural activities. The property that houses its mosque and cemetery were exempted from paying municipal and school property taxes because it was granted the status of a religious institution. In 2008, the Fondation acquired another property in Montreal that housed a high school, and it was granted a licence to teach by the Quebec Ministry of Education. In 2009, the City of Montreal issued two certificates exempting the Fondation from paying municipal and school property taxes on the school because it deemed it to be part of a religious institution.

    But the Quebec Ministry of Municipal Affairs, Regions and the Occupation of Territory (MAMROT) contested the two exemptions and brought the matter before the Tribunal administratif du Québec (TAQ). On November 2011, the adjudicators ruled in favour of MAMROT and held the Fondation should not qualify as a religious institution under the Act. Rather the TAQ held the Fondation should be classified as a cultural and community organization because its letters patent and promotional materials do not describe it as a religious institution and because its stated aim was above all charitable, philanthropic, and community-based. Oddly, the TAQ ruling made no reference to the fact that the Fondation was already granted the status of a religious institution for its other properties that housed the mosque and the cemetery.

    Quebec municipalities. Property tax exemptionsThe financial consequences of the TAQ ruling were enormous. If the ruling was upheld, the Fondation faced a tax bill running into the hundreds of thousands of dollars in back taxes, said Dorion. An exemption would spare it from paying municipal and school taxes that range between $75,000 and $100,000 annually. The Fondation successfully appealed the ruling.

    Justice Cohen overturned the TAQ decision, and held that the adjudicator’s decision was “incomprehensible and unreasonable,” particularly since the Fondation was already certified as being a religious institution for its other properties. “If the interpretation of the TAQ and MAMROT is correct, then all religious institutions will have to abstain from doing too much charitable, philanthropic or educational activities, in order not to lose its qualification as a religious institution” under the Act, noted Justice Cohen. “Such a conclusion would be the equivalent of an amendment to the Act and would require a definition of what is too much of these activities, a definition and limitation that is nowhere to be found in the Act.”

    Justice Cohen also pointed out that under article 2 of the Quebec Religious Corporations Act religious activities and charity, teaching, and education are not mutually exclusive. On the contrary, the Religious Corporations Act “suggests” that charity, teaching and education are part of the objectives of religious corporations, added Justice Cohen.

    “The ruling is lucid,” said Daniel Bouchard, the managing partner of Lavery, de Billy’s Quebec City office and an expert in municipal law. “If one thinks about it, it would be counterproductive for a society at large (if the TAQ decision was upheld). We’d be asking religious institutions who want to continue to benefit from the exemption to conduct the least charitable work possible. That would be a misinterpretation of the Act.”

    The ruling does not create new law, points out Guillaume Rousseau, a law professor at the Université de Sherbrooke. Instead, it reverts back to jurisprudence that existed before the TAQ began issuing a strict interpretation of what constitutes a religious institution. “Justice Cohen is ensuring that the TAQ decision does not evolve into jurisprudence that favours a strict and restrictive interpretation of religious institutions,” said Rousseau, a municipal law expert. “She clarified the notion of religious institution and goes back to the jurisprudence that existed before rather than making it evolve in the way the TAQ decision would have.”

    Dorion has another client that faces the same plight as the Fondation. The TAQ turned down the organization’s application to be certified as a religious institution because it was “too involved in education,” said Dorion. He intends to use Justice Cohen’s decision to appeal the TAQ decision.

  • Repeat drunk driving offender gets lenient sentence

    A lower court ruling that sentenced a 61-year old Montreal alcoholic and repeat offender of impaired driving offenses to only 120 days of imprisonment and a lifetime driving ban was upheld by the Quebec Court of Appeal in a ruling that reaffirms the discretionary sentencing powers of trial judges, highlights the merits of individualized sentencing, and reiterates the weight that can be given to rehabilitation when sentencing.

    “The ruling is important because it shows there is still a place for individualized sentencing, that people who may not be cookie cutter examples of a sentence can actually get something that is outside of the norm because obviously the sentence he got was quite lenient,” said Dylan Jones, a Montreal criminal lawyer with Boro, Polnicky, Lighter. “It’s also important because it at least shows that if people are willing make efforts to change their lives for the better they can be rewarded for that.”

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  • Ambitious international effort to rewrite tax rules at risk

    An ambitious international effort calling for a coordinated approach to rewrite global tax rules over profit shifting risks being undermined by the number of growing countries that are unilaterally introducing significant tax reforms, warn tax experts.

    The Paris-based Organisation for Economic Co-operation and Development (OECD), backed by the G20 Finance Ministers, proposed in July 2013 a sweeping series of proposals that take aim at aggressive international tax planning by multinational companies in the wake of intense political scrutiny and public outcry over the likes of Apple Inc., Google Inc. and Starbucks moving billions of profits out of higher-tax countries into low or no-tax jurisdictions.

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  • Task force proposes bold overhaul of Quebec tax system

    A blue-ribbon panel of tax experts has proposed a bold overhaul of Quebec’s tax system that would introduce a new tax mix by slashing $5.9 billion in Quebec personal and business taxes while increasing consumption taxes and fees in a bid to spur economic growth, job creation, and make the province a more competitive place to invest.

    The sweeping reforms, which represent a marked shift in tax policy by shifting the reliance on income taxes to provincial sales tax and user fees, could serve as a model for other provinces as they too are grappling with an ageing population and sluggish government revenue growth, said Stephen Gordon, a professor of economics at the Université Laval.

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  • Quebec regulates virtual currency ATMs and trading platforms

    In a move that caught the business and legal community by surprise, Quebec became the first jurisdiction in Canada to regulate the digital currency sector by requiring businesses that operate virtual currency automated teller machines or trading platforms to obtain a licence to operate in the province.

    But the recently published amendments to the Policy Statement of the Money Services Businesses Act (Act) by Quebec’s financial watchdog has drawn criticism from industry observers who assert that it is brimming with ambiguities and risks hindering the burgeoning digital currency industry.

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  • Landmark ruling clarifies franchisor’s obligations

    In a “sad saga” of a successful franchise operation that suffered a meltdown in Quebec following aggressive and fierce competition, a 12-year legal battle came to a bittersweet end after the Quebec Court of Appeal upheld a lower court ruling and ordered Dunkin’ Brands Canada Ltd. to pay 21 Quebec franchisees nearly $11 million, an amount that rises to $18 million with interest and additional indemnity, for breach of contract, misrepresentation, and negligence.

    In the biggest Quebec franchising case in nearly two decades, the Quebec Court of Appeal concluded that the franchise agreements between Dunkin’ Donuts and its franchisees explicitly imposed on Dunkin’ Donuts an obligation of means to take reasonable and timely measures to protect and enhance its brand, particularly in the face of market changes. The franchisor was also bound by obligations that could be implied in the agreement under article 1434 of the Civil Code of Quebec (CCQ), including the implied obligation to act in good faith towards its franchisees, to cooperate with them, and to assist them, held the appeal court. “The obligations owed by the franchisor were not only those explicitly stated in the agreements but also implicit obligations that flowed from the nature of the franchise agreement,” said appeal court Justice Nicholas Kasirer in a unanimous 53-page ruling in Dunkin Brands Canada Ltd. v. Bertico Inc. 2015 QCCA 624.

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  • Blind man wins discrimination case

    A now-defunct Montreal nightclub was ordered to pay $2,500 in moral damages to a blind man for refusing to grant him and his guide dog access to the dance floor, following a ruling by the Quebec Court of Appeal that raises the bar for business to accommodate disabled people.

    In a majority decision that demonstrates yet again the appeal court’s penchant to overturn rulings by the Quebec Human Rights Tribunal, the appellate court held that Simon Beauregard was a victim of discrimination because the nightclub did not take reasonable efforts to accommodate him.

    “The principles that emerges from this ruling is that it will take extremely serious reasons to refuse to accommodate someone so in one sense one can rejoice but what preoccupies me is that the Quebec Human Rights Tribunal does not appear to benefit from a minimal amount of deference by the appeal court,” remarked Christian Brunelle, a law professor specializing in human rights at the Université Laval. “The appeal court does not shy away from overturning the Tribunal’s rulings, sometimes even over the appreciation of evidence. That’s what it seems to have done here.”

    The ruling, which marks the first time the Quebec appeal court ruled on access to public spaces for service dogs for disabled persons, imposes a “heavy burden” on business that adopt a discriminatory policy to prove that it was based on a bona fide and reasonable justification, said Marc Benoit, an employment lawyer with Loranger Marcoux in Montreal. “Can you imagine the burden that it places on service providers who have to make a decision on the spot,” asked rhetorically Benoit. “The bar is higher than it was.”

    On May 2009, Beauregard went to the Radio Lounge Bar with his guide dog and a friend, and was told by the manager that he had to leave the animal in the coat-check area. The bar’s staff were concerned about the presence of the service dog in the middle some 500 partygoers, and feared that it could lead to falls, pushing and shoving, and even fights, even though Beauregard insisted he had never had a problem in other establishments. The owner of the bar, Ahmed Ziad, stepped in and offered Beauregard and his service dog access to a V.I.P. lounge, located away from the dance floor. A month later, Beauregard lodged a complaint with the Quebec Human Rights Commission alleging that he was a victim of discrimination, based on his handicap and the means he used to “palliate” his handicap, infringing articles 10 and 15 of the Quebec Charter of Human Rights and Freedoms.

    On February 2013, 18 months after the Commission took legal action before the Quebec Human Rights Tribunal, the Tribunal cleared the bar owner of any wrongdoing. The Tribunal held that while preventing Beauregard and his service dog to gain access to the dance floor was discriminatory, it found that the refusal was based on “a real and reasonable” concern for security. The “mere presence” of the dog on the dance floor where there were several hundred patrons, “many of who were probably drunk,” created a high risk for falls, said the Tribunal.

    The appeal court, heeding guidance issued by the Supreme Court of Canada in the Grismer case [British Columbia (Superintendent of Motor Vehicles) v. British Columbia (Council of Human Rights), [1999] 3 S.C.R. 868] and the Meiorin case [British Columbia (Public Service Employee Relations Commission) v. BCGSEU, [1999] 3 SCR 3, 1999] overturned the Tribunal’s ruling. In Meiorin, the SCC developed a new test for all types of discrimination that broadened the notion of the duty to accommodate. Once a plaintiff establishes a prime facie case of discrimination, the onus lies with the defendant to prove on a balance of probabilities that the policy or standard has a bona fide and reasonable justification. In order to establish this justification, the defendant must prove that that it adopted the policy or standard for a purpose or goal rationally connected to the function being performed, that it was adopted in good faith, and that the policy or standard is reasonably necessarily without incurring undue hardship. A serious risk or excessive cost may be considered as undue hardship.

    The Quebec Court of Appeal held in Commission des droits de la personne et des droits de la jeunesse c. 9185-2152 Québec inc. (Radio Lounge Brossard), 2015 QCCA 577 that the Quebec Human Rights Tribunal did not apply all of the elements of the Meiorin test correctly. The Tribunal correctly came to the conclusion that Radio Lounge passed the first two steps of the Meiorin test: its decision was based on a legitimate objective, that is, to ensure the security of its clients, and the nightclub acted in good faith. But the appeal court found that the Tribunal did not apply the third part of the test correctly. Instead “it limited itself to finding that the presence of the guide dog could entail a ‘high’ risk of incidents,” said Justice Jean-François Émond in reasons that Justice Marie-France Bich agreed with. “It did not consider whether the evidence had established the ‘serious’ or ‘undue’ nature of such risk or even its existence. It therefore bypassed the issue without addressing the fact that no actual accommodation had been seriously considered. In this case, the risk was assessed in light of evidence based on impressions.” Granting access to the V.I.P. section was not in fact an “actual accommodation,” but rather was an exclusionary measure that had the effect of isolating Beauregard.

    “The appeal court first of all confirmed the importance of granting equal access to handicapped people, and it reminds establishments – private as much as public – that blind people accompanied by service dogs must have access to the establishment,” remarked Marie Dominique, a lawyer with the Quebec Human Rights Commission who successfully plead the case. “They cannot allege a risk to skirt around their obligation to take reasonable steps to accommodate, unless the risk is serious or excessive. So this ruling goes further than the majority of decisions on matters regarding access to public spaces for handicapped people.”

    Benoit, however, is concerned about the burden of proof that service providers will have to establish to justify a discriminatory policy. He notes that a business that does not provide a reasonable accommodation will have to demonstrate that the risk is excessive and serious, and that it cannot be based on preconceived ideas or notions. “It has to be based on objective evidence – and it is going to be really interesting to see how service providers will be able to prove that before the courts,” said Benoit. “The burden of proof has become excessively high for service providers.”

    Appeal court Justice François Pelletier would have upheld the Tribunal’s ruling. He asserted that the appeal was principally based on an appreciation of evidence, and that deference should have been given to a “specialized body” that was given the mandate to decide on human rights matters. Besides, it was reasonable to conclude that it would have been “unwise” to allow the dog access to the dance floor given the risks that it posed under the circumstances, added Justice Pelletier.

    The ruling also appears to go against the grain of yet another ruling by the SCC that seemingly lowered the bar over the duty to accommodate, according to Brunelle. In Hydro-Québec v. Syndicat des employé-e-s de techniques professionnelles et de bureau d’Hydro-Québec, section locale 2000 (SCFP-FTQ), [2008] 2 SCR 561, 2008 SCC 43, the SCC overturned a ruling by the Québec appeal court and held that an employer’s duty to accommodate ends where the employee is no longer able to fulfill the basic obligations associated with the employment relationship for the foreseeable future.

    “The SCC held in the Hydro-Québec ruling that the Meiorin test must be read with a certain degree of flexibility,” noted Brunelle. “However, in the Radio Lounge decision, the appeal court takes a very strong stance and states the obligation to accommodate is extremely important. But in reading the decision one would be hard-pressed to figure out what the nightclub could have done more. Not much guidance is given to determine what is considered to be an excessive risk.”

  • Ruling extends reach of taxman’s demand letters

    Quebec’s tax authorities can issue demand letters and request the disclosure of financial information from third parties located outside of the province to determine whether the taxpayer is subject to the province’s tax laws, ruled Quebec Superior Court.

    The ruling illustrates the daunting challenge taxpayers face when trying to quash formal demand letters and requests for information by tax authorities, particularly when they are trying to ascertain the residency of corporations or trusts in order to establish where it makes its management decisions, according to tax experts.

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  • Bell ExpressVu ordered to pay $82 million to Videotron over pirated television signals

    The Quebec Court of Appeal has ordered Bell ExpressVu to pay over $82 million to Quebecor Inc. subsidiaries Videotron Ltd. and TVA Group Inc. for failing to prevent the piracy of its satellite signal in a ruling that clarifies the application of the business judgment rule.

    In a singular ruling that set aside the traditional deference shown to a trial judge’s assessment of damages, the appeal court revised a 2012 lower court decision that ordered Bell to pay approximately $339,000 to Videotron and $262,000 to TVA after it held that the trial judge’s analysis of expert evidence contained a “palpable and overriding error” when calculating the award. Quebecor estimates that the total sum will amount to $137 million including capital, interest and costs, according to a written statement.

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  • Only one kind of class action member, rules appeal court

    A lower court ruling that classified class action members into distinct categories, and would have allowed class action defendants to obtain detailed contact information of “registered” members as well as would have authorized counsel of the class action defendants to meet with “unregistered” members was overturned by the Quebec Court of Appeal in a majority decision.

    In a precedent-setting ruling that affirms the rights of class action plaintiffs and significantly restrains class action defendants from examining members of the class, the appeal court categorically concludes that there is no such thing as multiple categories of members. There are only members — including the representative and, if any, interveners — and those who chose to exclude themselves from the group.

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  • Appeal court orders new trial after expert witness changes testimony

    The Quebec Court of Appeal set aside the conviction of a second degree murder and ordered a new trial after it found that an expert witness offered a completely different conclusion during cross-examination at a jury trial compared to her written report and testimony she provided during the preliminary inquiry.

    In a clear message to expert witnesses, the appeal court held that the forensic scientist, a professional expert witness with 14 years of experience who is often called upon by the Crown to testify, should have at the very least disclosed her new conclusion to Crown counsel or to the police investigator who interviewed her before trial. “The sudden nature of her new testimony is worrisome,” said the three-judge Court of Appeal panel in Gakmakge c. R., 2015 QCCA 314.

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  • OECD report challenges widely-held assumptions on foreign bribery

    The majority of foreign bribes were paid by large companies, usually with the knowledge of senior management, to officials from developed countries to win contracts and cut through red tape, reveals an eye-opening report from a leading think tank that shatters many commonly-held preconceptions about corruption risks.

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  • Tax authorities target undisclosed foreign assets

    A letter recently sent to some Canadians “strongly” encouraging the voluntary disclosure of potential undisclosed foreign assets and unreported foreign income is the latest indication that the Canada Revenue Agency is stepping up efforts to crack down on international tax evasion and aggressive tax avoidance.

    A growing number of wealthy Canadians are coming clean with concealed assets in foreign tax havens through the CRA’s voluntary disclosure program after lists emerged over the past couple of years with information revealing the names of supposed Canadians who allegedly have offshore accounts. The number of offshore disclosures increased from 1,215 in 2006‐2007 to 5,248 in 2013‐2014, representing over $2 billion in total unreported income since 2006‐2007, according to the CRA’s latest annual report. The CRA’s latest letter-writing campaign, which began last December, is widely expected to entice more Canadian taxpayers to come forward.

    “It’s an inexpensive way of encouraging a greater level of compliance,” noted Michael Friedman, co-chair of McMillan LLP’s tax group. “Having a one-on-one audit can be costly for the CRA, and while those types of audits may be more effective in generating revenue for the tax authority, writing a letter to a taxpayer is inexpensive. When someone receives a letter from the CRA, they think twice.”

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Law in Quebec
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