Canada– Class Actions: Rules for Referral to Arbitration Should be Followed 

This article was first published in the Arbitration Matters Blog, here.

In Vidéotron c. 9238-0831 Québec inc. (Caféier-Boustifo), 2023 QCCA 110, the Court of Appeal dismissed Vidéotron’s appeal and confirmed Justice Lussier’s first instance judgement dismissing Vidéotron’s request to limit the definition of the plaintiff group in a class action to only those customers whose contracts do not contain an arbitration clause. After the application for authorization was filed but before it was decided, Vidéotron amended its contracts with all new customers so that they contained an arbitration clause. Almost three years later, it sought to change the definition of the plaintiff group so that it included only those customers with contracts that pre-dated the amendment to include an arbitration clause.  Justice Lussier found that Vidéotron was out of time. The Court of Appeal confirmed that section 622 CCP and its 45-day limit for an application for referral to arbitration are applicable to class action proceedings as well as to any other proceedings. Even if this limit is not de rigueur, the party asking for referral to arbitration has the burden of proof to justify any added delay. The Court of Appeal also reaffirmed that, based on an arbitration clause, the motion to request a modification to a plaintiff group in a class action is equivalent to a jurisdiction challenge. The Court of Appeal confirmed Justice Lussier’s ruling that Vidéotron did not meet its burden of proof to justify its delay to file its application to change the definition of the plaintiff class.

Procedural history – 9238-0831 Québec inc. (Boustifo) was the Plaintiff in a class action brought against Defendants Télébec, Bell, Vidéotron and Cogeco. Boustifo represented a group of companies which contracted with the Defendants for telecom services beginning in April 2015. At the authorization stage, in July 2018, Bell and Cogeco contested the court’s jurisdiction based on an arbitration clause included in their customer contracts. Bell and Cogeco’s jurisdiction challenge was successful on November 9th, 2018, when the Court declined jurisdiction with respect to these two Defendants.

Thereafter, on September 10th, 2019, the Québec Superior Court authorized the class action against Télébec, but dismissed the Plaintiff group’s request for authorization against Vidéotron for reasons that were not explained in this decision. 

On December 14th 2020, the Court of Appeal overturned the decision concerning Vidéotron’s participation, with the result that Vidéotron was a Defendant in the class action.

On January 28, 2021, Boustifo filed its Originating Application against both Télébec and Vidéotron. The file was assigned to Justice Lussier on March 25th, 2021, who called for a case management hearing to discuss the case protocol on September 27, 2021, following the Supreme Court of Canada’s decision to dismiss Télébec’s application for leave to appeal Justice Lussier’s decision authorizing the class action against it. 

It was only on November 23rd, 2021 that Vidéotron first disclosed, in the case protocol following the case management hearing, that on October 3rd, 2018, it had modified its customer contracts and added an arbitration clause which was to apply to any contracts with future customers. Vidéotron announced its intention to ask for a modification of the Plaintiff class action group based on the new arbitration clause.

The decision below – On January 27, 2022, Justice Lussier dismissed Vidéotron request because of the late application. (9238-0831 Québec inc. v. Télébec, 2022 QCCS 183) He ruled that Vidéotron did not give any reason why the 45-day period  specified in section 622 CCP had not been followed and why Vidéotron had not raised this jurisdiction challenge before. (For further details, see Rachel Howie’s Case Note # 595 – Québec – Delay in raising arbitration provision fatal to application to amend class.) Vidéotron appealed.

The appeal – Vidéotron raised three arguments before the Court of Appeal. 

First, Vidéotron argued that the period when the application to seek authorization for a class action was being decided should not be taken into consideration as part of 45-day calculation. Section 622 CCP specifically requires the application for a referral to arbitration to be brought within 45 days after the originating application. Vidéotron argued that, the 45-day period may be extended until the date fixed in the case protocol. Vidéotron based its argument on the fact that section 149 CCP provides for a 45-day delay to fix a case protocol. Therefore, since the case protocol in this matter was filed, with the authorization of the Court, on November 23rd, 2021, and included the disclosure of the application for modification of the class action group, the 45-day delay, in its extended version, was followed.

The Court of Appeal disagreed with Vidéotron’s argument. It agreed that an application for referral to arbitration can be made both during the authorization of the class action process or within 45 days after the originating application. However, the Court of Appeal decided that, as for the delay to file the case protocol, the delay to seek referral to arbitration may be modified, but with Court authorization only. The Court also reaffirmed that an extension of the 45-day period set out in section 622 CCP was not “de rigueur”. However, any extension of this period must be justified with a reasonable explanation

In this, the Court of Appeal affirmed the finding of first instance Justice Lussier that Vidéotron gave no reasonable explanation for the delay.

Second, Vidéotron argued that its application was based on section 588 CCP, which allows a court to modify the authorization judgment at any time, upon application of a party, if it considers that conditions relating to the issue of law or fact or to the compensation of the class are no longer justified. The Court dismissed Vidéotron’s argument because the nature of the modification it requested was equivalent to a jurisdiction challenge.

Third, considering its decisions on Vidéotron’s first two arguments, the Court of Appeal decided not to address Vidéotron’s last argument, in which it contested first instance Justice Lussier’s findings on its abandonment of arbitral jurisdiction by its participation in the judicial process.

Contributor’s notes:

First, it is well-known that arbitral jurisdiction cannot be avoided by bringing a class action. Several cases  have confirmed this rule: 9369-1426 Québec inc. (Restaurant Bâton Rouge) v. Allianz Global Risks US Insurance Company, 2021 QCCS 47(See Case Note: Québec – no legal principle to support applying competence-competence for mediation – #415); Société AGIL OBNL v. Bell Canada, 2021 QCCS 365 (See Case Note: Québec – ‘best to leave it to the Supreme Court to reverse or distinguish its own majority decisions’ – #431); and Centre de santé dentaire Gendron Delisle inc. v. La Personnelle, Assurances générales inc., 2021 QCCS 3463 (See Case Note: Québec – Arbitration clause cannot be avoided by bringing a class action – #531).

Second, it is also well-known that an application to seek referral to arbitration must be brought within 45-days after the originating application and that forgiveness of the delay is not “de rigueur” and requires a reasonable explanation. Several cases have confirmed this rule: 9107-7719 Québec inc. v. Constructions Hub inc., 2020 QCCQ 1706 (See Case Note: Québec – attorney’s lack of knowledge of arbitration clause justifies late request for referral to arbitration – #319); Ferme Cérélait inc. v. Ferme Roch Vincent inc., 2017 QCCS 3260 (See Case Note: Québec – court authorizes defendant to apply outside delay fir referra to arbitration – #009); and Fondacaro v. Syndicat des copropriétaires Prince Consort, 2018 QCCQ 4050Plourde v. Faltour inc., 2016 QCCS 1410.

Third, the Court of Appeal’s decision in Vidéotron is interesting because it clarifies the interaction between these two principles The Court of Appeal confirmed that in a class action, an application for referral to arbitration may be brought both as part of the authorization process and also the 45-day period after the originating application. The Court also reaffirmed the importance of justifying any extension to the 45-day delay. 

Finally, it is important to remember that the delay for referral to arbitration was shortened in the Code of Civil Procedure reform in 2016. Prior to this reform, the delay to seek for referral to arbitration was extended until the request for setting down for trial. It led to abuses which were costly and ineffective. Justice Dumais discussed this issue in Construction Leclerc et Pelletier inc. v. Commission scolaire du Fer, 2016 QCCS 1144.

author

Marie-Claude Martel

I have been working with the founding partners of Forseti for over 15 years. I myself became a partner at Forseti in 2022. Over time, we have developed a chemistry and an efficient working method based on the strengths of each team member. Teamwork is definitely one of our firm’s…

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