Date: 20030425
Docket: ITA-691-02
Citation: 2003 FCT 511
Ottawa, Ontario, the 25th day of April 2003
Present: THE HONOURABLE MR. JUSTICE SIMON NOËL
BETWEEN:
In the matter of the Income Tax Act
and
In the matter of an assessment or assessments established
by the Minister of National Revenue pursuant to one or more
of the following Acts: the Income Tax Act, the Canada
Pension Plan, the Employment Insurance Act,
AGAINST
THE ESTATE OF THE LATE LAWRENCE CORRIVEAU
Judgment debtor
and
BENOÎT PROULX
Garnishee
REASONS FOR ORDER AND ORDER
[1] This is a motion by the garnishee, Benoît Proulx, requesting nullity of the garnishee order absolute by Prothonotary Morneau dated February 4, 2003, in which he ordered, inter alia, that 30% of the sums received by the garnishee from the Quebec government be attached absolutely in response to the certificates filed against the judgment debtor, the estate of the late Lawrence Corriveau (the "estate"), by Her Majesty the Queen in right of Canada ("Her Majesty").
THE FACTS
[2] Two certificates certifying that the estate was indebted to Her Majesty in the amount of $58,524.89 and $447,673.21 were issued November 19, 1994, and December 19, 2001, with compound interest under section 223 of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.).
[3] Her Majesty is a creditor of the garnishee for the out-of-court fees and disbursements payable to the estate of his lawyer, the late Lawrence Corriveau, having carried on business under the name Corriveau, Avocats and/or Corriveau et associés, for services rendered in the context of a suit for damages brought in 1993 against the Attorney General of Quebec in which the garnishee was successful through a judgment of the Supreme Court of Canada dated October 18, 2001.
[4] The effect of the Supreme Court judgment was to vacate the judgment of the Court of Appeal dated February 1999 and to restore the judgment of Mr. Justice Claude Rioux of the Superior Court dated August 7, 1997, which held the Provincial Crown liable in damages of $1,179,747.86 and interest and the additional compensation payable from the institution of the proceedings that was awarded by Mr. Justice René Letarte of the Superior Court (judgment on the quantum) dated August 18, 1997. The final amount, including principal, interest and additional compensation paid to the garnishee by the Provincial Crown, was $2,126,196.55.
[5] The garnishee gave Her Majesty three fees agreements in relation to the damages suit against the Provincial Crown:
(a) The agreement dated March 20, 1993, establishing the fees payable to Mr. Corriveau at 10% of any money that was to be obtained ("the March 20, 1993 agreement");
(b) The agreement dated August 6, 1997, establishing the fees payable to Mr. Corriveau at 30% of any money that was to be obtained (the August 6, 1997 agreement");
(c) The agreement dated November 28, 2000, establishing the fees payable to Mr. Christian Trépanier of the law firm Fasken, Martineau, DuMoulin, at an hourly rate of $110, to act as counsel at the hearing before the Supreme Court of Canada, the said agreement being signed by the garnishee and Fasken, Martineau, DuMoulin.
[6] During the examination, the garnishee testified that:
- as a result of the Court of Appeal decision, the agreement of March 20, 1993, was in fact signed in 1999 and its purpose was to reduce Mr. Corriveau's fees from 30% to 10%, as the garnishee was not satisfied with the legal services and wanted to change solicitors. Mr. Corriveau had, he said, insisted on continuing to do the legal work and had agreed to reduce his fees accordingly.
- Mr. Christian Trépanier's fees in the amount of $22,630.07 were to be deducted from the 10% of any sum that would be obtained.
[7] On or about September 30, 2002, subject to not having received any invoice from the estate, the garnishee sent the government departments concerned the sum of $189,989.58 plus GST and QST representing approximately the 10% in fees of the agreement of March 20, 1993, less the fees of Mr. Christian Trépanier that he had already paid.
ISSUES
[8] This motion raises the following issues:
(a) Did the prothonotary err in law in holding that there was no commencement of proof that might make it probable that the agreement of March 20, 1993, had been signed in 1999, as the garnishee testified?
(b) Did the prothonotary err in law in holding that the fees agreements were sufficient in themselves to impose on the garnishee the obligation to pay the fees owing and that an invoice was not necessary?
(c) Did the prothonotary err in law in holding that Christian Trépanier's fees were not to be deducted from the fees owing to the garnishee's lawyer?
(d) Did the prothonotary err in law in holding that there was no evidence to demonstrate that the 30% fees gave the legal profession the character of a market-driven, profit-oriented undertaking since 30% fees are disproportionate to the services rendered?
APPLICABLE STANDARD OF REVIEW OF THE PROTHONOTARY'S NON-DISCRETIONARY DECISIONS
[9] The prothonotary's order raises questions of law and of fact that do not call for his discretionary authority. In that situation, it is the recognized appeal criteria that apply. This means that the judge should not intervene in findings of law and fact if no error in law has been committed or the findings of fact are not considered to have been made in a perverse or capricious manner or to be the result of some palpable and overriding error. [See Reading and Bates Construction Co. v. Baker Energy Resources Corp., [1995] 1 F.C. 483 (C.A.), per Létourneau J.A.]
ANALYSIS
[10] A. Did the prothonotary err in law in holding that there was no commencement of proof that might make it probable that the agreement of March 20, 1993, had been signed in 1999, as the garnishee testified?
[11] According to the garnishee, the agreement of March 20, 1993, does not indicate the correct year and should read 1999, and consequently this 10% agreement should be the one that applies since it is the most recent.
[12] Article 2863 of the Civil Code of Québec stipulates that a juridical act may not be contradicted or varied by testimony unless there is a commencement of proof.
[13] The garnishee contends that the "S.E.N.C." [Société en nom collectif, or general partnership] appearing at the bottom left of the agreement of March 20, 1993, is a material thing that gives rise to a commencement of proof. The requirement of the entry "S.E.N.C." came into force on January 1, 1994, so the document could not have been signed on March 20, 1993.
[14] Under article 2865 of the Civil Code of Québec, a material thing may give rise to a commencement of proof if it gives an indication that the change in year from 1993 to 1999 on the agreement may have occurred.
[15] The prothonotary found that the entry "S.E.N.C." did not give an indication that 1999 was the probable year of signature.
[16] There is quite a difference between the years 1993 and 1999 and I do not think the annotation "S.E.N.C.", in force January 1, 1994, on the stationery of a law firm, makes 1999 the probable year. The "S.E.N.C." means it is probable that the agreement was signed not in 1993 but after January 1, 1994. More is needed for that to validate 1999 as the year, since it is essential that the commencement of proof in writing make it not only possible but probable. In this regard, the Quebec Court of King's Bench has held that
[translation] the commencement of proof in writing is the logical association in the mind with the existence of a fact that is so related to the alleged fact that the latter acquires the character of probability and plausibility. (Sirois v. Parent, [1954] B.R. 91)
[17] Insofar as the self-interested testimony of the garnishee is concerned, I note that three persons - Mr. Corriveau, his secretary and the garnishee - saw the agreement of March 20, 1993 and did not identify the putative error. If the agreement was signed in 1999, I fail to understand why the signatories and the secretary did not see the year 1993 instead of 1999.
[18] Furthermore, the explanation given by the garnishee to explain the reduction in the percentage of fees from 30% to 10%, that he was dissatisfied with Mr. Corriveau's services as a result of a judgment of the Court of Appeal, seems surprising to me. Why would a lawyer waive 20% of his fees to prevent a client going to another lawyer when the agreement is established?
[19] To answer question A, I conclude that the prothonotary did not commit any error in law that might warrant the intervention of this Court.
[20] B. Did the prothonotary err in law in holding that the fees agreements were sufficient in themselves to impose on the garnishee the obligation to pay the fees owing and that an invoice was not necessary?
[21] For unknown reasons, the estate did not send any invoice to the garnishee.
[22] The garnishee's position is that the sending of an invoice by the estate was essential to enforce payment and that he could not resort to the arbitration procedure provided by the Act respecting the Barreau du Québec, R.S.Q., c. B-1, and the regulations thereunder. The garnishee adds that since the estate did not send any invoice, Her Majesty should have filed a petition in bankruptcy under the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, against the estate and the trustee could have sent the invoice or assigned its rights in the invoice to Her Majesty.
[23] Her Majesty argues that the receipt of the money resulting from the lawsuit by the garnishee sufficed to create the obligation to pay the estate.
[24] Under articles 1497, 1506 and 1507 of the Civil Code of Québec, an obligation may be conditional upon a future and uncertain event and the fulfillment of the condition has a retroactive effect and obliges the debtor to perform it.
[25] The agreements of March 20, 1993, and August 6, 1997, (which are similar in all respects apart from the fees percentage and the part immediately preceding the signatures) create a condition to pay if a sum of money is obtained. Pursuant to a final judgment of the Supreme Court of Canada, the Provincial Crown was ordered to pay $1,179,747.86 plus interest and additional compensation. From that moment, the condition was executed and the fees were owing to the estate.
[26] Concerning the garnishee's argument and the need for invoicing, I think he could have submitted the 30% fees request to an arbitration committee of the Barreau and asked it to rule on the validity of demanding this percentage. He did not do so and this is not a reason not to consider the fees as being payable.
[27] The prothonotary, in response to question B, did not err in law in finding that the fees agreements sufficed to make the payment of fees exigible once the money was obtained.
C. Did the prothonotary err in law in holding that Christian Trépanier's fees were not to be deducted from the fees given to his lawyer by the garnishee?
[28] Although I agree with the prothonotary that none of the fees agreements supports the garnishee's thesis, I would add that the fees agreement of November 28, 2000, on which there appears the signature of the garnishee and of Fasken, Martineau, DuMoulin, does not include the signature of the late Lawrence Corriveau, although a space was reserved for his signature.
[29] The estate is therefore not liable for the fees of Mr. Christian Trépanier and the prothonotary did not err in law in finding that these fees were not to be deducted from the fees owing to the estate by the garnishee.
D. Did the prothonotary err in law in holding that there was no evidence to demonstrate that the 30% fees gave the legal profession the character of a market-driven, profit-oriented undertaking since 30% fees are disproportionate to the services rendered?
[30] As the prothonotary correctly stated, there is no evidence that might support the garnishee's contention.
[31] On the contrary, the garnishee signed an agreement in which he assumed no liability in regard to any fees that might result from the litigation with the Provincial Crown other than Christian Trépanier's fees. Mr. Corriveau assumed all of the monetary consequences with no assurance of a positive outcome. Mr. Corriveau advanced all of his legal knowledge, while assuming the legal fees and disbursements pertaining thereto if the garnishee were to be successful.
[32] Thus, in response to question D, the prothonotary did not err in law.
[33] Having reviewed the decision of the prothonotary and each of the submissions by the garnishee, I am unable to conclude that the prothonotary committed any error in law or in fact that might warrant the intervention of this Court.
ORDER
THE COURT ORDERS THAT:
The garnishee's motion seeking nullity of the final garnishee order by Prothonotary Morneau dated February 4, 2003 is dismissed with costs.
"Simon Noël"
Judge
Certified true translation
Suzanne Gauthier, C. Tr., LL.L.
FEDERAL COURT OF CANADA
TRIAL DIVISION
SOLICITORS OF RECORD
DOCKET: ITA-691-02
STYLE: In the matter of the Income Tax Act
and
The estate of the late Lawrence Corriveau
PLACE OF HEARING: Montréal, Quebec
DATE OF HEARING: March 31, 2003
REASONS: The Honourable Mr. Justice Simon Noël
DATED: April 25, 2003
APPEARANCES:
Nadine Dupuis FOR THE JUDGMENT CREDITOR
Pierre Fournier FOR THE GARNISHEE
SOLICITORS OF RECORD:
Morris Rosenberg FOR THE JUDGMENT CREDITOR
Deputy Attorney General of Canada
Ottawa, Ontario
William Noonan FOR THE JUDGMENT DEBTOR
Sillery, Quebec
Fournier Associés s.e.n.c. FOR THE GARNISHEE
Montréal, Quebec
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