Fédération des producteurs acéricoles du Québec v. Regroupement pour la commercialisation des produits de l'érable inc., 2006 SCC 50, [2006] 2 SCR 591

                                                 SUPREME COURT OF CANADA

Between:

Citadelle, Coopérative de producteurs de sirop d’érable,

Produits alimentaires Jacques et Fils inc., Shady Maple Farm Ltd.

and Conseil de l’industrie acéricole

Appellants

and

Attorney General of Canada, Attorney General of Quebec,

Fédération des producteurs acéricoles du Québec,

PricewaterhouseCoopers Inc. and Regroupement pour la commercialisation

des produits de l’érable inc.

Respondents

Official English Translation

Coram: Bastarache, LeBel, Deschamps, Fish and Charron JJ.

______________________________

Fédération des producteurs acéricoles du Québec v. Regroupement pour la commercialisation des produits de l’érable inc., [2006] 2 S.C.R. 591, 2006 SCC 50

Citadelle, coopérative de producteurs de sirop d’érable,

Produits alimentaires Jacques et Fils inc., Shady Maple Farm Ltd.

and Conseil de l’industrie acéricole                                                               Appellants

v.

Attorney General of Canada, Attorney General of Quebec,

Fédération des producteurs acéricoles du Québec,

PricewaterhouseCoopers Inc. and Regroupement pour la

commercialisation des produits de l’érable inc.                                         Respondents

Indexed as:  Fédération des producteurs acéricoles du Québec v. Regroupement pour la commercialisation des produits de l’érable inc.

Neutral citation:  2006 SCC 50.

File No.:  30892.

2006:  June 19; 2006:  November 9.

Present:  Bastarache, LeBel, Deschamps, Fish and Charron JJ.

on appeal from the quebec court of appeal

Status of persons — Legal persons — Dissolution and liquidation — Forced dissolution of non-profit corporation constituted by letters patent under Part III of Quebec Companies Act — Whether suppletive scheme for dissolution and liquidation of legal persons set out in Civil Code of Québec applicable — Civil Code of Québec, S.Q. 1991, c. 64, arts. 300, 334, 355, 361 — Code of Civil Procedure, R.S.Q., c. C‑25, art. 829.

Civil procedure — Costs — Extra-judicial fees — Whether Court of Appeal’s order relating to payment of extra‑judicial fees should be struck from disposition — Code of Civil Procedure, R.S.Q., c. C‑25, art. 477.

The Regroupement pour la commercialisation des produits de l’érable is a non‑profit corporation constituted by letters patent under Part III of the Quebec Companies Act.  It is made up of producers, buyer‑processors and neutral third parties.  Eight years after its constitution, its activities were paralysed as a result of conflicting interests.  The Fédération des producteurs acéricoles du Québec applied for dissolution of the Regroupement and for the designation of a liquidator, and claimed to be entitled to the assets, which were worth over $22,000,000.  Other stakeholders also claimed to be entitled to the assets.  The Superior Court dissolved the Regroupement pursuant to the suppletive scheme of art. 355 C.C.Q., ordered that it be liquidated in accordance with the specific scheme of the letters patent constituting the Regroupement and attributed the assets to the Fédération.  The Court of Appeal considered that art. 334 C.C.Q. precluded the application of the suppletive scheme of dissolution set out in the Civil Code of Quebec.  It upheld the dissolution, but pursuant to the specific scheme of art. 829 C.C.P., and confirmed the attribution of the assets to the Fédération.

Held:  The appeal should be dismissed.

Article 300 C.C.Q. states that the suppletive commercial law applicable to legal persons in Quebec is the Civil Code of Québec.  In the instant case, both methods of dissolution provided for in the Companies Act with respect to a legal person constituted under Part III are inapplicable.  The method of dissolution provided for in art. 829, al. 2 C.C.P. is also inapplicable, since the letter sent by the Attorney General to the trial judge did not constitute an authorization, within the meaning of that article, to apply for dissolution of the corporation.  Although art. 334 C.C.Q. provides that the absence of specific rules for dissolution is the condition for applying the Civil Code of Québec’s provisions dealing with that subject, the fact that the rules are incomplete does not mean that the suppletive law is inapplicable.  Considered in its context and from a global perspective, art. 334 provides that arts. 355 to 364 C.C.Q. apply to the dissolution and liquidation of a legal person insofar as it is necessary to fill the gaps of a special statute, thereby preventing a legal vacuum.  Since no specific legal scheme is applicable to the forced dissolution of the Regroupement, the application for dissolution is governed by the rules of the Civil Code of Québec.  The Regroupement has become incapable of, within the meaning of art. 355 C.C.Q., accomplishing the objects for which it was constituted.  Its dissolution must therefore be ordered. [11‑15] [21] [30-32]

Since the Regroupement’s letters patent expressly provide for a method of liquidation, there is no need to resort either to the suppletive scheme of s. 31, para. 2(q) of the Companies Act or to that of art. 361 C.C.Q.  According to the letters patent, the criterion for attribution is that of similar activities.  Both the trial judge and the Court of Appeal were of the view that, at present, only the Fédération is carrying out activities similar to those of the Regroupement.  There is no reason to review this finding of fact. [36]

The part of the Court of Appeal’s order relating to payment of the fees of counsel for the buyer‑processors must be struck out.  That part of the order cannot be based on the discretion provided for in art. 477 C.C.P., and no tariff authorizes it. [42]

Cases Cited

Applied:  Doré v. Verdun (City), [1997] 2 S.C.R. 862; Aubry v. Éditions Vice‑Versa inc., [1998] 1 S.C.R. 591; approved:  Fédération des producteurs acéricoles du Québec v. Regroupement pour la commercialisation des produits de l’érable du Québec inc., J.E. 2001‑1444; disapproved:  Lussier v. Regroupement pour la commercialisation des produits de l’érable du Québec inc., J.E. 2002‑137.

Statutes and Regulations Cited

Civil Code of Lower Canada.

Civil Code of Québec, S.Q. 1991, c. 64, preliminary provision, arts. 300, 334, 355 to 364.

Code of Civil Procedure, R.S.Q., c. C‑25, arts. 477, 829.

Companies Act, R.S.Q., c. C‑38, ss. 28, 29, 31, 224, 227, 231.

Supreme Court Act , R.S.C. 1985, c. S‑26 , s. 47 .

Authors Cited

Brierley, John E. C.  “The Renewal of Quebec’s Distinct Legal Culture:  The New Civil Code of Québec” (1992), 42 U.T.L.J. 484.

Chamberland, Jacques.  “Discours inaugural du sous‑ministre de la Justice”, dans Conférences sur le nouveau Code civil du Québec: actes des Journées louisianaises de l’Institut canadien d’études juridiques supérieures 1991.  Cowansville, Qué.:  Yvon Blais, 1992, 1.

Côté, Pierre-André.  The Interpretation of Legislation in Canada, 3rd ed. Scarborough, Ont.:  Carswell, 2000.

Crête, Raymonde, et Stéphane Rousseau.  Droit des sociétés par actions: principes fondamentaux.  Montréal:  Thémis, 2002.

Martel, Paul.  La compagnie au Québec, vol. I, Les aspects juridiques.  Montréal: Wilson & Lafleur, 2002 (feuilles mobiles mises à jour juin 2006, envoi n^o 68).

Martel, Paul. La corporation sans but lucratif au Québec.  Montréal:  Wilson & Lafleur/Martel ltée, 1987 (feuilles mobiles mises à jour juillet 2006, envoi n^o 29).

Pratte, Caroline.  “Essai sur le rapport entre la société par actions et ses dirigeants dans le cadre du Code civil du Québec” (1994), 39 McGill L.J. 1.

Quebec.  Civil Code Revision Office.  Report on the Québec Civil Code, vol. I, Draft Civil Code.  Québec: Éditeur officiel, 1978.

Quebec.  Minister of Justice.  Commentaires du ministre de la Justice, t. I, Le Code civil du Québec:  un mouvement de société.  Québec: Publications du Québec, 1993.

APPEAL from a judgment of the Quebec Court of Appeal (Robert C.J.Q. and Morin and Dalphond JJ.A.), [2005] R.J.Q. 1000, [2005] Q.J. No. 2554 (QL), 2005 QCCA 301, affirming an order of Gervais J., [2003] R.J.Q. 534, [2002] Q.J. No. 5553 (QL), dissolving a legal person and designating a liquidator.  Appeal dismissed.

Robert J. Torralbo and Nassif BouMalhab, for the appellants.

Marie‑Claude Parent and Claude Rioux, for the respondent the Attorney General of Quebec.

Louis Coallier and Mathieu Turcotte, for the respondent Fédération des producteurs acéricoles du Québec.

Stéphane Lamonde, for the respondent PricewaterhouseCoopers Inc.

English version of the judgment of the Court delivered by

1                                   Deschamps J. — Does the Civil Code of Québec, S.Q. 1991, c. 64 (“C.C.Q.”), apply to an application for the forced dissolution of a legal person constituted pursuant to Part III of Quebec’s Companies Act, R.S.Q., c. C‑38 (“C.A.”)?  That is the legal question the Court must answer in this appeal.

1.  Facts

2                                   The respondent Fédération des producteurs acéricoles du Québec (“Fédération”) represents all maple syrup producers in Quebec.  In the early 1990s, the Fédération experienced serious financial difficulties as a result of significant fluctuations in the production of and demand for maple syrup.  In an attempt to resolve those difficulties, representatives of the maple products industry agreed, at the suggestion of Quebec’s Ministère de l’Agriculture,  to apply for the constitution by letters patent of a legal person, the Regroupement pour la commercialisation des produits de l’érable inc. (“Regroupement”).  The Regroupement is one of the respondents in this appeal.  The active members of the Regroupement are the Fédération and 21 maple syrup buyer‑processors, three of which are appellants in the case at bar.

3                                   Shortly after the Regroupement was constituted, internal conflicts developed, and they became so serious that they paralysed its activities.  The Fédération accordingly applied to the Superior Court on January 23, 2001, for dissolution of the Regroupement and for the designation of a liquidator for its assets, which were valued at a little over $22,000,000 by the trial judge in his decision dated December 10, 2002.

2.   Judgments of the Superior Court and the Court of Appeal

4                                   In his judgment on the motion for dissolution and for the designation of a liquidator, Gervais J. of the Superior Court stated that there was, in his view, no special statute under which the Regroupement could be dissolved.  The judge then turned to the Civil Code of Québec and applied its provisions on the dissolution of legal persons.

5                                   Regarding liquidation, he relied on the Regroupement’s letters patent rather than on the suppletive liquidation scheme of the Civil Code of Québec.  Nevertheless, he felt that both these schemes led to the same result, that is, that the net assets of the Regroupement should be transferred to the Fédération.  Gervais J. also ordered that the Regroupement pay the judicial and extrajudicial costs incurred by the Fédération, the interveners, and the sequestrator in respect of the proceeding: [2003] R.J.Q. 534.  The buyer‑processors appealed the Superior Court’s judgment.

6                                   The Court of Appeal considered the Civil Code of Québec’s provisions on dissolution to be inapplicable in the case at bar: [2005] R.J.Q. 1000.  It found that the provisions of the Code of Civil Procedure, R.S.Q., c. C‑25 (“C.C.P.”), were applicable.  Article 829 C.C.P. provides that the Attorney General of Quebec, or a person authorized by the Attorney General, may apply for the annulment of a legal person’s letters patent.  In the Court of Appeal’s view, a letter dated November 1, 2002, from the Attorney General of Quebec to Gervais J. constituted an authorization for this purpose, and the court accordingly upheld the order dissolving the Regroupement.

7                                   Concerning the liquidation of the Regroupement’s assets, the Court of Appeal found that the provisions of the Civil Code of Québec were applicable, but held that they permitted taking the letters patent into consideration.  The Court of Appeal, like Gervais J., concluded that the Regroupement’s assets should be remitted to the Fédération.  However, it refused to award costs, except to order the liquidator to reimburse the buyer‑processors (excluding the Conseil de l’industrie acéricole) for reasonable fees and disbursements owed to their counsel.  The buyer‑processors have appealed to this Court.

3.  Positions of the Parties

8                                   The buyer‑processors contest the Court of Appeal’s decision to order the Regroupement’s dissolution pursuant to the Code of Civil Procedure.  Although they agree with the Court of Appeal’s analysis concerning the inapplicability of the Civil Code of Québec and with its interpretation of the Code of Civil Procedure’s provisions on forced dissolution, the buyer‑processors dispute the meaning ascribed by the Court of Appeal to the Attorney General of Quebec’s letter of November 1, 2002.  Also, since this ground for dissolution was raised by the Court of Appeal on its own initiative after the hearing, they submit that the decision to do so constitutes a breach of the rules of procedural fairness, which guarantee them the right to be heard.  On the liquidation issue, the buyer‑processors contend that the rules on liquidation set out in the Civil Code of Québec apply and that a proper application of those rules requires that the Regroupement’s net assets be partitioned equally among all its active members.

9                                   The Fédération and the Attorney General of Quebec endorse Gervais J.’s approach.  They submit that no special statute applies to the forced dissolution of the Regroupement and that recourse should be had to the suppletive scheme of the Civil Code of Québec regarding the dissolution of legal persons.  The Fédération also agrees with Gervais J.’s order relating to liquidation.  The Attorney General of Quebec adds that the letter he sent to Gervais J. was not intended to authorize an application for dissolution.

4.  Analysis

4.1  Dissolution of a Legal Person

10                               The Civil Code of Québec lays down the jus commune (general law) of Quebec.  A principal characteristic of the Civil Code of Québec, as the jus commune, is that it has, in the areas to which it applies, a suppletive role in the event of gaps in special statutes.  It “must be interpreted broadly so as to favour its spirit over its letter and enable the purpose of its provisions to be achieved” (Doré v. Verdun (City), [1997] 2 S.C.R. 862, at para. 15).

11                               The rules governing legal persons are set out in Title Five of Book One — Persons — of the Civil Code of Québec.  Article 300 C.C.Q. establishes the general conditions for applying those rules.  The first paragraph of this article provides that all legal persons are governed primarily by the statutes applicable to them, and the second paragraph then states that they are also governed by the Civil Code of Québec “where the provisions of such Acts require to be complemented”.  The article reads as follows:  

300.  Legal persons established in the public interest are primarily governed by the special Acts by which they are constituted and by those which are applicable to them; legal persons established for a private interest are primarily governed by the Acts applicable to their particular type.

Both kinds of legal persons are also governed by this Code where the provisions of such Acts require to be complemented, particularly with regard to their status as legal persons, their property or their relations with other persons.

Article 300 C.C.Q. put an end to nearly a hundred years of debate over what constitutes the suppletive law in Quebec commercial law:  P. Martel, La compagnie au Québec (loose‑leaf), vol. I, Les aspects juridiques, at p. 2‑10.  Historically, Quebec commercial law was influenced by the common law, and this continued to be the case after the Civil Code of Lower Canada was adopted.  Article 300 C.C.Q. thus confirms that the suppletive commercial law applicable to legal persons in Quebec is the Civil Code of Québec: C. Pratte, “Essai sur le rapport entre la société par actions et ses dirigeants dans le cadre du Code civil du Québec” (1994), 39 McGill L.J. 1; R. Crête and S. Rousseau, Droit des sociétés par actions: principes fondamentaux (2002), at pp. 42‑43.

12                               In the case at bar, the legal person whose dissolution is requested was constituted pursuant to Part III of Quebec’s Companies Act, which governs non‑profit legal persons.  In accordance with art. 300 C.C.Q., it is necessary to consider that statute first, and then any other special statutes that may apply, to determine whether they provide for the forced dissolution of a non‑profit legal person.

4.1.1  Special Acts

13                               The Companies Act provides for two cases in which a legal person constituted under Part III may be dissolved.  In the first case, a Superior Court judge may “order the cancellation of the letters patent of such legal person, on petition of the enterprise registrar served upon the legal person and based on grounds of public interest” (s. 231 C.A.).  This procedure for dissolution is not relevant here, since the registrar did not intervene.  In the second case, voluntary dissolution is possible upon an application to that effect by the legal person itself (ss. 28, 29 and 224, para. 1 C.A.).  This method is not applicable in the instant case either, since the members did not agree on and pass a resolution authorizing the Regroupement to apply for dissolution.  Thus, the objective of dissolution could not be attained by applying the methods provided for in the Companies Act.

14                               The Court of Appeal applied a third method of dissolution that is provided for in art. 829, para. 2 C.C.P.:

829.  The Attorney General may apply for the annulment of letters patent granted by the State for the reasons set out in article 828.

Such recourse may also be exercised by any interested person, if the Attorney General has given his written authorization.

15                               After reviewing the case, the Court of Appeal found that the letter sent by the Attorney General of Quebec to Gervais J. of the Superior Court on November 1, 2002, constituted an authorization to apply for dissolution.  This letter must therefore be considered in its context.

16                               In his decision, Gervais J. referred to letters he had received from the attorneys general of Canada and Quebec following an order to reopen the hearing for the purpose of giving them an opportunity to make submissions concerning the liquidation of the Regroupement’s assets.

17                               In his letter, the Attorney General of Quebec wrote the following:

[translation]  We will not address the issue of dissolution, since dissolution is in our view inevitable in the circumstances of this case.  We will limit our comments to the issue of the destination of the assets of the R.C.P.E.Q. [the Regroupement].

18                               In his factum, the Attorney General of Quebec submits that this letter was in response to a request from Gervais J., [translation] “who wanted to know if the Quebec government had an interest to assert in the Regroupement’s assets” (para. 43).  The Attorney General denies having intended to authorize the dissolution of the Regroupement.  Neither the appellants nor the Fédération claim that the letter of November 1, 2002 constitutes a written authorization for the Fédération to apply for annulment of the letters patent.  I agree with the parties that the Court of Appeal ascribed a meaning to this letter that it did not have.  Gervais J. had asked the attorneys general of Canada and Quebec to state their positions with respect to the liquidation of the assets, not to the dissolution order.  Since the judge had inquired about liquidation, it is not surprising that the Attorney General of Quebec observed that dissolution seemed inevitable.  To ascribe a position on the dissolution issue to the Attorney General of Quebec is inconsistent not only with the purpose of the judge’s request, but also with the spirit and the letter of the Attorney General’s response.

19                               Since the methods provided for in the special statutes cannot be used to effect the forced dissolution of the Regroupement, it must be asked whether a forced dissolution is possible under Quebec’s jus commune.  It should be noted that this approach, in addition to being required by art. 300, para. 2 C.C.Q., is authorized by the Companies Act, which states that no provision of Part III thereof “shall have the effect of withdrawing any legal person constituted or continued thereunder, from the provisions of any other law which is applicable thereto” (s. 227 C.A.).

4.1.2  Scheme of Dissolution Provided for in the Civil Code of Québec

20                               Title Five of Book One — Persons — of the Civil Code of Québec contains a section entitled “Dissolution and Liquidation of Legal Persons” (arts. 355 to 364 C.C.Q.).  This section is found in a chapter whose first provision reads as follows:

334.  Legal persons assuming a juridical form governed by another title of this Code are subject to the rules of this chapter; the same applies to any other legal person if the Act by which it is constituted or which applies to it so provides or indicates no other rules of functioning, dissolution or liquidation.

They may, however, make derogations in their by‑laws from the rules concerning their functioning, provided the rights of the members are safeguarded.

21                               What must be determined, therefore, is whether, pursuant to art. 334, para. 1 C.C.Q., which refers to the absence of other rules for the dissolution of legal persons, the Civil Code of Québec’s provisions dealing with that subject can be applied in the circumstances of the case at bar.  In other words, where the rules provided for in one or more special acts are incomplete, does this mean that the suppletive law is inapplicable?

22                               Before the instant case came before the courts, there had been very little debate on this subject, in part, undoubtedly, because art. 334 C.C.Q. did not appear in the Civil Code of Lower Canada or in the Civil Code Revision Office’s Draft Civil Code of 1977.

23                               As evidenced by the decisions of the Superior Court and the Court of Appeal on the issue of dissolution, there are two opposing arguments in the case at bar.  The first is based on a mutually exclusive application of the Civil Code of Québec or the special statutes.  Thus, where a special statute sets out rules of dissolution, [translation] “however incomplete they may be”, the provisions of Chapter II of the Civil Code of Québec concerning the dissolution of legal persons are inapplicable (P. Martel, La corporation sans but lucratif au Québec (loose‑leaf), at p. 17‑2, quoted with approval by the Court of Appeal, at paras. 51 and 54).  Following this line of reasoning, Martel adds [translation] “that this chapter [Chapter II], in its entirety, cannot be applied to companies” (La compagnie au Québec, vol. I, at p. 2‑10).  Chapter II would be applicable only if the relevant statutes left, as the Court of Appeal put it, a [translation] “legislative vacuum” (paras. 38 and 41).  The buyer‑processors conceded to the Court that a possible consequence of this argument would be a dead end in which it would be legally impossible to wind up a legal person even if its operations were paralysed.

24                               According to the second argument, where no special statute governs a given case of dissolution of a legal person, the Civil Code of Québec applies in a suppletive manner.  The Quebec courts have accepted the first argument in some cases and the second in others:  see Fédération des producteurs acéricoles du Québec v. Regroupement pour la commercialisation des produits de l’érable du Québec inc., J.E. 2001‑1444 (Sup. Ct.) (decision on the motion to dismiss the motion to dissolve the Regroupement and designate a liquidator); Lussier v. Regroupement pour la commercialisation des produits de l’érable du Québec inc., J.E. 2002‑137 (Sup. Ct.) (decision on a motion to dismiss a motion to amend the Regroupement’s by‑laws).

25                               In my view, the “legislative vacuum” argument adopted by the Court of Appeal is inappropriate.  It represents an overly compartmentalized vision of Quebec civil law resulting from a literal interpretation of art. 334, para. 1 C.C.Q.  This argument is compatible neither with the other provisions of the Civil Code of Québec nor with the Code’s general function as the jus commune.

26                               Article 355 C.C.Q. sets out the various methods for dissolving a legal person:  

355.  A legal person is dissolved by the annulment of its constituting act or for any other cause provided for by the constituting act or by law.

It is also dissolved where the court confirms the fulfilment of the condition attached to the constituting act, the accomplishment of the object for which the legal person was constituted, or the impossibility of accomplishing that object, or the existence of some other legitimate cause.

This article, read as a whole, indicates that where a cause of dissolution provided for in a special statute applies, the legal person is then dissolved in accordance with that statute, but that where none of these legal causes are present, the legal person will also be dissolved in the cases provided for in the second paragraph.

27                               This interpretation of art. 355 C.C.Q. is consistent with the version of this provision that was proposed in the Draft Civil Code, namely, art. 267, which began with the following words:  “In addition to the grounds provided by law, a legal person is dissolved by . . .” (these words were followed by a list of causes of dissolution, most of which now appear in art. 355 C.C.Q.).

28                               It follows that art. 355 C.C.Q., read as a whole, contemplates and allows the coexistence of causes of dissolution established by a special statute and of the grounds for dissolution provided for in the Civil Code of Québec.  The article was not intended to trap legal persons in a dead end.  Rather, the intention of the Civil Code of Québec’s provision is to provide them with an alternative means where dissolution is not possible under a special statute.

29                               In addition to the text of the Civil Code of Québec provision, its context must also be considered.  The provisions of the Civil Code of Québec must be interpreted as being part of a body of rules whose letter, spirit and object lay down the jus commune of Quebec (preliminary provision of the C.C.Q.).  This statement, which appears in the preliminary provision, is intended to encourage the use of the rules of the Civil Code of Québec [translation] “to interpret and apply other legislation and fill any gaps in that legislation, where it relates to matters or makes use of concepts or institutions that come under the Civil Code” (Commentaires du ministre de la Justice (1993), vol. I, at p. 1).  As rules of the jus commune, the provisions on the dissolution of legal persons are thus called upon to play their suppletive law role to fill gaps in special statutes, thereby preventing a legal vacuum.  The suppletive scheme acts in a variety of ways to fill those gaps.  Professor P.‑A. Côté explains the function of the Civil Code of Québec as follows:

. . . a corpus of rules which constitutes the jus commune must be able to extend analogously so as to provide answers to questions that neither the Code nor the particular statutes have expressly settled.  Strict interpretation, that is to say non‑extensive application of the rules of the jus commune would be absurd.

(The Interpretation of Legislation in Canada (3rd ed. 2000), at pp. 335‑36)

Analogy is only one of the tools that can be used to ensure that the Civil Code of Québec functions properly.  As noted in 1991 by Quebec’s Deputy Minister of Justice, Jacques Chamberland (now Chamberland J.A.), this corpus of rules constitutes a system that is sufficiently developed to offer a practical solution in any given situation:  

[translation]  A civil code, on the other hand, even if it does not say everything and does not cover the legal reality in its entirety, contains sufficient general rules and organizing principles to establish the links needed to reach a practical solution in any situation, even an unforeseen one.

(“Le discours inaugural du sous‑ministre de la Justice”, in Conférences sur le nouveau Code civil du Québec: actes des Journées louisianaises de l’Institut canadien d’études juridiques supérieures 1991 (1992), 1, at p. 10)

Professor Brierley expressed the same opinion when he wrote that “the articles of the Code speak to each other in a coherent dialogue that aspires to gaplessness, to completeness” (J. E. C. Brierley, “The Renewal of Quebec’s Distinct Legal Culture: The New Civil Code of Québec” (1992), 42 U.T.L.J. 484, at p. 491).

30                               This, then, is the overall perspective that must be borne in mind in interpreting art. 334, para. 1 C.C.Q., which extends the application of Chapter II to legal persons if the statute “which applies to it so provides or indicates no other rules of functioning, dissolution or liquidation”.  In other words, art. 334, para. 1 C.C.Q., like other articles of the Civil Code of Québec, fulfils an organizing function in providing that the rules set out in arts. 355 to 364 C.C.Q. apply to the dissolution and liquidation of a legal person insofar as it is necessary to fill the gaps of a special statute.

4.1.3  Application to the Facts

31                               Since no specific legal scheme is applicable to the forced dissolution of the Regroupement, the application for dissolution is therefore governed by the rules of the Civil Code of Québec.  By applying these rules to the Regroupement’s current situation, we see that the Regroupement can be dissolved in one of the following four cases:  (i) the condition attached to the constituting act has been fulfilled, (ii) the object for which the legal person was constituted has been accomplished, (iii) it is impossible to accomplish that object, or (iv) there is some other legitimate cause (art. 355, para. 2 C.C.Q.).

32                               In the case at bar, the irreversible paralysis of the Regroupement was recognized by both the Court of Appeal (para. 67) and the Superior Court (paras. 22 to 36).  Given the resignation of three board members in 2001 and the fact that they were not replaced, it became impossible to form a quorum.  It must accordingly be found that the Regroupement has become incapable of accomplishing the objects for which it was constituted.  Its dissolution must therefore be ordered.

4.2  Liquidation of the Regroupement’s Assets

33                               The analytical framework for the liquidation of legal persons is provided for in art. 300 C.C.Q.  The first step is to consider whether a special statute applies to the liquidation of the assets of the legal person in question.  If no special statute governs the situation, it will then be necessary to refer to the Civil Code of Québec to identify the rules that apply to the liquidation.

34                               In the case at bar, the Court must consider applying the liquidation scheme of the Companies Act.  This scheme, which is provided for in s. 31, para. 2(q) C.A., first gives priority to the letters patent before setting out a suppletive method.  The provision is worded as follows:

31. . . .

Subject to the provisions of the preceding paragraph and without restricting their application, and saving express exclusion in the letters patent or supplementary letters patent, the company may:

                                                                   . . .

(q) distribute among its shareholders, in kind or otherwise, any property of the company, provided that such distribution is made for the purpose of enabling it to be dissolved or in circumstances where it would be lawful to make the same in cash.

Section 31, para. 2(q) C.A., which is found in Part I of the Companies Act, applies to legal persons incorporated under Part III (s. 224 C.A.).

35                               The Civil Code of Québec also sets out a dissolution scheme.  Article 361 C.C.Q. reads as follows:

361.  The liquidator first repays the debts, then effects the reimbursement of the capital contributions.

The liquidator, subject to the provisions of the following paragraph, then partitions the assets among the members in proportion to their rights or, otherwise, in equal portions, following if need be the rules relating to the partition of property in undivided co‑ownership.  Any residue devolves to the State.

If the assets include property coming from contributions of third persons, the liquidator shall remit such property to another legal person or a trust sharing objectives similar to those of the legal person being liquidated; if that is not possible, it devolves to the State or, if of little value, is shared equally among the members.

Pursuant to art. 300 C.C.Q., however, this liquidation scheme is merely suppletive in nature.  Moreover, as the Court of Appeal correctly noted, art. 361 C.C.Q. is not of public order.

36                               In the case at bar, since the letters patent expressly provide for a method of liquidation, there is no need to resort either to the suppletive scheme of s. 31, para. 2(q) C.A. or to that of the Civil Code of Québec.  I therefore agree with Gervais J. that the relevant provision of the letters patent should be applied first.  It reads as follows:

[translation]  In the event of liquidation of the corporation or distribution of its assets, the assets shall devolve to an organization carrying out similar activities;

In the instant case, both Gervais J. and the Court of Appeal were of the view that, at present, only the Fédération is carrying out activities similar to those of the Regroupement.  There is no reason to review this finding of fact.

37                               Although it is true that the Court of Appeal did not hear the buyer‑processors on the issue of the application of the Code of Civil Procedure, the parties nevertheless had an opportunity to make full representations to this Court, and there is no need to reconsider the issue.

38                               In its factum, the liquidator designated in the Superior Court’s decision asked this Court to set out the terms and conditions for liquidating the assets.  The difficulties raised by the liquidator concerning the sale of the assets should not materialize, since the Superior Court’s conclusions are upheld with regard to the liquidation.  The order provides that, rather than selling the assets, the liquidator is to hand them over to the Fédération.  Moreover, at the hearing, counsel for the liquidator said he was satisfied with the Superior Court’s conclusions as formulated.  Therefore, there is no need to vary the order as regards the terms and conditions of the liquidation.

5.  Costs

39                               Gervais J., referring generally to the facts of the case, considered it “normal” that the judicial costs and extrajudicial fees owed by the parties should be paid out of the Regroupement’s assets.  The Court of Appeal, allowing the Fédération’s cross‑appeal in part, noted that this order was unjustifiable.  It varied the disposition of the Superior Court’s decision and allowed the Fédération’s motion without costs, ordering the liquidator to reimburse the buyer‑processors for reasonable fees and disbursements owed to their counsel.  However, the Court of Appeal awarded the costs of the appeal to the Fédération.

40                               The Fédération asks the Court to apply, here and in the courts below, the general rule that the losing party pays all costs.  This rule is set out in art. 477, para. 1 C.C.P., which reads as follows:

477.  The losing party must pay all costs, including the costs of the stenographer, unless by decision giving reasons the court reduces or compensates them, or orders otherwise.

41                               In the case at bar, the Superior Court judge departed from the general rule.  The Court of Appeal wanted, although defining the parameters of the award of extrajudicial costs, to defer to the Superior Court judge’s discretion.

42                               In Aubry v. Éditions Vice‑Versa inc., [1998] 1 S.C.R. 591, at paras. 76‑80, the Court noted that, in Quebec, the awarding of costs is governed exhaustively by the Code of Civil Procedure and the various tariffs.  The order to pay the extrajudicial fees of counsel for the buyer‑processors cannot be based on the discretion provided for in art. 477 C.C.P., and no tariff authorizes it.  The part of the Court of Appeal’s order dealing with the payment of the fees of counsel for the buyer‑processors must therefore be struck out pursuant to s. 47  of the Supreme Court Act , R.S.C. 1985, c. S‑26 .

43                               For these reasons, the disposition of the Court of Appeal’s decision is upheld, except in respect of the order to pay the fees of counsel for the buyer‑processors, and the appeal to this Court is dismissed with costs to the respondent Fédération des producteurs acéricoles du Québec.

Appeal dismissed with costs.

Solicitors for the appellants:  Blake, Cassels & Graydon, Montréal.

Solicitors for the respondent the Attorney General of Quebec:  Chamberland, Gagnon, Québec.

Solicitors for the respondent Fédération des producteurs acéricoles du Québec:  Miller Thomson Pouliot, Montréal.

Solicitors for the respondent PricewaterhouseCoopers Inc.:  O’Brien, Québec.