A recent decision of the Superior Court1 reminds us
that one must be prudent when the rules applicable to litigious
rights may apply. The Civil Code2 provides that when
litigious rights are sold, the person from whom they are claimed is
discharged by paying to the buyer the sale price, the costs and
interest on the price computed from the day on which the payment
Although this rule is not new, it still causes difficulties
when, for example, a transfer of enterprise occurs as a result of
the sale of assets which includes the rights of the seller in
judicial proceedings which have already been undertaken. This
right, conferred on the person against whom a claim exists, is
called the redemption right.
When the rights of the seller in an action are sold, the
defendant may be entirely discharged of the recourse against him by
repaying the purchaser the price the purchaser paid to acquire
these litigious rights. The Civil Code provides for several
exceptions to this rule. The right of redemption may not be
where the sale is made to a creditor in payment of what is due
to him, to a coheir or co-owner of the rights sold or to the
possessor of the property subject to the right;
where a court has rendered a judgment affirming the rights
where the rights have been established and the case is ready
Attempts have been made to circumvent the application of the
right of redemption by adding to the sale price a percentage of the
amount to be collected at the end of the judicial proceedings.
However, under case law, the price of the redemption right must be
equal to the price actually paid by the purchaser at the time of
the sale, which excludes, according to Madam Justice Pierrette
Rayle, of the Superior Court in the Mendel4
case and confirmed by the Court of Appeal5, the
commitment to pay a percentage of the amount obtained as a result
of the claim:
"With respect to the 5% to
be paid on the eventual recovery of the Mendel claims, since it was
never disbursed by Kuczer, it does not have to be included in
the amounts to be «reimbursed» in virtue of Art. 1784
C.C.Q. (1) Furthermore, an undertaking to pay a percentage of the
claim recovered may very well be illegal and
The redemption right does not apply in case of an assignment or
transfer free of charge (gift) and, as it is incumbent on the
person who redeems to prove the actual amount of the sale price,
the right cannot be exercised if several items of property have
been transferred with the litigious claim for an all inclusive or
If there are ways to avoid the possible application of the
redemption right, the purchasers of litigious rights will be well
advised to acquaint themselves with the rules applicable to the
redemption right before going ahead with the sale rather than after
1. Girard c. Pearl, 2012 QCCS 5259
(CanLII), October 23, 2012.
2. Article 1784 paragraph 1.
3. Article 1784 paragraph 2.
4. Mendel v. Entreprise Pemik inc.,
J.E. 97-531 (C.S.).
5. Kuczer v. Mendel, J.E. 2001-761
6. Rénovations Langis inc. v.
Cabessa, REJB 1996-30611 (S.C.).
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
It's not often that our little blog intersects with such titanic struggles as the U.S. presidential race – and by using the term "titanic" I certainly don't mean to suggest that anything disastrous is in the future.
J.J. v. C.C., is an interesting case in which the court held that an automotive garage owes a duty to minor children to secure the vehicles on the premises by locking the cars and safely storing the car keys...
In Irwin v. Alberta Veterinary Medical Association, 2015 ABCA 396, the Alberta Court of Appeal found that the "ABVMA" failed to afford procedural fairness to a veterinarian undergoing an incapacity assessment.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).