Canada: Dismissal At The Interlocutory Stage: The Window Remains Small

In its decision in 9324-0422 Québec Inc. v. Gestion Paul Daigle Inc., 2017 QCCA 242, the Quebec Court of Appeal has reminded us that caution is in order when it comes to ruling on motions to dismiss at the interlocutory stage, even where a precedent would appear to predetermine the outcome of the proceeding.

The matter before the Court involved a promise of sale which the promissor-purchaser sought to enforce through an action to compel transfer of title. The promise to purchase called for the deposit of a down-payment, which was in fact made, but on the day after the date specified in the preliminary contract. The plaintiff pleaded the lack of cooperation of a real estate broker involved, who was to have received and passed on the deposit, as the justification for missing the deadline.

The defendant based its motion to dismiss on the decision in Penterman v. Ferme brune des Alpes, 2006 QCCA 1318. In that matter, the Court of Appeal concluded that given the promissor-purchaser's failure to make the down-payment stipulated in the preliminary contract within the specified period, the action to compel transfer of title must fail, even though the promissor, to justify his failure to make timely payment, pleaded that he had relied on a professional who had advised him that the deposit was no longer necessary. The Court stated that deposit of the down-payment was an essential condition for the validity of the preliminary contract, and that failure to timely make it entailed the nullity of the promise, the sole basis for the action to compel performance.

Considering himself bound by the Penterman decision, the trial judge accepted the defendant's arguments and concluded that even if the plaintiff's allegations were true, its action was doomed to fail. He therefore granted the motion to dismiss.

The Court of Appeal overturned the trial judge's decision, stating that a decision on a motion to dismiss at the interlocutory stage called for a high degree of caution, and that if there were any doubt involved, the judge on the merits must proceed to decide the questions of law at issue on the basis of full and complete evidence. The Court went on to state that only where a precedent provides a certain, complete and definitive solution could it justify granting a motion to dismiss. And the Penterman decision, moreover, had been rendered by the Court of Appeal pursuant to an appeal on the merits of the claim, with the benefit of a full and complete evidentiary record from the hearing at first instance. It was at least in part on the basis of the factual findings that emerged from that evidence that the Court of Appeal concluded that the failure to timely make the deposit was fatal to the plaintiff's action in that case.

Finally, the Court stated that the plaintiff's allegations were indicative of circumstances tending to show that the delay in making the down-payment should not be fatal in this instance, particularly since the delay was involuntary, whereas in the Penterman case, the promissory-purchaser, albeit on the advice of a professional, had deliberately and knowingly failed to deposit the down-payment.

This decision reminds us that while precedents are can be very useful in the judicial process, and close attention must be paid to them in instances where the questions of law involved are similar, the circumstances of each individual matter are determinative. Only on rare occasions will an applicable precedent have a sufficiently high degree of legal and factual similarity to the case at hand that the Court will be bound to dispose of the matter at the interlocutory stage, without the benefit of full and complete evidence.

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.

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