The Québec Code of Civil Procedure c-25.01 provides litigants with two procedural mechanisms for involving a third party in the proceedings, namely, (1) a recourse in warranty, which allows the litigant to be indemnified for an adverse judgment, and (2) forced intervention, which allows the addition of a third party to the litigation as a co-defendant.
These mechanisms are regularly used before the courts to allow the parties to involve all third parties implicated in the litigation. In a recent decision,[1] the Honourable Judge Pierre Nollet of the Superior Court points out that these mechanisms are subject to specific criteria, which must be met on pain of having the application for forced intervention or recourse in warranty dismissed.
BACKGROUND
In the case under review, the plaintiff is a lessor of various commercial units in the shopping centre Promenades St-Bruno in Saint-Bruno-de-Montarville, sued the defendant lessees of these commercial units for more than $1.4 million for unpaid rent, damages for abandonment during the lease and damages for removing property belonging to the lessor.
The defendants allege that they signed the leases due to misrepresentations made by the landlord and by Live Work Learn and Play Inc. (“LWLP”), which was mandated by the landlord to revitalize the shopping centre. The defendants accordingly filed a Declaration of forced intervention to call into warranty and implead against LWLP[2] so that it would be bound to assume the consequences of the landlord’s claim. In their recourse against LWLP, the defendants essentially maintained that LWLP’s involvement was indispensable in order to resolve the dispute and avoid the needless and costly repetition of the same arguments, given its role in revitalizing the shopping centre and the allegations made against it. The defendants also maintained that they were entitled to be indemnified by LWLP for all consequences of an adverse judgment in the main action instituted by the landlord.
LWLP objected to the forced intervention and the call into warranty and filed an application to dismiss. LWLP prevailed, for the reasons considered below by Judge Nollet.[3]
CHALLENGE TO THE FORCED INTERVENTION
The Court first pointed out that in the event of a challenge, the burden of proving that the forced intervention is necessary is on the party that seeks it, which in this case was the defendants. The courts have shown themselves to be exacting in applying the criterion of necessity, holding that the forced intervention must not merely be useful, but necessary.
The defendants argued that there was a connection between the principal dispute and the forced intervention. The Court pointed out that the criterion of necessity must be assessed in light of the main action, i.e., a claim for arrears in rent, damages related to the early termination of the leases and damage related to the unjust removal of property.
Thus, even though the defendants alleged an extra-contractual fault committed by LWLP as the agent of the landlord, i.e., purported misrepresentations at the time the leases were concluded, it was impossible for LWLP to be ordered to pay the rent in arrears and future rent, much less the damages tied to the removal of the leasehold improvements. The principle of relativity of contracts precludes this.
Consequently, since the forced intervention did not give rise to the same debate as the main action, the risk of a contradictory judgment became nil. Consequently, the criterion of necessity was not met. The application for forced intervention was thus ill-founded in law.
RECOURSE IN WARRANTY
The Court points out that a call into warranty presupposes a legal nexus between the party calling into warranty and the party being called into warranty. Very often, this nexus will be contractual in nature. In the case under review, the defendants argued that LWLP’s extra-contractual fault created this legal nexus.
However, the Court emphasized that in order for that situation to apply, there must be potential solidarity between the party calling into warranty and the party being called into warranty. That was not the case in this matter. Judge Nollet concluded that there was no chance that the contractual allegation against the defendants could be made against LWLP, even if the alleged misrepresentations were proven.
Consequently, Judge Nollet dismissed the defendants’ call into warranty and the forced intervention of LWLP.
To summarize, this decision illustrates the importance of complying with the specific and precise criteria applicable to forced intervention and recourses in warranty. The addition of a third party to litigation is far from being automatic and requires a legal justification. This matter reaffirms the rigour with which lawyers must assess applications for forced intervention and calls into warranty, and the rigour with which the courts apply the criteria involved.
[1] Court file 505-17-013697-232.
[2] LWLP was represented by Miller Thomson LLP.
[3] Jasmine de Guise of the firm Miller Thomson LLP successfully pleaded LWLP’s application to dismiss in this case. This decision was not appealed.
