The defendants, Les Constructions Citcom, and Mr Joseph Sagaria ask for the rejection of an action for damages filed by the Syndicate of the Co-ownership 1272-1282 Notre-Dame-de-Fatima and five owners of a single condo unit.
Citcom and Sagaria contest the syndicate's action for the following reasons:
• The action cannot be brought since the Superior Court does not have jurisdiction over a litigation concerning the quality of construction when the purchasers avail themselves of an arbitration clause contained in the APCHQ's Garantie sur les bâtiments résidentiels neufs contract. In such a case, the file should exclusively be dealt with by the APCHQ;
• There is already a judgement and lis pendens on this question, since a claim for18.866$, reduced to 7000$ in another file before Court of Quebec has been judged and executed, and two other actions were undertaken in Superior Court, on the same subject, which remain to be settled by the Court;
• There is no legal connection between the applicants and Sagaria. There is no allegation of fraud or embezzlement making it possible to pierce the corporate veil.
As for the syndicate and the other applicants they argue that:
• The arbitration decision by the APCHQ relate to repairs of construction defects.
• The present action claims damages suffered by the applicants as a result of the defects.
• The pending files before the Superior Court relate to other events, such as water damage suffered by the applicants.
• The claim for damages suffered due to demolition work on the floors, decontamination and repair of the condo units hes been withdrawn and they have amended their action and its conclusions claiming that trouble, inconvenience and the anxiety suffered by the co-applicants as well as a loss of enjoyment, and the related damage amounts claimed are decreased accordingly.
The Court denies the motion to dismiss the action for the following reasons:
• The decision by the adminstrator of the APCHQ's Garantie des bâtiments résidentiels neufs rendered under the terms of the Regulation respecting the guarantee plan for new residential buildings is a decision which, if it does not satisfy the parties, can be submitted either to mediation, or to arbitration.
• This provision, is the equivalent of an arbitration clause contained in a contract, as recognized as valid in Québec law in the case of Zodiac v. Polish People's Republic.
• Such an arbitration clause prevents the parties from submitting their dispute to the Courts of common jurisdiction, according to the method spelled out in that judgement.
• According to the Regulation, an arbitrator's would be final and thus not subject to appeal to a Court:
• However, the arbitrator's decision rules only on matters covered by the guarantee, i.e., to carry out works to repair the hidden defects or the major defects not discovered at the time of the purchase of the housing units.
• The regulations do not expressly exclude recourse in contractual civil liability against the contractor for damages, and after the amendment made by the applicants, this is the only issue which remains in the request.
• While supposing, as the Court must do at this stage, that the action is well-founded, the Court cannot countenance that the applicants, having suffered damages for this reason, may be denied the right to sue for compensation.
• The recourse brought in this case is different from the issue settled under the guarantee and the Regulations, and, as it cannot also be settled according to those, it must be done by the Courts of common jurisdiction. The Regulations do not prohibit recourse to the courts on matters not covered by the guarantee.
• The applicants did not apply for damages under the guarantee, and thus the parties subject to the general law.
• The Superior Court is competent to hear this action, subject to the other means raised.
• The second means raised by the defendants relates to cases pending before the Court of Quebec and before tthis Court, involving the same facts and some of the same parties. They claim that there is a situation of lis pendens, and require a suspension of the proceedings in this file.
• The Court notes that the same parties are not found in each action. On the other hand, except for the second action, the causes and objects are related. Strictly speaking, there is no lis pendens possible, as this requires that the case involve the same parties, of cause and object, all criteria for there to have been prior judgement, which can also be found in lis pendens.
• It is not therefore advisable to order the suspension of this action.
• As for the allegation of the defendant party to the effect that there is no legal connection between the applicants and Sagaria, and that there is no reason to pierce the corporate veil to personally claim damages from him, this is not relevant at this stage of the proceedings.
• Director liability is a question of fact, of which proof must be made, which must be left to the appreciation of the trial judge, if required.
• In order for the defendants to win their case proof will have to be made at trial that Sagaria circumvented the law or abused his position as a director, and that he can be regarded as the alter ego of the Company, who used it as a screen for his dishonest actions.
Source: Syndicate of the co-ownership 1272-1282 Notre-Dame de Fatima v. 158550 Canada Inc. (Construction Citcom) 2011 QCCS