Introduction On July 2, 2024, the Superior Court rendered a decision in Lallier c. Société d’assurance Beneva inc.,1 ruling on an insured’s claim against his insurer for an insurance benefit further to a loss, as the insurer had denied coverage, alleging the insured’s intentional fault. Despite the absence of hard evidence of the insured’s intentional fault, the Court ruled in favour of the insurer based on evidence established by presumption.  The facts During the night of August 2 to 3, 2020, a fire destroyed the home of Plaintiff, Mr. Réjean Lallier (hereinafter “the Insured”). His version is that he accidentally left a candle burning in the bathroom before running errands with his son. When he returned, the Insured saw that the house was on fire. Having no telephone, he rushed to a convenience store to call the fire department, rather than asking a nearby resident for help. After the loss, the Insured contacted his insurer Société d’assurance Beneva inc., the defendant in the case (“the Insurer”), to obtain compensation for the damage to his property. The claims adjuster that the Insurer had assigned to the case and who had been tasked with investigating the loss and compensating the Insured raised several anomalies in the Insured’s deposition. These included the Insured’s precarious financial situation, the fact that the residence was poorly maintained and the fact that, despite the urgency of the situation, the Insured had decided to take his car to call for help rather than go to a neighbour’s house. In these circumstances, the case is referred to the Insurer's special investigation unit. The Insurer’s investigation ultimately led to the conclusion that the Insured had intentionally caused the fire. This meant that contractual and legal exclusions applied, allowing the Insurer to deny coverage and justify its refusal to pay an insurance benefit. The Insured, who represented himself at the trial, instituted legal proceedings for the sum of $680,000, seeking reparation for damage to the immovable, his movable property and for living expenses. He also claimed $20,000 in compensation for the alleged inconvenience he suffered as a result of the Insurer’s “abusive behaviour.” Analysis The Honourable Justice Sébastien Vaillancourt, J.S.C., pointed out that, under article 2464 of the Civil Code of Québec2 and the provisions of the insurance policy, the Insurer is not obliged to compensate for damages intentionally caused by the Insured. However, the Insurer has the burden of establishing the Insured’s intentional fault. The Court reiterated that intentional fault is defined as behaviour that is deliberately and voluntarily intended to cause harm.3 The offender’s intention must not only be evident in the actions taken, but also in the ensuing consequences.4 This can be demonstrated through serious, precise and concordant presumptions, in accordance with the teachings of the Court of Appeal in Barrette on the subject.5 To meet its burden of proof, the Insurer presented to the Court the inconsistencies and improbabilities in the Insured’s statements. For example, in some statements, he claimed to be in a good financial position, while in others, he stated the opposite. In addition, the time at which he left his house after lighting the candle, what he did with his son after he left and how long he was gone changed from one statement to the next. The Insured had trouble explaining in a coherent manner why he was gone for so long late in the evening while his house was going up in flames. The Insured indicated that he went to the convenience store to contact the fire department after seeing the fire, stating that he did not want to go to his neighbour’s house because they had had a disagreement in the past. The Court concluded that this version was implausible given the gravity of the situation. Several other contradictions were noted in the Insured’s testimony at trial. The Insured tried to justify himself by claiming that he had trouble speaking in public and that his medication was causing him to lose his memory.6 However, there was no evidence to support these claims, and they were not upheld by the Court.7 Ultimately, the judge did not accept the Insured’s version. The sheer number of contradictions in his statements went beyond what was acceptable to the Court to consider them reliable. Given that certain contradictions emerged as early as the first statement after the fire, the time lapse between the incident and the trial could not be used as a justification.8 The statements were considered untrue, as they were mutually inconsistent.9 What is more, the contradictions and inconsistencies in the statements pointed to fraudulent intent on the Insured’s part. Lastly, the claim for damages in compensation for the Insurer’s abusive behaviour was also dismissed, given the absence of evidence in this regard.10 Conclusion Demonstrating fraudulent intent to deny coverage is no simple feat for insurers. In this case, the Insurer succeeded in meeting its burden of proof by relying on presumptions rather than hard evidence. The facts spoke for themselves. And faced with the Insured’s numerous inconsistent and contradictory statements, the Court ruled in favour of the Insurer. The Insured’s fraudulent intent was successfully substantiated and his claim against the Insurer was dismissed.11 Lallier c. Société d’assurance Beneva inc., [2024] n° 500-17-116356-216, QCCS. [Lallier] (Time limit for appeal: 30 days after the date of the notice of judgment). Civil Code of Québec, a. 2464; Lallier, para. 34. Allstate du Canada, compagnie d’assurances c. D., SOQUIJ AZ-50101469, J.E. 2001–1891, (C.A.), para. 18, as quoted in Lallier, para. 36. [Allstate] Allstate, para. 18, as quoted in Lallier, para. 36.  Lallier, paras. 37–38; see Barrette c. Union canadienne (L’), compagnie d’assurances,2013 QCCA 1687, paras. 12–13. Lallier, para. 43. Lallier, paras. 44–46. Lallier, para. 47. Maud Rivard, Dispositions générales applicables aux assurances de dommages, JCQ-Droit civil Contrats nommés II, Fascicle 20, para. 92, updated to June 20, 2023, as quoted in Lallier para. 49. Lallier, paras. 59–62. Lallier, paras. 56–58.

Introduction In 2023, where do we stand in terms of liability where smart products are concerned? The rules governing product liability set out in the Civil Code of Québec were introduced early in the 20th century in response to the industrial revolution and the growing number of workplace accidents attributable to tool failures.1 Needless to say, the legislator at the time could not have anticipated that, a century later, the tools to which this legislation applied would be equipped with self-learning capabilities enabling them to perform specific tasks autonomously.  These “smart products,” whether they are intangible or integrated into tangible products, are subject to the requirements of general law, at least for the time being. For the purposes of our analysis, the term “smart products” refers to products that have: Self-learning capabilities, meaning that they can perform specific tasks without being under a human being’s immediate control. Interconnectivity capabilities, meaning that they can collect and analyze data from their surroundings. Autonomy capabilities, meaning that they can adapt their behaviour to perform an assigned task more efficiently (optional criterion).2 These capabilities are specific to what is commonly referred to as artificial intelligence (hereinafter referred to as “AI”). Applying general law rules of liability to smart products Although Canada prides itself on being a “world leader in the field of artificial intelligence,”3 it has yet to enact its first AI law. The regulation of smart products in Quebec is still in its infancy. To this day, apart from the regulatory framework that applies to autonomous vehicles, there is no legislation in force that provides for distinct civil liability rules governing disputes relating to the marketing and use of smart products. There are two factors that have a major impact on the liability that applies to smart products, namely transparency and apportionment of liability, and both should be considered in developing a regulatory framework for AI.4  But where does human accountability come in? Lack of transparency in AI and product liability When an autonomous product performs a task, it is not always possible for either the consumer or the manufacturer to know how the algorithm processed the information behind that task. This is what researchers refer to as “lack of transparency” or the “black box” problem associated with AI.5 The legislative framework governing product liability is set out in the Civil Code of Québec6 and the Consumer Protection Act.7 The provisions therein require distributors, professional sellers and manufacturers to guarantee that the products sold are free from latent defects. Under the rules governing product liability, the burden of proof is reversed, as manufacturers are presumed to have knowledge of any defects.8 Manufacturers have two means to absolve themselves from liability:9 A manufacturer may claim that a given defect is the result of superior force or a fault on the part of the consumer or a third party; or A manufacturer may argue that, at the time that the product was brought to market, the existence of the defect could not have been known given the state of scientific knowledge. This last means is specifically aimed at the risks inherent to technological innovation.10 That being said, although certain risks only become apparent after a product is brought to market, manufacturers have an ongoing duty to inform, and how this is applied depends on the evolution of knowledge about the risks associated with the product.11 As such, the lack of transparency in AI can make it difficult to assign liability. Challenges in apportioning liability and human accountability There are cases where the “smart” component is integrated into a product by one of the manufacturer’s subcontractors.In Venmar Ventilation,12 the Court of Appeal ruled that the manufacturer of an air exchanger could not be exempted from liability even though the defect in its product was directly related to a defect in the motor manufactured by a subcontractor. In this context, it would be reasonable to expect that products’ smart component would be likely to result many similar calls in warranty, resulting in highly complex litigation cases, which could further complicate the apportionment of liability. Moreover, while determining the identity of the person who has physical custody of a smart product seems obvious, determining the identity of the person who exercises actual control over it can be much more difficult, as custody and control do not necessarily belong to the same “person.” There are two types of custodians of smart products: The person who has the power of control, direction and supervision over a product at the time of its use (frontend custody); The person who holds these powers over the algorithm that gives the product its autonomy (backend custody)13. Either one of these custodians could be held liable should it contribute to the harm through its own fault. As such, apportioning liability between the human user and the custodians of the AI algorithm could be difficult. In the case of a chatbot, for example, determining whether the human user or the AI algorithm is responsible for defamatory or discriminatory comments may prove complex. C-27: canadian bill on artificial intelligence Canada’s first AI bill (“Bill C-27”) was introduced in the House of Commons on June 16, 2022.14 At the time of publication, the Standing Committee on Industry and Technology was still reviewing Bill C-27. Part 3 of Bill C-27 enacts the Artificial Intelligence and Data Act. If adopted in its current form, the Act would apply to “high-impact AI systems” (“Systems”) used in the course of international and interprovincial trade.15 Although the government has not yet clearly defined the characteristics that distinguish high-impact AI from other forms of AI, for now, the Canadian government refers in particular to “Systems that can influence human behaviour at scale” and “Systems critical to health and safety.”16 We have reason to believe that this type of AI is what poses a high risk to users’ fundamental rights. In particular, Bill C-27 would make it possible to prohibit the conduct of a person who “makes available” a System that is likely to cause “serious harm” or “substantial damage.”17 Although the Bill does not specifically address civil liability, the broad principles it sets out reflect the best practices that apply to such technology. These best practices can provide manufacturers of AI technology with insight into how a prudent and diligent manufacturer would behave in similar circumstances. The Bill’s six main principles are set out in the list below.18 Transparency: Providing the public with information about mitigation measures, the intended use of the Systems and the “content that it is intended to generate”. Oversight: Providing Systems over which human oversight can be exercised. Fairness and equity: Bringing to market Systems that can limit the potential for discriminatory outcomes. Safety: Proactively assessing Systems to prevent “reasonably foreseeable” harm. Accountability: Putting governance measures in place to ensure compliance with legal obligations applicable to Systems. Robustness: Ensuring that Systems operate as intended. To this, we add the principle of risk mitigation, considering the legal obligation to “mitigate” the risks associated with the use of Systems.19 Conclusion Each year, the Tortoise Global AI Index ranks countries according to their breakthroughs in AI.20 This year, Canada ranked fifth, ahead of many European Union countries. That being said, current legislation clearly does not yet reflect the increasing prominence of this sector in our country. Although Bill C-27 does provide guidelines for best practices in developing smart products, it will be interesting to see how they will be applied when civil liability issues arise. Jean-Louis Baudouin, Patrice Deslauriers and Benoît Moore, La responsabilité civile, Volume 1: Principes généraux, 9th edition, 2020, 1-931. Tara Qian Sun, Rony Medaglia, “Mapping the challenges of Artificial Intelligence in the public sector: Evidence from public healthcare”, Government Information Quarterly, 2019, 36(2), pp. 368–383, online EUROPEAN PARLIAMENT, Civil Law Rules on Robotics, European Parliament resolution of 16 February 2017 with recommendations to the Commission on Civil Law Rules on Robotics (2015/2103(INL)), available online at  TA (europa.eu). GOVERNMENT OF CANADA, The Artificial Intelligence and Data Act (AIDA) – Companion document, online. EUROPEAN COMMISSION, White Paper on Artificial Intelligence:  a European approach to excellence and trust, COM. (2020), p. 3. Madalina Busuioc, “Accountable Artificial Intelligence: Holding Algorithms to Account”, Public Administration Review2020, online. Civil Code of Québec (CQLR, c. C-1991, art. 1726 et seq. Consumer Protection Act, CQLR c. P-40.1, s. 38. General Motors Products of Canada v. Kravitz, 1979 CanLII 22 (SCC), p. 801. See also: Brousseau c. Laboratoires Abbott limitée, 2019 QCCA 801, para. 89. Civil Code of Québec (CQLR, c. CCQ-1991, art. 1473; ABB Inc. v. Domtar Inc., 2007 SCC 50, para. 72. Brousseau, para. 100. Brousseau, para. 102. Desjardins Assurances générales inc. c.  Venmar Ventilation inc., 2016 QCCA 1911, para. 19 et seq. Céline Mangematin, Droit de la responsabilité civile et l’intelligence artificielle, https://books.openedition.org/putc/15487?lang=fr#ftn24; See also Hélène Christodoulou, La responsabilité civile extracontractuelle à l’épreuve de l’intelligence artificielle, p. 4. Bill C-27, An Act to enact the Consumer Privacy Protection Act, the Personal Information and Data Protection Tribunal Act and the Artificial Intelligence and Data Act and to make consequential and related amendments to other Acts, Minister of Innovation, Science and Industry. Bill C-27, summary and s. 5(1). The Artificial Intelligence and Data Act (AIDA) – Companion document, Government of Canada, online. The Artificial Intelligence and Data Act (AIDA) – Companion document canada.ca. Bill C-27, s. 39(a). AIDA, Companion document Bill C-27, s. 8. TORTOISE MEDIA, The Global AI Index 2023, available at tortoisemedia.com.

Introduction On June 1, 2023, the Minister of Justice, Simon Jolin-Barrette, tabled and presented Bill 29 entitled An Act to protect consumers from planned obsolescence and to promote the durability, repairability and maintenance of goods 1 (hereinafter the “Bill”) before the National Assembly. The Bill mainly provides for amendments to the Consumer Protection Act 2 (“CPA”) and reaffirms the government’s desire to protect consumers, in particular by improving the legal warranties available to them and introducing the notion of planned obsolescence into Quebec law. The date on which the new provisions will come into force has not yet been set, but the Bill is nonetheless worthy to consider right now. Proposed amendments to the Consumer Protection Act Purpose of the amendments to the CPA The main purpose of the Bill is to put an end to the business of trading in goods subject to planned obsolescence, defined as a “technique aimed at reducing the normal operating life” of a good3. Warranties The CPA already provides a framework for the legal warranty of quality that may apply to goods forming the object of a contract between a consumer and a merchant. This warranty supplements the warranty provided for in articles 1726 and following of the Civil Code of Québec. Under section 38 of the CPA, goods “must be durable in normal use for a reasonable length of time, having regard to their price, the terms of the contract and the conditions of their use4.” That being said, the Bill would further protect consumers by introducing “a warranty of good working order” for certain new goods that are the object of a contract of sale or long-term contract of lease5. The duration of such warranty would be determined by regulation6. If left unchanged, the warranty would apply to the following goods: Refrigerator; Dishwasher; Washing machine; Dryer; Television set; Desktop or laptop computer; Electronic pad; Cellular telephone; Video game console; Air conditioner; Heat pump. As for additional warranties, commonly referred to as “extended warranties,” merchants would now be required to inform consumers of the terms of their right to resolve a contract that includes an additional warranty7, adding to their obligation to inform consumers of the legal warranty before offering an additional warranty8. Merchant and manufacturer's obligations The Bill would impose a number of new obligations on merchants and manufacturers, particularly as regards display. For example, merchants would have to indicate the duration of the warranty of good working order near the goods concerned, in a manner as equally prominent as their price9. The Bill introduces a warranty of “availability” for goods of a nature that requires maintenance work. Merchants or manufacturers bound by the warranty of availability would have to make the replacement parts, repair services and information necessary to maintain or repair the goods available for a reasonable length of time and at a reasonable price after the contract has been concluded10. Seriously defective vehicles Under the Bill, automobiles would be declared “seriously defective” in the following circumstances, in particular11: After one or more unsuccessful repair attempts for defects under the manufacturer’s conventional warranty, including three unsuccessful repair attempts for the same defect; If the defects appear within three years of the first sale or long-term lease of the automobile where it has not covered more than 60,000 kilometres; The defects render the automobile unfit for the purposes for which it is ordinarily intended. Where all of the above apply, the automobile in question would be deemed to be affected by a latent defect. Penalties As concerns penal fines, the Bill provides for a significant increase in the amounts involved and introduces new offences, such as the following: Failure to meet the obligation to disclose the legal warranty of good working order. This could give rise to a fine of $3,000 to $75,000 in the case of a legal person and of $1,500 to $37,50012 in the case of a natural person. Trading in goods for which obsolescence is planned. Offending companies could be fined a minimum of $5,000 or an amount equal to twice the pecuniary benefit derived from the commission of the offence, whichever is greater. The maximum fine will be $125,000, or an amount equal to four times the pecuniary benefit derived from the commission of the offence, whichever is greater13. The Bill also proposes administrative monetary penalties for “objectively observable” failures to comply with the CPA14. The maximum penalty for a legal person will be $3,500 for each day the failure continues15. Moreover, the Bill provides that officers and directors of a company having committed an offence under the CPA would be presumed to have committed the offence themselves. It would be possible to rebut this presumption insofar as the person concerned is able to establish either that they exercised due diligence or that they took “all necessary precautions” to prevent the commission of the offence16. Conclusion The Bill aims to put a stop to planned obsolescence. The obsolescence of goods is planned where a “technique aimed at reducing its normal operating life is used on them17.” The proposed amendments to the CPA establish a new warranty of “good working order.” It will be interesting to see whether it will tie in with the teachings of the Supreme Court of Canada on the legal warranty of quality in the landmark Domtar decision18. How the notion of planned obsolescence will be applied in practice will also be something to watch closely, as the Courts will be confronted with it for the first time. Certain issues could arise, especially with the burden of proof and evidence aspects. The amendments to the CPA will also entail new obligations for manufacturers and merchants, particularly in terms of disclosure and information regarding the warranty of good working order and the additional warranty. The proposed amendments in the Bill also include a legal warranty of availability of parts and services for goods of a nature that requires maintenance work. The severity of the fines applicable to goods for which obsolescence is planned will be something to consider. In short, this Bill is definitely one to watch!  An Act to protect consumers from planned obsolescence and to promote the durability, repairability and maintenance of goods, Bill29 (Introduction – June 1, 2023), 1st Sess., 43rd Legis. (Qc) (“B.”) Consumer Protection Act, CQLR c. P-40.1 B., s. 14; CPA, s. 227.0.4, para. 2 CPA, s. 38 B., s. 3; CPA., s. 38.1 B., s. 3; CPA, s. 38.1, para. 2 Current obligation under the CPA, s. 228.1., para. 1 B., s. 15; CPA, s. 228.3 B., s. 3; CPA, s. 38.8 B., s. 3; CPA, s. 39, para. 1; s. 39.3, para. 1 B., s. 5; CPA, s. 53.1 B., s. 19; CPA, s. 277 Id. B., s. 18; CPA, s. 276.1 B., s. 18; CPA, s. 276.1, para. 2; s. 276.2 B., s. 19; CPA, s. 282.1 B., s. 14; CPA, s. 227.0.4, para. 2 ABB Inc. v. Domtar Inc., 2007 SCC 50

Introduction On February 1, 2023, Minister of Justice Simon Jolin-Barrette introduced and tabled in the National Assembly Bill 8 entitled An Act to improve justice efficiency and accessibility, in particular by promoting mediation and arbitration and by simplifying civil procedure in the Court of Québec1 (hereinafter the “Bill”). The Bill makes amendments to several laws, including the Courts of Justice Act2 and the Professional Code3. We are particularly interested in those relating to the Code of Civil Procedure (“C.C.P.”),4 and more specifically to proceedings pending before the Court of Québec of which practitioners and persons subject to trial will want to take note. Proposed Amendments to the Code of Civil Procedure Most of the amendments to the C.C.P. will come into effect on June 30, 20235. We note the following, in particular: Jurisdiction of the Court  Exclusive jurisdiction granted to the Court of Québec to hear applications in which the amount claimed or the value of the subject matter of the dispute is less than $75,000,6 instead of $85,000, which is the limit in effect on the date of this bulletin. However, the Court of Québec will continue to hear applications under the $85,000 limit that were filed prior to June 30, 2023, and these will remain governed by the provisions of the C.C.P., as they read before June 30, 2023;7 Concurrent jurisdiction with that of the Superior Court granted to the Court of Québec where the amount claimed or the value of the subject matter of the dispute is equal to or exceeds $75,000 but is less than $100,000.8 Case management The Bill also introduces a special procedure for applications in civil matters brought before the Court of Québec in which the amount claimed or the value of the subject matter of the dispute is less than $100,000:9 The preparation of a case protocol will no longer be necessary, as set time limits will now apply to all recourses;10 Originating applications must not exceed five pages in length;11 Preliminary exceptions must be disclosed within 45 days of filing an application;12 A defendant’s arguments must be disclosed within 95 days of filing an application;13 Settlement conferences will be held automatically after trial readiness is achieved (settlement conferences may also be replaced by pre-trial conferences);14 Cases will be set down for trial and judgment by a court clerk.15 Requests for particulars as to allegations made or to strike immaterial allegations The Court of Québec will only authorize such requests by way of exception and if warranted on serious grounds.16 Examinations The limit below which holding an oral examination on discovery is not permitted will be increased to $50,000.17 Currently, the limit is $30,000; Each party will be entitled to only a single oral examination on discovery, unless the Court decides otherwise;18 Written examinations must not exceed three pages in length.19 Expert opinion Parties must seek a joint expert opinion in cases where the amount claimed or the value of the property claimed is equal to or less than $50,000, unless the Court decides otherwise.20 Small claims With the parties’ consent, the Court may render judgment on the face of the record when the matter concerns the recovery of a claim of $15,000 or less.21 Adjustments Each of the monetary limits for the Court of Québec’s jurisdiction will be adjusted annually.22 Conclusion The proposed measures will significantly impact how lawyers will now handle and manage disputes in which the amount claimed is less than $100,000. The concurrent jurisdiction of the Court of Québec with that of the Superior Court for cases with a value equal to or exceeding $75,000 but less than $100,000 is interesting: Although the procedure for conducting proceedings in the Court of Québec has been simplified for such cases, it is likely that many cases will nonetheless be instituted in the Superior Court, as its procedural process is a little less intrusive, particularly with respect to joint expert opinions, mandatory settlement conferences and the number of examinations. The Minister of Justice is hopeful that the amendments to the Act will improve access to justice for persons subject to trial, thanks to faster and less costly justice services, among other things. While these amendments will allow for more out-of-court settlements and prevent costly trials, we believe that there is still some uncertainty as to how accessible the expedited process will be, given the current staffing shortages in courthouses. 1. An Act to improve justice efficiency and accessibility, in particular by promoting mediation and arbitration and by simplifying civil procedure in the Court of Québec, Bill 8 (Introduced — February 1, 2023), 43rd Legislature, 1st Session (Qc) (“B.”). 2. Courts of Justice Act, CQLR c. T-16. 3. Professional Code, CQLR, c. C-26. 4. Code of Civil Procedure, CQLR c. C-25.01. 5. Transitional provision: claims of $85,000 initiated in the Court of Quebec before June 30, 2023 will continue under the provisions in effect prior to the coming into force of the PL amendments (PL, s 44). 6. B., s. 3; C.C.P., art. 35. 7. B., s. 44. 8. B., s. 3; C.C.P., art. 35. 9. B., s. 8; C.C.P., art. 535.1. 10. B., s. 8; C.C.P., art. 535.2. 11. B., s. 8; C.C.P., art. 535.3. 12. B., s. 8; C.C.P., art. 535.5. 13. B., s. 8; C.C.P., art. 535.6. 14. B., s. 8; C.C.P., art. 535.12. 15. B., s. 8; C.C.P., art. 535.13. 16. B., s. 8; C.C.P., art. 535.11. 17. B., s. 7; C.C.P., art. 229. 18. B., s. 8; C.C.P., art. 535.9, para. 2. 19. B., s. 8; C.C.P., art. 535.9. 20. B., s. 8; C.C.P., art. 535.15. 21. B., s. 15; C.C.P., art. 561.1. 22. B., s. 3; C.C.P., art. 35.