Amendments to Privacy Laws: What Businesses Need to Know

October 4, 2021

Bill 64, also known as the Act to modernize legislative provisions respecting the protection of personal information, was adopted on September 21, 2021, by the National Assembly of Québec. It amends some 20 laws relating to the protection of personal information, including the Act respecting access to documents held by public bodies ("Access Act"), the Act respecting the protection of personal information in the private sector ("Private Sector Act") and the Act respecting the legal framework for information technology.

While the changes will affect both public bodies and private businesses, this publication will focus on providing an overview of the new requirements for private businesses covered by the Private Sector Act.

We have prepared an amended version of the Private Sector Act in order to reflect the exact changes brought about by Bill 64.

Essentially, the amended Private Sector Act aims to give individuals greater control over their personal information and promote the protection of personal information by making businesses more accountable and introducing new mechanisms to ensure compliance with Québec’s privacy rules. The following is a summary of the main amendments adopted by the legislator and the new requirements imposed on businesses in this area.

It is important to note that, for the most part, the new privacy regime will come into effect in two years.

1. Increasing transparency and individual control over personal information

The new Private Sector Act establishes the right of individuals to access information about themselves collected by businesses in a structured and commonly used technological format. Data subjects will now also be able to require a business to disclose such information to a third party, as long as the information was not “created or inferred” by the business (s. 27). This right is commonly referred to as the “right to data portability.”

Businesses now have an obligation to destroy personal information once the purposes for which it was collected or used have been fulfilled. Alternatively, businesses may anonymize personal information in accordance with generally accepted best practices in order to use it for meaningful and legitimate purposes (s. 23). However, it is important that the identity of concerned individuals can never again be inferred from the retained information. This is a significant change for private businesses which, under the current law, can still retain personal information that has lapsed.

In addition, Bill 64 provides individuals with a right to “de-indexation.” In other words, businesses will now have to de-index any hyperlink that leads to an individual’s personal information where dissemination of such personal information goes against the law or a court order (s. 28.1).

Additionally, whenever a business uses personal information to render a decision based exclusively on an automated processing of such information, it must inform the concerned individual of the process at the latest when the decision is made (s. 12.1). The individual must likewise be made aware of their right to have the information rectified (s. 12.1).

Bill 64 provides that the release and use of nominative lists by a private company for commercial or philanthropic prospecting purposes are now subject to the consent of concerned data subjects.

Furthermore, in an effort to increase transparency, businesses will now be required to publish their rules of governance with respect to personal information in simple and clear terms on their website (s. 3.2). These rules may take the form of a policy, directive or guide and must, among other things, set out the various responsibilities of staff members with respect to personal information. In addition, businesses that collect personal information through technology will also be required to adopt and publish a privacy policy in plain language on their website when they collect personal information (s. 8.2).

The amended Private Sector Act further provides that businesses that refuse access to information requests, in addition to giving reasons for their refusal and indicating the relevant sections of the Act, must now assist applicants in understanding why their request was denied when asked to (s. 34).

2. Promoting privacy and corporate accountability

Bill 64 aims to make businesses more accountable for the protection of personal information, as exemplified by the new requirement for businesses to appoint a Chief Privacy Officer within their organization. By default, the role will fall upon the most senior person in the organization (s. 3.1).

In addition, businesses will be required to conduct privacy impact assessments (“PIA”) for any information system acquisition, development or redesign project involving the collection, use, disclosure, retention or destruction of personal information (s. 3.3). This obligation forces businesses to consider the privacy and personal information protection risks involved in a project at its outset. The PIA must be proportionate to the sensitivity of the information involved, the purpose for which it is to be used, its quantity, distribution and medium (s. 3.3).

Businesses will likewise be required to conduct a PIA when they intend to disclose personal information outside Québec. In these cases, the purpose of the PIA will be to determine whether the information will be adequately protected in accordance with generally accepted privacy principles (s. 17). The extra-provincial release of personal information must also be subject to a written agreement that takes into account, among other things, the results of the PIA and, if applicable, the terms and conditions agreed to in order to mitigate identified risks (s. 17(2)).

The disclosure of personal information by businesses for study, research or statistical purposes is also subject to a PIA (s. 21). The law is substantially modified in this regard, in that a third party wishing to use personal information for such purposes must submit a written request to the Commission d'accès à l'information (“CAI”), attach a detailed description of their research activities and disclose a list of all persons and organizations to which it has made similar requests (s. 21.01.1 and 21.01.02).

Businesses may also disclose personal information to a third party, without the consent of the individual, in the course of performing a service or for the purposes of a business contract. The mandate must be set out in a written contract, which must include the privacy safeguards to be followed by the agent or service provider (s. 18.3).

The release of personal information without the consent of concerned individuals as part of a commercial transaction between private companies is subject to certain specific requirements (s. 18.4). The amended Private Sector Act now defines a business transaction as “the sale or lease of all or part of an enterprise or its assets, a change in its legal structure by merger or otherwise, the obtaining of a loan or other form of financing by it, or the taking of a security interest to secure an obligation of the enterprise” (s. 18.4).

Bill 64 enshrines the concept of “privacy by default,” which means that businesses that collect personal information by offering a technological product or service to the public with various privacy settings must ensure that these settings provide the highest level of privacy by default, without any intervention on behalf of their users (s. 9.1). This does not apply to cookies.

Where a business has reason to believe that a privacy incident has occurred, it must take reasonable steps to reduce the risk of harm and the reoccurrence of similar incidents (s. 3.5). A privacy incident is defined as “the access, use, disclosure or loss of personal information” (s. 3.6). In addition, businesses are required to notify concerned individuals and the CAI for each incident that presents a serious risk of harm, which is assessed in light of the sensitivity of the concerned information, the apprehended consequences of its use and the likelihood that it will be used for a harmful purpose (s. 3.7). Companies will furthermore be required to keep a confidentiality incident log that must be made available to the CAI upon request (s. 3.8).

3. Strengthening the consent regime

Bill 64 modifies the Private Sector Act to ensure that any consent provided for in the Act is clear, free and informed and given for specific purposes. This means that consent must be requested for each of the purposes of the collection, in simple and clear terms and in a clearly distinct manner, to avoid consent being obtained through complex terms of use that are difficult for individuals to understand (art. 14).

The amended Private Sector Act now provides that minors under the age of 14 must have a parent or a guardian consent to the collection of their personal information. For minors over the age of 14, consent can be given either directly by the minor or by their parent or guardian (s. 14).

Within an organization, consent to the disclosure of sensitive personal information (e.g., health or other intimate information) must be expressly given by individuals (s. 12).

4. Ensuring better compliance

The Private Sector Act has likewise been amended by adding new mechanisms to ensure that businesses subject to the Private Sector Act comply with its requirements.

Firstly, the CAI is given the power to impose hefty dissuasive administrative monetary penalties on offenders, which can be as high as $10,000,000 or 2% of the company's worldwide turnover (s. 90.12). In the event of a repeat offence, the fine will be doubled (s. 92.1).

In addition, when a confidentiality incident occurs within a company, the CAI may order it to take measures to protect the rights of affected individuals, after allowing the company to make observations (s. 81.3).

Secondly, new criminal offences are added to the Private Sector Act, which may also lead to the imposition of severe fines. For offending companies, such fines can reach up to $25,000,000 or 4% of their worldwide turnover (s. 91).

Finally, Bill 64 creates a new private right of action. Essentially, it provides that when an unlawful infringement of a right conferred by the Private Sector Act or by articles 35 to 40 of the Civil Code of Québec results in prejudice and the infringement is intentional or the result of gross negligence, the courts may award punitive damages of at least $1,000 (s. 93.1).

5. Coming into force

The amendments made by Bill 64 will come into force in several stages. Most of the new provisions of the Private Sector Act will come into force two years after the date of assent, which was granted on September 22, 2021. However, some specific provisions will take effect one year after that date, including:

The requirement for businesses to designate a Chief Privacy Officer (s. 3.1);
The obligation to report privacy incidents (s. 3.5 to 3.8);
The exception for disclosure of personal information in the course of a commercial transaction (s. 18.4); and
The exception to disclosure of personal information for study or research purposes (s. 21 to 21.0.2).

Finally, the provision enshrining the right to portability of personal information (s. 27) will come into force three years after the date of official assent.

The Lavery team would be more than pleased to answer any questions you may have regarding the upcoming changes and the potential impact of Bill 64 on your business.

The information and comments contained in this document do not constitute legal advice. They are intended solely for the use of the reader, who assumes full responsibility for its content, for their own purposes.

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Written by

Raymond Doray
Partner, Lawyer
Guillaume Laberge
Partner, Lawyer

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October 2, 2024

Proof of incapacity: analysis of CIUSSS de L’Ouest-de-L’île-de-Montréal (ST. Mary’s Hospital Center) c. R.C.

PROOF OF INCAPACITY: ANALYSIS OF CIUSSS DE L’OUEST-DE-L’ÎLE-DE-MONTRÉAL (ST. MARY’S HOSPITAL CENTER) c. R.C.1 Summary The authors comment on this decision rendered on September 20, 2024, in which the Court of Appeal ruled on the capacity to consent to care in the presence of a psychiatric disorder. The Court of Appeal overturned the first instance decision, which had found the respondent capable of refusing treatment with antipsychotic medications even though he had refuted his diagnosis, because he understood the benefits that antipsychotic medications could afford him and refused to take them because of their side effects. The Court of Appeal rather concluded that the trial judge had misapplied the five criteria to be used to assess whether a person is capable of consenting to care, particularly in the context where (i) the trial judge’s conclusion ran counter to the uncontradicted opinion of an expert; and (ii) there was much evidence supporting the fact that the respondent was incapable of making an informed decision. INTRODUCTION In this case, the Centre intégré universitaire de santé et de services sociaux de l’Ouest-de-l'Île-de-Montréal (the “CIUSSS”) appealed a decision rendered by the Superior Court on March 14, 2024, dismissing its application for an authorization to provide care to R.C., a 51-year-old man. The Superior Court had concluded that the CIUSSS had not proven that the respondent was incapable of consenting to care. The Court of Appeal was thus called upon to review the trial judge’s answer to the first question (incapacity to consent) in the analytical framework2 surrounding the test that has now been used for three decades.3 THE FACTS R.C. has a complex medical history. He was hospitalized several times between 2007 and 2019 for mental health issues, including suicidal ideation and personality disorders. In 2021, he was admitted to the CHUM for COVID-19-related complications having resulted in brain damage caused by hypoxia. From 2022 onwards, he made repeated visits to the emergency room, often to obtain benzodiazepines, leading him to become addicted. Even though he adhered to treatment with antipsychotic medication for a time, R.C. stopped taking his medication because of undesirable side effects. In January 2024, after an episode of confusion, he was taken to hospital where he was diagnosed with late-onset schizophrenia. However, R.C. refuted the diagnosis, claiming that his health problems were caused by an artificial intelligence device he believed had been implanted in his body. The psychiatrists who assessed him concluded that he was incapable of consenting to care. On February 16, 2024, the CIUSSS filed an application for authorization to re-hospitalize R.C. and administer antipsychotic medications, despite his categorical refusal. After analyzing the evidence, which essentially consisted of R.C.’s testimony and that of the CIUSSS psychiatrist, the Superior Court concluded that R.C. understood the nature of his condition and the benefits of the proposed treatment, despite his refusal to accept his diagnosis. The Court was of the opinion that the CIUSSS psychiatrists, in their analysis of R.C.’s capacity, had erroneously and repeatedly carried over his rejection of the diagnosis in a cascading fashion in their analysis of the five criteria from the decision in A.G.,4 thereby making the same error as the one that the Court of Appeal had identified in the M.H. decision.5 Despite the absence of a second opinion on R.C.’s capacity, the Superior Court had determined that he was able to consent to his care. According to the trial judge, in keeping with the teachings of the Court of Appeal in the F.D. decision,6 he therefore lacked jurisdiction to order care. For this reason, he dismissed the application for an authorization to provide care. THE COURT OF APPEAL’S DECISION The Court of Appeal began by reiterating the five criteria for assessing a person’s capacity, namely: Does the person understand the nature of the illness for which treatment is proposed? Does the person understand the nature and purpose of the treatment? Does the person understand the risks and benefits involved in undergoing the treatment? Does the person understand the risks involved in not undergoing the treatment? ls the capacity to consent to treatment affected by the patient's illness?7 It pointed out that the criteria are not cumulative and that it is incumbent upon the trier to assess them as a whole.8 Moreover, the mere fact that a person refuses care that would be in their best interest is not enough to conclude that the person is incapable,9 nor is their mere rejection of their diagnosis.10 In this case, the Court of Appeal considered that the Superior Court judge had committed a palpable and overriding error making its intervention warranted. It stated that the trial judge was obliged to express an opinion on whether the evidence proffered was sufficient, adding that the judge had a proactive role to play in protecting the interests of the person involved. If the trial judge felt that a point that had not been the subject in a genuine adversarial debate raised a problem in his view, it was up to him to ask questions.11 Subsequently, the court took extracts from the evidence consisting of a psychiatric report and the testimony of its author and went on to note that the evidence did not allow the trial judge to conclude that R.C. was capable of consenting or refusing the proposed treatment plan, on the contrary. Based on the same evidence, the Court declared R.C. incapable of consenting to care and sent the case back to the Superior Court so that it could determine whether there was indeed categorical refusal and assess the terms of the treatment plan sought. AUTHORS’ COMMENTS This decision of the Court of Appeal follows approximately 20 other decisions12 respecting orders authorizing care handed down by this same court, which have all further established and clarified the guiding principles surrounding such orders since the F.D. decision of 2015.13 These successive decisions have not only added to case law, they have refined the assessment criteria and legal requirements pertaining to applications for authorization to provide care. Such a development in case law shows that the courts are committed to circumscribing complex healthcare situations. Doing so involves striking a balance between the rights to freedom and self-determination and the protection of those who are vulnerable or otherwise unable to consent. On July 6, 2015, the Court of Appeal of Quebec marked a decisive turning point where orders authorizing care are involved by rendering a decision that sent a clear message to the Superior Court, namely F.D. c. Centre universitaire de santé McGill (Hôpital Royal-Victoria).14 In that decision, an analytical framework was established to ensure compliance both with the provisions of the law and the spirit of the law. Since then, the Court has handed down some 20 other significant decisions, each shedding additional light. The guiding principles derived from these decisions can be summarized under the following themes: Rights relating to the judicial process Every person has the fundamental right to contest an application for a order authorizing care, to be heard and to be represented.15 The judge must proactively protect the user’s interests and ensure that they are represented by a lawyer.16 Scope of the care plan Requiring a definite care plan does not mean dictating which medication should be administered in a limitative way.17 A judge may remove certain substances from a treatment plan if they deem that to be in the patient’s best interest.18 It is crucial to draw a distinction between preventive care and a treatment plan that includes various alternatives as the situation evolves.19 For a future hospitalization clause to be valid, there must be a reasonable foreseeability of hospitalization.20 When a patient is to be placed, the application for authorization must indicate where they are to be placed.21 Physical restraint may only be used if it is necessary to avoid serious harm, and must be limited to the minimum.22 A parent’s refusal to consent to a treatment plan may not be warranted if the plan is in the child’s best interests.23 Duration of the authorization When the person concerned is not cooperating and access to their previous medical records is not available, the judge must be especially careful in assessing whether the proposed care plan is legal, in particular in terms of its duration and scope.24 The duration of the care order should be as short as reasonably possible, without compromising the effectiveness of the treatment.25 When a future hospitalization is contemplated, the judge must take into account the time required to stabilize the patient.26 The 30-day period for a future hospitalization should not be considered an absolute limit, as a longer period may be deemed necessary after a thorough analysis.27 The evidence The mere fact that a relationship exists between an expert and a party does not make the expert’s testimony inadmissible: The circumstances surrounding the expert’s role must be reviewed.28 An expert who does not know a patient’s reasons for refusing treatment is not deemed to have breached their duty to inform.29 An expert may testify to reported facts without the possibility of anyone opposing them; however, this does not mean that reported facts are proven, as the rules of evidence remain stringent in this context.30 An expert report may suffice as testimony; the judge need not require the patient’s testimony if the patient cannot understand the issues at hand.31 Applications for safeguard orders may be unsuccessful where there is no expert report and it is not demonstrated that the matter is urgent.32 This review highlights the significant advances that the courts have made in overseeing applications for orders authorizing care and protecting vulnerable people. The analytical framework established in the F.D. decision remains relevant, and subsequent decisions have further refined its questions. The decision that the Court of Appeal handed down in Centre intégré universitaire de santé et de services sociaux de l’Ouest-de-l'Île-de-Montréal c. R.C. is milestone in the jurisprudence on court orders authorizing care. By overturning the lower court’s judgment, the Court of Appeal reaffirmed the need for a thorough assessment of the capacity to consent, emphasizing that the work of medical teams and applications made by healthcare institutions are important to ensure appropriate care. This decision not only underscores the fact that it is important to protect the rights of users, but also that the work of the court is crucial, for it must ensure that the criteria are met without substituting its opinion for that of the experts heard. CONCLUSION The decision discussed in this paper is part of a series of decisions that have clarified and enhanced the guiding principles established since the F.D. decision was handed down in 2015.33 The Court of Appeal has provided valuable guidelines for judges, institutions and healthcare professionals to use in their assessment of applications for authorization to provide care. Through a careful review of the circumstances of each case, the courts have shown that they are committed to effectively circumscribing complex health situations by ensuring that institutions have the tools they need to respond appropriately. Lastly, we must recognize that while progress has been made, there are still unresolved issues that need to be addressed. Recent court decisions, including the one that led to the R.C. decision,34 illustrate the importance of constant dialogue between those involved in the legal aspect of cases and those dealing with clinical realities. As jurisprudence continues to develop, paying close attention to future developments will be key to ensuring that healthcare institutions can act effectively in consideration of patients’ needs. 2024 QCCA 1231. F.D.c. Centre universitaire de santé McGill (Hôpital Royal-Victoria), 2015 QCCA 1139. See the landmark decision, Institut Philippe Pinel de Montréal c. A.G., 1994 CanLII 6105 (QC CA). Institut Philippe Pinel de Montréal c. A.G., 1994 CanLII 6105 (QC CA). M.H. c. Centre intégré universitaire de santé et de services sociaux de la Capitale-Nationale, 2018 QCCA 1948, para. 57. F.D. c. Centre universitaire de santé McGill (Hôpital Royal-Victoria), 2015 QCCA 1139. This decision, para. 13; with reference to Institut Philippe Pinel de Montréal c. A.G., 1994 CanLII 6105 (QC CA), pp. 28 to 33. This decision, para. 14; with reference to M. B. c. Centre hospitalier Pierre-le-Gardeur, 2004 CanLII 29017 (QC CA), para. 45; M.C. c. Service professionnel du Centre de santé et de services sociaux d’Arthabaska-et-de-L’Érable, 2010 QCCA 1114, para. 13. This decision, para. 14; with reference to M. B. c. Centre hospitalier Pierre-le-Gardeur, 2004 CanLII 29017 (QC CA), para. 46. This decision, para. 14, with reference to Starson v. Swayze, 2003 SCC 32, para. 79 and M.H. c. Centre intégré universitaire de santé et de services sociaux de la Capitale-Nationale, 2018 QCCA 1948, paras. 61–62. This decision, para. 18. We have excluded the following decisions from our analysis: Bédard c. Centre intégré universitaire de santé et de services sociaux du Nord-de-l’Île-de-Montréal, 2023 QCCA 508; M.G. c. Centre intégré universitaire de santé et de services sociaux de la Capitale-Nationale, 2019 QCCA 203; S.F. c. CIUSSS de Centre-Ouest-de-l’île-de-Montréal – Hôpital général juif – Sir Mortimer B. Davis, 2021 QCCA 1531; P.L. c. Centre intégré de santé et de services sociaux de la Montérégie-Centre, 2018 QCCA 318; N.G. c. Sir Mortimer B. Davis Jewish General Hospital, 2021 QCCA 1892; F.D. c. Centre intégré universitaire de santé et de services sociaux de la Capitale-Nationale, 2017 QCCA 1206. F.D.c. Centre universitaire de santé McGill (Hôpital Royal-Victoria), 2015 QCCA 1139. Ibid. M.H.c. Centre intégré universitaire de santé et de services sociaux de la Capitale-Nationale, 2018 QCCA 1948, paras. 68 and 69. A.N. c. Centre intégré universitaire de santé et de services sociaux du Nord-de-l’île-de-Montréal, 2022 QCCA 1167 , para. 30. Centre intégré universitaire de santé et de services sociaux de la Capitale-Nationale c. D.M., 2017 QCCA 1333, para. 25. Centre intégré universitaire de santé et de services sociaux du Saguenay-Lac-Saint-Jean c. O.G., 2018 QCCA 345, paras. 15 and 16. C.R.c. Centre intégré de santé et de services sociaux du Bas-St-Laurent, 2017 QCCA 328, para. 28. G.J. c. Centre intégré de santé et de services sociaux de Laval, 2021 QCCA 1944, paras. 24 to 26. Centre intégré universitaire de santé et de services sociaux de la Mauricie-et-du-Centre-du-Québec (CIUSSS MCQ) c. J.B., 2017 QCCA 1638,, paras. 30 to 35. X.Y.c. Hôpital général du Lakeshore, 2017 QCCA 1465, para. 20. A.P. c. Centre hospitalier universitaire Sainte-Justine, 2023 QCCA 58, para. 19. L.C. c. Centre hospitalier de l’Université de Montréal (CHUM), 2015 QCCA 1139, paras. 4 and 5. D.A. c. Centre intégré de santé et de services sociaux des Laurentides, 2016 QCCA 1734, para. 31. T.F. c. CIUSSS de l’Est-de-l’île-de-Montréal , 2022 QCCA 1306, para. 25. N.M. c. Centre intégré de santé et de services sociaux de la Montérégie-Centre, 2022 QCCA1567, para. 17. M.G. c. Centre intégré universitaire de santé et de services sociaux du Centre-Sud-de-l’Île-de-Montréal , 2021 QCCA 1326, para. 11. Centre intégré universitaire de santé et de services sociaux de l’Ouest-de-l’île-de-Montréal (Douglas Mental Health University Institute) c. I.A., 2023 QCCA 1100, para. 30. Institut universitaire en santé mentale Douglas c. W.M., 2016 QCCA 1081, para. 5 A.D. c. Centre intégré universitaire de santé et de services sociaux du Centre-Sud-de-l’île-de-Montréal, 2023 QCCA 1240, paras. 50, 56–57. A.F. c. Centre intégré de santé et de services sociaux des Laurentides, 2021 QCCA 928, para. 50. F.D. c. Centre universitaire de santé McGill (Hôpital Royal-Victoria), 2015 QCCA 1139. CIUSSS de l'Ouest-de-l'Île-de-Montréal (St. Mary’s Hospital Center) c. R.C.,2024 QCCA 1231.

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August 9, 2024

The elected domicile appearing in the Québec Enterprise Register cannot provide a basis for the Superior Court’s territorial jurisdiction within the meaning of article 41(3) of the Code of Civil Proce

Introduction On July 11, 2024, the Court of Appeal1 rendered a decision that, for the first time, addresses the question of whether the elected domicile appearing in the Québec Enterprise Register (the “REQ”), established under the Act respecting the legal publicity of enterprises,2 can provide a basis for the Superior Court’s territorial jurisdiction within the meaning of article 41(3) of the Code of Civil Procedure.3 Upholding the decision rendered by the Superior Court,4 the Court of Appeal answered that it cannot. The Facts On April 25, 2023, Promark Electronics Inc. and Electrical Components International Inc. (collectively, “Promark”) filed a claim for damages against Bombardier Recreational Products Inc. (“BRP”) in the judicial district of Montréal, alleging that a letter of agreement had been terminated and related purchase orders cancelled. On June 22, 2023, BRP raised a declinatory exception asking the court to issue an order transferring the case to the judicial district of Bedford, where its head office is located. Promark argued that filing its claim in the judicial district of Montréal was warranted because of BRP’s elected domicile indicated in the REQ, which corresponded to the office of its counsel located in Montréal. On September 5, 2023, the Honourable Tiziana Di Donato, J.S.C. (the “Judge”) allowed BRP’s declinatory exception and issued an order referring the case to the judicial district of Bedford. On November 10, 2023, the Honourable Stephen W. Hamilton, J.C.A., granted leave to appeal the Judge’s decision, indicating that the courts have never settled the question of whether the domicile elected under section 33 ALPE is sufficient to make paragraph 3 of article 41 of the C.C.P. apply. He added that it appeared to him that the lower courts had rendered contradictory judgments in this regard.5 The Trial Judgement The Judge began by pointing out that, generally, for a purely personal action, the judicial district of the defendant’s domicile is the natural forum (article 41(1) C.C.P.) and that, in the case of a corporation, the domicile would be that of its head office. The Judge further clarified this principle by explaining that, where more than one judicial district has jurisdiction, the plaintiff may institute its proceedings before another court having territorial jurisdiction (article 42 C.C.P.), provided that it establishes that it is entitled to make such an election. In support of its contestation to the declinatory exception, Promark argued that it was entitled to institute the proceedings in the judicial district of Montréal because BRP had elected its domicile under the ALPE, and that, consequently, that district constituted an “elected domicile” under article 41(3) C.C.P., which reads as follows: So far as public order permits, the court of the defendant’s elected domicile, or the court designated by an agreement between the parties other than a contract adhesion, also has territorial jurisdiction. [Our emphasis] To render her decision, the Judge determined that article 41(3) C.C.Q. should be interpreted using modern rules of statutory interpretation, adding in particular that it is useful to refer to prior provisions of a law to ascertain the legislature’s intent. The Judge thus revisited the legislative history of article 41 C.C.P., affirming that it essentially restates the prior law, in particular article 68 of the former Code of Civil Procedure, CQLR c. C-25, which provided in paragraph 1, subparagraph 1 that “. . . a purely personal action may be instituted: (1) [b]efore the court of the defendant’s real domicile or, in the cases contemplated by article 83 of the Civil Code, before that of his elected domicile.” Although paragraph 3 of article 41 C.C.P. no longer specifically refers to article 83 of the Civil Code of Québec (the “C.C.Q.”)6 the Judge, following an interpretive analysis, found that said article still applies to determine whether a party has elected domicile, and stressed the fact that the election of domicile must be express and unequivocal. The Judge added that election of domicile is the exception and must be interpreted restrictively. As for the scope of an election of domicile under the ALPE, the Judge pointed out that subsection 33(1) ALPE indicates that a business may elect domicile and appoint a person to “receive documents for the purposes of this Act.” Article 98(5) ALPE also indicates that the domicile elected by a business under the ALPE is intended to inform third parties of the address where the business wishes to receive documents “for the purposes of this Act.” The Judge was thus of the opinion that sections 33(1) and 98(5) ALPE, as drafted, cannot have the scope that Promark seeks to ascribe to them, as they are clear and they do not need to be interpreted. In the case of an election of domicile under the ALPE, the purpose of the election is to provide an address where documents can be sent to the business, unless there is specific evidence to the contrary. For these reasons, the Judge allowed the declinatory exception and referred the case to the judicial district of Bedford. The Judgement on Appeal From the outset, the Court of Appeal confirmed that the Judge did not commit a reviewable error: (1) the domicile elected for purposes of attributing territorial jurisdiction under article 41 (3) C.C.P. is the domicile designated by the parties for the execution of their agreement within the meaning of article 83 C.C.Q., and (2) the domicile elected under the ALPE is elected for the purposes of applying the ALPE (para. 23). The Court of Appeal is of the opinion that the Judge’s decision is consistent with what the legislature had prescribed in article 68 of the former Code of Civil Procedure and upholds stability in the law, which is particularly important in matters of jurisdiction. After analyzing the parliamentary debates surrounding the enactment of article 41 C.C.P. and the Commentaires de la ministre de la justice, the Court indicated that there is a presumption of the survival of the existing legal rule and that, contrary to what the appellants claimed, the wording of article 41 C.C.P. and articles 33 and 98 ALPE do not give the courts territorial jurisdiction other than that of the defendant’s domicile. The removal of the reference to article 83 C.C.Q. in article 41 C.C.P. does not constitute a clear indication of the legislature’s intent to set aside the requirements of article 83 C.C.Q., under which, for the purposes of determining territorial jurisdiction, the parties must establish the elected domicile in their agreement. On that basis, the Court of Appeal dismissed the appeal without costs and confirmed the Judge’s reasoning that territorial jurisdiction of the courts under article 41(3) C.C.P. is established based on the election of domicile made under article 83 C.C.Q., and not on the election of domicile made by a corporation under the ALPE, whereby a business elects a domicile for the purposes of the application of that law. Conclusion This case serves as a reminder that the C.C.Q. establishes the general law in our province. It is therefore important to refer to it when interpreting other laws enacted by the Quebec legislature. Because the legislature is “deemed to know its legislative fabric as well as the existing law,”7 the Court cannot interpret a given law—such as the ALPE—in a way that would amend a substantive statutory provision of general application—in this case, the C.C.Q.—where there is no clearly expressed intention to that effect. Promark Electronics Inc. c. Bombardier Recreational Products Inc., 2024 QCCA 906 CQLR, c. P-44.1 (the “ALPE”) CQLR, c. C-25.01 (the “C.C.P.”) Promark Electronics Inc. c. Bombardier Recreational Products Inc., 2023 QCCS 3405 Promark Electronics Inc. c. Bombardier Recreational Products Inc., 2023 QCCA 1427, para. 8 83. “The parties to a juridical act may, in writing, elect domicile with a view to the execution of the act or the exercise of the rights arising from it. Election of domicile is not presumed.” Promark Electronics Inc. c. Bombardier Recreational Products Inc., 2024 QCCA 906, para. 24

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July 26, 2024

A tenderer’s failure to comply with the preliminary complaint process as part of a municipality’s public call for tenders leads to a fin de non-recevoir

Introduction On June 14, 2024, the Superior Court of Québec issued a decision1 interpreting section 938.1.2.2 of the Municipal Code of Québec, which came into force in 2019. This provision gives a person interested in participating in the awarding process the opportunity to file a preliminary complaint about a requirement in the tender documents that they believe does not ensure the honest and fair treatment of tenderers. To our knowledge, this is the first time a court has considered the impact on a claim for damages for loss of profits2 when an unsuccessful tenderer fails to comply with this relatively new provision The Superior Court concluded that a tenderer’s failure to submit a complaint in a timely manner should be considered as [translation] “a form of fin de non-recevoir, or at the very least, a break in the chain of causation between the alleged fault and the damages claimed” (paragraph 40). Facts The dispute at hand pitted Transport Martin Forget Inc. (“Transport Forget”) against the Municipality of Saint-Alexis (the “Municipality”). On May 6, 2019, the Municipality issued a call for tenders for a snow clearing and salting contract. Transport Forget submitted the lowest bid, which was $150,000 below that of the winning tenderer. Transport Forget was excluded from the call for tenders given its failure to comply with the tender specifications requiring it to provide a Régie du bâtiment du Québec (“RBQ”) licence number, together with an attestation that its licence was in good standing. Further to the Municipality’s refusal to award the contract to Transport Forget, it claimed $300,000 in damages for alleged loss of profits. Transport Forget believed that its tender was compliant, that the RBQ licence requirement imposed by the Municipality was frivolous and unreasonable, that the Municipality failed to uphold the principle of equal treatment of tenderers and that the complaint process provided for in section 938.1.2.2 of the Municipal Code of Québec did not deprive it of its rights. As for the Municipality, it considered the irregularity in Transport Forget’s tender to be major and Transport Forget’s failure to comply with the complaint process concerning this requirement—both reasonable and in the public interest—was fatal to its legal action. The evidence showed that the RBQ licence number provided in Transport Forget’s tender was invalid and that Transport Forget deliberately chose not to renew said licence before submitting its tender, as it was unsure as to whether it would win the bidding process and wished to avoid needlessly paying the $1,000 annual fee required for the licence renewal. Applicable principles In order to determine the outcome of this dispute, the Court analyzed the case based on the decision in Tapitec,3 a landmark ruling in tendering matters. It reiterated the Court’s view that the decisive factor in determining whether an irregularity is minor or major is the equal treatment of tenderers. It also pointed out that municipalities can set out conditions aimed at limiting the number of tenderers, provided that this is done for an important and legitimate purpose. As for section 938.1.2.2 of the Municipal Code of Québec, the Court viewed it as a mechanism for monitoring all contracts awarded by public bodies which is designed to establish a process to ensure compliance with the principles of integrity needed to protect the public interest. According to the Court, the legislator’s intention is also to protect small municipalities such as the one in question (with a population of approximately 1,500) from potential legal action following the opening of tenders by ensuring that issues concerning the principle of equal treatment of tenderers are resolved prior to the tendering process. Tenderers that fail to comply with this requirement will not be entitled to claim damages for loss of profits, as in this case, except where there has been fraud or blatant bad faith, as in cases of collusion. The purpose of the provision in question is to prevent a tenderer that is aware of the requirements set out in the tender documents from contesting such requirements after the fact. Decision The Court found that the requirement to hold an RBQ licence number was a condition intended to limit the number of tenderers, which the Municipality was entitled to do. Although the Court recognized that there is no correlation between being able to perform snow clearing operations and holding an RBQ licence, it accepted the evidence that this condition was an appropriate and quick way for the Municipality to ascertain the credibility and organizational skills of tenderers, which was a important and legitimate objective. The Court therefore concluded that this requirement of the tender specifications was neither frivolous nor arbitrary. The Court considered the irregularity in Transport Forget’s tender to be major. Although the obligation to hold a valid RBQ licence is neither a requirement of public policy nor a substantive requirement, it is intended precisely to proscribe the lack of seriousness shown by Transport Forget when it opted not to pay the renewal fees for its RBQ licence before submitting its tender. The Municipality exercised its administrative discretion in a reasonable manner and ensured that all tenderers were treated equally. The Court found that the Municipality was right to reject Transport Forget’s tender. Although the Court dismissed the claim, it did nevertheless consider section 938.1.2.2 of the Municipal Code of Québec. In the Court’s view, Transport Forget could have lodged a preliminary complaint about the validity of the condition imposed by the Municipality to hold an RBQ licence. Doing so would have given the Municipality the opportunity to amend its call for tenders before the opening of tenders. Transport Forget’s failure to do this rendered its claim for damages inadmissible. Commentary Tenderers for public calls for tenders issued by a municipality must be aware of section 938.1.2.2 of the Municipal Code of Québec4 and understand how to apply it in a timely manner. As demonstrated by the Superior Court’s interpretation of this section in the judgment in question, an unsuccessful tenderer that has not complied with the complaint process set out in said section and who intends to sue for damages for an alleged loss of profits could have their claim turned down on grounds of a fin de non-recevoir. Transport Martin Forget Inc. c. Municipalité de Saint-Alexis, 2024 QCCS 2208 We came across the decision in Sintra inc. c. Municipalité de Noyan, 2019 QCCS 4293 (CanLII), which also deals with this provision, but in the context of an application for an interim injunction from the lowest tenderer attempting to prevent the awarding of the contract to a third party: the Court dismissed the claim, in particular because the tenderer had not lodged a complaint about the process provided for the awarding of the contract, in accordance with section 938.1.2.2 of the Municipal Code of Québec, and concluded that the prima facie case requirement had not been met. Tapitec c. Ville de Blainville 2017 QCCA 317 We would also like to draw your attention to section 573.3.1.4 of the Cities and Towns Act, which is identical to section 938.1.2.2 of the Municipal Code of Québec. We have not found any decisions interpreting this section, so we urge tenderers to be cautious and comply with the complaint process applicable to calls for tenders issued by cities and towns, to avoid having their claim turned down on grounds of a fin de non-recevoir.

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July 23, 2024

Requirements to Prevent and Reduce the Risk of Forced Labour or Child Labour: What Businesses Need to Know to Comply

On May 11, 2023, the Fighting Against Forced Labour and Child Labour in Supply Chains Act, S.C. 2023, c. 9 (the “Act”) was passed. The purpose of this Act is to implement Canada’s international commitment to contribute to the fight against forced labour and child labour, and to require certain entities to report on the measures they have taken to reduce the use of forced labour and child labour. The Act came into force on January 1, 2024, and reporting entities and federal institutions were required to submit their first report under the Act by May 31, 2024. In addition, Public Safety Canada (the “Government”) released the Guidance for reporting entities. Scope of the Act The Act applies to government institutions and to any corporation, partnership, trust or other unincorporated organization that (i) is listed on a stock exchange in Canada or (ii) has a place of business in Canada, does business in Canada or has assets in Canada and that, based on its consolidated financial statements, meets at least two of the following conditions for at least one of its two most recent financial years: (a) it has at least $20 million in assets (b) it has generated at least $40 million in revenue (c) it employs an average of at least 250 employees (collectively, the “entities”) Or (iii) is prescribed by regulations. The obligation to report applies to any entity (a) producing, selling or distributing goods in Canada or elsewhere; (b) importing into Canada goods produced outside Canada; or (c) controlling an entity engaged in any of these activities. Entities are considered to be operating in Canada if they produce, sell or distribute goods in Canada. They may also be considered to be operating in Canada if they have employees, if they make deliveries, purchases or payments in Canada, or if they have bank accounts in Canada. It is important to note that doing business in Canada does not require having a place of business in Canada. Forced Labour vs. Child Labour For the purposes of this Act, child labour is defined as labour provided by minors that (i) is provided or offered to be provided in Canada under circumstances that are contrary to the laws applicable in Canada; (ii) is provided or offered to be provided under circumstances that are physically, socially or morally dangerous to them; (iii) interferes with their schooling; or (iv) constitutes the worst forms of child labour, as defined in article 3 of the Worst Forms of Child Labour Convention.1 Forced labour is labour provided by a person (i) in circumstances in which it would be reasonable to believe that their safety or that of a person known to them would be threatened if they failed to provide such labour; or (ii) in circumstances which constitute forced or compulsory labour, as defined in article 2 of the Forced Labour Convention.2 Entities With Reporting Obligations Any entity required to report annually to the Government under the Act must include in its report the steps taken during its previous financial year to prevent and reduce the risk of forced labour and child labour. In order to comply with the obligations imposed by the Act, the entity must also include in its report information on its structure, its activities relating to the production, sale, distribution or importation of goods, as well as the type of goods and place of operation, and the countries or regions involved in its supply chains. Lastly, the report must include a brief explanation of the entity’s due diligence policies and processes regarding forced labour and child labour, information on the training provided to employees, and the parts of its business that carry a risk of forced labour or child labour. Given that the steps taken to prevent and reduce forced labour and child labour can result in a loss of income for vulnerable families, the Act requires entities to identify the measures taken to mitigate such impact on these families. Publication of Reports Entities must not only comply with the format, approval and attestation requirements for their report before submitting it to the Government but also make it available to the public by publishing it on a prominent place on their website. They can submit their report in one of the two official languages, although the Government recommends that reports be published in both English and French. In addition, the Act requires entities incorporated under the Canada Business Corporations Act or any other federal law to provide a copy of the report to each shareholder at the same time as their annual financial statements. Offences and Fines Reporting entities that fail to submit their report or make it available to the public are liable to a fine of not more than $250,000 per offence.3 The senior executives, directors and employees of an entity are also liable to fines and criminal prosecution should the entity contravene the Act.4 Any offence committed by an entity may also entail reputational risk. Our Advice Introducing policies, procedures, audit tools and other rules—or improving existing ones—to prevent and reduce modern slavery is essential. Such policies and rules may include procedures for reporting and an investigation process to address concerns, as well as a whistleblower protection system (whistleblower policy or similar measures). Businesses should think about how they select suppliers and whether they should adopt rules for monitoring the activities of their suppliers and partners. They should also consider updating their agreements with existing suppliers or partners to ensure compliance with the requirements of the Act, in particular by including provisions prohibiting the use of forced labour or child labour in suppliers’ business activities. Other measures may include raising awareness and training staff, directors and officers on how to implement company policies and procedures aimed at identifying and preventing forced labour and child labour. Our team has developed tools to help reporting entities identify the parts of their business that carry a risk of forced labour or child labour. We will be monitoring upcoming government publications in response to the first reports that reporting entities submit and, if need be, we will release another article to clarify reporting obligations. For any questions or advice relating to your obligations under the Act, do not hesitate to contact our team. Section 1 of the Act; see also the Worst Forms of Child Labour Convention, adopted in Geneva on June 17, 1999, article 3: Link Section 1 of the Act; see also the Forced Labour Convention, adopted in Geneva on June 28, 1930, article 2: Link Section 19 of the Act. Section 20 of the Act.

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