SUPERIOR COURT

CANADA

PROVINCE OF QUEBEC DISTRICT OF ABITIBI

N°: 635-17-000019-189

DATE: March 25, 2019

PRESIDING: HONORABLE ISABELLE BRETON, J.C.S.

JOBIE PETERS
And
J PETERS INC.
Plaintiffs (Applicants)
versus
NORTHERN VILLAGE OF KUUJJUAQ and
KATIVIK REGIONAL GOVERNMENT
Defendants
And
MAKIVIK CORPORATION
Questioned (under examination)

JUDGEMENT (on application for interlocutory injunction)

1. OVERVIEW
[1] The plaintiffs have brought an action for an injunction against the defendants and are
also seeking damages against them.

[2] With respect to the interlocutory injunction, the plaintiffs' claim contains the following
conclusions:

ORDER Northern Village of Kuujjuaq to cease offering any kind of construction

services is not within its application of its powers under the law;

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 ORDER Kativik Regional Government to cease contracting ultra vires and
encouraging Northern Village of Kuujjuaq to contravene to its constitutive Act;

ORDER Kativik Regional Government to proceed in accordance with the Act

respecting Northern Village and Kativik Regional Government regarding its
construction work and to proceed by way of call for tenders;

[3] The application is served on September 4, 2018 to the defendants.

[4] Northern Village of Kuujjuaq ("NVK") and Kativik Regional Government ("KRG")
contest the application for an interlocutory injunction.

[5] KRG also asks the Court to order the applicants to pay part of the fees incurred as a
result of their partial withdrawal on the day of the hearing.

2. BACKGROUND
[6] The plaintiffs operate a business that provides heavy machinery, including dump
trucks and loaders, and snow removal at Kuujjuaq.

[7] The defendants are municipal bodies governed by Act Respecting Northern Villages
And The Kativik Regional Government ("Northern Villages Act").

[8] The request for the injunction is in the context where, after various contracts
between them, NVK performs work for the benefit of KRG, namely:

• construction and paving of streets;

• crushing and providing granular;
• digging wells for drinking water;
• sediment dredging and reloading of marine facilities;
• snow removal of KRG land.
[9] The application also covers other types of work performed by NVK for the benefit of
third parties:
• Supply of granular material, use of heavy equipment including labor, mainly for
the purpose of preparing the floor for the construction of residences ("house
pads");
• Snow removal of third-party buildings, including Quebec infrastructure
corporations.
[10] NVK admits to performing the work in question. She also admits that the rental of
heavy machinery includes the services of the operator. However, she denies that these
are construction contracts.
[11] The contracts in question are concluded with natural persons, legal persons of
private law as well as legal persons governed by public law.

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[12] On the day of the hearing, the applicants withdrew their application for an
interlocutory injunction, the findings concerning the defendant KRG as well as the
conclusions concerning the contracts concluded or to be concluded between NVK and
KRG.
[13] From the outset, the Court notes that the order sought is far too broad and general
to be enforceable. As recalled by the Court of Appeal:
Moreover, like any other judgment, the injunction order must be enforceable,
within the meaning of Article 469 C.C.P. It must be clear and comprehensible to
those whom it refers to. They should not be forced to remain uncertain about the
extent of the obligations imposed upon them by the judgment. The author of the
order must then clearly define the acts he will order or those he will prohibit. This
rule is so necessary that the case law concludes that in case of doubt, an order
of injunction involving ambiguities must be interpreted in favour of the one to
which it refers (...). An injunction order does not fulfill its function when its content
is so vague as to require the court to hear contempt proceedings, to interpret it or
to force, in certain cases, the person against whom it is directed, to request
sophisticated legal opinions to determine the extent of the obligations to which it
is subject. [...]
(references omitted)

[14] On the reading of the statement of claim and the evidence, in the context of the
partial discontinuance, it appears that the plaintiffs are seeking in essence that NVK
cease to provide the services of the operator when it leases its machinery to third
parties other than KRG and stop performing snow removal work for these third parties
and refrain from selling granular material to third parties.

[15] The Court will therefore deal with the application for an interlocutory injunction with
respect to these three elements.

3. THE POSITION OF THE PARTIES

[16] While NVK's right to rent its machinery is not called into question by the plaintiffs,
they argue that by providing third parties the services of the machinery operator for the
execution of "house pads" , the contract is one of business or service, NVK acting as an
entrepreneur or service provider, which its constitutive law does not allow it to do.
[17] NVK claims that these are rather leases of machinery and that the services of the
operator being only incidental, it does not change the nature of the contract which is one
of rental of goods. According to her, there is no contravention of her incorporating
statute and the plaintiffs do not have the capacity to execute these contracts.
[18] She also submits that she has the right to contract with public corporations under
section 204.3 of the Northern Villages Act.

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[19] Regarding the sale of granular material, NVK submits that it is authorized to do so,
given the agreement with the owner of the land and that if an injunction prevents it from
selling granular material to third parties, NVK can no longer supply its population, any
more than the applicants elsewhere, who do not have a crusher.
[20] With respect to the sale of granular material, there is no specific allegation in the
originating application concerning the sale to persons other than KRG. The exhibits
supporting the application, however, clearly indicates it.
[21] Finally, no representation was made by the parties to the hearing regarding the
snow removal contracts executed by NVK.
[22] NVK also submits that the injunction sought may affect its right to contract with
other public bodies that have not been implicated in the present case.

[23] It is therefore necessary to determine whether the criteria of the interlocutory

injunction are satisfied, particularly regarding the powers conferred on NVK by its
incorporating statute, with respect to the contracts in question.
4. ANALYSIS AND DECISION
4.1 Applicable law
[24] Article 511 of the Code of Civil Procedure governs the interlocutory injunction.
[25] The criteria for issuing such an injunction are as follows:
• The appearance of law or the serious question;
• Serious or irreparable prejudice or of a nature to render the final judgment
ineffective;
• The balance of inconvenience.
[26] No witness is heard by the Court as the parties have agreed to proceed on file. At
this stage, the file consists of the procedures and parts, as well as the preliminary
interrogations held by the parties. The Court must make its decision considering these
documents. It should also be remembered that this is a discretionary power and that the
interlocutory injunction is an exceptional measure.

[27] NVK is a municipality whose status is that of "northern village" within the meaning
of the Northern Villages Act. Like other Quebec municipalities, it is a creation of the
state, with only the powers delegated by the state. As the Supreme Court pointed out,
with respect to municipalities:

"... as bodies created by law, the municipalities" may exercise "only the powers
expressly conferred on them by the law, the powers which necessarily or really
derive from the explicit power conferred by law, and indispensable powers that
are essential and not only convenient to achieve the ends of the body. "

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[28] With respect to this litigation, the NVK's powers are defined in section 18 of the
Northern Villages Act which provides:

1. Every municipality, under its corporate name, has perpetual succession, and
may:

(a.1) lease its property, although such power does not enable the municipality to
acquire or build property principally for leasing purposes;
(…)
(c) enter into contracts, bind and oblige itself, and bind and oblige others to itself,
and transact within the limits of its powers;
(…)
(e) exercise all the powers in general vested in it, or which are necessary for the
accomplishment of the duties imposed upon it;

(underlined by the Court)

[29] Article 1851 C.C.Q. defines what a lease is:

1851. Lease is a contract by which a person, the lessor, undertakes to provide
another person, the lessee, in return for a rent, with the enjoyment of movable or
immovable property for a certain time.

The term of a lease is fixed or indeterminate.

[30] As for the company or service contract, it is defined in article 2098 C.C.Q.:

2098. A contract of enterprise or for services is a contract by which a person, the

contractor or the provider of services, as the case may be, undertakes to another
person, the client, to carry out physical or intellectual work or to supply a service,
for a price which the client binds himself to pay to him.

[31] In order to determine whether the plaintiffs have an apparent right to obtain the
injunction sought, it is necessary to determine NVK's powers with respect to the
contracts covered by the introductory application, and more particularly:

• The right to provide labour (the services of the operator) with the rental
machinery;
• The right to sell granular material to third parties;
• The right to provide snow removal service.

[32] Where appropriate, the Court will have to assess the other two criteria, namely the
serious or irreparable harm and the balance of convenience.

[33] The Court of Appeal recently recalled the scope of the test for serious or irreparable
harm:

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 [31] Article 511 C.C.P. provides, however, that an interlocutory injunction may be
granted "if it is considered necessary to prevent serious or irreparable harm to be
caused to it or a state of affairs or law that renders the judgment ineffective
created (underlined and bold characters added). This is the main distinction
between the common law and the C.C.P. since, in the latter case, the legislature
has provided that "serious" prejudice - as opposed to "irreparable" prejudice - is
sufficient to justify the intervention of the court by means of an interlocutory
injunction. Judge Marie St-Pierre (then in the Superior Court) noted this in
Rogers Media Inc. v. Marchesseault:

[44] Beyond the criterion of color of right, Article 752 C.C.P. [now articles
510 and 511] specify the criterion of prejudice or the state of fact or law
that would be created and to which the final judgment could not remedy.
The Tribunal wishes to point out that, when the second criterion is
examined, it should never be forgotten that all the components of the
criterion are being examined. It should not be limited to the words
"irreparable harm". It must not be remembered that when monetary
compensation is possible the injunction no longer applies.

[45] If the Tribunal did so, it would have the effect of denying the creditor
the choice of the mode of performance, in kind or by equivalent, whereas
this choice is recognized and that it belongs to him, as the affirm articles
1590 and 1601 C.C.Q. [...]

[49] We must therefore avoid or be wary of case law arising from common
law situations where the principles could be different or inconsistent. [...]

(references omitted)
[34] In the presence of a law of interest or public order, the Court is not exempt
from assessing the seriousness of the serious or irreparable harm and the
preponderance of disadvantages.

4.2 Leases including the services of the machinery operator

4.2.1 1st criterion: the appearance of right

[35] Section 18 of the Northern Villages Act is clear, and the parties agree: NVK has the
right to rent its property to the extent that it has not acquired it primarily for the purpose
of renting it. In the present case, there is nothing in the proceedings or evidence to
support a finding of any breach by NVK in leasing its heavy machinery to third parties.
[36] But what about the exclusion of the service of the operators of these machineries?

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[37] NVK submits that the service of the operator is an accessory to the lease of the
machinery and that consequently, it does not change its nature.
[38] The Court does not agree. The evidence at this stage does not support this
contention.
[39] It appears from the rental rates established by NVK that the rate charged to the
labour force, although it represents only a part of the rental costs charged by the
municipality, constitutes non-negligible part, at least one-third or even half of the overall
rate, as the case may be.

[40] That the Quebec government has published a guide to the rates of rental of heavy
machinery with operator also can not be a form of justification for the municipality to rent
its property including the operator itself at rates comparable to those indicated in this
guide. It should also be noted that this is a guide for public departments and agencies
covered by the Regulation respecting service contracts of public bodies in the context of
the awarding of public contracts by these bodies. One of the objectives of this document
is to provide contractors, as equitably as possible, the reimbursement of the costs
associated with the ownership and operation of their machines and to know in
particular:
• "The maximum hourly compensation granted for certain contracts established by
the Government of Quebec;
• The amount of time to be allocated for the rental of the equipment as well as the
operating costs and the salaries of the operators "
[41] In the circumstances, the Court is of the view that, as the plaintiffs argue, these are
service or business contracts rather than the leasing of property.
[42] The inclusion of labor is not incidental and the power to lease provided for in
section 18 of the Northern Villages Act does not apply to persons, but only to property.
Article 2851 C.C.Q. is of the same effect.
[43] Although it appears to be the intention of the municipality to assist its taxpayers,
there is no provision in the Northern Villages Act that gives it the power to hire the
services of its employees to perform private work for the benefit of third parties, for non-
municipal purposes.

[44] NVK asserts that section 204.3 of the Northern Villages Act is an exception to enter
into contracts with public bodies and that, if granted, it should not apply to contracts with
these agencies.

[45] The Court is of the view that this provision is certainly an exception to NVK's
contractual rules, as it is for any municipality elsewhere. However, it does not confer an
unlimited right for the municipality to contract with any public body and for any purpose.
This provision falls under Title IX of the Act entitled "Public Works of the Municipality

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and Awarding of its Contracts". It contains the rules applicable to the awarding of
contracts awarded and concluded by the municipality and involving an expense.

[46] This is not the case here, nor for the other contracts that are the subject of the
injunction application: they are rather contracts generating income for NVK. In addition,
section 204.3 of the Act cannot be interpreted as giving the NVK the power to enter into
a contract for purposes other than municipal purposes.

[47] In the absence of enabling legislation or the ability to infer NVK's ability to include
labor when leasing its property, in the context that this type of contract is not for
municipal purposes or for fulfillment of the duties imposed on it, the Court is of the
opinion that there is an appearance of right, strong in addition, thus satisfying the first
criterion justifying the issuance of an interlocutory injunction, since there is a
contravention of Northern Villages Act which by its nature is of public interest.

4.2.2 Serious prejudice and the balance of convenience

[48] Despite the presence of a strong legal appearance, the Court is of the view that the
plaintiffs will not suffer serious or irreparable harm if the interlocutory injunction sought is
not granted.

[49] The allegations in the originating application must be reproduced:

47. It is urgent that an interlocutory injunction order be granted to force the

defendants to respect and follow their constitutive law which is a legislature
of public order;
48. Contravention to a legislature of public order is, in itself, an irreparable harm;
49. The injuction is necessary to preserve the plaintiff JPG Inc’s right to bid on
the defendants’ contracts that should be submited to call for tenders in
application of the Act;
50. Considering NVK’s answers to the plaintiff's letter, which was made by
KRG's legal team, it is clear that the defendants are denying the
contravention of the Act and have no intention to modify their actions without
the intervention of this Honorable Court;
51. This is an appropriate case for this Honorable Court to exercise its authority
to maintain public order in application of the Act, the whole in the interest of
all Northern Village of Kuujjuaq’s citizen;
52. The defendants, by acting the way they do, are showing a complete
disregard for the law and for the interest of their citizen and infringe their
purpose;
[50] If the injunction sought was not granted, although they would be placed in
competition with the municipality to obtain private contracts from third parties, the
plaintiffs will not be prevented from contracting with them.

[51] Although the plaintiffs have several heavy machineries, although some are not in
working order, they also allege in their application that there is another contractor who
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owns heavy machinery required for the construction, including loaders, excavators,
compactors and trucks in Kuujjuaq. They have no assurance of getting the contracts.

[52] Only two persons are employed full-time by plaintiff J Peters Inc., including plaintiff
Jobie Peters, the others being seasonal employees, thus hired according to the needs
of the business.
[53] If the plaintiffs succeed on the merits of the case, the final judgment may remedy
the prejudice and the state of fact or law, since the municipality could not then continue
to contract with third parties for the purposes referred to in the proceedings. It will
therefore be possible for claimants to recover this "lost clientele" for the benefit of the
municipality.
[54] n the particular circumstances of this case, the damages suffered by the plaintiffs, if
any, can easily be assessed since the amount of the contracts executed by NVK is
known, as are the time spent on the transactions, the hourly rate and the number of
granular trips delivered on the various sites.
[55] With respect to the public interest raised by the plaintiffs in view of the
contravention of the Northern Villages Act, the Court is of the view that this is a situation
where if the interlocutory was dismissed, the citizens of Kuujjuaq will not suffer serious
or irreparable harm as the community benefits from the revenues generated by the
services provided by the municipality.
[56] The risk of a possible civil liability for the municipality if it performs poorly the work
relating to the "house pads", raised by the plaintiffs, cannot allow to conclude to the
existence of a serious or irreparable prejudice as supported. Beyond a fear expressed
in the argument and lack of qualification of the supervisor works, no evidence can
support the existence of such prejudice.

[57] Finally, for the same reasons, the balance of convenience favours the rejection of
the order sought.

4.3 Snow removal contracts

[58] The same conclusion applies to snow removal contracts that NVK executes on
private property.
[59] This is a service contract for non-municipal purposes and unrelated to the
performance of the duties imposed by the municipality. There is no provision in the
Northern Villages Act that grants such power to NVK.

[60] Although the plaintiffs claim to offer a service of this nature, for the reasons
expressed in the machinery leases, they have not shown any serious or irreparable
harm nor that the balance of convenience favours them or that of the citizens. Moreover,
the evidence does not show any snow removal contract in force between NVK and third
parties for the winter of 2018-2019.

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4.4 The sale of granular material

[61] Although NVK has extraction rights in quarries and sandpits under an agreement
with the Kuujjuaq Land Corporation, which owns land rights, the Northern Village Act
does not give it the power to sell granular material even if NVK returns the proceeds of
such sale to the Land Corporation.

[62] Despite the strong appearance of right, the procedures and affidavits filed do not
show any prejudice suffered by the plaintiffs or even the citizens of Kuujjuaq with
respect to this activity.
[63] On the contrary, it appears that the municipality would be the only one holding a
crusher on the territory and that the plaintiffs do not have one. Preventing it from selling
granular material may cause serious harm to its citizens and the public bodies located
on its territory that benefit from it. The balance of inconvenience is in favour of the
municipality.

[64] There is therefore no reason to grant the interlocutory injunction with respect to this
type of contract.

5. KRG'S REQUEST FOR REIMBURSEMENT OF HONORARY FEES

[65] Following the withdrawal of the plaintiffs at the hearing concerning their claims for
an interlocutory injunction against KRG, KRG seeks reimbursement from the Court for
part of the fees it incurred to prepare its defense.

[66] She submits that the plaintiffs filed this withdrawal at the wrong time and, as a
result, failed in their collaborative duty under Article 20 C.C.P., thus committing a
material breach of the proceedings within the meaning of Article 342 of C.C.P.
[67] The plaintiffs challenge this request. They plead to have been diligent, having
expressed their withdrawal as soon as possible, given that they have only recently
received the documents at the end of the commitments made by the representatives of
the plaintiffs during the preliminary interrogations. They argue that it was only on the eve
of the hearing that the decision was taken at the meeting with their lawyers.
[68] Before taking the matter under advisement, the Court requested the production of
the accounts of fees and documents relating to the claim made.
[69] KRG states that it incurred a fee of $ 10,525 (approximately 70 hours) for the
preparation of its defense for the period from February 1 to March 12, 2019, excluding
the time devoted to disclosure, the preparation of his defense, the travel time and the
length of the March 13 hearing. It claims 75% of these fees.

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[70] A withdrawal is a right recognized in the Code of Civil Procedure. It can be done
unilaterally without any consequences for the applicants, subject to legal costs. Article
213 C.C.P. anticipates:

213.Discontinuance by the plaintiff of the whole of a judicial application

terminates the proceeding on the notification of a notice of discontinuance to
the other parties and its filing with the court office. It restores matters to their
former state, and is effective immediately if it takes place before the court
and in the presence of the parties. The legal costs are borne by the plaintiff,
subject to an agreement between the parties or a decision of the court.

[71] Articles 341 and 342 C.C.P. enact the following:

341. The court may order the successful party to pay the legal costs incurred by
another party if it is of the opinion that the successful party did not properly
observe the principle of proportionality or committed an abuse of procedure, or
that such an order is necessary to prevent serious prejudice to a party or to
permit a fair apportionment of the costs, including those incurred for expert fees,
the taking of testimony or its transcription.

The court may also make such an order if the successful party breached its
undertakings with regard to the conduct of the proceeding, such as by failing to
meet time limits, if it unduly delayed in presenting an incidental application or
filing a notice of discontinuance, if it needlessly required a witness to attend at
court or if it refused, without valid cause, to accept tenders, to admit the origin or
integrity of evidence or, in a family matter, to participate in a parenting and
mediation information session.

As well, the court may make such an order if the successful party delayed in
raising grounds that resulted in the expert report being corrected or rejected or a
new expert’s opinion being necessary.

342. The court, after hearing the parties, may punish substantial breaches noted
in the conduct of the proceeding by ordering a party to pay to another party, as
legal costs, an amount that it considers fair and reasonable to cover the
professional fees of the other party’s lawyer or, if the other party is not
represented by a lawyer, to compensate the other party for the time spent on the
case and the work involved.

[72] For the purposes of determining whether the plaintiffs have committed a material
breach of the proceedings, a brief history of the exchanges between the parties
surrounding the documents giving rise to the discontinuance must be made:
• On February 13, 2019, the defendants forward to the plaintiffs the written
examination of Mr. Paul Parson, representative of KRG, as well as the
undertakings entered by him. Commitment # 7 includes agreements
between KRG and the Government of Quebec;
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 • In this same mailing, the documents at the end of engagements #1, 3, 4
and 5 subscribed by the witnesses Michael Gordon and Frangois Crépeau
are transmitted. It contains the contracts between KRG and NVK, most of
which are subsequently disclosed as supporting documents for the
defense;
• On March 5, 2019, the defendants forward to the plaintiffs the
undertakings of NVK representatives Richard Jones, Ian Robertson and
Tunu Napartuk. Among these commitments, there are lists of equipment
owned by NVK, agreements relating to the exploitation of gravel, invoices
relating to the work of "house pads" and the contracts alleged in the
introductory application. A summary statement of the NVK and KRG
defenses is also notified to claimants by that date.
• On March 13, 2019, the parties are present at the Court for the hearing on
the interlocutory injunction.
[73] It is clear that a week elapses between the receipt by the applicants of the
documents relating to the commitments made by the representatives of NVK during the
preliminary interrogations and that these documents are numerous. Just over a month
has passed since we received the documents relating to the commitments made by the
KRG representatives.
[74] Beyond the receipt of documents, it is still necessary to analyze them, evaluate
their scope and sometimes review the strategy. It is only the day before the hearing that
this revised strategy is agreed upon by the plaintiffs with their lawyers and the decision
to produce the partial withdrawal is made.
[75] It should also be noted that the summary statement of the defenses is notified to
plaintiffs on March 6, 2019.
[76] The Court cannot blame the plaintiffs for making their late withdrawal. In the
circumstances, it must be concluded that the plaintiffs did not breach the course of the
proceedings, in view of the disclaimer they made.

[77] This is why the Court will reject the request made by KRG.

FOR THESE REASONS, THE COURT:

[78] DISMISSES the applicants' application for interlocutory injunction;
[79] DENIES the claim for fee claims made by the defendant Kativik Regional
Government;
[80] ALL, with costs against the plaintiffs.

ISABELLE BRETON, J.C.S.

Me Maryse Lapointe
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MARYSE LAPOINTE, AVOCATE
Attorney for the plaintiffs

Me Stéphane Reynolds
MONTY SYLVESTRE, CONSEILLERS JURIDIQUES INC.
Attorney for the defendants

Date of hearing: March 13, 2019

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