Introduction
Can one obtain reimbursement for legal fees in the event of a lawsuit? This is a question that generates significant interest among litigants, especially in the current economic climate. However, the answer is not so simple and requires some nuance. This article will attempt to demystify the various avenues available to litigants to obtain reimbursement or payment of their legal fees.
3 possible avenues
Quebec law does not normally allow litigants to obtain reimbursement for their lawyer’s fees, except in certain very specific situations. Indeed, a party may be entitled to the reimbursement of their extrajudicial fees in cases of abuse of process, when provided for by specific legislation—for example, under the Divorce Act and the Business Corporations Act—or finally, when provided for contractually. This article will address the first possible avenue for litigants: the awarding of extrajudicial fees against a party in the event of an abuse of process.
Applicable legal framework
Article 51 of the Code of Civil Procedure of Quebec constitutes the legal basis governing the reimbursement of extrajudicial fees in cases of abuse. Pursuant to this article, courts are empowered at any time to declare a procedural act abusive and to impose a sanction accordingly. Among the sanctions that can be taken is the reimbursement of extrajudicial fees.
First, if an abuse is found, the court may order the party that presented the abusive act to pay the other party an advance on costs for the proceedings, in a situation where the court recognizes that, without assistance, the party concerned risks finding themselves in an economic situation preventing them from validly defending their interests.[1]
Second, if the court recognizes that a party is committing or has committed an abuse, it may also order them to pay damages to the other party to compensate for the prejudice suffered due to that abuse. These claims may notably aim to compensate for the fees and expenses incurred by the latter.[2]
Case law and principles
It is now important to examine what constitutes an abuse under Quebec law. In this regard, Quebec case law offers a perspective on the practical application of Article 51 through decisions that have influenced the understanding of this legal framework.
In Viel v. Entreprises immobilières du terroir Ltée., the court established the fundamental distinction between abuse of right on the merits of the dispute and abuse of the right to sue. It is important to make this distinction because Article 51 of the Code of Civil Procedure of Quebec only provides for sanctions for abuse of process and not for abuse on the merits of the dispute.
- When a party multiplies judicial proceedings by unnecessarily and abusively pursuing a legal debate, it is an abuse of process. For example, an abuse of process could be the repeated filing of groundless judicial applications for the sole purpose of delaying proceedings or harassing the other party.
- On the other hand, if a party uses a right in an abusive or unreasonable manner for the purpose of causing harm or profiting from it, it is an abuse on the merits. For example, when a landlord invokes unfounded reasons to withhold a security deposit, such as minor repairs or unjustified costs (by doing so, the landlord makes abusive use of their right to withhold the security deposit, causing unjustified prejudice to the tenant).
Therefore, the fees a party pays to their lawyer cannot be reimbursed when it concerns an abuse on the merits. Indeed, only the abuse of the right to sue can be sanctioned by such damages.
In the case of Ciampanelli v. Syndicat du vêtement, du textile et autres industries, it was determined that bad faith constitutes the basis for the abuse of the right to sue.[3]
- Indeed, a party commits an abuse of process if, from the outset, their legal challenge is in bad faith: aware of the fact that they have no right to assert, the party uses the justice system as if they did.
- Furthermore, they commit an abuse of process if, although acting in good faith at the start, a party realizes their error during the case and persists in their malice by unnecessarily continuing a legal debate.
- They also commit an abuse when, in bad faith, they unnecessarily multiply proceedings and abusively pursue the legal debate.
In Royal Lepage Commercial inc. v. 109650 Canada Ltd., it was confirmed that recklessness also constitutes a source of abuse of process. Recklessness is the act of putting forward a remedy or procedure when a reasonable and prudent person, placed in the circumstances known by the party at the time they file or argue the procedure, would conclude that there is no basis for it. This is an objective standard, which requires not evidence of intent to harm or bad faith, but rather an evaluation of the circumstances to determine whether it is appropriate to conclude that a procedure is unfounded and abusive.
In Roman v. St-Jean-sur-Richelieu, the focus is on evaluating the behavior of the party accused of abuse of process. This case highlights the requirement for plaintiffs to provide convincing and documented evidence of the abuse, thereby illustrating the bad faith or recklessness of that party. Indeed, a simple error or confusion on the part of a party is not enough to constitute an abuse of process, as the intent to harm or the unreasonable nature of that party must be proven.
The decision in Lubecki v. Lubecki confirms that, in cases of abuse of process, the trial judge has discretionary power to evaluate unreasonable conduct and to decide on the order for reimbursement of extrajudicial fees.
Conclusion
It is undeniable that determining an abuse of process is a complex task that requires exhaustive evidence before the court. Thus, a declaration of abuse will only be obtained in very specific cases and in the face of clear evidence of abuse of the right to sue.
Of course, litigants must exercise caution and accuracy in the conduct of their disputes, or risk financial sanctions. However, it is important to note that just because a party presents a version of the case that is completely contradictory to yours does not mean they will necessarily be declared abusive if they lose. Cases of declared abuse are the exception rather than the rule, an important fact to keep in mind when deciding to engage in the judicial process.
That being said, if you are truly the victim of a completely groundless lawsuit, know that you are not without options, and the court could grant you the reimbursement of your legal fees.
For more information or if you have additional questions, please do not hesitate to contact us.
Also, stay tuned for our upcoming articles, which will cover other possible avenues of compensation, namely, reimbursement or the advance provided for by specific legislation such as the Divorce Act and the Business Corporations Act, and the reimbursement of fees when provided for contractually.
References
[1] Code of Civil Procedure, CQLR, c. C-25.01, art. 53 para. 2 (5)
[2] Code of Civil Procedure, CQLR, c. C-25.01, art. 54 para. 1
[3] Civil Code of Quebec, CQLR, c. CCQ-1991, art. 7
