In our newsletter of November 2011, we advised that the Québec Minister of Justice introduced on Sept. 29, 2011 the Draft Bill to Enact the New Code of Civil Procedure which was to replace the current Civil Code of Procedure. The main goals of this new legislation are to promote access to justice, reduce costs, promote collaboration between parties and simplify and improve the quality and efficiency of the judicial process.
In November 2013, the content of the Draft Bill to Enact the New Code of Civil Procedure was modified further to representations by third parties.
Since then, the Bill has been amended again and has been adopted. The New Code of Civil Procedure (N.C.C.P.) will come into force on January 1, 2016 .
You will find below the final changes that will affect mortgage recovery.
Under the actual Code of Civil Procedure, an introductory motion is served to debtor(s) with a notice of presentation. The notice indicates the date on which the motion will be presented before the court. Under the N.C.C.P., a notice of presentation will no longer be attached to the motion and there will be no date of presentation. Debtor(s) will have fifteen (15) days after service of the motion to answer. If no answer is received within the delay, a default judgment may be rendered.
Under the N.C.C.P., judgment by default must be rendered within one month.
If an answer is received, the parties are required to co-operate to either arrive at a settlement or to establish a case protocol, which is essentially an agreement as to the conduct of the proceedings.
Territorial jurisdiction of courts
Under the actual Code of Civil Procedure, it is mentioned that a real action (an action concerning an immovable property) may be taken before the court of the domicile of the defendant or before the court of the district where the property is situated.
There is currently case law confirming that the court can’t, without a request from the defendant, transfer the file to another jurisdiction.
Under the N.C.C.P., if a demand pertains to the exercise of a hypothecary right on an immovable, the court having jurisdiction is the court of the district where the immovable is situated.
It is uncertain at this point if this new article will give authority to the court to transfer a file without having received a request from the defendant.
Before proceeding with an eviction, a notice of five (5) days will be required.
At the time of eviction, if a debtor leaves moveable property behind, he will be deemed to have abandoned it and said property can be sold for the benefit of the creditor, donated or otherwise disposed of if a donation is not possible.
The N.C.C.P. provides that evictions cannot take place between Dec. 24 and Jan. 2.
Revocation of judgment
An application for revocation of judgment will have to be made within thirty (30) days from the knowledge of the judgment, as opposed to the current fifteen (15) days. This will most likely cause further delays to obtain certificates of non-appeal and delay the signature of deeds of sale.
Person designated to proceed with sales under judicial authority
In the 2011 version of the Draft Bill, sales under judicial authority were to be conducted exclusively by bailiffs, who could seek the assistance of a lawyer not related to any of the parties to the proceedings.
This change has been abandoned and the N.C.C.P. does not specify who can be appointed as officer to proceed with sales under judicial authority.
The N.C.C.P. refers to Section 2791 of the Québec Civil Code, which stipulates that the court designates the person who will proceed with the sale. Section 2791 of the Civil Code does not specify who can be appointed. Therefore, the creditor will continue to have the right to appoint an officer of its choice.
Distribution of proceeds of the sale
The delay for an interested party to contest the scheme of collocation (the table of distribution of proceeds of sale) will be reduced from fifteen (15) to ten (10) days. In addition, the Court appointed officer will no longer have to wait thirty (30) days from notification of the scheme of collocation to distribute the sale proceeds in the absence of contestation. If there is no contestation within the newly prescribed ten (10) day delay, the officer will have to immediately distribute the sale proceeds.
Possible annulment of a sale under judicial authority
The sale of property must be done in the interests of the debtor and creditor, at a “commercially reasonable” price.
A sale under judicial authority may be annulled at the request of the debtor or other creditor if the property is sold for a price that is clearly unreasonable given market conditions or if the sale is affected by serious irregularities that could not, despite reasonable diligence, be raised before the sale. The application for annulment of a sale under judicial authority of an immovable must be done within sixty (60) days of the date of the sale in the case of immovable property or twenty (20) days in the case of movable property.
The sale of a property is considered made at a “commercially reasonable” price if it is sold for fair market value. If the property sold is an immovable, the minimum sale price must be greater than 50% of the municipal evaluation, unless the court is convinced that the property cannot be sold at that price within an acceptable time frame.
Changes with respect to legal costs to be paid by debtor
The Tariff of Judicial Fees of Advocates will be repealed and legal fees will be borne by the parties, each paying its own. Although the Tariff of Judicial Fees of Advocates will indeed be repealed, it is now provided that the party who wins the case will have the right to claim some costs such as bailiffs’ fees and other disbursements.
Under the N.C.C.P., the court could however decide otherwise and could order the successful party to pay the costs incurred by the other party if such an order is necessary to prevent serious prejudice to a party or to allow a fair allocation of the costs.
The specific legislative changes will affect the mortgage recovery process and we will have to follow closely how the N.C.C.P. will be applied by the courts.