Pellerin Savitz LLP v. Guindon, 2017 SCC 29 (Prescription — Extinctive prescription — Beginning of prescription period)
On appeal from a judgment of the Quebec Court of Appeal (2016 QCCA 138) setting aside in part a decision of Laporte J.C.Q. (2015 QCCQ 5004).
In September 2011, G retained the services of a law firm. The parties entered into a fee agreement providing, among other things, that every invoice would be payable within 30 days and that after that time, interest would be computed and charged. Between October 5, 2011 and March 1, 2012, the lawyer sent five invoices to the client. On March 21, 2012, the client informed the lawyer that he was terminating the contract. On March 12, 2015, the lawyer brought an action to claim the unpaid fees. The trial judge dismissed the action, concluding that it was prescribed because it had been instituted after the prescription period, that is, more than three years after each invoice was prepared and sent. The Court of Appeal confirmed that the action was prescribed as regards the first four invoices. But it held that prescription had not begun to run until the expiration of the 30‑day period specified in the fee agreement and accordingly ordered the client to pay the invoice of March 1, 2012.
Held (7-0):The appeal should be dismissed.
The beginning of the period of extinctive prescription is, as provided for in art. 2880 para. 2 of the Civil Code of Québec, the day on which the right of action arises. In contract, the creditor’s right of action arises once the debtor’s obligation has arisen and is exigible. When this occurs varies with the circumstances, and especially with the terms of the contract itself. These principles apply to agreements for professional fees, which can provide for billing procedures that might alter the beginning of the prescription period.
In this case, the lawyer’s action is prescribed except in respect of the invoice of March 1, 2012. The parties’ fee agreement established when the client’s obligation to pay was to become exigible. It provided that every invoice was to be payable within 30 days. As a result of that suspensive term, each payment did not become exigible, and the prescription period therefore did not begin, until the 31st day after the invoice had been sent.
The time that work [“les travaux”] is completed, which applies under the Civil Code of Québec in the context of contracts of enterprise, is inapplicable to contracts between a lawyer and his or her client, which are not for the carrying out of a work [“un ouvrage”]. The nature of a lawyer’s work is the provision of services for a certain period of time, not the delivery to a client of a finished product that the client can use. Sometimes, the lawyer’s role is also to represent the client in court. A contract between a lawyer and a client can thus be characterized as a contract for services, a mandate or a mixed contract, depending on the nature of the services being provided. None of these types of contracts are subject to rules to the effect that prescription begins to run only upon termination of the contract. A court must therefore refer to the general rule set out in art. 2880 para. 2 of the Civil Code of Québec and determine when the right of action arose on the basis of the circumstances of the case before it.
Although lawyers are, because of their ethical obligations, generally barred from suing their clients while still acting for them, this does not have the effect of suspending prescription until the termination of the contract. A lawyer whose client has not yet paid an account that is due and exigible is certainly placed in a difficult situation. However, this situation does not result in an impossibility in fact to act that suspends prescription. Instead, the lawyer must make a choice: either let prescription run while continuing to act for the client despite the client’s failure to pay, or go to court to claim the fees he or she is owed while ceasing to act for the client.
Reasons for judgment: Gascon J. (McLachlin C.J. and Karakatsanis, Wagner, Côté, Brown and Rowe JJ. concurring)
Neutral Citation: 2017 SCC 29
Docket Number: 36915