In a recent decision, the Quebec Court of Appeal upheld the ruling of the Honourable Chantal Corriveau of the Superior Court that a party cannot benefit from the presumptions of liability in the Civil Code of Quebec when there is no contractual relation between the parties. In such cases, the rules of extra-contractual liability apply, and in the absence of fault, the plaintiff cannot obtain compensation.
While this conclusion may seem obvious, the particular facts of this case highlight the subtleties that both levels of court had to navigate to reach this decision.
Transport Kahkashan, the Appellant, is a company operating in the field of freight transportation with several tractors and trailers. On July 5, 2016, a trailer measuring over 50 feet in length was involved in an accident while being transported from Montreal to New York. The trailer was returned to Montreal and stored in the yard of Garage RB, an equipment and heavy machinery repair business, in Laval.
Unable to carry out the necessary repairs, Garage RB contacted a representative at Remorque Syr Plus (hereinafter “SYR”), the Respondent’s insured, to obtain a repair estimate. On July 18, 2016, after various proposals, Garage RB accepted the estimate that required the installation of new parts. The parts were thus ordered and a waiting period for delivery was to be expected.
It was not until mid-September 2016 that one of the Appellant’s drivers drove the damaged trailer from Garage RB’s yard to SYR’s facility. The Appellant’s trailer remained stored on the premises from mid-September until October 5, 2016. It is on this date that a SYR employee noticed the absence of said trailer and reported it stolen.
The principal issue at hand is the nature of the relationship between the Appellant and the Respondent. In the present circumstances, if the latter is contractual, the Appellant may avail itself of the presumptions of liability provided for in deposit and service contracts. This presumption, set out in article 2289 C.C.Q., provides that in the event of loss, liability for damages is incumbent on the depositary unless force majeure is proven. Otherwise, an extra-contractual fault must be proven.
The confusion between the legal entities involved and the contracting parties is at the root of the present dispute. It is precisely why the judge in first instance carefully unravelled the contractual organization structure, analyzed the evidence submitted to her and then ruled that there was no contractual relationship between Transport Kahkashan and SYR. Transport Kahkashan was not a party to the service contract between SYR and Garage RB, nor did the latter act as mandatary for the Appellant. Consequently, it could not benefit from the presumptions raised, since the legal basis was rather extra-contractual. It was therefore necessary for the Court to determine whether a fault had been committed against the Appellant, which it denied.
The Appellant appeals this judgment, claiming that it entered into a service contract with accessory deposit with the Respondent’s customer for the repair of its trailer by the estimate of July 18, 2016. In Appellant’s view, this submission constituted an offer to contract. Therefore, the judge erred in concluding that there was no contract between the parties.
This pretence was rejected by the Court of Appeal. It stated that the judge had properly considered all the evidence and rightly concluded that the preponderant evidence showed that on July 18, 2016, SYR was contracting with Garage RB on its own behalf and not on behalf of the Appellant. The conclusion regarding the absence of a contractual relationship is thus maintained.
The second issue addressed is the presence of a fault giving rise to liability.
In this case, the Court of Appeal also denied the presence of a manifest and determining error from the trial judge, and confirmed the absence of fault towards the Appellant. Indeed, she reiterated that, in the present case, the absence of any surveillance or security mechanism at the storage site for trailers awaiting repair, the long delay incurred before discovering the theft and the lack of isolation of the area reserved for the stored trailers did not constitute negligence. SYR could not have known and foreseen that the theft of such a trailer, which could only be moved by a large truck and whose movement was beyond anyone’s reach, was a foreseeable event.1
As the Superior Court judge had not committed any manifest and decisive error with regard to the liability regime or the absence of fault, the Court dismissed the appeal and upheld the trial court’s decision.
This decision highlights the importance of knowing the identity of one’s co-contractor, and underlines the fact that one person’s diligence should not be mistaken for negligence.
1Transport Kahkashan inc. v. Intact compagnie d’assurance, 2023 QCCA 1436, par. 38; Transport Kahkashan inc. v. Intact compagnie d’assurance, 2022 QCCS 794, par. 76.