Court of Appeal of Quebec

Hydro-Québec c. Isolation Morissette ltée

May 07, 2018

200-09-009237-162

St-Pierre, Gagnon, Rancourt

Appeals from a judgment of the Superior Court ordering the appellants to pay an amount of money. Allowed.

The appellant Hydro-Québec awarded a contract to the appellant Alstom Énergies renouvelables Canada inc. in the context of the Romaine II project. During the contract, Alstom awarded a sub-contract to the impleaded party for the performance of certain work and the impleaded party entered into an agreement with the respondent for it to perform a part of this sub-contract. Alstom paid the impleaded party for the performance of the part of the contract involving the respondent’s work. The respondent, who had not been paid, sued the appellants. The trial judge noted the absence of a contractual relationship between the appellants and the respondent, but said that in her view, the contract between the appellants contained stipulations for another in favour of the respondent. Alternatively, ruling on the appellants’ extra-contractual liability, the judge found that they had been negligent and careless in liquidating the project funds without obtaining a release from the respondent, knowing that the respondent had not been paid by the impleaded party.

The judge erred in concluding that the holdback provisions binding the appellants constituted a stipulation for another for the benefit of the respondent. At the outset, the respondent cannot be considered a [translation] “sub-contractor” within the meaning of the general provisions of the contract, which, moreover, reveal the clear, unequivocal, and unambiguous intention of the parties to the contract not to stipulate for another. The judge also erred in finding that the appellants’ conduct triggered their extra-contractual liability. As for Alstom, the judge determined that it had a contractual obligation to obtain a release from the respondent before paying the impleaded party. However, there is no such obligation in the contract between the appellants. Alstom had an obligation to obtain a release from its sub-contractor, the impleaded party, which it did, not from its sub-sub-contractor, the respondent. There is nothing to suggest that Alstom was trying to avoid its obligations to third parties. Finally, it acted as a reasonable manager would have by encouraging the impleaded party to honour its obligation to pay the respondent. As for Hydro-Québec, there was no provision in the contract requiring it to obtain a release from the sub-sub-contractor of its co-contracting party before liquidating the funds. Moreover, it was not provided that it would guarantee payment to Alstom’s sub-sub-contractor. Accordingly, the judge could not conclude that Hydro-Québec had been negligent or careless in the absence of an obligation to obtain a release from the respondent. In the circumstances, the allegation of negligent and careless conduct is unfounded.

*Summary by SOQUIJ
Text of the decision: Http://citoyens.soquij.qc.ca. This link open an external website in a new window.

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