Executive Summary: Key Legal and Evidentiary Issues

• Validity of a default judgment condemning mandataries to reimburse investment funds when they failed to respond to the action
• Effect of an erroneous reference to a non-existent courthouse on the defendants’ failure to appear and on their right to seek retraction of judgment
• Strict application of the 30-day and six-month “delays of rigour” for presenting a pourvoi en rétractation de jugement under articles 347 and 84 C.C.P.
• Sufficiency of notification instead of formal service of the retraction application where no prejudice is shown to the opposing party
• Whether ongoing settlement negotiations and a perceived understanding between counsel can constitute an “impossibility to act” justifying extension of a strict procedural deadline
• Absence of any substantive defence on the merits where the defendants admit the exact amount of the debt and only seek procedural relief

Facts of the case

The dispute arises out of an investment arrangement between the plaintiff, Kayvan Hesabi Arjomand, and the defendants, Masood Behnampour and Yin Import/Export Entreprise Inc. The plaintiff entrusted a sum of money to the defendants in their capacity as mandataries, with the funds to be used for investment purposes. The core of the original action is the plaintiff’s claim for reimbursement of that invested sum after it was not returned as expected. The decision does not identify any insurance policy or specific contractual clauses beyond the mandate relationship and the obligation to repay the money advanced; there is no discussion of policy wording or particular contractual clauses in the reasons.

Procedural history and default judgment

After the action was commenced, the defendants did not respond to the proceedings. Their silence led the plaintiff to proceed by default. On 28 February, Justice Annie Breault granted the plaintiff’s application, allowed the claim, and condemned the defendants to pay the plaintiff the amount he had claimed in his proceedings. Although the judgment clearly orders payment of the full claim, the exact monetary amount of the condemnation is not reproduced in the present reasons. The default judgment was rendered in the context of the defendants’ failure to appear, not after a contested trial on the merits.

Discovery of the judgment and initiation of retraction proceedings

On 17 March, the defendants learned of the existence of the default judgment. Less than ten days later, they initiated a pourvoi en rétractation de jugement. In that application, they explained that their earlier silence was due in part to an error in the “Avis à la partie défenderesse” attached to the originating application. The notice told them they had to appear at the Palais de justice de Mont-Tremblant on rue Saint-Jovite. Relying on that information, defendant Behnampour stated that he went to that address within the prescribed time, only to find himself at the doors of the city hall instead of a courthouse. In reality, there is no courthouse in Mont-Tremblant; that municipality falls within the judicial district served by the Palais de justice de Saint-Jérôme. This factual error in the notice was advanced as one of the irregularities justifying retraction of the default judgment.

Initial scheduling of the retraction application and settlement discussions

The retraction application was first scheduled to be presented on 4 April, but, with the parties’ consent, it was postponed to 8 May, then to 15 May, and finally was placed sine die. During this period, counsel for both sides engaged in discussions aimed at agreeing on payment terms for the admitted debt. From the plaintiff’s perspective, those negotiations culminated in a settlement (transaction) on 14 May, although the terms were never successfully reduced to writing. When it came time to formalize the agreement, certain conditions no longer suited one or both parties, or had been misunderstood, and the parties continued exchanging proposals through to September without reaching a finalized written deal. The defendants did not, however, press forward with the retraction application during this period, effectively leaving it dormant while settlement talks unfolded.

Text of the Code of Civil Procedure and delays of rigour

When the defendants eventually decided to revive their procedural recourse, they notified a new notice of presentation on 26 September, setting the hearing for 3 October. Because the Superior Court did not sit that day, the matter was further postponed to 17 October, when it was finally presented for the first time. Justice Turcotte emphasized the strict requirements of article 347 C.C.P., which governs retraction of judgment: the retraction must be served on all parties within 30 days of the disappearance of the impediment to defending or from the date the party becomes aware of the judgment, evidence, or fact giving rise to the retraction, and then must be presented within 30 days of service, and in all cases within six months of the judgment. These time limits are expressly designated as delays of rigour. Article 84 C.C.P. adds that such a delay may only be extended if the court is convinced that the party was in fact unable to act sooner; otherwise, a court may not relieve a party from failing to respect a delay of rigour.

Non-compliance with procedural requirements

In reviewing the file, the court identified several formal and temporal defects. First, the retraction application had been notified rather than formally served, contrary to the wording of article 347. Second, based on the date of knowledge of the judgment, the application should have been presented no later than 27 April to comply with the 30-day presentation period. Third, the application had to be presented within six months of the default judgment of Justice Breault, meaning no later than 28 August. In practice, the presentation occurred after both of those deadlines. The judge noted, however, that the alleged irregularities in the original proceedings—particularly the erroneous address of the courthouse—could clearly have constituted a valid ground to set aside a default judgment. The defendants did, in fact, raise those grounds in time within the 30-day period after learning of the judgment, and the plaintiff suffered no prejudice from receiving notification rather than formal service. On that basis, the court was prepared to treat notification as sufficient in lieu of service. Once that threshold was crossed, the real issue became the non-compliance with the presentation deadlines, especially the six-month outer limit.

Impossibility to act and the impact of settlement negotiations

To obtain an extension of a delay of rigour under article 84 C.C.P., the defendants had to show that they were in fact unable to act within the prescribed period. Their counsel argued that the ongoing settlement negotiations between the parties, and the perceived understanding that the plaintiff would not raise delay objections while talks continued, amounted to an “impossibility to act”. Justice Turcotte acknowledged that impossibility to act does not have to be absolute, but emphasized that it must be expressly alleged and proven. The retraction application itself was silent on this alleged impossibility; it did not plead any facts showing that the defendants were prevented from presenting their application within six months. Only after the hearing, while the matter was under deliberation, did defence counsel submit two sworn statements seeking to support the argument. In one statement, defendant Behnampour said he had understood in the spring that plaintiff’s counsel would not raise the issue of delay so long as settlement negotiations continued. In the other, defence counsel, Me Dubé Fortier, stated that he met with plaintiff’s lawyers on 3 April, that the parties agreed to postpone the retraction application, and that plaintiff’s lawyers would not hold the defendants responsible for delays caused by that postponement. He also asserted that, because of the ongoing settlement discussions, the retraction application was adjourned sine die on 15 May.

Assessment of the evidence and credibility of the alleged understanding

For Justice Turcotte, these late-filed affidavits tended to corroborate the plaintiff’s version that a settlement agreement had actually been reached on 14 May. From the plaintiff’s standpoint, the case was effectively settled and closed as of that date. On that premise, the judge considered it impossible to infer that the plaintiff had implicitly agreed to waive reliance on the six-month deadline; a party who believes a binding settlement has been concluded would have no reason to agree that the opposing party might later revive a retraction application beyond the outer time limit. When the defendants attempted to renegotiate better terms and saw that their subsequent proposals were being rejected, they still did not take timely steps to re-activate their procedural remedy. The judge found that they ought, at a minimum, to have raised concerns about the impending 28 August deadline with opposing counsel and taken protective steps before that date. Instead, they only reactivated the retraction on 26 September, by which time the six-month period had already expired. The court described the defendants’ conduct as lax and held that such laxity could not be equated with an impossibility to act within the meaning of article 84 C.C.P. Without proof of a true impossibility to act, the court had no authority to extend a delay of rigour and could not relieve the defendants from the consequences of missing the six-month limit.

Absence of a substantive defence on the merits

Justice Turcotte also observed that the defendants had no substantive defence to offer on the merits of the claim. They had acknowledged that the amount in dispute was accurate and even sought tax advice regarding the implications of paying the debt. In other words, the retraction application was not grounded in a contestation of liability or quantum, but purely in procedural and formal considerations. This absence of a defence reinforced the conclusion that there was no compelling reason to set aside the existing default judgment, especially in the face of strict statutory time limits and unexplained delay.

Outcome and financial consequences

In the result, the Superior Court rejected the defendants’ pourvoi en rétractation de jugement and ordered them to pay costs. The default judgment rendered by Justice Breault on 28 February therefore remains in full force, condemning the defendants to pay the plaintiff the full amount of his original monetary claim, while this subsequent decision confirms that the plaintiff is also entitled to his judicial costs in resisting the retraction application. The successful party, across the combined effect of the default judgment and this retraction judgment, is the plaintiff, Kayvan Hesabi Arjomand. However, the exact total amount of the monetary award and costs in his favour cannot be determined from this decision, as the judgment does not specify the dollar value of the original condemnation or quantify the costs awarded.