In a hotly contested case, on July 24, 2017 the Superior Court of Québec rejected an application from the Chambre des notaires du Québec (CNQ) and the Barreau du Québec (BQ) for a declaratory judgment and permanent injunction against several defendant insurance companies that offer title insurance primarily to lending institutions. The CNQ and BQ argued that certain data and document processing services performed by these title insurers with regards to legal acts and other documents needed for a mortgage refinancing are of the exclusive jurisdiction of notaries and lawyers. These services include preparing, drafting and drawing up mortgage loans, loans for the purpose of subrogation, acts for subrogatory release and cancellation, including seeing to the publication of these cancellations in the land registry, as well as verifying property titles and, allegedly, giving legal advice.
The CNQ and BQ applied to the Superior Court for a declaration that the impugned services constitute the illegal practice of the profession of notary or lawyer, and sought the injunction orders necessary to stop the title insurers from performing these services. For their part, the title insurers submitted that the services they perform amount to administrative work and are therefore performed legally, with certain reserved acts being performed by an external notary.
The Court found for the title insurers, declaring that the services rendered by them were primarily clerical, and did not fall under the purview of acts reserved for notaries and lawyers. In arriving at this decision, Chatelain J. discussed the importance of giving reserved acts a strict interpretation, explaining,
"[TRANSLATION] [135] Given that the exclusive exercise of certain acts confers a monopoly on their execution to notaries and lawyers, reserved acts are limited to what is really necessary for the protection of the public."
With that in mind, the Court agreed with the defendants that in preparing acts that were ultimately certified by an external notary, they were performing administrative work and not reserved acts. In the decision, the Court explained that as long as the notary performed the duties required for receiving or certifying an act, such as verifying the information in the act and the identity, quality and capacity of the parties to the act, that the notary did not need to participate in its preparation or drafting. Furthermore, Chatelain J. found that since the title insurers were simply filling in the blanks on templates that they used for these acts, that they were not, in fact, drafting these acts at all, but rather performing strictly clerical tasks.
With regards to the allegation that the title insurers were providing legal advice and opinions, the Court found that these claims were unfounded. As the Court enunciated,
"[TRANSLATION] [254] [...] [The title insurers] only perform a summary verification of the property titles in order to determine whether their underwriting criteria are being met and whether they will issue an insurance policy.
[255] Where this verification is negative, title insurance companies notify the lending institution of the reason why the policy cannot be issued, and when possible, inform them of the options available so that their underwriting criteria can be met."
Basing itself on the Court of Appeal's reasoning in Charlebois c. Barreau du Québec , the Court concluded that explaining the application of legal principles does not necessarily amount to legal advice, and that the title insurers are thus entitled to explain legal principles and requirements to their clients.
In their defence, the title insurers alleged that the CNQ and BQ brought this action in an attempt to quash competition and defend the economic advantages that exclusivity over these acts brings to lawyers and notaries. However, the Court determined that the motives of the CNQ and BQ were consistent with their mandate to protect the public, and that the economic consequences did not serve to diminish the legality or legitimacy of the action but were merely a side-effect of this mandate.
This decision serves as a reminder of the narrow interpretation that is granted to the acts reserved to certain professions, and that the public interest is the paramount concern in considering whether an act amounts to the illegal practice of a profession.
The likelihood that this decision is appealed is high so we may see what a higher court thinks of the issue.
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