While some see the development of artificial intelligence as a means of increasing access to justice by automating certain tasks, this new technology could have significant repercussions for the legal profession. In this context, the Superior Court recently rendered an important decision in Chambre des notaires du Québec c. Compagnie d’assurances FCT et al.1 on the legality of juridical acts automatically generated by title insurers.
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I. The Facts
The Chambre des notaires (the “Chambre”) and the Barreau du Québec (the “Barreau”) filed a joint motion for a declaratory judgment and permanent injunction, alleging that the defendant title insurers, FCT Insurance Company Ltd, First Canadian Title Company Limited, Chicago Title Insurance Company Canada and FNF Canada (the “Defendants”), prepared and drew up juridical acts and provided legal advice on behalf of others, which are acts reserved for the exclusive prerogative of notaries and lawyers.
The Defendants have been offering services in Quebec for several years in a variety of real estate and financing transactions. Title insurance is damage insurance that protects against problems with title on a given date. It is used in various real estate transactions in addition, or as an alternative, to a legal opinion on title.2 Its introduction has been the subject of much discussion, monitoring, and opinion by the Barreau and the Chambre given its impact on the role of notaries and lawyers during such transactions.
The proceedings brought by the Chambre and the Barreau were based on the Defendants’ use of a technological platform offered as an incidental service to lending institutions when issuing title insurance during financings. The application automatically generates financing-related documentation such as mortgage deeds, loan deeds for purposes of subrogation, subrogation releases and cancellations. Once the acts have been generated by the platform, they are executed by a notary acting under a limited mandate.
The Chambre and the Barreau claimed that the Defendants were not merely offering their clients “related administrative services”, but were preparing and drawing up acts on behalf of others, contrary to the Notaries Act3 (“NA”) and the Act respecting the Barreau4 (“BA”).
The Defendants admitted that they cannot provide professional services reserved for notaries and lawyers. However, they denied the allegations of the Chambre and the Barreau to the effect that they were performing such acts. They argued that their practices were legal because in reality they amounted to administrative work.
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II. The Decision
The Court sided with the Defendants and held that the title insurers’ alleged acts are not acts reserved for notaries and lawyers. The Court stated that the generation of juridical acts using the Defendants’ computer program is a related service and not the drawing up or preparation of juridical acts.
The evidence adduced showed that the Defendants’ computer platform simply merged the lending institution’s pre-filled form with the information specific to the transaction (names, cadastral description, mortgage amount, borrower’s civil status, etc.) and automatically generated the acts. Such tasks are [translation] “rather administrative and routine (…) in order to merge the information related to a specific transaction into the form”.5
The Court also stated that the confirmation and correction, as needed, of information in the document thus generated by the Defendants’ staff is not akin to the drawing up and preparation of an act within the meaning of the BA and the NA. The Court was also of the opinion that any summary title searches that the Defendants may conduct are not conducted on behalf of others, in this case the lending institutions, but for the Defendants’ themselves when underwriting the title insurance, for the purpose of verifying whether the underwriting criteria are satisfied. Last, the Defendants may sometimes notify the lending institution that a policy cannot be issued because of a problem with the title and then inform them of the options available in order to satisfy the underwriting criteria. This, however, does not amount to a legal opinion intended for others, but is instead the disclosure of information based on internal verifications.6
Finally, the Court rejected the arguments of the Chambre and the Barreau to the effect that the provisions in the NA and the BA on reserved acts should be broadly construed, and recalled that these laws should be narrowly construed in light of the monopoly granted to lawyers and notaries.7
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III. Comments
This is the latest in a series of recent decisions in which regulatory authorities and professional orders have unsuccessfully sued new market players supported by new technology based on the argument that they are performing acts reserved for their respective members. For now, in Coastal8 the Ordre des optométristes du Québec argued that the online sale of contact lenses amounted to the illegal practice of optometry, or the dispute between the Organisme d’autoréglementation du courtage immobilier du Québec and DuProprio.9
If the decision is not appealed, its conclusions foreshadow changes to the services offered by lawyers and notaries to their clients. Platforms and other “smart” technological tools that auto-generate legal documents are constantly evolving. Several new actors and technologies are expected to greatly democratize the performance of these traditional legal and notarial functions. In this context, the list of reserved acts in the NA and the BA may be questioned and subject to future dispute.
It will be interesting to see what position the Chambre and the Barreau take on regulating these new technological applications in order to protect the public. Any decisions made in this direction will have an impact on the profession’s future. The odds are that if these tools are well developed and regulated, they will benefit not only the public, but notaries and lawyers as well.
1 Chambre des notaires du Québec c. Compagnie d’assurances FCT ltée/FCT Insurance Company Ltd., 2017 QCCS 3388.
2 It may be an interesting tool for certain transactions given that it can be issued quickly, the indemnity is paid as soon as damage occurs, and it isn’t necessary to prove fault.
3 CQLR, c. N-3.
4 CQLR, c. B-1.
5 See para. 179 of the decision.
6 As defined by the Court of Appeal in Charlebois c. Barreau du Québec, 2012 QCCA 788, paras. 24-28.
7 Pauzé v. Gauvin [1954] S.C.R. 15, p. 18.
8 Coastal Contacts Inc. c. Ordre des optométristes du Québec, 2011 QCCA 1820, application for leave to appeal to the Supreme Court dismissed, 2012 CanLII 22021 (SCC).
9 Duproprio inc. c. Organisme d’autoréglementation du courtage immobilier du Québec (OACIQ), 2016 QCCA 515, application for leave to appeal to the Supreme Court dismissed, 2016 CanLII 74995 (SCC).