Law360 Canada ( December 10, 2021, 1:55 PM EST) -- Appeal by the City of Montreal from a judgment of the Quebec Court of Appeal that affirmed a declaratory judgment of the supervising judge. In 2018, SM Group, a consulting engineering firm, became subject to proceedings under the Companies’ Creditors Arrangement Act (“CCAA”). It continued to perform work for the City. The City refused to pay for the work and invoked its right to effect compensation between what it owed SM Group and two claims it allegedly had against SM Group resulting from fraud that arose before the initial order. The first claim arose from a settlement agreement entered into under the Voluntary Reimbursement Program (“VRP”) established by Bill 26. The second claim was based on a proceeding brought by the City against SM Group, in which it claimed money from SM Group for allegedly having participated in collusion in relation to a call for tenders for a water meter contract. The monitor of SM Group applied for a declaratory judgment that compensation could not be effected with respect to the amounts owed by the City to SM Group. The supervising judge granted the application. She held that pre‑post compensation was not possible with respect to the VRP claim, and that the water meter contract claim was neither liquid nor exigible, which precluded compensation. The Court of Appeal agreed that the compensation invoked by the City could not be effected....