2022 QCCA 149, 2022 QCCA 149

Liquidation de Côte Vertu Holdings Inc. 2022 QCCA 149 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-029897-220 (500-11-059448-213) DATE: February 4, 2022 BEFORE THE HONOURABLE MARTIN VAUCLAIR, J.A. IN THE MATTER OF THE LIQUIDATION OF: CÔTE-VERTU HOLDINGS INC. THE ESTATE OF THE LATE ANNE PRESHEL MICHAEL RAUCHMAN MYRA LIBENSON APPLICANTS – Defendants/Cross-Plaintiffs v. IMMEUBLES PARKSIDE INC. RESPONDENT – Plaintiff/Cross-Defendant and DAVID STELZER STEVEN STELZER RESPONDENTS – Cross-Defendants and COTE VERTU HOLDINGS INC.

IMPLEADED PARTY – Impleaded Party JUDGMENT [ 1 ] The applicants seek leave to appeal de bene esse from a judgment of the Superior Court of Quebec, district of Montreal (Hon. Marie-Anne Paquette) rendered on December 23, 2021. [ 2 ] The judgment ruled on several motions by both parties. With the risk of oversimplifying, a short overview of the facts should suffice. The applicants are the children of Anne Preshels who passed away in June 2019. They are equal partners with the respondents in Cote Vertu Holdings Inc. (the Company) that owned an apartment building.

In 2020, the building was sold and the proceeds, 7,9 million dollars, are waiting to be distributed. [ 3 ] In January 2021, the respondents brought an application seeking to orderly liquidate the Company. Since then, there is an ongoing disagreement between the parties. Central to this problem is the dispute over access to the financial documents of the Company.

Applicants retained the services of the accounting firm BDO to review the financial records of the Company for purposes of the cross demand they filed against the respondents, the administrators of the Company. [ 4 ] In December 2021, the parties were before Justice Paquette, seeking case management measures. At the outset, she noted that the parties agreed it was time to liquidate and dissolve the Company.

Indeed, she did appoint a liquidator with, inter alia, the mandate to address specific monetary claims and issues and disagreements raised in the BDO Report. [ 5 ] The appellants argue that by doing so, Justice Paquette overlooked their clear unwillingness to accept that appointment and therefore, the decision ruled prematurely on the merits. In January, however, the liquidator named by Justice Paquette declined the mandate because of a conflict of interest. The parties agree that they will have to appoint another liquidator.

Thus, the question is moot. [ 6 ] In her decision, Justice Paquette refused the applicants’ request to order further access to the financial records of the Company. On the arguments and evidence before her, she ruled that the applicants had failed to reasonably justify the extensive access they were seeking in the context of the proceedings. [ 7 ] The Judge did grant the respondents’ motion to disjoin the applicants’ cross demand. In her view, the applicants were seeking to enforce a claim of the Company (not a claim of the applicants).

Also the judge held that the scope of the proposed cross demand was unreasonable, because too broad.

[ 8 ] In sum, Justice Paquette was provided with many documents and weighed the probative value and the prejudicial effect of what she thought became a forensic accounting inquiry. [ 9 ] Further, it should be noted that Justice Paquette did not ignore the applicants’ claims. Again, her judgment orders the liquidator to address specific monetary claims of the parties such as, improper payments made to one of the respondents, excessive and unjustified management fees paid to the management Company owned and operated by the respondents as well as other issues raised in the applicants’ expert report.

The Judge also reserved the right of the liquidator to address the court to seek further directions while exercising the mandate. [ 10 ] In so deciding, Justice Paquette was acting squarely within her powers of case management as per

article 32 C.C.P. and, in the circumstances of the case before her, she exercised her discretion reasonably. Certainly, the rulings do not appear unreasonable in light of the guiding principles of procedure. FOR THESE REASONS, THE UNDERSIGNED: [ 11 ] DISMISSES the application for leave to appeal de bene esse , with judicial costs. MARTIN VAUCLAIR, J.A. Mtre Leon J. Greenberg STERNTHAL MONTIGNY GREENBERG ST-GERMAIN For the Applicants Mtre Ronald H. Levy DE GRANDPRÉ CHAIT For the Respondents Date of hearing: January 31, 2022