2021 QCCA 705, 2021 QCCA 705

Faunus Group International Inc. c. Garda Security Services Ltd. 2021 QCCA 705 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-0 28493-195 (500-17-088492-155) MINUTES OF HEARING DATE: April 30, 2021 CORAM: THE HONOURABLE GUY GAGNON, J.A. BENOÎT MOORE, J.A. FRÉDÉRIC BACHAND, J.A. APPELLANT COUNSEL FAUNUS GROUP INTERNATIONAL, INC. Mtre Adam spiro Mtre ZARNAB DURRANI ( KRB Avocats ) By videoconference M tre sébastien guy ( Blake, Cassels & Graydon By videoconference RESPONDENT COUNSEL garda security serVIces ltd.

Mtre ERIC CHRISTIAN LEFEBVRE Mtre GUILLAUME PIERRE MICHAUD ( Norton Rose Fulbright Canada ) By videoconference Mtre Eric boucher ( Le groupe de sécurité Garda inc. ) By videoconference IMPLEADED PARTIES fredy v. ramsoondar mnp ltd. ABSENT AND UNREPRESENTED

On appeal from a judgment rendered on June 25, 20 19 by the Honourable Chantal Masse of the Superior Court , District of Montreal. NATURE OF THE APPEAL: Civil liability. Clerk at the hearing : Lesly Ramos Courtroom: Pierre-Basile-Mignault HEARING 9:07 Commencement of the hearing. Continuation of the hearing held on April 29, 2021. The parties were excused from appearing in Court. BY THE COURT : Judgment – see page 4. Conclusion of the hearing.

Lesly Ramos, Clerk at the hearing JUDGMENT [ 1 ] At issue are a number of findings of fact and findings of mixed fact and law that were key to the trial judge’s decision to dismiss the appellant’s action. Because the appellant (“FGI”) essentially invites the Court to embark on an extensive re-examination of the evidence that was adduced during the trial, which lasted 10 days, some fundamental principles governing the appellate process are worth recalling at the outset.

They were recently restated by the Supreme Court as follows: [1] Absent a palpable and overriding error, an appellate court must refrain from interfering with findings of fact and findings of mixed fact and law made by the trial judge: Housen v. Nikolaisen , 2002 SCC 33 , [2002] 2 S.C.R. 235, at paras. 10 - 37 ; Benhaim v. St - Germain , 2016 SCC 48 , [2016] 2 S.C.R. 352. An error is palpable if it is plainly seen and if all the evidence need not be reconsidered in order to identify it , and is overriding if it has affected the result: H.L. v.

Canada (Attorney General) , 2005 SCC 25 , [2005] 1 S.C.R. 401, at paras. 55 - 56 and 69 - 70 ; Salomon v. Matte - Thompson , 2019 SCC 14 , [2019] 1 S.C.R. 729, at para. 33 . As Morissette J.A. so eloquently put it in J.G. v. Nadeau , 2016 QCCA 167 , at para. 77 , [translation] “a palpable and overriding error is in the nature not of a needle in a haystack, but of a beam in the eye. And it is impossible to confuse these last two notions”: quoted in Benhaim , at para. 39 .

The beam in the eye metaphor not only illustrates the obviousness of a reviewable error , but also connotes a misreading of the case whose impact on the decision is plain to see. [Underlining added] * * * [ 2 ] With respect to its first ground of appeal, FGI fails to identify palpable errors tainting the trial judge’s findings that the respondent (“Garda”) had not concluded final agreements with either itself or the United group. [2]

[ 3 ] It is clear from the handwritten note added to the letter of intention (“LOI”) signed by representatives of United and Garda on June 3, 2013 [3] that the transaction contemplated therein was conditional upon the approval of United’s board of directors. It is also clear from the evidence that no such approval ever occurred.

On the contrary, shortly after the LOI was signed by representatives of United and Garda, United sought to renegotiate many of the agreement’s terms. [4] Garda rejected the proposed modifications [5] and nothing indicates that the parties subsequently came to a final agreement on the sale of United’s key assets.

Furthermore, the LOI set out a number of conditions which were never fully met. [ 4 ] In these circumstances, it was reasonable for the trial judge to conclude that no final sales contract had ever been concluded between United and Garda. [ 5 ] She could also reasonably conclude that no final contract had ever been concluded between FGI and Garda.

Her holding that any agreement between the two companies was conditional upon the conclusion of a final agreement between Garda and United is supported by the evidence. [6] Moreover, the Court is of the view that it can reasonably be inferred from the evidence that any agreement between FGI and Garda was conditional upon a satisfactory due diligence of FGI’s relevant assets. [7] [ 6 ] The first ground of appeal must be dismissed. * * * [ 7 ] As for FGI’s second ground of appeal, the Court sees no basis to set aside the trial judge’s conclusion regarding Garda’s alleged extra-contractual liability to either United or FGI. [ 8 ] To succeed here, FGI must demonstrate — among other things — that the trial judge made palpable errors when she concluded that United’s collapse had not resulted from Garda’s actions.

She made no such errors. There is ample evidence supporting her holding that, by the end of May 2013, FGI had decided to permanently cease financing United’s operations. It is also clear from the evidence that FGI knew, or should have known, that its decision would place United in a most precarious financial situation. While FGI was aware of Garda’s interest in purchasing United’s key assets, it had no assurance that those discussions would lead to a final agreement. Furthermore, FGI knew that no one else was then seriously considering purchasing United’s business.

In these circumstances, it was certainly reasonable to conclude that — in all likelihood — United’s collapse resulted from FGI’s decision to cease supporting it, combined with United and Garda’s failure to come to a final agreement. [ 9 ] On the issue of fault, it bears mentioning that FGI’s factum contains a number of assertions that find little support in the evidence.

For example, the assertion that Garda engaged in mass hiring of United employees working at the Edmonton International Airport without United’s knowledge [8] is contradicted by an email dated May 31, 2013. [9] Another example is FGI’s claim that, as discussions were ongoing in early June 2013, “Garda took over more than 100 client contracts of $10M-12M per year.” [10] While the record shows that Garda entered into discussions with a number of United employees and clients during that period, it does not support a finding that such discussions then led to a takeover of more than 100 contracts.

Furthermore, the record shows that Garda entered into such discussions with United’s knowledge and consent. [11] [ 10 ] Lastly, the Court agrees with Garda’s submission that FGI’s argument on quantum is not particularly compelling.

The sums of $800,000 and $5,300,000 offered by Garda in early June 2013 [12] cannot be viewed as reliable indicators of the true value of the relevant assets, because these figures were based on partial and incomplete information obtained by Garda. [ 11 ] The second ground of appeal must also be dismissed. * * * [ 12 ] On the issue of unjust enrichment, it is clear from FGI’s brief that its argument regarding correlation hinges on a finding that United’s collapse resulted from Garda’s actions: “[t]he value of United’s Assets and of the FGI Security therein was rendered nil by Garda’s appropriation of the value of the Client Contracts, representing an impoverishment of the entire value of the Assets and the FGI Security therein”. [13] The Court’s holding that the trial judge made no palpable error when she found otherwise [14] suffices to dispose of this ground of appeal. * * * [ 13 ] Fourthly, the Court sees no basis to intervene in relation to FGI’s last-minute claim based on section 98(2) of the Bankruptcy and Insolvency Act . [15] While the trial judge did err when she applied

section 101.1 of the Act — a point which Garda concedes —, her error was of no consequence to the outcome. The reason lies in the fact that FGI has not demonstrated that its related to “[a] payment, contract, dealing or transaction to, by or with a bankrupt/ [des] paiements, remises, transports ou transferts, contrats, marchés et transactions auxquels le failli est

partie ” within the meaning of section 97(1). * * * [ 14 ] Finally, FGI’s arguments in relation to its fifth ground of appeal do not point to any palpable and overriding error tainting the trial judge’s dismissal of is claim for punitive damages. FOR THESE REASONS, THE COURT: [ 15 ] DISMISSES the appeal, with legal costs.

GUY GAGNON, J.A. BENOÎT MOORE, J.A. FRÉDÉRIC BACHAND, J.A.