2022 QCCA 1717, 2022 QCCA 1717

Unofficial English Translation of the Judgment of the Court I. Quint Group Inc. c. Quintcap inc. 2022 QCCA 1717 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No.: 500-09-029472-214 (500-17-093002-163) (500-11-051087-167) DATE: December 19, 2022 CORAM: THE HONOURABLE ROBERT M. MAINVILLE, J.A. SUZANNE GAGNÉ, J.A. FRÉDÉRIC BACHAND, J.A. No.: 500-17-093002-163 I. QUINT GROUP INC. IAN QUINT GOTHAM DEVRAKER DEVELOPMENTS INC. DEVRAKER REAL ESTATE INC. 7549881 CANADA INC. APPELLANTS/INCIDENTAL RESPONDENTS – Defendants v. QUINTCAP INC.

THEODORE QUINT RESPONDENTS/INCIDENTAL APPELLANTS – Plaintiffs and JOHN WAXLAX IMMOBILIER DQ INC. (DQ REALTY INC.) 8209375 CANADA INC. STORBEC MINI STORAGE INC. 9255-2504 QUÉBEC INC. 7335482 CANADA INC. IMPLEADED PARTIES – Impleaded Parties ______________________________________________________________________ No.: 500-11-051087-167 DEVRAKER REAL ESTATE INC. IAN QUINT APPELLANTS – Plaintiffs v. QUINTCAP INC. STORBEC MINI STORAGE INC. 8209375 CANADA INC. THEODORE QUINT SYLVIA QUINT JOHN WAXLAX 4528395 CANADA INC. 7340249 CANADA INC. DQ REALTY INC. 9255-2504 QUÉBEC INC.

SAM DRAZIN RESPONDENTS – Defendants and 9308-9290 QUÉBEC INC. 11225359 CANADA INC. LOUIS DRAZIN GROUPE QUINT INC.

IMPLEADED PARTIES – Impleaded Parties JUDGMENT [ 1 ] The appellants appealed from a judgment of the Superior Court, District of Montreal (the Honourable André Prévost), in which he granted in part the application of the respondents/incidental appellants in the first file (500-17-093002-163) and dismissed the appellants’ application in the second file (500-11-051087-167). [ 2 ] For the reasons given by Bachand J.A., with which Mainville and Gagné JJ.A. agree, THE COUR T: [ 3 ] ALLOWS the principal appeal for the sole purpose of substituting the following paragraph for paragraph 375 of the reasons in the judgment under appeal: [375] ORDERS the defendants Ian Quint, I.

Quint Group Inc., Devraker Real Estate Inc., and Gotham Devraker Developments Inc., their directors, officers, employees, and mandataries, as well as any other person under their control, to cease all passing off of their services as though they were provided by the Plaintiffs throughout the territory of the municipalities listed in

Schedule I of the Act respecting the Communauté métropolitaine de Montréal , CQLR c.

C-37.01 , and to cease using or otherwise announcing the Quint Group name or trademark or any variation thereof (except for the name Ian Quint or a trademark including “Ian Quint” providing that no precedence is given to the name Quint over the name Ian) throughout the said territory in relation to: the acquisition, sale, or leasing of immovable properties (industrial, commercial, or residential); the construction of immovable properties, property development, property management, or the operation or management of hotels; [ 4 ] ALLOWS the incidental appeal; [ 5 ] STRIKES paragraphs 383, 385 and 388 from the reasons of the judgment under appeal; [ 6 ] THE WHOLE with legal costs in favour of the respondents/incidental appellants Quintcap Inc. and Theodore Quint.

ROBERT M. MAINVILLE, J.A. SUZANNE GAGNÉ, J.A. FRÉDÉRIC BACHAND, J.A. Mtre Éric Christian Lefebvre Mtre Charles-Antoine M. Péladeau Mtre Julie France Lacourcière NORTON ROSE FULBRIGHT CANADA For the appellants/incidental appellants (500-17-093002-163) and the appellants (500-11-051087- 167) Mtre Alain Y. Dussault Mtre James Duffy LAVERY de BILLY For the attorneys of the respondents/incidental appellants (500-17-093002-163) Mtre Julien Lussier IMK For the respondents (500-11-051087-167) Date of hearing: October 25, 2022

REASONS OF BACHAND, J.A. Table of Contents Paragraph I..... Background............................................................................................................................ 8 II.... Analysis................................................................................................................................. 15 A. The passing off grounds........................................................................................................ 15 1. The existence of goodwill........................................................................................... 15 2.

The existence of confusion........................................................................................ 18 B. The duty of loyalty ground.................................................................................................................. 22 C. The ground in relation to the geographic scope of the injunction................................................ 23 D. The grounds in relation to the shares transferred between 2010 and 2013................. 33 1. Characterizing the transactions.................................................................................................... 34

i) Were the shares part of Ian’s remuneration?............................................................. 34 ii) Characterizing the transfers as indirect gifts........................................................................ 35 2. Revocation of the gifts on account of ingratitude................................................................. 42

i) Ian’s behaviour......................................................................................................... 43 ii) The true donee............................................................................................................... 44 iii) Is a legal person entitled to obtain revocation of a gift on account of ingratitude? 47 iv) The ground based on Sam Drazin’s participation in the transfer of the DQ shares. 51 3. Restitution of prestations........................................................................................................ 53 E.

The oppression remedy ground........................................................................................... 63 III. Conclusion............................................................................................................................. 66 __________________ [ 7 ] The appellants appeal from a judgment of of the Superior Court, District of Montreal (the Honourable André Prévost), [1] which decided a commercial dispute with multiple ramifications and which involved Ian Quint and his uncle, Theodore Quint. [2] I. Background

[ 8 ] Since the background of the case was described very well in the judgment under appeal, we need only give a brief outline of it here. [ 9 ] At the end of January 2015, after working for some ten years in Theodore’s property development companies, Ian broke his business ties with his uncle and decided to create his own business, I. Quint Group Inc. (“Quint Group”). According to Theodore, Ian then acted wrongfully in more than one respect, including by passing off and by violating his duty of loyalty under

article 2088 C.C.Q . Ian did not believe he had committed any fault and alleged that the real victims of the case were himself and his holding company Devraker Real Estate Inc. (“Devraker”), both allegedly oppressed by Theodore and his related companies. [ 10 ] The trial judge was seized of two cases that were joined. [3] In the first case, Theodore and a company he controlled, Quintcap Inc. (“Quintcap”), sued Ian and some of his companies, seeking an injunction, damages, and reimbursement of the profits Ian acquired through passing off.

Theodore also sought revocation of the shares he had given Ian as gifts through several related companies between 2010 and 2013 on account of ingratitude. The second case involved an oppression remedy brought by Ian and Devraker. [ 11 ] Since the proceedings were split, [4] the judgment under appeal deals only with liability issues.

Those related to evidence and the quantification of damages were postponed to a later stage in the proceedings. [ 12 ] At the end of a trial that lasted approximately 20 days, the judge rendered a lengthy judgment in which he upheld most of the arguments submitted by Theodore and Quintcap. More precisely, he concluded that Ian committed passing off, that he had violated his duty of loyalty, and that he had infringed Quintcap’s copyright. He issued an injunction ordering Ian and several natural and legal persons related to him to cease all passing off.

On the issue of the shares that were transferred between 2010 and 2013, the judge ruled that they were indirect gifts to Ian and should be revoked on account of ingratitude. Since he believed that Theodore and Quintcap would have an undue advantage if the increased value those shares had acquired by the end of January 2015 — when the business relationship broke down — was not factored in, the judge ordered Ian to return them while at the same time ordering Theodore and Quintcap to reimburse an amount equivalent to the increased value to Ian.

Lastly, the judge dismissed the oppression remedy sought by Ian and Devraker. [ 13 ] This Court has been seized of a principal appeal and an incidental appeal. [ 14 ] In the principal appeal, Ian and the companies related to him (“appellants”), including Quint Group and Devraker, impugn the judge’s decision on the passing off, the duty of loyalty, the shares given as gifts between 2010 and 2013 — which they consider not to have been gifts, contrary to the judge’s ruling — and the oppression remedy.

In the incidental appeal Theodore and Quintcap (“respondents”) dispute the judge’s order that they reimburse to Ian the increased value that the shares transferred between 2010 and 2013 had acquired by January 30, 2015. II. Analysis A. The passing off grounds 1. The existence of goodwill [ 15 ] Turning first to the passing off issue, the appellants first contend that the judge’s finding of existing goodwill associated with the “Quintcap” trademark — a key requirement [5] for any action based on

section 7 (

b) of the Trademarks Act [6] (“ TA ”) — was tainted by a reviewable error. More specifically, they allege that the judge erred by not asking whether, in addition to proving the use of the “Quintcap” trademark, Quintcap had also established that the trademark was recognized within the relevant reference group, i.e. potential lessees of the company’s immovable properties.

Such an error would be overriding because the evidence in the case could not have led to an affirmative answer to the second question. [ 16 ] The appellants were wrong to assert that the trial judge failed to analyze the existence of goodwill from the perspective of the members of the public who were likely to call on the respondents’ services.

Since he relied — rightly — on the definition of goodwill accepted by the Supreme Court in Veuve Clicquot , [7] he essentially looked for “the positive association that attracts customers towards its owner’s wares or services rather than those of its competitors.” [8] That definition clearly indicates that the existence of goodwill does not depend solely on the use made of a given trademark, but that is also based on the positive impact of such use on the potential clients’ perception of the owner’s goods or services.

What we must draw from the judge’s finding on goodwill associated with the “Quintcap” trademark is that he also believed the trademark had become sufficiently recognized among potential lessees of the immovable properties belonging to Quintcap. [ 17 ] The appellants were also wrong to argue that this finding was not supported by the evidence.

The evidence in the case was ample enough for the judge to conclude that the services rendered by Quintcap linked it to an extensive public composed of potential lessees, [9] and that the “Quintcap” trademark had been widely used in the normal course of its business, including in the performance and advertising of its services. [10] It was reasonable for the judge to infer from those facts that the “Quintcap” trademark had acquired sufficient recognition among the public, including potential lessees of the immovable properties belonging to Quintcap. 2.

The existence of confusion [ 18 ] The appellants’ second argument in relation to passing off was that the trial judge had made reviewable errors when he concluded that Ian had deliberately acted wrongfully by using the “Quint Group” trademark with the effect [11] of sowing confusion among Quintcap’s existing and potential clients. [ 19 ] There again the appellants are wrong. [ 20 ] First, the judge committed no error of law when he applied the test of the “first impression in the mind of a casual consumer

somewhat in a hurry” to the trademark in question.

That is precisely the test accepted by the Supreme Court, [12] and the judge was careful to apply it while taking account of the fact that Quintcap’s potential clientele is very diverse, a true reflection of the wide and varied real estate and commercial market it works in. [13] His findings as to the nature of that market are essentially findings of fact and were not tainted by any palpable or overriding error. [ 21 ] Nor did the judge commit a reviewable error when he concluded that Ian’s use of the “Quint Group” trademark had sown confusion in the minds of Quintcap’s existing and eventual clients.

His rigorous analysis of the issues — including, in particular, the confused reactions of Quintcap clients after the Quint Group started operating [14] — demonstrated that his conclusion was amply supported by the evidence. The appellants’ arguments are merely an urging to reassess that evidence in defiance of the applicable standards of review. [15] They have failed to show any error of law or any palpable or overriding error in the judge’s analysis of the evidence. B.

The duty of loyalty ground [ 22 ] I have come to the same conclusion with regard to the appellants’ arguments on whether Ian violated his duty of loyalty.

After finding that Ian had solicited a Quintcap employee, made away with a large number of documents belonging to Quintcap, deliberately sowed confusion in the minds of Quintcap’s existing and potential clients, claimed Quintcap’s achievements as his own, and acted disloyally toward a Quintcap client, the judge concluded that Ian had quite obviously violated his duty of loyalty. [16] The appellants dispute all of those findings and ask this Court to reassess the relevant evidence in its entirety, without ever explaining how the judge’s analysis was tainted by a palpable and overriding error. C.

The ground in relation to the geographic scope of the injunction [ 23 ] As I stated earlier, the trial judge issued an injunction for the appellants to cease all further passing off. He did not, however, specify the geographic scope of the injunction and the parties do not agree on the consequences of this fact. [ 24 ] The appellants believe that the inference to be made is that the injunction is not limited in terms of its geographic scope.

They add that the judge committed an error warranting the intervention of this Court because in their view he should have limited the scope of the injunction to the territory where Quintcap already had clients, i.e. the town of Brossard. [ 25 ] The respondents argue that the judge’s silence meant the scope of the injunction was bounded only by the territory of Quebec, since it had been issued by a judge of the Quebec Superior Court.

They add that the judge made no error by not further limiting the scoope of his order, since the evidence shows Quintcap’s clientele is spread throughout the province. [17] [ 26 ] In my opinion, the appellants’ reading of the judge’s order is the correct one: there are no geographic boundaries to the injunction. If the judge had intended to limit its geographic scope, he would undoubtedly have said so in his reasons, but he did not. Further, the respondents’ argument that there is an implicit limit flowing from the Superior’s Court’s jurisdiction over the whole of Quebec’s territory has not convinced me.

As the Supreme Court reiterated in Google , when the circumstances allow, Canadian superior courts can render injunctions intended to modify a person’s conduct beyond their jurisdictional boundaries. [18] For that reason, the territorial scope over which the judge’s jurisdiction extended does not seem a likely guide to the effect he intended to give to an injunction issued with no geographic boundaries specified. [ 27 ] The appellants were also right to assert that injunctions issued in passing off cases should be limited to the territory where the plaintiff’s clientele is to be found. [19] That means the judge committed a reviewable error by failing to consider that issue. [ 28 ] I find, however, that the appellants were wrong to argue that the evidence in the record established that Quintcap’s clientele was limited to the territory of the town of Brossard at the time in question.

The judge clearly found that Quintcap was active throughout Greater Montreal throughout that time, particularly on the city’s South Shore. [20] [ 29 ] The judge did not find that Quintcap’s clientele extended beyond Greater Montreal, however, and, contrary to what the respondents argued, the evidence in the file does not support a claim that Quintcap’s clientele extended province-wide. [ 30 ] On the latter point, the respondents submit first that some of Quintcap’s clients were active throughout Quebec at the time in question.

But that is not enough if nothing else is known about the commercial lessees who were active in the rest of the province. Are they enterprises that also operate within Greater Montreal? Is that the case throughout Quebec, or only in certain markets?

And in the markets where some enterprises that also operate in Greater Montreal are active, do they represent a significant proportion of the total commercial lessees or only a small part? [ 31 ] The respondents also stress that Quintcap had an Internet presence at the time in question, but there is nothing in the file about the identity and characteristics of its website users. [21] [ 32 ] Under the circumstances, I believe that this Court should intervene to limit the geographic scope of the injunction to Greater Montreal.

For greater clarity, in the dispositions of this judgment, I would identify the territory comprising the municipalities that make up the Communauté métropolitaine de Montréal. [22] D. The grou8nds in relation to the shares transferred between 2010 and 2013 [ 33 ] The appellants allege that the trial judge made reviewable errors at practically all stages of his analysis of the shares that were transferred between 2010 and 2013. Here again, most of their arguments amount to an attempt to repeat the trial, in defiance of the applicable standards for intervention on appeal.

1. Characterizing the transactions (

i) Were the shares part of Ian’s remuneration? [ 34 ] When characterizing the transactions, it is appropriate to begin by pointing out that the judge made no reviewable error when he dismissed Ian’s argument that the shares were part of his remuneration, concluding instead that they reflected Theodore’s intention to make gifts out of his real estate portfolio to members of his family, including Ian.

There is plenty of support for that finding in the evidence, including testimony from several people — Theodore among them — that the judge considered [ translation ] “far more credible” than Ian’s. [23] (ii) Characterizing the transfers as indirect gifts [ 35 ] The judge also did not commit a reviewable error when he found that the transactions by which those transfers were made constituted gifts, despite the fact that they were channeled through several companies controlled by both Theodore and Ian. [24] [ 36 ] It should be reiterated at the outset that a gift need not be obvious to be valid, since

article 1811 C.C.Q. recognizes indirect or disguised gifts in Quebec law. [25] The notion of an indirect gift, on which the trial judge relied in this case, corresponds to a liberality that matches the substantive characteristics of a gift — i.e. a transfer of value with no or insufficient consideration, [26] accompanied by a liberal intention [27] — even though it is channeled through one or more legal vehicles other than deeds of gift. [28] Further, indirect gifts are to be distinguished from disguised gifts, as Professor Brière pointed out, in that [translation ] “the parties do nothing to hide their intentions but merely fail to disclose them.” [29] [ 37 ] Such gifts are sometimes created in “neutral” acts, i.e. acts that do not specify whether the gifts are by gratuitous or onerous title, [30] at least in the eyes of an uninformed person: one example is the creation of a servitude over immovable property when the context, hitherto unknown to third parties, reveals that it was created by gratuitous title. [31] Indirect gifts can also take the form of acts by onerous title in which the parties deliberately stipulate unequal contributions. [32] Or they can [ translation ] “result from the attribution to a third party of the benefits of a juridical act between two persons,” which may arise from a stipulation for another or a payment on behalf of a third party. [33] According to

article 1811 C.C.Q . , indirect gifts — like disguised gifts — are governed by the rules on the substantive aspects of gifts, not by those as to form. [ 38 ] In the case before us, the transactions by which the disputed shares were transferred are different in both nature and form. [ 39 ] The first ones, which occurred in May 2010, consisted of a series of operations by which Theodore and the son of a long-term business partner, Sam Drazin, first transferred to Pierrevillage Inc. (“Pierrevillage”), a company controlled by Theodore, the shares they held in Immobilier DQ inc. (“DQ”).

In accordance with Theodore’s instructions, those shares were then transferred in equal parts to Devraker and to 4528395 Canada Inc. (“452”), a company controlled by Theodore’s son-in-law John Waxlax. Neither Devraker nor 452 paid anything for those shares, and the trial judge determined the value of those obtained by Devraker at over $104,000 on the transfer date.

That finding was supported by the expert report produced by the respondents, [34] as was the conclusion that the nature of the said operations was not in any way affected by an advance of $285,000 made by Ian to DQ. [35] Further, as stated earlier, Theodore carried out those transactions to make good on his intention of gifting part of his real estate portfolio to both Ian and his son-in-law. [ 40 ] Although the judge described that transaction as an indirect gift, and this Court must show deference to that conclusion, [36] one might wonder whether that was the right characterization. lt could well be seen as an apparent gift, even though it was made through an intermediary (Pierrevillage) acting as a mandatary.

There is no need to discuss this further, however, ; even if the judge erred on this point, his error would be of no consequence, because in all likelihood the gift was a valid one [37] and could be revoked on account of ingratitude. [ 41 ] The other transactions consisted of a series of operations by which Devraker and the appellant 7549881 Canada Inc. (“754”), a company of which Ian is a joint shareholder, were issued shares of various companies in exchange for financial contributions made almost entirely by Quintcap; once again, this was done in accordance with Theodore’s instructions.

Those transactions resulted in Devraker and 754 holding shares worth over $275,000 in exchange for contributions of negligible amounts: for example, in the case of one of the companies concerned, Devraker received shares worth $135,950 in exchange for a payment of $25. [38] These facts, combined with the fact that the transactions were aimed at making good on Theodore’s intention of giving Ian a gift of part of his real estate portfolio, [39] were more than enough to convince the judge that these transactions amounted to indirect gifts. 2.

Revocation of the gifts on account of ingratitude [ 42 ] The appellants argued that, even if the said transactions could properly be described as gifts, the judge made several reviewable errors in concluding that they should be revoked on account of ingratitude. (

i) Ian’s behaviour [ 43 ] First, the appellants allege that the judge made a serious error when he described Ian’s behaviour as “seriously reprehensible/ gravement répréhensible ” within the meaning of

article 1836 C.C.Q. That is not so. The judge found, on the evidence, that Ian had [ translation ] “deliberately intended to harm the [respondents] by creating confusion among Quintcap’s clients, suppliers and contractors, by appropriating Quintcap’s projects in order to promote his own business, by attempting to divert some of Quintcap’s business to his own advantage and by discrediting Theodore in front of one of his main partners, Louis Drazin, the whole with the goal of promoting his own interests in the startup of his new enterprise in a competitive market.” [40] The judge could certainly deduce from those

facts that Ian had behaved in a seriously reprehensible way as defined by the case law. [41] (ii) The true donee [ 44 ] The appellants went on to argue that the judge had committed a palpable and overriding error when he concluded that Ian was the true donee in all of the disputed share transfer transactions. They believed the evidence clearly showed instead that Devraker and 754 were the donees, alleging that there was nothing in the evidence indicating that either company had been party to the faults committed by Ian.

Further, they alleged that there was no reason to disregard the legal personalities of Ian and the two companies. [ 45 ] The appellants’ argument ignores two key points in the judgment under appeal. The first is the finding of fact that Theodore intended to make Ian the ultimate beneficiary of the disputed share transfers. That finding is apparent from several excerpts from the judgment [42] and was clearly supported by the evidence in the file.

The second conclusion — a mixed question of fact and law — is that Devraker and 754 held all the shares in question on Ian’s behalf, as appears from the following excerpts from the judgment: [43] [ translation ] [317] All of those facts show unambiguisly that the shares transferred to Ian and Waxlax were indirect gifts from Theodore (art. 1811 C.C.Q.). In the case of DQ, Theodore and Drazin first agreed to dilute their stakes to liberate 20% of the share capital, which was then divided equally between Ian and Waxlax, via their holding companies, using Pierrevillage as the intermediary.

In the other companies it was Quintcap that issued shares to Ian and Waxlax through those companies, in the same way. [350] Ian’s behaviour was serious and highly reprehensible.

It fully warranted revocation of the gifts of shares that the plaintiffs had agreed to using Devraker as an intermediary . [361] The shares had been given to Ian through Devraker while he was working for Quintcap.The work he did there included, among other things, the property development of the companies in which he received the shares. [Our emphasis] The judge could, of course, have expressed himself more clearly on the legal relationship between Ian and his two companies in the context of the share transfer transactions.

His lack of precision, however, is not in itself an error that attracts review by this Court. Rather, we must ask whether the judge made a palpable error when he found that Devraker and 724 held the transferred shares on Ian’s behalf. In my opinion, he did not.

In the particular circumstances of this case, such a conclusion is reasonable, based on the existence of mandator-mandatary relationship between Ian and the two companies, or on counter letters, [44] or even on stipulations for another. [45] This finding is sufficient to conclude that the appellants’ arguments with regard to the identity of the donee of the transferred shares should be dismissed. (iii) Is a legal person entitled to obtain revocation of a gift on account of ingratitude? [ 46 ] The appellants’ third argument concerning the revocation of the gifts is that the judge had committed a palpable error when he took for granted that a legal person could invoke the second paragraph of

article 1836 C.C.Q . More precisely, they contend that, since a legal person has neither feelings nor emotions, it can never be the victim of ingratitude within the meaning of the second paragraph of

article 1836 C.C.Q. That means that the gifts made by Quintcap through a number of companies [46] could not be revoked on account of ingratitude. [ 47 ] The appellants did not submit any authorities to directly support their argument. Rather, they relied on analogies with other legal situations, such as the fact that legal persons do not enjoy the protection of

section 12 of the Canadian Charter of Rights and Freedoms [47] against cruel and unusual treatment or punishment. [ 48 ] In my opinion, the appellant’s argument is unfounded. Its main weakness is that it ignores the fact that, in matters of ingratitude, the analysis must focus on the nature and gravity of the donee’s behaviour rather than on its repercussions for the donor. That can be understood from the wording of the second paragraph of

article 1836 C.C.Q., in which the legislator states: “[i]ngratitude is a ground of revocation where the donee has behaved in a seriously reprehensible manner towards the donor, having regard to the nature of the gift, the faculties of the parties and the circumstances / [i]l y a cause d’ingratitude lorsque le donataire a eu envers le donateur un comportement gravement répréhensible, eu égard à la nature de la donation, aux facultés des parties et aux circonstances .” Further, focusing the analysis on the nature and gravity of the donee’s behaviour is in line with the purpose of revocation on account of ingratitude, which, as Mignault pointed out, amounts quite simply to a [ translation ] “punishment inflicted on the donee.” [48] [ 49 ] I should add that the appellants’ argument is hard to reconcile with the fact that, since the Civil Code of Québec came into effect, legal persons have, as a general rule, the same capacity as natural persons for exercising all of their rights, [49] and that the legislator has not limited their capacity to make gifts. [50] This leads to the inference that the legislator wanted to give natural and legal persons equal treatment in matters concerning gifts.

Under the circumstances, it would be incongruous to limit the application of the second paragraph of

article 1836 C.C.Q . based on the status — natural person or legal person — of the donor. (iv) The ground based on Sam Drazin’s participation in the transfer of the DQ shares [ 50 ] It is appropriate to begin by briefly addressing one last ground that the appellants raised for the first time during the appeal hearing. In their view, the judge, in analyzing the transactions related to the transfer of shares from the DQ company, failed to consider the fact that Sam Drazin had participated as a co-donor. They allege that Theodore’s claim is therefore inadmissible — or at very least partially unfounded — because his co-donor never sought the revocation of the gift in question.

[ 51 ] As I stated earlier — and as the respondents acknowledge in their brief [51] — Mr. Drazin did in fact participate in those transactions. More precisely, Theodore and Mr. Drazin each transferred 10% of the shares they held in DQ at the time to Pierrevillage. However, the appellants’ argument disregards Theodore’s explanations at the hearing on the merits, according to which he was the one who was responsible for financing the entire transaction. [52] In other words, even though Mr.

Drazin participated in the transaction by transferring 10% of his DQ shares, the evidence in the record leads to the conclusion that his loss was eventually assumed by Theodore, who was therefore in reality the only person impoverished by this gratuitous share transfer. In the circumstances, it was reasonable for the judge to conclude that Theodore was the sole donor.

Restitution of prestations [ 52 ] The last disputed question with regard to the shares transferred between 2010 and 2013 was raised by the respondents’ incidental appeal: Did the trial judge commit a reviewable error when he ordered the respondents to pay Ian back an amount corresponding to the increased value the shares had acquired by January 30, 2015, the date when the business relationship between Theodore and Ian broke down? [ 53 ] We should start the analysis by citing the relevant excerpts from the trial judgment: [ translation ] [361] The shares were given to Ian through Devraker while he was working at Quintcap.The work he did there included property development of the companies in which he received the shares. [362] He stopped working for Quintcap on January 30, 2015.

His reprehensible behaviour that led to the revocation of the gifts also became apparent as of that date. [363] The plaintiffs would obtain an undue advantage were the Court to order the revocation of the gifts of shares without factoring in the increased value of those shares during the time Ian was still working at Quintcap and therebycontributing to the success of the companies in question. [364] Conversely, Ian would obtain an undue advantage were the Court to order restitution of the prestations taking the current value of those shares into account even though he has added nothing to their value since January 30, 2015. [365] The prestations will therefore be restituted as follows: 1. the defendants will return to the plaintiffs the shares received as gifts in the impleaded companies between 2010 and 2013; 2. the plaintiffs will pay the defendants the increased value of the said shares between the date the gifts were made and January 30, 2015 , with their initial value being the one established by expert Michelin in his report (P-17-73); 3.

DQ will return the advance of $285,000 granted by the defendants. [366] After consulting the parties, the Court will appoint an expert to determine the increased value of the shares as described above. [Our emphasis] [ 54 ] These excerpts make it clear that the judge exercised the power conferred on him by the second paragraph of

article 1699 C.C.Q. to modify the scope or modalities of the restitution of the shares to avoid giving the respondents an undue advantage. It is also clear that the judge felt the respondents would obtain an undue advantage if they received the value of the shares between the dates of the gifts and January 30, 2015, which had increased due to Ian’s contribution to the success of Theodore’s companies during that time.

Lastly, the excerpts make it clear that the judge did not know the value of the shares as at January 30, 2015; that explains why he decided to give an expert the mission of determining the said value. [ 55 ] The appellants were right to emphasize that the Court must show deference to the judge’s conclusion that the full restitution of the shares would accord the respondents an undue advantage within the meaning of the second paragraph of

article 1699 C.C.Q . [53] Deference is particularly appropriate since, as the Supreme Court pointed out in Octane Stratégie , the provision gives trial judges a discretionary and equitable power “that must be exercised with a view to achieving a balance between the parties.” [54] [ 56 ] Notwithstanding the deference appellate courts must show, and with all due respect for the trial judge, I believe he committed an error that warrants the intervention of this Court exercising the power conferred on it by the second paragraph of

article 1699 C.C.Q. [ 57 ] The trial judge’s reasons are implicitly based on two basic premises: first, that Ian’s contribution to the success of Theodore’s companies during the relevant time period was the only reason the shares increased in value during that time period; and second, that his remuneration from Quintcap during that time was insufficient because it did not properly reflect the impact of his contribution on the value of the shares. [ 58 ] However, neither of those premises is supported by the evidence. [ 59 ] With regard to the first premise, the evidence certainly allowed the judge to conclude that Ian had made a substantial contribution to the success of Theodore’s companies between the date the gifts were made and January 30, 2015.

But the appellants adduced no evidence showing that Ian’s contribution was the only reason the shares increased in value during that time. All indications are that the judge took this to be an established fact, although he should not have done so because the exceptional power set out in the second paragraph of

article 1699 C.C.Q . can be exercised only when there is conclusive evidence of an undue advantage. [55]

[ 60 ] With regard to the second premise, the problem lies in the fact that the judge did not know the value of the shares on January 30, 2015, so it was impossible for him to quantify, even approximately, how much their value had increased during the relevant time period. How then could he conclude that there was a significant imbalance between the remuneration Ian received and the increased value of the shares at the time Ian’s business relationship with Theodore broke down?

In my opinion the judge committed a reviewable error by taking the existence of such an imbalance for granted. [ 61 ] In short, I believe that the incidental appeal was well founded and that the judge’s conclusion ordering the respondents to repay Ian an amount corresponding to the increased value the shares had acquired on January 30, 2015, must be overturned. E.

The oppression remedy ground [ 62 ] The trial judge summarily dismissed the oppression remedy sought by Ian and Devraker after concluding, among other things, that their behaviour showed that their claims were unfounded and that they had been [ translation ] “guided more by the desire to harm the respondents than by any desire to settle the difficulties arising out of their status as shareholders of the companies in question.” [56] [ 63 ] It may be asked whether Ian and Devraker could make that claim without obtainin prior permission.

Although the judge did not explicitly conclude that they had acted abusively, his finding that they intended to harm Theodore and Quintcap does echo the second paragraph of

article 51 C.C.P., which states that abuse of procedure can consist in “in a use of procedure that … causes prejudice to another person / l’utilisation de la procédure de manière […] à nuire à autru i”. [ 64 ] Regardless, although they could appeal as of right, Ian and Devraker did not even try to show how the judge committed a reviewable error in concluding that their claim was unfounded and was more a reflection of their desire to harm the respondents. In the circumstances, I believe this argument to be completely unfounded. III.

Conclusion [ 65 ] In sum, I would allow the principal appeal for the sole purpose of limiting the ambit of the injunction to the entirety of the Communauté métropolitaine de Montréal. As for the incidental appeal, I would allow it. FRÉDÉRIC BACHAND, J.A.