2021 QCCA 1566, 2021 QCCA 1566

Unofficial English Translation of the Judgment of the Court Besnard c. Goupil 2021 QCCA 1566 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL Nos.: 500-09-029184-207 , 500-09-029185-204 ( 500-11-054959-180 ) MINUTES OF HEARING DATE: October 22, 2021 CORAM: THE HONOURABLE ROBERT M. MAINVILLE, J.A. JOCELYN F. RANCOURT, J.A. SOPHIE LAVALLÉE, J.A. No.: 500-09-029184-207 APPELLANTS COUNSEL ALEXANDRE BESNARD Patrick Hétu Mtre SÉBASTIEN SÉNÉCHAL ( DHC Avocats ) Absent RESPONDENTS COUNSEL Pierre-Jacques goupil 9269-5311 Québec inc.

Mtre JEAN-FRANÇOIS TOWNER Mtre VINCENT PICHÉ ( Jeansonne, Avocats ) Absent IMPLEADED PARTIES 9222-9053 Québec inc. PLANNINC inc. sun woo (antonio) park a5 management inc. 8978441 canada inc. ABSENT AND NOT REPRESENTED No.: 500-09-029185-204 APPELLANT COUNSEL

9323-7063 Québec inc. Mtre YVES ROBILLARD ( Miller Thomson ) Absent RESPONDENTS COUNSEL Pierre-Jacques goupil 9269-5311 Québec inc. Mtre JEAN-FRANÇOIS TOWNER Mtre VINCENT PICHÉ ( Jeansonne, Avocats ) Absent IMPLEADED PARTIES 9222-9053 Québec inc. PLANNINC inc. sun woo (antonio) park a5 management inc. 8978441 canada inc. ABSENT AND NOT REPRESENTED 500-09-029184-207 and 500-09-029185-204 On appeal from a judgment rendered on September 28, 2020, by the Superior Court, District of Montreal (the Honourable David R. Collier).

NATURE OF APPEAL: 500-09-029184-207 Judgment in the course of a proceeding – oppression remedy – splitting of proceeding – status of [ translation ] “applicant” for the purposes of s. 439 of the Business Corporations Act . 500-09-029185-204 Judgment in the course of a proceeding – splitting of proceedings – status of applicants for the purposes of s. 439 of the Business Corporations Act . Court Clerk: René Gutknecht Courtroom: Antonio-Lamer HEARING 9:42 a.m. Start of hearing. Resumption of hearing from October 18, 2021. The parties were dispensed from being present at the Court. 9:43 a.m.

BY THE COURT: Judgment – see page 4. 9:44 a.m. End of the hearing.

René Gutknecht, Clerk at the hearing JUDGMENT [ 1 ] The appellants Alexandre Besnard (“ Besnard ”), Patrick Hétu (“ Hétu ”), and 9323-7063 Québec inc. (“ 9323 ”) appeal from a judgment rendered on September 28, 2020, by the Honourable David R.

Collier of the Commercial Division of the Superior Court, District of Montreal, granting the oppression remedy brought by the respondents Pierre-Jacques Goupil (“ Goupil ”) and his management company, 9269-5311 Québec inc. (“ 9269 ”). [1] [ 2 ] In his oppression remedy proceeding under ss. 439 and 450 et seq . of the Business Corporations Act ( “ BCA ”), [2] Goupil alleged that there was a verbal contract between his management company 9269 and 9323, arising from Goupil’s significant contribution to the design and development of the new food court located in the Place Ville-Marie (“ PVM ”) shopping centre.

According to Goupil , the verbal agreement guaranteed him 15% of the share capital of 9323.

The appellants reneged on this agreement and acted in an oppressive manner towards him. [ 3 ] In their first ground of appeal , the appellants object to the judge having recognized the existence of a verbal agreement between the parties. [ 4 ] The Court is of the opinion that the judge did not err in noting the existence of a verbal agreement between the appellants, Besnard and Hétu, and the respondent Goupil, according to which 15% of the share capital of 9323 was issued to 9269. [ 5 ] The judge’s conclusion relied on the abundant evidence adduced at trial through testimony, admissions, writings, and circumstantial evidence.

He accepted the testimony of the impleaded party Antonio Park (“ Park ”) that he required 30% of the share capital of 9323, without, however, concerning himself with the distribution of the remaining 70% between Goupil, Besnard, and Hétu.

He also preferred the testimony of Goupil to that of the respondents and the impleaded party, insisting on the fact that (1) their agreement from the beginning of their collaboration in 2015 was that they would be co-shareholders in any common project; (2) the “hot seat” meeting in the summer of 2017, during which the share ownership of 9323 was agreed upon; (3) the confirmation of the share ownership agreement on February 6, 2018; and, (4) the actions of Besnard and Hétu after that date. [ 6 ] As is commonly known, assessing the credibility of witnesses is the prerogative of the trial judge, to whom great deference is owed.

Failing proof of the existence of a palpable and overriding error, the role of the Court is not to reassess the evidence adduced at trial. [3] [ 7 ] The appellants also argue that the judge erred in disregarding the principle that a contractual obligation exists only if its object is a determinate or determinable prestation. The Court is of the opinion that the judge was correct in recognizing Goupil’s contribution in services (“sweat equity”), which the appellants did not challenge.

He certainly could have seen in that contribution, at the very least, a determinable prestation within the meaning of art. 1373 CCQ. [ 8 ] The appellants also argue that the judge should have followed the corporate law rules with respect to issuing shares. Share subscription requires, according to them, a determinate monetary consideration. That being the case, the judge could not, as he did, be content with evidence of consideration in services (“sweat equity”). [ 9 ] The Court does not agree.

As author Paul Martel notes [ translation ] “acceptance of the subscription need not be formal to bind the parties” and [ translation ] “[a]ny expression of intent to accept the subscription is sufficient, provided that it can be legally proven”. [4] The judge concluded that the parties entered into a verbal contract within the meaning of the civil law.

In light of the documentary evidence and past practices adopted by the parties to the dispute, who functioned based on verbal agreements, the judge was justified in coming to that conclusion. [ 10 ] As a second ground of appeal , the appellants argue that, if an agreement did exist between the parties, it was tantamount to a bilateral promise to contract rather than an actual contract. This ground of appeal must also fail.

The judge found that the four partners had verbally established the contribution of each to the PVM food court project and the division of the shares during the “hot seat” meeting held in late summer 2017. [5] There was, therefore, as of that time, an agreement according to which 9269 held 15% of the share capital of 9323 in consideration for the services rendered by Goupil. [ 11 ] In their third ground of appeal , the appellants object to the judge having considered Goupil and 9269 to be applicants under s. 439 B.C.A .

As the beneficiaries of a promise to contract, Goupil and 9269 could not qualify as [ translation ] “applicants”. [ 12 ] As just stated, that premise based on a promise to contract is wrong since the evidence of an agreement between the parties was established and accepted by the judge. [ 13 ] In addition, the judge was right to add at paragraph 59 of his judgment that Goupil was in [ translation ] “a situation similar to that of the applicants whose right to bring a claim of oppression has been recognized by Quebec courts on many occasions”. [6]

[ 14 ] The appellants’ final ground of appeal can be presented in several ways. [ 15 ] They assert that ordering the repurchase of the shares was not the right remedy in this case; the issuance of shares would have sufficed. Given the wording of s. 451 B.C.A . , the discretion bestowed on the judge, [7] and the parties’ permanently broken relationship of trust, the judge did not err in considering the repurchase of the shares appropriate. [ 16 ] They next address the issue of the judge’s order to appoint a joint expert to assess the fair value of the shares.

It is true that, here, the judge’s order is not very clear.

There appears to be some confusion in the conclusion ordering the parties to [ translation ] “jointly” appoint an expert under 236 CCP, whereas that statutory provision concerns the expert appointed by the court. [8] It is appropriate in the circumstances to strike the conclusions at paragraphs 70 to 73 of the judgment under appeal and to replace them with a conclusion providing that the parties will have 30 days from the rendering of the appeal judgment to agree on the selection of a joint expert, failing which, the parties will each select their own expert to prepare a report within 120 days of the appeal judgment, in order to establish the fair value of the shares of 9323 as at the date of the Superior Court judgment. [ 17 ] Next, the appellants alleged that the judge did not provide sufficient reasons for his decision to find the directors, Besnard and Hétu, personally liable.

They argue that the judge disregarded the principles established by the Supreme Court in Wilson v. Alharayeri [9] to conclude that they were personally liable. This assertion is inaccurate. At paragraph 60 of the judgment, the judge applies the two- pronged test described in that judgment. He found that the abuse was attributable to Besnard and Hétu based on their actions and inaction as directors of 9323.

In addition, he concluded, quite appropriately, that they personally benefited from excluding Goupil from the share ownership, referring in all likelihood to the resulting financial advantage and increased control of 9323. [10] [ 18 ] Last, during the hearing, the appellants also argued that the order to purchase the shares, describe at paragraph 69 of the judgment under appeal, is not consistent with s. 451(6) of the B.C.A . since the order, as written, could have as an effect the purchase of shares by 9323 by that same corporation, which would be contrary to s. 86 B.C.A . prohibiting a corporation from holding its own shares.

There is no contradiction between the two statutory provisions since, when a company purchases its own shares, these shares are automatically cancelled, which means the rule set out under s. 86 of the B.C.A. is followed. [11] FOR THESE REASONS, THE COURT: [ 19 ] GRANTS the appeals in part only with judicial costs in favour of the respondents; [ 20 ] REVERSES in part the trial judgment; [ 21 ] AMENDS paragraph 69 of the judgment under appeal so that it reads as follows: ORDERS the purchase by the respondents, solidarily, of the shares that 9269-5311 Québec Inc. holds in the share capital of 9323-7063 Québec Inc., at their [ translation ] “fair value” established as of the date of this judgment; [ 22 ] STRIKES the conclusions at paragraphs 70 to 73 of the judgment under appeal to replace them by the following: [70] ORDERS the parties to agree on the selection of a joint expert within 30 days of the appeal judgment, failing which, the parties will each select their own expert to prepare a report, within 120 days of the appeal judgment, in order to establish the fair value of the shares of 9323 as at the date of the Superior Court judgment; [71] ORDERS the respondents to give the expert complete access to all the documentation concerning 9323-7063 Québec Inc. required to perform his or her mandate; ROBERT M.

MAINVILLE, J.A. JOCELYN F. RANCOURT, J.A. SOPHIE LAVALLÉE, J.A.