2016 QCCA 617, 2016 QCCA 617

Kucer c. 8237514 Canada inc. (Integral Security Systems) 2016 QCCA 617 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-026004-168 (500-17-089471-158) MINUTES OF THE HEARING DATE: April 11, 2016 THE HONOURABLE marie-france bich, J.A. PETITIONERS ATTORNEYS STEPHEN KUCER HARLAND TECH GROUP INC. Mtre REEVIN PEARL (Pearl & Associé

s) Mtre SOPHIE M. CARDINAL Mtre SONIA KEEGAN (Cardinal Léonard Denis, avocats) RESPONDENT ATTORNEY 8237514 CANADA INC. f.a.s.r.s. IntegraI Security Systems Mtre MARISSA FRISHMAN ( Levine Frishman Lancry ) IMPLEADED PARTY ATTORNEY 9136665 CANADA INC. f.a.s.r.s. Impax Media Mtre REEVIN PEARL (Pearl & Associé

s) DESCRIPTION: Application for leave to appeal from a judgment rendered in the course of a proceeding on March 22, 2016 by the Honourable Sylviane Borenstein of the Superior Court, District of Montreal. (Article 31 C.C.P. ) Clerk: Mihary Andrianaivo Courtroom: RC-18 HEARING 11:26 Start of the hearing. Submissions by Mtre Pearl. 11:54 Submissions by Mtre Frishman. 12:24 Rebuttal by Mtre Pearl. 12:26 Discussions between the Judge and the parties. 12:35 Recess. 12:41 Resumption of the hearing. 12:42 Recess. 13:57 Resumption of the hearing. BY THE JUDGE : Judgment – see page 3. 14:03 End of the hearing.

Mihary Andrianaivo Clerk BY THE JUDGE JUDGMENT [ 1 ] The petitioners seek leave to appeal from the judgment rendered on March 22, 2016 by the Superior Court, District of Montreal (the Honourable Madam Justice Sylviane Borenstein), ordering the following: [33] FOR THESE REASONS, THE COURT: [34] ORDERS Respondents:

a) to immediately cease doing business directly or indirectly with any person, firm or corporation who is a client or customer of Petitioner listed on Exhibit P-11, as well as with Pasquier Grocery Store, as regards lane gates monitors;

b) to immediately cease soliciting, interfering with or enticing away from Petitioner any person employed by Petitioner; [35] THE WHOLE to remain in force until such final judgment is rendered on the present motion to institute proceedings for the issuance of a permanent injunction; [36] RELIEVES Petitioner from furnishing security; [37] WAIVES service of the present order to the Respondents; [38] THE WHOLE with costs against the Respondents. [ 2 ] In the event that leave is granted, the petitioners also seek to suspend the effect of this interlocutory injunction during the appeal. Leave to appeal

[ 3 ] The dispute between the parties relates to a non-competition clause contained in a shareholders' agreement signed, amongst others, by petitioner Kucer. [ 4 ] The petitioners raise the following grounds of appeal: - the non-competition clause is invalid as it contains no territorial limitation and does not sufficiently define the kind of activities that the petitioners are forbidden to engage in; - the non-competition is also invalid because its duration is imprecise; [1] - despite appearances, petitioner Kucer is not a shareholder of the respondent and never was, thus he is not bound by the non- competition clause; - the petitioners did not infringe the clause as the products that they are selling do not compete with those of the respondent. [ 5 ] According to the petitioners, the judge committed an error of law in not examining the validity of a clause that is clearly null and unreasonable.

She also committed a palpable and overriding error of fact in deciding that petitioner Kucer is a shareholder of the respondent and thus bound by the clause, and in deciding that petitioners do actually compete with the respondent. [ 6 ] Considering that the first ground of appeal, insofar as it relates to the absence of a territorial limitation in the non-competition clause, raises an arguable question, prima facie , and deserves to be submitted to the Court, leave to appeal will be granted. [ 7 ] In concluding so, I am not saying that the other grounds are futile or ill-founded (except the one that relates to the duration of the clause), but they appear more fragile and the explanations given in the motion and at the hearing in support thereof were weak (especially in light of the judgment of the Supreme Court in Payette v.

Guay ) [2] . An examination of the file by the Court on the merits may however show otherwise. Stay of the injunction [ 8 ] There is no reason to stay the interlocutory injunction during the appeal (art. 514 C.C.P. ). It is true that one of the grounds of appeal appears serious (hence leave to appeal), but the merit of the other grounds is unclear. In addition, considering the circumstances of the case, it is impossible to say that the judge committed a flagrant or patent error in deciding as she did.

Her findings of fact are prima facie sound and the petitioners have not demonstrated that they will suffer an irreparable prejudice if the interlocutory injunction remains in force during the appeal (especially in view of the date on which the appeal will be heard). On the whole, the balance of inconvenience favours the respondent. * * [ 9 ] Considering the 3 rd paragraph of art. 31 C.C.P. , I do not believe that it is necessary to order the continuance of the proceedings before the Superior Court, such continuance being the rule now.

In any event, the parties do not ask that these proceedings be suspended during the appeal and, on the contrary, they both agree to pursue their case diligently. * * [ 10 ] The appeal will be managed according to art. 367 C.C.P. and will proceed by memorandum pursuant to

article 37 of the Civil Practice Regulation which reads as follows: 37. Leave to Appeal for a Judgment in the Course of a Proceeding (art. 31). A judge who grants leave to appeal from a judgment rendered in the course of proceedings shall establish the date and duration of hearing and establish a timetable for the filing of memoranda unless, for such purpose, the judge refers the matter to the Clerk (art. 368 & 374) .

For the FOREGOING reasons, the undersigned: [ 11 ] GRANTS leave to appeal; [ 12 ] DISMISSES the petitioner's request for a stay of the interlocutory injunction; [ 13 ] PLACES the case on the roll of August 4, 2016, in room Pierre-Basile-Mignault , for a 60 minutes hearing (30 minutes for the appellants/30 minutes for the respondent); [ 14 ] ORDERS the appellants, after having notified a copy upon the respondent, to file in the office of the Court, no later than June 3, 2016, five copies of a written argument not exceeding 25 pages.

All documents necessary for the adjudication of the appeal (judgment under appeal, pleadings, excerpts from depositions, etc.) shall be attached; [ 15 ] ORDERS the respondent, after having notified a copy upon the appellants, to file in the office of the Court, no later than June 30, 2016 , five copies of a written argument not exceeding 25 pages and of its supplementary documents; [ 16 ] REMINDS the parties of art. 376 C.C.P. and art. 55 of the Civil Practice Regulation , which read as follows: 376. The appeal lapses if the appellant does not file a brief or a memorandum within the time limit for filing.

The appellate clerk issues a certificate of lapse of appeal, unless an appellate judge is seized of an application for an extension. A respondent or any other party that does not make a timely filing of its brief or memorandum is precluded from filing and cannot be heard at the hearing unless so authorized by the Court of Appeal.

55. Format. The memorandum shall include a title page, a table of contents and be paginated consecutively. The provisions relating to briefs (including the final requirements) apply to memoranda with the necessary adaptations. [ 17 ] THE WHOLE , with legal costs to follow. marie-france bich, J.A.