2016 QCCA 1877, 2016 QCCA 1877

Schwartz Levitsky Feldman, l.l.p. c. Werbin 2016 QCCA 1877 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-025288-150 (500-17-036204-074) MINUTES OF THE HEARING DATE: November 18, 2016 CORAM: THE HONOURABLE MARTIN VAUCLAIR, J.A. GENEVIÈVE MARCOTTE, J.A. MARIE-JOSÉE HOGUE, J.A. APPELLANT COUNSEL SCHWARTZ LEVITSKY FELDMAN LLP Mtre ANDRÉ LEGRAND Mtre DOMINIC DUPOY (Norton Rose Fulbright Canada S.E.N.C.R.L.,s.r.l.) RESPONDENTS COUNSEL MORRIS WERBIN KENROB OFFICE SERVICES LTD Mtre ROBERT PANCER (Phillips Friedman Kotler s.e.n.c.r.l.)

On appeal from a judgment rendered on April 24, 2015 by the Honourable Justice William Fraiberg of the Superior Court, District of Montreal. DESCRIPTION : Claim for loss of profit - Sale agreement Clerk: Mihary Andrianaivo Courtroom: Pierre-Basile-Mignault HEARING 8:45 Continuation of the hearing of November 17, 2016. The parties have been excused from being present. BY THE COURT: Judgment – See page 3. End of the hearing.

Mihary Andrianaivo Clerk BY THE COURT JUDGMENT [ 1 ] While the Appellant Schwartz Levitsky Feldman (“SLF”) has not appealed the conclusions of the Superior Court judgment dismissing its claim in damages and granting in part Respondent Kenrob’s claim for unpaid counsulting fees, it is asking this Court to set aside the conclusions that declared its action improper and ordered it to pay to the Respondents an amount of $182,000 on account of their extra-judicial fees, as well as punitive damages of 15,000$. [ 2 ] According to the facts outlined in the judgment, Appellant claimed $1,922,563.90 from Respondent Werbin, a sole practitioner whose practice it bought.

As per the agreement reached with Werbin, the latter joined SLF as a consultant and continued providing services to his clients. The relationship between SLF and Werbin became difficult and did not develop as the parties had hoped it would. After four years, Werbin left and joined another firm. A good portion of his clients did not remain with SLF. Most followed him. [ 3 ] SLF argued that Respondent Werbin did not abide by the “best efforts” clause in the consulting agreement and did almost nothing to encourage the clients to remain with SLF.

It therefore claimed from him what it considered to be the loss of the profits it would have made over 20 years, nearly $2 million. [ 4 ] The proceedings were long and difficult. The claim filed in April 2007 was only heard in October and November 2015. Collaboration between the parties was apparently non-existent. Justice Gascon, then at the Superior Court, was called upon, in the course

of these proceedings, to deal with a dispute concerning documents. He rendered a judgment on December 16, 2011 in which he commented SLF’s refusal to admit documents and expressed the view that SLF’s position was excessive and unreasonable. [ 5 ] At about that time, SLF initiated proceedings against Respondents before the Court of Quebec claiming an amount of $24,522.22 said to represent professional fees collected by Respondents on its behalf.

The Court of Quebec, at Respondents’ request, eventually suspended these proceedings and SLF finally desisted. [ 6 ] The trial in itself lasted 12 full days and the matter was taken under advisement. [ 7 ] In rendering his decision to declare SLF’s action improper and to condemn it to pay damages to Respondents, the judge took into consideration a range of factors and concluded that SLF had shown temerity, as well as a degree of bad faith in bringing the proceedings. [ 8 ] He reviewed the evolution of the proceedings, the position taken by SLF and pointed out that in addition to knowing that Werbin’s obligation was only one of means, SLF had no basis in evidence to claim that it was deprived of a profit stream that would have lasted for twenty years at the levels of growth and attrition rate proposed by its expert. [ 9 ] He concluded that the claim was not only unfounded but exorbitant to the point of being presumptive of bad faith. [ 10 ] While it has not appealed the first portion of the judgment, SLF claims that the judge’s conclusion is based on various erroneous assumptions stemming from errors of law that he made. [ 11 ] More particularly, SLF asserts that the trial judge erred in law in concluding that the action was improper.

It argues that, on the contrary, its claim was brought in good faith, based on reasonable grounds, both in fact and in law and that the judge erred in law in the

interpretation of the obligations of the parties, namely in light of the “best efforts” clause in their contractual agreement. [ 12 ] The errors alleged are not errors of law. The issues raised are at best issues of mixed fact and law and, without the benefit of the transcripts which were not filed into the record, this Court is not in a position to express any opinion regarding same [1] . [ 13 ] That being said, the decision to declare the action improper was a discretionary one. It was made after a full consideration of both the conduct of the parties and the evidence offered by them at trial.

SLF has not shown that this discretion was exercised unreasonably or in a non-judicial manner that would justify the Court’s intervention. FOR THESE REASONS, THE COURT: [ 14 ] DISMISSES the appeal, with legal costs. MARTIN VAUCLAIR, J.A. GENEVIÈVE MARCOTTE, J.A. MARIE-JOSÉE HOGUE, J.A.