2013 QCCA 1803, 2013 QCCA 1803

Remer c. Remer 2013 QCCA 1803 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-021417-118 (500-17-024555-057) DATE: OCTOBER 22, 2013 CORAM: THE HONOURABLE JEAN BOUCHARD, J.A. CLÉMENT GASCON, J.A. JACQUES J. LEVESQUE, J.A. RUTH REMER ESTHER REMER APPELLANTS - Plaintiffs v. AARON REMER PEARL REMER BRATIN MILAN BRATIN APERDEV INVESTMENTS INC. and IRENE REMER RONALD WEXELMAN MANUEL DALFEN (in their capacities as executors of the Estate of the late Joseph Remer) RESPONDENTS - Defendants and REMER HOLDINGS INC.

IMPLEADED PARTY – Impleaded party JUDGMENT [ 1 ] THE COURT: On the appeal from the judgment of the Superior Court, District of Montreal (the Honourable Madam Justice Claude Dallaire), rendered on January 12, 2011, that dismissed with costs the appellants' claim for injunction, damages and derivative action, except for a condemnation against one of the respondents, Milan Bratin, in the amount of $2,572,040.41, with interest and costs; [ 2 ] For the reasons of Gascon, J.A., with which Bouchard and Levesque, JJ.A. agree: [ 3 ] DISMISSES the appeal, with costs against the appellants. JEAN BOUCHARD, J.A.

CLÉMENT GASCON, J.A. JACQUES J. LEVESQUE, J.A. Mtre K. Scott McLean Mtre Catherine Pilon DENTONS CANADA Mtre Brenda Lerman For the appellants

Mtre Gerald N. Apostolatos Mtre Stefan Chripounoff Mtre Jessica Syms LANGLOIS KRONSTRÔM DESJARDINS For the respondents Date of hearing: April 29, 2013 REASONS OF GASCON, J.A. [ 4 ] Remer Holdings Inc. (RHI), the impleaded party, is a very successful privately held family corporation. It is mainly involved in the commercial real estate business. Two brothers, Elo and Joe Remer, created it in November 1958. Both are now deceased: Elo, since November 1994; Joe, since September 1986. [ 5 ] As it sometimes unfortunately occurs, the transition of the business to their respective children has not been easy.

Many disputes have arisen between the families of the two brothers.

This case is one illustration. [ 6 ] In their claim for injunction, damages and derivative action filed in February 2005, the appellants, Ruth and Esther Remer, Elo's daughters, have sued the respondents, their cousins Aaron Remer and Pearl Remer Bratin, Joe's son and daughter, Milan Bratin, Pearl's husband, as well as Aperdev Investments Inc., a company owned by Aaron and Pearl, and Irene Remer, Ronald Wexelman and Manuel Dalfen, in their capacities as executors of Joe's Estate. [ 7 ] The core basis of Ruth and Esther's claim was that Elo and Joe had always agreed to share equally in all of their business ventures.

As a result, the appellants alleged fraud and breaches of fiduciary duty by the individual respondents with respect to specific diversions of funds and business opportunities of RHI. In the end, eleven transactions were attacked. These transactions dated as far back as 1973: eight took place prior to 1987 and all, except one, prior to 2000. The monetary damages the appellants claimed were anything but small. They stood at no less than $33,309,303. [ 8 ] The respondents asserted a myriad of defences to the appellants' claim.

The two main ones focused on the impact of prescription and the existence of a release agreement signed in 1987. They also denied vehemently the 50/50 verbal agreement allegedly entered into between the deceased brothers, as well as the alleged fraud and breaches of fiduciary duty. Finally, they contested the legal basis of most of the claims based on either a lack of interest or evidence, a failure to implead the proper parties or an absence of executory conclusions. [ 9 ] In a lengthy judgment where she was only seized of the liability issue, the trial judge dismissed the appellants' recourse.

She opined that their claim was prescribed for the most part, that a majority of the demands had been released in 1987 in any event, that no evidence supported the alleged verbal agreement between Elo and Joe or the alleged fraud and breaches of fiduciary duty, and that the recourse was improperly launched insofar as the remaining derivative action remedies were concerned. [ 10 ] Save for an amount that Milan acknowledged owing to RHI to the extent of $2,572,040 and that he was condemned to pay with interest and costs, the appellants' recourse was therefore dismissed, with costs. [ 11 ] Ruth and Esther contest this conclusion.

In their appeal, while no longer arguing that their father and uncle agreed to share equally in all of their business ventures, they ask the Court to reverse the trial judge's findings, to still maintain their claim in its entirety and to refer the case back to the Superior Court for adjudication of the value of their damages. [ 12 ] For the reasons that follow, I consider their appeal to be unfounded. In my view, the trial judge rightly concluded that the gist of the claim was prescribed and that most of the transactions attacked were indeed covered by the release agreement of 1987.

She properly concluded as well that no evidence supported any finding of liability for alleged fraud or breaches of fiduciary duty under the circumstances. Finally, she was correct in stating that, for many of the conclusions sought, the so-called derivative proceedings either were improperly launched or lacked essential elements to support any finding of liability. THE CONTEXT [ 13 ] Elo and Joe were born and raised in what was then a

section of Poland that, following the end of World War II, became part of Ukraine. Towards the late 1920s, Elo immigrated to Canada with Bertha Miller, who he later married. After a few years, he convinced his brother to also immigrate to Canada. Joe left Poland in 1938 and settled in Montreal, at the home of Elo, where he lived for fourteen years until he married to Irene Remer. [ 14 ] Upon Joe's arrival in Canada, the brothers became business partners. In the 1950s, they gradually focused their activities in the commercial real estate sector.

In November 1958, they incorporated RHI (then known as Remer Holdings Corporation), which they owned in equal shares. Joe was the president and Elo, the secretary. Their spouses each owned category B shares, and their respective children, Ruth and Esther for Elo, Aaron and Pearl for Joe, 25 ordinary shares each. [ 15 ] Of the two brothers, Joe was the acute businessman. While a hardworking man, Elo was less knowledgeable in business than

his brother. Accordingly, he left most of the management to Joe, notably after the death of his wife Bertha in June 1970 who, contrary to her husband, had been deeply involved in these issues. Throughout the years, the respective spouses and children of the brothers were indeed regularly involved in the business, albeit to a different degree. [ 16 ] Over the years, the brothers developed a large network of corporate entities in the commercial real estate sector and an impressive patrimony. [ 17 ] For instance, in January 1964, Storage Leaseholds Inc. was incorporated.

RHI owned 51% of the shares and Aperdev, around 10% starting in 1984. [ 18 ] In June 1973, Joe incorporated what eventually became Aperdev. He was the president. Besides him, the shareholders were limited to his immediate family, namely his wife and their two children. Although they were well aware of its existence, Elo and his family were never involved in Aperdev. [ 19 ] In February 1975, the brothers incorporated Notre-Dame Industrial Buildings Ltd. (NDI). From 1982 onwards, Aperdev owned about 63% of its shares and RHI, 12%. [ 20 ] In September 1975, Nirvana Management Consultants Ltd. was created.

Aperdev was the majority shareholder. Aaron and Milan Bratin were its directors. Elo's family was not involved in that company either. [ 21 ] In 1977, the brothers put in place a planning and an estate freeze to insure a proper transition of the business to the next generation.

Thus, when Joe died in 1986, Aaron and Pearl each received half of their father's shares in RHI. [ 22 ] Following Joe's death, Elo's family discovered, however, that the year before, in July 1985, Joe had arranged for RHI to issue 5,000 category C shares in his name, without any similar issuance to Elo, thereby changing unilaterally the equal participation of the two families in RHI. [ 23 ] After negotiations between the two families with the assistance of legal counsel, their equal participation in RHI was reinstituted in August 1987, through the signing of a Release and Discharge Agreement.

As a result of this release agreement, RHI redeemed the 5,000 category C shares and the two groups (Elo, Ruth and Esther, on the one hand, and Joe's Estate, Aaron and Pearl, on the other hand) then gave to each other: (…) a complete and total mutual release and discharge from any claims, pretended claims, demands, or rights of action which one or more of the members of either group may have or purport to have against one or more of the members of the other group to this date, and relating to the Estate of the Late Joseph Remer, Remer Holdings Inc., Sherbrun Investment Corp., Nun's Island Investment Inc. or any other partnership or corporation in which any or more of the members of one group may have an interest together with any or more of the members of the other group. (…) [ 24 ] In November 1994, Elo passed away.

Similar to what happened for their cousins when Joe died in 1986, Ruth and Esther then each received half of their father's shares in RHI. They also took his position on the board of directors of RHI. [ 25 ] Of the two sisters, Ruth was the most involved. Even though they had lived in Israel since 1971, that is after the death of their mother, they were in regular contact with the rest of the family living in Montreal. Ruth had full access to the books and records of RHI as well as its financial statements and corporate documentation.

Esther was less involved in the business and essentially relied on her sister in that regard. [ 26 ] In January 1995, Ruth discovered that, unbeknownst to the two sisters, their mother had bequeathed her shares in RHI to them. Despite the fact that their mother died in 1970, however, their father Elo had apparently kept these shares on their behalf up until his death, in November 1994. Ruth and Esther were consequently forced to take proceedings to correct the situation.

By judgment rendered on October 12, 1999, the Superior Court (Crépeau J.) ruled in their favour and declared them owners of these shares, retroactive to January 1, 1973. [ 27 ] Subsequently, in early 2001, as part of some discussions relating to a change of shareholding in Storage, Ruth, through her legal counsel, voiced complaints to Joe's family legal counsel with respect to numerous transactions that had occurred over the prior years.

The transactions then questioned, which are all the subject of the current litigation between the two families, can be briefly described as follows: [1] 1) The sale of 16⅔ of a property known as TransCanada Highway land by RHI to Aaron & Pearl Remer Investment Company Ltd. (now Aperdev) in 1973; 2) The first purchase by Aperdev and/or Joe of 25% of an Ottawa property and the second purchase by Aperdev and/or Joe of an additional 25% of this property, before Joe's death in 1986 for the first one and around December 1986 for the second one; 3) The purchases by Aperdev of 18% of the shares of Storage between 1984 and 1986; 4) The acquisition by Aperdev of the majority of the shares of NDI in 1975; 5) Aperdev's holdings in Nirvana and another company (FDL) of which Aperdev is the sole shareholder, which occurred in 1979; 6) The various transactions involving Aperdev and two other corporate entities, Remdal and Dalrem, with respect to the purchase, sale or development of the Trans-Canada Highway land, which took place in the 1990s; 7) The lease by NDI of 1 million sq. ft. of warehousing and commercial building space to Nirvana for an annual rent of $216,000,

covering the period 1979 to 1999; 8) The purchase by Nirvana of the Ames property in Agawam, Massachusetts, USA, in 1978-1979; 9) Aperdev's ownership in and the various profits derived from the Commerce Point property in Florida that was purchased in 1988- 1989; 10) The sale by RHI of 11,800 shares of Goodyear Tires to Aperdev for $456,600 in 1985. [ 28 ] As evidenced by this listing, eight of these transactions directly concerned Aperdev (numbers 1 to 6, 9 and 10), while the other two (numbers 7 and 8) related to NDI and Nirvana.

The two latter corporations were not made parties to the Superior Court proceedings, nor were they impleaded in appeal. As stated previously, of these three corporations, RHI and Elo's family were only involved in NDI. [ 29 ] Despite meetings, correspondence and discussions between the parties and their counsel in the spring of 2001, the matter remained unresolved. Additional discussions took place in that regard a year later, in the spring of 2002, but the negotiations eventually failed in December 2004.

During that time, no written agreement to suspend prescription was signed. [ 30 ] Shortly after the end of the negotiations, Ruth and Esther instituted their current proceedings, that is, in February 2005. [ 31 ] As the trial judge correctly indicated, it is not easy to summarize the lengthy and convoluted conclusions sought by the appellants in their proceedings. Like her, I find it appropriate to cite these conclusions at length for a better understanding of the issues involved: WHEREFORE PLAINTIFFS PRAY THAT THIS HONOURABLE COURT ISSUE THE FOLLOWING ORDERS: 1.

THAT the properties referred to in sub-paragraphs 13(a) (the Trans-Canada Highway Properties), 13(b) (the Ottawa Property), 13(

g) and 13(

h) and any other properties not within Plaintiffs knowledge which have been diverted from Remer Holdings Inc. and purchased by persons or entities other than Remer Holdings Inc. be returned and/or transferred to Remer Holdings Inc., together with all advantages and profits realized in connection with these properties and/or their development, as well as all dividends and distributions paid to APERDEV and/or any other persons and/or any other persons or entities connected with or under the control or direction of the Defendants which should have been paid to RHI: 2.

THAT Defendants transfer such percentage of their interests in Storage Leaseholds Inc., Notre-Dame Industrial Buildings Ltd., Fleur-de-Lys Warehousing Ltd. and Nirvana Management Consultants Ltd. to Remer Holdings Inc. so as to constitute Remer Holdings Inc. as the shareholder of all classes of shares of these corporations in the place and stead of Aperdev Investment Inc.; 3.

THAT Defendant cause such transfers to be made in the entities knows as "Remdal" and "Dalrem" and that "Dalrem Trust" as are required to constitute Remer Holdings Inc. as the beneficial owner of the ownership interests in such entities in the place and stead of Aperdev Investment Inc. or any successor to APERDEV; 4. THAT Defendants be ordered to take whatever steps are necessary to remove Notre-Dame Industrial Buildings Ltd. as the guarantor of the said mortgage loan or SUBSIDIARILY THAT Defendants be ordered personally to repay the said mortgage loan in the amount of $7,347,072.00; 5.

THAT the leasing agreement between Notre-Dame Industrial Buildings Ltd. And Nirvana Management Consultants Ltd. be set aside and cancelled for all legal purposes between the parties; 6. THAT Defendants personally or through Nirvana Management Consultants Ltd. be ordered to compensate Notre-Dame Industrial Buildings Ltd. for the loss of rental at fair market value for a period of over 30 years; 7. THAT Defendants personally or through Nirvana Management Consultants Ltd. be ordered to compensate Remer Holdings Inc. for the loss of its share of income since the acquisition of the said building (Ames Property); 8.

THAT Defendants be ordered to transfer to Remer Holdings Inc. the proceeds of sale of the property (Commerce Point) in Florida, U.S.A. that benefited Aperdev Investment Inc.; 9. THAT Defendants be ordered to transfer to Remer Holdings Inc. the profits arising from the sale of the Goodyear Tires shares that benefited Aperdev Investment Inc. in the amount of $310,400.00; 10.

THAT any other assets of Nirvana Management Consultants Ltd. that belong to Aperdev Investment Inc. and/or Aaron Remer and/or Pearl Remer Bratin and/or Milan Bratin be returned and/or transferred to Remer Holdings Inc., together with all advantages and profits realized in connection with these assets; 11. Such other orders as this Honourable Court may see fit to issue in the circumstances; and 12.

THAT, failing the foregoing, the Defendants be condemned solidarily to pay damages to Remer Holdings Inc. in the amount of $66,618,606.00 including the compound interest to February 23, 2005, or alternatively to Plaintiffs one-half (1/2) of the amount of $66,618,606.00, including the compound interest to February 23, 2005, namely $33,309,303.00; 13. THAT the Defendant, Milan Bratin, be condemned to pay the sum of $2,572,000.00 to the Mis-en-cause, Remer Holdings Inc., plus interest at the rate of at least 12% or such other interest rate as this Honourable Court may see fit to fix; 14.

THAT provisional execution of the Judgment to be rendered herein be ordered notwithstanding any Appeal; THE WHOLE with interest and costs from service of these proceedings solidarily against all the defendants including the cost of any

expertise in the event of the contestation of this motion by defendants, and to which interest shall be added the indemnity provided for in

article 1619 of the Civil Code of Quebec . [ 32 ] In the course of the proceedings, the appellants filed a motion to split their action and be authorized to first proceed on the liability issue only. The motion was granted and the case was ordered to proceed to trial solely on the liability questions, under reserve of the right of the parties to be heard later on the damages claimed, if necessary. This explains why the trial judgment did not deal with the damages issue. THE TRIAL JUDGMENT [2] [ 33 ] After a

summary of the context (paras. [1] to [16]) and a review of the general factual background (paras. [17] to [57]), the trial judge identified the six questions to be analysed and answered in her judgment (para. [59]).

They concerned: 1) The opposability of the release agreement of August 1987 and its impact on the appellants' claim; 2) The issue of the prescription of the appellants' claim; 3) The alleged verbal agreement of Elo and Joe to always share equally in all of their business ventures; 4) The alleged violations of the respondents' fiduciary duty; 5) The appellants' legal interest with respect to the derivative action remedies sought; 6) Whether it was appropriate to immediately condemn Milan Bratin to reimburse the sum of $2,572,040 that he recognized owing to RHI, with interest and costs, notwithstanding the splitting of the action ordered. [ 34 ] As Milan Bratin did not appeal his condemnation to reimburse RHI the amount he withdrew without permission, with interest and costs, it is not necessary to review the sixth question the judge considered. [ 35 ] In the same vein, I note immediately that, in appeal, Ruth and Esther are no longer raising two of the key arguments they had insisted upon at trial. [ 36 ] First, at para. 6 of their factum, they confirm that they are abandoning their contention that Elo and Joe had agreed to conduct all of their business interests together as equal partners and that Joe, and afterwards the respondents, had breached this agreement.

The trial judge had dismissed this claim in view of the lack of convincing evidence presented in support thereof (paras. [191] to [246]).

Her analysis of the third question previously listed therefore remains unchallenged in appeal and her findings in that regard are binding upon the parties. [ 37 ] Second, a few days before the hearing of their appeal, the appellants finally acknowledged that the prescription period applicable to their claim was that of three years for actions to enforce personal rights (art. 2925 C.C.Q. ), and not that of ten years governing actions to enforce immovable real rights (art. 2923 C.C.Q .).

Again, on this issue, the trial judge had, correctly in my view, concluded that the appellants' claims were personal in nature, and, therefore, subject to a three-year prescription period (paras. [115] to [130]). [ 38 ] Accordingly, only part of the judge's analysis of the second question dealing with prescription will be reviewed in my reasons, namely what she discussed on the starting point of the applicable period, on the appellants' alleged impossibility in fact to act and on the alleged suspension of this prescription period. [ 39 ] That said, on the question of the release agreement of August 1987, the judge ruled that it was valid and binding upon the parties (paras. [60] to [102]); as such, its terms covered all the impugned transactions that occurred prior to its signing.

In her view, it could not be set aside for fraud, error or vitiated consent. The two families were well aware of the situation when they knowingly signed it. They did so with the assistance of legal counsel throughout and the agreement then reached allowed them to reinstate their equal participation in RHI (para. [67]). This was indeed the key objective of the agreement they then reached (para. [68]). [ 40 ] The trial judge did not accept the argument related to Elo's alleged misunderstanding of the language used; he was assisted at all times by counsel and his daughters (paras. [72] to [83]).

She noted further that Elo continued his involvement in RHI until his death in late 1994 without ever complaining about the release agreement signed in 1987 (para. [82]). Neither did the judge retain the alleged lack of proper consent given by Ruth and Esther under the circumstances (paras. [85] to [102]). Both were well educated and experienced business persons (para. [99]). [ 41 ] On the question of prescription, the judge concluded that, for all the transactions the appellants attacked in their conclusions, except one, their claim was prescribed (paras. [103] to [190]).

The applicable period was three years and their recourse was filed in February 2005. However, as of February 2002 at the latest, the appellants were well aware of the existence of these transactions and of the alleged grounds of contestation they had against the respondents in that regard.

The correspondence exchanged in the spring of 2001 between the attorneys for both sides and the notes they then kept confirmed this knowledge (paras. [143] to [170]). [ 42 ] For the judge, contrary to what the appellants argued, there was no impossibility in fact to act on their part because of the release agreement of 1987 that was allegedly null for fraud, error or lack of valid consent.

As for the respondents' alleged renunciation to prescription or their agreement to suspend it, the judge considered that the evidence did not support the appellants' assertion (paras. [171] to [190]). [ 43 ] Turning to the question of the alleged fraud and breaches of fiduciary duty the respondents committed, the judge found that the evidence the appellants offered was weak and insufficient (paras. [247] to [255]). In her view, this evidence fell considerably short of what this Court had recognized [3] as necessary in matters involving alleged breaches of fiduciary duty. In addition, if any recourses

existed in that regard, the judge added that they belonged to RHI or the corporate entities involved, and not to the individual shareholders or directors such as Ruth and Esther. [ 44 ] Finally, on the question of the derivative action remedies sought, the trial judge concluded that the appellants lacked the legal interest to pursue them. If any recourses could be taken, they should be launched by RHI or the entities in which it was a shareholder (paras. [256] to [266]).

In any event, for the only impugned transaction not covered by prescription or the release agreement, that is the one pertaining to the suretyship given by NDI for a loan to Nirvana in 2003, neither of these companies were impleaded parties in the proceedings (para. [259]). THE GROUNDS OF APPEAL [ 45 ] In appeal, Ruth and Esther insist on four grounds. [ 46 ] First, they maintain that neither they nor Elo validly consented to the release agreement. They argue that, in 1987, they were not aware that they had inherited their mother's voting shares in RHI.

Their father and uncle had manoeuvred so as to hide this information from them. They only learned much later of that bequest contained in her will, that is in January 1995. The judgment of October 12, 1999 of Crépeau J. confirmed their ownership of these shares. According to the appellants, had they known this in 1987, they would have acted differently.

For them, in view of this vitiated consent, the release agreement should be ignored and set aside. [ 47 ] They add in that regard that, furthermore, it is only well after the signing of the release agreement that they learned about Joe's falsifications of Elo's signature on key corporate documents of RHI. They maintain that, had this been known, they would have been more vigilant before signing that document. [ 48 ] The appellants also insist upon the fact that Elo's consent to this release agreement was vitiated as well. They claim that he did not have a proper understanding of the English language.

Since he fully trusted his brother for the administration of the business, he essentially approved and signed whatever documents with which he was presented. It was therefore not a surprise that he never questioned the validity of this agreement. [ 49 ] The respondents reply that, in essence, the appellants are pleading the same arguments they unsuccessfully argued at trial.

In other words, they are asking the Court to substitute its own view on what remains, in the end, factual determinations of the trial judge. [ 50 ] For the respondents, the signing of the release agreement settled a number of issues then pending between the two families. It is clearly valid. There was no fraudulent behaviour on the part of Joe with respect to the appellants' mother's will. Ruth and Esther could have easily discovered the precise terms of this will had they made minimal efforts to look for it.

The respondents add that the appellants are improperly accusing Joe of falsifying the signature of his brother Elo on a number of documents to justify their lack of valid consent to this release agreement.

For them, this way of proceeding may well have been an accepted modus operandi between the brothers who were close and long-time business partners in the relevant years. [ 51 ] Second, on the prescription issue, while now conceding that the applicable period is three years, the appellants claim that they were in a situation of impossibility to act due to the same falsifications of Elo's signature by Joe and because of his alleged fraud and bad faith in that regard.

They further add that they were in a situation in which it was impossible to act because they believed that the 1987 release agreement was binding upon them up until they found out about the grounds of errors and lack of consent that arose from these falsifications and from their lack of knowledge of their inheritance of their mother's shares in RHI. [ 52 ] They also plead that, in any event, the prescription had been suspended by agreement with Milan Bratin during the negotiations of 2002-2004. [ 53 ] The respondents answer that the appellants were well aware of all the essential facts at the basis of their proceedings since at least March and June 2001.

As of then, they have in fact tried many times to revise the transactions they attack in their current proceedings, without success. As a result, the appellants were not in a position of impossibility to act for many years prior to February 2005. In addition, the respondents suggest that, at all relevant times, Ruth and Esther had full and unfettered access to all the relevant documentation and information pertaining to RHI or the other corporate entities related to RHI.

Finally, the respondents deny the existence of any reliable evidence of any kind of agreement to suspend the prescription during the negotiations that took place from 2002 to 2004. [ 54 ] Third, the appellants argue that their recourse is well founded because of the respondents' fraud and violation of their fiduciary duty. Even though they raised it, they do not, in the end, insist much on the alleged fraud. They rather focus on the alleged breaches of fiduciary duty.

They consider that all the transactions they attacked in the proceedings are, on their face, evidence of these breaches and confirmation that the respondents have diverted assets or business opportunities that belonged to RHI to their benefit. [ 55 ] The respondents counter that there is simply no evidence of breaches of fiduciary duty under the circumstances. For them, the applicable criteria for one to argue a violation of fiduciary duty are not met under the circumstances. There is an absence of evidence of the loss by RHI of any maturing business opportunity.

There is also an absence of evidence of any resulting prejudice suffered by RHI. [ 56 ] Fourth and last, the appellants insist that their derivative action remedies are well founded and that this recourse is clearly available in Quebec. This allows them to directly sue directors and other entities responsible for the prejudice caused to the moral person of which they are shareholders.

The appellants consider that there is no need to implead the corporations that are concerned by the conclusions sought in this respect. [ 57 ] For the respondents, the appellants do not have the legal interest to institute their derivative action remedies. Inasmuch as the conclusions pertaining to NDI and Nirvana are concerned, they cannot exercise recourses on behalf of corporate entities in which they are not directly shareholders and which are, moreover, not even parties to the proceedings.

[ 58 ] I will deal with these four grounds of appeal by first discussing the decisive issue of prescription. ANALYSIS 1. The prescription issue [ 59 ] In her judgment, the trial judge ruled that the appellants' claim was an action to enforce personal rights (art. 2925 C.C.Q .) as opposed to immovable real rights (art. 2923 C.C.Q .). The conclusions they sought attacked specific transactions involving RHI on the basis of alleged fraud or breaches of fiduciary duty by the individual respondents.

Since, however, the alleged fraud or breaches of fiduciary duty pertaining to all these transactions, except the one involving the suretyship NDI granted in 2003 in favour of Nirvana, were known to the appellants from at least March or June 2001, the proceedings they instituted in that regard more than three years later in February 2005 were prescribed. [ 60 ] While not debating anymore that the three-year prescription period applies to their claim, the appellants argue that the judge still erred 1) on the issue of the starting point of the applicable period, 2) on the question of their impossibility in fact to act prior to 2002, and 3) on the issue of the suspension of this prescription because of the negotiations that took place between the parties from 2002 to 2004. [ 61 ] I consider that none of these arguments allows the Court to set aside the findings of the trial judge that the appellants' claims, except one, were prescribed. [ 62 ]

Article 2875 C.C.Q. defines prescription as follows: 2875. La prescription est un moyen d'acquérir ou de se libérer par l'écoulement du temps et aux conditions déterminées par la loi: la prescription est dite acquisitive dans le premier cas et, dans le second, extinctive. 2875.

Prescription is a means of acquiring or of being released by the lapse of time and according to the conditions fixed by law: prescription is called acquisitive in the first case and extinctive in the second. [ 63 ] The necessity of insuring the stability of juridical relations after a given period explains this means of being released by law of potential liability through the mere lapse of time. In Gauthier v.

Beaumont , [4] the Supreme Court reiterated the purpose and legislative intent behind the rules of prescription in the following terms: 48 Cases of suspension of prescription, including those based on an absolute impossibility in fact to act, are exceptions to the rule set out in the first paragraph of art. 2232 C.C.L.C. : prescription runs against all persons. Prescription is a concept essential to the civil law whose rationale lies in practical utility and social interest.

As Mazeaud wrote, [ translation ] “[i]t is in the interest of public order for obligations to be eliminated after the creditor fails to act for a long period.” (H., L. and J. Mazeaud, Leçons de droit civil , t. II, vol. 1, Obligations: théorie générale , 8th ed., by F.

Chabas, 1991, at p. 1206.) Prescription appears as an institution designed to introduce security into legal relations by mitigating the consequences of time’s erosive effect on memory and on the value of evidence, and by encouraging creditors to act diligently. (…) [ 64 ] Professors Baudouin, Jobin and Vézina express a similar view in their work Les obligations : [5] La doctrine et la jurisprudence avancent plusieurs fondements ou justifications possibles à la prescription extinctive.

Les principaux fondements de la prescription, envisagée de façon globale ou dans le contexte propre à l'extinction d'un droit de créance, s'articulent autour de la notion d'ordre public, de la négligence attribuable à la

partie qui tarde à faire valoir son droit et, s'agissant plus spécifiquement de l'extinction d'un droit de créance, de la présomption de paiement. [ 65 ] On this first ground of appeal, by now conceding that the applicable prescription period is indeed three years, the appellants are not raising any question of law anymore. They are rather arguing that the judge erred in her assessment of the evidence pertaining either to the starting point of the period, their impossibility in fact to act or the suspension agreed upon by the parties. [ 66 ] It has often been said and repeated.

Failing a manifest and dominant error, the Court will not intervene on the factual determinations of a trial judge. [6] Significant deference is normally given to the trial judge in this regard: [236] Pour ce qui est de la détermination des faits, qui est du domaine souverain du juge du procès, une cour d'appel, et à fortiori une deuxième cour d'appel, n'interviendra que s'il lui est démontré une erreur manifeste, c'est-à-dire palpable de la part du premier juge.

C'est presque une vérité de La Palice aujourd'hui que d'affirmer que la détermination des faits relève de l'appréciation souveraine du juge de première instance qui a vu et entendu les témoins et qui est en mesure d'apprécier la crédibilité à accorder au témoignage de chacun. [7] [ 67 ] This is even more true where the credibility of the key witnesses is at the core of the trial judge's assessment. [8] [ 68 ] Here, the credibility of the witnesses was a key factor on this issue of the prescription.

At paras. [148], [149] and [162] of her reasons, the trial judge explained why she did not believe the appellants' testimony on the timing of their knowledge of the relevant facts at the basis of their action: [148] Même si elles font preuve de constance dans leurs interrogatoires, le Tribunal ne croit pas les demanderesses quand elles affirment qu'elles n'ont pris connaissance des documents pertinents à leur action qu'à la fin février ou au début mars 2002. [149] Les notes de leur avocat contredisent leur témoignage. […]

[162] Enfin, le dépôt par les demanderesses d'une lettre de Me Blumenstein datée du 22 juin 2001, par laquelle il transmet une copiede l'entente et de la quittance de 1987 à Me Neil Stein, contredit aussi le témoignage des demanderesses. [69] Likewise, at paras. [183], [184] and [185], she explained why she could not accept their testimony on the alleged suspension ofthe prescription that would have been agreed upon by the parties: [183] Le Tribunal ne peut également croire le témoignage des demanderesses au sujet de l'entente intervenue, puisque ce dernier varieau fil du temps et qu'il n'est pas précis sur le contenu de cette entente.

Le Tribunal rejette aussi la prétention des demanderesses que lesdéfendeurs ont reconnu les droits de ces dernières puisque la preuve faite ne rencontre pas les exigences de la jurisprudence pourinterrompre la prescription au profit des demanderesses.

Si offres il y a eu, celles-ci ne reconnaissaient pas la responsabilité par rapportaux fautes invoquées et ne démontraient nullement une volonté de reconnaître la dette. [184] Un autre fait important justifie le Tribunal de rejeter le témoignage des demanderesses sur cette question de prescription. [185] Dès la rupture des négociations, à la fin décembre 2004, elles ont immédiatement demandé à Milan Bratin de renoncer par écrit àla prescription, dans la mesure où elle était acquise.

Les défendeurs ont considéré la possibilité de signer cette entente, mais ontfinalement refusé. [References omitted] [70] In the end, on this issue of prescription, the appellants are rearguing their case as if the trial judgment had not been rendered.This they cannot do. This is not the role of the Court: [15] Earlier, in Regroupement des CHSLD Christ-Roy (Centre hospitalier soins de longue duré

e) c.

Comité provinciale des malades(2007 QCCA 1068 , 2007 R.J.Q. 1753 (C.A.)), the Court observed that: [54] L’appel, rappelons-le encore une fois, n’est pas une occasion de refaire le procès. [55] Lorsqu’une preuve de quelque complexité prête à interprétation et requiert de la part du juge de première instancel’appréciation individuelle puis globale de multiples éléments, dont certains sont divergents ou contradictoires, il ne suffit pas desélectionner aux fins du pourvoi tout ce qui aurait pu être interprété différemment, à l’exclusion de tout le reste, afin de réitérer une thèsedéjà tenue pour non fondée par le juge qui a entendu le procès.

Une erreur dans la détermination d’un fait litigieux n’est manifeste que sison caractère évident ou flagrant se dégage avec netteté du réexamen de la

partie pertinente de la preuve et qu’une conclusion différentesur ce fait litigieux s’impose dès lors à l’esprit. Une erreur n’est déterminante que si elle prive le jugement entrepris d’une assisenécessaire en fait, faussant ainsi le dispositif de la décision rendue en première instance et commandant réformation de ce dispositif pourcette raison. Cette question pourtant importante en appel n’est nulle part abordée par les appelants privés conventionnés pour qui,semble-t-il, toutes les erreurs ou prétentions d’erreur se valent.

Il leur revenait d’identifier spécifiquement et de circonscrire dans leurmémoire ce en quoi le jugement souffrait d’une telle faiblesse et ils ne l’ont pas fait. [Emphasis added.] [16] Admittedly, the appellants do not simply allege that the trial judge misapprehended the whole of the evidence and they seek toidentify and pinpoint a variety of specific mistakes, none of which, however, results from a univocal proof (“élément de preuveunivoque”, see Benchetrit, supra) that the trial judge would have ignored or misconstrued.

Relying on a series of carefully chosenelements that should in their opinion have been interpreted differently by the judge, the appellants ignore or downplay in their argumentmost of what is incompatible with their viewpoint. In reality, they ask the Court to re-evaluate the evidence and conclude in a mannerdifferent from that of the trial judge, without demonstrating the unreasonableness of the latter's findings and conclusions.[9]

a) The starting point of the period [71] On the starting point of the applicable period, the evidence adduced at trial and analyzed by the judge confirmed that, since atleast March or June 2001, the appellants were aware of the existence of the impugned transactions (except for the suretyship NDI grantedin 2003) and of their grounds of contestation in relation thereto. [72] As the judge summarized, in the spring of 2001, counsel for the appellants and the respondents had meetings together wherethese transactions were thoroughly discussed, including the specific issue of prescription.

The documentary evidence emanating fromtheir respective personal notes and correspondence confirmed the correctness of this factual finding of the judge, on a balance ofprobabilities. Their testimony at trial was to the same effect. [73] It suffices to highlight three decisive points in that regard. [74] First, in a memo to file dated March 22, 2001, Mtre Yoine Goldstein, respondents' counsel, confirmed his discussion with MtreL.

Michael Blumenstein, appellants' counsel, on the transactions pertaining to: 1) The sale of a 16⅔ interest of the TransCanada Highway land by way of a "forged" resolution in 1973; 2) The purchase by Aperdev and Joe of percentages in the Ottawa property; 3) The transfer of shares of Storage to Aperdev in 1986; 4) The ownership of Aperdev in NDI; 5) The "sweetheart" deal between and NDI and Nirvana with respect to the lease of warehousing space; and 6) the sale of stock of Goodyear.

[ 75 ] In that memo to file, Mtre Goldstein wrote that he specifically then raised the issue of prescription with appellants' counsel: I said that all of this, even if true, was manifestly prescribed and that I had already told my clients that there is no right of action. He said that he does not want to talk about the law, but wants to talk about "what's right". I said that I saw nothing wrong with Joe Remer having bought some things, or invested in some matters, without his brother, just as his brother would have been absolutely free to do the same thing.

He says that the agreement in the family was that everything would be done together. I said that Eloy obviously knew that some things were not done together and apparently did not complain about it during his lifetime so why the complaint 15 years later? [ 76 ] Second, in his own notes of a telephone conversation of March 8, 2001 with Mtre Goldstein, Mtre Blumenstein this time confirmed his discussions with the former on these specific issues, including the matter of prescription: Re: Telephone call from Yoine Goldstein on March 8, 2001 1. Transfer of shares by Dalfen (…) 2.

Get RHI out of ND and Aperdev out of Storage Leasehold - Joe transferred to Aperdev Raises release 3. Land on Trans Canada – Vieux Pecheur RHI 91% - 8 ½ % Aperdev front lot RHI 54% - 46% Aperdev back lot - value the lots, through a third party, and adjust the shares - threatens to make a motion.

What are her expectations? - 3 year prescription: she knew well before – should have brought it up: prescribed - Can't upset the release – Fraud (?) can't be prescribed (Note: this comment was added by me after the phone call ) - She waited too long - Didn't come as a lawyer and tell them they have no legal right [ 77 ] Mtre Blumenstein reiterated this understanding in a letter that he sent later, on June 22, 2001, to Mtre Neil Stein about their common client: Dear Neil: RE: RUTH REMER As discussed, enclosed is the 1987 Remer Release and Discharge as well as the August 27, 1987 Agreement.

Various counterparts have been signed by all parties.

The issue Ruth would like you to focus on is whether or not the Release is valid in respect of claims of which she was unaware at the time she signed (and has only in the last year or two become aware of) and whether or not the current knowledge of facts not disclosed to Ruth in 1987 would allow a current claim based on these facts (for example, deception by the Late Joe Remer). (…) [ 78 ] Third, in their inscription in appeal, the appellants reaffirmed the correctness of this evidence the trial judge accepted on the timing of their knowledge of the existence of the transactions attacked by stating at para. 17: Since the spring of 2001, the appellants attempted by way of negotiation with the respondents to cause them to rectify and reverse the irregular transactions carried out by them as well as the irregular and improper transactions carried out by their late father Joe Remer (…); [ 79 ] Despite this, the appellants elected to stay quiet and not to sue the respondents until February 2005, well after prescription had been acquired.

They were then too late. There is no manifest and dominant error of the trial judge on this subject.

b) The impossibility in fact to act [ 80 ] On the impossibility in fact to act that would have interrupted the prescription in their favour, the appellants insist on two

arguments. [ 81 ] First, they claim that they only became aware that their mother bequeathed the shares of RHI to them in January 1995.

A judgment of the Superior Court confirmed their ownership of the shares, retroactive to July 1, 1973, only on October 12, 1999. [ 82 ] Second, they maintain that they were always under the impression that the release agreement of 1987 was binding upon them up until they realized that their consent had been vitiated because of their lack of knowledge of either their ownership of their mother's shares in RHI or of the impugned transactions that prevented them from having a complete picture of the situation before signing the release. [ 83 ] I consider that neither of these arguments establishes an impossibility in fact to act that would have interrupted the prescription in such a way as to justify the appellants not instituting their proceedings before February 2005. [ 84 ] On the one hand, assuming that, at best, the appellants' awareness of their ownership of their mother's shares in RHI was officially confirmed by the judgment of Crepeau J. of October 12, 1999, any alleged impossibility in fact to act would have terminated then.

Any interruption of prescription would not have continued beyond that date. Hence, even on that basis, the three-year prescription would have been acquired well before February 2005. [ 85 ] Similarly, any alleged impossibility in fact to act because of their ignorance of the impugned transactions terminated once they became aware of their existence and of their grounds of contestation in this respect.

That was at the latest in March or June 2001, again well before February 2005. [ 86 ] In any event, even assuming that the appellants could have raised the potential nullity of the release agreement of 1987 because of a vitiated consent that they only realized upon learning of their ownership of their mother's RHI shares on October 12, 1999, or upon their knowledge of the impugned transactions in March or June 2001, their delay to claim the annulment of this release agreement and, therefore, their impossibility in fact to act as a result, would have expired at best three years later. [ 87 ] This is what

article 2927 C.C.Q. prescribes in these situations: 2927 . Le délai de prescription de l'action en nullité d'un contrat court à compter de la connaissance de la cause de nullité par celui qui l'invoque, ou à compter de la cessation de la violence ou de la crainte. 2927 .

In an action in nullity of contract, the prescriptive period runs from the day the person invoking the cause of nullity becomes aware of such cause or, in the case of violence or fear, from the day it ceases. [ 88 ] In such a case, the applicable prescription period to claim the nullity would have been three years "from the day the person invoking the cause of nullity becomes aware of such cause". Therefore, the appellants' alleged claim that the release agreement of 1987 was null and void because of their vitiated content could not have been raised through the proceedings they instituted in February 2005.

It was then too late to do so. [ 89 ] On the other hand, the impossibility in fact to act of the appellants arises, for the most part, from their own negligence in acting sooner, under circumstances where they had, as shareholders and directors of RHI, complete access to the books and records of the company and to all the relevant corporate documentation since, at the very least, the end of the 1990s. [ 90 ] In that regard, in Nadeau v. Nadeau , [10] the Court reiterated that the mere decision not to act does not amount to an impossibility to act.

There have to be reasons that prevent a party from acting: [63] Le fait de ne pas agir n’équivaut pas à impossibilité d’agir. Encore faut-il qu’il y ait un obstacle qui empêche l’action. Les Appelants le démontrent eux-mêmes qui allèguent avec virulence un tel obstacle, soit les manœuvres pour endormir leur méfiance et entretenir leur ignorance. [64] Dans l’arrêt de la Cour suprême Oznaga c.

Société d’exploitation des loteries , [1981] 2 R.C.S., on lit : Ainsi suis-je d’avis que c’est à bon droit que de façon générale les auteurs refusent de considérer l’ignorance, par le créancier, des faits juridiques générateurs de son droit, comme étant une impossibilité absolue en fait d’agir (voir Pierre Martineau, La prescription , P.U.M., 1977, aux pp. 353 et ss.).

Par ailleurs, on semble tout autant d’accord, et j’y souscris, pour reconnaître que l’ignorance des faits juridiques générateurs de son droit, lorsque cette ignorance résulte d’une faute du débiteur, est une impossibilité en fait d’agir prévue à l’art. 2232 et que le point de départ de la computation des délais sera suspendu jusqu’à ce que le créancier ait eu connaissance de l’existence de son droit, en autant, ajouterais-je, qu’il se soit comporté avec la vigilance du bon père de famille. [65] Ici, il n’y a pas « d’ignorance qui résulte d’une faute du débiteur » et l’ignorance des Appelants ne saurait donc constituer une impossibilité absolue d’agir. [ 91 ] Professors Baudouin and Deslauriers, in La responsabilité civile , [11] indicate that the mere ignorance of a right of action is not the same as an impossibility in fact to act.

The former is not a valid cause of suspension of prescription: 1.1430 - […] Il convient à cet égard de ne pas confondre l'impossibilité d'agir et la simple ignorance du droit, qui ne constitue pas une raison valable de suspension. En d'autres termes, il importe de distinguer « l'ignorance des faits de l'ignorance qui découle de faits connus ». […] [References omitted]

[ 92 ] Consequently, there is no reason to intervene in the findings of the trial judge on this issue as well.

c) The waiver or suspension of the prescription [ 93 ] On the alleged agreement of the parties to waive or suspend the prescription during their negotiations from 2002 to 2004, the trial judge concluded that the evidence did not support the appellants' assertion to that effect.

Again, notwithstanding their burden in this regard, the appellants do not point to any manifest and dominant error of the trial judge on this conclusion, on the contrary. [ 94 ] There is no credible evidence establishing an agreement to waive or suspend prescription during these negotiations that did not even trigger any offer of settlement, as one of the attorneys involved, Mtre Michael Heller, confirmed. [ 95 ] The appellants' main ground of complaint on this last topic is that the trial judge preferred the testimony of Milan Bratin over that of Ruth.

This is quite insufficient to justify the Court's intervention in appeal. [ 96 ] As the respondents rightly emphasized, in addition to the appellants' lack of credibility on this alleged agreement to waive or suspend the prescription, their position in that regard had been anything but consistent in their proceedings. First, in July 2006, they alleged that there was a "tacit agreement" between the parties in that regard. Then, in March 2010, in a subsequent amended version of their proceedings, they alleged the existence of a "verbal agreement" to that end.

A few weeks later, in May 2010, they reiterated the fact that it was a "tacit agreement" that took place to waive or suspend prescription. [ 97 ] In any event, as the trial judge duly noted, the appellants' sending of a draft written waiver of prescription to Milan Bratin for his review and approval in January 2005 appeared to directly contradict the alleged existence of the respondents' prior agreement to suspend prescription or renounce to same.

This draft waiver of prescription, of course, was never approved or signed by the respondents. [ 98 ] In short, no matter from what angle one analyzes the arguments of the appellants on this issue of prescription, they fail to establish any error of the trial judge that would warrant the Court's intervention. For all the impugned transactions except one, the appellants' claim was indeed prescribed. [ 99 ] Even though this suffices to a large extent to dismiss their appeal, I will nevertheless deal with the other grounds the appellants raised, as analysing them also supports this conclusion. 2.

The release agreement of 1987 [ 100 ] The second ground of appeal of the appellants concerns the release agreement of 1987. In essence, they contend that it should be set aside or ignored because of Ruth and Esther's vitiated consent and by reason of their father Elo's lack of understanding of its terms, error or vitiated consent. [ 101 ] The trial judge dismissed the appellants' argument on the lack of valid consent of Elo.

Considering the assistance of counsel and his daughters in the negotiation and signing of this release agreement, the judge was of the view that the evidence established his proper understanding of what he had signed. She added that, from 1987 up until his death in 1994, he never complained about having signed this release or its extent. At all times, he had a full and unfettered access to the books and records and corporate documentation of RHI. [ 102 ] The judge dismissed as well the argument of the appellants with respect to their own lack of valid consent to this release agreement.

Most likely, Ruth and Esther's assertion with respect to their ignorance of their ownership of their mother's shares in RHI would not have changed anything in the signing of this release agreement. The two families actually subscribed to the agreement as two "groups"; Elo was part of Ruth and Esther's group and he knew full well the content of the will that he did not disclose to his daughters.

The judge noted indeed that Ruth and Esther became aware of their mother's will in 1995 and, yet, did not react with respect to the alleged nullity of the release agreement until at least February 2005. [ 103 ] The judge was not impressed by the other assertion of Ruth and Esther that they were not aware of the alleged forged resolution of 1973 with respect to one of the impugned transactions, or by their lack of knowledge of the other impugned transactions.

For the judge, when the release agreement was signed in August 1987, the appellants and Elo were aware of Joe's dishonesty in the unilateral steps that he took for RHI to issue, in his favour only, category C shares that changed the equal participation of the brothers in RHI.

Accordingly, she considered that they should have been more vigilant and have reviewed the books and records to which they had access before signing a complete and general release and discharge. [ 104 ] For three main reasons, the appellants have not convinced me that the Court should reverse these findings. [ 105 ] First, the terms of the release agreement of August 1987 were clear and far reaching.

On that date, the two families granted to each other a mutual release and discharge of all claims or rights of action that they had against each other relating, amongst others, to RHI or any partnership or corporation where they had an interest together. [ 106 ] This release agreement was negotiated through counsel. Ruth and Esther were educated and had experience in business dealings. As shareholders and directors, they had access to the books and records of RHI and its related entities. [ 107 ] The signed agreement included three pages with annotations and a schedule.

The number of annotations indicates that, at the very least, its terms were thoroughly discussed. The objective was to reinstate the equal participation of the two families in RHI by cancelling, at the same time, the issuance by RHI of category C shares solely to Joe. This objective was, in fact, met through the signing of the release agreement. [ 108 ] Considering its wording, unless it is set aside, this agreement did release the respondents from any of the appellants' claims pertaining to any of the impugned transactions that occurred prior to August 1987. This would include all of them, except three, that is:

a) The transaction involving Aperdev and two other corporate entities, Remdal and Dalrem, with respect to the purchase, sale and

development of the TransCanada Highway land in the 1990s;

b) The suretyship by which NDI guaranteed a loan of the Bank of Montreal to Nirvana in 2003;

c) The Aperdev's ownership and profits derived from the Commerce Point property in Florida purchased in 1988 and 1989. [ 109 ] Second, to set the release agreement aside, the appellants claimed at trial that their consent and that of their father were vitiated. The trial judge did not agree. In her view, the evidence did not support this assertion. [ 110 ] In this respect, the appellants are again arguing that, in essence, the judge made a manifest and dominant error in her assessment of the factual evidence. In my view, they fall short of establishing such an error in their written or oral argument.

Here as well, the credibility of the appellants in that regard was questioned by the trial judge in no unclear terms: [91] D'ailleurs, sur la crédibilité de l'argument, notons que le questionnement au sujet d'un possible vice de consentement survient pour la première fois lorsque la prescription est soulevée par l'avocat qui représente les défendeurs en mars 2001 et que les demanderesses décident alors de confier un mandat à ce sujet à leur avocat, en juin 2001.

D'ailleurs, pour justifier de ne pas avoir déposé de poursuite avant 2005 relativement à certaines transactions qui la préoccupaient dont elle avait découvert l'existence au cours des années 1990, Ruth déclare de façon constante qu'elle s'est toujours sentie liée par cette quittance. […] [100] Sur l'aspect crédibilité de leur témoignage, signalons au passage qu'elles allèguent n'avoir découvert cette fameuse résolution de 1973 qu'en mars 2002.

Pourtant, en mars 2001, elles informent leur avocat de l'existence de cette résolution, ce qui permet à ce dernier de l'invoquer pour expliquer entre autres pourquoi Ruth refuse le transfert d'actions souhaité par Many Dalfen. Elles demandent aussi à leur avocat d'étudier l'impact de cette résolution sur le consentement qu'elles ont donné pour la transaction de 1987 en juin de la même année. [101] Le Tribunal est justifié de ne pas croire leur témoignage lorsqu'elles tentent d'utiliser cette résolution pour éviter l'effet de la quittance sur la majeure

partie de leurs réclamations. [References omitted] [ 111 ] Third, while I see no reasons to intervene in the factual findings of the trial judge on this issue, it is unnecessary to discuss this point any further since, as stated before, any of the appellants' claim for the annulment of this release agreement would have been long since prescribed in February 2005. In fact, in their proceedings of February 2005, none of the conclusions sought included a request for the annulment of this release and discharge. [ 112 ] Assuming they would have had valid grounds to set aside this release agreement, neither Ruth and Esther nor Elo could have waited to do so forever. Under

article 2927 C.C.Q ., the prescription period for proceedings to annul a contract such as a release agreement runs from the day the person invoking the cause of nullity, for instance a vitiated consent, becomes aware of it. [ 113 ] In the case of Elo, assuming he allegedly failed to understand what he signed, his awareness of this cause of nullity would have arisen at the latest before his death that occurred in November 1994.

Thus, in his case, a claim for nullity of the release agreement would have been prescribed by the end of 1997 in the best scenario. [ 114 ] As for Ruth and Esther, their claim of vitiated consent relied on the alleged concealment by Elo and Joe of the fact that their mother's will contained a bequest of her RHI shares in their favour. They learned of that will in January 1995. Their ownership of the RHI shares arising from that will was confirmed by the judgment of Crépeau J. of October 12, 1999.

Thus, in that regard, any claim for the nullity of the release agreement because of this alleged concealment would have been prescribed at the latest in October 2002. [ 115 ] The other ground of vitiated consent that the appellants raised was their alleged unawareness of the impugned transactions enumerated in their proceedings. As again already explained, Ruth and Esther's knowledge of the impugned transactions was certainly crystallized as of March and June 2001 through correspondence between counsel.

As such, their claim to annul the release agreement on that basis would have been prescribed in March 2004 or June 2004 at the latest. [ 116 ] Only one conclusion flows from this analysis. Under any of the circumstances contemplated, a claim for the nullity of the release agreement of 1987 on the basis of a vitiated consent of either Ruth, Esther or Elo was prescribed when the appellants' current proceedings were instituted.

In law, they were therefore foreclosed from arguing the setting aside of this release agreement on the various factual bases that, in any event, the trial judge concluded were not proven. [ 117 ] The appellants' second ground of appeal consequently is unmeritorious. 3. The alleged breaches of fiduciary duty [ 118 ] Before analysing the appellants' third ground of appeal, a comment on the impact of the splitting of the action ordered by the Superior Court is necessary.

For reasons that remain difficult to understand, Ruth and Esther appear to suggest that, as long as they establish that they have a prima facie remedy for breach of fiduciary duty under the circumstances, it suffices at this stage for the matter to be referred back to the Superior Court for adjudication of the damages. [ 119 ] In my view, this assertion is incorrect. It shows a misunderstanding of the splitting of the action the trial court ordered. [ 120 ] Following the order to split, the parties were to deal fully and completely with the liability issue, so that this question be decided once and for all.

That being so, it was thus the appellants' burden not to merely show that a potential remedy existed, but rather that, on a balance of probabilities, the evidence adduced established the alleged fraud and/or breaches of fiduciary duty that they were relying upon in support of their claim. Failing that, to conduct a second trial on the damages issue would be useless and unwarranted. This was the

whole purpose of the splitting of the action ordered. In fact, this is precisely what art. 273.1 C.C.P. contemplates. [ 121 ] In other words, on the liability issue, the appellants' burden remained unchanged even in the current context of the action having been split. This burden was not different or less demanding because a second phase of the trial may have taken place at a later stage. This is precisely how the trial judge understood the state of the applicable law.

She was right in that regard. [ 122 ] Accordingly, besides the fact that the appellants' claim with respect to most of the impugned transactions was either prescribed or covered by the release agreement of 1987, the judge was of the view that, in any event, the alleged breaches of the respondents' fiduciary duty were not proven on a balance of probabilities. Since the appellants had failed to meet their burden in that regard, this was the end of the matter and no hearing on the quantification of the potential damages was necessary.

I agree. [ 123 ] To that end, at para. [251] of the judgment, after having concluded that the alleged verbal agreement between Elo and Joe to conduct all their business interests together as equal partners was not proven, the judge noted more particularly this: [251] De plus, les demanderesses n'ont présenté aucune preuve démontrant, pour chaque transaction alléguée, qu'elle a été faite en violation des obligations fiduciaires des défendeurs à l'endroit de RHI, soit que de telles occasions d'affaires ont été présentées ou découvertes par les administrateurs de RHI, qu'elles auraient pu être réalisées par la compagnie RHI, que les défendeurs ont manœuvré de façon à lui en faire perdre le bénéfice, que le tout a été fait pour avantager une autre compagnie dans laquelle ils ont des intérêts, telle Aperdev, que ces transactions ont été réalisées, qu'elles ont été profitables aux compagnies auxquelles elles ont été présentées et que RHI en a subi un préjudice. [ 124 ] Ruth and Esther had alleged that Joe, Aaron, Pearl and Milan Bratin violated their obligations as directors of RHI by putting themselves in conflict of interest situations and by scooping corporate opportunities of RHI for the benefit of Aperdev or other corporate entities in which the appellants were not involved. [ 125 ] In support of their assertion, the appellants offered, however, no evidence about the impugned transactions short of their mere existence.

In a context where their claim that a verbal agreement that all the business ventures between Elo and Joe were to be conducted as equal partners was dismissed, the mere existence of the transactions certainly did not amount to the level of evidence necessary to establish the breach of the fiduciary duty alleged, that is, the wrongful appropriation of corporate opportunities belonging to RHI. [ 126 ] As the judge correctly noted, in Gravino v.

Enerchem Transport Inc., [12] the Court stated that the relevant criteria to be considered in connection with an alleged loss of a corporate opportunity under the Civil Code were, in essence, those summarized by the Supreme Court in Canadian Aero Service Ltd. v. O'Malley. [13] In Gravino , Morissette J.A., for a unanimous court, said the following on these criteria: [39] C’est l’examen auquel a procédé le juge de première instance.

Cela l’a conduit au paragraphe 161 de ses motifs à tirer de la jurisprudence les éléments suivants : 1. l’intensité du devoir fiduciaire varie selon les responsabilités; plus elles sont élevées, plus le devoir est élevé; 2. le devoir fiduciaire repose sur la loyauté, la bonne foi et l’absence de conflit d’intérêts; 3. le devoir fiduciaire interdit à un administrateur ou haut dirigeant de s’approprier, secrètement ou sans le consentement de la compagnie, un avantage commercial de la compagnie ou négocié par elle et ce, surtout si l’administrateur ou le haut dirigeant ont participé aux négociations ; 4. l’occasion d’affaires doit être en voie de réalisation ; 5. la compagnie ne sera protégée que si elle poursuit activement [l’occasion] d’affaires ; 6. l’interdiction de s’approprier l’occasion d’affaires survit après le départ pendant une période variable, selon les circonstances; 7. la survie de l’interdiction découlera soit d’un départ provoqué par le désir d’obtenir l’occasion d’affaires, soit du fait que [l’occasion] ne provient pas d’une initiative fraîche de l’administrateur ou du haut fonctionnaire, mais plutôt de sa position au sein de la compagnie; 8. la restitution des profits est un remède approprié; 9. il n’est pas nécessaire pour la compagnie de prouver qu’elle aurait réussi à réaliser l’occasion d’affaires; 10. il n’est pas nécessaire pour la compagnie de prouver qu’il y a eu utilisation d’informations confidentielles; 11. les offres présentées par l’administrateur ou le haut dirigeant pour obtenir l’occasion d’affaires n’ont pas à être substantiellement similaires dans la mesure où les objets généraux sont les mêmes.

Je ne suis pas certain que l’expression « devoir fiduciaire » demeure appropriée après l’entrée en vigueur du Code civil du Québec . En droit québécois, ce que l’arrêt Canaero avait établi est désormais subsumé sous l’

article 322 C.c.Q. et découle de l’obligation ou du devoir d’agir avec honnêteté et loyauté. L’

article 323 C.c.Q. fournit les principaux exemples de ce qu’impose ce devoir. L’

article 2146 C.c.Q. admet, du moins dans le cas du mandataire, le type de réparation mentionnée au point 8 ci-dessus. À ces quelques nuances près, qui tiennent surtout aux termes que l’on choisit pour exprimer les choses, l’énumération du juge de première instance me paraît fidèle à l’état actuel du droit positif. Ne serait-ce qu’en raison de la terminologie qu’il a utilisée, la filiation est évidente entre l’arrêt Canaero et les points 4, 5, 7, 8, 9, 10 et 11 de cet énoncé .

Comme ces termes demeurent relativement abstraits, il pourrait être nécessaire, au besoin, de revenir sur les circonstances particulières de l’arrêt Canaero pour voir si l’analogie avec l’espèce actuelle présente le degré d’étroitesse qui justifie que la solution soit la même. [My emphasis]

[ 127 ] In that case, the Court emphasized that, for a maturing corporate opportunity to exist, the evidence must show a strong interplay between the corporate opportunity and the information the director obtained because of his functions. [14] More particularly, evidence must exist to show that the material information in connection with the alleged corporate opportunity was obtained by the director while acting in this capacity for the company, that the corporate opportunity was more than a mere hypothesis and that it was, in fact, substantially advanced and at the stage of maturation: [78] Je note tout d’abord qu’en juin 1996, ETI était très loin d’avoir atteint « le dernier droit » dans ses négociations avec Ultramar, et encore moins avec Shell, qui n'avait pas encore demandé à connaître la structure de prix des transporteurs.

Une occasion d'affaires doit être plus qu’un concept ou qu’une simple piste, et elle n’est en voie de réalisation que lorsqu’elle met en jeu un intérêt prioritaire de la compagnie, digne de la protection des tribunaux et justifiant qu’ils restreignent un droit rival à la libre concurrence. La notion d’occasion d’affaires en pleine maturation (« in the heat of maturation ») évoque le point sur un continuum où l’on départage les occasions dignes de la protection du tribunal de celles qui ne le sont pas . Il faut fixer ce point en tenant compte des caractéristiques propres au marché en cause.

S’il s’agit d’un marché restreint, une simple piste sera nécessairement connue de tous les joueurs.

C’est par la manière de l’exploiter que les concurrents finiront par se distinguer entre eux. [My emphasis] [ 128 ] Notwithstanding this, relying on the incorrect assumption that the mere existence of the impugned transactions sufficed, the appellants elected to offer no evidence to establish that the corporate opportunities at issue were mature ones, that the respondents directors used information to which they became privy in that capacity in order to divert them from RHI, or that RHI suffered damages as a result. [ 129 ] Considering my conclusion that all the impugned transactions, except the suretyship whereby NDI guaranteed the $8,000,000 loan of the Bank of Montreal to Nirvana, were either prescribed or covered by the release agreement of 1987, I do not need to discuss any further this absence of evidence in support of the alleged loss of the corporate opportunities covered by these transactions.

It is sufficient to underline that this evidence is not in the record. [ 130 ] With respect to the impugned transaction pertaining to the suretyship given by NDI in 2003 that the appellants contest through their derivative action remedy, not only did they fail to prove the existence of any fraudulent act by the respondents, but they have also failed to establish the existence of any prejudice suffered by RHI.

This is particularly important in a context where, according to the trial court record, there is no evidence that the Bank of Montreal ever made a claim against NDI on the basis of this guarantee. [ 131 ] Given this absence of evidence, the appellants failed to establish any basis for the Court to intervene on this third ground of appeal. It is unfounded as well. 4. The remedies sought [ 132 ] The last ground of appeal pertains to the availability of the derivative action remedy to support the appellants' claim.

In terms of available remedy, assuming some evidence existed to support it, the suretyship given by NDI in 2003 was the only impugned transaction not covered by prescription or the release agreement of 1987.

Yet, the trial judge held that the appellants could not attack its validity or ask that it be set aside without, at the very least, impleading NDI, Nirvana or, for that matter, the Bank of Montreal as parties in the proceedings. [ 133 ] In that regard, in paragraph 4 of their conclusions in the Superior Court, the appellants asked that the respondents "be ordered to take whatever steps are necessary to remove [NDI] as the guarantor of the (…) mortgage loan" between the Bank of Montreal and Nirvana.

In the following conclusion numbered 5, they asked that the "leasing agreement between [NDI and Nirvana] be set aside and cancelled for all legal purposes". Nevertheless, neither NDI, Nirvana nor the Bank of Montreal were made parties to the proceedings, whether at trial or in appeal. Clearly, conclusions of that nature cannot be granted in favour of the appellants without these corporate entities being part of the proceedings. In my view, the trial judge was right to so conclude. [ 134 ]

Article 5 C.C.P. reiterates the very well known fundamental principle of natural justice that "no judicial demand can be adjudicated upon unless the party against whom it is made has been urged or duly summoned". [15] The Court has stated before that no party can seek the annulment of a given contract without impleading the parties involved; proceedings that pretend to do so are unfounded on their face. [16] [ 135 ] That is not all. As the trial judge noted, the appellants' legal interest to present such claim for and on behalf of NDI was also lacking.

Their alleged derivative action remedy cannot justify this interest. The appellants were neither shareholders nor directors of NDI. RHI was a 12% shareholder of NDI; the appellants were not.

In such a situation, the general rule that a person cannot use the name of another to plead must apply (art. 59 C.C.P .). [ 136 ] This lack of legal interest and failure to implead the proper parties are sufficient to dismiss this fourth and final ground of appeal. [ 137 ] As a matter of fact, even though they are either prescribed or covered by the release agreement of 1987, many other conclusions sought by the appellants could not have been granted as well for similar procedural reasons. [ 138 ] For instance, in the first, second, third, eight, ninth and tenth conclusions of their proceedings, the appellants asked that assets, shares or participations be transferred back to RHI without any mention of the restitution of the prestations (art. 1699 and foll.

C.C.Q .) that RHI had received before in that regard. The request for the return of the TransCanada Highway land, the Ottawa property and Aperdev's interests in Storage, NDI and Nirvana to RHI are an illustration. [ 139 ] These conclusions could not have been granted. The Court has indicated before that a party who seeks the nullity of a given transaction must offer to restitute the consideration received. If it is an amount of money, it must offer it and deposit it into Court. [17]

[ 140 ] To sum up, be it because of the applicable prescription, the impact of the release agreement of 1987, the absence of evidence in support of the alleged breaches of fiduciary duty of the respondents or the irregularities of the conclusions sought for lack of interest and failure to implead the correct parties or to properly offer the restitution of the prestations received, the trial judge was correct in concluding that the appellants' claim was unfounded. The appellants do not provide any valid basis on which to overturn her judgment. [ 141 ] I therefore propose to dismiss their appeal, with costs. CLÉMENT GASCON, J.A.