Case information

Contracts — Contract of partnership — Limited partnership — Service agreement — Discretionary termination clause of services agreement ? Forced buyout clause for expulsion of special partner — Trigger event of forced buyout clause based on discretionary termination of services agreement — Legal regime for “without cause” discretionary expulsion clauses and how they should be interpreted — Whether principle of internal coherence as stated in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, must be applied in respect of interrelated issues within civil proceeding and, if so, how that should be done — Civil Code of Québec, art. 2229.

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(SEALING ORDER)

The respondents and interveners are limited partnerships (LPs) that do business in the real estate industry. These LPs are all financed in equal proportions by the respondent Rimanesa Properties Inc. (Rimanesa), a company 100% owned by Richard Hylands and that holds 60% of the shares issued by each of the LPs, and the applicant, Marigec Management Inc. (Marigec), owned by the intervener Giuseppe Argento, and the respondent Gestion Nolands inc. (Nolands), owned by François Desjeans, which each hold half of the other 40% of the shares issued. Each of these LPs was the subject of a separate contract between the three parties. In addition to those special contracts, Marigec and Nolands also each entered into a services agreement with Rimanesa. In May 2014, Rimanesa put an end to the services agreement that it had with Marigec by means of para. 8.2, which stipulates that Rimanesa can terminate the agreement at its discretion. Approximately three weeks later, Rimanesa used the forced buyout upon the occurrence of a trigger event clause (“Call Option upon the Occurrence of a Trigger Event”) set out in para. 12.2 of each of the LP’s contracts to remove Marigec as a special partner. Marigec and Mr. Argento, while they recognized that Rimanesa had the right to terminate the services agreement without cause, challenged the interpretation that it was open to Rimanesa to use that termination to provoke the trigger event under para. 1.1(f) and use the forced buyout clause in each of the LP’s contracts. The parties went before the Superior Court to enforce their right.

The Superior Court rendered two judgments because of the splitting of the proceeding ordered on October 19, 2018. In the first decision, rendered on March 10, 2021, the Superior Court found that the termination of the services agreement constituted a trigger event under para. 1.1(f) set out in each of the LP’s contracts. It also found that the action brought by Marigec and Mr. Argento may constitute an abuse within the meaning of art. 52 of the Code of Civil Procedure but that in the second hearing it would be possible for them to demonstrate that they did not abuse their right to sue. On May 26, 2022, the Superior Court rendered a second judgment in which it found that Marigec and Mr. Argento failed to demonstrate that their action was not abusive and in which it condemned them to pay half of the extrajudicial fees incurred by Rimanesa. The Court of Appeal allowed the appeals filed by Marigec and Mr. Argento in part for the sole purpose of quashing the declarations of abuse and the order to pay the extrajudicial fees.