Case information

Contracts – Innominate contract – Contract for indeterminate and indeterminable term – Circumstances in which judge can disregard requirement clearly articulated in contract; more specifically, whether jurisprudence of our highest courts has absolutely abolished “clear act” rule – Nature of evidence that can be used to assess value of lost future earnings – Whether there can be relationship of subordination, within meaning of art. 2099 C.C.Q., where provider and client are not bound by contract of employment.

Case summaries are prepared by the Office of the Registrar of the Supreme Court of Canada (Law Branch). Please note that summaries are not provided to the Judges of the Court. They are placed on the Court file and website for information purposes only.

In 2010, the respondent Serge Côté started a company that sold used vehicles to purchasers in a situation of credit rehabilitation. The company operated under the name “Services financiers CSM inc.” (“CSM”). Mr. Côté was its sole shareholder and director. The launch of the company brought in the applicant, 9147 8966 Québec inc. (“Corporation”), and its director, Serge Brizard. The parties agreed on the sharing of responsibilities in the company and also signed a loan contract that dealt, among other things, with the sharing of profits (contract P 3). That sharing was later reviewed and became the subject of a new contract (contract P 5), which was subsequently amended verbally by the parties. The business relationship deteriorated. The Corporation’s share of the profits and the commissions on sales were no longer paid to it. The Corporation and Mr. Brizard brought a judicial application against Mr. Côté and CSM. They alleged damage to Mr. Brizard’s honour, dignity and reputation. They also alleged loss of income and loss of a share of CSM’s future profits.

The Quebec Superior Court found that there was no damage to reputation and excluded Mr. Brizard from the claim because he was not a party to contracts P 3 and P 5. The parties had signed a contract entitled [TRANSLATION] “loan contract”. Despite its name, the contract was not strictly speaking a loan contract. Some of its features resembled a loan contract, but it also contained a profit sharing clause and a clause providing that the lenders were not shareholders or directors of CSM. Contract P 3, amended by P 5 and other subsequent agreements, was supplemented by verbal agreements clarifying the relationship between the parties. As a result, contract P 3, amended by P 5 and the subsequent agreements, was not in the nature of an undeclared partnership but was not entirely a contract of enterprise either. It was an innominate contract under the Civil Code of Québec. An interpretation of the contract’s terms led the trial judge to conclude that the parties had opted for a contract for an indeterminate and indeterminable term. Following her analysis of prescription, the judge established amounts of claims due, with interest.

The Quebec Court of Appeal held that the trial judge had not erred in her analysis. However, the trial judge could not order the Corporation to pay interest and the additional indemnity from the date of service, because the payment in question had been made by Mr. Côté and CMS on a monthly basis only since December 15, 2017. The Court of Appeal therefore allowed the appeal in part in order to rectify the situation.