Executive Summary: Key Legal and Evidentiary Issues

• Scope and prudential limits of a motion to strike allegations and exhibits under art. 169 C.C.P. in a complex, fact-intensive employment and investment dispute
• Relevance of post-filing conduct and “pattern” evidence, including alleged delays, refusals to honour agreements, and prejudicial application of contractual terms toward the plaintiff
• Use of allegations about “Employees Funds” (employee investment vehicles) to contextualise and nuance the defendants’ own pleadings, despite those funds not being a direct head of claim
• Interaction between court jurisdiction and arbitration clauses, particularly whether referencing conduct under agreements subject to arbitration improperly circumvents an agreement to arbitrate
• Effect of strict confidentiality clauses in fund agreements where one party has already pleaded those agreements and filed them under seal, and whether this can limit the opposing party’s narrative
• Allocation of procedural costs where a motion to strike is dismissed and the court declines to pre-emptively rule on admissibility or probative value of contested evidence

Factual background and employment relationship

Patrick Lynch worked in investment strategy for Fiera Comox Partners inc. from 1 November 2017 until his dismissal without cause on 30 May 2022. His compensation comprised base salary, bonuses, and performance commissions through carried interest or “performance fees,” allocated by points tied to profits on specified investments within the firm’s strategies. After his termination, Lynch pursued claims linked not only to his termination package but also to ongoing participation in investment structures administered by the defendants. In April 2023, Lynch and his holding company, 9367-8068 Québec inc. (PLHoldco), filed their originating application. They sought, among other things, a termination indemnity they initially quantified at $1,141,667 for a 15-month notice period (to be adjusted), declaratory relief establishing that the South Branch Capital Trust I (PL Trust) was entitled to 19 of 50 points on certain Fiera Comox investments in strategies closing after 1 January 2022, and further declarations that PL Trust held points on other specified investments closing no later than 31 August 2023. They also asked for an order regarding the appointment of an independent expert to value the shares PLHoldco held in Comox Equity Partners inc.

Evolution of the pleadings and monetary claims

The defendants served their defence in October 2024. They admitted the dismissal without cause but argued that the plaintiffs’ claims exceeded the compensation provided by the agreements governing the employment and investment relationships. In September 2025, the plaintiffs amended their originating application. The amended application reduced the claimed termination indemnity to $958,333 (to be adjusted) and added about 140 new paragraphs plus many new exhibits. These additions largely concerned alleged post-filing conduct, delays, refusals to honour contractual provisions, and applications of agreements said to be prejudicial to Lynch, including in the context of share repurchases, carried interest programs, and employee investment funds. The defendants responded by bringing a motion to strike specific new allegations—paragraphs 128.4(o) to (w) and 128.5—and for the withdrawal of nine related exhibits. They argued that those passages were either irrelevant to the conclusions sought or fell within the scope of arbitration and confidentiality clauses to which the Superior Court should defer.

Allegations regarding share valuation and carried interest rights

In a newly added section H of the amended application titled “2023–2025: Ongoing delays, non-compliance, and prejudicial applications of agreements,” the plaintiffs described a series of factual examples. Some related to the purchase of PLHoldco’s shares in Comox Equity Partners. They alleged that Lynch was formally excluded from the valuation process, that the PwC valuation report was delayed until December 2023—more than 18 months after termination and six months after the 31 May 2023 valuation date—in breach of a “commercially reasonable efforts” clause in section 8.2(1) of the shareholders’ agreement, and that requested valuation documents were not provided. The plaintiffs also pleaded that the defendants refused to accommodate a timetable for the plaintiffs’ own expert report by withholding valuation materials, abruptly repurchased PLHoldco’s shares on 1 February 2024 despite having earlier proposed a 15 March 2024 purchase date, and refused to structure the transaction in a tax-efficient manner. According to the pleading, that refusal occurred despite section 4.2(10) of the shareholders’ agreement and caused Lynch approximately $1 million in avoidable tax, in a context where the defendants were said to be aware of a federal capital gains tax increase effective 25 June 2024. The plaintiffs further asserted that the defendants retained the benefit of interest on more than $10 million between the valuation date and the transfer of purchase funds, failed to provide documentation confirming the closing date of the transaction, demanded a release as a condition for releasing funds, and did not deliver a promised “safe income” calculation for over a year, allegedly exposing PLHoldco to tax charges and penalties.

The amended pleading also detailed post-termination issues under the carried interest programs. Lynch claimed that he was not notified of a first Private Credit Carried Interest Program distribution dated 7 May 2024 and had to learn about it from a third party. Payment of that distribution was allegedly conditioned on signing a release that the plaintiffs say is not required by the relevant governing agreements, and the defendants were said to have refused interest for delayed payment relative to other unitholders. The plaintiffs pleaded that, more than a year after a promise made on 30 July 2024, the defendants had still not provided an account statement setting out past distributions and entitlements to future distributions under the Private Equity and Private Credit carried interest programs, despite repeated follow-ups. These allegations were central to the plaintiffs’ portrayal of a continuing pattern of contractual non-compliance and prejudicial treatment after the original filing.

Employees funds, pattern evidence, and contractual framework

The defendants’ motion focused on allegations and exhibits concerning “Employees Funds,” which are distinct investment vehicles allowing employees of Fiera Comox to invest in funds managed by the defendants. Importantly, these Employees Funds were not linked directly to employee remuneration or performance-based commissions and thus differed from the carried interest arrangements, even though they formed part of the broader ecosystem of advantages available to Lynch during his employment. The plaintiffs’ new paragraphs described various events between 2024 and 2025 involving governance and redemptions from these funds. They alleged, among other things, that the defendants ignored a 16 September 2024 notice of transfer by South Branch Capital Trust I to Lynch personally and relied on an incorrect agreement to challenge the transfer; continued to issue tax slips in the name of a dissolved trust; and adopted what the plaintiffs characterized as an unreasonable and punitive interpretation of tax allocation provisions in the Private Credit Employee Fund limited partnership agreement, resulting in Lynch being allocated 91% of the fund’s 2024 taxable income despite redeeming his units during the year. They pleaded that this allocation forced Lynch to pay taxes exceeding his returns, to the direct benefit of employees involved in his termination.

Other allegations concerned refusal to convene the Combined Investors annual meeting of the Private Equity Employee Fund despite an obligation in section 20.1.1 of the limited partnership agreement and a formal request from Lynch; refusal to reissue a tax slip said to be inconsistent with the scheme and commercial logic of the limited partnership agreement; issuance of a forced redemption notice allegedly breaching section 10.8.1 of that same agreement and likely to produce similarly punitive tax consequences; rejection of Lynch’s offer to sell his interests at 97.5% of value rather than redeeming for cancellation, which the plaintiffs say was contrary to the general partner’s fiduciary duty to act diligently and in the investors’ best interests; and a failure to respond to a 14 August 2025 request for a payment to offset punitive tax consequences of the Private Credit Employee Fund redemption. The plaintiffs capped this portion by reserving the right to further amend their application to claim damages arising from redemptions in the Employees Funds. They then added allegations about the defendants’ conduct within the litigation, including delays in responding to document requests and undertakings and limited disclosure of private communications despite evidence that sensitive business was often conducted through private channels. Collectively, these post-filing events were pleaded as illustrating the same pattern of “consistent delays, disregard for contractual duties, and prejudicial application of the governing agreements” that Lynch claimed to have experienced throughout his relationship with Fiera Comox.

Arbitration and confidentiality clauses in the employees funds agreements

The Employees Funds were governed by a suite of agreements: the Private Equity Employee Feeder Fund Limited Partnership Agreement and related Subscription Agreement (filed as exhibit D-41 under seal), and the Private Credit Employee Feeder Fund Limited Partnership Agreement and Private Credit Employee Fund Subscription Agreement (exhibit D-43). Each of these included an arbitration clause in article 24.1.1, providing that any dispute “relating to this Agreement” between the parties must be finally determined by arbitration in Montreal or Toronto, in English, under Ontario law and “to the exclusion of all courts of law.” The clause further specified that any controversy concerning whether a dispute is arbitrable must itself be determined by the arbitral tribunal, and that the agreement to arbitrate is intended to be “valid, exclusive, specifically enforceable and irrevocable.”

The defendants argued that by pleading a prejudicial “pattern” that extended into the management of the Employees Funds, the plaintiffs were effectively inviting the Superior Court to sidestep the arbitration regime and arrogate to itself the arbitrator’s role. They stressed that their own references to the Employees Funds in the defence served only to illustrate the total package of advantages offered to Lynch, not to litigate the content or enforcement of the fund agreements. In addition, the defendants invoked confidentiality provisions in articles 24.1.7 and 25.10.1 of the same agreements. Article 24.1.7 imposed strict confidentiality on “all aspects of the arbitration,” prohibiting disclosure of the fact, conduct, or outcome of any arbitration except as required by applicable law or necessary for related court proceedings, with breaches subject to monetary sanctions determined by the arbitral tribunal. Article 25.10.1 required limited partners and their related persons and advisers to maintain the secrecy and confidential status of “Confidential Fund Information” relating to the fund, the partnership, the general partner, the manager, affiliates, portfolio investments, and portfolio entities, subject to limited carve-outs for disclosure required by law or for bona fide business purposes, with specified safeguards. On that basis, the defendants contended that the court should refuse to entertain allegations about the Employees Funds to preserve both the arbitration agreement and contractual confidentiality.

Court’s analysis on relevance and procedural prudence

The Superior Court began its analysis by restating the principles governing motions to strike allegations under article 169, paragraph 2 of the Code of Civil Procedure. That provision allows a court to order the striking of immaterial or irrelevant allegations to streamline the proceedings and avoid costs and delays devoted to refuting or explaining non-essential facts. Referring to prior authority, the court emphasized that relevance is assessed by the allegation’s logical connection to the cause of action and the conclusions sought, and that, at the preliminary stage, disputed allegations are presumed true. The remedy is reserved for the clearest cases, and any doubt as to relevance should generally be resolved in favour of allowing the allegation to stand, particularly in complex cases raising numerous issues. The appellate jurisprudence highlighted that questions of admissibility and probative value—whether evidence will ultimately be received or carry weight—belong to the trial judge rather than to a judge hearing a motion to strike.

Within that framework, the court rejected the defendants’ contention that references to the Employees Funds were wholly irrelevant. While those funds were indeed distinct from remuneration-related carried interest rights and did not correspond to a specific head of compensation claimed by the plaintiffs, the defendants themselves had first put the Employees Funds in play. In their defence, they had alleged that the Employees Funds were a highly attractive investment vehicle available to Lynch and had filed the governing agreements as confidential exhibits to demonstrate the overall advantages he enjoyed. In that context, the court held that the plaintiffs were entitled to complete and nuance the factual picture drawn by the defendants and to attempt to show that these same arrangements formed part of a broader pattern of behaviour they alleged was prejudicial. The court acknowledged that the plaintiffs were, in effect, invoking evidence of similar facts or a “pattern” of conduct but concluded that excluding such evidence at this early stage would be premature. The proper time to assess whether those allegations satisfy the rules on similar-fact evidence, and whether specific items of proof should be admitted, would be at trial, under the supervision of the trial judge.

Interaction with arbitration and confidentiality provisions

On the arbitration issue, the court accepted that clause 24.1.1 was mandatory and that disputes relating to the Employees Funds agreements fall in principle within an arbitral forum. However, it disagreed that the plaintiffs were seeking to bypass that mechanism. The court underscored that its jurisdiction is determined by the conclusions sought in the amended application. Here, none of the plaintiffs’ conclusions asked the court to resolve a dispute about the interpretation or application of the Employees Funds agreements, nor did they seek relief that would require the court to determine whether a particular controversy was arbitrable. The plaintiffs explicitly acknowledged that questions falling within the arbitration clause rested with the arbitrator. The defendants had not raised a declinatory plea challenging the court’s jurisdiction in favour of arbitration. Against that background, the court reasoned that merely pleading post-filing conduct involving the Employees Funds as contextual or pattern evidence did not amount to the court usurping the arbitrator’s role.

As for confidentiality, the court found it inconsistent for the defendants, on the one hand, to have chosen to plead the Employees Funds agreements and file them—even under seal—and, on the other, to try to restrict the plaintiffs from situating those agreements within a fuller narrative. The confidentiality clauses did not permit the defendants to selectively invoke confidential arrangements as a shield while preventing the plaintiffs from referring to related aspects of their treatment under those same arrangements. Moreover, the court observed that there was no existing arbitration process whose secrecy could be compromised. In the absence of an ongoing arbitration, the plaintiffs could not be said to be violating the confidentiality of an arbitral proceeding that did not yet exist. The court concluded that the arbitration and confidentiality clauses, properly interpreted, did not justify striking the contested allegations or withdrawing the associated exhibits at this stage.

Outcome, successful party, and monetary consequences

In light of its analysis, the Superior Court dismissed the defendants’ motion in full. It refused to strike paragraphs 128.4(o) to (w) and 128.5 from the amended application and declined to order the withdrawal of the nine related exhibits. The decision confirms that in a complex employment and investment dispute involving multiple contracts, fund vehicles, arbitration clauses, and confidentiality obligations, allegations that arguably form part of a broader factual pattern will ordinarily be left for the trial judge to assess in terms of admissibility and weight. The successful parties in this procedural decision are the plaintiffs, Patrick Lynch and 9367-8068 Québec inc., and the court awarded them costs of justice against the defendants. The judgment does not fix any specific dollar amount for those costs, and it does not adjudicate the underlying monetary claims (such as the claimed $958,333 termination indemnity, alleged tax losses, or any other damages), so the total monetary amount ordered in favour of the successful party cannot be determined from this decision.