Executive Summary: Key Legal and Evidentiary Issues

• Relationship between a $30,000,000 share purchase agreement (with a $6,000,000 earn-out) and a later claim of constructive dismissal by the seller-executive.
• Allegations by the executive that substantial interference with his powers as president transformed his resignation into a congédiement déguisé, supporting claims for notice and moral damages.
• Counter-allegations by the purchasers that the executive orchestrated a fraudulent scheme and misrepresented profitability, supporting a $9.78M counterclaim for reduction of the purchase price.
• Core procedural issue over whether the employment claim and fraud-based counterclaim should be split, with the defendants seeking disjonction under article 210 C.p.c. so the main action proceeds first.
• Overlap of factual and expert evidence (profitability, tax credits, COVID-19 subsidies, accounting treatments) argued to make the employment and commercial issues effectively inseparable.
• Court’s application of proportionality and trial-management principles, leading to rejection of disjonction and an order that the case proceed as a single unified trial, with costs in favour of the plaintiffs.

Factual background

Yves Perron founded Source Évolution inc. in 2003, an information-technology consulting firm, and served as its president from 1 March 2003. In March 2021, representatives of Alan Allman began discussions with him to acquire Source Évolution. After negotiations, a share purchase agreement (the “Convention”) was executed on 21 March 2022, under which the defendants acquired all the shares of Source Évolution for a stated price of $30,000,000. The Convention provided that this price would be adjusted according to detailed mechanisms, including a significant contingent component: a conditional consideration of $6,000,000 payable in shares of a new publicly listed company, in three instalments over three years, provided that Source Évolution’s adjusted EBITDA met or exceeded a reference EBITDA for each corresponding year. This earn-out-type structure made the ongoing profitability of the company after closing particularly important to both sides. In line with pre-closing documentation and the Convention, Mr. Perron signed an employment contract with Source Évolution, now owned by the purchasing group, on 1 April 2022. Under this employment contract, he remained president, with the same functions and responsibilities as before, exercised in collaboration with the defendants’ representatives. The employment contract was of indefinite duration but allowed Source Évolution to terminate his employment on written notice in particular circumstances, including: (i) a significant loss of profitability, defined as a reduction of more than 50% in revenue compared with the same quarter of the previous year over two consecutive quarters; and (ii) if he were found guilty of theft, fraud or misappropriation of funds against Source Évolution, Alan Allman entities, or their affiliates. Mr. Perron continued in his role until 26 September 2022, when he tendered his resignation by letter to the defendants. He later claimed that this resignation was forced in substance due to fundamental changes imposed on his role and authority.

Procedural history and claims

On 4 May 2023, Mr. Perron filed his initial originating application in the Superior Court of Québec, District of Montréal, asserting that his resignation amounted in law to a congédiement déguisé (constructive dismissal). He sought $430,000 as an indemnity in lieu of reasonable notice and $50,000 in moral damages. In this initial pleading, he did not seek the unpaid $6,000,000 contingent purchase price or any other balance of the sale price; his allegations focused on post-closing conduct. He claimed that after the transaction, the defendants progressively stripped him of real decision-making power. According to him, his title as president became largely nominal because he could no longer perform most of the functions and responsibilities set out in the schedule to his employment contract. He alleged that, despite his multiple complaints, the defendants deliberately blocked his actions and thereby participated in breaching the employment contract between him and Source Évolution. The pleading also referred to events after his resignation, including the effective end of his employment and the quantification of his claimed indemnity and damages. All facts alleged at this stage related to the post-Convention period and to the employment relationship. On 11 December 2023, the defendants, Source Évolution inc. and Alan Allman Associés Amérique du Nord inc., served a Defence and Counterclaim. Despite an arbitration clause in the Convention, they relied on that agreement and its negotiation as part of their defence to the constructive dismissal claim. They characterized his resignation as part of a “triad” of dolosive manoeuvres and asserted that his court action was a bad-faith attempt to obtain a remedy exceeding what he would otherwise be entitled to. The Defence recounted their version of the pre-contractual negotiations and the price-determination mechanism, including the $6,000,000 contingent consideration, which was payable at $2,000,000 per reference year in listed shares if Source Évolution achieved an adjusted EBITDA of about $4,128,313, with adjustments for projected growth. The defendants alleged that events following the Convention showed that Source Évolution’s profitability had been misrepresented and that the large gap between the agreed valuation and the company’s “real” value was attributable to fraudulent manoeuvres by Mr. Perron. They alleged a deliberate fraudulent scheme composed of three core elements: false representations regarding the accounting treatment of tax credits; treatment of COVID-19 government subsidies as if they were organic business growth; and accounting entries said to conceal volume rebates. Based on these allegations, the defendants’ counterclaim sought $9,779,842.98 in damages, said to correspond to an overvaluation of $15,779,842.98 on the agreed $30,000,000 price, minus the $6,000,000 contingent consideration which they did not pay. On 17 December 2024, Mr. Perron filed a Response, Defence to the counterclaim and an Amended originating application, to which 9126-4168 Québec inc. intervened as a co-plaintiff. The amended pleading expanded the case beyond employment issues, now seeking: the unpaid $6,000,000 contingent price under the Convention; an additional $500,000 allegedly due due to an error; and the lifting of a movable hypothec registered over shares valued at $1,000,000 issued in favour of 9126-4168 Québec inc. This brought the commercial and secured-transactions dimensions fully into the main action. Over the course of 2025, the parties conducted examinations on discovery, including of representatives of the defendants and of Mr. Perron, and attempted private mediation on 22 July 2025, which did not result in a settlement. By late 2025, most pre-trial steps had been completed or substantially advanced, with only some undertakings, objections and expert work outstanding.

The motion for disjunction of instance

On 12 November 2025, the defendants brought the procedural motion that is the subject of this judgment: an application for disjonction de l’instance under article 210 of the Code of Civil Procedure. They sought to have their own counterclaim separated from the main action and requested that the main action—essentially the constructive dismissal and related claims—proceed first and be heard alone. Their argument was that the main claim was relatively straightforward, involving classic employment-law questions about the nature of the resignation, alleged changes to essential terms of employment and the quantum of notice and moral damages. By contrast, the counterclaim, in their view, raised much more complex issues: alleged fraudulent misrepresentation, tax credits and COVID-19 subsidies, accounting treatments, valuation of the company at the time of the sale and interaction with the earn-out mechanism. They argued that these matters would require extensive expert evidence and significantly more court time and party resources. On this basis, they asserted that all criteria for disjunction were met and that ordering disjunction would reflect the proportionality principle in civil procedure, by allowing a shorter first trial on the employment issues that might lead to an out-of-court resolution of the remaining issues. The plaintiffs opposed the motion. They emphasized that it was the defendants themselves who had chosen to insert highly detailed allegations about the Convention—fraud, misrepresentations and overvaluation—directly into their Defence to the constructive dismissal claim, not only into the counterclaim. In the plaintiffs’ view, those allegations had become inseparable from the entire case, as they now permeated both the main action and the counterclaim. They argued that the same factual matrix—profitability, rebates, tax credits, government subsidies, accounting entries and the earn-out—was central to both the defence to the employment claim and the counterclaim and that trying these issues separately would duplicate evidence, increase costs and delay resolution.

Legal framework on disjunction and scission

The Court confirmed that article 210 C.p.c. is the correct procedural vehicle to seek disjunction of another claim (here, a counterclaim) from the main action. Disjunction is characterized as a case-management measure designed to give effect to the Code’s guiding principles, notably proportionality and the sound administration of justice. It allows separate hearings of claims joined in the same proceeding, but it is not automatic; the judge must assess whether the outcome of one claim is likely to influence the other and whether separation will truly increase efficiency. The judgment recalls established criteria for disjunction, including: the relative amount of costs and fees that global hearings would entail; differences in complexity between the joined matters; the conduct of the party seeking disjunction; the risk of multiple trials on similar or related points; the procedural stage reached; anticipated duration of hearings; the risk of contradictory judgments; and whether a decision on one claim could put an end to or significantly narrow the other. The Court also observes that the criteria for disjonction (art. 210) and for scission de l’instance (art. 211) are not identical but overlap significantly, which explains why some judgments transpose scission principles into disjunction cases. In scission, jurisprudence stresses that unity of trial remains the rule and that the party seeking scission must demonstrate a marked advantage and the absence of other reasonable means to address the alleged problem. The request must also be assessed in light of access to justice, procedural economy and fairness to both parties.

Court’s analysis

In analysing the first group of criteria—simplicity of the first step, connections between issues in each step and comparative complexity—the Court finds that the defendants’ own pleadings undermine their case for disjunction. Mr. Perron’s constructive dismissal claim rests not only on changes to his title or reporting lines but also on how those changes affected his ability to negotiate client rebates, close strategic contracts and maintain profitability. The defendants, in responding, explicitly link his departure to alleged fraudulent misrepresentations and a pre-planned scheme, including alleged misstatements on profitability, tax credits and COVID-19 subsidies. They thus embed the acquisition-fraud narrative directly into the defence of the employment claim itself, not merely in an ancillary counterclaim. As a result, many of the same factual and expert issues—profitability, valuation, treatment of tax credits and government subsidies, accounting of discounts—would have to be examined in any trial on the constructive dismissal claim alone. The amended originating application further tightens this link by asserting claims for the $6,000,000 contingent consideration, the additional $500,000 and the release of the $1,000,000-backed hypothec, all rooted in the Convention. The Court concludes that the facts to be established at a first trial, if the instance were disjoined or split, would overlap substantially with those required at a second trial. On the second set of criteria, the judge considers whether a first-phase decision could dispose of the entire dispute, narrow the issues or materially increase the prospect of settlement. The Court finds that it would not. Regardless of the outcome on the constructive dismissal claim, the defendants intend to pursue what they call overpayments under the Convention, and the plaintiffs intend to pursue the contractual sums they allege are still owed. A first judgment would therefore not render the second phase unnecessary. The defendants’ suggestion that a first-phase judgment might encourage settlement is deemed speculative, particularly in light of a failed mediation attempt. The Court then turns to costs, delay and duplication. It notes that the case is already well advanced: pleadings on both sides (initial and amended), examinations of key witnesses and responses to undertakings have largely been completed, and only some outstanding undertakings, a set of objections and expert work remain. The parties have also invested in mediation. In these circumstances, disjoining the proceedings would mean organizing two trials around a largely common evidentiary base. That would almost inevitably multiply legal costs, lengthen the overall process and require more judicial resources, without clear compensating benefits. The judge also considers the risk of inconsistent judgments on overlapping factual questions if the issues were fragmented. Finally, the Court weighs potential advantages or prejudice. It finds that the plaintiffs would suffer serious prejudice from disjunction, through prolonged uncertainty and higher costs. The defendants, by contrast, identify no concrete prejudice if the case proceeds as a single trial, other than the hypothetical prospect of a quicker resolution or settlement. They fail to demonstrate any “marked advantage” that would justify departing from the default rule of unity of trial.

Outcome and implications

For these reasons, the Superior Court rejects the defendants’ motion for disjunction of instance. The counterclaim remains joined to the main action, and all issues—constructive dismissal, claims under the share purchase agreement, alleged fraudulent misrepresentation and valuation disputes—will be heard together at a single trial. As a case-management measure, the Court orders the parties to file a new, jointly signed case protocol within fifteen working days, setting out the next procedural steps. On this interlocutory motion, the successful parties are the plaintiffs, Yves Perron and 9126-4168 Québec inc.; they obtain dismissal of the defendants’ motion and an order that the defendants pay their costs of justice. The judgment does not quantify those costs and does not decide any of the substantive monetary claims (notice, moral damages, contingent purchase price, additional sums or the counterclaimed $9.78M), so the total amount ultimately ordered in favour of the successful party (including costs and any damages) cannot yet be determined from this decision alone.