Executive Summary: Key Legal and Evidentiary Issues

• Corporate governance conflict over who may validly mandate counsel and institute proceedings in the name of the corporation EDLR in the context of a 50/50 shareholder–director deadlock.
• Central legal issue as to whether the president alone, relying on article 19 of EDLR’s general by-law, can authorize a law firm to bring internal litigation (including a safeguard order) against another director without a board resolution or derivative-action authorization.
• Existence of a conflict of interest for the law firm Hickson Noonan, which was instructed solely by one administrator (the president) to represent the corporation in a dispute pitting her against the co-administrator and co-shareholder.
• Admissibility and receivability of a second safeguard order application where the first was rejected for lack of urgency and lack of sufficient legal interest because the corporation itself had not been joined as a plaintiff.
• Evidentiary reliance on corporate records (register of directors, corporate by-laws, board composition) and sworn declaration of the president to establish who actually mandated counsel and whether any board resolution was ever adopted.
• Practical application of Quebec corporate law (and derivative-action provisions analogous to LSA arts. 445–446 / CBCA art. 239) to confirm that internal litigation on behalf of the corporation against an insider requires proper corporate authorization or court leave, failing which the proceeding is rejected and counsel disqualified.

Facts of the case

The dispute arises out of a broader corporate conflict within a closely held company, Espace EDLR inc. (EDLR), involving two principal protagonists: Marie-Annik Beaudet and Olivier Bouchard. They are both directors and officers of EDLR, together with a third director, Kim Labrecque. The board of directors is composed of three persons: Marie-Annik as president, Olivier as vice-president and Kim as secretary. All three also occupy officer positions within EDLR.
On 20 February 2026, the plaintiffs Gestion Marie-Annik Beaudet inc. and Marie-Annik Beaudet filed a principal action seeking oppression-type relief (redressement pour abus de pouvoir et iniquité), a share buy-out and related remedies, coupled with a first application for a safeguard order. That first safeguard motion targeted various measures against the defendants, including those relating to the conduct of the business and the role of Olivier Bouchard in the company.
The first safeguard application was dismissed on 5 March 2026 by another judge (Bonsaint j.c.s.). The court held that the urgency requirement for a safeguard order was not satisfied and, more importantly for later developments, that the plaintiffs lacked sufficient legal interest in their own names because the alleged prejudice actually belonged to the corporation EDLR, which had not been joined as a plaintiff. The judge underlined that EDLR has a distinct legal personality from its shareholder and that Marie-Annik could not simply assume she was authorized to represent EDLR without EDLR itself being a party.
In late March 2026, the conflict within the company escalated further when the human resources manager sent a termination letter to defendant Olivier Bouchard on 26 March 2026. On 7 April 2026, the board of directors of EDLR convened and adopted a resolution that had the effect of annulling the HR manager’s termination letter and thus attempted to preserve or restore Olivier’s position. This board decision triggered the second round of urgent proceedings.

The second safeguard application and mandate to counsel

In reaction to the 7 April board resolution, a second safeguard application was prepared. Dated 13 April 2026, it is styled as a “Demande de la mise en cause et de la demanderesse Marie-Annik Beaudet pour l’émission d’une ordonnance de sauvegarde”, brought jointly by EDLR (then as mise en cause) and Marie-Annik. The pleading is signed by two law firms: Hickson Noonan as lawyers for EDLR and Lavery De Billy as lawyers for the plaintiffs, including Marie-Annik.
In a sworn declaration dated 15 April 2026, Marie-Annik explains how this procedural configuration came to be. She states that, in her capacity as president of EDLR, she duly mandated the firm Gestion Hickson Noonan inc. to represent EDLR in the proceedings, invoking the powers conferred by article 19 of EDLR’s general by-law. According to her affidavit, she specifically retained Hickson Noonan to prepare and send a demand letter dated 7 April 2026 and to draft and file the second safeguard application dated 13 April 2026. She emphasizes that Hickson Noonan represents only EDLR’s interests, while she herself is personally represented by the separate firm Lavery.
The main conclusion sought in the second safeguard motion is to obtain an interim suspension of the board’s 7 April 2026 decision that annulled the termination letter addressed to Olivier. In other words, the motion seeks to maintain the effect of the HR manager’s 26 March termination letter by suspending the subsequent board resolution that attempted to undo it. The second safeguard application is presented urgently on 15 April 2026.

Challenge to counsel’s ability to act and to the receivability of the motion

Meanwhile, on 8 April 2026, even before formal service of the second safeguard application, counsel for Olivier Bouchard raised an objection to the mandate of Hickson Noonan, alleging a conflict of interest and absence of proper corporate authorization. This objection culminated in a formal motion notified on 14 April 2026 seeking a declaration of disqualification (inhabileté) of Hickson Noonan and of Me Noonan.
The opposing lawyers argue that Olivier is entitled to seek the disqualification of Hickson Noonan and Me Noonan due to their conflict of interest, grounded in the fact that they were never duly mandated by a board resolution of EDLR to represent the corporation in this internal dispute. They additionally contend that, given the circumstances and the internal nature of the conflict, no other firm could validly represent EDLR for purposes of presenting the second safeguard application unless a proper board resolution granting such a mandate had first been adopted.
Although Marie-Annik had invoked her prerogatives as president, she had never brought the question of mandating Hickson Noonan before the full board. No resolution of the board of directors of EDLR was ever adopted to authorize the firm to act for the company in an internal dispute opposing one director and shareholder against another. The evidence included corporate records confirming the composition of the board and a corporate register of officers, as well as the by-laws and Marie-Annik’s affidavit setting out how she, acting alone, engaged Hickson Noonan.

Corporate law framework and policy clause at issue

The legal analysis turns on the interaction between the company’s internal governance instruments and the broader corporate law framework governing internal disputes. The key “policy term” in this context is not an insurance clause but rather article 19 of EDLR’s general by-law, which regulates the authority to institute or defend legal proceedings in the name of the corporation.
Article 19 provides that the president of the company or any other person authorized by the directors is authorized to institute any civil, criminal, administrative or other legal proceedings in the name of the company, or to appear and respond on its behalf to any writ, order, injunction, examination or other procedure, to deal with garnishments, insolvency-related procedures, creditor meetings and similar matters, and in general to take any steps in legal proceedings that they consider to be in the best interests of the company. This formulation is broad and closely mirrors the language of article 93 of a corporate by-law that was analyzed by the Quebec Court of Appeal in 9172-5671 Québec inc. v. Lépine.
Relying on these authorities and on Professor Paul Martel’s commentary, the court recapitulates several principles: decisions to commence or defend legal proceedings on behalf of a corporation normally fall within the exclusive competence of the board of directors; an individual director cannot sue in the name of the company without the consent of the board unless acting through a properly authorized derivative (oppression-type) action; and where internal litigation is brought by the company against an administrator or insider, the usual doctrines of indoor management and implied mandate do not dispense with the requirement for formal authorization or a court-granted derivative action.
The Court of Appeal’s reasoning in Lépine is transposed almost directly. In that case, a president and 50% shareholder had relied on a similarly worded by-law clause to unilaterally retain counsel and institute proceedings in the company’s name against the co-administrator and co-shareholder. The appellate court held that such a clause does not grant the president absolute power and control over the corporation, especially in litigation directed against another administrator or shareholder. Its purpose is to facilitate the day-to-day legal affairs of the company (external litigation) and not to allow one faction to use the company as a vehicle in an internal dispute without either board approval or court authorization under the derivative-action provisions (arts. 445–446 LSA / art. 239 CBCA).
Accordingly, the general policy embedded in article 19 of EDLR’s by-laws is interpreted in the same restrictive light. The clause permits efficient management of ordinary external litigation but does not empower the president, acting alone, to instruct lawyers to sue or seek relief against a fellow director in the company’s name in an internal governance conflict. In such situations, a resolution of the board or a court-authorized derivative action remains necessary.

Conflict of interest of counsel and irregularity of the proceedings

Against that legal background, the court evaluates the position of Hickson Noonan. The firm was mandated solely by Marie-Annik and received instructions only from her, even though she is locked in a dispute with Olivier within the board. Applying Lépine and Martel’s analysis, the judge concludes that this places the firm in a situation of conflict of interest. In an internal dispute between directors and shareholders, an attorney who receives instructions only from one side cannot properly represent the corporate entity as a neutral client, because the board as a collective body has not determined that it is in the company’s interest to take that legal position.
The court emphasizes that it is for a majority of the board of directors to decide if suing or taking an internal procedural step is in the company’s interest. Where the board is deadlocked or cannot validly decide, the proper route is to seek leave from the court under the statutory derivative-action provisions. Absent such leave or a board resolution, the corporation cannot validly be represented in an internal dispute by counsel instructed unilaterally by one administrator.
From a procedural standpoint, this lack of corporate authority renders the second safeguard application irregularly instituted. The safeguard motion, filed in the name of EDLR and of Marie-Annik, is tainted both by the conflict of interest of EDLR’s purported counsel and by the absence of a proper mandate to act for the company. In light of this threshold defect, the court considers it unnecessary to re-examine the substantive criteria for granting a safeguard order (appearance of right, urgency, balance of convenience), which had already been touched upon in the earlier March 2026 decision.

Outcome and consequences

The Superior Court grants the motion seeking the disqualification (inhabileté) of Hickson Noonan and the irreceivability (irrecevabilité) of the second safeguard application. It declares the lawyers of the firm Hickson Noonan disqualified from representing 14960815 Canada inc. f.a.s.n. Entrepôt de la Réno (here treated as the corporate entity at the heart of the dispute) and formally rejects the application brought by that corporation and by Marie-Annik Beaudet for a safeguard order. As a consequence, the board resolution of 7 April 2026 annulling the termination letter is not suspended by judicial order, and the court leaves intact the corporate status quo as determined by the company’s internal organs without endorsing any interim protection sought by Marie-Annik’s side.
In terms of costs and monetary relief, the judgment orders costs of justice (frais de justice) against the plaintiff Marie-Annik Beaudet but does not state any specific monetary amount. The successful party in this decision is therefore the side opposing the safeguard application—principally 14960815 Canada inc. f.a.s.n. Entrepôt de la Réno and the interests aligned with Olivier Bouchard—who obtain disqualification of opposing counsel and dismissal of the safeguard motion, but the total amount of costs or any monetary award in their favour cannot be determined from the text of this judgment.