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Factual background and structure of the transaction
The dispute arises from the sale of a specialized collectibles business operating under Les Cartes sportives de la Capitale inc. (“Cartes sportives”) and 9494-3461 Québec inc. (“3461”), which buy and sell sports cards, precious metals and currency. The holding company 9494-3420 Québec inc. (“3420”) owns all the shares of Cartes sportives and 3461. On 1 August 2023, the defendants Sylvain Martineau, Gestion International 2016 inc. and Fiducie familiale Sylvain Martineau 2015 (collectively, the “Vendors”) sold all their shares in Cartes sportives to 3420 (the “Purchaser”) for a purchase price of $21,000,000. A substantial portion of that price, $13,000,000, had already been paid, bringing total payments to $14,000,000 with subsequent adjustments. The business was portrayed as a major player in Quebec, with sales throughout Canadian provinces and into the United States, and with a clear growth opportunity in the American market.
Employment relationship and post-closing obligations
As part of the overall commercial deal, Martineau undertook to remain employed by Cartes sportives for three years at an annual salary of $500,000. His role was expressly to transfer his know-how so that the Purchaser could properly operate the acquired business. The employment contract also imposed a duty of loyalty and confidentiality for the three-year term, extended by 24 months after termination. These personal obligations sat alongside the broader covenants contained in the share purchase agreement.
Restrictive covenants and contractual framework
The key contractual provisions were found in the 1 August 2023 share purchase agreement. Clause 9 contained a 10-year confidentiality undertaking by the Vendors. They agreed to preserve the confidentiality of all confidential information relating to the company or the Purchaser, not to disclose it to third parties, and not to use it directly or indirectly for their own benefit or for others. Clause 10 imposed non-competition and non-solicitation obligations. “Activities” were defined very broadly to include the purchase and sale of a range of collectibles: sports cards, precious metals, coins, watches, pocket watches, toys, figurines, military items, collectibles, advertising posters, antiques, comic books, banknotes and jewellery. The “Territory” was defined as all of Canada and the United States. Under clause 10.1, each Vendor undertook for seven years from closing or five years from the end of Martineau’s employment, whichever was longer, not to hold, operate, own, participate in, or otherwise be involved in any business acting in whole or in part in the same field of Activities anywhere in the Territory. Clause 10.2 prohibited the Vendors for the same period from soliciting, doing business with or attempting to do business with the company’s clients or suppliers, in relation to products or services identical or competing with those of the company, throughout the Territory. Clause 10.3 imposed a seven-year non-solicitation of employees, barring the Vendors from soliciting, engaging or encouraging any employees of the company to leave, without any territorial limit on this obligation. Clause 10.4 set out a detailed penalty regime in case of breach, including a daily penalty of $20,000 for contraventions of the non-competition covenant, a multiple of prior revenues for client solicitation and 300% of an employee’s annual salary for employee solicitation, while also preserving the right of the Purchaser to seek greater damages or injunctive relief. Importantly, clause 10.5 recorded the Vendors’ express acknowledgment that the confidentiality, non-competition and non-solicitation undertakings were reasonable in duration, scope of persons and territory, given the consideration and the nature of the company’s activities. Clause 11.8 confirmed the share purchase agreement as the entire agreement on the subject, replacing all prior understandings.
Negotiation context and governing legal standards
The court placed significant weight on the commercial context. This was a negotiated sale of business between parties assisted by legal counsel, with a high price and specific recognition of “key employees.” Evidence showed the Vendors’ lawyer had expressly confirmed, during negotiations in July 2023, that the maximum non-competition and non-solicitation period would be seven years from closing, and did not raise other reservations about clauses 9 and 10. The Superior Court applied the Supreme Court’s guidance in Payette c. Guay inc., which holds that restrictive covenants in a commercial sale of business context are assessed more flexibly than in employment contracts. In such commercial settings, non-competition and non-solicitation clauses are presumed lawful unless proven unreasonable as to scope, duration or territory, taking into account the price, business nature, parties’ experience and access to professional advice. On the interlocutory record, Martineau had not “clearly” demonstrated that clause 10 was unreasonable in any of these dimensions.
Competing business and the Gold Wanted operation
After the transaction, and while still subject to his employment and post-closing obligations, Martineau launched a new venture under the commercial name “Gold Wanted.” Promotional material and event flyers in the record showed that Gold Wanted’s business model mirrored that of the plaintiffs, involving itinerant buying events for the same categories of items listed in the definition of Activities. The Gold Wanted events were held at multiple locations in 2025 and early 2026, all within Canada and the United States, i.e., squarely within the contractually defined Territory. The evidence also suggested steps by Martineau to obscure his link to the business, such as using his brother’s address in corporate filings and having a key former employee operate under a fictitious name. This conduct reinforced the plaintiffs’ allegation that Gold Wanted was a direct competitor created in breach of the non-competition covenant.
Solicitation of key employees and staff
A crucial evidentiary pillar concerned the solicitation of employees. The confidential information memorandum prepared prior to the sale identified Patricia Pagé (co-ordinator), Alexandra Guay (co-ordinator) and Dany Dion (shipping manager) as “key employees.” The share purchase agreement itself linked part of the price to the retention of two key employees, Pagé and Dion, for at least 24 months after closing; if either resigned within that window, the balance of the purchase price would be reduced, provided they had always reported directly to Martineau. Against that backdrop, Pagé resigned from 3461 on 6 January 2025 after discussions with Martineau in late December 2024, during which he described his new Swiss-focused project and invited her to join his new company. She then began working for Gold Wanted, initially under the fictitious name “Emma Smith.” Martineau first denied knowing anyone under that name, then admitted in examination that “Emma Smith” was in fact Patricia Pagé. The court found his explanation – that Pagé feared pressure from her former employer – unconvincing and closer to a deliberate ruse. Other sworn statements reinforced the pattern. Former and current employees, including Dany Dion, Guy Leclerc, Samuel Aubin, Pierre Héon and Luc Loupien, testified that Martineau contacted them (often via blocked or masked calls or through intermediaries) to present his new enterprise as similar to Cartes sportives/3461, operating in Europe and North America. He allegedly offered continued or improved salary, profit-sharing of 10% of profits among employees and even future employee buy-out financing within three to five years. In some instances he explicitly referred to having already hired Pagé and suggested that his recruiting efforts would destabilize Encan International (the trading name of 3461). The court concluded that, on this interlocutory record, there was strong prima facie evidence that Martineau had solicited key and other employees, in direct contravention of clause 10.3, even before his formal dismissal on 4 February 2025.
Procedural history and nature of the relief sought
On 28 January 2025, the plaintiffs commenced proceedings seeking a provisional interlocutory injunction, an interlocutory injunction, a permanent injunction and damages. The originating application was amended in March 2025. At the provisional stage, the Superior Court refused relief but expressly urged the parties to move swiftly to a hearing on the interlocutory injunction. The present judgment addresses that interlocutory stage. The plaintiffs sought essentially prohibitive orders compelling the defendants to cease and abstain from conduct that allegedly breached the confidentiality, non-competition and non-solicitation clauses, including specific orders targeting the Gold Wanted enterprise. The court characterised all seven substantive conclusions (apart from ancillary requests on publication, security, execution and service) as prohibitive rather than mandatory, which meant that the applicable evidentiary threshold was a “simple” appearance of right rather than a “strong” one.
Legal test for interlocutory injunction and its adaptation
The court reviewed the statutory framework in articles 510 and 511 of the Code of Civil Procedure, identifying three standard criteria: appearance of right, serious or irreparable harm, and balance of convenience. It also emphasized the discretionary nature of injunctive relief, particularly where enforcing contractual obligations is at stake. In line with appellate authority, the judge noted that in some contractual contexts involving obligations to do or not do, the balance of convenience can be downplayed because civil law favours specific performance as the primary remedy. For prohibitive injunctions, the court focused on whether there was a serious issue to be tried – that is, whether the claim was non-frivolous and raised genuine questions for adjudication – rather than definitively resolving controversies of fact or law that belong to the trial on the merits.
Appearance of right regarding the restrictive covenants
On the covenant side, the court found that the wording of clauses 9 and 10, their commercial context and the nature of the company’s activities together established a prima facie appearance of right for the plaintiffs. The broad territorial scope (Canada and the United States) was supported by the confidential information memorandum, which showed that Cartes sportives was already selling across Canada and into the U.S. and viewed the American market as a major growth opportunity. The Vendors’ own contractual acknowledgment in clause 10.5 that the covenants were reasonable in duration and territory, negotiated at arm’s length with counsel on both sides, further supported enforceability. The judge stressed that Martineau had not, at this stage, shown the non-competition and non-solicitation clauses to be “clearly” unreasonable, especially given the high sale price, his particular expertise, the Purchaser’s relative inexperience in the sector and the transfer-of-know-how employment arrangement. On that basis, the court rejected the notion that invalidity of the covenants “went without saying” and held that the plaintiffs met the appearance-of-right threshold.
Appearance of right on the factual allegations
On the factual plane, the court accepted that there was credible, detailed evidence of ongoing competition and solicitation. The Gold Wanted advertising materials showed activities virtually identical to those listed in the contractual definition of Activities. The sworn statements of multiple employees, together with Pagé’s use of a false identity, Martineau’s inconsistent testimony and his own admission of having launched Gold Wanted after payment disputes, all pointed to a significant probability that he was using the plaintiffs’ business model, confidential information and workforce in breach of the covenants. The judge expressly adopted and extended earlier interlocutory reasoning that the scale and territorial reach of Gold Wanted’s operations were issues that could not be excluded from the interlocutory analysis.
The defendants’ non-payment defence and exception d’inexécution
In response, the defendants invoked the civil law defence of exception d’inexécution under article 1591 of the Civil Code of Québec, arguing that the plaintiffs had failed to pay the balance of the purchase price and that this justified their refusal to respect the restrictive covenants. They relied particularly on clause 3.2(iv), which ties annual payments on the $5,000,000 balance to complex financial conditions, including net after-tax profits and a fixed-charges coverage ratio of 1.10 for Cartes sportives and 9494-3461. The plaintiffs contested any default. Their president, Anthony Doyon, swore that the $2,000,000 deposit was held in trust bearing interest in accordance with the agreement, payable by 1 August 2026, and that no capital was owed for 2023 because the specified financial ratios had not been met. He further indicated that $13,000,000 plus an additional $1,000,000 adjustment had already been paid, for a total of $14,000,000, and that no further sum was “due or payable” as of March 2025 under the contract’s terms. The court noted that the deposit’s due date (1 August 2026) had not yet arrived and that the agreement contains a “notwithstanding” clause requiring any unpaid portion of the balance, with accrued interest, to be paid by 1 August 2029 at the latest. In this procedural context, the judge held that the alleged default was not established on a prima facie basis. Moreover, the court found it inappropriate to allow the exception d’inexécution to neutralize compliance with clauses on non-competition, non-solicitation and confidentiality at the interlocutory stage, especially given the commercial nature of the agreement and the availability of monetary remedies at trial.
Serious and irreparable prejudice to the plaintiffs
The court then assessed whether the plaintiffs faced serious or irreparable harm. It rejected the simplistic view that potential monetary compensation automatically bars injunctive relief. Where a non-competition clause is being flouted, an injunction may be essential to avoid rendering the clause illusory. Here, the evidence showed that Martineau was actively leveraging the plaintiffs’ business model to run parallel events, purchase goods, and attract customers, while simultaneously soliciting or attempting to recruit current and former employees. These continuing acts risked diverting clientele, undermining the plaintiffs’ goodwill, and eroding the very benefits of the $21,000,000 transaction. The court emphasized that the status quo could not be restored after the fact: once Gold Wanted events occurred and market relationships shifted, a final judgment could not simply “undo” those competitive incursions. This was sufficient to demonstrate serious and irreparable harm warranting interlocutory intervention.
Balance of convenience and cumulative remedies
On the balance of convenience, the judge acknowledged appellate guidance that, in contract enforcement cases, the primacy of specific performance may diminish the weight of this factor. Nevertheless, the court carried out a comparative analysis. It found that the harm to the plaintiffs if the injunction were refused – namely, continued erosion of their market position and loss of the value of the restrictive covenants – markedly outweighed the inconvenience to Martineau and his entities of being temporarily barred from operating in this specific line of business and territory. The existence of a penalty clause did not preclude injunctive relief. The share purchase agreement expressly preserved the buyer’s right to seek both penalties and other remedies, including injunctions, and made clear that seeking damages did not waive the right to insist on compliance. The court therefore concluded that both doctrinally and on the contract’s text, penalty provisions and injunction operated as cumulative, not alternative, remedies.
Outcome of the interlocutory application and scope of the orders
In its dispositive section, the Superior Court granted the interlocutory injunction in full. It ordered Martineau, Gestion International 2016 inc., and Fiducie familiale Sylvain Martineau 2015, personally and through any company, to cease and abstain, until final judgment, from soliciting employees of 9494-3461 Québec inc., from using confidential information to contact or induce employees to leave, and from using confidential information obtained from Cartes sportives and 3461 for their own benefit or that of others. The court further ordered them to cease and abstain from operating the Gold Wanted enterprise, or any other business acting in whole or in part within the defined domain of Activities, anywhere in Canada and the United States. They were also prohibited from owning, holding, participating in, advising, financing or otherwise being linked to any such competing business, directly or indirectly, and from acting personally or through third parties in that domain throughout the Territory. In addition, the judgment directed any person made aware of the order to refrain from publishing, distributing or circulating any promotional material relating to Gold Wanted’s activities and authorized the plaintiffs to serve the order by any means, at any time, including outside legal hours and on non-business days.
Provisional execution, security and costs
The plaintiffs also requested provisional execution notwithstanding appeal and a dispensation from posting security. The court found no need to order provisional execution, since article 514 C.C.P. already provides that an injunction remains in force despite an appeal, a rule the Court of Appeal has confirmed applies to both interlocutory and permanent injunctions. On the question of security, article 511 C.C.P. now leaves the imposition of a bond to the trial judge’s discretion. Given the strength of the plaintiffs’ prima facie case and the nature of the relief, the judge chose not to require any security from them. Finally, the court awarded costs (“frais de justice”) against the defendants in favour of the plaintiffs, without specifying an exact monetary amount, which will be determined according to the applicable tariff and procedures. As a result, the successful parties at this interlocutory stage are the plaintiffs 9494-3461 Québec inc., 9494-3420 Québec inc. and Les Cartes sportives de la Capitale inc., and while they obtained broad injunctive relief and an order for costs, the decision does not fix any precise total for damages, penalties or costs in their favour, so the exact amount awarded cannot be determined from this judgment alone.
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Plaintiff
Defendant
Court
Quebec Superior CourtCase Number
200-17-037113-255Practice Area
Corporate & commercial lawAmount
Not specified/UnspecifiedWinner
PlaintiffTrial Start Date