Executive Summary: Key Legal and Evidentiary Issues

• Characterization of the proceedings as either a true derivative action for the benefit of the corporations or primarily an oppression/redress remedy between equal co-shareholders over profit sharing.
• Extent to which alleged diversions of corporate funds by Lemieux (management fees, retained rent, salary, and post-sale withdrawals) constitute personal enrichment versus legitimate compensation and project expenses.
• Impact of the corporations’ cessation of active operations and sale of all immovables on whether corporate interests genuinely justify shifting Bellavance’s legal fees to the companies.
• Significance of Bellavance’s mixed conclusions (corporate recovery vs. direct personal recovery of 50% and personal/punitive damages) in assessing whether he is acting mainly in his own interest.
• Risk that ordering the corporations to fund only Bellavance’s legal fees at this preliminary stage would unfairly distort the balance of power between two equal co-shareholders in a profit-sharing dispute.
• Judicial discretion under article 447 LSA to defer any order for corporate payment of legal fees until after a full hearing on the merits, when the true nature and beneficiaries of the action can be properly assessed.

Factual background

Cédrik Bellavance and Olivier Lemieux are equal shareholders of Les Investissements Lebell inc., where they are also the only directors and officers. Through this holding company, they collectively control 92% of the voting shares of 9407-6734 Québec inc. Together with a third person, they also act as directors and officers of 9407-6734 Québec inc. The companies’ business is real estate investment, specifically the holding of rental properties through these corporations.
Bellavance alleges that Lemieux, personally and through his management company, Lemieux Gestion Finance inc., diverted funds belonging to the corporations or caused them to assume expenses solely for Lemieux’s benefit. According to Bellavance, Lemieux charged unjustified management fees, kept a portion of the rents for himself, and drew an unwarranted salary from the corporate accounts.
The financial situation of the corporations deteriorated over time. Bellavance claims that the parties ultimately sold three of their immovables in 2024 due to the corporations’ fragile finances. After the sale proceeds were received, Bellavance alleges that Lemieux diverted several sums, including a payment of $245,000 to his own management company, from the corporations’ accounts. In total, Bellavance estimates that Lemieux appropriated $461,825.44 for his own benefit.
Lemieux does not dispute that the payments were made, but he offers a different context. He explains that in 2021, the parties were warned that the corporations’ financial situation was critical and that their financing risked being transferred to special accounts or recovery. From early 2022 onward, Lemieux maintains that Bellavance largely disengaged from their joint investments, while Lemieux devoted his full time to the projects, leaving his prior work as a mason. Lemieux characterizes part of the sums he withdrew as fair remuneration equivalent to his former masonry income, reflecting the work he claims to have done to bring the projects to completion.

Competing narratives and evidentiary disputes

Lemieux asserts that many of the amounts Bellavance labels as “diverted” were applied to the purchase of materials or to pay workers involved in renovating the parties’ immovables. He also acknowledges having withdrawn a large sum from the corporate accounts upon the sale of the properties, but he claims this was done to place the funds beyond the immediate reach of Bellavance, whom he believed might otherwise appropriate them.
Lemieux further asks the court to recognize a disproportionate sharing of the project profits in his favour, suggesting a 60% share for him in the first project and 70% in the second, based on his alleged greater contribution after Bellavance’s withdrawal.
By the time of this judgment, all of the corporations’ immovables have been sold. The corporations are effectively inactive; there is no ongoing business. What remains is a conflict over how to allocate the profits realized from these projects between the two co-shareholders. The allegations on each side will ultimately require detailed factual findings on: the legitimacy of the withdrawals; whether they represent reasonable compensation, project costs, or misappropriation; and the true extent of each party’s contribution to the venture.

Nature of the legal proceedings

Bellavance brought a shareholder oppression/redress action (recours en redressement pour abus et iniquités) in his own name and on behalf of Les Investissements Lebell inc. and 9407-6734 Québec inc., targeting Lemieux, the other shareholder. He subsequently obtained authorization to institute and continue a derivative action in the name of the corporations against Lemieux. The result is that a personal redress action and a corporate derivative action coexist in the same proceedings.
In his latest pleading, Bellavance seeks multiple remedies. Beyond a declaration that Lemieux acted abusively and oppressively, his primary relief is an order compelling Lemieux to reimburse to the corporations the amounts allegedly diverted. In the alternative, he asks personally to receive 50% of the sums Lemieux is said to have appropriated. He also seeks $25,000 in compensatory damages and $20,000 in punitive damages in his own favour, and he now additionally claims punitive damages on behalf of the corporations.
Lemieux contests the characterization of the action as a genuine derivative claim for the corporations’ benefit. In his view, the dispute is fundamentally an inter-shareholder conflict over profit-sharing, with the corporations serving largely as vehicles through which profits and losses are channelled and then reallocated.

Request for corporate payment of legal fees

The specific issue decided in this judgment is a preliminary, procedural one: Bellavance asks that his lawyers’ fees, both prospectively and retroactively from 1 January 2026, be paid by the corporations. He relies on article 447 of the Québec Business Corporations Act (Loi sur les sociétés par actions – LSA), which allows the court, in derivative and related proceedings, to make a range of orders, including authorizing who conducts the action and ordering the corporation or its subsidiary to pay all or part of the reasonable fees and expenses incurred by the applicant in relation to the action or intervention.
The judge recalls that an order under article 447(7) LSA is appropriate when the applicants have acted in the interests of the company and it would be unjust for them alone to bear the costs of a proceeding that benefits the corporation. In classic derivative actions, where a shareholder steps in to pursue a claim the company itself has neglected or refused to assert, it is easy to see why shifting legal fees to the corporation may be fair: the recovery belongs to the company, not to the individual shareholder personally.

Judicial assessment of the true nature of the claim

At this very early stage, the court finds that the true nature of the proceeding initiated by Bellavance appears to be, above all, a personal redress action between co-shareholders. The judge notes that the dispute is essentially about sharing the profits of the corporations, which no longer carry on active operations. Each party argues that his own contribution, and the other’s lack of involvement, justifies a particular distribution of the profits. The corporations’ involvement seems primarily a means to claw back amounts paid to the shareholders so that those sums can be redistributed according to the ultimate judgment.
In this light, the court concludes that Bellavance seems to be acting primarily in his own interest, with the benefit to the corporations being secondary. This is underscored by his alternative conclusion that the amounts allegedly withdrawn by Lemieux should be paid directly to him personally. The judge distinguishes this scenario from the typical derivative action, where the corporation is clearly the main beneficiary of the litigation and the shareholder is acting in a representative capacity to vindicate a corporate right the company itself has not pursued.
Given this characterization, the judge is concerned that granting Bellavance’s request now—having the corporations pay only his legal fees—would create a significant imbalance in the power dynamic between two equal co-shareholders locked in a profit-sharing dispute. Such an order could effectively finance one side of the litigation from corporate funds even though the action, on its face, primarily advances that shareholder’s own financial interests.

Outcome of the fee application and implications

The court therefore declines, at this stage, to order the corporations to pay Bellavance’s legal fees. Instead, it defers the question of whether the corporations should ultimately bear some or all of those costs to the trial judge who will hear the case on the merits. The present judgment explicitly states that it will not bind that future judge. Depending on the evidence presented at trial, the final judgment might still award Bellavance reimbursement of all or part of the legal fees he has incurred, but that assessment is left for later.
The judge also reminds both parties that they are on a path where they risk consuming, in fees and expenses, the very profits they are disputing. He suggests that a settlement conference could allow both sides to maximize their net gain rather than eroding it through continued litigation.
As for the procedural outcome, the court formally defers the question of corporate payment of Bellavance’s lawyers’ fees to the judge who will hear the merits of the case, with costs to follow the ultimate result of the litigation. There is no determination at this stage of a “successful party”: Bellavance does not obtain the fee-payment order he sought, but the issue remains open for reconsideration at trial. No damages, no monetary award, and no specific costs are fixed in this interim judgment, and the total amount that might ultimately be ordered in favour of any party cannot yet be determined.