At the start of the 2022 marketing season, a company involved in processing maple syrup obtained the status of authorized buyer within the meaning of the maple syrup marketing agreement (Convention de mise en marché du sirop d’érable) (the Agreement), allowing it to receive syrup directly from maple syrup producers.
The Agreement provides that a purchaser is entitled to spread the payment for the syrup it has received from the producers over the marketing year. The Agreement also requires the authorized buyer to have an irrevocable letter of credit in favour of the Québec Maple Syrup Producers (QMSP) or a solidary guarantee from a surety company.
In the fall of 2022, the company experienced liquidity problems, but it continued to use and sell the syrup it had received from producers. However, it only partially paid for quantities used by the QMSP until May 2, 2023, the date the last payment was made. On that date, the unpaid syrup was valued at $2,686,498.26.
On June 16, 2023, the QMSP filed an application with the Régie des marchés agricoles et alimentaires du Québec (the Régie) seeking an order to require the company and its president (and sole shareholder) to jointly and severally pay the QMSP the value of the unpaid syrup, plus interest as provided in the Agreement.
As part of the litigation, the company acknowledged that it owed this amount to the QMSP, but contested the solidary nature of the payment obligation, which involved the company’s president.
The Régie found that the evidence of the QMSP did not show that the president acted as guarantor or had participated in a fraud or had used the company he controlled as a “corporate veil” to try to cover up any fraud, abuse of right or contravention of a rule of public order. These conditions set out in article 317 of the Civil Code, which would have justified the Régie lifting the corporate veil to order Lalli to solidarily pay the sums owed to QMSP, were not met.
Accordingly, the Régie concluded that the president could not be required to solidarily pay the amount owed to the QMSP.
A Fasken team composed of Antoine Aylwin and Marilou Simard represented the defendants in this legal action.Jurisdiction
- Québec
