Executive Summary: Key Legal and Evidentiary Issues

• Confirmed that fraudulent misrepresentation (dol) about maple tap count vitiated the buyer’s consent.

• Accepted audio evidence of false declarations made during negotiations as proof of intentional deception.

• Recognized unwritten pricing terms inferred from negotiation context and testimonial evidence.

• Validated trial judge’s method of calculating price reduction based on per-tap valuation.

• Affirmed the judge’s assessment of witness credibility, including rejection of the sellers’ expert evidence.

• Rejected all grounds of appeal, finding no reviewable errors in the Superior Court’s factual and legal analysis.

Facts of the case

Manon Martel, Yvan Roy, and Benoît Fontaine sold shares of a company that owned and operated a maple syrup production business (an "érablière") to 9217-7195 Québec inc., represented by M. Charbonneau. The business value was primarily derived from the number of productive maple tree taps ("entailles"), which were said during negotiations to number 30,000. This figure significantly influenced the purchase price, which was negotiated based on a per-tap valuation plus an additional sum for forested land.

After the transaction closed, the buyer discovered that the actual number of usable taps was considerably lower—approximately 25,000—and that an additional 1,900 taps were located in an expansion zone that could not be used after the sale. The buyer filed suit to reduce the sale price and claimed misrepresentation had induced the agreement.

The trial judge of the Superior Court accepted that M. Roy had falsely represented the number of taps, including in a recorded conversation, and that these misrepresentations were decisive. The judge awarded a reduction of the share price by $483,660 and ordered the sellers to pay the net balance due to the buyer. The judge dismissed the sellers’ counterclaim in full.

Court of Appeal analysis

The sellers appealed on the grounds that the trial judge erred in both her finding of dol (fraudulent misrepresentation) and in the method used to calculate the price reduction. They also challenged the judge’s preference for the buyer’s testimony over their own expert evidence.

The Court of Appeal unanimously dismissed the appeal. It held that the trial judge made no reviewable error in concluding that Mr. Roy’s misrepresentation was intentional and materially influenced the buyer’s consent. The Court found that the evidence—including the recorded conversation and testimony from another employee—supported the trial judge’s conclusion that the sellers knowingly misled the buyer.

The Court also endorsed the trial judge’s approach to calculating the price adjustment, even though the contract itself did not list a per-tap price. The judge had reasonably inferred this valuation method from the context of the negotiations and the parties’ conduct. The appellants’ argument that this method was only valid when explicitly stated in the contract was rejected.

On the evidentiary issues, the Court confirmed that the trial judge was entitled to prefer the credibility of M. Charbonneau and the buyer’s witnesses over that of the sellers’ expert, and that such findings of fact did not warrant appellate interference.

Outcome

The Court of Appeal dismissed the appeal in its entirety and upheld the trial judgment reducing the sale price due to fraudulent misrepresentation. The sellers were ordered to pay the buyer $9,860.17 (post-compensation), along with interest and the additional indemnity under article 1619 of the Civil Code of Québec.