Executive Summary: Key Legal and Evidentiary Issues

• Hydro-Québec disqualified a supplier and terminated contracts due to performance and ethical concerns.

• The Superior Court judge exceeded his mandate by ruling on the merits of judicial review during a stay hearing.

• Procedural fairness was breached when Hydro-Québec’s preliminary objections were accepted without proper notice.

• The Court of Appeal found these procedural errors justified partial intervention.

• Despite the errors, the denial of the stay was upheld due to insufficient evidence of irreparable harm.

• No clear winner declared — the appeal was partially allowed for procedural reasons, but the stay remained denied and no costs were awarded.

Facts and procedural background

Ldomo inc. appealed a Superior Court decision that dismissed both its judicial review application and a request for a stay (sursis) of Hydro-Québec’s decision disqualifying it as a contractor. On October 30, 2024, Hydro-Québec notified Ldomo that it was disqualified from participating in vegetation control work along transmission corridors, citing low performance scores and breaches of ethical and contractual obligations. As a result, all current contracts were terminated. Ldomo filed for judicial review and sought a stay to suspend the effects of the decision pending that review.

At the Superior Court level, Justice Shaun E. Finn rejected both requests. The judge ruled not only on the stay but also dismissed the judicial review application in its entirety. He accepted preliminary objections raised by Hydro-Québec during the hearing, including claims of institutional immunity and improper choice of legal recourse, despite those arguments not being previously disclosed in accordance with procedural rules.

Appeal and legal analysis

Ldomo appealed, arguing that the Superior Court judge exceeded his jurisdiction and violated principles of procedural fairness. The Court of Appeal agreed in part. It held that the judge erred in ruling on the judicial review application when he was only asked to decide on the stay. Furthermore, the judge improperly addressed preliminary objections that Hydro-Québec had not formally raised or notified before the hearing, contravening article 166 of the Quebec Code of Civil Procedure and the audi alteram partem rule (right to be heard).

The Court found that the lower court’s conduct deprived Ldomo of the chance to properly respond to serious procedural issues, including the interpretation of Hydro-Québec’s legal immunity under the Loi sur Hydro-Québec and whether a contractual claim was the appropriate remedy. These errors justified appellate intervention.

Outcome of the stay application and evidentiary issues

Despite the procedural errors, the Court of Appeal upheld the dismissal of the stay request. It found that the trial judge did not commit a decisive error in assessing the other legal criteria, such as the appearance of right and irreparable harm. While the judge was overly strict in interpreting what constituted a serious appearance of right, this did not render the decision unreasonable in the broader context.

Ldomo had argued that disqualification would lead to bankruptcy and job losses for 25 employees and 30 subcontractors. However, the court found that the evidence of irreparable harm was insufficiently detailed. The loss of a single client, even a major one, without more concrete evidence of financial collapse, was not enough to warrant a stay.

Final disposition

The Court of Appeal allowed the appeal in part, correcting the lower court’s overreach and clarifying that only the request for a stay had been properly before the Superior Court. However, it maintained the original ruling on the denial of the stay. No costs were awarded due to the mixed result.

This decision emphasizes the importance of procedural fairness in judicial review proceedings, particularly when public bodies and urgent injunctive remedies are involved. It also highlights the high threshold for obtaining a stay, especially where claims of financial harm must be proven with detailed and reliable evidence.