Executive Summary: Key Legal and Evidentiary Issues

• Existence and validity of a binding transaction (settlement agreement) concluded on 9 May 2025 to end the commercial litigation between the parties.
• Whether the 9 May 2025 email, drafted jointly by counsel in the presence of the parties, contained all essential terms necessary to form a complete and enforceable settlement.
• Impact of later tax optimisation discussions and calculations on the parties’ prior consent and whether fiscal advice or approval by Mr. Gadoury’s tax advisor was a condition to the transaction.
• Distinction between the conclusion of the transaction itself and the subsequent implementation of its financial mechanics, including determining the net amount to be received by Mr. Gadoury.
• Scope of the Superior Court’s limited role on an application to homologate a transaction under article 528 C.p.c., focused on legality, existence, and compliance with public order rather than interpretation or execution.
• Whether the defendants could obtain additional declaratory relief clarifying payment modalities, or whether they had to resort to the Court’s “contentious” jurisdiction for any future dispute about interpretation or execution.

Facts and background of the dispute

The dispute arose out of the termination of a business relationship between 9403-8387 Québec inc. and its principal, Stéphane Gadoury (the plaintiffs), and Antidote Média inc., together with Gestion 3MS inc. (the defendants). In June 2023, the plaintiffs commenced proceedings before the Superior Court of Québec seeking damages and a permanent injunction linked to the end of their commercial relationship with Antidote Média and Gestion 3MS. The litigation concerned both financial consequences of the breakdown and ongoing business restraints between the parties. During the course of the proceedings, the defendants filed a summary statement of defence in July 2024, and Antidote Média inc. also advanced a cross-demand. Following case management, a four-day trial was scheduled to proceed from 20 to 23 May 2025. In the days immediately preceding trial, settlement discussions intensified. On 9 May 2025, negotiations between the parties and their counsel culminated in what was described as an “entente de principe” (agreement in principle). The central element was a global reference figure of 190,000 dollars to be paid by Antidote Média inc. and structured in a way that would be financially efficient for the paying company and tax-optimised for Mr. Gadoury personally. The parties jointly drafted the key terms of this agreement directly in an email, on a shared screen, with everyone present.

The settlement terms and their structure

The settlement terms were set out in detail in the 9 May 2025 email, which the Court treated as the written record of the transaction. The email confirmed that the settlement was built around a “montant total et final équivalent à 190 000 $ de facturation brut” to be paid first to 9403-8387 Québec inc. and then immediately transferred into the personal patrimony of Mr. Gadoury. The idea was that Antidote Média could structure its payment using tax optimisation, provided that the result for Mr. Gadoury would be net equivalent to what he would have received if the entire 190,000 dollars had been immediately paid out to him as salary or dividends from his company, assuming that this sum represented his only taxable income for the relevant year. The parties contemplated that part of the payment could be classified as moral damages to Mr. Gadoury (such as capital gain, damages, expenses or legal fees) and that the proposed structure could be “corroboré et confirmé par le fiscaliste de M. Stéphane Gadoury”. Payment was to be made within 10 working days after confirmation by his tax advisor. Alongside the financial component, the email also set out several contractual “policy-type” terms governing the parties’ future relationships and restraints. These included notice to the Superior Court and the filing of a discontinuance within five days; authority for the defendants’ secretary to undertake any required corporate steps to definitively sever rights and business relations between the parties and to formalise mutual releases; a bilateral quittance (full and final release) between the parties; withdrawal of any non-competition undertakings binding 9403-8387 Québec inc. and Mr. Gadoury; an undertaking by the plaintiffs not to solicit markets outside the Capitale-Nationale region (Region 03) for substantially similar products until March 2028; a more targeted non-solicitation obligation within Region 03 towards specific clients who were part of the “Cellule Quoi faire” in 2022 but not previously served by 9403-8387 Québec inc. before 1 January 2022; confidentiality of the agreement; and mutual non-disparagement obligations covering all parties, including the impleaded individuals and the defendants’ principals, together with a brief neutral communication to be sent to Mr. Gadoury confirming that the parties had reached an agreement, that it ended the litigation and that the “Voilà Québec” operation would continue.

Post-agreement discussions and emerging disagreement

Shortly after the 9 May 2025 agreement, the parties exchanged calculations to implement the settlement’s financial framework. A calculation sent the same day indicated that a payment structured around the 190,000-dollar reference would yield a net amount of approximately 108,059 dollars for Mr. Gadoury personally. After consulting his tax advisor, Mr. Gadoury and his counsel took the position that the proposed structure did not meet the intended net result. On 12 May 2025, they insisted either on a gross payment of 190,000 dollars or on a net payment of 146,802 dollars, based on a scenario where Antidote Média would pay 190,000 dollars to 9403-8387 Québec inc., which would then distribute dividends primarily to another shareholder (Aïcha) and in smaller part to Mr. Gadoury, so as to maximise the household’s after-tax return. This approach relied on dividend allocation and assumed tax rates of 12.2 percent at the corporate level, 10 percent personal tax for Aïcha and 30 percent for Mr. Gadoury. This generated tension because the defendants considered this proposed structure to fall outside the parameters set in the 9 May email, which envisioned payment into Mr. Gadoury’s personal patrimony and did not contemplate splitting income with a third party for purposes of “fractionnement” (income splitting). While these financial back-and-forths were occurring, both sides continued to present the matter externally as settled. On 12 May 2025, the Court was advised that an agreement in principle had been reached and that a transaction and quittance was being drafted. On 20 May 2025, counsel for the plaintiffs confirmed to the Superior Court that the file was settled. Drafts of a formal release and calculations continued to be exchanged, and the defendants’ lawyer sought to facilitate direct discussions between Mr. Gadoury’s tax advisor and a representative of Antidote Média to reconcile the tax assumptions. Mr. Gadoury, however, refused this type of direct contact between his tax advisor and the adverse party.

Breakdown of negotiations and renewed dispute

As the weeks went by, the divergence widened. In mid-May 2025, plaintiffs’ counsel reaffirmed that, in their view, the “essence” of the agreement was that everything must “start” from a gross amount of 190,000 dollars, and he offered two alternative scenarios: either 40,000 dollars in personal moral damages for Mr. Gadoury and 150,000 dollars to the company, or 100,000 dollars in personal moral damages and 90,000 dollars to the company, with corporate amounts justified by items such as display stands and their use. He asserted that these options met the points of the agreement in principle and stated that if defendants wished to truly settle, they would have to “stick to” what had been agreed on 9 May 2025, when his client had shaken hands with one of Antidote Média’s shareholders. Defendants’ counsel responded that the parties were bound by the exact wording of the 9 May 2025 email, which constituted a complete and indivisible transaction: it could not be partially invoked, unilaterally modified or denounced when one element no longer suited a party. He stressed that the agreement specified payment into Mr. Gadoury’s personal patrimony and not through third-party structures designed for further income splitting. On 3 June 2025, plaintiffs’ counsel wrote that negotiations were bogging down, reiterated that the tax advisor disagreed with the defendants’ calculations and warned that, absent a serious offer, his clients would withdraw from any settlement. Defendants’ counsel replied on 6 June 2025 that a full and final transaction had already been concluded on 9 May 2025. On 16 June 2025, the plaintiffs signalled that, perceiving defendants to be proposing to pay less than the agreed 190,000 dollars, they were now prepared to accept a 140,000-dollar non-taxable payment instead. Ultimately, on 9 July 2025, Mr. Gadoury formally withdrew from the negotiations, taking the position that there was no binding settlement. This triggered the defendants’ application to homologate the alleged transaction and to obtain an order compelling the plaintiffs to sign a formal settlement agreement and related corporate documentation.

Legal framework on transactions and homologation

The Court began by recalling the civil-law concept of “transaction” under Québec law. A transaction is an agreement by which parties prevent or end a dispute through reciprocal concessions. Whether a transaction exists is a question of fact. Three cumulative conditions must be met: the objective of putting an end to a lawsuit; reciprocal concessions or reserves; and consensus on all elements the parties consider essential for their settlement. No specific formalities are required; a transaction can be verbal and result from negotiations, or it can arise from an exchange of correspondence such as emails. Under article 1385 of the Civil Code of Québec, a contract is formed by the mere exchange of consents between capable parties. As for homologation, article 528, paragraph 2 of the Code of Civil Procedure provides that a court asked to homologate an act verifies only its legality and does not rule on its opportunity or merits unless a specific provision confers such jurisdiction. Case law further clarifies that, when seized of an application to homologate a transaction, the judge’s role is limited to verifying three points: that the agreement is a true “transaction” within the meaning of article 2631 C.c.Q.; that it is not null; and that it does not contravene public order. Issues of interpretation or execution of the settlement, such as disputes about how exactly to calculate and implement payments, are reserved to the Court’s contentious jurisdiction and are not to be determined at the homologation stage.

Court’s analysis of consent and essential terms

On the factual record, which consisted of documentary exhibits and sworn declarations but no oral testimony, the Court was satisfied that a transaction had indeed been concluded on 9 May 2025. The email drafted jointly by counsel on a shared screen in the presence of the parties contained the essential terms: a reference amount of 190,000 dollars to be paid by Antidote Média with tax optimisation; commitments regarding the structure of the payment and the ability of Mr. Gadoury’s tax advisor to corroborate and confirm the proposed structure; the post-contractual obligations like non-competition withdrawal, non-solicitation, confidentiality and non-disparagement; and the steps to be taken before the Court to signal settlement and discontinue proceedings. The Court emphasised that the parties’ intention to end the dispute was obvious. They informed the Court that the matter was settled even before the four-day hearing was to begin, and plaintiffs’ counsel later confirmed to the Court again that the file was resolved. The judge found no indication of any reservation or condition in the text of the settlement that would leave essential elements open. The agreement did not state that approval by Mr. Gadoury’s tax advisor was a suspensive condition for the very existence of the transaction. Instead, the possibility for the fiscal advisor to “corroborate and confirm” the payment structure related to implementation and optimisation, not to whether a binding settlement existed. In assessing the sworn declaration of Mr. Gadoury, the Court noted that he did not actually dispute the content of the 9 May 2025 email or argue that it was incomplete or partial. Nor was there proof of any vitiation of consent that would justify nullity. The burden to show absence or defect of consent rested on Mr. Gadoury, and the Court concluded that it had not been discharged. From the Court’s perspective, what followed after 9 May 2025 were not continued negotiations towards a yet-to-be-finalised transaction, but rather exchanges aimed at implementing an already binding settlement, especially with respect to final net amounts and tax treatment.

Limits of the Court’s powers and requested declaratory relief

Although the defendants’ application primarily sought homologation of the transaction, it also requested that the Court declare the defendants’ proposed payment modalities (in particular, a payment of 100,000 dollars in moral damages to Mr. Gadoury and 10,750 dollars to 9403-8387 Québec inc. for the purchase of display stands) to be consistent with the settlement, and that the Court order the parties to sign the draft settlement agreement and corporate documentation. They further asked that, in the event of plaintiffs’ default, the draft agreement and related documents be deemed valid and enforceable against the plaintiffs, effectively granting them an additional declaratory and execution framework designed to pre-empt future disputes. The Court declined to go that far. It reiterated that, at the homologation stage, its mandate is strictly confined to determining the legality and existence of the transaction and its compliance with public order. Questions of interpretation of specific clauses, including whether a given payment structure complies with the parties’ 190,000-dollar reference framework, and questions of execution, such as compelling particular forms or sequences of acts to implement the settlement, fall under the Court’s contentious jurisdiction. If a dispute later arises about how precisely to interpret or carry out the settlement, the creditor may bring a separate contentious proceeding before the Superior Court to have those issues resolved. Accordingly, the Court refused the additional declaratory and interpretive relief sought by the defendants, beyond the core homologation.

Outcome and financial consequences

In the result, the Superior Court held that a valid and complete transaction had been concluded on 9 May 2025 and that the defendants were entitled to have it homologated. The Court therefore ordered that the transaction of 9 May 2025 be homologated, thereby giving it the same enforceable force as a judgment of the Superior Court. The Court awarded costs (“frais de justice”) in favour of the party that succeeded on the homologation application. In practical terms, this means that Antidote Média inc. and Gestion 3MS inc., as defendants and applicants for homologation, emerged as the successful parties in this decision. The settlement itself is built around a global reference amount of 190,000 dollars to be structured using tax optimisation, but the judgment does not specify the final net figure payable to Mr. Gadoury or the precise breakdown between the company and the individual. Nor does it quantify the judicial costs. As a result, while the homologated transaction clearly involves a substantial financial component for the plaintiffs, the exact total amount of monetary award, costs or damages in favour of the successful parties cannot be determined solely from the judgment’s text.