Executive Summary: Key Legal and Evidentiary Issues

• Scope and interpretation of the partnership contract and addendum, including whether commission rights extended to subsidiaries acquired after the contract, such as Innovair Solutions USA Inc.
• Centralised purchasing obligation requiring Groupe Ouellet and its corporate group to route all Gree purchases through ACD/Dettson or Flex Dépôt to protect Flex Dépôt’s commission stream.
• Effect of the promesse de porte-fort clause, under which Groupe Ouellet undertook to ensure that all its subsidiaries and related entities complied with the contractual obligations.
• Characterisation of the 10% payments as ongoing contractual commissions tied to access to Gree, rather than a one-time finder’s fee based on Flex Dépôt’s introduction of Gree.
• Legal impact of Innovair Solutions USA Inc.’s pre-existing direct relationship with Gree on the obligation to pay commissions after its acquisition by Groupe Ouellet.
• Determination, through audit, of the commissions due upon termination and whether commissions on Innovair USA’s purchases were properly included in the final amount payable.

Background and commercial relationship

Flex Dépôt is a major distributor of air conditioning products manufactured by the Chinese company Gree, the world’s largest air-conditioner manufacturer. It has sourced products from Gree since 2010 but by 2017 was facing liquidity problems that threatened its operations. At the same time, Groupe Ouellet Canada Inc. wanted to secure direct access to Gree products, avoiding reliance on another main distributor, Sunrise Dépôt. Through intermediaries, Flex Dépôt and Groupe Ouellet opened discussions to structure a commercial relationship that would both solve Flex Dépôt’s cash-flow difficulties and give Groupe Ouellet direct sourcing access from Gree on better terms.

The partnership contract and structure of the arrangement

On 17 December 2017, Flex Dépôt and Groupe Ouellet signed a partnership contract to develop the residential heat pump market in North America. The contract provided for the creation of a new purchasing company (eventually operating as ACD/Dettson and later Industries Dettson Inc.) which would act as a central buying entity for Gree’s residential mini-split and light commercial products directly from Gree in Asia. Flex Dépôt could still purchase directly from Gree in its own right, but Groupe Ouellet and its subsidiaries were required to make all their Gree-related purchases through this new entity. In parallel, ACD/Dettson purchased Flex Dépôt’s existing inventory, which helped resolve Flex Dépôt’s liquidity issues and formed the initial stock of the new company. A second inventory purchase agreement was subsequently concluded for U.S.-based inventory.

Commission mechanism and economic rationale

The contract did not simply give Groupe Ouellet direct access to Gree; it monetised that access for Flex Dépôt through commissions. Under clause 3.1, Flex Dépôt was to receive a 10% commission based on the cost price of products (excluding transport and customs) whenever ACD/Dettson resold Gree products to Groupe Ouellet or its subsidiaries. A similar 10% commission applied, unless otherwise agreed, for purchases from other manufacturers or suppliers introduced via Flex’s China office. The commission was payable upon resale by ACD/Dettson, not upon purchase from Gree, reinforcing that this was an ongoing remuneration structure tied to all resales to the Ouellet group. This showed that the parties built a long-term economic arrangement under which Flex Dépôt monetised its direct access to Gree, rather than merely earning a one-off finder’s fee.

Key contractual clauses on exclusivity and group obligations

The contract was designed to prevent circumvention of Flex Dépôt’s commission entitlement. First, it centralised purchasing by obliging Groupe Ouellet and its subsidiaries to buy through ACD/Dettson and thereby generate commissionable transactions for Flex Dépôt. Second, the contract contained a promesse de porte-fort clause (article 9.8), under which Groupe Ouellet personally promised that its subsidiaries would respect all the obligations in the contract, effectively guaranteeing that the broader corporate group would not undermine the central purchasing structure. Third, the contract included an integration clause (article 9.4), stating that the written contract captured the parties’ entire agreement and could not be altered without written, signed amendments. These elements showed an intention to create a robust, enforceable framework ensuring that the value of direct access to Gree could not easily be sidestepped through corporate structuring.

The addendum and strengthened restrictions

On 30 July 2020, after resolving a dispute between the parties, they executed an addendum amending the partnership contract. The addendum replaced the central purchasing clause (article 1.2) with new language expressly allowing ACD/Dettson itself to buy directly from Gree but requiring all other Ouellet subsidiaries to purchase through ACD/Dettson or Flex. It also expressly prohibited Groupe Ouellet, its subsidiaries and any “related company” or entities linked to its directors and shareholders from buying directly from Gree; all such purchases had to go through ACD/Dettson or Flex, at least until the end of the specified adjustment periods. The addendum further clarified that any future mergers or liquidations of Ouellet entities into ACD/Dettson would not constitute a breach and that the resulting entity would succeed to ACD/Dettson’s obligations. At the same time, the addendum confirmed that, except where explicitly modified, all other provisions of the partnership contract remained in full force, including the porte-fort undertaking.

Termination provisions and audit rights

The contract included a minimum duration of five years, during which neither party could unilaterally terminate. After that, ACD/Dettson or Ouellet could end the contract on 30 days’ written notice. Upon termination (whether under the contract or by operation of law), Groupe Ouellet and the purchasing company were required to pay, within 15 days, all commissions due on products already resold in accordance with clause 3.1. In addition, they had to pay commissions on all products purchased by the purchasing company but not yet resold at the time of termination. The addendum also gave Flex Dépôt a contractual audit right, allowing it to have an external accounting firm review ACD/Dettson’s and other Ouellet entities’ records at its own expense in order to verify and, if necessary, adjust the commissions payable. These provisions became central once the contract was actually terminated and Flex Dépôt sought to enforce its commission rights.

Termination of the partnership and audit findings

On 13 December 2022, Groupe Ouellet gave written notice terminating the partnership contract in accordance with the termination clause. Thereafter, it made several payments to Flex Dépôt, described as end-of-contract commission payments, although subject to further adjustment. Flex Dépôt then exercised its audit right under the addendum, commissioning an external accounting firm to review purchasing and resale data from ACD/Dettson and other Ouellet entities. The audit concluded that total commissions owing to Flex Dépôt amounted to USD 857,650. Part of this amount was paid, but a substantial balance remained outstanding. The unpaid balance of USD 561,835 corresponded to commissions on purchases made by Innovair Solutions USA Inc. (Innovair USA), which had become a subsidiary of Groupe Ouellet after the original contract and addendum but had a pre-existing direct relationship with Gree.

Dispute over Innovair USA and the claimed commissions

The defendants did not dispute the mathematical calculation of the USD 561,835 commission tied to Innovair USA purchases. Instead, they argued that commissions were not owed on those purchases for two main reasons. First, they contended that the spirit of the partnership contract was to compensate Flex Dépôt for introducing Gree and for being the cause of the commercial relationship (a finder’s fee). Because Innovair USA was already buying from Gree before its acquisition by Groupe Ouellet, Flex Dépôt was allegedly not the “efficient cause” of those purchases, and no commission should follow. Second, Groupe Ouellet argued that the contractual obligations to channel purchases through ACD/Dettson and to pay commissions applied only to subsidiaries existing at the time of the contract and addendum, not to companies acquired later, such as Innovair USA. In their view, the absence of explicit language referring to future acquisitions, contrasted with the express reference to mergers and liquidations, showed that newly acquired subsidiaries were meant to be excluded.

Court’s interpretation of the contract and addendum

The Court approached the dispute as a matter of contractual interpretation under Québec civil law. It began by asking whether the wording of the relevant clauses was clear or ambiguous. Finding no ambiguity, it applied the terms as written, considering context only to confirm their clarity. The Court rejected the characterisation of the commissions as a simple finder’s fee. The payment structure, tied to resale by ACD/Dettson and centralised purchasing, showed that the parties had built a long-term economic arrangement under which Flex Dépôt monetised its direct access to Gree. The minimum five-year term, centralisation of purchases, porte-fort clause and audit rights all pointed to a comprehensive, ongoing partnership, not a one-time introduction. The Court also relied on the integration clause to dismiss attempts to recast the bargain according to alleged unwritten understandings.

Promesse de porte-fort and reach to acquired subsidiaries

A central element in the judgment was the promesse de porte-fort under article 9.8, read together with the addendum’s reinforced wording. By this clause, Groupe Ouellet personally promised that its subsidiaries would comply with all the obligations in the contract, effectively guaranteeing their adherence. The addendum then broadened the prohibition against direct purchases from Gree to include not only existing subsidiaries, but also “any related company” and companies linked to Ouellet’s directors and shareholders, all of which were required to route Gree purchases through ACD/Dettson or Flex. The Court held that interpreting this framework as limited only to subsidiaries existing on the date of signature would contradict both the nature of the porte-fort and the parties’ expressed intention to protect Flex Dépôt’s commission stream over the minimum term. Such a narrow reading would allow Groupe Ouellet to evade its obligations simply by creating or acquiring new subsidiaries immediately after signing the contract and having them buy directly from Gree, a result the Court considered incompatible with good faith and the clear language chosen by the parties.

Rejection of the “unforeseen effect” and efficiency arguments

Groupe Ouellet argued that paying commissions on Innovair USA’s purchases would be an unforeseen consequence, because Innovair USA already had a commercial relationship with Gree before its acquisition, and Flex Dépôt had not contributed to these purchases. The Court rejected this as inconsistent with the text and structure of the contract. The obligation to pay commissions arose from the centralised purchasing arrangement and the porte-fort promise, not from whether Flex Dépôt had originated a particular customer’s relationship with Gree. Once Innovair USA became a subsidiary of Groupe Ouellet, Groupe Ouellet had an obligation under the contract and the porte-fort clause to ensure that Innovair USA purchased through ACD/Dettson, thereby generating commissionable transactions. By failing to do so, Groupe Ouellet breached its obligations and deprived Flex Dépôt of commissions to which it was contractually entitled.

Application of the contract and liability

In applying the contract to the facts, the Court dismissed the argument that the omission of explicit words about future acquisitions (as opposed to mergers or liquidations) meant that acquired subsidiaries were excluded. It held that such a reading would undermine the essence of the agreement and the protection that Flex Dépôt sought when allowing Groupe Ouellet to share its direct access to Gree. The contract was intended to operate over a period of at least five years, and the parties could not have intended to create an easy means of avoiding the commission structure through corporate manoeuvres. Because Groupe Ouellet failed to require Innovair USA to channel purchases through ACD/Dettson, it breached its porte-fort promise and its broader contractual commitments. Consequently, the resulting lost commissions on Innovair USA’s purchases were recoverable by Flex Dépôt.

Outcome and monetary award

Having established breach and accepted the audit’s quantification of the unpaid commissions attributable to Innovair USA, the Court granted Flex Dépôt’s claim. It held the defendants solidarily liable and ordered them to pay Flex Dépôt USD 561,835, representing the outstanding commissions on Innovair Solutions USA Inc.’s purchases, together with interest at the legal rate plus the additional indemnity under article 1619 of the Civil Code of Québec from 7 September 2023, as well as court costs. Using a purely illustrative exchange rate of 1 USD = 1.35 CAD, this principal amount would correspond to approximately CAD 758,477.25; however, the exact Canadian-dollar equivalent and the precise totals for interest, additional indemnity and costs are not specified in the decision itself and would depend on the applicable rate and subsequent calculations.