Executive Summary: Key Legal and Evidentiary Issues

• Groupe IBE claimed $314,491.17 from CIUSSS for renovation work on a kitchen and rest area, while CIUSSS filed a counterclaim for $31,650.71.
• Central to the dispute was whether CIUSSS exercised a unilateral termination under article 2125 C.c.Q. or a sanction-based termination under article 1590 C.c.Q., as the applicable indemnification regime differed significantly between the two.
• No formal notice of default (mise en demeure) was sent prior to the site closure, but the court found Groupe IBE was in default by operation of law under article 1597 C.c.Q. given repeated and documented failures to address dust control obligations.
• Groupe IBE's claim for lost profits and administrative costs was rejected both because the unilateral termination regime under article 2129 C.c.Q. excludes such heads of damage, and because the evidence did not support any profit would have been realized.
• Disputed evidence regarding the percentage of work completed at closure — 65% as claimed by Groupe IBE versus approximately 13–25% as assessed by CIUSSS witnesses — was resolved by the court at 25%, resulting in a substantially reduced award.
• CIUSSS's counterclaim for the cost differential between the original and replacement contracts was dismissed, as completion costs incurred after a unilateral termination cannot be set off against the contractor's claim.

Facts of the case

In October 2018, 9368-6616 Québec inc. (Groupe IBE) was awarded a construction contract by the Centre intégré universitaire de santé et de services sociaux du Centre-Sud-de-l'Île-de-Montréal (CIUSSS) following a public tender process. The contract, valued at $139,817.90 before taxes, covered renovation works on a kitchen and rest area at the CIUSSS facility, with a scheduled construction period from November 18, 2018 to January 31, 2019. Works began late — on April 29, 2019 — after a second start-up meeting on April 25, 2019, at which a revised schedule of eight weeks (April 29 to July 1, 2019) was agreed upon. The site was abruptly closed by CIUSSS on May 14, 2019, just two weeks into active construction. The parties' relationship had deteriorated rapidly, with friction arising from a disputed telecommunications wall relocation, personality conflicts between the principal representatives, delivery delays, and — most critically — Groupe IBE's repeated failure to maintain the construction site under negative pressure, which allowed dust to spread through an occupied building housing a vulnerable clientele of minors receiving addiction treatment. On May 16, 2019, CIUSSS contacted the bonding company, Echelon, to notify it of Groupe IBE's repeated contractual breaches and formally requested that Echelon complete the works in Groupe IBE's place. Echelon chose instead to pay out the maximum amount of the performance bond ($80,377.85) rather than continue the project. A new tender was subsequently issued, with Construction S.M. Paquet Inc. retained at $244,854.17 — significantly more than Groupe IBE's original bid.

Contractual clauses and indemnification regime at issue

The contract contained several provisions directly relevant to the dispute. Article 13.03.01 permitted CIUSSS to terminate the contract without having to provide reasons ("sans qu'il soit nécessaire pour lui de motiver la résiliation"). Article 13.07 limited Groupe IBE's recovery upon termination to costs and disbursements representing the value of works actually performed up to the date of termination, expressly excluding any other compensation or indemnity. A separate procedure under article 13.03.03 applied in cases of termination for contractual breach, requiring written notice — a procedure that CIUSSS did not follow, which the court took as further support for characterizing the termination as unilateral rather than sanction-based. These contractual provisions aligned with the statutory indemnification regime under article 2129 C.c.Q., which governs unilateral terminations of construction contracts initiated by the client and limits recovery to the value of work performed and materials supplied, proportional to the contract price and the stage of advancement of the works.

Reasoning and analysis

The court's analysis centred on determining the nature of the termination. Groupe IBE argued it was a sanction-based termination under article 1590 C.c.Q., which would have entitled it to the broader common law damages regime — including lost profits and missed business opportunities — and would have made the absence of a formal default notice fatal to CIUSSS's position. CIUSSS, in its pleadings, had separately argued that the termination occurred automatically by operation of the contract when Echelon chose to pay out the bond rather than complete the works. The court rejected both positions. Applying a contextual analysis guided by the approach set out in Neptune Sécurité Services inc. c. Ville de Québec, 2020 QCCS 1627, the court found that the termination was unilateral under article 2125 C.c.Q., driven not by a single identifiable contractual breach but by an irreparable breakdown of trust stemming from a combination of factors: the telecommunications wall dispute, personality conflicts between the parties' representatives, project delays, and Groupe IBE's persistent failure to control dust on an occupied site. The court further held that even if a sanction-based termination had been found, Groupe IBE was in default by operation of law under article 1597 C.c.Q., given the documented, repeated warnings and the contractor's failure to remedy the dust control issues despite multiple opportunities to do so. On the question of bad faith, the court found no evidence of a malicious intent or hidden agenda on CIUSSS's part; the decision to close the site was supported by the testimony of multiple witnesses, including a CIUSSS manager who described daily dust complaints from staff, asthma episodes among building occupants, and an unsanitary working environment. The court also noted that a December 23, 2025 decision of the Bureau des Régisseurs de la Régie du Bâtiment du Québec (Régie du bâtiment du Québec c. Groupe IBE Construction inc., 2025 QCRBQ 121) had made severe findings regarding the probity and competence of Groupe IBE's president, Mahmoud Ramezanpour, and that Groupe IBE had lost its RBQ licence in 2022 and remained subject to a prohibition on bidding for public contracts until February 13, 2029 — factors that the court found further undermined any claim for lost profits. As to quantum, the court rejected Groupe IBE's 65% progress estimate as inconsistent with its own payment request of May 15, 2019 — which reflected roughly 13% completion — and with the testimony and contemporaneous photographs of architect Marie-Ève Ouellet, who estimated actual progress at generously 20 to 25%. The court retained a 25% completion figure, reasoning that Groupe IBE worked on site for two weeks out of a planned eight-week schedule. Applied to the pre-tax contract value of $139,817.90, this yielded $34,954.48, to which the court added $10,000.00 to account for materials that CIUSSS had required to be ordered in advance — bringing the total to $44,954.48 before taxes. The claims for $100,000 in lost profits, $30,000 in administrative costs, and $80,000 paid to Echelon were each rejected for lack of supporting evidence and on the basis that the unilateral termination regime does not permit such heads of damage. On the counterclaim, the court held that under a unilateral termination framework, CIUSSS could not recover the cost differential between the original and replacement contracts, as such completion costs arise after the termination and may only be claimed in a sanction-based termination context — not as a set-off against a contractor's claim for work performed.

Ruling and overall outcome

The Superior Court of Québec, per the Honourable Luc Morin J.C.S., partially allowed Groupe IBE's claim and dismissed CIUSSS's counterclaim in its entirety. Groupe IBE was the successful party on its main claim, with the court ordering CIUSSS to pay $44,954.48 — a fraction of the $314,491.17 originally sought. CIUSSS was ordered to pay costs.