Executive Summary: Key Legal and Evidentiary Issues

• Whether an accounting firm's working capital adjustment report, prepared under clauses 2.8–2.10 of the parties' Master Transaction Agreement, is equivalent to a binding arbitral award that excludes the courts' jurisdiction.
• Clause 2.9(b) designated the accounting firm as an "expert and not as arbitrator," and the engagement letter added that the report would bind the parties absent manifest error.
• The two-part test for the arbitral nature of a clause requires a genuine dispute and recourse to an arbitral process entrusted to a third party.
• Manifest error is not among the exhaustive grounds in articles 646 and 648 C.p.c. for refusing homologation or annulling an arbitral award, reinforcing that the report is not arbitral in nature.
• At the case protocol stage, a party's right to communicate an expert report is assessed flexibly on necessity, relevance, or appropriateness, not under the stricter admissibility rules applicable at trial.
• Prohibiting an expert report is a case management measure that must be ordered with circumspection, balanced against the adversarial principle and the parties' control over their own case.

Facts of the case

Until recently, the plaintiffs (including Les Restaurants Lafleur inc., Le Marquis Investments Inc., 9155–6431 Québec inc., George Papagiannis and The Achille Papagiannis Family Trust) and the defendants (including Le Petit Québec Management Inc., related numbered companies, The Christos Papagiannis Family Trust and Christos Papagiannis) jointly operated well-known fast-food restaurant chains in Québec. Through a multi-part transaction — a Master Transaction Agreement dated June 1, 2022, a collaboration agreement and an ancillary confidentiality agreement — they voluntarily ended their common management while preserving some collaboration. The main agreement mandated an accounting firm, chosen jointly, to determine the working capital adjustment amount. The firm delivered its report on June 25, 2025. The defendants consider the report to be erroneous and intend to file an accounting expert report at trial; the plaintiffs, who served their originating application in July and August 2025 claiming $655,614.43 under Articles 2.9 and 2.10 of the agreement (plus interest and additional indemnity calculated as at July 11, 2025), opposed the inclusion of any expert evidence in the case protocol. The protocol, ratified by the Court on November 27, 2025, expressly provided that the defendants' right to communicate an accounting expert report would be debated by way of a case management notice, which is the matter decided in this judgment of June 30, 2026 by Justice Ian Demers of the Superior Court of Québec.

Policy terms and contractual clauses at issue

Clauses 2.8 to 2.10 of the Master Transaction Agreement frame the accounting firm's mandate, which is limited to establishing the working capital adjustment amount. Clause 2.9(b) provides that the selected firm, the "Closing Adjustment Independent Accountant," will "act as expert and not as arbitrator," must consider only the items in dispute submitted to it, and that its determination "will be final and binding upon the Parties and will not be subject to appeal." The engagement letter drafted by the accounting firm and ratified by the parties on September 24, 2024 added a qualification in its introduction: the report would bind the parties unless it contained a manifest error — a qualification not repeated in the letter's section on the final and binding character of the firm's decision. Read together, the Court found, the main agreement and the engagement letter mean that a party who believes the report is tainted by manifest error may be released from the obligation to be bound by it.

The court's reasoning and analysis

Justice Demers first held that the accounting report is not equivalent to an arbitral award and that clause 2.9(b) is not an arbitration clause excluding the jurisdiction of the courts. Applying the principles of contractual interpretation centred on the parties' common intention, and the two-part test from Sports Maska Inc. c. Zittrer — a genuine dispute and recourse to an arbitral process entrusted to a third party — the Court noted that although the parties were undeniably in a dispute, clause 2.9(b) treats the accounting firm as an expert, wording the Court described as heavily significant, and the engagement letter points the same way. The concept of manifest error reinforced this conclusion: articles 646 and 648 C.p.c. exhaustively list the grounds on which an arbitral award may be refused homologation or annulled, and manifest error is not among them, so an arbitration agreement could not validly incorporate it. The report is therefore reviewable by the courts where manifest error is alleged. Turning to whether the defendants could use an accounting expert report to prove such an error, the Court situated the plaintiffs' proportionality and relevance objections within the adversarial principle, the parties' control over their own case, and the restrained scrutiny of expert evidence at the preliminary stage under articles 148, 158(2°) and 232 C.p.c. It observed that the plaintiffs themselves put the working capital question in issue by claiming $655,614.43 in their originating application, that the report's favourable result evidently coloured their opposition, that an individual expert report would not contradict the parties' agreed framework, and that the subject matter — a complex accounting calculation exceeding a judge's ordinary knowledge — lends itself to expert evidence. While the defendants said little about the alleged manifest error, the Court held it would be inappropriate at this stage to require them to demonstrate the very error to be proven at trial, and any sanction for unduly delaying the proceeding or filing a useless report can be addressed by the trial judge.

Ruling and overall outcome

The Tribunal granted the defendants' case management notice, making the defendants the successful party on this application. It modified the case protocol to authorize, for each side, an accounting expert report strictly limited to the working capital adjustment amount established in the accounting firm's report: the defendants' expert report is due by September 25, 2026 and the plaintiffs' by November 27, 2026 (I note the judgment's paragraph 46 and its formal conclusions attribute these two dates to opposite parties; the dates stated here follow the formal orders at paragraphs 50.1 and 50.2). The deadline to request the setting down for trial and judgment was extended to December 18, 2026. This being an interlocutory case management decision, no damages or monetary sum was awarded to either party, and legal costs were ordered "to follow," meaning no amount can be determined from this judgment.