Executive Summary: Key Legal and Evidentiary Issues

• Gildan Activewear Inc. sought leave to appeal a Superior Court order requiring it to advance legal fees to ten former directors under an indemnification agreement and section 124 of the Canada Business Corporations Act.
   
• Interlocutory orders under section 249(2) of the CBCA can be appealed only with leave, which in Quebec is governed by article 31, paragraph 2 of the Code of Civil Procedure.
   
• To obtain leave, the company had to show that the judgment decided part of the dispute or caused it irremediable prejudice, and that the appeal served the best interests of justice.
   
• Possible reimbursement of the advanced fees did not stop the court from finding that the order placed Gildan in an irremediable situation.
   
• Allegations that the directors breached their duties and acted in bad faith gave the section 124 questions definite importance for the fairness and integrity of the administration of justice.
   
• A stay of the first-instance proceedings was granted pending the appeal, with costs to follow the outcome.
   

Facts of the case

Gildan Activewear Inc. applied to the Quebec Court of Appeal for leave to appeal, de bene esse, a judgment of the Superior Court, District of Montréal, rendered on July 2, 2026. That judgment ordered Gildan to advance funds to its former directors to cover their legal fees in litigation between them. The respondents are Donald C. Berg, Maryse Bertrand, Dhaval Buch, Marcello Caira, Shirley Cunningham, Sharon Driscoll, Charles Herington, Luc Jobin, Craig Leavitt and Anne Martin-Vachon. Alongside the leave application, Gildan asked for a stay of the first-instance proceedings. The matter was heard as a continuation of a September 29, 2026 hearing, with the parties exempted from appearing, and a single judge of the Court of Appeal ruled on October 1, 2026. Neither the details of the underlying claims nor the amount of the fees to be advanced are set out in the decision.

Policy and legislative provisions at issue

The Superior Court's order rested on an indemnification agreement and on section 124 of the Canada Business Corporations Act, RSC 1985, c C-44. Neither the terms of the agreement nor the wording of section 124 are quoted or summarized in the Court of Appeal's decision. On the procedural side, the court held that the order is interlocutory within the meaning of section 249(2) of the CBCA and can therefore be appealed only with leave under the rules applicable in the province, which in Quebec is article 31, paragraph 2 of the Code of Civil Procedure, citing Kelvin Energy Ltd. v. Lee, [1992] 3 S.C.R. 235, and Picard c. Picard, 2018 QCCA 1241. The court also relied on article 9, paragraph 3 (best interests of justice) and articles 17 and following (guiding principles of procedure). Gildan brought its stay request under article 31, paragraph 3.

Reasoning and analysis

Gildan had to show that the judgment decided part of the dispute or caused it irremediable prejudice. It also had to establish that the proposed appeal was in the best interests of justice and consistent with the guiding principles of procedure. The court acknowledged that the advanced fees could be repaid if the directors were ultimately found not to be entitled to them. Even so, it concluded that the order imposed an irremediable situation on Gildan as a party to the litigation. On the significance of the appeal, the court pointed to questions concerning, among other things, the interpretation and application of section 124 where the directors are alleged from the outset to have breached their duties to the corporation and acted in bad faith. Those questions were of definite importance because they bear on the fairness and integrity of the administration of justice, which justified granting leave. Given the nature of the issues in dispute, the stay request was granted as well. The court also directed that the appeal proceed without a brief, by the filing of memoranda.

Ruling and overall outcome

Gildan succeeded on both applications: the court granted leave to appeal and stayed the first-instance proceedings until judgment on the appeal. Its memorandum, limited to 20 pages of written argument plus three schedules, is due November 20, 2026. The respondents must file theirs by January 8, 2027, also capped at 20 pages and accompanied, if necessary, by a supplement to either of the appellant's schedules. Each side was given 45 minutes of hearing time, and the file was referred to the master of the rolls to set a hearing date. No monetary amount was awarded in this decision, and it does not state how much Gildan was ordered to advance; costs will follow the outcome of the appeal.