Stryker Canada Holding Company c. 3997413 Canada inc.  
2022 QCCS 2284  
SUPERIOR COURT  
(Civil Division)  
CANADA  
PROVINCE OF QUEBEC  
DISTRICT OF MONTREAL  
No:  
500-17-094341-164  
DATE: 23 June 2022  
_____________________________________________________________________  
BY THE HONOURABLE BABAK BARIN, J.S.C.  
_____________________________________________________________________  
STRYKER CANADA HOLDING COMPANY  
Plaintiff  
v.  
3997413 CANADA INC.  
-and-  
MENACHEM LIEBERMAN  
-and-  
LOUIS WEIL  
-and-  
JOEL RUBINFELD  
Defendants  
_____________________________________________________________________  
JUDGMENT ON A REQUEST FOR THE LIFTING OF  
THE CORPORATE VEIL  
____________________________________________________________________  
INTRODUCTION  
[1]  
This case tests the resilience of the corporate veil where an ordinary creditor  
alleges that it has been deliberately wronged – because it was not paid for the supplies it  
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PAGE: 2  
had sold – by the shareholders, directors and officers of the parent and sole shareholder  
corporation of the subsidiary entity it had appointed as a distributor of medical supplies.  
[2]  
There is no recognized principle applicable, the issue is not a simple one, the court  
is not free to act on what it considers to be “just and equitable”1 and, like lightening the  
effects of the remedy sought may be severe.2 Traditionally, courts have ignored the  
separate existence of a corporation where a failure to do so has given rise to a result  
“flagrantly opposed to justice.”3  
[3]  
In law, a corporation is an entity endowed with a separate and independent legal  
existence. Under Quebec civil law, the juridical personality of a legal person may not be  
invoked against a person in good faith so as to dissemble fraud, abuse of right or  
contravention of a rule of public order.4 In Quebec, every person has a duty to abide by  
the rules of conduct incumbent on that person, according to the circumstances, usage or  
law, so as not to cause injury to another.5 Moreover, the obligation to make reparation for  
injury caused to another through the fault of two or more persons is solidary where the  
obligation is extra-contractual.6  
[4]  
Under the Canada Business Corporations Act7, every director and officer of a  
corporation in exercising his or her powers and discharging the associated duties shall  
act honestly and in good faith with a view to the best interests of the corporation and  
exercise the care, diligence and skill that a reasonably prudent person would exercise in  
comparable circumstances. When acting with a view to the best interests of the  
corporation, the directors and officers may consider the long-term interests of the  
corporation and the interests of, among others, shareholders, employees, creditors.8  
[5]  
By and large, directors and officers do not owe a fiduciary duty to creditors.  
Directors and officers will also not be held in breach of their duty to care if they acted  
prudently and on a reasonably informed basis. Corporations today are amongst the most  
active and influential protagonists of modern economy. Never has so much attention and  
care been directed towards their protection and development.  
[6]  
As a result, advocating for corporate rights and responsibilities in recent years has  
commanded new and varying vigorous forms, enticing in the process, astute and  
experienced professionals to seek creative and unique avenues to satisfy and address  
the sophisticated needs and challenges of their clients. The avenues followed, however,  
are not always the appropriate or justified ones and attempts to discipline corporate  
1 Parkland Plumbing & Heating Ltd. v. Minaki Lodge Resort, 2009 ONCA 256 at par. 50.  
2 Frank H. Easterbrook and Daniel R. Fischel, “Limited Liability and the Corporation” (1985), 52 U. Ch. L.  
Rev. 89.  
3 Kosmopoulos v. Constitution Insurance Company of Canada, [1987] 1 S.C.R. 2 at page 10.  
4 Article 317 of the Civil Code (C.C.Q.)  
5 Article 1457 C.C.Q.  
6 Article 1526 C.C.Q.  
7 R.S.C., 1985, c. C-44 (CBCA).  
8 Ibid, section 122.  
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management require deliberate reflection. A measured dose of caution is often  
warranted9.  
[7]  
The judicial system on the whole is ill-suited to second-guess or intervene in the  
internal affairs of corporations, especially when they involve the reasonable but not  
always necessarily the perfect decisions of executives who have been appointed to run  
its operations. Business decisions are not always the best decisions except for the  
corporation for which they are made.  
BACKGROUND  
[8]  
Incorporated in Nova Scotia as an unlimited liability corporation, Stryker Canada  
Holding Company (Stryker) is the Canadian subsidiary of Stryker Corporation, a  
company based in Michigan, U.S.A. and one of the world’s leading medical technology  
companies offering a wide array of medical devices to the health care industry globally.  
Many health settings in Quebec and Canada operate daily using Stryker products.  
[9]  
On 10 January 2002, Stryker entered into a one-year distribution agreement with  
Medca Canada Inc. (Medca Inc.), a company incorporated in 1999 by Pascal Bruneau10  
for the principal purpose of selling Stryker products. As distributor, Stryker did not want  
its products sold by a company that also sold competing products.  
[10] The agreement was to renew annually upon the mutual agreement of the parties.  
At the time Bruneau was also the owner of Équipement Médical Rive-Nord Inc. (EMRN),  
a company that was in the business of selling medical supplies to, among others, the  
ambulance industry. EMRN was the sole shareholder of Medca Inc. and it was also a  
direct competitor of an operation started and owned by Menachem Lieberman, who was  
then, as a young entrepreneur, interested in buying the business of his competitors and  
growing his network.  
[11] Keen on acquiring the entire business of Bruneau but not in possession of enough  
funds to do it alone, Lieberman, who was apparently only twenty-five years old at the time,  
approached Joel Rubinfeld in New York to intervene as an investor. Lieberman and  
Rubinfeld, as shareholders then, put into operation 3997413 Canada Inc. (Canada Inc.)  
– constituted a little over two years earlier on 19 December 2001 – on 21 June 2004.  
[12] They both testified at the hearing. Lieberman, who has a Talmudic education and  
lived in Montreal for 26 years until he moved to New York a year ago was present in  
person, and Rubinfeld, who permanently resides in Brooklyn, New York, testified via  
Teams. As it was visible during the hearing, there was little love lost between these two  
individuals.  
9 Craig Packaging Ltd. v. Beaumont, 2020 QCCS 367 at par. 2 and 3.  
10  
Use of the first or last name only of individuals is to simply render the text more reader-friendly. No  
disrespect is intended.  
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[13] On 15 July 2004, Canada Inc. alone purchased the assets of EMRN, which also  
included the assets of Medca Inc. On 4 August 2004, the shares of EMRN were  
transferred to Canada Inc., Bruneau resigned as the director and officer of Medca Inc.  
and Lieberman and Rubinfeld were both appointed as administrators of the company.  
The next day, Lieberman and Rubinfeld agreed to arrange for a credit facility with the  
HSBC Bank of Canada for an amount up to $500,000.  
[14] Starting on 11 August 2004, Canada Inc. formally declared that it would also be  
doing business under the trade names Équipement Médical Rive-Nord, EMRN, EMRAN,  
Entreprise Dixie EMS (Canada) and Medca Canada (Medca). Lieberman then took the  
helm for the day-to-day operations of the business, but it did not take long thereafter for  
Lieberman and Rubinfeld to face conflict. Rubinfeld who was the financial investor in the  
duo quickly became of the view that Lieberman was not professionally equipped to run  
their joint business. Lieberman, of course, did not share the same views.  
[15] Between 28 February and 5 June 2006, “Medca Canada” ordered for resale a  
number of products from Stryker. Sometime in early 2006, Canada Inc. became aware  
that Stryker was considering appointing another distributor in its territory. This likely made  
the already difficult relationship between Lieberman and Rubinfeld even more tumultuous.  
[16] In the meantime, in April of 2005, the two shareholders of Canada Inc. opted for  
peace in their relationship after a form of arbitration apparently – at least momentarily –  
by entering into a Memorandum of Agreement dated 15 April 2005 that placed the  
management of the business into the hands of a committee of three.  
[17] A few months later, around November of 2005, Louis Weil was appointed to  
manage the affairs of Medca Inc. and Canada Inc. Weil who testified in person at trial is  
an experienced business owner and consultant. He was put in place and recommended,  
principally by Rubinfeld to look after his interests. Pressed about this issue at trial by  
Stryker’s lawyer, Lieberman testified his discontent with the arbitration and the process  
that led to it. He indicated he was young and did not know better. Today, he exclaimed ‘’  
he would never opt for that same option.’’  
[18] In a press release dated 7 June 2006, Stryker announced that it had entered into  
a new distribution agreement with another company. In response, “Medca” sent a note to  
its clients advising them that they were surprised “to find out from the [Stryker] press  
release […] that a new distributor agreement” had been entered into and reassured them  
that they continued to have the exclusive right to sell and distribute Stryker products in  
Ontario and Quebec. The note was signed by Weil and Lieberman.  
[19] Subsequently, in a letter dated 20 June 2006, Stryker responded that in its view,  
“Medca” did not have an exclusive relationship with Stryker that the distribution  
agreement between them expressly permitted the termination of their relationship “without  
cause by notice” and in any event, as early as 2003, it had informed “Medca” that it was  
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failing to maintain an appropriate sales force, make adequate penetration into the Ontario  
market and keep Stryker informed of its sales effort.  
[20] Stryker also informed “Medca” that it was not pleased that “Medca” had recently –  
on 2 June 2006 – stopped payment on a check in the amount of roughly $92,000 and told  
Stryker not to cash another in the amount of roughly $48,500. Finally, Stryker reminded  
“Medca” that the total amount of approximately $319,000 was still owed to it.  
[21] Slightly over two weeks later, and following a formal demand by Medca Inc., on 7  
July 2006, Stryker gave its notice of intention to terminate the distribution agreement as  
of 11:59 p.m. on 5 September 2006 and placed “Medca” on credit hold until all outstanding  
sums were paid. Stryker also advised “Medca” that unless satisfactory payment  
arrangements were made by 28 July 2006, it would pursue its rights and remedies.  
Stryker’s injured commercial relationship with Medca Inc. was never re-established.  
[22] The various exhibits filed in the court record indicate that effective 21 December  
2006, the signature card for Canada Inc.’s Canadian and US bank accounts at the HSBC  
permitted only Louis Weil to alone conduct banking activities for the company. Lieberman  
needed the signature of either Rubinfeld or Usher Steinmetz to be able to transact on  
behalf of Canada Inc., which was also, according to the signature card, “trading as  
EMRN”. The same records also indicate that on 6 February 2008 Lieberman resigned as  
a director and officer of Medca Inc. and the next day Weil took his position.  
[23] Following the above events, business never really picked again for Canada Inc.  
and Medca Inc. On 13 June 2008, with Weil in control, Canada Inc. filed a proposal in  
bankruptcy pursuant to section 62 of the Bankruptcy and Insolvency Act.11 M. Diamond  
& Associates Inc. - Trustees & Receivers was appointed as trustee, and the first meeting  
of the creditors was scheduled for 4 July 2006. The statement of affairs of Canada Inc.  
reveals that the total assets of the company was about $600,000 while its deficiency was  
around 3.5 million dollars. Among the unsecured and secured creditors were Rubinfeld in  
Trust and Rubinfeld to the tune of close to 2 million dollars.  
[24] On 27 February 2009, despite the fact that Medca Inc. was the only signatory to  
the then terminated distribution agreement, Stryker commenced an action for non-  
payment of accounts against both Medca Inc. and Canada Inc. According to the “Motion  
in Introduction of Suit,” both Medca Inc. and Canada Inc. purchased products for close to  
$319,000 from Stryker and both Defendants failed to fulfill their obligations pursuant to  
the distribution agreement. Accordingly, Stryker sought that both Defendants be  
condemned jointly and solidarily to pay it the outstanding sum of $310,668.26.  
[25] On 4 March 2009, the trustee in bankruptcy sent a notice to Stryker indicating that  
pursuant to section 69.1 of the BIA the proceedings commenced against Canada Inc.  
ought to be suspended. On 9 March 2009, Canada Inc. removed the name of Medca  
11 R.S.C., 1985, c. B-3 (BIA).  
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PAGE: 6  
Canada from the registry of enterprises in Quebec such that that name could no longer  
be associated with Canada Inc.  
[26] On 23 April 2009, the Greffière adjointe Annick Gagnon of the Quebec Superior  
Court rendered a default judgment against Medca Inc., condemning it to pay the sum of  
$310,668.26 along with interest at the rate of 5% per year from 3 March 2009 plus  
additional indemnity pursuant to article 1619 C.C.Q. and costs. That judgment is still  
outstanding.  
[27] On 10 September 2009, following receipt of Stryker’s proof of claim form filed  
pursuant to, among others, section 50.1 of the BIA, that claim was rejected by the trustee  
Mayor Diamond C.I.R.P., because based on the documentation provided, Stryker “did  
business with a company called Medca Canada and not 3997413 Canada Inc.” Stryker  
then took no other steps in the bankruptcy proceedings, and it did not appeal the trustee’s  
decision.  
[28] Close to three years later, just before examining Weil on the unsatisfied judgment  
obtained in April of 2009, Stryker requested and obtained a financial investigative report  
from a “Services d’enquêtes privés” concerning Medca Inc. That report, dated 12 June  
2012, indicated that Medca Inc. was no longer in business, it did not have a place of  
business, it used to bank with the Business Development Bank of Canada and a judgment  
was obtained by the BDC against it in 2009 for $138,500. According to the report, the  
company never filed for bankruptcy.  
[29] On 27 October 2010, Stryker desisted from its action against Canada Inc.  
[30] On 12 November 2012, Weil was summoned to the Montreal Court House on 29  
November 2012 to be examined on the assets and liabilities of Medca Inc. Following that  
examination, on 14 December 2012, Stryker wrote to Medca Inc. and Weil asking for,  
among other things, the financial statements of Medca Inc. for the years 2002 to 2008.  
[31]  
On 30 June 2014, seeing that Stryker’s various requests made to Medca Inc. had  
still not been complied with, Julien Lanctôt, j.s.c. ordered Medca Inc. to respond to such  
requests.  
[32] On 3 January 2014, pursuant to the judgment of Registrar Chantal Flamand of the  
Quebec Superior Court, the trustee was liberated.  
[33] In an email dated 14 April 2015, Medca Inc. sent to Stryker the consolidated  
financial statements of Medca Inc. and Canada Inc. for the years 2005 to 2007 that it had  
unearthed. According to Medca Inc., the financial statements of 2007 had never been  
finalized.  
[34] At trial Michael Frankel, FCA (Fellow Chartered Accountant), FCPA auditor and a  
retired partner of the firm of RSM Richter who was a member of its assurance practice  
group until his retirement testified that the only relevant documents that he was able to  
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locate copies of for Canada Inc. was the Auditors’ Report dated 29 November 2006, which  
corresponding consolidated balance sheet as at 31 July 2006, provided financial details  
with respect to the years 2005 and 2006.  
[35] A review of Canada Inc.’s consolidated financial statements indicate that they  
include the accounts of Canada Inc. and its subsidiaries Medca Inc. and 9011-3069  
Quebec Inc., with a note that on consolidation, “all intercompany transactions and  
balances [were] eliminated.” The financial statements also indicate, among other things,  
that sales in 2006 dropped from about 9.5 million dollars in 2005 to 7.9 million and  
accounts receivable dropped from 1.8 million to $800,000.  
[36] Neither the directors nor the auditors were able to explain why the consolidated  
financial statements for 2007 was blank with respect to number of aspects and, moreover,  
why the uncompleted statements for the year ending 31 July 2007 indicate that the sales  
figures for the company were exactly the same as the one in 2005 – in other words,  
$9,489,066. According to Frankel, if they are blank it is because the company decided  
not to complete them.  
[37] On 15 June 2016, Stryker lodged an action against Canada Inc., Lieberman, Weil  
and Rubinfeld seeking, among other things, the lifting of the corporate veil of the company  
and a personal condemnation against the Defendants to jointly and solidarily pay the sum  
of $310,668.26 outstanding since June 2006. Stryker amended its “Judicial Application  
Originating a proceeding” on 19 January 2017 and then again on 4 June 2020.  
[38] On the last day of the hearing, Stryker also implored the court to rely on article 342  
of the Code of Civil Procedure (C.C.P.) and order the Defendants to pay $7,500 for the  
unnecessary efforts Stryker had been put through to obtain the relevant monthly bank  
statements of Canada Inc. from the HSBC Bank for the years 2004 to 2008.  
[39] By way of background, during their respective pretrial examinations, Weil and  
Rubinfeld were asked to provide the “Monthly bank statements of [Medca Inc.] and  
[Canada Inc.] from 2004 to 2012. That request was objected to, and the answer provided  
by the Defendants was “Available but under objection. These accounts were closed  
around 2009-2010. Statements from November 2004 to August 2010 are available.”  
[40] On 3 June 2019, during the hearing of the various objections raised by the  
Defendants, including this one, Karen Rogers, j.s.c. asked the lawyers for Weil and  
Rubinfeld to check and see whether either Weil or Rubinfeld had the documents in  
question or whether they had access to them, and if so, to provide them by 15 July 2019.  
[41] On 28 April 2022, only a few days before the commencement of the trial and close  
to three years after they had been directed by the court to provide the documents in  
question, if available, Stryker’s lawyers followed on the above request and the answer  
that was given to them was: “The bank statements of Canada Inc. have not been sent to  
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PAGE: 8  
you because Weil and Rubinfeld do not have them and they do not have access to them  
either.”  
[42] In response, Stryker sent a duces tecum subpoena to the HSBC Bank in order to  
obtain some or all of the documents in question. At trial, the representative of the Marché  
Central Branch of the bank brought Canada Inc.’s Canadian and US bank account  
statements for the period between 2 August 2004 and 22 July 2008. The delivery of these  
documents at trial (even though they were certainly available since 2019) and because  
they were being shown to all parties for the first time obliged the court to suspend the  
proceedings to allow them to view the documents.  
[43] Article 342 C.C.P. permits the court to punish, after hearing the parties, substantial  
breaches noted in the conduct of the proceeding by ordering a party to pay to another  
party, as legal costs, an amount that it considers fair and reasonable to cover the  
professional fees of the other party’s lawyer. I will have something to say about this issue  
later in the judgment.  
POSITION OF THE PARTIES  
[44] In its modified action filed on 4 June 2020, Stryker advances a number of  
interrelated arguments explaining why the Defendants ought to jointly and solidarily pay  
to it the sum of $310,668.26 together with legal interest and additional indemnity as of 23  
April 2009. Broken down to its basic elements, Stryker’s claim against the Defendants  
can be summarized as follows.  
[45] During the period between 2006 and 2008, the Defendants Lieberman, Rubinfeld  
and Weil, who were all three directors and officers of Medca Inc., deliberately emptied  
that company’s bank account by transferring significant sums of money found in it to  
Canada Inc., Medca’s parent company, such that it was thereafter impossible for Medca  
Inc. to meet its contractual and more specifically its payment obligations towards its sole  
creditor, Stryker.  
[46] Stryker submits that based on the two companies’ bank statements, the total sum  
of $633,723.12 was transferred from Medca Inc. to Canada Inc.’s account on these dates:  
8 February 2006  
8 May 2006  
6 July 2006  
$190,000  
$65,000  
$234,723.12  
$24,000  
$10,000  
$80,000  
$20,000  
$6,000  
26 July 2006  
8 August 2006  
10 November 2006  
9 February 2007  
8 May 2007  
16 August 2007  
$4,000  
[47] Stryker also submits that given the fact that during the period immediately following  
the acquisition of Medca Inc. by Canada Inc. and up until the period closely following  
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PAGE: 9  
Canada Inc.’s proposal in bankruptcy, Canada Inc. was holding itself out as doing  
business as Medca, given that Canada Inc. ceased to do business under that name as of  
3 March 2009, the date on which Stryker served Canada Inc. and Medca Inc. with its  
originating application, and moreover, given that both entities had their head offices at the  
same address and they both were active in the distribution of medical equipment, “there  
was a deliberate confusion created, as early as 2004, and maintained by Lieberman, Weil  
and Rubinfeld between the juridical personalities of [Medca Inc.] and [Canada Inc.].  
[48] Stryker also points to the moveable hypothecs listed in favour of Rubinfeld in the  
statement of affairs of Canada Inc. and argues that as a shareholder of Canada Inc. and  
director of Medca Inc. Rubinfeld was listed as a secured creditor for the amount of  
$450,000.  
[49] According to Stryker, based on principally the above facts, “the corporate veil  
between [Medca Inc.] and [Canada Inc.] must be lifted as [Medca Inc.] was being used  
as Canada Inc.’s alter ego with the purpose of transferring all of its assets to Canada Inc.  
on a gratuitous basis and/or for the purpose of defrauding [Stryker].” Indeed, adds Stryker,  
“by transferring [Medca Inc.’s] assets to [Canada Inc.] prior to the latter’s proposal under  
the [BIA], Defendants Lieberman, Weil and Rubinfeld ensured that said assets would fall  
into the Defendant [Canada Inc.’s] proposal.”  
[50] In that context, continues Stryker, “[Medca Inc.’s] default to file a plea in [Stryker’s]  
action against it comes as no surprise as Defendants Weil and Rubinfeld were clearly  
aware in 2009, that [Stryker] would be unable to execute any judgment against [Medca  
Inc.].  
[51] Finally, Stryker submits that Lieberman was a director of “Medca” based on its own  
records and in any event he presented himself as a director of that company from 2004  
to 2008, Rubinfeld was a director of “Medca” from 2004 to 2008 and Weil was a signing  
officer of “Medca” and Canada Inc. as of 2004, and he was a director of Medca as per the  
records of the company since 2006.  
[52] According to Stryker, “the Defendants Lieberman, Rubinfeld and Weil, acting as  
directors and/or officers of [Medca Inc.], knew about [Medca Inc.’s] debt towards [Stryker],  
and decided, nonetheless, to clear out [Medca Inc.’s] bank account, making it unable to  
meet its obligations towards its sole creditor.”  
[53] Also according to Stryker, Lieberman, Rubinfeld and Weil, in their respective  
positions as directors and officers of Medca Inc. committed extra contractual faults that  
caused Stryker damages.  
[54] Stryker adds, that it “only became aware of the extent of the Defendants  
involvement and fraudulent actions as of April 14th, 2015”.  
[55] In response, Lieberman, Rubinfeld and Weil collectively deny Stryker’s various  
allegations and argue that Stryker’s action commenced on 15 June 2016 is prescribed.  
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They also argue that Medca Inc. only had one supplier – Stryker – and when Stryker  
“abusively and abruptly terminated” the distribution agreement, it itself put Medca Inc. in  
the precarious financial position that the company found itself in June of 2006.  
[Accordingly], Medca Inc. “had no other stream of business, save and except for Stryker  
Products and this to the full knowledge of [Stryker]”.  
[56] According to the Defendants Rubinfeld and Weil, Stryker sued Medca Inc. and  
Canada Inc. together in 2009, “knowing full well the distinction between the two legal  
entities, and knowing full well what they alleged to as being fraudulent and this as appears  
from the examination on discovery under Oath of its representative […] Christopher  
[Chappus…] and therefore the claim is prescribed by law.”  
[57] The following exchange is an excerpt of what was said during Chappus’  
examination on 30 March 2017:  
35.  
Q. Okay. Are you aware of the fact that the proceedings were taken against  
both the company, Medca, and the company 3397413 Canada Inc.?  
A. Yes, I’m aware.  
Q. And do you know why?  
A. Yes.  
36.  
37.  
Q. Why?  
A. Because the clients, your clients, failed to respect the corporate  
structure and used each of the entities as if they were their own. And in  
doing so committed fraud.  
[Underlining added]  
ANALYSIS  
[58] For reasons that follow, Stryker’s action must be dismissed with legal costs as  
against it. I will begin with the issue of prescription as it is a natural starting point following  
the excerpt of the pretrial examination of Chappus that took place in March of 2017. I will  
then address the Plaintiff’s request for the lifting of the corporate veil and end with the  
cost condemnation sought pursuant to article 342 C.C.P.  
Prescription  
[59] At the hearing, Chappus testified that he has been the director of commercial  
contracting since 2017, and he first arrived at Stryker as a young lawyer in early 2006.  
Chappus has a B.A. in Business Administration and a law degree from the University of  
Iowa. He then left in September of 2008. As such, Chappus explained, he was not at  
Stryker when it commenced an action against Medca Inc. and Canada Inc. in 2009. He  
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was also not involved in the filing of a proof of claim form in the bankruptcy of Canada  
Inc.  
[60] Michael Puca, the Vice-President of workplace practices at Stryker also testified  
at trial. Puca obtained a B.A. from Michigan State University and a law degree from the  
University of Michigan. He began to work at Stryker’s legal department in 1998 and he  
was there until 2010. He explained that the reason Medca Inc. and Canada Inc. were  
sued together in 2009 was because there was confusion about who the right entity was  
and they could not determine which entity was which and who was doing what. Even  
though according to his own testimony, he was coordinating the outside legal work of  
Stryker at the time, he could not explain why no additional follow up was done by Stryker  
after the proof of claim form was refused by the trustee in September of 2009.  
[61] Ms. Dari Bargy, a lawyer and a member of the senior in-house litigation team at  
Stryker since 2018 also testified at the hearing. Bargy began to work at Stryker in 2011.  
She explained that as part of her duties, she came across the 2009 default judgment  
against Medca Inc., did some due diligence on it, retained an outside firm to carry out a  
financial investigation and then decided to proceed with post-judgment execution  
proceedings, including examining a representative of the judgment debtor corporation,  
Weil to attempt to collect on the judgment.  
[62] Surprisingly, Bargy testified that she only realized there was something out of the  
ordinary with the Medca Inc. and Canada Inc. relationship when she obtained a copy of  
Canada Inc.’s consolidated financial statements in April of 2015. Thereafter, she quickly  
instructed outside lawyers to look into the situation and pursue the collection steps further.  
It is useful to recall that Stryker’s second action against Canada Inc., adding this time as  
Defendants, Lieberman, Rubinfeld and Weil was commenced about a year later on 15  
June 2016.  
[63] It is also useful to recall that the proceedings against Canada Inc. were initially  
commenced on 27 February 2009 given likely that the first invoice from Stryker to Medca  
Inc. dated back to 28 February 2006 and the last invoice was payable either sometime in  
late June or July 2006, they were suspended on 4 March 2009, Stryker desisted from that  
action on 27 October 2010, and finally the bankruptcy trustee was liberated on 3 January  
2014.  
[64] Based on these facts, Stryker’s ability to pursue Canada Inc. after having desisted  
from its claim against that company in October of 2010 would have come to an end at the  
latest by the end of 2015. In other words, Stryker’s claim against Canada Inc., following  
its bankruptcy, would have been prescribed, again at the latest, by the end of 2015.  
[65] As explained by the Court of Appeal:12  
12 Marier c. Tétrault, 2008 QCCA 2108. See also Kokorogiannis (Succession de) c. Popescu, 2014 QCCA  
329, par. 7.  
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PAGE: 12  
[27] […] En raison de l'article 2894 C.c.Q., le demandeur qui se désiste  
volontairement de sa procédure introductive d'instance perd rétroactivement l'effet  
interruptif de prescription édicté par l'article 2892 C.c.Q. Il peut bien sûr intenter un  
nouveau recours si son droit d'action n'est pas prescrit. Mais si ce droit d'action, à  
la date du désistement, est par ailleurs prescrit, il est évidemment normal — cela  
va sans dire — qu'il ne puisse alors profiter de l'article 2895 C.c.Q. La situation, à  
cet égard, est donc identique à celle qui serait survenue si le demandeur n'avait  
jamais intenté l'action dont il s'est par la suite désisté.  
[Underlining is mine]  
[66] Under Quebec law, an action to enforce a personal right or movable real right is  
prescribed by three years, if the prescriptive period is not otherwise determined13. In the  
context of an action in contract or tort seeking indemnity by way of damages, prescription  
begins to run from the moment when the different conditions of attributing responsibility  
are present – in other words, the facts giving rise to responsibility, a prejudice and a  
causal link.  
[67] According to the Court of Appeal:14  
[8] En matière de responsabilité civile, ce moment (ce premier jour) survient dès  
que le titulaire du droit acquiert une connaissance suffisante d'une faute, d'un  
dommage et du lien de causalité qui les unit (art. 1457 C.c.Q.) en faisant preuve  
de diligence raisonnable dans la recherche des faits.  
[68] In this case, in my view, Stryker was aware of enough facts or certainly had enough  
information or knowledge in 2006 and then again in early 2014 after the liberation of the  
trustee of bankruptcy in the affairs of Canada Inc. that could and should have led it, if  
indeed it was interested in pursuing a timely claim against Canada Inc. and the other  
Defendants, to pursue its claim against them. For whatever deliberate or accidental  
reason, it did not.  
[69] During his examination for discovery in 2017, Chappus explicitly indicated that  
when in February of 2009 Stryker initiated its first claim against Canada Inc., it was  
because it was of the opinion that the Defendants had failed to respect the corporate  
structure and used each of Canada Inc. and Medca Inc. as if they were their own.  
[70] At that time, Chappus also went as far as indicating that the Defendants collectively  
– the reference was “the clients or your clients” in the context of the 2016 action against  
Canada Inc., Lieberman, Rubinfeld and Weil – had committed fraud. It is an inescapable  
fact that in the conclusions of its 2009 claim, Stryker sought the joint and solidary  
responsibility of Canada Inc. and Medca Inc. Stryker was also certainly aware that these  
13 Article 2925 of the Civil Code (C.C.Q.).  
14 Rosenberg c. Canada (Procureur général), 2014 QCCA 2041.  
500-17-094341-164  
PAGE: 13  
corporations were acting through their directors and officers, Lieberman, Rubinfeld and  
Weil.  
[71] Following the liberation of the trustee in bankruptcy, Stryker had two years or close  
to two years to pursue its claim against Canada Inc., and try and argue at that time that  
Lieberman, Rubinfeld and Weil should have been added to the claim because of their  
actions, if in fact it was of the view that that was the case. Stryker did not.  
[72] But Stryker also did not take any steps to more actively participate in the  
bankruptcy proceedings relating to Canada Inc. It did not for example write to the trustee  
and voice its concern about the intermingling of the affairs of the two companies Medca  
Inc. and Canada Inc. as Chappus described it during his examination in 2017.  
[73] It bears repeating that in 2012, three years prior to the expiration of the prescription  
deadline at the end of 2015, and just before examining Weil on the unsatisfied judgment  
obtained in April of 2009, Stryker requested and obtained a financial investigative report  
from “Services d’Enquêtes Privés” concerning Medca Inc. That report, dated 12 June  
2012, indicated that Medca Inc. was no longer in business, it did not have a place of  
business, it used to bank with the Business Development Bank of Canada and a judgment  
had been obtained by the BDC against it in 2009 for $138,500. According to that report,  
Medca Inc. had also never filed for bankruptcy.  
[74] As explained by the Court of Appeal:15  
[52] Cela étant, la règle générale veut que la prescription commence à courir dès  
lorsque la victime sait qu’une faute a été commise et qu’elle connaît le dommage  
en ayant résulté. Le fait qu’elle reçoive ultérieurement d’autres informations  
confirmant sa conviction ne lui permet pas d’en repousser le point de départ  
jusqu’à ce moment.  
[53] Or, le moment où cette connaissance est acquise par la victime est  
essentiellement une question de fait.  
[75] Here, by its own admission, Stryker had enough knowledge in 2009 to issue a  
claim against Canada Inc. and seek that it be condemned jointly and solidarily with Medca  
Inc. Stryker also had ample opportunity to pursue its claims against the Defendants both  
in the context of Canada Inc.’s bankruptcy in 2009 and subsequently. It decided instead  
to wait until it was in possession of the consolidated financial statements of Medca Inc.  
and Canada Inc. to react.  
[76] But even Stryker had to wait, as it persistently insisted at trial, until it could see the  
consolidated financial statements in question, it still had eight months until the end of  
2015 to lodge a new action – because it had desisted from its original action in 2010 –  
15 Commission des droits de la personne et des droits de la jeunesse (Jalbert) c. Ville de Montréal (Service  
de police de la Ville de Montréal), 2019 QCCA 1435.  
500-17-094341-164  
PAGE: 14  
against Canada Inc. and the other Defendants. It is worthy of mention that both the  
consolidated financial statements of Medca Inc. and Canada Inc., as well as the bank  
statements of Canada Inc. have been available since at least 2009.  
[77] Moreover, assuming that Stryker’s action lodged in 2016 against the Defendants  
was not prescribed, which is not the case as I indicated before, for the following reasons,  
I am still of the view that its action against the Defendants Lieberman, Rubinfeld and Weil  
ought to be dismissed.  
[78] This leads me to the other issue argued by Stryker.  
Lifting of the Corporate Veil  
[79] Under Quebec law, legal persons are endowed with juridical personality and they  
have full enjoyment of civil rights. Such persons act through their organs, for example  
their board of directors and the general meeting of the members. In law, a corporation is  
an entity endowed with a separate and independent legal existence and the juridical  
personality of a legal person may not be invoked against a person in good faith so as to  
dissemble fraud, abuse of right or contravention of a rule of public order.16  
[80] Like all persons, corporations are not above the law and they cannot take the law  
into their own hands either. While there is a distinction to be made between the  
corporation as a legal entity, its shareholders, directors and officers, neither is allowed to  
direct the other to violate the law or undermine the administration of justice.  
[81] Under Quebec law, as under the laws of the other provinces in Canada,  
corporations exist separately from their owners, who are known as its shareholders and  
from those who make decisions relating to the management of the corporation. As a  
corporation is a separate person in the eyes of the law from its shareholders and directors,  
its financial and other responsibilities are also generally distinct. Once incorporated, the  
corporation has the capacity and the rights, powers and privileges of a natural person. It  
is precisely this fact that distinguishes it from the other forms of business organizations.  
[82] Since a corporation has its own capacity, rights, powers and privileges, it means  
that it is able to take on legal obligations and enforce obligations in its own name.  
However, given that a corporation is not a natural person, it must act through others to,  
among other things, contract for example, and exercise its rights. As set out explicitly in  
the Civil Code, legal persons act through their organs, such as the board of directors and  
the general meeting of the members.17  
[83] A legal person is represented by its senior officers, who bind it to the extent of the  
powers vested in them by law, the constituting act or by-laws.18 Directors, consequently,  
16 Article 317 C.C.Q.  
17 Article 311 C.C.Q.  
18 Article 312 C.C.Q.  
500-17-094341-164  
PAGE: 15  
are charged with the fundamental obligation of managing or supervising the management  
of, the business and affairs of the corporation.19 Directors owe their fiduciary obligation  
and duty of loyalty exclusively to the corporation not its shareholders or its creditors.20  
[84] The interests of the corporation should not be confused with those of its creditors  
or stakeholders.21 While the interests of the shareholders, creditors and the corporation  
itself may be perfectly aligned when the corporation is well capitalized, profitable,  
performing and showing strong positive prospect, the same will likely not be the case in  
more difficult financial times.22  
[85] The directors’ fiduciary duties do not shift when the corporation is in the so-called  
nebulous vicinity of insolvency.23 The creditors’ interests in the corporation often increase  
as that entities financial situation deteriorates.  
[86] In Quebec, directors have generally been held liable for either their contractual or  
extra-contractual obligations. Contractual liability arises when a director personally  
guarantees a contractual obligation of the corporation. Extra-contractual liability arises  
where a director or directors of a corporation behave in a manner that attracts such a  
responsibility.  
[87] Under Quebec law, article 1457 C.C.Q. sets out the following standard:  
1457. Every person has a duty to abide by the rules of conduct which lie upon him,  
according to the circumstances, usage or law, so as not to cause injury to another.  
[…]  
[88] In this case, Stryker pursues Weil, Lieberman and Rubinfeld personally for their  
extra-contractual acts carried out close to ten years earlier. Put differently, unable to and  
unsatisfied with its attempt to collect a judgment against the company with which it  
engaged in the business of selling medical supplies, Stryker alleges, among other things,  
that the company’s directors committed personal faults that merit civil liability and solidary  
reparation.  
[89] In a rather broad, all-encompassing and all-out “Modified Judicial Application  
Originating a Proceeding” dated 4 June 2020, Stryker demands that the corporate veil  
between Medca Inc. and Canada Inc. be lifted, because the former was being used as  
the latter’s alter ego with the purpose of transferring all of its assets to Canada Inc. on a  
gratuitous basis or for the purpose of defrauding the Plaintiff.  
19 Article 335 C.C.Q.  
20 Peoples Department Stores Inc. (Trustee of) v. Wise, [2004] 3 S.C.R. 461 at 43 and 46 (Peoples). See  
also BCE Inc. v. 1976 Debentureholders, [2008] 3 S.C.R. 560 (BCE Inc.).  
21 Peoples, par. 43.  
22 Ibid., par. 44.  
23 Ibid., par. 46.  
500-17-094341-164  
PAGE: 16  
[90] According to Stryker, by transferring Medca Inc.’s assets to Canada Inc. before  
that company’s proposal under the BIA, Lieberman, Weil and Rubinfeld ensured that  
Medca’s assets would fall into Canada Inc.’s proposal.  
[91] Moreover, according to Stryker, the Defendants Lieberman, Weil and Rubinfeld,  
acting all three as directors and/or officers of Medca Inc. stopped payment of two checks  
payable to Stryker because they were of the opinion that the Plaintiff had abusively and  
abruptly terminated their distribution agreement and they had also during the period of  
July 2006 to August 2007, rendered Medca Inc. unable to meet its obligations towards  
the Plaintiff, “its sole creditor, by clearing out Medca’s bank account, and transferring the  
funds in a bank account located at the same branch” that belonged to Canada Inc.  
[92] In order to demonstrate this point, at trial, Stryker referred to the following transfers  
totalling $378,723.12 from Medca Inc. to Canada Inc.:  
6 July 2006  
26 July 2006  
8 August 2006  
10 November 2006  
9 February 2007  
8 May 2007  
$234,723.12  
$24,000  
$10,000  
$80,000  
$20,000  
$6,000  
16 August 2007  
$4,000  
[93] Stryker also adds, whether or not the funds were in fact transferred to Canada Inc.  
or not is immaterial, as according to Stryker, the Defendants Lieberman, Rubinfeld and  
Weil, acting as directors and officers of Medca Inc., knew about that company’s debt  
towards the Plaintiff and decided “nonetheless, to clear out Medca’s bank account,  
making it unable to meet its obligations towards its sole creditor.” That operation, Stryker  
reiterates, was “directly aimed [at] the Plaintiff and its ability to recover Medca’s debt.”  
[94]  
Finally, Stryker argues that Canada Inc., like the Defendants Lieberman, Weil and  
Rubinfeld, committed extra-contractual fault by transferring funds from Medca Inc. to  
Canada Inc. to reduce its overdraft facility with the HSBC Bank and also by allowing  
themselves to benefit from the reduction of the overdraft, considering that Lieberman and  
Rubinfeld as directors had personally guaranteed the obligations of Canada Inc. towards  
the bank.  
[95] According to Stryker, since these three individuals had “no contractual relationship  
with it, the extra-contractual liability of directors of [Canada Inc./Medca Inc.] is based on  
their duty of care towards the creditors of Medca Inc.”  
[96] In short, Stryker advances that the decision of the three directors to stop payments  
of the checks payable to it and thereafter not paying Stryker the sum that was owed to it  
was a not a business decision but rather a clear breach of their duty of care and diligence  
owed to Stryker as the creditor of the company that they administered.  
[97] Needless to say that the Defendants all of course disagree.  
500-17-094341-164  
PAGE: 17  
[98] The Defendants all three submit that the activities of both Canada Inc. and Medca  
Inc. (and to some extent EMRN) were interrelated and even interconnected and that such  
activities were made possible and were largely dependent on the $500,000 line of credit  
opened at the HSBC Bank for Canada Inc.  
[99] They explain, in particular, that Canada Inc. played the role of the parent company  
among the clearly related companies and that HSBC Bank required that Medca Inc.  
guarantee the credit facility offered to Canada Inc. in the summer of 2004. According to  
the Defendants, this explains why on 5 August 2004, a day after Medca Inc. was acquired  
by Canada Inc., a resolution of the board of directors at the time composed of Lieberman  
and Rubinfeld was passed for Medca Inc. to guarantee Canada Inc.’s credit facility at the  
bank.  
[100] The Defendants also explain that even though the three interrelated companies –  
Medca Inc., Canada Inc. and EMRN – were separate entities, they were all nevertheless  
managed and operated as one large operation with monetary transfers from time to time  
from one to another. For example, Lieberman explains, there were significant sums of  
money transferred from Medca Inc. to Canada Inc. in both 2005 and 2006 before there  
were any financial disputes between the parties that support such a state of affairs.  
[101] As set out in the HSBC Bank statements for Medca Inc., the following transfers  
were made from that company to Canada Inc.:  
21 January 2005  
8 February 2005  
13 September 2005  
8 February 2006  
8 May 2006  
$100,000  
$87,000  
$75,000  
$190,000  
$65,000  
[102] There was also, among others, a transfer on 28 September 2005 of $180,000 from  
Canada Inc. to Medca Inc. to reduce the more than $200,000 overdraft that Medca Inc.’s  
bank account was facing and on 13 March 2006 a transfer of $3,000 from EMRN to Medca  
Inc.  
[103] According to Lieberman, the decision to put a stop payment on the transfer of  
$92,526.11 from the account of Medca Inc. to Stryker on 2 June 2006 and the decision  
to tell Stryker not to cash another check in the amount of $48,500, like the transfer of  
$234,723.12 from the account of Medca Inc. to Canada Inc. on 6 July 2006 was simply a  
business decision and nothing else.  
[104] As explained by Lieberman, Stryker was not the only creditor of Medca Inc., there  
were others, including the HSBC Bank, the BDC and Rubinfeld who had personally  
invested money in the business. Also as explained by Lieberman, it was the HSBC Bank,  
that had asked for consolidated financial statements and it was the decision of the bank  
to demand for collaterals and guarantees from all-related companies.  
500-17-094341-164  
PAGE: 18  
[105] According to the Defendants, nothing before the Court indicates that they  
personally benefitted from the financial decisions made by the directors in the interest of  
the companies in question and as part of their day-to-day management and operation,  
and there is also nothing in the record that indicates that any of the directors made any  
false representations or committed any extra-contractual faults. If anything, as explained  
by Rubinfeld and Weil, Rubinfeld personally lost a significant amount of his investment in  
the business.  
[106] In short, argue the Defendants, the various payment or non-payment decisions  
that they made at all relevant times were business decisions made in the course of them  
managing the various entities under their control and they had nothing to do with  
committing any fault or fraud as alleged by Stryker. Finally, the Defendants add, the  
decision to terminate the distribution agreement with Medca Inc. was solely that of Stryker  
and it was that decision and that decision alone that ultimately put Canada Inc. and Medca  
Inc. in such a precarious financial situation that led them to their demise.  
[107] Having the examined the documentary proof and listened to the testimony of the  
Defendants, I am of the view that the removal of the corporate veil between Canada Inc.  
and Medca Inc. is not justified in this case. My reasons are as follows.  
[108] As set out by the Supreme Court in Peoples, three elements of article 1457 C.C.Q.  
are relevant to the integration of the director’s duty of care into the principles of extra-  
contractual liability: who has the duty, to whom is duty owed and what breach will trigger  
liability.  
[109] The reach of 1457 C.C.Q. is broad, and it must be given a liberal, open and  
inclusive meaning.24 There is now no doubt in Quebec law that directors and officers owe  
under article 1457 C.C.Q. a duty of care to creditors. The question that needs to be  
answered in every case is: Has there been a breach of the standard of care, is there  
causation and are there damages that have been suffered and can be established?  
[110] The first paragraph of article 1457 C.C.Q. does not set out the standard of conduct  
that needs to be examined. Instead, it incorporates for federally chartered corporations  
governed by the CBCA, – Canada Inc. in this case – a rule under section 122(1)(b), which  
requires that directors and officers “exercise the care, diligence and skill that a reasonably  
prudent person would exercise in comparable circumstances” and for provincially  
chartered corporations governed by the Quebec Business Corporations Act,25 – Medca  
Inc. in this case – a rule under section 119 that requires directors to be bound by the  
same obligations as those found in the C.C.Q., and consequently, in the exercise of their  
functions, to be “duty bound toward the corporation to act with prudence and diligence,  
honesty and loyalty and in the interest of the corporation”.  
24 Peoples, par. 56.  
25 C.Q.L.R., c. S-31.1 (QBCA).  
500-17-094341-164  
PAGE: 19  
[111] In other words, the decisions that directors and officers make “must be reasonable  
business decisions in light of all the circumstances about which the directors or officers  
knew or ought to have known. In determining whether the directors have acted in a  
manner that breached the duty of care, it is worth repeating that perfection is not  
demanded.”26  
[112] A court asked to determine whether a decision or decision made by directors and  
officers is a reasonable business decision must bear in mind that:27  
Courts are ill-suited and should be reluctant to second guess the application of  
business expertise to the considerations that are involved in corporate decision  
making, but they are capable, on the facts of any case, of determining whether an  
appropriate degree of prudence and diligence was brought to bear in reaching  
what is claimed to be a reasonable business decision at the time it was made.  
[113] In Quebec, the above dicta must be read in conjunction with the decision of the  
Court of Appeal in Lanoue c. Brasserie Labatt ltée28 that :  
L’insolvabilité future de la personne morale n’a pas pour effet de rendre les  
actionnaires débiteurs personnels d’une dette qu’ils n’avaient garantie en aucune  
façon; c’est l’essence même de la personnalité juridique de la personne morale  
qui est ici en cause. Il ne saurait donc être question de « soulever le voile  
corporatif » pour condamner les frères Lanoue à titre d’actionnaires.  
[Underlining is mine]  
[114] In this case, I am of the view that given the more than one half million dollars of  
transfers that were made, starting as early as in January of 2005, from Medca Inc. to  
Canada Inc. before June of 2006 when it was formally announced by Stryker that Medca’s  
distribution agreement was not being renewed, the Court can not second-guess the  
decision of the directors of Medca Inc. with respect to the transfers that were made post  
June of 2006.  
[115] In the same way that Stryker argues that these transfers were made to frustrate  
the payments that were due to it or to prevent it from being able to collect its debt from  
Medca Inc., Lieberman testifies that Medca Inc. and the other related companies that  
worked together as a group had other obligations that needed to be satisfied at the time  
in question.  
[116] As explained by Lieberman, Stryker was not the only creditor of Medca Inc. or  
Canada Inc. There was at least the HSBC Bank, the BDC and Rubinfeld himself. As also  
explained by Lieberman, the company and the companies together had important  
26 Peoples, par. 67.  
27 Ibid.  
28 REJB 1999-11842 par. 33.  
500-17-094341-164  
PAGE: 20  
business decisions to make and they made them under real time and real constraints. As  
explained by Supreme Court:29  
[36]  
The directors are responsible for the governance of the corporation. In the  
performance of this role, the directors are subject to two duties: a fiduciary duty to  
the corporation under s. 122(1) (a) (the fiduciary duty); and a duty to exercise the  
care, diligence and skill of a reasonably prudent person in comparable  
circumstances under s. 122(a) (b) (the duty of care). The second duty is not at  
issue in these proceedings as this is not a claim against the directors of the  
corporation for failing to meet their duty of care. However, this case does involve  
the fiduciary duty of the directors to the corporation, and particularly the ‘’fair  
treatment’’ component of this duty, which, as will be seen, is fundamental to the  
reasonable expectations of stakeholders claiming an oppression remedy.  
[37]  
The fiduciary duty of the directors to the corporation originated in the  
common law. It is a duty to act in the best interests of the corporation. Often the  
interests of shareholders and stakeholders are co-extensive with the interests of  
the corporation. But if they conflict, the directors’ duty is clear – it is to the  
corporation: Peoples Department Stores.  
[38]  
The fiduciary duty of the directors to the corporation is a broad, contextual  
concept. It is not confined to short-term profit or share value. Where the corporation  
is an ongoing concern, it looks to the long-term interests of the corporation. The  
content of this duty varies with the situation at hand. At a minimum, it requires the  
directors to ensure that the corporation meets its statutory obligations. But,  
depending on the context, there may also be other requirements. In any event, the  
fiduciary duty owed by directors is mandatory; directors must look to what is in the  
interests of the corporation.  
[117] There is therefore no reason, or I should say no justified reason, to second-guess  
or question the decisions made by the directors of Medca Inc. and Canada Inc. at the  
time in question.  
[118] This is especially so, since there is also evidence that in September of 2005,  
Canada Inc. transferred a large sum of money – $180,000 to be precise – from its bank  
account to that of Medca Inc.  
[119] I am consequently reluctant to immerse myself in the corporate decision-making  
of the directors who at the time, no doubt, had a variety of competing considerations to  
juggle. Under the circumstances, I am of the view that the Plaintiff has not discharged the  
onus of proof incumbent on it to demonstrate that the requirements of article 1457 C.C.Q.  
have been made.  
[120] Moreover, the future insolvency of Canada Inc., in which Stryker in any event  
participated to the extent it found appropriate, does not have any impact on the outcome  
29 BCE Inc., pages 583 and following.  
500-17-094341-164  
PAGE: 21  
of this case. Stryker’s request for the lifting of the corporate veil between Medca Inc. and  
Canada Inc. is, therefore, dismissed.  
Article 342 C.C.P.  
[121] At the end of the hearing, Stryker verbally requested that the Defendants  
collectively be condemned under article 342 C.C.P. to pay it the sum of $7,500 to  
compensate the company for the unjustified delay and the unnecessary and certainly  
avoidable work its lawyers had to go through to get the bank account of Canada Inc. by  
way of a duces tecum subpoena, when in fact they had always been available and the  
Defendants, and in particular Weil and Rubinfeld had at all times access to them as  
directors and officers of Canada Inc.  
[122] Under the heading “Legal Costs”, article 342 C.C.P. provides:  
TITLE II  
LEGAL COSTS  
342. The court, after hearing the parties, may punish substantial breaches noted  
in the conduct of the proceedings by ordering a party to pay another party, as legal  
costs, an amount that it considers fair and reasonable to cover the professional  
fees of the other party’s lawyer or, if the other party is not represented by a lawyer,  
to compensate the other party for the time spent on the case and the work involved.  
[Underlining is mine]  
[123] The most recent appellate authority on the application of article 342 C.C.P. is Biron  
c. 150 Marchand Holding inc.30  
[124] The salient facts in Biron, where the Court of Appeal reversed a decision of the  
Superior Court granting a 342 C.C.P. application, are instructive. In Biron, among other  
things, the first instance judge sanctioned the Plaintiff because he waited until the last  
minute to inform the opposing party that there was no proof to be presented at trial with  
respect to his loss of reputation claim, because he did not inform the opposing party that  
he was wrong in thinking that he was dismissed because the space was going to be  
rented to a representative of the region and because he defended an alternative theory  
that ended up being ultimately without any merit at trial.  
[125] In Biron, on behalf of a majority court, Chamberland J.A. wrote:  
[113] Deux remarques avant d’aller plus loin. Premièrement, il faut savoir faire  
preuve de modération avant de conclure à un « manquement important » aux  
obligations incombant aux parties dans le déroulement de l’instance. Les  
obligations et devoirs prescrits par le législateur dans les articles 19 et 20 C.p.c.,  
ainsi que dans la disposition préliminaire, sont bien évidemment fort valables, mais  
il ne faut pas oublier qu’ils s’inscrivent dans une dynamique où les avocats  
30 2020 QCCA 1537 (Biron).  
500-17-094341-164  
PAGE: 22  
impliqués ont (généralement) plusieurs dossiers à gérer en même temps.  
L’idéalisme est de mise dans la formulation des principes et des objectifs à  
atteindre, mais le réalisme l’est tout autant dans leur application quotidienne, au  
risque, autrement, de compliquer sérieusement, et inutilement, le travail des  
avocats de les exposer, de même que les parties qu’ils représentent, à des  
demandes de ce genre dans la quasi-totalité des dossiers. En d’autres mots, il  
convient de viser haut dans la formulation des principes, mais de viser juste dans  
leur application. Ce qui m’amène à mon second commentaire.  
[114] Les manquements que le juge peut sanctionner aux termes de l’article 342  
C.p.c. doivent être « importants » […].  
[…]  
[123] L’article 342 C.p.c. est important pour changer les mentalités face à l’action  
en justice, contrer les abus et discipliner les plaideurs, qu’ils soient avocats ou non,  
mais il ne doit pas mener à un examen systématique par le juge de leur conduite  
par rapport à ce qu’elle devrait être selon les principes directeurs de la procédure  
civile, procédure par procédure, à toutes les étapes du déroulement de l’instance  
jusqu’à la fin du procès. […]  
[Underlining is mine]  
[126] If there is an example of a substantial breach in the conduct of a proceeding that  
should not be contestable, it should be the conscious, deliberate and blatant disregard of  
a court’s decision or order during a proceeding. This does not mean that a litigant has no  
recourse against a court’s ruling or decision. Far from it. Articles 29 to 32 C.C.P., in  
particular, confirm this point. But litigants cannot take matters into their own hands,  
disregard a judge’s decision, undermine the rule of law and thereby compromise the  
administration of justice. The primacy of the rule of law is directly dependent on the ability  
of the courts to enforce their process and maintain their dignity and respect.31  
[127] The C.C.P. offers judges with a variety of mechanisms to better and more  
efficiently administer the matters before them. It also offers them with a number of options  
to sanction litigants when and where appropriate. Articles 51, 57 and 342 C.C.P. serve  
as examples.  
[128] There is nothing unrealistic about expecting a party and his, her or its legal  
representative to respect an explicit decision of the Court. There is also nothing  
complicated or complicating about ensuring compliance with the Court’s directions,  
decisions and orders. This is not merely an option that requires consideration before  
exercise, it is a legal and, for the members of the bar in particular I would add, ethical  
obligation that requires strict compliance.  
31  
United Nurses of Alberta v. Alberta (Attorney General), [1992] 1 S.C.R. 901, at p. 931.  
500-17-094341-164  
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[129] There is equally nothing cumbersome or particular in ensuring that the required  
level of transparency and candor is respected vis-à-vis the Court.  
[130] Article 342 C.C.P. permits the court, in exceptional circumstances, to punish a  
litigant who is responsible for a substantial breach in the conduct of the proceedings.  
Such an award is meant to mark, among other things, the court’s disapproval of a party’s  
conduct in the litigation. The unreasonable, vexatious or abusive conduct in question may  
relate to events leading up to the proceeding, the actual bringing of the proceeding or  
prosecuting it. The conduct in question may be misleading the court or deliberately  
disregarding its decision to multiply proceedings.  
[131] In this case, as indicated earlier, during their respective examinations, Weil and  
Rubinfeld were asked to provide the “Monthly bank statements of Canada Inc. from 2004  
to 2012. That request was objected to, and the answer provided by the Defendants was  
“Available but under objection. These accounts were closed around 2009-2010.  
Statements from November 2004 to August 2010 are available.”  
[132] On 3 June 2019, during the hearing of the various objections raised by the  
Defendants, including the one relating to Canada Inc.’s bank accounts, Karen Rogers,  
j.s.c. asked the lawyers for Weil and Rubinfeld to check and see whether either Weil or  
Rubinfeld had the documents in question or whether they had access to them, and if so,  
to provide them by 15 July 2019.  
[133] On 28 April 2022, only a few days before the commencement of the trial and close  
to three years after they had been directed by the court to provide the documents in  
question, if available, Stryker’s lawyers followed on the above request and the answer  
that was given to them was: “The bank statements of Canada Inc. have not been sent to  
you because Weil and Rubinfeld do not have them and they do not have access to them  
either.”  
[134] In response, Stryker had to send a duces tecum subpoena to the HSBC Bank in  
order to obtain some or all of the documents in question. At trial, the representative of the  
bank brought to Court Canada Inc.’s Canadian and US bank account statements for the  
period between 2 August 2004 and 22 July 2008. The delivery of these documents at trial  
and because they were being made available to all of the parties for the first time during  
the hearing obliged the Court to temporarily suspend the proceedings to allow the parties  
to view them.  
[135] In my view, the actions of the Defendants, Weil and Rubinfeld were deliberate, not  
diligent and they give rise, under the circumstances, to a condemnation of a monetary  
amount pursuant to article 342 C.C.P.  
[136] While it turns out that the Defendants are successful in defending the principal  
claims lodged against them, there is no doubt that the bank account statements of  
Canada Inc. held at HSBC Bank were relevant and available, as indicated by both Weil  
500-17-094341-164  
PAGE: 24  
and Rubinfeld, and there is no doubt that Justice Rogers asked the lawyers for these two  
individuals to obtain and give them to the Plaintiff by 15 July 2019. They did not, even  
though they knew that these documents were available, they had much easier access to  
them than the Plaintiff and they were ordered by Justice Rogers to do so.  
[137] This kind of deliberate obstinence is unacceptable and the Court disapproves of it.  
The deliberate actions of the Defendants Weil and Rubinfeld obliged the Superior Court  
to stop the proceedings in the middle of the trial in order to allow all parties to review the  
voluminous documents brought by the bank representative that should have been  
disclosed, exchanged and reviewed before trial.  
[138] The bank account statements and the transactions found in them were clearly  
relevant and useful for the ultimate disposal of the case. In my view, the actions of the  
Defendants Weil and Rubinfeld amount to a substantial breach in the proceedings that  
justify the punishment envisaged in article 342 C.C.P.  
[139] At the end of the day, this is a case about a business transaction that sophisticated  
parties entered into more than twenty years ago. They each had their own reasons to  
embark on it and then disembark from it. They each made their own choices along the  
way, and assumed at the time and must continue to assume now the ensuing  
consequences in the business world, in bankruptcy proceedings and now before this  
Court. There is no result that is flagrantly opposed to justice present here and the Court  
can not act on what it simply considers to be just and equitable without appropriate proof.  
[140] It is now time for all parties to move on – the administration of justice certainly  
requires it.  
FOR THESE REASONS, THE COURT:  
DISMISSES the Modified Judicial Application Originating a Proceeding dated 4 June  
2020;  
ORDERS the Defendants Louis Weil and Joel Rubinfeld to pay to the Plaintiff, the sum of  
$3,000 pursuant to article 342 C.C.P.;  
WITH LEGAL COSTS as against the Plaintiff, Stryker Canada Holding Company.  
__________________________________,  
BABAK BARIN, J.S.C.  
Me Robert Tannous  
Me Christian Casimir  
ALLALI BRAULT  
Attorneys for Plaintiff  
500-17-094341-164  
PAGE: 25  
Me Frédéric Dupont  
Me Joseph Le  
SEGAL SANTILLO  
Attorneys for Defendants – Mr. Louis Weil and Mr. Joel Rubinfeld  
Me Caroline Léonard  
CARDINAL LÉONARD DENIS AVOCATS  
Attorneys for Defendant – Mr. Menachem Lieberman  
Hearing dates:  
2, 3, 4 and 5 May 2022  


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