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A Quebec Superior Court judge has ruled against an attempt by the lawyer acting for Paul Desmarais’ estate to dismiss the suit, which alleges that older brother Louis is entitled to $100-million rather than the $5-million Paul gave him a few months before his death at age 86 a little over a year ago.

Reuters

In a rare public airing for one of Canada's most secretive families, the estate of billionaire Paul Desmarais is preparing to fight a $100-million lawsuit by his brother Louis over an alleged broken promise made in 1979.

A Quebec Superior Court judge has ruled against an attempt by the lawyer acting for Paul Desmarais' estate to dismiss the suit, which alleges that older brother Louis is entitled to $100-million rather than the $5-million Paul gave him a few months before his death at age 86 a little over a year ago.

Louis Desmarais, 91, filed the suit earlier this year. In it, he alleges that Paul asked him in 1979 to sell his 60,000 shares into a share buyback that Power Corp. of Canada was initiating in order to tighten Paul's control over the Montreal-based holding company.

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Louis agreed to that and also to a request that he drop a plan to buy 300,000 more Power shares, it is alleged. Paul argued that the optics of his own brother not tendering his shares to the buyback would be detrimental, according to the allegations, which have not been proved in court.

At the same time, Paul promised "he would, at a later time, give back the 60,000 shares" or their cash equivalent, says the recap of allegations in Justice Michèle Monast's Nov. 11 ruling.

The matter was never discussed again, until Paul's decision last year to have $5-million sent to Louis with the stipulation that this was all he would receive and there was nothing for him in the will, the decision states.

"The Plaintiff, having always believed his brother to be a man of his word, never doubted that the agreement between them would be honoured," it's alleged.

The $5-million payment is paltry when compared with the more than $200-million the shares are now worth, Louis Desmarais alleges. Nevertheless, the former Liberal MP, chairman of Canada Steamship Lines and the anti-separatist Council for Canadian Unity, chose to reduce his claim to $100-million.

Attorney Guy Fortin, representing the estate, asked that the claim be thrown out, alleging it was "frivolous, inappropriate and abusive."

It is "absurd" that Paul would have made such a promise, and even if it had been made, too much time has elapsed for any claim to be accepted, he said.

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The sum of $100-million is also outrageous, Mr. Fortin alleged: Taking into account share splits, the amount claimed is not even worth 10 per cent of that.

The $5-million was given to Louis out of "pure brotherly generosity," Mr. Fortin alleges.

Sudbury, Ont. native Paul Desmarais is survived in the immediate family by his wife, Jacqueline, sons Paul Jr. and André – who took over at Power in 1996 – daughters Sophie and Louise as well as 10 grandchildren.

Louis Desmarais alleges that he informed Mr. Fortin about the 1979 verbal agreement before his brother's death and also told him $5-million was insufficient.

But Mr. Fortin did not take up the issue with Paul Desmarais, according to the decision's recounting of events.

Mr. Fortin's request for dismissal was based on the argument that the $5-million Paul gave to Louis was simply a gift and had no connection to a supposed contract struck in 1979, the judge states.

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If Louis Desmarais can prove there was indeed an agreement between him and Paul in 1979 and that there is a link between that deal and the "partial" payment of $5-million in July, 2013, a case can be made against a statute of limitations on the claim, she said.

The judge concluded it would be hasty at this point to grant the request for dismissal and it is preferable that a trial judge decide on the implications of Paul Desmarais' $5-million transfer to his brother.

"It is not certain that that the plaintiff will be vindicated, but it is impossible for now to conclude that his claim has no legal basis and is clearly doomed to fail."

A trial date has yet to be scheduled.

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