SCC to rule on dealer’s appeal request

Next week, the Supreme Court of Canada will decide whether it will hear an appeal from the operators of a former fund dealer in a dispute over the sale of their clients, and payment of non-compete fees. 

The legal action arose over the sale of a book of business by International Capital Management Inc. (ICM) and its operators, John and Javier Sanchez, to another dealer, Optimize Inc., in 2017. 

According to court decisions, the transaction included an agreement requiring Optimize to pay monthly non-compete fees to ICM, along with referral fees — with the provision that those fees would be refunded if the non-compete clause was breached. Optimize claimed that the clause was breached, and it demanded the repayment of almost $750,000 in fees.

ICM then sued Optimize, seeking to have the agreements enforced, and claiming $3.6 million in damages. Optimize countersued seeking the repayment of the fees it had paid under the deal. 

And, in 2024, the Ontario Superior Court of Justice granted summary judgment in favour of Optimize, ordering the repayment of the fees.

That decision was appealed by ICM and the Sanchez brothers — which argued that the judge erred by not holding a trial to determine whether the non-compete agreement was breached, and argued that the refund clause amounted to a penalty clause, which was unenforceable, among other things. 

In October 2025, the Court of Appeal for Ontario rejected their appeal, upholding the finding that there was no need for a trial to determine whether the non-compete agreement was breached — and agreeing with the lower court that the refund provision was not a penalty, and wasn’t unfair.

Now, ICM is seeking leave to appeal its case to the Supreme Court. The proposed appeal may deal with the issue of whether the refund clause represents a penalty, and, if it is a penalty, can it be enforced. 

The Supreme Court will issue its decision on whether to hear the case or not on May 14.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.