2014 QCCQ 3771, 2014 QCCQ 3771

9279-0500 Québec inc. (Sanidas) c. 9282-5942 Québec inc. (Restaurant Kam Fung) 2014 QCCQ 3771 COURT OF QUEBEC CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL “Civil Division“ No: 500-22-207213-136 DATE: April 30, 2014 ______________________________________________________________________ BY THE HONOURABLE JEFFREY EDWARDS, J.C.Q. ______________________________________________________________________ 9279-0500 QUÉBEC INC. (SANIDAS) Plaintiff v. 9282-5942 QUÉBEC INC. (RESTAURANT KAM FUNG) Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] Plaintiff claims from Defendant an amount of $12,910.51 on account for services rendered and for damages further to an alleged breach of a contract of rental of equipment and for services.

The question in issue is to determine if any amount is owed by Defendant. [ 2 ] The proof reveals as follows: Plaintiff is a company operating in the area of rental, maintenance and repair of equipment relating to the sanitation needs of commercial businesses. One of Plaintiff’s clients was Restaurant La Maison Kam Fung (“Restaurant Kam Fung”) located on St-Urbain Street in Montreal. Their contractual relation goes back to at least 2011. [ 3 ] In January 2013, the owner of the company (9156-4914 Quebec inc.) operating Restaurant Kam Fung was Mr. Cherk Ng Kwan. At that time, Mr.

Kwan advised Plaintiff that the company was having financial difficulties and that it could be going out of business or file for bankruptcy, but no decision had been made at that time. Since at least March 2011, Plaintiff had rented equipment and provided sanitation maintenance and repairs on the equipment on the premises of the restaurant.

The equipment is listed in the contract (Exhibit P- 5) between 9156-4914 Québec inc. and Plaintiff in the following table: Équipement Manufacturier Modèle # de Série Hobart C44 Motor/transmission/pump Hobart C44 Ref picture attached Value 3500.00 + tax Dispenser Knight Unitech 2 5036869 Value 650.00 + tax Dema 652 GAP Utility room 450.00 + tax Dema 652 GAP Back sink 350.00 + tax Dema 652 GAP Wash pit 350.00 + tax Autres Équipements (spécifier) 7 x Air fresh dispensers Tork hand paper disp x 2 [ 4 ] In light of Mr.

Kwan’s statement as to financial difficulties, Plaintiff’s representatives wanted to protect Plaintiff and proceeded

to conclude an additional contract with the company operating the restaurant (Exhibit P-5

a) dated January 5, 2013. The relevant part of this additional contract states: We would like to thank you for informing us with your honesty and frankness regarding your current financial situation with La Maison Kam Fung in Chinatown; due to our long term relationship we are willing to work with you to the best of our capacity. As of this date above all preventive maintenance will still continue as usual; as for any major repairs will be done but all equipment will still remain the property of the above mentioned companies [including SANIDAS (being the Plaintiff)].

All equipment mentioned on existing contract signed March 1, 2011 remains the sole property of the above mentioned companies and is strictly on loan to La Maison Kam Fung and its owners as per existing contract.

As per your contract with the above mentioned companies in case of any financial changes ie: sale or bankruptcy as per existing contract signed on March 1, 2011 all equipment listed will remain the property of above mentioned companies and the current contract as well as this amendment is and will be transferable to any new owner as per sale if ever La Maison Kam Fung should be sold; in case of bankruptcy the conditions will be followed as per contract signed March 1, 2011. [ 5 ] On or around March 14, 2013, 9156-4914 Québec inc. filed for bankruptcy. Plaintiff made a claim in bankruptcy for past services unpaid.

It also advised the trustee in bankruptcy that it was the owner of certain equipment (Exhibit P-7). There is no proof that the trustee ever contested the ownership claim of Plaintiff to the equipment. However, the proof establishes that the restaurant never stopped operating and the restaurant was in continuous operation by the trustee and then by the Defendant after its purchase of equipment of the restaurant. [ 6 ] Defendant is the new operator of the Restaurant Kam Fung and leased its premises since June 4, 2013. Accordingly to the proof and testimony, contemporaneous to the new operation, Mr.

Kwan introduced Plaintiff’s representatives to the representative of the new owner of the restaurant, namely, Yiuwah (Benny) Shek. The Plaintiff’s representative Angela Olejniczak testified to the Court that on June 5, 2013, she met with Mr. Shek and walked through the restaurant premises and pointed out the various equipment owned by Plaintiff. [ 7 ] Plaintiff proposed to continue to provide the maintenance, repair and rental of the equipment. Mr. Shek said the cost was high for the maintenance and services. However, Mr.

Shek acknowledges that he agreed that services continue until further notice. [ 8 ] Plaintiff states that at that time a contract was signed for the continuation of the services (Exhibit P-2). Defendant denies this. Plaintiff provides a photocopy of the original of the contract. Ms. Olejniczak testifies that she gave the original to her bailiff who said that he required it for the preliminary proceedings of seizure before judgment in the proceedings. Ms. Olejniczak testifies that despite searches for it, the bailiff has been unable to locate the original. Mr.

Shek states that although the signature on the copy appears to be his, he never signed it. [ 9 ] In any event, it is clear that there was a verbal contract that was concluded between the parties. The documentary proof shows that from July to October 2013 (Exhibits D-5 (invoices), P-6 (payment cheques)), services were rendered by Plaintiff and Defendant paid for them. [ 10 ] However, at the beginning of October 2013, Ms. Olejniczak visited the premises of Defendant and discovered that the various equipment rented had been removed.

It appears that Defendant had decided to terminate the contract and to replace Plaintiff with another company (Chemtech) to carry out the same activities (invoices, Exhibit D-7). [ 11 ] The most expensive piece of equipment belonging to Plaintiff was the Hobart dishwashing machine, with an estimated value by the Plaintiff of $3,500. Defendant and the representative of Chemtech appear to have removed the Hobart and left it on the loading dock of the building where the restaurant was located. Thereafter the Hobart was taken away or stolen by some unidentified person.

The other equipment of Plaintiff was also removed by Defendant and Chemtech. [ 12 ] Plaintiff proceeded with a seizure before judgment as owner of the remaining items but the items were all severely damaged to the point that they are now worthless.

[ 13 ] Plaintiff claims as damages based upon alleged breach of contract the value of the items lost or damaged. In support of its claim, Plaintiff files a statement of account (Exhibit P-3) which details in part as follows: 26/09/2013 30/09/2013 01/10/2013 01/10/2013 04/10/2013 04/10/2013 06/10/2013 13/10/2013 20/10/2013 27/10/2013 Balance forward INV #845. Due 30/09/2013 INV #679. Due 01/10/2013 INV #803. Due 01/10/2013 INV #891. Due 04/10/2013 INV #892. Due 04/10/2013 INV #804. Due 06/10/2013 INV #805. Due 13/10/2013 INV #806. Due 20/10/2013 INV #807.

Due 27/10/2013 724.34 431.16 431.16 6,141.96 3,880.41 431.16 431.16 431.16 431.16 312.69 1,037.03 1,468.19 1,899.35 7,342.95 11,223.36 11,654.52 12,085.68 12,516.84 12,948.00 [ 14 ] Based upon the proof and the applicable law, the Court will dispose of each of the 11 points claiming an amount: 1. Balance Forward - $312.69 As it has been clearly established and agreed between the parties, there was an agreement to provide services from July to October 2013. There is no reason to question the accounting of Plaintiff and it would appear that this amount remains owed and the Court will grant it. 2.

Invoices 845 ($724.34), 679 ($431.16) and 803 ($431.16) This amount claimed in these invoices is for regular weekly maintenance and sanitary product refills already completed prior to or contemporaneous to the termination of the contract. There is no reason why this amount should not be paid as the services were rendered. The amount claimed will be granted $1,586.66. 3. Invoice 891 - $6,141.96 This is the claim for the value of the rental equipment negligently disregarded or damaged beyond value by Defendant or stolen.

In the opinion of the Court, the value that the Plaintiff attempts to attribute to these items is exaggerated and excessive. This equipment was at least three years old and in the case of the Hobart Dishwasher, it was very old (more than 15 years). Furthermore, Mr. Kwan testified that he transferred ownership of the Hobart dishwasher for nothing in exchange for his temporary commitment to pay the sanitary and product regular charges. The representative of Plaintiff, Stefan Collin, stated that its only value was attributable to the recently installed motor ($1,000) and some accessories.

In the Court’s opinion, the various items were highly depreciated in value. However, Defendant was aware or should have been aware that Plaintiff had a right or claim of ownership to these items. Defendant acted in a negligent manner in not protecting them and in contributing to their loss or destruction. Defendant is responsible for breach under the contract in that regard. But the Court will only condemn Defendant to pay their revised true market value at the time of the

loss. For the Dema 652, the Court arbitrates a value of $225. For the Dema 651, the Court arbitrates a value of $175. For the Unitech 2 Digital Dilution System, the Court grants $400. For the air freshener dispensers the Court grants $220. For the Hobart Dishwasher claim, it should be noted that this equipment appears to have been illegally sold by the trustee in bankruptcy to the owner of the building (as appears from Exhibits D-4 (Lease) and D-9 (sale)) where the restaurant Kam Fung is located. However, under

Article 1714 of the Civil Code of Quebec (C.C.Q.) and Article 72 (1) of the Bankruptcy and Insolvency Act, R.S.C., 1985 - C. B-3, Plaintiff as true owner would still be entitled to claim it. As a result of the negligent and reckless disposable of the Hobart by the Defendant, this unit has now been lost and Plaintiff has lost any recourse to claim it. Defendant is liable either under

Article 1458 C.C.Q. under the contract or, even assuming as accurate Defendant’s position as to the absence of a written contract, under

Article 1457 C.C.Q. The Court considers that Plaintiff’s claim on this item should be granted in the amount of $1,500. 4. Invoice 892 - $3,880.41 This amount is a claim for a penalty fee under the contract for cancellation without a 60 day notice period. There were no actual services rendered in that regard. Defendant contests this claim on the basis that he never signed the contract (Exhibit P-2). Plaintiff’s representative Ms. Olejniczak affirms that she witnessed Plaintiff’s representative sign the contract. In the Court’s view, it is not necessary to decide which of these two versions is true.

The Court is satisfied that this penalty clause was not brought to the attention of Defendant by Plaintiff. Furthermore, based upon the proof, the Court considers that the imposition of such a penalty clause would have been abusive in the circumstances. Accordingly, pursuant to the authority given to the Court under

Article 1623 C.C.Q., the Court is authorized to reduce the amount of a penalty to zero given that no damages beyond those claimed and granted in the present matter have been suffered by Plaintiff. 5. Invoices 804, 805, 806 and 807 These invoices are for the weekly services product program of Plaintiff from October 6 to November 2, 2013. However, accordingly to the uncontested proof, no services were in fact rendered by Plaintiff to Defendant for that period. Accordingly, the amounts claimed in these invoices will not be granted.

Total amount In light of the above, the Court will grant the Plaintiff the amount of $4,419.35. Seizure before judgment [ 15 ] As explained above, the seizure before judgment as owner was granted and executed but the objects seized were damaged beyond any value. However, for purposes of the record, the Court will confirm the validity of the seizure before judgment. FOR THESE REASONS, THE COURT: GRANTS in part Plaintiff’s Motion; CONDEMN Defendant 9282-5942 Québec inc. to pay Plaintiff 9279-0500 Québec inc. the amount of $4,419.35, plus interest at the

legal rate of 5% and the additional indemnity provided at

Article 1619 of the Civil Code of Quebec from the date of the demand letter (October 7, 2013); WITH COSTS in favour of Plaintiff. __________________________________ Jeffrey Edwards, J.C.Q. Date of hearing: April 11, 2014