2021 QCCQ 5598, 2021 QCCQ 5598

9097-6713 Québec inc. (Elegance Leasing) c. Bostan Auto Inc. 2021 QCCQ 5598 COURT OF QUEBEC “Small Claims Division” CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL LOCALITY OF MONTREAL “Civil Division” No.: 500-32-707417-186 DATE: June 28, 2021 ______________________________________________________________________ PRESIDING: THE HONOURABLE JO ANN ZAOR, J.C.Q. ______________________________________________________________________ 9097-6713 QUÉBEC INC. c.o.b. Elegance Leasing Plaintiff v.

BOSTAN AUTO INC. and SULTAN MAHMOOD Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ OVERVIEW [ 1 ] 9097-6713 Québec inc. (“ Elegance Leasing ”) claims $15,000 in damages from the used car dealership Bostan Auto Inc. (“Bostan”) and its president Sultan Mahmood for having fraudulently represented the distance on the odometer of the car it sold to the plaintiff as 49,000 km, when it was actually 128,000 km. [ 2 ] In a joint contestation, Bostan and Mahmood refute the plaintiff’s allegations of misrepresentation.

They argue that the plaintiff was negligent in its verifications when it purchased the 2013 Nissan Rogue motor vehicle, serial number [...] (the “ vehicle ”) and that it has no one to blame but itself if in hindsight it feels that it paid too much for the vehicle in question. ISSUES: [ 3 ] The Court must answer the following questions: 1. Has Elegance Leasing proved that Bostan and M. Mahmood misrepresented the distance on the motor vehicle’s odometer at the time of the sale so that its consent was vitiated due to fraud? 2. If so, to what damages is the plaintiff entitled?

BACKGROUND [ 4 ] Elegance Leasing and Bostan both operate in car sales and know each other from having previously concluded a few transactions between merchants because the plaintiff also offers financing for the sale and lease of cars, which is sometimes sought out by dealers that do not offer it, like Bostan. [ 5 ] This is the context for the present dispute. [ 6 ] On October 18, 2017, Bostan’s president, Sultan Mahmood, called Majid Ghadi, the representative of the plaintiff’s financing department.

Ghadi was told that one of Mahmood’s clients needed to finance the purchase of his car and Mahmood wanted to know if he could make the sale through Elegance Leasing. [ 7 ] Ghadi agreed, subject to the usual verifications required in such matters. [ 8 ] The president of Elegance Leasing, Mr. Pazouki-Mehr, stated that at Elegance Leasing, every transaction follows a rigorous process. Thus, it is always essential to verify the make, model, mileage, year, and serial number of a car. In addition, the Car proof report, available since 2013, is verified.

Finally, to determine the value of the car, the dealer’s experience comes into consideration. [ 9 ] At the hearing, Majid Ghadi explained what steps he took prior to the sales transaction with Bostan.

[ 10 ] On October 18, 2017, he obtained from Bostan the information regarding the identity of the client-purchaser (P-1) and the credit application (P-2). [ 11 ] Once the credit application was approved, he obtained the registration certificate from Bostan (P-4). It is relevant that Bostan stated in its email dated October 21, 2017, that the distance on the odometer was 49,000 km (P-3). [ 12 ] In a contract of sale between merchants entered into on October 20, 2017, Elegance Leasing purchased the vehicle from Bostan for $14,955, before taxes. The information relating to the vehicle all came from Bostan.

The contract includes information about the mileage, that is, 49,000 km (P-8). [ 13 ] On October 23, 2017, in a contract of sale for a used vehicle, Elegance Leasing sold the vehicle in question to Bostan’s client, Steven Rajarison, for the same price, $14,995, before applicable taxes (P-11). [ 14 ] Ghadi acted on behalf of Elegant Leasing at the time. He testified that he had clearly explained to Rajarison the purpose of the contract and made certain that he understood that he should address any problems related to the vehicle to Bostan (P-14).

Ghadi is affirmative when he states that he said out loud that the vehicle had 49,000 km on the odometer. He remembers that Rajarison was with Mahmood at the time, which the latter denies. [ 15 ] Ghadi then sent the Société de l’assurance automobile du Québec (the “ SAAQ ”) the Attestation de transaction avec un commerçant documents that were completed following the purchase of Bostan’s vehicle (P-9) and its resale to Bostan’s client, Rajarison (P-12).

Once again, these documents contain all the information about the vehicle, including the mileage established at 49,000 km. [ 16 ] On March 8, 2018, the Royal Bank of Canada (” RBC ”), which financed the purchase of Rajarison’s vehicle demanded that the plaintiff buy back the vehicle (P-15). [ 17 ] It appears that in a judgment rendered on February 16, 2018, RBC was declared the sole owner of the vehicle after fraud was discovered, and in particular, the theft of Rajarison’s identity and personal information. [ 18 ] On April 10, 2018, after negotiating for a lower price, Elegance Leasing bought the vehicle back from RBC for the total amount of $17,500 (P-20 and P-21). [ 19 ] As explained by Pazouki-Mehr, Elegance Leasing wanted to maintain its business relationship with the RBC, which was swindled in this transaction, and believed that it could resell the vehicle to reduce its loss. [ 20 ] Once it had repurchased the vehicle, Elegance Leasing was stupefied to discover that the odometer indicated 128,000 km. [ 21 ] After taking several steps to confirm this information, Elegance Leasing understood that it had been deceived.

It demanded that Bostan and Mahmood take back the vehicle by repaying what it had cost Elegance Leasing (P-22). [ 22 ] On June 1, 2018, Bostan notified Elegance Leasing that it denied any liability in this dispute. [ 23 ] On June 13, 2018, Elegance Leasing sold the vehicle at auction for $4,700 (P-26). [ 24 ] On November 29, 2018, Elegance Leasing brought its proceeding before the Small Claims Division.

In its application, it claims the reimbursement of the cost of buying the car back from the RBC ($17,500), and its attorney fees ($2,179.61), from which it deducts $4,450, the net profit from the sale of the vehicle at auction. Because this amount exceeds the jurisdiction threshold for this division, Elegance Leasing has voluntarily reduced its claim to $15,000.

ANALYSIS [ 25 ] First, the Court will recall the civil law rules of evidence. [ 26 ] A person seeking to assert a right must prove the facts on which his or her claim is based through evidence that renders the existence of the facts underlying the claim more probable than their non-existence. [1] [ 27 ] While the evidence adduced need not lead to absolute, scientific or mathematical certainty of the facts alleged, it must be sufficiently clear and convincing to satisfy the balance of probabilities test, to render the disputed fact probable. [ 28 ] If the evidence is not sufficiently convincing or if it is contradictory and the judge cannot determine where the truth lies, the party that has the obligation of convincing the Court of the merits of his or her claim will lose, in whole or in part. [ 29 ] On the merits of the case, the file will be analyzed from the perspective of error vitiating consent because Elegance Leasing alleges that Bostan and Mahmood misled it as to information that was essential for there to be free and informed consent. [ 30 ] To this question, which is essentially a question of fact, the integrity of the documentary evidence will be analyzed because the parties filed documents that are similar, except for the distance indicated on the odometer.

The plaintiff’s documents indicate 49,000 km, whereas those of the defence indicate 128,000 km. [ 31 ] Let us consider the issues. 1. Has Elegance Leasing proved that Bostan misrepresented the distance on the motor vehicle’s odometer at the time of the sale such that its consent was vitiated by fraud?

[ 32 ] The plaintiff submits that Mahmood and Bostan vitiated its consent to the purchase of the vehicle.

It maintains that Bostan and Mahmood wilfully misled it by misrepresenting that the vehicle had low mileage when that was not the case. [ 33 ] The law recognizes that error may vitiate consent. [2] [ 34 ] The authors Baudouin and Jobin [3] state that not all errors give rise to the right to cancel an agreement, only those of a certain type, and only if they have a determinative impact on consent. [ 35 ] In this case, the plaintiff is not looking to cancel the contract due to a simple error, but is seeking damages arising from the fraud committed by the defendants. [ 36 ] Its remedy is based on art. 1401 of the Civil Code of Québec (“ C.C.Q . ”), [4] which provides: 1401.

Error on the part of one party induced by fraud committed by the other party or with his knowledge vitiates consent whenever, but for that error, the party would not have contracted, or would have contracted on different terms. Fraud may result from silence or concealment. [ 37 ] Fraud is defined as the fact of intentionally producing an error in the mind of another to induce that person to enter into the contract or to enter it on different terms.

The fraud must be determinative and more than just reasonable exaggerations by the other contracting party when these exaggerations are not joined with fraudulent means or assertions likely to mislead a normally prudent contracting party. Finally, the purpose of the fraud must be to mislead someone to induce them to contract on less advantageous terms. [ 38 ] Because fraud is not presumed, it is up to the plaintiff to prove it.

In this sense, the plaintiff must establish the defendants’ intention to mislead it and the fact that they knew the actual mileage of the vehicle. [ 39 ] At the hearing, the plaintiff adduced several documents from the defendants or signed by them on which 49,000 km appears: • The email dated October 21, 2017, sent by Bostan to the plaintiff (P-3); • The original of the contract of sale between merchants entered into by the parties on October 20, 2017 (P-8); • The Attestation de transaction avec un commerçant (P-9); • The original contract of sale for a used vehicle between the plaintiff and Rajarison, dated October 23, 2017 (P-11); • The original of the Attestation de transaction avec un commerçant (P-12); and • The insurance documents given to Rajarison on October 23, 2017 (P-13). [ 40 ] While the Court may be tempted at first glance to recognize the probative value of these documents, Mahmood questioned the authenticity of the email dated October 21, 2017 (P-3) and the contract of sale between merchants (P-8). [ 41 ] At the hearing, he adduced a copy of the contract of sale between merchants (D-1) and another version of the email dated October 21, 2017, where the distance indicated is 128,177 km (D-3).

The plaintiff denies the authenticity of that contract of sale and ever receiving that email. [ 42 ] To separate fact from fiction, Mahmood undertook to file the original of the contract of sale during the suspension granted by the Court. He also undertook, at the plaintiff’s request, to file the original Attestation de transaction avec un commerçant (P-9). [ 43 ] As explained by Pazouki-Mehr, this last document cannot be tampered with because it is provided to the SAAQ. [ 44 ] In the time allowed, the Court received the documents promised from the defendants.

With respect, neither provides the guarantee of reliability required to prove their authenticity. [ 45 ] On the Attestation de transaction avec un commerçant , the Court sees that the information concerning the vehicle’s mileage does not appear. In itself, this is problematic given the importance of this information. It is also unlikely because all the other boxes were completed. But there is more. The Court has the distinct impression that this information was simply erased from the original that was given to it by Mahmood.

In fact, the document bears the markings of efforts to make this information disappear, which is unacceptable. [ 46 ] As for the original of the contract of sale between merchants that Mahmood sent, the Court does not assign any value to it. Obviously, this “original” contract looks nothing like the contract of sale between merchants filed by the plaintiff (P-8). Thus, it was incumbent upon Mahmood to explain to the Court how there could be two different contracts of sale for a single vehicle because he contests the plaintiff’s allegation.

In the absence of explanations and a denial of signature, the Court will rely on the original contract of sale filed by the plaintiff (P-8), which has the guarantees of reliability required for authenticity.

Furthermore, this contract is consistent with all the other documents, including those regarding the purchase of a vehicle warranty. [ 47 ] In these circumstances and based solely on the documentary evidence, the Court cannot do otherwise but conclude that the defendants wilfully and on several occasions, communicated erroneous information to the plaintiff about the distance on the vehicle’s odometer. [ 48 ] In addition to this documentary evidence, the Court heard the witnesses and was able to assess the quality of their testimony. [ 49 ] Following this exercise, the Court is of the view that Mahmood is not a credible witness.

Here is why.

[ 50 ] While Ghadi said that he had explained to the buyer the ins and outs of the vehicle that he was about to purchase in Mahmood’s presence, Mahmood categorically denied being there. [ 51 ] This assertion is inaccurate because on the day of the sale, October 23, 2017, Mahmood signed the document releasing the plaintiff from any liability in front of Rajarison and Ghadi (P-14). [ 52 ] This document puts his testimony in check, but more so attests to his silence with respect to disclosing that the information written in the contract of sale concerning the mileage of the vehicle was wrong. [ 53 ] In their contestation, the defendants claim that they always gave the correct information and they hid nothing from the plaintiff, however, they certainly missed an opportunity to correct the plaintiff’s mistake, if there was one.

But the Court doubts it because it believes instead that the defendants were in bad faith. With their manoeuvering and repeated lies, they wilfully misled the plaintiff by giving it an inaccurate distance on the odometer. [ 54 ] Furthermore, the Court believes Pazouki-Mehr when he claims that a vehicle with 128,000 km is not worth as much as one with 49,500 km. This determinative information would have been gotten his attention. [ 55 ] In fact, the evidence reveals that Bostan paid $7,500 to purchase the vehicle in August 2017 (D-2).

A profit of almost 100% upon resale two months after it was purchased is unusual in the car industry. [ 56 ] Like the plaintiff, the Court does not believe that the defendants were initially aware of the theft of Rajarison’s identity or the fact that this car would never be paid for but put on a container bound for a foreign country. [ 57 ] It remains that the facts and the conduct of the defendants make it possible to characterize this transaction as suspicious. [ 58 ] Thus, the Court is of the view that the plaintiff has convincingly proved on a balance of probabilities the fraud committed by the defendants, which gives rise to its action for damages.

This leads us to the last issue. 2.

If so, to what damages is the plaintiff entitled? [ 59 ] The plaintiff claims the reimbursement of the price paid to buy the car back from the RBC ($17,500), and its attorney fees ($2,179.61), from which it deducts the net profit from the sale of the vehicle at auction ($4,450). [ 60 ] The plaintiff filed the invoices and cheques in support of its claims (P-20, P-21, P-26, and P-27.) [ 61 ] Because this amount exceeds the jurisdictional threshold of this division, Elegance Leasing has reduced its claim to $15,000. [ 62 ] The defendants have brought no evidence to contradict the plaintiff’s expenses.

Nor does it offer a counter-value on the resale price of the vehicle at auction by the plaintiff in June 2018 (P-26). [ 63 ] In the circumstances, the Court deems that the amounts of $17,500 and $4,450 are proved. The Court also adds that these amounts are the direct result of the fraudulent transaction of October 23, 2017. [ 64 ] The defendants are therefore solidarily responsible for the amount of $13,050 owed to the plaintiff.

The Court deems that the alleged conduct of the defendants is inseparable and contributes equally to the same prejudice, even if the liability of each defendant is based on different regimes, that is, a contract of sale for Bostan, and an extracontractual fault for Mahmood. [ 65 ] Finally, with respect to the claim for attorney fees in the amount of $2,179.61, the Court will not grant it, even if it does not doubt the payment of these fees. [ 66 ]

Article 542 of the Code of Civil Procedure sets out the framework for the representation of parties before the Small Claims Division.

Essentially, parties represent themselves, without counsel. [ 67 ] From this provision, the Court accepts the legislator’s will to set up the regime for the recovery of small claims in a way that promotes a substantive and procedural balance between the parties, where one party should not have an advantage over the other. [ 68 ] In short, it is intended to be a process that is accessible, affordable, fair, fast, inclusive, simple, and without formality. [ 69 ] That said, the Court finds that allowing the reimbursement of the professional fees of an attorney would be doing indirectly what cannot be done directly according to the legislator’s choice.

Especially in this case, where the dispute does not present any particular difficulties or complex points of law. FOR THESE REASONS, THE COURT: ALLOWS IN PART the plaintiff's action; CONDEMNS SOLIDARILY the defendants, Bostan Auto inc. and Sultan Mahmood, to pay the plaintiff the amount of $13,050, with interest at the legal rate of 5% per year and the additional indemnity under art. 1619 of the Civil Code of Québec , as of November 29, 2018, the date of the summons. THE WHOLE with legal costs in the amount of $302.

_________________ JO ANN ZAOR, J.C.Q. Date of hearing: Under advisement : April 19, 2021 May 11, 2021