2012 QCCQ 7656, 2012 QCCQ 7656

9213-8338 Québec inc. (Mann soins pour hommes inc.) c. Holding Unity ltée 2012 QCCQ 7656 COURT OF QUEBEC Small Claims Division CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL TOWN OF MONTREAL Civil Division No: 500-32-119912-097 DATE: August 28, 2012 ______________________________________________________________________ BY THE HONOURABLE SUZANNE HANDMAN, J.C.Q. ______________________________________________________________________ 9213-8338 QUÉBEC INC. doing business as Mann Soins Pour Hommes Inc. 5670, Drummond Court, Halifax (N-É) B3K 3Z4 Plaintiff v.

HOLDING UNITY LTÉE […] , Montreal, Qc. […] Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] 9213-8338 Quebec Inc. (“Quebec inc.”) is claiming $6,674.80 from Holding Unity Ltée, alleging that Holding Unity overcharged it for various items, pursuant to a commercial lease. [ 2 ] Holding Unity Ltée denies the claim and presented a cross demand for $2,839.70. This sum represents the amount Quebec Inc. undertook to pay Holding Unity in order to cede its lease to a third party, but failed to pay.

The evidence: [ 3 ] Plaintiff, 9123-8338 Québec inc., was formerly known as Mann Soins Pour Hommes Inc. [1] .

Its representative is Ian Sutherland. [ 4 ] Defendant, Holding Unity [2] , represented by its President, Carlo Bizzotto, is the successor to a lease which was signed, in March 2006, by Les Développements D'Arcy McGee Ltée, as Landlord, and by Mann Soins Pour Hommes Inc., as Lessee, for premises located on Viger Street, in Montreal. [ 5 ] The lease commenced on April 1, 2006 and ended on March 31, 2011. [ 6 ] In December 2008, Plaintiff's representative, Ian Sutherland, met with Federico Bizotto, another Defendant representative, to discuss rental adjustments to that date.

The statement of tax arrears together with other amounts owed, which were presented to Plaintiff, as of the end of 2008, amounted to $5,651.94. [ 7 ] In 2009, Plaintiff feared it was facing bankruptcy. It attempted to sell its business. When Plaintiff found a buyer in August 2009, it approached Defendant with a request to assign its lease. [ 8 ] In order to get approval for the assignment of its lease, Plaintiff agreed to pay all outstanding amounts due. On August 25, 2009, Carlo Bizzotto, Defendant's President, remitted a new statement for taxes and other expenses that allegedly had not been paid.

This new statement amounted to $15,611,79. After deducting Plaintiff’s initial deposit, the total amount remaining came to $10,839.79.

[ 9 ] Plaintiff claimed it had asked for a meeting to deal with the difference between the amount that Federico said was due in December 2008 (namely $5,651.94) and the new amount that Carlo said was due in August 2009 ($15,611.79). [ 10 ] However, no meeting was held. According to Plaintiff, Carlo stated that he (Carlo) would be making decisions alone. Defendant denied having received any request for a meeting. [ 11 ] Plaintiff contends that to get approval for the assignment of its lease, it had to pay the amount Defendant required, namely $10,839.70.

Plaintiff remitted two cheques, one for $8,000 and the other for $2,839.70. [ 12 ] Plaintiff then put a stop payment on the cheque for $2,839.70. In addition, it sent a demand letter stating it had overpaid Defendant by $6,674.80. [ 13 ] Plaintiff is seeking $6,674.80 from Defendant, claiming that it paid the said amount without justification. *********** [ 14 ] Defendant's version of the facts is very different.

It explained that the lease was comprised of a base rent, namely, the rate per square foot and an additional rent, which involved expenses such as municipal taxes, school taxes, heating costs, etc.. [ 15 ] After Defendant received a tax invoice, there were subsequent adjustments. Consequently, it asked its tenants to pay the estimated amount until it determined the final amount payable. It then modified the amount that was to be paid when the final determination was established. It referred to articles 3.1.3; 4.2 and 4.5 of the lease. [ 16 ]

Article 3.1.3 refers to Additional rent: An additional rent …made up of the condominium fees assessed…and all other amounts due and payable under this Lease…are specifically designated as Additional Rent. Said additional rent shall be estimated but not limited to an annual rate of …($8.05) per square foot of the Premises… (the underlining is ours) [ 17 ]

Article 4.2 deals with Real Estate Taxes Real Estate Taxes means all taxes , whether municipal, school or otherwise, which are now or at any time during the Term assessed against the immoveable or the Landlord….by the legal authorities imposing same and including, without limitation, any new tax… (the underlining is ours) [ 18 ]

Article 4.5 refers to the Estimate of Operating Expenses and Real Estate Taxes: The landlord shall remit to the Tenant, before each fiscal year or as soon as possible thereafter, a statement indicating the estimated amount of the Operating Expenses and Real Estate Taxes and of the Tenant's Proportionate Share for that fiscal year and the monthly instalments of Additional Rent payable under this Lease shall then be established for said fiscal year based on that estimate… (the underlining is ours) [ 19 ] At the end of each fiscal year, Defendant did the actual accounting of its operating expenses and taxes and it submitted, to its tenants, the amounts due with supporting documents.

The provisional amount, already paid by its tenants, was deducted from the amount payable. [ 20 ] In the present case, according to

article 3.2 of the lease, the Tenant must pay a security deposit of $14,781.68 to the Landlord, which is applied to the first and two last months of the lease if the Tenant is not in default under the terms and conditions of the lease. This amount was paid by Plaintiff. [ 21 ] Plaintiff signed the lease in March 2006 and began paying rent in May 2006. Plaintiff’s deposit was applied to the rent due for May 2006. [ 22 ] Defendant claims that the rent for June and July 2006 was not paid and Plaintiff also had a history of late payments.

In December 2008, upon request, Plaintiff’s representative, Ian Sutherland, signed as a personal surety. [ 23 ] In December 2008, Plaintiff met with Defendant's representative, Federico Bizzotto. They discussed credits that would apply to the outstanding operating costs, if Plaintiff paid all its arrears and respected its lease in the future. However, Plaintiff did not respect this arrangement. [ 24 ] In the summer of 2009, Plaintiff put its business up for sale but required Defendant's consent in order to assign its lease.

Carlo Bizzotto met with Plaintiff's representative, Ian Sutherland, and pointed to the fact that Plaintiff was always late in paying its operating expenses. In addition, Plaintiff had failed to pay rent for June and July 2006. Defendant nevertheless decided to cancel the amounts owing for these two months to allow Plaintiff to sell its business. [ 25 ] Defendant asked for the outstanding amount that was due and agreed to accept the new tenant as a lessee. Defendant also waived the liability of Ian Sutherland, as a guarantor of Plaintiff's obligations in virtue of the lease.

[ 26 ] Defendant agreed to allow Plaintiff to cede its lease if Plaintiff paid the amounts it owed. The amount claimed by Defendant does not include the two months rent that were not paid. [ 27 ] Carlo Bizzotto asked his accountant to prepare a statement of account, which represented the full amount due. It came to $10,839.79. The statement was provided to Plaintiff's representative, Ian Sutherland, and to Plaintiff's attorneys. [ 28 ] Plaintiff paid by means of two cheques, one for $8,000 and the remainder for $2,839.79 consisted of a post-dated cheque.

Plaintiff paid $8,000 but then put a stop payment on the post-dated cheque. [ 29 ] Defendant denies it owes any money to Plaintiff. It seeks $2,839.79 from Plaintiff, representing a portion of the sum payable under the Agreement of Assignment of Lease. Plaintiff had failed to pay this amount when it put a stop payment order on its cheque. Analysis of the Principal Action: [ 30 ] Plaintiff is seeking a reimbursement of $6,674.80, which it says it paid without justification.

It arrived at this figure by comparing the statement presented by Carlo in 2009 with that prepared by Federico in 2008 (which was adjusted by adding Carlo's 2009 statement): Carlo Federico 2006 $2,989.08 $ 54.52 2007 $3,931.86 $2,225.65 2008 $5,393.63 $3,371.77 2009 $3,297.22 ? total $15,611.79 5,651.94 (plus $3,297.22 for 2009 since Plaintiff accepts this amount, which was established by Carlo) = $ 8,949.16 [ 31 ] Plaintiff states that the difference between $15,611.79 (established by Carlo) and the amount of $8,949.16, (namely the amount established by Federico, plus the sum of $3,297.22 for 2009 set by Carlo for that year) comes to $6,674.80 [3] , which it is seeking. [ 32 ] However, Plaintiff was unable to explain the basis of its figures to the satisfaction of the Court, other than to point to the list prepared by Federico in 2008. [ 33 ] A review of the figures shows that Federico's statements do not include administration charges or taxes on the total amount due each year. [ 34 ]

Article 4.1 (

l) of the Lease stipulates that an administration fee is payable that is equal to 15% of the Operating Expenses. [ 35 ] Carlo's statements for 2006, 2007 and 2008 [4] indicate $1,596.59, $1,924.36 and $2,093.27 respectively, as the administration fee for each of these years, for a total of $5,614.22. [ 36 ] In addition, taxes were applied to Carlo’s statements for 2006 and 2007; they come to $340 and $448 respectively. [ 37 ] If one adds the above amounts, foreseen for administration fees and taxes, to the total of Federico's statement, the actual amount outstanding (without the 2008 taxes) comes to $15,352.79.

Once the 2008 taxes are added, the amount owed is virtually the same as the amount claimed by Carlo. There is not a difference of $6,674.80 between the two accounts, as Plaintiff contends. [ 38 ] In sum, Plaintiff claims it was overcharged by Carlo. However, Federico's statement is incomplete and does not include amounts that are clearly payable under the lease.

When such amounts are added to Federico's statement, the amount payable is virtually the same amount as that established by Carlo. [ 39 ] Finally, it must be recalled that the final amount, charged by Defendant, took into account the security deposit remitted by Plaintiff at the beginning of the lease, such that the amount Defendant was claiming was not $15,611.79 but $10,839.79. [ 40 ] More importantly, in virtue of an Agreement of Assignment of Lease, dated August 31, 2009, providing for the assignment of Plaintiff's lease to a third party, namely Clinique Euphoria Medicospa inc.,

article 4 stipulates that Plaintiff “shall pay any and all rentals and additional rentals owing up to and including the Closing Date.” [ 41 ]

Article 6 establishes the amount owed by Plaintiff herein (the Assignor of the lease): “The Assignor shall pay an amount of Ten Thousand Eight Hundred Thirty-Nine dollars and Seventy-Nine Cents ($10,839.79) by way of

two cheques” [ 42 ] Finally,

article 8 of the said Agreement states: “THAT this document contains the entire agreement between the parties with respect to its subject matter . No subsequent amendment to this document shall be binding upon the parties unless made in writing and signed by each of them.

If any term of this document is declared invalid by a competent tribunal, the remainder shall not be affected thereby.” (the underlining is ours) [ 43 ] The amount payable in virtue of the Agreement corresponds precisely to the final statement presented by Defendant with respect to amounts owed by Plaintiff under the lease. [ 44 ] Plaintiff signed the said Agreement.

Plaintiff has not established any cause of nullity affecting the Agreement nor has it established the existence of a distinct agreement concluded by the parties that was concomitant or posterior to the Agreement of Assignment of Lease. ******* [ 45 ] Following the hearing, both parties presented additional information regarding their positions. [ 46 ] Plaintiff claims it had paid the rent due for March 2009 but that it was not taken into account.

However, after explanations were provided, Defendant had in fact dealt with the March 2009 payment. [ 47 ] Defendant points out that Federico agreed to discount two items, namely the 15% operating fee and the capital tax, in return for a prompt payment of Plaintiff’s outstanding balance. [ 48 ] However, Plaintiff failed to make the prompt payment in order to take advantage of the discounts and consequently, the above- mentioned discounts were no longer applicable. New negotiations took place, without the said discounts and the amount of $10,839.70 owed was presented to Plaintiff and to its attorneys.

As indicated below, Plaintiff accepted that the said amount of $10,839.70 was owed, as evidenced in the Agreement it executed. [ 49 ] The said Agreement is binding on the parties. Plaintiff has the burden of proof. It has not shown, in any comprehensible manner, the amount it claims Defendant owes it. Given that Plaintiff has failed to satisfy the Court that its action is well founded, its claim cannot be granted.

Analysis of the Cross-Demand: [ 50 ] Holding Unity Ltée is claiming the sum of $2,839.79 from Plaintiff, after Plaintiff put a stop payment on a cheque for this amount. [ 51 ] As indicated above, Plaintiff undertook to pay Defendant the sum of Ten thousand eight hundred and thirty-nine dollars and seventy-nine cents by way of two cheques.

The Agreement stipulates that: “The first shall be a current cheque in the amount of Eight Thousand dollars ($8,000), and the second cheque shall be a post-dated cheque (payable thirty (30) days after the Closing Date) in the amount of Two Thousand Eight Hundred Thirty-Nine Dollars and Seventy-Nine Cents ($2,839.79). [ 52 ] Plaintiff paid the first amount of $8,000. However, it put a stop payment on the second cheque, such that Defendant never received the outstanding amount Plaintiff agreed to pay. [ 53 ] A contract, validly formed, binds the parties who have entered into it (

article 1434 of the Civil Code of Quebec ). Plaintiff has a duty to honour its contractual obligations (

article 1458 of the Civil code of Quebec). It has failed to do so. [ 54 ] Defendant is therefore entitled to the sum of $2,839.79, which to date is outstanding. However, Defendant noted an error in its figures such that the total amount outstanding is $2,538.38 and not $2,839.79. FOR THESE REASONS, THE COURT: DISMISSES the action of 9213-8338 Québec inc. against Defendant Holding Unity Ltée;

THE WHOLE , with costs. GRANTS the action of Defendant Holdings Unity Ltée against Plaintiff 9213-8338 Québec inc., CONDEMNS 9213-8338 Québec inc. to pay Holding Unity Ltée the sum of $2,538.38 plus interest at the legal rate and the additional indemnity foreseen by

section 1619 of the Civil code of Quebec , since the institution of the cross demand, plus judicial fees of $76. __________________________________ SUZANNE HANDMAN, J.C.Q. Date of hearing: May 28, 2012