2016 QCCQ 10176, 2016 QCCQ 10176

Cartier c. 9173-8559 Québec inc. 2016 QCCQ 10176 COURT OF QUEBEC Small Claims Division CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL Civil Division No: 500-32-148196-159 DATE: September 26, 2016 ______________________________________________________________________ BY THE HONOURABLE JEFFREY EDWARDS, J.C.Q. ______________________________________________________________________ MICHAEL CARTIER Plaintiff v. 9173-8559 QUEBEC INC. , also doing business under the name of MONTREAL EXOTIC CAR RENTALS -and- ANTONIO SANTO Defendants ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] Michael Cartier claims the amount of $14,248.12 against 9173-8559 Quebec Inc. carrying on business under the registered trade name of Montreal Exotic Car Rentals ( Exotic ) and its president, secretary and principal shareholder, Antonio Santo, for alleged fault and abuse of proceedings arising from a car rental contract between the parties.

Mr. Cartier also claims punitive damages against Exotic. Questions in issue 1) Is Mr. Cartier entitled to a refund of his overpayment of $2,693.33? 2) Have Exotic and Antonio Santo committed a fault and abuse of legal proceedings rendering them liable for damages in favour of Mr. Cartier? 3) If the answer to question 2 is yes, what are the damages that Mr. Cartier is entitled to claim as compensation? 4) If the answer to question 2 is yes, is Mr. Cartier within his rights to obtain punitive damages against Exotic, and if so, for what amount?

5) Does Mr. Santo have personal liability for the claim of Mr. Cartier? Context Introduction and Background [ 2 ] In August 2012, Plaintiff Michael Cartier rented a car, a Range Rover model 2010, from Exotic for one week. During the rental period, he had an accident with the car, which involved primarily one of the tires of the wheels. He had understood that there was a $2,500 deductible.

At the time of rental of the car, an amount of $3,000 was debited or frozen on his credit card pending return of the car. [ 3 ] When he returned the car, he believed that the previously debited amount would cover the total costs of rental of the car, including any damages from the accident. [ 4 ] He was therefore surprised when, on August 15, 2012, two supplemental charges were put through on his credit card by Exotic: one for $1,873.33 and one for $1,500. [ 5 ] The total amount charged to Mr. Cartier’s credit card was therefore $6,373.33. [ 6 ] Mr.

Cartier contested the additional amounts totalling $3,373.33 as unauthorized charges with his credit card company. [ 7 ] However on or around September 27, 2012, his credit card company decided against him and allowed these charges, which he subsequently paid. The credit card company in turn paid that amount to Exotic. [ 8 ] Strangely however, that was not the end of the matter. [ 9 ] On August 17, 2012, Exotic had instituted legal proceedings (no. 500-32-134931-122) against Mr. Cartier in the Small Claims Division of the Court of Quebec for the amount of $7,000 (the “ Exotic Action ”).

In those proceedings, Exotic claimed that Mr. Cartier owed $8,620 for unpaid rental charges. Exotic reduced its claim to $7,000 which was the maximum monetary limit at the time in the Small Claims Division. [ 10 ] One would have thought that, since Exotic had prevailed with the credit card company and was fully paid, the Exotic Action against Mr. Cartier would have been withdrawn. However, it was not. [ 11 ] Unfortunately, Mr. Cartier did not receive the notice of convocation to the trial hearing of the Exotic Action which was scheduled for November 11, 2014.

He therefore was absent at the hearing. [ 12 ] Exotic did appear at the Exotic Action hearing. Surprisingly, Exotic presented, pursued and made proof of its claim against Mr. Cartier alleging that the $7,000 amount was due and exigible.

[ 13 ] In light of Mr. Cartier’s absence, judgment was granted by default by Justice Suzanne Vadboncoeur, J.C.Q. [1] , condemning Mr. Cartier to pay the amount of $7,000 plus interest, additional indemnity and costs. According to the judgment on the Exotic Action, Exotic testified that neither the $3,000 pre-authorized amount nor the subsequent amounts of $1,599 and $1,873.33 had been paid. That was clearly not the case. [ 14 ] On November 27, 2014, Exotic wrote to Mr.

Cartier regarding the judgment rendered by Justice Vadboncoeur in the Exotic Action, and asked for payment and satisfaction of the judgment [2] . [ 15 ] Mr. Cartier was shocked with the judgment rendered in the Exotic Action and deposited a motion for revocation [3] . On December 12, 2014, the motion in revocation was received by Associate Coordinating Judge Louise Comeau, J.C.Q. As per the usual practice, that decision was an interim one and Justice Comeau referred the matter to a subsequent hearing to decide the motion of revocation on the merits and, if granted, to re-hear Exotic’s initial claim of $7,000.

Hearing on the Merits of the Grounds of Revocation and Re-hearing of Exotic’s claim [ 16 ] A new hearing of the Exotic Action was held on March 2, 2015 before Justice Sylvain Coutlée, J.C.Q. During that hearing, Exotic reduced its initial claim of $8,620 by $3,000 on the basis that it now acknowledged having received payment from Mr. Cartier of the pre-authorized amount. Exotic therefore reduced its claim against Mr. Cartier to $5,660. [ 17 ] Surprisingly, Exotic did not reduce its claim further in recognition of its receipt of the payment of the other amounts from Mr.

Cartier’s credit card company, namely $1,500 and $1,873.33, totalling $3,373.33. Revocation of the judgment by default (Justice Vadboncoeur) [ 18 ] With regard to the merits of the motion of revocation, by judgment issued on May 11, 2015 [4] , Justice Coutlée concluded that Mr. Cartier had never received the notice of the original trial hearing. The judgment of Justice Vadboncoeur rendered by default on November 11, 2014 was therefore retracted. Re-hearing of Exotic’s Claim on the merits before Justice Coutlée [ 19 ] Exotic’s claim was then made up of two items.

First, Exotic claimed the amount of $2,722.28 for the replacement of four (4) tires. Second, Exotic claimed $2,475 for the alleged loss of enjoyment suffered by Exotic during the time that the vehicle was being repaired and could not be rented. No further amount was claimed. The total claim was therefore actually $5,197.28. [ 20 ] With respect to the charge for the four tires, Justice Coutlée concluded that there was no legal reason or other justification to make such a claim. Only one tire had been damaged at the time of return of the car.

Justice Coutlée therefore only allowed the claim for one tire, at a cost of $680. Justice Coutlée held: “[8] Le Tribunal ne voit pas sur quel fondement juridique la demanderesse peut réclamer au défendeur le remboursement de quatre pneus neufs. Cette réclamation est tout à fait abusive. La demanderesse a droit à une réparation pour le dommage qui lui a été causé, mais il ne peut réclamer plus que son dommage.”

[ 21 ] With respect to the charge for loss of enjoyment of the vehicle during repairs, Justice Coutlée was of the view that the claim was groundless and without proof. He concluded that “[c]ette réclamation doit être rejetée”. [ 22 ] Justice Coutlée confirmed that Mr. Cartier should obtain credit for the $3,000 paid (and with respect to which Mr. Cartier agreed was owed), but that Mr. Cartier should also receive credit for the two overpayments made, totalling $3,373.33 ($1,500 + $1,873.33). [ 23 ] Accordingly, Exotic had no outstanding legal claim for any amount whatsoever.

Regarding the amount of $680 for the tire, it had already been completely paid as a result of Mr. Cartier’s forced overpayment of $3,373.33. [ 24 ] Applying the rule of legal compensation (Article 1673 (1) of the Civil Code of Quebec (“ C.C.Q. ”)), Justice Coutlée declared and recognized that the amount of $680 owed to Exotic had already been paid. Justice Coutlée also held that there was an outstanding amount of the overpayment due and payable to Mr. Cartier, namely $2,693.33. [ 25 ] However, Mr. Cartier had not made a Cross-Demand. So the Court was unable to order Exotic to repay that amount.

In the circumstances, the Court limited itself to taking notice of that remaining amount of overpayment in favour of Mr. Cartier. [ 26 ] As the only amount owed to Exotic was already paid before the legal proceedings were pursued, the Court refused to grant costs to Exotic. [ 27 ] One month after Justice Coutlée rendered his judgment, namely on June 15, 2015, Mr. Cartier’s attorney wrote [5] to Exotic and Mr. Santo claiming the following amounts: (a) $2,693.33 for the overpayment amount made by Mr. Cartier, as decided by Justice Coutlée. (b) $5,555.48 representing damages suffered and costs incurred by Mr.

Cartier to defend himself against Exotic’s abusive claim in the Exotic Action. for the total amount of $8,248.81. [ 28 ] Defendants did not respond or satisfy Mr. Cartier’s demand either. On July 2, 2015, Mr. Cartier instituted the present legal proceedings. [ 29 ] In addition to the amounts mentioned above, Mr. Cartier claims (i) $2,500 for travel, hotel and other costs required to attend the Court proceedings in Montreal in the present instance to present his claim for the refund ascertained as due by Justice Coutlée’s judgment, and (ii) $3,500 in punitive damages.

The four amounts total $14,248.81. [ 30 ] Defendants contested Mr. Cartier’s claim as being unfounded in fact and in law. They also instituted a Cross-Demand for $3,500 on the basis of loss of use of the vehicle as a result of the accident, when that claim had been rejected by Justice Coutlée in the Exotic Action.

Analysis and Decision 1) Is Mr. Cartier entitled to a refund of his overpayment of $2,693.33? [ 31 ] In accordance with

Article 564 of the Civil Code of Proced ure (“ C.C.P. ”), Justice Coutlée’s judgment was a final judgment and has the effect of res judicata between the parties. In any event, the proof heard at the hearing of the present matter confirmed that that amount was owing to Mr. Cartier. Accordingly, the Court will order the refund of that amount to Mr. Cartier. 2) Have Exotic and Antonio Santo committed a fault and abuse of legal proceedings rendering them liable for damages in favour of Mr.

Cartier? [ 32 ] The concept of abuse of judicial proceedings constituting a fault giving rise to damages claimable by the innocent party was analysed by the Court of Appeal in the matter of Viel c. Entreprises immobilières du terroir Ltée [6] . [ 33 ] The Court of Appeal held that the act of abuse of judicial proceedings, including the prosecution of, or the defence against, a claim that is clearly without merit in fact or in law constitutes a fault and renders the person responsible for such conduct liable for all damages thereby caused, including legal fees.

The Court of Appeal stated as follows: “[75] À l’opposé, l’abus du droit d’ester en justice est une faute commise à l’occasion d’un recours judiciaire. C’est le cas où la contestation judiciaire est, au départ, de mauvaise foi, soit en demande ou en défense. Ce sera encore le cas lorsqu’une

partie de mauvaise foi, multiplie les procédures, poursuit inutilement et abusivement un débat judiciaire. Ce ne sont que des exemples. À l’aide d’hypothèse, Baudouin et Deslauriers cernent la nature de l’abus du droit d’ester en justice; Fondement – La première hypothèse est celle où l’agent, de mauvaise foi, et conscient du fait qu’il n’a aucun droit à faire valoir, se sert de la justice comme s’il possédait véritablement un tel droit. Il n’agit pas alors dans le cadre de l’exercice ou de la défense de son droit, mais totalement en dehors de celui-ci.

Une faute peut également être reprochée à l’agent qui, dans l’exercice d’un droit apparent, utilise les mécanismes judiciaires ou procéduraux sans cause raisonnable ou probable, sans motif valable, même de bonne foi. … La mauvaise foi (c’est-à-dire l’intention de nuire) ou la témérité (c’est-à-dire l’absence de cause raisonnable et probable) restent donc les bases de l’abus de droit dans ce domaine. [77] … La causalité adéquate correspond à ou aux événements ayant un rapport logique, direct et immédiat avec l’origine du préjudice subi.

Seul l’abus du droit d’ester en justice peut être sanctionné par l’octroi de tels dommages. … [78] … Les honoraires ne seraient d’ailleurs pas encourus si la

partie adverse reconnaissait, dès le début des procédures judiciaires, sa faute même si cette dernière peut être qualifiée d’abus sur le fond (conduite abusive, répréhensible, scandaleuse, outrageante, de mauvaise foi). … [79] À l’inverse, peu importe qu’il y ait abus ou non sur le fond, une

partie qui abuse de son droit d’ester en justice causera un dommage à la

partie adverse qui, pour combattre cet abus paie inutilement des honoraires judiciaires à son avocat. Il y a dans ce cas, un véritable lien de causalité entre la faute et le dommage. … [84] J’ajoute que l’abus du droit d’ester en justice peut naître également au cours des procédures. L’abuseur qui réalise son erreur et s’enferme dans sa malice pour poursuivre inutilement le débat judiciaire sera responsable du coût des honoraires extrajudiciaires

encourus à compter de l’abus.” [ 34 ] Here, with respect to the Exotic Action (500-32-134931-122) against Michael Cartier, there was no basis in law or in fact to either institute them or continue them. Mr. Cartier had already overpaid the amount of at least $2,693.33. [ 35 ] In these circumstances, there was no rational or legitimate reason for Exotic to sue him for $8,620. There was no justification to present a case, give evidence and obtain an ex parte judgement for $7,000 when Defendants must have known that not only was no money owed by Mr.

Cartier but that quite to the contrary, it was Exotic who in fact owed money to Mr. Cartier. [ 36 ] After judgment by default was obtained by Exotic on the basis of false information and testimony, there was no justification to take measures to insist on payment of the judgment of $7,000, plus interest, additional indemnity and costs. [ 37 ] For these reasons, the Court concludes that the Exotic Action – the first judicial demand constituted an abuse of proceedings by Exotic. These abusive proceedings forced Mr.

Cartier to first contest them, including the filing of a defence, motion for revocation of a judgment and then to attend at the new hearing on the merits before Justice Coutlée. [ 38 ] The Court agrees with Justice Coutlée’s findings and conclusions that Exotic’s claim for three undamaged tires was abusive. Defendants knew full well that Mr. Cartier was located in Alberta and that it would be costly for him to undertake to contest and effectively defend against what were abusive proceedings, namely claiming amounts against Mr.

Cartier when nothing at all was due. [ 39 ] In particular, apart from the clear and irrefutable overpayment of $2,693.33 which remained owing by Exotic to Mr. Cartier as a result of the decision of the credit card company, Mr. Cartier was now being sued, without colour of right by Exotic, for a further amount of $7,000, plus interest, additional indemnity and legal costs. [ 40 ] Furthermore, with regard to the second set of legal proceedings, namely the present judicial demand taken by Mr.

Cartier, the Court concludes that the contestation of Defendants was also an abuse of proceedings. [ 41 ] There was absolutely no legal justification to contest refunding Mr. Cartier the amount that Justice Coutlée had decided was an overpayment, namely the $2,693.33. Defendants should have simply paid it, especially after receipt of Mr. Cartier’s attorney’s demand letter requesting that amount. Instead, Defendants forced Mr. Cartier to institute this second round of legal proceedings. After judicial proceedings were instituted by Mr.

Cartier, Defendants had the opportunity and again should have at least paid that indisputable amount. [ 42 ] Instead, they decided to contest Mr. Cartier’s action and denied that anything at all was owed. Furthermore, they made a Cross- Demand, without colour of right, claiming $3,500 on a ground that had already been dismissed in the final judgment rendered on the matter by Justice Coutlée. [ 43 ] In effect, such a claim for loss of enjoyment was illegal under

Article 13 of the Quebec Consumer Protection Act which states:

13. Est interdite la stipulation qui impose au consommateur, dans le cas de l’inexécution de son obligation, le paiement de frais, de pénalités ou de dommages, dont le montant ou le pourcentage est fixé à l’avance dans le contrat, autres que l’intérêt couru. 13. Any stipulation requiring the consumer, upon the non-performance of his obligation, to pay a stipulated fixed amount or percentage of charges, penalties or damages, other than the interest accrued, is prohibited. [ 44 ] Defendants therefore again forced Mr.

Cartier to return to Montreal to attend at Court in order to present his proof to obtain payment of what was clearly already judicially determined as being owed to him, namely, the amount of $2,693.33, and to contest Defendant’s abusive Cross-Deamnd for $3,500. 3) If the answer to question 2 is yes, what are the damages that Mr. Cartier is entitled to claim as compensation? [ 45 ] As compensation for the first set of abusive legal proceedings, Mr.

Cartier claims the following amounts: 1) Legal fees of his Montreal attorneys $2,299.51 2) Court Stamp fee for Motion for Revocation of Judgment $81.75 3) Return airfare from Edmonton, Alberta to Montreal, Quebec for Mr.

Cartier and his partner Angela Mills (who was a 2 nd driver on the vehicle under the car rental agreement) $2,062.04 4) Photocopies of documents for the Court hearing before Judge Coutlée $153.57 5) Restaurant meals in Montreal $271.45 6) Taxi payments $402.75 7) Hotel: 1 night $284.41 Total: $5,555.48 [ 46 ] With regard to item 1 (legal fees), the Court will not grant the entire amount, since attorneys do not appear in Small Claims Division of the Court of Quebec. However, Mr.

Cartier pleads that he was a non-resident who was trying to defend himself against an abusive claim, that all the proceedings were in French and he is a unilingual Anglophone. [ 47 ] It should be noted that the legal fees are not for legal representations in Court but for legal advice regarding the abusive claims and proceedings against Mr. Cartier. It is certainly legal and often recommended to obtain legal advice in order to properly present a claim or defence in the Small Claims Division of the Court of Quebec.

In fact, Article 542 (4) of the Code of Civil Procedure clearly authorizes such consultation with regard to the Small Claims Division: Tant les personnes physiques que les personnes morales peuvent consulter un avocat, notamment afin de préparer la présentation de leur dossier. Both natural persons and legal persons may consult a lawyer, including for the purpose of preparing the presentation of their case. [ 48 ] For these reasons, the Court will grant 60% of the amounts paid by Mr.

Cartier to his attorneys, namely $1,379.70 ($2,299.51 x 60%). [ 49 ] With regard to item 2, this amount will be granted ($81.75). [ 50 ] With regard to item 3, Mr. Cartier came with his partner Angela Mills, who attended at the Court hearing before Justice

Coutlée. While Ms. Mills’ involvement in the defence with respect to the abusive claims against Mr. Cartier was significant, if not crucial, the proceedings were only taken against or by Mr. Cartier. The Court will therefore only grant one half ($1,031.02) of this amount. [ 51 ] With regard to item 4, this amount will be granted as a direct damage ($153.57). [ 52 ] With regard to item 5, this amount covers both the meals of Mr. Cartier and Ms. Mills. For the reason expressed regarding item 3, only one half will be granted ($135.73). [ 53 ] With regard to item 6, no taxi receipts were provided.

However, it was necessary to travel from the Montreal airport to the hotel, then to the Courthouse and back to the hotel and then back to the airport in order to present the case against the abusive claim. The Court arbitrates 50% of this claim as valid ($201.38). [ 54 ] With regard to item 7, that amount was reasonable and necessary and will be granted ($284.41). [ 55 ] These out of pocket expenses incurred by Mr. Cartier for the Exotic Action total $3,267.56. [ 56 ] Mr.

Cartier also claims for damages suffered as a result of the second legal proceedings which were necessary in order to obtain his refund, namely: 8) $1,280.20: Return airfare from Alberta to Montreal, Quebec for Mr. Cartier and Ms. Mills; 9) $184.81: Rental car (3 days); and 10) $361.66: hotel charges (2 days). [ 57 ] For item 8, on the same basis as item 3 above, only one half will be granted ($640.10). [ 58 ] For item 9, only 2 days will be granted ($121.97). [ 59 ] For item 10, only 1 day will be granted ($180.83). [ 60 ] These additional out of pocket expenses incurred by Mr.

Cartier for the present Court proceedings total $942.90. 4) If the answer to question 2 is yes, is Mr. Cartier within his rights to obtain punitive damages against Exotic, and if so, for what amount?

[ 61 ] The car rental agreement was governed by the Quebec Consumer Protection Act [7] (“ Act ”). There has been a clear violation of Articles 12 , 13 and 219 [8] of the Act.

Article 272 of the Act authorizes the consumer to claim and obtain punitive damages in the event of violation of an obligation imposed by the Act. [ 62 ] In setting the amount of punitive damages, the legislator refers to

Article 1621 C.C.Q. which reads as follows: 1621. Lorsque la loi prévoit l'attribution de dommages-intérêts punitifs, ceux-ci ne peuvent excéder, en valeur, ce qui est suffisant pour assurer leur fonction préventive. Ils s'apprécient en tenant compte de toutes les circonstances appropriées, notamment de la gravité de la faute du débiteur, de sa situation patrimoniale ou de l'étendue de la réparation à laquelle il est déjà tenu envers le créancier, ainsi que, le cas échéant, du fait que la prise en charge du paiement réparateur est, en tout ou en partie, assumée par un tiers. 1621.

Where the awarding of punitive damages is provided for by law, the amount of such damages may not exceed what is sufficient to fulfil their preventive purpose.

Punitive damages are assessed in the light of all the appropriate circumstances, in particular the gravity of the debtor's fault, his patrimonial situation, the extent of the reparation for which he is already liable to the creditor and, where such is the case, the fact that the payment of the reparatory damages is wholly or partly assumed by a third person. [ 63 ] In the present case and for both sets of legal proceedings, Defendants’ behaviour evidenced bad faith and their conduct appears akin to fraud.

How else can one explain repeatedly claiming significant amounts that are manifestly not due and contesting amounts that are manifestly due? The Court considers that Defendants abused the situation and Mr. Cartier’s unfamiliarity with Quebec law and its legal system. [ 64 ] The Court concludes that an amount of $2,000 as punitive damages would be appropriate in the circumstances, including to fulfill their preventive purpose and avoid a repeat of faulty conduct. 5) Does Mr. Santo have personal liability for the claim of Mr. Cartier? [ 65 ] The evidence shows that Mr.

Santo is the principal of Exotic, and was involved in all aspects of Exotic’s conduct. He formulated, applied and pursued such conduct which was abusive and constituted an abuse of proceedings. Mr. Cartier sued Mr. Santo, and also raised at the hearing the solvability of Exotic.

Article 317 C.C.Q. states: 317. La personnalité juridique d'une personne morale ne peut être invoquée à l'encontre d'une personne de bonne foi, dès lors qu'on invoque cette personnalité pour masquer la fraude, l'abus de droit ou une contravention à une règle intéressant l'ordre public. 317. The juridical personality of a legal person may not be invoked against a person in good faith so as to dissemble fraud, abuse of right or contravention of a rule of public order. [ 66 ] Mr. Santo personally directed and orchestrated the abusive conduct of Exotic. He did so in flagrant contravention of rules of public order as stipulated in the Quebec Consumer Protection Act . The Court concludes that

Article 317 C.C.Q. applies and Mr. Santo should be held personally liable for his conduct. [ 67 ] In virtue of Articles 1525 (3) and 1526 C.C.Q., Defendants will be held solidarily liable for amounts owed.

FOR THESE REASONS, THE COURT: GRANTS in part Mr. Cartier’s judicial demand; CONDEMNS solidarily 9173-8559 Quebec Inc., carrying on business under the name of “Montreal Exotic Car Rentals” and Antonio Santo to pay Michael Cartier the sum of $2,693.33 at the legal rate of interest of 5% per year, plus the additional indemnity provided at

Article 1619 of the Civil Code of Quebec , from the date of the demand, which corresponds to the contestation in the first legal proceedings (500-32-134931-122), namely October 10, 2012; CONDEMNS solidarily 9173-8559 Quebec Inc., carrying on business under the name of “Montreal Exotic Car Rentals” and Antonio Santo to pay Michael Cartier the sum of $3,267.56 at the legal rate of interest of 5% per year, plus the additional indemnity provided at

Article 1619 of the Civil Code of Quebec , from the date of the demand letter (Exhibit P-3), dated June 15, 2015; CONDEMNS solidarily 9173-8559 Quebec Inc., carrying on business under the name of “Montreal Exotic Car Rentals” and Antonio Santo to pay Michael Cartier the sum of $942.90 at the legal rate of interest of 5% per year, plus the additional indemnity provided at

Article 1619 of the Civil Code of Quebec , from the date of the present judgment; CONDEMNS solidarily 9173-8559 Quebec Inc., carrying on business under the name of “Montreal Exotic Car Rentals” and Antonio Santo to pay Michael Cartier the sum of $2,000 at the legal rate of interest of 5% per year, plus the additional indemnity provided at

Article 1619 of the Civil Code of Quebec , from the date of the present judgment; CONDEMNS solidarily 9173-8559 Quebec Inc., carrying on business under the name of “Montreal Exotic Car Rentals” and Antonio Santo to pay Michael Cartier the legal costs set at $200 (Court Stamp Fee). __________________________________ Jeffrey Edwards, J.C.Q. Date of hearing: September 2, 2016