2014 QCCQ 8960, 2014 QCCQ 8960

Prompt Direct inc. c. Poirier 2014 QCCQ 8960 COURT OF QUEBEC CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL “Civil Division” No: 500-22-206737-135 DATE: August 28, 2014 ______________________________________________________________________ BY THE HONOURABLE JEFFREY EDWARDS, J.C.Q. ______________________________________________________________________ PROMPT DIRECT INC. Plaintiff v.

MICHEL POIRIER Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] The present case raises several issues regarding the personal liability of a person who carries out business in Quebec but fails to register or comply with the civil law and statutory requirements regarding the registration in the public corporate registry as to his commercial activities in Quebec. Plaintiff Prompt Direct Inc. (“Prompt Direct”) has sued Defendant Michel Poirier on an action on account for $29,046.52. Mr.

Poirier pleads that there is no legal connection between him and Prompt Direct and Prompt Direct has sued the wrong party. The parties made a joint request that the judgment be rendered in English. Context [ 2 ] Prompt Direct operates a print and direct mail company based in State Island, New York, United States of America. Essentially, it prints advertising documentation and mails that documentation to various addresses located in the United States. According to the proof heard, the addresses to which the documentation is sent by mail are normally supplied to Prompt Direct by its client.

This was the case in the present matter. [ 3 ] In October 2012, Mr. Poirier contacted Prompt Direct in order to enquire about using Prompt Direct’s services [1] . At the time, Mr. Poirier indicated that he was operating his business under the name of “Clinico-Pharma Media” located on Eglinton Avenue West in Toronto, Ontario. This was the business description at the bottom of his e-mail at the time. But he used a Montreal area code telephone number (514). As Mr. Poirier was asking for credit, he completed Prompt Direct’s form of credit application [2] .

In the form, he indicated different information, namely that the company name was 2222410 Ontario Inc. A Montreal street address was given: 208-925 de Maisonneuve. However, no city was indicated. The application for credit made by Mr. Poirier was not accepted. Mr. Poirier did not pursue the matter at that time and nor did Prompt Direct. [ 4 ] Sometime in June 2013, Mr. Poirier again contacts Prompt Direct to enquire about using its services [3] . Prompt Direct’s representative stated that any contract would be subject to payment in advance or in his words “payment up front”.

The entire mailing costs would have to be paid in advance and 50% of the service charge would also need to be paid in advance. The remaining 50% charge would be payable 30 days later. Mr. Poirier agreed to those terms. The address indicated on the e-mails emanating from Mr. Poirier in the second exchange of e-mails stated that Mr. Poirier was now the President/CEO of “Clinicopharma”. This is different from the first business name indicated (Clinico-Pharma Media). Also, the address of the business is different.

It is now indicated as being 208-925 de Maisonneuve, Montreal instead of the address indicated in the previous e-mails namely Eglinton Avenue, Toronto. Further to their agreement, on July 9, 2013, Prompt Direct issued invoices addressed to Mr. Poirier. In particular, the invoices are addressed as follows: Michel Poirier

Clinicopharma 208-925 de Maisonneuve Montreal, Quebec H3A 0A5 CANADA [ 5 ] Mr. Poirier does not indicate to Prompt Direct that the invoices are directed to the wrong person or address. Mr. Poirier’s product, which is the subject of the direct mailing campaign, is diet pills. Mr. Poirier and Prompt Direct worked together to create the advertising material for that purpose to the satisfaction of Mr. Poirier. As stated, as per the usual practice in the industry, it is Mr.

Poirier who provides the addresses of persons to whom the direct mailing is to be sent by Prompt Direct. [ 6 ] In accordance with these agreed terms, Mr. Poirier sends two cheques to Prompt Direct. The cheques are drawn on a Canadian Bank on an account held under the name of “Global Media Water Park Place [4] ”, having an address on Bay Street in Toronto, Ontario. The total amount of the cheques is $20,431 (U.S.). [ 7 ] As a precaution, Prompt Direct stated that it would only proceed to mail the brochures one week from deposit of the cheques to ensure that the cheques “cleared”.

On July 16, 2013, Prompt Direct received the payment cheques. On July 23, 2013, Prompt Direct advised Mr. Poirier by e-mail that it would deposit the envelopes or “release the mail” into the American postal service that same day [5] . Mr. Poirier replied “Thank you”. Accordingly, that same day, namely July 23, 2013, Prompt Direct paid the postage fees and released approximately 50,000 items of mail into the US postal service [6] . Prompt Direct’s direct cost to do so was $11,435.93 (US). [ 8 ] After being advised that his promotional items had been deposited into the American postal service, Mr.

Poirier immediately and without advising Prompt Direct, then put a “stop payment” on the two cheques that he had sent. He did not advise Plaintiff that he hade done so. [ 9 ] On August 1, 2013, when Prompt Direct was informed about the stop payment of the cheques, Prompt Direct’s representative Dennis Lacognata, who testified at the trial, immediately tried to reach Mr. Poirier as to why Mr. Poirier had effected a stop payment and why Prompt Direct was not advised beforehand by Mr. Poirier. These exchanges are detailed in another set of e-mails adduced as proof in the Court Record [7] . Mr.

Poirier explained to Mr. Lacognata as follows: “I was confident to resolve this and then send a wire or take the stop payment off, it was really a last minute change”. [ 10 ] Mr. Poirier went on to reassure Mr. Lacognata that he was arranging for a wire transfer of replacement funds and that they would be sent immediately. However, Mr. Poirier did not keep his subsequent promises to send the wire transfer nor did he pay by another method. Mr. Lacognata testified that he tried to call, e-mail and by all means available to him to communicate with Mr. Poirier over the next several weeks. Mr.

Lacognata describes a frustrating and exasperating period for him. Mr. Lacognata states that he was constantly being put off by Mr. Poirier and the numerous promises to pay were simply not being honoured. [ 11 ] On August 7, 2013, Mr. Lacognata wrote by e-mail to Mr. Poirier: “Where are you? Please don’t disappoint me, I trusted you”. [ 12 ] Mr.

Poirier responded by e-mail that he was having financial issues (“I am trying to find a solution to replace my financial partner”, “This is a business issue that I am trying to resolve.”). [ 13 ] On August 20, 2013, Prompt Direct hired an attorney to send a demand letter to Mr. Poirier. Although he received it, Mr. Poirier did not send any reply. At the trial, Mr. Poirier testified that he chose not to respond. Prompt Direct’s Position

[ 14 ] When Prompt Direct’s Quebec attorneys received the mandate to institute legal proceedings against Mr. Poirier and Clinicopharma, they proceeded to carry out the normal and standard online searches on the Quebec and Canadian corporate data bank registries for the trade name of “Clinicopharma” [8] used by Mr. Poirier. That name appeared on the latest e-mails from Mr. Poirier and the invoice sent to him.

However, there was no data that came up on the registries for this name. [ 15 ] Accordingly, it is established by the proof that the name “Clinicopharma” was an unregistered “trade name” (in French: “Raison sociale”) in Quebec. It is also confirmed that there was and is no business at all registered in the Quebec or Canada corporate registries under that name. [ 16 ] The Quebec attorneys then proceeded to carry out corporate searches under the name of Michel Poirier with regard to the business located at the address indicated by Mr. Poirier.

Again, there was nothing in the corporate Quebec or Canadian registries that came up. [ 17 ] In the present judicial proceedings, Prompt Direct takes the position that since “Clinicopharma” has no legal existence whatsoever, Mr. Poirier himself was carrying on business in Montreal, Quebec under his own name as a natural person and has therefore personal liability for the debt contracted with Prompt Direct. Mr. Poirier’s Position [ 18 ] Mr.

Poirier testified that he had intended to register the name of “Clinicopharma” as a trade name for his Ontario company, 2222410 Ontario inc. [9] , a company with respect to which he acknowledges being the sole officer, director and shareholder. He stated to the Court that he had had certain discussions with his attorney to that effect but Mr. Poirier did not proceed to register the corporate name. It is unclear in Mr. Poirier’s testimony whether he did not follow up on his attorney’s advice to do so or whether the said attorney did not follow up on Mr.

Poirier’s request, but it is clear that it was never done, and this to the knowledge of Mr. Poirier. [ 19 ] During his testimony, Mr. Poirier did not give any credible reason why Prompt Direct’s invoice was not paid by 2222410 Ontario inc. instead given that he is of the view that it is the proper debtor. Mr. Poirier admits that the work of Prompt Direct was done and the services were performed, as per the contract. Mr.

Poirier admits that he carried on business in Montreal and used as his address a UPS store and that he did not file the prescribed form under the required government corporate registries, despite having a place of business and carrying on business in the Province of Quebec. Mr. Poirier also admits that, after the mailing of his marketing documentation by Prompt Direct, he did get some calls from potential and, in some cases, real customers for his diet pills. [ 20 ] But Mr. Poirier states in his testimony that he was disappointed with the quantity of the calls. However, Mr.

Poirier and his attorney acknowledge that payment of Prompt Direct’s invoices was never made conditional upon the level of success of the advertising campaign conceived of by Mr. Poirier. At the hearing, Mr. Poirier’s sole defence is that Prompt Direct has sued the wrong person. According to Mr. Poirier, Prompt Direct should have instead sued the numbered company 2222410 Ontario Inc. Mr. Poirier pleads that he acted simply as a mandatary of 2222410 Ontario Inc. and has no personal responsibility for the invoices of Prompt Direct. Mr.

Poirier did not explain why, after all the calls, e-mail requests, receipt of invoices, demand letter and legal proceedings of Prompt Direct, he has not had the invoices in question paid by the numbered company owned by him, which he alleges is the true debtor of Prompt Direct’s claim. Analysis and Decision [ 21 ] There is no factual issue to be resolved by the Court. Essentially, the question of law in issue is whether, based upon the proven facts, Mr.

Poirier is personally liable for the invoices and other accessory damages claimed by Prompt Direct. [ 22 ] The Court will first review the codal, statutory and jurisprudential authorities relevant to the legal question of the omission to register under the Quebec corporate registry.

[ 23 ]

Article 306 of the Civil Code of Quebec reads as follows: “ Art. 306 A legal person may engage in an activity or identify itself under a name other than its own name. It shall give notice to the enterprise registrar by filing a declaration to that effect in accordance with the Act Respecting the Legal Publicity of Enterprises (chapter P-44.1)” [ 24 ] The Act Respecting the Legal Publicity of Enterprises [10] reads in part as follows: “ 21.

The following are required to be registered: (1) natural persons who operate a sole proprietorship, whether or not a commercial enterprise, in Québec under a name that does not include their surname and given name; […] (5) legal persons established for a private interest not constituted in Québec, or legal persons constituted in Québec and continued under the laws of a jurisdiction other than Québec, if they are domiciled in Québec, carry on an activity in Québec, which includes the operation of an enterprise, or possess an immovable real right, other than a prior claim or hypothec, in Québec; […] 25.

For the purposes of

section 21, a person, trust or partnership who has an address in Québec or, either directly or through a representative acting under a general mandate, has an establishment, a post office box or the use of a telephone line in Québec or performs any act for profit in Québec is presumed to be carrying on an activity or operating an enterprise in Québec.” Several judgments have ruled upon the legal consequences of not respecting these provisions. [ 25 ] In Meunerie Gérard Soucy inc. v. Guay [11] , Judge Anne Laberge held: [55] Suivant l’

article 306 du Code civil du Québec , si une compagnie veut exercer une activité sous un nom autre que le sien, elle doit donner un avis au registraire des entreprises, en lui produisant une déclaration en ce sens , ce que l’a pas fait Alimentation Tardif & Guay inc. […] [64] Il apparaît clair que le défendeur est tenu personnellement de payer les sommes dues à la demanderesse car il a admis ne lui avoir jamais mentionné qu’il n’était pas son débiteur avant le présent recours. (Emphasis added.)

[ 26 ] In Michael Publishing Company inc. v. 6183310 Canada inc. [12] , Judge Diane Quenneville held: [22] The purpose of these provisions is to clearly inform third parties who exactly they are doing business with . [23] A shareholder who neglects to properly register a corporate name or neglects to inform a third party of the actual person the latter does business with cannot invoke on his behalf the corporate veil.

In those circumstances, the Court is justified in concluding that the contract was concluded by the shareholder personally. (Emphasis added.) [ 27 ] In light of the above articles and jurisprudence, the Court is of the opinion that Mr. Poirier is personally liable for Prompt Direct’s invoice and the bank charges incurred by Prompt Direct resulting from the stop payment made by Mr. Poirier of the payment cheques. The Court arrives at this conclusion for the following reasons: 1) Mr. Poirier carried on business in Montreal, Quebec and had a place of business in Montreal, Quebec.

In violation of the applicable codal and legislation requirements, Mr. Poirier did not register those business activities. As such, he carried out the business under his own name and engaged his personal liability for all transactions which he concluded with third parties, including with Prompt Direct. Accordingly, the contract in issue was made between Mr. Poirier and Prompt Direct. 2) Mr. Poirier carried on business under the name of “Clinicopharma”.

However, “Clinicopharma” is not a registered trade name under either the Canadian or Quebec corporate registry and does not exist as a registered trade or business name for any other legal entity or moral person. Therefore, the factual and legal situation is that Mr. Poirier acted in his own name when dealing with Plaintiff. Plaintiff is therefore correct to assert that Mr. Poirier simply claims to be acting under the business name of “Clinicopharma” but that in law was not doing so, in particular with regard to Prompt Direct. 3) It was the responsibility of Mr.

Poirier to register “Clinicopharma” as a trade name in Quebec (he in fact did not register in any jurisdiction) of 2222410 Ontario inc. Having failed to do so, he cannot attempt to benefit with regard to any third party, including Prompt Direct, from the legal protection or shield from personal liability that such registration would have afforded him. [ 28 ] As Judge Quenneville noted above, the purpose of the requirement of registration under the public corporate registries is to allow third parties to be aware of the persons with whom they are dealing.

It would be inconsistent with the legislative framework that a non registered individual could benefit from the protection of the registry for a corporation when the third party with whom he is dealing is unable to determine whether such individual is acting on behalf of a corporate entity. [ 29 ] But there is more. The Court is of the view that the conduct of Mr. Poirier in the present circumstances constitutes an extracontractual fault giving rise to Mr. Poirier’s personal liability. Jurisprudence and doctrine have noted that in such circumstances, the mandatary will bear personal liability.

The following authorities are relevant: [ 30 ] In Gicleurs automatiques du Québec v. 9092-1297 Quebec inc. [13] , Judge Jacques Désormeau stated as follows : « [19] À

titre de corporations inter-reliées, affiliées et apparentées, l’utilisation simultanée qu’elles faisaient de la raison sociale « Construction Vog » créait une confusion certaine et laissait croire qu’elles n’étaient pas animées d’une personnalité juridique distincte capable de contracter; à cet égard, la demanderesse a été induite en erreur quant à l’identité véritable de sa débitrice. […] [21] La création volontaire de la confusion résultant de l’utilisation simultanée de la raison sociale « Construction Vog » constitue une faute extra-contractuelle teintée de mauvaise foi et l’

article 317 du Code civil du Québec doit recevoir sa pleine application »

(Emphasis added.) [ 31 ] In Normandeau v. 6004610 Canada inc. [14] , Judge Richard Landry held: « [79] On ne peut « jongler » ainsi avec des entités juridiques en principe distinctes pour ensuite se draper du voile corporatif . [80] On ne peut opposer aux demandeurs la confusion que les défenderesses ont créée de toutes pièces à leur insu. […] [83] Quant à la confusion qui peut exister entre un individu et sa ou ses compagnies et la responsabilité personnelle qui peut en découler, Mes Maurice et Paul Martel ( Mes Martel ) dans leur Traité sur la Compagnie au Québec , écrivent (à la page 1 - 56) [8] : « Il pouvait aussi arriver que l'actionnaire puisse être personnellement tenu responsable d'un acte parce que c'est lui-même qui l'avait posé, et non sa compagnie; tout dépendait de la relation juridique qui s'était établie entre l'actionnaire et le tiers.

Si l'actionnaire avait posé directement envers le tiers un geste entraînant sa responsabilité contractuelle ou délictuelle, il ne pouvait évidemment pas prétendre que c'était sa compagnie et non lui-même qui devait être poursuivie. Le même raisonnement devait s'appliquer en sens inverse, lorsqu'un tiers causait un dommage direct à un actionnaire.

Lorsqu'un actionnaire faisait signer un contrat par sa compagnie, mais que par des actes concomitants ou subséquents, il désavouait lui- même les structures corporatives dont il s'était prévalu, il manifestait clairement son intention de transiger personnellement avec le tiers et devait en subir les conséquences.

Dans le même ordre d'idées, le fait pour un actionnaire de ne pas respecter lui-même les structures corporatives de sa propre compagnie ou de ses propres compagnies, en les confondant, devait jouer contre lui et l'empêcher de se prévaloir de ces structures. » » (References omitted and emphasis added.) [ 32 ] First, Mr. Poirier, in his dealings with Prompt Direct, used and gave five different legal names (Michel Poirier, Clinicopharma, 2222410 Ontario Inc., Global Media Water Park Place and Clinico-Pharma Media).

According to the proof heard at trial, there was at least a sixth name that he used elsewhere namely “Global Media”. Mr. Poirier also used at least three different addresses (Boulevard de Maisonneuve, Montreal, Bay Street, Toronto and Eglinton Avenue, Toronto.) Accordingly, if there was any confusion on the part of Prompt Direct with respect to which party it entered into contract, this confusion was caused by the negligent, improper and unlawful conduct of Mr. Poirier which constitutes in the present circumstances an extra-contractual fault under

Article 1457 of the Civil Code of Quebec and gives rise to his personal liability. [ 33 ] Second, in light of the testimony and other proof adduced at trial, the Court is of the view that Mr. Poirier had a very deliberate plan to trick Plaintiff into incurring very substantial expenses on behalf of Mr. Poirier and in rendering services when Mr. Poirier had no intention of paying for them. It appears that Mr. Poirier intended to obtain the benefits of the preparation of advertising material by Prompt Direct’s staff and the amounts spent for the mailings by Prompt Direct, which generated orders for Mr.

Poirier’s product, without actually paying for these services or paying for those direct expenses incurred in good faith by Prompt Direct. Such conduct constitutes a civil fraud, either contractual in nature ( Articles 1401 , 1407 of the Civil Code of Quebec ) or extra-contractual in nature (

Article 1457 of the Civil Code of Quebec ). Either way, Mr. Poirier is personally liable to Plaintiff for the damages caused by such faulty conduct [15] . [ 34 ] Lastly, Plaintiff has produced proof with respect to the applicable conversion rate from American to Canadian dollars for the amount claimed and chosen as the date of conversion a date contemporaneous to the date of the institution of the proceedings [16] . This is a legitimate and valid date and results in the conversion of the amount of $28,047.83 (US) to $29,046.52 (CAN). FOR THESE REASONS, THE COURT:

GRANTS Plaintiff’s action; CONDEMNS Defendant Michel Poirier to pay Plaintiff Prompt Direct Inc. the amount of $29,046.52; WITH INTEREST at the legal rate of 5% per annum , plus the additional indemnity in accordance with

Article 1619 of the Civil Code of Quebec from the date of the demand letter, being August 20, 2013; WITH COSTS against Defendant Michel Poirier. __________________________________ Jeffrey Edwards, J.C.Q. Mtre. Francine Danais La Boîte Juridique Attorney for the Plaintiff Mtre. David Beaudoin BBK Avocats Inc. Attorneys for the Defendant Date of hearing: May 9, 2014