2016 QCCQ 2678, 2016 QCCQ 2678

Immeubles Village DDO inc. c. Simhon 2016 QCCQ 2678 COURT OF QUEBEC (Small Claims Division) CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL Civil Division No: 500-32-145268-142 DATE: March 2, 2016 ______________________________________________________________________ BY THE HONOURABLE DOMINIQUE GIBBENS, J.C.Q. ______________________________________________________________________ les immeubles village D.d.o. Inc. Plaintiff v.

Benjamin Simhon Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] Plaintiff, a real estate agency, claims $7,000 from Defendant, its former associated real estate broker, in reimbursement of legal costs paid to obtain the release of a seizure resulting from legal proceedings directed against him. [ 2 ] Defendant contests the claim on various grounds, including prescription and Plaintiff’s failure to put him in default prior to taking action.

He also alleges that the dispute was the object of an out-of-court settlement and, by way of a counter-claim, seeks a commission of $14,939.58. questions in issue [ 3 ] The case raises the following questions:

a) Is Plaintiff’s right of action prescribed or is it inadmissible because Plaintiff did not put Defendant in default prior to filing its claim?

b) Did a settlement agreement occur between the parties?

c) If not, is Plaintiff entitled to the amount claimed?

d) Is Defendant entitled to the amount claimed through his counter-claim? FACTUAL CONTEXT [ 4 ] Plaintiff is a real estate agency doing business under the name of “Royal LePage - D.D.O.”.

Defendant is a licensed real estate broker who was associated to Plaintiff until January 31, 2012. [1] [ 5 ] On March 18, 2011, Plaintiff paid $12,109.59 to Paquette & Associés, bailiffs, to obtain the release of a seizure carried out in execution of a judgment rendered against Defendant and relating to his conduct as a real estate broker. [2] [ 6 ] Plaintiff claims that Defendant undertook to reimburse these legal costs to Plaintiff as soon as he was able to do so and to pay interest on the outstanding amount at the rate of 6% per annum. [ 7 ] On December 23, 2011, Defendant made a partial payment of $2,000 towards reimbursement of the legal costs.

The cheque indicated that the payment related to “Court costs account Benji”. [3] No further payments were made in 2011, 2012 or 2013. [ 8 ] On August 12, 2014, Plaintiff received a commission of $5,551.51 ($6,382.85 with applicable taxes) following the sale of a property located on Décarie Blvd. in Montreal (the « Property ») negotiated by Defendant when he was still associated to Plaintiff. [4] [ 9 ] Plaintiff deducted 30% from this commission as an administration fee in accordance with Defendant’s compensation plan [5] and the net amount of $3,886.06 due to Defendant was applied in further payment of the legal costs. [6] [ 10 ] The commission was the object of a dispute between the parties and by letter of demand dated October 30, 2014, Defendant sought $24,368.95 allegedly due to him following the sale of the Property. [7] He claimed that Plaintiff had wrongly accepted a lower commission and that its decision to do so could not be opposed to him. [ 11 ] According to Defendant, the parties’ respective claims (Plaintiff’s claim for the balance of the legal costs and Defendant’s claim for the commission) were the object of a settlement agreement in November 2014.

Plaintiff allegedly agreed to pay Defendant $3,000 to resolve all respective claims based on their business relationship, including the recovery of the legal costs paid by Plaintiff in

2011. [ 12 ] Although Plaintiff acknowledges that settlement discussions took place, it denies that the parties reached an agreement. [ 13 ] Plaintiff filed its application on December 22, 2014. Although it claimed that the outstanding balance of the legal costs paid, including interest at the rate of 6% per annum, was $8,731.75, it reduced its claim to $7,000 to respect the jurisdiction of the Small Claim division of this Court. ANALYSIS

a) Is Plaintiff’s right of action prescribed or is it inadmissible because Plaintiff did not put Defendant in default prior to filing its claim? [ 14 ] Defendant argues, firstly, that Plaintiff’s claim must be dismissed because any right of action that Plaintiff could have had was extinguished by way of prescription on March 18, 2014, three years after payment of the legal costs at issue. Defendant invokes

article 2925 of the Civil Code of Québec (« C.C.Q. »), which reads as follows: 2925.

An action to enforce a personal right or movable real right is prescribed by three years, if the prescriptive period is not otherwise determined. [ 15 ] In response, Plaintiff argues that the three-year prescriptive period applicable to its claim was interrupted on December 23, 2011 when Defendant acknowledged his debt to Plaintiff by making a partial payment thereon. [ 16 ] Plaintiff is correct that the acknowledgement of a debt by the debtor interrupts prescription [8] and that the applicable prescriptive period begins to run again for the same period from the date of the acknowledgment. [9] [ 17 ] It is also true that the partial payment of a debt is often considered to constitute an acknowledgement of debt. [10] [ 18 ] Is it the case here? [ 19 ] On the basis of the evidence, the Court is of the opinion that Defendant’s partial payment of $2,000 on December 23, 2011 [11] constitutes a partial payment and operates as an acknowledgement of debt, as confirmed by the words “Court costs account Benji” appearing on Defendant’s cheque. [ 20 ] Consequently, the three-year prescriptive period applicable to Plaintiff’s right of action against Defendant began to run again on December 23, 2011 when the partial payment was made.

It would therefore have expired on December 23, 2014, but the filing of Plaintiff’s claim on December 22, 2014 interrupted it again. Contrary to what Defendant argued, it is the date of filing of the claim that is determinative and not the notice of same to Defendant. [12] [ 21 ] Plaintiff’s claim is therefore not prescribed. [ 22 ] Defendant also argues that Plaintiff’s claim is inadmissible because Plaintiff did not formally put him in default prior to filing the claim.

This argument must be dismissed, as the law specifically provides that a debtor may be put in default by a judicial demand filed against him, as was the case here. [13]

b) Did a settlement agreement occur between the parties? [ 23 ] Defendant argues that Plaintiff’s claim must be dismissed because it was the object of an out-of-court settlement. He argues that this settlement agreement constitutes a transaction within the meaning of

article 2631 C.C.Q. and he seeks the homologation of said transaction. [ 24 ] Defendant claims that after demanding payment of the $24,368 commission in October 2014, [14] he spoke to Mr. Jan Engelsman, Plaintiff’s co-owner, who agreed to pay him $3,000 to resolve all claims that may arise out of the parties’ previous business relationship, including Plaintiff’s claim for reimbursement of the legal costs. He argues that this agreement was confirmed by Mr. Stuart Jones, Plaintiff’s other co-owner, in an email in November 2014. [15] [ 25 ] Mr. Engelsman and Mr. Jones both deny that a settlement occurred.

They testified that those terms were discussed and considered because Defendant’s lawyer represented to them that their claim for legal costs was prescribed. The discussions were subject to consultation with Plaintiff’s lawyer, however, and after their lawyer advised them that the claim for legal costs was not prescribed, the settlement fell through. [ 26 ] The Court prefers the testimony of Mr. Engelsman and Mr. Jones to that of Defendant. [ 27 ] Both Mr. Engelsman and Mr. Jones testified without hesitation, in a frank and credible manner and without attempting to hide any information.

The Court accepts their explanations regarding the context of the email exchange and discussions with Defendant’s lawyer. [16] They also stated that no settlement documents were sent to them by Defendant’s lawyer after this exchange, which corroborates that the settlement fell through. [ 28 ] On a balance of probabilities, the Court therefore concludes that no settlement agreement was reached by the parties.

c) Is Plaintiff entitled to the amount claimed? [ 29 ] Having concluded that the claim is not prescribed or inadmissible, the Court must now determine what amount Plaintiff is entitled to claim from Defendant.

[ 30 ] Plaintiff has proved to the satisfaction of the Court that it is entitled to recover the outstanding balance of the legal costs it paid. Indeed, the compensation agreement between the parties [17] obliged Defendant to pay for any “legal costs & settlements“, which includes legal costs resulting from proceedings related to the broker’s activities.

Defendant also acknowledged his debt through the partial payment he made in 2011. [18] [ 31 ] Plaintiff, however, has not provided conclusive evidence of Defendant’s obligation to pay 6% interest on any outstanding amount from the date that the legal costs were paid by Plaintiff. [19] In the absence of an agreement regarding interest, Plaintiff is only entitled to interest at the legal rate of 5% [20] and the additional indemnity provided by law. [21] Also, it is not entitled to interest prior to the filing of the claim, as this is when Defendant was put in default. [22] [ 32 ] Plaintiff paid a total of $12,109.59 in legal costs and partial payments of $2,000 and $3,886.06 were made, leaving a balance of $6,223.53.

Plaintiff is therefore entitled to $6,223.53, together with interest at the legal rate and the additional indemnity from December 22, 2014.

d) Is Defendant entitled to the amount claimed through his counter-claim? [ 33 ] Defendant has the burden of proving, on a balance of probabilities, the facts upon which his counter-claim is based [23] . The evidence must be clear and convincing and the facts must not only be possible, but probable. [ 34 ] Defendant claims to be entitled to a commission $14,939.58 following the sale of the Property, on the basis of the compensation agreement discussed above [24] .

This is the same transaction for which Defendant demanded payment of a $24,368.95 commission in October 2014 [25] and following which Plaintiff received a commission of $5,551.51 ($6,382.85 with applicable taxes). [26] [ 35 ] Defendant alleged at trial that Plaintiff had wrongly accepted from the vendor of the Property a commission of $5,551.51, rather than the $45,127.69 that it was entitled to, and that its decision to do so could not be opposed to him.

He failed, however, to provide conclusive evidence of such allegations. [ 36 ] The evidence before the Court is that Plaintiff received a commission of $5,551.51 ($6,382.85 with applicable taxes) for this transaction, that it deducted 30% from this commission as an administration fee in accordance with Defendant’s compensation plan [27] and that the net amount of $3,886.19 due to Defendant was applied in partial payment of the legal costs. [ 37 ] Consequently, the counter-claim must be dismissed.

FOR THESE REASONS, THE COURT: GRANTS the action in part; CONDEMNS Defendant Benjamin Simhon to pay to Plaintiff Les Immeubles Village D.D.O. inc. an amount of $6,223.53, together with interest at the legal rate of 5%, plus the additional indemnity stipulated in

article 1619 of the Civil Code of Québec , from December 22, 2014; WITH COSTS of $220 representing the judicial stamp on the Application; DISMISSES the counter-claim; WITHOUT COSTS . __________________________________ DOMINIQUE GIBBENS, J.C.Q. Date of hearing: January 25, 2016