2018 QCCQ 1179, 2018 QCCQ 1179

Kojakain c. 9340-1578 Québec inc. 2018 QCCQ 1179 COURT OF QUEBEC Small Claims Division CANADA PROVINCE OF QUEBEC DISTRICT OF MONTRÉAL TOWN OF MONTRÉAL Civil Division No: 500-32-155108-162 DATE: February 14, 2018 ______________________________________________________________________ BY THE HONOURABLE MAGALI LEWIS ______________________________________________________________________ SHANT KOJAKAIN Plaintiff v. 9340-1578 QUÉBEC INC. and ZIYAD ABOUDAN and STÉPHANE FRANÇOIS and MOHAMED EL KAAKI Defendants ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] Plaintiff claims $7,837.50 as reimbursement of the money he paid to the Defendants as part of his financial contribution to their project to open a restaurant, because shortly after they agreed to be business partners and Plaintiff started paying his contribution toward the implementation of the project, the Defendants changed their minds, informed him that they no longer wanted him to be part of the project and agreed to pay him is money back. [ 2 ] Defendants confirm that they unilaterally decided that they did not want Plaintiff to be part of their business project and that they would reimburse him his money, but submit that they informed him that they would not be in a position to do so before the restaurant opened. [ 3 ] Since they never opened the restaurant, have abandoned their project and have lost all of the money they paid toward their failed endeavour, Defendants take the position that Plaintiff’s claim should be dismissed. [ 4 ] Stephane François has not filed a contestation.

The hearing proceeds in his absence. QUESTIONS AT ISSUE [ 5 ] To decide this matter the Court must first determine whether Plaintiff’s claim is well founded and, if so, if the claim should be granted again all the Defendants.

CONTEXT [ 6 ] Sometime during the month of April 2016, Defendant Aboudan talked to Plaintiff about the project he had with Defendants François and Kakki to open a restaurant, asking him if he would be interested to invest money and participate in the endeavour. [ 7 ] Plaintiff was enthusiastic about the project and on April 14, 2016, shortly after the first discussion with Defendant Aboudan, with the consent of Defendants Aboudan, François and Kakki, incorporated the Defendant Company; Defendants Aboudan and François, as well as Plaintiffs being designated as its administrators [1] . [ 8 ] Although Plaintiff insisted with the Defendants that they should get together to agree on the terms of and sign a shareholder’s

agreement, for various reasons Defendants Aboudan, François and Kakki never had the time to do so and as shareholders’ agreement was never signed. [ 9 ] Before they even had finalized the business plan and decided exactly what type of business they would operate, Defendants quickly chose what they considered to be a suitable place to exploit their restaurant, signed a lease and paid a deposit toward the first month’s rent. [ 10 ] At that point Defendants did not have a definitive business plan; had no previous experience in the restoration business; did not know exactly what they wanted to do: everything remained to be thought through, developed and decided. [ 11 ] A bank account was never opened for the company.

All payments made toward the development of the business was made by the business partners personally. [ 12 ] Plaintiff either transferred money into Defendants Aboudan and François’s respective bank accounts for them to pay expenses incurred, or he paid service providers directly. [ 13 ] It is in those circumstances that Plaintiff made etransfers to Defendants François ($750) [2] and Aboudan ($2,500) [3] and transferred $4,462.50 to Louis Eric Simard to pay him for his services in relation to the website the parties wanted to create for their business [4] .

In total he contributed $7,712.50 to set up the business before Defendants Aboudan, François and Kakki decided to exclude him from the project. [ 14 ] On or before May 14, 2016, Defendants Aboudan, François and Kakki informed Plaintiff that they had agreed on ending his participation to the project. [ 15 ] At the hearing the parties testified at length about their disagreements on what the business should be, how to conduct it and what led the Defendants to change their minds about Plaintiff’s participation to the endeavour. [ 16 ] After the meeting where the matter of Plaintiff’s exclusion from the project was discussed, Plaintiff forwarded a text message to the Defendants Aboudan, François and Kakki, whereby he was confirming his agreement with their unilateral decision to exclude him from the project, detailing the amounts he had paid as his contribution to the project up to that point, asking them to confirm that they agree with the amount. [ 17 ] Although it is not clearly stated in the message, it implies that the parties had discussed about Plaintiff being reimbursed and further to the Defendants agreeing with the amount he was claiming to have contributed as a business partner that he was expecting to be reimbursed. [ 18 ] According to Plaintiff, although Defendants Aboudan, François and Kakki agreed to reimburse him, they kept on postponing the payment, pretexting that they did not have money, all their savings having been invested in their project. [ 19 ] To stop Plaintiff from continuously asking for his reimbursement, Defendant François offered to transfer him his used Audi car in partial payment of the money owed. [ 20 ] Although the parties did not agree on the value of the car and Plaintiff did not really want the car, worried that he would not see the colour of his money, he agreed to take François’s car to reduce the amount the Defendants owed him. [ 21 ] When Plaintiff presented with Defendant Kakki to a branch of the Société de l’assurance automobile du Québec to have what they believed to be François’s car transferred into Plaintiff’s name, they could not proceed with the transfer because they learned that the car did not belong to Defendant François but to his brother [5] , who had not signed the power of attorney to authorize the transfer. [ 22 ] Defendants Aboudan and Kakki acknowledge that all three Defendants had agreed to reimburse Plaintiff of his contribution as a business partner in a way to buy him out of the project, but claim that they had told him they would do so after they had opened the restaurant because all of their savings had been invested or would be invested in the project. [ 23 ] Since they never opened the restaurant for lack of money and have thus lost the money they had invested in the project, they consider that they do not have to reimburse Plaintiff.

ANALYSIS [ 24 ] When the Defendants informed Plaintiff that they did not want him to be involved in the business anymore and decided to exclude him from any further development, they agreed to reimburse him the money he had contributed as a business partner toward the expenses related to the projected business. [ 25 ] Plaintiff did not lend them money; he contributed to the expenses made to set up a restaurant business with the Defendants as a stakeholder in the endeavour. [ 26 ] It was clear for all parties on May 14, 2016, that if Plaintiff would not be allowed to take

part in the decision-making on how to set up the business, he would not be part of the project altogether and expected to be reimbursed the money he had paid toward it. [ 27 ] Whether Defendants actually told Plaintiff that they would reimburse him only after they opened the restaurant is not relevant to deciding the claim: Plaintiff was not obliged to accept that condition and the Defendants did not establish according to the balance of probabilities that he did. [ 28 ] The Defendants understood that they could not just inform Plaintiff that he was no longer welcome to take

part in the endeavour without paying him the money he had paid in consideration of the fact that they were business partners.

[ 29 ] Plaintiff never agreed that the repayment was conditional to the business being opened or profitable. Although being part of a business entails taking a risk of losing one’s investment, being told that one’s participation in the endeavour is no longer wanted entails that one should get his final contribution made in consideration of the involvement in the projected business back. [ 30 ] WHEREFORE, THE COURT: [ 31 ] GRANTS the claim in part; [ 32 ] CONDEMNS Defendants jointly to pay $7,712.50 to Plaintiff with the legal interest and the additional indemnity provided for by

article 1619 of the Civil Code of Québec from the day of the assignation; [ 33 ] CONDEMNS the Defendant jointly to pay $200.00 to Plaintiff as the judicial costs. ________________________________ MAGALI LEWIS, J.C.Q. Date of hearing: January 9, 2018