2012 QCCA 1043, 2012 QCCA 1043

Furs by Leonard Gorski Inc. c. Global Furs Inc. 2012 QCCA 1043 COURT OF APPEAL CANADA PROVINCE OF QUEBEC MONTREAL REGISTRY No. 500-09-021118-104 (500-17-028794-058) DATE: June 7, 2012 CORAM: THE HONOURABLE ANDRÉ FORGET, J.A. YVES-MARIE MORISSETTE , J.A. JACQUES A. LÉGER, J.A. FURS BY LEONARD GORSKI INC. APPELLANT – Defendant/Plaintiff by counterclaim v. GLOBAL FURS INC. and NATURAL FURS INTERNATIONAL INC. RESPONDENTS – Plaintiffs/ Defendants by counterclaim JUDGMENT [ 1 ] The appellant appeals from a judgment of the Superior Court, District of Montreal (the Honourable Mr.

Justice Yves Poirier), rendered on September 21, 2010, [1] that allowed the action of the respondents, Global Furs Inc. ("Global") and Natural Furs International Inc. ("Natural"), condemned the appellant to pay them $420,029.87 and $251,606.20, respectively, and dismissed the appellant's counterclaim. [ 2 ] In its appeal, the appellant again seeks the dismissal of the respondents' action and requests that the counterclaim dismissed in first instance be allowed for $1,221,187.48. The respondents have not cross-appealed. I.

Principal facts and nature of the dispute [ 3 ] The respondents are fur clothing manufacturers that market their products as wholesalers. Untill 2005, the appellant was bound to them under a contract entered into orally in 1990, the terms and conditions of which were reworked in 1997. Initially, the contract applied to the respondent Global, but it was subsequently extended to the respondent Natural. The same person, Thomas Nacos, is the directing mind of the two companies.

Under the contract, the appellant, acting through its founder Leonard Gorski, represented the respondents on the U.S. market, although not exclusively, because it had its own fur wholesaler and distribution activities.

As consideration for the services, the appellant received a 7% commission on the price of products purchased by retailers, or a 4% commission on products purchased by the Neiman Marcus chain, a major, preferred customer of the respondents. [ 4 ] According to the trial judge's conclusions drawn from the evidence, the appellant's business was comprised of two separate components. [ 5 ] First, the appellant obtained orders from retailers (some of which, like Neiman Marcus, were already customers of the respondents, while others were part of the appellant's network of customers), which were then filled by the respondents.

The products thus sold were billed directly by the respondents to the retailers, which paid directly to the respondents the amount out of which the appellant received a commission of 7% to 4%, as applicable. [ 6 ] Second, from 1997 to 2005, the appellant also organized [ translation ] "special events" at various locations in the United States, with the respondents' consent. On those occasions, retailers (including Neiman Marcus, through its Last Call discount stores) sold the respondents' merchandise to local customers.

In this second scenario, the appellant received the merchandise on consignment, made it available to retailers, billed them for products sold to third parties, received payment from them, and then, rendering account to the respondents, issued to them a cheque prepared accordingly. [ 7 ] At trial, the main application, that of the respondents, concerned various amounts claimed from the appellant, first and foremost being the amounts the respondents alleged that the appellant collected, without their knowledge and unlawfully, on purchases and sales made at "special events" in which the Neiman Marcus chain had participated.

In counterclaim, the appellant sought

commissions that it contended the respondents had neglected to pay it, as well as various types of damages for wrongful breach of the contract terminated in 2005. [ 8 ] The trial judge sided with the respondents, finding first that a 5% [ translation ] "manufacturer's discount" [2] they had always paid to Neiman Marcus had been diverted from its purpose and kept by the appellant, in violation of the respondents' rights.

The judge further ruled that the appellant had billed, deducted or withheld the price of certain merchandise it had provided to retailers, and ordered the appellant to reimburse the amounts to the respondents. [ 9 ] Lastly, the judge disimssed the appellant's claims for [ translation ] "dismissal" or wrongful breach of contract, being of the opinion that, had the appellant so wished, it could have continued to represent the respondents in accordance with the terms of the original agreement, but that, on its own initiative, it stopped [ translation ] "requiring its customers to buy from Global and Natural". [ 10 ] In appeal, the appellant raises five grounds.

II. Contentions of the appellant [ 11 ] First, the appellant argues that a judicial admission by the respondents disposed of the question of the relationship between it and Neiman Marcus, regardless of the purpose or terms and conditions of the discount the respondents had given the latter.

The appellant states that it therefore had the right to keep the amounts claimed by the respondents in that regard. [ 12 ] Second, it argues that the judge erred in finding admissible certain evidence which, given the respondents' judicial admission, could not be thus adduced. [ 13 ] Third, it affirms that any claim by the respondents prior to the filing of the motion to institute poceedings (December 16, 2005) is prescribed. [ 14 ] Fourth, the appellant submits that, in its relationship with certain retailers, it was the reseller of the articles manufactured by the respondents—with their knowledge, in fact—and that, in that capacity, it was free to set, with the retailers, conditions for sale other than those determined by the respondents. [ 15 ] Fifth and lastly, the appellant contends that the trial judge erred in dismissing various claims relative to (

i) unpaid commissions owing and (ii) damages resulting from the prejudice it suffered when the respondents terminated the contract binding the parties. [ 16 ] In short, the appellant restates the arguments it put forward in first instance, but with the nuances required in appeal. It places special emphasis on the respondents' so-called judicial admission, which is the cornerstone of its appeal and the subject matter of the main error it alleges the trial judge made, leading, it claims, to other erroneous conclusions. III.

Merits of the appeal [ 17 ] On an importantpoint that will be cleared up in the following paragraphs, the parties presented diametrically opposed versions of a central term of the contract entered into in 1990 and broadened in 1997. Indeed, the dispute may be seen to arise from the absence of a clear, complete written contract between the appellant and the respondents.

As a result, the trial judge had to scrutinize the allegations of the prosecution and the defence, as well as the evidence supporting the allegations, to determine the exact nature of the legal relationship that had emerged between the parties since the conclusion of the contract. [ 18 ] It is appropriate to consider the appellant's grounds in the order in which they were raised. 1. The appellant's grounds a. Judicial admission [ 19 ] The respondents' original motion to institute proceedings dates back to December 16, 2005.

The appellant points out that the respondents acknowledged at the outset of the motion its wholesaler status and its fur garment manufacturing and resale activities, parallel to their own. But in particular, the appellant discusses at length paragraph 19 of the motion, which in its view contains a judicial admission subsequently corroborated by other judicial admissions made during previous examinations. [ 20 ] First, paragraph 19 should be put in context: 16. From 1990 to 1997, Defendant’s functions were those of a typical sales agent.

Regardless of whether Gorski " wrote orders" in the aforementioned spring period or sold garments to retailers on consignment or otherwise, all customers were billed by Plaintiffs directly and remitted payment to same;

17. In January of 1997, Leonard Goski represented to Nacos that he wished to modify the " Special Events" aspect of his business. "Special Events" refers to the process whereby Gorski, on its own initiative, would personally transport garments to retailers with a view to selling same on consignment. Given its abundant marketing skills, Gorski was well-equipped to assist retailers with the selection, promotion and presentation of the consigned merchandise; 18. It is instructive to note that all parties, i.e.

Plaintiffs, Defendant and retailers, benefited from Plaintiffs’ innovative policy of maintaining a fixed wholesale price for all merchandise, including those garments destined for sale by consignment. Given that Plaintiffs’ competitors were inclined to raise their wholesale prices for consignment goods, Plaintiffs’ fixed price policy was particularly attractive to smaller retailers and ultimately, of benefit to Gorski, insofar as the said policy led to increased sales; 19.

In a spirit of accommodation, Nacos acquiesced to Leonard Gorski’s request that henceforth, Plaintiffs would sell and ship merchandise destined for consignment to Defendant directly. Having taken delivery of the said merchandise, Gorski would then " resell" it to retailers on consignment at a price to be determined by Gorski and the retailers; 20. Pursuant to the rules of consignment, a sale would be consummated at the moment that the retailer sold a garment to one of its customers.

At that point, the retailer would remit payment (less its profit ) to Gorski which, in turn, would remit the wholesale price to Plaintiffs, less a percentage for costs which the parties continued to designate as " commissions". Samples of sales reports produced herewith en liasse as Plaintiffs’ Exhibit P-1 reveal that Gorski customarily deducted seven percent (7%) from the wholesale price remitted to Plaintiffs, the self-same percentage which it customarily exacted [ sic ] from Plaintiffs as commissions; 21.

With the passage of time, Plaintiff noted that Gorski’s sales reports for Special Events conducted at Neiman Marcus’ outlets and more particularly, the latter’s Last Count discount stores, invariably bore the inscription "less 5%, less 4%". Samples of the said sales reports are produced herewith en liasse as Plaintiffs’ Exhibit P-2; 22. Plaintiffs were justified in concluding that the aforesaid four percent (4%) reflected the commission which Gorski had customarily earned on all sales to Neiman Marcus.

As for the additional five percent (5%), Plaintiffs had ample and sufficient reason to conclude that the said five percent (5%) reflected the customary rebate exacted [ sic ] by Neiman Marcus on all merchandise purchased from Plaintiffs and for which Plaintiffs had billed Neiman Marcus directly. 23 It was not until July of 2005, that Plaintiffs discovered that Gorski’s consignment sales to Neiman Marcus were truly special by virtue of the fact that since March of 1999, Gorski had appropriated the additional five percent (5%) as an undisclosed and unauthorized "commission"; A June 19, 2006 motion to institute proceedings containing supplementary information clarified paragraphs 17, 20 and 21, but there is no reason to reproduce them here. [ 21 ] On June 16, 2010, the last day of the trial, with both parties having rested their cases and the attorneys preparing to present their arguments, counsel for the respondents filed an oral motion to amend his written proceeding and replace paragraph 19 by the following: 19.

In a spirit of accommodation, Nacos acquiesced to Leonard Gorski's request that henceforth, Plaintiffs would consign and ship merchandise to Defendant directly.

Having taken delivery of the said merchandise, Gorski would then "re-consign" it to retailers at a price to be determined by Gorski and the retailers; The trial judge granted the motion and, in fact, cited the amended passage in paragraph [34] of his reasons. [ 22 ] In any event, for the appellant, the amendments (to which it objected before the judge) are unimportant because it is the words "at a price to be determined by Gorski and the retailers" that represent the key passage in the judicial admission. [ 23 ] In addition, the appellant relies on admissions allegedly made by Thomas Nacos during examination on discovery after defence,

summarizing them as follows in its factum: "…. Nacos was firm during discoveries in 2006 to the effect that there was no deal with Gorski Furs regarding the 5% discount". Here again, however, it is important to put the statements in question in context. In the excerpts below, what the appellant considers to be admissions are underlined. [ 24 ] Questioned by counsel for the appellant on October 27, 2006, Thomas Nacos responded as follows: Q. Gorski is organising a special event and he’s explaining in a letter what is involved, he’s taking percentage to get compensation. A. We did not ask Mr.

Gorski to organize a special event. Never. Never we asked him. He organized it for his own benefit and at the same time, he did more business, so we sold more merchandise. Q. Okay. What was the reaction of Mr. Goski when you told him for the first time that he had to give a five percent (5%) discount to Neiman Marcus? A. I never told him he had to give a five percent (5%) discount . Q. You said in July two thousand and five (2005). A. I said I questioned why he took five percent (5%) discount. Q. What was his reaction then? A. He says, "I didn’t." Q. When would that be exactly? A. It was in July sometime.

When I found out, then I picked up the phone called Mr. Gorski and I say, "Leonard, what’s this five percent (5%) here that I see?" He says, "What are you talking about?" "You’re taking five percent (5%) for Neiman Marcus and now he’s asking us for another five percent (5%)?" "No, I never took five percent (5%)." Q. Okay. A. And then he says to me . . . then I said, "What’s the five (5) plus four (4)?" He says, "You know what? I don’t want to talk without looking what I’m saying, what I’m doing." He says, "Let me give you an answer on Monday, when my secretary comes back." And that’s when he changes.

He says, "Well, you know, I had expenses" and this and that. This examination was continued on October 31, and Nacos provided the following additional information: Q. So, you’re absolutely not involved until two thousand five (2005) in how Gorski distributes the percentage that he’s taking away from the wholesale price? A. I was not… I was not involved and I was not aware, no. Q. Didn’t want to be involved in that? A. Excuse me? Q. You didn’t have any intention to be involved in that? A. Why should I have an intention to be involved?

The… the person which you might call it fit to do that kind of a work, he was dong it. Q. Before two thousand five (2005), do you know where the five percent (5%) should go? Do you have any idea… A. I didn’t know there was such a thing as a five percent (5%) . Q. Yes. A. How could I know? Q. Okay. So, it was not… you never had a deal with Gorski before two thousand five (2005), to the effect that he would have to grant the five percent (5%) discount to Neiman Marcus? That you admit? You’re not even aware of that? A. I didn’t…I was not aware of it. Q. Okay. A. That was Mr. Gorski’s doing. Q.

And if you’re not aware and there’s not such a deal, how can you take the decision that you took for such a reason? You’re not even aware… you’re not even saying… A. I found out…I found out in two thousand five (2005) that Mr. Gorski is taking five percent (5%). Q. Yes. A. And I confronted him and I said, "Leonard, from now on… from now on, we are not going to operate that way." Q. How can it be a problem for you, when you were not even aware of such five percent (5%) before and you did not even care about that? A. It was a problem for me when I was made aware of.

Q. Yes. A. Yes. And . . . Q. But how can you say that there was such an agreement if you’re not… were not aware of anything before two thousand and five (2005), and you didn’t care about that? A. Who said it was an agreement? What agreement did I say? Q. There was not such a thing as an agreement following which Neiman Marcus had to receive a five percent (5%) discount from Gorski. Do you… would you admit that there is not an agreement between you and Gorski following which Gorski had to give a five percent (5%) discount to Neiman Marcus? A. I wasn’t aware of the five percent (5%).

What kind of agreement can I have? I was not aware of it. Q. Okay. A. When I . . . when I was made aware, I confronted Mr. Gorski. And I testified before, the other day. Q. M’hm. A. And if you ask me that question again, I’m going to testify again. Q. My understanding is that you just don’t get involved, you don’t say to Gorski that he has to give a five percent (5%) discount to Neiman Marcus for eight (8) years between nineteen ninety- seven (1997) to two thousand five (2005). He just takes the four percent (4%), takes the five percent (5%).

And now, in two thousand five (2005), for the first time, you tell Gorski that this needs to be changed, is that correct? A. No. It’s not true. When I made aware of, I told Gorski this cannot go on. You have to go back… Q. Yes. A. … the way we were dong business. … Q. You don’t have to be aware of where the five percent (5%) is going. You just don’t get involved and there’s no such… A. Well, why not? It’s my money.

When I was made aware, I just put a stop to it. [ 25 ] There is no doubt that the wording of the original version of paragraph 19 is likely to create a certain amount of confusion and can be characterized as clumsy.

That said, when it is put in context and read in light of all that was alleged before and after by the respondents, especially in paragraphs 20, 21 and 22 of the motion, the full meaning of paragraph 19 comes through, namely, that of the amended—and clear—version of the paragraph, from June 16, 2010. [ 26 ] The fact actually in dispute between the parties concerns the destination of the 5% discount, which, in a long series of transactions documented by delivery slips, consignment memos and cheques, the appellant neglected to reimburse to the respondents, apparently on the ground that it did not bill it to the retailer Neiman Marcus.

A judicial admission by the respondents concerning that disputed fact should include their explicit acknowledgment that they agreed that the appellant keep the equivalent of the [ translation ] "manufacturer's discount", which the respondents had always given to their client Neiman Marcus, as an additional commission for it alone. [ 27 ] As to the elements the appellant raises here as judicial admissions by the respondents, however, there is nothing of the sort.

To admit that, as of a certain point in time after January 1997, "resell" or "on consignment" accounted for part of the sales between the appellant and retailers, or to admit that the price offered to retailers was " determined by Gorski and the retailers", is obviously not tantamount to admitting that a process like the one that in fact materialized functioned with the respondents' knowledge and consent. [ 28 ] What was that process? The trial judge described it clearly in paragraph [25] of his reasons when he identified elements of the documentary evidence that are crucial here and make the process transparent.

The process can be described schematically as follows: ― The appellant, from which Neiman Marcus received various items on consignment, billed Neiman Marcus for an amount (for example, $100,000) corresponding to the wholesale price of the items sold by Neiman Marcus to individual buyers (of which Neiman Marcus kept a profit margin for itself). ― The appellant deposited the payment of $100,000 received from Neiman Marcus. ― The appellant rendered account of the transaction to the respondents, stating that it billed Neiman Marcus for $95,000 ($100,000 minus the 5% so-called "manufacturer's discount = $95,000) and that it would deduct its 4% commission ($5000 x 4% = $3800; $95,000 - $3800 = $91,200). ― In other words, the appellant represented the facts in its sales reports as if, now as before (between 1990 and 1997), Neiman Marcus received a special discount on the purchase of furs manufactured by the respondents. ― Consequently, the appellant issued a cheque for $91,200 to the respondents, paying itself a commission of $8800, or 8.8%, on an actual selling price of $100,000 to Neiman Marcus.

― Ultimately, the appellant kept $5000 without the knowledge of the respondents, which believed, in keeping with their long-standing business practice that was known to the appellant, that it had given this amount as a discount to Neiman Marcus. [ 29 ] Thomas Nacos's testimony must also be understood in that context.

When he said "I never told him he had to give a five percent (5%) discount" or "I didn’t know there was such a thing as a five percent (5%)", it is of course important to take into account the circumstances in which the respondents discovered that the "less 5%" indicated by the appellant on its delivery slips corresponded to nothing tangible for Neiman Marcus, but in fact constituted an additional (and, in their eyes, surreptitious) commission for the appellant [ 30 ] In short, the respondents' affirmation in their motion to institute proceedings that the appellant could set a selling price with Neiman Marcus does not contradict their contention that the appellant was not authorized to keep for itself a [ translation ] "manufacturer's discount" that it made a point of not giving to Neiman Marcus.

Nonetheless, the appellant could still negotiate a higher price with Neiman Marcus, but within a range in which the 5% discount, which could not be reduced, would remain a special condition to attract a major customer rather than enable the appellant to absorb the costs of [ translation ] "special events". [ 31 ] In the best-case scenario for the appellant, the respondents' judicial admission is complex and not without amibiguity, and does not support the proposition the appellant raises. [ 32 ] The appellant must therefore fail on its first ground. b.

Presentation of evidence [ 33 ] This ground flows in large part from the preceding one. [ 34 ] The appellant submits that the trial judge could not allow as evidence testimony that contradicted the judicial admission considered above. But it is not an admission: It bears repeating that the respondents' affirmation in their motion to institute proceedings that the appellant could set a retailer's selling price is not inconsistent with the statement that the appellant could not appropriate a so- called [ translation ] "manufacturer's discount" of which it deprived Neiman Marcus.

Therefore, in the absence of a judicial admission, the appellant cannot allege that the judge erroneously allowed, on the basis of a commencement of proof, testimonial evidence contradicting a judicial admission. [ 35 ] But the appellant goes even further, stating that, in any event, there was no commencement of proof in the present case. [ 36 ] A brief reminder of the relevant rules seems appropriate here. The Civil Code of Québec defines commencement of proof as follows: 2865 .

A commencement of proof may arise where an admission or writing of the adverse party, his testimony or the production of a material thing gives an indication that the alleged fact may have occurred . In his reasons, the judge referred to the following elements, which in his view gave an indication that the facts alleged by the respondents may have occurred: [ translation ] [35] The objections taken under advisement respecting the testimony by Mr. Nacos, his daughter and Mr. Simatos must be dismissed.

The cheques issued by Gorski and the invoices relative to those transactions show "less 5%, less 4%", constituting a commencement of proof in writing that authorizes the testimony for the purpose of establishing the origin and the destination of the manufacturer's discount, as provided in

article 2865 C.C.Q . . . . [36] Gorski itself acknowledged that the 5% corresponded to the manufacturer's discount given to Marcus. Gorski did not establish that Global and Natural knew it was keeping that discount for itself. Those inferences were drawn from the evidence as assessed by the judge and, barring an obvious error on the judge's part, the Court will refrain from intervening. [ 37 ] In fact, the question is not such as it appears to be formulated by the appellant. True,

article 2863 C.C.Q. provides that one cannot freely contradict or vary the terms of a written instrument. This provision is reproduced here: 2863. The parties to a juridical act set forth in a writing may not contradict or vary the terms of the writing by testimony unless there is a commencement of proof. But the above

article is followed by one stipulating the following: 2864. Proof by testimony is admissible to interpret a writing, to complete a clearly incomplete writing or to impugn the validity of the juridical act which the writing sets forth.

That said, the indications on the appellant's delivery slips are not enough in their own right to settle the question opposing the parties: that of the destination of the appellant's 5% deduction. [ 38 ] While it is admitted, as the appellant itself contends, that "the cheques and the invoices contain a neutral mention of ‘less 5%, less 4%’, which does not tend to make [should read: Gorski’s] alleged obligation to remit the 5% discount to Neiman Marcus more probable " [emphasis added], the testimony cited by the judge does not contradict those writings.

[ 39 ] In fact, the latter do not constitute written instruments even within the meaning of

article 2831 C.C.Q ., which states the following: 2831. An unsigned writing regularly used in the ordinary course of business of an enterprise to evidence a juridical act makes proof of its content. But in principle, an invoice is not a written instrument; it conveys a fact affirmed by the person who issued it. Even supposing that, in certain circumstances, it could constitute a writing contemplated by

article 2831 C.C.Q ., in a case like this one, such a writing would also be subject to the following provision: 2836. Writings contemplated in this

section may be contested in any manner. [ 40 ] Thus,

article 2863 does not apply here. And since there can be no doubt that any juridical acts that existed in the present case were carried out, albeit orally, in the ordinary course of business of one or more enterprises, the testimony in question was admissible. It was the role of the judge to assess it, and he did.

In the absence of a palpable and overriding error, his conclusions, based in part on the credibility of the witnesses he heard, must be accepted. [ 41 ] That testimony, along with the emails exchanged by the parties in July 2005, makes the respondents' allegations not only plausible but also more likely than the appellant's. At least it cannot be alleged that, in assessing the evidence, the trial judge committed an error reviewable on appeal. [ 42 ] This second ground of the appellant is without merit. c.

Prescription [ 43 ] The judgment a quo concluded that the respondents' proceeding, which began on December 16, 2005, was not prescribed, since the respondents did not discover the fate of the so-called manufacturer's discount until July 11, 2005, when they received an email revealing an unforeseen request from Neiman Marcus. [ 44 ] At first glance, that conclusion seems founded.

Article 2880 C.C.Q . states that "[t]he day on which the right of action arises fixes the beginning of the period of extinctive prescription". Yet the case law unambiguously establishes that the beginning of the period of extinctive prescription is the first time the holder of the right could have taken action to assert it. [3] The respondents could not bring an action against the appellant before they became aware that the appellant was keeping the 5% discount for itself. Seen from another angle, it was impossible for them to act, which results in the suspension of prescription under

article 2904 C.C.Q. [4] [ 45 ] What is more, it cannot be contended that the trial judge's conclusion is marked by an error of fact warranting intervention by the Court. To reach the conclusion, the trial judge analyzed the evidence adduced. From it, he noted that the appellant did not establish that the respondents knew about the process described above, in paragraph [27]. These are factual conclusions, amply supported by the evidence of the incident of July 11, 2005 (receipt of the email mentioned in paragraph [43] above), and its consequences.

They can be challenged only in the presence of a palpable and overriding or decisive error. [5] The appellant does not submit any evidence showing that the respondents were aware of the situation before that date. It merely contends that, as of 1997, it had exchanged with Global and Natural several documents indicating that the price of the merchandise sold to Neiman Marcus was "less 5%, less 4%”. [6] That in no way shows that the respondents knew prior to 2005 what the appellant was doing with the so-called discount of 5% in Neiman Marcus's favour.

There is no reason to quash the trial judge's factual conclusions regarding prescription. d.

Appelant's status and duty to disclose [ 46 ] The appellant's fourth ground, as set forth briefly by the appellant, is as follows: "Gorski Furs had no obligation to inform Global and Natural about the destination of the 5% discount, because the nature of their relationship did not impose such an obligation upon Gorski Furs". [ 47 ] That argument is again based on the legal characterization of the contract between the parties, as it appears to be described in the excerpt from the motion to institute proceedings quoted above in paragraph [20].

The appellant affirmed that it was a contract of commercial representation by a reseller.

According to the evidence adduced at trial, the appellant's status was apparently comparable to that of a " commissionnaire " [ translation : "commission agent"] governed by France's Code de commerce , because the parties functioned by consignment, which French law defines as the [ translation ] "remittance of merchandise to a commission agent charged with selling it". [7] But these notions are not codified in Quebec law, and it was up to the trial judge to explicitly state the obligational content of the contract in question. In the present case, it was, as the appellant argues, an innominate contract.

Moreover, it was an oral contract, entered into in the ordinary course of business of two enterprises, whose terms and conditions were reflected in

part in abundant documentary evidence, comprised of correspondence and commercial writings commented upon by several witnesses. [ 48 ] As was seen earlier, the judge accepted the respondents' amendment to paragraph 19 of their motion. By that amendment, they contended that they did not sell the merchandise to the appellant, but consigned it to the appellant's hands. In paragraph [21] of his judgment, the judge accepted that explanation, which was more consistent with the idea that the appellant's status was that of an intermediary, not a wholesaler.

The fact that the appellant paid the respondents only once it had received payment from the retailers, including Neiman Marcus, also contradicts the idea that the appellant was acting as an independent wholesaler. Rather, a wholesaler would have paid the supplier directly and would have then resold the merchandise it now owned to a retailer. [ 49 ] Be that as it may, the matter of the appellant's status at the time of the sales at "special events" cannot affect the outcome of the dispute.

Whether the appellant acted as mandatary, agent or independent wholesaler is without impact on the fundamental question, correctly articulated by the trial judge: Under the innominate contract, the respondents, on receiving payment for the merchandise consigned to the appellant, were entitled to know whether or not their preferred customer Neiman Marcus had received its discount on direct sales between them and Neiman Marcus with or without the appellant's asistance. By entering its sales to Neiman Marcus during

special events as if they were subject to the same 5% then 4% deduction applicable to direct sales on which it was entitled to a commission, the appellant misled the respondents and hid the 8.8% commission it kept for itself without first having obtained the respondents' consent. [ 50 ] Therefore, there is no reason to allow the appeal on the appellant's fourth ground. e.

Claims relative to commissions and damages [ 51 ] This ground must be examined in light of the preceding analysis, the consequences of which are that the appellant was not entitled to the additional 5% commission, that the appellant withheld it in violation of the respondents' rights, that the respondents could have demanded from the appellant, as of July 2005, that henceforward the respondents bill retailers directly, and lastly, that by not meeting that demand, the appellant decided on its own to cease doing business with the respondents. All of these conclusions of the trial judge are upheld.

It follows that the appellant was not unlawfully dismissed and that it is not entitled to any damages in this regard. [ 52 ] Nonetheless, the respondents recognize that certain commissions owing to the appellant are still outstanding. The trial judge did not take them into account and neglected to offset the amounts he ordered the appellant to pay to the respondents.

That error must therefore be corrected. [ 53 ] In light of these clarifications obtained from the attorneys prior to the hearing of the appeal, it turns out that the respondents recognize that they owe respectively to the appellant $95,195.33 (for Global) and $61,271.52 (for Natural), for a total of $156,466.85. Consequently, the conclusions in the trial judgment will have to be amended accordingly: The amount owing to the respondent Global will be reduced from $420,029.87 to $324,834.54, while that owing to the respondent Natural will be decreased from $251,606.20 to $190,334.68.

Given the respondents' judicial admission, this question must be resolved in the appellant's favour. 2. True basis of the respondents' claim [ 54 ] One aspect of the case that has not been clearly stated to date concerns the basis of the claim allowed by the trial judge. After all, in the final analysis, the object of the claim, a 5% discount, should have gone not to the respondents but to Neiman Marcus, a third party in this trial, on behalf of which no representative testified in first instance. To justify their claim, the respondents relied on Bank of Montreal v .

Kuet Leong Ng , [8] but it is not necessary to show or a fortiori to conclude that there was bad faith or dishonesty on the part of the appellant for the respondents to succeed on the merits of the appeal.

Their proceeding is in fact one of unjust enrichment: [9] There was lost income (the respondents did not receive from the appellant a 5% fraction of the selling price collected by the appellant), there was enrichment (the appellant received an 8.8% commission on certain sales, rather than the agreed commission of 4%), these two factors correspond (the lack of income is equal to the amount of enrichment), and the enrichment is unjustified because it has nothing to do with the terms and conditions to which the parties had agreed and long submitted.

The status of the appellant in its other commercial activities, whatever it may have been, did not give it the right to unilaterally withdraw from an explicit contractual condition with which it had initially complied in its relationhip with the respondents and Neiman Marcus. * * * * * * [ 55 ] Given the respondents' judicial admission, the appeal will therefore be allowed, but solely for the purpose of making the amendments already indicated in the conclusions of the judgment a quo, but with costs against the appellant given the final outcome of the appeal. [ 56 ] Therefore, the Court: [ 57 ] Allows the appeal , solely to substitute the following paragraphs for paragraphs [65] and [66]: [65] CONDEMNS Furs by Leonard Gorski Inc. to pay Global Furs Inc. $324,834.54, with interest and the additional indemnity from December 16, 2005; [66] CONDEMNS Furs by Leonard Gorski Inc. to pay Natural Furs International Inc. $190,334.68, with interest and the additional indemnity from December 16, 2005 ; [ 58 ] With costs against the appellant, given the outcome of the appeal.

ANDRÉ FORGET, J.A. YVES-MARIE MORISSETTE, J.A. JACQUES A. LÉGER, J.A. Mtre Max R. Bernard Mtre Véronique Roy HEENAN BLAIKIE For the appellant/defendant –plaintiff in counterclaim Mtre. Donald Michelin

STEIN & STEIN INC. For the respondents/plaintiffs –defendants in counterclaim Date of hearing: May 15, 2012