2018 QCCQ 1779, 2018 QCCQ 1779

Paul D. Michael Financial Services Inc. c. Gelly 2018 QCCQ 1779 COURT OF QUEBEC Small Claims Division CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL Civil Division No: 500-32-152349-165 DATE: March 12, 2018 ______________________________________________________________________ BEFORE THE HONOURABLE ENRICO FORLINI, J.C.Q. ______________________________________________________________________ PAUL D. MICHAEL FINANCIAL SERVICES INC. Plaintiff v.

ANDRÉ GELLY Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] Paul D. Michael Financial Services Inc. (Michael Financial Services) claims from Dr. André Gelly $13,961.75, which represents the commission it claims it is owed following the conversion by Dr. Gelly of a term life insurance policy. [ 2 ] Dr. Gelly contests the claim and argues that he never agreed to pay any commission to Michael Financial Services. Moreover, Dr.

Gelly adds that Plaintiff provided unreasonable financial projections for the conversion of the policy, which explains why he ultimately chose to do business with another insurance broker when he converted the policy. Question in Issue Has Michael Financial Services proved that Dr. Gelly agreed to pay a commission on the conversion of his Term Life Insurance Policy? Context [ 3 ] Michael Financial Services operates an insurance brokerage firm. Mr. Paul Michael is its principal and is a licensed representative in insurance of persons.

He generates the bulk of his revenues from commissions earned on the sale of individual insurance products in insurance of persons. [ 4 ] In 1986, Dr. Gelly purchased through Mr. Michael a number of insurance products, including a “term to age 70” life insurance policy [1] (“Term Life Insurance Policy” or “Policy”) and salary insurance in case of disability. As the broker through which the Term Life Insurance Policy was purchased, Mr.

Michael was paid a commission on the issuance of the Policy in 1986. [ 5 ] The Term Life Insurance Policy had a capital of $250,000 at issuance which had increased to approximately $400,000 in 2016. [ 6 ] Moreover, the Policy contained a conversion clause which allowed Dr. Gelly to convert the term policy into a permanent policy without the need undergo a medical examination, so long as this conversion was made before the conversion date ( i.e. , March 18, 2017). [2] [ 7 ] In 2002, Dr.

Gelly replaced Michael Financial Services as the broker of record on the Term Life Insurance Policy. [3] [ 8 ] In December 2015, Dr. Gelly contacted Mr. Michael because he needed information in order to make a disability claim on the salary insurance policy he had purchased through him in 1986. [4] [ 9 ] While Michael Financial Services was no longer the broker of record on the Term Life Insurance Policy, Mr. Michael nonetheless saw this communication as an opportunity to drum up new business with Dr. Gelly. [ 10 ] Hence, on January 20, 2016, he spoke to Dr.

Gelly and reminded him that the conversion privilege on the Term Life Insurance Policy expired shortly and that he should consider exercising this privilege. [5] Although he was not the servicing broker on the Policy, he provided this information in the hope that Dr. Gelly would retain his services to convert the Term Life Insurance Policy, which in turn

would generate a commission for him. [ 11 ] Dr. Gelly informed Mr. Michael that he was interested in pursuing this topic and invited him to speak to his tax lawyer, Mtre Matte. [ 12 ] On February 9, 2016, Dr. Gelly signed a Servicing Advisor Change Form through which he appointed Paul Michael as the servicing advisor on the Term Life Insurance Policy. [6] [ 13 ] During the months of February and March 2016, Michael Financial Services exchanged a number of emails with Dr.

Gelly and his tax lawyer (Mtre Matte) pertaining to the exercise of the conversion privilege. [7] [ 14 ] However, sometime during the week of April 11, 2016, Michael Financial Services discovered that Dr. Gelly had indeed converted $150,000 of the Term Life Insurance Policy to a permanent life insurance policy, but had done so through another insurance broker. [ 15 ] By letter dated April 11, 2016, Michael Financial Services sent Dr.

Gelly an invoice requesting payment of a commission of $13,961.75 on the conversion of the Policy. [8] [ 16 ] It argues that in exercising the conversion privilege through another broker rather than itself, Dr. Gelly breached the terms of their services agreement. Michael Financial Services therefore claims payment of the commission it would have earned had Dr. Gelly exercised the conversion privilege through it. It argues that it performed work and services for Dr. Gelly and that it was unjustly deprived of its remuneration on the conversion of the Term Life Insurance Policy.

Analysis and Decision Has Michael Financial Services proved that Dr. Gelly agreed to pay a commission on the conversion of the Term Life Insurance Policy? [ 17 ] Michael Financial Services’ claim against Dr. Gelly is a contractual claim. To succeed, it must prove that the parties entered into a contract whereby Dr. Gelly agreed to pay it a commission upon the conversion of the Term Life Insurance Policy, that Dr.

Gelly failed to honour this contractual undertaking, and that this fault caused injury to Michael Financial Service. [9] [ 18 ] The contract which Michael Financial Services alleges it entered into it Dr. Gelly is a contract for services, which is notably governed by articles 2098 and 2106 of the Civil Code of Québec . [ 19 ] As in any civil case, Michael Financial Services has the burden of proving that, on the balance of probabilities, Dr.

Gelly agreed to retain it services and to pay it a commission on the conversion on the Term Life Insurance Policy. [10] [ 20 ] The balance of probabilities standard requires that proof be clear and convincing and based upon cogent evidence. [11] [ 21 ] Michael Financial Services admits that there is no written contract supporting its claim for payment of commission. Nonetheless, it argues that through a series of telephone conversations it had with Dr. Gelly or his legal counsel (Mtre Matte), the emails exchanges between the parties and a Servicing Adviser Change Form signed by Dr.

Gelly [12] , the parties entered into an agreement whereby Dr. Gelly agreed to pay commission on the conversion of the Term Life Insurance Policy. [ 22 ] The lack of a written contract raises evidentiary burdens and difficulties for Michael Financial Services. [ 23 ] Firstly,

article 2862 C.C.Q provides that where the value in dispute exceeds $1,500, as it does in the present case, proof of a juridical act may not be made, between the parties by testimony. In other words, when

article 2862 C.C.Q. applies, proof of the juridical act, for example, a contract for services, must be made by producing the written document evidencing the contract. [ 24 ] However, paragraph 2 of

article 2862 C.C.Q provides that, in the absence of proof in writing and regardless of the value in dispute, proof may be made by testimony of any juridical act where there is a “commencement of proof”. [13] [ 25 ] In the present case, the Court is satisfied that the Servicing Advisor Change Form [14] as well as emails emanating from Dr.

Gelly and his tax lawyer (Mtre Matte) [15] constitute a commencement of proof which therefore allow Plaintiff to prove the existence of the contract for services through testimony. [ 26 ] However, and for the reasons that follow, Michael Financial Services has not discharged its burden of proving that, on the balance of probabilities, Dr.

Gelly ever agreed to pay it a commission or any sort of remuneration when he exercised his right to convert the Term Life Insurance Policy. [ 27 ] The evidence simply does not convince the Court that there was ever a meeting of the minds or an exchange of consents on the essential elements of the contract for services that Michael Financial Services claims existed. [16] [ 28 ] Firstly, the Servicing Adviser Change Form [17] which Michael Financial Services relies on to prove the existence of the contract does not have the scope that the Plaintiff claims it has. [ 29 ] Nowhere in the Service Advisor Change Form does it state that Dr.

Gelly retains Michael Financial Services on an exclusive basis. Nor does it state that by signing it, Dr. Gelly agrees to pay it remuneration. [ 30 ] In this regard it is worthwhile to quote directly from the Servicing Advisor Change Form [18] : “Important instructions

You and your refers to the policy owner identified below [André Gelly] Servicing advisor ; producer or agent all identify the advisor who services the policy (whether receiving commission or not) . The commissionable advisor receives commission. The servicing advisor and the commissionable advisor may be the same person. Complete this form to change the advisor who provide services or individual life insurance or Living Benefits insurance.

To change the advisor who receives commission use Commissionable advisor change form CAC or IAC, NN1613E ”. (Underlining added by the Court) [ 31 ] The terms of the Servicing Advisor Change Form are clear. By signing this form, Dr. Gelly allowed Michael Financial Services to act as a “Servicing advisor”, but he did not agree to give him an exclusive mandate nor did he agree to pay him a commission.

As the document spells out clearly, being appointed a Servicing advisor does not mean that you will be entitled to a commission (“whether receiving commission or not”). [ 32 ] In fact, to give rise to an obligation to pay a commission, Dr. Gelly would have had to sign another form, the Commissionable advisor change form, which he never did. [ 33 ] Moreover, the uncontradicted evidence of Mr. Reginald Barbe establishes that it is not uncommon for an insured to authorize two different brokers to act as servicing advisors. In fact, Mr. Barbe stated that Dr.

Gelly had also signed a servicing advisor change form authorizing him to have access to the information relating to the Term Life Insurance Policy. [ 34 ] In conclusion, the Servicing Advisor Change Form did not create an exclusive mandate nor did it give rise to an obligation for Dr. Gelly to pay commission to Michael Financial Services upon the conversion of the Term Life Insurance Policy. [ 35 ] Secondly, the testimony heard at the trial does not support Michael Financial Services’ claim. Plaintiff claims that since Dr.

Gelly or his mandatary (Mtre Matte), asked him to carry out some work related to the conversion (i.e. provide quotes as to the cost of conversion) and he in fact performed this work, this gave rise to an obligation to convert the policy exclusively through him and to pay a commission. [ 36 ] However, nowhere in his testimony did Mr. Michael ever state that Dr. Gelly agreed to pay plaintiff a commission. In fact, he freely admits that he never even mentioned to Dr.

Gelly or his mandatary that if Michael Financial Services did some work on the file, it would be obliged to pay commission or fees. [19] [ 37 ] Moreover, Dr. Gelly is categorical: never did he accept to exclusively do business through Michael Financial Services, much less agree to pay it a commission for the information it received relating to the conversion of the policy. When he spoke to Paul Michael on January 28, 2016, it is Mr. Michael who suggested that he could avail himself of the conversion privilege on the Term Life Insurance Policy. Dr.

Gelly agreed to listen, but he listened as he would listen to any salesperson who makes a sales pitch. [ 38 ] He never agreed to deal exclusively with Michael Financial Services much less to pay a commission. Dr. Gelly’s testimony is clear, forthright and credible. There is no reason to set it aside. [ 39 ] Likewise, Mtre Matte never agreed on behalf of Dr. Gelly to deal exclusively with Michael Financial Services, much less agree to pay it a commission for the quotes that it provided.

Mtre Matte’s testimony is credible and there is no reason to set it aside. [ 40 ] In conclusion, the Court considers that Michael Financial Services has not discharge its burden of proving that Dr. Gelly agreed to retain his services on an exclusive basis and agreed to remunerate it for its services. FOR THESE REASONS, THE COURT: [ 41 ] DISMISSES Paul D. Michael Financial Services Inc.’s application; [ 42 ] WITH COSTS of $200. __________________________________ ENRICO FORLINI, J.C.Q. Dates of hearing: April 18 and November 13, 2017