2016 QCCQ 10664, 2016 QCCQ 10664

TCB Network Inc. c. Gurberg 2016 QCCQ 10664 COURT OF QUEBEC (Small Claims Division) CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL Civil Division No: 500-32-146742-152 DATE: June 23, 2016 ______________________________________________________________________ BY THE HONOURABLE DOMINIQUE GIBBENS, J.C.Q. ______________________________________________________________________ TCB network Inc. Plaintiff v.

Bernard Gurberg Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] TCB Network Inc. (“ TCB” ) claims $4,041.58 from Defendant as a commission or success fee for its role in Defendant securing a business loan from Banque de développement du Canada (“ BDC ”). [ 2 ] Defendant denies owing anything to TCB. He admits that he obtained a business loan from BDC, but claims that it was as a result of his accountant’s efforts and not those of TCB.

FACTUAL CONTEXT [ 3 ] On October 19, 2014, Defendant retained TCB’s services to help him secure a business loan of $50,000 or more, with a maximum loan amortization period of four years and maximum interest rate of 6%. The loan was for his business, Dollar Cinema. [1] [ 4 ] The agreement signed by the parties (the « Contract ») contains the following provision: “(…)

b) Success Fee. The Borrower agrees to pay TCB a success fee equal to 7% of any loan secured by the Business for which TCB was the procuring cause of the financing for a period of 7 days from the execution of this Agreement. The success fee is fully earned by the (sic) TCB when the financing has been approved in writing by a lender with terms and conditions acknowledged in writing to be acceptable to the Borrower. Financing is not Guaranteed (sic). The Borrower understands and agrees that this Agreement is not a guarantee and that the proposed financing may not be successfully completed.

If acceptable financing cannot be obtained, TCB’s obligation shall be limited to advising the Borrower that the (sic) TCB is unable to procure the proposed financing. (…) Term of this Agreement The term of this Agreement is 90 days and shall remain in full force and effect from the date of its execution until its expiration. (…)” [ 5 ] As soon as the Contract was signed on October 19, 2014, Mr. Andreas Schonfelder of TCB contacted Ms. Monique Tawil of BDC and introduced her to Defendant. Ms. Tawil met with him on or around October 21, 2014 to visit his business and discuss possible loan scenarios.

She advised him that BDC offered small business loans of up to $50,000 that could be obtained through a virtual online application process. She undertook to provide TCB with the application forms and also offered to meet Defendant again to fill out the forms with him. [ 6 ] The possibility of a larger loan was also discussed, but Ms. Tawil was not positive about the availability of such financing. She nonetheless undertook to look into it and advise TCB accordingly. [ 7 ] After meeting with Defendant, Ms. Tawil provided the relevant small business loan application to Mr.

Schonfelder of TCB, who then contacted Defendant to obtain the documentation that BDC would need to process the application. Defendant referred him to his accountant, Mr. Antonio Argento, but Mr. Schonfelder was unable to get the documents. [ 8 ] On October 23, 2014, Defendant submitted his own online application for a BDC Small Business Loan through Mr. Argento, who piloted the application without advising Mr. Schonfelder of TCB. [2] [ 9 ] It is uncontested that Defendant’s loan application was directed to Ms.

Tawil, who forwarded it to the BDC Virtual Business Centre, the department responsible for authorizing these types of loans. In late November or early December 2014, Defendant was advised through Mr. Éric Boyer, a BDC account manager, that the loan had been approved. [3] It was disbursed shortly thereafter.

[ 10 ] On January 5, 2015, TCB invoiced Defendant $4,041.58, representing the 7% success fee provided for in the Contract. [4] Defendant refused to pay. He denied that TCB had been the procuring cause of the BDC loan and claimed that his accountant was asked to intervene because TCB’s efforts were not getting results and that it was his efforts that lead to the financing. [5] [ 11 ] On March 10, 2015, TCB demanded payment of $4,041.58 from Defendant. [6] It filed its claim on April 14, 2015. ANALYSIS

a) The proper

interpretation of the Contract [ 12 ] Plaintiff’s claim rests on the following provisions of the Contract: “(…)

b) Success Fee. The Borrower agrees to pay TCB a success fee equal to 7% of any loan secured by the Business for which TCB was the procuring cause of the financing for a period of seven days from the execution of this Agreement. The success fee is fully earned by the TCB when the financing has been approved in writing by a lender with terms and conditions acknowledged in writing to be acceptable to the Borrower . Financing is not Guaranteed. The Borrower understands and agrees that this Agreement is not a guarantee and that the proposed financing may not be successfully completed.

If acceptable financing cannot be obtained, TCB’s obligation shall be limited to advising the Borrower that the TCB is unable to procure the proposed financing. (…) Term of this Agreement The term of this Agreement is 90 days and shall remain in full force and effect from the date of its execution until its expiration. (…)” [Emphasis added] [ 13 ] The parties disagree on the meaning of these provisions. [ 14 ] On the one hand, Defendant argues that no success fee could be claimed by TCB unless a financing acceptable to him was approved in writing by a lender within seven days of Contract signature. [ 15 ] On the other hand, TCB claims that it was entitled to a success fee if its efforts within seven days of Contract signature lead to an acceptable financing, even if the financing was approved in writing after the 7-day period has expired. [ 16 ] Where the terms of a contract are ambiguous, as the provisions of the Contract reproduced above are, reference should be made to the rules of

interpretation set out in articles 1425 and following of the Civil Code of Québec (“ C.C.Q. ”). These rules are intended to help ascertain the common intention of the parties. [ 17 ] In case of ambiguity, our Courts have generally favoured an

interpretation that is commercially reasonable; where words may be construed in two different ways, the more reasonable one, the one which produces a fair and commercially sensible result, should be preferred. [7] [ 18 ] Applying these principles to the instant case, the Court prefers the

interpretation put forward by TBS to that of Defendant because it is more reasonable and provides a fair and commercially sensible result. [ 19 ] Indeed, Defendant’s

interpretation would deprive the Contract of any effect. Even if TCB was to put a lender and Defendant in contact on the very day that the Contract is signed, it appears highly unlikely that a lender could act quickly enough to approve financing in writing within a period of seven days. [ 20 ] Defendant’s

interpretation is also difficult to reconcile with the term of the Contract. Why provide a term of 90 days when the contract can only produce effects for 7 days based on Defendant’s

interpretation? [ 21 ] Recognizing that TCB is entitled to the success fee if its efforts within seven days of the Contract lead to an acceptable financing that may be approved in writing later on (but no later than the 90-day term of the Contract) is a much more reasonable

interpretation. [ 22 ] The Court must now determine if TCB is entitled to the success fee under the proper

interpretation of the Contract.

b) Is TCB entitled to the success fee? [ 23 ] To succeed on its claim, TCB must prove, on a balance of probabilities, [8] that its efforts during the seven days following the execution of the Contract (i.e. between October 13 and October 26, 2014) were the “procuring cause” of the BDC loan to Defendant approved and disbursed in December 2014. [ 24 ] The Court is not aware of any decisions by Québec Courts in which the expression “procuring cause” is considered. However, the expression has been defined as follows in the similar context of real estate brokers whose efforts may lead to the sale of a property: “ 2.

Real Estate . The efforts of the agent or broker who effects the sale of realty and who is therefore entitled to a commission.” [9] [ 25 ] This definition is applicable here. [ 26 ] Based on the evidence, the Court finds without hesitation that TCB was the procuring cause of the BDC financing at issue.

[ 27 ] It is uncontested that Ms. Tawil of BDC was introduced to Defendant by Mr. Schonfelder of TCB and that she met Defendant and told him about the BDC small business loan process on October 21, 2014, only two days after the Contract was signed. [ 28 ] It is also uncontested that Defendant’s loan application was submitted by Mr. Argento, his accountant, on October 23, 2014, only two days after the meeting with Ms. Tawil and four days after Contract signature. [ 29 ] Ms.

Tawil stated that Defendant’s application was directed to her because he was her potential client and that it was this application that she forwarded to the Virtual Business Center, where it was eventually approved by Mr. Boyer. [ 30 ] Although Defendant claims that he asked his accountant to apply for a loan because Ms. Tawil told him that financing was unlikely and TCB’s efforts were getting nowhere, this is not credible. Both Mr. Schonfelder and Ms.

Tawil deny telling Defendant that a BDC loan was unlikely and the Court prefers their testimony to that of Defendant. [ 31 ] On the preponderance of the evidence, the Court therefore concludes that TCB’s contacts and efforts within seven days of Contract signature were indeed the procuring cause of the BDC loan. [ 32 ] TCB is therefore entitled to the success fee claimed. FOR THESE REASONS, THE COURT: GRANTS the action; CONDEMNS Defendant Bernard Gurberg to pay to Plaintiff TCB Network Inc. the amount of $4,041.58, together with interest at the annual rate of 5% and the additional indemnity stipulated for in

Article 1619 of the Civil Code of Quebec from March 21, 2015. WITH COSTS of $189 representing the judicial stamp on the Application. __________________________________ DOMINIQUE GIBBENS, J.C.Q. Dates of hearing: March 7 and June 13, 2016