2017 QCCQ 12679, 2017 QCCQ 12679

Yuen c. 9333-9562 Québec inc. 2017 QCCQ 12679 COURT OF QUÉBEC Small Claims CANADA PROVINCE OF QUÉBEC DISTRICT OF ST-FRANÇOIS LOCALITY OF SHERBROOKE Civil Division No. 450-32-018484-162 DATE: October 18, 2017 ______________________________________________________________________ PRESENT: THE HONOURABLE H SERGE CHAMPOUX J.C.Q. ______________________________________________________________________ BESS FUNG SOO YUEN Plaintiff v. 9333-9562 QUÉBEC INC. -and- FENG YAO YANG Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] The undersigned rendered a judgment between the parties on April 27, 2017 given that the plaintiff failed to appear at the hearing.

The plaintiff is now presenting an application for revocation of the judgment, alleging that she failed to receive the notice of hearing. [ 2 ] Given the evidence adduced and the reasons alleged, the judgment is revoked and the Court will rule on the merits of the dispute. [ 3 ] Following the new hearing, the situation is clearer but not that different in most respects. [ 4 ] The evidence shows that a lease was signed between the parties for the period from February 1, 2016 to January 31, 2021. The lease was for the operation of a “Chinese buffet” style restaurant in the leased premises.

The lease was suddenly terminated on October 1, 2016. In the judgment of April 27, the Court said the following with regard to certain facts: [5] The evidence shows that, for many years, the premises and the immovable in question had been used to operate a Chinese buffet style restaurant. It is reasonable to assume that, during a certain period, the plaintiff herself operated the restaurant. For several years though, various tenants have operated it, more or less successfully. [6] It appears that the establishment's original equipment probably deteriorated through use over the years.

At the time the defendants took possession of the establishment, a clause in the lease agreement provided that all the equipment had to be in working order and that the owner, the plaintiff, was responsible for the first 30 days of use of the equipment. [7] Several problems were experienced.

The cold rooms and refrigerators did not perform adequately, a water pressure problem impeded the proper functioning of the dishwasher, the kitchen ventilation was inefficient and the air conditioner turned out to be inoperable as soon as the hot season got under way. [8] Each time a problem arose, the defendant complained to the plaintiff, orally then in writing. This led to resolution of the kitchen ventilation problem, but no other repairs were done. In practice, the plaintiff may have sent a repair person, but that person merely did estimates or temporary repairs.

After the expiry of the 30-day time period, the plaintiff allegedly indicated that she had fulfilled her obligations, leaving the tenants to deal with the other repairs required. [9] Another serious problem was the error of leaving the restaurant's electricity bill in the plaintiff's name. In order to allow the business to better maintain its liquidity, it was agreed that the electricity bill would be left in the plaintiff's name, even though the tenant had to pay it in part. This was done because the registration of a new tenant or account holder requires the payment of a $5000

security deposit to the electricity provider, which would have reduced the liquidity by a corresponding amount. [10] A few months after the beginning of the lease, the plaintiff unexpectedly ceased abiding by her promise, which resulted in the electricity being disconnected, fees to have it reconnected, loss of business, and the obligation to pay a $5000 deposit. [ 5 ] For clarification, and following the evidence adduced at the time of this hearing, certain new elements have come to light. [ 6 ] First, it is now clear that the undertaking by the plaintiff to leave the electricity bill in her name also included the obligation that she pay the defendant the sum of $670.00 a month for her share of the bill.

This obligation is clearly indicated in contract D-3 and is not denied. [ 7 ] It was revealed that the premises occupied by the restaurant did not have a separate electric meter. The meter served the entire immovable, which belonged to the plaintiff who, at least at one time (which is contested), also occupied other premises in the basement for the purpose of operating a meat-selling business. [ 8 ] The business had cold rooms powered by electricity and the payment of $670.00 was supposed to cover, among other things, the portion of electricity consumed for those rooms, which was part on the monthly bill.

However, regardless of the electricity consumed for the cold rooms, and even in the event that the plaintiff had stopped using the basement for commercial purposes, that space had to be heated to prevent the restaurants’ installations from being damaged, given their poor insulation. That space was clearly not covered by the lease. [ 9 ] The plaintiff tried to prove that the operation of the meat business had ceased before the defendant began to operate the restaurant, but that proof is far from preponderant.

In any case, the meat business accounted for a fraction of the heating that had to be paid and contract D-3 did not tie the obligation to pay the defendant $670.00 a month to the operation of a business. [ 10 ] Since it is well established in the record that the electricity bill was to remain in the plaintiff’s name, the defendant wanted and asked the plaintiff to “bill” the electricity to it (once the monthly amount of $670.00 had been deducted) so that it would have a supporting document for accounting purposes.

The plaintiff never did so, and this ultimately resulted in the electricity being disconnected, with serious consequences for the defendant’s business. [ 11 ] The fact that the defendant had to have the electricity reconnected seriously limited its liquid assets, in addition to not being compliant with the agreement (Exhibit D-3) and being unfavourable to the operation of a restaurant in general. [ 12 ] The new evidence also confirmed the dilapidated state of certain pieces of equipment that had been left to the defendant for the purpose of operating a business.

The Court cannot fail to understand that the agreement between the parties expressly stipulated that this equipment was to be in good condition, given that it had been sold for the sum of $22 000.00 (article 9, Exhibit D-3). [ 13 ] Moreover, the Court understands that the plaintiff was required to maintain and even replace any equipment that stopped working within the first three years of the lease, regardless of whether this was due to normal use or failure (article 7, Exhibit D-3).

The evidence is very convincing that the air-conditioning equipment could not operate efficiently (Exhibits D-14 and D-15) and the plaintiff admitted in her testimony that she had no intention of replacing this equipment and thus fulfilling her obligations. [ 14 ] The other deficiencies alleged at the time of the first hearing were not explained or justified. [ 15 ] On the basis of the foregoing, the amounts claimed by the plaintiff are not owed.

Due to the exception for nonperformance (articles 1591 and following of the Civil Code of Québec [1] ), the failure on the part of the plaintiff to fulfil her obligations justified the defendant’s failure to fulfil hers. [ 16 ] It is important to specify that the plaintiff’s obligations were, in particular, to provide the defendant with premises that could be used efficiently for operating a restaurant, to pay a portion of the electricity bill, to keep the electricity bill in her own name and not withdraw her deposit within the first year, to supply adequate functional equipment for operating a restaurant and to keep that equipment in good working order at her expense. [ 17 ] However, very few of her obligations were met.

In fact, the defendant, in operating the restaurant, encountered an almost continuous series of problems, obstacles and disappointments that even obliged her to prematurely cease operations. [ 18 ] Following the analysis of the various heads of damages, the Court concluded the following in its judgment of April 2017: [11] Ultimately, the defendant Québec inc. is claiming the following damages: a) $1500 for loss of business after the power was cut: A report on sales between the months of May and June 2016 (Exhibit D- 13) indeed shows a reduction in sales in this order of magnitude.

However, a reduction in sales does not represent a profit loss. Furthermore, July was hardly better than June, and this cannot be explained by the power cut. Nevertheless, we can surmise that the power cut was not good for business or for the establishment's reputation. On the basis of the current evidence, the Court will allow $500 for the loss caused by the power cut.

b) A rent reduction of $500 for two months' rent: This is not a claim per se, but a means of defence to the principal action. Since no evidence was submitted in respect of this claim, it is largely irrelevant to decide whether it must be reduced.

c) Loss of income due to the lack of air conditioning: In its application, the defendant is claiming a loss of $500 per day in this respect. There is cogent evidence that the air conditioning was out of order and that it was the plaintiff's responsibility to provide air- conditioned premises. There is little doubt that the heat certainly resulted in the loss of some customers. It is credible that the lack of

air conditioning caused losses. However, one can imagine that, on certain days, there was less need for air conditioning. It is clear that there was a greater need for it during the summer months. Furthermore, proven sales, shown in Exhibit D-13, indicate for March and April when the air conditioning was not in operation, that the monthly sales amounted to approximately $17 000 or $18 000. It is worthwhile to mention that those were the months just after the opening. In July and August, monthly sales were down to approximately $13 000.

A drop in sales is readily noted and it is logical to believe that, at the temperatures observed (Exhibit D-16), customers opted to go elsewhere. However, a daily loss of $500 represents $15 000 per month, which means that, were it not for the air conditioning problem, monthly sales would have been approximately $28 000. This appears highly unlikely. Moreover, once again, the total amount of sales does not represent profit. Compensation can only be granted for a loss of profit or an increase in losses.

All things considered, the Court will allow $5000 for loss of customers and other trouble and inconvenience related to the lack of air conditioning.

d) Recovery of a $2800 deposit made at the beginning of the lease: The defendant is claiming the reimbursement of an amount of $2800 it gave the plaintiff at the beginning of the lease as security (Exhibit D-17). The circumstances surrounding the end of the lease appear to be entirely attributable to the plaintiff. No evidence of property damage justifying the withholding of that deposit or of an illegal failure to pay the rent has been adduced. Therefore, there is no reason for the plaintiff to keep that amount.

e) Monthly amount of electricity of $670 to be reimbursed: The evidence in this regard is not clear. The Court will not grant any amount in this respect. [ 19 ] Point

e) must be revised. The situation is clear now; however, the conclusions do not change. The monthly amount was not granted the first time round and nor will it be granted now. It must be remembered that, in so holding, the Court does not require the defendant to pay its share of the electricity bill either. THEREFORE, THE COURT: [ 20 ] DISMISSES the principal application, with legal costs. [ 21 ] GRANTS IN PART the cross-application. [ 22 ] ORDERS the plaintiff to pay the defendant 9333-9562 Québec inc. the sum of $8300 plus interest at the legal rate and the additional indemnity provided for in

article 1619 of the Civil Code of Québec , starting from the date of the summons, with legal costs. __________________________________ Serge Champoux J.C.Q. Date of hearing: September 11, 2017