2018 QCCQ 1543, 2018 QCCQ 1543

2536-8408 Québec inc. c. 4124766 Canada inc. 2018 QCCQ 1543 COURT OF QUEBEC Small Claims Division CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL Civil Division No: 500-32-152766-160 DATE: March 8, 2018 ______________________________________________________________________ BY THE HONOURABLE ELIANA MARENGO, J.C.Q. ______________________________________________________________________ 2536-8408 QUÉBEC INC. Plaintiff/cross-defendant v. 4124766 CANADA INC. and 9278-1962 QUÉBEC INC.

Defendants/cross-plaintiffs ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] The evidence in this matter, as presented by the parties, remains somewhat murky, despite the numerous documents filed into the court record. [ 2 ] On November 28, 2011, a 10-year commercial lease (exhibit P-10, hereinafter “the Lease”) intervened between Estate Jacob Jack Plotnick (hereinafter “the Landlord”) and 4124766 Canada Inc. (hereinafter “the Tenant”). [ 3 ] The Lease provided a commencement date of January 1 st , 2012, and a possession date of October 3, 2011. [ 4 ] On December 16, 2011, one Giovanni (John) Pellegrino (hereinafter “John”) complained to the Landlord about the sprinkler system, the lights and the garage door openers (email, exhibit P-11). [ 5 ] It would appear, from a series of emails exchanged between John and the Landlord, in December, 2012, and February and July, 2013, that the Tenant was experiencing financial difficulties and was having trouble keeping up with its obligations under the lease. [ 6 ] On February 21 and then May 22, 2013, the Tenant’s guarantors lodged a proposal under the Bankruptcy and Insolvency Act (exhibits P-10-C en liasse ). [ 7 ] In either the month of April or August, 2013 (the evidence is unclear), co-defendant 9278-1962 Québec Inc. (hereinafter “the New Tenant”) began occupying the premises. [ 8 ] On September 4, 2013, the Landlord’s lawyer sent a letter to the Tenant, which read as follows:

“This office represents the interests of Estate Jacob Jack Plotnick in connection with the Lease of the Premises referenced in caption and we have been mandated to provide you with the present Letter of Demand. We have been informed that notwithstanding 4124766 Canada Inc. being the signatory Tenant to that certain Memorandum of Agreement of Lease intervened in the city of Montreal on November 28 th 2011 (the “Lease”), the Premises are currently being occupied by a business which is not known to the Landlord namely 9278-1962 Quebec Inc., the whole in contravention of

Section 14 of the aforesaid Lease. The Landlord was never consulted in connection with any sublease of the Premises nor has it ever approved same. Our client recently informed us that it had nevertheless accepted a cheque(

s) in payment of the applicable rent and additional rent for the Premises from 9278-1962 Quebec Inc. due to and in replacement of NSF cheque(

s) previously received from the Tenant. In accordance with the terms of the Lease, any such collection of rent and application shall not be deemed to the waiver of the provisions of

Section 14 of the Lease nor does same release the Tenant from its obligations pursuant thereto. Our client requires information in connection with the company 9278-1962 Quebec Inc., including but not limited to, a description of its business, assets it holds, list of shareholders and directors, financial references, and financial statements, in order to ascertain and assess the risk relating to its unauthorized occupancy of the Premises. This does not in any way relieve the Tenant of its obligations pursuant to the Lease.

Furthermore, we have determined that the two (2) corporate guarantors of the obligations of Lease, namely Réparation et Pièces de Camion B.V. Inc, and Transmission Pépin Inc. are currently under notice of intention pursuant to the Bankruptcy and Insolvency Act of Canada . The guaranty of the obligations of Lease by the two (2) guarantors was a primary consideration for leasing to 4124766 Canada Inc. The Landlord was not notified nor kept apprised of the co-guarantors depositing a notice of intent with any bankruptcy trustees.

The corporate guarantors must be replaced with a personal guaranty from Vittorio Pellegrino. Additionally, the Landlord has observed that you or the current occupan t of the Premises has failed in its obligation s to maintain same as a prudent owner would.

Without limiting the generality of the foregoing, we have been informed that Tenant has failed to maintain the cleanliness of the exterior of the Premises as well as the interior thereof and the Landlord fears that the Tenant has failed to comply with all requirements of the municipal, provincial and federal applicable government or regulatory authorities in connection with the use of the Premises and the handling of hazardous substances/environmental contaminants, the whole as required by Sections 9 and 10 of the Lease.

The Tenant must comply with the maintenance requirements of the Lease and to confirm that all handling, use and disposal of hazardous substances/environmental contaminants is being carried out in conformity with applicable laws and that there have not been any events of contamination that the Tenant has not otherwise reported to the Landlord.

The Tenant must rectify the foregoing breaches, provide the requested information and communicate with the Landlord, the whole within five (5) days of receipt of the present letter, failing which the Landlord shall be entitled to avail itself of such remedies and recourses as may avail at law DO GOVERN YOURSELVES ACCORDINGLY.

JFBV LAW OFFICES LLP” (exhibit P-10 D) [ 9 ] It appears, from several emails filed into the Court record, that over the next few months, the Landlord dealt with the New Tenant from whom it tried to collect rent and taxes owed. [ 10 ] On April 16, 2015, the New Tenant’s lawyer sent the following letter to the Landlord: “We represent the interests of 9278-1962 Quebec Inc. doing business as le Groupe TFM in order to advise you of the following. Our client informs us that on September 14 th , 2013 you sent him a written letter from your attorneys, Me Bill Voyatzis, confirming that there is no lease with our client.

An email was sent on April 8 th , 2015 by Palmina Pellegrino requesting once again a new lease with our client which was again refused. Considering that our client cannot continue paying rental without having a clear lease under their company name, 9278-1062 Quebec Inc., we are hereby advising you with these presents that our client will be vacating the premises at the latest by June 30 th , 2015. We are hereby asking you to confirm and acknowledge the reception of the present letter at the latest April 20 th , 2015.

Default by you to respond and confirm the reception of said letter will be considered as acceptance of the fact of the present letter. DO GOVERN YOURSELF ACCORDINGLY, CERUNDOLO & MAIORINO” (sic) (exhibit P-12)

[ 11 ] On May 22, 2015, lawyer Bill Voyatzis responded as follows: “This office represents the interests of Estate Jacob Jack Plotnick, Bertha Plotnick and 2536-8408 Quebec Inc. in connection with the commercial Premises referenced in caption. Your correspondence dated April 16th, 2015 has been turned over to the undersigned for review and reply. The aforementioned property is currently owned by 2536-8408 Quebec Inc. having acquired by notarial deeds from Estate Jacob Jack Plotnick and from Bertha Plotnick.

As you are undoubtedly aware, by Memorandum of Agreement of Lease (the “Lease”) intervened in Montreal on November 28th, 2011, the Premises were leased unto 4124766 Canada Inc. Notwithstanding such Lease, the Premises are currently being occupied by your client 9278-1962 Quebec Inc. carrying on business under social denomination of “Le Groupe TFM” (hereinafter the “Actual Occupant”). We reiterate on our client’s behalf that the Landlord was never consulted in connection with any alleged sublease or assignment of the Lease nor has Landlord ever approved same.

Our client has informed us that Le Groupe TFM has nevertheless been acquitting applicable rent and additional rent as provided for in the Lease in the place and stead of 4124766 Canada Inc. Le Groupe TFM has repeatedly paid rent and additional rent in a tardy fashion, failing to acquit sums on the first (1st) of the month or as and when due. Without limiting the generality of the foregoing, your client unilaterally decided to provide the Landlord with post-dated cheques to acquit additional rent for property taxes otherwise payable on March 2, 2015, sum which your client recognizes as due and exigible.

The 1 st instalment for property taxes for the 1 st half of the year payable by your client amounts to $16,284.70. While the Landlord acknowledges having received the amount of $4652.78 in reduction thereof, your client’s remaining post-dated cheques are insufficient to cover the balance (ie; $11,631.92). The Landlord hereby demands payment of the sum of $11,631.92 within 2 business days of the date of this letter. Our client did not consent to accepting instalment payments for property taxes.

Our client disagrees that an early departure would otherwise terminate any other obligations of the Tenant and/or of Le Groupe TFM. Our client reserves all of its right at law and pursuant to the Lease, as applicable, against the actual occupant and against 4124766 Canada Inc. to recover accelerated rent as well as any damages on a going forward for basis. In the interim, our client expects that Le Groupe TFM will acquit rent, including additional rent, payable to the Landlord for occupancy of the Premises.

We once again reiterate that any acceptance of rent shall not be deemed to be a waiver of the provisions of the Lease, nor shall same release the original Tenant from its obligations pursuant thereto. Groupe TFM’s position in your correspondence concerning its unilateral decision to vacate the Premises at some undetermined date does not release it from it’s or the Tenant 4124766 Canada Inc.’s obligations at law or pursuant to the Lease. The Landlord has furthermore informed us that Le Groupe TFM has failed to maintain the cleanliness of the exterior of the building as well as the interior thereof.

The Landlord fears that the Tenant has failed to comply with all requirements of municipal, provincial and federal statutory and regulatory requirements in connection with the use of the Premises and the handling of hazardous substances/environmental contaminants. Le Groupe TFM as well as the original Tenant are hereby placed on formal notice to comply with all applicable statutory and regulatory requirements for the handling of hazardous substances/environmental contaminants and that they maintain and repair the Premises as a prudent owner would.

Failure to comply with the foregoing shall entitle the Landlord to seek damages against the Tenant, Le Groupe TFM and their principals. Le Groupe TFM is hereby placed on formal notice to maintain and repair the Premises as a prudent owner would and without limiting the generality of the foregoing, to keep the Premises clean, replace any broken Windows, and maintain the landscaping. This situation is unacceptable to the Landlord and must cease immediately. The Landlord shall hold the Tenant and Le Groupe TFM responsible for any environmental contamination of the Premises and/or underlying soils and/or property.

The premises will be professionally evaluated upon your departure and any damages assessed. Finally, the Landlord is entitled to and does hereby demand access to the Premises in order to inspect and assess the physical State thereof. Our client or its representatives shall be able to attend the Premises upon 24 hour written notice (including email) and your client’s collaboration is required.

Do advise your client to govern itself accordingly.” [ 12 ] Here is the response from the New Tenant’s lawyers: “Dans un premier temps nous vous avisons que ce n'est pas notre bureau, mais moi-même qui vous a adressé la lettre datée du 16 avril 2015. Prenez note que le fait que vous n'avez pas répondu à notre lettre avant 36 jours confirme nos prétentions quant aux droits de notre cliente. Par conséquent, nous vous confirmons que les lieux seront vides pour le 1 er juillet 2015 et que notre cliente remettra les lieux dans l'état ou elle les a eus.

Ainsi, veuillez aviser votre cliente de ne pas encaisser les chèques pour la balance de la taxe d'affaires qui n'est pas due pour le reste de l'année et que le loyer du dernier mois sera celui du mois de juin. Notre cliente mettra un avis d'arrêt de paiement sur les chèques à défaut par votre cliente de nous retourner tous les chèques dans quarante-huit (48) heures. Concernant vos prétentions envers notre cliente, vos lettres confirment qu'il n'existe aucun lien de droit avec notre cliente et qu'au surplus vos réponses tardives confirment le tout.

Enfin, notre cliente n'a rien contaminé du terrain et le tout sera nettoyé avant son départ. ” (letter dated May 23, 2015)

[ 13 ] The New Tenant did in fact vacate the premises at the end of June, 2015. On July 1, 2015, another tenant moved in. [ 14 ] In July and August, 2015, plaintiff carried out repairs to the sprinkler system at a cost of $5,288.85 (exhibit P-3), the gas heating system at a cost of $2,503.57 (exhibit P -1) and a garage door at a cost of $2,184.53 (exhibit P-2). [ 15 ] In September, 2015, plaintiff and the tenants, represented by Francesco Pellegrino (“Pellegrino”), agreed to settle their differences for an amount of $9,000.00.

An email dated September 22, 2015, from plaintiff’s representative reads as follows: “Hi Frank, Attached please find a bill for payment for outstanding repairs/maintenance for 888 montee de Liesse. I understand from Myra that you both agreed on an amount of $9000 for this repair vs the 11,500 bill we incurred. As such, pls. expedite immediate payment to my Mother for the attached bill. I will not be chasing you for the money, so if it is not received by the end of this month, we will hand the file over to our lawyer to collect the debt in full.

Many thanks Rachel ” (sic) (exhibit P-7) [ 16 ] Plaintiff filed another email and copies of text messages where the agreement is confirmed and Pellegrino promises to pay (exhibit P-12A). [ 17 ] Subsequently, the tenants did not pay the amount of the settlement. [ 18 ] The following demand letter was sent to the tenants, on November 11, 2015: “ Mr. Francesco Pellegrino 4124766 Canada Inc. 177 Dagenais Blvd. East, Laval, Québec H7M 5V8 Mr. Franceso Pellegrino 9278-1962 Québec Inc. 177 Dagenais Blvd.

East, Laval, Québec H7M 5V8 Re: Estate Plotnick v. 9278-1962 Quebec Inc (doing business under the name Groupe TFM) and 4124766 Canada Inc. Premises: 888 Montée de Liesse, Saint-Laurent, Québec Tenant : 4124766 Canada inc. Our file: 101472/1 Sirs: We are the attorneys for the Estate Jacob Jack Plotnick, Bertha Plotnick and 2536-8408 Québec inc. in connection with the commercial Premises referenced in caption and we have received instructions from our client to send you the present Demand Letter. The company 9278-1962 Québec inc. was occupying the Premises instead of its actual tenant, 4124766 Canada Inc.

We hold you jointly and severely (sic) responsible for the damages to the property which amounts to 13,471.48$, as detailed in

Annexe A attached hereto. Therefore, we are putting you in demand to pay the amount of 13,471.48$ within five (5) days of receipt of the present Demand Letter, failing which we will take the appropriate legal procedures with regards to this matter without any further delay or notice. DO GOVERN YOURSELF ACCORDINGLY. Yours truly, SPIEGEL SOHMER INC.

ANNEXE A Actual incurred costs to-date: Gas Heating System maintenance: Gas Nat-Mar $3,349.30 Garage Door Repair

(1) Door Doctor $2,184.53 Sprinkler Maintenance and Repair: Modern Sprinkler Inc. $5,288.85 Unpaid Water Tax Bill City of St.

Laurent for 2014 $ 109.27 Total $10,931.95 Plus Additional repairs to be made but not yet completed due to high costs already incurred but not yet reimbursed. another Garage Door, estimated cost $ 2,184.53 landscaping & replacement of grass, est. cost $ 300.00 Water Tax Bill for 6 months of 2015, est. cost $ 55.00 $13,471.48 ” (sic) (exhibit D-1) [ 19 ] The parties’ lawyers then wrote back and forth to each other, the New Tenant agreeing to pay $5,643.10, in response to plaintiff’s claim (letter dated December 14, 2015, exhibit D-1) and plaintiff reiterating its claim as above (letter dated December 16, 2015, exhibit P-9). [ 20 ] On June 10, 2016, plaintiff filed its claim, in the amount of $14,739.65, against the tenants. [ 21 ] In their joint contestation, the tenants agreed to pay $3,349.30 for “gas heating maintenance”; $2,184.53 for “garage door repair”; and $109.27 for “unpaid water tax bill”.

At trial, the tenants’ representative Pellegrino also agreed to pay the amount claimed ($55.00) for “Water tax bill for 6 months of 2015, estimated cost”.

He denied owing any other amount. [ 22 ] The tenants filed a cross-demand claiming the following: “After reviewing the lease, a payment of $23,006.48 was given to you as a security deposit including GST and QST, which amount covers the claim that we accept to pay in the amount $5,643.10 leaving a balance of $17,363.38 to be reimbursed to us.” [ 23 ] GIVEN the evidence; [ 24 ] WHEREAS a transaction intervened between the parties, on or about September 22, 2015 with a view to prevent a future contestation, in the amount of $9,000.00 (exhibits P-7 and P-12A); [ 25 ] WHEREAS , according to

article 2633 of the Civil Code of Quebec , a transaction has, between the parties, the authority of a final judgment; [ 26 ] WHEREAS , therefore, the parties are barred from claiming any further amounts and making any further demands, as they did; WHEREFORE THE COURT HEREBY: DISMISSES plaintiff's demand; DISMISSES defendants’ cross-demand; HOMOLOGATES the transaction which intervened between the parties, on September 22, 2015, whereby defendants jointly and severally agreed to pay plaintiff the sum of $9,000.00, and plaintiff agreed to accept said amount in full and final settlement of all outstanding matters between them; and ORDERS the parties to abide by the terms thereof.

__________________________________ ELIANA MARENGO, J.C.Q. Dates of hearings: October 17, 2017 and January 23, 2018