2021 QCCQ 7947, 2021 QCCQ 7947

9292-2988 Québec inc. c. 9336-0337 Québec inc. 2021 QCCQ 7947 COURT OF QUEBEC (Civil Division) CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL No: 500-22-252235-182 DATE: August 5, 2021 ______________________________________________________________________ BEFORE THE HONOURABLE ENRICO FORLINI, J.C.Q. ______________________________________________________________________ 9292-2988 QUÉBEC INC. Plaintiff/Cross-defendant v. 9336-0337 QUÉBEC INC.

Defendant/Cross-plaintiff ______________________________________________________________________ JUDGMENT ______________________________________________________________________ OVERVIEW [ 1 ] Plaintiff 9292-2988 Québec Inc., doing business as Renovations STS (“ STS ”), operates an enterprise which carries out construction and renovation work. [ 2 ] The defendant, 9336-0337 Québec Inc., doing business under the name Notre-Boeuf-de-Grâce Centre-ville (“ NBG ”), leased premises in downtown Montréal for the purposes of opening a restaurant under the Notre-Boeuf-de-Grâce name. [ 3 ] In September 2016, STS and NBG entered into a construction agreement whereby STS agreed to renovate the leased premises so that the restaurant could be opened and operate (the ‘’ Project ’’). [ 4 ] STS carried out construction work towards the Project in September, October and November 2016. [ 5 ] In late November 2016, STS left the construction site and never returned. [ 6 ] Renovations STS claims from NBG $84,999 in damages, which includes the balance of the price owed on the construction agreement plus $27,427.29 for additional work or “extras” performed on the Project which it claims was beyond the scope of the agreement [1] . [ 7 ] NBG denies owing the amount claimed by Renovations STS.

Firstly, with regards to the portion of the claim pertaining to the balance of the price of the contract, it relies on the exception for non-performance defence and argues that since STS did not carry out all the work that was within its scope of work, it was justified in not paying the balance of price. [ 8 ] Secondly, NBG argues that the portion of the claim dealing with “extras” is unfounded since the parties are governed by a fixed- price construction agreement [ 9 ] Subsidiarily, it contends that if the price of the work was simply estimated at the time the contract was entered into, Renovations STS is not entitled to the payment of the invoices for the additional work because the alleged additional work was foreseeable at the time the contract was entered into given the information it had in its possession.

Finally, it argues that the claim for additional work is also unfounded because even if the contract is not a fixed-price agreement, the alleged additional work was in fact within the original scope of work agreed to by the parties and did not constitute additional work. [ 10 ] NBG also argues that not only did STS fail to carry out all the work that was within its scope, but the work it did perform at the Project was deficient in many regards.

As a result, it had to hire third parties to complete the unfinished work and to correct STS’s work, at significant expense. [ 11 ] This also justifies its refusal to play the amount claimed by STS and its cross-application through which it seeks damages of $84,184.23 for the expenses it incurred to correct the allegedly deficient work. [ 12 ] STS responds to the cross-application by arguing that it is unfounded because it was never put in default and thus was deprived of the opportunity to correct the defects, if there were any. [ 13 ] The issues before the Court are:

a) What is the nature of the Construction Agreement between the parties?

b) Is STS entitled to the payment of the invoices for additional work, namely invoices nos. 98, 99 and 100?

c) Is STS entitled to the payment of the balance of price owed on the Construction Agreement?

d) Did NBG prove that STS failed to execute all or a portion of the work for which it claims payment?

e) Was the work carried out by STS afflicted with poor workmanship or otherwise deficient and if so, what damages were caused by these breaches? INTRODUCTORY REMARKS [ 14 ] The trial of this matter lasted three days.

Seven witnesses were heard, one on behalf of the Plaintiff, STS, and six on behalf of the Defendant/Cross-Plaintiff, NBG. [ 15 ] No expert evidence was adduced by either party on the issues of the alleged deficiencies, whether the work was carried out in conformity with the plans and drawings or in conformity with good practice (“ règles de l’art” ) in the construction industry, or the cost to remedy the alleged defects. [ 16 ] In addition, while a significant portion of the witnesses’ testimony centered on the

interpretation and explanation of the construction drawings and plans issued by the interior designers and architects for the Project, including the different revisions and iterations of these documents, the author(

s) of the plans and drawings was never called to testify. [ 17 ] As a result of this evidence not being adduced, the Court was left in the dark on many aspects that were relevant to the determination of the issues before the Court. ANALYSIS

a) What is the nature of the Construction Agreement between the parties? [ 18 ] The Court must first decide a preliminary, yet central, matter, namely the nature of the construction agreement entered into between the parties. The answer to this question settles some of the issues raised by lawsuit. [ 19 ] NBG contends that the parties entered into a fixed-price contract.

STS argues otherwise and asserts that the price of the work was merely estimated at the time it was entered into. [2] [ 20 ] The difficulty in deciding this issue resides in part on the fact that the parties never signed a contract, despite the substantial construction work performed by STS at the Project. [ 21 ] A chronology of the case is useful to understand and decide this issue. [ 22 ] Prior to entering into a contractual relationship with respect to the Project, the parties had done business on two other restaurant renovation construction projects, one on Sherbrooke Street and another on Côte-Vertu Boulevard. [ 23 ] Because of their prior relationship, Mr.

Jonathan Dresner, NBG’s president, explains that he trusted STS’s principal, Mr. Samathos (Sam) Madimenos. He adds that in 2016, when the facts that gave rise to this litigation occurred, he had very little experience in the construction field and relied on STS’s expertise and Sam’s advice.

In hindsight, he believes that he should have acted differently. [ 24 ] NBG first approached STS sometime in June 2016 to carry out preliminary plumbing work at the leased premises prior to the pouring of the concrete slab of the floor. [ 25 ] STS agreed and in June 2016 and it ultimately supplied and installed plumbing drains and water lines at the leased premises and was paid roughly $4,817. [3] This work is not within the scope of work of the construction agreement which is the subject matter of this litigation. [ 26 ] Later in the summer 2016, NBG asked STS to provide an estimate to carry out construction and renovation work at the leased premises.

The Project essentially consisted in supplying and installing all materials and performing all construction work required to open a restaurant. [ 27 ] On or about August 12, 2016, STS submitted to NBG a first estimate in the amount of $108,256.64 (taxes included). [4] [ 28 ] One month later, on September 11, 2016, STS submitted a second estimate for $129,000 or $148,961.14 inclusive of taxes. [5] [ 29 ] Sometime in early September, STS sent NBG a five page construction agreement for signature (“ Construction Agreement ” or “ Agreement ”). [6] [ 30 ] According to the Agreement, the work which STS undertook to carry out for the Project is described as follows under the heading ‘’Description of the Work’’: The Contractor agrees to supply materials, labor and supervision to perform the following work: - As per Estimate #1059 [7] - As per Architect Plan #16061 by Walter Qualizza Design [8]

[ 31 ] As for the construction schedule, the heading ‘’ Work Calendar’’ states: • Work Starting Date: 2016-09-016 • Work Estimated Completion Date: 2016-11-05 [ 32 ] The price is described as follows under the headings ‘’Price’’ and ‘’Terms of payment’’: PRICE Project Price: $129,000.00 GST: $6,450.00 QST: 13,511.41.

TOTAL: $148,961.14 TERMS OF PAYMENT Progressive payments 30% upon signing contract: $44,688.34 30% upon 50% of the work performed: $44,688.34 30% upon 75% of the work performed: $44,688.34 10% holdback upon 14 days of completion of work: $14,896.12 TOTAL: $148,961.14 [ 33 ] Finally, the following provisions are also worth reproducing: CONSIDERATION Price In consideration of the Work carried out, the Client shall pay the Contractor a fixed amount of ONE HUNDRED FOURTY EIGHT THOUSAND NINE HUNDRED SIXTY ONE AND FOURTEEN CENTS, applicable taxes included, (hereinafter referred to as the "Price"). … Terms of Payment The Client shall pay the Price to the Contractor according to the terms of payment specified above.

Upon reception of invoice payment shall be made within 24 hours and if not, will cause delay of completion of work. … Fixed Price This Agreement is on a fixed price basis. Consequently, the Client shall pay the price stated above and shall not claim a price reduction on the ground that the Work required less effort or has cost less than had been foreseen. Similarly, the Contractor shall not claim a price increase for the opposite reason. The fixed price shall remain unchanged notwithstanding any modification of the original terms and conditions of performance, unless otherwise agreed by the Parties.

In such a case, the Parties shall sign a work order prepared on the basis of the additional work and materials required, which work order shall be deemed to form an integral part of this Agreement. [ 34 ] The parties never signed the Construction Agreement. [ 35 ] Despite not signing the contract, Mr.

Madimenos asserts that STS carried out 95% to 98 % of the work that was contemplated under the Agreement when it left the site in late November. [ 36 ] NBG contends that the unsigned Construction Agreement nonetheless contains the essential terms of the agreement between the parties, including the scope of work and the nature of the price, namely that it is a fixed price agreement. [ 37 ] Mr. Madimenos, STS’s principal, testified otherwise. According to Mr. Madimenos, Estimate no. 1059 was based on rough and preliminary plans supplied by NBG and could not form the basis for a fixed price agreement.

Moreover, he could not commit to a fixed price because the scope of the work progressed as the work went along. [ 38 ] Mr. Dresner counters and states that by mid-August the scope of work was clearly defined and the plans had been issued for construction in early September 2016 when STS sent it the Construction Agreement. [ 39 ] For the reasons that follow, given all the facts surrounding the conclusion of the Construction Agreement and because the Court considers that Mr. Dresner’s testimony is more reliable and trustworthy than Mr. Madimenos’s, the Court concludes that while the

contract is unsigned, the Construction Agreement nevertheless constitutes the agreement between the parties. They agreed on a fixed- price construction contract. [ 40 ] According to Mr. Madimenos, he could not commit to a fixed price when he sent Estimate no. 1059 on September 11, nor when he sent the Construction Agreement shortly thereafter, because the architect’s plans and drawings which he had received were very preliminary.

The lack of details precluded him from submitting a fixed price. [ 41 ] This testimony is not credible nor reliable since it is contradicted by the documentary evidence. [ 42 ] NBG filed as exhibit D-2 copies of the design plans that it purports it submitted to STS for the purpose of obtaining an estimate. [9] [ 43 ] In cross-examination, Mr. Madimenos asserted that he did not have these plans when he prepared Estimate no. 1059 dated September 11, 2016. [ 44 ] Later in his cross-examination, Mr.

Madimenos admits that on August 18, 2016, he received by email from Walter Qualizza Design Inc. revision no. 3 of the plans for the Project. [10] [ 45 ] When confronted with this email, Mr. Madimenos asserts that the plans attached to the email do not correspond to the plans he had. [ 46 ] Yet, the Court reviewed the plans attached to the August 18, 2016 email and these plans correspond precisely to the plans filed by NBG as exhibit D-2. The title block of the plans which Mr.

Madimenos had in his possession on August 18, prior to submitting Estimate no. 1059 or the Construction Agreement, indicates that the plans were issued for the purpose of permitting on June 20, 2016, revision no. 2 was issued on July 12, 2016, they were issued for quotes (bids) on July 21, 2016, and revision no. 3 was issued August 16, 2016. [11] [ 47 ] Mr. Madimenos’s answers with respect to the plans he had in his possession when he prepared the Estimate no. 1059 in September 2016 are vague and contradictory. His testimony is not forthright and credible. [ 48 ] Another example of Mr.

Madimenos’s lack of credibility is borne out in an answer he gave in cross examination when he states that he first communicated with Mr. Gregoriadis in October 2016. [ 49 ] Yet text messages exchanged between he and Mr.

Gregoriadis show that they communicated regularly as far back as in August 2016. [12] [ 50 ] The evidence further shows that the plans that were issued for construction and that were actually used on site during the Project were dated August 24, 2016. [13] [ 51 ] The evidence shows that as of September 11, 2016, the date of Estimate no. 1059, the plans for the Project were very detailed and had been revised three times, the latest occurring on August 16, 2016, and had been issued for construction. [14] [ 52 ] In conclusion, the Court considers that STS had in its possession detailed and complete plans and drawings for the Project when it prepared Estimate no. 1059 and the Construction Agreement.

Mr. Madimenos is not credible when he states that he could not commit to a fixed price at that time period.

He did commit to a fixed-price. [ 53 ] Even though the parties did not sign the Construction Agreement, there was an exchange of consents between them to enter into a contract of enterprise, which consent included the essential elements of the contract, including the nature and scope of the work that STS was to carry out for the Project, the fixed-price nature of the price and the payment terms. [15] [ 54 ] These essential terms are reflected in the Construction Agreement, which albeit unsigned, governs the relationship between the parties. [ 55 ] The language of the Construction Agreement sets out in clear terms that STS was willing to agree to a fixed-price contract, and NBG agreed to this. [16] [ 56 ] Moreover, the conduct of STS subsequent to September 2016 and even during the course of the judicial proceedings demonstrates that it acted consistent with a fixed price contract and in conformity with the terms set out in the Construction Agreement. [ 57 ] In other words, its conduct is wholly consistent with the fact that the Construction Agreement represents the terms of the contract of enterprise between the parties. [ 58 ] Indeed, STS’s invoice no. 85 dated September 11, 2016 in the amount of $44,688.35 indicates ‘’partial payment of 30% as per signed contract ’’ [17] (Underlining added). [ 59 ] STS’s invoice no. 80 dated October 11, 2016 also in the amount of $44,688.35 indicates ‘’partial payment of 30% as per completion of 50% of work performed’’. [18] [ 60 ] Invoices nos. 85 and 80 were fully paid by NBG. [ 61 ] STS’s invoice no. 96 dated November 22, 2016 in the amount of $44,688.35 also indicates ‘’partial payment of 30% as per agreed contract upon completion of 75% of work performed’’. [19] [ 62 ] Finally, STS’s invoice no. 97 dated December 3, 2016 also indicates ‘’10% holdback upon 14 days of completion of work – as specified on contract to estimate no. 059’’. [20]

[ 63 ] Invoices nos. 96 and 97 remain unpaid by NBG. [ 64 ] The amounts claimed by STS in invoices nos. 85, 80, 96 and 97 is consistent with the terms of payments set forth in the Construction Agreement and likewise with a fixed price contract. [ 65 ] STS further admits that the Construction Agreement binds the parties when it writes in its demand letter dated December 7, 2016: Mr.

Dresner: As you know, our client STS Renovation…executed construction and renovation work for both Café Pigeon (9292-2988 Québec inc.) and Notre-Boeuf-de-Grace Centreville (9336-0337 Québec inc.) according to two separate contract agreements attached to the present demand letter [The Construction Agreement is attached to the demand letter]. [21] [ 66 ] Finally, in its pleadings, STS once again admits that the Construction Agreement, including the fixed-price nature of the contract, governs the relationship. [22] [ 67 ] For example, in paragraphs 3 and 8 of the Demande introductive d’instance , it alleges: 3.

La compagnie Notre-Bœuf-de-Grâce CentreVille a mandaté Rénovations STS par contrat de service d’effectuer des travaux de construction et de rénovation et autres améliorations locatives pour le local sis au ….à Montréal, le tout pour une somme de 129,000.00$ plus taxes pour une somme totale de 148,961.14$, le tout tel qu’il appert d’une copie du contrat communiqué au soutien des présentes comme PIÈCE P-3; … 8.

En date du 22 novembre 2016, la demanderesse a envoyé à la défenderesse, 9336-0337 Québec inc. [NBG] la facture # 96 au montant de 44,688.35$ y compris les taxes représentant la dernière tranche de 30% prévu au contrat, Pièce P-3, le tout tel qu’il appert d’une copie de la facture # 96…. [ 68 ] For all these reasons, the Court concludes that although the Construction Agreement is not signed, it constitutes the agreement governing the relationship between the parties and is a fixed price contract.

b) Is Renovations STS entitled to the payment of the invoices for additional work, namely invoices nos. 98, 99 and 100? [ 69 ] STS claims the payment of $27,427.29, which includes the work covered by following three invoices: • Invoice no. 98 in the amount of $11,675.71 dated Nov. 20, 2016; • Invoice no. 98 in the amount of $13,682.03 dated Dec. 3, 2016; • Invoice no. 100 in the amount of $2,069.55 dated Dec. 3, 2016; [ 70 ] These three invoices cover work which STS claims is beyond the scope of the Construction Agreement and results from changes requested as the contract was being executed. [23] [ 71 ]

Article 2109 of the Civil Code provides that where the price of a contract of enterprise is fixed by the contract, as is the case in the present matter, the contractor may not claim an increase of the price because the work required more effort or cost than had been foreseen. The “Fixed Price” clause of the Construction Agreement incorporates this same rule. [24] [ 72 ] The Court of Appeal teaches that the parties must strictly follow the procedure set out in a contractual provision which allows for the modification of the scope and the price of the work. For example, in Consortium MR Canada ltée v.

Commission scolaire de Laval the Court writes: [33] La règle cardinale en matière de contrat à forfait est donc celle de l’immuabilité des obligations respectives des parties, sous réserve de l’application stricte des clauses permettant les modifications aux travaux et au prix. [25] [ 73 ] The “Fixed Price” clause of the Construction Agreement contains a mechanism allowing for a change in scope and price: Fixed Price … The fixed price shall remain unchanged notwithstanding any modification of the original terms and conditions of performance, unless otherwise agreed by the Parties.

In such a case, the Parties shall sign a work order prepared on the basis of the additional work and materials required, which work order shall be deemed to form an integral part of this Agreement. [26] [ 74 ] NBG, through Mr. Dresner and Mr. Gregoriadis, testified that they never asked STS to carry out any work that was beyond the scope of the Construction Agreement, much less did they ever approve a change order varying the scope.

This testimony is credible and reliable, as it is notably supported by the lack of any change orders or work orders for the Project. [ 75 ] Accordingly, STS is legally and contractually barred from seeking and receiving payment for invoices nos. 98, 99 and 100. This portion of its claim will be dismissed.

c) Is Renovations STS entitled to the payment of the balance of price owed on the Construction Agreement?

d) Did Notre-Boeuf-de-Grâce prove that Renovations STS failed to execute all or a portion of the work for which it claims payment? [ 76 ] Questions C and D are interrelated, given that NBG raises the exception for non-performance defence. Accordingly, the Court will answer the questions together. [ 77 ] NBG paid the first two installments due under the Construction Agreement, that is to say $89,376.68, or 60% of the fixed contract price. [27] [ 78 ] STS claims the payment of the balance of the price owed on the Construction Agreement, namely (

i) the payment of invoice no. 96 in the amount of $44,688.35 which represents 30% of the contract price (taxes included) and (ii) the payment of invoice no. 97 in the amount $14,896.12 which represents the 10% holdback on the contract price of $148,961.14 (taxes included). [28] [ 79 ] NBG relies on the exception for non-performance defence set forth in

article 1591 of the Civil Code of Québec , and argues that since STS did not carry out some of the work that came within its scope, it was justified in not paying invoices nos. 96 and 97. [ 80 ] It is important to underline that unlike a claim or cross-application to recover the costs incurred by a client who claims that the work carried out by a contractor is defective, a client who claims that the contractor did not complete all the work that he agreed to carry out and who relies on the exception for non-performance defence under

article 1591 C.C.Q. to refuse to pay a portion of the contract price does not have the obligation to send the contractor a notice of default in order to invoke this grounds of defence. [29] [ 81 ] The exception for non-performance defence s erves as a temporary excuse for non-performance by the NBG of its correlative obligation to pay the contract price owed under the synallagmatic Construction Agreement. [30] [ 82 ] STS admits that when it left the work site on November 25, 2016, it had not completed 100% of the scope of work it agreed to carry out under the construction agreement. Mr.

Madimenos contends that on that date, STS had performed somewhere between 95 and 98% of the work. He adds that the value of the work items to be completed represents approximately $500. [ 83 ] NBG claims that STS failed to complete a much more significant portion of the scope of work. [ 84 ] Of course, to prevail on the exception for non-performance defence, it has the burden of proving on the balance of probabilities what items that were within STS’s scope of work it did not carry out and to the quantify the uncomplete work. [31] [ 85 ] It bears repeating that the author(

s) of the design and architect plans issued for the Project did not testify. His or her testimony explaining the scope of work as per the plans and the actual work carried out as of November 29, date after which STS never returned to work on the Project, would have enlightened the Court as to what percentage of the work was not carried out. [ 86 ] Mr. Dresner and Mr. Gregoriadis attempted to explain this, but they are not versed in the construction field and their testimony on this subject was deficient and lacked clarity. [ 87 ] The Court was notably struck by Mr.

Gregoriadis’ statement when he was explaining the alleged incomplete and deficient work and comparing the unfinished work with the scope as per the plans and drawings. [32] [ 88 ] He stated that “if we go item by item on the plan as to what was supposed to be done and what was not done, the trial would last for months.” [ 89 ] While explaining to the Court the scope of work item per item on a plan or drawing and comparing it to the work actually carried out by the contractor may be fastidious and time consuming, it is nonetheless essential evidence in a case like the present one where the client invokes the exceptio non adimpleti contractus defence.

Often time this type of evidence is adduced through an expert in the construction filed, although this form of evidence is not obligatory. [ 90 ] The rights and obligations of STS and NBG are set out in the Construction Agreement and are supplemented by various previsions of the Civil Code , including articles 1458 and 2100 and following of the Code . [ 91 ] Pursuant to

article 1458 C.C.Q. , STS had the obligation to honor its contractual obligations, which according to the Construction Agreement, includes the obligation to carry out the work described in Estimate no. 1059 [33] and the plans. [34] [ 92 ] NBG claims that STS or its subcontractor did not complete all the electrical work called for in the construction agreement and as a result it was obliged to have this work completed by H&M Construction (9322-3220 Québec Inc.) and paid $5,822.73. [35] [ 93 ] Mr.

Reza, electrician and president of H&M Construction, testified with respect to the three invoices issued by this company which total $5,822.73. With respect to invoice no. 2016-34 in the amount $2,399.53, he explained that 80 to 90 % covered by this invoice was to carry out electrical work that was either not properly done or simply not done.

For example, the counter heater, the forced air heater in the vestibule and the meat grinder had not been connected to the electrical system by STS. [ 94 ] NBG has proven through this testimony that 85% of the invoice covers work that was within STS’s scope of work and was either not completed or improperly done. Therefore, $2,039.60 should be deducted from the balance of the price owed by NBG to STS. [ 95 ] As for the other invoices issued by H&M Construction, Mr. Reza’s testimony was vague and unclear.

The evidence does not prove on the balance of probabilities that the work covered by invoices no. 2017-37 and 2017-38 was work that was within STS’s scope of work or work that was defective. No deductions shall be afforded to NBG for the work covered by H&M Construction’s invoices. [ 96 ] NBG filed two invoices issued by Hayes Nulman Design. Invoice no. 20170412 in the amount of $55,101.77 pertains to defective work and is not relevant for the purpose of the issues addressed in this portion of the judgement.

[ 97 ] Hayes Nulman Design’s invoice no. 20170102 in the amount of $833.57 allegedly pertains to completing work that STS should have carried out. [36] NBG has not adduced clear and cogent testimony to convince the Court that the work covered by this invoice was within STS’s scope or work. The amount covered by this invoice cannot be deducted from the balance of price owed. [ 98 ] NBG claims that the work covered by invoice no. ADR-010717 issued by Les Entreprises Adrian in the amount of $1,843.80 covers work that was within the STS’s scope, but which it did not complete. [37] [ 99 ] Mr.

Adrian Marcotte carried out the work covered by this invoice. He explained clearly and precisely that it covered painting, plastering and tiling work that had not been done at the premises. However, his testimony also establishes that a portion of the work covered by this invoice covers repairs to defective work carried out by STS, although he said that this was a minor portion of the invoice. [ 100 ] The Court is convinced that 85% of the invoice issued by Les Entreprises Adrian, or specifically $1,567.23 represents work that was in its scope but that STS did not complete.

This amount will be deducted from any balance owed by NBG to STS. [ 101 ] NBG paid two invoices issued by Abe Cohen Plumbing and Heating inc. which it claims should be deducted from any amounts owing to STS. [ 102 ] Invoice no. 123619 covers work carried out on December 14, 2016. Mr. Unger, master plumber, explained that his invoice covered work required to correct deficient work that had been done by STS or one of its subcontractors.

The work covered by this invoice pertains to defective work and is not relevant for the purpose of the issues addressed in this portion of the judgement. [ 103 ] On December 8, 2016, Abe Cohen Plumbing and Heating inc. carried out work at the Project and issued an invoice in the amount of $1,584.67 which NBG paid. [38] The work covered by this invoice does not address deficiencies but rather connecting drains and restaurant equipment, which is all work that STS had been contracted to carry out. [ 104 ] This constitutes work that STS should have done.

NBG is entitled to withhold from the balance of price $1,584.67. [ 105 ] Finally, the impact of STS’s invoice no. 92 for $65,892.17 ($57,313 before taxes) which NBG paid on or about November 18, 2016 must be addressed [39] . [ 106 ] STS frames this invoice as one for “additional work” which was beyond the scope of work contemplated in the Construction Agreement. [ 107 ] Was all or a portion of the work covered by invoice no. 92 within the scope of work of the Construction Agreement? [ 108 ] NBG claims that the work described on this invoice and for which payment was made was in fact work which, except for one item [40] , was within STS’s scope. [ 109 ] It nonetheless paid invoice no. 92 because, as Mr.

Dresner said, NBG was in panic mode and felt like it was being taken hostage because the work was progressing slowly and Mr. Madimenos pressured him to pay, otherwise STS would not continue working on the Project. Mr.

Madimenos admits that he insisted upon NBG for the payment of this invoice. [ 110 ] Invoice no. 92 covers 7 items including: 1- Plumbing (hot water tanks, 3 toilets and gas work): $7,870.00 2- Construction work (window arches and coverings, beer trench, office and closet doors, shelves in closet): $6,250.00 3- Tiling (white tiles in kitchen, service counter, mosaic tiles and bar counter): $6,800.00 4- Painting (paint epoxy kitchen floor): $4,050.00 5- Millwork (service station with shelves on mezzanine, cabinets for bar, washroom doors, wood shelves, barn wood, bench in vestibule): $20,100.00 6- Metal work: $4,500.00 7- Furniture (46 chairs, 12 bar stools and 6 bar stools bolted to floor) [41] : $7,740.00 [ 111 ] In cross examination, Mr.

Dresner admitted that he knew at the time that the window arches and coverings were installed that this work was not part of the original scope. However, he assumed it would not cost extra for this work. That was not an assumption he should have made. [ 112 ] As for the shelves and the closet, Mr. Gregoriadis also admitted that these were also not included in the scope of work but he adds that NBG was charged too much for this extra work.

No evidence was adduced as to how much was “too much”. [ 113 ] NBG has proven based on the contents of the plans that the item ‘’office and closet doors’’ in item no. 2 ‘’Construction Work’’ was within STS’s scope of work. [ 114 ] However, as for many other items which pertain to invoice no. 92, NBG did not prove the value of this work for which it paid for twice, whether on a quantum meruit basis or otherwise. [ 115 ] Therefore, it is difficult for the Court to evaluate or put a dollar value on what portion of the contract price it was entitled to withhold from payment for this item which it paid twice.

[ 116 ] Similarly, NBG has also proven that the hot water tanks which are charged on Invoice no. 92 were in STS’s scope of work according to the plans. [42] However, as for the forgoing item, NBG did not prove the amount of the reduction of the contract price. [ 117 ] The same holds for the item ‘’bench in vestibule’’ which is part of item no. 5 ‘’Millwork’’.

Based on the plans and drawings, STS was obliged to install depicted a bench in the vestibule. [43] However, NBG did not prove the value for this work item that was charged twice. [ 118 ] Likewise item no. 3 (Tiling) of invoice no. 92 covers a charge for installing white tiles in the backsplash of the kitchen.

However, the plans establish that the backsplash was supposed to be recovered with tiles. [44] However, as is the case for many of the other items in invoice no. 92, NBG did not prove the value of this work that was billed twice. [ 119 ] NBG has proven on the balance of probabilities that a portion of the work which is described in STS invoice no. 92 constitutes work which should not have been charges as additional work because it was in STS’s scope of work. [ 120 ] However, a portion of the work covered by this invoice also constituted work that was not within STS’s scope, yet NBG nonetheless paid the invoice at the time, although today it claims it never should have because the Agreement was a fixed-price agreement.

However, NBG did not allege in its pleadings nor did it argue or make a Cross-claim based on the theory of receipt of a payment no due under

article 1491 C.C.Q . [ 121 ] While invoice no. 92 does cover work which was within STS’s scope, the difficulty the Court is faced with resides in the fact that NBG did not quantify that portion of the work covered by this invoice which was in STS’s scope of work. [ 122 ] That said, given the principle of proportionality, given all the facts of the case, the Court arbitrates the value of this work as 30% of the amount of the invoice, or $19,767.66 (0.30 x $65,892.17). [ 123 ] Accordingly, based on art. 1591 C.C.Q ., the Court considers that NBG is justified in withholding $19,767.66 from the balance of the price of the Construction Agreement it owes STS. [ 124 ] In addition to this amount, NBG is also entitled to withhold $5,191.50 representing parts of the amounts it paid to H&M, Abe Cohen Plumbing and Heating inc. and Les Entreprises Adrian to complete work that STS failed to carry out. [45] [ 125 ] In conclusion, NBG was justified in withholding $24,959.16 from the balance of price owed on invoices nos. 96 and 97. [ 126 ] It nonetheless still owes $34,625.31 to STS ($59,584.47 – $24,959.16) for invoices nos. 96 and 97.

e) Was the work carried out by STS afflicted with poor workmanship or otherwise deficient and if so, what damages were caused by these breaches? [ 127 ] Pursuant to

article 2100 C.C.Q. , STS had the obligation to act in the best interests of its client, NBG, with prudence and diligence, to ensure that its work was carried out in accordance with ‘’usage and good practice’’, and to ensure that ‘’the work carried out… is in conformity with the contract’’, that is the Construction Agreement. [ 128 ] STS was also bound to respect the warranty against defects or poor workmanship of

article 2120 of the Civil Code . [ 129 ] NBG claims that a significant portion of the work that STS carried out on the Project was defective and that it incurred damages because it had to hire third parties to correct or redo some of the work it carried out. [ 130 ] As a result, it filed a Cross-application in which it claims $84,184.23 from STS. [ 131 ] STS argues that the Cross-application should be dismissed because it was never put in default to remedy the alleged deficiencies. [ 132 ] The Court must first decide whether NBG’s Cross-application is barred on the sole basis that it did not send STS a notice of default prior to carrying out the corrective work.

If the Court concludes that NBG did send STS a notice of default or that it was dispensed from doing so, it will then address the merits of the Cross-application. [ 133 ] NBG argues that it did put STS in default, albeit by text message sent from its principal to Mr. Madimenos. In any event, it adds that the urgency of the situation and the fact that STS repudiated its obligations dispensed it from sending STS a “formal” notice of default. The Law with Respect to the Obligation to Send a Notice of Default [ 134 ] The obligation to send a co-contracting party a notice of default arise from art. 1590 C.C.Q: 1590.

An obligation confers on the creditor the right to demand that the obligation be performed in full, properly and without delay.

Where the debtor fails to perform his obligation without justification on his part and he is in default , the creditor may, without prejudice to his right to the performance of the obligation in whole or in part by equivalence, (1) force specific performance of the obligation; (2) obtain, in the case of a contractual obligation, the resolution or resiliation of the contract or the reduction of his own correlative obligation; (3) take any other measure provided by law to enforce his right to the performance of the obligation.

… [ 135 ] The purpose of a notice of default is to inform the debtor that his creditor considers that one or more obligations which he undertook to perform have not been executed in conformity with the contract. [ 136 ] The minimal contents of a notice of default are set out in articles 1594 to1595 C.C.Q. [ 137 ] Firstly, the notice must be made in writing. [ 138 ] Secondly, the extrajudicial notice of default must describe, even if only succinctly, the nature of the breach or default attributed to the debtor, the performance required, as well as the creditor's intention to avail himself of sanctions in the event that the non- performance persists. [46] [ 139 ] Lastly, the creditor must indicate in the notice of default the period of time during which he considers that the debtor may still perform his obligation.

This time limit must be reasonable and must allow the debtor sufficient time, having regard to the nature of the obligation and the particular circumstances of the case. [ 140 ] The implementation of the warranty against poor workmanship or defects requires that the client first send a notice of default to the contractor. [ 141 ] Exceptionally, a party, including the client in a contract of enterprise who wishes to avail itself of the remedy set forth in art. 2120 C.C.Q. , may be exempted from sending a formal notice if the conditions set out in

article 1597 C.C.Q. are met: 1597. A debtor is in default by the sole operation of law where the performance of the obligation would have been useful only within a certain time which he allowed to expire or where he failed to perform the obligation immediately despite the urgency that he do so.

A debtor is also in default by operation of law where he has violated an obligation not to do, or where specific performance of the obligation has become impossible through his fault, and also where he has made clear to the creditor his intention not to perform the obligation or where, in the case of an obligation of successive performance, he has repeatedly refused or neglected to perform it. [ 142 ] The conditions required to invoke default by sole operation of law must be interpreted restrictively. [ 143 ] In Petrucci c.

Le Groupe Latitude inc. , Justice Landry explains in what circumstances a creditor may be dispensed from sending a notice of default [47] : [22] L'objectif poursuivi par le législateur est de faire en sorte que l'entrepreneur connaisse clairement ce qu'on attend de lui, d'évaluer sa responsabilité, de lui accorder un délai raisonnable pour s'exécuter et ainsi empêcher un créancier de se faire justice lui- même. [23] À cet égard, les auteurs Baudouin et Jobin, dans leur plus récente édition de leur traité sur Les Obligations , écrivent ce qui suit (page 690): « ...le législateur a voulu que tout débiteur soit en demeure, le plus souvent par une mise en demeure, avant qu'une sanction ne soit prise contre lui, afin de l'avertir que sa faute ne sera pas tolérée et qu'il s'expose à des sanctions. » [24] La nécessité d'une mise en demeure est encore plus grande lorsque le créancier envisage d'exécuter lui-même l'obligation de son débiteur ou le faire exécuter par quelqu'un d'autre, conformément à l'

article 1602 du Code civil du Québec cité ci- dessus. Les auteurs Baudouin et Jobin commentent ainsi cet

article (à la page 700): « Il convient toutefois de relever un recours au sujet duquel les tribunaux s'avèrent particulièrement exigeants et pour lequel l'absence de mise en demeure préalable sera fatale , sauf si les circonstances justifient une demeure de plein droit par l'effet de la loi ou du contrat. Il s'agit de l'exécution en nature par remplacement, par laquelle le créancier exécute lui-même l'obligation ou, le plus souvent, la fait exécuter par un tiers, aux frais du débiteur (article 1602).

Pour se prévaloir de ce droit, le créancier doit , par une mise en demeu re préalable à la prestation exécutée aux frais du débiteur, prévenir expressément ce dernier des manquements qui lui sont reprochés, l'inviter à s'exécuter et lui annoncer la sanction qui sera appliquée s'il fait défaut de s'exécuter dans le délai imparti.

La sévérité démontrée par les tribunaux dans l'application de ce recours s'explique par la volonté de s'assurer que le débiteur soit conscient des frais – souvent considérables – qu'il risque d'encourir par cette sanction extrajudiciaire, s'il n'exécute par son obligation. » [25] Le défaut de mettre le débiteur en demeure par écrit de s'exécuter avant de confier les travaux correctifs à un tiers a souvent entraîné le rejet des poursuites pour malfaçons.

Ce fut le cas concernant l'achat d'un camion atteint d'un vice caché, l'exécution de travaux correctifs par un tiers sans mettre en demeure l'entrepreneur, même situation dans le cas d'un puits, de pose de céramique ou de terrazo. [26] Ce sont les principales règles de droit applicables en semblables matières. Application to the Facts of the Case [ 144 ] The issues that the Court must decide is whether the text message send to STS by Mr. Dresner constitutes a notice of default, and if not, was STS in default by the operation of law.

Specifically, was NBG dispensed from sending a notice of default owing to the urgency of the situation or because STS repudiated its obligations under the Construction Agreement. Did NBG send STS a Valid Notice of Default? [ 145 ] The short answer to this question is no.

[ 146 ] NBG asserts that it sent STS a notice of default by way of a text message sent by Mr. Dresner to Mr. Madimenos on December 1, 2016. Mr. Dresner writes [48] : Mr. Dresner : Sam as we discussed we left off that we would call you two nights ago to discuss an arrangement to settle on all the damage and delays. You did not answer my calls or return them. The next morning Greg called you and you did not answer or contact anyone all day. I even heard from elsewhere that you are no longer talking to me.

With all the delays you decided again to have nothing done yesterday as if to hold us hostage with each day costing us minimum $1,00 a day. We obviously had to make arrangements to complete the job. Mr. Madimenos : Where is my check. Mr.

Dresner: We will see how much to deduct [ 147 ] This text message does not constitute a valid notice of default. [ 148 ] The message does not describe, even if only succinctly, the nature of the breach or default attributed to STS by NBG, the work that is allegedly incomplete or defective, as well as the NBG's intention to avail itself of sanctions in the event that the non-performance persists. [ 149 ] Lastly, the text message does not indicate in what the period of time STS may still carry out its obligations, in other words, what is the time period during which it can cure or remedy the defects. [ 150 ] Mr.

Dresner, implicitly admitted at trial that the text message he sent was deficient. He stated that in hindsight, he wished he had sent STS a demand letter indicating what the defects were. But he didn’t send one because by late November, he was in panic mode and wanted to open the restaurant as soon as possible because money every day the restaurant was not open for business.

This is not a legitimate excuse for not sending a notice of default. [ 151 ] The Court concludes that the NBG never sent STS a notice of default prior to having third parties correct its alleged defective work. [ 152 ] That being said, was STS in default by the sole operation of law pursuant to

article 1597 C.C.Q. ? Was STS in Default Because of the Urgency of the Situation? [ 153 ] Baudouin and Jobin describe as follows the notion of urgency which dispenses a creditor from sending the debtor a notice of default [49] : 705 – Demeure par l'effet de la loi – ….La seconde hypothèse envisagée au premier alinéa diffère quelque peu de la précédente, dans la mesure où elle concerne une prestation qui s'est avérée nécessaire de façon urgente, alors que le débiteur ne pouvait s'exécuter immédiatement .

Il convient de souligner la difficulté que peut présenter l'interprétation de la notion d’urgence pour les fins de l'application de cette règle. Il semble acquis qu'un risque immédiat d'atteinte à la santé ou à la sécurité des personnes ou encore à l'intégrité des biens est susceptible de présenter un caractère d’urgence . À

titre d'exemple, un client constate que l'installation défectueuse d'un nouveau système électrique pour sa résidence pose un risque imminent d'incendie ; il n'est pas tenu de mettre son débiteur en demeure si ce dernier est absent pour causes de vacances et qu'il doit faire appel à un autre entrepreneur électricien compte tenu de l'urgence de la situation. En dehors de telles hypothèses qui posent un risque pour les personnes ou les biens, il convient d'apprécier la notion d’urgence au cas par cas . Ainsi, le fait qu'un voyageur soit contraint de se procurer un nouveau

titre de transport à la dernière minute en raison du défaut de l'agent de voyage de l'avertir de modifications à son itinéraire de vol a été considéré comme un cas d’urgence qui permettait de dispenser ce voyageur d'envoyer une mise en demeure préalable à l'agent, quoique cette situation, à notre avis, correspond sans doute plus clairement à l'autre hypothèse évoquée au premier alinéa de l'article 1597 C.C.Q. , soit l'exécution en temps utile .

Un problème informatique qui entraîne le chaos total au sein d'une entreprise peut présenter un caractère d’urgence , alors qu'un problème de moindre ampleur qui n'a pas pour effet de paralyser les activités de l'entreprise ne sera pas considéré urgent. Le simple fait de devoir encourir des conséquences pécuniaires en raison du retard du débiteur à s'exécuter ne constitue pas en soi un critère suffisant pour conclure qu'il y a urgence.

Le créancier qui agit sans mise en demeure préalable sur le compte de l’urgence doit donc évaluer sa situation avec prudence, puisque le tribunal pourrait ultérieurement considérer que la situation ne présentait pas un degré d’urgence suffisant pour justifier une dispense de mise en demeure, ou encore que le débiteur était en mesure de s'exécuter immédiatement malgré l’urgence de la situation . (References omitted- underling added) [ 154 ] Vincent Karim considers that a creditor is dispensed from sending a notice of default where the situation is dangerous or that there is a risk that a property may deteriorate or perish and that immediate action is required to prevent this from happening [50] : B.

Situations urgentes 1828. L’urgence prévue à l’

article 1597 C.C.Q. vise des situations qui présentent un élément de dangerosité, de risque de détérioration ou de [Page 676] perte de bien, et qui nécessitent une action immédiate pour éviter la réalisation du préjudice, notamment l’exécution des travaux de réparation. Elle couvre aussi des circonstances imprévisibles, mais dont la survenance subite nécessite la prise de mesures préventives ou l’accomplissement d’actes sans retard, pour épargner au créancier un préjudice imminent. 1829. Lorsque le créancier, en situation d’urgence, procède à l’exécution de l’obligation du débiteur, le tribunal doit s’assurer que seules

les réparations urgentes ont été effectuées avant l’envoi de la mise en demeure. Ainsi, c’est au tribunal d’évaluer les dommages en fonction du caractère urgent des réparations. Il peut ainsi refuser d’accorder le coût des réparations effectuées avant l’envoi d’une mise en demeure, mais qui ne sont pas urgentes [ 155 ] NBG has not proven that the circumstances at the Project when STS left the site in late November constitute urgency for the purposes of

article 1597 C.C.Q. [ 156 ] There was no imminent danger of damage to property or persons. The simple fact that it would potentially have to incur damages because there might be a delay in the restaurant opening does not amount to urgency. Was STS in Default Because it Repudiated its Obligations? [ 157 ] A debtor is in default by the sole operation of law alone when he or she clearly manifests an intention not to perform the obligation. [ 158 ] The debtor can repudiate his or her obligations either expressly or tacitly.

However, where the repudiation is tacit, it can only dispense the creditor of the obligation to send a notice of default when prior to the refusal to perform, the debtor had actual knowledge of the non-performance of which he is accused by the creditor. [ 159 ] There can be no question of an indefinite stay by operation of law on the ground of repudiation, express or implied, where the debtor's refusal to perform is legally justified; the exception of non-performance ( art. 1591 C.C.Q. ) is a good example. [51] [ 160 ] NBG has not proven that STS was in default because it repudiated its obligations. [ 161 ] Firstly, NBG never informed STS in sufficient detail of its non-performance. [ 162 ] Moreover, STS’s refusal to continue carrying out construction work at the Project was a valid exercise of its rights under

article 1591 C.C.Q. given that NBG was not paying invoices that were past due. [ 163 ] Since NBG never sent STS a notice of default and considering that it did not prove that is was dispensed from doing so, its Cross-application is dismissed. [ 164 ] In light of this conclusion, the Court does not have to determine whether the work carried out by STS was afflicted with poor workmanship or otherwise deficient and if so, what damages were caused to NBG by these breaches. [ 165 ] That said, if the Court had determined that NBG did put STS in default or that it was dispensed from doing so, it would nonetheless have dismissed the Cross-application due to the NBG’s failure to prove through sufficiently clear, convincing and cogent evidence the existence of the poor workmanship. [ 166 ] Although art. 2120 C.C.Q. creates a presumption of liability of the contractor, the client still has the burden of proving that that the work was afflicted with poor workmanship. [52] [ 167 ] NBG’s two main witnesses, Mr.

Dresner and Mr. Gregoriadis, have no experience in the construction field. Their testimony as to allegedly defective work carried out by STS has little or no probative value. No expert evidence was adduced to prove non- compliance with the plans or that the work was not carried out with usage and good practice. [ 168 ] NBG’s evidence as to the existence of poor workmanship is not sufficiently clear, convincing and cogent to meet its burden of proof. CONCLUSIONS [ 169 ] STS’s claim will be granted in part.

The portion of the claim pertaining to extras is unfounded owing to the fact that the parties entered into a fixed-price contract of enterprise. As for the portion of the claim related to the balance of the contract price, NBG owes $34,625.31 to STS. [ 170 ] NBG’s Cross-application is dismissed because it failed to put STS in default and nor has proved that STS was in default by the sole operation of law pursuant to art. 1597 C.C.Q. [ 171 ]

Article 340 of the Code of Civil Procedure states that legal costs are owed to the party that was successful in the litigation, “unless the court orders otherwise”. Legal costs will not be awarded to STS given the mixed outcome of the litigation FOR THESE REASONS, THE COURT: [ 172 ] GRANTS in

part 9292-2988 Québec Inc.’s Demande introductive d’instance ; [ 173 ] CONDEMNS 9336-0337 Québec Inc. to pay to 9292-2988 Québec Inc. $34,625.31 with interest at the legal rate and the additional indemnity provided by

article 1619 of the Civil Code of Québec , since December 16, 2016; [ 174 ] DISMISSES 9336-0337 Québec Inc.’s Cross-application; [ 175 ] WITHOUT LEGAL COSTS .

__________________________________ ENRICO FORLINI, J.C.Q. Me Pietro Iannuzi Gatusso Bourget Mazzone s.e.n.c. Plaintiff/Cross-defendant’s lawyer Me Cynthia Khayat Liebman Légal Inc. Defendant/Cross-plaintiff’s lawyer Dates of hearing: September 16, 17 and 18, 2020