2019 QCCQ 6365, 2019 QCCQ 6365

White c. BMOD Communications Inc. 2019 QCCQ 6365 COURT OF QUÉBEC « Small Claims Division» CANADA PROVINCE OF QUÉBEC DISTRICT OF MONTRÉAL No: 500-32-155413-174 DATE: October 11, 2019 ______________________________________________________________________ BEFORE THE HONOURABLE MARIE-JULIE CROTEAU, J.C.Q. ______________________________________________________________________ STEPHEN WHITE Plaintiff v.

BMOD COMMUNICATIONS INC. -and- ERIC FRENDO Defendants ______________________________________________________________________ JUGDMENT ______________________________________________________________________ [ 1 ] On November 10, 2006, the services of Mr. Stephen White were retained as a consultant to assist bMod Communications Inc. ( bMod ) complying with the Act to Promote Workforce Skills Development and Recognition [1] ( Contract ) [2] . [ 2 ] Between 2008 and 2011, Mr. White submitted two invoices for the services he rendered pertaining to the fiscal years 2006, 2007, 2009 and 2010 [3] .

Those two invoices combined amounted to $14,400.00 and were entirely paid by bMod. [ 3 ] On February 20, 2015, Mr. White billed for the work he carried out for bMod in 2012, 2013 and 2014 respectively for the fiscal years 2011, 2012 and 2013, amounting to a total of $21,887.96 [4] . [ 4 ] That bill proved to be problematic and is at the heart of this matter. [ 5 ] Indeed, as bMod was shocked by the amount it was billed for, it contacted the external firm Solertia to assess Mr.

White’s work, which then led bMod to retain their services with regards to the Training Act. [ 6 ] Based on the information received from Solertia thereafter, bMod refused to pay Mr. White’s invoice namely alleging that he did not provide, nor develop, all the proper documentation required by the Training Act, and failed to train bMod’s employees to enable them to complete the work. [ 7 ] On November 2, 2016, Mr. White, through his attorney, sent a demand letter to bMod requesting payment of the outstanding invoice [5] , but to no avail. [ 8 ] On January 12, 2017, Mr.

White filed his Demand claiming $15,000.00 [6] . [ 9 ] In the contestation, bMod maintains its refusal to pay Mr. White’s last invoice and counter-claims $14,400.00 in reimbursement of the sums paid for the services rendered for the 2006 to 2010 fiscal years. QUESTIONS IN DISPUTE [ 10 ] To determine whether bMod owes payment for Mr. White’s outstanding invoice, the Court needs to first address the issue of prescription for which the parties were, upon deliberation, convened to present their respective arguments as this was not initially raised at trial [7] . [ 11 ] Thereafter, the Court must decide if Mr.

White has proven having rendered the services for which he is claiming payment. [ 12 ] Finally, the Court has to determine whether bMod has demonstrated, by a preponderance of evidence, that the work carried out by Mr. White was poorly executed and did not meet the applicable standards, thus preventing him from claiming any amount that may still be outstanding and giving rise to bMod’s counter-claim of $14,400.00.

ANALYSIS [ 13 ] Before analyzing the evidence, the Court must stress that in civil matters, any person wishing to assert a right must prove the facts on which their claim is based [8] . [ 14 ] As such, Mr. White must present compelling evidence to prove that he executed the services for which he is seeking payment.

[ 15 ] Furthermore, since bMod refuses to pay Mr. White and claims reimbursement of the fees it already paid, alleging that his professional services were poorly executed, it is therefore bound to prove the facts on which its allegations are based. [ 16 ] The evidence will be weighed on a balance of probabilities [9] . Where the evidence is contradictory or not sufficiently convincing and the Court is unable to determine where the truth lies, the party with whom the burden of proof lies loses its case. Prescription [ 17 ]

Article 2925 CCQ provides that an action to enforce a personal right is prescribed by three years.

Consequently, if a lawsuit or judicial application is not filed before the expiry of the three year limitation period, unless prescription has been suspended [10] , the creditor’s right is extinguished. [ 18 ] Extinctive prescription begins running on the day the right of action arises [11] . [ 19 ] The Supreme Court of Canada recently underlined that, in contractual matters, « the creditor’s right of action arises once the debtor’s obligation has arisen and is exigible », adding that « when this occurs varies with the circumstances, and especially with the terms of the contract itself » [12] . [ 20 ] When did Mr.

White’s right of action arise in the present case? [ 21 ] To answer this question, the Court must refer to the terms and conditions of the Contract that were detailed by Mr. White in the email he sent to Mr. Eric Frendo, president of bMod, in 2006 : A three year contract whereby I will review your training both internal and external and help you to establish the mechanisms to meet the criteria to qualify for the annual 1% training tax credit (committees, training plans, time logs, expense sheets, etc.).

I will provide/develop all of the documents required and utilize a train-the-trainer approach so that you have the option of continuing the procedure on your own at the end of the contract. The fee for this service will be 30 % for all internal/transferable training and 20 % of all external training submitted for the tax credit. To begin I will require a retainer fee of $2,400 and thereafter I will bill the remainder annually , according to the fee

schedule above. Billings are typically in March after the amount of training done is determined and we have filed for the credit . (emphasis added) [ 22 ] By that email, the parties have decided that Mr. White would bill bMod annually, typically in March since the fees they agreed upon were to be calculated on the basis of a percentage of the amount submitted for the 1% tax credit. [ 23 ] As a result, the parties contractually established that bMod’s obligation to pay for the services rendered by Mr. White was to become exigible in March of each year, which constitutes the starting point of Mr.

White’s right of action and the beginning of the extinctive prescription period. [ 24 ] At trial, Mr. White argued that the extinctive prescription period only began on February 20, 2015, when he submitted his invoice for the work he performed in 2012, 2013 and 2014. He also pointed out that bMod had agreed, in 2008 [13] and 2011 [14] , to pay his invoices that were not issued in March of the year the work was performed. [ 25 ] The fact that bMod has agreed to pay the invoices issued by Mr.

White after the agreed period, cannot, in this case, have the effect of modifying the terms and conditions of the Contract, especially since Mr. Frendo has established, by his clear and credible testimony, that this was never his intention. [ 26 ] Moreover, the documentary evidence filed by Mr. White also demonstrates that he had no intention to modify the terms and conditions of the Contract, including the billing procedures, since its conclusion in 2006 [15] . [ 27 ] Based on the Contract and the testimonial evidence adduced at the hearing, the Court concludes that for each year Mr.

White provided services to bMod, prescription ran during the following periods: Years in which Mr. White rendered his services Dates on which bMod’s obligation to pay became exigible Dates on which Mr. White’s right of action became extinguished 2012 (fiscal year 2011) March of 2012 March of 2015 2013 (fiscal year 2012) March of 2013 March of 2016 2014 (fiscal year 2013) March of 2014 March of 2017 [ 28 ] Mr. White filed his Demand on January 12, 2017. At that time, his right of action for the services he rendered in 2012 and 2013 was already extinguished. As such, Mr.

White’s claim for those services, totalizing $8,162.47, is time-barred and bMod can no longer be forced to pay for it. [ 29 ] However, Mr. White’s filing of proceedings interrupted the prescription period that had not yet expired for the services he rendered in 2014, pertaining for the 2013 fiscal year, and amounting to $6,837.53 [16] . Services rendered by Mr. White in 2014 for the 2013 fiscal year [ 30 ] As stated in the Contract, it was agreed that Mr. White would:

• review bMod’s internal and external trainings in order to establish the mechanisms to meet the criteria to qualify for the annual 1% training tax credit set by the government of Québec (committee, training plans, time logs, expense sheets, etc.); • provide and develop all of the documents required and utilize a train-the-trainer approach so that bMod would have the option of continuing the procedure on its own at the end of the Contract. [ 31 ] In other words, Mr.

White's services involved both the preparation and review of relevant credit documentation, and the training of internal employees to allow them to perform this task by themselves in the future. [ 32 ] By his testimony and the documentation he produced, Mr. White established that further to bMod’s controller’s specific requests, he calculated the figures for government purposes based on the information that was given to him in January and February 2014 [17] . During the same period, he organized Training Committees to which bMod’s employees attended to [18] . [ 33 ] bMod had agreed to pay Mr.

White a compensation calculated on a predetermined percentage of the amounts submitted for the tax credit [19] . At trial, Mr. White explained how he calculated the amount of $6,837.53 he is claiming for the services he rendered in 2014 [20] . [ 34 ] As such, subject to bMod’s arguments raised in its contestation and cross-claim as to the quality of Mr. White’s services, the Court concludes that Mr. White rendered professional services amounting to $6,837.53 for which he has not received any payment. Quality of Mr. White’s professional services [ 35 ] bMod refuses to pay Mr.

White's invoice and is claiming reimbursement of the fees it already paid ($14,400.00) for two main reasons that the Court will address separately. 1. Lack of supportive documentation [ 36 ] bMod argues that it discovered in 2016, through Solertia, that Mr. White had not provided and developed all of the supportive documentation required by Revenu Québec to properly document bMod’s training expenses for the fiscal years 2006 to 2015. [ 37 ] In support of bMod’s contentions, Ms.

Shrutin Bhasin testified and described the contours of the mandate bMod gave Solertia in March of 2016 [21] . [ 38 ] Firstly, it is important to emphasize that the scope of Solertia’s mandate was specifically limited to the documentation detailing and supporting bMod’s training expenses for the four years prior to 2016 (2012 to 2015). Indeed, Ms. Bhasin explained that in the event of an audit, Revenu Québec reserves its right to revise the documentation of the training costs of the past four years. [ 39 ] Consequently, Ms. Bhasin never examined the supporting documents developed by Mr.

White prior to 2012, which are at the heart of bMod’s $14,400.00 cross-claim [22] . [ 40 ] In these circumstances, the Court is of the opinion that Ms. Bhasin cannot express a valid opinion on the quality of the professional services rendered by Mr. White between 2006 and 2011. Consequently, bMod failed to prove, with compelling evidence, that Mr. White did not properly document bMod’s training expenses for that period. [ 41 ] All that remains is to examine the evidence with respect to the quality of the services rendered by Mr.

White in 2014, for the fiscal year 2013, which were part of the mandate entrusted to Solertia. [ 42 ] Ms. Bhasin explained that in order to enable her to carry out her mandate, she transmitted a list of documents to bMod for her to review. She then assessed the documentation she received and concluded that the supporting documentation produced by Mr. White for the fiscal year 2013 was incomplete, as there were no training certificates, training plans, training committee minutes, and because the training logs contained no calculations. [ 43 ] On the other hand, at trial, Mr.

White managed to convincingly demonstrate that some documents he had prepared were never provided to Ms. Bhasin, more particularly concerning training committee, “carry forward” details and information contained in the computer server. Ms. Bhasin confirmed that she requested access to these documents, but she was specifically informed by bMod that they did not exist. [ 44 ] As such, the Court must conclude that Ms.

Bhasin did not have access to all the relevant documentation, which has the effect of greatly diminishing the probative value of her conclusions as to the insufficiency of the documentation prepared by Mr. White in 2013. In addition, it cannot be ignored that because of Solertia's findings as to the quality of Mr. White's services, bMod retained its services with regards to the Training Act, which also impact the probative value of Ms. Bhasin’s opinion. [ 45 ] But, there is more. [ 46 ] To succeed in its claim against Mr.

White, bMod must prove that not only did he fail to provide the appropriate supportive documentation, but also that bMod suffered damages because of Mr. White’s contractual breach. In Québec civil law, causation is an essential component of liability. Even though bMod maintains that the documentation was incomplete, the fact remains that bMod never suffered any damage as a result thereof, considering it has never been subjected to a reassessment by Revenu Québec since 2006. 2. Lack of training [ 47 ] bMod contends that Mr.

White did not complete one of the features of the work he was originally entrusted with, which consisted in training bMod’s employees to take over the majority of the training tasks for the future. [ 48 ] In order to properly train bMod’s employees and make them self-sufficient for the future, Mr. White explained that he needed

to be able to benefit from their support and commitment, which he demonstrated was lacking over the years. [ 49 ] At first, Ms. Sarah Krohl, an account executive at bMod, was designated to work with him as she was familiar with the internal training system and would eventually be assigned to take over his role. At one point, Mr. White was informed that Ms. Diane Millington, the controller, had taken over the training from Ms. Krohl. This proved to be insufficient since Ms. Millington's involvement was mostly, if not solely, of an accounting nature. Indeed, the evidence adduced at trial demonstrates that Ms.

Millington provided the financial details to Mr. White and specifically requested that he prepares the final figures for Revenu Québec for the fiscal years 2011 to 2014. [ 50 ] Furthermore, Mr. White convincingly explained that he encountered several difficulties to put in place the appropriate structure to facilitate the transfer of knowledge, such as the important turnover of bMod employees and their lack of time or interest. At trial, Ms. Teresa Leclerc confirmed that “ everybody at bMod was busy ”, while Ms. Ivah Rosenburm agreed that some years were marked by a greater turnover of personnel.

In fact, she was added to one of the committees put in place by Mr. White, but ended up leaving bMod soon after. [ 51 ] As a result of all the difficulties he was encountering, Mr. White sent a specific request to Mr. Frendo in January of 2014 stating: “ I am completing my second 3 year cycle this year concerning the 1% tax credit. Going forward, I would like to get more of your staff involved so that most of this work can be done in-house . This will allow me to decrease my role substantially and I believe it will be more cost effective for you .

To date, Diane Millington has been very cooperative and of great help in providing the financial information required to submit the financial returns to the government. However, greater involvement is needed from the trainers as they have the added expertise that allows us to provide training documents that the government mandates for a company to qualify the training for the 1% credit. […]”. (emphasis added) [ 52 ] Mr. Frendo did not seek to contradict Mr. White's claim that a greater involvement from his employees was needed, and simply answered “ sure ” to Mr.

White’s request [23] . [ 53 ] In 2014 and 2015, Mr. White initiated meetings during which tasks were defined, but the employees assigned to execute them were not showing the appropriate cooperation to the extent that Mr. White wrote a second email to Mr. Frendo: “[…] I have tried on numerous occasions to employ a train the trainer format in order to transfer the majority of the responsibility over to your staff in order to reduce the cost. However, due to personnel changes and other reasons this was not successful.

If nobody takes responsibility for the 1% portfolio , not only may a lot of our efforts to date be wasted, but we might expose ourselves to future penalties. ” (emphasis added) [ 54 ] Again, Mr. Frendo did not contradict Mr.

White’s assertions and even confirmed that he “ will arrange to have someone assigned to this ” [24] . [ 55 ] As such, if bMod claims that employees have not been sufficiently trained, this is partly, if not exclusively, due to the fact that they were not available or willing to invest the required time and energy. [ 56 ] Furthermore, the Court concludes that bMod failed to demonstrate, by a preponderance of evidence, what damages it would have suffered as a result of Mr. White’s alleged fault in relation to the internal training of its employees. [ 57 ] Incidentally, the Court must underline that Mr.

Frendo’s dissatisfaction appears to stem largely, if not exclusively, from the fact that Mr. White’s last invoice was too pricey. Prior to receiving that invoice, Mr. Frendo had never raised any concerns as to the lack of training. In addition, although it is true that the amount of the last invoice was higher, it must be reminded that the terms of the Contract were such that the growth of bMod’s employees over the years led to an increase of the training activities and, as a result, an increase of the amounts submitted for the tax credit, on which Mr. White's fees were calculated.

Summary [ 58 ] The Court concludes that bMod failed to establish, with a preponderance of evidence, that Mr. White’s services were not satisfactory and did not meet the different criteria established by the Training Act. [ 59 ] Consequently, bMod will have to pay for the services rendered in 2014 for the 2013 fiscal year and the cross-claim by which bMod was claiming to be reimbursed of the fees it paid between 2006 and 2012 is dismissed. [ 60 ] As for the claim instituted against Mr.

Frendo, the fact that he is the president of bMod does not, on its own and in the absence of additional elements, allow the Court to conclude that he is personally liable for the debts of bMod. In fact, legal persons are distinct from their members and their acts bind none but themselves. [ 61 ] According to

article 340 of the Code of civil Procedure , legal costs are owed to the party that was successful, unless the court decides otherwise. In the present case, Mr. White’s demand is granted, but the greater part was dismissed based on prescription and the claim against Mr. Frendo was ill-founded, as was bMod’s cross-claim. Accordingly, the Court will exercise its discretion and each party will pay its own costs. FOR THESE REASONS, THE COURT: GRANTS in part the action of Mr. Stephen White against bMod Communications Inc.; CONDEMNS bMod Communications Inc. to pay $6,837.53 to Mr. Stephen White, with interest at the legal rate and the additional

indemnity foreseen by

article 1619 of the Civil Code of Québec , calculated from November 2, 2016, without judicial costs; DENIES the action of Mr. Stephen White against Mr. Eric Frendo, without judicial costs; DENIES the counter-claim of bMod Communications Inc. against Mr. Stephen White, without judicial costs. __________________________________ MARIE-JULIE CROTEAU, J.C.Q.