2014 QCCQ 10102, 2014 QCCQ 10102

Engel c. Rudick 2014 QCCQ 10102 COURT OF QUEBEC Small Claims Division CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL Civil Division No: 500-32-141796-146 DATE: October 1, 2014 ______________________________________________________________________ PRESIDED BY THE HONOURABLE DAVID L. CAMERON, J.C.Q. ______________________________________________________________________ RALPH ENGEL […] Montréal (Québec) […] Plaintiff v.

GERALD RUDICK […] Montréal (Québec) […] Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] The Plaintiff, Ralph Engel, a chartered accountant, sues a former client, Dr Gerald Rudick, dentist, for a balance of account owed for professional services rendered in connection with the preparation of the 2012 tax returns relating to Dr Rudick’s dental practice. [ 2 ] The account, based on a flat fee of $1,400.00 plus taxes, amounts to $1,609.65. [ 3 ] The Defendant made a partial payment of $1,034.77 leaving a balance of $574.88.

In addition to this balance, Mr Engel claims $1,250.00 for time spent in giving Dr Rudick several explanations about the questions that were raised concerning the tax filing.

This amount also includes his claim for lost time appearing in Court. [ 4 ] Dr Rudick contests owing the balance of account, stating that he deducted this amount as a result of work that had not been properly done by the Plaintiff for which he was charged $500.00 plus taxes from the accounting firm to which he gave the engagement for the 2013 tax year. [ 5 ] To resolve this case, the Court must determine: Is the balance of account owing to is the Plaintiff entitled to additional charges for time spent dealing with the issues raised after the income-tax returns had been filed? ANALYSIS

[ 6 ] In preparing the income-tax returns, Mr Engel used materials received from Dr Rudick’s book-keeper. This included an amount of money withdrawn as a reimbursement of part of a loan made by Dr Rudick to the practice. [ 7 ] The book-keeper believes that she included this amount under the wrong category.

It was treated as an income amount rather than as a balance-sheet item under “assets”. [ 8 ] Be that as it may, the $70,000.00 was not treated as income or expense, it was simply irrelevant for the purposes of the income- tax return, and Mr Engel did not take it into account. [ 9 ] Dr Rudick had several exchanges with the Plaintiff about this amount, which were time consuming but unnecessary. [ 10 ] Another item of interest is the amount claimed for an RRSP contribution.

Mr Engel considered an amount less than the contribution as giving rise to the tax deferral, not knowing that the RRSP “room” that had been stated in Dr Rudick’s 2011 Notice of assessment had subsequently been increased through supplemental correspondence from the revenue authorities. [ 11 ] Another singular fact is that the e-filing was inadvertently done prior to Dr Rudick having a chance to review the draft return, and to notify the accountant of any corrections required. [ 12 ] As for the change that had to be made to the 2012 income-tax return to correct the RRSP deferral amount, it was a simple matter to simply file an amendment document, and the Plaintiff was prepared to do so at no extra cost. [ 13 ] The amount that the Defendant claims he had to pay to his new accountant to make this correction, $ 500.00, is not justified; the amount is high and it would have been normal for the Plaintiff, as accountant of record for 2012, to make the corrections as part of his obligation to fulfill his engagement fully. [ 14 ] He was prepared to do so but was denied the opportunity. [ 15 ] The Court comes to the conclusion, therefore, that the balance of account on the flat fee should be paid.

On the other hand, the extra charges claimed are not warranted; in a professional relationship such as that between an accountant and a customer whose income- tax returns are being prepared, it is only normal to engage in follow-up, explanation, and if necessary, reiteration of what has already been explained. This is part and parcel of the professional mandate. [ 16 ] This was not a case where the accountant had to carry out additional work that was not part of the original mandate. If that had been the case, he would have been entitled to charge on hourly basis.

In this case, he did not issue any invoice and, rightly so. [ 17 ] Finally, apart for reimbursement of the Court’s stamp, there are no amounts related to time spent in Court or in preparation of the file that can be compensated as part of the judgement. [ 18 ] Dr Rudick brought a Cross-demand for $ 7,000.00, for additional time spent seeking the advice of another accountant, additional time to prepare documentation, and time spent with his new accountant, as well as preparation time for the Defence of this case. [ 19 ] In the Court’s estimation, the time spent with the new accountant was a natural result of the Defendant’s decision to transfer his file.

This is not a prejudice that is causally related to the error that was made by submitting the e-filing before the client had verified the draft income-tax returns.

[ 20 ] The error resulted in no prejudice and, though the Defendant was free to transfer the file, his additional expenditure of time and energy in doing so is not actionable. [ 21 ] Finally, the Counter-claim related to the defence of a frivolous action, is not well founded as the action was in no way frivolous. [ 22 ] As in the other cases where a Plaintiff is not entirely successful or even not successful at all, that does not make the case frivolous. A frivolous case is one that is so obviously wrong and carried out maliciously, so as to constitute an abuse of process.

This was simply a case where neither party’s position was upheld in full. FOR THESE REASONS, THE COURT: CONDEMNS the Defendant to pay the Plaintiff the amount of $ 574.88, with interest at the legal rate plus the additional indemnity provided for in

article 1619 of the Civil Code of Québec , calculated from August 22, 2013. CONDEMNS the Defendant to pay the Plaintiff’s judicial cost of $ 106.00. __________________________________ DAVID L. CAMERON, J.C.Q. Date of hearing: September 22, 2014