2020 QCCQ 3098, 2020 QCCQ 3098

Hébert Desjardins c. Ta 2020 QCCQ 3098 COURT OF QUÉBEC Small Claims Division CANADA PROVINCE OF QUÉBEC DISTRICT OF SAINT-FRANÇOIS TOWN OF SHERBROOKE Civil Division No: 450-32-700966-195 DATE: August 5, 2020 ______________________________________________________________________ PRESIDED BY SOPHIE LAPIERRE, J.C.Q. ______________________________________________________________________ Jeanne HÉBERT DESJARDINS , residing at [...], Stanstead (Québec) [...] Plaintiff v.

Tuan TA , residing at [...], Cir Ajax (Ontario) [...] Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] This is the story of a business project that turned short. The project implicated the production and distribution of apple cider. Three persons played a role in the project. Mrs. Jeanne Hébert Desjardins knows cider and wanted to launch a new cider on the market. Her ex-brother-in-law, Mr. Lorenzo Stada and his business partner, Mr. Tuan Ta, wanted to participate.

They discussed, met, but never put in writing their business plan nor any agreement. That certainly explains why they now disagree on who should pay for the bottling of the cider. ISSUES [ 2 ] Mrs. Hébert Desjardins asks the Court to condemn Mr. Ta to pay for the cost of bottling. The decisive questions raised are the following : - What is the nature of the business relation between the parties? - Is Mr. Ta obliged for the cost of bottling, or for part of it? [ 3 ] Mrs. Hébert Desjardins submits that Mr. Ta is obliged to pay the entire bottling cost. He was the investor in the project.

He approved every step leading to production and bottling. Thus, he should pay the total amount due to the bottler. [ 4 ] Mr. Ta denies. He pretends the project was still at a preliminary stage. He was waiting for a revised sample of the cider together with some financial data in order to decide if he would invest in the business or not. He never undertook to pay for the bottling. FACTUAL CONTEXT [ 5 ] Proof of the facts leading to an agreement, and of those related to the execution of said agreement, is scarce. It is difficult to sort out facts from perception and

interpretation by the parties. Here is the general context in which the agreement formed and how the parties conducted themselves afterwards. The evidence is almost exclusively based on selected text message exchanges chosen by Mrs. Hébert Desjardins. [ 6 ] At the end of 2017, Mrs. Hébert Desjardins, a young entrepreneur, discussed her desire to produce apple cider with her then brother-in-law, Mr. Stada. The latter had business contacts with the Liquor Control Board of Ontario (LCBO) and a certain useful knowledge about marketing and distributing of similar products. [ 7 ] Mr.

Stada was already in business with Mr. Ta. He interested Mr. Ta in the project in part because of his access to the Asian market. [ 8 ] The three of them met and discussed and as a result, the business project started. Nothing was put in writing. [ 9 ] In February 2018, a sample of the cider was in possession of Mr. Stada and Mr. Ta. At the time, Mr. Stada was busy filing the paper work to be sent to LCBO.

[ 10 ] In March and April, Mrs. Hébert Desjardins was working on logo, labels, boxes and bottles. She kept the other two informed of her progress. Mr. Ta accepted the designer’s bill to be sent to him for payment. He asked about the number of labels and boxes to be made. He accepted to reimburse Mrs. Hébert Desjardins of the cost for the sample. [ 11 ] As for Mr. Stada, he was working on the domain for the web site and on the e-mail addresses to be created for each of them. [ 12 ] During that period of time, Mr. Ta and Mr. Stada had the cider sample tested. As a result, they asked Mrs.

Hébert Desjardins to sweeten the taste. She did, but did not produce nor submit a modified sample for approval. [ 13 ] In August, the labels were printed and paid for by Mrs. Hébert Desjardins. Mr. Stada informed her that the check to reimburse her was in the mail. [ 14 ] At the time, Mr. Ta was busy with something else and lost track of the communications between the parties. At one point, he expressed his surprise at having a business e-mail address already in force. [ 15 ] On the second day of September, Mrs. Hébert Desjardins still had not received the check for the labels.

Three days later, she sent a photo of a bottle of cider and wrote: “Bottling today!”. Mr. Ta reacted with surprise, asking if they were bottling with the old taste. Mrs. Hébert Desjardins reassured him, they were bottling a sweeter cider. She asked him if it was what he wanted and Mr. Ta confirmed that it was indeed. Mr. Ta apologized for not being up to date on their communications. [ 16 ] Then Mrs. Hébert Desjardins wrote that she was still waiting to receive the check for the labels and Mr. Ta promised to take care of it the following day. At the same time, Mr.

Ta inquired on the cost of bottling and wanted confirmation that the cider was bottled in Québec, which it was. Later on the same day, Mr. Ta asked again how much was the cost for the bottling of 9000 bottles which amounted to $15,300. He also demanded the due date for payment. He asked Mr. Stada where the money would come from. [ 17 ] Then things got sour. [ 18 ] Mr. Stada and Mr. Ta texted that they thought only a small batch was bottled, that they were not ready to launch the product on the market, that the new taste had still not been tested. [ 19 ] Two days later, on September 7, Mr. Ta wrote that he and Mr.

Stada did not have the money to pay for something they did not know would generate profit. [ 20 ] Finally, Mr. Ta and Mr. Stada paid for the labels but not for the bottling. [ 21 ] Mrs. Hébert Desjardins is suing only Mr. Ta, saying that he was the investor, not Mr. Stada. ANALYSIS

a) Onus of proof [ 22 ]

Section 2803 of the Civil Code of Québec states : 2803. A person seeking to assert a right shall prove the facts on which his claim is based. […] [ 23 ] In order to succeed, Mrs. Hébert Desjardins needs to prove that Mr. Ta committed to paying for the bottling of the cider, or is obliged by law. [ 24 ]

Section 2804 of the same Code adds : 2804. Evidence is sufficient if it renders the existence of a fact more probable than its non-existence, unless the law requires more convincing proof. [ 25 ] In other words, Mrs. Hébert Desjardins’ evidence shall convince, be conclusive and surpass the one offered by Mr. Ta.

b) Applicable law [ 26 ] A business agreement, either oral or written, is first and foremost a contract. A contract forms when two or more persons agree on binding obligations. The Civil Code tells us : 1378. A contract is an agreement of wills by which one or several persons obligate themselves to one or several other persons to perform a prestation. […] 1385.

A contract is formed by the sole exchange of consents between persons having capacity to contract, unless, in addition, the law requires a particular form to be respected as a necessary condition of its formation, or unless the parties subject the formation of the contract to a solemn form. It is also of the essence of a contract that it has a cause and an object.

[ 27 ] The Civil Code also provides : 1386. The exchange of consents is accomplished by the express or tacit manifestation of the will of a person to accept an offer to contract made to him by another person. [ 28 ] The proof of an oral contract lies on testimony, but also on facts and circumstances. That is called proof by presumption. The Civil Code contains the following provisions: 2846. A presumption is an inference drawn by the law or the court from a known fact to an unknown fact. […] 2849 .

Presumptions which are not established by law are left to the discretion of the court which shall take only serious, precise and concordant presumptions into consideration. [ 29 ] Partnerships are nominated contracts in the Civil Code . This is how they are described : 2186.

A contract of partnership is a contract by which the parties, in a spirit of cooperation, agree to carry on an activity, including the operation of an enterprise, to contribute thereto by combining property, knowledge or activities and to share among themselves any resulting pecuniary profits. [… ] [ 30 ] There are different types of partnerships: 2188. Partnerships are either general partnerships, limited partnerships or undeclared partnerships. They may also be in joint-stock form, in which case they are legal persons. [ 31 ] As to undeclared partnerships, the Code provides: 2250.

The contract by which an undeclared partnership is constituted may be written or verbal. It may also arise as a result of facts clearly indicating the intention to form an undeclared partnership. […] 2251. The partners agree upon the object, operation, management and other terms and conditions of the undeclared partnership.

Failing any special agreement, the relations of the partners between themselves are subject to the provisions governing the relations of general partners between themselves and with the partnership, adapted as required. [ 32 ] As to sharing between partners, the Code refers to general partnerships, particularly to

section 2202 : 2202. T he share of each partner in the assets, profits and losses is equal if it is not determined by the contract. If the contract determines only each partner’s share of the assets, profits or losses, that determination is presumed to be made for all three cases. [ 33 ] The Court believes that the key

section in the present matter is the following: 2205. A partner is entitled, if he was in good faith, to recover the amount of the disbursements he made on behalf of the partnership and to be indemnified for the obligations he contracted and for the losses he suffered in acting for the partnership.

c) The evidence [ 34 ] Neither Mrs. Hébert Desjardins nor Mr. Ta testified precisely about their discussions and meetings prior to starting the project. Their testimony was vague and general. The Court invited both of them to try to be more specific without any success. The lack of Mr. Stada’s testimony added to the fog. [ 35 ] Mrs. Hébert Desjardins testified that Mr. Stada and Mr. Ta agreed to participate in her project. She was, and still is, a student with no real knowledge in business, although she has a certain expertise with cider. She said Mr. Stada had strings and knowledge as to distributing and Mr.

Ta had the money to invest and access to the Asian market. It appears from her testimony that there was no discussion about sharing profits and losses, nor about financial projections or funding. [ 36 ] As for Mr. Ta, he testified that the business project was at a preliminary stage. He was still waiting for financial projections but does not say from whom. It is only if the business announced to be profitable that he would have decided to invest. [ 37 ] His testimony does not find any bearing on the evidence.

On the contrary, evidence shows his full participation in the project, by his approval, his omission to protest and his financial investment. [ 38 ] The evidence supports the existence of a partnership between Mrs. Hébert Desjardins, Mr. Stada and Mr. Ta. They agreed upon an object which was the production of the cider, on a way to put every step in motion, and on their respective role, even if their agreement was not complete or clear [1] .

[ 39 ] The text messages help to see the intention of the parties, although the exchanges are sometimes fragmented and imprecise. For example, at 6:24 p.m. on September 5, Mr. Ta asked about the cost for the bottling of 9000 bottles, but the Court cannot tell where that number comes from and how it came to Mr. Ta’s knowledge. As for the next day, the first part of the exchange is missing. It is the same situation for the exchange that occurred the day before September 10. [ 40 ] However, the exchanges show that the three protagonists were in continuous communication throughout the steps leading to bottling.

They agreed on a name for their business, on a logo for it, on a label for the bottles. Mr. Stada and Mr. Ta requested a sweeter taste for the cider. They knew bottling was starting and did not protest. Their mutual intention was to join their forces in that business project and they did until they were presented with the invoice for bottling. [ 41 ] The Court concludes that Mrs. Hébert Desjardins and Mr. Ta entered into an oral undeclared partnership, together with Mr. Stada, for the bottling and distribution of a new apple cider to be produced by Mrs.

Hébert Desjardins [2] . [ 42 ] There are many gaps in that agreement but it is nevertheless a binding contract with consequences for third parties and between partners [3] . Maybe it was still at a preliminary stage in Mr. Ta’s mind but he did not protest when came the time to pay for the designer, the labels or the making of a sample to be tested. He did not protest when Mrs. Hébert Desjardins seeked his approval for the bottling of 9000 bottles. He only protested when presented with the bottler’s invoice and the obligation to pay it. [ 43 ] That leads the Court to decide if Mrs.

Hébert Desjardins is entitled to claim the full cost of the bottling. [ 44 ] It is Mrs. Hébert Desjardins who ordered the bottling. The invoice from the bottler is addressed to Cidrerie Atwater which is the name chosen by the partners for their business. The business address is at Mr. Stada’s residential address. [ 45 ] As it appears, Mrs. Hébert Desjardins contracted with the bottler for and in the name of the partnership, to the bottler’s knowledge. She acted in good faith, honestly believing that her partners approved and would pay for the bottling, as they did for the sample and the labels.

She had no way of anticipating their protest and refusal when came the time to pay for the bottling. Thus,

section 2205 of the Civil Code applies and she is entitled to recover the amount of the disbursement she made on behalf of the partnership [4] . [ 46 ] Although the evidence is only testimonial, Mr. Ta does not dispute Mrs. Hébert Desjardins’ assertion that she paid $6,000 to the bottler, out of a loan from a family member. She is entitled to recover that amount, but no more. [ 47 ] That leaves another difficulty to be addressed. [ 48 ] There is no agreement as to the proportion in which partners share assets, profits and losses. The Court finds the evidence too thin as to Mr.

Ta’s obligation to pay all the costs alone. It is unclear who exactly paid for the labels and the sample. Was it Mr.Ta and Mr. Stada, or Mr. Ta alone, or Mr. Stada and Mr. Ta’s business? The Court cannot tell. [ 49 ] The Code states what happens in this situation: 2253. Each partner contracts in his own name and is alone liable to third persons. However, where the partners act in the quality of partners to the knowledge of third persons, each partner is liable to the latter for the obligations resulting from acts performed in that quality by any of the other partners. 2254.

The partners are not solidarily liable for debts contracted in the course of carrying on their activity unless the debts have been contracted for the service or operation of a common enterprise; they are liable to the creditor, each for an equal share, even if their shares in the undeclared partnership are unequal. 2256. The partners may exercise all the rights arising from contracts entered into by another partner, but the third person is bound only towards the partner with whom he contracted, unless that partner declared his quality. [ 50 ] The law does not allow Mrs.

Hébert Desjardins to claim from her partners their share of the amount due to a third party. She is only entitled to recover what she paid on behalf of the partnership. [ 51 ] Considering the lack of evidence as to unequal sharing in the partnership, each partner should equally support the cost of bottling. That is why Mrs. Hébert Desjardins can only recover from Mr. Ta $2,000 out of $6,000 she paid to the bottler. [ 52 ] The Court hopes that this judgment will shed light on the obligations of the partners and that each of them will pay their share to the bottler for the balance owed, or to Mrs.

Hébert Desjardins in order for her to pay the bottler, and avoid further litigation. FOR THESE REASONS, THE COURT: [ 53 ] GRANTS the introductive demand in part; [ 54 ] CONDEMNS Mr. Tuan Ta to pay to Mrs. Jeanne Hébert Desjardins the sum of TWO THOUSAND DOLLARS ($2,000) with interest thereon at the legal rate, plus the additional indemnity provided pursuant to

Article 1619 of the Civil Code of Quebec as of November 30, 2018, which is the date of the letter of demand ; [ 55 ] CONDEMNS Mr. Tuan Ta to judicial costs of $205.

__________________________________ SOPHIE LAPIERRE, J.C.Q. Date of hearing: July 7, 2020