2016 QCCQ 13059, 2016 QCCQ 13059

9263-0185 Québec inc. (MLC Affaires) c. NBS Global Services Inc. 2016 QCCQ 13059 COURT OF QUÉBEC Small Claims Division CANADA PROVINCE OF QUÉBEC DISTRICT OF MONTRÉAL Civil Division N os : 500-32-146172-152 500-32-146303-153 500-32-146304-151 500-32-146509-155 DATE: October 20, 2016 ______________________________________________________________________ PRESIDED BY THE HONOURABLE EMMANUELLE SAUCIER, J.C.Q. ______________________________________________________________________ 9263-0185 QUÉBEC INC. (MLC AFFAIRES) Plaintiff v.

NBS GLOBAL SERVICES INC. and SHAFQAT BASHIR Defendants ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] 9263-0185 Québec Inc. doing business under the trade name “MLC Affaires” (“ Québec Inc. ”) is claiming the following amounts jointly and severally from NBS Global Services Inc. (“ Global ”) and Shafqat Bashir personally, as the shareholder of Global, representing the damages that it sustained as a result of the late delivery and lack of quality of the merchandise sold by Global: - $15,000 in the file bearing number 500-32-146304-151 ( Container A ); - $15,000 in the file bearing number 500-32-146303-153 ( Container B ); - $15,000 in the file bearing number 500-32-146172-152 ( Container C ); - $8,750 in the file bearing number 500-32-146509-155 ( Container D ). [ 2 ] Global denies being indebted to Québec Inc., stating further that Québec Inc. inspected all merchandise before it was bundled in bales and when it was loaded into the containers for shipment. [ 3 ] Furthermore, Global claims that all complaints, shortfalls or changes in the merchandise (quality and quantity) were settled between the parties and that Québec Inc. was fully compensated. [ 4 ] Mr.

Bashir denies owing any amount and further states that the sale contracts were between Global and Québec Inc. He adds that he never made any false representation to Québec Inc. [ 5 ] The four files were heard in a common hearing and will be disposed of in the present judgment. QUESTIONS IN LITIGATION [ 6 ]

a) Is Québec Inc. entitled to damages resulting from the delivery of unsatisfactory goods by Global, and if so, what is the amount payable?

b) Is Mr. Bashir personally liable to Québec Inc. because of his conduct? ANALYSIS [ 7 ] In order to win its case, under the general provisions of the rules of evidence, Québec Inc. has the burden of proving the merits of its claim, pursuant to articles 2803 and 2804 of the Civil Code of Québec (“ C.C.Q. ”), which read as follows: 2803. A person seeking to assert a right shall prove the facts on which his claim is based. A person who claims that a right is null, has been modified or is extinguished shall prove the facts on which he bases his claim. 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.

[ 8 ] Québec Inc. specializes in the sale of goods for clients abroad. [ 9 ] Global is a sorting company and an exporter of used clothes, shoes and accessories. [ 10 ] On or about September 17, 2014, Québec Inc. purchased 37 specific items of used and new clothing, which consisted in 567 bales of 45 kg each for a purchase price of US$33,899.50 (Container A) . [ 11 ] On or about October 9, 2014, Quebec Inc. purchased from Global 571 bales of used clothing, including 22 bales of used women purses (grade A), 22 bales of used men boots (grade

A) and 22 bales of used children boots (grade

A) for a purchase price of US$35,587 (Container B) . [ 12 ] Container A arrived at its destination approximately 10 weeks later with a two-week delay. [ 13 ] Meanwhile, on or about November 6, 2014, Québec Inc. purchased from Global for US$23,158.06, 19,090 kg of “Brick-a- Brack” items, which consist of miscellaneous kitchen articles described in the invoice (Container

C) as follows, namely: “Bark Berik Mix Krokery, 50% steel and metal, 40% plate and cup; 5% to mex, 10% wine glace”. [ 14 ] On November 19, 2014, Québec Inc. was informed by the custom agent that the quantity and weight of Container A did not match the description specified in the Bill of Lading and that the container was half empty. [ 15 ] At that time, Québec Inc. had already paid in full to Global the purchase price for Containers A and B and 50% of the purchase price for Container C. [ 16 ] On or about December 1, 2014, Québec Inc. discovered that the goods in Container A differed in quality and quantity from the ones ordered. [ 17 ] Québec Inc. confronted Mr.

Bashir about the differences of quantity and quality of the goods. [ 18 ] Mr.

Bashir initially denied the allegations before finally acknowledging his employee’s error when confronted with the documentation, but he refused to reimburse Québec Inc. [ 19 ] Global insisted that the only way in which Québec Inc. could be compensated was to order more goods and apply a credit note on such new order. [ 20 ] Québec Inc. felt pressured to place an additional order in order to benefit from the credit. [ 21 ] On or about December 11, 2014, Québec Inc. purchased from Global 65 bales of new clothing for a total weight of 2,925 kg for a purchase price of US$14,625. [ 22 ] On December 29, 2014, Québec Inc. was advised by the custom agent that the weight and quantity of the goods in Container B were inconsistent with the Bill of Lading. [ 23 ] On or about January 10, 2015, Quebec Inc. discovered that the goods in Container B differed in quality and quantity from the ones ordered. [ 24 ] On or about January 22, 2015, Quebec Inc. was advised by the custom agent that the custom document did not match the information on the Bill of Lading for the goods in Container C.

The merchandise weighed 15,860 kg instead of 19,345 kg. [ 25 ] The proof reveals that Global purchased these goods from a third party (“ Third Party ”) and sold them to Québec Inc. [ 26 ] The Third Party testified at trial that the grade, price and weight were much lower than the ones indicated on Global’s invoice to Québec Inc. [ 27 ] Québec Inc. advised Global that its client was dissatisfied, that the goods were of lesser quality than the ones ordered and that the client refused to pay the remaining 50% owing to Québec Inc. [ 28 ] With respect to the goods in Container D, the representative of the company who purchased said goods from Québec Inc. testified that not only was the weight much lower, but also that the quality of such goods was so bad that they were of no use to the company. [ 29 ] In February 2015, Global granted an additional credit to Québec Inc. and suggested to send additional goods (“ Additional goods ”). [ 30 ] Global did not convince the Court that Québec Inc. accepted the credit and the Additional goods as a final settlement for its damages. [ 31 ] On the contrary, the Court concludes that Québec Inc. meets its burden of proving that it never requested these goods but accepted delivery of same as a partial compensation for its losses. [ 32 ] Québec Inc. was shocked when it discovered that the Additional goods weighed significantly less than promised and that the quality was of the poorest category. [ 33 ] The Additional goods are still in Québec Inc’s warehouse and Québec Inc. tendered same to Global at the hearing.

[ 34 ] The Court concludes from the testimony heard at the hearing and the exhibits that the Plaintiff met its burden of proving that Global failed to deliver the goods contemplated in the invoices. [ 35 ] Global did not submit any convincing evidence that the goods sold and delivered matched their description on the invoices. [ 36 ] Global even acknowledges that there were discrepancies in the weight and offered a credit to be applied on the next order. [ 37 ] In addition, the Court concludes from the evidence submitted at the hearing that Québec Inc. was unable to inspect all merchandise before it was bundled in bales and when it was loaded into the containers for shipment. [ 38 ] The Court concludes that the arguments raised by Global are unsupported by the evidence. [ 39 ] Québec Inc.’s clients were totally dissatisfied with the content of the four containers. [ 40 ] Québec Inc. demonstrated that it only received payment for half of the amount billed to its clients for the goods contained in Containers A, B, C and D, namely US$69,725, leaving an equivalent amount outstanding. [ 41 ] The Court concludes that Québec Inc. meets its burden of proving its damages in each file and condemns Global to pay to Québec Inc., for the following amounts, namely: • $15,000 in the file bearing number 500-32-146304-151 (Container A); • $15,000 in the file bearing number 500-32-146303-153 (Container B); • $15,000 in the file bearing number 500-32-146172-152 (Container C); • $8,750 in the file bearing number 500-32-146509-155 (Container D). [ 42 ] Québec Inc. is also seeking a personal condemnation of Mr.

Bashir for these damages. [ 43 ] In Publicité postale Premier Choix c. Groulx [1] , the Court reviews the principles surrounding the personal liability of a shareholder. [ 44 ] The C.C.Q.’s fundamental rules are that a contract has a relative effect and that a company has a distinct personality from its members: 1440. A contract has effect only between the contracting parties; it does not affect third persons, except where provided by law. 309. Legal persons are distinct from their members. Their acts bind none but themselves, except as provided by law. [ 45 ] There are, however, exceptions to these principles.

Namely, the general obligation imposed on everyone to act in good faith, as provided by articles 6, 7 and 1375 C.C.Q. or when a fault is committed, as stated in

article 1457 C.C.Q. or by lifting the corporate veil, when the conduct of a shareholder is equivalent to an abuse of right, fraud or contrary to public order, as provided in

article 317 C.C.Q. [ 46 ] The Court concludes that Québec Inc. did not meet its burden of proving that Mr. Bashir acted in bad faith and conducted himself in an abusive manner. [ 47 ] Québec Inc.’s request for a personal condemnation of Mr. Bashir is denied. FOR THESE REASONS, THE COURT: IN THE FILE N o 500-32-146172-152: GRANTS in part the demand; PRAYS ACT of 9263-0185 Québec Inc.’s tender of the Additional goods; CONDEMNS NBS Global Services Inc. to pay $15,000 to 9263-0185 Québec Inc. with interest at the legal rate plus the additional indemnity stipulated in

article 1619 of the Civil Code of Québec plus $250 of legal costs; DISMISSES 9263-0185 Québec Inc.’s demand against Shafqat Bashir with legal costs of $120. IN THE FILE N o 500-32-146303-153: GRANTS in part the demand; PRAYS ACT of 9263-0185 Québec Inc.’s tender of the Additional goods; CONDEMNS NBS Global Services Inc. to pay $15,000 to 9263-0185 Québec Inc. with interest at the legal rate plus the additional indemnity stipulated in

article 1619 of the Civil Code of Québec plus $250 of legal costs; DISMISSES 9263-0185 Québec Inc.’s demand against Shafqat Bashir with legal costs of $120. IN THE FILE N o 500-32-146304-151:

GRANTS in part the demand; PRAYS ACT of 9263-0185 Québec Inc.’s tender of the Additional goods; CONDEMNS NBS Global Services Inc. to pay $15,000 to 9263-0185 Québec Inc. with interest at the legal rate plus the additional indemnity stipulated in

article 1619 of the Civil Code of Québec plus $250 of legal costs; DISMISSES 9263-0185 Québec Inc.’s demand against Shafqat Bashir with legal costs of $120. IN THE FILE N o 500-32-146509-155: GRANTS in part the demand; PRAYS ACT of 9263-0185 Québec Inc.’s tender of the Additional goods; CONDEMNS NBS Global Services Inc. to pay $8,750 to 9263-0185 Québec Inc. with interest at the legal rate plus the additional indemnity stipulated in

article 1619 of the Civil Code of Québec plus $250 of legal costs; DISMISSES 9263-0185 Québec Inc.’s demand against Shafqat Bashir with legal costs of $120. __________________________________ Emmanuelle Saucier, J.C.Q. Date of hearing: October 4, 2016