2018 QCCQ 7534, 2018 QCCQ 7534

Lavery De Billy c. Gomaa 2018 QCCQ 7534 COURT OF QUEBEC Small Claims Division CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL Civil Division No: 500-32-156385-173 DATE: October 11, 2018 ______________________________________________________________________ BEFORE THE HONOURABLE ENRICO FORLINI, J.C.Q. ______________________________________________________________________ LAVERY DE BILLY Plaintiff v. OSAMA GOMAA and 9315-5273 QUÉBEC INC. and LE ROI AWAWA INC.

Defendants ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] Lavery de Billy (“Lavery”) claims $9,303.89 solidarily from the defendants for professional legal services rendered but which remain unpaid. [ 2 ] It notably argues that Mr.

Gomaa personally guaranteed the obligations of the corporate defendants. [ 3 ] 9315-5273 Québec Inc. (“9315”) admits that it is responsible for the payment of the legal services but adds that the corporation is no longer active and it does not have the ability to pay the debt. [ 4 ] Le Roi Awawa Inc. (“Roi Awawa”) denies that it was Lavery’s client and that it owes anything to the law firm. [ 5 ] Mr. Gomaa argues that he is not personally liable for the payment of the legal fees as the legal services were rendered at the request of and for the benefit of the corporate defendants.

He denies ever agreeing to personally guarantee the payment of the corporations’ obligations. Issues

a) Did Mr. Gomaa personally oblige himself to pay for the legal services rendered by Lavery?

b) Is Roi Awawa responsible for the payment of the legal services? Context [ 6 ] Lavery is a general partnership which operates a business law firm. [ 7 ] Mtre Jean-Philippe Turgeon is a partner with this law firm and has a practice which focuses on franchise law. [ 8 ] 9315 is a corporation which was created in January 2015 for the purpose of operating restaurants. [1] [ 9 ] Roi Awawa was created in February 2014 also for the purpose of operating restaurants. [ 10 ] Mr.

Gomaa is a director and sole shareholder of 9315 and Roi Awawa. [ 11 ] In January 2015, Lavery and Roi Awawa entered into an Agreement for Legal Services. This Agreement was formally witnessed in writing in April 2015. [2] [ 12 ] During the course of 2015 and 2016, Lavery provided legal services to Roi Awawa and 9315 in various fields, including the review of a lease and the development of a franchise program. [ 13 ] Lavery invoiced 9315 and Roi Awawa $30,197.33 for the legal services rendered. A portion of these legal fees were paid, but a

balance of $9,303.89 remains outstanding, including the payment of invoices # 1261784 and 1261785 dated June 30, 2015 (“Outstanding Invoices”). [ 14 ] By the summer of 2016, 9315 and Roi Awawa were insolvent and their restaurant business ceased operations. [3] [ 15 ] On August 25, 2016, Lavery sent 9315 and Mr. Gomaa a demand letter claiming the payment of $9,303.89 for the Outstanding Invoices. [4] [ 16 ] 9315 does not deny owing the amount claimed by Lavery but adds that it has no assets. Considering that impecuniosity is not a valid defense, Lavery’s application against 9315 will be granted. Analysis and Decision

a) Did Mr. Gomaa personally oblige himself to pay for the legal services rendered by Lavery? [ 17 ] Lavery argues that it entered into a verbal contract of suretyship with Mr. Gomaa whereby he personally guaranteed the debts of the corporate defendants. [ 18 ] Mr. Gomaa denies that he ever personally guaranteed the payment of the corporate defendants’ obligations. [ 19 ] The outcome of this litigation turns principally on issues of burden of proof, credibility and reliability of the witnesses.

The Law - Contracts of Suretyship [ 20 ] A contract of suretyship is a contract in which a person binds himself towards the creditor to perform the obligation of the debtor if he fails to fulfill it. [5] [ 21 ] A contract of suretyship can be in writing or verbal. [ 22 ] Lavery argues in the instant case that a verbal contract of suretyship was entered into between it and Mr.

Gomaa. [ 23 ] The law imposes a particularly heavy burden of proof upon a party who alleges a verbal contract of suretyship. [6] [ 24 ] Despite the absence of a commencement of proof, Lavery may make proof of the verbal contract of suretyship by testimony considering that this contract was executed by Mr. Gomaa in the ordinary course of business of an enterprise. [7] [ 25 ] Suretyship is not presumed; it is effected only if it is express. [8] A verbal contract of suretyship cannot be implicit.

The evidence must establish the surety’s firm intention of its commitment to pay. [ 26 ] It is Lavery’s burden in the present case to prove that a verbal contract of suretyship was entered into. [9] Application to the Facts of the Instant Case [ 27 ] In mid-January 2015, Mr. Gomaa contacted Mtre Turgeon because he wanted to retain his legal services for the establishment of a franchise system to operate restaurants under the name Roi Awawa. [ 28 ] Mtre Turgeon learned during their initial meetings that Mr. Gomaa had recently immigrated to Canada.

He was also told that the two corporate defendants were start-ups and had no assets. Mr. Gomaa’s son attended these meetings. [ 29 ] Considering Roi Awawa’s and 9315’s lack of assets, Mtre Turgeon was justifiably concerned about their ability to pay for the legal services. However, Mr.

Gomaa reassured him and told him not to worry because he would personally pay the invoices as he had considerable funds available in his home country. [ 30 ] From mid-January to the end of February 2015, Mtre Turgeon and others from the Lavery law firm performed legal services in relation to the review of a lease agreement. [10] [ 31 ] On or about April 21, 2015, Mr. Gomaa signed on behalf of Roi Awawa the Agreement for Legal Services outlining the terms and conditions of the legal services to be provided by the firm. [11] [ 32 ] In May 2015, Lavery sent Roi Awawa two invoices. At Mr.

Gomaa’s request, the invoices were cancelled and reissued to 9315 and resent. [12] [ 33 ] In August and October 2015, Lavery’s invoice # 1258551 for $5,748 and invoice # 1261783 for $11,494 were paid by cheques issued by 9315. [13] [ 34 ] By early 2016, Lavery invoices # 1261784 and 1261785, dated June 30, 2015 remained partly unpaid, leaving an outstanding balance of $9,303.89. [ 35 ] In April 2016, Mr. Gomaa contacted Mtre Turgeon as he once again needed his services, notably to negotiate a termination of a lease agreement.

The parties agreed to meet at a coffee-shop in the food-court of Lavery’s office building. Mr. Gomaa’s son was again at the meeting. [ 36 ] Mtre Turgeon was reluctant to provide more legal services considering the balance owed on Outstanding Invoices. [ 37 ] Mr. Gomaa reassured him and promised that the Outstanding Invoices would be paid. He remitted postdated cheques to Mtre

Turgeon for the payment of the invoices owed and added that he had personally replenished 9315’s bank account on which the cheques were drawn. [14] [ 38 ] Significantly, he reiterated his personal undertaking to pay the firm’s invoices should the corporation not be able to pay. [ 39 ] Mr. Gomaa denies ever making a personal commitment to pay the corporate defendants’ obligation, whether at the April 2016 meeting or at any other time. [ 40 ] His credibility and reliability is doubtful. He states that he met Mtre Turgeon for the first time in April 2015.

His recollection of the events is not reliable since Lavery’s first invoice (# 1258551) indicates that Mr. Gomaa and Mtre Turgeon communicated and met in January and February 2015. [ 41 ] In addition, Mr. Gomaa’s son was present at the meetings where Mtre Turgeon states that Mr. Gomaa made the personal guarantees. Yet, despite being present at the trial, Mr. Gomaa’s son never testified to corroborate his father’s testimony. The court draws a negative inference from this lack of testimony. [ 42 ] Overall, the Court prefers Mtre Turgeon’s recollection of the facts which took place during his meetings with Mr.

Gomaa and affords credibility and reliability to his testimony. [ 43 ] Mtre Turgeon knew at the outset of the relationship with the defendants that the corporate defendants did not have sufficient assets to pay for the legal services. Hence Mr. Gomaa’s personal commitment to pay the invoices was a primordial condition in Lavery’s agreement to provide legal services.

It is not plausible in the circumstances of the instant case that a legal professional would agree to provide services to impecunious corporate clients without securing a personal guarantee from their sole shareholder. [ 44 ] The Court believes Mtre Turgeon when he states that Lavery only agreed to provide legal services on the condition that Mr. Gomaa act as a surety for the corporate defendants. [ 45 ] For the forgoing reasons, the Court concludes that Lavery has proven the existence of a verbal contract of suretyship with Mr. Gomaa. Therefore, he is personally obligated to pay the debts of 9315 and Roi Awawa.

b) Is Roi Awawa responsible for the payment of the legal services? [ 46 ] The Agreement for Legal Services was entered into between Lavery and Roi Awawa. [15] [ 47 ] At Mr.

Gomaa’s request, Lavery’s invoices were reissued and sent to 9315. [ 48 ] 9315 paid Lavery’s invoices, except for the Outstanding Invoices which remain unpaid because the postdated cheques which had been remitted to Lavery were not honored by 9315’s financial institution. [16] [ 49 ] Although a third person may agree to pay the debts of a party to a contract, this does not mean that the party to the contract is liberated from its obligations. [17] [ 50 ] In the instant case, while 9315 paid for the legal services which Roi Awawa obligated itself to pay by signing the Agreement for Legal Services, this does not liberate Roi Awawa from its obligations under this agreement. [ 51 ] Accordingly, the Court concludes that Roi Awawa is and remains liable towards Lavery for the payment of the Outstanding Invoices. [ 52 ] 9315 has admitted its indebtedness towards Lavery and accordingly, it too will be condemned to pay the amount claimed by Lavery. [ 53 ] Applying paragraph 2 of

Article 1525 C.C.Q. , the Court concludes that 9315, Roi Awawa and Mr. Gomaa are solidary liable for the payment of Lavery’s unpaid invoices. FOR THESE REASONS, THE COURT: [ 54 ] GRANTS Lavery de Billy’s Application; [ 55 ] CONDEMNS Osama Gomaa, Le Roi Awawa Inc. and 9315-5273 Québec Inc. solidarily to pay to Lavery de Billy $9,303.89 with interest at the legal rate and the additional indemnity provided for by

article 1619 of the Civil Code of Québec from August 30, 2016; [ 56 ] WITH COSTS of $170. __________________________________ ENRICO FORLINI, J.C.Q.

Date of hearing: June 11, 2018