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Again, the fine print!  The following content is based on judgments rendered by the courts in Quebec and elsewhere in Canada, is shared as general information only, does not constitute a legal opinion on our part and does not establish a solicitor-client relationship. The law discussed here may be modified or may have been modified and the facts of the case are not necessarily the same as those that may concern you. Be prudent and consult an attorney before making an important decision. Each of our articles is based on authentic events, court cases and judgments, although we have, out of respect, attributed fictitious names to the implicated parties for publication purposes on the present web site. Your utilization of the present site is subject to the Terms and conditions of utilization. If you do not see a navigation bar at left, you may access the optimal version of our site by clicking here. To contact a Quebec attorney, click here.

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60. Internet attacks against a business operation: injunction and damages.

As president of Cleopatra Inc., Caesar heads a franchise operating about a hundred health studios (dieting care, weight loss and control, etc.).

On the other hand, Brutus has a phys ed. degree and describes himself as a "anti-diet" activist with two missions: to  bring women to love themselves by complementing "the natural beauty of feminine roundness", and to lead a "crusade" against diet clinics, regarding which he considers himself justified to take any means which may be required. In the course of his activities, Brutus operates four Web sites on which he describes Cleopatra Inc. and/or Caesar as follows: raptor of the worst kind, liar, defrauder, cheat, dishonest, antisocial, thief, worse than a biker gang, rat, rat face, Al Capone of weight loss, and so on.

Having been informed of the existence of these Web sites, Cleopatra Inc. and Caesar sued Brutus for 500 000$ for libel as well as moral and exemplary damages, by invoking the fact that he had entertained and published libelous, injurious and false discourse concerning them. They also asked the court to order Brutus to cease acting in this way.

At trial, Brutus admitted that he had never visited Cleopatra's establishments, that he had indeed held such discourse and that his words were susceptible of causing harm to Cleopatra Inc.'s and Caesar's reputations, regarding which the court mentioned the following:

"The right to free speech is a fundamental right and all citizens have the right to voice their opinions, even if they are contrary to the majority's opinions, and even if, on occasion, they may shock. But a person may not, in invoking such right, unjustly and maliciously cause prejudice to the reputation of another.

 

A line separates honest debate on a litigious matter from personal and vicious attacks, and [Brutus] has clearly crossed this line.

 

In holding such injurious and excessive discourse, he evidently wished to expose [Cleopatra Inc. and Caesar] to public disapproval, to harm them and to cause them loss of clientele."

According to the court, Brutus' discourse was rambling, he did not submit any evidence in support of it, he was obsessed by his "mission", he had lost all sense of proportion and he was manifestly acting in bad faith.

As to damages, at trial Caesar testified to the effect that following Brutus' ravings, business had dropped off considerably for the first time since Cleopatra Inc.'s incorporation, whereas in previous years business volume had always grown monthly. Although he was unable to directly link this drop to Brutus' discourse, according to Caesar the coincidence was strange.

Caesar also established that after the publication of Brutus' attacks, representatives of consumer protection publications had, for the first time since Cleopatra Inc.'s incorporation, called him to obtain explanations and clarifications.

Thus, even if it was difficult for Caesar to quantify to what extent Brutus' discourse had harmed his and Cleopatra Inc.'s reputations, he stated that it was unthinkable that such was not the case since Brutus' Web sites had high hit rates and that it was very unlikely that Cleopatra's Inc.'s businesses had not been tarnished. Caesar also mentioned that Quebec was a "small market", that competition was fierce and that since news or rumors spread quickly, they could rapidly affect people such Cleopatra's patrons.

However, since Cleopatra Inc. and Caesar did not establish in court that their business had indeed dropped off (they could have submitted accounting data, for example), nor that Caesar's reputation had been tarnished, the court had no choice but to dismiss their claims for libel.

As to moral damages caused to Caesar, the court noted that even if they were hard to quantify, they certainly existed in view of the harshness of Brutus' accusations, regarding which the court referred to previous judgments in such matters:

"The moral prejudice being, by nature, qualitative and irreparable, its appreciation in monetary terms is an imprecise and arbitrary exercise, and it is difficult to evaluate mathematically."

 

"The monetary evaluation of non pecuniary losses is more a philosophical exercise that a legal or logical one."

The court ordered Brutus to pay 10 000$ to Caesar in moral damages.

As to exemplary damages, since Brutus had not submitted any evidence to justify his behavior, the court concluded that he had intentionally acted illegally and ordered him to pay, in addition, 5 000$ to Cleopatra Inc. and 10 000$ to Caesar, i.e. 25 000$ in total.

The court also ordered Brutus:

a) to cease and abstain from holding, publishing or publicizing by any mean or under any form whatsoever, personally or by the intermediary of anyone else, any libelous or injurious discourse, or any discourse of such nature as to harm the reputation, the honor or the dignity of Cleopatra Inc. or Caesar, or Caesar's private life; and

 

b) to delete all comments, declarations, allegations or references pertaining to such discourse concerning Cleopatra Inc. or Caesar from any Web site under his direct or indirect control, including the four Web sites which the judge indicated.

This judgment shows how difficult it is for courts to evaluate these types of damages, so in such circumstances it is important to assure a solid preparation of the case at hand, and to submit the most precise data available to the court.

As to Alphonso Capone, who weighed in at over 113 kg, we doubt he counted calories!

[Posting date in the "Articles" section: 29/10/01. Court file number: 505-05-006915-018. Judgment date:07/05/01]

Brought to you by Beaulieu Normandeau, Quebec City law firm practicing in collaboration with the law offices in Montreal of Therrien Turcotte.

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59. The omission to pay an important debt does not necessarily entail bankruptcy.

Before undertaking proceedings in bankruptcy against someone who owes you money, it is important that you verify his or her financial situation correctly, or you risk being ordered to pay damages.

Such is the effect of a judgment rendered by the Quebec Superior Court in a case where , in view of Debtor Inc.'s default in paying some 80 000$ it owed to it, Creditor Inc. had addressed the bankruptcy registrar to obtain a receiving order against Debtor Inc., as well as the nomination of an interim receiver (trustee) to take possession of Debtor Inc.'s assets to administer, conserve and protect them.

In support of its motions, Creditor Inc. invoked sub-section 42 (1) j) of the Act respecting Bankruptcy and Insolvency, to the effect that a debtor commits an act of bankruptcy when he or she "ceases to meet his liabilities [obligations] generally as they become due".

Creditor Inc.'s motions having been granted by the registrar, Debtor Inc. immediately asked the Superior court to annul these decisions, and to order Creditor Inc. to pay damages in compensation for inconveniences caused.

At trial, the question as to whether Debtor Inc. had ceased to meet its liabilities generally as they became due was debated.

Although it had admitted owing the 80 000$ to Creditor Inc., Debtor Inc. established that with the exception of this amount, it regularly paid its debts, and its attorney argued that Creditor Inc. had illegally used the Act to try to collect a debt rather than utilize appropriate and available civil recourses (action for payment).

Creditor Inc. replied by referring to caselaw to the effect that the refusal or omission by a debtor to pay one single creditor may be considered as an act of bankruptcy.

As mentioned by the court, certain judgments are indeed to the effect that a debtor who owes an important amount to a single creditor may commit an act of bankruptcy if he does not pay him, although most judgments are to the effect that in referring to "liabilities generally as they become due", section 42 (1) j) requires evidence of a general cessation of payments, which implies that an isolated omission or belatedness does not suffice unless special circumstances prevail, in which the debtor has one creditor only and defaults repeatedly in paying his due or has several debts in such Creditor's favor, or in which the debtor acts fraudulently towards this creditor or is notoriously insolvent without possibility of eventual repayment of his debt or debts.

Thus, since Creditor Inc. had not established that such special circumstances prevailed and since evidence submitted was to the effect that the business operated by Debtor Inc. had an important clientele and operated profitably, the Superior court concluded that the sole demonstration to the effect that Debtor Inc. owed some 80 0000$ to Creditor Inc. did not suffice and could not justify the emission of a bankruptcy order.

The registrar's decisions were therefore annulled by the court and the judge ordered Creditor Inc. to pay all of the receiver's costs.

As to Debtor Inc.'s claim for damages, it was thrown out on the basis that no evidence had been submitted as to any damages due to Creditor Inc.'s bankruptcy motions, and one may surmise that things would had gone differently had such evidence been submitted.

Although the Superior court judgment does not mention anything in this regard, Creditor Inc. most probably subsequently sued Debtor Inc. to obtain payment of the 80 000$.

[Posting date in the "Articles" section: 22/10/01. Court file number: 200-11-009402-010. Judgment date:07/08/01]

Brought to you by Beaulieu Normandeau, Quebec City law firm practicing in collaboration with Therrien Turcotte, lawyers in Montreal.

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58. Civil liability: a defective stool costs a restaurateur 53 975$.

Jules enters into a restaurant and sits on a stool, which breaks and sends him crashing to the floor, causing him severe back injuries.

In alleging that the owner of the restaurant was responsible for his fall and injuries, Jules sued him on the basis that the accident was entirely due to the restaurateur's imprudence, negligence and carelessness in that he or his employees had neglected to provide clients with equipment in good condition, and neglected to adequately maintain the stool to assure its safety, thereby tolerating a dangerous situation created by the stool's defective nature.

In defense, although he could not explain which part of the stool had broken, nor the cause of the break, the restaurateur testified to the effect that he had taken for granted that is was in good condition in view of the fact that no such accident had occurred since his acquisition of the stools over ten years ago. His attorney argued that the incident was uncontrollable and unforeseeable, and therefore constituted a fortuitous event regarding which his client could not be held liable.

In ordering the restaurateur to pay Jules 53 975$ in damages (incapacitation, pain and suffering, loss of enjoyment of life, etc.), the court considered that the owner of an establishment:

a) "has the obligation to put to the disposal of those who enter the premises equipment and furniture which are in good condition and safe, and which may sustain frequent usage by people whose weight may greatly vary"; and

 

b) "also has the obligation not only to undertake repairs which may be required from time to time, but also to take preventive and reasonable steps to assure that the furniture remains in good condition and safe".

In considering that the owner of such an establishment "certainly is not responsible for injuries sustained by a client who uses furniture abusively or recklessly", the court underlined the fact that a restaurant may be frequented by clients which may be particularly hard on furniture, which requires greater vigilance.

As to the stool, the court also mentioned that "even if it must be presumed that this was equipment of good quality, it would not be abnormal that after so many years of use certain of the stool's parts or components could have weakened, rendering its use more risky."

Furthermore, the court rejected the restaurateur's argument to the effect that it was Jules who had to establish that the stool was defective or in bad condition, on the basis that it was rather to the restaurateur to establish that the stool was in good condition, or that despite all reasonable precautions which had been taken (inspections or preventive maintenance, etc.) he had not been able to prevent or avoid the break. Since the restaurateur had not submitted such evidence, the court concluded that he was liable (the judgment makes no mention of any insurance policy).

Since one may deduce from this judgment that any business may have to establish that its furniture, equipment and other utilitarian objects were in good condition at the moment a regrettable incident occurred, or at least that it could not have prevented or avoided such an incident, which occurred despite its precautions, in addition to being adequately insured well-advised business people will periodically inspect their property and undertake maintenance as may be required.

[Posting date in the "Articles" section: 15/10/01. Court file number: 760-05-0000094-886. Judgment date: 02/04/01]

Brought to you by Beaulieu Normandeau, Quebec City law firm practicing in collaboration with the Therrien Turcotte law office in Montreal.

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57. Short story of a theft and of a dismissal followed by threats.

A judgment recently published in electronic databases concerns a case where Beatrice, the assistant director of a business operation, had informed its board of directors of the fact that one of its employees, Ralph, had taken money which did not belong to him, thereby committing theft.

In reaction, the business CEO fired Ralph, who at the end of the day brought the news to his wife, a surprised Rita who did not believe the theft accusation and considered Ralph's firing unjust.

The next morning, Rita went to the florist and had a funeral wreath shipped to Beatrice with the following note: "A tender thought. This is what I was able to find which best represents the hell of your upcoming months."

In receiving the wreath and the note at work, Beatrice burst into tears, became nauseated and, fearing for her life and that of her family, interrupted her day's work. At her husband's insistence and in view of her general condition, Beatrice consulted a physician, who prescribed medication since in addition to nausea, she was suffering from trembling, loss of appetite, insomnia, fear and anxiety, while feeling followed and watched. She was then referred to a psychologist, and filed a complaint with the municipal police. Also, Beatrice was unable to concentrate at work and had to take leave on several occasions.

Considering all this, Beatrice sued Rita for some 22 000$ in damages and at trial, testified to the effect that she had perceived the note accompanying the wreath as a "sooner or later" death threat, i.e. someone would follow her and kill her. She also testified to the effect that her fears had increased following anonymous phone calls in the middle of the night, as well as the loosening of bolts on her car wheels, although she could not prove Rita had anything to do with this.

As to Rita, she admitted sending the wreath and the note to Beatrice, but added that she was frustrated by the bad news and had only wanted to communicate the pain she felt to Beatrice, without thinking of death threats and in referring only to the legal fight ahead (Ralph's judicial complaint for unjust dismissal was subsequently thrown out). In arguing that Beatrice's claim was exaggerated, Rita offered to pay her 2 000$.

The court partly granted the action and ordered Rita to pay Beatrice 12 090$: 2 090$ for the psychologist's fees, 5 000$ for moral damages and compensation for shock and loss of enjoyment of life, plus another 5 000$ as exemplary damages.

In so doing, the court considered that Rita's 2 000$ offer was manifestly insufficient considering her behavior, which the court qualified as odious, somber, lugubrious, and vindictive, adopted in the sole design of profoundly hurting Rita and of undermining her physical integrity and security:

"The defendant [...] has vainly tried to convince the court that she only wanted to show her disapproval regarding her partner's dismissal, without having any other design. The court does not sustain what appears, at the most, to be the defendant's superficial remorse and regret. To the contrary, it appears that [Rita] deliberately chose to send the funeral wreath and the note while knowing full well that Beatrice, as any other human being, would associate this note with death."

In support of its decision, the court quoted the Quebec Charter of human rights and freedoms' sections 1 ("Every human being has a right to life, and to personal security, inviolability and freedom") and 49 (" Any unlawful interference with any right or freedom recognized by this Charter entitles the victim to obtain the cessation of such interference and compensation for the moral or material prejudice resulting therefrom. In case of unlawful and intentional interference, the tribunal may, in addition, condemn the person guilty of it to punitive damages.").

The court also quoted section 1457 of the Quebec Civil Code:

"Every person has a duty to abide by the rules of conduct which lie upon him, according to the circumstances, usage or law, so as not to cause injury to another.

 

Where he is endowed with reason and fails in this duty, he is responsible for any injury he causes to another person and is liable to reparation for the injury, whether it be bodily, moral or material in nature.

 

He is also liable, in certain cases, to reparation for injury caused to another by the act or fault of another person or by the act of things in his custody."

Although this case did not concern the additional damages which were undoubtedly caused to the employer by Beatrice's incapacity to regularly assume her functions at work, the business' owners most probably also had good cause of action against Rita. As to Beatrice's complaint with the police department, although the judgment does not follow up on it, in view of Rita's admissions criminal accusations may well have been brought against her

[Posting date in the "Articles" section: 09/10/01. Court file number: 500-02-005851-963. Judgment date: 20/11/97]

Brought to you by Beaulieu Normandeau, Quebec City law firm practicing in collaboration with Therrien Turcotte, law firm in Montreal.

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56. Franchise agreement: the importance of uniformity.

A Quebec Superior court judgment has granted the action undertaken by a franchiser against one of his franchisees, to the effect of annulling the franchise contract and the lease granted to the franchisee, of expulsing him from the rented premises and of ordering him to pay some 87 000$ in damages and royalties to the franchiser.

Although the franchisee had recognized, in the franchise agreement, that it was of vital importance to the franchiser and for each of the chain's franchisees that he respect the franchiser's standards and policies (non-smoking environment, uniformity of services, wearing of uniforms, adequate training of employees, maintenance and cleanliness of premises, presence at yearly conventions, participation in promotional activities, non utilization of unauthorized products; payment of salaries, rent, suppliers, taxes and royalties when due, transmission to the franchiser of regular financial statements, etc), according to the judge the franchisee had in several aspects and repeatedly omitted, neglected or refused to respect these standards and policies.

This judgment is of interest in that the court mentions that a franchisee's conduct impacts on the whole chain operated by the franchiser and that the chain is only as strong as its weakest link, whereas the banner, trademark, image, ambiance, and reputation of a franchise operation is part of a formula or system to which all franchisees subscribe and from which they derive mutual and reciprocal benefit.

The court also mentioned that it is essential and vital to the success of a franchise operation that the following qualities coexist:

a) positive identification with the banner and trademark;

 

b) homogeneity in the standards applied and system or formula followed;

 

c) integrity and consistency in the application of the formula and standards in detail throughout the franchise operation so as to establish credibility for the banner, trademark and the chain;

 

d) reliability and consistency of products and in product control standards so that the same products, of identical quality and size, be furnished throughout the chain by approved suppliers who can rely on the reputation of the franchise operation at large to fulfill their financial commitments to them.

In noting that the franchiser was not only entitled to but obliged to take proceedings against his defaulting franchiser to protect the integrity and reputation of the chain since any client who was lost as a result of a bad experience was a client lost by the entire chain, the court mentioned the following:

"Each franchisee within the chain contributes a vital and essential part to the success of the entire franchise operation: each contributes to the maintenance of the goodwill, the banner, and trademark, by adhering to the common standards to which they have all subscribed and which they have all endorsed by becoming members of that chain. Conversely, where they deviate from such common objectives and standards they detract from, minimize, and destroy the reputation of the common trademark and banner, causing damage to each of the operators and the chain at large."

Since this judgment has been appealed from, we will keep you posted as to future developments.

[Posting date in the "Articles" section: 02/10/01. Court file number: 500-05-048960-999. Judgment date: 17/04/01]

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