Executive Summary: Key Legal and Evidentiary Issues

• Plaintiff alleged he was misled into signing a vehicle lease with hidden costs and misunderstood financial terms.

• The court assessed whether the merchant breached its duty to explain the contract and obtain valid consent.

• Evidence showed the plaintiff was vulnerable, and key contract elements were not clearly communicated.

• Financing terms were bundled with add-ons and misrepresented as part of a standard sale.

• The court found the plaintiff’s consent vitiated under the Civil Code due to error and lack of understanding.

• Both corporate defendants were held jointly liable for restitution and cancellation of the contract.

Facts and procedural background

Rafael Brandon Sorto filed a claim against Les Autos Flash Auto Flash 2 Inc. and Les Entreprises Claude Mondou Inc., following his lease of a used 2016 BMW. He alleged that he was misled about the nature and cost of the transaction, claiming he believed the car’s total price was around $10,000 with monthly payments near $150. In reality, the lease extended for 84 months at a cost of $283.56 per month, leading to a total cost of over $21,000 once fees and warranties were included.

Sorto, a consumer with limited financial understanding and vulnerable due to his personal situation, stated that the merchant rushed the transaction, presented documents with insufficient explanation, and pressured him to sign without giving time to review or reflect. He later realized the true scope of the financial obligation and attempted to return the vehicle, which the defendants refused to accept.

The defendants argued that all terms were disclosed and that Sorto had willingly entered into the contract. They claimed he signed the necessary documentation and accepted the vehicle with knowledge of the financial terms. The financing had been assigned to a third party, but the plaintiff continued to make monthly payments while disputing the legality of the contract.

Court’s analysis and findings

The court evaluated the evidence under both the Civil Code of Québec and the Consumer Protection Act (LPC). Judge Matthieu Poliquin found that the plaintiff’s consent was vitiated, referencing Article 1399 C.c.Q., which nullifies contracts formed under error or misrepresentation. The court held that the contract’s structure was not transparent and that the plaintiff’s vulnerable state heightened the seller’s obligation to explain the lease's true implications.

The court also cited Articles 9 and 17 LPC, which require merchants to act transparently and prohibit misleading commercial practices. It concluded that the vehicle’s cost, payment terms, and the inclusion of extended warranties and fees were not properly explained. The merchant failed to provide the clarity required by consumer protection legislation, and the plaintiff did not offer valid informed consent.

The judge further found that both corporate defendants shared responsibility, with one acting as the dealer and the other involved in administering the financing. Their coordinated roles contributed to the legal consequences of the flawed transaction.

Outcome

The court declared the contract null and ordered both Les Autos Flash Auto Flash 2 Inc. and Les Entreprises Claude Mondou Inc. to refund Rafael Brandon Sorto the sum of $4,000 (the jurisdictional limit of the small claims court) and take back the vehicle. Each defendant was held jointly and severally liable. The judgment emphasized the importance of informed consent and transparent business practices in consumer leasing and financing arrangements.