Executive Summary: Key Legal and Evidentiary Issues

• Dispute over payment and deductions under a forestry service contract, including the legitimacy of claimed offsets for supplies and services.

• Sufficiency and reliability of evidence supporting alleged defects in work and deductions for supplies, particularly regarding the need for employee signatures.

• Requirement for a formal notice (mise en demeure) before contract termination or claiming damages, and whether exceptions to this requirement applied.

• Determination of whether the defendant could complete the plaintiff’s work and deduct related costs without prior notice.

• Calculation of the final monetary award based on recognized claims, justified deductions, and applicable interest.

• Assessment of contractual compliance, including the effect of non-production of compliance certificates on payment obligations.

Facts of the case

9478-8718 Québec inc. (Forêt Maska) (“Maska”) was engaged by Sylviculture Tramfor inc. (“Tramfor”) in September 2023 to perform forestry work for the benefit of Rexforêt inc. The parties signed a service contract detailing payment per hectare for three work sectors, with a total area of 168.40 hectares. The contract also provided for free accommodation for Maska’s workers at Tramfor’s forest camp. The contract was effective from September 4 to November 15, 2023, but required work completion by October 31, 2023.

Maska completed all work in sector I78 and was paid in full except for a 5% holdback. In sectors G70 and G75, Maska partially completed the work before the camp closed on October 20, 2023. Maska issued invoices for the completed work, and Tramfor made partial payments, leaving a balance due after applying the holdback. Tramfor also invoiced Maska for supplies (fuel, equipment parts) and the services of a foreman, deducting these amounts from payments owed. Maska acknowledged some deductions but disputed others, especially those lacking employee signatures or relating to the foreman’s services, which Maska argued were not its responsibility.

Discussion of contract terms and clauses at issue

The contract specified payment per hectare, a 5% holdback, and a requirement for a CNESST compliance certificate for the release of certain payments. Disputes arose over the legitimacy of deductions for supplies and services, the sufficiency of evidence supporting those deductions, and the necessity of employee signatures on supply purchases. The contract did not explicitly require such signatures, and the court found that Maska had not previously insisted on this formality.

A key legal issue was whether Tramfor could withhold payment or complete the work without first providing Maska with a formal notice (mise en demeure) of alleged defects or incomplete work. The court emphasized that, under Quebec civil law, such notice is generally required unless there is urgency or bad faith, neither of which was established in this case.

Arguments and positions of the parties

Maska sought full payment for services rendered, arguing that the camp’s closure was outside its control and that Tramfor’s deductions for supplies and foreman services were unjustified. Maska also contended that Tramfor failed to provide timely notice of alleged defects or incomplete work, which would have allowed Maska to remedy any issues. Tramfor claimed that Maska abandoned the worksite and that some work was non-compliant or incomplete, justifying Tramfor’s decision to finish the work with its own employees and deduct related costs. Tramfor also argued that it was entitled to withhold payment for supplies and services provided to Maska.

Court’s analysis and findings

The court found that Maska did not abandon the worksite; rather, its departure coincided with the camp’s closure, which Tramfor had decided. The court determined that Tramfor’s evidence of defects and incomplete work was insufficient, lacking documentation or timely notification to Maska. The court emphasized that under Quebec civil law, a formal notice (mise en demeure) is generally required before a party can terminate a contract or claim damages for non-performance, except in cases of urgency or bad faith, which were not established here. Regarding deductions, the court allowed Tramfor’s claims for supplies (fuel and equipment) but rejected the deduction for the foreman’s services, as there was no contractual basis or timely claim for these costs.

Ruling and outcome

The court ruled in favor of Maska, ordering Tramfor to pay a total of $22,419.06, with interest calculated on two portions: $12,634.39 from December 30, 2023 (the date of formal notice), and $9,784.67 from May 13, 2025 (the date of the amended claim), as well as legal costs. The amount reflects the invoices for completed work, less justified deductions for supplies, and excludes the foreman’s services. The successful party is 9478-8718 Québec inc. (Forêt Maska), and the total monetary award granted is $22,419.06, plus interest and legal costs.