Executive Summary: Key Legal and Evidentiary Issues

• Characterization of the contractual framework: whether there was a single overarching subcontract for all floor-covering work on the Code 440 project or multiple distinct contracts/avenants for separate units and phases.
• Validity and opposability of the assignment of Tapis Dimension Inc.’s accounts receivable to Couvre-Planchers Dimension (2022) Inc., including whether notice and RDPRM registration made the cession enforceable against Cosoltec.
• Availability of legal and contractual compensation (set-off) in light of Cosoltec’s alleged damages arising from Tapis’s non-performance of the Clinique Dr Luc contract, and whether Cosoltec’s claim was certain, liquid, and exigible at the relevant dates.
• Interpretation and application of key subcontract clauses, notably the 10% holdback, clause 21 (right of the contractor to remedy default and charge costs plus administration/profit) and clause 27 (compensation in case of insolvency or bankruptcy), and their limits in the circumstances.
• Evidentiary sufficiency concerning Cosoltec’s alleged damages and extrajudicial fees, including the absence of proof of actual legal costs and the existence of a separate dispute between Cosoltec and Carreaux Cera Design.
• Abuse of process and recovery of extrajudicial fees: whether the main action was “infondée, inutile et excessive” and if Cosoltec could recover its lawyer’s fees via a reconventional claim for damages (ultimately rejected).

Facts and contractual background

Couvre-Planchers Dimension (2022) Inc. (Dimension) sued Cosoltec Inc. (Cosoltec) before the Court of Québec to recover 43,271.88 $ for the sale, delivery, and installation of floor coverings on several commercial real estate projects, most of them within a development known as “Code 440” in Laval. The work had originally been performed by Tapis Dimension Inc. (Tapis), a floor-covering contractor, which later became insolvent and transferred its assets, including accounts receivable, to Dimension.
Cosoltec is a general contractor active in the construction of residential and commercial buildings. On 9 December 2021, it entered into a standard subcontract with Tapis for floor-covering work on the Code 440 project, a four-storey commercial building where units were sold as commercial condominium spaces. The initial subcontract covered common areas and one specific unit (Ancona), with a contractual value of 32,000 $. Over time, as Cosoltec sold individual units and each purchaser defined its specific fit-out needs, Cosoltec and Tapis agreed to additional work orders structured as “avenants” (addenda). These addenda governed floor-covering works for various commercial occupants (including Arcon, Trekking, Ancona, Poulet Rouge, SDB RDC/NIV2, BND Avocats), each with its own price and specific scope.
The overall balance claimed by Dimension arose from unpaid invoices and retained amounts relating to Code 440, adjusted for minor invoices and credits, for a net of 34,313.37 $, plus additional amounts tied to another project (Mandala), totalling 43,271.88 $. The evidence showed that the Code 440 work was completed, accepted by the project owner, and conferred a clear added value to the building. In many instances only the 10% contractual holdback remained unpaid.
Tapis encountered serious financial difficulties in 2022 after the death of one of its partners and the tightening of its credit conditions by its financial institution. On 8 August 2022, it filed a notice of intention to make a proposal under the Bankruptcy and Insolvency Act. On 4 October 2022, Tapis entered into an asset purchase agreement with Dimension and Tapis National [1991] Ltée. Despite some drafting imperfections, the contract clearly stipulated that the purchase price of 300,000 $ included 250,000 $ allocated to accounts receivable, and the Superior Court approved the transaction on 20 October 2022, ordering that all of Tapis’s rights, title, and interests in its assets be transferred to Dimension. The cession of the universality of claims was later registered at the RDPRM on 5 February 2025.
Parallel to this, a specific addendum dated 7 March 2022 concerned the fit-out of a medical clinic, “Clinique Dr Luc,” also within Code 440. Under this addendum, Tapis was to supply and install floor coverings and wall finishes for operating rooms for 140,000 $. By summer 2022, however, Tapis’s insolvency prevented it from starting that work. Tapis referred one of its subcontractors, Carreaux Cera Design, which directly contracted with Cosoltec to execute the clinic work for 157,282 $, later increased by two addenda: 3,967.29 $ for work outside Tapis’s original scope, and 15,931.97 $ for acrylic panels included in Tapis’s scope. In effect, Carreaux Cera Design performed the clinic work instead of Tapis, at an extra cost of 33,213.97 $ compared with Tapis’s original price, and Cosoltec also claimed administration, supervision and other damages, raising its asserted loss to 70,773.56 $.

Policy terms and contractual clauses at issue

Several contractual provisions framed the dispute. First, the standard subcontract included a 10% holdback clause. Cosoltec had withheld this percentage from a number of invoices and later attempted to justify not releasing it by invoking Tapis’s later non-performance on the Clinique Dr Luc work. The court had to decide whether the holdbacks on work actually completed and accepted could be withheld to offset alleged losses on a different phase of the project.
Clause 21 of the subcontract addressed Cosoltec’s rights when the subcontractor defaulted or failed to perform properly. It allowed Cosoltec, after giving written notice specifying the default and a two-day cure period, to correct the default, complete the work itself or through others, charge the cost of completion to the subcontractor, and deduct such amounts from sums otherwise payable. It also entitled Cosoltec to impose a 10% administration and supervision fee and an additional 5% profit on the remedial work. Cosoltec relied heavily on this clause to justify offsetting its alleged completion costs (and related fees and profit) against all amounts otherwise payable to Tapis and, by extension, Dimension.
Clause 27 dealt specifically with insolvency or bankruptcy scenarios and described Cosoltec’s right to pay claims or amounts necessary to clear up problems connected to the subcontractor’s work and then retain, as indemnity, any sums otherwise payable to the subcontractor under that or any other contract between the parties. Given that Tapis became insolvent and filed an intention to make a proposal, the court considered whether clause 27, rather than clause 21, was the more appropriate provision in the circumstances.
On the level of assignments of claims, the Civil Code of Québec provisions on cession of créance and opposability were central. Article 1637 C.c.Q. allows a creditor to assign all or part of a claim provided the debtor’s rights are not worsened; article 1641 governs when an assignment becomes opposable to the debtor; and article 1642 addresses assignments of an “universalité de créances,” which become opposable through registration at the RDPRM, subject to proper notice or other formalities towards debtors who have not expressly acquiesced. Drawing on an earlier related decision (Couvre Planchers Dimension (2022) Inc. c. Construction CPB Inc., 2025 QCCQ 4586), the court confirmed that, despite some poor drafting, the parties had clearly intended to transfer all of Tapis’s accounts receivable to Dimension, and that a debtor informed through a clear notice and supporting documentation is bound by the assignment even before publication at the RDPRM.
The Civil Code rules on compensation (set-off) were also crucial. Under articles 1672 and 1673 C.c.Q., compensation operates de plein droit only when both parties are reciprocally debtor and creditor, and their respective debts are certain, liquid, and exigible, involving money or fungibles of the same kind. Article 1680 C.c.Q. restricts a debtor’s ability to invoke compensation once it has acquiesced to, or has been duly notified of, an assignment of claim. The court had to determine whether Cosoltec’s alleged claim for damages (completion costs and related charges for the Clinique Dr Luc work) met these criteria before the assignment became opposable to it, and whether the contractual machinery (particularly clause 21) could transform an inchoate, disputed claim into a “certain, liquid and exigible” debt suitable for legal compensation.

Issues of assignment, notice, and opposability

Cosoltec argued that the assignment of claims from Tapis to Dimension was not opposable because it was only registered at the RDPRM on 5 February 2025, long after Cosoltec claims to have compensated its alleged loss against what it owed Tapis. The court rejected this. It noted that the asset sale agreement clearly allocated most of the purchase price to accounts receivable and that the Superior Court had approved the transfer of all such receivables to Dimension. More importantly, on 7 December 2022, Dimension’s lawyers sent Cosoltec a detailed demand letter that explicitly informed Cosoltec of the asset sale, the Superior Court order, and the fact that all Tapis accounts receivable, including those from Cosoltec, had been transferred to Dimension. The letter enclosed a communication from the trustee and a statement of account.
This correspondence constituted “une preuve de la cession” sufficient to render the assignment opposable to Cosoltec under article 1641 C.c.Q., as interpreted by doctrine and case law: a debtor who receives a clear written notice or state of account referring explicitly to the assignment of its debt is deemed to be properly informed. Accordingly, from 7 December 2022 onwards, Cosoltec could no longer rely on compensation based on debts arising thereafter or not yet sufficiently determined, and it became, vis-à-vis Dimension, the debtor of the assigned claim.

Analysis of compensation and Cosoltec’s alleged damages

Cosoltec defended the action primarily by claiming that Tapis’s failure to execute the Clinique Dr Luc contract created a significant claim in its favour, which, by legal or contractual compensation, had extinguished any sums otherwise owing to Tapis (and thus to Dimension). It quantified its alleged loss at 70,773.56 $, made up of the extra cost of the Carreaux Cera Design contract compared to Tapis’s price, plus contractual administration and profit percentages and other alleged damages. It maintained that this claim had arisen and been “compensated” before the assignment of claims became opposable.
The court carefully dissected the timing and nature of Cosoltec’s alleged damages. The mere signing of a replacement contract on 3 October 2022 for 157,282 $ did not, by itself, make the entire claimed difference a certain, liquid, and exigible debt. Actual invoices from Carreaux Cera Design were issued progressively starting 5 October 2022, and payments from Cosoltec began only on 29 November 2022, with further payments in December 2022 and 2023. In addition, the representative of Carreaux Cera Design testified that Cosoltec had not fully paid those invoices and that a separate dispute remained ongoing between them. This meant that both the quantum and even the existence of Cosoltec’s alleged loss were still contested and unsettled.
The court emphasized that compensation requires each debt to be valid, certain, and liquid. A contested, partially unpaid and unadjudicated “damages” claim based on a replacement contract cannot be treated as automatically liquid and certain merely by virtue of a contractual clause, particularly where the actual costs and payments are still evolving and disputed. The damages for having another contractor complete Tapis’s work are conceptually damages for non-performance under articles 1607 and 1611 C.c.Q.; they may be recoverable in principle, but until they are clearly quantified and established, they cannot sustain legal compensation.
Cosoltec also invoked clause 21 of the subcontract to argue that, once Tapis defaulted, Cosoltec acquired a contractual right to complete the work and charge Tapis for its full costs, plus 10% administration and 5% profit, with such amounts being deductible from any sums owed. Yet the court found two major weaknesses: Cosoltec had not given the required written default notice specifying the breach and allowing the cure period; and even reading clause 21 broadly, the clause did not instantly convert future, uncertain completion costs into a present, liquid debt that could be used to extinguish Tapis’s receivables by compensation. Given that the contract was a standard form imposed by Cosoltec—thus a contract of adhesion under article 1379 C.c.Q.—any ambiguity was to be interpreted against Cosoltec, the drafter.
In the bankruptcy context, the court also examined clause 27, which specifically addressed insolvency and allowed Cosoltec to pay sums necessary to cover claims connected with the subcontractor’s work and retain, as indemnity, any amounts otherwise payable under that or any other contract. Nonetheless, the court observed that there were no claims or liens against Tapis relating to the work actually performed on the various Code 440 units; the work had been completed and accepted to Cosoltec’s satisfaction. The real problem was Tapis’s inability to start the Clinique Dr Luc phase. In these circumstances, the court held that clause 27 did not allow Cosoltec to unilaterally declare and set off its broadly asserted, still-disputed damages claim against clear, accepted receivables for independently completed phases and even other projects (such as Boisbriand).
The court concluded that, as of 7 December 2022—the date when the assignment of claims became opposable through Dimension’s demand letter—Cosoltec’s alleged claim for damages linked to the replacement contract was not yet certain, liquid, and exigible. Therefore, legal compensation had not arisen and could not be validly opposed to Dimension. From that date forward, article 1680 C.c.Q. further barred Cosoltec from invoking compensation against the assignee for later-accruing or undetermined claims. As a result, Cosoltec remained debtor of the amounts corresponding to Tapis’s invoices and holdbacks now owned by Dimension.

Multiple contracts versus a single overarching contract

Another pivotal issue was whether there was a single global subcontract between Tapis and Cosoltec for all of the Code 440 work (including Clinique Dr Luc) or several distinct contracts entered successively through addenda. Cosoltec argued for a single overall contract, which would make it easier to argue that non-performance of one phase (Clinique Dr Luc) justified withholding and compensating against amounts due for other areas.
The court rejected this characterization. It found that the 9 December 2021 subcontract covered the general floor-covering scope for the common areas and a single unit (Ancona). Each subsequent “avenant” arose only after a specific unit had been sold and its purchaser had finalized its fit-out requirements; following discussions and a meeting of minds on that distinct scope and price, a new agreement was made. In substance, each addendum expressed a separate contract, corresponding to a distinct “phase” of the work within the meaning of article 2114 C.c.Q., which allows for receipt and payment by phases.
The invoices showed separate descriptions and pricing for the different units, and Cosoltec had paid many of them without protest, thereby confirming its acceptance of each completed phase. The court held that payments were not random but systematically linked to the delivery and acceptance of specific phases. This structure further undermined Cosoltec’s attempt to treat a later, unperformed phase (Clinique Dr Luc) as a basis to withhold payment for unrelated, earlier phases and even for an entirely different project (Boisbriand).

Reconventional claim and allegations of abusive proceedings

Cosoltec filed a reconventional claim seeking 15,000 $ in damages for legal fees allegedly incurred to defend what it characterised as an unfounded, unnecessary, and excessive lawsuit. It argued that Dimension’s action was abusive and that it should recover its extrajudicial fees.
The court found there was no evidentiary basis for this claim. Cosoltec presented no invoices or concrete proof of the quantum of legal fees supposedly paid, and its only witness did not even testify about whether any amounts had been paid, let alone their amount. Factually, there was simply no proof of damage.
More fundamentally, the court held that the litigation was far from abusive. The issues raised were serious, both legally and factually: complex questions of contract interpretation, assignment of claims, compensation in a bankruptcy context, and the interaction between multiple phases and projects. The Court of Appeal’s jurisprudence in Viel confirms that recovering extrajudicial fees as damages requires proof of an abuse of the right to sue—characterized by bad faith, intent to harm, or the pursuit of a manifestly groundless and abusive judicial debate. None of these elements was present. Dimension’s action was a legitimate effort to collect assigned receivables in a complex commercial setting, not an abusive proceeding.
Accordingly, the reconventional claim was dismissed in its entirety.

Outcome and financial consequences

In the result, the Court of Québec held that there were multiple distinct contracts between Cosoltec and Tapis for the Code 440 project, not a single all-encompassing subcontract; that the assignment of Tapis’s accounts receivable to Couvre-Planchers Dimension (2022) Inc. was valid and opposable to Cosoltec as of 7 December 2022; and that Cosoltec’s alleged claim for damages arising from the Clinique Dr Luc replacement contract was neither sufficiently certain, liquid, nor exigible to support legal compensation at the relevant times. Clauses 21 and 27 of the subcontract did not permit Cosoltec to unilaterally convert its disputed, partially unpaid completion costs into a set-off capable of extinguishing Dimension’s assigned claim. The court also rejected Cosoltec’s attempt to withhold payment for the Boisbriand project based on problems confined to the Code 440 clinic phase.
The successful party was Couvre-Planchers Dimension (2022) Inc. The court allowed its main claim, condemned Cosoltec Inc. to pay 43,271.88 $ plus legal interest from 15 December 2022 and the additional indemnity under article 1619 C.c.Q., and awarded Dimension its judicial costs both on the principal action and on the reconventional claim. The precise monetary amount of interest, the additional indemnity, and the taxed costs was not fixed in the judgment and will be determined in the usual way by application of the legal rates and the tariff of costs, but the principal monetary award in favour of the successful party is 43,271.88 $.