Executive Summary: Key Legal and Evidentiary Issues

• Personal liability of shareholders/directors for lawyers’ fees where legal services are rendered both to corporations and to the individuals in the context of real estate development litigation.
• Application of Civil Code rules on mandate and solidarity (arts. 1458, 1525 and 2156 C.c.Q.) to hold corporate principals solidarily liable with their companies for extrajudicial fees, despite the absence of a signed written fee agreement.
• Weight given to documentary and testimonial evidence showing that services were requested for the personal benefit of Ms. Gould and Mr. Scartozzi, and that they implicitly acknowledged responsibility for payment.
• Significance of repeated invoicing addressed jointly to the corporations and to the individuals, combined with follow-up communications and payment plans, in establishing a binding personal undertaking.
• Treatment of promises of payment, partial payments and text/email exchanges as confirmations of an otherwise unsigned repayment plan and of the defendants’ solidarity with the corporate debtors.
• Rejection of allegations of abusive or frivolous defence due to the absence of clear, fault-based litigation conduct and the expectation that counsel should narrow issues through pre-trial communications.

Factual background and parties

Markakis & Co. Inc. is a law firm founded by Me Angela Markakis, a litigator with a civil and commercial litigation practice. Over several years, she and her colleague, Me Sarah Bennett, acted in numerous contentious matters for a group of real estate development companies as well as for their principals, Stephanie Gould and Francesco Scartozzi. The defendants’ business activities involve the development, promotion and construction of real estate projects, primarily residential condominiums. Ms. Gould is the directing mind of the corporate entities: she is a shareholder, directly or indirectly, a corporate officer, and the holder of the necessary construction licences and permits. Mr. Scartozzi, drawing on his experience in accounting and real estate, oversees operations and negotiations with contractors and business partners. The law firm is retained to represent the corporations and, in several instances, Ms. Gould and Mr. Scartozzi personally in disputes related to these projects.
The specific amounts claimed arise from a series of mandates in which Markakis & Co. provided legal services in ongoing and prospective litigation files involving 1192183 Canada Inc., 11229026 Canada Inc. and 9411-4329 Québec Inc., along with their principals. The firm also undertook a discrete personal mandate for Ms. Gould related to negotiations with an insurer following a fire at her chalet. The total claimed was $51,779.87 in unpaid extrajudicial fees and disbursements relating to the corporate and personal files, plus $1,967.48 for the chalet-related services.

Mandates, billing practices and the chalet file

Throughout the relationship, Ms. Gould and Mr. Scartozzi instructed Me Markakis as to which company should be invoiced for particular services. However, save for one exception, each invoice was systematically addressed both to the relevant company and to Ms. Gould and Mr. Scartozzi personally. In one instance relating to 9411-4329 Québec Inc., an invoice was issued solely in the name of Mr. Scartozzi, reinforcing the impression of personal as well as corporate engagement. By contrast, the invoice for the chalet fire file was addressed only to Ms. Gould, reflecting the purely personal nature of that mandate.
In the chalet matter, Ms. Gould explicitly retained Me Markakis to advise her in negotiating with an insurer on the handling of a loss related to a fire at her private property. The judgment notes this as a distinct, non-corporate file. There is no discussion in the reasons of any specific insurance policy wording or individual clauses; the decision simply acknowledges that the lawyer assisted Ms. Gould in dealing with the insurer over the fire claim. The dispute in court is not about coverage nuances or policy interpretation but about payment of legal fees for that advisory work.

Financial difficulties and payment arrangements

Tensions over fees developed when one of the defendants’ major construction projects faced serious structural problems with the building’s foundations. This issue led to a work stoppage and eventual abandonment of the project, triggering multiple lawsuits involving the corporations and also naming Ms. Gould and Mr. Scartozzi personally. The financial repercussions of the failed project adversely affected the entire group.
As arrears on legal fees mounted, Me Markakis queried the defendants about the delays in payment. She was told the defendant corporations were awaiting financing. In light of their difficulties, she reduced her hourly rate and the overall amounts billed. Still, payments lagged. In November 2022 she prepared and sent a repayment plan, stipulating monthly payments of $5,000 to reduce an outstanding balance then assessed at just over $66,000. The plan contemplated that Ms. Gould and Mr. Scartozzi would be personally responsible, jointly with the corporate entities. They never signed the plan, but they made subsequent payments that aligned with its terms, including a $10,000 cheque in early December 2022 and a further payment in early 2023.
In exchanges of texts and emails, Ms. Gould and Mr. Scartozzi repeatedly promised to make payments, referenced the $5,000 monthly commitment, and expressed that they were doing their best to honour “the funds we agreed upon” and that they were not reneging on the promise to pay those monthly sums. The Court viewed these communications and payments as confirming their acceptance of the essential terms of the proposed repayment arrangement, notwithstanding the absence of a signed formal agreement.

Termination of mandate and commencement of proceedings

At the same time as fees remained outstanding, further tensions surfaced when the law firm discovered that a significant lawsuit had been instituted against the defendants and 9411-4329 Québec Inc. by a project financier in July 2022, without their informing their own counsel. Me Markakis learned of this claim only months later, via a media article. She wrote to the defendants seeking explanations about the allegations and relationships described in the press, and shortly thereafter, on 30 January 2023, she formally advised that she was terminating her representation. She demanded full payment of the outstanding fees by 1 March 2023, warning that she would proceed with legal action if payment was not received.
After further partial payment but without full settlement, Markakis & Co. Inc. commenced proceedings in May 2023. The action sought recovery of unpaid fees and disbursements from the corporations and from Ms. Gould and Mr. Scartozzi, asserting that the individuals were solidarily liable with the corporate clients. While all defendants initially appeared and defended, certain corporate defendants ultimately did not contest, and one did not properly maintain representation at a later stage. The individual defendants, however, maintained that they had never personally committed to pay the firm’s fees and that only the corporations could be liable.

Key legal framework: burden of proof and solidarity

The Court first sets out the general evidentiary standard in civil matters under the Civil Code of Québec. The plaintiff bore the onus to establish its claims on the balance of probabilities, meaning the facts alleged must be shown as more probable than not. This standard does not require certainty but does demand convincing evidence, and the Court is not to rest judgment on mere possibilities or conjecture. The assessment of witnesses’ credibility and the probative value of documents falls within the trial judge’s broad discretion.
Substantively, the Court anchored its analysis in contractual liability and the law of mandate. Article 1458 C.c.Q. imposes on every person the duty to honour contractual undertakings and to repair materially, morally or bodily any loss resulting from non-performance. The firm’s fee claim is framed as a contractual obligation to pay for services rendered.
On the question of who is bound to pay, the Court relied heavily on article 2156 C.c.Q., which creates solidarity among multiple mandants towards their mandatary. When several persons jointly give a mandate to a lawyer, their obligation to the lawyer is solidary unless the parties have clearly agreed otherwise. Jurisprudence has repeatedly applied this principle to situations where both a company and its shareholders or directors receive legal services in the same context or litigation.

Presumption of solidarity in the context of an enterprise

A key provision reinforcing solidarity is article 1525 C.c.Q., which establishes that while solidarity between debtors generally does not arise by presumption, an important exception exists: solidarity is presumed between debtors who contract an obligation for “the service or operation of an enterprise.” Where legal services are provided in the course of running a business, and especially where shareholders or directors have a direct personal stake in the lawsuits and outcomes, courts have tended to find a presumption of solidarity among the corporate and personal clients for the payment of legal fees.
The Court reviewed and distinguished the authorities invoked by the defence, including decisions where individuals had clearly and expressly informed their lawyers that they would not be personally responsible, or where the lawyers had not acted for them in their personal capacity. In those cases, the presumption of solidarity was successfully rebutted because the evidence established both that no personal mandate had been granted and that no personal commitment to pay had been made.

Assessment of personal mandates and interests

Applying these principles to the facts, the Court identified several instances where Markakis & Co. acted directly for Ms. Gould and Mr. Scartozzi personally, often alongside one or more of their corporations. In one sizeable subcontractor lawsuit, the individuals were named as personal defendants in a claim of nearly $300,000, and Me Markakis filed both a response and a motion to dismiss the claim against them individually. In another proceeding, the firm first responded on behalf of a company and subsequently also for Ms. Gould and Mr. Scartozzi. In yet another matter, a dissatisfied client sent a formal demand to the corporation and to the individuals, to which Me Markakis responded on their behalf.
For each of these files, the Court noted that the individuals had a clear, personal interest in the outcome: they wished to avoid personal liability and protect their own assets, and not merely the corporate balance sheet. Because services were rendered to defend them in their personal capacity, the Court held that the presumption of solidarity applied and had not been rebutted. No evidence showed they had ever explicitly disclaimed personal responsibility to their lawyers, nor did they deny that the services had been performed. Instead, their conduct—seeking representation, accepting filings in their own names, and participating in payment discussions—pointed toward a personal obligation to pay.

Weight of invoicing patterns and communications

The Court attached substantial importance to the consistent invoicing practice of issuing joint bills to the corporations and to Ms. Gould and Mr. Scartozzi, as well as to the absence of any timely protest or correction from them about being named personally on the invoices. This long-standing practice, combined with their pattern of communications about payment and their partial payments aligned with the proposed plan, led the judge to infer that the individuals accepted that they were, in fact, debtors for the fees.
The draft repayment plan, though unsigned, was particularly significant. It expressly referred to the personal solidarity of Ms. Gould and Mr. Scartozzi for a global balance, and subsequent texts and emails from them—where they promised to send $5,000, confirmed their efforts to respect the agreed-upon monthly amount, and acknowledged that they were honouring that commitment—were treated as implicit ratification of those terms. The timing and amounts of the two $10,000 payments, which closely followed and mirrored the projected schedule, reinforced this conclusion.

Rejection of the abusive proceedings allegation

Markakis & Co. also sought a declaration that the defendants’ conduct in the litigation was frivolous and abusive, particularly on the basis that they had initially denied the existence of mandates and services that were later effectively acknowledged at trial. The plaintiff argued that this forced the firm to prepare for a full merits contestation of matters that were not truly in issue, thereby inflating costs and prolonging the dispute.
The Court refused to grant this exceptional remedy. It noted that the Code of Civil Procedure encourages and expects counsel to communicate and clarify issues in dispute before trial. Any inefficiency or lack of pre-trial narrowing of issues was not shown to result from blameworthy conduct by Ms. Gould or Mr. Scartozzi themselves. The judge declined to shift the consequences of any missed opportunities for pre-trial cooperation onto the individual defendants by characterising their defence as abusive.

Final outcome and monetary awards

Ultimately, the Court partially allowed the action. It definitively held that the three corporate defendants—1192183 Canada Inc., 11229026 Canada Inc. and 9411-4329 Québec Inc.—were liable for the unpaid legal fees and disbursements identified on the invoices for their respective files. More importantly, it also concluded that Ms. Gould and Mr. Scartozzi were solidarily liable with these corporations for the same sums because the services were rendered for the operation of their real estate enterprise and, in several key files, for their personal defence. For the chalet fire file, where the mandate was purely personal, the Court ordered Ms. Gould to pay the full invoiced amount herself.
In concrete terms, the successful party is the plaintiff, Markakis & Co. Inc. The Court ordered: (i) Ms. Gould, Mr. Scartozzi and 1192183 Canada Inc., solidarily, to pay $47,415.90; (ii) Ms. Gould, Mr. Scartozzi and 11229026 Canada Inc., solidarily, to pay $3,875.31; (iii) Ms. Gould, Mr. Scartozzi and 9411-4329 Québec Inc., solidarily, to pay $488.66; and (iv) Ms. Gould personally to pay $1,967.48 for the chalet-related mandate. Taken together, these principal amounts total $53,747.35, to which the Court added legal interest at the statutory rate and the additional indemnity from 1 March 2023, along with costs of justice in favour of the plaintiff. The exact dollar value of interest, indemnity and costs is not specified in the judgment and would need to be calculated separately, but the principal monetary award in favour of the successful party, Markakis & Co. Inc., is fixed at $53,747.35.