Executive Summary: Key Legal and Evidentiary Issues

• Responsibility for transactions on a corporate bank account when the debit card and PIN were used, without any prior notice to the bank of loss, theft, or compromise.
• Credibility of William Puentes Caballero’s claim that he was abroad and uninvolved, despite a $950 transfer from the company account to his personal account on 31 December 2023.
• Application of the Bank of Montreal’s business account terms on card/PIN use, liability for account activity, and overdraft interest at an annual rate of 21%.
• Effect of the solidarity clause making the corporate owner personally and solidairement liable with 9488-8898 Québec inc. for deficits and other liabilities on the account.
• Use of email addresses linked to Sebastian Ochoa, issuance of a second debit card, and transaction patterns as circumstantial evidence of authorization and negligence.
• Basis for solidary condemnation of the corporation and its director for the overdraft resulting from a blocked cheque, including interest and court costs.

Factual background
William Puentes Caballero incorporated 9488-8898 Québec inc. on 14 April 2023 as a company that was supposed to operate a concierge and maintenance service. He is the sole shareholder and director, and the judgment notes that he does not seem to have actually operated this business. On 19 April 2023, 9488-8898 Québec inc. opened a non-borrowing bank account (no. 0261-1990-356) with the Bank of Montreal. At trial, the bank statements filed covered the period from 1 December 2023 to 28 March 2024. As of 1 December 2023, the account balance was an overdraft of $134.47. Until 26 December 2023, a few small deposits were made and withdrawn almost immediately. Mr. Puentes stated that he was outside Canada between 4 December 2023 and 11 February 2024. He said he had left the corporate debit card in his “office” at his residence on rue Pierre-de-Coubertin in Montreal. Between 1 December and the third transaction recorded on 21 December 2023, all deposits and withdrawals on the company’s account were Interac transfers. The sums deposited were often around $50, and the sums withdrawn ranged between $10 and $200.

Change in the pattern of account use and cheque deposit
The usage pattern changed from the fourth transaction on 21 December 2023. The corporate debit card began to be used for three in-store purchases and three cash withdrawals. On 22 December 2023, fourteen transactions were recorded: eight Interac transfers of $10 or $20, three purchases paid with the debit card, and two online purchases made the day before but posted on 22 December. The next entries in the account were dated 27 December 2023. There were forty-five transactions that day, including twenty-five Interac transfers between $10 and $1,300, several in-store purchases, and the deposit of a cheque for $41,546.42 at a branch counter. The cheque was deposited using the corporate debit card and the associated personal identification number, and it was endorsed by the person making the deposit. According to Mr. Puentes, because he was out of the country on 27 December 2023, he was not the person who deposited the cheque. The signature on the back of the cheque, however, clearly reads “William Puentes.” This signature does not resemble any of the six signatures on the account opening documents, where his signature appears to consist only of two initials. The cheque was made payable to 9488 Québec inc. at Mr. Puentes’ civic address, although the apartment number is not indicated, and the court notes that it is unlikely the cheque was transmitted by mail. As it is dated 1 December 2023, it is also possible that Mr. Puentes had taken possession of it before his departure for Colombia on 4 December 2023.

Interac transfers and debit card transactions
The judgment sets out a detailed table of Interac transfers from the company’s account between 27 December 2023 and 1 January 2024, showing a total of $28,797 in transfers. The table lists dates, sender email addresses, recipient email addresses, and amounts, including several transactions linked to addresses such as servicedentretienogs@gmail.com and multiservicedextreme@gmail.com, with recipients including loonio.ca addresses and other email accounts. One of these transfers, in the amount of $950 on 31 December 2023 at 14:06, was made to an email address that Mr. Puentes acknowledged as his own; he admitted at trial that he received this $950. The court also lists important amounts debited from the account using the corporate debit card: on 30 December 2023, an online “Facture en ligne” of $2,020.00 and four purchases at Pharmaprix for $1,119.53, $1,054.90, $1,111.17, and $1,048.00; and on 31 December 2023, a purchase at Eggspectation for $139.26, a Pharmaprix purchase of $1,339.07, and three transactions at Stereo Bar ($10.35, $10.35, and $25.31). These card-based amounts total $7,877.94. The judgment notes that no other transactions appeared on the company’s account after 3 January 2024, except for the addition on 31 January 2024 of service fees and overdraft interest, bringing the balance to $38,484.65, on which annual interest at 21% (0.575% per day) has continued to accrue.

Dishonour of the cheque and bank’s recovery steps
Two days after the cheque for $41,546.42 was deposited, it was returned to the issuing institution because its compensation had been blocked. The Bank of Montreal therefore debited the company’s account for the amount of the cheque, as allowed under the account agreement. The judgment states that on 29 December 2023, the bank on which the cheque was drawn informed Bank of Montreal that the amount would not be released because the cheque had been blocked. Bank of Montreal only became aware of this information on 3 January 2024 when its offices reopened, at which point the company’s account was overdrawn by $37,818.94. After unsuccessful attempts to contact Mr. Puentes by telephone in the days following the holiday closure, the bank sent him a registered letter dated 20 February 2024 to claim payment of the overdraft of $38,593.39 on the company’s account. Someone signing as “William” signed the delivery confirmation. Mr. Puentes admitted that he received the letter and did not follow up, giving no further explanation. He said he asked Mr. Ochoa for explanations about the transactions made on the account after 4 December 2023, and that since then Mr. Ochoa has not responded. The court observes that the signature on the delivery confirmation is completely different from the signature of Mr. Puentes on the account opening documents, and that it may resemble the signature at the bottom of the document filed as his grounds for contesting the claim, although that signature is itself completely different from the one on the “Avis requis par les articles 535.4, 535.5 et 535.7 C.p.c.” form filed in the record. The judgment also notes that Mr. Puentes never, before or after receiving the demand letter, reported his company’s bank card as lost or stolen.

Relationship with Sebastian Ochoa and access to the account
The judgment records that Mr. Puentes confirmed that Sebastian Ochoa is a person with whom he worked or did business before his trip abroad between December 2023 and February 2024, though Mr. Ochoa was not his employee. The detailed Interac transfer records between 1 and 3 December 2023 show that of sixteen transactions from the company’s account, ten used Mr. Ochoa’s email address and four used the email address servicedentretienogs@gmail.com, which is the address of Sebastian Entretien OGS inc. and of Mr. Ochoa. All of these transfers were made to loonio.ca. The court concludes that everything suggests that Mr. Puentes gave all the banking credentials for 9488 Québec inc. to Mr. Ochoa, including the debit card issued when the account was opened and the personal identification number, so that he could transact freely on the company’s account. A representative of the Bank of Montreal testified that a second debit card had been issued for the company’s account in November 2023, without the first card ever having been reported lost or stolen. The court states that it is therefore permissible to think that this second card was used by Mr. Ochoa to make transactions on the company’s account well before 27 December 2023.

Contractual terms and clauses at issue
The “Guide-conseil des services bancaires aux entreprises” given to Mr. Puentes when the company account was opened contains key provisions on the use of the debit card and liability. Under the heading “Acceptation, utilisation de la carte et code d’identification secret,” it provides that by accepting one or more cards, the client assumes responsibility for them and their use in accordance with the agreement. It states that use of the card and a secret identification code is required to access various services, and that the use of the card and code—by the client, by cardholders, or by any person, with or without the client’s consent or knowledge—in any transaction binds the client in law and makes the client responsible to the same extent and with the same effect as if the client had given written, signed instructions, unless the client has previously notified the bank of the loss or theft of any card or code, or that confidentiality has been compromised, or that services have been used without authorization. The same guide, under the heading “Responsabilité du client – Transactions autorisées,” states that the client is responsible for the total amount of any authorized activity arising from the use of the card(s) or secret identification codes by whomever. The guide also includes a solidarity clause for the responsibility of the owners of the company account. Under “VI. Responsabilité solidaire,” each owner agrees that they are and will be solidarily responsible with the client for all deficits and other liabilities relating to the account, and that the bank may turn to such an owner, in addition to the client, for payment of all such obligations. The court further notes, by reference to another decision (Banque de Montréal c. Desrochers, 2023 QCCS 1993, para. 29), that even if a third party or other person used the corporate debit card without the authorization of Mr. Puentes, he would still be solidarily responsible for the overdraft on his company’s account. The applicable interest rate for overdrafts is also specified in the guide at 21% annually, which corresponds to 0.575% per day, and the bank relies on this rate in its claim.

Court’s analysis of credibility and liability
The court highlights that the account balance at the end of 4 December 2023—the date on which Mr. Puentes says he left the country—was $0.53. When questioned about the $950 transfer he received on 31 December 2023 from the company’s account to his personal account, he was unable to explain how, if he truly never consulted the account transactions, he knew there was money in the account when such a sum was not there when he departed on 4 December. The court explicitly finds that his testimony is simply not credible. It reasons that he must have consulted the company account if he made the $950 transfer on 31 December 2023 and thus must have seen that a significant amount had been deposited in the account a few days earlier. Alternatively, if he did not personally initiate the $950 transfer, it is incomprehensible that he would accept the transfer without asking who had programmed it from the company’s account. The judgment also notes that Mr. Puentes did not work during his absence and generated no income, and that, while no substantial amount was deposited into the account between 1 and 27 December 2023, he nonetheless accepted and cashed the $950. On the evidence, the court concludes that Mr. Puentes allowed the use of his company’s account by providing all necessary information to third parties so they could make Interac transfers and in-store and online purchases from the account well before the “fraudulent” transactions that occurred between 27 December 2023 and 1 January 2024. It further finds that he personally benefited from these fraudulent transactions by receiving the $950, which he knew or should have known came from the deposit of a cheque that would be blocked.

Ruling and overall outcome
On the basis of the contractual documents and the factual findings, the court accepts the Bank of Montreal’s position that Mr. Puentes was negligent in the safekeeping of the company’s debit card and PIN, and that he even participated in the fraudulent use of the card and PIN. Applying the clauses on card use, client responsibility, and solidarity of the owner, the court holds that the bank is entitled to recover the overdraft from both the company and Mr. Puentes personally. The court therefore grants the originating application, condemning 9488-8898 Québec inc. and William Puentes Caballero, solidarily, to pay $39,573.38 to the Bank of Montreal, with interest at a rate of 21% per year from 28 March 2024, together with court costs. The judgment does not specify an exact dollar figure for the costs, but clearly identifies Bank of Montreal as the successful party and confirms that it is awarded the principal amount of $39,573.38 plus 21% annual interest from 28 March 2024 and the judicial costs.