Executive Summary: Key Legal and Evidentiary Issues

• Misrepresentation (dol) found where the web agency described a custom-built site but delivered a site based on a cheap pre-fabricated template with add-on modules.
• Vitiated consent established under arts. 1400 and 1401 C.c.Q., as the client’s error related to the very nature and object of the services promised.
• Nullity of the service contract ordered, triggering restitution of prestations by both parties, including valuation of three years’ use of a substandard but functional website.
• Expert evidence was pivotal to prove the technical gap between the “sur-mesure” site described in the proposal and the template-based site actually delivered.
• Claim for loss of business opportunities was rejected for lack of financial or objective proof linking the alleged loss to the defective website.
• Defendant’s counterclaim for the unpaid balance and related charges failed because the null contract could not support any further receivable.

Facts of the case

Gestion LL inc., operating a sleep apnea clinic under the name Clinique ASC, engaged Propaganda Design inc., a web agency, to design and build a website and online store for selling sleep-apnea related products. On 30 September 2020, Clinique accepted Propaganda’s detailed proposal, which estimated 185 hours of work at an hourly rate of $70, for a total of $12,950 plus taxes, amounting to $14,889.26. The contract document described a full, bespoke web development process, including creation of the production tree, navigation design, mock-ups, page integration, adaptive (responsive) design, database creation and programming in PHP, JavaScript and CSS. In December 2020, Propaganda delivered the site and invoiced the full contract price of $14,889.26. Clinique paid $9,000 in January 2021, leaving a balance outstanding. By March 2021, dissatisfied with the quality and nature of the work, Clinique retained an expert, Paola Reyes, to audit the site’s design and build. Her analysis concluded that, instead of custom programming and development as suggested by the contract language, Propaganda had assembled the site “grâce à un gabarit préfabriqué (Thème / Template), et des modules (extensions) achetés pour bonifier le thème”, effectively personalizing a pre-built template rather than building a site from scratch. The expert likened Propaganda’s performance to buying a ready-made house with walls and floors and merely painting and installing fixtures, even though the contract suggested it would “build the house” itself. The expert also identified multiple problems affecting the site’s quality, efficiency and performance, including mediocre and unprofessional design, slow response times, and failure to respect accepted standards of coding, branding and accessibility. Over the next three years, Clinique used the site but relied on the expert’s “efforts techniques” to attempt technical improvements, paying nearly $1,000 for this work. Eventually, Clinique commissioned the expert to create an entirely new custom site, launched on 4 December 2023, for a fee of $4,335.

Claims and counterclaims

Clinique sued Propaganda in the Small Claims Division of the Court of Québec, alleging that Propaganda had made false representations about the nature and scope of its services and had failed to deliver the custom site described in the contract. It sought restitution of the $9,000 already paid, reimbursement of $1,500 for the expert’s report, and $3,000 in damages for lost business opportunities. Propaganda defended on the basis that the site had been fully functional and in line with the written estimate, emphasizing that Clinique continued to use it until December 2023. It asserted that its team spent 168 hours developing the project and had even implemented optimization changes recommended by the expert at no extra cost. Propaganda also filed a counterclaim, asking for payment of the outstanding balance of $5,889.26 and reimbursement of additional expenses totalling $445.06 that it said were incurred for Clinique’s benefit.

Contractual framework and nature of the services

The court characterized the agreement as a contract for services under the Civil Code of Québec, supported by an estimate of total price. As a service provider, Propaganda had a pre-contractual duty under article 2102 C.c.Q. to give its client all useful information regarding the nature of the task and the goods and time required. The wording of the proposal and contract—referring to “création”, “conception”, “intégration”, “programmation” and a full suite of development steps—was read as representing a bespoke or “sur-mesure” build tailored to Clinique’s needs, rather than configuration of an off-the-shelf template. The court accepted the expert’s opinion that, by using a low-cost template (approximately $39) and plug-ins, Propaganda had not delivered the custom programming and build implied by its terminology. Notably, Propaganda did not produce any counter-expert evidence to justify or nuance its contractual language.

Misrepresentation, error and vitiated consent

On the strength of the expert report and the contract wording, the judge found that Propaganda had made false representations about the extent and nature of its services. While the contract suggested it would create, design, integrate and program Clinique’s website, it in reality personalized a pre-fabricated template within its inherent constraints. Clinique’s understanding that it was purchasing a custom-built site thus amounted to an error about the very object of Propaganda’s prestation. Under articles 1400 and 1401 C.c.Q., when a party’s error is induced by the other party’s misrepresentations (dol), consent is vitiated if, without that deception, the party would not have contracted or would have contracted on different terms. The court held that the misrepresentation was sufficiently serious, and directly related to the core of the bargain, to qualify as dol and to vitiate Clinique’s consent.

Nullity of the contract and restitution of prestations

Because consent was vitiated by dol, Clinique was entitled to seek nullity of the contract pursuant to article 1407 C.c.Q. When a contract is null, it is deemed never to have existed, and each party must restore what it has received, in accordance with articles 1422 and 1699 C.c.Q. The court therefore ordered annulment of the contract and turned to the mechanics of restitution. On Propaganda’s side, restitution meant returning the $9,000 already paid by Clinique and abandoning any claim to the remaining contract balance or other invoiced amounts. This led the court to reject Propaganda’s entire counterclaim, as it was premised on a contract now treated as never having existed. On Clinique’s side, restitution required compensating Propaganda for the value of the benefit actually received, namely three years’ use of a website that, while functional, was of poor quality and below the level of professionalism Clinique legitimately expected. Restitution in kind was not possible, so the court, guided by Supreme Court authority in Montréal (Ville) v. Octane Stratégie inc., assessed an equivalent monetary value. In doing so, it weighed several concrete factors: Propaganda’s claimed 168 hours of work at $70/hour (which would have yielded $11,760 under a purely hourly billing); the trivial cost of the template; the expert’s opinion that a templated site should cost around $500; the documented deficiencies in quality and performance; the nearly $1,000 paid for remedial technical efforts; the $4,335 fee for the new fully custom site as a benchmark of fair value; and the fact that Clinique nonetheless used the original site for three years and did not reject it immediately. Balancing these considerations, the court estimated that the value of the benefit Clinique received from Propaganda’s work fell between $500 and $4,335, and fixed Clinique’s restitution obligation at $3,000. After setting off this $3,000 against the $9,000 to be returned by Propaganda, the net result was that Propaganda owed Clinique $6,000 by way of restitution of prestations.

Damages, expert fees and procedural costs

Clinique also sought $3,000 in general damages, mainly on the basis of lost business opportunities allegedly caused by the substandard site. The court accepted that, in principle, a victim of dol can recover damages for losses that are the immediate and direct consequence of the misrepresentation, and that such damages can cover both actual loss and loss of profit. However, Clinique failed to produce any concrete financial data, comparative figures or other evidence demonstrating a specific lost gain attributable to the site’s shortcomings. Without proof beyond the bare allegation of missed opportunities, the judge declined to award the claimed $3,000 in additional damages. By contrast, the court considered the $1,500 fee for the expert report to be a recoverable item. Clinique lacked technical expertise and reasonably needed an expert both to uncover that the site was not truly custom-built and to prove the dol in court. The report was thus essential to establishing misrepresentation and vitiated consent, and the court ordered Propaganda to reimburse this $1,500 as damages tied to the fraud. Finally, the judgment addressed interest and costs. Because Clinique had formally put Propaganda in default by a demand letter dated 8 April 2021, allowing ten days to pay, interest at the legal rate and the additional indemnity under article 1619 C.c.Q. run from 18 April 2021. The court also awarded Clinique its judicial costs for the proceeding, set at $317.

Outcome and amount awarded

In the result, the Court of Québec, Small Claims Division, partially allowed Clinique’s claim and dismissed Propaganda’s counterclaim. It annulled the service contract of 30 September 2020 on the basis of misrepresentation and vitiated consent, ordered restitution of prestations, and held that Propaganda must pay Clinique $6,000 in net restitution plus $1,500 for the expert’s fees, together with legal interest and the additional indemnity from 18 April 2021, as well as $317 in court costs. Overall, the successful party is Gestion LL inc. (Clinique ASC), which obtained a total quantified monetary award of $7,817 before interest and additional indemnity, with all of these sums ordered against Propaganda Design inc.