Executive Summary: Key Legal and Evidentiary Issues

• Personal claim by shareholders for their own damages was found to be prescribed because more than three years had elapsed from when they knew of the alleged fault.
• Prior Superior Court action by the corporation did not interrupt prescription for the shareholders, as they were not parties to that earlier proceeding.
• Evidence from 2019 email exchanges showed the claimants were already aware of their personal grievances and of alleged bad faith by Transteck during that period.
• The court distinguished clearly between the legal personality of the corporation 9353-5755 Québec inc. and that of its shareholders, who could not piggyback on the corporation’s rights or procedures.
• The judge treated the earlier Superior Court judge’s remark about possible personal damages to the shareholders as non-binding and insufficient to revive or extend their personal claim.
• No judicial costs were awarded, with the small claims division rejecting the claim without costs after finding the three-year prescription period under article 2925 C.c.Q. had expired.

Factual background and the parties’ relationship

Caroline Simard and Dany Paquette are shareholders and directors of 9353-5755 Québec inc. (9353), a company active in the transport logistics sector that leases vehicles to other businesses. In 2019, 9353 entered into a commercial relationship with Groupe Transteck inc. (Transteck), under which Transteck used vehicles provided by 9353. The relationship deteriorated rapidly. Email exchanges from spring and summer 2019 show ongoing disputes, late or missing payments, and increasing frustration on the part of Mr. Paquette, including concerns about Transteck’s good faith, payment of vehicles (in particular Yaris vehicles), and the financial impact on 9353 and its ability to meet tax obligations. These emails demonstrated the existence of concrete disputes and alleged harmful conduct well before any court action was filed.

Earlier Superior Court proceedings involving the corporation

Against that tense commercial backdrop, 9353, and not its shareholders personally, brought an action in the Superior Court of Québec against Transteck on 10 January 2020, seeking $243,263.65 in damages. That action concerned the business relationship between the two companies. The matter was heard before the Honourable Paul Mayer J.C.S. from 18 to 20 May 2022. On 20 May 2022, Judge Mayer rendered an oral judgment from the bench, ordering Transteck to pay $43,000 to 9353. In his oral reasons, he remarked that, had Ms. Simard and Mr. Paquette been parties to that proceeding, he would have awarded each of them $5,000 in personal damages. However, that comment remained hypothetical because they were not named as claimants in that case. It was this remark that later prompted the shareholders to attempt their own personal claim in small claims court.

The small claims action by the shareholders

Following the Superior Court decision, Ms. Simard and Mr. Paquette decided to pursue Transteck personally in the Court of Québec, Small Claims Division. They claimed a total of $10,845.75, consisting of $5,000 in personal damages for each of them (reflecting the amount identified in the Superior Court judge’s oral comments), plus $847.75 in alleged expenses related to preparing their file. They relied heavily on Judge Mayer’s oral statement to argue that their personal loss had effectively been recognized. On 1 September 2022, they sent demand letters to Transteck, and after receiving no satisfactory response, they filed their small claims action on 14 November 2022. In their claim, they expressly acknowledged that the underlying fault by Transteck dated back to 14 March 2019. Transteck defended the action on two main grounds: first, that the earlier Superior Court judge’s remark was merely obiter dictum (a non-binding observation), and second, that in any event the personal claim was prescribed because more than three years had passed since the alleged fault and its consequences had become known.

Legal framework on burden of proof and prescription

The small claims judge began by recalling the burden and standard of proof in civil matters: the plaintiffs had to prove their allegations on a balance of probabilities, through clear and convincing evidence. The court emphasized that mere possibilities or beliefs are insufficient; the facts relied upon must be more probable than not. Once the plaintiffs assert a right, the defendant may in turn defeat the action by proving, again on a balance of probabilities, that the alleged right does not exist, including by raising prescription. On prescription, the court applied article 2925 of the Civil Code of Québec, which establishes a three-year limitation period for actions seeking to enforce personal rights where no other period is specified. The judge also referred to the principle that prescription begins when a reasonably prudent and informed person is aware of the elements of liability, including the fault, the damage and the causal link. The court then considered articles 2892 and 2896 C.c.Q. on interruption of prescription by a judicial demand, and the rule that such interruption benefits only the parties to the proceeding when the right invoked flows from the same source.

Shareholders as distinct legal persons and the effect of the earlier action

A central legal issue was whether the Superior Court action filed by 9353, and the subsequent judgment, could interrupt prescription for the personal claims of Ms. Simard and Mr. Paquette. The court answered this in the negative. It held that the words “all the parties” in article 2896 C.c.Q. must be given their ordinary meaning: they refer only to persons actually involved as parties in the proceeding. The interruption of prescription therefore extended only to 9353 and Transteck, not to third parties who were absent from the record. The judge underlined that shareholders of a corporation are distinct legal persons from the corporation itself. Their status as shareholders does not make them beneficiaries (ayants droit) of the corporation’s rights, nor does it automatically extend to them any interruption of prescription obtained by the corporation. In this case, 9353 brought the Superior Court action in its own name and obtained a judgment for its own corporate loss. The personal rights now asserted by Ms. Simard and Mr. Paquette were different and were never part of the earlier proceeding. As such, the prior action and judgment could not revive or preserve their individual claims.

When the shareholders’ personal claim arose

The court then examined when the shareholders first became aware of their alleged personal damage. It relied on several emails from May to July 2019, written by Mr. Paquette to Transteck’s representatives, complaining of unpaid amounts, the financial pressure caused by Transteck’s conduct, and an explicit doubt as to Transteck’s good faith. These communications showed that by mid-2019 the claimants were already fully aware of both the alleged breaches and the personal impact on them, including mounting financial difficulties and the inability to resell vehicles or meet tax obligations because of Transteck’s non-payment. The judge concluded that any personal cause of action had clearly manifested itself in the summer of 2019. Even assuming that the harm continued over time, article 2926 C.c.Q. provides that prescription runs from the first manifestation of the injury. Here, the three-year period began at that first manifestation and expired before the small claims action was filed in November 2022.

Outcome and consequences of the court’s decision

Given that the action was filed on 14 November 2022, the court held that more than three years had elapsed since the shareholders first knew of their alleged personal losses and Transteck’s conduct in 2019. The claim was therefore prescribed under article 2925 C.c.Q. Because prescription is a complete bar to the exercise of a civil right when the period expires, the judge rejected the action without needing to quantify damages or rule further on the earlier judge’s obiter remarks. The court also decided not to award any judicial costs, as is common in the small claims division, and expressly rejected the claim “without costs.” As a result, Transteck emerged as the successful party in this proceeding, and no monetary award, damages or costs of any kind were ordered in its favour, so the total amount granted or ordered in this case is 0 dollars.