Executive Summary: Key Legal and Evidentiary Issues

• Responsibility of an independent tax preparer for late filing of the federal T1135 form, despite using a firm’s software and name.
• Characterization of the contract as a contract for services under articles 2098 and 2100 C.c.Q., and the resulting duty of prudence, diligence, and competence owed by the preparer to the client.
• Assessment of whether a mistaken belief about software functionality (automatic transmission of T1135) constitutes a professional fault engaging civil liability.
• Determination that the tax preparer remains personally liable toward the client even though he worked under the umbrella of a cabinet (AAST) that might also bear fault.
• Scope of recoverable damages: reimbursement of CRA penalty and interest versus refusal to refund professional fees where the tax work was otherwise properly done.
• Evaluation and partial award of “troubles et inconvénients” and judicial costs, including time spent dealing with the CRA and formal notice expenses.

Facts of the case

Fanny Chedrue retained Bouchaib Latrach on 1 April 2022 to prepare and file her income tax returns. Mr. Latrach presented himself as a “comptable” and held an Attestation d’études collégiales in computerized accounting since 2015, but he was not a chartered professional accountant and did not belong to any professional order. He worked as an independent worker with the accounting and tax services cabinet A.A.S.T. services comptables et fiscaux (AAST), collecting fees directly from clients and remitting a portion to AAST. Ms. Chedrue paid him personally for the mandate by Interac transfer to his private email account.

In the course of filing her federal return, a specific reporting form was required: the T1135, which relates to foreign income verification. Mr. Latrach relied on the accounting software provided through AAST and mistakenly believed that the software automatically transmitted the T1135 electronically together with the rest of the federal return. In fact, the T1135 required a separate transmission. This misconception led to a late filing of the form in the eyes of the Canada Revenue Agency (CRA/ARC).

Because the T1135 had not been duly transmitted within the prescribed time, the CRA imposed a late-filing penalty and interest charges on Ms. Chedrue. She attempted to mitigate her loss by asking the CRA to cancel these amounts, explaining that the delay was caused by her tax preparer’s error. The CRA refused, taking the position that taxpayers remain responsible for mistakes made by third parties acting on their behalf. Ms. Chedrue then requested a second-level independent review, but this, too, was refused. In that second refusal, the CRA reiterated that third parties acting for remuneration are generally responsible toward their clients for penalties and interest their errors generate.

Procedural background and parties’ positions

Ms. Chedrue brought a claim before the Small Claims Division of the Court of Québec seeking several heads of damages. She asked for reimbursement of the CRA penalty and interest, reimbursement of the fees she had paid to Mr. Latrach for preparing her return, and additional amounts for “troubles et inconvénients” related to the time and effort spent trying to resolve the situation with the CRA and others.

For his part, Mr. Latrach did not deny that the T1135 had been filed late due to his misunderstanding of the software’s functionality. He even wrote explanatory letters to the CRA seeking leniency for his affected clients. However, he sought to shift or dilute responsibility onto AAST, arguing that the cabinet had failed to inform him that the T1135 must be sent separately. In his view, Ms. Chedrue should instead have pursued claims against the cabinet AAST and potentially the Syndic of the order of chartered professional accountants.

Although he suggested AAST might be to blame, he categorically refused to call AAST in warranty in these proceedings, stating that he no longer wished to have any dealings with the firm. The court therefore had before it only the dispute between Ms. Chedrue and Mr. Latrach; AAST was not a party and no evidence or submissions from AAST were heard.

Legal framework and nature of the obligation

The court characterized the relationship between Ms. Chedrue and Mr. Latrach as a contract of enterprise or contract for services under article 2098 of the Civil Code of Québec. Article 2100 C.c.Q. imposes on the provider of services an obligation to act in the best interests of the client, with prudence and diligence, and, depending on the nature of the service, to comply with the usages and rules of the trade and to ensure the service conforms to the contract.

The judge emphasized that an accountant (or tax preparer) is generally bound by an obligation of means rather than result: the professional must take appropriate steps to deliver the expected service, exercising competence and due care, but is not automatically at fault simply because a particular fiscal outcome is not achieved. However, the professional has a clear duty of competence, which includes knowing the applicable filing requirements and understanding how the chosen software functions in fulfilling those obligations.

Finding of fault and personal responsibility

On the facts, the court held that Mr. Latrach’s mistaken belief that the T1135 was automatically transmitted by the software amounted to a professional error. As a tax preparer, he was expected to know both the CRA’s transmission requirements for the T1135 and the operational particularities of the software he used. His failure to ensure that the T1135 was properly and timely filed was a breach of his obligation of prudence, diligence, and competence.

The court acknowledged that AAST could possibly share some responsibility, for example if they failed to train or inform him about the need for a separate filing of the T1135. However, because AAST was not called in warranty and was not a party, the court expressly declined to rule on AAST’s potential fault. The focus remained on the contractual and extra-contractual responsibility of Mr. Latrach toward his client.

Given his status as an independent worker within AAST, the fact that AAST’s name appeared on the tax returns and that he used its software did not exonerate him vis-à-vis Ms. Chedrue. If he wished to allege that his own error had been induced by AAST’s fault, his remedy lay in a separate recourse against AAST, not in avoiding personal liability toward his client in this small-claims action.

Assessment of damages

The court then turned to the quantification and types of damages. First, the amount of $2,739.39 representing the CRA late-filing penalty and interest was undisputed. The judge found this to be a direct and immediate consequence of Mr. Latrach’s error in handling the T1135 filing and awarded this sum in full.

Second, Ms. Chedrue sought reimbursement of $225 in professional fees she had paid to Mr. Latrach for preparing her tax return. The court refused this claim. The reasoning was that the error relating to the T1135 did not negate the fact that the main tax preparation service had otherwise been rendered. Ms. Chedrue did not complain about the other components of her tax return, and a professional misstep in one aspect does not necessarily mean the client received no value from the service overall.

Third, Ms. Chedrue claimed $400 for “troubles et inconvénients,” principally the time and stress associated with making repeated phone calls to the CRA, the Syndic of the professional order, and AAST. The judge distinguished between compensable consequences and those stemming from personal choices or ordinary litigation activity. The court declined to award anything for the call to the Syndic, viewing that as essentially arising from Ms. Chedrue’s decision to lodge a complaint rather than a direct consequence of the fault. Similarly, time spent calling AAST was considered part of the usual effort of asserting one’s rights against a defendant and not typically indemnifiable absent an abuse of process, which the court did not find here.

However, the court accepted that the time Ms. Chedrue spent on multiple lengthy calls with the CRA—estimated between five and eight calls, each lasting over an hour due to holds and routing issues—was a direct and foreseeable result of the original filing error. Exercising its discretion, the court awarded her $250 under this head for troubles and inconveniences connected specifically to attempts to correct the T1135 problem with the CRA.

Lastly, the court considered judicial costs. In addition to the $188 court filing fee paid by Ms. Chedrue, she incurred $12.44 for sending a demand letter (mise en demeure), representing half of an invoice covering two separate mailings, only one of which related to this matter. The court found these expenses reasonable and directly tied to the enforcement of her rights in this case, awarding a total of $200.44 as recoverable judicial costs.

Outcome and final orders

The Court of Québec, Small Claims Division, partially allowed Ms. Chedrue’s claim. It condemned Mr. Bouchaib Latrach to pay her $2,989.32, corresponding to the CRA penalty and interest plus $250 for troubles and inconveniences, together with legal interest at the statutory rate and the additional indemnity under article 1619 C.c.Q., running from 25 August 2023, the date he received the letter of formal notice. It further ordered him to pay $200.44 in judicial costs, covering the court fee and the cost of sending the demand letter.

In practical terms, the successful party was Ms. Fanny Chedrue, who obtained judgment for a principal amount of $2,989.32 and an additional $200.44 in costs, for a total of $3,189.76, plus legal interest and the statutory additional indemnity from the date of formal notice.