Executive Summary: Key Legal and Evidentiary Issues

• BVD Petroleum Inc. claimed unpaid balances of $10,038.08 and $13,665.69 from the defendants for the purchase of petroleum products.
• Liability against individual defendant Balwant Singh Bal was pursued on the basis of a personal suretyship he provided under the contract.
• Extrajudicial legal fees were claimed by BVD pursuant to a contractual indemnification clause in Schedule A of the parties' agreement.
• Court of Appeal precedents (Van Houtte, 2010 QCCA 1970; Davidovit, 2021 QCCA 551) require that extrajudicial fees be reasonable, proportional to the amounts claimed, and proven by the claiming party.
• Defendants' counsel withdrew their mandate shortly before the hearing, leaving the matter uncontested at the default hearing.
• After reviewing the invoices in detail, the tribunal reduced the claimed extrajudicial fees from $15,529.72 to $12,000, finding certain charges unrelated, unsubmitted, or unsupported.

Facts of the case

BVD Petroleum Inc. (BVD) brought an action before the Court of Quebec, District of Beauharnois, against 8806438 Canada Inc. (operating as BS Bal Transport) and its administrator, Balwant Singh Bal, seeking payment of outstanding balances for petroleum products sold. The amounts claimed were $10,038.08 and $13,665.69, representing unpaid balances owed to BVD. Balwant Singh Bal was sued jointly with the corporate defendant by virtue of a personal suretyship he had signed, found at Appendix 1 of exhibit P-3. The demand was served on October 15, 2024. A first case management conference was held on March 5, 2025, followed by a settlement conference on June 20, 2025, which was unsuccessful. A preparatory conference took place on August 6, 2025, after which the matter was set down for trial on May 22, 2026. On May 14, 2026, defense counsel advised BVD's lawyers of their withdrawal and that the claim would not be contested.

Contractual clause at issue

In the days preceding the hearing, BVD amended its claim to include extrajudicial legal fees and expenses totaling $15,529.72. These fees were claimed under clause 5 of Schedule A of contract P-3, which provides that BVD may charge and pay reasonable sums for expenses incurred and services rendered — including legal fees, whether described as substantial indemnity costs, solicitor-and-own-client costs, or other terminology — in connection with BVD's realization of the collateral or otherwise dealing with the collateral under the authorization, all such sums to be payable to BVD on demand.

Court's reasoning and analysis

The tribunal acknowledged that fee recovery clauses of this nature have been upheld by the Court of Appeal in Groupe Van Houtte Inc. c. Développements industriels et commerciaux de Montréal Inc., 2010 QCCA 1970, which confirmed that such clauses must be applied reasonably, under judicial supervision, and in context — permitting recovery only of fees and disbursements that are reasonable and not excessive or abusive. This framework was reaffirmed in Banque de Nouvelle-Écosse c. Davidovit, 2021 QCCA 551, which further specified that the quantum of extrajudicial fees must be proportional to the amount claimed, and that the burden of proving reasonableness rests on the claiming party. After reviewing the detailed invoices filed as exhibit P-7, the tribunal reduced the claimed amount for several reasons: certain disbursements in the October 31, 2024 invoice were properly recoverable as court costs rather than extrajudicial fees; some charges appeared unrelated to the present file, particularly the first entries in the September 30, 2024 invoice; fees for the preparation of a demand for particulars that was never filed (February 28, 2025 invoice) were disallowed; and certain entries did not correspond to the court records (invoices of April 30 and September 1, 2025). The tribunal noted that, in the absence of representations from the defendants, its review was limited to the most evident elements. It also found that the file had proceeded with reasonable speed and in accordance with simplified procedure timelines, rejecting the suggestion that the defendants' conduct had caused disproportionate delays.

Ruling and overall outcome

The tribunal partially granted BVD's amended application. The defendants, 8806438 Canada Inc. (BS Bal Transport) and Balwant Singh Bal, were condemned solidarily to pay BVD Petroleum Inc. the sum of $23,703.77, plus interest at the rate of 24% per year from July 30, 2024. They were further condemned solidarily to pay $12,000 as compensation for extrajudicial fees incurred by BVD, plus legal interest and the additional indemnity provided under article 1619 of the Civil Code of Quebec, from the date of the judgment. Court costs were also awarded. The successful party was BVD Petroleum Inc., with total amounts ordered in its favor of $35,703.77, exclusive of interest and costs.