Executive Summary: Key Legal and Evidentiary Issues

• Prescription (limitation) under article 2925 of the Civil Code of Québec barred the tenant's business tax claims predating April 24, 2022, as the action was filed on April 24, 2025.
• Article 2904 C.c.Q. on impossibility to act was rejected because ignorance of the law and difficulty obtaining evidence do not suspend prescription.
• Interpretation of the lease's "Municipal Business Tax" clause was central, with the Court finding the 50/50 allocation conformed to the method set out in the lease.
• Ratification and acknowledgment of debt arose from the June 6, 2024 payment agreement and the tenant's October 31, 2024 email, and his pleading of the landlords' $11,464.76 claim in compensation constituted a judicial admission.
• Credibility findings favoured the landlords, whose testimony the Court found credible and preponderant, while the tenant's records were viewed as an ex post facto reconstruction and his testimony on the key-return date was evasive.
• Rent indexation to the CPI in the counterclaim was disallowed as unjustified, and the Court recognized the parties' agreement to terminate the lease on December 31, 2024.

Facts of the case

In 2013, Khalid Benthami leased a commercial space in a building on St-Denis Street in Montréal owned by Andréas and Helen Birbilas, where he operated Le Marrakech Store until mid-February 2025. Initially located on the first floor, the business was relocated to the basement, and his rent was reduced from $1,475 to $1,200 as of June 1, 2014; the rent was never increased thereafter. For 2013, 2014, and 2015, Mr. Benthami contributed to the business tax in proportions of 35%, 30.73%, and 29.89%, respectively, an allocation he agreed with. Following a reclassification of the building requested by Mr. Birbilas, the City of Montréal classified it as 50% commercial and 50% residential. From 2016 onward, Mr. Benthami was allocated 50% of the business tax, with the remainder assumed by Mr. Birbilas, whose insurance brokerage operated from a portion of his third-floor apartment. Mr. Benthami claimed he was misled about the tax proportions attributed to him for 2016 to 2024, resulting in an alleged overpayment of $29,913.71, from which he deducted the $11,464.76 the Birbilas claimed in rent arrears, leaving a balance of $18,448.95 in his favour, which he reduced to $15,000 to fall within the jurisdiction of the Small Claims Division of the Court of Québec. The Birbilas contested the claim and counterclaimed $14,106.62, representing unpaid arrears and rent increased by the consumer price index (CPI) for all rents until the end of the lease on June 5, 2025.

Policy terms and contractual clauses at issue

The dispute centred on the "Municipal Business Tax" clause of the initial lease dated January 1, 2013, under which the lessee undertook to pay the lessor the proportion of the business tax charged for the premises occupied, calculated as per the rental of each tenant indicated at the municipal tax bill issued by the City of Montréal, payable starting March 1 each year in six equal consecutive monthly payments. The parties agreed on the interpretation of this clause: a tenant's share is determined by its commercial rent in proportion to all commercial rents of the building. Also at issue were the June 6, 2024 agreement, in which Mr. Benthami acknowledged rent arrears of $4,139.10 for April, May, and June 2024, payable in twelve instalments of $344.92, and the 2024 business tax of $2,876.02, payable in twelve consecutive payments of $239.66 beginning July 1, as well as the alleged agreements on rent indexation and early lease termination.

The court's reasoning and analysis

Applying articles 2803 and 2804 C.c.Q. on the burden of proof, the Court first found that the calculation of Mr. Benthami's business tax proportion conformed to the method set out in the lease. From 2016 there were only two commercial tenants: Mr. Benthami, and Mr. Birbilas's insurance brokerage, which paid an annual rent of $12,000 against total commercial revenues of $26,400, making the Birbilas's proportional share 45.54%; they nevertheless assumed 50%, more than their quota. The Court found the Birbilas's testimony credible and preponderant, noting they had never raised the base rent between 2014 and 2024, granted payment arrangements rather than exercising recourses, and accepted lease termination at Mr. Benthami's request. It viewed Mr. Benthami's documentation as an ex post facto exercise designed to construct a claim as a counterweight to the landlords' claim for genuine rent arrears, observing he had never protested the allocation for ten years and that his testimony about when he returned the keys was evasive. On prescription, since the action asserting a personal right prescribes by three years under article 2925 C.c.Q. and the claim was filed on April 24, 2025, everything predating April 24, 2022 was prescribed. The Court rejected the argument based on article 2904 C.c.Q., holding that Mr. Benthami knew his injury, its cause, and its author from April 1, 2016, and that ignorance of the law and the difficulty of obtaining evidence do not constitute a factual impossibility to act. The non-prescribed portion for 2023 and 2024 was unfounded on the merits, and the June 2024 agreement, together with his October 31, 2024 email and his pleading of the landlords' $11,464.76 claim in compensation — a judicial admission — established that he had ratified the 50/50 allocation and acknowledged his debt. On the counterclaim, the Court agreed with Mr. Benthami that CPI indexation was never agreed upon and appeared to be an afterthought, and that the parties had agreed the lease would terminate when Le Marrakech Store ceased operations on December 31, 2024. Using the December 2024 table (exhibit P-5) as the reference, the Court deducted a $1,406.26 tax adjustment for 2024 from the $11,464.76 total, and noted it could not award more than what was judicially claimed.

Ruling and overall outcome

The Court dismissed Mr. Benthami's claim in its entirety and granted the counterclaim in part, making Andréas and Helen Birbilas the successful parties. Mr. Benthami was ordered to pay them jointly $10,058.50, with interest at the legal rate and the additional indemnity provided under article 1619 of the Civil Code of Québec from the date of default, October 26, 2024, together with court costs of $237 representing the filing fee for the contestation.