Executive Summary: Key Legal and Evidentiary Issues

• Whether the parties' agreement constituted a cost-plus contract under article 2108 of the Civil Code of Québec or an estimate-based contract under article 2107.
   
• Dvolu bore the burden of proving that costs exceeding the estimate resulted from unforeseeable work or additional client requests.
   
• LSO sought restitution of overpayments under article 1491 of the Civil Code of Québec, which requires proof that payment was made by error or under protest.
   
• Contested issues also included whether LSO could recover the cost of corrective and completion work performed by third parties after Dvolu suspended its services.
   
• Evidence turned largely on the timing and consistency of the successive estimates issued before and during the contract's performance.
   
• A separate claim concerning a mechanical failure discovered in Pennsylvania in 2024 raised questions of causation given the equipment's transport and subsequent handling by other parties.
   

Facts of the case

Dvolu inc. and 9349-3039 Québec inc., doing business as Les Solutions Optiprocess ("LSO"), entered into a contract for Dvolu to design and build the control components of a prototype machine-tool conceived by Jonathan Gagné, LSO's founder and sole shareholder. The device was intended to refurbish the interior surfaces of large pipes feeding hydroelectric turbines. Dvolu's mandate covered designing a control box, integrating electrical automation components, programming the interface and machine safety functions, installing and connecting field components, and testing and commissioning the equipment. Before the contract was signed, Dvolu issued two estimates: one for $98,995 on January 13, 2022, which LSO refused, and a second for $83,026 before tax (95,459.14 $ including tax) on January 20, 2022, which LSO accepted by issuing a purchase order. Work began January 18, 2022. On August 8, 2022, once the project's technical details were largely settled, Dvolu issued a revised estimate of $105,000 before tax (120,723.75 $ including tax). LSO ultimately paid $173,275.89 against total invoices of $200,925.49, leaving a claimed balance of $27,649.60. Dvolu also claimed $47,558.84 in legal fees, for a total claim of $75,208.44, and sought interest at a reduced rate of 2% per month rather than the 4% stated in its proposal. LSO disputed the claim and filed a cross-demand, arguing that Dvolu had exceeded the estimate without justification and seeking repayment of $52,552.14 in alleged overpayment, plus $21,868.45 for expenses incurred to complete and correct the work, for a total cross-claim of $74,420.59. Relations between the parties deteriorated as a June 2023 deadline for LSO's client, Voith, approached; Dvolu suspended its services on May 3, 2023, after LSO stopped paying invoices issued from February 2023 onward. LSO retained Pascal Bouthot to complete the programming and correct several deficiencies, and engaged the firm Eneroptim to finalize and seal the electrical plans. A separate claim arose from a 2024 equipment failure in Pennsylvania, where a connector reportedly detached during use on a Voith project.

Policy and legislative provisions at issue

The case turned on the characterization of the contract under the Civil Code of Québec. Dvolu argued the parties had entered into a cost-plus contract under article 2108, under which the client bears the risk of cost fluctuations and the final price is not fixed in advance. LSO argued the contract was one on estimation under article 2107, which provides that "if, at the time the contract is entered into, the price of the work or services has been estimated, the contractor or provider of services shall justify any increase in the price," and that the client is only bound to pay an increase that "results from work, services or expenses which were not foreseeable by the contractor or provider of services at the time the contract was entered into." LSO's cross-claim for restitution of overpayments relied on article 1491, which obliges a person who received a payment to restore it where the payment "was made in error, or simply to avoid injury to the person who makes it while protesting that he owes nothing." The court also referenced article 1591, governing exception for non-performance, in assessing whether Dvolu was entitled to suspend its services.

Reasoning and analysis

The court found that the contract was one on estimation under article 2107, not a cost-plus arrangement. It based this conclusion on the parties' conduct: LSO initially refused the higher of two pre-contract estimates on cost grounds alone, showing that projected cost was an essential element of the agreement, and the estimates themselves were closely aligned in figures. Having found the contract to be estimate-based, the court held that Dvolu bore the burden of proving that the amounts billed beyond the estimate resulted from unforeseeable circumstances or additional client requests. The court found Dvolu's evidence insufficient: its general assertions about the device's technical novelty were undercut by the fact that it had itself provided three estimates, including one issued mid-project when uncertainties should have been largely resolved. Dvolu offered no reliable method to isolate which portion of the overage was attributable to unforeseeable elements, and the sole supporting calculation, generated using an artificial intelligence tool without independent verification, was excluded from evidence. Because Dvolu could not justify the overage, the court held it was not entitled to claim the unpaid balance. On LSO's claim for restitution of $52,552.14 under article 1491, the court found that LSO paid its invoices voluntarily and with full knowledge of the amounts owed, without ever indicating error or protest, so the claim failed on both required elements. Regarding the corrective and completion work, the court found that Dvolu, not LSO, had unlawfully suspended performance, since LSO was not in default on any amount actually owed and Dvolu could not invoke the exception for non-performance. The court accepted LSO's claim of $10,163.79 for the substitute contractor's completion work and $8,581.37 for the engineering firm's completion of the electrical plans, finding these flowed directly from Dvolu's unjustified suspension. The court rejected LSO's $3,123.29 claim for the 2024 Pennsylvania repair, finding the evidence did not establish, on a balance of probabilities, that the defect was attributable to Dvolu's original workmanship rather than the transport, handling, or other interventions that occurred in the intervening period.

Ruling and overall outcome

The court dismissed Dvolu's claim in its entirety, including its claim for reimbursement of legal fees. LSO's cross-demand was granted in part: the court condemned Dvolu to pay LSO $18,745.16, representing the combined completion costs of $10,163.79 and $8,581.37, with legal interest and the additional indemnity under article 1619 of the Civil Code of Québec running from October 24, 2024, the date the amended cross-demand was filed. LSO's claims for restitution of alleged overpayment ($52,552.14) and for the 2024 repair costs ($3,123.29) were dismissed. Dvolu was also ordered to pay LSO's court costs. LSO was the successful party overall.