Executive Summary: Key Legal and Evidentiary Issues

• Undivided co-owners of a commercial building disputed whether one could unilaterally commission necessary repairs without the other's consent.
   
• Insurance-driven deadlines for corrective masonry and steel-structure work factored heavily into the necessity analysis.
   
• Case law distinguished "necessary expenses" for property preservation from administrative decisions requiring majority consent.
   
• A prior judgment concerning unilateral lease termination was found factually distinguishable from the maintenance dispute at hand.
   
• Nice's expert report on the value of completed work was given little weight due to methodological gaps.
   
• Contractual interest at 21% was denied for lack of clear, informed consent, with only legal interest awarded instead.
   

Facts of the case

K-Selem inc. and Boutique Nice inc. are undivided co-owners of a commercial building, holding 75% and 25% shares respectively. In June 2024, the building's insurer, Intact, notified K-Selem's representative, Wassim Shirry, that coverage would be terminated due to non-compliance with underwriting standards, citing corrosion in the steel structure, deficiencies in the brick cladding and mortar joints, and inadequate insulation protection. A replacement insurer, Promutuel, later agreed to provide coverage on condition that corrective work be completed by May 20, 2025. Shirry and Nice's representative, Marwan Omar-Agha, discussed the required work, but disagreements arose over the choice of contractor. Omar-Agha obtained two competing quotes lower than the contractor Shirry had selected, but Shirry proceeded regardless, engaging Les frères Sarenov inc. for the masonry work and later Rénovation Raco for the steel structure work. Nice objected to the unilateral decision-making and to the cost, and later relied on an inspection report to argue the completed work was worth less than billed.

Policy and legislative provisions at issue

The dispute centred on provisions of the Civil Code of Québec governing undivided co-ownership. Article 1020 C.C.Q. entitles a co-owner to reimbursement of necessary expenses incurred to preserve undivided property. Articles 1025 and 1026 C.C.Q. require that decisions on the administration of jointly held property be made by majority of the co-owners, in number and in shares. Article 1619 C.C.Q., governing the additional indemnity on money judgments, was applied to the amounts awarded. Articles 2803 and 2804 C.C.Q., concerning burden and standard of proof, informed the Court's assessment of necessity. The Court also considered whether a contractual interest rate above the legal rate had been validly agreed to, applying principles requiring clear client consent for such a rate to be enforceable.

Reasoning and analysis

The Court first addressed whether K-Selem could commission the repairs without Nice's consent. It held that decisions relating to necessary expenses for the preservation of jointly held property, as opposed to decisions on the administration of the property, do not require majority consent in number and in shares; a co-owner may incur such costs unilaterally while seeking reimbursement from the other. The Court distinguished this dispute from a separate, earlier judgment involving the same parties concerning unilateral termination of a lease, which it characterized as an administrative decision subject to the majority rule, unlike the maintenance-related expenses at issue here. The Court found the masonry work was clearly necessary and, despite Promutuel not strictly requiring the steel-structure work, found that work necessary as well, since it addressed deterioration risks flagged by the prior insurer. The Court found Shirry's conduct toward Omar-Agha to be cavalier and intimidating in imposing the choice of contractor and failing to transmit the Sarenov quote, but nonetheless rejected Nice's argument that there was no urgency justifying the decision to proceed, given the insurer's approaching deadline. On quantum, the Court gave limited weight to Nice's expert report, finding its own language suggested it was prepared to estimate future corrective work rather than assess work already completed a year earlier, and that it lacked a stated methodology or reference to the actual invoice. The Court also rejected K-Selem's argument that Nice should bear the full cost of the steel-structure work due to alleged tenant-caused water damage, finding no evidence supporting that claim. Finally, the Court found no valid consent to a 21% contractual interest rate, concluding that a text exchange relied upon by K-Selem reflected acknowledgment of pending legal proceedings rather than agreement to that rate, and it accordingly applied the legal interest rate.

Ruling and overall outcome

The Court partially granted K-Selem's claim. Boutique Nice inc. was ordered to pay K-Selem inc. $7,473.57 [as stated in the dispositive order; the Court's own calculation at paragraph 45 and the claim breakdown at footnote 2 both state this share as $7,473.37] for its portion of the masonry work, with interest at the legal rate and the additional indemnity under article 1619 C.C.Q. running from the May 20, 2025 demand letter. Nice was further ordered to pay $574.88 for its share of the steel-structure work, with legal interest and the article 1619 C.C.Q. indemnity running from the May 28, 2025 demand letter. Nice was also ordered to pay court costs of $312. K-Selem's claims for reimbursement of loan interest and for a contractual interest rate of 21% were both dismissed.