Executive Summary: Key Legal and Evidentiary Issues

• JBMB Export inc. sought reimbursement of an $8,363.58 deposit paid toward tires and equipment purchased from Les Pneus Yves Thériault inc., along with punitive damages.
   
• Thériault contended that JBMB cancelled the sale for a reason not agreed upon between the parties, after the necessary purchases had already been made to fulfill the order.
   
• Evidence showed that JBMB's own representative inspected and initialed the tires before confirming the purchase, undermining JBMB's claim that the goods were unsuitable.
   
• Article 1711 of the Civil Code of Québec presumes a deposit is refundable unless the contract states otherwise, placing the burden on the seller to prove a non-refundable agreement.
   
• The court exercised its discretion to assess Thériault's damages at $3,000, well below the nearly $9,000 it claimed, citing insufficient documentary support.
   
• No punitive damages were awarded, as the court found no wrongful conduct by Thériault, which remained willing to complete the sale.
   

Facts of the case

JBMB Export inc., an import-export business, purchased a compressor, a tire press, and a vulcanizer from Les Pneus Yves Thériault inc. under a purchase order signed on December 23, 2022, paying a $3,000 deposit by credit card, with no delivery deadline set. In April 2023, aiming to complete a shipping container for export to Africa, JBMB acquired 138 used tires and additional equipment for $5,363.58, paid in cash under an invoice stipulating that the tires not be retreaded. Although Thériault was ready to deliver by April 2023, JBMB refused delivery in July 2023 and sought to cancel the transaction, taking the same position on a separate lot of tires bought in June 2023 for which no deposit had been paid. JBMB claimed some tires were regrooved and therefore unsuitable for its African client given local climate conditions, framing itself as an intermediary let down by the goods supplied.

Policy and legislative provisions at issue

The court applied article 1711 of the Civil Code of Québec, which presumes that any sum paid in connection with a promise of sale constitutes a refundable deposit unless the contract expressly says otherwise, with the seller bearing the burden of proving a non-refundability agreement. Related provisions considered included articles 1507(2), 1422, 1606, and 1699 of the Civil Code, concerning release from obligations when a promise of sale is resolved or lapses, and article 1619, governing the additional indemnity applied to the final award.

Reasoning and analysis

The court rejected JBMB's argument that the tires were defective or unsuitable, finding that Thériault had no contractual relationship with JBMB's African client and had never been informed of any special requirements. Critically, JBMB's own representative had inspected the tires at Thériault's premises and personally initialed some of them before confirming the purchase, and nothing in the evidence indicated the tires available for delivery differed from those selected. Because the sale carried no condition tied to a third party's acceptance, and such conditions cannot be presumed, the court held that the transaction's collapse was due entirely to JBMB's unilateral refusal to take delivery, not any failing by Thériault. Turning to the deposit, the court applied the presumption of refundability under article 1711 and found no evidence that the parties had agreed the deposit was non-refundable, meaning JBMB's fault in walking away from the deal did not disentitle it to recovery of the deposit itself. It did, however, expose JBMB to liability for damages flowing from that fault. Thériault claimed close to $9,000 in losses tied to purchases, labour, transport, and storage, but the court found the documentary evidence insufficient to support that figure, instead fixing damages at $3,000 as fair and reasonable in the circumstances. Finally, the court found no evidence of wrongful conduct by Thériault that could justify punitive damages, noting Thériault had remained willing throughout to complete the sale.

Ruling and overall outcome

Setting off the $8,363.58 in deposits paid by JBMB against the $3,000 in damages owed to Thériault, the court ordered Thériault to pay JBMB $5,363.58, with interest at the legal rate and the additional indemnity under article 1619 of the Civil Code of Québec, running from August 27, 2024. The court also ordered Thériault to pay JBMB's legal costs of $303. JBMB was the successful party overall, recovering net reimbursement of $5,363.58, though its claim for punitive damages was dismissed entirely.