Executive Summary: Key Legal and Evidentiary Issues

• Marin Scutelnic sued 10069426 Canada inc. and its sole shareholder and director, Andrei Spinei, jointly and severally for $88,002.28 in total claims, including the price of undelivered renovation goods, a trailer, gutters, and damages.
• Only the claim for $63,002.28 (CAD equivalent of $46,556 USD) for undelivered merchandise was proven on a balance of probabilities; the remaining claims were dismissed for insufficient evidence.
• Two bank drafts payable to 10069426 Canada inc. totalling $46,556 USD, along with a Canadian dollar conversion record, constituted the principal documentary evidence supporting the merchandise claim.
• Corporate law principles under Articles 309 and 317 of the Civil Code of Québec were central to determining whether the corporate veil could be lifted to hold Spinei personally liable.
• The court found that Spinei acted in bad faith and never ordered the goods from the China-based supplier, constituting fraud and an extra-contractual fault against Scutelnic.
• Piercing the corporate veil was justified because Spinei used the company's separate legal personality to conceal fraudulent conduct.

Facts of the case

Marin Scutelnic and Andrei Spinei have known each other since 2019. Scutelnic occasionally performed work for 10069426 Canada inc., a company of which Spinei is the sole shareholder and director. Scutelnic paid the company $46,556 USD (equivalent to $63,002.28 CAD) by way of two bank drafts for renovation merchandise to be sourced from a supplier in China. Despite repeated promises from Spinei, the goods were never delivered. Scutelnic also claimed $10,000 for the purchase of a trailer, $2,500 for the purchase and installation of gutters, $10,000 in compensatory damages, and $2,500 (reduced at the hearing) in punitive damages. The defendants failed to respond to the summons and the court proceeded in their absence.

Contractual and legal provisions at issue

The case turned on both the contractual obligations of 10069426 Canada inc. and the personal liability of Spinei. Article 309 of the Civil Code of Québec provides that legal persons are distinct from their members and that their acts bind only themselves, except as provided by law. Article 317, however, carves out an exception: the legal personality of a corporation cannot be invoked against a person acting in good faith when that personality is used to conceal fraud, an abuse of right, or a contravention of a rule of public order. Article 1375 requires that good faith govern the conduct of parties from the formation of an obligation through to its performance or extinction. Article 1457 imposes a duty on every person to respect rules of conduct so as not to cause injury to others, and provides that a person may also be liable for injury caused by the fault of another person or by things under their care.

Reasoning and analysis

The court found that Scutelnic's claim for the undelivered merchandise was clearly established on a balance of probabilities. The two bank drafts payable to 10069426 Canada inc. totalling $46,556 USD, together with the Canadian dollar conversion record showing $63,002.28, demonstrated that payment had been made. Scutelnic's credible testimony that the goods were never received, corroborated by text message exchanges with Spinei, supported the finding of non-delivery. The court, however, found that Scutelnic had not discharged his burden of proof with respect to the trailer, the gutters, or the claims for compensatory and punitive damages, and those claims were dismissed.

On the question of Spinei's personal liability, Scutelnic conceded that no written contract established Spinei's personal engagement. The court nonetheless found that Spinei had acted in bad faith — having never ordered the goods from the Chinese supplier and never intending to deliver them — and that his conduct amounted to fraud. This constituted an extra-contractual fault on Spinei's part, bringing Article 317 into play and justifying the lifting of the corporate veil. The enterprise registry confirmed that Spinei was the sole shareholder and administrator of 10069426 Canada inc., which reinforced the conclusion that the corporate structure was being used to shield fraudulent conduct.

Ruling and outcome

The Cour du Québec, per the Honourable David Pecho J.C.Q., partially granted Scutelnic's claim. The court annulled the contract for the purchase of merchandise and condemned both defendants — 10069426 Canada inc. and Andrei Spinei — jointly and severally to pay Marin Scutelnic $63,002.28, plus legal interest and the additional indemnity provided under Article 1619 of the Civil Code of Québec, running from November 14, 2024. The defendants were also ordered to pay court costs. All other claims, including those for the trailer, gutters, compensatory damages, and punitive damages, were dismissed.