Executive Summary: Key Legal and Evidentiary Issues

• Allocation of responsibility for contract termination and characterization as unilateral resiliation by the homeowners rather than a sanction-based termination by the contractor
• Interpretation of a lump-sum (forfaitaire) construction contract and whether the disputed painting-related work formed part of the original price or constituted chargeable extra work
• Application of Civil Code of Québec articles 2125 and 2129 governing unilateral resiliation of a contract of enterprise, including the scope of the client’s payment obligations upon early termination
• Effect of consumer protection legislation on contractual clauses that attempted to expand the contractor’s recovery beyond what articles 2125 and 2129 C.c.Q. permit in a consumer renovation context
• Evidentiary assessment of competing testimony and documentary exchanges (texts, emails, and invoices) to determine who actually ended the contract and the proper valuation of completed work and extras
• Validity and enforcement of a legal construction hypothec, including whether the contractor could proceed with a hypothecary recourse and forced sale of the immovable to satisfy its liquid and exigible claim

Background and facts of the renovation dispute

Kathryn Berry and Carl Sauvageau entered into a lump-sum contract with Les Constructions Galileo inc. (Galileo) on 9 March 2022 for renovations to their home in Greenfield Park, Québec. The contract price was $103,477.60 (taxes included) for the renovation of a kitchen, a bathroom and a powder room. The homeowners paid Galileo a $35,000 advance. Galileo began work in the kitchen and bathroom, but not yet in the powder room, when the relationship between the parties deteriorated in early July 2022. During the work, Galileo uncovered defects and conditions not visible at the outset, including water damage to a bathroom window frame, an uninsulated exterior wall, and outdated plumbing. It recommended additional work to address these conditions, which Berry and Sauvageau approved and Galileo completed. Later, at the end of June 2022, when a molding was removed from a wall, a large quantity of existing paint peeled away, revealing that previous layers did not adhere properly. A similar adhesion problem was discovered on the ceiling. Galileo recommended further preparatory work before repainting, but this extra work was not performed and became the focal point of a major disagreement.

The contractual framework and key clauses

The court characterized the agreement as a contract of enterprise under the Civil Code of Québec: Galileo, as contractor, undertook to perform material work in exchange for a price payable by the clients. The contract was explicitly at a forfait (fixed/lump-sum) price. As such, the basic rule is that the contractor must complete the agreed work for the fixed price, without adjustment merely because more effort or cost was required, unless the parties agree otherwise. The contract also contained specific “extras” provisions in clauses 10 and 11. Clause 10 stated that Galileo would not be responsible for any “defects, conditions, or existing problems, known or not by the client, and discovered… while the work is being carried out,” and that in such situations it would be paid according to clause 11. Clause 11 provided that “all supplementary work or work not covered by the present contract” would be assumed by the client, to be recorded on time-and-material forms, and that any “extra” work would be invoiced at cost for materials and labour plus 15%. These clauses were central to the analysis of what counted as extra work versus what was included in the lump-sum price.

How the dispute over painting and extra costs escalated

As the project progressed, Galileo notified the homeowners that the time had come for the second scheduled progress payment and for payment of the already-completed extra work to the window frame, insulation and plumbing. A meeting was set for 7 July 2022 to deal with that payment. On 5 July, Galileo’s representative, Vince Vilone, observed additional problems with the adhesion of existing paint on the ceiling and communicated this by text at around 13:40, asking to be called. Berry called him shortly thereafter. According to Vilone, Berry accused Galileo of having “duped” her regarding the contract price and considered the costs excessive. He felt insulted and left the site roughly 20 minutes later, taking his tools as he normally did. He testified that he did not intend to terminate the contract and immediately asked Galileo’s office colleague, Chantale Dumas, to follow up with Berry to resolve the situation so work could continue. Berry’s version of this conversation was that Vilone demanded yet more money for additional work, she replied that she only wanted what had been contracted for, and she insisted that quality painting, including proper preparation, was already part of the agreed work. When she refused to pay for extra paint-related preparation, she says Vilone told her that if she would not pay more he would leave, to which she responded that it was his choice, and he said “Fine, I’m leaving” before departing. Berry perceived his departure as Galileo “walking off the job” and thus ending the contract.

Post-incident communications and determination of who terminated the contract

Shortly after Vilone’s departure, Dumas emailed Berry at 14:48 on 5 July 2022. The email explained that the project had been stopped because Berry wanted unforeseen work to be included in the contract price and stressed that when Galileo’s crew identified defects, their suggestions were optional and the final decision rested with the client. The email invited Berry to clarify the situation so Galileo could continue, and it asked for payment of both the second progressive instalment under the contract and $7,301.35 (later corrected to $6,997.18) for extras already performed. Berry acknowledged receiving this invitation but did not respond to it. Instead, later that afternoon she requested copies of all invoices for materials and work. On 6 July 2022 at 11:12, Berry emailed Dumas stating that “Vincent walked off the job yesterday and thus terminated the contract,” asserting that stripping the paint was part of the contract and that Galileo would be responsible for all costs resulting from its supposed termination of the agreement. Dumas replied, reminding Berry that in their last conversation Galileo had offered to continue the project and that Berry had refused several times to let Galileo return. Dumas then wrote in another email the same day that, given Berry’s accusation that Galileo had duped her and her lack of comfort continuing to deal with the company, it was in the best interest of both parties to end the contract. Berry answered that she was “very sorry that this did not work out” and agreed there was no need to meet if Galileo did not see any purpose in it. At trial, Berry eventually admitted that she had spoken with Dumas after Vilone left and that she had been “pretty clear” that she did not want to continue working with Galileo.

Legal characterization of resiliation: unilateral vs sanction-based

The court first distinguished between two regimes applicable to the termination (resiliation) of a contract of enterprise under the Civil Code of Québec: resiliation as a sanction for a serious breach (after the debtor is in default) and unilateral resiliation under the special rules for contracts of enterprise (articles 2098, 2125 and 2129 C.c.Q.). The judge emphasized that a client may unilaterally resiliate such a contract at any time, even after work has begun, without having to prove any breach and without needing to provide a reason, but that exercising this discretionary right is not a vehicle for claiming damages against the contractor. Under article 2129 C.c.Q., when the client unilaterally ends the contract, the contractor is entitled to the value of the work done, costs and expenses incurred, and, where applicable, the value of any goods supplied that can be delivered and used by the client, while the contractor must refund any advance payments in excess of what it has earned. On the evidence, the court held that Galileo did not terminate the contract when Vilone left the site on 5 July 2022. A contractor is entitled to temporarily pause work and leave the jobsite during a dispute without that act alone constituting resiliation. Galileo’s prompt invitation to clarify the situation and continue the project was inconsistent with any intent to terminate. By contrast, Berry’s repeated refusal to allow Galileo back, coupled with her later refusal to accept Galileo’s 21 July 2022 proposal to resume and complete the work upon payment of the extras and the second progress payment, led the court to find that Berry had, in substance and in law, unilaterally resiliated the contract.

Why a sanction-based termination was rejected

Berry and Sauvageau attempted to frame the situation as a termination-sanction caused by Galileo’s alleged breach, essentially arguing that preparation related to the adhesion problem should be included in the original lump-sum painting scope. They pointed to the contractual wording that promised to “plaster and paint” the work area with a specified Benjamin Moore paint, arguing that stripping defective paint to ensure proper adhesion formed part of that obligation. The court rejected this analysis. While the walls and ceilings were visible before the works began, the underlying adhesion defect was not, and there was no proof that the paint had been peeling beforehand. Galileo argued, and the court accepted, that the lump-sum price covered patching surface imperfections and applying new paint, not rectifying a hidden adhesion issue beneath old layers of paint. Corrective work to address that latent problem was therefore extra work under the contract, not something already included in the forfaitaire price. Because there was no established breach of Galileo’s contractual obligations on this issue, and because Galileo had never been formally put in default (mise en demeure) regarding any alleged failure before Berry ended the contract, the preconditions for termination as a sanction under the general law of obligations were not met. The judge also gave more weight to Vilone’s testimony than Berry’s, noting that Berry’s account evolved significantly during the hearing, especially regarding her conversations with Dumas, which undermined her credibility.

Impact on the homeowners’ claim for damages

Having found that Berry had exercised a unilateral resiliation under article 2125 C.c.Q., the court held that she and Sauvageau could not then rely on arguments of breach to claim damages against Galileo. Under Quebec law, a client who chooses the unilateral resiliation route cannot use that mechanism to recover damages for alleged contractual wrongdoing by the contractor. The homeowners had claimed a range of amounts, including $5,984.31 for additional electricity, gasoline, lost time and other items; $10,000 for loss of enjoyment of the property; and $10,000 for stress and inconvenience. The court dismissed these claims outright, both because unilateral resiliation does not open the door to damages from the contractor and because, in any event, the claimed amounts were poorly supported. Many items lacked a clear causal link to Galileo’s conduct, extended over an unjustified period into late 2022, and included discretionary expenses such as family travel, yoga classes and beverages.

Valuation of work, extras and the effect of consumer protection law

The central financial issue was how much Galileo was entitled to recover after the unilateral resiliation. The homeowners argued that the value of Galileo’s completed work was only $10,363.85, based on an “estimate” from another contractor, B.A.M & Fils construction et rénovation inc. The court refused to treat this estimate as reliable. The author, Mr. Mughal, had not read the original contract, had only visually inspected apparent work, and simply projected what his own company would have charged, without factoring in certain materials or a waste container. The court declined to qualify him as an expert and found his valuation unpersuasive. Galileo, for its part, claimed $28,909.82, comprising $6,997.18 for the approved extra work and $21,912.63 as the balance of the value of work and materials under the lump-sum contract, based on an expert assessment that 55% of the contract had been completed by 5 July 2022. The expert, Louis-Pier Jussaume, of Transformation LPJ, renovation générale, was found credible, but his 55% completion rate incorporated elements that could not be charged under the law in the circumstances, including hours spent before the contract was signed and several materials that had never been delivered to the homeowners (kitchen cabinets, ceramic tiles, sink, basins and a medicine cabinet).

Contract clauses vs mandatory consumer protections

Galileo sought to rely on clause 5 of the contract, which purported to require the client, upon requesting termination, to pay “any amount due relative to the work carried out up to the termination, plus the amount of the materials supplied or delivered, materials on order and costs incurred for the execution of the contract,” and to assume all costs incurred by Galileo prior to or because of the termination. During deliberations, the court invited submissions on the applicability of the Québec Consumer Protection Act (Loi sur la protection du consommateur, L.p.c.), in particular articles 11.4 and 16. Both parties ultimately accepted that the L.p.c. applied, as Galileo was a commercial contractor and Berry and Sauvageau were consumers renovating their residence. Article 11.4 L.p.c. forbids any contractual stipulation that excludes, in whole or in part, the application of articles 2125 and 2129 C.c.Q. concerning resiliation of contracts of enterprise or services. Article 16 L.p.c. states that the trader’s principal obligation is to deliver the goods or provide the services specified in the contract. The judge concluded that the contractual clause upon which Galileo relied could not override the statutory scheme. In other words, the homeowners could not be obliged by contract to pay more than what articles 2125 and 2129 C.c.Q. lawfully required them to pay upon unilateral resiliation.

Recovery for delivered vs undelivered materials and pre-contract work

Applying article 2129 C.c.Q., the court held that the homeowners were legally bound to pay, in proportion to the agreed price, the actual costs and expenses, the value of the work performed before resiliation, and, where applicable, the value of property supplied that could be delivered and used by them. Galileo had never delivered the kitchen cabinets, ceramic tiles, sink, basins or medicine cabinet. Although the cabinets were ordered before resiliation, there was no proof that, at the time of resiliation, they had been manufactured, could be delivered or could be used by the homeowners. After resiliation, Galileo received the cabinets, kept them for about a year, and then discarded them. Some ceramic tiles were also ultimately thrown away and other items were returned to suppliers for credit. Because these materials were never delivered and could not be used by the homeowners at the moment of resiliation, Galileo could not recover their value from the clients under article 2129 C.c.Q. Nonetheless, Galileo had prepared design plans for the cabinets and those plans had been given to, and approved by, Berry. The court accepted that Galileo was entitled to compensation for the professional services of producing these plans, as they formed part of the value of the work performed before resiliation. The judge also excluded from Galileo’s recoverable claim the profit margin of 15% that Galileo had baked into its detailed post-resiliation invoices for undelivered materials and pre-contract hours, noting that profit on work or goods that had not been executed or delivered cannot be claimed as “other prejudice” under article 2129 C.c.Q.

Recalculation of the completion percentage and final entitlement

Taking into account the legal constraints and the factual record, the court recalculated the percentage of work completed that could legitimately be billed under the lump-sum contract, excluding extras. It determined that Galileo had effectively accomplished 34% of the lump-sum contract price by the time Berry unilaterally resiliated the agreement. Applying that percentage to the fixed price of $103,477.60 yielded a value of $35,182.38 (taxes included) for the included works performed. From that amount, the court deducted the $35,000 advance already paid, leaving a modest balance of $182.38 for the core contract work. Separately, the court fully allowed Galileo’s claim of $6,997.18 for extra work on the window frame, insulation and plumbing, which had been properly approved in writing by Berry and Sauvageau and invoiced on a time-and-material plus 15% basis. In total, Galileo was found entitled to $7,179.56 for all completed and approved work.

Construction hypothec and hypothecary recourse

In August 2022, Galileo had registered a legal construction hypothec on the homeowners’ property to secure its claim. In February 2023, it published a modified notice of hypothec stating a claimed balance of $8,604.44 for the works. Berry and Sauvageau contested the hypothec and sought its cancellation, while Galileo, by cross-demand, pursued a hypothecary recourse, asking for forced surrender and judicial sale of the property. The court found that the hypothec had been published within statutory deadlines and in proper form, and that Galileo held a liquid, certain and exigible claim in the amount of $7,179.56. As the homeowners refused to voluntarily surrender the property and had shown no valid ground of opposition, the court declared the hypothec valid, recognized that Galileo’s work had increased the value of the property by at least the amount of its claim, and ordered a forced surrender (délaissement forcé) and sale under judicial control if the debt was not paid. The judgment set out detailed instructions for the sale, including appointing a bailiff, authorizing the use of a real estate broker, specifying a minimum sale price, and addressing how deposits and closing conditions would be handled.

Final outcome and monetary consequences

The court rejected entirely the homeowners’ main action for cancellation of the hypothec and for damages, and allowed Galileo’s cross-demand in part. Berry and Sauvageau were condemned to pay Galileo a total of $7,179.56, with legal interest and the additional indemnity from 1 August 2022, together with court costs and execution expenses, the precise amount of which was not quantified in the decision. They were granted ten days from the judgment date to pay this sum in full. Failing payment within that period, the court ordered that their property be surrendered and sold under judicial control to satisfy Galileo’s secured claim. Thus, the successful party was Les Constructions Galileo inc., which obtained a monetary award of $7,179.56 plus interest, the additional indemnity and unquantified costs, supported and enforced through a valid legal construction hypothec and an order for sale under judicial control.