Executive Summary: Key Legal and Evidentiary Issues

• Interpretation of a salary clause in an asset sale agreement that also operated as an employment contract, including a right to “augmentations selon le coût de la vie”.
• Determination of whether cost-of-living increases were to be calculated from the original $25/hour rate or from later, higher hourly rates agreed after hiring.
• Assessment of documentary and testimonial evidence proving the actual hourly wages paid to Mr. Prescott over the relevant periods.
• Application of the Civil Code of Québec rules on contract as “la loi des parties” and allocation of the burden of proof to establish any variation from the written agreement.
• Evaluation of whether the employer’s later voluntary increase to $30/hour implied a new contractual obligation to index that higher rate to cost of living.
• Review of whether the amounts actually paid exceeded or fell short of the remuneration Mr. Prescott was contractually entitled to receive.

Facts of the case
René Prescott was a locksmith operating his own business in Montréal and surrounding areas. Serrurier Beaubien Inc. is a locksmith company active in the same geographic market. In 2019, Beaubien’s new owner, Ms. Pageau, who knew Prescott personally, negotiated an asset sale under which Beaubien acquired Prescott’s locksmith business. As part of that transaction, the parties included an important employment clause in the asset purchase agreement. That clause committed Beaubien to employ Prescott as a technician at an hourly wage and on defined terms.
The key contractual provision, set out in the “garantie pour le vendeur” section of the asset sale convention, granted Prescott a salary of $25 per hour for his services, four weeks of paid vacation per year, and an additional two weeks at his own expense if he wished. It further stipulated that he “aura le droit à des augmentations selon le coût de la vie” (would have the right to cost-of-living increases). This clause effectively created and governed the employment relationship. The court treated it as a contract of employment within the meaning of article 2085 of the Civil Code of Québec, with the employer’s obligations defined in particular by article 2087 C.c.Q.
Prescott worked for Beaubien under these terms. In 2021, after a new employee joined Beaubien, Prescott discovered that this colleague was being paid more than he was. This prompted discussions between Prescott and Ms. Pageau about his compensation. Following those discussions, Beaubien agreed to increase Prescott’s hourly rate to $27 as of 1 September 2021, and then to $30 per hour as of 1 September 2022. These increases were not expressly documented as amendments to the original contract clause, but they were undisputed facts before the court.

Contractual clause and its interpretation
The central dispute turned on how to interpret the contractual right to “augmentations selon le coût de la vie” in light of the later wage increases that Beaubien voluntarily granted. The original asset sale agreement had fixed Prescott’s salary at $25 per hour, with cost-of-living increases applying to that baseline rate. The court emphasized that the source of Beaubien’s obligation was the written contract, which is the law between the parties. The text of the agreement made clear that the cost-of-living adjustments were to be calculated from the stipulated $25/hour rate.
Prescott argued that once his wage was increased to $27 and then to $30 per hour, the cost-of-living mechanism should be applied to those higher, subsequently agreed hourly rates. In other words, he contended that the employer was contractually obliged not only to raise him to $30 per hour, but also to index that $30 rate annually according to the cost of living. Beaubien rejected this interpretation. The company’s position was that it had voluntarily increased Prescott’s pay beyond what the original cost-of-living formula would have required, but had never agreed that the higher rate would itself be subject to further indexing.

Evidence of wages and cost-of-living calculations
The court examined both documentary and testimonial evidence to determine what Prescott had actually been paid after the wage increases took effect. Payroll records and related documents confirmed that from 1 September 2021 to 31 August 2022, Prescott was paid $27 per hour, and for the following periods up to February 2025 (his end of employment) he received $30 per hour.
The judge then took the cost-of-living clause and applied it strictly to the original $25/hour base rate to calculate the amounts Prescott would have been entitled to if the contract had been followed exactly and only in accordance with that formula. On that basis, the court found that Prescott should have received:

• For the period starting 1 September 2021: $26.04 per hour if only the contractual cost-of-living increase on $25/hour had been applied.
• For the period 1 September 2022 to 30 August 2023: $27.81 per hour.
• For the period 1 September 2023 to 30 August 2024: $28.89 per hour.
• For the period 1 September 2024 to February 2025 (end of employment): $29.58 per hour.
  Comparing these figures to the wages actually paid, the court noted that for the first period Prescott was paid $27/hour, which was higher than the $26.04/hour he would have received under the contract’s cost-of-living increase alone. For all subsequent periods, he was paid $30/hour, again more than the indexed contractual amounts. Thus, on a purely numerical basis, Beaubien had paid Prescott more than the minimum he was contractually owed.

Burden of proof and absence of a new agreement
Prescott’s claim was premised on the idea that the parties had effectively modified the original contract by agreeing that the higher $30/hour rate would itself be subject to ongoing cost-of-living increases. To succeed, he needed to prove the existence of this additional agreement or variation of the original terms. Under article 2803 of the Civil Code of Québec, the burden of proof lay on him to establish, on a balance of probabilities, that the parties had agreed to something beyond what was set out in the written contract.
The court found that the evidence did not support Prescott’s position. There was no convincing proof of an understanding that the $30/hour rate would be indexed. On the contrary, Beaubien’s representative testified that her intention was simply to grant a higher fixed wage, while remaining within the limits of the original contractual obligation. She explained that as long as the wages paid were at or above what the contract required on a cost-of-living-adjusted basis, the employer considered itself compliant. She further indicated that if, at some future point, the contractually calculated indexed wage had exceeded $30/hour, Beaubien would then have adjusted Prescott’s pay in accordance with the contract. This testimony, together with the documentary record, led the court to conclude that no new cost-of-living obligation had been created for the $30/hour rate.

Outcome and monetary consequences
On the basis of the contractual language, the wage evidence, and the allocation of the burden of proof, the court held that Serrurier Beaubien Inc. had fulfilled—and in fact exceeded—its remuneration obligations toward Prescott. The cost-of-living clause was applied only to the original $25/hour baseline, and the employer’s later decision to pay $27, then $30 per hour did not generate a new, separately indexed obligation. Because Prescott failed to establish any agreement beyond the written contract, his claim for unpaid cost-of-living increases for 2022, 2023 and 2024, amounting to $12,238, was dismissed in full.
The successful party in the litigation was Serrurier Beaubien Inc. The court rejected Prescott’s claim and ordered him to pay costs of justice in the amount of $374 in favour of Serrurier Beaubien Inc., which was the only monetary award specified in the decision.