Commission des normes, de l'équité, de la santé et de la sécurité du travail v. Multi-Gaz S.P. inc.

Executive Summary: Key Legal and Evidentiary Issues

• Characterization of Michelle Bonnette’s status as a true employee versus a volunteer performing work informally through her spouse for Multi-Gaz.
• Extent of Christian Audet’s knowledge and consent regarding Bonnette’s hiring, hours, and pay, assessed largely through conflicting testimony and contemporaneous emails.
• Credibility issues arising from inconsistencies in the accounts of Bonnette and David Lebel, including who authorized salary, access to systems, and banking arrangements.
• Determination that David Lebel, as shareholder and co-owner, breached his duty of loyalty and created a conflict of interest by unilaterally arranging remuneration for his spouse.
• Causation and quantum of loss, balancing the unauthorized hiring against the real benefit Multi-Gaz obtained from Bonnette’s administrative and accounting work.
• Limitation of the indemnity in warranty to a portion of the CNESST wage settlement (salary component only), excluding penalties and interest, and capping Lebel’s liability at $4,500.

Factual background

Multi-Gaz S.P. inc. is a small company specializing in the installation and repair of gas equipment. Its share capital was held 60% by Christian Audet and 40% by David Lebel. For a time, they were essentially the only workers, handling both technical service and basic administration, with the formal accounting entrusted to an external accountant, Kassandra Landry. As the workload increased, Audet hired an administrative employee, Nathalie Jacques, at the end of 2017 to take over reception, some administration, and bookkeeping tasks he had been doing. Around the same period, a third technician, Philippe Robert, joined the company and also assisted with IT. Lebel, who was responsible for accounts receivable in addition to field work, struggled to keep up. His spouse, Michelle Bonnette, a retired Hydro-Québec employee, offered assistance and began helping with receivables from home. With Audet’s knowledge, she obtained access to the company’s accounting software and a dedicated email address, and some accounting documents were physically moved to the couple’s home for this purpose.

The CNESST wage claim and settlement

The dispute began with a CNESST claim filed on behalf of Bonnette seeking unpaid salary, overtime and related vacation, holiday and termination amounts, as well as the 20% statutory indemnity under article 114, first paragraph, of the Loi sur les normes du travail. Shortly before the scheduled hearing on that wage complaint, Multi-Gaz and the CNESST entered into a settlement by way of a transaction and release. Multi-Gaz agreed to pay an amount corresponding to essentially the full capital sum claimed, plus interest and costs. The settlement was expressly without admission and was stipulated to be without prejudice to Multi-Gaz’s separate recourse in warranty against Lebel. In total, the evidence showed that approximately $11,000 was paid to or for the benefit of Bonnette as salary: about $3,000 through payroll cheques and roughly $8,000 through the CNESST settlement, with the rest of the settlement covering vacation, statutory holidays, termination-related amounts and statutory penalties.

Conflicting versions of Bonnette’s role and employment

Bonnette and Lebel presented one version of events. They claimed her involvement as a worker for Multi-Gaz evolved through three distinct phases, all allegedly with Audet’s knowledge and agreement. First, at the end of 2017, she supposedly worked on a volunteer basis. Then, from around February to June 2018, she allegedly worked about 40 hours per week, banking her hours with the understanding that she would later become an official employee and be paid for those hours. According to this version, she was entrusted not just with receivables but with a broader reorganization of the company’s accounting and administration. Finally, on 4 June 2018, Bonnette instructed the external accountant to put her on the payroll as an employee for 30 hours per week at $12 per hour, and she said this formalized what had already been agreed. She maintained a timesheet of hours worked, which later became the basis of the CNESST claim and the amounts ultimately paid. Bonnette further testified that she had immediate and extensive access to the company’s accounting system and bank account, and that she issued her own handwritten pay cheques, signed by Lebel. She contended that Audet was aware of and approved these arrangements, citing emails in which she claimed to have copied him or referred to his supposed consent. Lebel, for his part, downplayed his knowledge of detailed discussions between Audet and Bonnette about the terms and timing of her hiring and suggested that he simply signed cheques consistent with an agreed employment arrangement.

Audet’s version and the company’s position

Audet’s evidence sharply contradicted that narrative. He testified that he had repeatedly opposed hiring family members of shareholders or employees and made his position clear to Lebel when the latter first raised hiring his spouse. In his view, Bonnette’s role was limited to volunteer work meant to ease Lebel’s burden in collections. He accepted that she could access the accounting software and certain documents to help with receivables, but stressed that she was never provided with a company computer or phone, unlike Jacques, who was always treated as a regular employee and properly recorded on payroll. According to Audet, he only discovered that Bonnette had been added to the employee register and was being paid wages when Jacques alerted him in June 2018. This discovery quickly led to a confrontation with Lebel, the termination of Bonnette’s work with the company around mid-July 2018 and, more broadly, to the breakdown of the partnership and related oppression proceedings and eventual dissolution of the corporation. Audet emphasized that any e-mails mentioning that he was “aware” of a pay request were either inaccurate or never copied to him, and that he did not authorize Bonnette to place herself on payroll or unilaterally decide her hours and compensation.

Key evidentiary assessment and credibility findings

The court identified important weaknesses in both versions but ultimately preferred Audet’s account over that of Bonnette and Lebel. On Bonnette’s side, the judge found her story “cousue de fil blanc,” noting several logical gaps. If Audet had truly agreed to hire her as an employee, the court questioned why she was not hired and registered from the outset like Jacques and Robert, why she used her own equipment rather than company-provided tools, and why she unilaterally instructed the external accountant to start paying her, including a first request for a specific lump-sum pay “without tax” and with overtime disguised as banked hours. Emails she sent to the accountant in late May and early June 2018 asking for pay (and asserting that “Christian is aware”) did not actually show that copies had ever been sent to Audet, and the external accountant did not testify to confirm her assertions. The judge also highlighted that Bonnette prepared her own handwritten cheques, which were then signed by Lebel, and that these cheques, while appearing in bank statements, were only reflected as numbered items among many financial transactions and not clearly flagged as her wages, undermining the claim that Audet must have noticed them. Lebel’s testimony that he was unaware of critical aspects of his spouse’s employment and pay terms was described as untenable, given that she worked full time and he signed all her cheques. Collectively, these elements led the court to conclude that Bonnette and Lebel had, without Audet’s knowledge, elevated her from volunteer to paid employee and arranged for her compensation.

Recognition of Bonnette’s real contribution and limits of Audet’s version

At the same time, the court found that Audet’s narrative understated the breadth and value of Bonnette’s work for the company. Emails between Audet and Bonnette showed that he frequently communicated with her about invoices, bank balances, supplier payments, telecom contracts, payroll matters and the preparation of declarations of work, among other issues. This correspondence suggested that he understood Bonnette to be doing significantly more than simply helping with receivables and that he relied on her in broader administrative and financial tasks. The judge noted that Audet appeared to practice a degree of “wilful blindness” about the true extent of her involvement, especially during the months before he formally learned she was on the payroll. This more nuanced view of the facts was crucial when the court turned to the question of damages.

Legal framework: duty of loyalty, conflict of interest and civil liability

Multi-Gaz’s claim in warranty against Lebel was grounded in civil liability principles, especially the extracontractual fault of a shareholder and officer who places himself in a conflict of interest and breaches his duty of loyalty to the corporation. The court accepted that, by orchestrating the effective hiring and payment of his spouse as an employee without the informed consent of his co-shareholder and business partner, and by allowing her to prepare her own pay and his while leaving Audet to handle the rest of the staff, Lebel acted primarily in his and his spouse’s personal interest rather than that of the corporation. This conduct was characterized as a breach of the duty of loyalty and a conflict of interest, grounding his responsibility towards Multi-Gaz for the financial loss connected to his actions. However, the court emphasized that Quebec civil liability is indemnitary rather than punitive: even when fault is clear, a plaintiff may only recover actual loss proved to have been caused by the fault, and not an amount meant to punish the wrongdoing in and of itself.

Quantification of damages and apportionment

In evaluating damages, the court dissected the amounts Multi-Gaz paid under the CNESST settlement. It found that about $8,000 of that settlement corresponded to salary owed to Bonnette and that the remainder covered vacation, holidays, termination amounts and statutory percentage penalties. Of this $8,000, approximately $1,000 related to the period when Bonnette was officially on the company payroll between May and July 2018. The judge noted that almost all of this $1,000 related to the very end of the employment relationship, by which time Audet admittedly knew Bonnette was an employee. In the court’s view, those sums were legitimately due to her and should be borne by Multi-Gaz itself, not shifted to Lebel. The remaining roughly $7,000 represented salary for hours accumulated and banked between February and May 2018, while Audet believed she was either volunteering or doing work effectively on Lebel’s behalf. Yet the court also found that a non-trivial, albeit impossible-to-precisely-quantify, portion of her work during that period went beyond what could reasonably be expected from Lebel alone and genuinely benefited Multi-Gaz. To avoid unjust enrichment of the company at Bonnette’s expense, the judge attributed a value of $3,000 to this “excess” contribution for which the corporation had received and retained a real advantage. As a result, of the $8,000 salary component paid through the CNESST settlement, only $4,000 was deemed to reflect unjustified cost attributable to Lebel’s fault.

Scope of the warranty claim and final outcome

The court underscored that Multi-Gaz’s claim against Lebel was a recourse in warranty directly tied to the sums it had paid to settle the CNESST complaint; it could not be extended to other amounts such as the approximately $3,000 paid earlier to Bonnette by handwritten pay cheques. In addition, the judge declined to shift the statutory penalties and interest contained in the settlement onto Lebel. Those amounts, calculated as a percentage and arising from the employer’s failure to comply with labour standards in a timely fashion, were not considered appropriate to transfer to the co-shareholder as part of the indemnity. Ultimately, the court concluded that Lebel should reimburse Multi-Gaz for 50% of the $9,000 in salary owed and paid to Bonnette through the CNESST settlement, recognizing both his breach of loyalty and the real value of Bonnette’s services to the business. The judgment therefore partially allowed Multi-Gaz’s claim in warranty and ordered David Lebel to pay Multi-Gaz S.P. inc. a total of $4,500, inclusive of capital, interest and costs, making Multi-Gaz the successful party and fixing the total monetary award in its favour at that amount.