Executive Summary: Key Legal and Evidentiary Issues

• Plaintiff sought recovery of unpaid invoices for electrical materials sold to the defendant company.

• Claim included contractual interest at 18% annually and collection fees of 20% of the principal.

• Plaintiff proceeded solely against the company president as guarantor after the company declared bankruptcy.

• Evidence established a signed credit application by the guarantor personally securing the debt.

• Defendants failed to appear, and the case proceeded by default with unchallenged documentary proof.

• Court ordered payment of the principal, interest, and collection fees against the individual guarantor.

Facts and procedural background

In Dubo Électrique ltée v. 9392-8026 Québec inc., 2025 QCCQ 1357, Dubo Électrique ltée filed a civil claim seeking $24,173.07 for electrical materials supplied to 9392-8026 Québec inc., along with $5,163.64 in collection fees. The action was also directed against the company’s president, Daniel Desnoyers, who had signed a personal guarantee in the form of a credit application. The defendants initially submitted a summary statement of defense but did not attend the hearing. Subsequently, 9392-8026 Québec inc. went bankrupt following the rejection of a proposal under the Bankruptcy and Insolvency Act, at which point Dubo chose to pursue only Desnoyers personally.

Court analysis and default proceeding

The Court noted that in light of the bankruptcy, Article 69.3 of the Bankruptcy and Insolvency Act barred continued proceedings against the company, but not against the individual guarantor. The hearing proceeded in the absence of both defendants. As the plaintiff, Dubo bore the burden of proving its claim on a balance of probabilities. The Court accepted Dubo’s documentary evidence, including the statement of account, invoices, and the signed credit application from Desnoyers. The credit application explicitly provided for an 18% annual interest rate on unpaid balances and a 20% collection fee, both of which were claimed.

Although the defendants had alleged in their summary defense that the interest and collection fees were excessive, the Court held that such a clause must be specifically contested and proven as abusive by the debtor. As no such argument or evidence was presented, the court accepted the enforceability of those terms.

Judgment and conclusion

The Court of Québec found that Dubo had successfully demonstrated the debt and the personal guarantee. It awarded $24,173.07 in principal and $4,834.61 in collection fees (note: the court slightly adjusted the claimed fee). Interest at 18% annually was awarded from September 28, 2022, as per the notice of default. The claim against the company was formally dismissed due to the bankruptcy, and judgment was entered solely against Daniel Desnoyers. Dubo was also awarded judicial costs. The decision affirms the enforceability of credit agreements and personal guarantees in commercial transactions, especially where uncontested by the debtor.