Executive Summary: Key Legal and Evidentiary Issues

• The bank’s mortgage release did not include a full discharge of the borrowers’ personal obligations on the loan balance.

• Defendants remained liable for the shortfall due to incorrect payoff information provided to the notary.

• A notarial fault was alleged but dismissed due to lack of evidence showing deviation from professional standards.

• Defendants failed to disclose full loan details and did not act prudently in verifying mortgage repayment amounts.

• The court found no error in the notary’s reliance on incomplete payoff data directly provided by the bank.

• Financial hardship or miscommunication did not extinguish the defendants’ contractual repayment duty.

Background of the dispute

The Laurentian Bank of Canada sued Jocelyn Vincent and Véronique Arès to recover the unpaid balance of a mortgage loan following the sale of their home in April 2022. The bank had provided incomplete payoff information to the notary, Me Lucie Bédard, who handled the sale. As a result, only part of the outstanding loan was paid from the sale proceeds. The bank later pursued the borrowers for the remaining balance.

Mr. Vincent and Ms. Arès claimed that the release of the mortgage (“mainlevée”) signed by the bank meant they were fully discharged from the loan. They also argued that their notary failed in her duty by not identifying the missing loan components in the bank’s payoff instructions. They brought a third-party claim against Me Bédard seeking to shift liability to her.

Contractual and legal issues

The court found that while the bank had released the mortgage on the property to allow the sale to proceed, it had not issued a “quittance” releasing the borrowers from personal liability for the loan. Under Quebec law, the borrowers’ contractual obligations remained intact unless expressly discharged. The court held that the misstatement of the balance by the bank did not waive its right to recover the unpaid portion.

The court also found that the borrowers knew or should have known that the amount paid at closing did not fully satisfy their debt. Despite this, they did not notify the bank or the notary, nor did they request clarification when one margin of credit was paid by Ms. Arès shortly after the sale. These facts were taken as evidence that the borrowers understood there was still an outstanding balance.

Third-party claim against the notary

The court dismissed the third-party claim against Me Bédard. It ruled that she acted prudently and diligently based on the documents provided by the bank. She had no access to the borrowers’ internal banking records and relied on their confirmation that the payout amounts were correct. The court emphasized that the defendants had a greater obligation to verify the completeness of their loan obligations, particularly since they were seeking to repay their debts and avoid insolvency.

Final decision

The court ordered Jocelyn Vincent and Véronique Arès to pay the remaining mortgage balance of $82,669.17, plus an additional $55.50 from a related credit account, along with applicable interest. The defendants’ third-party claim against the notary was rejected in full. The judgment was issued with costs against the defendants.