Executive Summary: Key Legal and Evidentiary Issues

• Legal validity of a construction hypothec amid a name discrepancy in the subcontractor's corporate identity

• Determination of whether a single hypothec can cover multiple lots within a unified construction project

• Timing of the end of construction work for purposes of registering a valid legal hypothec

• Enforceability of a claim assignment without the original contractor’s written consent

• Evaluation of whether additional construction work was properly authorized and invoiced

• Sufficiency of evidence presented to challenge the execution quality of the subcontracted work.

Facts and outcome

Système Intérieur Excel + inc., a subcontractor, was hired by Constructions Core Canada inc. to perform interior construction work on a condominium development located at 333 du Canal in Montréal. The property was owned by 9324-5538 Québec inc. Due to non-payment by the general contractor, Excel + inc. registered a legal construction hypothec for $49,931.45 against the property. Later, Excel + inc. agreed to substitute the hypothec with a bank guarantee held by a notary, Me Martin Sansfaçon, to allow for the property's continued marketing and sale.

Shortly thereafter, Core filed for bankruptcy. Excel + inc. then assigned its claim to 9289-4955 Québec inc., which launched a legal proceeding to have the hypothec declared valid, obtain the bank guarantee, and recover $7,000 held in trust by Fortier Avocats inc.

9324-5538 Québec inc. challenged the validity of the hypothec on six grounds: the name on the subcontract was slightly different; the work had allegedly been completed before the hypothec was registered; individual hypothecs should have been filed per unit; the claim was time-barred; additional work had not been approved; and the quality of the work was deficient. 9324 also filed a counterclaim against 9289 and its administrator Michel Viau, seeking legal fees, financial compensation, and punitive damages.

The court rejected all six objections. It found the name discrepancy—a missing “+” in the company name—to be a clerical error, noting that the contractor’s registration number, license, invoices, payments, and the actual performance of the work all pointed to the correct entity: Système Intérieur Excel + inc. The court determined that the hypothec was registered within the legal timeframe because construction had not yet been completed when it was filed. It also ruled that a single hypothec was valid in this case due to the unified nature of the construction project and the fact that the claim had been properly divided among the ten condo units.

The court further held that the assignment of the claim to 9289-4955 Québec inc. was valid and did not constitute a prohibited assignment of the subcontract itself. It found that all additional work was authorized in writing by Core, and that no credible evidence had been provided to prove poor workmanship. Since the main claim succeeded, the court found it unnecessary to rule on the counterclaim’s substance.

The court declared the hypothec valid, ordered the release of the bank guarantee to 9289-4955 Québec inc., and instructed Fortier Avocats inc. to transfer the $7,000 in trust to the plaintiff. 9289 was awarded costs, including publication and service fees related to the hypothec.