Executive Summary: Key Legal and Evidentiary Issues

• Homologation of a “transaction et quittance” settling arrears and the balance of price for the sale of bar assets, and its interaction with the original contract of sale.
• Distinction between abuse on the merits of a contractual relationship and abuse of procedure under articles 51 to 54 C.p.c. in claims for extrajudicial legal fees.
• Procedural limits of a motion to homologate a transaction, including incompatibility between homologation and a simultaneous direct claim in condemnation for the same debt.
• Validity and lawfulness of a seizure before judgment (saisie avant jugement) based on a sworn declaration that omitted the subsequent Transaction and alleged default.
• Causation and proof requirements for recovery of extrajudicial fees, and the high threshold for characterising a party’s litigation conduct as abusive.
• Quantification of damages for an abusive seizure, including modest moral damages to an individual shareholder and reimbursement of specific bailiff’s fees.

Factual background and the initial contract of sale

The case opposes 9265-8095 Québec inc. as plaintiff to 9561-6492 Québec inc. and its shareholder-director Michaël Beaudoin as defendants, with Guillaume Cyr involved as mise en cause. Both corporations operate in the tavern, bar and nightclub industry. The plaintiff owned an establishment called La Piazz and agreed in June 2024 to sell its business assets to the defendant company for a total of $45,000, payable by instalments. Under the written contract of sale, the price was to be paid as follows: $5,000 on 10 June 2024, $5,000 on 14 June 2024, $7,500 on 15 August 2024, $7,500 on 15 August 2025, $7,500 on 1 January 2026, and a final $12,500 on 15 August 2026. The contract also contained protective clauses in favour of the plaintiff. In the event of default by the purchaser and following notice from the seller, the plaintiff could retake possession of the assets. The defendant company was further prohibited from selling the assets to third parties. The first two payments were made as scheduled, but only $2,000 of the $7,500 due on 15 August 2024 was paid, leaving $5,500 outstanding despite reminders, a grace period and a formal demand.

Negotiations and the transaction and quittance

In April 2025, the defendant company informed the plaintiff that it intended to sell the assets to Resto-Bar-Lima inc. in June. This announcement led to negotiations over both the unpaid $5,500 from August 2024 and the remaining balance of the sale price, then $27,500. In early May 2025, the parties reached an agreement (the Transaction). The defendant undertook to pay the $5,500 arrears in weekly instalments of $1,000, ending with a final instalment of $500, and undertook to pay the full remaining balance of $27,500 on the day of the sale of assets to Lima. Mr. Beaudoin personally bound himself as surety (caution) for the obligations arising from this Transaction. The plaintiff’s lawyers prepared a written “transaction et quittance” reflecting these terms and sent it to Mr. Beaudoin for signature, initially using DocuSign and then by PDF after electronic issues arose. Despite reminders, the defendants did not immediately return a signed copy, although they did begin paying according to the Transaction, making two payments of $1,000 each in mid and late May. The written Transaction contained an integration clause stating that it was the complete, definitive and final agreement between the parties on the subject and replaced any prior agreements. It also stipulated that any unpaid amount at maturity would bear interest at 12% per year. In this way, the Transaction reorganised the arrears, fixed a clear trigger for the payment of the $27,500 balance (the sale to Lima), and introduced a significant contractual interest rate on amounts not paid at maturity.

Seizure before judgment and the later signature of the transaction

On 28 May 2025, the plaintiff resorted to a seizure before judgment of the assets under article 517(1) C.p.c. It alleged that the defendant remained indebted in the amount of $3,500 under the original contract of sale and that the plaintiff was entitled to revendicate the assets. In its supporting sworn declaration, the plaintiff’s representative asserted that the defendant was in default of paying this amount and refused either to cure the default or return the property. At that point, however, the Transaction was in force, payments under it were up to date, and the plaintiff had not sent the 48-hour default notice required by the Transaction before treating the obligations as in default. The sworn declaration made no reference to the Transaction or to the fact that the arrears were being repaid in accordance with the new agreement. The seizure was executed on the eve of a weekend, targeting most of the business assets, even though both sides knew the sale to Lima was pending and the Transaction was being respected. Faced with the imminent paralysis of his business, Mr. Beaudoin, who was in Montréal when the bailiff called, quickly sought to avoid the seizure. With little time and without immediate access to legal counsel, he agreed that the defendants would sign the transaction and quittance document, pay $2,500 on the spot (a payment not yet due under the Transaction), pay a further $1,000 on 13 June, and assume the bailiff’s fees. This compromise allowed the seizure to be lifted but also highlighted the pressure created by a measure presented on a contested factual basis.

Developments around the sale to Lima and funds in trust

The sale of assets to Resto-Bar-Lima inc. was completed in early June 2025. Lima signed the contract on 1 June and the defendant company signed on 4 June. On 16 June, after enquiries from the plaintiff’s lawyers, Mr. Beaudoin confirmed that the sale had in fact occurred. The plaintiff obtained the Lima sale contract on 2 July and learned that only one final payment remained to be made, due on 15 July. Between 2 and 11 July, the parties exchanged various settlement proposals and arguments. The defendant company for the first time alleged that a terrace and two computers had never been delivered by the plaintiff and claimed a $1,000 reduction in the balance of price, also arguing that the seizure had been abusive and that bailiff’s fees had been unjustly imposed. The plaintiff denied that the terrace was part of the assets sold, denied having the computers, and refused any reduction, insisting instead on payment of the $27,500 balance plus applicable interest. On 17 July, Lima proposed to deposit the remaining sale proceeds, totalling $24,795, into its lawyers’ trust account pending resolution of the dispute. On 29 July, the plaintiff amended its application to add a claim for extrajudicial legal fees initially of $15,000, later increased at trial to $19,512.24, alleging that abusive conduct by the defendants had forced it to incur unnecessary legal costs.

The homologation application and the limits of the court’s role

The modified application filed by the plaintiff sought primarily the homologation of the Transaction under article 528 C.p.c. It also asked that the defendants be condemned to pay the $27,500 balance plus interest at 12% per year, and that they be ordered to reimburse the plaintiff’s substantial extrajudicial fees on the basis of abuse and bad faith. The defendants argued that the plaintiff’s claim for extrajudicial fees was itself abusive, and they sought a declaration that the seizure before judgment was abusive, with compensation for resulting moral and financial harm. Initially, they also invoked vitiated consent to the Transaction, alleging that it had been obtained under pressure in the context of an abusive and unfounded seizure, but they abandoned this argument at the hearing when the judge questioned it. Mr. Beaudoin acknowledged having consented to the Transaction and having read the written document when it was sent in early May; he also admitted he believed he had signed and returned it and that he had made payments in accordance with its terms. The court first considered its limited mandate on an application for homologation. It recalled that it could not revisit the advisability or substantive fairness of the Transaction. It had to confine itself to three questions: whether the agreement was indeed a transaction within the meaning of article 2631 C.c.Q., whether it was valid and not null, and whether it offended public order. In light of the evidence, and given that the plea of vitiated consent had been withdrawn, the court held that all conditions for homologation were satisfied. The Transaction clearly qualified as a contract of transaction and now had the authority of res judicata between the parties. The court therefore homologated it, which had the effect of rendering it enforceable. At the same time, the court refused the plaintiff’s attempt to obtain a direct money judgment ordering payment of the $27,500 balance plus 12% interest in this same proceeding. It followed established case law holding that such a condemnation is premature and procedurally incompatible with an application for homologation. A transaction becomes enforceable by judgment once homologated, and the appropriate procedural vehicles for execution differ from an ordinary introductory motion in condemnation.

Abuse of procedure, extrajudicial fees and the distinction between abuse on the merits and abuse in litigation

Both sides relied on articles 51 to 54 C.p.c. to seek sanctions for alleged abusive conduct. The plaintiff relied on the defendants’ refusal to promptly sign the transaction and quittance, the wording “paiement final tel quentendu avec ton avocate” in a payment description, the sale of assets notwithstanding the original contract’s prohibition, the failure to release the trust funds without court intervention, and the attempt to renegotiate terms by raising the issues of the terrace and computers. The judge, however, characterised these grievances as relating to the merits of the underlying contractual relationship, not to the conduct of the judicial process itself. For a party to recover extrajudicial fees as damages, there must be proof of an abuse of process or abuse of the right to sue, or exceptional circumstances creating a tight causal link between abusive conduct on the merits and the need to incur legal costs. Here, the plaintiff did not claim that the defendants’ defence or their arguments in the proceeding were frivolous, manifestly ill-founded or disproportionate. In fact, the plaintiff’s own application was only partly successful. The court examined the case law submitted by the plaintiff and found it distinguishable: in those precedents, the abusive conduct occurred during the pending litigation, for example refusal to honour a settlement intended to end an existing action or to file an acquiescence to judgment. In this case, by contrast, the plaintiff complained about the way the Transaction had been negotiated, signed and executed. The judge concluded that the plaintiff had confused abuse on the merits with abuse of procedure. Misinterpreting one’s rights or misreading the jurisprudence, even when assisted by counsel, does not in itself constitute abusive litigation, and the high threshold set by the courts to avoid trivialising abuse of process and impeding access to justice was not met. The claim for approximately $19,500 in extrajudicial fees was therefore dismissed.

The defendants’ abuse claim and the finding of abusive seizure before judgment

The defendants argued that the plaintiff’s insistence on a large extrajudicial-fee claim and its continuation of the proceedings despite offers to pay the principal amount constituted an abuse of procedure. They pointed to an offer of $26,500 on 8 July 2025, and a later offer of the full $27,500 balance made shortly before trial, which the plaintiff rejected, noting that these offers did not include interest or costs. The court acknowledged that the plaintiff’s revised strategy after the Lima trust arrangement could be seen as aggressive and that the large fee claim might be viewed as a form of pressure. Still, it held that such conduct remained within the bounds of a party’s right to press what it sees as a legitimate claim, particularly given that the defendants had themselves maintained an untenable vitiated-consent argument until the end of the hearing. The court therefore refused to declare the plaintiff’s pursuit of extrajudicial fees abusive. The situation was different with respect to the seizure before judgment. The judge carefully examined the sworn declaration supporting the seizure and the contractual and transactional context at the time it was requested. The declaration asserted that the defendant was in default of paying $3,500 under the contract of sale and that it refused either to cure the default or return the assets. Yet the parties had already entered into the Transaction, which expressly restructured the same arrears, and payments under that agreement were up to date. Moreover, the Transaction required a 48-hour default notice before default could be alleged, and no such notice had been given because no sum was then due. The sworn declaration omitted any mention of the Transaction and gave the impression of an unremedied default that no longer existed in that form. The court stressed that the oath is a solemn undertaking to tell the truth and that seizure before judgment is an exceptional remedy governed by strict statutory conditions. Using this extraordinary measure to seize nearly all the assets of a business, allegedly to secure a claim ten times smaller than the value of the property, while misstating or at least seriously understating the true contractual situation, was found to be clearly wrongful. The court also noted that the plaintiff acknowledged that the goal was to “protect the assets” in light of the impending sale to Lima, but nowhere did the sworn declaration explain that the Transaction was in force and being respected, or that the seizure was primarily a protective step rather than an enforcement of an actual default. The judge characterised the seizure as manifestly unfounded, cavalier and reckless in the circumstances and declared it abusive.

Damages, costs and overall outcome with respect to the successful party

Having found the seizure before judgment to be abusive, the court turned to the assessment of damages under article 54 C.p.c. The defendants claimed $3,000 in extrajudicial legal fees and $2,000 for moral damages to Mr. Beaudoin. The invoices produced showed fees totalling $3,449.25, but they covered preparation for the hearing and arguments on multiple issues, including the defence against the plaintiff’s extrajudicial-fee claim and the now-abandoned vitiated-consent plea. The defendants had not retained counsel specifically to challenge the seizure at the time it was executed; instead, they negotiated a rapid arrangement to avoid its immediate effects. The judge therefore found the evidence insufficient to isolate any extrajudicial fees directly and exclusively attributable to the abusive seizure and declined to grant a specific monetary award for fees on that basis. The court did, however, accept that the seizure caused real moral harm to Mr. Beaudoin. He was contacted by the bailiff while in Montréal and informed that a locksmith would be called if he did not quickly come to open the premises for seizure, even though he believed that payments were up to date under the Transaction. In a context where the weekend and the operation of the bar were at stake, he was confronted with a highly stressful, urgent situation that threatened to paralyse his business. The judge considered his distress credible and, using her discretion in matters of non-pecuniary loss, awarded him $500 in moral damages plus interest at the legal rate of 5% per year and the additional indemnity provided by article 1619 C.c.Q. from 19 September 2025. In addition, the court ordered the plaintiff to reimburse the defendants $747.76 in bailiff’s fees related to the seizure, specifying that these were the only recoverable costs in the circumstances. On the central contractual and enforcement questions, however, 9265-8095 Québec inc. emerged as the successful party. The court homologated the Transaction, thereby confirming that the defendants owe the $27,500 balance with interest at 12% per year in accordance with that agreement. It also recorded the agreement of the parties that the sum of $24,795 held in trust by the buyer’s lawyers be paid to the plaintiff as partial payment of the balance of price. As a result, the plaintiff obtained judicial confirmation of its settlement rights and the release of $24,795 from trust, while the defendants secured only a modest award for the abusive seizure. For practical purposes, the successful party is the plaintiff, and the determinable amount ordered in its favour by this judgment is the $24,795 to be paid out of trust, since the precise total of all future interest, enforcement costs and other monetary consequences of the homologated Transaction cannot be calculated from the judgment alone.