Executive Summary: Key Legal and Evidentiary Issues

• Dispute over whether third-party garnishees (corporations and their directors) owed an enforceable debt to the judgment debtor, or whether a July 2018 payment had been converted into shares of a start-up rather than remaining a repayable loan.
• Assessment of the truthfulness of the garnishees’ negative declarations under articles 711, 712 and 717 C.p.c., including their duty to disclose debts and assets and to provide information during judgment execution.
• Application of the obligation to act in good faith and to collaborate in enforcement proceedings under article 683 C.p.c., and whether any failure to inform the judgment creditors amounted to a “fausse déclaration” rather than a mere good-faith error.
• Evaluation of documentary and testimonial evidence regarding a partnership agreement, a convertible loan, the incorporation and ownership structure of a technology start-up (Angel Eyes), and the reality of the defendant’s shareholding.
• Consideration of potential personal civil liability of corporate directors under articles 320 and 322 C.c.Q., including whether they failed in their duties of prudence, diligence, honesty and loyalty in structuring and reporting the transaction.
• Impact of an alleged Ponzi-type scheme in the background, and whether the garnishees’ involvement in the Angel Eyes project formed part of that fraud or instead reflected their own status as victims who relied on the defendant’s misleading assurances.

Factual background and underlying judgment

Ms. Tuyet Mai Quach and her corporation, Services conseil Tuyet Mai Quach inc. (collectively, the plaintiffs), invested approximately $1 million with Mr. Genis Sotelo Castellon between 2018 and 2019. They allege that these funds were lost in a Ponzi-type scheme. Mr. Sotelo presented himself as an investment fund dealer in 2017–2018 but could no longer be found after the winter of 2019. In September 2020, the plaintiffs sued Mr. Sotelo in the Superior Court of Quebec for the loss of their investments. In August 2021, they obtained a default judgment condemning him to pay $1,114,541.92 to Ms. Quach and $811,830.62 to Services TMQ, based on the promised returns and accumulated interest, an amount that had grown to over $2.3 million by the time of this decision.
To enforce that substantial judgment, the plaintiffs turned to post-judgment measures in 2023, including a third-party garnishment (saisie en mains tierces) against several companies and their directors they believed might be indebted to Mr. Sotelo. These third parties were Investissement Tridan inc., Tridan inc., and 9376-3506 Québec inc. (operating as Tridan Investissement Oka), along with their administrators, Messrs. Éric Dandurand and Alexandre Triquet. The plaintiffs alleged that these entities had received a $250,000 sum that in substance remained a loan owed back to Mr. Sotelo, and thus garnishable for their benefit.

Third-party garnishment and negative declarations

In June 2023, the plaintiffs served an execution notice on the third parties and effected a seizure in their hands. The garnishees responded with negative declarations, asserting that as of service of the notice they held no movable property, money or other assets belonging to Mr. Sotelo or that might later belong to him. The plaintiffs reacted by filing a contestation of these negative declarations, asking that they be rejected and that the garnishees be condemned to pay them the sum of $288,938.36 corresponding to the alleged debt owed to Mr. Sotelo.
The core factual disagreement centered on the legal nature of a $250,000 payment made in July 2018. The plaintiffs maintained this was a classic monetary loan from Mr. Sotelo to the Tridan group, still repayable in capital and interest, and therefore a debt that should have been disclosed in the garnishees’ declarations. By contrast, the garnishees admitted having received $250,000 but contended that this amount formed part of a broader partnership arrangement with Mr. Sotelo and was later converted into equity in a technology start-up, not left as a loan.

Contractual structure and the Angel Eyes start-up

The evidence showed that on 9 July 2018 the Tridan group and Mr. Sotelo signed a partnership agreement under which he was expected to contribute $500,000 to finance one or more investment projects. A loan contract dated 20 July 2018 recorded a $250,000 advance at 5% interest per annum, with a mechanism allowing conversion of that loan into shares in one of the contemplated projects rather than simple repayment in cash. Among the identified projects was a mobile-phone application designed to block texting while driving, to be marketed under the working name “Angel Eyes.”
According to the garnishees, Mr. Sotelo expressed particular interest in Angel Eyes, portraying himself as a youthful tech-savvy entrepreneur who had allegedly made part of his fortune through an app developed in London. As the partnership moved forward, the parties executed a “note de couverture” on 28 August 2018 in which Investissement Tridan inc. and the two directors undertook obligations “in the interval before incorporation of the company that would hold the rights to the application.” This interim commitment was presented as a bridge until the formal corporate vehicle was created and the equity structure finalized.
A corporation, 9386-7547 Québec inc., was incorporated on 24 October 2018 and registered with the Quebec enterprise registrar, listing Mr. Sotelo as a shareholder. A draft shareholders’ agreement was prepared by the garnishees’ lawyers to formalize the partnership, though it was never executed. The court emphasized that the enterprise register entry is an authentic document carrying a presumption of validity, and the plaintiffs did not bring concrete factual proof to rebut the presumption or to establish that Mr. Sotelo’s shareholding was a sham.

Business steps and failure of the project

Evidence from documents and testimony showed that the Tridan group undertook several real steps to develop and finance the Angel Eyes start-up. They retained Sunny Apps Technologies to build the application’s back-end architecture and algorithm, and obtained estimates for marketing services and front-end interface design. Intellectual property professionals were engaged to study the patentability of the proposed product.
In parallel, the garnishees hired consultant Louis Turp to explore public funding opportunities, including programs offered by the National Research Council of Canada and other government sources. These programs generally required entrepreneur capital contributions that the State would match through grants. The plan was for Mr. Sotelo’s additional promised investment of $250,000 to support the first $250,000 advance and allow the company to leverage public funds.
However, repeated attempts to have Mr. Sotelo pay the additional $250,000 failed. Text messages, emails and other communications from October 2018 to February 2019 showed the garnishees consistently pressing him to inject capital to pay service providers and move the project forward. Sunny Apps sent Mr. Sotelo a link to a test version of the Angel Eyes app in December 2018 but received no response. The consultant in charge of financing also attempted to contact him without success. Ultimately, Mr. Sotelo stopped participating, and the start-up stalled.
The plaintiffs argued that because the Angel Eyes company had no value by the time of the garnishment and was later struck from the enterprise registry in October 2023 for inactivity, the entire structure should be treated as a fraudulent façade. The court rejected this reasoning, stressing that early-stage technology companies are inherently risky and often go through a costly development and fundraising phase before becoming viable. Here, the garnishees had in fact committed resources, engaged professionals, and performed concrete preparatory steps. The failure of the project, in the court’s view, resulted from lack of funding and Mr. Sotelo’s disappearance, not from a pre-planned fraud by the Tridan group.

Procedural history and intervention of the Court of Appeal

Once the negative declarations were filed, the plaintiffs not only contested them but also faced a response from the garnishees. In September 2023, the Tridan entities and their directors sought to have the contestation dismissed and to have it declared abusive. On 4 June 2024, the Superior Court granted their request to dismiss the contestation but declined to characterize it as abuse.
The plaintiffs then applied for leave to appeal. On 1 August 2024, the Quebec Court of Appeal granted permission to appeal. In a judgment on the merits delivered on 5 February 2025, the Court of Appeal set aside the first-instance dismissal and remitted the matter back to the Superior Court so that the parties could proceed on the contestation of the garnishees’ negative declarations, including holding an evidentiary hearing if needed. This remand led to the full consideration of the evidence and legal issues in the 2026 Superior Court decision.
Alongside this main dispute, the record shows the garnishees initiated contempt of court proceedings against Ms. Quach in August 2024, with a citation issued and a not-guilty plea entered, while the hearing remained unscheduled at the time of this judgment. The plaintiffs also pursue additional lawsuits in the Superior Court to have various acts concluded with Mr. Sotelo declared inopposable, as well as several Quebec Court claims against persons who allegedly received payments from him. These related proceedings form part of a broader litigation strategy to recover losses from the alleged Ponzi scheme.

Legal framework on garnishee obligations and good faith

The court’s analysis was anchored in several provisions of the Code of Civil Procedure and the Civil Code of Québec. Article 683 C.p.c. imposes general duties on participants in judgment execution, including third-party garnishees: to act in good faith, to collaborate in proper enforcement of the judgment, and to refrain from conduct that could undermine execution. These obligations are tied to the broader procedural principles of proportionality, good faith and cooperation.
Article 711 C.p.c. requires a garnishee to disclose any debt it owes or may owe to the judgment debtor at the time of its declaration, specifying the amount, cause, and terms of any such debt. If the garnishee holds property of the debtor, it must give a detailed description and identify the legal basis for that possession, and must also disclose any seizures already made in its hands. Article 712 C.p.c. compels the garnishee to communicate all relevant information and documents relating to any debt and to submit to a post-judgment examination when expressly requested by the seizing creditor.
Article 717 C.p.c. provides the sanction where a garnishee fails to declare or makes a declaration later shown to be false. If the court rejects a negative declaration, it is converted into an affirmative declaration, enabling the seizing creditor to obtain a judgment against the garnishee for the amount of the debt, with retroactive effect from the date of seizure. Jurisprudence also allows some flexibility: a garnishee may be permitted to correct or renew its declaration or even be relieved of default if it has otherwise acted in good faith and complied with its obligations, though it may still be ordered to pay the creditor’s costs.
The court further considered the “obligation de renseignement”—the duty to provide information that helps to correct informational imbalances. Under this doctrine, a party must inform the other of determinative information it knows or is presumed to know and that the other cannot reasonably discover for itself. However, the creditor invoking this duty must also show it acted with minimal prudence and diligence and did not behave recklessly, failing which it risks exposure to an abuse-of-process claim.

Distinction between inaccurate and false declarations

A key conceptual issue was the distinction between a declaration that is inaccurate and one that is “fausse” in the sense of article 717 C.p.c. The court noted that a good-faith error, even if it results in an incomplete or technically incorrect declaration, does not necessarily amount to a “false” declaration attracting the sanction of converting it into an affirmative one. A truly false declaration is more serious than a mere inaccuracy but less grave than a deliberately deceptive statement akin to dol, which involves both a material misrepresentation or concealment and an intentional element aimed at misleading the other party.
In the court’s view, a “fausse déclaration” in this enforcement context reflects a breach of the duty to inform concerning determinative information about the debt relationship, but it is not automatically equivalent to fraud. The analysis therefore required a careful review of what the garnishees knew, what they communicated, and whether they attempted to conceal material facts about the alleged debt or the structure of the Angel Eyes transaction.

Corporate law aspects and directors’ liability

The plaintiffs also targeted the personal liability of the directors, Mr. Dandurand and Mr. Triquet. The court reminded that under Quebec civil law, an administrator of a corporation can be personally liable in extracontractual fault when his conduct causes damage, without any need to pierce the corporate veil. Additionally, article 320 C.c.Q. makes a person who contracts on behalf of a corporation before its constitution personally bound by the obligations, and article 322 C.c.Q. imposes duties of prudence, diligence, honesty and loyalty on administrators in the interest of the corporation.
The standard for directors is objective: they must inform themselves adequately before acting so that their decisions are reasoned and the risk of error is minimized. However, the court emphasized that this responsibility does not transform directors into guarantors of business success, especially in the volatile context of early-stage technology ventures. The focus remained on whether these administrators acted in bad faith or with a lack of diligence in structuring the partnership and in dealing with the plaintiffs’ enforcement measures.

Application of the law to the evidence

After reviewing testimony and documentary exhibits, the court concluded that the garnishees had not made a false negative declaration and had not committed any fault. The partnership agreement of 9 July 2018, the loan with a conversion option of 20 July 2018, the note of coverage of 28 August 2018 and the subsequent incorporation of 9386-7547 Québec inc. together supported the version that the $250,000 July payment was converted into equity in the Angel Eyes start-up rather than remaining a straightforward loan repayable in cash. The existence of the firm in the enterprise registry, with Mr. Sotelo recorded as a shareholder, was a significant element confirming a genuine shareholding structure.
The plaintiffs argued that any conversion of the loan into shares should be declared inopposable to them as judgment creditors, but the court held that this issue belonged in a separate Superior Court proceeding where they had already sought such inopposability. In the garnishment context, the record before the court did not contain detailed evidence sufficient to evaluate all legal criteria for inopposability, and it would have been inappropriate to prejudge that distinct action. For present purposes, it was enough that the conversion of the $250,000 into share capital appeared plausible and supported by the evidence.
The court also observed that the garnishees had pursued real business steps—retaining developers and consultants, seeking government funding and preparing a business plan—showing a serious attempt to launch Angel Eyes. The fact that the company was eventually struck off for inactivity only after Mr. Sotelo disappeared and failed to provide additional promised capital aligned with the narrative that the garnishees themselves were misled by his apparent wealth. They had even been shown a bank screen capture suggesting more than $500,000 in available funds, which later turned out to be false.

Good faith, cooperation and outcome of the case

On the procedural side, the court found that the garnishees had complied with their obligation under article 683 C.p.c. to act in good faith and to collaborate with enforcement efforts. They provided extensive information requested by the plaintiffs, including bank statements and other financial records, and they cooperated with the police investigation into the alleged crimes committed by Mr. Sotelo. There was no evidence that they attempted to hide assets, obstruct execution, or otherwise manipulate the process to the plaintiffs’ detriment.
The plaintiffs’ additional contention that the directors had breached civil-law duties of good faith or committed independent faults also failed. The court was satisfied that Messrs. Dandurand and Triquet acted diligently and loyally: they multiplied legal and technological steps to develop the Angel Eyes project, incurred expenses, and pursued external funding channels. While the project ultimately collapsed, this outcome was attributed to the withdrawal and misconduct of Mr. Sotelo rather than to any wrongful conduct by the directors. Issues such as potential shortcomings in tax filings or corporate formalities had no causal link to the plaintiffs’ losses and did not transform the garnishees into wrongdoers or debtors of Mr. Sotelo.
Taken as a whole, the preponderant evidence did not establish that the negative declarations were false. The court accepted that the $250,000 had been converted into shares of an early-stage company that later became worthless and that, as a result, no repayable debt to Mr. Sotelo existed at the time of the seizure. The garnishees had not breached their obligation to provide information or their duties of good faith and cooperation in the judgment-execution process.

Final ruling and financial consequences

In its 2026 judgment following the Court of Appeal’s remand, the Superior Court of Quebec rejected the plaintiffs’ application contesting the garnishees’ negative declarations and held that the third parties owed nothing to the plaintiffs in the context of the garnishment. The Tridan entities and their directors were therefore fully successful on the merits of the contestation. While the earlier default judgment against Mr. Sotelo for more than $1.9 million (now exceeding $2.3 million with interest) remains in place, this enforcement avenue against the garnishees failed. The court ordered that the plaintiffs’ contestation be dismissed with costs in favor of the garnishees, but the exact monetary amount of those costs is not specified in the judgment and will be determined through the ordinary taxation or assessment process, meaning the total amount ordered in favor of the successful parties cannot be precisely determined from the decision itself.