Executive Summary: Key Legal and Evidentiary Issues

• Recouvrement hypothécaire du Québec inc. sought eviction of the defendants from several immovable properties following an alleged default under a court-homologated transaction.
• Central to the dispute was whether the defendants breached Clause 10 of the Transaction by delivering confirmation of municipal and school tax payment arrears at 3:20 p.m. on February 12, 2026 — after the contractual deadline.
• Despite the technical default, the court examined whether the plaintiff exercised its right to register the voluntary surrender deed in a reasonable manner, as required under Quebec civil law good faith obligations.
• Evidence from the plaintiff's own president, Xavier Mathieu, confirmed he was aware of the tax payment on February 12, 2026, before the deed was actually registered on February 13, 2026, yet chose not to halt its publication.
• The defendants' alleged default under Clause 11 (TD Bank notice) was caused by the plaintiff's own unreasonable registration of the voluntary surrender deed, which prevented the defendants from renewing or settling the TD Bank loan.
• Beauregard's request for a six-month extension of the $1,500,000 payment deadline was dismissed due to insufficient evidence.

Facts of the case

Recouvrement hypothécaire du Québec inc. (the plaintiff) is a hypothecary creditor of the defendants — Renée Beauregard, Franco Lemay, DD995 inc., and Location Immobilière JR inc. — pursuant to various loan agreements and deed assignments. On May 21, 2024, the plaintiff filed a proceeding for forced surrender and taking in payment of several immovable properties. The case was set for a three-day hearing on February 4, 5, and 6, 2026. On the second day of hearing, the parties reached a settlement (the "Transaction"), which was homologated by judgment on February 9, 2026.

Under the Transaction, the defendants undertook to pay $1,500,000 to the plaintiff no later than May 6, 2026 at 11:59 p.m. As security, the defendants simultaneously signed voluntary surrender deeds over the immovable properties, to be held in trust by the plaintiff's counsel, Me Christian Saraïlis, and registrable only upon a defined "Eventuality" — either full payment or any default under the Transaction's terms and deadlines.

Contractual clauses at issue

Several clauses of the Transaction imposed specific obligations on the defendants within fixed deadlines, all declared to be strict (Clause 18). Relevant to the dispute were Clause 10, which required the defendants to provide written confirmation — before February 12, 2026 — that all municipal and school tax arrears on the properties had been paid or that payment arrangements had been made with the Municipality of Saint-Albert and the Centre de services scolaire des Bois-Francs; and Clause 11, which required the defendants to provide confirmation before March 9, 2026 that they had reached an agreement with TD Bank regarding a notice of exercise of hypothecary rights published on January 8, 2026. Clauses 2 and 5.2 together provided that upon any such default, the plaintiff was irrevocably authorized to register the voluntary surrender deeds.

Reasoning and analysis

The court accepted that Clause 10's text was clear and that the confirmation was not delivered until 3:20 p.m. on February 12, 2026, technically after the deadline. However, the court held that the analysis could not stop there: it was also necessary to determine whether the plaintiff exercised its contractual right in a reasonable manner, consistent with good faith obligations under Articles 6, 7, and 1375 of the Civil Code of Québec and the principles articulated by the Supreme Court of Canada in Houle c. Banque Canadienne Nationale, [1990] 3 R.C.S. 122.

The court found that, prior to February 12, 2026, the defendants had fulfilled all their other Transaction obligations on time (Clauses 6, 7, 8, and 9), demonstrating a genuine intention to perform. The objective of Clause 10 — preventing the municipality from initiating a tax sale of the properties, a process that was to begin in the week of February 12, 2026 — had in fact been achieved: the tax arrears of $32,488.73 were paid on February 12, 2026, and the municipality's general director, Nathalie Beauchesne, confirmed that the tax sale by the MRC d'Arthabaska would have taken place on June 11, 2026 absent the payment. Moreover, Mathieu testified that he gave instructions to register the deed as early as February 11, 2026, and that he was informed of the tax payment on February 12, 2026 — before the deed was registered on February 13, 2026 — yet did not rescind those instructions. The court concluded that the plaintiff had obtained the very benefit of Clause 10 while still invoking its penalty, thereby using the Transaction for a purpose other than that contemplated by the parties and exercising its rights unreasonably.

As to the alleged Clause 11 default, the court found that the defendants' inability to reach an agreement with TD Bank was itself caused by the plaintiff's unreasonable registration of the voluntary surrender deed, which caused the bank to refuse payment and made renewal of the loan impossible, since the defendants had lost ownership of the hypothecated properties. The plaintiff therefore could not invoke a default it had itself created.

The court also rejected the defendants' request for extrajudicial fees, finding no abuse of procedure under Article 51 of the Code of Civil Procedure and no supporting evidence of the fees claimed.

Ruling and overall outcome

The court ruled substantially in favour of the defendants. It granted their application for the cancellation (radiation) of the voluntary surrender deed registered on February 13, 2026 under inscription number 30 095 272, and ordered the Registrar of Real Rights of the circonscription foncière d'Arthabaska to proceed with the cancellation. The Transaction's timelines were suspended for the period between February 13, 2026 and the date of cancellation, with that period excluded from the calculation of all applicable deadlines; interest under the Transaction was likewise suspended for the same period. The plaintiff's application for a declaratory judgment and to facilitate enforcement — including the eviction of the defendants — was dismissed. Costs were awarded to the defendants on both the cancellation application and the dismissed plaintiff's application. No specific monetary award or damages were ordered; the costs quantum was not specified in the judgment.