Executive Summary: Key Legal and Evidentiary Issues

• The Quebec Court of Appeal considered two motions to dismiss appeal under article 365 C.p.c., both targeting the same Superior Court judgment.
   
• Both appeals challenged a ruling that granted forced surrender and taking in payment of mortgaged property to the respondents.
   
• A key dispute centered on whether the respondents could claim interest on interest under the underlying loan.
   
• Appellants further alleged a breach of the audi alteram partem rule, claiming they were denied a fair trial.
   
• Inconsistent quantum figures were presented over time by one appellant regarding the amount allegedly owed.
   
• Six distinct grounds of appeal were raised, none of which the Court found persuasive.
   

Facts of the case

This appeal arose from a Superior Court judgment rendered on February 23, 2026, by the Honourable Raymond W. Pronovost in the district of Saint-Maurice, which granted the respondents' application for forced surrender and taking in payment of a mortgaged property. The loan underlying the mortgage security was in the amount of $150,000. The appellants, FCS Capital inc. and 9270-9906 Québec inc., were co-debtors on the loan and co-owners of the property given as security. Before the Court of Appeal, two separate motions to dismiss appeal were filed against essentially the same judgment, with the appellants' respective declarations of appeal being nearly identical. At trial, the appellants did not contest that they had defaulted on repayment when the loan matured; instead, their defence focused on the quantum of fees and interest claimed, the exigibility of those amounts, the alleged irregularity of the notice of exercise, the calculation of rents collected by the respondents, and the respondents' alleged lack of cooperation.

Policy and legislative provisions at issue

The proceedings centered on article 365 of the Code of Civil Procedure, which governs motions to dismiss an appeal. The underlying substantive dispute concerned the respondents' right, as mortgagees, to exercise the hypothecary remedy of taking in payment once the prescribed delays following notice of exercise had expired. The appellants also invoked the audi alteram partem principle, arguing that the trial judge's conduct of the hearing had denied them a fair opportunity to be heard. Additional issues raised in the appellants' declarations of appeal concerned the validity of penalty clauses attached to the loan and the propriety of claims for extrajudicial legal fees in relation to a right of withdrawal from the surrender proceeding.

Reasoning and analysis

The trial judge had found that a loan secured by a validly published mortgage had been made, that the principal had not been repaid at maturity, and that no interest had been paid or even offered, such that the delays for taking in payment had expired and the remedy was warranted. On appeal, the appellants raised six grounds, including that the trial judge failed to rule on the monetary value of the respondents' claim, the validity of penalty clauses, the respondents' alleged bad faith, the propriety of extrajudicial fee claims, the interest-on-interest issue, and the respondents' conduct in relation to settlement discussions. The Court of Appeal found none of these arguments persuasive. It reasoned that the six grounds obscured the unavoidable reality of an unpaid $150,000 loan, a validly published mortgage, a complete absence of interest payment, and a notice of exercise that supported the remedy granted—meaning that regardless of the precise quantum of interest that might validly be claimed, the respondents' right to take the mortgaged property in payment remained uncontestable. On the audi alteram partem argument, the Court noted that the trial judge had devoted half a day to a hearing originally scheduled for only one hour, even offering to continue the hearing the following Wednesday if needed, and that the judge's interventions were aimed at refocusing the debate on relevant issues and ensuring the trial proceeded efficiently.

Ruling and overall outcome

The Court of Appeal granted the motions to dismiss appeal and dismissed both appeals, finding that neither had a reasonable chance of success. The respondents, Wael Tayara and 9295-2837 Québec inc., were the successful parties. The judgment ordered costs against the appellants, but the decision does not specify a monetary quantum for those costs, so the amount awarded is Not Specified.