Executive Summary: Key Legal and Evidentiary Issues

• Two lease-financing contracts for used trucks fell into default after the corporate lessee abandoned the vehicles to the lessor.
   
• Bankruptcy proceedings against the corporate defendant triggered a statutory stay under section 69.3 of the Bankruptcy and Insolvency Act.
   
• Solidary and unlimited suretyship agreements signed by the two individual defendants remained enforceable despite the stay against the company.
   
• Contested charges for NSF fees, bailiff fees, and a resale commission were rejected as unsubstantiated by the evidence.
   
• Interest was capped at the 24% rate actually claimed rather than the higher 30% contractual rate, applying the ultra petita rule.
   
• Legal costs were denied to the plaintiff because of nearly two years of unexplained file inactivity.
   

Facts of the case

Arundel Capital (Québec) Corporation sued F1 Transport Inc. and its two directors, Patrice Boudreau and Patrick Desautels, over sums owed under two lease-financing contracts for used trucks — a Western Star 4900 CNV 2012 and a Kenworth T800 2016. Boudreau and Desautels had signed as solidary and unlimited sureties for the company's obligations, on January 17 and March 24, 2023 respectively. The claim was served on the defendants on May 23 and 29, 2024, and went unanswered, resulting in an entry for default judgment on July 11, 2024. The file then sat dormant for nearly two years because the plaintiff was slow to respond to a notice of incomplete file. A notice of suspension of proceedings against F1 Transport Inc. was filed on January 31, 2025, reflecting the company's assignment in bankruptcy. Months after signing, the company had abandoned both trucks to the plaintiff, which repossessed and resold them, then sued for the shortfall between what remained owing under the leases and the net resale proceeds.

Policy and legislative provisions at issue

The lease contracts barred the lessee from terminating either agreement during its term (clause 4). On default, clause 11 entitled the plaintiff to demand immediate payment of "all rent and all other payments until the end of the contract term," plus "the value of the purchase option plus interest at the rate of 30% per year." Clauses 10 and 11 also fixed when repossession-related costs began accruing interest, tying it to the date the originating application was filed rather than an earlier default date. Article 1617(3) of the Civil Code of Québec supported the additional damages claim for repossession costs. On the insolvency side, section 69.3 of the Bankruptcy and Insolvency Act stayed any judgment against F1 Transport Inc. once its bankruptcy assignment was on record. Article 10(2) of the Code of Civil Procedure — the ultra petita rule — prevented the court from awarding interest above the 24% rate the plaintiff had actually claimed, notwithstanding the contracts' 30% rate.

Reasoning and analysis

The evidence established amounts due of $41,284.45 on the Western Star lease and $31,686.71 on the Kenworth lease, both as of April 22, 2024, excluding NSF charges and other unsubstantiated fees. An additional $3,797.26 in repossession-related costs was allowed under clause 11 and article 1617(3) C.C.Q. A resale commission claimed on the second contract was rejected: the only supporting document was an invoice issued by the plaintiff itself rather than proof of a payment made to a third party, and towing records indicated the sale had already been arranged before the equipment was repossessed. Because the plaintiff had claimed interest at 24% rather than the 30% specified in the contracts, the court held it could not award more than what was claimed, applying the ultra petita principle. The claim against F1 Transport Inc. could not proceed because of the statutory stay triggered by the company's bankruptcy assignment, leaving Boudreau and Desautels liable as solidary sureties for the outstanding amounts.

Ruling and overall outcome

The court granted the claim in part against the individual defendants, ordering them to pay Arundel Capital (Québec) Corporation $72,971.16 with interest at 24% per annum from April 22, 2024, plus a further $3,797.26 with interest at 24% per annum from May 29, 2024 — a combined total of $76,768.42. Any judgment against F1 Transport Inc. was stayed under section 69.3 of the Bankruptcy and Insolvency Act. The court declined to award legal costs to the plaintiff, citing nearly two years of unexplained inactivity in advancing the file.