Executive Summary: Key Legal and Evidentiary Issues

• The central question was whether clause 10 a) of a commercial lease, an automatic termination clause, applied to the tenant's rent arrears and its lack of valid insurance.
   
• A corporate tenant without counsel since April 24, 2025, was proceeded against by default because article 87, para. 3 C.C.P. requires legal persons to be represented by a lawyer in contentious proceedings.
   
• Notices of default for three and four months of cumulative rent, followed by a formal termination notice on March 8, 2024, formed the core documentary evidence.
   
• An unrevoked judicial admission by the tenant before Justice Urbas concerning four months of rent arrears supported the finding of default.
   
• Pursuing rent-payment remedies during the litigation did not amount to a waiver of the landlord's right to automatic termination.
   
• Ms. Lacroix's request for a postponement on the morning of trial was dismissed, while both sides' monetary claims, including her $1,249,172 counterclaim, were deferred to a later hearing.
   

Facts of the case

Inter-Op Immobiliers inc. leased ground-floor commercial premises at 74 B, rue Sainte-Anne, in Sainte-Anne-de-Bellevue to La Venue du Quai inc. under a lease signed January 21, 2023. The 8-year term began March 1, 2023, and the premises were leased for the operation of a restaurant-bar. Rent was $3,000 per month for the first two years, plus taxes and additional amounts. Marie-Michelle Lacroix, the tenant's sole shareholder and director, is surety under the lease.

After alleged payment defaults and delays, the landlord sued the tenant and Ms. Lacroix on November 22, 2023, asking, among other things, that the court acknowledge the termination of the lease by operation of law under clause 10a). The defendants denied any default and counterclaimed for the landlord's alleged contractual breaches. On March 8, 2024, the landlord sent a formal termination notice, following notices of default for three and then four months of rent [the judgment describes these as "consecutive" months at para. 8 and "cumulative" months of rent at para. 22], and citing the tenant's failure to hold a valid insurance policy.

Several interim rulings followed. At the end of a hearing held on May 17, 2024, Justice Daniel Urbas dismissed the landlord's safeguard application and granted the defendants' application in part. He took note of the defendants' undertaking and ordered payments that included rent for the subsequent months and arrears of $4,600 per month over three months. After the landlord alleged non-compliance with those orders, a notice of execution was served on the defendants. Justice Chantal Tremblay granted their opposition on August 27, 2024, finding that the contradictory evidence did not establish non-compliance with the Urbas judgment. Justice Thomas M. Davis then dismissed the landlord's application to renew payment orders on October 11, 2024.

Counsel for the defendants withdrew in February and April 2025, and no new lawyer appeared for the tenant. On or about September 3, 2026, Ms. Lacroix communicated an amended counterclaim seeking termination of the lease at the landlord's exclusive fault, release of the tenant from its obligations under the lease, and $1,249,172 in damages for lost profits, material, moral and punitive damages. On the morning of the September 11, 2026 trial, she asked for a postponement and a safeguard order that would, among other things, keep the lease in force without rent. The court refused the postponement but deferred the parties' monetary claims, so the judgment addressed only the termination question. As co-defendant and surety, Ms. Lacroix was allowed to cross-examine the landlord's witness and make submissions.

Policy and legislative provisions at issue

Clause 10a) of the lease provided that if the tenant failed to pay three months of cumulative rent and any other sum owed, or failed to meet any condition of the lease, and, for a monetary default, did not cure it within 21 business days of written notice, the lease would be automatically terminated by operation of law at the landlord's option. The clause also allowed the landlord to retake possession, re-let the premises, recover rent due or to become due, and claim reasonable judicial and extrajudicial costs. The landlord's March 4, 2024 default notice stated that the tenant lacked valid insurance in contravention of clause 6.16 of the lease.

On the procedural side, article 87, para. 3 C.C.P. requires a legal person to be represented by a lawyer in contentious proceedings. The court described it as a mandatory provision that leaves no room for interpretation. The default inscription against the tenant was referred to the trial judge under article 183 C.C.P.

Reasoning and analysis

Justice Courchesne noted that the landlord was asking the court to acknowledge an existing termination rather than to pronounce one. Automatic termination clauses of this kind are in principle lawful, and a landlord may rely on one where the lease has been breached, according to its terms. Seeking rent payments while the case was ongoing did not waive that right.

Exhibits and testimony from the landlord's representative established that a notice of default for three months of cumulative rent was sent on February 2, 2024. A second notice for four months followed on March 4, 2024, which also stated that the tenant lacked valid insurance in breach of clause 6.16. The termination notice came on March 8, 2024. The tenant's judicial admission before Justice Urbas regarding four cumulative months of arrears had never been revoked. On this evidence, the court found that the conditions of clause 10 a) were met and that the clause applied. The judgment does not separately discuss the 21-business-day cure period in the clause.

At no point, including the day of trial, did the tenant ask to be relieved from its failure to appoint new counsel or take steps to comply with the representation rules. The termination application therefore proceeded by default against it.

Ruling and overall outcome

Inter-Op Immobiliers inc. succeeded on its application, which the court granted in part. The court acknowledged the termination by operation of law of the January 21, 2023 lease and ordered La Venue du Quai inc. to vacate the premises by 5:00 p.m. on September 30, 2026, unless the parties agreed otherwise in writing. The other claims in the originating application, together with the parties' competing monetary claims, were deferred to a separate hearing, to be set by the master of the rolls after the filing of a joint declaration for inscription. The judgment was rendered with legal costs, but it states no dollar figure, so no monetary amount can be determined from this decision.