Executive Summary: Key Legal and Evidentiary Issues

• Leave to appeal was sought only from the finding of abuse and the $8,000 damages award, not from the cancellation of the legal construction hypothec.
   
• Article 2727 C.C.Q. requires a legal construction hypothec to be published within 30 days after the end of the work, and preserved within six months by an action against the owner or a registered prior notice of exercise.
   
• Darveau registered its hypothec on September 12, 2025, after the 30-day period that ran from the July 31, 2025 end-of-work date, and it never served a prior notice of exercise.
   
• Filing an answer to the cancellation application was held not to satisfy the six-month preservation requirement, and the trial judge noted that Darveau cited no authority for that position.
   
• Repeated failures to respect the protocol also supported the finding of abuse, alongside Darveau's filing of its defence, cross-application and sworn statement the day before the hearing.
   
• Because the judgment under appeal contained a declaration of abuse, leave required a question that ought to be submitted to the Court under article 30 para. 3 C.C.P., an apparent weakness that could cause an injustice, and consistency with the interests of justice and proportionality.
   

Facts of the case

Les Habitations Darveau inc. registered a legal construction hypothec on September 12, 2025. The Superior Court later fixed the end of the work at July 31, 2025, adopting the date most favourable to Darveau. 6967337 Canada inc. applied to the Superior Court, District of Terrebonne, for a declaration of abuse and the cancellation of the hypothec. Sandrine Bourgon, Sébastien Lajoie and the Registrar of the Land Registry Office for the Registration Division of Deux-Montagnes were impleaded parties. None of them appeared before the Court of Appeal.

Darveau filed an answer to the cancellation application. Beginning in March 2026, 6967337 Canada inc. told Darveau, citing authorities, that failing to register a prior notice or bring a legal action within six months was fatal to the hypothec. Darveau did not withdraw the hypothec, and the cancellation application was heard on June 19, 2026. The day before the hearing, Darveau served and filed its defence, a cross-application and its sworn statement. Its defence and cross-application had been due on December 19, 2025, and the sworn statement was to have been served on April 21, 2026.

On July 2, 2026, Justice Eleni Yiannakis granted the application in a judgment reported as 2026 QCCS 2415. The judgment declared the hypothec invalid and illegal, ordered its cancellation, declared the maintenance of its registration abusive, and ordered Darveau to pay $8,000 to 6967337 Canada inc. Darveau then applied to the Court of Appeal for leave to appeal. Justice Christian Immer heard the application on September 1, 2026, and rendered judgment from the bench on September 3, 2026.

Policy and legislative provisions at issue

Article 2727 C.C.Q. sets out two conditions for preserving a legal construction hypothec. The second paragraph requires the hypothec to be published within 30 days after the end of the work. Under the third paragraph, an action must be instituted against the owner of the immovable, or a prior notice of exercise of a hypothecary right registered, within six months after the end of the work.

Darveau framed its challenge to the abuse finding under article 51 C.C.P. Its leave application was brought under articles 31 and 357 C.C.P. Article 30 para. 3 C.C.P. supplied the threshold for leave: the matter must be one that ought to be submitted to the Court, in particular because it raises a question of principle, a new issue, or an issue of law that has given rise to conflicting case law.

Reasoning and analysis

At trial, Justice Yiannakis found both formalities unmet. The hypothec was registered after the 30-day period. No prior notice of exercise was served, and the cross-application came 11 months after the end of the work. She rejected Darveau's argument that its answer to the cancellation application was enough to satisfy article 2727 para. 3 C.C.Q. The cross-application was not before her on a motion to dismiss, and she described it as independent of the fate of the notice of legal hypothec.

Her abuse finding combined Darveau's failure to meet these formalities with its repeated failures to respect the protocol. She called the answer-as-notice argument untenable and observed that Darveau offered no authority for it. In her view, Darveau forced the preparation and holding of a hearing that a voluntary cancellation would have avoided. Cancelling the hypothec, she noted, would not have prejudiced Darveau's right to sue for the amounts it says it is owed.

On the leave application, Darveau did not challenge the cancellation itself. Its position was that an erroneous legal position cannot amount to abuse under article 51 C.C.P. without a separate showing that its conduct objectively fit one of the forms of abuse the provision contemplates. Darveau stressed the high threshold for abuse and denied acting in bad faith, recklessly or with intent to harm. In its submission, it had acted in good faith, believing, wrongly, that it had a reasonable and probable cause. It also pointed out that its cross-application had not been dismissed and so was not frivolous.

Justice Immer applied three requirements. The question had to be one that ought to be submitted to the Court under article 30 para. 3 C.C.P. Because leave exists to prevent abuse from continuing on appeal, Darveau also had to show an apparent weakness in the judgment that could cause an injustice. Finally, the appeal had to serve the interests of justice and respect proportionality. He found the principles governing declarations of abuse well established and saw no question of principle extending beyond the parties' own interests. In his view, the proposed appeal would ask the Court to reassess Darveau's conduct and substitute its own opinion for the trial judge's. Justice Yiannakis had clearly explained why maintaining the hypothec six months after the respondent's proceedings began was abusive. No injustice resulted, since she awarded only $8,000 of the $10,522.92 in fees and disbursements the respondent had paid.

Ruling and overall outcome

The Court of Appeal dismissed Darveau's application for leave to appeal, with legal costs, leaving 6967337 Canada inc. as the successful party. Both the $8,000 award from the Superior Court and the cancellation of the hypothec remain undisturbed. No new monetary amount was ordered in the leave decision, and the legal costs awarded on it were not quantified.