Executive Summary: Key Legal and Evidentiary Issues

• Filing 17 days after service of the notice of execution, rather than within the five-day limit under article 522 C.C.P., did not bar Ontario Inc.'s application because the court found the delay justified.
   
• Ontario Inc. argued that the 2010 judgment debt was prescribed under the ten-year limit in article 2924 C.C.Q., but the court found that alleged acknowledgements of the debt could have interrupted prescription.
   
• At this stage, the court took Drummcor's alleged facts as true and declined to weigh the probative value of each exhibit.
   
• A series of transactions involving the Montréal condominium between 2002 and 2023, including a nominee agreement and a 2023 hypothec securing Morentzos's personal debt to Revenu Québec, supported an objective fear that recovery was in jeopardy.
   
• Morentzos's 2025 tax return reporting total income of $102,966 was not enough to show that Drummcor's allegations were false.
   
• After declining the court's offer to postpone the hearing so its representative could be cross-examined, Ontario Inc. abandoned its challenge to the truth of every allegation except the one concerning Morentzos's income.
   

Facts of the case

In Drummcor Equities inc. c. Morentzos, 2026 QCCS 3408, the Superior Court of Quebec heard an application by 1906898 Ontario Inc. to quash a seizure before judgment of a condominium it owns at 2464 rue des Harfangs in Montréal. The court had authorized the seizure on June 23, 2026, in an action by Drummcor Equities Inc. seeking a declaration that Peter (Panagiotis) Morentzos is the property's true owner or, alternatively, that the 2015 sale of the unit by his former spouse, Ourania Morfonios, to Ontario Inc. cannot be set up against Drummcor.

Drummcor's aim is to enforce a judgment of November 25, 2010, homologating a settlement in which Morentzos undertook to pay $1,700,000 in principal, solidarily with other legal persons he represented. According to Drummcor, $615,799.89 in principal remained unpaid as of June 22, 2026, plus $278,535.67 in interest.

Drummcor traced the condominium's history in detail. In November 2002, while Morentzos faced a lawsuit by Thomas Nacos and Drummcor, as well as divorce proceedings and Revenu Québec investigations, the unit was bought for $410,000 cash by 9121-4189 Québec Inc. That company's majority shareholder was a trust of which Morentzos is a trustee and beneficiary. With Morentzos as its president, the company sold the unit to Morfonios for $405,000 on July 25, 2012. After Morfonios asked in 2013 to be released from her role, Morentzos wrote on September 11, 2013, that the property was being prepared for transfer into "a proper company," and Ontario Inc. was incorporated on November 21, 2013. His accountant, Michel Montmorency, signed a $493,000 promise to purchase on December 16, 2014, for a company to be formed, later identified as Ontario Inc. Morfonios served proceedings on May 11, 2015, to end the arrangement. On May 28, 2015, the unit was sold to Ontario Inc. for $493,000, with Morfonios still represented by Morentzos. A municipal assessment roughly a year later valued the property at nearly $700,000. On October 28, 2023, Ontario Inc. consented to a second-ranking hypothec on the unit securing Morentzos's payment of $300,000 to Revenu Québec. Drummcor also alleged that Morentzos has lived in the unit since 2003 and that Morentzos Restaurant Group paid its condominium fees until at least 2016.

Policy and legislative provisions at issue

Under article 518 of the Code of Civil Procedure, a court may authorize seizure of a defendant's property before judgment if there is reason to fear that recovery of the claim would otherwise be put in jeopardy. Article 522 allows the defendant to seek annulment within five days of service of the notice of execution, on the grounds that the allegations are insufficient or false. Hearsay is permitted in the seizing party's sworn declaration under article 520, as long as its sources are disclosed.

Prescription turned on the Civil Code of Québec. A right resulting from a judgment is prescribed by ten years if not exercised (article 2924), acknowledgement of a right interrupts prescription (article 2898), and after interruption the same period starts running again (article 2903).

The July 25, 2012 agreement between Morentzos and Morfonios was central to Drummcor's case. It stated that Morentzos had paid all purchase costs and was "the only owner of the said property." It also made him sole administrator responsible for all expenses, including mortgage payments, and allowed him to require Morfonios to transfer the unit to third parties of his choosing "without any compensation or consideration." On Morfonios's death or incapacity, her interest would pass to Morentzos for $1. A same-day power of attorney let Morentzos accept offers, enter a brokerage contract, sign a deed of sale and receive the sale proceeds on her behalf.

Reasoning and analysis

Ontario Inc. filed its application on July 16, 2026, 17 days after service on June 29, 2026. Because the five-day limit is not strict, the court had discretion to relieve Ontario Inc. of its default if it showed serious or valid reasons. The bailiff's return said the notice was handed to a "Julie" who claimed to own Ontario Inc., yet public records named Effie Evanthia Spanidis as its officer. Spanidis swore she was on vacation in northern Ontario at the time. She stated that an unidentified person later left a sealed envelope with her sister Georgia, that she only received it on July 9, 2026, and that she retained Quebec counsel the next day. Pointing to these murky circumstances, the Canada Day holiday period and the complexity of the events underlying Drummcor's proceedings, the court refused to dismiss the application for lateness.

On prescription, Drummcor relied on post-dated cheques covering October 2019 to March 2020, emails of September 30, 2019, and a table that appeared to come from an accounting ledger. The cheques came from Construction Steakco De La Montagne Inc., most bearing a handwritten note that they were issued on Morentzos's behalf. The email that started the exchange referred to execution proceedings for 9375-1931 Québec inc. and Lioness Capital Inc., not Drummcor, leaving it unclear whether the documents concerned this debt. Still, the table mentioned "Loan – Sunshine," apparently referring to Sunshine Boys Holding Corporation, one of the companies covered by the homologated debt. The cheque payments also appeared in Drummcor's payment table, which showed monthly payments from 2008 until they stopped at the end of 2017. Since the documents did not on their face contradict Drummcor's sworn allegations, the court held that those allegations, read with the exhibits, could eventually support a finding that Morentzos acknowledged the debt. That acknowledgement would have interrupted prescription, so the debt was not prescribed when the seizure was sought in June 2026.

Ontario Inc. then argued that Drummcor's allegations were essentially copied from 2017 Revenu Québec proceedings and relied on past misconduct. It invoked the maxim "once a fraudster, always a fraudster" and the Court of Appeal's ruling in Pavage Desrochers et Cie inc. v. Osez Propulser inc. Copying was not a problem, the court said, since the sworn declaration of Drummcor's representative, Christopher Nacos, identified its sources. Although fraud alone does not justify a seizure, the Court of Appeal in Desjardins Assurances générales inc. v. 9330-8898 Québec inc. recognized that persistent dishonest conduct can, in certain circumstances, ground the required fear. Here, the alleged conduct was aimed at keeping assets beyond creditors' reach. Morentzos acted for the seller in the 2015 sale while his accountant represented the buyer on the offer to purchase. Morentzos also continued living in the unit, with one of his companies paying the fees. In addition, Ontario Inc. hypothecated its own property in 2023 to secure his personal debt to Revenu Québec. Taken as true, those facts established a prima facie objective fear that recovery was in jeopardy.

Only one allegation was challenged as false: that Morentzos did not declare enough income to pay his debt. Its representative's sworn declaration had been signed the day before the hearing. Ontario Inc. declined the court's offer to postpone so Drummcor could cross-examine her, chose to proceed largely without that declaration, and so abandoned its other truthfulness challenges. Its only remaining evidence was Morentzos's 2025 tax return showing total income of $102,966. The court found this insufficient, since the fear rested mainly on his manoeuvres over time rather than on his current income. Ontario Inc. also offered nothing showing assets available to creditors in his name, whether any of that income remained, or why he had made no payment to Drummcor since 2017.

Ruling and overall outcome

The court dismissed Ontario Inc.'s application to annul the seizure before judgment authorized on June 23, 2026. The seizure of the Montréal condominium therefore remains in place in Drummcor's favour. The court ordered legal costs to follow, without fixing any amount. No sum was ordered paid. The $615,799.89 in principal and $278,535.67 in interest are Drummcor's own figures and were not adjudicated, so no exact monetary amount was granted in this judgment.