Executive Summary: Key Legal and Evidentiary Issues

• Scope and continuity of the personal suretyships (cautionnements solidaires) given by the two business partners, and whether one partner effectively terminated his guarantee in 2021–2022.
• Proof of the applicable interest rate for the business credit card, in the absence of any written rate in the signed credit agreement or supporting brochure.
• Validity and enforceability of the bank’s claim on the business line of credit and credit card based on the documentary account statements and credit agreement.
• Allocation of ultimate responsibility between the co-sureties, given evidence that virtually all post-dissolution expenditures were incurred for the exclusive benefit of one partner.
• Assessment of a “manquement important” under article 342 C.p.c. due to the bank’s very late production of key account statements despite a clear undertaking to disclose them.
• Impact of judicial compensation and procedural sanctions on the net amounts owed, including set-off in favour of one defendant and a monetary penalty against the bank.

Facts of the business relationship and credit facilities

Piro Construction s.e.n.c. was a renovation business formed in 2018 by two associates, Roger Ivars and Pierre Lalonde. To finance its activities, Piro obtained a business line of credit from Banque Toronto-Dominion (TD Bank) on 10 August 2018, with a maximum limit of 50,000 CAD. A week later, on 17 August 2018, the bank also issued a business credit card to Piro with a limit of 10,000 CAD. Both facilities were corporate (business) products, used in the name of Piro.
Piro was eventually struck off the Quebec enterprise register in December 2021 for failing to file two consecutive annual update declarations. Despite this deregistration, the line of credit and credit card continued to be used and to accrue balances. Payments on the line of credit stopped in April 2024, and no payments were made on the business credit card after May 2024. The bank’s collections manager, Patrick Mpiana, took over the file in March 2024, unsuccessfully tried to contact Lalonde, then spoke with Ivars, who said he was still a shareholder but no longer involved in operations, which he said were now effectively in Lalonde’s hands.
After failed collection efforts, TD Bank sent a formal demand letter to Piro, Lalonde, and Ivars, claiming 49,558.85 CAD plus interest on the business line of credit, and 7,142.39 CAD plus interest on the business credit card. When payment was not forthcoming, TD Bank filed a civil claim in the Court of Québec on 9 August 2024. Lalonde never responded to the claim, ignored a forced intervention in warranty brought against him by Ivars, skipped scheduled pre-trial examinations despite being duly cited, and did not attend trial.

Suretyship arrangements and alleged termination of the guarantee

From the outset, both Lalonde and Ivars had personally guaranteed Piro’s debts. On 10 August 2018, each signed a document titled “Suretyship and Subordination” (Surety and Subordination), under which they became solidary sureties for all present and future debts of Piro toward the bank. The contract expressly stated that they were bound as solidary co-debtors, “without benefit of discussion or division”, allowing the bank to pursue them directly without first exhausting remedies against Piro.
A central defence raised by Ivars was that he had effectively put an end to his suretyship sometime in 2021 or 2022. He testified that he went to a bank branch to “close the company’s accounts” and was then told to call by phone to handle it. He says he made that call and then, in his own words, “after that, it’s a mystery”. He also explained that Lalonde had told him he wanted to run Piro alone, would take back the chequebook, and would “take care of closing the company”.
However, the suretyship contract contained a very specific clause on how a surety could limit future liability. It required the surety to give written notice to the bank branch holding the suretyship, and to provide proof that the debtor and other sureties had received a copy of the notice. Importantly, the contract also included a clause stating that any promise, waiver, modification, or limitation of the agreement would bind the bank only if set out in writing and signed by an authorized officer of the bank.
The court stressed that under article 2362 C.c.Q., a suretyship covering future or indeterminate debts can be ended by the surety, but only by a clear and explicit notice to the creditor, debtor, and other sureties. Jurisprudence requires that such a notice be unambiguous. In this case, it was undisputed that Ivars never sent any written notice, and no document of that kind existed in the bank’s file. Even if a verbal request in a branch or by phone could in theory have some effect, the judge found that Ivars’s own evidence about any such steps was brief, vague, uncertain (even on the year it may have occurred), and not convincing.

Evidence on interest rates and contractual terms

The credit agreement for the business line of credit was clear: it specified a credit limit of 50,000 CAD and an interest rate equal to TD’s prime rate plus 3.5%. At trial, the parties agreed that this contractual variable rate would govern the line of credit, without any additional indemnity, and the court adopted this rate from 8 August 2024 going forward.
The business credit card contract, by contrast, did not clearly state the interest rate. The bank’s representative suggested that the parties would have received a brochure in the branch explaining the applicable rate, and the bank’s affidavit referred to a 19.99% annual rate. But the signed credit card agreement did not mention 19.99%, and the bank never produced the supposed brochure. Account statements sometimes showed 19.99% and sometimes 14.99%, but the witness could not explain the variations, stating that he did not work in the branch and that some clients benefit from better promotional rates.
The judge noted that a creditor cannot unilaterally impose a particular interest rate merely by putting numbers on its monthly statements. Under article 1565 C.c.Q., interest is payable at the rate agreed upon, or, failing such an agreement, at the legal rate. Because there was no clear evidence of a mutually agreed contractual rate for the credit card, the court held that the bank had not met its burden of proving the alleged 19.99% rate (or any other specific contractual rate). Consequently, the court ordered that the credit card balance would bear only legal interest plus the additional indemnity under article 1619 C.c.Q., rather than the higher contractual rate claimed.

Court’s analysis of liability between the bank and defendants

On liability, the court found that TD Bank had established, on the civil standard of a clear and convincing preponderance of evidence, the existence of the credit facilities, the outstanding balances, and the signatures of the two sureties. The quantum of principal claimed was not really disputed in terms of the arithmetic in the account statements.
As to Lalonde, there was no defence at all: no response to the claim, no participation in pre-trial procedures, and no appearance at trial. Given his signature on the suretyship and the unchallenged documentary proof of the debts, the court condemned him in full.
As to Ivars, the court rejected his argument that he had effectively terminated his suretyship. The written contract required a clear written notice with proof of transmission to the other surety; none was ever sent. The court also emphasized that jurisprudence on article 2362 C.c.Q. rejects vague or ambiguous notices, and here, even the alleged verbal steps were poorly specified and unsupported. Ivars therefore remained jointly and severally liable toward the bank for the same debts as Lalonde.
The court then took into account a credit balance of 3,900 CAD on another TD credit card held by Ivars, which the bank conceded at trial. It ordered judicial compensation (set-off) so that 3,900 CAD would be applied against what Ivars personally owed TD Bank, reducing his net exposure, though not the gross condemnation against both defendants.

Allocation of responsibility between the co-debtors

Although both defendants were solidarily bound toward the bank, the judge had to consider, in the context of Ivars’s forced intervention against Lalonde, how the debt should be shared between them as between co-debtors. Under the Civil Code’s rules on solidarity and suretyship, a solidary debtor who pays may recover each co-debtor’s share, but if the obligation was contracted in the exclusive interest of one debtor, that debtor must bear the whole amount.
Here, the evidence showed that Piro had ceased formal operations: it was deregistered from the enterprise register and its Quebec sales tax registration was inactive from October 2020. The detailed transaction history of the business line of credit, eventually produced, contained numerous charges to restaurants, fast-food outlets, grocery stores, cannabis stores (SQDC), tanning salons, pet shops, and other retail merchants that appeared personal in nature and difficult to reconcile with the activities of a defunct construction firm.
Ivars testified that he had nothing to do with these expenses, that all bank statements were sent to Piro’s address, which was also Lalonde’s address, and that he never took “a cent” from Piro for personal purposes. The court found this credible, and there was no contrary evidence because Lalonde had chosen not to participate at all.
On this basis, the judge concluded that the expenditures giving rise to the debt were incurred by Lalonde for his exclusive benefit. Applying article 1537 C.c.Q., the court held that, as between the two defendants, Lalonde must ultimately bear the full debt. It therefore granted Ivars’s action in warranty and ordered Lalonde to indemnify him for the entirety of the condemnation pronounced against him, including capital, interest, and costs.

Procedural misconduct and costs consequences

Separately, the court addressed a complaint by Ivars under article 342 C.p.c. about TD Bank’s conduct during the litigation. During the pre-trial examination of the bank’s representative, the bank undertook to provide the complete file and full account statements for the line of credit and credit card. While some documents were delivered relatively promptly, the core transactional histories and full statements covered by “Undertaking No. 4” were not.
Over the course of nearly a year, counsel for Ivars repeatedly followed up, pointing out that the statements provided were incomplete, limited to narrow time windows, or merely partial screen captures with missing months and no bank logo, and that they did not satisfy the engagement to produce full statements. In a case management conference, the bank’s counsel stated that all existing documents had been provided. Later, however, when Ivars’s new counsel indicated she would issue a subpoena duces tecum to a TD branch manager, the full statements and transaction histories suddenly appeared and were transmitted at 3:09 pm on the day before trial.
The bank’s representative admitted that the statements were indeed stored within TD’s systems and could be obtained on request. He also stated that he had made only one request for them and forwarded them to counsel when he finally received them, suggesting that a proper internal request had been made only at the last minute in response to the subpoena. The court found that the initial partial screen captures were not “very authentic”, were incomplete, and excluded several potentially relevant months.
In light of the clear undertaking, the length of the delay, the repeated written follow-ups, and the bank’s incorrect assertion that no further documents existed, the judge found that this was not a trivial oversight but an “important” procedural breach under article 342 C.p.c. It forced Ivars’s counsel to engage in unnecessary extra work, including preparing a subpoena. Exercising its discretionary but punitive power under article 342, the court ordered TD Bank to pay 750 CAD to Ivars as a compensation for unnecessary professional fees, with legal interest and the additional indemnity from the date of judgment. The full 2,000 CAD sought by Ivars was not granted; the judge considered 750 CAD proportionate given that the misconduct, though serious, was more targeted and less systemic than in other cases.

Outcome and significance

In the result, the Court of Québec partially allowed TD Bank’s claim on the merits but essentially granted it the full principal it sought: it condemned both Roger Ivars and Pierre Lalonde, solidarily, to pay 49,558.85 CAD on the business line of credit, with interest at the TD prime rate plus 3.5% from 8 August 2024, and 7,142.39 CAD on the business credit card, with legal interest and the additional indemnity from the same date. The court also ordered judicial set-off of 3,900 CAD in credit due to Ivars on another TD account, reducing his net liability, and granted him 750 CAD in procedural sanctions against the bank, both amounts bearing legal interest and the additional indemnity. Finally, the court upheld Ivars’s forced intervention, ordering Lalonde to indemnify him fully for all amounts he must pay under the judgment, and awarded costs to TD Bank on the main action and to Ivars on his warranty claim. Taken together, the decision confirms TD Bank as the successful party on the substantive debt recovery, with a total principal condemnation in its favour of 56,701.24 CAD plus interest and ordinary court costs, although this is partially offset by the 3,900 CAD set-off and the 750 CAD sanction in favour of Ivars and, as between the co-defendants, the entire financial burden is shifted in principle onto Lalonde.