Executive Summary: Key Legal and Evidentiary Issues

• Characterisation of Cedma Finance’s business model as mortgage brokerage and syndicated mortgage placements triggering registration and prospectus requirements under the LDPSF and LVM.
• Adequacy of the evidence of “irreparable harm,” including the absence of detailed financial statements to substantiate claims that the business would effectively be shut down without a stay.
• Proper standard for appellate review of a discretionary stay (sursis) and whether the Court of Québec misapplied the criteria of irreparable harm and balance of convenience.
• Weight to be given to investor protection and the public-interest objectives of the LDPSF, LVM and their regulations versus the private commercial interests of the respondents.
• Regulatory concern over how investments were solicited and presented as low-risk, and over valuation practices (e.g., use of projected post-renovation fair market value to secure loans).
• Impact of recent regulatory changes on the classification and oversight of syndicated mortgage loans and the limits of a stay judge’s role in effectively re-weighing that policy choice.

Background and business model of the respondents

Jocelyn Grégoire has been investing in real estate since 2011 and owns close to 1,000 residential units. He is also the sole shareholder and directing mind of 9256-7619 Québec inc., operating as Cedma Finance, a company that specialises in arranging and managing mortgage financing for borrowers who cannot readily obtain loans from traditional financial institutions. Cedma invites potential borrowers to submit financing applications. After assessing the borrower’s needs and performing due diligence, Cedma issues a financing offer where appropriate. If the borrower accepts, he or she pays Cedma an upfront fee of about 4% of the loan amount. In many cases, Cedma funds only a small fraction of the loan itself. The bulk of the capital comes from a pool of roughly 40 “partners” who have previously indicated their interest in lending money. When a file is ready, the respondents circulate a summary of the project and loan terms; lenders who elect to participate receive the interest paid by the borrower at the agreed rate, less a spread of 2% to 4% retained by Cedma under a management agreement that covers administration of the loan, collection, monitoring of security and enforcement in case of default. The funds are pooled and held in a trust account, and a notary is instructed to prepare the hypothecary loan deed to which both borrower and co-lenders are parties.

Regulatory concerns and the AMF’s enforcement position

The Autorité des marchés financiers (AMF) took the view that this model breached two key Quebec regulatory schemes. First, it considered that Mr. Grégoire was acting as a mortgage broker and Cedma as a firm offering products and services in the mortgage brokerage discipline without being duly registered with the AMF, contrary to the Loi sur la distribution de produits et services financiers (LDPSF). Second, by arranging placements of syndicated mortgage receivables with its “partners” without a prospectus and without registration as a dealer or adviser, the respondents were said to be carrying out securities placements governed by the Loi sur les valeurs mobilières (LVM) and its regulations, including the comprehensive registration and prospectus-exemption frameworks applicable to syndicated mortgage investments. The AMF therefore applied to the Tribunal administratif des marchés financiers (TMF) for orders prohibiting the respondents from engaging in mortgage brokerage and syndicated mortgage placement until they regularised their situation by registering and complying with the securities law regime.

Provisional measures and continued non-compliance

In December 2023, after a three-day hearing, the TMF issued provisional measures. Those interim orders prohibited the respondents, among other things, from carrying on mortgage brokerage activities and from placing securities, unless and until they registered with the AMF and complied with the LVM requirements for securities offerings. Despite those interim orders, the respondents continued operating their business in substantially the same way. Thirteen additional mortgage loans were concluded between February and November 2024, contrary to the provisional decision. This pattern of continuation after interim restraints later informed the TMF’s view of sanctions and the AMF’s insistence that leaving the business entirely unsupervised pending appeal posed an unacceptable regulatory risk.

Final TMF decision and administrative penalties

After a full hearing on the merits spread over some 20 days, the TMF granted the AMF’s application. The final decision essentially confirmed the substance of the provisional measures: it significantly restricted the respondents’ ability to operate in the manner they had, targeting both the unregistered mortgage brokerage function and the unregistered placement of syndicated mortgage investments. Importantly, the TMF did not order the respondents to cease all business activity. It allowed them to continue granting hypothecary loans on the condition that Cedma itself fund 100% of the capital, without pooling funds from other co-lenders, and it expressly authorised them to continue to administer and manage existing loans for which a hypothecary deed had already been signed. In addition to these behavioural restrictions, the TMF imposed administrative monetary penalties: $80,000 for breaches related to the syndicated mortgage placements, and a further $130,000 for defying the provisional decision, for a total of $210,000 in administrative penalties.

Appeal to the Court of Québec and the stay of execution

The respondents, convinced that the TMF’s final decision was wrong in law and fact, filed an appeal to the Court of Québec. Under the Loi sur l’encadrement du secteur financier (LESF), such an appeal does not automatically stay the execution of the TMF’s decision unless the TMF itself or a judge of the Court of Québec orders otherwise. The respondents therefore applied to the Court of Québec for a stay (sursis) of the TMF decision pending the outcome of their appeal. On 8 July 2025, the Court of Québec (Administrative and Appeal Division) granted the requested stay. The judge recognised that the appeal raised a serious question, accepted that the respondents would suffer irreparable harm if the decision took effect immediately, found “exceptional circumstances” justifying suspension, and held that the balance of convenience (prépondérance des inconvénients) favoured the respondents. In substance, the judge accepted Mr. Grégoire’s sworn evidence that enforcing the TMF’s decision would, to all practical intents, shut down his business and deprive him of his livelihood, likening the situation to a prior case in which refusing a stay would have amounted to the closure of a professional practice.

Standards for stays and appellate review

The AMF obtained leave to appeal that stay decision to the Quebec Court of Appeal and, in parallel, the respondents secured provisional execution of the Court of Québec’s judgment, allowing them to continue their mortgage-lending operations without the TMF restrictions while the appeal was pending. On appeal, the AMF argued that the Court of Québec judge erred in law by applying a low threshold of a mere “serious question” rather than requiring an apparent weakness in the TMF decision, and that the judge made palpable and overriding errors in assessing irreparable harm and the balance of convenience. The Court of Appeal reiterated that a stay of execution is a discretionary remedy that attracts a high degree of appellate deference. Appellate intervention is warranted only where the first-instance judge misdirects himself in law, makes a significant error in assessing the evidence, or otherwise exercises discretion in an unreasonable manner. Although the Court of Appeal did not find it necessary to decide whether the “serious question” standard for appearance of right was in itself correct, it focused on whether the irreparable harm and balance-of-convenience analyses were reasonably conducted.

Evaluation of irreparable harm

The Court of Appeal found that the lower-court judge’s acceptance of irreparable harm was tainted by errors. It underscored that a party claiming such harm must go beyond vague, general or hypothetical assertions and must support the claim with precise, clear and concrete facts, including a detailed picture of its financial situation. Here, the sworn declaration by Mr. Grégoire contained general statements about the impact of the TMF decision but no financial statements—no balance sheet, income statement or cash-flow information—to substantiate that the business would effectively collapse. Critically, the Court stressed that, unlike the professional “shutdown” scenario relied upon by the judge, the TMF decision did not order the respondents to cease all operations. They remained free to grant hypothecary loans, provided Cedma lent 100% of the capital, and they were explicitly authorised to continue administering existing loans and earning their 2%–4% management spread. The decision also left open the possibility of regularising their situation by registering with the AMF as a mortgage broker and firm, and by using appropriate prospectus exemptions for syndicated mortgage placements. In the Court’s view, the respondents’ choice not to submit to AMF oversight did not transform the regulatory restrictions into the functional equivalent of a professional disbarment. These factual and legal misappreciations rendered the finding of irreparable harm unreasonable.

Public interest and the balance of convenience

Turning to the balance of convenience, the Court of Appeal held that the Court of Québec judge had effectively disregarded the public-interest dimension of the case. The lower-court judge placed weight on the fact that both borrowers and lenders appeared satisfied with the respondents’ services, and he discounted the importance of the regulatory framework on the basis that the relevant rules represented a relatively recent “paradigm shift” whose validity the respondents were challenging. The Court of Appeal considered this approach incompatible with the role of a stay judge, who is required to treat duly enacted legislation and regulations as presumptively valid and to recognise their public-interest purposes. The TMF had expressly expressed concern about how Mr. Grégoire marketed these investments as passive and low-risk by reason of real-estate security and about the use, in some files, of projected post-renovation fair market values to assess the hypothecary collateral, a practice that could overstate the strength of the security. The regulatory conditions governing prospectus exemptions for syndicated mortgage placements are designed precisely to ensure that only lower-risk structures can bypass the full prospectus process. Against that backdrop, the Court of Appeal emphasised that the LDPSF and LVM have as their core objective the protection of the investing public through registration, supervision of conduct, disclosure obligations and enforcement. Registration with the AMF is the main mechanism for imposing competency standards and codes of ethics, ensuring objectivity, independence, transparency and avoidance of conflicts of interest. The LVM, in turn, is a corrective legislative scheme intended to shield investors from the hazards of an unregulated market and must be interpreted broadly and liberally to achieve that protective purpose, including through the central requirement to issue a prospectus containing full, true and plain disclosure of material facts. By minimising these public-interest elements, the stay judgment failed to conduct a proper weighing of the inconvenience to investors and the broader market if unregistered, unsupervised syndicated mortgage placements were allowed to continue pending appeal.

Outcome of the appeal and financial consequences

In light of the flawed appreciation of irreparable harm and the public interest, the Court of Appeal concluded that the Court of Québec judge had exercised his discretion in an unreasonable manner. It therefore allowed the AMF’s appeal, set aside the judgment that had granted the stay, and substituted an order dismissing the respondents’ stay application, with costs. As a result, the TMF’s final decision—including all behavioural restrictions and the administrative penalties totalling $210,000—remains fully operative pending the outcome of the merits appeal to the Court of Québec. The successful party in this appellate decision is the Autorité des marchés financiers. The total fixed monetary award already imposed in favour of the regulatory authority, as described in the TMF merits decision, is $210,000 in administrative penalties ($80,000 plus $130,000). The Court of Appeal also awards the AMF its costs of justice in the stay appeal, but the exact amount of those costs is not specified in the judgment and cannot be determined from the text.