Executive Summary: Key Legal and Evidentiary Issues

• Default by corporate borrower on a $40,000 loan secured by second-rank and third-rank hypothecs on two distinct immovables
• Procedural failure of 9426-7424 Québec inc. to appoint new counsel after its attorney ceased to act, leading to a default judgment mechanism
• Proof of the lender’s claim, including principal, high contractual interest (up to 24% per annum in default), penalties, and additional indemnity under article 1619 C.c.Q.
• Validation and enforcement of a registered immovable hypothec on a specific income property in Trois-Rivières, including refusal to voluntarily surrender the property after pre-exercise notice
• Judicial order for forced surrender (délaissement forcé), writ of possession, potential expulsion, and sale under judicial control (vente sous contrôle de justice) with detailed sale conditions
• Preservation of the lender’s separate rights and recourses against the individual co-debtor, Kevin Dauphinais, and against the second hypothecated property

Factual background

Prêts Express.ca inc. granted a loan of $40,000 to 9426-7424 Québec inc., with the individual, Kevin Dauphinais, also bound as a co-debtor on the obligation. The indebtedness was secured by immovable hypothecs on two distinct properties, one owned by the corporation and one owned by Mr. Dauphinais. For the purposes of this decision, the court focuses on the hypothec attached to the property owned by 9426-7424 Québec inc., a building located in Trois-Rivières, identified as lot 1 018 693 of the cadastre of Québec, with municipal addresses on rue Saint-Philippe and rue Sainte-Élisabeth. The loan documentation provided for interest at 18% per annum and, in the event of default, a default rate of 24% per annum, together with fees, penalties, and the additional indemnity contemplated by article 1619 of the Civil Code of Québec. The corporate defendant fell into arrears on its interest payments for the months of May, June and July 2025, putting it clearly in contractual default in relation to its obligations under the loan agreement and the associated hypothec. Following this payment default, the creditor served and registered a prior notice of the exercise of a hypothecary right of taking in payment, and allowed the statutory period of 60 days to elapse without the borrower voluntarily surrendering (délaisser) the hypothecated immovable.

Procedural history and default

In the wake of the default, Prêts Express.ca inc. instituted proceedings in the Court of Québec by way of an originating application in “délaissement forcé et vente sous contrôle de justice” (forced surrender and sale under judicial control). During the course of the proceedings, the attorney who had been representing the defendants ceased to act. The plaintiff then served, through a bailiff, a formal notice dated 7 March 2026 requiring the defendants to appoint a new lawyer within 10 days, in accordance with article 194 of the Code of Civil Procedure, which governs the obligation of legal persons to be represented by counsel. The defendants failed to comply and did not designate new counsel. On this basis, the plaintiff filed a request for inscription for default judgment dated 27 March 2026, seeking judgment specifically against the corporate defendant for failure to appoint a new attorney. That request was originally set for 8 April 2026 and later postponed to 22 April 2026. With authorization from the special clerk, a bailiff served the inscription for default, the sworn declaration, amended notice of presentation, list of exhibits, and supporting documents on both defendants on 10 April 2026, using a special mode of service for the corporation. When the matter came before the Court on 22 April 2026, neither the corporation nor Mr. Dauphinais appeared, and no opposition or contestation was filed. The plaintiff’s counsel asked the Court to render default judgment against 9426-7424 Québec inc. based on the procedural default and the substantiated claim.

Issues before the court

The Court had to determine whether the plaintiff had adequately proved the essential elements of its hypothecary action in forced surrender and sale under judicial control against the corporate defendant in light of the defendant’s absence and failure to appoint new counsel. This included establishing the existence and quantum of the claim, the validity and scope of the immovable hypothec, the occurrence of contractual default, and the propriety of ordering surrender of the property and its subsequent sale under judicial control. The judge also had to consider whether the procedural steps under the Code of Civil Procedure—such as prior notice of exercise, delays, and service of the inscription for default—had been properly followed so as to justify a default judgment.

Loan terms and hypothecary security

The judgment recognizes a claim of $40,000 in capital in favour of Prêts Express.ca inc. against 9426-7424 Québec inc., with interest at a default rate of 24% per annum from 22 July 2025, in addition to fees, penalties, and the additional indemnity under article 1619 C.c.Q. While the reasons do not reproduce the full loan contract, they confirm that the immovable hypothec published on 8 May 2025 in the land registry secures capital of $40,000 with interest at 18% per annum in the ordinary course, increasing to 24% per annum in the event of default, plus applicable costs, penalties, and indemnity. The Court declares this hypothec valid and in force on the specified lot and building in Trois-Rivières. This validation is critical, as it confirms the lender’s rank and the enforceability of its security ahead of or subject to other registered creditors according to the state of collocation that will be prepared.

Remedies of forced surrender and sale under judicial control

Given the proven arrears, the expiry of the pre-exercise notice period, and the refusal of the corporate borrower to voluntarily surrender the hypothecated immovable, the Court orders the forced surrender of the property in favour of Prêts Express.ca inc. The corporate defendant and all other occupants are given 10 days from service of the judgment to vacate and hand over possession of the building. In the event of non-compliance, the judgment empowers a specific bailiff, or another bailiff from the same firm, to be put in possession by execution of a writ of possession and to carry out any necessary expulsion of 9426-7424 Québec inc. The Court further authorizes a sale under judicial control of the immovable, by private sale (vente de gré à gré) under articles 742 and following of the Code of Civil Procedure. A detailed framework is established: a named bailiff is designated to manage the sale, prepare the deed of sale, draft the state of collocation under article 766 C.p.c., distribute the sale price, and perform all acts related to the mandate at an hourly rate of $150 plus disbursements. The property must be marketed at a minimum asking price of $215,700, corresponding to 75% of the municipal valuation of the land and building. Any offer to purchase must be approved in advance by the plaintiff; without such approval, the sale cannot proceed. The sale is to be done without legal warranty, at the risk and peril of the purchaser, and the designated person acts in the name of the corporate owner, not personally. The buyer will choose the notary and pay all notarial, registration, discharge, and tax costs. The judgment also permits the designated officer to hire a licensed real estate broker, to whom a 5% commission plus taxes may be paid out of the sale proceeds if the transaction closes. A minimum deposit of 5% of the offer price, in the form of a certified cheque to the order of the designated person in trust, is required and will be credited against the price at closing. The plaintiff is expressly authorized, if it wishes, to bid on and acquire the property itself and to retain the sale price up to the amount of its claim until the time comes for distribution of the proceeds according to the state of collocation.

Reserved rights against the co-debtor and other property

Although this judgment deals primarily with the corporate borrower and its property at lot 1 018 693, the Court explicitly reserves the plaintiff’s rights and recourses against the individual co-debtor, Kevin Dauphinais. It also preserves the plaintiff’s ability to pursue hypothecary remedies in relation to the other hypothecated property, namely lot 1 131 907 of the cadastre of Québec, a different immovable owned by Mr. Dauphinais and located at rue Gilles-Lupien in Trois-Rivières. This reservation reflects the structure of the original transaction, which involved multiple securities and debtors, and leaves open the possibility of further proceedings or complementary judgments if the sale proceeds from the corporate property are insufficient or if the lender chooses to pursue parallel enforcement.

Outcome and monetary consequences

The Court ultimately grants the action in part against 9426-7424 Québec inc., issues a monetary condemnation for $40,000 in principal, and orders the payment of contractual interest at 24% per annum from 22 July 2025, plus contractual fees, penalties, and the additional indemnity under article 1619 C.c.Q., together with judicial costs and, if necessary, the costs of expulsion. It also confirms the validity of the immovable hypothec, orders forced surrender and potential expulsion, and authorizes a sale under judicial control subject to precise procedural safeguards. Prêts Express.ca inc. is therefore the successful party in this decision. However, because the judgment does not liquidate the amounts of interest, penalties, additional indemnity and taxable costs, the exact total of the monetary award—including all accessories and costs—cannot be determined from the text of the decision; only the base principal amount of $40,000, plus those additional but unquantified sums, is clearly established.