Executive Summary: Key Legal and Evidentiary Issues

• Allocation of professional liability for a notary’s failure to obtain the intervention of the first-rank hypothecary creditor (FAC) in a land sale, despite an agreed tripartite structure.
• Interaction between the sale deed’s mainlevée (partial discharge) clause and a prior $4,000,000 first-rank hypothec in favour of FAC, and how this left the buyer’s lots exposed to enforcement despite compliance with the sale contract.
• Evidentiary assessment of when the purchaser (9210) acquired sufficient knowledge of fault, loss, and causation to start the three-year prescription period, including the “crystallization” of damage upon judicial sale.
• Scrutiny of the notary’s duty to advise, inform, and act impartially, including failure to explain risks, failure to reflect the parties’ true tripartite intent, and over-reliance on a non-binding “letter of intent” from FAC.
• Causation and mitigation debates around 9210’s choice not to contest FAC’s hypothecary proceedings or to repurchase the land at judicial sale, and whether those choices broke the causal chain or merely framed the quantum of loss.
• Quantification of damages based on the judicial sale price of the remaining lots, offset by unpaid balance of sale price and interest that 9210 was spared, leading to a net loss fixed at $314,800 plus interest and costs.

Factual background and parties’ relationships

The case arises from a real estate development project in Sutton, Québec. 9210-7317 Québec inc. (9210) is a land developer controlled by Louis Beauregard. In 2009, it agreed to buy a large tract of land (the “Terrain”) from 9034-8822 Québec inc. (9034), a company linked to the Champigny family. At that time, 9034 already owed money to Financement agricole Canada (FAC) under a loan secured by a first-rank hypothec over multiple immovables, including the Terrain, in the amount of about $4,000,000.
9210’s business plan was to subdivide the Terrain and resell lots free of FAC’s hypothec. To make this possible, 9034 agreed that, for each subdivided lot sold, 9210 would pay it a minimum of $5,000 per acre in exchange for partial discharge (mainlevée) of FAC’s hypothec on that lot, with a total discharge once the full sale price was paid. Over time, 9210 did in fact sell several lots and paid the agreed amounts, and FAC routinely issued partial discharges through the notaries handling the sub-sales.

The sale deed and key mainlevée clause

On 18 September 2009, 9210 and 9034 signed the notarial deed of sale (the “Acte”) before notary André Plamondon. The Acte included a specific clause of mainlevée in favour of the buyer: on payment of a minimum of $5,000 per acre, the seller (9034) undertook to grant partial releases of hypothec as lots were sold, and a total release on full payment of the price. This clause, however, was structurally incomplete: only 9034 and 9210 signed the deed. FAC, as first-rank hypothecary creditor, did not intervene and did not assume any direct, binding obligation toward 9210 within the Acte itself.
Parallel to the drafting of the Acte, FAC sent a letter dated 24 August 2009 (exhibit P-10) to the notary. In that letter, FAC expressed its “intentions” to consent to releases on specified lots upon receipt of a cumulative total of $625,000 from future lot sales. The court later characterises this as a non-binding letter of intent, not an “engagement écrit et irrévocable” to grant discharges, and certainly not a stipulation for the benefit of 9210. Fundamentally, the judge finds that relying on this letter instead of bringing FAC into the deed left 9210 without a direct contractual right against FAC, despite the tripartite economic understanding.

The underlying financing and tripartite understanding

FAC’s 2008 hypothec acted as a “parapluie” (umbrella) over many lots, including those sold to 9210, and secured a much larger debt than the Terrain’s sale price. From 9210’s perspective, the critical assurance was that each subdivided lot could be freed from FAC’s hypothec as long as the $5,000 per acre payments and global $625,000 figure were met, so that its development project could proceed lot by lot. FAC’s internal position, confirmed through correspondence and testimony, was that it was comfortable with 9034 transferring the Terrain to 9210 and with the subdivision-and-resale plan, so long as FAC kept its security and was eventually repaid.
The court accepts that there was a genuine tripartite “entente” in 2009 between 9034, 9210 and FAC regarding how sales and mainlevées would operate. However, this economic and practical understanding was never properly translated into a legally secure, binding obligation in the notarial deed, because FAC was kept outside the four corners of the Acte.

Subsequent lot sales and initial performance of the mechanism

Between 2009 and 2016, 9210 successfully sold multiple subdivided lots from the Terrain. For each sale, it paid agreed sums to 9034, and FAC gave partial discharges allowing buyers to take title free of the first-rank hypothec. The pattern described by the court is straightforward: a promise to purchase would be negotiated; Beauregard would transmit it and the notary’s name to 9034; 9034 and 9210 would agree the mainlevée price; 9034 would contact FAC, which would then send a letter to the purchaser’s notary specifying the release amount to be sent to FAC. This sequence worked for several years and tended to reinforce 9210’s belief that its arrangements were secure.

Default of 9034 and FAC’s enforcement measures

The fragile point in this structure was that all of 9210’s security against FAC depended on 9034’s faithful performance of its own loan obligations. Eventually, 9034 fell into default under the FAC loan. When that occurred, FAC changed its approach: in October 2017, it informed 9210 that it would no longer issue partial releases because of 9034’s default and, in November 2017, demanded payment of the full remaining value of the Terrain, estimated between $400,000 and $450,000, expressly stating that it was “not a party” to the 2009 sale deed.
9210 could not pay this amount. FAC then served a pre-notice of exercise of hypothecary rights in March 2018 and commenced proceedings for forced surrender and sale under judicial control in May 2018 against both 9034 and 9210. 9210 ultimately chose not to contest these proceedings; a special clerk’s judgment on 14 September 2018 ordered the surrender and sale of the remaining lots, and the property was later sold to a third party in December 2018 for $475,000.

Emergence and crystallization of the loss

The court pays particular attention to when 9210’s loss became a real, compensable damage for prescription purposes. The judge distinguishes between apprehended or hypothetical damage (such as the prospect of losing the land when proceedings were announced) and concrete, “cristallisé” damage. While 9210 knew, by late 2017 and early 2018, that FAC blamed the notarial work and was threatening enforcement, the court holds that the real, compensable loss only crystallised on 14 September 2018, when the special clerk’s judgment effectively dispossessed 9210 of the remaining lots. Before that date, 9210 still owned the Terrain and could not sue for the loss of land it had not yet lost.

Professional liability issues and the notary’s duties

The judgment offers an extended discussion of the notary’s professional obligations. The court emphasises that a notary has obligations of means, including a duty to advise, inform, and act with impartiality, and to ensure parties give free and informed consent. In this case, the judge identifies several key breaches:

• The notary failed to bring FAC as a party to the Acte, despite knowing FAC held the first-rank hypothec and that the parties’ practical intention was tripartite.
• He relied on FAC’s August 2009 letter (P-10) as though it were an irrevocable, binding undertaking to discharge the hypothec, without conducting legal research to verify its sufficiency and without clearly explaining to 9210 the limitations of such a letter.
• He overvalued P-10 as providing “full protection” to 9210, when, in law, it was merely a statement of intention with no contractual effect in favour of the buyer.
• He did not properly inform Beauregard that 9210 could be fully compliant with the sale deed yet still lose the entire Terrain because 9034 defaulted on a separate financing arrangement to which 9210 was not party.
  The court also finds that the notary failed to disclose his prior relationship with FAC as the notary who had instrumented the 2008 hypothec, which raised impartiality concerns. Although this alone did not disqualify him, it reinforced the need for transparency and for him to ensure 9210 understood the structural risks.

Evaluation of the “letter of intent” and contractual structure

A central legal discussion concerns the status of FAC’s 24 August 2009 letter. The court analyses it through contract law principles on the relativity of contracts and third-party benefits. Since FAC and 9034 did not clearly enter into a stipulation pour autrui in favour of 9210, and since P-10 did not contain the language of an irrevocable promise or binding engagement, 9210 could not rely on it as a direct contract right. Nor could P-10 be treated as a promise of the act of another in the relevant technical sense.
The judge ultimately classifies P-10 as a simple letter of intention: it reflected FAC’s then-current internal willingness to grant releases subject to payment but did not transform FAC into a co-debtor toward 9210. As a result, when 9034 later defaulted and FAC decided to stop granting partial discharges and to enforce its hypothec, 9210 had no contractual shield, even though everyone had initially operated as if the tripartite mechanism were secure.

Prescription, notice, and the mise en demeure debate

The notary argued that 9210’s claim was prescribed because it knew or ought to have known of the notarial fault and resulting loss by fall 2017. The court rejects this, stressing that for prescription to start, the claimant must know, with sufficient certainty, all three elements of civil liability—fault, damage, and causation—and that the damage must be concrete and actual. Here, although Beauregard was aware by late 2017 that FAC viewed the notarial work as defective and was threatening foreclosure, the actual loss only materialised with the 14 September 2018 judgment that dispossessed 9210. Taking into account the three-year limitation period plus COVID-related suspension of prescription, the January 2022 action is found to be timely.
On mise en demeure, the notary argued that he was not properly put on notice in time to remedy the situation. The court finds both that a formal demand was sent in July 2019 and that, in any event, a mise en demeure existed “de plein droit” because the notary’s fault had rendered any meaningful cure impossible by the time the damage crystallised. There was no evidence that a timelier formal notice would have enabled the notary to avoid the loss.

Causation and alleged mitigation failures

On causation, the court concludes that “but for” the notary’s failure to secure FAC’s direct intervention in the Acte and his failure to advise 9210 properly about the legal consequences of leaving FAC outside the deed, there would have been no hypothecary proceedings by FAC against 9210’s lots, and no judicial sale of the Terrain. Proper advice would also have allowed 9210 to refuse to sign the Acte in its flawed form or to insist on a different structure that genuinely protected its interests.
The defendants contended that any loss was self-inflicted because 9210:

• Chose not to defend FAC’s hypothecary proceedings;
• Declined several opportunities to “buy out” FAC by paying amounts ranging from $100,000 to about $410,000 at different points; and
• Failed to bid on or repurchase the Terrain at the judicial sale, even though a company owned by one of its then-shareholders, Excavation Dominique Carey inc., ultimately bought it.
  The judge treats these arguments under the doctrine of avoiding the aggravation of damages. He holds that 9210 had only an obligation of reasonable means, judged by an objectively prudent and diligent person in similar circumstances. The court finds it would have been unreasonable to expect 9210 to pay very substantial additional sums—which it did not demonstrably have—simply to “fix” a structural error in the Acte and thus effectively repair the notary’s fault at its own expense. There was no persuasive proof that 9210 actually had the liquidity or access to financing to pay the amounts FAC demanded, nor that FAC would have accepted the earlier, lower offer for any longer than the very short window shown by the evidence.

Assessment of damages

In quantifying damages, the court starts from the judicial sale price of the remaining lots, $475,000, treating it as a reliable indicator of the Terrain’s value at the time of loss and as a proper base for assessing 9210’s prejudice. From this amount, two elements are deducted:

• The unpaid balance of the sale price that 9210 still owed 9034 at the time of the 14 September 2018 judgment, $138,600; and
• About $21,600 in interest on that balance from May 2016 to August 2018, which 9210 effectively avoided because of the judicial sale.
  These deductions yield a net loss of $314,800 representing the value of the asset 9210 lost, after accounting for the obligations it was spared. The court rejects the defense theory that 9210 had already made so much gross revenue on prior lot sales that it suffered no real loss, accepting Beauregard’s evidence that significant development costs had been incurred and that the project had not yet reached a profit point that would cancel out the harm from losing the remaining land.

Role of the professional liability insurer

The Fonds d’assurance responsabilité professionnelle de la Chambre des notaires du Québec was sued alongside the notary and his professional corporation as liability insurer. Relying on article 2501 C.c.Q., the court acknowledges the plaintiff’s right to proceed directly against the insurer and holds the fund liable for the damages flowing from the notary’s professional fault, as 9210 elected to exercise this direct action route. The judgment thus binds both the notary defendants and the fund.

Final ruling and monetary outcome

In the result, the Superior Court of Québec partially grants 9210-7317 Québec inc.’s claim. It holds that notary André Plamondon and his professional corporation committed multiple professional faults in the drafting and structuring of the 2009 sale deed and in their advisory role, that these faults caused the loss of 9210’s remaining land, and that 9210’s conduct did not break causation nor unreasonably aggravate its own damages. The court condemns the notary, his corporation and the professional liability fund, jointly, to pay 9210 damages of $314,800, together with interest at the legal rate and the additional indemnity under article 1619 C.c.Q. from 24 July 2019, plus costs of justice, although the exact peso or dollar value of the interest and costs cannot be determined from the decision’s text.