Case information

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Case summaries are prepared by the Office of the Registrar of the Supreme Court of Canada (Law Branch). Please note that summaries are not provided to the Judges of the Court. They are placed on the Court file and website for information purposes only.

Hypothecs – Legal construction hypothec (arts. 2724 et seq. C.C.Q.) – Legal person established in the public interest – Property – Seizability – Civil procedure – Pleadings – Parties – Costs – Whether Court of Appeal erred in holding that there could be no legal hypothec on property in question because it was exempt from seizure – Whether Court of Appeal wrongly dismissed cross demand on basis that parties against whom cross demand brought were not plaintiffs at first instance – Whether burden of costs should be borne by SEBJ and Hydro-Québec in circumstances.

In 2004, the Société d’énergie de la Baie James (SEBJ) awarded HMI-Promec S.E.N.C. (HMI) a contract under which it was to be the general contractor for the work of supplying and installing electrical and mechanical equipment and systems for the Eastmain-1 hydroelectric powerhouse. HMI subcontracted part of the work to the Applicant (Construction Kay-Bek Inn). On March 9, 2007, Kay-Bek had a notice of legal hypothec published for the [translation] “[i]mmovable property located at Eastmain camp, consisting of administrative offices, housing units and units for sports and other recreational activities”. HMI then filed a motion to institute proceedings to have the hypothec cancelled. It argued, inter alia, that no work had been done on the property in question, that the property was not immovable and that, even assuming that it was immovable, it was owned by the state and was therefore exempt from seizure.

In response, Kay-Bek filed a cross demand (which it called a motion to institute proceedings) against HMI and SEBJ and against, as surety, the Respondent Travelers Guarantee Company of Canada (Travelers). It sought, inter alia, recognition of the legal hypothec and $1,788,863.39 in damages. HMI, SEBJ and Travelers then filed a motion to dismiss those proceedings.

The trial judge dismissed both motions. The Court of Appeal reversed the judgment, finding that it was not open to the trial judge to decide that the property at Eastmain camp, which was owned by Hydro-Québec, could be seized. It allowed the motion to cancel the legal hypothec. It also dismissed the cross demand against HMI and SEBJ, since they had not filed a demand against Kay-Bek at first instance.