Investors who say they were cheated obtain an order freezing the developer’s assets, including a property in Mont-Tremblant. Meanwhile, the property’s hypothecary lender exercises its recourse and becomes the owner, without notifying them. The investors ask that the judgment be set aside. The Superior Court refuses: a Mareva injunction protects against the dissipation of assets, but it confers no right in them.
When fraud is suspected, the reflex is often to “freeze” the alleged fraudster’s assets before they disappear. That is precisely what a Mareva injunction is for. But how far does it protect the creditors who obtain it against a lender holding a hypothec (the civil law equivalent of a mortgage) on the frozen asset? The judgment in Hypothèque Solution Québec inc. c. Manoir Winchester (2026 QCCS 2908), rendered on April 17, 2026, by the Honourable Daniel Beaulieu of the Superior Court (District of Québec), provides a clear answer.
The facts: a building, a hypothec and worried investors
In June 2023, a $1,300,000 hypothec was granted in favour of a lender, Hypothèque Solution Québec inc., and two individuals, to secure a loan on a property in Mont-Tremblant, which the company Manoir Winchester acquired a few days later. In 2025, a host of creditors, mainly investors, alleged that the head of this group had engaged in a fraudulent “Ponzi”-type scheme. These were allegations that had not been decided on the merits.
On February 18, 2025, the investors obtained a Mareva injunction prohibiting the principal, his companies and several related persons from selling, hypothecating or otherwise disposing of their assets. The Mont-Tremblant property was expressly listed among the assets covered. The order was renewed several times, then extended until judgment on the merits, and it was published in the land register. At one renewal, in March 2025, a judge ordered the hypothecary lender to produce its loan documents and specified that “any affected party” by the order “may seek directions from the Court” (our translation).
In April 2025, the lender confirmed that the borrower was in default on its hypothecary payments and that the building was no longer insured. On June 6, 2025, the lender published in the land register a prior notice of the exercise of a hypothecary right, namely its right to take the property in payment. On September 25, 2025, the Superior Court, sitting in Québec City, rendered judgment by default: finding a debt of $1,099,386.52, it ordered the surrender of the property and declared the lenders owners, retroactively to June 6, 2025. The investors learned of this on November 3, 2025, while trying to have a hearing scheduled for the sale of the building. On December 22, they applied for revocation of the judgment, that is, to have it set aside.
Two concepts to understand
A Mareva injunction is a freezing order. It prohibits a person from disposing of their assets pending final judgment, to prevent them from making those assets disappear. The court stressed its nature: it acts against the person targeted, not on the property itself. It gives the party who obtains it neither a real right in the property nor priority over other creditors.
Taking in payment is one of the recourses the Civil Code of Québec gives a hypothecary creditor when its debtor defaults. Rather than having the property sold, the creditor becomes its owner, and the debt is extinguished. An important consequence for other creditors: there is no sale, and therefore no possible surplus to share. That is what worried the investors, since the building had been listed for sale at $1.7 million in another proceeding.
The conditions for revocation at the request of a third person
Article 349 of the Code of Civil Procedure (C.C.P.) allows a person whose interests are affected by a judgment rendered without their having been called to the proceeding to apply for its revocation. The case law requires that person to show that they were unable to oppose the judgment, that their interests are affected, that they have serious grounds of defence and that they are acting within six months of learning of the judgment. This remedy is applied restrictively, in the name of the stability of judgments.
Justice Beaulieu readily acknowledged that the investors had not been called and that their interests were affected. He also rejected the lenders’ argument that the investors had lacked diligence by waiting 48 days: given the complexity of the case and the number of parties, that delay was not negligent. Everything therefore turned on the last criterion: did they have a serious ground of defence?
No prior notice owed to the beneficiaries of a Mareva
The investors’ main argument rested on article 2757 of the Civil Code of Québec (C.C.Q.), which requires a creditor intending to exercise a hypothecary right to serve its prior notice on the debtor, on the grantor of the hypothec and “on any other person against whom he intends to exercise his right.” In their view, the Mareva gave them a sufficient interest in the building to be counted among those persons.
The court disagreed. Only a very limited number of persons are entitled to service of the prior notice. The judge relied on an analogy with seizure before judgment: according to legal scholarship, a creditor who has seized an immovable “undeniably has an interest,” but the seizure confers no real right, so the hypothecary creditor does not have to serve its prior notice on that creditor. If a seizing creditor is not entitled to it, neither is the beneficiary of a Mareva.
The March 2025 order changed nothing: by writing that any affected party “may” seek directions from the Court, the judge had granted an option, not created an obligation. As for abuse of rights, the judge acknowledged that the lenders could have shown more transparency, but refused to find that they had acted on the sly: their prior notice had been published in the land register since June 6, 2025, and the law presumes that a right entered in the register is known to anyone who later publishes a right on the same property, as the investors had done by registering their Mareva. Since taking in payment is a recourse expressly provided for in the Code, exercising it is not an abuse. The application for revocation was dismissed, with legal costs.
Why this decision stands out
It highlights a common misunderstanding. For the victim of a fraud, obtaining a Mareva injunction feels like having “seized hold” of the assets. In reality, a Mareva freezes the situation as regards the alleged fraudster, without changing the ranking of creditors. The hypothecary creditor, whose right is earlier and registered, retains all its recourses.
The judgment also distinguishes this case from another decision rendered in a related file, in which a judge had set aside a judgment obtained by other investors, mere ordinary creditors, who were trying to bypass the process for liquidating the building. The difference lies in the nature of the right: a hypothecary creditor is enforcing a legitimate security; an ordinary creditor has no priority.
One can nevertheless understand the investors’ frustration. The lender had been impleaded in the Mareva case since March 2025 and, after the judgment, its president even exchanged with the investors’ lawyer about a hearing on the sale of the building, before they were told it had already become the owner. The judge implicitly acknowledged this, writing that the lenders could have shown greater transparency. But the law of security interests rests on the publication of rights in the land register, and it is up to each party to keep watch.
Key takeaways
A Mareva injunction is not a security. It prevents the debtor from dissipating assets, but gives you no priority over a hypothecary creditor.
Register your address in the land register. The Code allows any interested person to request the registration of their address in respect of an immovable (article 3022 C.C.Q.). The land registrar must then notify that person of certain registrations, including that of a prior notice of exercise (article 3017 C.C.Q.). The lenders pointed this out, and the legal scholarship cited by the judge confirms it.
Actively monitor the land register. A published prior notice of exercise is presumed to be known. Do not count on the hypothecary creditor to warn you.
There are ways to protect a building’s residual value. The judge noted that the investors could have resorted to subrogation, in particular by paying the prior-ranking creditor to take its place. The Code also provides that subsequent hypothecary creditors or the debtor may, under certain conditions (article 2779 C.C.Q.), force the creditor to abandon taking in payment in favour of a sale; that recourse, however, requires holding a hypothec oneself, which the investors did not. These tools require prompt action, within the prescribed time limits.
For lenders: a Mareva targeting your debtor does not, in principle, prevent you from exercising your hypothecary rights, as long as the order does not target you yourself. Transparency nonetheless remains good practice, if only to avoid costly litigation.
Further reading
See also our columns on a construction legal hypothec registered too late, a $230,000 hypothec cancelled and $8,000 to pay, on CEO fraud, where Desjardins and its client share a $1.4 million loss and on seizures.
This column is published for general information purposes only and does not constitute legal advice. Because every situation is unique, you should consult a lawyer for advice tailored to your own case. Feel free to contact Virtulex avocats to discuss your situation.
William Desrochers, Attorney, Virtulex avocats — www.virtulexavocats.com
Reference: Hypothèque Solution Québec inc. c. Manoir Winchester, 2026 QCCS 2908, Superior Court of Québec, District of Québec, the Honourable Daniel Beaulieu, J.S.C., April 17, 2026 — read the judgment on CanLII (in French).
