The Maison du développement durable (“MDD”), a not-for-profit organization that owns and manages a building in Montreal, and Petit Réseau inc. (“Petit Réseau”), a not-for-profit organization that operates an early childhood centre in the building, signed a usufruct contract in 2012 (“Contract”). As the usufructuary, Petit Réseau benefited from the real estate tax exemption, and the amount of the real estate taxes that would have been payable in respect of the usufruct was paid to the City. In 2014, the Minister of Municipal Affairs and Land Occupancy asked the City to have the part occupied by Petit Réseau included in MDD’s real estate assessment unit because the contract between the parties was actually a “lease” agreement. In 2015, the City accordingly informed the MDD that its real estate assessment roll had been amended and Petit Réseau had been reincorporated into the MDD’s real estate assessment unit. As a result, the MDD had to pay the real estate taxes for the part of the building occupied by Petit Réseau that would normally have been exempt and for which a payment should have been made to the City by the Minister. The City claimed a retroactive payment of $550,000 in taxes from the MDD and an annual payment of $85,000 starting in 2015 for the portion of the building that had initially been exempt.
The Court ruled in favour of the MDD and Petit Réseau and declared that the Contract was one of usufruct (and not a lease contract) that had been enforceable against the City and the Minister since January 1, 2012.
Based on the testimony, the Court concluded, first, that usufruct had always been central to the relationship between the Plaintiffs. The Court then found that the Contract contained the fundamental characteristics of usufruct: an assignment of the MDD’s real rights to Petit Réseau along with the right to use and enjoy the property for a fixed period of 25 years. The Court added that the other rights excluded or modified were only residual rights. The Court then concluded that amendments made to certain suppletive rules of the CCQ , namely, the restriction on the right to hypothecate and the clause prohibiting the usufructuary from renting out the building, [TRANSLATION] “do not alter the substance of the act of usufruct, or do not do so to such a point that the Court can characterize it as something else” (para. 61). As long as it is not contrary to the public interest and the nature of the act of usufruct is not completely altered, the bare owner may agree to take on more obligations than the CCQ imposes on it, just as the usufructuary may agree that the bare owner will do less than it could be required to do under the CCQ.