The facts
On July 6, 2018, in Lorraine (Ville) v. 2646-8926 Québec inc., 2018 SCC 35, the Supreme Court of Canada (the “SCC”) allowed the appeal by Ville de Lorraine (the “Ville”) and the Municipalité régionale de comté de Thérèse-de-Blainville (the “MRC”) from the decision rendered by the Court of Appeal of Quebec on November 7. 2016.
On July 6, 2018, in Lorraine (Ville) v. 2646-8926 Québec inc., 2018 SCC 35, the Supreme Court of Canada (the “SCC”) allowed the appeal by Ville de Lorraine (the “Ville”) and the Municipalité régionale de comté de Thérèse-de-Blainville (the “MRC”) from the decision rendered by the Court of Appeal of Quebec on November 7. 2016.
The Court of Appeal ruled that the amendments to the zoning by-laws adopted by the Ville could not be annulled given the time that had passed between their coming into force and the proceeding, but should instead be declared inoperable against 2646-8926 Québec inc. (the “Owner”), since they constituted a disguised expropriation. The Court of Appeal therefore allowed the Owner’s appeal from the Superior Court judgment rendered on July 7, 2015, by the Honourable Benoît Emery.
The Ville’s appeal raised the following issue: whether a by-law that is contested for being abusive can be declared to be inoperable in respect of the party contesting it if that party did not institute its action within a reasonable time?
Decision of the Supreme Court
At the outset, the SCC recalled that “[b]ecause of the importance attached to private property in liberal democracies, the exercise of the power to expropriate is strictly regulated to ensure that property is expropriated for a legitimate public purpose and in return for a just indemnity”. In Quebec, this power is regulated by the Expropriation Act, CQLR, c. E-24.
At the outset, the SCC recalled that “[b]ecause of the importance attached to private property in liberal democracies, the exercise of the power to expropriate is strictly regulated to ensure that property is expropriated for a legitimate public purpose and in return for a just indemnity”. In Quebec, this power is regulated by the Expropriation Act, CQLR, c. E-24.
The Court then discussed the two remedies available to an owner who is the victim of a disguised expropriation. The owner can institute an action to annul the by-law or have it declared inoperable, or can claim an indemnity based on the value of the property expropriated under article 952 of the Civil Code of Québec (“C.C.Q.”).
Given that an action in nullity for abuse of power is based on the Superior Court’s general superintending and reforming power with respect to government actions, including the acts of municipal councils, such an action must be instituted within a reasonable time. Here, the SCC was of the opinion that Emery J. was justified in dismissing the Owner’s action to annul for being out of time by considering the presumption of legal knowledge, i.e., as of the date the By-law was adopted on June 23, 1991.
As a result, the Owner’s action to annul had to be dismissed, but this had no bearing on the conclusions being sought in the proceeding that were not dealt with by the trial judge. Indeed, the SCC reiterated that even if the plaintiff no longer meets the conditions for applying for judicial review, “he or she still has the right, in appropriate cases and if the claim is supported by the evidence, to seek payment of an indemnity for disguised expropriation” (at para. 46).
Teaching of the Supreme Court
First, the SCC proposes a simpler definition than the one it had proposed in common law in Canadian Pacific Railway Co. v. Vancouver (City), 2006 1 S.C.R. 227, according to which there are two requirements for a disguised expropriation: “(1) an acquisition of a beneficial interest in the property or flowing from it, and (2) removal of all reasonable uses of the property”. The SCC defined disguised expropriation in Quebec law more simply as being where a municipal government limits the enjoyment of the attributes of the right of ownership of property to such a degree that the person entitled to enjoy those attributes is de facto expropriated from them (at para. 27).
First, the SCC proposes a simpler definition than the one it had proposed in common law in Canadian Pacific Railway Co. v. Vancouver (City), 2006 1 S.C.R. 227, according to which there are two requirements for a disguised expropriation: “(1) an acquisition of a beneficial interest in the property or flowing from it, and (2) removal of all reasonable uses of the property”. The SCC defined disguised expropriation in Quebec law more simply as being where a municipal government limits the enjoyment of the attributes of the right of ownership of property to such a degree that the person entitled to enjoy those attributes is de facto expropriated from them (at para. 27).
Two different remedies then become available to aggrieved owners, in this case an action to annul the by-law or declare it inoperable or a claim for an indemnity based on article 952 C.C.Q. Should the action to annul or for a declaration of inoperability no longer be open, the owner is nevertheless permitted to "claim an indemnity based on the value of the property that has been wrongly taken from them” (at para. 2). The claim for an indemnity for expropriation is therefore a separate remedy which remains possible, even where the action to annul or for a declaration of inoperability is no longer available for one reason or another.
Fasken team, composed of Nikolas Blanchette, Martin Sheehan and Nicolas-Karl Perrault, successfully represented the APCHQ as an intervener before the Supreme Court of Canada in the case of Ville de Lorraine and the Municipalité régionale de comté de Thérèse-de-Blainville.
