On March 7, 2023, the Superior Court of Québec (the “Court”), presided over by the Honourable Lukasz Granosik, J. S. C., rendered judgment in a case between Sommet Prestige Canada Inc. and Propriétés Sommet Prestige Inc. (collectively, the “Plaintiffs”) to the City of Saint-Bruno-de-Montarville (the “City”). The Court’s decision is of major importance in matters of disguised expropriation and is part of a trend in case law that is increasingly favourable to expropriated parties. In fact, the Court ruled in favour of the Plaintiffs by recognizing that they are entitled to compensation for the City’s disguised expropriation, while reiterating key principles regarding disguised expropriation. The final amount of the expropriation compensation of approximately $15,000,000 claimed by the Plaintiffs will have to be decided at a subsequent hearing if applicable.
Facts and Claims of the Parties
The Plaintiffs own a wooded lot known as the “Hirondelles Woodland” (“le boisé des Hirondelles”) adjacent to Mont-Saint-Bruno National Park since March 28, 2006 (the “Woodland”). They had acquired the Woodland, which was zoned for residential use at the time, for the purpose of developing single-family homes. Moreover, the Plaintiffs had made the necessary verifications to ensure that the Woodland could be subdivided into lots to build some thirty homes.
Following several years of collaboration with the City to carry out their project, as well as numerous studies, meetings and investments, the Plaintiffs filed a subdivision plan for the Woodland on December 12, 2011. Such a project had to take into consideration the environmental issues inherent to the Mont-Saint-Bruno National Park.
However, following the filing of the subdivision plan, the City amended the municipal by-law in consideration of the Plaintiffs’ development project. The City has thus approved the project, subject to obtaining a certificate of authorization under section 32 of the Environment Quality Act (the “Certificate”). Certain municipal authorizations were also required before the development project could proceed.
However, a change of custody in the City’s political environment delayed the implementation of the Plaintiffs’ real estate project, when a new mayor and a new political party were elected on November 3, 2013, promising not to authorize residential development in the Woodland. The evidence clearly revealed that the City’s new political administration was opposed to the Plaintiffs’ project. Thus, the years passed without the Plaintiffs obtaining the Certificate from the provincial Ministry of the Environment and other necessary permits from the City.
On December 4, 2017, the City officially identified the Woodland as a protected natural environment and, through new provisions in its zoning by-laws, undertook to impose restrictive tree cutting standards that prevented the residential real estate project meticulously planned by the Plaintiffs several years from being carried out, and in their opinion, any possibility of development in the Woodland.
Consequently, the Plaintiffs initiated legal proceedings in 2018 to challenge the validity of the zoning by-laws adopted by the City, and failing to obtain their invalidity, they requested an expropriation indemnity of over $15,000,000, alleging a disguised expropriation situation in violation of article 952 C.C.Q. At the hearing, the main conclusion sought by the Plaintiffs was instead compensation for the disguised expropriation and, only if the Court dismissed this claim for compensation, the nullity of the zoning by‐laws adopted by the City.
In support of its claims, the City stated that the zoning by‐laws adopted did not constitute disguised expropriation. It believes that following the municipal elections, it was perfectly within its rights to change its regulatory standards in order to ensure the protection of nature and protected species found in the Woodland. It also alleges that section 113(16) of the Act respecting land use planning and development provides for a non-compensation regime in cases where the regulations adopted are intended to protect the environment, even in cases of disguised expropriation where the regulations prevent any reasonable use of private property. Moreover, the City argues that the application for nullity was not brought within a reasonable timeframe, thereby causing the Court to dismiss the application without considering its merits.
The Court first addressed the issue of a reasonable timeframe for filing an appeal on judicial review challenging the validity of the City’s by-laws. After concluding that the reasonable timeframe had now expired and that the application for nullity sought by the Plaintiffs in this regard should be rejected, the Court turned to the choice and scope of the remedies available to the party expropriated under Québec law of disguised expropriation.
Possible Remedies for Disguised Expropriation: Two Alternatives
While the conclusion sought by the Plaintiffs as to the validity of the provisions of the zoning by-laws is inadmissible, the disguised expropriation debate continues under the principal claim for compensation. The Court then addressed the principle that the two possible remedies for disguised expropriation, namely the remedy of nullity and the remedy for compensation, are alternatives rather than subordinates. The choice then belongs to the expropriated party and not to the expropriating municipality.
The City’s position in this regard was that disguised expropriation inevitably involves determining the validity of the normative acts being challenged, so that the plaintiffs had no choice between the two remedies. It argues that the principles of public law require that the nullity of the challenged regulation be addressed first, and that the effects of the regulation be addressed thereafter. However, after hearing the parties, the Court instead retains the position of the Plaintiffs: the nullity remedy and the compensation remedy are alternatives. Thus, the Plaintiffs may choose to directly challenge the validity of the by-laws triggering a situation of disguised expropriation, or they may seek compensation.
In reviewing the case law, Judge Granosik relied particularly on the Supreme Court’s decision in Canada (Attorney General) v. TeleZone Inc. to uphold the position of the Plaintiffs, where the principle that a party may choose to claim damages without first having to challenge the validity of the standard that caused the injury was upheld. This principle was applied in its entirety in a recent decision on disguised expropriation, namely Dupras v. Ville de Mascouche, which states that disguised expropriation does not depend on the validity of the administrative or prescriptive act as the cause. To the extent that valid by-laws consistent with the municipality’s enabling authority can be a source of disguised expropriation, it would be illogical to oblige a person deprived of any reasonable use of their property to challenge those by-laws before they could claim compensation.
The Request for Nullity: Failure to Comply with the Reasonable Timeframe
Section 529 C.C.P. provides that the application for judicial review must be brought within a reasonable timeframe from the act or event giving rise to the application. Where the passing of a by-law by a municipal council is the event that gives rise to an appeal for judicial review, the timeframe will depend on the cause of action for invalidity.
In the present case, the Plaintiffs do not allege the absence or excess of jurisdiction of the defendant as a cause of the nullity of the by-laws in dispute. Therefore, the concept of reasonable timeframe must be applied. The general rule is that 30 days from the adoption of the impugned act is understood as reasonable. That being said, it has been over seven months for certain provisions of the zoning by-laws and over 11 months for others since they were passed by the City before the Plaintiffs introduced the appeal challenging their validity. Moreover, the Court recalled that the Plaintiffs were aware of the adoption of the impugned provisions of the zoning by‐laws because they closely followed the City’s zoning changes.
Generally, if the usual 30-day timeframe for filing an application for judicial review has not been met, the plaintiff has the burden of justifying the additional delay by alleging the facts and circumstances that delayed the filing of the application. In the course of the proceedings, the Plaintiffs did not allege any facts or provide any evidence justifying the seven-month and eleven-month delays between the adoption of the impugned provisions and the introduction of its application for judicial review. The Court then concluded that the appeal challenging the validity of the by-laws adopted by the City was inadmissible since it was not brought within a reasonable timeframe under s. 529 C.C.Q.
Determination of Disguised Expropriation
The Plaintiffs’ claim for compensation for the disguised expropriation of which they are victims is based on section 952 C.C.Q. reproduced below:
“952. No owner may be compelled to transfer his ownership except by expropriation according to law for public utility and in return for a just and prior indemnity.”
In this case, the Court reiterated the teachings of the Court of Appeal in Dupras v. Ville de Mascouche to the effect that a situation of disguised expropriation occurs when an act “which has the effect of dispossessing an individual or an enterprise of property or of practically removing all possibility of use” of that property is committed by the State. Furthermore, the Court noted in this case that the City’s bad faith or fault need not be demonstrated in order to find disguised expropriation. The claim for compensation based on section 952 C.C.Q. is based on a no-fault liability regime.
In this case, to determine the absence or presence of a disguised expropriation situation, the Court must analyze whether the zoning by-laws adopted by the State eliminate all reasonable use of the immovable, in this case the Woodland. If so, there is disguised expropriation. In this instance, the Court concludes that the regulatory provisions for, in particular, tree removal were so restrictive as to prevent “not only any development, but any reasonable use of that building”.
However, the City argues that its zoning by-laws do not prevent all reasonable use of the Woodland property. For example, the City believes that the Plaintiffs could use the Woodland to develop a bicycle path, a pedestrian trail, a park or a garden. The Court rejected this argument, stating that the uses and activities permitted under City regulation cannot constitute “reasonable uses” of the Woodland found in a residential area. The Court therefore concluded that the criteria for a disguised expropriation remedy are met in this case.
Finally, the City argues as a last line of defence that section 113(16) of the Act respecting land use planning and development allows for the restriction and prohibition of land uses without compensation to the owner in cases of public interest and environmental protection. According to the City, this article would support the argument that no right to compensation exists for the Plaintiffs, since this disguised expropriation stems from environmental protection measures. However, the Court rejected this argument by reiterating that property rights are a fundamental right protected by the Charter of human rights and freedoms, and that unless a law explicitly overrides section 952 C.C.Q., Québec’s cities and municipalities have an obligation to compensate the owner in the event of disguised expropriation.
In summary, and following an analysis of the recent Dupras and Annapolis decisions, the Court concluded that the zoning regulations adopted by the City had the effect of expropriating the Plaintiffs and that they were entitled to claim compensation, having been deprived of any reasonable use for the Woodland.
In light of recent and consistent jurisprudence in Québec law, the Court restated the principle that depriving a party of any reasonable use of its property constitutes a disguised expropriation situation.
Additionally, the Court took the opportunity in this case to reiterate that there are two possible remedies to resolve a disguised expropriation. On the one hand, the nullity remedy makes it possible to have restrictive normative acts declared invalid or inoperative in its regard. On the other hand, a party may wish to seek compensation in the event of a disguised expropriation. This decision confirms that the first action is not subordinate to the other and that these are two alternatives.
The Court also applied the principles established in Dupras according to which the Court must, in order to find disguised expropriation, analyze the effects of the impugned regulation and ask whether it prevents any reasonable use of the immovable. The Court particularly argued that since the doctrine of disguised expropriation is a no-fault scheme, it is not relevant to consider the City’s wrongful or non-culpable conduct or its good or bad faith to conclude that a disguised expropriation has occurred.
Finally, the Court ruled on the enabling power set out in section 113(16) of the Act respecting land use planning and development, confirming that this provision does not authorize Québec cities and municipalities to expropriate landowners without payment of a fair and prior indemnity. This point of law is all the more important in this case because it cements the position of the Québec courts on the right to compensation of expropriated owners and confirms the fundamental nature of the right to property enshrined in the Charter of human rights and freedoms. Moreover, only an express and unequivocal legislative authorization would allow to set aside the compensation regime provided for in 952 C.C.Q.
On March 21, 2023, the City announced its intention to appeal Judge Granosik’s decision. It will be interesting to follow future developments in this matter, which could play a crucial role in Québec’s disguised expropriation law in the years to come. There have also been reports in the media that the current government is seeking to amend certain laws to remove the obligation of municipalities to compensate victims of disguised expropriations, or to reduce the value of expropriation compensation altogether. We will monitor the bills on this subject closely and keep you informed.
 Canada (Attorney General) v. TeleZone Inc., 2010 SCC 62.
 Dupras v. Ville de Mascouche, 2022 QCCA 350.
 Lorraine (Ville) v. 2646–8926 Québec Inc., 2018 SCC 35.
 Sommet Prestige Canada Inc. v. Ville de Saint-Bruno-de-Montarville, 2023 QCCS 676, para. 34.
 Mallat v. Autorité des marchés financiers de France, 2021 QCCA 1102, para. 60
 Dupras v. Ville de Mascouche, supra, fn. 2, para. 27; Strateco Resources Inc. v. Attorney General of Québec, 2020 QCCA 18, para. 113.
 Annapolis Group Inc. v. Halifax Regional Municipality, 2022 SCC 36; Sommet Prestige Canada Inc. v. Ville de Saint-Bruno-de-Montarville, supra fn. 4, para. 61.
 Sommet Prestige Canada Inc. v. Ville de Saint-Bruno-de-Montarville, supra fn. 4, at para. 72.
 Charter of human rights and freedoms, CQLR, C-12, s. 6.