WHEN MUNICIPAL BY-LAWS LEAD TO DE FACTO EXPROPRIATION

Sommet Prestige Canada Inc. (Sommet Prestige), the owner of a six-hectare plot of land in St. Bruno since 2006 (the Land), claimed that regulations adopted by the municipality resulted in de facto disguised expropriation. That was the issue before the court in a recent decision by Québec Superior Court1.

Adjacent to Mount St. Bruno Park, the land is zoned residential. Sommet Prestige intends to establish a residential sector of approximately 30 single-family residences, subdividing the land into as many lots. After six years of various studies, a subdivision plan to create 31 lots was submitted in December 2011. An agreement to carry out infrastructure work was signed with the municipality, according to which Sommet Prestige paid the City $450,430.

Numerous constraints were imposed on the project, including limiting the size of the buildings, providing for conservation areas and prohibiting various structures. The town of St. Bruno endorsed the project, subject to obtaining a certificate of authorization under section 32 of the Quality of the Environment Act.

Despite the city council's approval of the project, citizens organized to preserve the natural state of the Land and filed a request for an injunction, which was deemed premature. A new municipal council and a new mayor, opposed to the project, were elected in November 2013 while the certificate of authorization was still pending.

The new municipal administration adopted several measures to protect the woodland that was part of the site. In 2014 the city of Longueuil adopted an interim control by-law designating the land as an "ecosystem of confirmed interest", thus preventing any development. Following pressure from Sommet Prestige, that designation was toned down. In December 2017 the municipality identified the site as a protected natural environment, with restrictions on tree removal that, in effect, prevent any development.

In 2018 Sommet Prestige initiated proceedings to have the by-laws declared null and void. Failing that, it would sue the municipality to obtain compensation for de facto disguised expropriation in the amount of over $15 million.

In February 2020 the Ministry of the Environment refused to authorize the project. Sommet

Prestige filed a legal challenge against that refusal in March 2020. The Metropolitan Montréal Community then passed a by-law prohibiting all construction on the site, designating it as a land area of metropolitan interest. That by-law was in turn the subject of a legal challenge filed by Sommet Prestige.

The suit filed by Sommet Prestige is based on Article 952 of the Québec Civil Code:

"No owner may be compelled to cede or transfer his property, except by expropriation according to the law for a cause of public utility, and in return for a just and prior indemnity."

The court identified three principles, based on the authorities cited from that section of the Civil Code:

(a) The doctrine of disguised expropriation in Québec civil law cited in that Article is based on a regime of no-fault liability;

(b) If the regulation removes all reasonable uses of the property, then there is disguised expropriation;

(c) An owner who is the victim of disguised expropriation may challenge the validity or applicability of the regulation on the basis of administrative law principles or, alternatively, claim compensation under Article 952.

In this case, the tree removal standards and conditions imposed by the by-laws are so stringent as to preclude any reasonable development and use of the Land. The City argued that the Land would retain some value, for example for environmental organizations, for silviculture or maple syrup production, as a bicycle path, hiking path, park, green space or nature reserve or community garden, or as an area for urban agriculture.

In examining the uses permitted by the current regulations, the court found that they are insufficient for reasonable use of the Land. As for the potential uses mentioned above, while the Land remains a residential zone, they do not constitute reasonable use of a building. In the eyes of the court, there is therefore disguised expropriation.

The fact that the City may have acted in good faith, and the restrictions it imposed may have been genuinely necessary, is irrelevant. The restrictions may still result in disguised expropriation.

Nor did the court find any non-compliance with respect to the regulations adopted. Thus, just because regulations are adopted in a manner consistent with the statutory authority does not preclude the possibility of a disguised expropriation.

The judge indicated that the right to property may no longer be absolute, but it is still a fundamental right under the Charter of Human Rights and Freedoms. It is therefore false to claim that no compensation is possible because the action taken was permitted by law. The law must clearly state that no compensation is due the claimant, in order to exclude the right to compensation.

In conclusion, Sommet Prestige was the victim of a disguised expropriation, and will be entitled to receive compensation accordingly.