On September 5, 2008, the Quebec Superior Court ruled on the validity of a legal hypothec that had been published in respect of certain contaminated land rehabilitation work. In Charles-Auguste Fortier inc. (Arrangement relatif à),1 the Court clarified the conditions under which a legal hypothec may be registered in relation to work of this kind.
In this case involving a motion for cancellation of a construction legal hypothec registered against unbuilt land, the petitioner Charles-Auguste Fortier inc. (“CAF”) had wanted to subdivide a parcel of land that it owned for purposes of residential development.
Since the land in question was subject to a notice of contamination under the Environment Quality Act, R.S.Q., c. Q-2, CAF had entered into an agreement for the decontamination of the soil with the respondent Solaction inc. (“Solaction”). In fact, as described in the judgment, CAF had excavated the contaminated soil itself, filled in the excavation site with contaminant-free soil and sent the contaminated soil to Solaction for treatment and disposal.
Solaction submitted that an increase in value had undeniably been added to the immovable as a result of the rehabilitation work. The Court set aside this submission by Solaction, noting that such an increase in value could only be used to determine the value of a legal hypothec, not to create one.
In its ruling, the Court accepted CAF’s arguments that the construction legal hypothec referred to in article 2726 C.C.Q. did not cover the decontamination work in question. That article reads as follows:
2726. A legal hypothec in favour of the persons having taken part in the construction or renovation of an immovable may not charge any other immovable. […]
The article provides that such a legal hypothec avails in favour of persons having taken part in the construction or renovation of an immovable, whereas in the Court’s view, the services rendered by Solaction were performed on movable property, i.e., the treatment of soil that had been excavated.
In this regard, the Court relied on article 902 C.C.Q., which provides that integral parts of an immovable that are temporarily detached therefrom retain their immovable character if they are destined to be put back. The Court noted that CAF never intended to put the treated soil back in the land, nor could it legally have done so; therefore, article 902 C.C.Q. did not apply. Accordingly, the
Court found that Solaction had not provided any services that were part of the construction or renovation of the immovable, declared Solaction’s hypothec null and void and ordered it cancelled.
Although the Superior Court ordered the legal hypothec for contaminated soil rehabilitation work cancelled in this case, the Court’s analysis nevertheless suggests that in different circumstances, a firm engaged in providing contaminated soil rehabilitation services could in fact register a legal hypothec on an immovable in respect of which it had performed work of this kind.
Indeed, a firm that had treated contaminated soil by means of an in situ treatment process would be able to benefit from article 2726 C.C.Q. as the soil would retain its immovable character. Moreover, where contaminated soil was excavated for purposes of treatment away from the site of the immovable, the contractor could still benefit from article 2726 C.C.Q. provided the treated soil was subsequently used to fill in the land from which it was removed.