Lorraine (Ville) v. 2646 8926 Québec inc., 2018 SCC 35– Municipal law — By laws — Validity

On appeal from a judgment of the Quebec Court of Appeal (2016 QCCA 1803) setting aside a decision of Emery J. (2015 QCCS 3135).

On July 7, 1989, 2646‑8926 Québec inc. (“Company”) purchased a wooded lot in a residential zone in Ville de Lorraine (“Town”), intending to eventually subdivide the lot for residential construction. On June 23, 1991, the Town adopted by‑law U‑91, the effect of which was that approximately 60 percent of the area of the Company’s lot became part of a conservation zone in which the authorized uses were limited to recreational and leisure activities. The Company’s majority shareholder learned of the by‑law in late 2001 or early 2002. In 2004, the Town informed the Company that it did not intend to change the zoning restrictions applicable to the lot. In November 2007, the Company brought an action against the Town in which it sought to have the by‑law declared to be null, alleging that it had been a victim of disguised expropriation. In 2010, the Company amended its motion to institute proceedings to request that the Town’s by‑law URB‑03, which had replaced by‑law U‑91, and by‑law 10‑02 of the Municipalité régionale de comté de Thérèse‑De Blainville be declared to be null. The latter by‑law had been adopted to bring the land use and development plan into line with the restrictive zoning designation for the portion of the Company’s lot that was affected by by‑law U‑91. The Superior Court dismissed the action in nullity for being out of time. The Court of Appeal allowed the appeal and declared the by‑laws to be inoperable in respect of the Company.

Held (9-0): The appeal should be allowed.

The Superior Court judge exercised his discretion under art. 33 of the Code of Civil Procedure judicially. A plaintiff who intends to contest a zoning by‑law he or she considers abusive must bring an action within a reasonable time. In this case, the judge was justified in applying the presumption of legal knowledge to determine that the starting point for reasonable time was June 23, 1991. Sixteen years elapsed between the adoption of by‑law U‑91 and its being contested in court. In addition, the time that elapsed after the Company’s majority shareholder had acquired factual knowledge of the by‑law was at least 5 years. Given the discretionary nature of the Superior Court’s power of judicial review, that 5‑year period was in itself sufficient for that court to dismiss the action in nullity for being out of time.

The alleged abuse of power did not have the effect of relieving the plaintiff of its duty of diligence, that is, the requirement that the plaintiff institute its action within a reasonable time. Furthermore, it was not appropriate in this case to distinguish between inoperability and invalidity of a by‑law, which are both remedies that fall within the Superior Court’s discretionary exercise of its inherent power to order a remedy where a by‑law is abusive. The duty to act within a reasonable time and the presumption of legal knowledge that determines the starting point for reasonable time, which apply in exercising the discretion to dismiss or not to dismiss an action in nullity, are equally applicable to a finding that a by‑law is inoperable.

This action in nullity was also prescribed in accordance with the 10‑year general law prescriptive period provided for in art. 2922 of the Civil Code of Québec, which, as the Act respecting the implementation of the reform of the Civil Code provides, began to run on January 1, 1994. This means that that period ended on January 1, 2004, well before the action in nullity was filed in November 2007.

A plaintiff who no longer meets the conditions for applying for judicial review still has the right, however, in appropriate cases and if the claim is supported by the evidence, to seek payment of an indemnity for disguised expropriation. This case can continue in the Superior Court on the claims that remain unresolved, including the claim for an indemnity for disguised expropriation.

Reasons for judgment: Wagner C.J. (Abella, Moldaver, Karakatsanis, Gascon, Côté, Brown, Rowe and Martin JJ. concurring)

Neutral Citation: 2018 SCC 35

Docket Number: 37381