Gravel v. City of St-Léonard, [1978] 1 SCR 660

SUPREME COURT OF CANADA

Gravel v. City of St-Léonard, [1978] 1 S.C.R. 660

Date: 1977-09-30

Charles Édouard Gravel (Plaintiff) Appellant;

and

City of St-Léonard (Defendant) Respondent.

1977: June 9 and 10; 1977: September 30.

Present: Laskin C.J. and Martland, Judson, Ritchie, Spence, Pigeon and Dickson JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR QUEBEC

Municipal law — Plans and estimates for municipal works — Professional fees — Resolution by Council — Approval of Municipal Commission — Municipal Commission Act, R.S.Q. 1941, c. 207, ss. 24, 25, 26.

Interpretation — Legislative history — Laws not retroactive — Meaning compatible with French and English versions — Revised Statutes of 1941 Act, 1941 (Que.), c. 15, s. 7 — Act amending the Municipal Commission Act, 1965 (Que.), c. 55, s. 6 — Interpreta­tion Act, R.S.Q. 1964, c. 1, s. 50.

Appellant prepared plans and estimates for the con­struction of a waterworks and sewer system. This work was done following two resolutions of the Council of respondent city adopted in 1953 and 1957 respectively. In 1959, appellant was requested by resolution to produce the plans and estimates prepared and to suspend all further work. Appellant then sent his bill for fees both for the plans of completed work (approximately $4,000) and for the plans of work not completed (approximately $697,000). When respondent refused to pay the bill, appellant brought an action against it in the Superior Court and his claim was allowed in whole. The Court of Appeal, however, held that the latter sum was not recoverable because, in its opinion, the municipality's credit was affected by hiring appellant, and under s. 25 of the Municipal Commission Act it could only be bound if the Commission had approved the agreement, which was not the case. Appellant appealed to this Court, and relied essentially on an earlier decision of the Court of Appeal of Quebec, Ville de Sept-Îles v. Trépanier, [1962] Que. Q.B. 956, in maintaining that s. 25 applied only to municipal loans and not to payment of fees.

Held: The appeal should be dismissed.

Per Martland, Judson, Ritchie and Pigeon JJ.: Appel­lant maintained that the words "affecting its credit" in s. 25 must be read with s. 26, which deals with municipal

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loans. The legislative history of these sections is contrary to this claim. Section 26 existed prior to the enactment of the second paragraph of s. 25, and it cannot restrict its scope. To say that the latter is not applicable to agreements affecting municipal credit because it is not a loan is not interpreting the text—it is depriving it of any effect. The Court of Appeal was correct in refusing to follow the opinion expressed in Trépanier.

As for the amendments to s. 25 introduced by the 1965 Act, which excepts agreements relating to payment of fees from approval by the Municipal Commission, it is not in any way to be taken into consideration, due to the rule against retrospective operation. The Legislature has the power to enact laws having a retroactive effect, but this retroactivity is not to be presumed.

Section 25 cannot be construed as applicable only to agreements which have an effect on the credit of the municipality in the sense of affecting its solvency. Although the word "affecting" in the English version most frequently has this meaning, the meaning to be adopted must be the one compatible with the definition of the word "engager" used in the French version, which applies to all obligations for future payment of sums of money. In light of respondent's budget for the years in question and of the cost of the services rendered, appel­lant's commitment could be considered to fall within the exception contained in the second paragraph of s. 25—an exception which applies to ordinary administrative acts for which the expenses incurred must be paid entirely out of the revenues of the then current year.

Per Laskin C.J. and Spence and Dickson JJ.: The question of whether a contract is an "... agreement .. . affecting ... credit" is a question of fact. In the circum­stances in the instant case, the contract was an agreement affecting the credit of respondent, and consequent­ly subject to the approval of the Municipal Commission. Failure to obtain this approval stands as a direct bar to relief of appellant.

Ville de Sept-Îles v. Trépanier, [1962] Que. Q.B. 956, not followed; Gingras v. General Motors Prod. of Canada, [1976] 1 S.C.R. 426; Ace Holdings Corpora­tion v. The Montreal Catholic School Board, [1972] S.C.R. 268; Village de la Malbaie v. Boulianne, [1932] S.C.R. 374; Cusson v. Robidoux, [1977] 1 S.C.R. 650; M.F.F. Equities v. The Queen, [1969] S.C.R. 595; Notre-Dame Hospital v. Patry, [1975] 2 S.C.R. 388; Quebec Railway v. Vandry, [1920] A.C. 662; Bernardin v. North Dufferin (1891), 19 S.C.R. 581; Olivier v. Wottonville, [1943] S.C.R. 118, referred to.

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APPEAL from a decision of the Court of Appeal of Quebec[1] reversing in part the judgment of the Superior Court. Appeal dismissed.

Bertrand Lacombe, for the appellant.       

Alfred Tourigny, Q.C., and J. Roch St-Ger­main, Q.C., for the respondent.

The judgment of Laskin C.J. and Spence and Dickson JJ. was delivered by

DICKSON J.—I have had the advantage of read­ing the reasons for judgment prepared by Mr. Justice Pigeon for delivery in this appeal. I agree with Mr. Justice Pigeon that the appeal fails but for somewhat different reasons. I hold the view that the issue as to whether a contract is an ".. . agreement ... affecting ... credit," or in French, a

.. convention ... engageant [le] crédit" is a question of fact. In the circumstances of the instant case, I am of opinion that the contract was an agreement affecting the credit of the City of St-Léonard. Elaboration of this point will be found in my reasons for judgment being delivered con­temporaneously herewith in the case of Lalonde et al. v. City of Montreal North[2].

Failure to comply with the formalities specified at s. 25 of the Municipal Commission Act, R.S.Q. 1941, c. 207 therefore stands as a direct bar to relief of appellant in the present appeal. As coun­sel for appellant abandoned any claim based on de in rem verso, that issue need not be considered further in this appeal.

I would dismiss the appeal with costs.

The judgment of Martland, Judson, Ritchie and Pigeon JJ. was delivered by

PIGEON J.—This is an appeal from a decision of the Court of Appeal of Quebec, disallowing the major part of the amount awarded to the appellant Charles Edouard Gravel by the judgment of the Superior Court against the City of St-Léonard ("the City").

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Appellant, a consulting engineer, claimed by his action fees for the preparation of plans for a waterworks and sewers system. This work was done following two resolutions of the City Council. The first, adopted on August 25, 1953, reads as follows:

[TRANSLATION] That the offer of services submitted to this meeting by Mr. Charles Ed. Gravel, consulting engineer, for the making of a preliminary study compris­ing the precise sites of buildings, streets etc., as well as a survey of the level of streets and other possible locations for the site of a sewers and waterworks system with an estimate and preliminary plan, be accepted, on the following conditions: that in the event of the construc­tion, in whole or in part, of the sewers and waterworks system, his services will be retained by the City at the rate of six per cent of the cost of the work completed. This rate includes delivery of detailed plans and specifi­cations, preparation of forms for tenders to be called, supervision of the work by visits during the execution of the work, and progressive estimates with certificates of the amounts to be paid to contractors; and in the event of acceptance of these conditions by the said Mr. Gravel, it is hereby agreed that the rate of six per cent will apply to the cost of the work completed in whole or in part. The Mayor and the Secretary-Treasurer are hereby authorized to sign for and on behalf of the city the agreement to be concluded, to give effect to this resolution.

The second resolution, adopted on November 30, 1957, after a preamble referring to the previ­ous resolution, provides for the following undertak­ing:

[TRANSLATION] That Charles Edouard Gravel, con­sulting engineer, with offices located at 3717 boulevard Lévesque, L'Abord-à-Plouffe, be requested to prepare complete plans of the sewers and waterworks system, paving and sidewalks within the territory of the City of Saint-Léonard-de-Port-Maurice, at the rate of three per cent (3%) for the plans, specifications and estimates and three per cent (3%) for partial supervision, the latter to be payable in proportion to the progress of the work.

On February 24, 1959, a new resolution was adopted in the following terms:

[TRANSLATION] That Mr. C. E. Gravel, consulting engineer, be hereby requested to produce all the plans, specifications and estimates prepared for the City of St-Léonard-de-Port-Maurice, in accordance with the resolution and authorization of the Secretary-Treasurer of the City, on or before March 3, 1959, as well as a

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detailed statement of the fees which are or may be due to him, and that he be and is hereby instructed to suspend all work until the Council has had the time to examine the whole and to give him new instructions, except as regards sewers and waterworks work now in progress.

Pursuant to this resolution, appellant completed the preparation of the plans, which were almost finished. When the City refused to pay the bill, both the small sum due for the plans of completed work and the large sum claimed for the plans of work not completed, an action was brought against it in the Superior Court.

An expert valuation made on the order of the trial judge fixed the value of appellant's work for plans of work not completed at $696,617.17. It is this sum which the Court of Appeal held was not recoverable, relying solely on s. 25 of the Quebec Municipal Commission Act, (Revised Statutes of Quebec 1941, c. 207). This is the second section in Division IV, the heading and the first two sections of which are as follows:

Approval of Loans by the Commission

24. Subject to the provisions of the second paragraph of this section, every loan contracted by a municipality or every renewal of a loan contracted by a municipality must, in order to bind such municipality, be approved by the Commission.

25. No promissory note given by a municipality, in payment of an account or other debt exceeding one hundred dollars, shall bind the municipality unless the issuing thereof shall have been approved by the Commission.

Every agreement whatsoever entered into by a municipality affecting its credit must, to bind such municipality, be approved by the Commission, except an agreement respecting ordinary administrative acts under which agreement the expenses incurred must be paid entirely out of the revenues of the then current year.

To contend that this section does not prevent appellant's action from succeeding, counsel relied essentially on an earlier decision of the Court of Appeal of Quebec, Ville de Sept-Îles v. Trépanier[3]. As in the present case, the claim was

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for fees for the preparation of plans for a sewers and waterworks system. At pages 959 and 960 one reads:

[TRANSLATION] The whole issue is thus the meaning of the words "affecting its credit". If used alone, they would perhaps have the meaning which defendant wishes to give them. However, s. 25 must be read with s. 26 of the Act, the first three paragraphs of which provide:

26. When a municipal corporation is concerned, the approval mentioned in section 24 or 25 is obtained upon application made by mere resolution and sub­mitted to the Commission:

(a) After the loan by-law has been approved by the electors who are property-owners, when such by-law is subject to such formality; or

(b) Immediately after the adoption of the procedure enacting the loan in other cases.

In my opinion, it is clear from this section that s. 25 applies only to municipal loan by-laws and not to expenses such as those authorized by the above-men­tioned resolutions.

To determine the validity of this reasoning, ref­erence must be made to the legislative history of ss. 24, 25 and 26 of the Quebec Municipal Com­mission Act. The first, like the heading of the Division, was part of the original enactment of 1932, 22 Geo. V, c. 56, except for the words "or every renewal of a loan contracted by a municipal­ity" added to the first paragraph in 1933, 23 Geo. V, c. 50, s. 1. The first paragraph of s. 25 was also added in 1933, as s. 24a, by the same Act, s. 2. The second paragraph of s. 25 was enacted in 1935, 25-26 Geo. V, c. 50, s. 2. However, it was the year before that s. 26 was given the form quoted above, by 24 Geo. V, c. 35, s. 1, replacing the words "the preceding section" at the beginning of the first paragraph by "section 24 or 24a" which became "section 24 or 25" in the 1941 revision.

It will thus be seen that s. 26 existed prior to the enactment of the second paragraph of s. 25, that paragraph not being added until a year later. Therefore, s. 26 cannot be relied on to restrict the scope of that paragraph which was enacted subse­quently and is the most recent expression of the will of the legislature. It cannot be deprived of any effect because all desirable changes were not made

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in the earlier wording of the following section. When what is now s. 26 was enacted, loans only were mentioned because this was all that was contemplated in the division in which it appeared. Later, however, the Legislature subjected promis­sory notes to the same requirements, notes being generally, although not necessarily, used for bor­rowing purposes. Later on yet, another provision was enacted which clearly contemplated something else than loans contracted by a municipality, namely, "every agreement whatsoever ... affect­ing its credit". It would obviously have been appro­priate to amend at the same time the section pertaining to the obtaining of the approval of the Commission, so as to take into account the fact that this legislation was no longer directed only at loans, but also at all agreements affecting a municipality's credit. This lapse in drafting cannot, however, nullify the intention of the legis­lature to make the provision applicable to all agreements affecting municipal credit, and not only to all loans.

If it was a question of interpreting the second paragraph of s. 25 enacted in 1935 so as to give it a meaning consistent with s. 26, much could be said in favour of appellant's submission; but to say that this paragraph does not apply to an agreement affecting a municipality's credit because this is not a loan is not to interpret the paragraph, it is to deprive it of any effect, and that does not appear to me to be possible. I note that the Revised Statutes of 1941 Act (5 Geo. VI, c. 15) enacts in s. 7:

7. The said Revised Statutes shall not be held to operate as new law, but shall be construed and have effect as a consolidation of the law which they replace.

Thus it appears to me that the Court of Appeal was not in error in refusing to follow the opinion expressed in Trépanier and in the judgments which followed it. As in Gingras y. General Motors Prod. of Canada[4], at p. 437, it does not appear to me that the circumstances here are similar to those which led this Court to hold in Ace Holdings Corporation v. The Montreal Catholic School

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Board[5], and Village de la Malbaie v. Boulianne[6], that a series of cases in the provincial courts was conclusive. Moreover, this is not a case in which the Court of Appeal followed the prior decisions, but one in which it overruled them.

What is now to be said of the 1965 Act, 13-14 Eliz II, c. 55, s. 6, by which there was inserted in the second paragraph of s. 25: "except in the case of an agreement obliging it to pay fees for profes­sional services ..."? In my view, it is not to be in any way taken into consideration, due to the rule against retrospective operation. The Legislature has the power to enact laws having a retroactive effect, including declaratory laws (see Cusson v. Robidoux[7]). However, this is not to be presumed. Section 50 of the Interpretation Act, R.S.Q. 1964, c. 1, bears it out in enacting:

50. No provision of law shall be declaratory or have a retroactive effect, by reason alone of its being enacted in the present tense.

When an act is not applicable because it is subsequent to the facts which gave rise to the action, nothing is to be made of it: M.F.F. Equities v. The Queens[8], at pp. 598-599. Legislative history may be used to interpret a statute because prior enactments may throw some light on the intention of the legislature in repealing, amending, replacing or adding to it. It is even possible, seeing that the Quebec Interpretation Act does not prohibit it, to consider judgments rendered before the adoption of a statute, when there is reason to believe that the legislator himself took them into consideration (see Notre-Dame Hospital v. Patry[9], at p. 394). The situation is completely different with respect to a statute subsequent in time to the facts which gave rise to the action. The construction of prior legislation is then exclusively a matter for the courts. In refraining from giving the new enactment retroactive or declaratory effect, the legisla­tor avoids expressing an opinion on the previous state of the law, leaving it to the courts.

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Moreover, in the instant case, how could it be concluded with any certainty from the 1965 amendment, that the legislature approved the Trépanier decision? Could it not be, on the con­trary, that while finding the result desirable it doubted that it was in keeping with the wording of the Act? All that can be said is that the legislature wanted this to be the meaning of the enactment, whether it felt a need to limit its scope or wanted to avoid any further controversy. It may also have taken into consideration the hardships which the application of the rule in s. 25 might create in practice for all contracts for professional services entered into by a municipality. These hardships are undeniable, but it was for the legislature, not the courts, to decide whether an exception to the requirement of prior approval by the Municipal Commission was to be made.

In the course of our consideration of the case, the question was raised whether s. 25 should be construed as applicable only to agreements which have an effect on the credit of the municipality in the sense of affecting its solvency. Since this ques­tion had not been argued at the hearing, a re-hear­ing was ordered by the Court. At this re-hearing our attention was directed to the following passage in the reasons of Montgomery J.A.:

Whatever may be said as to the first of the two resolu­tions, the second appears to me to be clearly covered by the second paragraph of sec. 25. This refers to "every agreement whatsoever entered into by a municipality affecting its credit" or, in the French version, "toute convention quelconque consentie par une municipalité engageant son crédit". These words are very broad, and I cannot see how it can be contended that an undertak­ing by a municipality to pay to an engineer 3% of the estimated cost of any works regarding which he may see fit to prepare plans is not an agreement affecting the credit of the municipality.

It is urged on behalf of Respondent that in the period before the resolution of 24th February, 1959, he did not in fact make any charge to the Town for plans other than those used for projects authorized by by-law, so that the Town's credit was not affected. This is, in my opinion, immaterial. Respondent does not suggest that by his conduct he renounced the right to claim a fee for plans before they were used, but if he did his claim for

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fees for such plans is clearly unfounded. If, on the contrary, as he now claims, he reserved the right to recover a fee for plans prepared but not used, then the resolution creating such a right in my opinion affected the credit of the Town.

In my opinion the word "affecting" cannot be interpreted in the context of s. 25 in the sense of "prejudicing", so as to limit the application of the provision to those cases where it could be shown that the undertaking, when it was effected, did in fact prejudice the municipality's credit. It is true that the word used in the English version can have that meaning. Black's Law Dictionary (3rd ed.) defines it as follows:

AFFECT. To act upon; influence; change; enlarge or abridge; often used in the sense of acting injuriously upon persons and things.

It is obvious, however, that we cannot consider the English version alone. Consideration must equally be given to the French version, in which the expression used is "engageant" its credit. "Engager" comes from "en" and "gage" and means (see Dictionnaire Robert, meanings 1 and 2) "mettre en gage, lier par une promesse, une convention". There is no basis in the French mean­ing of the word for limiting the scope of the expression to that which prejudices the credit of a municipality; it applies to everything that binds the latter. Since the word "affecting" in the English version may have that meaning, even if the other is frequent, it seems to me that this is the meaning that must be taken, it being the only one the French version can have. Counsel for the appellant was unable to refer us to any definition of the word "engager" that gives it a meaning corresponding to the last meaning given by Black's for "affect". I would point out that in Quebec Railway v. Vandry[10], at p. 674, the Privy Council likewise rejected a possible meaning of the English version that was incompatible with the French version of the Code.

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The exception contained in the second paragraph of s. 25 makes it clear that the general rule stated therein applies to all obligations for the payment of sums of money. The exception is set out in the following terms: "except an agreement respecting ordinary administrative acts under which agreement the expenses incurred must be paid entirely out of the revenues of the then cur-rent year". Deschênes J.A. made the following observations on this point:

[TRANSLATION] We must now ask ourselves whether, by thus retaining the services of respondent, appellant's municipal council was performing an "ordinary adminis­trative act" without "affecting the credit" of the City (s. 25 of c. 207).

Respondent, stating that he was acting in accordance with the resolution retaining him, P-2, prepared plans for work having a value of $27,207,934.41 and claimed a three per cent fee of $816,238.03.

In 1957-1958, the period which is of interest to us, appellant had some 2,000 inhabitants, approximately 600 of whom were property-owners.

In 1957 the municipal assessment was $2,092,436.00. In 1958 it was $2,338,000.00 (page 954).

According to Exhibit D-4 (Volume 10, page 606), appellant's budget for the same two years was as follows:

Year       Revenue         Expenditures                Surplus or deficit
1957   $ 48,684.14   $ 45,666.94                   $3,017.20 (surplus)

1958   $127,713.74  $132,088.09                  $4,374.35 (deficit)

In the face of these figures there is no argument that can assist appellant.

Before concluding, I wish to point out that counsel for the appellant, who relied in argument on the decision of this Court in Bernardin v. North Dufferin[11], admitted in reply that unjust enrichment did not arise in this case. There is therefore no need to consider our decision in Olivier v. Wottonville[12], on that point.

Not only did respondent not lodge a cross-appeal against the judgment condemning it to pay the fees due for plans of completed work, but the Court was informed at the hearing that a substantial

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additional sum had been paid on account of fees for plans of work completed after the institu­tion of these proceedings.

I would dismiss the appeal with costs.

Appeal dismissed with costs.

Solicitors for the appellant: Martineau, Walker, Allison, Beaulieu, MacKell & Clermont, Montreal.

Solicitor for the respondent: Alfred Tourigny, Montreal.