Entreprises Lafleur (1961) Ltée v. Commission scolaire Jérôme Le Royer, [1976] 2 SCR 101

Supreme Court of Canada

Entreprises Lafleur (1961) Ltée v. Commission scolaire Jérôme Le Royer, [1976] 2 S.C.R. 101

Date: 1975-03-07

Les Entreprises Lafleur (1961) Limitée Appellant;

and

Jérôme Le Royer School Commission Respondent in continuance of suit;

and

Attorney General of the Province of Quebec Respondent;

and

Eastern Development Corporation Appellant;

and

Registrar of Montreal Registry Division Mis en cause.

Eastern Development Corporation Appellant;

and

Jérôme Le Royer School Commission Respondent in continuance of suit;

and

Attorney General of the Province of Quebec Respondent;

and

Les Entreprises Lafleur (1961) Limitée Appellant;

and

General Trust of Canada Appellant mis en cause;

and

Registrar of Montreal Division Mis en cause.

Larissa Development Corporation Appellant;

and

Jérôme Le Royer School Commission Respondent;

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and

Attorney General of the Province of Quebec Intervenor;

and

Registrar of Montreal Registry Division Mis en cause.

1974: October 22 and 23; 1975: March 7.

Present: Laskin C.J. and Pigeon, Dickson, Beetz and de Grandpré JJ.

ON APPEAL FROM THE COURT OF QUEEN’S BENCH, PROVINCE OF QUEBEC

Expropriation—Prior possession—Discontinuance by expropriating party after transfer of the record to the Public Service Board—Dismissal of discontinuance set aside by Court of Appeal—Expropriated parties refused leave to appeal to the Supreme Court—Action by the expropriating party creating substantial rights in favour of the expropriated parties—Loss of complete title not necessary for this purpose—Rights which cannot be cancelled by the unilateral act of the expropriating party—Code of Civil Procedure, art. 784.

Eastern Development was owner of two immovables, one of which was sold to Les Entreprises Lafleur with a hypothec in favour of Eastern Development, and the other leased to Les Entreprises Lafleur by an emphyteutic lease. Larissa Development was also owner of an immovable. Respondent School Commission gave the owners concerned a notice of expropriation for these three immovables, and by motions, accompanied by deposits in the case of the first two immovables, it obtained by judgments of the Superior Court prior possession of these immovables and transmission of the records to the Public Service Board for compensation to be awarded. A few days before the date set by the Board for hearing the parties, respondent School Commission discontinued the expropriation. Appellant expropriated parties submitted motions to dismiss these discontinuances which were granted by the Superior Court. These decisions were reversed by. the Court of Appeal in majority judgments. Appellants’ motion for leave to appeal to this Court was refused. The School Commission then submitted a motion asking that the appeals be dismissed and quashed and it was ordered that the motion be referred to the Court, which would decide the case on the merits.

Held: The appeals should be allowed.

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The effect of the decision of the Court of Appeal was to terminate the expropriation proceedings and to finally divest appellants of rights that may belong to them under the terms of the notices of expropriation served on them. Since the amount in question in each of the appeals is in excess of $10,000 and since we are dealing with final judgments, the motion to quash should be denied.

This Court’s refusal to grant leave to appeal cannot be construed as a denial of the rights of appellants to appeal in the case at bar. After the recognition of the right of expropriation contained in each of the three cases, the School Commission took certain action which created supplementary rights in favour of the expropriated parties, rights which the expropriating party did not have the power to cancel without the consent of the expropriated parties. The latter need not have lost complete title in order to be holders of substantial rights, of which they cannot be divested by the unilateral act of the expropriating party. Article 784 of the Code of Civil Procedure does not set aside the general rules applicable to discontinuance in expropriation proceedings, but gives the expropriated party the right to demand the cancellation of the judgment of homologation and to claim damages when the expropriating party does not take the necessary action within thirty days to satisfy the judgment.

Gatineau Power Company v. Cross, [1929] S.C.R. 35; Hamel v. La Corporation d’Asbestos, [1967] S.C.R. 535, distinguished. Montreal Tramway Co. v. Creely, [1949] S.C.R. 197, referred to.

APPEALS from judgments of the Court of Queen’s Bench[1], Province of Quebec, reversing decisions of the Superior Court. Appeals allowed.

P.F. Vineberg, Q.C. and D. Miller, for Les Entreprises Lafleur.

Bernard Reis, for Larissa Development Corporation.

J.J. Croteau, for the Jérôme Le Royer School Commission.

J.C. Pothier, for the Attorney General of the Province of Quebec.

V. Bergeron, for General Trust of Canada.

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The judgment of the Court was delivered by

DE GRANDPRE J.—These five different appeals are the result of three notices of expropriation given by respondent in April 1970, and discontinued in November 1970, a few days before the date set by the Public Service Board to hear the parties concerning fixing of the various compensation awards.

All of these appeals really raise the same questions, and there is no need to deal with them separately. However, the facts in the Eastern Development Corporation and Les Entreprises Lafleur cases are somewhat different from the facts in the Larissa Development Corporation case, and they must therefore be stated separately.

Facts—Eastern Development and Entreprises Lafleur

Appellant Eastern Development was originally owner of two immovables which may be described as A and B.

Immovable A, the subject of cases Nos. 12754 and 12755 before the Court, was sold by Eastern Development to Lafleur in 1966. The deed of sale created a hypothec in favour of Eastern Development in the amount of $1,840,000.

Immovable B, the subject of appeals Nos. 12777 and 12778 before the Court, was leased by Eastern Development to Lafleur by an emphyteutic lease on June 10, 1966. This lease was for thirty years and stipulated a yearly rental of $37,346 with an increase of four per cent per annum after nine years, plus an undertaking by the tenant to improve the immovable by the expenditure of at least $350,000.

The principal facts relating to expropriation proceedings during 1970 are the following:

April 1—	notice of expropriation of immovables A and B by the School Commission;
April 17—	motions by the School Commission to take prior possession and deposits of $311,934 and $90,840 respectively;

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April 17—	motions to refer the records to the Public Service Board for compensation to be awarded;
April 23—	judgments by the Superior Court allowing these two groups of motions; judgments granting prior possession were duly registered against the two immovables;
April and May—various proceedings and judgments relating to disposition of the amounts filed with the notices of expropriation;
Sept. 23 and 24—filing with the Public Service Board of claims by appellants;
Oct. 22—	notice given to various parties by the Board that the hearing would be held on November 18;
Nov. 13—	discontinuance.

Facts—Larissa Development

The immovable in question in this case has an approximate area of 1,200,000 square feet. Here the relevant dates are as follows, again in 1970:

April 27—	notice of expropriation by the Commission;
April 30—	letter from appellant to the Commission counsel recognizing the right to expropriate but disputing the proposed amount of compensation;
May 11—	motion by the Commission to refer the record to the Public Service Board;
May 11—	motion by the Commission to take prior possession;
May 15—	judgments allowing these motions; judgment in the case of prior possession registered against the immovable;
Sept. 30—	claim by the expropriated party;
Oct. 22—	notice of hearing;
Nov. 13—	discontinuance.

* * *

From the foregoing it can be seen that, apart from certain differences in dates which are not pertinent, the procedure was the same in all cases, with one exception. In the Larissa case there was

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no deposit with the notice of expropriation, and consequently no distribution of money prior to discontinuance. However, I do not consider the last factor essential to disposition of the case. As I observed earlier, I am of the opinion that all the appeals can be dealt with together.

Following on the discontinuances filed by the School Commission on November 13, various motions to dismiss these discontinuances were submitted to the Superior Court and granted by it. The judgments of the latter were reversed by the Court of Appeal in majority decisions.

Appellants immediately inscribed an appeal to this Court and also through motions requested leave to appeal. This leave was denied on October 16, 1972, no reasons being given. By a motion on June 14, 1973, respondent School Commission asked that the appeals be dismissed and quashed, and on November 8, 1973, the Court held:

It is ordered that the motion to quash be referred to the Court who will hear the case on the merits.

The first question that arises, therefore, is one of jurisdiction under the Supreme Court Act, in particular s. 36.

In support of its motion to dismiss and to quash the appeal, the School Commission referred the Court to, inter alia, Gatineau Power Company v. Cross[2], and to Hamel v. La Corporation d’Asbestos[3].

In my view the case is governed more by Montreal Tramway Co. v. Creely[4]. I would draw particular attention to the following extract from the reasons of Rinfret C.J., at p. 199:

The question raised by the defendant (appellant) concerns the jurisdiction of the Court of King’s Bench (Appeal Side) to pass upon its motion for nonsuit; and, by the judgment appealed from, that Court has finally deprived the defendant (appellant) of its substantive right to have that matter determined.

In the case at bar, as in Creely, the effect of the decision of the Court of Appeal was to terminate

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the expropriation proceedings and to finally divest appellants of rights that may belong to them under the terms of the notices of expropriation served on them.

I should also say that this conclusion is to some extent confirmed by Hamel, since the latter decision takes care to note that at this stage of the proceedings there is no amount in question, appellant denying the right of expropriation itself. In the case at bar, appellants each recognized the right of expropriation, and from that point until the discontinuance it was purely and simply a matter of determining the quantum of the compensation.

This quantum is proven by various affidavits, and I shall briefly summarize the situation. In the Eastern Development and Entreprises Lafleur cases:

(1) the real value of the immovables is more than $10,000 in excess of the amount offered by the School Commission;

(2) accumulated taxes between April and November 1970 are in excess of $10,000;

(3) the rental value of the immovables is in excess of $10,000;

(4) interest on the hypothec between April and November 1970 is in excess of $10,000.

In the Larissa case, simple interest at the legal rate of five per cent, on the compensation of $560,000 offered by the School Commission in its notice of expropriation, is in excess of $10,000.

These various factors seem to me to justify the conclusion that the amount in question in each of the appeals is in excess of $10,000. In view of this conclusion and the fact that we are dealing here with final judgments, I am of the opinion that the motion to quash should be denied.

This conclusion is in no way modified by the fact that this Court has denied leave to appeal in each of the requests made to it. Such denial cannot be construed as a denial of the right of appellants to appeal in the case at bar.

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The merits of the question must now be considered. The discontinuance disputed by appellants reads as follows in each case (partial quotations):

[TRANSLATION] 2. It withdraws its expropriation and all proceedings contained in this record, with costs and fees for expert appraisement, if any;

3. It desists, requesting certification thereof, from the judgment against the expropriated party obtained by it in this case… and registered in the Montreal Registry Division … granting it prior possession of the expropriated immovable

…

Appellants submit that in a case of this kind no unilateral discontinuance is possible when the right of expropriation has been recognized, and judgments have intervened, moving the proceedings on towards fixing of the compensation, especially where, as in the case at bar, there has been a judgment granting prior possession of the immovables to the expropriating party. Appellants maintain that this body of facts confers rights on the expropriated parties which cannot be taken from them without their consent. These are the arguments which the Superior Court accepted and the majority of the Court of Appeal rejected. I should say at once that I would reinstate the judgment at first instance.

The right of expropriation which the law confers on certain agencies for the good of the public is an exorbitant right, the exercise of which must be accompanied by all the safeguards provided by the law. These safeguards are to be found principally in the Code of Civil Procedure, Book Five, Title II, Chapter III, a chapter which prescribes not only procedure but substantive rules as well. It is in this light that this group of articles must be read (773 to 797 inclusive).

Reading them we are necessarily led to the conclusion that any expropriation proceeding involves two stages:

(1) recognition, whether voluntary or judicial, of the right of expropriation;

(2) once such recognition is established, the determination of compensation.

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The first requirement, namely the right of expropriation, is contained in the following provisions:

(a) art. 774, which, it should be noted, refers to the right to acquire immovable property, and which provides in this regard that if mutual agreement cannot be reached on such acquisition “application will be made before the Superior Court of the district where the immoveable is situated, for recognition of the right of expropriation”;

(b) art. 776 provides that such an application before the Superior Court is made by the filing of the original of the notice of expropriation, and this original “is then introductive of suit”;

(c) under arts. 776 (final paragraph) and 777 this suit is either a proceeding by default or a contested action, the rules of which are those of any other action in the Superior Court;

(d) it is not until this right of expropriation has been determined, either because there is no contest or because the contest is dismissed, that fixing of the compensation can be proceeded with (art. 778).

It might be argued that this first stage of the expropriation proceeding constitutes a determination of rights, and that once completed a discontinuance of the notice of expropriation is no longer possible without obtaining the consent of the expropriated party.

However, it is not necessary to decide this point in the case at bar, since after the recognition of the right of expropriation contained in each of the three cases, the School Commission took certain action which created supplementary rights in favour of the expropriated parties, rights which the expropriating party no longer had the power to cancel without the consent of the expropriated parties.

In each of the cases indeed possession was taken in accordance with a judgment rendered by the Superior Court. As indicated in art. 789, such a judgment has considerable consequences:

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A judgment which grants prior possession gives to the expropriating party all the rights of the owner, subject to his obligation to satisfy the condemnation which may later be made against him.

Respondent submitted that this article does not have the effect of transferring title, since complete transfer only exists in conformity with the terms of arts. 786 and 787, to be found under the heading “Transfer of Title” in Section IV of the chapter under consideration. I am in agreement with respondent on this point, but appellants need not have lost complete title in order to be holders of substantial rights, of which they cannot be divested by the unilateral act of the expropriating party.

Respondent submitted that its position differs from that of the Crown, the rights and duties of which in expropriation cases are set out in Section VI (arts. 791 to 797 inclusive). In respondent’s submission these articles provide that

(a) the right of ownership is transferred to the Crown merely on filing of the notice of expropriation;

(b) notwithstanding such transfer, discontinuance is still possible.

It would follow that expropriating parties (such as respondent), which do not acquire the right of ownership merely by filing, cannot be placed in a more difficult position than that of the Crown.

To my mind this argument cuts both ways. I consider that, on the contrary, the legislator felt it necessary to provide the Crown with a much more extensive right of discontinuance than that conferred on other expropriating parties.

Respondent also argued that the wording of art. 784 unquestionably supports its case, since

The expropriating party cannot unilaterally desist from the judgment of homologation, but if he does not satisfy it within thirty days, the expropriated party may demand its cancellation, except as to costs, and may claim damages, if any.

That is not the construction I would place on this article, which is found in Section III, on “Indemnity”. In my opinion, all that the first part of this article does is to state the general rule on

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discontinuances when a judgment has been rendered (art. 476 C.C.P.), the positive part of art. 784 being the right granted to the expropriated party of demanding the cancellation of the judgment of homologation and claiming damages, when the expropriating party does not take the necessary action within thirty days to satisfy the judgment. I find no indication by the legislator in this provision that all rules applicable to discontinuance in expropriation proceedings must be set aside and replaced by those of art. 784. On the contrary I consider that, once again, there has been a reaffirmation of the general rules of discontinuance and the creation of a specific right in favour of the expropriated party.

I would therefore allow all the appeals with costs, but these should be limited to two groups, namely Eastern Development and Entreprises Lafleur, on the one hand, and Larissa on the other; these costs to include costs of the motion to quash.

Appeals allowed with costs.

Solicitors for Les Entreprises Lafleur (1961) Limitée: Notkim, Luterman & Schwartz, Montreal.

Solicitors for Eastern Development Corporation: Phillips & Vineberg, Montreal.

Solicitors for Jerôme Le Royer School Commission: Malo, Croteau, Larue, Cyr, Boudreault & Latulippe, Montreal.

Solicitors for the Attorney General of the Province of Quebec: Geoffrion & Prud’homme, Montreal.

Solicitors for General Trust of Canada: Decary, Guy, Vaillancourt, Bertrand, Bourgeois & Laurent: Montreal.

Solicitor for Larissa Development Corporation: Marcel Paquette, Montreal.