SUPREME COURT OF CANADA
Between:
Michel Marcotte
Appellant
and
City of Longueuil
Respondent
‑ and ‑
Attorney General of Ontario
Intervener
and between:
Usinage Pouliot Inc.
Appellant
and
City of Longueuil
Respondent
Official English Translation
Coram: McLachlin C.J. and Binnie, LeBel, Deschamps, Fish, Abella, Charron, Rothstein and Cromwell JJ.
| Reasons for Judgment: (paras. 1 to 44) Dissenting Reasons: (paras. 45 to 130) |
LeBel J. (Fish, Abella, Charron and Rothstein JJ. concurring) Deschamps J. (McLachlin C.J. and Binnie and Cromwell JJ. concurring) |
______________________________
Marcotte v. Longueuil (City), 2009 SCC 43, [2009] 3 S.C.R. 65
Michel Marcotte Appellant
v.
City of Longueuil Respondent
and
Attorney General of Ontario Intervener
‑ and -
Usinage Pouliot Inc. Appellant
v.
City of Longueuil Respondent
Indexed as: Marcotte v. Longueuil (City)
Neutral citation: 2009 SCC 43.
File Nos.: 32213, 32214.
2009: January 19; 2009: October 8.
Present: McLachlin C.J. and Binnie, LeBel, Deschamps, Fish, Abella, Charron, Rothstein and Cromwell JJ.
on appeal from the court of appeal for quebec
Civil procedure — Class action — Conditions for authorizing action — Applications for authorization to institute class actions in order to seek declarations that municipal by‑laws imposing property and business taxes are null and claim refund of taxes paid — Whether class actions should be authorized — Code of Civil Procedure, R.S.Q., c. C‑25, arts. 4.2, 1003.
To alleviate the financial shock the municipal amalgamations of 2000 might entail, the National Assembly established a scheme to gradually equalize the tax burdens of the amalgamated sectors over a period of 20 years. The Charter of Ville de Longueuil capped yearly increases in the tax burden of each sector of the new City of Longueuil at 5%, but did not establish a direct ceiling for the tax imposed on each unit of assessment. The Charter provided for a similar sector‑by‑sector ceiling on revenues derived from the business tax imposed on businesses. In 2006, four of the amalgamated municipalities were reconstituted and separated from the territory of the City of Longueuil. Two ratepayers, M and UP, who were dissatisfied with the assessment of their tax burdens before the demerger of their respective sectors, applied separately for authorization to institute class actions to quash the municipal by‑laws imposing property taxes and the business tax for 2003, 2004 and 2005 in four sectors of the municipality and obtain a refund, in respect of 2005, of the taxes that had been paid by the ratepayers covered by the proposed actions. They also contested resolutions of the municipal council related to those by‑laws. The Quebec Superior Court and the Quebec Court of Appeal denied them authorization on the basis that even though M and UP had established prima facie cases, the Quebec Court of Appeal had consistently held that the class action could not be used to challenge the validity of a municipal by‑law. Since the result of an individual action in nullity would apply in respect of all ratepayers, if such an action was successful, the declaration of nullity would achieve the desired result in respect of all ratepayers without the need for a class action.
Held (McLachlin C.J. and Binnie, Deschamps and Cromwell JJ. dissenting): The appeals should be dismissed.
Per LeBel, Fish, Abella, Charron and Rothstein JJ.: In light of art. 1003 C.C.P., it was not open to M and UP to institute class actions in order to have the municipal by‑laws declared to be null and to recover payments made under them. It is undisputed that there are common questions (art. 1003(a)) and that the representatives are qualified to represent the groups (art. 1003(d)), but the existence of a prima facie case (art. 1003(b)) and the composition of the groups (art. 1003(c)), having regard to the nature of the conclusions being sought, are problematic. [14] [23]
Because of the way they are worded, the conclusions being sought are unenforceable as regards the city’s obligation to refund. Although a declaration of nullity would apply in respect of all citizens and ratepayers in the municipality in question, the quashing of the by‑laws would not result in a right to have the taxes refunded, as it would not immediately give rise to liquid and exigible claims. In light of the taxation and budgetary system governing municipalities such as the city, the declarations of nullity would entitle the members of the groups to a recalculation of their property or business taxes. Only such a recalculation would give rise to a liquid and exigible claim, which would cause prescription to start running in respect of an action for restitution. The proposed class actions would thus be of no assistance in interrupting prescription, since prescription has not yet started to run. Furthermore, the requests that all property and business taxes paid in the four sectors covered by the proposed class actions be refunded do not appear to be compatible with the principles of the Civil Code of Quebec governing the restitution of payments not due and the restitution of prestations. Whereas M and UP received municipal services throughout 2003, 2004 and 2005, the dispute over the calculation of their taxes concerns only a portion of what they paid. It is therefore unlikely that the amount of their claim would correspond to the amount they are seeking. Given this legal framework and this context, the conclusion being sought does not meet the prima facie case requirement of art. 1003(b) C.C.P. [26] [28] [33‑36] [39]
The action in nullity also gives rise to difficulties related to the operation of certain procedural rules governing the establishment of and changes to the group covered by a class action. Thus, because of the fact that such a declaration would apply in respect of all ratepayers, members of the group would not be able to withdraw effectively from the action in nullity. This is contrary to the rules respecting the institution and conduct of class actions. [40]
Finally, the class action is not an appropriate procedure for seeking to quash a municipal by‑law. Although the actions M and UP wish to institute fall undeniably within the ambit of art. 33 C.C.P., other causes of nullity, such as formal defects and irregularities, would instead fall within the framework of annulment proceedings over which the Superior Court is granted jurisdiction in statutes relating to municipalities. Recourse to the class action in such situations could hamper the conduct of proceedings that are in principle simple and quick, and would hardly be consistent with the principle of proportionality set out in art. 4.2 C.C.P., according to which litigation must be consistent with the principles of good faith and of balance between litigants and must not result in an abuse of the public service provided by the institutions of the civil justice system. [27] [41] [43]
Per McLachlin C.J. and Binnie, Deschamps and Cromwell JJ. (dissenting): The application of art. 4.2 C.C.P. to the conditions for authorizing a class action does not support the conclusion that a class action would in this case be inconsistent with the principle of proportionality. Since the proposed actions meet all the conditions set out in the Code of Civil Procedure, they should have been authorized. [130]
Article 4.2 C.C.P. on the principle of proportionality does not supplement the criteria for authorizing a class action set out in art. 1003 C.C.P. and therefore does not confer on the court a discretion separate from the one flowing from the latter provision. Proportionality is a guiding principle of civil procedure that cannot be applied independently. The purpose of art. 4.2 C.C.P. is to reinforce the authority of the judge as case manager. The effect of the principle of proportionality on art. 1003 C.C.P. is to give concrete expression to and to reinforce the discretion judges are already recognized as having when reviewing each of the four conditions for authorizing a class action. The enactment of art. 4.2 C.C.P. did not have the effect of requiring applicants for authorization to show that the class action would be the preferable procedure for resolving common issues. The effect of requiring applicants to prove this would be to limit access to the class action. [63‑67] [81] [84‑85]
In this case, a thorough analysis by the courts below of the four conditions for authorizing a class action was required. The actions easily meet the similar questions requirement of art. 1003(a), and this is not a case in which a judge should exercise his or her discretion to decide whether to authorize or refuse the actions. What is in issue for all the members relates to the city’s compliance with the ceiling on increases in the tax burden and the business tax. The same by‑laws are in issue for all members of the groups. The questions of law are therefore identical. The only difference in M’s appeal lies in the factual demonstration based on the specific figures for each of the four sectors. Moreover, the calculations are the same for every ratepayer in a given sector. At stake for all the members is the right to recover taxes paid. [85] [89]
The claims of M and UP have a “good colour of right” as required by art. 1003(b) C.C.P. This is, prima facie, a case of excess of jurisdiction in which it is alleged that the exercise of taxing authority was inconsistent with the Charter of Ville de Longueuil. The information that has been provided is, prima facie, capable of supporting an inference that the 5% ceiling on yearly increases in the tax burden and in the business tax was exceeded. As for the impugned resolutions, they identify specific amounts rather than prescribing, as required by s. 87.5 of the Charter, rules for calculating the part of the tax increase resulting from the constitution of the city. Moreover, the remedy — a tax refund — sought by M and UP represents an application of the general rule on quashing an administrative act. The amount paid by each ratepayer would be easy to determine. It would be a liquid amount whose exigibility would hinge solely on an order of the court declaring the administrative act to be null. If a plaintiff contends that a public body has acted contrary to an enabling statute, the court cannot dismiss the action on the basis that the conclusions sought would have dire consequences. To hold that the courts have such a discretion would amount to granting immunity to municipalities, which would be inconsistent with the principle of the division of powers. Finally, the question whether the action for restitution is prescribed in respect of 2003 and 2004 requires an assessment of the facts, and it would be unwise to answer it at the stage of the application for authorization. The trial judge will be able, upon application, to reconsider this question. [94‑103]
Regarding art. 1003(c) C.C.P., no explanation has been given as to why it might be more practicable to pursue the claim for restitution — which is common to all the members — by mandate or by joinder. It is incorrect to characterize the action as a simple request to quash the by‑law and to state that bringing a class action would be pointless because the judgment would have effect with regard to everyone. It is true that, acting individually, M and UP might obtain declarations of nullity that would apply in respect of all ratepayers, but if their actions for the recovery of taxes were successful, only M and UP would benefit from orders to refund taxes. The actions in restitution of the other ratepayers could be prescribed even before a final judgment was rendered in the individual actions of M and UP. Article 2900 C.C.Q. on the interruption of prescription does not apply to an action for the recovery of municipal taxes, because the possible claim of the ratepayers is not indivisible and each ratepayer has an individual and distinct obligation to the city to pay his or her own taxes. Finally, there is no requirement in Quebec law that the members of a class action group not have conflicting interests. In Quebec, members with divergent interests can ask to be excluded from the action: arts. 1005 to 1007 C.C.P. In the cases at bar, it is clear that it would be far more practicable to proceed by way of class actions than by way of individual proceedings. The application of the principle of proportionality here enhances the usefulness of the class action, which clearly facilitates access to justice. [110] [115‑116] [121] [124] [127]
As for the condition provided for in art. 1003(d) C.C.P., M and UP have shown that they are in a position to represent the members of their respective groups adequately. [128]
Cases Cited
By LeBel J.
Applied: Bouchard v. Agropur Coopérative, 2006 QCCA 1342, [2006] R.J.Q. 2349; Francœur v. Municipalité régionale de comté d’Acton, [1985] R.D.J. 511; Comité de citoyens et d’action municipale de St‑Césaire v. Ville de St‑Césaire, [1986] R.J.Q. 1061; Gravel v. Corporation municipale de la paroisse de La Plaine, [1988] R.D.J. 60; Vena v. Montréal (Ville), [2002] J.Q. no 4807 (QL); referred to: Breslaw v. Montréal (City), 2009 SCC 44, [2009] 3 S.C.R. 131; Lac d’Amiante du Québec Ltée v. 2858‑0702 Québec Inc., 2001 SCC 51, [2001] 2 S.C.R. 743; Nault v. Canadian Consumer Co., [1981] 1 S.C.R. 553; Comité régional des usagers des transports en commun de Québec v. Quebec Urban Community Transit Commission, [1981] 1 S.C.R. 424; Comité d’environnement de La Baie Inc. v. Société d’électrolyse et de chimie Alcan Ltée, [1990] R.J.Q. 655; Château v. Placements Germarich Inc., [1990] R.D.J. 625; Tremaine v. A.H. Robins Canada Inc., [1990] R.D.J. 500; Thompson v. Masson, [1993] R.J.Q. 69; Pharmascience Inc. v. Option Consommateurs, 2005 QCCA 437, [2005] R.J.Q. 1367; Robertson v. City of Montreal (1915), 52 S.C.R. 30; Corporation du village de Deschênes v. Loveys, [1936] S.C.R. 351; Guimond v. Quebec (Attorney General), [1996] 3 S.C.R. 347; Abel Skiver Farm Corp. v. Town of Sainte‑Foy, [1983] 1 S.C.R. 403; Doré v. Verdun (City), [1997] 2 S.C.R. 862; Québec (Sous‑ministre du Revenu) v. B.D., [2002] R.J.Q. 54; Amusements St‑Gervais inc. v. Legault, [2000] J.Q. no 687 (QL); Immeubles Port Louis Ltée v. Lafontaine (Village), [1991] 1 S.C.R. 326.
By Deschamps J. (dissenting)
Francœur v. Municipalité régionale de comté d’Acton, [1985] R.D.J. 511; Comité de citoyens et d’action municipale de St‑Césaire v. Ville de St‑Césaire, [1986] R.J.Q. 1061; Gravel v. Corporation municipale de la paroisse de La Plaine, [1988] R.D.J. 60; Abel Skiver Farm Corp. v. Town of Sainte‑Foy, [1983] 1 S.C.R. 403; Kingstreet Investments Ltd. v. New Brunswick (Finance), 2007 SCC 1, [2007] 1 S.C.R. 3; Guimond v. Quebec (Attorney General), [1996] 3 S.C.R. 347; Boutique Linen Chest (Phase II) Inc. v. Wise (1997), 80 C.P.R. (3d) 540; Lownds v. Home Office, [2002] EWCA Civ 365, [2002] 4 All E.R. 775; Rogers v. Merthyr Tydfil County Borough Council, [2006] EWCA Civ 1134, [2007] 1 All E.R. 354; Callery v. Gray (Nos 1 and 2), [2002] UKHL 28, [2002] 3 All E.R. 417; Hashtroodi v. Hancock, [2004] EWCA Civ 652, [2004] 3 All E.R. 530; Leigh v. Michelin Tyre plc, [2003] EWCA Civ 1766, [2004] 2 All E.R. 175; Totol Vision Enterprises Inc. v. 689720 B.C. Ltd., 2006 BCSC 639, [2006] B.C.J. No. 925 (QL); Roy v. Boivin Carrier, 2006 QCCS 2663, [2006] J.Q. no 4679 (QL); Quesnel v. KPMG, s.r.l., 2007 QCCS 3990, [2007] J.Q. no 9465 (QL); Canada (Procureur général) v. Malcolm Média inc. (Expour 2000), 2007 QCCS 2427, [2007] J.Q. no 5098 (QL); Harmegnies v. Toyota Canada inc., 2008 QCCA 380, [2008] J.Q. no 1446 (QL); Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46, [2001] 2 S.C.R. 534; Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158; Rumley v. British Columbia, 2001 SCC 69, [2001] 3 S.C.R. 184; Gelmini v. Procureur général du Québec, [1982] C.A. 560; Bouchard v. Agropur Coopérative, 2006 QCCA 1342, [2006] R.J.Q. 2349; Lallier v. Volkswagen Canada Inc., 2007 QCCA 920, [2007] R.J.Q. 1490; Brito v. Pfizer Canada inc., 2008 QCCS 2231, [2008] R.J.Q. 1420; Option Consommateurs v. Infineon Technologies AG, 2008 QCCS 2781, [2008] R.J.Q. 1694; Comité régional des usagers des transports en commun de Québec v. Quebec Urban Community Transit Commission, [1981] 1 S.C.R. 424; Berdah v. Nolisair International Inc., [1991] R.D.J. 417; Lasalle v. Kaplan, [1988] R.D.J. 112; Desmeules v. Hydro‑Québec, [1987] R.J.Q. 428; Immeubles Port Louis Ltée v. Lafontaine (Village), [1991] 1 S.C.R. 326; Beauchamp v. Cité d’Outremont, [1970] C.A. 286; York Condominium Corp. No. 148 v. Singular Investments Ltd. (1977), 16 O.R. (2d) 31; Butler v. Regional Assessment Commissioner, Assessment Region No. 9 (1982), 39 O.R. (2d) 365; Dell Computer Corp. v. Union des consommateurs, 2007 SCC 34, [2007] 2 S.C.R. 801; Bisaillon v. Concordia University, 2006 SCC 19, [2006] 1 S.C.R. 666; Gosselin v. Procureur général du Québec, [1986] SOQUIJ AZ-87021083; Canada (Attorney General) v. Hislop, 2007 SCC 10, [2007] 1 S.C.R. 429.
Statutes and Regulations Cited
Act respecting municipal taxation, R.S.Q., c. F‑2.1, s. 172.
Act respecting the consultation of citizens with respect to the territorial reorganization of certain municipalities, S.Q. 2003, c. 14.
Act to reform the municipal territorial organization of the metropolitan regions of Montréal, Québec and the Outaouais, S.Q. 2000, c. 56, Schedule III, s. 3.
Charter of Ville de Longueuil, R.S.Q., c. C‑11.3, ss. 86, 86.1, 87.1, 87.2, 87.5, 135.
Cities and Towns Act, R.S.Q., c. C‑19, ss. 397, 474, 474.1, 474.2, 474.3, 586, 592, 595.
Civil Code of Québec, S.Q. 1991, c. 64, arts. 1491, 1492, 1519, 1520, 1522, 1699, 2900, 2903, 2908, 2922, 2925.
Class Proceedings Act, 1992, S.O. 1992, c. 6, s. 5(1).
Code of Civil Procedure, R.S.Q., c. C‑25, arts. 4.1, 4.2, 33, 59, 67, 165(4), 199, 397, 509, 999, 1003, 1005‑1007.
Municipal Code of Québec, R.S.Q., c. C‑27.1, arts. 689, 690.
Supreme Court Rules, B.C. Reg. 221/90, r. 68.
Authors Cited
Baudouin, Jean‑Louis, et Pierre‑Gabriel Jobin. Les obligations, 6e éd. par Pierre‑Gabriel Jobin avec la collaboration de Nathalie Vézina. Cowansville, Qué.: Yvon Blais, 2005.
Chamberland, Luc. “La règle de proportionnalité: à la recherche de l’équilibre entre les parties?”, dans Service de la formation continue du Barreau du Québec, vol. 242, La réforme du Code de procédure civile, trois ans plus tard. Cowansville, Qué.: Yvon Blais, 2006, 1.
Crerar, David A. “The Resitutionary Class Action: Canadian Class Proceedings Legislation as a Vehicle for the Restitution of Unlawfully Demanded Payments, Ultra Vires Taxes, and Other Unjust Enrichments” (1998), 56 U.T. Fac. L. Rev. 47.
David, Éric McDevitt. “La règle de proportionnalité de l’article 4.2 C.p.c. en matière de recours collectif — Premières interprétations jurisprudentielles”, dans Service de la formation continue du Barreau du Québec, Développements récents en recours collectifs. Cowansville, Qué.: Yvon Blais, 2007, 315.
Delaney‑Beausoleil, Kathleen. “Le recours collectif”, dans Denis Ferland et Benoît Emery, dir., Précis de procédure civile du Québec, 4e éd., vol. 2. Cowansville, Qué.: Yvon Blais, 2003.
Dennis, Craig P. “Proportionality: A More Effective Tool”. Paper prepared for the Continuing Legal Education Society of British Columbia conference entitled “Rule 68” held September 29, 2005 (online: http://www.bcjusticereview.org/working_groups/civil_justice/cle_paper_09_29_05.pdf).
Durnford, John W. “Some Aspects of the Suspension and of the Starting Point of Prescription”, [1963] Thémis 245.
England. Final Report to the Lord Chancellor on the civil justice system in England and Wales. Access to Justice. London: The Stationery Office, 1996.
Faribault, Paul. Les recours de contrôle judiciaire, vol. 1. Cowansville, Qué.: Yvon Blais, 2001.
Finn, Shaun. “In a Class All its Own: The Advent of the Modern Class Action and its Changing Legal and Social Mission” (2005), 2 Can. Class Action Rev. 333.
Hétu, Jean, et Yvon Duplessis. Droit municipal — Principes généraux et contentieux, 2e éd., vol. 1. Brossard, Qué.: Publications CCH, 2002 (feuilles mobiles mises à jour 2009, envoi 12).
Jutras, Daniel. “À propos de l’opportunité du recours collectif”, dans Colloque sur les recours collectifs. Montréal: Association du Barreau canadien — Division Québec, 2007, 7.
L’Heureux, Jacques. “La fiscalité locale québécoise peut‑elle remplir ses promesses?”, dans Rapport général de synthèse du Colloque de l'Association québécoise de droit comparé, Dans la foulée des réformes municipales, le 20 avril 2001 (en ligne: http://aqdc.qc.ca/colloque_2001_04_20/J.L’Heureux.htm).
Latendresse, Anne. “La réforme municipale et la participation publique aux affaires urbaines montréalaises: Rupture ou continuité”, dans Bernard Jouve et Philip Booth, dir., Démocraties métropolitaines: Transformations de l’État et politiques urbaines au Canada, en France et en Grande‑Bretagne. Sainte‑Foy: Presses de l’Université du Québec, 2004, 155.
Martineau, Pierre. La prescription. Montréal: Presses de l’Université de Montréal, 1977.
Morissette, Yves‑Marie. “Gestion d’instance, proportionnalité et preuve civile: état provisoire des questions” (2009), 50 C. de D. 381.
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Québec. Assemblée nationale. Journal des débats, vol. 37, no 31, 2e sess., 36e lég., 1er juin 2001, p. 1818.
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APPEALS from two judgments of the Quebec Court of Appeal (Brossard, Rochon and Dufresne JJ.A.), 2007 QCCA 866, [2007] R.J.Q. 1467, [2007] J.Q. no 6258 (QL), 2007 CarswellQue 5318, and 2007 QCCA 867, [2007] J.Q. no 6259 (QL), affirming decisions by Hébert J., 2006 QCCS 6516, [2006] J.Q. no 15494 (QL), 2006 CarswellQue 12027, and 2006 QCCS 6517, [2006] J.Q. no 15495 (QL), 2006 CarswellQue 12030. Appeals dismissed, McLachlin C.J. and Binnie, Deschamps and Cromwell JJ. dissenting.
Marie Audren and Emmanuelle Rolland, for the appellants.
Nicole Gibeau and Louis Bouchart d’Orval, for the respondent.
Sara Blake and Lise Favreau, for the intervener.
English version of the judgment of LeBel, Fish, Abella, Charron and Rothstein JJ. delivered by
LeBel J. —
I. Introduction
[1] The municipal reorganization process undertaken by the Quebec government in several regions of the province in the early 2000s generated intense political controversy. It affected the entire greater Montréal area. Cities on Montréal’s South Shore were merged into a large agglomeration, the new City of Longueuil, which took its name from one of the amalgamated municipalities. A few years later, some of those municipalities were reconstituted and regained their autonomy. The drafting of a legal framework for the amalgamations and dissolutions no doubt taxed the imagination of lawmakers as they attempted to uphold the principles of equality in taxation between and tax fairness for the ratepayers affected by these processes.
[2] Dissatisfied with the assessment of their tax burdens following the creation of the new city, ratepayers of two sectors of the municipality, one a citizen, Mr. Marcotte, and the other a business corporation, Usinage Pouliot Inc., applied separately for authorization to institute class actions to quash the municipal by‑laws imposing property taxes and the business tax in four sectors of the City of Longueuil. These sectors corresponded to the territories of the four amalgamated cities that subsequently regained their autonomy. The Quebec Superior Court and the Quebec Court of Appeal denied the appellants the authorization they sought. The appeals against those judgments challenge the interpretation and application of the conditions for authorizing class actions under Quebec’s Code of Civil Procedure, R.S.Q., c. C‑25 (“C.C.P.”). In my opinion, for the reasons that follow, the denial of authorization was warranted and reflected a correct interpretation of the relevant provisions of the Code of Civil Procedure. In reasons released concurrently with these ones, in Breslaw v. Montréal (City), 2009 SCC 44, [2009] 3 S.C.R. 131, another appeal that relates to municipal amalgamations on the island of Montréal, I analyse a similar legal situation and reach the same conclusion.
II. Origins of the Cases
[3] To properly understand the issues and the nature of the proceeding before this Court, it is necessary to consider the origin thereof. To this end, I will pay particular attention to the statutory framework applicable to these cases.
[4] As part of the process of municipal amalgamations begun by the Quebec government in the early 2000s, nine municipalities on Montréal’s South Shore were amalgamated to form a new city, Ville de Longueuil, which adopted the name of one of the amalgamated cities (An Act to reform the municipal territorial organization of the metropolitan regions of Montréal, Québec and the Outaouais, S.Q. 2000, c. 56, Schedule III, s. 3).
[5] One of the main difficulties the legislature had to overcome was to achieve tax fairness for all the constituent parts of the new municipality and to alleviate the financial shock the amalgamation might entail. Each municipality had set its own tax rates in accordance with the legislation applicable to municipal taxation in Quebec. The legislature aimed to achieve equality in tax burdens among the residents of the amalgamated cities. But it was possible that the pursuit of this objective would lead to sudden and perhaps significant changes in tax rates in some of the new city’s sectors. The Quebec National Assembly accordingly established a scheme to gradually equalize the sectors’ tax burdens over a period of 20 years, the implementation of which gave rise to the disputes in these cases.
[6] The Charter of Ville de Longueuil, R.S.Q., c. C‑11.3, provided that this municipality was subject to the Cities and Towns Act, R.S.Q., c. C‑19 (“C.T.A.”). In s. 86 of the Charter, the amalgamated municipalities were designated as sectors of the new municipality. Section 86.1 set out the principle of equality in general property tax rates among the city’s sectors. But the application of this principle was limited by a series of provisions in the Charter that would phase it in over a period of 20 years. Thus, s. 87.1 capped annual increases in a sector’s tax burden at 5%:
87.1. The city may, for a fiscal year, fix any general property tax rate in such manner that, in relation to the preceding fiscal year, the increase in the tax burden borne by the aggregate of the units of assessment situated in a sector and in respect of which all or part of the rate applies is not greater than 5%.
. . .
[7] As can be seen, this provision placed a ceiling on increases in the collective tax burden of all units of assessment in a sector. It did not, however, establish a direct ceiling for the tax imposed on each individual unit.
[8] Section 87.2 provided for a similar sector‑by‑sector ceiling on revenues derived from the business tax imposed on businesses established in each sector:
87.2. The city may, for a fiscal year, fix the rate of the business tax in such manner that, in relation to the preceding fiscal year, the increase in the revenues derived from that tax in respect of all the business establishments situated in a sector is not greater than 5%.
. . .
[9] These provisions applied to the city’s nine sectors until 2006. As of January 1, 2006, four of the amalgamated municipalities were reconstituted and separated from the city’s territory. The respondent remained an amalgamated municipality whose territory consisted of a portion of the territory that had been attributed to it in 2002. At the same time, it became the “central” city of the urban agglomeration of Longueuil, which also included the four “demerged” sectors.
[10] The disputes before the Court arise from the application of ss. 87.1 and 87.2 of the Charter of Ville de Longueuil during the period prior to the partial dissolution of the city. The appellant Marcotte owned property in the Saint‑Lambert sector. As a property owner, he was required to pay the general property tax. The appellant Usinage Pouliot operated a business in the Saint‑Bruno‑de‑Montarville sector and was required to pay the business tax. Mr. Marcotte contends that increases in the general property tax burden crashed through the 5% ceiling in the sectors of Saint‑Lambert, Brossard, Saint‑Bruno‑de‑Montarville and Boucherville in the 2003, 2004 and 2005 taxation years. According to Usinage Pouliot, the 5% ceiling on the business tax was also exceeded in the same four sectors.
[11] The appellants submit that because the 5% ceiling was exceeded, the by‑laws imposing the taxes in issue for 2003, 2004 and 2005 were null. They allege that the respondent acted unlawfully, in a manner contrary to the legal framework for their taxation powers, and that the taxes paid by ratepayers had accordingly been collected unlawfully, without the appropriate statutory authority. On this basis, the appellants filed motions for authorization to institute class actions in order to have the municipal by‑laws imposing the property tax and the business tax in the four sectors quashed and in order to have the respondent refund amounts in respect of those taxes that had been paid by the ratepayers covered by the proposed class actions. The respondent contested the motions.
III. Judicial History
A. Quebec Superior Court (2006 QCCS 6516, [2006] J.Q. no 15494 (QL), and 2006 QCCS 6517, [2006] J.Q. no 15495 (QL))
[12] In both cases, Hébert J. first rejected an initial argument raised by the city that the facts alleged did not justify the conclusions sought. In his opinion, the applicants had established prima facie cases. But he dismissed the application for authorization on another basis: that class actions were inappropriate in these cases. He held that according to well‑settled Quebec case law, the class action is not available to a litigant seeking to have a municipal by‑law quashed and to recover taxes paid under it.
B. Quebec Court of Appeal, Brossard, Rochon and Dufresne JJ.A. (2007 QCCA 866, [2007] R.J.Q. 1467, and 2007 QCCA 867, [2007] J.Q. no 6259 (QL))
[13] Rochon J.A., writing for a unanimous Court of Appeal, dismissed the appeals of Mr. Marcotte and Usinage Pouliot. He agreed with the judge at first instance that the appellants had established prima facie cases, but he noted that the Quebec Court of Appeal had consistently held since 1985 that the class action could not be used to challenge the validity of a municipal by‑law (para. 14 R.J.Q.). The result of an individual action in nullity would apply in respect of all ratepayers. If such an action was successful, the declaration of nullity would achieve the desired result in respect of all ratepayers without the need for a class action (para. 21 R.J.Q.). In Rochon J.A.’s view, the applicant could not, in the circumstances, meet the condition set out in art. 1003(c) C.C.P., because to combine individual actions would not be “difficult or impracticable” in the words of that provision, but would instead be pointless (para. 23 R.J.Q.). Rochon J.A. also referred to the opinion expressed by his colleague Pelletier J.A. in Bouchard v. Agropur Coopérative, 2006 QCCA 1342, [2006] R.J.Q. 2349, at paras. 64‑68, that in addition to applying the conditions for admissibility set out in art. 1003 C.C.P., a court hearing a motion for authorization retains a residual discretion to reject an inappropriate class action (para. 22 R.J.Q.). Finally, he discussed difficulties related to the prescriptive period applicable to the right to a refund of the taxes should the by‑law imposing them be quashed. Despite the problems in applying the three‑year prescriptive period to an action to recover taxes, he seemed to think that one could be brought in time. However, he declined to rule on this aspect of the cases. He concluded that declarations of nullity would not make it possible to establish the amounts owed to ratepayers. In his opinion, how to determine the method for establishing the refund amounts remained an open question. Rochon J.A. adopted this reasoning in both Marcotte and Usinage Pouliot.
IV. Analysis
A. Issues
[14] In these appeals, this Court must consider issues related to the possibility of authorizing class actions under Quebec’s Code of Civil Procedure in areas originally associated with administrative law, and the effect of doing so. The Court must decide whether, in light of art. 1003 C.C.P., it is open to the appellants to institute class actions in order to have municipal by‑laws imposing property and business taxes declared to be null, and to recover payments made under those by‑laws.
[15] According to the appellants, if the conditions set out in art. 1003 for authorizing a class action had been applied properly, the Superior Court would have been justified in granting the authorizations. Any other interpretation would confer on the judge hearing a motion for authorization a discretion to assess the appropriateness of the action that is not provided for in the Code of Civil Procedure. The appellants add that the class action would be the only way to effectively protect the ratepayers’ right to a refund of the unlawfully imposed municipal taxes and to shield their actions for recovery from prescription.
[16] The city submits that the proposed actions do not meet the conditions for authorization set out in art. 1003. The respondent adds that, in any event, a court hearing a motion for authorization has a duty, under the Quebec rules of civil procedure, to determine whether a class action is in fact appropriate. A class action to quash a municipal by‑law would be pointless, as the Quebec Court of Appeal has consistently held. In the alternative, the city once again raises two arguments that the Superior Court and the Court of Appeal have already rejected: that the actions are prescribed and that they lack a sufficient legal basis. Finally, the city submits that even if the Court were to accept the argument that the by‑laws are null, this would not create an obligation to pay back the taxes. Rather, it would lead to a review of the city’s budgets, the adjustment of the tax burdens of the various sectors and the imposition of new taxes. The amount of the new taxes and of the city’s repayment obligations would not be known until the completion of that process.
[17] As is clear from these opposing arguments, the first issue raised by these appeals relates to the interpretation and application of the conditions governing the prior authorization of class actions by the Superior Court. It will therefore be necessary to review the conditions for authorization set out in the Code of Civil Procedure and then to determine whether they have been interpreted and applied correctly. This review will afford an opportunity to comment on decisions in which the Quebec Court of Appeal has held that class actions cannot be brought to quash municipal by‑laws. This will lead to consideration of the possibility of finding that the taxes can be recovered should the by‑laws in issue be declared to be null. For this purpose, it will be necessary to assess the consequences of such a declaration and to determine whether declaring the by‑laws to be null might lead to immediately enforceable conclusions for recovery of the taxes. This will require a review of the application of the rules of the Civil Code of Québec, S.Q. 1991, c. 64 (“C.C.Q.”), respecting the prescription of actions for restitution.
B. Statutory Framework for Class Actions and Conditions for Bringing Such Actions in the Quebec Law of Civil Procedure
[18] Quebec civil procedure is primarily statute‑based (Lac d’Amiante du Québec Ltée v. 2858‑0702 Québec Inc., 2001 SCC 51, [2001] 2 S.C.R. 743, at paras. 35‑38). The procedure for class actions is no exception. The Code of Civil Procedure sets out the conditions for authorizing such proceedings and the principles to be applied in conducting them. I will now review some of the components of the statutory framework for class actions.
[19] The provisions respecting class actions are found in Book IX of the Code of Civil Procedure. Article 999 establishes an initial rule for bringing class actions by limiting them to natural persons and to legal persons employing not more than 50 people. Other legal persons cannot institute class actions or even belong to a group on whose behalf one is brought. Furthermore, the institution of a class action requires the prior authorization of the Superior Court, which must be satisfied that the proposed action meets the conditions set out in the Code. Under art. 1003, the authorization of a class action is subject to the following conditions:
1003. The court authorizes the bringing of the class action and ascribes the status of representative to the member it designates if of opinion that:
(a) the recourses of the members raise identical, similar or related questions of law or fact;
(b) the facts alleged seem to justify the conclusions sought;
(c) the composition of the group makes the application of article 59 or 67 difficult or impracticable; and
(d) the member to whom the court intends to ascribe the status of representative is in a position to represent the members adequately.
[20] The outcome of the action is the same for all members of the group, except those who have requested to be excluded within the time limit set in the judgment granting authorization (art. 1007 C.C.P.). Thus, the members will be bound by any judgment — whether favourable or adverse — rendered in the action.
[21] Although the class action is subject to special rules, the procedure applicable to it is included in the general framework of the Code of Civil Procedure, the provisions of which continue to apply insofar as they are relevant. Thus, the conduct of class actions remains subject to the guiding principles of the Code of Civil Procedure, including those of good faith and proportionality provided for in arts. 4.1 and 4.2.
[22] Since the legislature enacted the provisions that make it possible to bring class actions in Quebec, this Court and the Quebec Court of Appeal have, despite some initial hesitation, interpreted and applied the rules respecting such proceedings quite broadly. The decisions have favoured easier access to this form of legal proceeding because of the advantages it frequently offers to group members (Nault v. Canadian Consumer Co., [1981] 1 S.C.R. 553; Comité régional des usagers des transports en commun de Québec v. Quebec Urban Community Transit Commission, [1981] 1 S.C.R. 424; Comité d’environnement de La Baie Inc. v. Société d’électrolyse et de chimie Alcan Ltée, [1990] R.J.Q. 655 (C.A.); Château v. Placements Germarich Inc., [1990] R.D.J. 625 (C.A.); Tremaine v. A.H. Robins Canada Inc., [1990] R.D.J. 500 (C.A.)). From this perspective, the motion for authorization to institute a class action acts as a screening mechanism and does not allow for an advance review of the merits of the case (Nault v. Canadian Consumer; Thompson v. Masson, [1993] R.J.Q. 69 (C.A.), at p. 72; Pharmascience Inc. v. Option Consommateurs, 2005 QCCA 437, [2005] R.J.Q. 1367).
[23] In sum, the judge hearing the motion for authorization checks whether there are sufficiently similar questions of fact and law (art. 1003(a)); whether the facts alleged seem to justify the conclusions sought, or in other words, whether there is a prima facie case (art. 1003(b)); whether the composition of the group makes it difficult to use arts. 59 and 67 C.C.P. (art. 1003(c)), and whether the representative has the qualities needed to represent the group members (art. 1003(d)). In the cases at bar, it is undisputed that there are common questions and that the representatives are qualified to represent the groups. But problems remain in respect of the existence of a prima facie case and the composition of the groups, having regard to the nature of the conclusions being sought. It will therefore be necessary to review the nature and effects of the actions proposed in the motions for authorization in light of the framework established by the municipal by‑laws in issue.
C. Municipal Context
[24] As I mentioned above, the actions the appellants wish to bring in the Superior Court fall within the specific context of municipal law and of taxation by Quebec cities. Following a review of this context, it will be possible to more precisely identify the purpose of the actions and the legal effect of the conclusions being sought. The appellants submit that the municipal by‑laws are null, that the taxes they imposed were therefore collected unlawfully and that the respondent must refund those taxes to the ratepayers. In addition, the proposed actions are intended to ensure that any subsequent actions to recover the taxes paid are not prescribed.
[25] In passing the municipal reorganization legislation, the legislature sought to gradually standardize the varying tax burdens of the different cities being amalgamated. At the same time, it sought to place a ceiling on total tax revenues from the sectors until their tax burdens were harmonized. The main legal argument made by the appellants in their motions for authorization is that the city erred in interpreting and applying the enabling statutory provisions governing the imposition and collection of property and business taxes and that, because of this error, it imposed increases in property and business taxes in the sectors concerned that exceeded the maximum permitted by law. This argument raises an issue that is common not only to the members of the group, but to all the city’s ratepayers, regardless of whether they belong to this group and whether they may take part in a class action. If this argument were accepted, the taxation by‑laws and the collection of the taxes imposed under them would be null.
[26] But this leads to the question whether quashing the by‑laws would result in a right to have the taxes refunded in that it would immediately give rise to liquid and exigible claims in favour of the ratepayers covered by the proposed class actions. Or would a finding of nullity instead place the city under an obligation to redo the necessary calculations to establish its tax base and then adopt new by‑laws to reapportion the tax burden among the sectors in a manner consistent with the statutory ceilings? The taxes to be paid in respect of each unit of assessment and the amounts, if any, owed to the group members would not be known until this new process had been completed. This raises the problem of allowing the conclusions being sought if they do not follow from the nature of the action and do not correspond to the legal situation in the case. This problem is aggravated by the fact that an action in nullity affects all ratepayers, regardless of whether they are members of the group. It will therefore be necessary to discuss the decisions in which the Quebec Court of Appeal has refused to authorize class actions in similar cases in which declarations of nullity of municipal by‑laws were being sought.
D. Case Law of the Court of Appeal on Class Actions in the Area of Municipal Law
[27] Since 1985, the Quebec Court of Appeal has consistently held that the class action is not an appropriate procedure for seeking to quash a municipal by‑law. This line of authority can be traced back to Francœur v. Municipalité régionale de comté d’Acton, [1985] R.D.J. 511. In that case, the Court of Appeal refused to authorize an action to quash a process leading to the constitution of a regional county municipality. It concluded that a class action would be pointless. An individual action in nullity could have resulted in a declaration of nullity that would have applied in respect of all citizens and ratepayers of the municipality (p. 512). That judgment has since been applied in several other Court of Appeal decisions (Comité de citoyens et d’action municipale de St‑Césaire v. Ville de St‑Césaire, [1986] R.J.Q. 1061; Gravel v. Corporation municipale de la paroisse de La Plaine, [1988] R.D.J. 60; Vena v. Montréal (Ville), [2002] J.Q. no 4807 (QL)).
[28] The rationale for the Court of Appeal’s position lies in the actual effect of a conclusion of nullity. When a request for nullity or for the quashing of an administrative act such as a municipal by‑law is granted by a court, it does not benefit only the party that brought the action. The conclusion also applies in respect of all citizens and ratepayers in the municipality in question (Robertson v. City of Montreal (1915), 52 S.C.R. 30, at p. 76, per Brodeur J.; Corporation du village de Deschênes v. Loveys, [1936] S.C.R. 351; G. Rousseau, “Le recours en cassation dans le contentieux municipal” (1980), 21 C. de D. 715, at p. 778). According to the Court of Appeal, the effect of nullity, which applies in respect of all ratepayers, makes a class action utterly pointless. Although this Court has not explicitly adopted this theory, it did observe in Guimond v. Quebec (Attorney General), [1996] 3 S.C.R. 347, at para. 20, that it was “generally undesirable” to pursue a class action to obtain a declaration of constitutional invalidity. In the case of an act such as a municipal by‑law, the fact that a declaration of nullity applies in respect of everyone, even if it results from an individual action, is undisputed.
E. Effect of Conclusions Respecting the Recovery of Taxes
[29] However, the appellants submit that the view that a class action is pointless should be reconsidered where conclusions respecting the recovery of unlawfully collected taxes accompany the request for a declaration of nullity. Such conclusions, it is argued, make a class action necessary. Only a class action would interrupt the three‑year prescriptive period applicable to an action for restitution pursuant to art. 2925 C.C.Q. An initial reservation is in order with respect to this argument: it applies only to the 2005 fiscal year. The motion for authorization does not request the recovery of taxes for 2003 and 2004. The only conclusions sought in respect of those two fiscal years are for declarations of nullity.
[30] For 2005, however, the legal situation flowing from the addition of this conclusion must be considered. The questions that must be asked concerning the conditions set out in art. 1003 C.C.P. for authorizing a class action are whether the declarations of nullity would result in an immediate right to a refund of the taxes and whether prescription had in fact started to run in respect of this right. It will therefore be necessary to consider what the legal effect of declarations of nullity would be. In the appellants’ view, the situation is simple and clear. Once the by‑laws authorizing the collection of the taxes have been quashed, a debt immediately arises. Ratepayers in the sectors concerned are entitled to a refund of the municipal taxes they paid. But the situation that would result from quashing the by‑laws appears to be more complicated than this argument suggests and will require careful analysis: it will be necessary to determine the legal effect of the declarations of nullity and to consider the real nature of the appellants’ actions in the context of the taxation system applicable to the municipality and its ratepayers.
[31] It will be necessary, in analysing the legal situation resulting from the request for declarations of nullity, to take into account the strict rules governing the respondent’s financial administration. The City of Longueuil was subject, inter alia, to the provisions of the Cities and Towns Act insofar as they were consistent with specific provisions of its charter or special legislation. That Act provides that a municipality must prepare and adopt an annual budget (s. 474 C.T.A.). In principle, this budget must be balanced (s. 474(1) C.T.A.). In the event of a deficit, the municipality may adopt a supplementary budget (ss. 474.1, 474.2 and 474.3 C.T.A.). Since it cannot finance its activities out of thin air, the municipality must impose and collect any taxes, fees or levies it needs for that purpose. It must, for example, pay back its loans and settle its debts, including those resulting from judgments against it. If a judgment is rendered against it, the municipality must — unless it has sufficient funds at its disposal to pay the judgment amount — adopt a resolution to raise the funds needed to satisfy the judgment by means of a levy on all taxable property within its territory (s. 592 C.T.A.). Such a resolution would impose the equivalent of a special tax on all ratepayers. Should the municipality fail to do so, and should it be necessary to go that far, the public official responsible for the compulsory execution of judgments would impose such a tax on all property within the municipality (s. 595 C.T.A.). As a result of this process, a ratepayer who is a judgment creditor following a successful action against the municipality for the recovery of taxes would have to pay a portion of the judgment amount to be determined by applying the principles and rules for the assessment of taxable property and the calculation of municipal taxes.
[32] One of the conclusions sought in the motion for authorization filed by the appellant Marcotte is for a refund of the property taxes collected in 2005 in the four sectors where the legal limit was allegedly exceeded. The motion by Usinage Pouliot Inc. contains a similar conclusion in respect of the business tax. These conclusions are based on an implicit premise that in the context of these cases, a declaration of nullity would give rise to an immediate obligation to refund. There have been cases in which such an obligation has flowed immediately from a court’s determination that a municipal tax by‑law is null. This Court’s judgment in Abel Skiver Farm Corp. v. Town of Sainte‑Foy, [1983] 1 S.C.R. 403, is an interesting example of this. The amount of the municipality’s debt was established. Because the by‑law was null in respect of a piece of property that was wrongly held not to be agricultural land subject to special tax treatment, the owner was entitled to immediate payment of a specific amount. The request for a declaration of nullity and the claim for taxes wrongly paid were inseparable elements of a single proceeding.
[33] The situation in the cases now before the Court differs from the one in Abel Skiver Farm. Because of the way they are worded, the conclusions sought by the appellants are unenforceable as regards the city’s obligation to refund. Moreover, I will not discuss at length whether it is in fact feasible for the city to refund at once all the property taxes relating to four of its sectors. The appellants describe this as a totally unrealistic disaster scenario that would result in swift remedial action by the Quebec National Assembly (transcript, at pp. 3 and 13). I readily concede that such a scenario would no doubt not occur and that, in the public interest, a different solution would have to be found if the appellants were to succeed in a trial on the merits. The fact remains that the appellants’ conclusions as worded lead to just such an outcome.
[34] Furthermore, in substance, these conclusions disregard the entire taxation and budgetary system governing municipalities such as the city, which I outlined above. In the context of this system, the appellants’ request for a declaration of nullity amounts in legal terms to asking the court to hold that the respondent has an obligation to recalculate the property and business taxes in a manner consistent with the law as interpreted by the appellants. In the cases at bar, a declaration that the tax by‑laws are null would oblige the city to revisit its budgetary exercise and tax regime to restore the necessary balance in its finances. It would have to review its fiscal planning, determine to what extent it intended to resort to property taxes or to other sources of municipal revenues, reassess allocations among the various sectors and, possibly, adopt a supplementary budget pursuant to the provisions of the Cities and Towns Act and of its charter. As debtor in respect of the collected taxes, the municipality would probably be unable to refund them without imposing additional taxes on its ratepayers. Even the members of the group covered by the class action would be debtors in respect of the taxes needed to satisfy their own claims. Moreover, all these transactions would have to be conducted after the partial demerger of the city. The amount of tax owed in respect of each unit of assessment and, consequently, the refund amounts would depend on the results of this exercise. In reality, the action in nullity looks very much like a proceeding to quash the by‑laws that includes a request for mandamus to compel the city to calculate its taxes in accordance with the law.
[35] I would add that the requests that all property and business taxes paid in the four sectors covered by the proposed class actions be refunded do not appear to be compatible with the principles governing the restitution of payments not due and of prestations set out in the Civil Code of Québec, and in particular in arts. 1492 and 1699. These principles have constituted the jus commune of Quebec in such matters, even in the area of municipal law, since the Civil Code of Québec came into force (Doré v. Verdun (City), [1997] 2 S.C.R. 862). The appellants’ claim for the restitution of payments not due is subject to the rules governing, more broadly, the restitution of prestations (arts. 1492 and 1699 C.C.Q.). In an action for the restitution of prestations, the Civil Code of Québec authorizes the court to negate or temper the obligation to make restitution (J.‑L. Baudouin and P.‑G. Jobin, Les obligations (6th ed. 2005), by P.‑G. Jobin in collaboration with N. Vézina, at pp. 830‑31). This rule applies to legal persons established in the public interest, in accordance with the principles laid down in Québec (Sous‑ministre du Revenu) v. B.D., [2002] R.J.Q. 54 (C.A.), and Amusements St‑Gervais inc. v. Legault, [2000] J.Q. no 687 (QL) (C.A.), at paras. 30‑31, per Michaud C.J.Q. Thus, the amount of the debt is not established until after the court has intervened, and the court may even cancel the debt in its entirety in some cases, as in Québec (Sous‑ministre du Revenu) v. B.D.
[36] In the cases at bar, the appellants received municipal services throughout 2003, 2004 and 2005. Moreover, the dispute over the calculation of their taxes concerns only a portion of what they paid. Under the rules applicable to the restitution of prestations, it is unlikely that the amount of their claim would correspond to the amount they are seeking. Given this legal framework and this context, the conclusion being sought does not meet the prima facie case requirement of art. 1003(b) C.C.P. (Comité régional des usagers des transports en commun de Québec v. Quebec Urban Community Transit Commission).
F. Argument Regarding Prescription
[37] The conclusion respecting the refund is also problematic in light of the appellants’ argument regarding prescription. According to the appellants, only a class action will interrupt prescription in the case of an action for restitution. This argument is based on the assumption that it was possible for prescription to run. But for prescription to run, there must be a debt in a recoverable form. A claim cannot be prescribed before it has arisen and become exigible. Before discussing the suspension or interruption of prescription, it is necessary to determine when and how it began to run (J. W. Durnford, “Some Aspects of the Suspension and of the Starting Point of Prescription”, [1963] Thémis 245, at p. 250; P. Martineau, La prescription (1977), at pp. 251‑52).
[38] Moreover, where the prescription or extinction of the action in nullity itself is concerned, an individual action for a declaration of nullity would interrupt prescription just as effectively as a class action in that it would, if successful, have effect with regard to everyone, provided that it was brought within the general time limit set out in the Civil Code of Québec. That time limit would correspond to the 10‑year general law prescriptive period provided for in art. 2922 C.C.Q. (Abel Skiver Farm, at p. 445; J. Hétu and Y. Duplessis, Droit municipal — Principes généraux et contentieux (2nd ed. (loose-leaf)), vol. 1, at p. 8 566). This Court has also noted that despite this general provision of the Civil Code of Québec, the action must be pursued diligently, within a reasonable time, because of its discretionary nature in administrative law (Immeubles Port Louis Ltée v. Lafontaine (Village), [1991] 1 S.C.R. 326; Hétu and Duplessis, at pp. 8 568 and 8 569). If it is brought within a reasonable time, an action in nullity that is allowed by a court results in a nullity that has effect with regard to everyone.
[39] In the cases at bar, as I mentioned above, the declarations of nullity being sought would entitle the members of the groups identified in the motions for authorization to a recalculation of their property or business taxes. Only such a recalculation would give rise to a liquid and exigible claim, which would cause prescription to start running in respect of an action for restitution, with the underlying problems I mentioned above. In my view, this makes it all the more clear that the Court of Appeal was right to uphold the Superior Court’s judgment and deny the appellants authorization to institute class actions. The actions would be of no assistance in interrupting prescription, since prescription has not yet started to run. The demands do not lead to the conclusion being sought. But this is not the only problem raised by the appellants’ motions.
G. Composition of the Group
[40] Owing to the specific characteristics of an action to quash a municipal by‑law, difficulties arise with respect to the operation of certain procedural rules governing the establishment of and changes to the group covered by a class action. Thus, because of the fact that such a declaration would apply in respect of all ratepayers, members of the group would not be able to withdraw effectively from the action in nullity. This is contrary to the rules respecting the institution and conduct of class actions, which give them the option of withdrawing from or refusing to participate in such actions and set time limits for doing so (arts. 1006(e) and 1007 C.C.P.).
H. Jurisdictional Issues
[41] The actions the appellants wish to institute fall undeniably within the ambit of art. 33 C.C.P. But other causes of nullity, such as formal defects and irregularities, would instead fall within the framework of annulment proceedings over which the Superior Court is granted jurisdiction in statutes relating to municipalities, such as the Cities and Towns Act, s. 397, and the Municipal Code of Québec, R.S.Q., c. C‑27.1, arts. 689 and 690. In many cases, there is a fine line between the subject matter of a motion for annulment and that of an action in nullity under art. 33 (see Rousseau, at pp. 766‑68; Hétu and Duplessis, at p. 8 553; Immeubles Port Louis Ltée v. Lafontaine (Village), at pp. 343‑46, per Gonthier J.). Recourse to the class action in such situations could hamper the conduct of proceedings that are in principle simple and quick, and would hardly be consistent with the principle of proportionality set out in art. 4.2 C.C.P.
I. Principle of Proportionality
[42] Even though there is no need to invoke the principle of proportionality to justify the dismissal of the motions to authorize the class actions in issue here, I think it would be helpful to add a few comments about this principle, as I would not wish to limit it to a principle of interpretation that confers no real power on the courts in respect of the conduct of civil proceedings in Quebec.
[43] The principle of proportionality set out in art. 4.2 C.C.P. is not entirely new. To be considered proper, a proceeding must be consistent with it (see Y.-M. Morissette, “Gestion d’instance, proportionnalité et preuve civile: état provisoire des questions” (2009), 50 C. de D. 381). Moreover, the requirement of proportionality in the conduct of proceedings reflects the nature of the civil justice system, which, while frequently called on to settle private disputes, discharges state functions and constitutes a public service. This principle means that litigation must be consistent with the principles of good faith and of balance between litigants and must not result in an abuse of the public service provided by the institutions of the civil justice system. There are of course special rules for the most diverse aspects of civil procedure. The application of these rules will often make it possible to avoid having recourse to the principle of proportionality. However, care must be taken not to deny this principle, from the outset, any value as a source of the courts’ power to intervene in case management. From this perspective, the effect of the principle of proportionality is to cast serious doubts on the appropriateness of bringing class actions to achieve the purposes being pursued in the appellants’ proceedings. The class action has a significant social and legal role, as the courts have often confirmed. Nevertheless, I consider the Quebec Court of Appeal’s consistent line of authority, according to which a request for a declaration that a municipal by‑law is null cannot be made by means of a class action, to be sound in that it reminds us that the class action must be used properly, which does not seem to me to be the case in the two appeals before this Court.
V. Conclusion
[44] For these reasons, I would dismiss the appeals with costs.
English version of the reasons of McLachlin C.J. and Binnie, Deschamps and Cromwell JJ. delivered by
[45] Deschamps J. (dissenting) — The Court must decide whether Quebec courts have a discretion to grant municipalities immunity from class actions for the recovery of wrongfully collected taxes and, in so doing, to block ratepayers’ access to justice through such proceedings. In my opinion they do not, and I would therefore allow the appeals.
I. Facts
[46] The subject of municipal reorganization was very much in the public eye in Quebec for almost a quarter of a century before the Act to reform the municipal territorial organization of the metropolitan regions of Montréal, Québec and the Outaouais, S.Q. 2000, c. 56 (“Amalgamations Act”), was enacted. In 2000, Louise Harel, the then Minister of Municipal Affairs, announced the tabling of a bill whose purpose was to reorganize municipalities. At that time, Quebec had 1,306 local municipalities, far more than the neighbouring provinces and states. This fragmentation was seen as an impediment to economic development. But in creating conditions favourable to municipal development, equality in taxation among ratepayers would have to be taken into account: A. Latendresse, “La réforme municipale et la participation publique aux affaires urbaines montréalaises: Rupture ou continuité”, in B. Jouve and P. Booth, eds., Démocraties métropolitaines (2004), 155, at p. 158, note 2; J. L’Heureux, “La fiscalité locale québécoise peut‑elle remplir ses promesses?”, in Rapport général de synthèse du Colloque de l’Association québécoise de droit comparé, Dans la foulée des réformes municipales, April 20, 2001; Quebec, National Assembly, Journal des débats, vol. 37, No. 31, 2nd Sess., 36th Leg., June 1, 2001, at p. 1818 (Mr. Marc Boulianne). As part of the most sweeping reform ever carried out in the municipal sphere in Quebec, the Amalgamations Act came into force on January 1, 2002. These two appeals concern the new city of Longueuil (“Longueuil”). This city resulted from the amalgamation of several municipalities on Montréal’s South Shore: the cities of Boucherville, Brossard, Greenfield Park, LeMoyne, Longueuil, Saint‑Bruno‑de‑Montarville, Saint‑Lambert and Saint‑Hubert. These former municipalities became sectors of Longueuil.
[47] The amalgamations did not go smoothly, however, and in 2003, Quebec passed the Act respecting the consultation of citizens with respect to the territorial reorganization of certain municipalities, S.Q. 2003, c. 14 (“Demergers Act”). Under it, a sector could obtain authorization to “demerge” after a referendum was held. The citizens of Boucherville, Brossard, Saint‑Lambert and Saint‑Bruno‑de‑Montarville voted in favour of demerger, which took effect in 2006.
[48] At issue in these appeals is Longueuil’s exercise of its taxation powers in the 2003, 2004 and 2005 fiscal years. The relevant statutory provisions are reproduced in the Appendix. The appellant Marcotte is a resident of Saint‑Lambert, and the appellant Usinage Pouliot Inc. is resident in Saint‑Bruno‑de‑Montarville. They applied to the Superior Court for authorization to institute class actions, arguing that Longueuil had not exercised its taxation power in accordance with the law.
[49] Mr. Marcotte applied to represent all natural persons and legal persons (with no more than 50 employees) required to pay Longueuil’s general property tax in 2003, 2004 and 2005 in four sectors: Boucherville, Brossard, Saint‑Bruno‑de‑Montarville and Saint‑Lambert. Usinage Pouliot’s application concerned the business tax for 2005 and was limited to the sector of Saint‑Bruno‑de‑Montarville.
[50] The appellants Marcotte and Usinage Pouliot contended that the tax increases for the years in issue were ultra vires. Tax rates varied from one former municipality to another, but the legislation provided that they were to be harmonized over a period of 20 years. Mr. Marcotte and Usinage Pouliot contested the by‑laws setting the property tax and business tax rates (“the by‑laws”). According to the appellants, these by‑laws were ultra vires Longueuil because they increased, in Mr. Marcotte’s case, the tax burden and, in Usinage Pouliot’s case, the business tax, by more than 5% per year in each of the sectors, thereby contravening ss. 87.1 and 87.2 of the Charter of Ville de Longueuil, R.S.Q., c. C‑11.3, which had come into force on January 1, 2002. Mr. Marcotte also contested a resolution for the 2005 fiscal year in which the municipal council identified the part of the increase in the tax burden that did not result from the constitution of the new city. In the Superior Court and in the Court of Appeal, Mr. Marcotte contested the by‑laws for 2003, 2004 and 2005, but he contested only the resolution for 2005 and claimed restitution in respect of 2005 only. Usinage Pouliot’s application related only to 2005. In this Court, Mr. Marcotte seeks to amend his conclusions to request a declaration that the resolutions for 2003 and 2004 were null and claim restitution in respect of those years.
II. Judicial History
A. Superior Court
[51] In the Superior Court, Longueuil raised three arguments to contest the motions: (1) that the motions were unfounded in law, (2) that the class action is not an appropriate vehicle for quashing a municipal by‑law and recovering taxes paid, and (3) that the conditions set out in art. 1003 of the Code of Civil Procedure, R.S.Q., c. C‑25 (“C.C.P.”), for authorizing a class action had not been met.
[52] In support of its contention that the motions were unfounded in law, Longueuil submitted that the alleged facts did not lead to the conclusion that the 5% ceiling on increases had been exceeded. Hébert J. rejected this argument on the basis that the discussion of the facts went to the merits of the cases: 2006 QCCS 6516, [2006] J.Q. no 15494 (QL), and 2006 QCCS 6517, [2006] J.Q. no 15495 (QL). Regarding the appropriateness of proceeding by class action, he held that he was bound by the case law of the Court of Appeal, according to which the class action is not an appropriate procedural vehicle for quashing a municipal by‑law and recovering taxes. He relied in particular on the following cases: Francœur v. Municipalité régionale de comté d’Acton, [1985] R.D.J. 511; Comité de citoyens et d’action municipale de St‑Césaire v. Ville de St‑Césaire, [1986] R.J.Q. 1061; Gravel v. Corporation municipale de la paroisse de La Plaine, [1988] R.D.J. 60. Hébert J. accordingly did not consider the conditions for authorizing a class action set out in art. 1003 C.C.P.
B. Court of Appeal
[53] The main reasons of the Court of Appeal in Mr. Marcotte’s case (2007 QCCA 866, [2007] R.J.Q. 1467) were written by Rochon J.A. They were incorporated by reference into the reasons in Usinage Pouliot’s case (2007 QCCA 867, [2007] J.Q. no 6259 (QL)). Rochon J.A. invoked the same precedent‑based argument as Hébert J.:
[translation] Since 1985, this court has consistently held that the class action is not an appropriate procedure for seeking the nullity of orders or by‑laws. [para. 14]
[54] Rochon J.A. also considered that, [translation] “as a general rule”, a class action would be pointless in these circumstances, since a declaration of nullity would apply in respect of all ratepayers (para. 19). He accordingly wrote:
[translation] An individual action will make it possible to attain the objective being pursued in respect of all those who are subject to the by‑law without the procedural burden that a class action entails. [para. 21]
[55] Rochon J.A. stated that the question could also be approached from the perspective of art. 1003(c) C.C.P., which provides that a class action will be authorized if the composition of the group makes it difficult or impracticable to join similar claims (art. 59 C.C.P.) or proceed by mandate (art. 67 C.C.P.). In his view, the appellants had failed to meet this condition, since the composition of the groups did not make the application of art. 59 or 67 “difficult or impracticable”. Rather, the formation of the groups would be pointless (para. 23).
[56] Rochon J.A. acknowledged that the claim for restitution would make it impossible to fully resolve the issues by means of an individual action and could raise a problem related to prescription. An action for restitution is subject to a prescriptive period of three years (art. 2925 of the Civil Code of Québec, S.Q. 1991, c. 64 (“C.C.Q.”)), and prescription runs from the time the tax is paid, not from the date of a judgment declaring the by‑law to be null (Abel Skiver Farm Corp. v. Town of Sainte‑Foy, [1983] 1 S.C.R. 403, at pp. 447 et seq.; Kingstreet Investments Ltd. v. New Brunswick (Finance), 2007 SCC 1, [2007] 1 S.C.R. 3). It is therefore possible that a ratepayer’s action for restitution would be prescribed if brought only after judgment was rendered in an action in nullity, as the latter action could take over three years to resolve. Rochon J.A. concluded, however, that since the effect of filing the motion for authorization to institute a class action was to suspend prescription (art. 2908 C.C.Q.), [translation] “there is good reason to believe that an individual action in nullity can be brought in time and that it could enable the ratepayers concerned to recover the tax overpayments” (para. 29). He added that [translation] “there is no reason to believe that the City, a public corporation, would refuse to take the necessary steps to reimburse ratepayers for any amounts it may have collected unlawfully” (para. 29). He did not consider it necessary to definitively resolve the issue, for two reasons: first, a judicial declaration of nullity would not make it possible to establish the amount to be refunded to each ratepayer (para. 30); and second, [translation] “the claim, if one exists, can be said to be indivisible and therefore triggers the civil interruption provided for in art. 2900 C.C.Q.” (para. 32).
III. Issue
[57] The main issue in the appeals of Mr. Marcotte and Usinage Pouliot can be summed up as follows: May a class action be authorized in Quebec where the applicant for authorization seeks to recover municipal taxes paid pursuant to an ultra vires municipal by‑law? Two approaches are proposed. According to the first, the court hearing the motion for authorization may exercise a discretion distinct from the conditions set out in art. 1003 C.C.P. to assess the appropriateness of the class action and conclude that, even where the recovery of taxes is sought, the action should not be authorized. According to the second, the discretion must be exercised in reviewing the four conditions under art. 1003 C.C.P., and the fact that the recovery of taxes is sought does not mean that a class action is inappropriate. In short, the existence of a discretion is recognized, but the two approaches differ on when it may be exercised and on the conditions for exercising it. In my opinion, the second approach is more consistent with the spirit of the provisions governing the authorization to institute a class action.
IV. Analysis
[58] This case turns on the interpretation of art. 4.2 C.C.P., the scope of which will determine which approach should prevail. I will therefore begin my analysis by considering the scope of this provision. I will then review the conditions set out in art. 1003 C.C.P.
A. Article 4.2 C.C.P.
[59] Article 4.2 C.C.P. reads as follows:
4.2 In any proceeding, the parties must ensure that the proceedings they choose are proportionate, in terms of the costs and time required, to the nature and ultimate purpose of the action or application and to the complexity of the dispute; the same applies to proceedings authorized or ordered by the judge.
[60] Before January 1, 2003, when art. 4.2 C.C.P. came into force, the courts had held that a court hearing a motion for authorization to institute a class action enjoyed a degree of latitude, which was often characterized as a discretion. Although in my view the term “latitude” corresponds to the exercise a judge must engage in when deciding such a motion, there is no need, for the purposes of these appeals, to distinguish it from the term “discretion”. What it is important to note is that the power was exercised not independently, but in the context of the four conditions of art. 1003 C.C.P. On this point, the state of the law at that time was summed up clearly in Guimond v. Quebec (Attorney General), [1996] 3 S.C.R. 347, at para. 12:
The discretion resides in the determination of whether the case meets the threshold of art. 1003, namely whether the case possesses “une apparence sérieuse de droit” and not whether having established the necessary criteria, the applicant may nonetheless be denied authorization on the basis of diverse arguments of appropriateness or convenience. [Emphasis added.]
[61] It must therefore be asked whether the effect of the coming into force of art. 4.2 C.C.P. was to give a court considering a motion for authorization a power in addition to those it already had. In other words, does this provision have an independent scope that makes it a fifth condition pursuant to which the court has a discretion separate from the one flowing from art. 1003 C.C.P.?
[62] In its report entitled La révision de la procédure civile: une nouvelle culture judiciaire (2001), the Comité de révision de la procédure civile set out the objectives of the reform of civil procedure:
[translation] [I]t is important to incorporate rules into the code that reflect a constant concern to control the costs of proceedings and promote proportionality, that is, a better balance between the nature and ultimate purpose of a lawsuit and the available means of pursuing it.
. . .
. . . If civil justice is to remain an accessible public service, it will be necessary to ensure that the costs and delays thereof are reasonable. To this end, it is important that the provisions of the code and the actions of the parties and the courts be informed by a common concern for proportionality between, on the one hand, the proceedings undertaken, the time taken and the costs incurred and, on the other hand, the nature, complexity and ultimate purpose of the action or application. This principle can be applied to better define the scope of a judge’s authority when intervening in the management of a case and to guide the actions of parties and their counsel. [Emphasis added; pp. 33 and 38-39.]
[63] In the view of the committee’s members, proportionality was to be a guiding principle of civil procedure. They made the following formal recommendation:
[translation] That it be stated that proceedings provided for in the code that are chosen by the parties and authorized or ordered by a court must be proportionate to the nature, complexity and ultimate purpose of the action or application. [Emphasis added; p. 39.]
[64] Furthermore, the comments made by the Minister of Justice in introducing the reform bill confirmed the objective advanced by the committee:
[translation] What this bill does and what it is intended to do is, among other things, to ensure that our civil justice system is faster, more efficient and less expensive, thereby improving access to justice and increasing the confidence of citizens in the justice system.
(National Assembly, Journal des débats, vol. 37, No. 110, 2nd Sess., 36th Leg., June 6, 2002, at p. 6666 (Mr. Paul Bégin))
[65] As can be seen, both the Minister’s comments and the words of art. 4.2 C.C.P. are consistent with the objectives advanced by the committee. The principle of proportionality must be applied in the context of the procedures provided for in the Code of Civil Procedure. It is the backdrop against which a judge decides a given case. It cannot be applied independently.
[66] In its report, the committee also considered, but separately, the criteria for authorizing a class action. In light of the committee’s remarks on the subject, it seems highly unlikely that art. 4.2 C.C.P. was intended to supplement those criteria:
[translation] The criteria on the basis of which a court may authorize an action are set out in article 1003 of the Code. The questions to be considered are whether the action raises identical, similar or related questions of law or fact; whether the facts alleged seem to justify the conclusions sought; whether the composition of the group makes the application of certain other rules set out in article 59 or 67 of the Code difficult or impracticable; and whether the member claiming representative status is in a position to represent the group members adequately. The case law concerning these criteria is now well established. In the Committee’s opinion, the criteria are still appropriate and should be maintained. [Emphasis added; p. 203.]
[67] What is clear from these different sources is that the purpose of art. 4.2 C.C.P. is to reinforce the authority of the judge as case manager. The judge is asked to abandon the role of passive arbiter. At first glance, this case management function does not mean that it would be open to a judge to prevent a party from exercising a right. However, the judge must uphold the principle of proportionality when considering the conditions for exercising a right.
[68] It should be noted that if the principle of proportionality is now set out explicitly in Quebec’s Code of Civil Procedure, the principle itself is not new. Before the reform, even though the principle was not formally spelled out, judges applied it in determining whether a given action or application was reasonable: Boutique Linen Chest (Phase II) Inc. v. Wise (1997), 80 C.P.R. (3d) 540 (Que. C.A.).
[69] The acceptance of this principle and the increased significance attached to it originated in Lord Woolf’s report on reform of the civil justice system of England and Wales: Access to Justice — Final Report (1996). One of the recommendations in that report was that greater proportionality be ensured between the nature of the case and the procedure used.
[70] According to Lord Woolf, one thing that can be done to achieve justice is to deal with each case in a way that is proportionate to its importance, to the amount of money involved, to the complexity of the issues and to the parties’ financial positions (Final Report, at p. 275). The English courts have stated that the main objective of the new rules of procedure is to control costs, which must, where possible, be proportionate to the amount of money at stake. To this end, the parties must adopt an appropriate strategy. See: Lownds v. Home Office, [2002] EWCA Civ 365, [2002] 4 All E.R. 775, per Lord Woolf C.J., at para. 1; Rogers v. Merthyr Tydfil County Borough Council, [2006] EWCA Civ 1134, [2007] 1 All E.R. 354, per Brooke L.J., at para. 106; Callery v. Gray (Nos 1 and 2), [2002] UKHL 28, [2002] 3 All E.R. 417, per Lord Scott, at para. 121; Hashtroodi v. Hancock, [2004] EWCA Civ 652, [2004] 3 All E.R. 530, per Dyson L.J., at para. 20; Leigh v. Michelin Tyre plc, [2003] EWCA Civ 1766, [2004] 2 All E.R. 175, per Dyson L.J., at para. 1.
[71] Proportionality has been advanced as a guiding principle not only in Quebec, but also in other Canadian province and territories. For example, the British Columbia Supreme Court amended its rules of procedure in 2005 to formally incorporate this principle: Rule 68 — Expedited Litigation Project Rule (Supreme Court Rules, B.C. Reg. 221/90). Subrule 68(13), entitled “Proportionality”, reads as follows: “In considering any application under this rule, the court must consider what is reasonable in relation to the amount at issue in the action”. See also C. P. Dennis, “Proportionality: A More Effective Tool”, paper prepared for the Continuing Legal Education Society of British Columbia conference entitled “Rule 68” held September 29, 2005 (online: http://www.bcjusticereview.org/working_groups/civil_justice/cle_paper_09_29_05.pdf). In British Columbia, the principle of proportionality plays a significant role in case management: Totol Vision Enterprises Inc. v. 689720 B.C. Ltd., 2006 BCSC 639, [2006] B.C.J. No. 925 (QL).
[72] The case law and academic opinion on the possible effect of art. 4.2 C.C.P. on Quebec’s procedure for authorizing class actions is not yet fully developed, but some trends are emerging. According to one view, the class action itself gives effect to the principle of proportionality because of the savings in judicial resources it makes possible. According to another, the principle of proportionality constitutes a fifth condition for authorization that incorporates a rule from the legislation of several other provinces that a class action may be authorized only if it is the most appropriate proceeding. Finally, another possible view is that the principle of proportionality must be applied by the judge in exercising his or her discretion when reviewing each of the four conditions of art. 1003 C.C.P. (É. M. David, “La règle de proportionnalité de l’article 4.2 C.p.c. en matière de recours collectif — Premières interprétations jurisprudentielles”, in Développements récents en recours collectifs (2007), 315, at pp. 328‑35).
[73] In my opinion, the first approach is overly simplistic. As Professor Jutras points out, the class action is not necessarily synonymous with proportionality:
[translation] It is true that the class action averts the duplication of proceedings and is conducive to the effective resolution of common issues. It also makes economies of scale possible and helps deter wrongful conduct. On the other hand, a class action can also lead to procedural and administrative complications — no one benefits from overburdening the courts with class actions that serve no positive social or legal purpose. . . . In every case, the anticipated benefits must be reviewed to ensure that a representative proceeding would in fact serve the social purposes attributed to it.
(D. Jutras, “À propos de l’opportunité du recours collectif”, in Colloque sur les recours collectifs (2007), 7, at p. 12)
[74] The second approach, according to which art. 4.2 C.C.P. constitutes an independent condition, seems to be incompatible with the objective advanced at the time the provision was adopted. All the sources of information predating its enactment indicate that this provision incorporates a principle — it does not create an independent standard. It is, in a word, a rule of assessment that does not alter the conditions set out in the Code of Civil Procedure. If it were to be held that this provision establishes a power distinct from the conditions for authorizing a class action, the same reasoning would have to apply to all proceedings provided for in the Code of Civil Procedure, which does not seem to me to be the case. For example, if a party argued erroneously that a suit was unfounded in law even if the facts alleged were true (art. 165(4) C.C.P.), it would not be open to the judge to nevertheless apply art. 4.2 to dismiss the action. However, a judge can, upon application, stay proceedings in relation to certain parties where that would make a more efficient use of judicial resources possible (Roy v. Boivin Carrier, 2006 QCCS 2663, [2006] J.Q. no 4679 (QL)), although art. 4.2 cannot serve on its own as a basis for rejecting an action. Finally, a judge could not, in my opinion, rely on art. 4.2 to refuse to hold an examination before the defence is filed where the defendant who wishes to summon the plaintiff has satisfied the conditions for doing so set out in art. 397 C.C.P. The judge could, however, impose limits on the examination in respect, for example, of its timing, of its duration and of whether it will be held in or out of court: Quesnel v. KPMG, s.r.l., 2007 QCCS 3990, [2007] J.Q. no 9465 (QL); Canada (Procureur général) v. Malcolm Média inc. (Expour 2000), 2007 QCCS 2427, [2007] J.Q. no 5098 (QL).
[75] In my view, it is the third approach that the courts should follow. In Harmegnies v. Toyota Canada inc., 2008 QCCA 380, [2008] J.Q. no 1446 (QL), in which the appropriateness of a class action was in issue, Baudouin J.A., writing for the Quebec Court of Appeal, clearly stated that the court’s discretion did not constitute a fifth condition:
[translation] Thus, Quebec judges exercise a discretion in their review of each of the four conditions of article 1003 C.C.P., but this discretion is not imposed as a fifth condition. In other words, judicial discretion is exercised in the context, and only in the context, of the four requirements established by the legislature. [para. 22]
[76] One author who has written on this subject agrees that art. 4.2 C.C.P. does not add a new condition to art. 1003 C.C.P.:
[translation] When all is said and done, article 4.2 C.C.P. cannot establish another criterion or test no more than can article 4.1 or article 2. These are “guiding principles”, laid down in the general introductory provisions of the Code, which essentially apply to the management of class actions as to that of any proceeding.
. . . the application of the rule of proportionality finds its full expression in, among other things, a correct interpretation of the four conditions for authorization identified by the legislature, through judicial support for this essential procedure for access to justice and through a case management process that renders this procedural vehicle practicable at each of these stages.
(David, at p. 337)
See also: L. Chamberland, “La règle de proportionnalité: à la recherche de l’équilibre entre les parties?”, in La réforme du Code de procédure civile, trois ans plus tard (2006), 1, at p. 27; S. Finn, “In a Class All its Own: The Advent of the Modern Class Action and its Changing Legal and Social Mission” (2005), 2 Can. Class Action Rev. 333.
[77] I do not accept the argument that art. 4.2 imports into Quebec law the requirement set out in the legislation of other Canadian provinces. A brief review of that legislation reveals that where a judge has the authority to refuse to certify an action on the basis that it is not the most appropriate procedure, the legislation says so. Eight of the nine common law provinces, as well as Parliament, have enacted provisions requiring that a class action be the most appropriate or “preferable” procedure for resolving common issues. For example, s. 5(1) of Ontario’s Class Proceedings Act, 1992, S.O. 1992, c. 6, reads as follows:
5.—(1) The court shall certify a class proceeding on a motion under section 2, 3 or 4 if,
(a) the pleadings or the notice of application discloses a cause of action;
(b) there is an identifiable class of two or more persons that would be represented by the representative plaintiff or defendant;
(c) the claims or defences of the class members raise common issues;
(d) a class proceeding would be the preferable procedure for the resolution of the common issues; and
(e) there is a representative plaintiff or defendant who,
(i) would fairly and adequately represent the interests of the class,
(ii) has produced a plan for the proceeding that sets out a workable method of advancing the proceeding on behalf of the class and of notifying class members of the proceeding, and
(iii) does not have, on the common issues for the class, an interest in conflict with the interests of other class members.
[78] It is easy to see that the first condition corresponds to art. 1003(b) C.C.P. (“the facts alleged seem to justify the conclusions sought”). The second and fifth conditions, which correspond to the one set out in art. 1003(d) C.C.P., concern the representativeness of the representative. The third concerns the requirement that the action raise common issues and is equivalent to art. 1003(a) C.C.P. It should be noted, however, that the wording of the fourth condition — that the class action be “the preferable procedure for the resolution of the common issues” — is different from that of art. 1003(c), which requires the court to consider whether the composition of the group makes recourse to a mandate or to the joinder of plaintiffs impracticable. The scope of the Ontario requirement is very different from that of the Quebec provision, which requires a judge to determine whether recourse to either of two specific procedures — mandate or joinder — would be practicable. The Quebec judge does not have to consider the possibility of recourse to other procedures. Article 1003(c) does not give a judge the authority to decide that a class action should not be authorized because it would not be the preferable procedure for resolving the common issues, or that to proceed by class action would be inappropriate.
[79] Moreover, three cases that originated in the common law provinces show that, even in those provinces, the approach is not uniform. In those three cases, this Court dealt with the question in slightly different ways, owing to differences in the specific provisions of the provinces concerned. The legislative choices of the provinces must be respected. In Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46, [2001] 2 S.C.R. 534, the action had been filed before the province enacted comprehensive legislation on class actions. The Court held that courts could determine the conditions for authorizing class actions by exercising their inherent power to establish the rules of practice applicable to disputes brought before them. In that case, this Court decided that the court had to take into account the benefits the class action offered in the circumstances of the case as well as any unfairness it might cause. In Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158, the Ontario legislation included the “preferable procedure” requirement but did not provide for all the subsidiary matters a court was required to consider under the British Columbia statute in issue in Rumley v. British Columbia, 2001 SCC 69, [2001] 3 S.C.R. 184. In each of those cases, the Court approached the “preferable procedure” issue by referring to the specific wording of the applicable law.
[80] In Quebec, art. 1003(c) requires the judge to determine whether the composition of the group makes the use of a mandate (art. 59 C.C.P.) or joinder (art. 67 C.C.P.) difficult or impracticable. Where a plaintiff acts on behalf of a mandator, a power of attorney must be filed with the first pleading. This requirement implies that each mandator must act individually. In the case of joinder, each plaintiff must participate in the pleadings. Where the groups are very large, the application of these provisions is often considered to be impracticable. As can be seen, the exercise a judge engages in when applying art. 1003(c) is different from that of a judge who must determine whether a class proceeding would be the preferable procedure for resolving common issues. The Quebec Court of Appeal did not take long to draw a distinction between the conditions of art. 1003 C.C.P. and the preferable procedure requirement: Gelmini v. Procureur général du Québec, [1982] C.A. 560, at p. 564.
[81] In my opinion, the effect of requiring applicants to prove that the class action is the “preferable procedure” for resolving common issues would be to limit access to the class action. The words of art. 1003 impose no such condition. Furthermore, in Bouchard v. Agropur Coopérative, 2006 QCCA 1342, [2006] R.J.Q. 2349, a decision rendered after the enactment of art. 4.2, the Court of Appeal explained that the discretion must be exercised in the context of the special conditions applicable to the class action, not independently as a fifth condition. Pelletier J.A. made the following comment:
[translation] Here, the legislature has established guidelines, and it is at the stage of reviewing each of the conditions rather than at the final moment of deciding whether or not to grant authorization that it chose to give the judge the flexibility needed for the screening process to be effective. In my view, the structure of article 1003 C.C.P. reflects this intention. . . . [para. 41]
[82] In Lallier v. Volkswagen Canada Inc., 2007 QCCA 920, [2007] R.J.Q. 1490, Pelletier J.A. also distinguished the approach of the common law provinces from the one dictated by the Quebec legislation:
[translation] This is in a way the same type of discretion that the Supreme Court found judges to have under Alberta law, except that it is not exercised globally after the relevant criteria have been considered, but in the context of the individual review of each of those conditions. [para. 20]
[83] In sum, the judge’s role in upholding the principle of proportionality is to ensure that “the proceedings [the parties] choose are proportionate, in terms of the costs and time required, to the nature and ultimate purpose of the action or application and to the complexity of the dispute” (art. 4.2 C.C.P.). The judge’s role is to manage the case, not to limit access — except where that is dictated by the conditions set out in the Code — to a procedure whose purpose is to ensure access to justice.
[84] Although I conclude that the effect of the enactment of art. 4.2 C.C.P. was neither to add a condition to the ones set out in art. 1003 C.C.P. nor to require applicants to show that the class action would be the preferable procedure for resolving common issues, this does not mean that the principle of proportionality does not apply to class actions. On the contrary, I believe that an interpretation that emphasizes the management role of the judge in reviewing the four conditions of art. 1003 gives all due weight to that principle.
[85] Thus, in Quebec law, the effect of the principle of proportionality on art. 1003 C.C.P. is to give concrete expression to and to reinforce the discretion judges are already recognized as having when reviewing each of the four conditions for authorizing a class action. It is in this context that the principle is applied (see Brito v. Pfizer Canada inc., 2008 QCCS 2231, [2008] R.J.Q. 1420, at para. 47, per Grenier J.; Option Consommateurs v. Infineon Technologies AG, 2008 QCCS 2781, [2008] R.J.Q. 1694, at paras. 210‑13, per Mongeau J.). In every case, the court must consider the specific wording of art. 1003 C.C.P., which the Superior Court did not do in the cases at bar because of its interpretation of the Court of Appeal’s judgments on the quashing of municipal by‑laws. As for the Court of Appeal, it considered art. 1003(c) C.C.P. briefly, but quickly concluded that a class action would be pointless because the judgment in an action in nullity would apply in respect of all the members. In my view, a more thorough analysis is required.
B. Review of the Criteria Set Out in Article 1003 C.C.P.
(1) Article 1003(a) C.C.P.: Are the Questions Similar or Related?
[86] Mr. Marcotte asks the Court to conclude that clause 3 of each of the resolutions adopting the city’s budgets for 2003, 2004 and 2005 is null. These clauses relate to s. 87.5 of the Charter of Ville de Longueuil, which provides that if the city wishes to apply s. 87.1 of the Charter to raise taxes in a manner consistent with the 5% limit on the increase in the tax burden, it must “prescribe the rules to determine whether the increase under that section [87.1] results solely from the constitution of the city and, if not, to establish the part resulting from the constitution”. The second paragraph of s. 87.5 provides that “[t]he Government may, by regulation, determine the only cases in which an increase is deemed not to result from the constitution of the city.” The impugned resolutions, rather than prescribing rules for calculation, identify specific amounts, namely the parts of the increases not resulting solely from the constitution of the new city. The appellant Marcotte also argues that subss. 1, 2, 5 and 7 of s. 1 of each of the municipal by‑laws setting the property tax rates by sector for 2003, 2004 and 2005 are ultra vires.
[87] In sum, Mr. Marcotte submits that the 5% ceiling on increases in the tax burden established in s. 87.1, para. 1 has been exceeded. The tax burden, which is defined in para. 2 of s. 87.1, includes not only property taxes, but other sources of revenue as well, such as taxes for the supply of drinking water, waste water purification, snow removal and waste disposal. To show that the ceiling was exceeded in 2005, Mr. Marcotte submits three figures for each of the sectors concerned: the increase in the general property tax (which represented 62% of the city’s revenues), the increase in the business tax and the tax on non‑residential immovables (which represented 10% of the city’s revenues), and the increase in Longueuil’s total revenues. In the cases of Boucherville, Brossard, Saint‑Bruno‑de‑Montarville and Saint‑Lambert, the increases in the general property tax were 5.7%, 10.4%, 13.4% and 10.9%, respectively. The increases in the business tax and the tax on non‑residential immovables in the four sectors were 5.5%, 5.2%, 11.9% and 7.9%, respectively. As for the budget, Longueuil’s revenues had increased by 5.8% over 2004. On the basis of these figures, Mr. Marcotte asserts that the tax burden increased by more than 5% between 2004 and 2005. He has produced little information with respect to 2003 and 2004. However, he states that the city failed to provide him with the tax burden amounts for the years in issue. What is more, ever since his initial motion, he has indicated that the main questions the court would have to deal with in the class action included whether the resolution for 2005 and the by‑law imposing property taxes for the 2005 fiscal year were ultra vires. And in his amended motion in November 2005, he asked that the by‑laws imposing the property taxes for 2003, 2004 and 2005 be declared to be ultra vires.
[88] The appellant Usinage Pouliot contests the validity of by‑law CM‑2004‑309, which imposed a business tax for the 2005 fiscal year. Under s. 87.2, the city may impose a business tax, but the increase in revenues derived from that tax in a given sector may not, in relation to the preceding fiscal year, be greater than 5%. As can be seen from Longueuil’s budget for 2005, however, the business tax rate for the Saint‑Bruno‑de‑Montarville sector rose from 7.03% in 2004 to 7.87% in 2005, which represented an increase of 11.09%, despite the fact that Saint‑Bruno‑de‑Montarville’s tax base increased over that period.
[89] Article 1003(a) requires the judge to determine whether the questions to be resolved in the recourses of the group’s members are similar. In the cases at bar, what is in issue for all the members relates to Longueuil’s compliance with the ceiling on increases in the tax burden (Mr. Marcotte’s case) and the business tax (Usinage Pouliot’s case). The same by‑laws are in issue for all members of the groups. The questions of law are therefore identical. The only difference in Mr. Marcotte’s appeal lies in the factual demonstration based on the specific figures for each of the four sectors. Moreover, the calculations are the same for every ratepayer in a given sector. At stake for all the members is the right to recover taxes paid. The action therefore easily meets the similar questions requirement, and this is not a case in which a judge should exercise his or her discretion to decide whether to authorize or refuse the actions. I will therefore turn now to the second condition.
(2) Article 1003(b) C.C.P.: Do the Facts Alleged Seem to Justify the Conclusions Sought?
[90] Under the second condition of art. 1003 C.C.P., the judge must determine whether the facts alleged seem to justify the conclusions sought. This condition goes to the merits of the case, not to procedure. The courts have long held that an applicant does not have to prove the alleged facts at the stage of the motion for authorization: Guimond, at paras. 9, 11 and 12; Comité régional des usagers des transports en commun de Québec v. Quebec Urban Community Transit Commission, [1981] 1 S.C.R. 424; Berdah v. Nolisair International Inc., [1991] R.D.J. 417 (C.A.), at pp. 420‑21; Lasalle v. Kaplan, [1988] R.D.J. 112 (C.A.); Desmeules v. Hydro‑Québec, [1987] R.J.Q. 428 (Sup. Ct.); and K. Delaney‑Beausoleil, “Le recours collectif”, in D. Ferland and B. Emery, eds., Précis de procédure civile du Québec (4th ed. 2003), vol. 2, at p. 913. The facts are assumed to be true, and the court may take both the alleged facts and the exhibits into account to determine whether the applicant has met the applicable standard of the prima facie case, the same standard applicable to injunctions.
[91] Since the conclusions sought in the instant cases have two aspects — the declarations that the by‑laws and resolutions are null and the claim for recovery — the standard must be applied in respect of two questions: (1) Do the alleged facts justify a conclusion that the by‑laws and resolutions are null? (2) If the by‑laws or the resolutions are null, will it be possible for the judge who hears the actions to order that the wrongfully collected taxes be refunded?
[92] A municipal by‑law may be quashed either because no law authorized its adoption — that is, the municipality lacked the authority to adopt it — or because it is abusive or oppressive: P. Faribault, Les recours de contrôle judiciaire (2001), vol. 1, at p. 10; Immeubles Port Louis Ltée v. Lafontaine (Village), [1991] 1 S.C.R. 326, at pp. 346‑56. A resolution, too, can be quashed for these same reasons. Although the action in nullity is a procedure that entails the exercise of the Superior Court’s superintending powers and its discretion, that court’s power to refuse to grant a declaration of nullity is all but nonexistent where a municipality has exceeded its authority, as the appellants Marcotte and Usinage Pouliot allege in the cases at bar: Immeubles Port Louis, at p. 372. As for restitution, it will be granted if the administrative act is quashed, as the parties will have to be restored to the position they were in before that act.
(a) Do the Alleged Facts Justify a Conclusion of Nullity?
[93] In Mr. Marcotte’s appeal, Longueuil submits that the facts alleged in respect of 2005 are insufficient to justify a conclusion that the municipal acts in issue are null. According to Longueuil, the tax burden decreased in 2003 and 2004.
[94] Without prejudging the merits of the cases, and subject to the decision on prescription as regards the years 2003 and 2004, I would say that the claims of the appellants Marcotte and Usinage Pouliot have “a good colour of right”: Comité régional des usagers des transports en commun de Québec, at p. 429. The appellants submit that Longueuil exceeded its powers under ss. 87.1 and 87.2 of its charter by increasing the tax burden, in one case, and the business tax, in the other, by more than 5% per year in each sector. The information they have provided is, prima facie, capable of supporting an inference that the ceiling was exceeded. As for the impugned resolutions, they identify specific amounts rather than prescribing, as required by s. 87.5, rules for calculating the part of the tax increase resulting from the constitution of the city. Subject to the argument concerning prescription in respect of 2003 and 2004, the action cannot be rejected on the basis that it is “frivolous or manifestly improper”: Comité régional des usagers des transports en commun de Québec, at p. 429. This is, prima facie, a case of excess of jurisdiction, since it is alleged that the exercise of taxing authority was inconsistent with the Charter of Ville de Longueuil.
(b) If the By‑laws and Resolutions Are Null, Will It Be Possible for the Judge to Order That the Taxes Be Refunded?
[95] In Mr. Marcotte’s case, Longueuil submits that the action for restitution is prescribed in respect of 2003 and 2004 because Mr. Marcotte did not apply for declarations of nullity for those years before asking this Court for permission to amend his conclusions.
[96] In principle, the amendment of a motion will be permitted, even on appeal, provided that it is not useless or contrary to the ends of justice and does not result in an entirely new action or application having no connection with the original one (arts. 199 and 509 C.C.P.). The requests for declarations that the resolutions are null and for restitution in respect of 2003 and 2004 are not unrelated to the request for declarations that the by‑laws are null included in the original motion. It would be hard for the city to claim to be surprised that Mr. Marcotte wishes to amend his conclusions in respect of 2003 and 2004 to make them similar to those already sought in respect of 2005, especially since the motion already included the question whether the by‑laws and resolutions for 2003 and 2004 were ultra vires as a common question in 2005.
[97] When applying art. 1003(b), a court may have to decide questions of law or of mixed fact and law flowing from the alleged facts. Thus, although a question related to prescription often requires proof that goes to the merits, this is not always the case. In the cases at bar, I think it would be unwise to answer questions requiring an assessment of the facts at the stage of the application for authorization. The judge at first instance reached this same conclusion in dismissing the motion to dismiss. The trial judge will be able, upon application, to reconsider this question concerning prescription in respect of 2003 and 2004 when he or she sees fit, on the basis of evidence not before this Court. I would add that the Court of Appeal considered prescription, although in relation to an altogether different aspect of the case. It did not discuss the prescriptive period applicable to 2003 and 2004, but concluded on another issue that individual actions would not be prescribed even if the class action were not authorized. I will return to this question below.
[98] According to the Court of Appeal, a declaration by a judge would not make it possible to establish the amount of the refund owed to each ratepayer. Rochon J.A. wrote the following:
[translation] Even if a judge were to declare that the by‑laws in issue are null, that would not make it possible to establish the amount of the refund owed to each ratepayer.
This is because of the nature of the unlawful act that is alleged to have been committed. The claim that the city exceeded its authority is based on the allegation that the overall tax burden increased by more than 5%. The tax burden consists of revenues from various sources, including the property tax. Accordingly, if the 5% limit is exceeded, the question of the appropriate remedy remains unanswered. Should all revenues, to the extent possible, be reduced in the same proportion to comply with the 5% limit? Are other remedies possible? Or, taken to the extreme, can it be said that this aspect of the case is justiciable? [paras. 30‑31]
This comment implies that the Court of Appeal did not see how the conclusions, as drafted, could be granted. In fact, the appellants Marcotte and Usinage Pouliot have not asked for a tax reduction, a recalculation or any other remedy. In this Court, Mr. Marcotte seeks the following conclusion:
[translation] ORDER the City of Longueuil to refund to the members of the group the unlawfully imposed general property taxes in respect of the years 2003, 2004 and 2005 . . . .
This is a simple conclusion for the recovery of taxes paid.
[99] If the Court of Appeal saw a problem, it was that it did not see how a simple refund of the wrongfully imposed taxes would be possible. In its view, if the by‑laws and resolutions were quashed, new versions would have to be adopted and implemented to provide for the city’s needs, and it wanted to avoid the processes of refunding the taxes and imposing new taxes. With respect, the approach implicitly suggested by the Court of Appeal is not the one that is usually taken in the context of an action to recover taxes. As a general rule, if a public body performs an act that it does not have the authority to perform, the act must be quashed, with all the consequences this entails. If a tax has been wrongfully imposed, taxpayers can be reimbursed. There may be cases in which a court has the necessary authority, and the information it needs, to order restitution of an amount lower than the amount paid pursuant to an obligation that was wrongfully imposed. It is also conceivable that if the National Assembly were to intervene, one of the solutions it might consider would be to set up a mechanism through which a partial refund would be possible. It is not open to the courts to propose such a solution, however. In the cases at bar, at this stage, the judge would not have all the information needed to depart from the general rule and order the refund of a lesser amount. It is not up to the judge to decide how the increases should be apportioned among the various components of the tax burden.
[100]Thus, I do not see why the conclusions sought by Mr. Marcotte and Usinage Pouliot could not be granted. They simply represent an application of the general rule on quashing an administrative act. The amount paid by each ratepayer would be easy to determine. It would be a liquid amount whose exigibility would hinge solely on an order of the court declaring the administrative act to be null.
[101]In addition to the question whether the amounts claimed by the appellants Marcotte and Usinage Pouliot are liquid and exigible, another concern of the Court of Appeal can be identified. Behind its refusal to contemplate a full refund of the taxes paid, a hint of the fiscal chaos argument raised by Longueuil can be seen. According to this argument, if tax by‑laws were quashed, the municipality hopes that the National Assembly would confer on it a special power to adopt new by‑laws to cover expenditures already incurred during the years in question. If so, nothing would then be gained from quashing the impugned resolutions and by‑laws. Longueuil adds that, unlike the government — which may enact retroactive legislation on its own — the municipality is dependent on the government’s will. Finally, Longueuil submits that a court hearing an administrative law case does not have the same powers as in a constitutional case, especially as regards a possible suspension of the effects of a declaration of nullity. It contends, in short, that any order for a refund would cause fiscal chaos for all ratepayers, particularly in the context of the demergers.
[102]Two comments must be made regarding the fiscal chaos argument: (1) to hold that the courts have a discretion to dismiss an action on the basis that the consequences of a judgment would be too great would amount to granting the defendants immunity, which would be inconsistent with the principle of the division of powers, and (2) this Court has already held that municipalities do not have immunity.
[103]As part of the democratic process, elected officials vote for the laws that govern executive action. If the courts were to grant the executive branch the right not to comply with the law where the consequences of an adverse judgment would be too great, the judiciary would be usurping the authority not only of elected officials, but also of voters. In the cases at bar, the amalgamation process begun in the 1970s resulted in the Amalgamations Act in 2002. After a political debate, public consultations were authorized, and the Demergers Act was passed. This entire process was highly politicized (see: A. Sancton, “Municipal Mergers and Demergers in Quebec and Ontario”, paper prepared for the Annual Meeting of the Canadian Political Science Association, York University, June 1, 2006). The appropriateness of the amalgamations and demergers is a political question. The courts have only a limited role to play in the process, that of reviewing acts performed, having regard to the rules established by the legislature. If a plaintiff contends that a public body has acted contrary to an enabling statute, the court cannot dismiss the action on the basis that the conclusions sought would have dire consequences.
[104]Furthermore, in Kingstreet Investments, this Court rejected the notion of immunity against claims for the recovery of taxes. In that case, the Court heard a claim for the recovery of taxes that had been held to be unconstitutional. Bastarache J., writing for the Court, stated that “[w]hen the government collects and retains taxes pursuant to ultra vires legislation, it undermines the rule of law” (para. 15).
[105]Bastarache J. was also clear in rejecting the fiscal chaos argument:
Another policy reason given by La Forest J. for the immunity rule [in Air Canada v. British Columbia, [1989] 1 S.C.R. 1161,] was a concern for fiscal inefficiency and fiscal chaos (p. 1207). My view is that concerns regarding potential fiscal chaos are best left to Parliament and the legislatures to address, should they choose to do so. Where the state leads evidence before the court establishing a real concern about fiscal chaos, it is open to the court to suspend the declaration of invalidity to enable government to address the issue. [para. 25]
See also D. A. Crerar, “The Restitutionary Class Action: Canadian Class Proceedings Legislation as a Vehicle for the Restitution of Unlawfully Demanded Payments, Ultra Vires Taxes, and Other Unjust Enrichments” (1998), 56 U.T. Fac. L. Rev. 47, at pp. 66‑71.
[106]Although a municipality cannot enact legislation to remedy the fact that it has exceeded its authority, it can of course ask the provincial legislature to do so. But this legal and political situation falls outside the scope of a class action brought before a judge. Furthermore, the municipality may be protected by prescription. Commenting in Abel Skiver Farm on the five‑year prescriptive period that applied in that case, Beetz J. wrote the following:
In imposing this short prescription, the legislator has provided, inter alia, relative protection for municipal and school finances. [p. 447]
[107]It is now settled that a claim for the recovery of wrongfully imposed taxes is an action for restitution (art. 1491 C.C.Q.). The prescriptive period applicable to an action for recovery of wrongfully imposed municipal taxes is set by the general provision of art. 2925 C.C.Q. Section 586 of the Cities and Towns Act, R.S.Q., c. C‑19 (six‑month prescriptive period for “damages occasioned by faults, or illegalities”, committed by a municipality), and s. 172 of the Act respecting municipal taxation, R.S.Q., c. F‑2.1 (on the quashing of the roll), do not apply. The action is therefore prescribed by three years as of the date of payment: Abel Skiver Farm; J. Pineau, D. Burman and S. Gaudet, Théorie des obligations (4th ed. 2001), at p. 474, §268.
[108]Since the facts alleged seem to justify the conclusions sought, and since it would be possible to grant those conclusions if the position of the appellants Marcotte and Usinage Pouliot were accepted, I find it impossible to agree with either Longueuil’s arguments or the Court of Appeal’s reasons respecting art. 1003(b) C.C.P.
(3) Article 1003(c) C.C.P.: Does the Composition of the Group Make the Application of Article 59 or Article 67 C.C.P. Difficult or Impracticable?
[109]Regarding the claim for the recovery of taxes, the condition of art. 1003(c) was not analysed in detail by either the Superior Court or the Court of Appeal. But it is clear that if every ratepayer wanted to take part in the action, it would be very difficult and quite impracticable to ask each of them for a mandate or to join them all as co‑plaintiffs. What the Court of Appeal held — and Longueuil argues this here — is that there would be no point in having all the members take part in the action given that a judgment in a single action in nullity would apply in respect of all of them. The cases relied on in support of this proposition are Francœur, St‑Césaire and Gravel. In St‑Césaire, Rothman J.A. summarized the legal basis for this position as follows:
All of the taxpayers would, of course, be bound by any declaration of nullity pronounced by the Court whether the action is taken by Appellants individually or under Articles 59 or 67 C.C.P. or under the class action provisions of the Code. Whoever takes the proceedings, all of the taxpayers would, in any event, obtain the same benefits and be subject to the same disadvantages that flow from the nullity of these by‑laws. But that does not mean that all of them have an interest in seeking their nullity or pursuing the recourse proposed by Appellants. The contrary would seem to be the case here.
In my opinion, a taxpayer cannot be authorized to represent all of the other taxpayers in the municipality merely because they will be affected by the judgment in the action in nullity he proposes to institute. That does not create a “group” and it does [not] make all of the taxpayers “members” of a group. Indeed, in any action to set aside a municipal by‑law, all of the taxpayers would be affected by the outcome. That does not mean they are all, necessarily, “members” of a “group” or that they all have similar or related interests and similar recourses to exercise.
. . . I do not believe that all of the taxpayers should be deemed to be members of a group for the purpose of taking proceeding to set aside these by‑laws, particularly since the same result can be obtained, if it is to be obtained at all, with much less procedural and administrative complexity and at much less cost through an ordinary action or an action taken under Articles 59 or 67 C.C.P. [Italics omitted; p. 1072.]
If it is assumed that the Court of Appeal’s approach may be valid in certain cases, two questions are raised: (1) Would an individual action make the same result possible in the cases at bar as a class action? (2) Is the fact that the interests of certain ratepayers conflict with those of the group members an impediment to the authorization of the class action?
[110]One of the fundamental problems with the Court of Appeal’s reasons is that the claim for the recovery of taxes is not given consideration in proportion to its importance in the instant cases. In this sense, the trilogy of cases on which the Court of Appeal based its approach do not answer all the questions raised in the actions for which Mr. Marcotte and Usinage Pouliot are seeking authorization. Acting individually, the appellants might obtain declarations of nullity that would apply in respect of all ratepayers. But if their actions for the recovery of taxes were successful, only Mr. Marcotte and Usinage Pouliot would benefit from orders to refund taxes. As a result, the actions of the other ratepayers for the recovery of taxes could be prescribed even before a final judgment was rendered in the individual actions of Mr. Marcotte and Usinage Pouliot.
[111]Furthermore, whereas prescription is suspended in respect of the members while the authorization procedure is under way (art. 2908 C.C.Q.), time would begin running again if this Court were to affirm the Court of Appeal’s judgment. It goes without saying that such a decision would force all ratepayers who wanted to go to the trouble of doing so to bring individual actions promptly. The end of the suspension does not have the effect, as in the case of the interruption of prescription, of causing prescription to run again for the same period (art. 2903 C.C.Q.).
[112]The Court of Appeal countered this argument by stating that a class action would be pointless, since the prescriptive period that would otherwise apply to the actions for restitution would be interrupted in respect of ratepayers who did not participate in the direct action in nullity. According to the Court of Appeal, the interruption of prescription would result from art. 2900 C.C.Q.:
Interruption with regard to one of the creditors or debtors of a solidary or indivisible obligation has effect with regard to the others.
[113]The Court of Appeal therefore asserted that [translation] “the claim, if one exists, can be said to be indivisible” (para. 32). Thus, it considered that any claim of the ratepayers in respect of municipal taxes would be indivisible. This interpretation is surprising and, if accepted, would have quite surprising consequences.
[114]I agree that each ratepayer’s individual obligation to pay a municipal tax is indivisible, in that the tax is imposed in respect of an entire year. A municipality can decide to impose the tax for a given year at a time of its choosing. It can also ask ratepayers to pay the tax by a certain date: Beauchamp v. Cité d’Outremont, [1970] C.A. 286, at p. 289.
[115]But this is not the rule on which the Court of Appeal based its assertion. In the Court of Appeal’s view, it is the possible claim of the ratepayers that is indivisible. But if this reasoning were followed, the effect would be that the whole of the refund due from the municipality could be claimed by a single ratepayer in light of art. 1520, para. 2 C.C.Q. This presupposes that the ratepayers’ obligation to pay their taxes would also be indivisible, which means that the total of the taxes owed to the municipality could be claimed from a single ratepayer. Finally, this would mean that if one of the ratepayers brought an action for the recovery of taxes, that action would interrupt prescription in respect of all the municipality’s other ratepayers. This interpretation of the concept of debt for non‑payment of a municipal tax is, to say the least, a novel one. I doubt that adopting it would be desirable.
[116]Obligations are generally divisible. An obligation is indivisible only where this is stipulated to be the case or where the object of the obligation is indivisible owing to its nature (art. 1519 C.C.Q.). Where a divisible obligation (such as the payment of a sum of money) binds a single creditor and a single debtor, however, it must be performed as if it were indivisible (art. 1522 C.C.Q.). It might be asked whether an obligation concerning municipal taxes involves a relationship between a single creditor and a single debtor or one that binds many other persons. For example, Mr. Marcotte resides in a municipality with thousands of ratepayers. Are there thousands of distinct obligations between the city and individual ratepayers? Or, on the contrary, is there a single obligation between the city on the one hand and all its ratepayers on the other? To conclude that all the ratepayers are bound to the city by an indivisible obligation would be to establish an entirely new rule. If there are thousands of distinct obligations, art. 2900 C.C.Q. cannot apply. With respect, I believe this to be the case. Each ratepayer has an individual and distinct obligation to the city to pay his or her own taxes. If the city collects a tax from that person, either the tax was imposed lawfully and the ratepayer is accordingly discharged, or it was imposed unlawfully and the ratepayer who paid it can obtain a judgment requiring the city to refund the amount in question. Article 2900 C.C.Q. therefore does not apply to an action for the recovery of municipal taxes.
[117]Finally, it could be argued that the city has an indivisible obligation to all its ratepayers not to exceed its authority. However, this obligation would be limited to the public law dimension of the action and would not affect the recovery of taxes aspect.
[118]In sum, each ratepayer must pay the imposed tax. His or her own obligation to the municipality is, in principle, indivisible. Unless the municipality allows ratepayers to pay the tax in instalments, it must be paid all at once. In my opinion, the rule of indivisibility extends no further than this in municipal taxation matters.
[119]Consequently, an action for the recovery of taxes brought by one ratepayer does not interrupt prescription in respect of the other ratepayers. The emphasis given to the aspect of the action concerning the nullity of a municipal by‑law cannot be allowed to overshadow the other aspect concerning the recovery of the taxes, which is at least as important to the appellants. In sum, prescription runs against all ratepayers who wish to claim a refund of the taxes they have paid.
[120]A parallel can be drawn with the situation of a citizen who sustains an injury because of a poorly maintained sidewalk. Even if it were said that a city has an indivisible obligation to all its ratepayers regarding maintenance and safety, it would not be open to a ratepayer who did not bring an action within the prescriptive period to invoke an interruption of prescription resulting from proceedings brought on time by another. Moreover, in such a case, it could not be argued that the sole purpose of the action was to have the court find a fault on the defendant city’s part and, in the case of a motion for authorization to institute a class action, that the choice of a class action was pointless. (I express no opinion, of course, on cases where the issues are not similar.)
[121]Likewise, in an action for the recovery of taxes on the basis that the by‑law imposing them is null, the plaintiff cannot claim to be entitled to a refund of the taxes in question until the court finds that the by‑law is in fact null. It is incorrect to characterize the action as a simple request to quash the by‑law. Consequently, it is also incorrect to state that bringing a class action would be pointless because the judgment would have effect with regard to everyone. No explanation has been given as to why it might be more practicable to pursue the claim for restitution — which is common to all the members — by mandate or by joinder.
[122]It should be noted that in Francœur and St‑Césaire, two key cases on which the Court of Appeal’s case law is based, the group members were not seeking the recovery of unlawfully imposed taxes. In my view, therefore, those cases do not support a categorical statement that in Quebec law, a class action cannot be brought where the recovery of taxes is sought. The third case cited, Gravel, is of little assistance, since no reasons were given for the decision. I therefore find that the past decisions of the Court of Appeal do not support the conclusion it reached in the instant cases.
[123]In fact, the only issue here — whether a class action can be brought to claim a refund of municipal taxes further to a declaration of nullity — was never really considered by the Court of Appeal before this case. In my view, therefore, no authority supports the conclusion the court reached in the cases at bar.
[124]Furthermore, the fact that ratepayers may have divergent interests is not relevant in Quebec class action law. There is no requirement in Quebec that the members of a class action group not have conflicting interests. The city’s argument that they may not is drawn from legal principles that used to be applied in certain common law provinces. For example, before the enactment of the Class Proceedings Act, 1992, the Ontario courts required that group members not have conflicting interests: see, for example, York Condominium Corp. No. 148 v. Singular Investments Ltd. (1977), 16 O.R. (2d) 31 (H.C.J.), at pp. 34‑35; Butler v. Regional Assessment Commissioner, Assessment Region No. 9 (1982), 39 O.R. (2d) 365 (H.C.J.). In Quebec, members with divergent interests can ask to be excluded from the action: arts. 1005 to 1007 C.C.P.
[125]It has often been said that the class action is only a legal procedure and cannot afford a representative more rights than a plaintiff acting alone would have: Dell Computer Corp. v. Union des consommateurs, 2007 SCC 34, [2007] 2 S.C.R. 801, at para. 106; Bisaillon v. Concordia University, 2006 SCC 19, [2006] 1 S.C.R. 666, at para. 17. In the same vein, if an individual plaintiff can in an ordinary action seek both a declaration that a municipal by‑law is null and the recovery of taxes, I do not see why a similar claim could not be made by means of a class action. On this point, the comments made by Reeves J. in authorizing a class action in Gosselin v. Procureur général du Québec, [1986] SOQUIJ AZ-87021083 (Sup. Ct.), at pp. 8‑9, are instructive:
[translation] It was argued that it would be enough for one or more persons in the group to file a suit in that the resulting decision would establish a precedent that would suffice to ensure that the respondent, in applying its general policy on assistance to recipients of social aid, disposed of all their claims. This, adds counsel for the respondent, would reduce the costs of litigation significantly.
Even if this were true, the applicant and the members of her group would still be lawfully entitled to use the class action provided for by law if they met the conditions of art. 1003 C.C.P.
The declaration, as laudable as it may be, of a political intention to comply with a possible judicial precedent can be accorded no weight by the court, which must disregard it.
What is more, if the action has merit, it is only right, since the recourse is available, that it be brought, lest many members of the group lose their rights owing to prescription.
Finally the argument regarding cost savings is without merit. The combined costs of bringing several thousand suits similar to this one would equal or exceed the costs of a class action.
[126]Reeves J.’s comments also apply to municipalities and stand in opposition to those of the Court of Appeal, which stated that there was no reason to believe that the municipality would refuse to take the necessary steps to reimburse ratepayers for any amounts it may have collected unlawfully. This approach would amount to granting immunity to municipalities. But as I mentioned above, municipalities are afforded no such protection, no more, I should add, than are the legislatures or Parliament — see, for example, Kingstreet Investments or Canada (Attorney General) v. Hislop, 2007 SCC 10, [2007] 1 S.C.R. 429. The law reports are now replete with decisions in cases in which monetary conclusions have been attached to applications for declarations of nullity or have flowed from such declarations. So the presumed good intentions of public authorities do not constitute a basis for dismissing actions that include monetary claims.
[127]In the cases at bar, it is clear that it would be less difficult and far more practicable to proceed by way of class actions than by way of individual proceedings. The application of the principle of proportionality here enhances the usefulness of the class action, which constitutes an alternative to the institution of thousands of individual actions. Moreover, the fact that Mr. Marcotte’s tax bills total approximately $6,000 for the three years in issue shows that it would have taken a well‑to‑do and very determined ratepayer to contest the municipality’s action alone. This is unquestionably a case in which access to justice will be facilitated by the institution of a class action.
(4) Article 1003(d) C.C.P.: Is the Representative in a Position to Represent the Members Adequately?
[128]As with the first condition, the courts below did not rely on the appellants’ ability to represent the members of their respective groups adequately as a basis for dismissing the motions, and Longueuil presents no arguments in this respect. Moreover, the appellants have shown that they are in a position to represent their groups adequately. In my view, therefore, this condition has been met.
V. Conclusion
[129]Much has been made of the principle of proportionality. This principle was adopted to ensure that the proceedings chosen would be proportional to the nature, complexity and ultimate purpose of the action or application. It was regarded as a means of enhancing access to justice. It is almost ironic that the principle is being relied on in the cases at bar to prevent class actions, as the class action itself is intended to enhance access to justice.
[130]In my opinion, although the application of art. 4.2 C.C.P. to certain of the conditions for authorizing a class action may in certain circumstances support the conclusion that a class action would be inconsistent with the principle of proportionality, that is not the case here. Rather, I find that the proposed actions meet all the conditions set out in the Code of Civil Procedure, and I would therefore allow the appeals and authorize the actions as conceived by the appellants, with costs throughout.
APPENDIX
Code of Civil Procedure, R.S.Q., c. C‑25
4.2. In any proceeding, the parties must ensure that the proceedings they choose are proportionate, in terms of the costs and time required, to the nature and ultimate purpose of the action or application and to the complexity of the dispute; the same applies to proceedings authorized or ordered by the judge.
1003. The court authorizes the bringing of the class action and ascribes the status of representative to the member it designates if of opinion that:
(a) the recourses of the members raise identical, similar or related questions of law or fact;
(b) the facts alleged seem to justify the conclusions sought;
(c) the composition of the group makes the application of article 59 or 67 difficult or impracticable; and
(d) the member to whom the court intends to ascribe the status of representative is in a position to represent the members adequately.
Charter of Ville de Longueuil, R.S.Q., c. C‑11.3
5% increase.
87.1. The city may, for a fiscal year, fix any general property tax rate in such manner that, in relation to the preceding fiscal year, the increase in the tax burden borne by the aggregate of the units of assessment situated in a sector and in respect of which all or part of the rate applies is not greater than 5%.
Tax burden.
The tax burden shall consist of
(1) the revenues derived from the general property tax which result from the application of all or part of a rate of that tax;
(2) the revenues derived from other taxes, including the taxes imposed on the basis of the rental value of immovables and compensations considered by the applicable legislation to be taxes, in particular the taxes used to finance services such as the supply of drinking water, waste water purification, snow removal, waste disposal, and residual materials upgrading;
(2.1) the revenues considered in establishing the aggregate taxation rate and derived from compensations and modes of tariffing not referred to in subparagraph 2;
(3) the revenues derived from the amounts to stand in lieu of taxes that must be paid in respect of immovables by the Government in accordance with the second paragraph of section 210 of the Act respecting municipal taxation (chapter F‑2.1) or by the Government in accordance with section 254 and the first paragraph of section 255 of that Act, or by the Crown in right of Canada or by one of its mandataries;
(4) the revenues of which the city has deprived itself by granting a credit in respect of any of the sources of revenue referred to in any of subparagraphs 1 to 3, for the application of section 8 as regards the allocation of the credit from a surplus.
Exclusion.
However, the revenues referred to in the second paragraph which are used to finance expenditures relating to debts shall be excluded from the tax burden.
“immovables”.
For the purposes of subparagraphs 2 and 3 of the second paragraph, the word “immovables” means business establishments when the business tax or the amount standing in lieu thereof is involved.
5% increase.
87.2. The city may, for a fiscal year, fix the rate of the business tax in such manner that, in relation to the preceding fiscal year, the increase in the revenues derived from that tax in respect of all the business establishments situated in a sector is not greater than 5%.
Amounts in lieu of tax.
The revenues derived from the amounts to stand in lieu of the business tax that must be paid by the Government in accordance with the second paragraph of section 210 or the second paragraph of section 254 and the first paragraph of section 255 of the Act respecting municipal taxation (chapter F‑2.1), or that must be paid by the Crown in right of Canada or one of its mandataries, shall be included in those revenues.
Rules on source of increase.
87.5. If the city avails itself of any of the powers provided for in sections 87.1 and 87.2, it shall, subject to any regulation under the second paragraph, prescribe the rules to determine whether the increase under that section results solely from the constitution of the city and, if not, to establish the part resulting from the constitution.
Regulation.
The Government may, by regulation, determine the only cases in which an increase is deemed not to result from the constitution of the city.
135. Sections 86 to 88.6 have effect until 31 December 2021.
Appeals dismissed with costs, McLachlin C.J. and Binnie, Deschamps and Cromwell JJ. dissenting.
Solicitors for the appellants: Borden Ladner Gervais, Montréal.
Solicitors for the respondent: Montgrain Gibeau, Longueuil.
Solicitor for the intervener: Attorney General of Ontario, Toronto.
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