The Superior Court corrects the interpretation of by-laws applicable on the territory of the City of Montreal concerning real estate development

In recent months, the interpretation of municipal and urban planning by-laws on the territory of the City of Montreal has been the subject of several judgments of the Superior Court, some of which correct the application made by public officials to the detriment of real estate developers. This is the case of Propriétés Cons 9 inc. v. Ville de Montréal, 2022 QCCS 576, rendered by the Honourable Serge Gaudet on February 22, 2022 (hereinafter the “PC9 decision“) and of Immeubles Blue Stone inc. v. Ville de Montréal et l’arrondissement Côte-des-Neiges–Notre-Dame-de-Grâce, 2022 QCCS 1148, rendered by the Honourable Michel Déziel on April 4, 2022 (hereinafter the “Immeubles Blue Stone decision“), in which Beauregard Avocats represented Immeubles Blue Stone jointly with Avocats Renno & Vathilakis.

In the PC9 decision, PC9 sued the City of Montreal on the basis of receipt of an overpayment of park fees for its residential redevelopment project. According to section 5 of By-law No. 17-055 respecting the transfer for the purpose of establishing, maintaining and improving parks, playgrounds and the preservation of natural areas on the territory of the City of Montreal / Règlement no 17-055 relatif à la cession pour fins d’établissement, de maintien et d’amélioration de parcs, de terrains de jeux et de préservation d’espace naturels sur le territoire de la Ville de Montréal (hereinafter the “By-law“), the compensatory amount is calculated as follows :

Compensatory Amount = (10% of site value/total number of dwelling units) X (number of dwelling units created – number of social or community dwelling units – number of dwelling units with 3 or more bedrooms)

However, section 6 of the By-law provides that in determining the value of the site for the purpose of calculating the compensation amount, “the portion of the site that does not contain dwelling units or space dedicated strictly to dwelling units” must be excluded (our translation).

The dispute between PC9 and the City involved two elements of the formula for calculating the compensation amount: the value of the site and the exclusion of the number of social or community dwellings. As part of the negotiations, PC9 was required to develop a portion of the site as a “street garden” that would be accessible to the public, a portion that PC9 argued should be excluded from the calculation of the park fee compensatory amount. In addition, PC9 had chosen to make a contribution to the City’s community and social housing fund. PC9 believed this amount should be deducted from the park fee compensatory amount, while the City believed that only social or community dwellings on the project site were eligible for the formula deduction.

The Superior Court ruled in favour of PC9 for the following reasons:

  • The exclusion of the street garden from the site value: “the area of land occupied by the street garden, on the one hand, does not include housing, and, on the other hand, is not a space strictly dedicated to housing, since […] this space can be used by the general public as a place of relaxation or as a pedestrian passage […]” (para. 38);
  • The exclusion of the financial contribution for social or community housing: on-site, off-site and purely financial contributions are all contributions to social housing and are therefore functional equivalents giving rise to the same deduction in the calculation of the compensatory amount of park fees (paras. 68 and 71).

In the Blue Stone decision, the issue was the validity of a building permit within the meaning of the Building Construction and Alteration Regulation (11-018) / Règlement sur la construction et la transformation de bâtiments (11-018) (hereinafter “By-law 11-018“) and the scope of what constitutes construction works, a concept not defined in By-law 11-018. Immeubles Blue Stone had obtained its construction permit and carried out work, including the preparation and excavation of the site and the decontamination of the soil, which according to the Borough did not constitute construction work within the meaning of By-law 11-018. Thus, according to the Borough, Immeubles Blue Stone’s construction permit had expired since no construction work had been started within 18 months of the issuance of the permit. It is important to note that Immeubles Blue Stone was limited in its work due to a judicial saga, including several provisional and interlocutory injunctions, not allowing it to advance in its construction work further. Thus, in addition to pleading that the work is already undertaken constituted construction work, Immeubles Blue Stone alleged the impossibility of acting (l’impossibilité d’agir).

The Superior Court ruled in favour of Immeubles Blue Stone and concluded that the work undertaken by Blue Stone constituted construction work, since “construction work refers to the process, including all the steps and actions required for construction” and that, without a construction permit, the work undertaken by Immeubles Blue Stone would have contravened By-law 11-018 (para. 53; our translation). Furthermore, since Immeubles Blue Stone Real was subject to interlocutory judgments limiting the scope of the work it could undertake or advance, the Superior Court was of the view that impossibility of action applied and therefore decided to declare the building permit valid for an additional period of time, so that Immeuble Blue Stone would not have to re-file a costly permit application.

As the PC9 decision and the Blue Stone decision demonstrate, the application of municipal and urban planning by-laws is not always straightforward and may require judicial intervention to clarify the rights of taxpayers.

Please do not hesitate to contact Beauregard Avocats with any questions you may have regarding your permit applications and the amount of park fees to be paid.