Last March 16, the Court of Appeal rendered judgment in Dupras v. Ville de Mascouche[1] with respect to a disguised expropriation of a lot zoned “conservation” following a regulatory amendment undertaken by the City of Mascouche (hereinafter the “City “). The Court of Appeal condemned the City to pay compensation to the owner by concluding that there was a disguised expropriation, even though the restrictive by-law had been adopted more than 10 years after the owner filed the action.

Facts

The facts are simple. When the lot was acquired in 1976, it was under forest cover and located in an area allowing residential use on 70% of the lot. From 1985, the owner entered into an agreement with the City providing for the development of a cross-country ski trail by the City. However, on September 5th, 2006, the City modified the zoning of the entire lot so that the only authorized use was that of “conservation”, resulting in the prohibition of all construction.

In 2008, the owner became aware of this zoning change and began discussions with the City to either change the zoning or have the City purchase the lot. The City made several private and public representations suggesting the possibility of a possible acquisition of the lot. It was not until February 8th, 2016, that the City informed the owner that it did not intend to acquire the lot in question.

Decision confirmed by the Court of Appeal

In its judgment, the Court of Appeal confirms that the actions taken by the City constitute a disguised expropriation, particularly that the 2006 by-law deprived the owner of any reasonable use of her land. The Court of Appeal pointed out that although the City has the power to adopt restrictive by-laws with a view to manage and protect the environment (wetlands, forest cover, etc.), this power does not allow it to prohibit any use of the land and certainly does not exempt it from its legal obligation to compensate the landowner who sees his right severely affected[2].

While citing a text published by Beauregard lawyers in 2017[3], the Court of Appeal confirms that “it is an error to conclude that there can be no disguised expropriation when the City has the power to adopt restrictive regulation”

In addition, the Court of Appeal intervened as to the starting point of the prescription, recalling the teachings of the judgment of the Supreme Court of Canada in Lorraine (Ville de) c. 2646-8926 Québec inc.[4], according to which a cause of action cannot crystallize when the actions taken by the City maintain “the reasonable hope, even a legitimate expectation, of a zoning change or expropriation in good and due form” when it is not the case[5]. In this case, the date of February 8th, 2016 marks the start of the three-year prescription, which is when the City informed the owner that it did not intend to acquire the lot.

Moreover, although the restrictive by-law entered into force in 2006, the Court of Appeal also retained the date of February 8, 2016, as the valuation date, since that is when the cause of action crystallized. The Court underlines the fact that between 2006 and 2016, the City had told the owner publicly that the residential zoning would be restored or that it would buy the lot; thus, this date makes it possible to take into account the entire loss suffered by the owner due to the disguised expropriation[6].

As for the value of the lot as of February 8th, 2016 according to residential zoning and the reimbursement of taxes, interest and the additional indemnity, the Court of Appeal returned the case to the Superior Court for a ruling. To be continued…

For any questions relating to municipal law and urban planning, do not hesitate to contact the Beauregard Avocats team.

[1]      2022 QCCA 350.

[2]      Idem., par. 37 to 39.

[3]      Roger Paiement and Simon Frenette, « L’expropriation déguisée : où en sommes-nous ? » (2017) 433 Développements récents en droit de l’environnement (2017), Montréal, Yvon Blais, 2017, page 79, pages 105 and following.

[4]      2018 CSC 35.

[5]      Supra note 2, par. 45.

[6]      Idem, par. 56.