The Court of Québec Imposes A Near-Total Expropriation On A Municipality And Reiterates The Applicable Criteria

The Court of Québec Imposes A Near-Total Expropriation On A Municipality And Reiterates The Applicable Criteria

On June 21, 2024, the Court of Québec dismissed the appeal of the municipality of Val-David, which was contesting the decision of the Administrative Tribunal of Québec requiring it to execute a near-total expropriation rather than a partial expropriation.[1] The municipality is now required to acquire the vast majority of the lots in the sector rather than the 12.43% it had initially planned to expropriate. The dispute began a few years ago, when the land of Ms. Diane Beaudry’s “Destination Spa” business was the subject of a notice of expropriation served by the municipality of Val-David.[2] This notice concerned the partial expropriation of the land for the purpose of building a school. The municipality’s plan thus prevented the owner from using this part of the site to build small cottages and develop outdoor activities on it to provide services that would complement her health and wellness business.[3]

Ms. Beaudry had acquired the land in 2014 for the purpose of developing a large-scale project that would include a resort, a spa and several outdoor activities on the site.[4] Before acquiring the land, she had met with Val-David’s mayor and director general on several occasions. Ms. Beaudry had also prepared a redevelopment concept for the site that had been favourably received by the municipality.[5] But despite this initial support from the municipality, she received the above-mentioned notice of expropriation a few years later.[6] The partial expropriation that the municipality of Val-David was requesting would not only have led to the loss of a large part of the site’s buildable surface area but also to a significant loss of clientele. These two aspects were incompatible with Ms. Beaudry’s vision, which was to provide the guests with relaxing residential spaces.[7]

The owner therefore applied to the Administrative Tribunal of Québec in 2021 to compel the municipality to carry out a near-total expropriation, as permitted under section 65 of the Expropriation Act (EA) in force at the time. In her view, this was the only way she would receive adequate compensation.[8] Section 65 of the EA, which applied in this case, states that an expropriated party may apply to have the Tribunal order the total or partial expropriation of the remaining part of the land if that part is no longer suitable for use in whole or in part.[9] The Tribunal found it appropriate to order a near-total expropriation, because the part of the land remaining after partial expropriation would not be suitable for use for the purposes of the business, namely, to use the entire property as a whole for the owner’s comprehensive redevelopment plan.[10] However, the Tribunal ruled that one of the lots, which was further away from the others and had never been part of the redevelopment plan, did not need to be expropriated, since it could still be used for favourable, appropriate and acceptable purposes.[11] Indeed, it is because this lot was excluded that the judgment refers to a “near-total” rather than “total” expropriation.

In its judgment dismissing the appeal of the Tribunal’s decision, the Court of Quebec based its analysis, on the “suitable for use” concept in the wording of section 65 of the EA. In its judgment, the Court explains that, to meet this criterion, it is not necessary to prove that the non-expropriated remainder is not suitable for any other possible alternative related to the plan.[12] Rather, the criterion implies that a total expropriation must be ordered “when the expropriation measure hinders or harms the operation of the expropriated party’s business” (our translation).[13] Accordingly, the Court of Québec dismissed the appeal after conducting a detailed analysis, stating that the Administrative Tribunal of Québec had not erred in ruling that the non-expropriated portion was no longer suitable for use in the “Destination Spa” business under section 65 of the EA.[14] That said, the Expropriation Act at issue in this judgment was replaced in December 2023 by the Act respecting expropriation. As a result, the provision at issue in this case, section 65 of the EA, was replaced by section 30 of the Act respecting expropriation.

It is interesting to note that the concept of “suitable for use” has been replaced in the new law, meaning that a different criterion must now be met before an expropriated party may apply for a total expropriation. While the previous version required that the non-expropriated remainder no longer be “suitable for use”, the new version requires that “the remainder may no longer be used according to the highest and best use”. This amendment is intended to account for the fact that the indemnity provided for under the Act respecting expropriation no longer takes into account the value to the owner, as was the case under the previous Act. The wording is now more precise and limits the situations in which an expropriated party may apply for a total expropriation, thus setting out a threshold that is easier to meet. This amendment therefore takes into account the recent legislative change relating to the calculation of the indemnity, and seeks to strike a balance in order to ensure that the expropriated party receives adequate compensation.[15] Thus, despite this insightful decision by the Court of Québec regarding the terms of an application for a total expropriation under section 65 of the EA, this issue will need to be revisited in light of section 30 of the Act respecting expropriation and its interpretation by the courts.

In Québec, the right of expropriation granted to public bodies is powerful and exceptional in nature, because it constitutes the ultimate infringement of property rights. That is why it is interpreted very strictly by the courts. Indeed, expropriation rights are interpreted restrictively in the interest of the expropriated party, which has no choice but to accept being dispossessed. The dismissal of the appeal from the decision at issue is a good example of the strict interpretation that courts apply to ensure that the expropriation of property does not result in disproportionate harm to the expropriated party.

The Administrative Tribunal of Québec thus ruled in the owner’s favour in 2022, and the municipality appealed the decision. The Court of Québec dismissed the appeal in June 2024, which however did not bring the case to an end, as the municipality filed an application for judicial review of the Court of Québec decision, although it had recently announced that this decision will have no impact on the construction of the new school, which is due to begin in spring 2025.[16]

A previous version of this article stated that the decision of the Court of Quebec had put an end to the case. However, between the drafting and publication of this article, the municipality filed an application for judicial review.

[1] MUNICIPALITY OF VAL-DAVID, Dossier d’expropriation : Rejet de l’appel par la Cour du Québec, June 21, 2024, available online: Dossier d’expropriation : Rejet de l’appel par la Cour du Québec | Municipalité du Village de Val-David (valdavid.com) (available in French only).
[2] Municipalité de Val-David v. 9297-8246 Québec Inc., 2022QCTAQ 06630, paras. 18-39 (available in French only).
[3] Ibid at para. 41.
[4] Ibid at paras.19-21.
[5] Ibid at para. 20.
[6] Ibid at para. 9.
[7] Ibid at para. 124.
[8] Quentin DUFRANNE, “Val-David perd sa demande en appel”, La Presse, June 23, 2024, available online: Expropriation du terrain d’un ancien hôtel | Val-David perd sa demande en appel | La Presse (available in French only).
[9] The Act respecting expropriation, which came into force at the end of 2023, preserves this right in the expropriated party’s favour, but section 30 now requires proof that the remainder may no longer be put to the expropriated property’s highest and best use.
[10] Supra note 2 at paras. 62 and 124.
[11] Ibid at paras. 63-66.
[12] Municipalité du village de Val-David v. 9297-8246 Québec inc., 2024 QCCQ 2784, para. 90 (available in French only).
[13] Ibid at para. 51.
[14] Ibid at paras. 94-96.
[15] COMMITTEE ON TRANSPORTATION AND THE ENVIRONMENT, Hansard, Bill 22, 1^stSession, 43^rd Legislature, 2023, Vol. 47, nos. 21, 22 and 27.
[16] MUNICIPALITÉ DE VAL-DAVID, supra note 1.

by Martin Thiboutot, Andrei Pascu and Lila Perrier (summer law student)

A Cautionary Note

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

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