The Act respecting expropriation (ARE) and the Act to amend the Act respecting municipal taxation and other legislative provisions (AARMT) were both passed by the Quebec National Assembly at the end of 2023 and mark a significant paradigm shift in expropriation and real estate law in Quebec.
They have multiple impacts on landlords, real estate developers, municipalities and public bodies, but before we explore them, it’s important to define the concept of expropriation. Expropriation takes place when private immovable property is confiscated without the consent of the owner at a time not of their choosing. It deprives the owner of the property’s use, the collection of its fruits and the right to dispose of it as they see fit.
New expropriation rules in Quebec
The ARE has been in effect since December 29, 2023. It replaces the Expropriation Act and the expropriation system in place in Quebec since 1973. In short:
- The new provisions exclude the concept of value to the owner, thereby reducing the immovable indemnity owed to the expropriated party.
- Certain considerations apply in determining the value of an expropriated right, including:
- A use different from the use in progress at the date of expropriation may be chosen, provided that it is authorized by the statutes and regulations in effect and implemented within three years of the expropriation;
- The use chosen must show a positive return as measured by net income, which is problematic if it is a potential use.
- Certain indemnities are now capped (e.g., for trouble, nuisance and inconvenience).
- Certain types of damages are not compensated (e.g., damages incurred before the expropriation or caused by the expropriating party’s project).
Limitation of damages resulting from an expropriation
The ARE also limits the damages owed for any prejudice caused directly by an expropriation. Take, for example, business projects that can no longer be carried out due to expropriation. The compensation due to the expropriated party is limited to projects allowed under statutes and municipal by-laws, which are economically feasible and profitable. In addition, the construction work must begin within three years following the date of expropriation. All preliminary steps to implement the project must have been completed as of the date of expropriation and all the permits, authorizations and approvals required by a statute or municipal by-law must have been obtained.
Some damages are not considered to be damages directly caused by the expropriation, for instance where they precede the notice of expropriation or are caused by the preparatory work for an expropriation. The expropriating party may carry out preparatory work even before having received the decision or authorization required to carry out the expropriation, provided it gives the owner 10 days’ prior notice before setting foot on the immovable concerned.
Possibility of dispossession without compensation
Adopted and assented to on December 8, 2023, the AARMT introduces new provisions in the Act respecting land use planning and development (ALUPD) regarding de facto expropriation.
These provisions allow a public body to dispossess a private owner’s immovable without having to compensate them, insofar as this dispossession is deemed to be justified within the meaning of the ALUPD if it is intended to protect wetlands and bodies of water or an environment of high ecological value, or if it is necessary to ensure human health or safety or the safety of property.
These provisions are broadly worded and give rise to multiple interpretations. What is an environment of high ecological value? Are biological studies systematically required for these provisions to apply? What circumstances are covered when ensuring human health or safety or the safety of property? The courts have yet to rule on these matters. In Ville de Saint-Bruno-de-Montarville c. Sommet Prestige Canada inc., (2024 QCCA 804), the Quebec Court of Appeal recently returned a case to be reassessed by the Superior Court in light of the new legal framework, which applies immediately. Accordingly, even legal recourses filed prior to the adoption of the AARMT may be governed by this new legal framework.
Under the new provisions introduced in the ALUPD by the AARMT, an immovable must be considered being susceptible of reasonable use where the infringement of the right of ownership is justified in the circumstances of each case, which must be assessed from a proportionality perspective, taking into account, among other things:
- The characteristics of the immovable;
- The objectives set out in a metropolitan land use planning and development plan, a regional county municipality’s land use and development planor a municipality’s planning program;
- The public interest.
It is not clear what other elements may determine whether an immovable is considered being susceptible of reasonable use, thereby leaving room for interpretation.
Disguised expropriation remedy
An owner who has suffered an infringement of their right of ownership that prevents all reasonable use of the immovable may bring a proceeding before the Superior Court for the payment of an indemnity under article 952 of the Civil Code of Québec. This is in fact a disguised expropriation remedy, which is prescribed three years after the date of coming into force of the act that infringes on their right of ownership.
If successful, the owner is entitled to be indemnified in accordance with the new ARE rules but potentially may not be. The public body concerned has four months after the judgment to decide whether to put a stop to the infringement or to acquire the property and pay the indemnity determined by the court.
In summary, the ARE and AARMT constitute a bona fide revolution in expropriation law in Quebec. Quebec’s decision to abandon such high-profile concepts as the value to the owner and allow dispossession without compensation is a major departure from the longstanding rules.
For any questions about these new provisions or about a notice of reserve or expropriation received from a public body, reach out to our Municipal, Planning & Land Development Group.
