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Expropriation—Resale of expropriated property—Abuse of right—Unjust enrichment.

Municipal law—Action in damages—Six-month prescription—Charter of the City of Montreal, S.Q. 1959-60, c. 102 as am., ss. 1090, 1092.

Appeal—Conclusions added by amendment—Omission in factum—Supreme Court Act, R.S.C. 1970, c. S-19, s.50.

As a result of the expropriation of his immovable property, appellant received compensation pursuant to judgments of the Public Service Board, homologated by the Superior Court on October 8, 1963. On December 13, 1963, the City sold the expropriated property at public auction, and on August 7, 1964 it executed a deed of sale in the purchaser’s favour. On April 12, 1965, appellant brought an action against respondent, alleging that the expropriation was part of a wrongful agreement between the City and the purchaser to enable the latter to acquire ownership of the expropriated property, and he asked that the City be ordered to pay him the sum of $66,038, namely the profit realized on the resale. At the close of the trial on November 13, 1969, appellant requested and was granted leave to amend the conclusions of his action to include a request that the resolutions which authorized the expropriation and the judgments homologating the decisions of the Public Service Board be annulled. The Superior Court judge dismissed the action solely on the ground that the claim was subject to the six-month prescription contained in the Charter of the City of Montreal, but without saying anything about the conclusions in nullity. The Court of Appeal affirmed the judgment of the Superior Court and also held that “It is unnecessary to deal with these conclusions [in nullity] because the only claim put forward by appellants in their brief is for judgment for a sum of money…”. Appellant appeals to this Court solely on the ground that this was a case of unjust enrichment and such a claim is not subject to the short prescription.

[Page 512]

Held: The appeal should be allowed for the sole purpose of allowing the appellant to make proper proceedings to implead the purchaser of his expropriated property in order to have judgment rendered on his conclusions for annulment.

Appellant cannot succeed on his argument that the claim is based on unjust enrichment and such a claim was not subject to the short prescription. If there was any enrichment of respondent municipality, it was not unjust enrichment but the result of the expropriation and resale. If the expropriation was tainted with illegality appellant might perhaps, had it not been for the prescription, have obtained damages instead of the annulment of the expropriation, but the prescription is an insurmountable obstacle to any claim of this nature. The only conclusions on which appellant could hope to succeed were therefore those he had added by amendment, but which he did not mention in his brief, namely the prayer to have the expropriation annulled, to which only the thirty-year prescription applies. However, even if a direct action in nullity was admissible, the Court cannot rule on these conclusions with the record in its present state. The rights of the purchaser cannot be prejudiced without impleading it, and this seems to have been forgotten. On the other hand, in accordance with the principle that a party may not be deprived of his rights on account of an error of counsel where it is possible to rectify the consequences of such error without injustice to the opposing party, appellant should be allowed to take the necessary steps to obtain a decision on his conclusions for the annulment of the expropriation, on which the courts below did not rule.

Protestant Board of School Commissioners of the City of Montreal v. Royal Trust Co., [1965] Que. Q.B. 249; Côté v. Corporation of the County of Drummond, [1924] S.C.R. 186; Royal Trust Co. v. City of Montreal (1918), 57 S.C.R. 352; Brinks Express v. Plaisance et al., [1977] 1 S.C.R. 640; Cité de Pont Viau v. Gauthier Mfg. Ltd., [1978] 2 S.C.R. 516, referred to.

APPEAL against a decision of the Court of Appeal of Quebec, affirming a judgment of the Superior Court. Appeal allowed for the sole purpose of allowing appellant to make proper proceedings to implead the purchaser of his expropriated property in order to have judgment rendered on his claim that all expropriation proceedings be declared void.

A.L. Stein, Q.C., for the appellant.

Marcel Gerbeau and Pierre Caron, for the respondent.

[Page 513]

The judgment of the Court was delivered by

PIGEON J.—This is an appeal as of right from the decision of the Court of Appeal of the Province of Quebec dated November 11, 1974, affirming the judgment of the Superior Court dismissing appellant’s action against respondent. This action was brought by appellant jointly with Dame Esther Zuckerman, but since the latter is now deceased appellant, who is her heir, has continued the action alone.

The action alleges that plaintiffs were the owners of an immovable property on Aylmer Street in Montreal which the City expropriated on July 13, 1961. Compensation for the expropriation was paid pursuant to judgments of the Superior Court dated October 8, 1963, homologating reports of the Public Service Board dated September 4, 1963. The grounds on which a claim was filed against the City on April 12, 1965 are essentially contained in the following three allegations:

8. THAT subsequently, on or about December 13, 1963 Defendant, by what was purported or alleged to be a public auction, sold Plaintiffs’ immoveable property to Henry Morgan and Company, a large departmental store located in the vicinity of the said immoveable property, for a price and consideration of $32.00 per square foot, realizing thereon a total price of $105,-660.80 and thereby acquiring or realizing a profit (apart from the profits above-mentioned derived from the parking lot operation) in the sum of $66,038.00 over and above the price paid to Plaintiffs;

9. THAT, in fact, the entire plan and expropriation by Defendant allegedly for improvement of the northern approaches to widened Ontario Street and the southern approaches of extended Concord Street between Union Avenue and Aylmer Street of the land property with buildings bearing civic numbers 2024, 2030, 2034 and 2036 Aylmer Street on Lot P-1213 cadastre of St. Antoine Ward owned by Plaintiffs was part of a proposal and agreement between Defendant and/or certain of its officers and/or officials and/or agents and the said Henry Morgan and Company made with a view to enabling the said Company to acquire the ownership of Plaintiffs immoveable property, and was not necessarily in the best interests of the citizens of the City of Montreal in general nor the Plaintiffs in particular;

[Page 514]

10. THAT the aforesaid expropriation and prior possession of Plaintiffs immoveable property was acquired by Defendant by abuse of its rights under By-Laws of the City of Montreal, and more particularly by abuse of its rights under Articles 955 and following, of the Charter of the Defendant City;

At the close of the trial, on November 13, 1969, plaintiffs filed a motion requesting leave to amend the conclusions of their action, and this motion was granted by the trial judge on December 11, 1969. Pursuant to this judgment the conclusions were amended to read as follows:

WHEREFORE Plaintiffs, under reserve of their rights and recourses for any additional accounting of the profits realized from their immoveable property during the period used and expropriated by the Defendant as a parking lot, pray that by judgment of this Honourable Court to intervene:

a) the resolutions, Exhibits D-8, (a) and (b) and/or Exhibits D-9, (a) and (b), and the judgments, Exhibits D-16 and D-17, and any by-laws and/or provisions of the charter of the City of Montreal be resiliated, annulled and rescinded in so far as applicable to the Plaintiffs and the expropriation of their immoveable property as described in the present cause, for all purposes of law;

b) that the Defendant be condemned to pay to the Plaintiffs jointly the sum of $76,188.03 with interest from December 13, 1963 and costs.

The judgment of the Superior Court on the merits was handed down by Collins J. on December 12, 1969. The action was dismissed solely on the ground that the claim was prescribed. The judge wrote:

WHEREAS the defendant after expropriating the said properties caused them to be included with other properties adjacent thereto and to be put up for auction sale on the 11th day of December 1963, all of which properties were acquired at the said auction sale by Henry Morgan & Co. Limited and the defendant subsequently executed a notarial deed of sale on the 7th day of August 1964 in favour of Henry Morgan & Co. Limited conveying all the properties so acquired by Henry Morgan & Co. Limited at the said auction sale including the properties of the plaintiffs so expropriated by the defendant and,

WHEREAS it is clear that, under any view of the facts, the claim of the plaintiffs against the defendant

[Page 515]

arose at the latest on the 7th day of August 1964, the date of the said deed of sale, and,…

He then cited ss. 1090 and 1092 of the Charter of the City of Montreal:

1090. No action against the city for damages or for compensation shall be admissible unless the same be instituted within six months from the date when the right of action originated.

1092. All actions, suits or claims against the city, or any of its officers or employees, for damages resulting from any offense, quasi-offense or other illegal act, are prescribed by six months from the day on which the cause of action originated, notwithstanding any legislative provision inconsistent herewith.

He then rejected the distinction plaintiffs were trying to make by maintaining that their claim was not an action in damages but rather one founded on unjust enrichment. He accordingly held that the action should be dismissed, but said nothing about the conclusions in nullity added by an amendment he had authorized the day before. In the circumstances it cannot be presumed that he considered them to be without foundation, particularly since his last reason reads as follows:

CONSIDERING that with regard to costs, the action should be dismissed without costs because:

a) The said prescriptions are very short prescriptions and were enacted only for the benefit of the defendant which would otherwise have been subject to the usual prescription in matters of this kind (apart from any other applicable statutory enactment for its benefit).

b) The Court is satisfied that it would have decided otherwise were it not for the question of prescription.

The Court of Appeal unanimously affirmed the judgment of the Superior Court, also on the basis of the short prescription provided for in the Charter of the City of Montreal. With regard to the conclusions in nullity the reasons of Gagnon J.A., with whom Brossard and Crête JJ.A. concurred, read as follows:

[TRANSLATION] There was no mention either in the parties’ briefs or at the hearing of the additional conclusions added to the action praying that resolutions D-8 (a) and (b) and D-9 (a) and (b), as well as judgments D-16 and D-17 “and any by-laws and/or provisions of the Charter of the City of Montreal—in so far as

[Page 516]

applicable to the Plaintiffs and the expropriation of their immoveable property”, be annulled.

The resolutions are those authorizing the expropriation and the judgments are those of the Superior Court homologating the decisions of the Public Service Board fixing the compensation. It is unnecessary to deal with these conclusions because the only claim put forward by appellants in their brief is for judgment for a sum of money in accordance with the theory of unjust enrichment, a claim which is incompatible with the annulment of the expropriation proceedings.

It should also be noted that a cross-appeal by the City of Montreal respecting the refusal to award costs and the reason therefor was dismissed on the following ground:

[TRANSLATION] In view of the provisions of art. 477 C.C.P. and solely on the ground that the defence of prescription was not expressly raised in the City’s arguments, I would affirm the decision on costs.

Regarding appellant’s principal argument, the only one he presented in his factum, namely that there was unjust enrichment and that such a claim was not subject to the short prescription, it must be said that nothing in the authorities cited supports appellant’s contention. If there was any enrichment of respondent municipality, it was not unjust enrichment but the result of the expropriation and resale. The City became the owner by the expropriation and resold at a higher price. If an enrichment resulted, this had its legal cause in the deeds of purchase and resale (The Protestant Board of School Commissioners of the City of Montreal v. Royal Trust Company[1]).

If the expropriation was tainted with illegality and appellant can ask that it be annulled on this ground, he might perhaps, had it not been for the prescription, have obtained damages instead of the annulment of the expropriation, as indicated by the trial judge’s last reason. It is clear, however, that prescription is an insurmountable obstacle in the way of any claim of this nature. Since this is a case where the right of action is denied, the Court could, under art. 2188 C.C., of its own motion supply the defence of prescription.

[Page 517]

The only conclusions on which appellant could hope to succeed were therefore those he had added by amendment at the close of the trial, that is, the prayer to have the expropriation annulled. Counsel was therefore asked at the hearing in this Court whether he was abandoning these conclusions. He replied that even though he had not mentioned them in his factum he was not abandoning them. Counsel for the City told the Court in this connection that he was not contending that the short prescription could apply to that claim. It will be noted, moreover, that in Côté v. Corporation of the County of Drummond[2], Anglin and Mignault JJ. expressed the opinion that, as a rule, an action to annul municipal proceedings is subject only to the thirty-year prescription.

Counsel for the City of Montreal contended, however, that the latter could argue res judicata because the homologation judgments rendered on October 8, 1963 could have been appealed. Because no appeal was brought within the prescribed time, appellant was said to have no remedy against these judgments. This contention appears to me ill-founded. The right to appeal judgments homologating the decisions of the Public Service Board was granted by s. 995f of the Charter of the City of Montreal. This section was enacted in 1962 by 10-11 Eliz. II, c. 59, s. 104, and reads as follows:

995f. An appeal shall lie before the Court of Queen’s Bench from the judgment of the Superior Court which homologates the final decision of the Board, as to the expropriated party, if the indemnity be at least $5,000.00 less than the amount claimed by him, and as to the expropriating party, if the indemnity awarded be at least $5,000.00 higher than the amount appearing in the report of its expert.

However, s. 995g, enacted at the same time, provides:

995g. The provisions of the present division shall apply only to the proceedings in expropriation instituted before the Bureau.

The reports of the Board that were entered in the record show that the latter did not decide on appeal from a decision of the Montreal Expropriation Bureau, the “Bureau” referred to in s. 995g,

[Page 518]

but in first instance under s. 984 of the Charter, replaced by s. 94 of the above-cited Act of 1962. This section is as follows:

984. The Board shall continue, notwithstanding the institution of the Bureau, to have jurisdiction to complete and to decide the expropriation cases the hearing of which shall have been commenced before it and those which shall have been referred to it before the sanction of the act instituting the Montreal Expropriation Bureau.

Under s. 978 of the Charter as it stood at the commencement of the expropriation proceedings, the judgment of the Superior Court, like the decision of the Board, could not be appealed:

978. On the day specified in the notice, the city shall submit such report to the Superior Court or to a judge thereof, for confirmation or homologation; the court or judge, as the case may be, upon being satisfied that the proceedings and formalities prescribed by the foregoing articles have been observed, shall confirm and homologate the report.

The decision of the court or judge shall be final as regards all interested parties and shall not be subject to appeal.

In view of the foregoing, an action to have all the expropriation proceedings annulled was not inadmissible (see Royal Trust Co. v. City of Montreal[3]). This Court cannot, however, rule on these conclusions with the record in its present state since these concern real rights and the City of Montreal’s title cannot be invalidated without prejudice to the rights of the company to which it has sold the expropriated immovable. Just as the conclusions in nullity seem to have been completely overlooked in the judgment on the merits, the need to implead the purchaser in order to rule on them also seems to have been forgotten. However, the failure to implead a third party whose presence is necessary is not a ground of defence on the merits but merely a ground for a dilatory exception. Having come to the conclusion that the claim for damages or compensation for the injury resulting from an allegedly illegal expropriation could not be allowed owing to prescription, the trial judge should therefore, in my opinion, have decided that the Court ought not rule on the conclusions

[Page 519]

in nullity without the purchaser of the immovable being impleaded.

This Court cannot rectify this omission by ordering that the party in question be impleaded in this Court, as it did in Brinks Express v. Plaisance et al.[4], since the evidence already adduced cannot be used against a third party who has not been served with the writ. On the other hand, this Court cannot endorse the formalistic attitude of the Court of Appeal. This would be contrary to a fundamental principle that is at the root of s. 50 of the Supreme Court Act and of the reform of civil procedure effected by the 1965 Code, and which has been sanctioned in numerous decisions, the most recent being Cité de Pont Viau v. Gauthier Mfg. Ltd.[5] This principle is that a party must not be deprived of his rights on account of an error of counsel where it is possible to rectify the consequences of such error without injustice to the opposing party. In the circumstances, it appears to me that appellant should be allowed to take the necessary steps to obtain a decision on his conclusions for the annulment of the expropriation, on which the courts below did not rule.

The appeal is allowed for the sole purpose of allowing the appellant to make within sixty days from the date hereof proper proceedings to implead the purchaser of his property expropriated by the City of Montreal in order to have judgment rendered on his claim that all expropriation proceedings be declared void. If appellant acts on this authorization, costs in the Superior Court shall be dealt with by the judge of that court hearing the case without being bound by any previous judgment thereon. Appellant will have to pay the costs of the appeal to this Court and of the previous appeal to the Court of Appeal unless he succeeds on his claim that all expropriation proceedings be declared void in which case there shall be no costs in this Court and in the Court of Appeal.

Judgment accordingly.

Solicitors for the appellant: Stein & Stein, Montreal.

Solicitors for the respondent: Péloquin, Badeaux, Allard and Lacroix, Montreal.

 



[1] [1965] Que. Q.B. 249.

[2] [1924] S.C.R. 186.

[3] (1918), 57 S.C.R. 352.

[4] [1977] 1 S.C.R. 640.

[5] [1978] 2 S.C.R. 516.

 

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