Supreme Court Judgments

COUR SUPRÊME DU CANADA

Cie Immobilière Viger v. L. Giguère Inc., [1977] 2 S.C.R. 67

Date : 1976-01-30

Cie Immobilière Viger Ltée (Defendant) Appellant;

and

Lauréat Giguère Inc. (Plaintiff) Respondent.

1975: March 6; 1976: January 30.

Présent: Judson, Pigeon, Dickson, Beetz and de Grandpré JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR QUEBEC

Unjust enrichment — Conditions of application — Action de in rem verso—Civil code, arts. 1041, 1042, 1057 and 2613.

Municipal law — Illegal and irregular agreements between the municipality and third parties — Invalidity — Municipal Aid Prohibition Act, R.S.Q. 1964, c. 176, s. 1 — Municipal Works Act, R.S.Q. 1964, c. 177, ss. 1 and 5 — Municipal Commission Act, R.S.Q. 1964, c. 170, s. 24 — Cities and Towns Act, R.S.Q. 1964, c. 193, s. 593.

The town of Plessisville (“Plessisville”) wanted the Coopérative agricole de Granby (“the Cooperative”) to locate a dairy processing plant on its territory. The land on which the plant was to be built was to be acquired through appellant, the Compagnie Immobilière Viger Ltée (“Viger”), a subsidiary of the Cooperative which held all its shares. To encourage the Cooperative to locate on its territory, Plessisville concluded an agreement with Viger on August 10, 1966, under which the Town undertook to procure Viger with land intended for the construction of the plant and to level and improve the said land “at the sole expense” of the municipality. To fulfil its promise, Plessisville transferred to Viger on October 25, 1966 a lot which it had purchased, and at the same time it authorized the latter to purchase two other lots situated beyond the town limits, on which Plessisville had a buyer’s option. On the same day Viger bought the lots for the prices and terms contained in the said options. Before transferring the lots on August 25, 1966, Plessisville had concluded a contract with respondent, Lauréat Giguère Inc. (“Giguère”), under which the latter was to do the levelling work. It is admitted that the agreements of August 10 and October 25 contravened the Municipal Aid Prohibition Act, and that the by-law authorizing the conclusion of the contract with Giguère and the issuing of a loan for this purpose were never approved by the Municipal Commis­sion nor submitted to municipal electors, as required by

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law. Giguère carried out the work, pursuant to its contract, for the price of $161,313.30. Plessisville paid $75,000 to Giguère but there remains an amount of $72,547.13, which the parties agree is still owed to Giguère. The evidence discloses that, despite these irregularities, there is no reason to doubt the good faith of either Viger or Giguère.

In the Superior Court Giguère brought action against Plessisville, the Cooperative and Viger jointly. As its action was dismissed, it appealed only against Viger and the Cooperative. The Court of Appeal unanimously dismissed the action against the Cooperative but upheld the action against Viger and ordered the latter to pay Giguère $72,547.16. This order is the only point at issue before this Court. Initially, Giguère had based its action on art. 1053 C.C. and, alternatively, had contended that Viger had been unjustly enriched at its expense. Before this Court, Giguère only argued unjust enrichment, which was the reason upheld by the majority decision of the Court of Appeal.

Held: The appeal should be dismissed.

Incorporation of the theory of unjust enrichment into the civil law is no longer open to debate; discussion relates only to its theoretical basis and to the conditions of application. Most authorities recognize six such con­ditions: (1) an enrichment; (2) an impoverishment; (3) a correlation between the enrichment and the impoverishment; (4) the absence of justification; (5) the absence of evasion of the law; (6) the absence of any other remedy.

In the case at bar, the first condition for the applica­tion of this theory, namely the enrichment of Viger, is fulfilled although the latter owns lots by virtue of titles subject to dispute. Viger is in possession of lots which accumulated in value and it is in the interest of neither party to dispute the validity of the titles. Giguère’s impoverishment is equally certain. The Court of Appeal also recognized the correlation between Viger’s enrichment and Giguère’s impoverishment.

It is on the absence of justification that there is a divergence of opinion between the Superior Court and the Court of Appeal. The Superior Court judge and the dissenting judge on the Court of Appeal considered that the enrichment was justified by the contracts which gave Viger title to the lots in their existing condition. However, in the case at bar, the contracts by which Viger acquired the lots from their owners do not constitute a justification for its enrichment: these contracts do not

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have the cost of improvements as their object and they are not the real cause of Viger’s enrichment and Giguère’s impoverishment. The real cause is the promise of aid made by Plessisville to Viger, that is the promise that the town would level the lots to the benefit of Viger without cost. This promise, which is absolutely void, cannot be treated as the legal basis for the enrichment. Moreover, it is not contained in Viger’s contracts of acquisition.

With respect to the fifth condition, the view taken by the Superior Court that Giguère entered into a null contract with Plessisville, without making sure that the formalities required by law were observed, cannot be upheld either. Although the contracts and agreements between Plessisville and Viger are null because they are contrary to public policy, the contract between Giguère and Plessisville is null only because of non-compliance with formalities, such as approval by the competent authorities. It is the illegality of the agreements between Viger and Plessisville, agreements which Giguère had absolutely nothing to do with, which prevented approval by the competent authorities and it would be unjust and unlawful that a third party should have to bear the cost of an illegality of which it is innocent. Nor can the subsidiary nature of Giguère’s action be advanced as an argument on the assumption that this nature would be a bar to the action de in rem verso.

Price v. Neault (1886), 12 A.C. 110; Tanguay v. Price (1906), 37 S.C.R. 657; Regent Taxi & Transport Company v. La Congrégation des Petits Frères Maristes, [1929] S.C.R. 650, rev’d. [1932] A.C. 295; Stanley Johnston v. Dame Vera Channel!, [1937] S.C.R. 275; R. v. Sylvain et al., [1965] S.C.R. 164; Boudier, D.P. 1892.1.596; Lawrence v. Stuart (1856), 6 L.C.R. 294; Stuart v. Eaton (1857), 8 L.C.R. 113; La Cie de Prêt et de Crédit Foncier v. St. Germain (1881), 26 L.C.J. 39; Gage Investment Inc. v. Ménard and Marge Construction Engineers Ltd. (1931), 50 Que. Q.B. 315; Belle-Isle Lumber Inc. v. Craft Finance Corp., [1966] Que. Q.B, aff’d [1966] S.C.R. 661, referred to; de Choudens, D.P. 1923.1.64; Vachon v. Deschesnes (1935), 59 Que. Q.B. 193; St. Pierre v. Lefebvre (1935), 61 Que. Q.B. 168; Dumberry v. Moquin, [1959] C.S. 184, distinguished.

APPEAL from a decision of the Court of Appeal of Quebec[1] which condemned appellant to pay respondent $72,547.13 and in part reversed a judgment of the Superior Court. Appeal dismissed.

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L. B. Grignon, for the appellant.

L. Vézina and F. Pelletier, for the respondent.

The judgment of the Court was delivered by BEETZ J.—

I—The proceedings

La Compagnie Immobilière Viger Ltée (“Vi­ger”) is appealing, from a majority decision of the Court of Appeal for the Province of Quebec order­ing it to pay Lauréat Giguère Inc. (“Giguère”), $72,547.13, the amount of its alleged unjustified enrichment at Giguère’s expense. This decision in part reverses a judgment of the Superior Court dismissing an action that Giguère had brought against Viger, the Coopérative agricole de Granby (“the Cooperative”) and the Town of Plessisville (“Plessisville”). Giguère based its action against these three defendants on art. 1053 C.C. and, alternatively, on the theory of unjustified enrichment, also called the theory of unjust enrichment or enrichment without cause.

Neither Plessisville nor the Cooperative are before this Court: Giguère withdrew its appeal against Plessisville in the Court of Appeal and accepted the part of the Court of Appeal’s decision upholding the dismissal of its action against the Cooperative.

Finally, Giguère ceased to argue Viger’s liability under art. 1053 C.C.

Thus the only point at issue is whether the Court of Appeal was correct in concluding that Viger was unjustly enriched at Giguère’s expense.

II—The            facts

The facts that gave rise to the suit, though complex, are not in dispute.

In 1966 the municipalities of Princeville and Plessisville both wanted the Cooperative to locate in their territory a dairy processing plant it was planning to build.—It should be pointed out that Viger was to acquire the land and build the plant. Viger is a subsidiary of the Cooperative, which holds all its shares. Viger’s board of directors was composed of the general director and other directors

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of the Cooperative. The latter was simply to rent Viger’s plant. However, this corporate struc­ture was not a matter of common knowledge and the Cooperative and Viger were easily confused with one another.—

In any case, the Cooperative decided on Plessis­ville. Among the advantages which may have prompted the Cooperative’s choice was the obliga­tion undertaken by Plessisville to procure Viger with land intended for the construction of the plant for the price of vacant and unlevelled land. These lots totalled an area of more than a million square feet, completely levelled and improved according to Viger’s requirements at the sole expense of Plessisville. Plessisville assumed this obligation toward Viger in a notarial deed (DP-4) received August 10, 1966 by Mr. Jean Tétrault who, incidentally, was a member of the municipal council. Clause 3 of this agreement reads as follows:

[TRANSLATION] 3. The TOWN undertakes in particu­lar to acquire the said land and to improve it to the specifications of the COMPANY, over an area of at least one thousand five hundred feet (1,500’) of frontage by one thousand feet (1,000’) in depth, the whole before next September 1, 1966 at the sole expense of the TOWN, which shall resell the land to the COMPANY after it has been prepared and accepted by the latter at the price set above only and within the time limits mentioned above.

Earlier, on May 12 and 18, 1966, Plessisville obtained promises of sale from Alphonse Jam and Armand Marcoux, owners of lots located in the parish of Plessisville, beyond the town limits, and from Gilles Vallée, owner of a smaller lot within the town limits. The promising vendors agreed to sell their land to the Town of Plessisville or to any other person or corporation which it might desig­nate. The purchaser could take possession of the land before the expiry date provided the notarial contract was executed within three months. The promises were to remain in effect until September 1, 1966. Later these promises were renewed for the lots belonging to Jam and Marcoux at a date not mentioned in the record.

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On August 25, 1966 Plessisville awarded the levelling contract to Giguère. Giguère began work on September 6 and completed it on October 31.

Meanwhile Viger had acquired the three lots on which the plant was to be built.

On October 25 Plessisville sold to Viger the lot which it had previously purchased from Vallée in fulfilment of its promise of sale. It sold it at the price it had paid it, the price of an unlevelled lot.

By another agreement signed the same day (P-15), Plessisville, at Viger’s request, gave the latter express authorization to purchase directly from Jam and Marcoux the lots which they had promised to sell to the Town. Viger accordingly bought, also on October 25, Jam’s and Marcoux’s lots for the same prices and terms as contained in the options already granted by the latter to Plessis­ville, that is, for the price of vacant, unlevelled lots.

Paragraph 3 of agreement P-15 states:

[TRANSLATION] 3. Notwithstanding the purchase of the said lots by the party of the Second Part (Viger), all the conditions and stipulations mentioned in the deed concluded between the parties last August 10 (1966) before the undersigned notary shall remain in force and shall have their full and entire effect, as to their form and content, not only with respect to the lot purchased from the Town itself, but also to those purchased from Messrs. Alphonse Jam and Armand Marcoux.

In their baste, the parties piled irregularities over illegalities. Agreements DP-4 and P-15 con­cluded between Viger and Plessisville on August 10 and October 25 were null because, in undertak­ing to pay the cost of improving the lots, Plessisville was granting a benefit to Viger, thereby contravening the Municipal Aid Prohibition Act (R.S.Q. 1964, c. 176, s. 1). The levelling contract concluded between Giguère and Plessisville on August 25, 1965 was also null. By-law No. 353, dated August 30, which was intended to authorize the conclusion of this contract and issue a loan for this purpose, was never approved by the Municipal Commission (Municipal Works Act, R.S.Q. 1964, c. 177, ss. 1 and 5, and Municipal Commission Act, R.S.Q. 1964, c. 170, s. 24).

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Such a loan by-law, moreover, is susceptible to be submitted to municipal electors and must subsequently be authorized by the Minister of Municipal Affairs (Cities and Towns Act, R.S.Q. 1964, c. 193, s. 593). There is nothing in the record to indicate that the procedure prescribed by the Cities and Towns Act was followed after the passing of by-law 353. Perhaps it was thought that it would be pointless to follow this procedure since it was known shortly afterwards that in any event the Quebec Government, that is the Municipal Com­mission or the Minister, would not grant the required approval.

Finally, as already mentioned, two of the three lots were situated outside the town limits at the time the contracts were signed and the levelling work was being carried out.

An attempt was made in part to remedy the irregularities. Thus, by-law No. 355 annexed Jam’s and Marcoux’s lots to the Town of Plessis­ville. By the admission of the parties, this by-law, dated December 15, 1966, was published in the Quebec Official Gazette on March 4, 1967. Fur­thermore, on . November 25, 1966, Plessisville passed by-law No. 354 authorizing a loan of $90,000 to pay the cost of the work necessary for the opening of several streets [TRANSLATION] “so as to facilitate residential building in the munici­pality”. This by-law was duly approved. $75,000 was allocated for the cost of gravel and machinery. By this expedient Plessisville was able to make Giguère a payment of $75,000 for the work it carried out under the contract of August 25, as it transported the stone and earth removed from the lots it was to level to the roads to be built.

It is admitted by the parties that the cost of the work was $147,547.13 and the total price $161,-313.30, the difference representing Giguère’s profit. Giguère was originally claiming $86,313.30, that is, the price of the work including its profit ($161,313.30 less a payment of $75,000), plus $4,179.74, the interest on the loans undertaken to finance the work. The Court of Appeal set aside the financing costs and awarded Giguère the cost of the work it had carried out, not including profit, that is, the difference between $147,547.13 and

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the payment of $75,000, or $72,547.13, plus interest since the date of service of the writ and costs. Giguère is asking simply to uphold the decision of the Court of Appeal. The amount at issue is not in dispute.

It appears from the correspondence in the record that Plessisville after hoping to receive authorization from the Quebec Government to pay Giguère, lost this hope a few months later and then put pressure on the Cooperative to pay for the levelling work.

Neither the Cooperative nor Viger responded to this pressure and Giguère took the action leading to this appeal.

The evidence does not disclose at what point the parties became aware of the irregular character of their actions, the nature of each irregularity or the fact that it was not possible to remedy at least some of them by an administrative authorization. Thus a letter written to Giguère’s counsel by the secretary-treasurer of Plessisville on April 28, 1967 indicated that the Cooperative, that is Viger, had purchased Jam’s and Marcoux’s lots directly rather than obtaining them from Plessisville as had been originally planned because [TRANSLATION] “the lot was in the parish, (now annexed) (so) we could not purchase it” (P-9). Knowledge of this obstacle does not necessarily create a presumption of knowledge of the irregularity of the other actions. In any case, the Superior Court concluded that [TRANSLATION] “no evidence has been sub­mitted proving that ‘Viger’ committed fraud, or acted in bad faith toward plaintiff, or that it was in connivance with the Town in order to get hold of plaintiff’s property”. To these conclusions, however, must be added those of the Court of Appeal, which held that Viger could not be given the benefit of good faith without Giguère receiving it also. Giguère was not aware of the nature of the relations between Plessisville and Viger. The agreement by which Plessisville undertook to pay the cost of the levelling work without being reim­bursed by Viger, an illegal agreement which is the basis of the whole proceeding, was unknown to Giguère. The action for unjustified enrichment must be examined in the light of these conclusions.

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III—The           theory of unjustified   enrichment in Quebec law

It seems that neither this Court nor the Judicial Committee of the Privy Council has ever decided whether the theory of unjust enrichment is part of Quebec civil law. In Price v. Neault[2], the Judicial Committee nearly touched on the question without referring directly to it. It was discussed in Tan­guay v. Price[3]; in Regent Taxi and Transport Company v. La Congrégation des Petits Frères Maristes[4], a decision of this Court quashed by the Judicial Committee; in Stanley Johnston v. Dame Vera Channell[5]; and, finally, in R. v. Sylvain et al.[6] However, those discussions were obiter. I have been unable to find a single instance where this Court or the Judicial Committee of the Privy Council upheld an action based on the theory.

Nevertheless, the theory of unjustified enrichment is now undeniably incorporated into the civil law and it is important, in my opinion, to sanction the principle itself as well as those of its conditions of application on which it is necessary to rule in order to dispose of the appeal. The theory comes from the Roman law, which gave its name to one of the proceedings that enforced it, the action de peculio et de in rem verso, later simply action de in rem verso (Morel, André, L’évolution de la doctrine de l’enrichissement sans cause, Montreal, 1955, at pp. 20-31). It was mentioned in an aphor­ism of Pomponius: “Jure naturae aequum est neminem cum alterius detrimento et injuria fieri locupletiorem”. In ancient law, an author such as Pothier saw it as an unusual form of negotiorum gestio (Bugnet, M., OEuvres de Pothier, vol. 5, appendix to the treatise on the contract of mandate, Nos. 167 et seq., No. 186, No. 189). Modern French case law, along with practically all the writers, finally adopted it toward the end of the nineteenth century, after a rather long period during which the silence of the Code had been

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interpreted as preventing its adoption (Boudier[7]). In Quebec, both before and after promulgation of the Civil Code, case law implicitly but effectively applied the theory of unjustified enrichment (Law­rence v. Stuart[8] Stuart v. Eaton[9]; La Cie de Prêt et de Crédit Fancier v. St. Germain[10]). It was especially after the 1930s, however, that a number of writers made a systematic analysis of the theory of unjustified enrichment, at the same time as many decisions in the trial and appeal courts attempted to define the scope of the conditions for its application (Mignault, P. B., L’enrichissement sans cause, (1934) 13 R.. du D. 157; Rinfret, T., The Doctrine of Unjust Enrichment in the Law of Quebec, (1937) 15 Can. Bar Rev. 331; Challies, G. S., The Doctrine of Unjustified Enrichment in the Law of the Province of Quebec, Montreal, 1952; Morel, A., op. cit.; Baudouin, C. L., Traité élémentaire de droit civil, Les Obligations, 1970, at pp. 215-229; Tancelin, M. A., Théorie du droit des obligations, 1975, at pp. 310-318. The theory of unjustified enrichment is no longer open to debate; discussion relates only to its theoretical basis and to the conditions of application. Finally, legislative support for this theory can be found, if necessary, in arts. 1041 and 1042 C.C. or in arts. 1057 and 2613, depending on whether it is viewed as based on an innominate [sic] quasi-contract or on law or custom. Such support can also be found in an extrapolation from the numerous provisions of the Civil Code, that are only special applications of it. The Civil Code does not contain the whole of civil law. It is based on principles that are not all expressed there, which it is up to case law and doctrine to develop:

[TRANSLATION] “... our Code, like the French Civil Code, has often applied this maxim-”Pomponius max­im”-to special situations, but it has not made it into a general rule. I have admitted, however, the possibility of maintaining that the legislator recognizes its authority, since he gives it effect in all the cases of application which he contemplates. Surely it can be argued that if

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he had contemplated other situations, and he sometimes lacks foresight, he would have applied it again”. (Mignault, op. cit., pp. 1971 and 1972).

IV—Conditions under which the theory of unjusti­fied enrichment applies

Most authorities, but not all, recognized that an action for unjustified enrichment is subject to the existence of the following conditions:

1. an enrichment;

2. an impoverishment;

3. a correlation between the enrichment and the impoverishment;

4. the absence of justification;

5. the absence of evasion of the law;

6. the absence of any other remedy.

When these conditions are all present, the remedy is maintained for the lesser of the two amounts, the enrichment or the impoverishment.

Some authorities, however, while admitting that the action de in rem verso must not conflict with or vary established rules of written law, dispute the fifth condition, because in their opinion it is included in the fourth, absence of justification (Morel, A., op. cit., p. 113).

Others do not accept the rule of subsidiarity contained in the sixth condition (Challies, G. S. op. cit., p. 143).

It may be that these differences arise from the meaning and extension given to the fourth condi­tion, which is the most complex, and to the rule of subsidiarity. In any case, it is really a matter for authors systematically to clarify these difficulties. The judge is bound by the issues before him, and does not extend his ruling beyond what is neces­sary to settle them.

V—Application          of the theory of unjustified enrichment

In the case at bar, the disagreement between the parties and the divergence of opinion between the Superior Court and the majority in the Court of Appeal is mainly with respect to the fourth condition.

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Nevertheless, application of the first, fifth and sixth conditions also raises certain problems.

At first glance, there seems to be no doubt that Viger was enriched, since it obtained for the price of a vacant lot a lot improved to its specifications, without paying a cent for the levelling. It was therefore enriched by the value of the work neces­sary to improve the lot. The value of this enrichment greatly exceeds Giguère’s claim: even if Giguère’s action is maintained, Viger remains enriched by the fact that Giguère received a payment on account of $75,000 and is only suing for a balance which is less than the value of the improvements. But, it may be said, Viger was enriched only if it is really the owner of the lot. If the contracts by which Viger purchased Cam’s and Marcoux’s lots are, as far as Viger is concerned, “vitiated by an unlawful consideration”, as Rinfret J. stated in the Court of Appeal, can it not be maintained that they are null, and that Viger was not enriched, since it would then not be the owner of these lots? The late and lamented Gagnon C., dissenting in the court of Appeal, held that these contracts cannot be at the same time valid and null, valid as between the parties and null with respect to a third party. In this dilemma, he regarded the contracts as undisputed titles and, like the Superior Court, he saw in them the justifi­cation for Viger’s enrichment. He did not mention Vallée’s lot, however, which was sold directly by Plessisville to Viger. Vallée’s lot, it is true, is much smaller and accounts for less than five percent of the total area.

It is in the interest of neither party to linger over this question; Giguère’s action cannot be main­tained if one of the conditions of unjustified enrichment is not fulfilled. As for Viger, it is hard to see what advantage it would gain from a decla­ration that its titles are void. In fact, Viger states in its brief that it believes these titles to be valid or that they should be [TRANSLATION] “deemed to be valid”.

We are not required, for the purposes of this case, to rule on the validity of the three contracts of acquisition. Viger is in possession of the lot by

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virtue of titles which were contested neither by Jam, Marcoux, Vallée, Plessisville, Giguère, nor, obviously, by Viger. Cam, Marcoux and Vallée were never parties to the suit and Plessisville no longer is. Viger in effect profits, as proprietor, from the improvements made by Giguère and is not entitled to avail itself of the fragility of titles that are not disputed. In any event, Viger is not contesting its enrichment: in its brief it only men­tions it in the conditional; but it cannot be doubted that it is real, especially since Viger insists on the validity of its titles.

Giguère’s impoverishment is equally certain. It is a material and positive impoverishment, that is, a reduction of its patrimony.

The correlation between Viger’s enrichment and Giguère’s impoverishment was readily and rightly recognized by the Court of Appeal. It was the same work, carried out by Giguère, that caused both events. The theory of unjustified enrichment does not require that the enrichment pass directly from the property of the impoverished to that of the enriched party (Mignault, op. cit., at p. 165). The impoverished party looks to the one who profited from its impoverishment. It is then for the enriched party to find a legal justification for its enrichment.

It is on this last point, related to the fourth condition for unjustified enrichment, that there is a divergence of opinion between the Superior Court and the Court of Appeal. Viger seeks its justification in the contracts through which it acquired the lots. If it profited, it contends, this was not without cause, it was because of these contracts concluded directly with the owners, which gave it title to the lots in their existing condition. On this point, which if accepted is fatal to Giguère’s case, Laliberté J. of the Superior Court and Gagnon C., dissenting in the Court of Appeal, ruled in favour of Viger, while Rinfret J. and Lajoie C. of the Court of Appeal ruled against it.

It is true that, when the enrichment occurs as the result of a contract concluded between the

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enriched party and a third party, case law and authors generally treat this contract as justifica­tion for enrichment (de Choudens[11]); Vachon v. Deschesnes[12]; St. Pierre v. Lefebvre[13]; Dumberry v. Moquin[14]. However, these are cases where the contract concluded between the enriched party and the third party expressly provided that improve­ments might be made to a building and disposed of them in advance to the enriched party. It appears that it can be otherwise if the enriched party has no special title that is good against the impover­ished party, giving it the right to keep the improve­ments without paying for them, or if the improve­ments predate this title: Gage Investment Inc. v. Ménard and Marge Construction Engineers Ltd.[15]; Belle-Isle Lumber Inc. v. Craft Finance Corp.[16], a judgment of the Court of Appeal, the reasons and judgment of which were approved by this Court[17]. It should be pointed out, however, that these latter decisions relate to the privilege of the builder and supplier of materials and their relevance to the question of unjustified enrichment is indirect. However, see Demogue’s comment on Boudier (René Demogue, Traité des Obligations, 1923, vol. III, at p. 262).

In the case at bar, the contracts between Viger on the one hand, and Jam and Marcoux on the other, are remarkably silent on the improvements that Giguère was in the process of making to the lots sold the very day the contracts were signed. On that date the levelling work was practically finished.

In my opinion the contracts by which Viger acquired the lots from their owners do not consti­tute a justification for its enrichment, even if it is granted, for the purpose of discussion, that they suffice to give it a valid title to these lots and to the improvements Giguère made to them. First of all, these contracts do not have the cost of improvements as their object. Secondly, they are

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not the real cause of Viger’s enrichment and Giguère’s impoverishment. The cause . of this enrichment and impoverishment is the promise of aid made by Plessisville to Viger, a promise which is absolutely void. Consequently, Viger cannot treat it as the legal basis for its enrichment.

What enables us to distinguish between the transfer of the lots to Viger, including the improvements, and the, obligation to pay the cost of these improvements, is the clearly expressed intention of the various parties to the suit to treat the two things separately.

It was Viger’s and Plessisville’s intention that the aid, that is the levelling of the lots without cost, to the benefit of Viger, was to be guaranteed by the agreements between these two parties rather than by Viger’s contracts of acquisition, which were only a formal stage in implementing the plan to set up the factory and the contracts concluded between Plessisville and Viger. Care was taken to specify this clearly in the second agreement, signed on October 25 (P-15) after it was found necessary to alter the original plan, since the Town could not acquire Jam’s and Mar­coux’s Its itself as they were outside its territorial limits. It was decided that Viger would purchase them directly from the respective owners. Not only was purchase of the lots by Viger not intended, by itself, to secure the subsidy, but it was apparently feared that the purchase would jeopardize it. Paragraph 3 of the second agreement (P-15), already cited, states that notwithstanding the fact that Viger will purchase directly from the owners Jam and Marcoux, Plessisville’s commitment to have the lot levelled at its own cost will remain in effect.

The intention of the owners Jam and Marcoux could not bear upon the cost of the improvements made by the levelling work. For them there was no question of this. The work was carried out by order of Plessisville, which was in possession of the lots by virtue of the promises, and which also had the right by virtue of the same promises to designate a purchaser other than itself. For Jam and Marcoux

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it was simply a matter of transferring the property as agreed and according to the terms of the promise. The price stipulated is the one that had been set in the promises of sale, without taking into account the state of the lots on the day the sale agreements were signed. This was also the case with the contract concluded between Viger and Plessisville regarding the Vallée lot except that, if the parties’ intention was to exempt Viger from paying for the improvements, this intention had an illegal pro tanto.

Viger’s contracts to purchase the lots thus have an object other than the cost of improvements; further, the cause of Viger’s enrichment and Giguère’s impoverishment is not to be found in these contracts-except by separating them artifi­cially from the project as a whole.

The Superior Court held that Giguère’s misfor­tune resulted from the fact that it entered into a null contract with Plessisville, without making sure that the formalities required by law were observed. With respect, I cannot, in view of the circum­stances of this case, subscribe to this proposition, which has only superficial merit. It is important to compare the contract concluded between Giguère and Plessisville on August 25, 1966 with the contracts concluded between Viger and Plessisville on August 10 (DP-4) and October 25, 1966 (P-15), in order to perceive their relationships and appreciate the nature of their invalidity. The contract con­cluded between Giguère and Plessisville is not intrinsically null, as the law clearly does not pro­hibit towns from having municipal works carried out by contractors. It only makes their contracts subject, on penalty of invalidity, to formalities, the purpose of which is to protect their ratepayers and enable the government to exercise control over their affairs. On the other hand, the contracts concluded between Viger and Plessisville (DP-4 and P-15) are null because the law states that municipal subsidies are contrary to public policy. This latter invalidity does not depend on non-com­pliance with a formality. It is inherent to such agreements and no administrative authorization could cover it. Accordingly, neither the Municipal

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Commission nor the Minister of Municipal. Affairs could give their approval, either before or after the fact, to loan by-law No. 353, which was intended to pay Giguère, or to any other similar by-law, since they would, in this roundabout way, have ratified and made apparently possible the aid which Viger was seeking, and which the law pro­hibited. It follows that the reason why Giguère could not be paid by Plessisville with the authori­zation of the Quebec Government was the illegal­ity of the agreements between Viger and Plessis­ville, agreements which Giguère had absolutely nothing to do with, and the invalidity of which cannot be imputed to it. It seems to me, therefore, that the objection made to Giguère’s claim in reality turns against Viger. In fact, Viger’s enrichment and Giguère’s impoverishment have a common origin in the agreements made between Plessisville and Viger, and this origin, far from constituting a justification, is clearly unlawful with respect to Viger. Plessisville’s gratuity to Viger was merely paid by Giguère. It was illegal for Viger to be enriched at the expense of the ratepay­ers of Plessisville, even with Plessisville’s consent as had been agreed. It was enriched nevertheless, despite this illegality, but at Giguère’s expense. It is unjust and unlawful that a third party should have to bear the cost of an illegality of which it is innocent.

It cannot be claimed, as Viger contends, and as was upheld by the Superior Court, that Giguère is by its action trying to circumvent positive law, relying as he does on a claim based on a null contract. This objection would have to be con­sidered if Giguère were suing Plessisville: but it was Viger that was enriched, and I do not see what provision of the law is circumvented if Giguère’s action is allowed against Viger.

There remains the subsidiary nature of Giguère’s action. I do not think it necessary to comment on the existence of this condition of the action for unjustified enrichment. The least that can be said is that Giguère tried to satisfy the condition by bringing its action against not only Viger, but Plessisville and the Cooperative as well.

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No one complained of its abandoning its proceedings against these two parties, and it may be wondered whether Viger would not have had an equal interest in continuing them by bringing itself an appeal. During the pleading, it was asked whether Giguère would have had a personal action for damages against the members of the Plessis­ville municipal council. None of the defendants complained of Giguère’s not having brought an action against them, and none of the lower courts discussed the question. I doubt that the subsidiary nature of the action de in rem verso, if it exists, requires the court hearing the action to calculate the chances of success of an action for damages that the impoverished party might have brought against a party other than the enriched party, and to conjecture as to the possibility of executing a judgment thus obtained, if any. It would at least be necessary, for it to be so, that this other remedy be more apparent than it is in this case. In fact, the only objection relating to subsidiarity that Viger formulates against Giguère’s claim is the follow­ing: if Giguère had been diligent, it could have registered a builder’s privilege against the buildings, and it would have had a remedy based on its privilege without having to rely on the theory of unjustified enrichment. However, this objection does not withstand analysis. Either the privilege is the accessory of an invalid claim, that is, Giguère’s claim against Plessisville; or, if it is possible, the privilege attaches to the claim that performance of the work created against Viger, the owner of the lots, by virtue of the theory of unjustified enrichment. In the first case, the privilege is null. In the second, Viger cannot complain that Giguère pre­sented itself as a general creditor rather than as a preferred creditor.

I would dismiss the appeal with costs.

Appeal dismissed with costs.

Solicitors for the appellant: Lizotte, Grignon & Robert, Granby, Que.

Solicitors for the respondents: Vézina, Sheehan, Pouliot, L’Écuyer & Morin, Quebec.