SUPREME COURT OF CANADA
Duquet v. Town of Sainte-Agathe,  2 S.C.R. 1132
John E. L. Duquet (Plaintiff) Appellant; and
The Town of Sainte-Agathe-des-Monts (Defendant) Respondent.
1976: May 19 and 20; 1976: October 5.
Present: Ritchie, Spence, Pigeon, Beetz and de Grandpré JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR QUEBEC
Civil proceeding— Motion for declaratory judgment — No distinction between preventive and curative remedy — Code of Civil Procedure, arts. 2, 55 and 453.
Municipal law — Water rate — Territory not supplied — Imposition ultra vires — Cities and Towns Act, R.S.Q. 1964, c. 193, ss. 421, 439, 440, 441, 442, 445 and 446.
In October 1973, appellant, the owner of a house within respondent's territory, received a statement of account from it claiming from him water rates, interest and costs for three years, amounting to a total of $2,124.14. The statement of account was accompanied by a notice stating that if the rates were not paid by the end of the month, the Council could order the sale of this immovable by public auction. This statement of account was based on the waterworks by-law enacted by the Town and amended three times, in 1971, 1972 and 1973, to oblige all property owners to pay the water rate, and not only those supplied by the water system. Appellant's house is situated on a peninsula which has no public road, no water system and no sewage system.
Following receipt of this statement of account and the attached notice, appellant caused to be served on respondent notice of a motion for a declaratory judgment, under art. 453 of the Code of Civil Procedure. This motion alleged in substance that the three by-laws amending the original waterworks by-law were ultra vires. The Court of Appeal affirmed the judgment of the Superior Court dismissing appellant's motion for a declaratory judgment on the grounds that this proceeding should be used for a preventive and not a curative purpose. It did not come to a decision on the second point admitted by the Superior Court, namely that there was no remedy other than that of a petition for the quashing of a by-law provided for under s. 411 of the Cities and Towns Act. Hence the appeal to this Court.
Held: The appeal should be allowed.
On the procedural question: appellant is threatened with seizure for refusing to pay a tax which he denies owing. This is definitely a situation where there is a "genuine problem". Appellant has an interest in having the question settled and in determining "any right, power or obligation which he may have under a ... resolution or by-law of a municipal corporation".
The distinction made by the Quebec courts in applying art. 453 of the C.C.P. between a preventive and a curative remedy derives from the Commissioners' report and not from the Code of Civil Procedure itself. It is true that these Commissioners distinguish between preventive and curative justice, but if they omitted this distinction from the wording of the Code, it was because they did not wish the courts to be embarrassed by it. To decide whether the case can be dealt with by a motion for a declaratory judgment, the Court must merely determine whether it comes within the terms of art. 453 of the Code.
In any case, the governing intention behind the new Code, stated expressly in art. 2, was the desire to bury the old adage that "form takes precedence over substance", and as the distinction is not a rule of public order, any party who wishes to complain that an action should have been instituted must do so when the motion is presented, and he shall be considered to have waived this objection if he files a contestation in writing.
As to the second point, it is not true to say that appellant had no remedy other than a petition for the quashing of a municipal by-law "on the ground of illegality" provided for under s. 411 of the Cities and Towns Act. The courts have for a long time allowed actions in nullity in cases of ultra vires.
On the merits, even if the facts alleged in the contestation of the motion are established, the town still did not have the authority to enact that the water rate would be payable by all property owners. Section 442(4) of the Cities and Towns Act only allows it to give notice that "the Municipality is ready to supply water" and to request that the owners make the necessary connection under certain circumstances. In the case at bar, the Municipality disregarded these conditions. It does not have the authority to pass a by-law obliging all property owners to pay the water rate, regardless of the provisions of the Act laying down the conditions under which it can be done. The by-laws criticized are therefore held to be void.
Sun Oil Co. v. City of Hamilton,  O.R. 209; Dominion of Canada v. City of Levis,  A.C. 505; Barrette v. The Queen,  2 S.C.R. 121; Frank v. Alpert,  S.C.R. 637;
Basarsky v. Quinlan,  S.C.R. 308; Ladouceur v. Howarth,  S.C.R. 1111; Witco Chemical Co. v. Oakville,  1 S.C.R. 273; General Foods v. Struthers,  S.C.R. 98; Hamel v. Brunelle,  1 S.C.R. 147; L'Oeuvre du Patronage de Ste-Hyacinthe v. La Cité de Ste-Hyacinthe,  Que. K.B. 496; Donohue v. La Paroisse de St-Étienne de la Malbaie,  S.C.R. 511, referred to.
APPEAL from a decision of the Court of Appeal of Quebec affirming a judgment of the Superior Court dismissing a motion for a declaratory judgment. Appeal allowed.
Andrée-Anne Charbonneau, for the appellant.
Paul Gélinas, Q.C., for the respondent.
The judgment of the Court was delivered by
PIGEON J.—This appeal, brought with leave of the Court, is against a decision of the Court of Appeal of Quebec, which upheld the judgment of the Superior Court dismissing appellant's motion for a declaratory judgement.
Appellant is the owner of a house within respondent's territory. This house is in a place known as Mitawanga Point, which has no public road, no water system and no sewage system. Until 1971, the waterworks by-law enacted by the Town fixed a water rate payable by users. On March 16, 1971, ss. 25 and 26 of that by-law were replaced, under by-law 453, by the following:
[TRANSLATION] Section 25: As from May 1, 1971, in accordance with the provisions of s. 442(4) of the Cities and Towns Act, an annual water rate payable in advance by the property owners and tenants on May 1 of each year and fixed at twelve per cent of the annual value of the immovables entered on the valuation roll, subject however to a minimum of fifty dollars, is hereby imposed and shall be levied on all immovables in the Town of Sainte-Agathe-des-Monts for the purpose of defraying all costs and expenses.
Section 26: For the supply of water to immovables located beyond the limits of the Town of Sainte-Agathe-des-Monts, users and consumers shall pay in advance, from May I, 1971, a contribution as determined by the
resolution of April 15, 1969 adopted by the Town Council, or as may be determined at any time by the Town Council, which is authorized to amend, correct or add to the tariff thus determined.
On May 2, 1972, s. 25 was replaced by a new provision which reads as follows:
[TRANSLATION] Section 25: As from May 1, 1972, an annual water rate fixed at twelve per cent of the annual value of the immovables entered on the valuation roll, subject to a minimum of fifty dollars for each dwelling or premises, is hereby imposed and shall be levied, on all immovables in the Town of Sainte-Agathe-des-Monts. This rate shall be payable in advance by the property owners for the purpose of defraying all costs and expenses. The whole in accordance with the provisions of s. 442(4) of the Cities and Towns Act.
Finally, on February 6, 1973, again pursuant to s. 442 of the Cities and Towns Act, a by-law was adopted enacting the following as section 1.
1.—[TRANSLATION] As from May 1, 1973, an annual water rate fixed at twelve per cent of the annual value of the immovables entered on the valuation roll, subject to a minimum of fifty dollars for each dwelling or premises, is hereby imposed and shall be levied from May 1, 1973, on all immovables in the Town of Sainte-Agathe-des-Monts. This water rate shall be payable in advance by the property owners for the purpose of defraying all costs and expenses.
On October 10, 1973, the Town sent appellant a statement of account claiming from him water rates, interest and costs for three years, amounting to a total of $2,124.14, with the following notice:
[TRANSLATION] Unless we receive on or before October 30, 1973 payment of the real estate tax and water rate arrears on your property, we shall have to submit this statement of account to the Town Council, which may order the sale of this immovable by public auction, the whole in accordance with s. 549 of the Cities and Towns Act.
Appellant then caused to be served on respondent notice of a motion to the Superior Court for a declaratory judgment, under art. 453 of the Code of Civil Procedure:
453. Any person who has an interest in having determined immediately, for the solution of a genuine problem, either his status or any right, power or obligation which he may have under a contract, will or any other written instrument, statute, order in council, or resolution
or by-law of a municipal corporation, may, by motion to the court, ask for a declaratory judgment in that regard.
This motion alleged in substance the facts summarized above, and concluded:
WHEREFORE the Plaintiff concludes, and asks that by judgment to be rendered herein, it be declared:
a) THAT, the Defendant had no authority to impose the water tax on the Plaintiff or on the immovable property of the Plaintiff pursuant to the provisions of the said By-law 191 as amended by said By-laws 453, 472 and 486 respectively of the Defendant:
b) THAT the Defendant had no authority to add the name of the Plaintiff to the Collection Roll of the Defendant or to maintain the name of the Plaintiff on such Collection Roll for the purposes of such water tax;
c) THAT the Defendant had no authority to collect or to attempt to collect the said water tax or any interest thereon or any charges relevant thereto from the Plaintiff;
d) THAT, in any event, the said By-laws 453, 472 and 486 are ultra vires of the Defendant and the Defendant had no authority to enact the same;
the whole with costs against the Defendant.
When the motion was submitted to the Court, respondent requested and obtained, under art. 455, leave to contest it in writing. The only relevant parts of the allegations made in this contestation are the following:
[TRANSLATION] It was the plaintiff-applicant and the other property owners on Mitawanga Point who insisted on constructing their own water supply, by themselves, and refused the Town access to their peninsula for the purpose of laying roads, waterworks or a sewage system;
as the plaintiff and the other property owners of Mitawanga Point knew, respondent was always prepared to bring water as far as the entrance of Mitawanga Point, and the water works does, in fact, run along the street known as Tour du Lac, which is very close to the said entrance and constitutes the street facing the residence of the plaintiff, within the meaning of the Cities and Towns Act, since the Town has no public highway on this peninsula, which has always been considered, at the special request of the property owners, an exclusively private property;
In this reply, appellant alleged that the water-works extends only to about one-quarter of a mile from the side road leading to Mitawanga Point, that is over one mile from appellant's house.
At the Superior Court hearing on March 7, 1974, counsel for the Town contended that the motion was not that provided for by art. 453: "in this case it is not preventive but curative". Judgment was rendered in the following terms:
[TRANSLATION] THE COURT admits for the purpose of this judgment that the facts alleged in the said motion for a declaratory judgment are true, and that a trial is therefore unnecessary;
WHEREAS recourse to art. 453 C.C.P. is permitted only in the cases specially provided for, and is not left to the discretion of the parties involved (Fefferman v. Bentley's Cycles and Sports Ltd,  Qué. Q.B. 806);
WHEREAS the Cities and Towns Act provides special remedies for the quashing of municipal by-laws, and for the setting aside of an assessment by a collection roll affecting properties and immovables;
WHEREAS rates are at present levied in accordance with that by-law and constitute a charge on respondent's properties;
WHEREAS a declaratory judgment will have no effect either on the by-laws or the rates presently collectable;
WHEREAS the conclusions of the said motion, on the face of the motion itself and of the conclusions, are of a curative and not preventive nature; the declaratory action is in no way curative as it cannot decree any condemnation;
WHEREAS the motion is preventive while the litigation in question is not potential but real and existing;
THE COURT DISMISSES the said motion with costs;
JUDGMENT CONSULTED AT THE HEARING
Corporation des Enseignants du Québec v. The Attorney General of the Province of Quebec et al.,  C.S. 793.
The Court of Appeal affirmed, and stated inter alia:
[TRANSLATION] ... it appears, from both the motion itself and the contestation of the motion by respondent,
that there exists and has existed for three years a genuine issue between appellant and respondent. Therefore, despite the groundless allegations to the contrary made by appellant, this is not a potential issue, since an issue arose and existed in fact between the two parties.
This Court has held on two previous occasions that "the motion for a declaratory judgment must be used for a preventive and not for a curative purpose": in Laflamme v. Drouin,  C.A. 707, and in Fefferman et al. v. Bentley's Cycles and Sports Ltd.,  Qué. Q.B. 806, at p. 807.
Jules Deschênes C.J. of the Superior Court gave a similar ruling in Corporation des Enseignants du Québec v. The Attorney General of the Province of Quebec et al.,  S.C. 793 et seq.
I consider that the aforementioned decisions are applicable to this motion, and that the judge of first instance properly applied them in the judgment a quo.
Article 453 C.C.P. is not designed to create, at the option of litigants, an alternative method of instituting, proceeding with and hearing existing cases; the remedy provided under this article is an exceptional one, related to that of decision on a point of law (C.C.P. 448 et seq.), and should not, except in equally exceptional circumstances, do double duty to obtain priority of hearing over other cases which have been instituted and prosecuted in due form.
If the strict limits set under art. 453 were exceeded, there could be only one result: to destroy the economy of our Code of Civil Procedure by creating a second system for instituting and hearing cases, to a large extent parallel to the first but more expeditious; if the choice of this parallel system were left to the litigants, disorder and chaos would result, and ultimately it would be the administration of justice which would suffer, for justice needs to be administered in an orderly manner.
With respect, I must say that the decision of the Court of Appeal is tantamount to deleting art. 453 from the Code. Can there be a "genuine problem" which does not constitute an "issue", as this word is understood in this context? This is not a situation where another suit has already been filed: that would be quite a different situation, a kind of lis pendens. Here, a taxpayer is threatened with seizure for refusing to pay a tax which he denies owing. He should not be obliged to wait for a seizure before filing an opposition. He therefore undoubtedly has an interest in having the question
settled. I do not see how it can be argued that this is not a "genuine problem". Moreover, it must be noted that the enactment goes on to mention "any right, power or obligation which he may have under a ... resolution or by-law of a municipal corporation", which clearly appears to refer directly to cases of this kind. The Court of Appeal does not seem to have stopped to consider what application the provision could have, if not to cases of this kind.
The reference to "a preventive and not a curative purpose" is clearly not to the wording of the 1965 Code of Civil Procedure, but rather to the report of the Commissioners who prepared the draft. To reject this distinction, it might suffice to say that it does not appear in the enactment. However, if one wishes to ascertain what the Commissioners meant when they referred, in their comments on arts. 453 to 456, to the "reasons which led them to propose the declaratory action, as a means of preventive justice", one must read some observations which they made on art. 55:
In the present state of things, one may say, in a general way, that rights are sanctioned only by the condemnation of the person who has violated them; it is only exceptionally, in effect, that the litigant may invoke the aid of justice before the actual violation of his right has taken place.
There would be little to say aginst this curative justice if rights were never violated other than by deliberate intention. But, observation reveals that often the litigant wants c his rights, but he is not aware of their precise limits because of the obscurity of the law or of the agreement which governs them. Not knowing what he must do—or what he must not do—to stay within the law, the litigant is in a dilemma, whether to deprive himself of exercising all his rights through fear of going beyond their legal limits, or to run the risk of being sued for having crossed the limit which he could not know.
It is, therefore, extremely desirable that there should be put at the disposal of the litigants a means which permits them to determine in advance in certain conditions the true nature of the juridical situation in which they find themselves. But the means required for this are declaratory procedures under which, when two litigants are in disagreement as to their reciprocal rights and obligations, one of them may demand from the tribunal,
a declaration as to what his rights are. This declaration will not involve any condemnation, but, having the force of chose jugée, it will compel the respect of the parties.
This declaratory procedure has existed in Scotland for two centuries; it started developing in England about 1828, and is now in use in all the English speaking countries, as well as in Germany and Austria. In France, the doctrine is favorable to it and jurisprudence admits it more and more (SOLUS et PERROT, Droit judiciaire privé, t. I, No. 233, p. 211). Everywhere beneficial effects are noticed.
The objections that one could raise against this form of preventive justice are:
1. That the Courts do not have as their function the giving of opinions; and
2. That declaratory actions risk causing the blocking of the Courts.
To that one must answer that the declaratory judgment is not the giving of an opinion, but a decision with the force of chose jugée; and that the means of avoiding the abuse which one fears— "... is not to be opposed systematically to this procedure but to be very strict in the appreciation of the interest alleged by requiring that, on the one hand the danger be grave and serious to the point of creating from that moment a definite difficulty, and on the other hand, the judicial declaration sought be of such a nature as to offer to the plaintiff not merely a purely theoretical satisfaction but a concrete and determined usefulness". (SOLUS et PERROT, Droit judiciaire privé, t. I, No. 233).
These observations show that the Court of Appeal went against the intention of the Code of Civil Procedure in refusing to consider as a measure of "preventive justice" a motion made to provide against an express threat from the other party. In saying this, I am in no way suggesting that the Commissioners' observations on the distinction between preventive and curative justice should be considered as part of the wording of the Code. On the contrary, it appears obvious to me that their purpose in omitting it from the draft, which they proposed and the legislature later enacted, was precisely that they did not wish the courts to be embarrassed by it. In fact, the governing intention behind the whole new Code was the desire to bury the old adage that "form takes precedence over substance". This intention is stated expressly in art. 2, the first sentence of which reads as follows:
2. The rules of procedure in this Code are intended to render effective the substantive law and to ensure that it is carried out; and failing a provision to the contrary, failure to observe the rules which are not of public order can only affect a proceeding if the defect has not been remedied when it was possible to do so.
If there is a case where this rule is especially applicable, it is, in my view, when the Court has to decide when one may proceed by motion under art. 453, or when, on the contrary, an action must be instituted. It is apparent that the intention was to make the motion widely applicable. The specific mention of a "resolution or by-law of a municipal corporation" was, in my view, clearly prompted by a desire to avoid the difficulties which had arisen in this area under Ontario rules, see the decision in Sun Oil Co. v. City of Hamilton & Veale, only a few years before the 1965 Code of Civil Procedure was drawn up.
Having regard to the general principles of this Code, I find it positively unacceptable that a motion under art. 453 should be dismissed on the grounds that an action would be required, once a contestation in writing has been filed. In such case the Court has complete pleadings before it, exactly as if an action had been instituted, the only difference being that the opposing party received a mere notice instead of a copy of a writ of summons. To dismiss the application at the hearing on the grounds that an action should have been instituted implies that, although the exception to the form has been abolished, it is resurrected free of all limitations imposed on its ancient strictness.
As I have already had occasion to note, when the decision on a question of form causes a litigant to be deprived of a substantial right, the matter ceases to be a question of form and becomes a question of law (see Barrette v. The Queen). For this reason, this Court has not hesitated to intervene on procedural questions in such circumstances,
On the procedural question, therefore, I would say:
(1) in order to decide whether a case can be dealt with by a motion for declaratory judgment, the Court is not required to determine if the motion is preventive or curative, but merely whether it comes within the terms of art, 453;
(2) as the distinction is not a rule of public order, any party who wishes to complain that an action should have been instituted must do so when the motion is presented, and he shall be considered to have waived this objection if he files a contestation in writing.
I think I should add that I see no basis for fears of an abuse of the procedure by motion. Firstly, it must be noted that no order for payment of money can be sought under art. 453, however widely the article is interpreted. Furthermore, if the judge considers that this procedure is being abused, there is nothing to prevent him from ordering that the case be proceeded with as if it were an action. In the case at bar, I consider it appropriate to say that the public interest in municipal proceedings made a procedure for a prompt decision eminently desirable.
I shall now turn to the second point, admitted by the judge of first instance and not considered by the Court of Appeal. Is it true to say that appellant had no remedy other than those provided under the Cities and Towns Act? Under s. 411 of the Cities and Towns Act, a municipal by-law may be quashed "on the ground of illegality". Apart from special formalities, such as security for costs and so on, the right to apply by petition for the quashing of a by-law is subject to a time limit of
three months after the coming into force of the by-law (s. 421). If there had been no other possible remedy, the by-laws in question could not have been attacked when appellant made his motion. Such a conclusion runs counter to many decisions of the courts, which for a long time have allowed actions in nullity against municipal by-laws in cases of ultra vires.
In L'OEuvre du Patronage de St-Hyacinthe v. La Cité de St-Hyacinthe, Létourneau J.A. expressed the unanious opinion of the Court of Appeal when he said (at p. 500):
[TRANSLATION] ... this provision of the Act, under which the remedy against by-laws is restricted to a certain time limit, does not apply in the case of by-laws expressly prohibited under the Act: ultra vires can always be pleaded, even as a defence, against a tax which the Act declares not to be due by those who are complaining of it. (See authorities supra.)
This decision is based primarily on the ruling of this Court in Donohue v. La Paroisse de St-Etienne de la Malbaie, where Mignault J. stated (at p. 521):
[TRANSLATION] ... absence or excess of jurisdiction is a cause of absolute nullity, and any person aggrieved has a remedy under Art. 50 of the Code of Civil Procedure.
The question is, therefore, whether respondent had the authority to enact, under s. 442(4) of the Cities and Towns Act, that the water-rate would be payable by all property owners. Section 442 reads as follows:
442. The council may make by-laws:
(4) To establish the rate for water, in addition to the special taxes mentioned in sections 439 and 441; to supply meters for buildings or establishments, for measuring the quantity of water used therein; and to fix the amount to be paid for the water and rent of meters;
However, in the same division of the Act, under the same reading Water Supply, there are the following sections:
445. As soon as the municipality is ready to furnish water to any part of the municipality not already supplied,
public notice thereof shall be given; and, after such notice, all persons liable to the payment of water-rates in such part of the municipality, whether they consent or not to receive the water, shall pay the rates fixed by the tariff.
446. The municipality shall lay the distribition pipe to the line of the street, and may exact payment of the water-rate from the property owner, even although the latter refuses or neglects to connect such a pipe with his house or building.
It seems clear that a town does not have the authority to eliminate, by a by-law, the conditions governing the recovery of a water rate, when those conditions are laid down by the Act itself. Such conclusion is further supported by the provisions in ss. 439 and 441 whereby the right to recover the "special tax" for the waterworks, "in addition to" which the rate for water may be established under s. 442(4), is essentially subjected to the same conditions. In fact, s. 440 reads as follows:
440. Such a special tax shall be imposed and levied, even upon the owners or occupants not availing themselves of the water from the waterworks; provided that the municipality has notified such owners and occupants, that it is prepared, at its own expense, to bring the water to the line of the street opposite their respective houses, shops or buildings.
The tax imposed under s. 441 is levied "on the immovables facing the water conduits constructed by the municipality ..."
In my view, once it is held that the imposition of the water rate under s. 442(4) is subject to the conditions prescribed under ss. 445 and 446, the appellant must succeed, even assuming that the facts alleged in respondent's contestation are established. What the Town is seeking to do, in fact, through the by-laws in dispute, is to oblige all property owners in the municipality to pay the "water rate", whereas the Act provides that it can levy it only under certain conditions. As the Privy Council held in Dominion of Canada v. City of Levis (at p. 511):
Water supplied at the cost of the municipality from artificially constructed waterworks is in the nature of a merchantable commodity.
It is, therefore, only in exceptional cases that the price of the service can be claimed from those to whom it is not supplied. Provision is made for such exception under the Act, but if the Municipality wishes to avail itself of it, it must comply strictly with what is required. In the case at bar, the Municipality, instead of seeking to avail itself of ss. 445 and 446, purported through its by-law to ignore them.
To oblige the property owners on Mitawanga Point to pay the water rate, the Municipality maintains that, because they built their houses without opening public roads to them, the laying of the waterworks pipe from the nearest street is at their expense, and their refusal to provide the pipe themselves renders them liable to pay for the service which they do not receive. Before such a claim can be made, the conditions prescribed under ss. 445 and 446 must be fulfilled. These sections require that notice be given that the Municipality is ready to supply water, and that the owners be requested to make the necessary connection. Instead of doing this, the Municipality passed by-laws purporting to oblige all property owners to pay unconditionally. The question raised by these by-laws is not whether the Municipality acted within the conditions prescribed by ss. 445 and 446, it disregarded them. Strictly speaking, it would suffice to note that it did not have the authority to pass a by-law obliging all property owners to pay the water rate, regardless of the provisions of the Act.
If the houses on Mitawanga Point were built along a public road and not a private road, the Municipality could obviously not claim the "water rate". It is true that, because the Municipality did not order the opening of public roads, the property owners are obliged to pay the same general taxes as the other taxpayers, although they are responsible for the upkeep of their private road. But, this is because the Act does not contain for roads provisions. similar to those for waterworks. The latter service is considered the supply of merchandise to such extent that the water may be sold by meter. The purpose of ss. 445 and 446 is not to allow the Municipality to oblige those who reside in a part of the territory to which the service is not
supplied, to pay the water rate. The contrary is clearly indicated by the wording of the Act. The sections which we have examined merely seek to prevent some owners from evading their liability to contribute to the cost of installing and operating a waterworks system designed to serve them.
For these reasons, I would allow the appeal, set aside the judgments of the Court of Appeal and of the Superior Court, and declare that respondent's by-laws 453, 472 and 486 are void, and that accordingly the water rate claimed by its statement of account dated October 10, 1973, cannot be recovered from appellant, the whole with costs throughout against respondent.
Appeal allowed with costs.
Solicitors for the appellant: Duquet, MacKay, Weldon & Bronstetter, Montréal.
Solicitors for the respondent: Gélinas & Chamard, Sainte-Agathe-des-Monts, Québec.