Case information

Contract — Transaction — Novation — Modalities of obligation — Compensatory prestation — Prescription of right of action — Insofar as Agreement P 5 dated February 19, 2001, constitutes transaction, whether Court of Appeal erred in not finding it to have novatory if not declaratory nature that modified pre existing obligations of parties — Whether Court of Appeal could order restitution of prestations where no situation set out in art. 1699 of Civil Code of Québec was alleged or proven and where parties had signed notarial acts by which Les Investissements Laroda transferred surplus parks free of charge — Whether Court of Appeal, in interpreting Agreement P-5, erred in characterizing City’s obligation to reimburse as being obligation with term; if not, whether it could simultaneously apply arts. 1510 and 1512 of Civil Code of Québec with direct effect on prescriptive period — Whether Court of Appeal erred in failing to apply performance by equivalence regime in context of this case after having previously recognized that City’s obligation had become exigible — Civil Code of Québec, arts. 1497, 1508, 1510, 1512, 1660, 1699, 1700, 2631, 2925.

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In the 1990s, Promotion M.G. Larochelle inc. (Promotion M.G.) was involved in real estate development in Ville de Sainte-Julie (City), the applicant/cross respondent. In December 2000, the total area of Promotion M.G.’s real estate projects was 760,926.3 m2. The municipal by law on parks and playgrounds required 76,092.63 m2, that is, 10% of that area, to be transferred free of charge to the City. However, Promotion M.G. had already transferred 3,898.27 m2 in excess to the City. In February 2001, the City and Promotion M.G. signed an agreement (Agreement) regarding land transfers for the purposes of parks or playgrounds. The Agreement included an undertaking by Promotion M.G. to transfer land with an area of 45,615 m2 to the City, 50% of that area (22,807.5 m2) being applicable, along with the 3,898.27 m2 already transferred in excess, to the creation of a total [TRANSLATION] “area bank” of 26,705.78 m2. The creation of that bank allowed the City to avoid having to compensate Promotion M.G. in money for the excess area transferred. In fact, the parties expressly agreed that the bank was to be applied in compensation for park fees to be paid to the City in the context of future real estate development by Promotion M.G. or companies related to it in the City. While at the time Promotion M.G. did not have any land to develop in the City, a company related to it, the respondent/cross applicant, Les Investissements Laroda inc. (Laroda), owned lots located in an agricultural zone that it intended to develop for real estate purposes. On two occasions, that is, in 2004 and 2008, the City filed an application with the Commission de protection du territoire agricole du Québec (CPTAQ) to have part of the sector (called “Du Moulin”) where Lorada’s lots were located excluded from the agricultural zone, and each time, the application was rejected. The Administrative Tribunal of Québec dismissed the appeal from CPTAQ’s last decision in 2011. In December 2015, Laroda, which, since 2010, had had all the rights, titles and interest that belonged to Promotion M.G., sent a letter, through its representative, Éric Larochelle, to the City’s mayor requesting that she make it a monetary offer that corresponded to the present value of the area included in the bank provided for in the Agreement. After talks broke down, Laroda filed an originating application against the City asking the court to fix a term for the Agreement and to order the City to pay damages. The Superior Court dismissed the originating application and the Court of Appeal allowed the appeal.