Marcotte v. Longueuil (City)

Marcotte v. Longueuil (City)
Collection
Supreme Court Judgments
Date
2009-10-08
Neutral citation
2009 SCC 43
Report
[2009] 3 SCR 65
Case number
32213, 32214
Judges
McLachlin, Beverley; Binnie, William Ian Corneil; LeBel, Louis; Deschamps, Marie; Fish, Morris J.; Abella, Rosalie Silberman; Charron, Louise; Rothstein, Marshall; Cromwell, Thomas Albert
On appeal from
Quebec
Subjects
Civil procedure
Notes
SCC Case Information: 32214, 32213
Decision Content
SUPREME COURT OF CANADA
Citation: Marcotte v. Longueuil (City), 2009 SCC 43, [2009] 3 S.C.R. 65
Date: 20091008
Docket: 32213, 32214
Between:
Michel Marcotte
Appellant
and
City of Longueuil
Respondent
‑ and ‑
Attorney General of Ontario
Intervener
and between:
Usinage Pouliot Inc.
Appellant
and
City of Longueuil
Respondent
Official English Translation
Coram: McLachlin C.J. and Binnie, LeBel, Deschamps, Fish, Abella, Charron, Rothstein and Cromwell JJ.
Reasons for Judgment:
(paras. 1 to 44)
Dissenting Reasons:
(paras. 45 to 130)
LeBel J. (Fish, Abella, Charron and Rothstein JJ. concurring)
Deschamps J. (McLachlin C.J. and Binnie and Cromwell JJ. concurring)
______________________________
Marcotte v. Longueuil (City), 2009 SCC 43, [2009] 3 S.C.R. 65
Michel Marcotte Appellant
v.
City of Longueuil Respondent
and
Attorney General of Ontario Intervener
‑ and -
Usinage Pouliot Inc. Appellant
v.
City of Longueuil Respondent
Indexed as: Marcotte v. Longueuil (City)
Neutral citation: 2009 SCC 43.
File Nos.: 32213, 32214.
2009: January 19; 2009: October 8.
Present: McLachlin C.J. and Binnie, LeBel, Deschamps, Fish, Abella, Charron, Rothstein and Cromwell JJ.
on appeal from the court of appeal for quebec
Civil procedure — Class action — Conditions for authorizing action — Applications for authorization to institute class actions in order to seek declarations that municipal by‑laws imposing property and business taxes are null and claim refund of taxes paid — Whether class actions should be authorized — Code of Civil Procedure, R.S.Q., c. C‑25, arts. 4.2, 1003.
To alleviate the financial shock the municipal amalgamations of 2000 might entail, the National Assembly established a scheme to gradually equalize the tax burdens of the amalgamated sectors over a period of 20 years. The Charter of Ville de Longueuil capped yearly increases in the tax burden of each sector of the new City of Longueuil at 5%, but did not establish a direct ceiling for the tax imposed on each unit of assessment. The Charter provided for a similar sector‑by‑sector ceiling on revenues derived from the business tax imposed on businesses. In 2006, four of the amalgamated municipalities were reconstituted and separated from the territory of the City of Longueuil. Two ratepayers, M and UP, who were dissatisfied with the assessment of their tax burdens before the demerger of their respective sectors, applied separately for authorization to institute class actions to quash the municipal by‑laws imposing property taxes and the business tax for 2003, 2004 and 2005 in four sectors of the municipality and obtain a refund, in respect of 2005, of the taxes that had been paid by the ratepayers covered by the proposed actions. They also contested resolutions of the municipal council related to those by‑laws. The Quebec Superior Court and the Quebec Court of Appeal denied them authorization on the basis that even though M and UP had established prima facie cases, the Quebec Court of Appeal had consistently held that the class action could not be used to challenge the validity of a municipal by‑law. Since the result of an individual action in nullity would apply in respect of all ratepayers, if such an action was successful, the declaration of nullity would achieve the desired result in respect of all ratepayers without the need for a class action.
Held (McLachlin C.J. and Binnie, Deschamps and Cromwell JJ. dissenting): The appeals should be dismissed.
Per LeBel, Fish, Abella, Charron and Rothstein JJ.: In light of art. 1003 C.C.P., it was not open to M and UP to institute class actions in order to have the municipal by‑laws declared to be null and to recover payments made under them. It is undisputed that there are common questions (art. 1003(a)) and that the representatives are qualified to represent the groups (art. 1003(d)), but the existence of a prima facie case (art. 1003(b)) and the composition of the groups (art. 1003(c)), having regard to the nature of the conclusions being sought, are problematic. [14] [23]
Because of the way they are worded, the conclusions being sought are unenforceable as regards the city’s obligation to refund. Although a declaration of nullity would apply in respect of all citizens and ratepayers in the municipality in question, the quashing of the by‑laws would not result in a right to have the taxes refunded, as it would not immediately give rise to liquid and exigible claims. In light of the taxation and budgetary system governing municipalities such as the city, the declarations of nullity would entitle the members of the groups to a recalculation of their property or business taxes. Only such a recalculation would give rise to a liquid and exigible claim, which would cause prescription to start running in respect of an action for restitution. The proposed class actions would thus be of no assistance in interrupting prescription, since prescription has not yet started to run. Furthermore, the requests that all property and business taxes paid in the four sectors covered by the proposed class actions be refunded do not appear to be compatible with the principles of the Civil Code of Quebec governing the restitution of payments not due and the restitution of prestations. Whereas M and UP received municipal services throughout 2003, 2004 and 2005, the dispute over the calculation of their taxes concerns only a portion of what they paid. It is therefore unlikely that the amount of their claim would correspond to the amount they are seeking. Given this legal framework and this context, the conclusion being sought does not meet the prima facie case requirement of art. 1003(b) C.C.P. [26] [28] [33‑36] [39]
The action in nullity also gives rise to difficulties related to the operation of certain procedural rules governing the establishment of and changes to the group covered by a class action. Thus, because of the fact that such a declaration would apply in respect of all ratepayers, members of the group would not be able to withdraw effectively from the action in nullity. This is contrary to the rules respecting the institution and conduct of class actions. [40]
Finally, the class action is not an appropriate procedure for seeking to quash a municipal by‑law. Although the actions M and UP wish to institute fall undeniably within the ambit of art. 33 C.C.P., other causes of nullity, such as formal defects and irregularities, would instead fall within the framework of annulment proceedings over which the Superior Court is granted jurisdiction in statutes relating to municipalities. Recourse to the class action in such situations could hamper the conduct of proceedings that are in principle simple and quick, and would hardly be consistent with the principle of proportionality set out in art. 4.2 C.C.P., according to which litigation must be consistent with the principles of good faith and of balance between litigants and must not result in an abuse of the public service provided by the institutions of the civil justice system. [27] [41] [43]
Per McLachlin C.J. and Binnie, Deschamps and Cromwell JJ. (dissenting): The application of art. 4.2 C.C.P. to the conditions for authorizing a class action does not support the conclusion that a class action would in this case be inconsistent with the principle of proportionality. Since the proposed actions meet all the conditions set out in the Code of Civil Procedure, they should have been authorized. [130]
Article 4.2 C.C.P. on the principle of proportionality does not supplement the criteria for authorizing a class action set out in art. 1003 C.C.P. and therefore does not confer on the court a discretion separate from the one flowing from the latter provision. Proportionality is a guiding principle of civil procedure that cannot be applied independently. The purpose of art. 4.2 C.C.P. is to reinforce the authority of the judge as case manager. The effect of the principle of proportionality on art. 1003 C.C.P. is to give concrete expression to and to reinforce the discretion judges are already recognized as having when reviewing each of the four conditions for authorizing a class action. The enactment of art. 4.2 C.C.P. did not have the effect of requiring applicants for authorization to show that the class action would be the preferable procedure for resolving common issues. The effect of requiring applicants to prove this would be to limit access to the class action. [63‑67] [81] [84‑85]
In this case, a thorough analysis by the courts below of the four conditions for authorizing a class action was required. The actions easily meet the similar questions requirement of art. 1003(a), and this is not a case in which a judge should exercise his or her discretion to decide whether to authorize or refuse the actions. What is in issue for all the members relates to the city’s compliance with the ceiling on increases in the tax burden and the business tax. The same by‑laws are in issue for all members of the groups. The questions of law are therefore identical. The only difference in M’s appeal lies in the factual demonstration based on the specific figures for each of the four sectors. Moreover, the calculations are the same for every ratepayer in a given sector. At stake for all the members is the right to recover taxes paid. [85] [89]
The claims of M and UP have a “good colour of right” as required by art. 1003(b) C.C.P. This is, prima facie, a case of excess of jurisdiction in which it is alleged that the exercise of taxing authority was inconsistent with the Charter of Ville de Longueuil. The information that has been provided is, prima facie, capable of supporting an inference that the 5% ceiling on yearly increases in the tax burden and in the business tax was exceeded. As for the impugned resolutions, they identify specific amounts rather than prescribing, as required by s. 87.5 of the Charter, rules for calculating the part of the tax increase resulting from the constitution of the city. Moreover, the remedy — a tax refund — sought by M and UP represents an application of the general rule on quashing an administrative act. The amount paid by each ratepayer would be easy to determine. It would be a liquid amount whose exigibility would hinge solely on an order of the court declaring the administrative act to be null. If a plaintiff contends that a public body has acted contrary to an enabling statute, the court cannot dismiss the action on the basis that the conclusions sought would have dire consequences. To hold that the courts have such a discretion would amount to granting immunity to municipalities, which would be inconsistent with the principle of the division of powers. Finally, the question whether the action for restitution is prescribed in respect of 2003 and 2004 requires an assessment of the facts, and it would be unwise to answer it at the stage of the application for authorization. The trial judge will be able, upon application, to reconsider this question. [94‑103]
Regarding art. 1003(c) C.C.P., no explanation has been given as to why it might be more practicable to pursue the claim for restitution — which is common to all the members — by mandate or by joinder. It is incorrect to characterize the action as a simple request to quash the by‑law and to state that bringing a class action would be pointless because the judgment would have effect with regard to everyone. It is true that, acting individually, M and UP might obtain declarations of nullity that would apply in respect of all ratepayers, but if their actions for the recovery of taxes were successful, only M and UP would benefit from orders to refund taxes. The actions in restitution of the other ratepayers could be prescribed even before a final judgment was rendered in the individual actions of M and UP. Article 2900 C.C.Q. on the interruption of prescription does not apply to an action for the recovery of municipal taxes, because the possible claim of the ratepayers is not indivisible and each ratepayer has an individual and distinct obligation to the city to pay his or her own taxes. Finally, there is no requirement in Quebec law that the members of a class action group not have conflicting interests. In Quebec, members with divergent interests can ask to be excluded from the action: arts. 1005 to 1007 C.C.P. In the cases at bar, it is clear that it would be far more practicable to proceed by way of class actions than by way of individual proceedings. The application of the principle of proportionality here enhances the usefulness of the class action, which clearly facilitates access to justice. [110] [115‑116] [121] [124] [127]
As for the condition provided for in art. 1003(d) C.C.P., M and UP have shown that they are in a position to represent the members of their respective groups adequately. [128]
Cases Cited
By LeBel J.
Applied: Bouchard v. Agropur Coopérative, 2006 QCCA 1342, [2006] R.J.Q. 2349; Francœur v. Municipalité régionale de comté d’Acton, [1985] R.D.J. 511; Comité de citoyens et d’action municipale de St‑Césaire v. Ville de St‑Césaire, [1986] R.J.Q. 1061; Gravel v. Corporation municipale de la paroisse de La Plaine, [1988] R.D.J. 60; Vena v. Montréal (Ville), [2002] J.Q. no 4807 (QL); referred to: Breslaw v. Montréal (City), 2009 SCC 44, [2009] 3 S.C.R. 131; Lac d’Amiante du Québec Ltée v. 2858‑0702 Québec Inc., 2001 SCC 51, [2001] 2 S.C.R. 743; Nault v. Canadian Consumer Co., [1981] 1 S.C.R. 553; Comité régional des usagers des transports en commun de Québec v. Quebec Urban Community Transit Commission, [1981] 1 S.C.R. 424; Comité d’environnement de La Baie Inc. v. Société d’électrolyse et de chimie Alcan Ltée, [1990] R.J.Q. 655; Château v. Placements Germarich Inc., [1990] R.D.J. 625; Tremaine v. A.H. Robins Canada Inc., [1990] R.D.J. 500; Thompson v. Masson, [1993] R.J.Q. 69; Pharmascience Inc. v. Option Consommateurs, 2005 QCCA 437, [2005] R.J.Q. 1367; Robertson v. City of Montreal (1915), 52 S.C.R. 30; Corporation du village de Deschênes v. Loveys, [1936] S.C.R. 351; Guimond v. Quebec (Attorney General), [1996] 3 S.C.R. 347; Abel Skiver Farm Corp. v. Town of Sainte‑Foy, [1983] 1 S.C.R. 403; Doré v. Verdun (City), [1997] 2 S.C.R. 862; Québec (Sous‑ministre du Revenu) v. B.D., [2002] R.J.Q. 54; Amusements St‑Gervais inc. v. Legault, [2000] J.Q. no 687 (QL); Immeubles Port Louis Ltée v. Lafontaine (Village), [1991] 1 S.C.R. 326.
By Deschamps J. (dissenting)
Francœur v. Municipalité régionale de comté d’Acton, [1985] R.D.J. 511; Comité de citoyens et d’action municipale de St‑Césaire v. Ville de St‑Césaire, [1986] R.J.Q. 1061; Gravel v. Corporation municipale de la paroisse de La Plaine, [1988] R.D.J. 60; Abel Skiver Farm Corp. v. Town of Sainte‑Foy, [1983] 1 S.C.R. 403; Kingstreet Investments Ltd. v. New Brunswick (Finance), 2007 SCC 1, [2007] 1 S.C.R. 3; Guimond v. Quebec (Attorney General), [1996] 3 S.C.R. 347; Boutique Linen Chest (Phase II) Inc. v. Wise (1997), 80 C.P.R. (3d) 540; Lownds v. Home Office, [2002] EWCA Civ 365, [2002] 4 All E.R. 775; Rogers v. Merthyr Tydfil County Borough Council, [2006] EWCA Civ 1134, [2007] 1 All E.R. 354; Callery v. Gray (Nos 1 and 2), [2002] UKHL 28, [2002] 3 All E.R. 417; Hashtroodi v. Hancock, [2004] EWCA Civ 652, [2004] 3 All E.R. 530; Leigh v. Michelin Tyre plc, [2003] EWCA Civ 1766, [2004] 2 All E.R. 175; Totol Vision Enterprises Inc. v. 689720 B.C. Ltd., 2006 BCSC 639, [2006] B.C.J. No. 925 (QL); Roy v. Boivin Carrier, 2006 QCCS 2663, [2006] J.Q. no 4679 (QL); Quesnel v. KPMG, s.r.l., 2007 QCCS 3990, [2007] J.Q. no 9465 (QL); Canada (Procureur général) v. Malcolm Média inc. (Expour 2000), 2007 QCCS 2427, [2007] J.Q. no 5098 (QL); Harmegnies v. Toyota Canada inc., 2008 QCCA 380, [2008] J.Q. no 1446 (QL); Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46, [2001] 2 S.C.R. 534; Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158; Rumley v. British Columbia, 2001 SCC 69, [2001] 3 S.C.R. 184; Gelmini v. Procureur général du Québec, [1982] C.A. 560; Bouchard v. Agropur Coopérative, 2006 QCCA 1342, [2006] R.J.Q. 2349; Lallier v. Volkswagen Canada Inc., 2007 QCCA 920, [2007] R.J.Q. 1490; Brito v. Pfizer Canada inc., 2008 QCCS 2231, [2008] R.J.Q. 1420; Option Consommateurs v. Infineon Technologies AG, 2008 QCCS 2781, [2008] R.J.Q. 1694; Comité régional des usagers des transports en commun de Québec v. Quebec Urban Community Transit Commission, [1981] 1 S.C.R. 424; Berdah v. Nolisair International Inc., [1991] R.D.J. 417; Lasalle v. Kaplan, [1988] R.D.J. 112; Desmeules v. Hydro‑Québec, [1987] R.J.Q. 428; Immeubles Port Louis Ltée v. Lafontaine (Village), [1991] 1 S.C.R. 326; Beauchamp v. Cité d’Outremont, [1970] C.A. 286; York Condominium Corp. No. 148 v. Singular Investments Ltd. (1977), 16 O.R. (2d) 31; Butler v. Regional Assessment Commissioner, Assessment Region No. 9 (1982), 39 O.R. (2d) 365; Dell Computer Corp. v. Union des consommateurs, 2007 SCC 34, [2007] 2 S.C.R. 801; Bisaillon v. Concordia University, 2006 SCC 19, [2006] 1 S.C.R. 666; Gosselin v. Procureur général du Québec, [1986] SOQUIJ AZ-87021083; Canada (Attorney General) v. Hislop, 2007 SCC 10, [2007] 1 S.C.R. 429.
Statutes and Regulations Cited
Act respecting municipal taxation, R.S.Q., c. F‑2.1, s. 172.
Act respecting the consultation of citizens with respect to the territorial reorganization of certain municipalities, S.Q. 2003, c. 14.
Act to reform the municipal territorial organization of the metropolitan regions of Montréal, Québec and the Outaouais, S.Q. 2000, c. 56, Schedule III, s. 3.
Charter of Ville de Longueuil, R.S.Q., c. C‑11.3, ss. 86, 86.1, 87.1, 87.2, 87.5, 135.
Cities and Towns Act, R.S.Q., c. C‑19, ss. 397, 474, 474.1, 474.2, 474.3, 586, 592, 595.
Civil Code of Québec, S.Q. 1991, c. 64, arts. 1491, 1492, 1519, 1520, 1522, 1699, 2900, 2903, 2908, 2922, 2925.
Class Proceedings Act, 1992, S.O. 1992, c. 6, s. 5(1).
Code of Civil Procedure, R.S.Q., c. C‑25, arts. 4.1, 4.2, 33, 59, 67, 165(4), 199, 397, 509, 999, 1003, 1005‑1007.
Municipal Code of Québec, R.S.Q., c. C‑27.1, arts. 689, 690.
Supreme Court Rules, B.C. Reg. 221/90, r. 68.
Authors Cited
Baudouin, Jean‑Louis, et Pierre‑Gabriel Jobin. Les obligations, 6e éd. par Pierre‑Gabriel Jobin avec la collaboration de Nathalie Vézina. Cowansville, Qué.: Yvon Blais, 2005.
Chamberland, Luc. “La règle de proportionnalité: à la recherche de l’équilibre entre les parties?”, dans Service de la formation continue du Barreau du Québec, vol. 242, La réforme du Code de procédure civile, trois ans plus tard. Cowansville, Qué.: Yvon Blais, 2006, 1.
Crerar, David A. “The Resitutionary Class Action: Canadian Class Proceedings Legislation as a Vehicle for the Restitution of Unlawfully Demanded Payments, Ultra Vires Taxes, and Other Unjust Enrichments” (1998), 56 U.T. Fac. L. Rev. 47.
David, Éric McDevitt. “La règle de proportionnalité de l’article 4.2 C.p.c. en matière de recours collectif — Premières interprétations jurisprudentielles”, dans Service de la formation continue du Barreau du Québec, Développements récents en recours collectifs. Cowansville, Qué.: Yvon Blais, 2007, 315.
Delaney‑Beausoleil, Kathleen. “Le recours collectif”, dans Denis Ferland et Benoît Emery, dir., Précis de procédure civile du Québec, 4e éd., vol. 2. Cowansville, Qué.: Yvon Blais, 2003.
Dennis, Craig P. “Proportionality: A More Effective Tool”. Paper prepared for the Continuing Legal Education Society of British Columbia conference entitled “Rule 68” held September 29, 2005 (online: http://www.bcjusticereview.org/working_groups/civil_justice/cle_paper_09_29_05.pdf).
Durnford, John W. “Some Aspects of the Suspension and of the Starting Point of Prescription”, [1963] Thémis 245.
England. Final Report to the Lord Chancellor on the civil justice system in England and Wales. Access to Justice. London: The Stationery Office, 1996.
Faribault, Paul. Les recours de contrôle judiciaire, vol. 1. Cowansville, Qué.: Yvon Blais, 2001.
Finn, Shaun. “In a Class All its Own: The Advent of the Modern Class Action and its Changing Legal and Social Mission” (2005), 2 Can. Class Action Rev. 333.
Hétu, Jean, et Yvon Duplessis. Droit municipal — Principes généraux et contentieux, 2e éd., vol. 1. Brossard, Qué.: Publications CCH, 2002 (feuilles mobiles mises à jour 2009, envoi 12).
Jutras, Daniel. “À propos de l’opportunité du recours collectif”, dans Colloque sur les recours collectifs. Montréal: Association du Barreau canadien — Division Québec, 2007, 7.
L’Heureux, Jacques. “La fiscalité locale québécoise peut‑elle remplir ses promesses?”, dans Rapport général de synthèse du Colloque de l'Association québécoise de droit comparé, Dans la foulée des réformes municipales, le 20 avril 2001 (en ligne: http://aqdc.qc.ca/colloque_2001_04_20/J.L’Heureux.htm).
Latendresse, Anne. “La réforme municipale et la participation publique aux affaires urbaines montréalaises: Rupture ou continuité”, dans Bernard Jouve et Philip Booth, dir., Démocraties métropolitaines: Transformations de l’État et politiques urbaines au Canada, en France et en Grande‑Bretagne. Sainte‑Foy: Presses de l’Université du Québec, 2004, 155.
Martineau, Pierre. La prescription. Montréal: Presses de l’Université de Montréal, 1977.
Morissette, Yves‑Marie. “Gestion d’instance, proportionnalité et preuve civile: état provisoire des questions” (2009), 50 C. de D. 381.
Pineau, Jean, Danielle Burman et Serge Gaudet. Théorie des obligations, 4e éd. par Jean Pineau et Serge Gaudet. Montréal: Éditions Thémis, 2001.
Québec. Assemblée nationale. Journal des débats, vol. 37, no 31, 2e sess., 36e lég., 1er juin 2001, p. 1818.
Québec. Assemblée nationale. Journal des débats, vol. 37, no 110, 2e sess., 36e lég., 6 juin 2002, p. 6666.
Québec. Ministère de la Justice. Comité de révision de la procédure civile. La révision de la procédure civile: une nouvelle culture judiciaire. Sainte‑Foy: Le Comité, 2001.
Rousseau, Gilles. “Le recours en cassation dans le contentieux municipal” (1980), 21 C. de D. 715.
Sancton, Andrew. “Municipal Mergers and Demergers in Quebec and Ontario”, paper prepared for the Annual Meeting of the Canadian Political Science Association, York University, June 1, 2006 (online: http://www.cpsa-acsp.ca/papers-2006/Sancton.pdf).
APPEALS from two judgments of the Quebec Court of Appeal (Brossard, Rochon and Dufresne JJ.A.), 2007 QCCA 866, [2007] R.J.Q. 1467, [2007] J.Q. no 6258 (QL), 2007 CarswellQue 5318, and 2007 QCCA 867, [2007] J.Q. no 6259 (QL), affirming decisions by Hébert J., 2006 QCCS 6516, [2006] J.Q. no 15494 (QL), 2006 CarswellQue 12027, and 2006 QCCS 6517, [2006] J.Q. no 15495 (QL), 2006 CarswellQue 12030. Appeals dismissed, McLachlin C.J. and Binnie, Deschamps and Cromwell JJ. dissenting.
Marie Audren and Emmanuelle Rolland, for the appellants.
Nicole Gibeau and Louis Bouchart d’Orval, for the respondent.
Sara Blake and Lise Favreau, for the intervener.
English version of the judgment of LeBel, Fish, Abella, Charron and Rothstein JJ. delivered by
LeBel J. —
I. Introduction
[1] The municipal reorganization process undertaken by the Quebec government in several regions of the province in the early 2000s generated intense political controversy. It affected the entire greater Montréal area. Cities on Montréal’s South Shore were merged into a large agglomeration, the new City of Longueuil, which took its name from one of the amalgamated municipalities. A few years later, some of those municipalities were reconstituted and regained their autonomy. The drafting of a legal framework for the amalgamations and dissolutions no doubt taxed the imagination of lawmakers as they attempted to uphold the principles of equality in taxation between and tax fairness for the ratepayers affected by these processes.
[2] Dissatisfied with the assessment of their tax burdens following the creation of the new city, ratepayers of two sectors of the municipality, one a citizen, Mr. Marcotte, and the other a business corporation, Usinage Pouliot Inc., applied separately for authorization to institute class actions to quash the municipal by‑laws imposing property taxes and the business tax in four sectors of the City of Longueuil. These sectors corresponded to the territories of the four amalgamated cities that subsequently regained their autonomy. The Quebec Superior Court and the Quebec Court of Appeal denied the appellants the authorization they sought. The appeals against those judgments challenge the interpretation and application of the conditions for authorizing class actions under Quebec’s Code of Civil Procedure, R.S.Q., c. C‑25 (“C.C.P.”). In my opinion, for the reasons that follow, the denial of authorization was warranted and reflected a correct interpretation of the relevant provisions of the Code of Civil Procedure. In reasons released concurrently with these ones, in Breslaw v. Montréal (City), 2009 SCC 44, [2009] 3 S.C.R. 131, another appeal that relates to municipal amalgamations on the island of Montréal, I analyse a similar legal situation and reach the same conclusion.
II. Origins of the Cases
[3] To properly understand the issues and the nature of the proceeding before this Court, it is necessary to consider the origin thereof. To this end, I will pay particular attention to the statutory framework applicable to these cases.
[4] As part of the process of municipal amalgamations begun by the Quebec government in the early 2000s, nine municipalities on Montréal’s South Shore were amalgamated to form a new city, Ville de Longueuil, which adopted the name of one of the amalgamated cities (An Act to reform the municipal territorial organization of the metropolitan regions of Montréal, Québec and the Outaouais, S.Q. 2000, c. 56, Schedule III, s. 3).
[5] One of the main difficulties the legislature had to overcome was to achieve tax fairness for all the constituent parts of the new municipality and to alleviate the financial shock the amalgamation might entail. Each municipality had set its own tax rates in accordance with the legislation applicable to municipal taxation in Quebec. The legislature aimed to achieve equality in tax burdens among the residents of the amalgamated cities. But it was possible that the pursuit of this objective would lead to sudden and perhaps significant changes in tax rates in some of the new city’s sectors. The Quebec National Assembly accordingly established a scheme to gradually equalize the sectors’ tax burdens over a period of 20 years, the implementation of which gave rise to the disputes in these cases.
[6] The Charter of Ville de Longueuil, R.S.Q., c. C‑11.3, provided that this municipality was subject to the Cities and Towns Act, R.S.Q., c. C‑19 (“C.T.A.”). In s. 86 of the Charter, the amalgamated municipalities were designated as sectors of the new municipality. Section 86.1 set out the principle of equality in general property tax rates among the city’s sectors. But the application of this principle was limited by a series of provisions in the Charter that would phase it in over a period of 20 years. Thus, s. 87.1 capped annual increases in a sector’s tax burden at 5%:
87.1. The city may, for a fiscal year, fix any general property tax rate in such manner that, in relation to the preceding fiscal year, the increase in the tax burden borne by the aggregate of the units of assessment situated in a sector and in respect of which all or part of the rate applies is not greater than 5%.
. . .
[7] As can be seen, this provision placed a ceiling on increases in the collective tax burden of all units of assessment in a sector. It did not, however, establish a direct ceiling for the tax imposed on each individual unit.
[8] Section 87.2 provided for a similar sector‑by‑sector ceiling on revenues derived from the business tax imposed on businesses established in each sector:
87.2. The city may, for a fiscal year, fix the rate of the business tax in such manner that, in relation to the preceding fiscal year, the increase in the revenues derived from that tax in respect of all the business establishments situated in a sector is not greater than 5%.
. . .
[9] These provisions applied to the city’s nine sectors until 2006. As of January 1, 2006, four of the amalgamated municipalities were reconstituted and separated from the city’s territory. The respondent remained an amalgamated municipality whose territory consisted of a portion of the territory that had been attributed to it in 2002. At the same time, it became the “central” city of the urban agglomeration of Longueuil, which also included the four “demerged” sectors.
[10] The disputes before the Court arise from the application of ss. 87.1 and 87.2 of the Charter of Ville de Longueuil during the period prior to the partial dissolution of the city. The appellant Marcotte owned property in the Saint‑Lambert sector. As a property owner, he was required to pay the general property tax. The appellant Usinage Pouliot operated a business in the Saint‑Bruno‑de‑Montarville sector and was required to pay the business tax. Mr. Marcotte contends that increases in the general property tax burden crashed through the 5% ceiling in the sectors of Saint‑Lambert, Brossard, Saint‑Bruno‑de‑Montarville and Boucherville in the 2003, 2004 and 2005 taxation years. According to Usinage Pouliot, the 5% ceiling on the business tax was also exceeded in the same four sectors.
[11] The appellants submit that because the 5% ceiling was exceeded, the by‑laws imposing the taxes in issue for 2003, 2004 and 2005 were null. They allege that the respondent acted unlawfully, in a manner contrary to the legal framework for their taxation powers, and that the taxes paid by ratepayers had accordingly been collected unlawfully, without the appropriate statutory authority. On this basis, the appellants filed motions for authorization to institute class actions in order to have the municipal by‑laws imposing the property tax and the business tax in the four sectors quashed and in order to have the respondent refund amounts in respect of those taxes that had been paid by the ratepayers covered by the proposed class actions. The respondent contested the motions.
III. Judicial History
A. Quebec Superior Court (2006 QCCS 6516, [2006] J.Q. no 15494 (QL), and 2006 QCCS 6517, [2006] J.Q. no 15495 (QL))
[12] In both cases, Hébert J. first rejected an initial argument raised by the city that the facts alleged did not justify the conclusions sought. In his opinion, the applicants had established prima facie cases. But he dismissed the application for authorization on another basis: that class actions were inappropriate in these cases. He held that according to well‑settled Quebec case law, the class action is not available to a litigant seeking to have a municipal by‑law quashed and to recover taxes paid under it.
B. Quebec Court of Appeal, Brossard, Rochon and Dufresne JJ.A. (2007 QCCA 866, [2007] R.J.Q. 1467, and 2007 QCCA 867, [2007] J.Q. no 6259 (QL))
[13] Rochon J.A., writing for a unanimous Court of Appeal, dismissed the appeals of Mr. Marcotte and Usinage Pouliot. He agreed with the judge at first instance that the appellants had established prima facie cases, but he noted that the Quebec Court of Appeal had consistently held since 1985 that the class action could not be used to challenge the validity of a municipal by‑law (para. 14 R.J.Q.). The result of an individual action in nullity would apply in respect of all ratepayers. If such an action was successful, the declaration of nullity would achieve the desired result in respect of all ratepayers without the need for a class action (para. 21 R.J.Q.). In Rochon J.A.’s view, the applicant could not, in the circumstances, meet the condition set out in art. 1003(c) C.C.P., because to combine individual actions would not be “difficult or impracticable” in the words of that provision, but would instead be pointless (para. 23 R.J.Q.). Rochon J.A. also referred to the opinion expressed by his colleague Pelletier J.A. in Bouchard v. Agropur Coopérative, 2006 QCCA 1342, [2006] R.J.Q. 2349, at paras. 64‑68, that in addition to applying the conditions for admissibility set out in art. 1003 C.C.P., a court hearing a motion for authorization retains a residual discretion to reject an inappropriate class action (para. 22 R.J.Q.). Finally, he discussed difficulties related to the prescriptive period applicable to the right to a refund of the taxes should the by‑law imposing them be quashed. Despite the problems in applying the three‑year prescriptive period to an action to recover taxes, he seemed to think that one could be brought in time. However, he declined to rule on this aspect of the cases. He concluded that declarations of nullity would not make it possible to establish the amounts owed to ratepayers. In his opinion, how to determine the method for establishing the refund amounts remained an open question. Rochon J.A. adopted this reasoning in both Marcotte and Usinage Pouliot.
IV. Analysis
A. Issues
[14] In these appeals, this Court must consider issues related to the possibility of authorizing class actions under Quebec’s Code of Civil Procedure in areas originally associated with administrative law, and the effect of doing so. The Court must decide whether, in light of art. 1003 C.C.P., it is open to the appellants to institute class actions in order to have municipal by‑laws imposing property and business taxes declared to be null, and to recover payments made under those by‑laws.
[15] According to the appellants, if the conditions set out in art. 1003 for authorizing a class action had been applied properly, the Superior Court would have been justified in granting the authorizations. Any other interpretation would confer on the judge hearing a motion for authorization a discretion to assess the appropriateness of the action that is not provided for in the Code of Civil Procedure. The appellants add that the class action would be the only way to effectively protect the ratepayers’ right to a refund of the unlawfully imposed municipal taxes and to shield their actions for recovery from prescription.
[16] The city submits that the proposed actions do not meet the conditions for authorization set out in art. 1003. The respondent adds that, in any event, a court hearing a motion for authorization has a duty, under the Quebec rules of civil procedure, to determine whether a class action is in fact appropriate. A class action to quash a municipal by‑law would be pointless, as the Quebec Court of Appeal has consistently held. In the alternative, the city once again raises two arguments that the Superior Court and the Court of Appeal have already rejected: that the actions are prescribed and that they lack a sufficient legal basis. Finally, the city submits that even if the Court were to accept the argument that the by‑laws are null, this would not create an obligation to pay back the taxes. Rather, it would lead to a review of the city’s budgets, the adjustment of the tax burdens of the various sectors and the imposition of new taxes. The amount of the new taxes and of the city’s repayment obligations would not be known until the completion of that process.
[17] As is clear from these opposing arguments, the first issue raised by these appeals relates to the interpretation and application of the conditions governing the prior authorization of class actions by the Superior Court. It will therefore be necessary to review the conditions for authorization set out in the Code of Civil Procedure and then to determine whether they have been interpreted and applied correctly. This review will afford an opportunity to comment on decisions in which the Quebec Court of Appeal has held that class actions cannot be brought to quash municipal by‑laws. This will lead to consideration of the possibility of finding that the taxes can be recovered should the by‑laws in issue be declared to be null. For this purpose, it will be necessary to assess the consequences of such a declaration and to determine whether declaring the by‑laws to be null might lead to immediately enforceable conclusions for recovery of the taxes. This will require a review of the application of the rules of the Civil Code of Québec, S.Q. 1991, c. 64 (“C.C.Q.”), respecting the prescription of actions for restitution.
B. Statutory Framework for Class Actions and Conditions for Bringing Such Actions in the Quebec Law of Civil Procedure
[18] Quebec civil procedure is primarily statute‑based (Lac d’Amiante du Québec Ltée v. 2858‑0702 Québec Inc., 2001 SCC 51, [2001] 2 S.C.R. 743, at paras. 35‑38). The procedure for class actions is no exception. The Code of Civil Procedure sets out the conditions for authorizing such proceedings and the principles to be applied in conducting them. I will now review some of the components of the statutory framework for class actions.
[19] The provisions respecting class actions are found in Book IX of the Code of Civil Procedure. Article 999 establishes an initial rule for bringing class actions by limiting them to natural persons and to legal persons employing not more than 50 people. Other legal persons cannot institute class actions or even belong to a group on whose behalf one is brought. Furthermore, the institution of a class action requires the prior authorization of the Superior Court, which must be satisfied that the proposed action meets the conditions set out in the Code. Under art. 1003, the authorization of a class action is subject to the following conditions:
1003. The court authorizes the bringing of the class action and ascribes the status of representative to the member it designates if of opinion that:
(a) the recourses of the members raise identical, similar or related questions of law or fact;
(b) the facts alleged seem to justify the conclusions sought;
(c) the composition of the group makes the application of article 59 or 67 difficult or impracticable; and
(d) the member to whom the court intends to ascribe the status of representative is in a position to represent the members adequately.
[20] The outcome of the action is the same for all members of the group, except those who have requested to be excluded within the time limit set in the judgment granting authorization (art. 1007 C.C.P.). Thus, the members will be bound by any judgment — whether favourable or adverse — rendered in the action.
[21] Although the class action is subject to special rules, the procedure applicable to it is included in the general framework of the Code of Civil Procedure, the provisions of which continue to apply insofar as they are relevant. Thus, the conduct of class actions remains subject to the guiding principles of the Code of Civil Procedure, including those of good faith and proportionality provided for in arts. 4.1 and 4.2.
[22] Since the legislature enacted the provisions that make it possible to bring class actions in Quebec, this Court and the Quebec Court of Appeal have, despite some initial hesitation, interpreted and applied the rules respecting such proceedings quite broadly. The decisions have favoured easier access to this form of legal proceeding because of the advantages it frequently offers to group members (Nault v. Canadian Consumer Co., [1981] 1 S.C.R. 553; Comité régional des usagers des transports en commun de Québec v. Quebec Urban Community Transit Commission, [1981] 1 S.C.R. 424; Comité d’environnement de La Baie Inc. v. Société d’électrolyse et de chimie Alcan Ltée, [1990] R.J.Q. 655 (C.A.); Château v. Placeme