Montréal (City) v. Octane Stratégie inc.

Montréal (City) v. Octane Stratégie inc.
Collection
Supreme Court Judgments
Date
2019-11-22
Neutral citation
2019 SCC 57
Report
[2019] 4 SCR 138
Case number
38066, 38073
Judges
Wagner, Richard; Abella, Rosalie Silberman; Moldaver, Michael J.; Karakatsanis, Andromache; Gascon, Clément; Côté, Suzanne; Brown, Russell; Rowe, Malcolm; Martin, Sheilah
On appeal from
Quebec
Subjects
Municipal law
Notes
Case in Brief
SCC Case Information: 38066, 38073
Decision Content
SUPREME COURT OF CANADA
Citation: Montréal (City) v. Octane Stratégie inc., 2019 SCC 57, [2019] 4 S.C.R. 138
Appeals Heard: February 20, 2019 Judgment Rendered: November 22, 2019 Dockets: 38066, 38073
Between:
Ville de Montréal
Appellant
and
Octane Stratégie inc.
Respondent
- and -
Union des municipalités du Québec and
Ville de Laval
Interveners
And Between:
Octane Stratégie inc.
Appellant
and
Richard Thériault and
Ville de Montréal
Respondents
Official English Translation
Coram: Wagner C.J. and Abella, Moldaver, Karakatsanis, Gascon, Côté, Brown, Rowe and Martin JJ.
Joint Reasons for Judgment: (paras. 1 to 95)
Wagner C.J. and Gascon J. (Abella, Karakatsanis, Rowe and Martin JJ. concurring)
Joint Dissenting Reasons: (paras. 96 to 173)
Côté and Brown JJ. (Moldaver J. concurring)
montréal (city) v. octane
Ville de Montréal Appellant
v.
Octane Stratégie inc. Respondent
and
Union des municipalités du Québec and
Ville de Laval Interveners
‑ and ‑
Octane Stratégie inc. Appellant
v.
Richard Thériault and
Ville de Montréal Respondents
Indexed as: Montréal (City) v. Octane Stratégie inc.
2019 SCC 57
File Nos.: 38066, 38073.
2019: February 20; 2019: November 22.
Present: Wagner C.J. and Abella, Moldaver, Karakatsanis, Gascon, Côté, Brown, Rowe and Martin JJ.
on appeal from the court of appeal for quebec
Municipal law — Contracts — Restitution of prestations — Receipt of payment not due — Large‑scale media event designed and produced within short period of time by public relations and communications firm and its subcontractor at request of municipality — Mandate granted to firm without rules of public order for awarding municipal contracts having been complied with and without grant of mandate having been approved by resolution of municipal council or by officer authorized by valid delegation of powers — Municipality refusing to pay firm’s invoice for subcontractor’s services — Whether rules on restitution of prestations set out in Civil Code of Québec apply under municipal law — Whether contract exists between municipality and firm — Whether restitution of prestations is necessary — Civil Code of Québec, arts. 1491, 1699.
In April 2007, the City’s director of transportation made use of the services of Octane, a public relations and communications firm, to create an event concept for the launch of the City’s transportation plan that was to take place on May 17, 2007. The launch was held on the scheduled date and was a success. Following the event, Octane sought payment for the costs incurred for the services provided by a subcontractor to produce and organize the event, but the City was slow to pay. In view of the City’s failure to act, Octane finally sent it an invoice in October 2009. In May 2010, nearly three years after the launch was held, the invoice was still unpaid and Octane instituted an action against the City. The City countered by stating that it had in fact never authorized the mandate, which, for that matter, had not been granted as a result of the tendering process required by law. Octane therefore amended its pleading to add T, a member of the political staff of the mayor’s office, as a defendant, arguing that he had given it a mandate to produce the event and had assured it many times that the City would pay the costs incurred.
The Superior Court allowed Octane’s action against the City and dismissed the alternative claim against T. It was of the view that T had indeed given Octane a mandate but that the contract was null because it had been awarded in contravention of the rules of public order for awarding municipal contracts. However, it found that the rules on restitution of prestations set out in the Civil Code of Québec (“C.C.Q.”) apply in the municipal context, and it ordered restitution by equivalence for the services provided in the amount of $82,898.63. The Court of Appeal dismissed the City’s appeal as well as Octane’s appeal against T, which it found to be moot. It upheld the Superior Court’s findings on the issue of the nullity of the contract between Octane and the City and on the application of the rules on restitution of prestations in the municipal context.
Held (Moldaver, Côté and Brown JJ. dissenting) : The City’s appeal should be dismissed and Octane’s appeal is moot.
Per Wagner C.J. and Abella, Karakatsanis, Gascon, Rowe and Martin JJ.: The rules on restitution of prestations set out in arts. 1699 to 1707 C.C.Q. apply in the municipal context. The preliminary provision of the C.C.Q. states that the C.C.Q. is the foundation of all other laws that apply or rely on civil law concepts. By virtue of arts. 300 and 1376 C.C.Q., this includes the laws that govern legal persons established in the public interest, such as municipalities. Since the rules on restitution of prestations are in the Book on Obligations, they apply to municipalities unless other special rules exclude their application. The fact that ss. 573 et seq. of the Cities and Towns Act (“C.T.A.”), which require certain rules to be followed when municipal contracts are awarded, are of public order and that their violation is sanctioned by the absolute nullity of the contract is not an express or even an implicit derogation from the rules on restitution of prestations. In the absence of clear, unequivocal legislative direction to this effect, the importance of the C.T.A.’s public order provisions is not enough to exclude the application of the rules of the general law. Since there is no such derogation, the principle remains the restoration of the parties to their previous positions, which must occur where a juridical act is annulled with retroactive effect.
Restitution of prestations in the municipal context does not create a bypass. The rules on restitution of prestations give a judge the power to objectively determine the fair value of restitution in order to restore the parties to their previous positions, based on the evidence in the record and the circumstances of each case, where restitution cannot be made in kind. Article 1699 para. 2 C.C.Q. provides that a court may, exceptionally, refuse the restitution of prestations or modify the scope or modalities of restitution where one party derives an undue advantage from it. The legislature thus ensures that the remedy for a first inequity does not create a second one. Obtaining a municipal contract in violation of the rules of public order for awarding such contracts does not necessarily constitute an undue advantage, and a court hearing such a case must not automatically refuse the restitution of prestations. The appropriateness of tempering restitution under art. 1699 para. 2 C.C.Q. must be assessed on a case‑by‑case basis and not on the basis of automatic or pre‑established rules.
In the instant case, no contract came into existence between Octane and the City for the event production services. The mandate on which Octane’s action is based was never approved by a resolution of the City’s municipal council or by an officer authorized by a valid delegation of powers. The appearance of consent is not sufficient, nor can a municipality’s consent be inferred from its silence. The rules for awarding municipal contracts require certain formalities to be observed in order to protect the public interest by favouring competition, but they do not exempt a municipality from having to pass a by‑law or resolution to express its will to contract. If it does not do so, no contract will cross the threshold of legal existence and restitution cannot be grounded in the retroactive annulment of a juridical act in accordance with the doctrine of nullity. In the case at bar, however, the conditions imposed by the rules on receipt of a payment not due are satisfied, with the result that the parties must still be restored to their previous positions under arts. 1491 and 1492 C.C.Q.
Three conditions must be met to recover a payment not due under art. 1491 C.C.Q.: (1) there must be a payment, (2) the payment must have been made in the absence of a debt between the parties, and (3) the payment must have been made in error or to avoid injury. Where these conditions are met, and subject to the exception set out in art. 1491 para. 2 C.C.Q., restitution of payments not due is made according to the rules for the restitution of prestations laid down in arts. 1699 to 1707 C.C.Q. It is truly the receipt of something not due that grounds an obligation to restore the parties to their previous positions. An obligation to make restitution will arise only if the payment was made in error or under protest. However, while error is what usually explains a payment made in the absence of debt, the possibility that a payer acted with full knowledge of the facts cannot be ruled out. The burden of proof rests on the person alleging a liberal intention.
The provision of services can constitute payment within the meaning of art. 1553 C.C.Q. The payment of a sum of money is not all that can be characterized as a payment in Quebec civil law: art. 1553 C.C.Q. expressly provides that payment also means the performance of whatever forms the object of an obligation. Payment may validly be made by a representative of the debtor of an obligation, such as the debtor’s mandatary or subcontractor, unless the nature or terms of the contract prevent such a delegation. In the instant case, it is clear that the subcontractor was acting on Octane’s behalf in producing the City’s event and that the City did not object to this. The provision of services to the City, that is, payment in the legal sense, therefore originated from Octane. This condition for recovering a payment not due is met.
It does not matter what Octane should or could have done to avoid making an error. The purpose of restitution is not to sanction negligence or fault, but rather to restore the parties to their previous positions where it is shown that one of them received something without having a right to it. The only question is whether the provision of services by Octane resulted from an error and not from a liberal intention. Given the nature of the evidence in the record, it cannot be concluded that Octane had a liberal intention to provide services to the City in the absence of a debt. The testimony of Octane’s representatives confirms that they did in fact believe they had an obligation to provide services for the production of the event and that they had no intention of providing those services for free. Octane would not have provided the services in question if it had known that its obligation to the City did not exist in law. In the absence of any liberal intention by Octane or any other cause that could justify its provision of the services to the City for free, it must be concluded that the services were provided as a result of an error, as required by art. 1491 C.C.Q.
Restitution for the services provided by Octane for the production of the City’s event must be made by equivalence in accordance with art. 1700 C.C.Q. The trial judge’s findings concerning the good quality and fair market value of the services provided, the benefit the City derived from them and the fact that the event lived up to expectations were not challenged by the City. Since the City has not proved that full restitution would accord an undue advantage to Octane, restitution by equivalence for the services provided corresponds to the cost of producing the event, $82,898.63.
Octane’s action against the City is not prescribed. Section 586 C.T.A. does not apply in this case. According to the wording of that section, the six‑month prescriptive period applies only to an action, suit or claim for damages. In the case of recovery of a payment not due, the basis for restitution is that there never existed an obligation to perform a prestation. The parties are restored to their previous positions, but this remedy cannot be characterized as damages. The authorities recognize that an action to recover a payment not due is subject to the general law period of three years provided for in art. 2925 C.C.Q.
As for Octane’s appeal against T, the dismissal of the City’s appeal makes it unnecessary to decide the issue raised by Octane’s appeal with regard to T’s personal liability. This appeal is therefore moot.
Per Moldaver, Côté and Brown JJ. (dissenting): The City’s appeal should be allowed and Octane’s appeal should be dismissed.
Article 1385 para. 1 C.C.Q. states that “[a] contract is formed by the sole exchange of consents between persons having capacity to contract, unless, in addition, the law requires a particular form to be respected as a necessary condition of its formation”. Sections 573 et seq. of the C.T.A. provide in this regard that certain formalities must be observed in the awarding of municipal contracts. These provisions set out imperative standards of public order, the violation of which is sanctioned by absolute nullity. A services contract with a value of $82,898.63 must be awarded after a call for tenders by written invitation in accordance with the C.T.A. A contract entered into in violation of these rules, if it is in fact formed, may be absolutely null in addition to giving rise to the penalties provided for by the C.T.A. Article 1422 C.C.Q., which sets out the effect of nullity, expressly creates an obligation to make restitution. According to art. 1699 para. 1 C.C.Q., restitution takes place “where” (“chaque fois” (each time) in the French version) a juridical act is annulled with retroactive effect. Recent judgments of the Court of Appeal confirm that it is possible to order the restitution of prestations where a municipal contract is annulled.
However, the annulment of a contract presupposes the existence of the contract. In the present case, the contract on which Octane’s claim is based is quite simply non‑existent. In civil law, the existence of a contract is conditional on the manifestation of a will to be bound by contract (arts. 1378 para. 1, 1385 para. 1 and 1386 C.C.Q.). Where, objectively speaking, the manifestation of such a will is absent (where there is no offer to contract or where such an offer is refused or not accepted), there is no contract. By‑laws and resolutions are the legal vehicles by which a municipality expresses its will. A municipality may, through a by‑law passed by its council, delegate to an officer the power to incur obligations on its behalf. However, since only one professional services firm was solicited, no officer of the City had a delegation of powers authorizing him or her to enter into a contract with a value exceeding $25,000. As a result, no duly authorized officer could have incurred an obligation in the amount of $82,898.63 on the City’s behalf.
T was not invested with any delegation of powers authorizing him to make contracts on the City’s behalf, since he was a member of the political staff of the mayor’s office, not a municipal officer or employee. The non‑application in the municipal context of the doctrine of apparent mandate codified at art. 2163 C.C.Q. is a general principle or rule of public law that prevails over the civil law rules, because those rules are merely suppletive in nature in this area (art. 300 C.C.Q.). It is a control measure enacted in the interest of the public to ensure sound administration and transparency. It is very firmly established that persons wishing to enter into a contract with a municipality must at their peril ascertain that the particular person dealt with is acting pursuant to due authority.
Where a contract is non‑existent, there can be no restitution of prestations as a consequence of the annulment of an invalid contract (arts. 1422 and 1699 C.C.Q.). In the case at bar, there is no juridical act that can be annulled with retroactive effect. Any obligation to make restitution must rather be justified on a different basis. While recent jurisprudence of the Court of Appeal confirms that it is possible to order the restitution of prestations where a municipal contract is annulled, it is silent on whether it is possible to order the restitution of prestations on the basis of receipt of a payment not due where a party claims to have provided services to a municipality in reliance on a contract it believes it entered into but that turns out not to exist at all.
In civil law, the three conditions for bringing an action to recover a payment not due are: (1) the existence of a payment made by the payer to the payee, (2) the absence of a debt between the parties, and (3) an error by the payer. These three conditions must be interpreted cautiously, if not restrictively, and where they are met, art. 1491 para. 1 C.C.Q. expressly creates an obligation to make restitution, subject to the exception set out in art. 1491 para. 2 C.C.Q. Article 1492 C.C.Q. then requires “[r]estitution of payments not due” to be made according to the rules for the restitution of prestations codified at arts. 1699 to 1707 C.C.Q. In principle, the payer bears the burden of establishing that the conditions for bringing an action to recover a payment not due are met. The payer must first prove the existence of a payment and the absence of a debt. An error by the payer is then presumed to be the most likely explanation for a payment that in itself is inexplicable. The payee must then prove that there was no error by the payer.
In the present case, services were provided to the City, which constitutes payment within the meaning of art. 1553 C.C.Q. However, the evidence does not clearly show that the services received by the City were provided by the subcontractor on Octane’s behalf. Any ambiguity in this regard that was not resolved at trial stems from the fact that Octane was not relying on receipt of a payment not due as a basis for its claim. It is therefore not advisable for the Court now to dispose of the City’s appeal on the basis of that mechanism. However, since Octane’s claim must be dismissed in any event, the interpretation of the evidence that is most favourable to it with respect to the condition requiring the existence of a payment will be adopted. As for the absence of a debt between the parties, it stems from the non‑existence of a contract between Octane and the City for the services rendered by the subcontractor.
An error, which may be of fact or of law, is an essential condition for an action to recover a payment not due. Article 1554 para. 1 C.C.Q. is not a distinct source of the obligation to make restitution: rather, that provision must be read together with art. 1491 para. 1 C.C.Q. In principle, the payee can show the absence of an error by the payer by proving that the payer made the payment knowing that he or she was not bound to do so. In such circumstances, the payment will be treated as a liberality and an action to recover a payment not due will be dismissed. The payee can prove the absence of an error by the payer by showing: (1) that the payer made the payment knowing that he or she was not bound to do so (i.e., absence of error as such), or (2) that the payer made the payment with the true intention of providing a gratuitous benefit or making an informal gift to the payee, or that another cause excluding the possibility of error provides legal justification for the payment. Here, the evidence shows clearly that Octane did not pay the City in error at the time of payment, May 17, 2007, the date on which the services were provided to the City.
Octane knew at the time of payment that it had no contract with the City for the services provided by the subcontractor. The testimony of a senior partner at Octane in 2007 shows that he believed the mandate could not exceed the limit for proceeding by agreement, that is, $25,000, and that he was aware that the limit was relevant not only because it was the highest threshold for a contract to be awarded without a call for tenders, but also because it was the highest threshold for a contract to be granted by an officer on the City’s behalf. Octane knew at the time the transportation plan was launched that no duly authorized officer could lawfully grant a contract with such a value on the City’s behalf, that no resolution had been passed by the City’s municipal council to award Octane a contract for its subcontractor’s services and that no framework agreement between Octane and the City was in effect. Moreover, Octane knew at the time of payment that the City could not grant it a valid contract at a later date for the services provided by the subcontractor. Although the City’s executive committee did indeed have the power to grant a contract with a value of up to $100,000, the contract could not have been valid, because it was too late to issue an invitation to tender or to make a public call for tenders given that the event had already taken place.
While Octane was undoubtedly not acting with a liberal intention, since it was at least hoping to be paid, the fact that there was no liberal intention does not necessarily mean that the payment was made in error. Octane did not pay in error, because it in fact knew at the time of payment that no contract had been formed between it and the City for the services rendered by the subcontractor. Absence of error by Octane cannot be equated with fault, which is not relevant for the purposes of restitution. The conditions for bringing an action to recover a payment not due are not met. Octane’s action to recover a payment not due must therefore be dismissed and the City’s appeal allowed.
Octane’s appeal against the City and T should be dismissed. Article 2158 C.C.Q., which concerns the personal liability of a mandatary who exceeds his or her powers, cannot apply in the particular circumstances of this case, because the onus was on Octane to ensure that the proper procedure would be followed in entering into the contract, that is, to ensure: (1) that the person with whom Octane was dealing was authorized to act on behalf of the municipality, (2) that the City and its employees were acting within their powers, and (3) that all legal requirements for the formation or awarding of the contract were met. Octane cannot shift the onus which rested on it to T. Furthermore, even if T had committed a fault for which he could be extracontractually liable when he gave Octane an assurance that it would be paid, he would not have caused the injury suffered by Octane. There is no causation, because it seems that Octane (1) made a first payment to the subcontractor, (2) entered into a contract with the subcontractor and (3) provided the services to the City before T gave it any kind of assurance.
Cases Cited
By Wagner C.J. and Gascon J.
Referred to: Doré v. Verdun (City), [1997] 2 S.C.R. 862; Prud’homme v. Prud’homme, 2002 SCC 85, [2002] 4 S.C.R. 663; Autobus Dufresne inc. v. Réseau de transport métropolitain, 2017 QCCS 5812; Construction Irebec inc. v. Montréal (Ville de), 2015 QCCS 4303; Centre de téléphone mobile (Québec) inc. v. Marieville (Ville de), 2006 QCCS 1179, [2006] AZ‑50359395; Ville de Saguenay v. Construction Unibec inc., 2019 QCCA 38; Québec (Ville) v. GM Développement inc., 2017 QCCA 385, 72 M.P.L.R. (5th) 203; Lacroix & Fils ltée v. Carleton‑sur‑Mer (Ville), 2014 QCCA 1345, 27 M.P.L.R. (5th) 10; Montréal (Ville de) v. St‑Pierre (Succession de), 2008 QCCA 2329, [2009] R.J.Q. 54; Habitations de la Rive‑Nord inc. v. Repentigny (Ville), 2001 CanLII 10048; Rouleau v. Canada (Procureur général), 2016 QCCS 4887; Langevin v. Mercier, 2010 QCCA 1763; Boucher v. Développements Terriglobe inc., [2001] R.D.I. 213; Fortier v. Compagnie d’arrimage de Québec ltée, 2014 QCCS 1984; Hakim v. Guse, 2013 QCCS 1020; 9112‑2648 Québec inc. v. Cauchon et associés inc., 2005 CanLII 44114; Marcotte v. Longueuil (City), 2009 SCC 43, [2009] 3 S.C.R. 65; Amex Bank of Canada v. Adams, 2014 SCC 56, [2014] 2 S.C.R. 787; Fortin v. Chrétien, 2001 SCC 45, [2001] 2 S.C.R. 500; Air Canada v. City of Dorval, [1985] 1 S.C.R. 861; Silver’s Garage Ltd. v. Town of Bridgewater, [1971] S.C.R. 577; Poulin De Courval v. Poliquin, 2018 QCCA 1534; Amar v. Dollard‑des‑Ormeaux (Ville), 2014 QCCA 76, 18 M.P.L.R. (5th) 277; Belœil (Ville de) v. Gestion Gabriel Borduas inc., 2014 QCCA 238; 9129‑6111 Québec inc. v. Longueuil (Ville), 2010 QCCA 2265, 21 Admin L.R. (5th) 320; Cité de St‑Romuald d’Etchemin v. S.A.F. Construction inc., [1974] C.A. 411; Bourque v. Hull (Cité) (1920), 30 B.R. 221; Verreault (J.E.) & Fils Ltée v. Attorney General of the Province of Quebec, [1977] 1 S.C.R. 41; Immeubles Beaurom ltée v. Montréal (Ville de), 2007 QCCA 41, [2007] R.D.I. 26; Aylmer (Ville) v. 174736 Canada inc., 1997 CanLII 10176; Banque de Nouvelle‑Écosse (Banque Scotia) v. Ville de Drummondville, 2018 QCCS 5053; Quebec (Agence du revenu) v. Services Environnementaux AES inc., 2013 SCC 65, [2013] 3 S.C.R. 838; 2736‑4694 Québec inc. v. Carleton — St‑Omer (Ville de), 2006 QCCS 4726, aff’d 2007 QCCA 1789; Threlfall v. Carleton University, 2019 SCC 50, [2019] 3 S.C.R. xxx; Willmor Discount Corp. v. Vaudreuil (City), [1994] 2 S.C.R. 210; 9112‑4511 Québec inc. v. Agence de développement de réseaux locaux de services de santé et de services sociaux de Laval, 2008 QCCA 848; C.J. v. Parizeau Popovici, 2011 QCCS 2005; Pearl v. Investissements Contempra Ltée, [1995] R.J.Q. 2697; Roux v. Cordeau, [1981] R.P. 29; Garage W. Martin Ltée v. Labrie, [1957] C.S. 175; Green Line Investor Services Inc. v. Quin, 1996 CanLII 5734; Confédération, compagnie d’assurance‑vie v. Lareau‑Lacroix, 1997 CanLII 10277; Société canadienne de sel ltée v. Dubord, 2012 QCCS 1994; Beaudry v. Cité de Beauharnois, [1962] B.R. 738; Pacific National Investments Ltd. v. Victoria (City), 2000 SCC 64, [2000] 2 S.C.R. 919; Tremblay v. 2543‑7443 Québec inc., 1999 CanLII 11903; Steckmar Corp. v. Consultants Zenda ltée, 2000 CanLII 18061; Young v. Young, [1993] 4 S.C.R. 3; Mackin v. New Brunswick (Minister of Finance), 2002 SCC 13, [2002] 1 S.C.R. 405; British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71, [2003] 3 S.C.R. 371; Finney v. Barreau du Québec, 2004 SCC 36, [2004] 2 S.C.R. 17; Richard v. Time Inc., 2012 SCC 8, [2012] 1 S.C.R. 265; Schachter v. Canada, [1992] 2 S.C.R. 679.
By Côté and Brown JJ. (dissenting)
Amex Bank of Canada v. Adams, 2014 SCC 56, [2014] 2 S.C.R. 787; Montréal (Ville de) v. St‑Pierre (Succession de), 2008 QCCA 2329, [2009] R.J.Q. 54; Community Enterprises Ltd. v. Acton Vale (Ville), [1970] C.A. 747; Construction Hydrex inc. v. Havre St‑Pierre (Corporation municipale de), [1980] C.S. 1038; Jourdain v. Ville de Grand‑Mère, [1983] J.Q. no 360; Boisvert v. Baie‑du‑Febvre (Municipalité de), [1992] J.Q. no 2574; Repentigny (Ville) v. Les Habitations de la Rive‑Nord inc., 2001 CanLII 10048; Lacroix & Fils ltée v. Carleton‑sur‑Mer (Ville), 2014 QCCA 1345, 27 M.P.L.R. (5th) 10; Pacific National Investments Ltd. v. Victoria (City), 2004 SCC 75, [2004] 3 S.C.R. 575; Québec (Ville) v. GM Développement inc., 2017 QCCA 385, 72 M.P.L.R. (5th) 203; Aliments Breton (Canada) inc. v. Oracle Corporation Canada inc., 2015 QCCA 336; Air Canada v. City of Dorval, [1985] 1 S.C.R. 861; Silver’s Garage Ltd. v. Town of Bridgewater, [1971] S.C.R. 577; Poulin De Courval v. Poliquin, 2018 QCCA 1534; Habitations Germat inc. v. Ville de Rosemère, 2017 QCCA 1294; Amar v. Dollard‑des‑Ormeaux (Ville), 2014 QCCA 76, 18 M.P.L.R. (5th) 277; Beloeil (Ville de) v. Gestion Gabriel Borduas inc., 2014 QCCA 238; 9129‑6111 Québec inc. v. Longueuil (Ville), 2010 QCCA 2265, 21 Admin. L.R. (5th) 320; Lévesque v. Carignan (Corp. de la ville de), [1998] AZ‑98026278; Ville de Saguenay v. Construction Unibec inc., 2019 QCCA 38; Construction Irebec inc. v. Montréal (Ville de), 2015 QCCS 4303; J.E. Verreault & Fils Ltée v. Attorney General (Quebec), [1977] 1 S.C.R. 41; Cité de St‑Laurent v. Boudrias, [1974] C.A. 473; Hinse v. Canada (Attorney General), 2015 SCC 35, [2015] 2 S.C.R. 621; Finney v. Barreau du Québec, 2004 SCC 36, [2004] 2 S.C.R. 17; Prud’homme v. Prud’homme, 2002 SCC 85, [2002] 4 S.C.R. 663; Canadian Food Inspection Agency v. Professional Institute of the Public Service of Canada, 2010 SCC 66, [2010] 3 S.C.R. 657; Immeubles Beaurom ltée v. Montréal (Ville de), 2007 QCCA 41, [2007] R.D.I. 26; Pacific National Investments Ltd. v. Victoria (City), 2000 SCC 64, [2000] 2 S.C.R. 919; Beaudry v. Cité de Beauharnois, [1962] B.R. 738; Lalonde v. City of Montreal North, [1978] 1 S.C.R. 672; Olivier v. Corporation du Village de Wottonville, [1943] S.C.R. 118; Cité de St‑Romuald d’Etchemin v. S.A.F. Construction inc., [1974] C.A. 411; Corporation municipale de Havre St‑Pierre v. Brochu, [1973] C.A. 832; Cité de Montréal v. Teodori, [1970] C.A. 401; Bourque v. Cité de Hull (1920), 30 B.R. 221; Threlfall v. Carleton University, 2019 SCC 50, [2019] 3 S.C.R. xxx; Pearl v. Investissements Contempra Ltée, [1995] R.J.Q. 2697; Roux v. Cordeau, [1981] R.P. 29; Garage W. Martin Ltée v. Labrie, [1957] C.S. 175; Sodexho Québec ltée v. Cie de chemin de fer du littoral nord de Québec & du Labrador inc., 2010 QCCA 2408, 89 C.C.P.B. 203; Agence de développement de réseaux locaux de services de santé et de services sociaux de Laval (Régie régionale de la santé et de services sociaux de Laval) v. 9112‑4511 Québec inc., 2006 QCCS 5323, aff’d 2008 QCCA 848; Canadian Imperial Bank of Commerce v. Perrault et Perrault Ltée, [1969] B.R. 958; Aussant v. Axa Assurances inc., 2013 QCCQ 398, [2013] R.J.Q. 533; Société nationale de fiducie v. Robitaille, [1983] C.A. 521; Commission des écoles catholiques de Verdun v. Giroux, [1986] R.J.Q. 2970; Pelletier v. SSQ, société d’assurance‑vie inc., 2015 QCCS 132; Faucher v. SSQ, société d’assurance‑vie inc., 2010 QCCS 4072, [2010] R.R.A. 1111; Steckmar Corp. v. Consultants Zenda ltée, 2000 CanLII 18061; London Life, cie d’assurance‑vie v. Leclerc, 2002 CanLII 17098; L’Unique, assurances générales inc. v. Roy, 2017 QCCS 3971; Société canadienne de sel ltée v. Dubord, 2012 QCCS 1994; Puits du Québec Inc. v. Lajoie, [1986] J.Q. no 447; Sotramex Inc. v. Ste‑Marthe‑sur‑le‑Lac (Ville de), [1988] AZ‑88021171; Tableaux Indicateurs International inc. v. Cité de Beauharnois, C.S. Québec, n° 13617, 11 avril 1975; 2736‑4694 Québec inc. v. Carleton — St‑Omer (Ville de), 2006 QCCS 4726, aff’d 2007 QCCA 1789.
Statutes and Regulations Cited
Act to amend various legislative provisions concerning municipal affairs, S.Q. 2001, c. 25, ss. 34, 54, 512.
Act to amend various legislative provisions concerning municipal affairs and the Société d’habitation du Québec, S.Q. 2018, c. 8.
By‑law concerning the delegation of powers to officers and employees, June 26, 2002, Ville de Montréal, By‑law 02‑004, s. 22.
Charter of Ville de Montréal, Metropolis of Québec, CQLR, c. C‑11.4, s. 33 para. 2.
Cities and Towns Act, CQLR, c. C‑19, ss. 47, 70.1 et seq., 114.7, 114.10, 350, 477.2, 573 et seq., 586, 604.6(2).
Civil Code of Lower Canada.
Civil Code of Québec, arts. 298, 300, Book Five, 1376, 1378 para. 1, 1385 to 1397, 1416 to 1419, 1422, 1457, 1491 , 1492, 1553 to 1555, 1671, 1699 to 1707, 2101, 2158, 2163, 2803 para. 1, 2925.
Municipal Code of Québec, CQLR, c. C‑27.1, arts. 79, 438 para. 1.
Authors Cited
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Cumyn, Michelle. La validité du contrat suivant le droit strict ou l’équité: étude historique et comparée des nullités contractuelles. Cowansville, Que.: Yvon Blais, 2002.
Desfossés, Katheryne A. L’extinction de l’obligation et la restitution des prestations (Art. 1671 à 1707 C.c.Q.), dans coll. Commentaires sur le Code civil du Québec (DCQ). Montréal: Yvon Blais, 2015.
Dussault, René, and Louis Borgeat. Administrative Law: A Treatise, vol. 1, 2nd ed. Translated by Murray Rankin. Toronto: Carswell, 1985.
Fabre‑Magnan, Muriel. Droit des obligations, vol. 2, 3e éd. Paris: Presses Universitaires de France, 2013.
Fréchette, Pascal. La restitution des prestations. Montréal: Yvon Blais, 2018.
Garant, Patrice, avec la collaboration de Philippe Garant et Jérôme Garant. Droit administratif, 7e éd. Montréal: Yvon Blais, 2017.
Garant, Patrice, Philippe Garant et Jérôme Garant. Précis de droit des administrations publiques, 6e éd. Montréal: Yvon Blais, 2018.
Gaudet, Serge. “Inexistence, nullité et annulabilité du contrat: essai de synthèse” (1995), 40 McGill L.J. 291.
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Gervais, Céline. La prescription. Cowansville, Que.: Yvon Blais, 2009.
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Hétu, Jean, et Yvon Duplessis, avec la collaboration de Lise Vézina. Droit municipal: Principes généraux et contentieux, vol. 1, 2e éd. Brossard, Que.: Wolters Kluwer, 2002 (feuilles mobiles mises à jour janvier 2019).
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APPEALS from a judgment of the Quebec Court of Appeal (Schrager, Mainville and Hogue JJ.A.), 2018 QCCA 223, 81 M.P.L.R. (5th) 39, [2018] AZ‑51468022, [2018] J.Q. no 893 (QL), 2018 CarswellQue 742 (WL Can.), affirming a decision of Lefebvre J., 2015 QCCS 5456, 46 M.P.L.R. (5th) 309, [2015] AZ‑51233047, [2015] J.Q. no 12811 (QL), 2015 CarswellQue 11236 (WL Can.). Appeal of Ville de Montréal dismissed, appeal of Octane Stratégie inc. moot. Moldaver, Côté and Brown JJ. dissenting.
Olivier Nadon, Pierre‑Yves Boisvert and Steven Rousseau, for the appellant Ville de Montréal (38066) and the respondents Richard Thériault and Ville de Montréal (38073).
Sylvain Dorais and Jocelyn Ouellette, for the respondent (38066)/appellant (38073) Octane Stratégie inc.
Sébastien Laprise and Jean‑Benoît Pouliot, for the intervener Union des municipalités du Québec (38066).
Jean Prud’homme and Gabrielle Robert, for the intervener Ville de Laval (38066).
English version of the judgment of Wagner C.J. and Abella, Karakatsanis, Gascon, Rowe and Martin JJ. delivered by
The Chief Justice and Gascon J. —
I. Overview
[1] This case consolidates two files relating to an unpaid invoice for $82,898.63 for the production of a launch event for the appellant Ville de Montréal (“City”) more than 10 years ago. The issues raised in these appeals go beyond, however, the mere payment of that invoice. The Court is called upon to determine whether the principles of Quebec civil law concerning the formation of contracts and the restitution of prestations apply under municipal law.
[2] The respondent Octane Stratégie inc. (“Octane”) is a public relations and communications firm. In April 2007, the City’s director of transportation made use of its services to create an event concept for the launch of the City’s transportation plan that was to take place the following month. After a meeting at which several key players in the City’s administration, including the respondent Richard Thériault (“Mr. Thériault”), discussed their high expectations for the project, Octane developed a concept with the help of a specialized firm whose services it retained for the production of the event.
[3] The launch was held on the scheduled date and was a success. Octane repeatedly sought payment for the costs incurred for its subcontractor’s services, but the City was slow to pay. In view of the City’s failure to act, Octane finally sent it an invoice for those expenses in October 2009. In May 2010, nearly three years after the event was held, Octane instituted an action against the City because the invoice was still unpaid. The City countered by stating, for the first time, that it had in fact never authorized the mandate, which, for that matter, had not been granted as a result of the tendering process required by law. Octane therefore amended its pleading to add Mr. Thériault as a defendant. It argued that, at the initial meeting, he had given it a mandate to produce the event for the City and that he had assured it many times that the City would pay the costs incurred.
[4] The Superior Court allowed Octane’s action against the City. The trial judge concluded from the evidence that Mr. Thériault had indeed given Octane a mandate but that the contract was null because it had been awarded in contravention of the rules of public order for awarding municipal contracts. However, he rejected the City’s argument that the restitution of prestations does not apply in the municipal context because of the imperative rules set out in the Cities and Towns Act, CQLR, c. C‑19 (“C.T.A.”). He therefore ordered restitution by equivalence for the services provided, and he determined that the fair value of those services was the cost of producing the event, $82,898.63. The City appealed that award, and Octane filed an appeal against Mr. Thériault. The Court of Appeal dismissed the City’s appeal as well as Octane’s appeal, which had become moot. Considering itself bound by the trial judge’s findings concerning the existence of a mandate between Octane and the City for the production of the launch event, the Court of Appeal affirmed that the C.T.A. does not derogate from the rules on restitution of prestations and accepted the trial judge’s reasoning with respect to the application of those rules to the facts. The majority added that, even if the parties were not bound by a contract, it was nonetheless necessary to restore them to their previous positions under the rules on receipt of a payment not due. The City and Octan