Laurentide Motels Ltd. v. Beauport (City)

Laurentide Motels Ltd. v. Beauport (City)
Collection
Supreme Court Judgments
Date
1989-04-20
Report
[1989] 1 SCR 705
Case number
19842
Judges
Beetz, Jean; McIntyre, William Rogers; Lamer, Antonio; Wilson, Bertha; Le Dain, Gerald Eric; La Forest, Gérard V.; L'Heureux-Dubé, Claire
On appeal from
Quebec
Subjects
Courts
Municipal law
Torts
Notes
SCC Case Information: 19842
Decision Content
Laurentide Motels Ltd. v. Beauport (City), [1989] 1 S.C.R. 705
Laurentide Motels Ltd.
(Les investissements T.R.L. Ltée),
Le restaurant Bastogne Inc. and
Thomas R. Lévesque Appellants
v.
City of Beauport Respondent
and
Gérard Tremblay Mis en cause
indexed as: laurentide motels ltd. v. beauport (city)
File No.: 19842.
1988: May 24; 1989: April 20.
Present: Beetz, McIntyre, Lamer, Wilson, Le Dain,* La Forest and L'Heureux‑Dubé JJ.
on appeal from the court of appeal for quebec
Municipal law -- Extra-contractual liability of municipalities ‑‑ Firefighting -- Applicable law: public or private law -- Whether civil law applies to a municipality regarding determination of its liability for damage caused by fire -- Whether Anns and City of Kamloops apply to Quebec -- Civil Code of Lower Canada, arts. 356, 1053 -- Cities and Towns Act, R.S.Q. 1977, c. C‑19, ss. 412, 423.
Civil liability -- Municipality -- Firefighting -- Malfunction of and failure to maintain hydrants -- Fault by firefighters in the performance of their duties ‑- Whether city liable for damage caused by fire -- Whether civil law applies to a municipality regarding determination of its liability for damage caused by fire -- Quantum of damages -- Additional indemnity -- Civil Code of Lower Canada, arts. 356, 1053, 1054, 1056c, 1073.
Courts -- Appeal -- Court of Appeal intervening in trial judge's findings and conclusions of fact -- Whether Court of Appeal erred by substituting its opinion for that of trial judge.
Damages -- Additional indemnity -- Calculation -- Civil Code of Lower Canada, art. 1056c.
Damages -- Future damages -- Burning of hotel complex -- Sale of residue of hotel complex three years later -- Sale taken into consideration in calculating future damages -- Cost of reopening deducted.
A client's negligence led to a fire that damaged appellants' hotel complex in the city of Beauport. As soon as they arrived, the firefighters sprayed water from the fire truck onto the fire, but the water soon ran out owing to the impossibility of connecting with the hydrants. The latter, which were difficult to reach and covered with snow, were unusable because they were frozen or broken. It was not until some forty minutes later that water was finally obtained from the hydrants. The appellants brought an action for damages against the person who had set the fire and the respondent, alleging fault by the latter in fighting the fire, namely that its equipment had not been maintained and did not function properly, as well as fault by its employees in the performance of their duties.
The trial judge allowed the action and found the person who had set the fire liable for part of the damage and the respondent liable for the remainder. The trial judge blamed the respondent for its negligence in checking and maintaining the fire hydrants and its employees for a number of faults in the performance of their duties. The trial judge found that, on the evidence, the fire had almost been put out when the water ran out in the fire truck. He concluded that it was the lack of water coupled with the faults of the respondent's employees which had caused the remainder of the damage. He accordingly directed the respondent to pay the sum of $2,542,732.83 in damages. The Court of Appeal, hearing only an appeal by the respondent, reversed the Superior Court judgment.
The appeal at bar seeks to determine (1) whether the delictual civil liability of municipalities in firefighting is governed by public or by private law; (2) whether the fault alleged against the respondent makes it liable; and (3) whether the quantum of damages and the calculation of the additional indemnity should be varied.
Held: The appeal should be allowed.
(1) Applicable law
Per Beetz, McIntyre, Lamer, Wilson and La Forest JJ.: Article 356 C.C.L.C. provides that political corporations such as municipal corporations are in principle governed by the public law. The civil law applies to them only exceptionally. Consequently, it is the public law which must determine when the civil law will apply to municipal corporations. Public law in Quebec has two sources: the statutory law and the common law. Since there is no express statutory provision dealing with a municipality's delictual and quasi‑delictual relations with individuals, it is the second source of public law, the "public" common law as it exists at present, which determines the respects in which a municipal corporation falls "within the control of the civil law" in its relations with individuals. Under the "public" common law established in the Anns and City of Kamloops cases, a municipality cannot be held responsible for its policy decisions. (Policy decisions are decisions of a political nature such as the initial decision to exercise the power to establish a service.) A municipality, however, which acts within the operational sphere of its discretionary powers -- i.e., within the practical execution of its policy decision -- is subject to the private law standards of conduct. In Quebec, the private law stan­dards of conduct are those enunciated in the Civil Code, and particularly in arts. 1053 et seq. C.C.L.C.
Here, respondent's by‑laws indicate that it exercised the discretionary powers conferred upon it by the Cities and Towns Act to establish a fire‑fighting service and waterworks. There is no statutory provision either exonerating respondent from, or subjecting it to, liability for damage caused by its acts pursuant to its discretionary powers. Therefore, the question whether the civil law applies to determine the respondent's responsibility must be reasoned by the common law. Under the common law, arts. 1053 et seq. C.C.L.C. will apply if the acts or omissions alleged to have caused damage -- the failure to keep the fire hydrants clear and operational and the acts and omissions of the municipality's firefighters -- fall within the operational sphere of the municipality's activities.
The respondent could have, as a matter of policy, established some scheme of inspection and repair. The failure to make such a policy decision, however, does not allow the respondent to escape the application of the private law. Absent a policy decision to which the omission alleged to have caused damage can be attributed, the inspection and repair of the fire hydrants must be taken to be in the operational sphere, since they are the practical execution of the respondent's policy decision to establish the water system and to allocate personnel and money to maintain the system. The acts and omissions of respondent's firefighters, too, should be characterized as operational in nature. The responsibility of the respondent, therefore, falls to be determined by arts. 1053 et seq. C.C.L.C., and the trial judge's finding that the respondent was at fault under arts. 1053 et seq. C.C.L.C. was correct.
Per L'Heureux-Dubé J.: Municipal corporations in Quebec are governed by public law, which has its origin in the common law.
So far as the liability of municipalities is concerned, Anns and City of Kamloops, together with certain subsequent common law judgments, set out the principles of public law which apply in Canada and in Quebec. Applying these principles, the fact that a municipal corporation makes a policy decision or refuses to do so does not entail its civil liability; if, however, the municipal corporation exercises its powers, discretionary or otherwise, so as to make its decision operational, it can be held liable for any damage caused to another through its fault, or through that of its employees in the course of their duties, unless the enabling legislation expressly excludes such liability or authorizes the municipal corporation to exonerate itself from liability. The private law criteria set out by the common law as stated in these judgments cannot however be applied in Quebec, as since the Quebec Act and in keeping with the Canadian Constitution, jurisdiction over property and civil rights has been a matter for the provinces. Pursuant to art. 356 C.C.L.C., in the absence of provisions to the contrary in their charters or enabling legislation, and subject to public law, municipal corporations are therefore governed by the Civil Code of Lower Canada in private law matters.
In the case at bar the respondent exercised its discretionary power conferred by the Cities and Towns Act to create a firefighting service (a policy decision), and no provision of that Act, not even s. 442, confers an immunity on municipalities from their extra-contractual liability in respect of the operation of their water and firefighting services. Though the Act also does not impose any specific liability in this regard, it is clear, in light of the by-laws adopted by the respondent dealing with firefighting and water services, the monies allocated and employees assigned to maintenance of the water system, including hydrants, that the respondent undertook, at the very least by implication, to maintain this service and ensure that it was in good working order (an operational decision). In the exercise of its discretionary power, arts. 1053 et seq. C.C.L.C. were therefore applicable to the respondent's activities.
(2) Fault and Causal Link
Under arts. 1053 et seq. C.C.L.C., the respondent must be held liable for the additional damage caused by the fire, as this was due to its fault in maintaining its water and firefighting systems and to the fault of its employees in carrying out their duties. This fault had a causal link with the damage sustained by the appellants and was the direct and immediate consequence of it.
The trial judge committed no error in his determination of the facts or in the conclusions which he drew from them, and the Court of Appeal was not justified in intervening and substituting its opinion for that of the trial judge. A trial judge's findings of fact based on the credibility of witnesses are not to be reversed on appeal unless it can be established that the trial judge made some palpable and overriding error which affected his assessment of the facts. In the case at bar the determination of the facts in this great volume of opposing evidence was based essentially on the trial judge's view of the credibility of the testimony of various witnesses. The trial judge ruled on the credibility of the key witnesses, he indicated why he preferred one witness rather than another, and there is nothing in a review of the evidence to suggest that in so doing he made a palpable error in determining the facts or an error which could have a bearing on the outcome of the case in the conclusions that he drew from them. Far from being unreasonable, his findings are supported by the evidence.
(3) Damages and Additional Indemnity
An appellate court should not alter the quantum of damages set by the trial judge unless it can be shown that he applied an erroneous rule of law or that the amount awarded was palpably incorrect compensation for the damage suffered. It was not shown that the trial judge erred in selecting the depreciated replacement method to determine the value of the damage caused to the buildings and their contents or that the amount awarded for this was unreasonable. However, the amount awarded for incidental expenses must be deducted. Although events occurring after the date of the loss are generally not taken into account in estimating loss in a delictual or quasi‑delictual matter, this rule is not absolute and is subject to exceptions, especially in the case of estimation of loss for future damages. In the case at bar the sale of the hotel complex three years after the fire prospectively eliminated the assumption that the appellants would rebuild and reopen the motel. The items for pre-opening costs, publicity and renewal of liquor licences are expenses that were not, and never will be, incurred. However, the trial judge properly awarded compensation for lost profit for a total period of two years. The evidence was that the residue of the hotel complex continued to be operated with reduced profits after the fire and the two-year period corresponds to the time needed to rebuild a hotel of this kind and resume operations. The eventual sale of the hotel complex does not have the necessary nexus for it to be said that, had it not been for the fire, the appellants would have sold their business and that they intended to sell it in any case.
Finally, the wording of the judgment should be varied with respect to calculation of the additional indemnity. The additional indemnity provided for in art. 1056c C.C.L.C. is intended to compensate for loss due to delay in paying the amount ordered. The excess interest authorized by that article thus runs until the date the damages are finally paid. Although the trial judge has a discretion whether to award the indemnity, he has no discretion as regards the calculation of that indemnity, as this must necessarily be calculated by applying to the amount awarded by judgment from the date when the action at law was instituted "a percentage equal to the excess of the interest rate fixed according to section 53 of the Revenue Department Act, R.S.Q. 1964, c. 66, over the legal interest rate". The amount by which the interest rate fixed under s. 53 exceeds the legal interest rate, which was 5 per cent at the time the trial judgment was rendered, has subsequently fluctuated many times. The additional indemnity awarded by the trial judge must therefore be calculated by applying each of these rates for the periods during which they were in effect, rather than by using the 5 per cent rate referred to in the trial judgment. Limiting the additional indemnity to 5 per cent would be depriving the appellants of full compensation for the financial loss incurred by them as a consequence of being deprived of the amount owed from the time of the trial judgment.
Cases Cited
By Beetz J.
Applied: City of Kamloops v. Nielsen, [1984] 2 S.C.R. 2; Anns v. Merton London Borough Council, [1978] A.C. 728; referred to: East Suffolk Rivers Catchment Board v. Kent, [1941] A.C. 74; Adricon Ltée v. Town of East Angus, [1978] 1 S.C.R. 1107.
By L'Heureux-Dubé J.
Applied: City of Kamloops v. Nielsen, [1984] 2 S.C.R. 2; Anns v. Merton London Borough Council, [1978] A.C. 728; referred to: East Suffolk Rivers Catchment Board v. Kent, [1941] A.C. 74; Wing v. Moncton, [1940] 2 D.L.R. 740; Stevens‑Willson v. City of Chatham, [1934] S.C.R. 353; Chevalier v. Corporation de la Cité de Trois‑Rivières (1913), 20 R. de J. 100; Magasin Continental (Québec) Ltée v. Rhéaume, C.A. Québec, No. 8797, August 30, 1973; Larivière v. Cité de Montréal (1941), 47 R.L. 505; Cité de Pont‑Viau v. Gauthier Mfg. Ltd., [1979] C.A. 77; Corporation of Montreal v. Doolan (1871), 18 L.C.J. 124; Phaneuf v. Corporation du Village de St‑Hugues (1936), 61 K.B. 83; City of Verdun v. Sun Oil Co., [1952] 1 S.C.R. 222; Westminster Corporation v. London and North Western Railway Co., [1905] A.C. 426; Authier v. Corporation de la Ville de l'Assomption (1903), 9 R. de J. 374; Lefebvre v. Town of Grand-Mère (1917), 55 S.C.R. 121; City of Montreal v. Mulcair (1898), 28 S.C.R. 458; Napper v. Cité de Sherbrooke, [1968] S.C.R. 716; Peltier v. Corporation of the Village of Gatineau Pointe (1937), 76 C.S. 180; Brousseau v. Cité de Québec (1912), 42 C.S. 91; Roy v. Cité de Montréal (1892), 2 C.S. 305; Wilshire v. Corporation du village de St‑Louis du Mile‑End (1899), 8 Q.B. 479; Quesnel v. Emard (1912), 8 D.L.R. 537; Fournier v. Cité de Lachine (1926), 66 C.S. 109; Lanouette‑Perreault v. Corporation municipale de St‑Théodore de Chertsey, Sup. Ct. Joliette, No. 705‑05‑000840‑75, January 30, 1979; Harris v. Marter (1874), 15 N.B.R. 165; Welbridge Holdings Ltd. v. Metropolitan Corporation of Greater Winnipeg, [1971] S.C.R. 957; Marcoux v. Ville de Plessisville, [1973] R.P. 385; Joseph Investment Corp. v. Cité d'Outremont, [1973] S.C.R. 708; R. v. Corporation of the City of Sault Ste. Marie, [1978] 2 S.C.R. 1299; Langelier v. Giroux (1932), 52 K.B. 113; Brown v. Corporation de Montréal (1871), 4 R.L. 7; Citizens Insurance Co. of Canada v. Parsons (1881), 7 App. Cas. 96; Adricon Ltée v. Town of East Angus, [1978] 1 S.C.R. 1107; O'Reilly v. Mackman, [1982] 3 W.L.R. 604; Attorney General of Quebec v. Labrecque, [1980] 2 S.C.R. 1057; McLeave v. City of Moncton (1902), 32 S.C.R. 106; Vallières v. Cité de Montréal (1908), 33 C.S. 250; Harper v. Cité de Montréal (1908), 16 R. de J. 229; Levinson v. Cité de Montréal (1911), 39 C.S. 259; Exchange Bank of Canada v. The Queen (1886), 11 App. Cas. 157; Bank of Montreal v. Attorney General of Quebec, [1979] 1 S.C.R. 565; J. E. Verreault & Fils Ltée v. Attorney General of Quebec, [1977] 1 S.C.R. 41; Mainwaring v. Nanaimo, [1951] 4 D.L.R. 519; Miller & Brown Ltd. v. City of Vancouver (1966), 59 D.L.R. (2d) 640; Barratt v. Corporation of the District of North Vancouver, [1980] 2 S.C.R. 418; McCrea v. City of White Rock (1974), 56 D.L.R. (3d) 525; Martel v. City of Montreal, [1943] C.S. 290; Seguin v. Town of Hawkesbury, [1955] O.R. 956; Yuen Kun Yeu v. Attorney-General of Hong Kong, [1988] A.C. 175; Curran v. Northern Ireland Co‑ownership Housing Association Ltd., [1987] 2 All E.R. 13; Sutherland Shire Council v. Heyman (1985), 60 A.L.R. 1; Berkovitz by Berkovitz v. United States, 108 S. Ct. 1954 (1988); Montreal Light, Heat and Power Co. v. Cité de Montréal (1917), 26 K.B. 368; Joseph Brant Memorial Hospital v. Koziol, [1978] l S.C.R. 491; Maryland Casualty Co. v. Roland Roy Fourrures Inc., [1974] S.C.R. 52; Chartier v. Attorney General of Quebec, [1979] 2 S.C.R. 474; Schreiber Brothers Ltd. v. Currie Products Ltd., [1980] 2 S.C.R. 78; Lensen v. Lensen, [1987] 2 S.C.R. 672; Pelletier v. Shykofsky, [1957] S.C.R. 635; St‑Pierre v. Tanguay, [1959] S.C.R. 21; Dorval v. Bouvier, [1968] S.C.R. 288; Métivier v. Cadorette, [1977] 1 S.C.R. 371; Beaudoin‑Daigneault v. Richard, [1984] 1 S.C.R. 2; Volkert v. Diamond Truck Co., [1940] S.C.R. 455; Morin v. Blais, [1977] 1 S.C.R. 570; Nance v. British Columbia Electric Railway Co., [1951] A.C. 601; Proctor v. Dyck, [1953] 1 S.C.R. 244; Watt v. Smith, [1968] S.C.R. 177; Industrial Teletype Electronics Corp. v. City of Montreal, [1977] 1 S.C.R. 629; Hamel v. Brunelle, [1977] 1 S.C.R. 147; Andrews v. Grand & Toy Alberta Ltd., [1978] 2 S.C.R. 229; Hôpital général de la région de l'amiante Inc. v. Perron, [1979] C.A. 567; Woelk v. Halvorson, [1980] 2 S.C.R. 430; Snyder v. Montreal Gazette Ltd., [1988] 1 S.C.R. 494; Hôpital Notre‑Dame de l'Espérance v. Laurent, [1978] l S.C.R. 605; Royal Insurance Co. v. Rourke, [1973] C.A. 1046; Colomba v. Madill, [1979] C.S. 17; Delarosbil v. Prévoyance, Cie d'assurance, [1978] C.S. 363; Findlay v. Howard (1919), 58 S.C.R. 516; Pratt v. Beaman, [1930] S.C.R. 284; Golden Eagle Canada Ltd. v. Ray Gas Bar Inc., [1973] C.A. 680; Procureur général du Québec v. Dugal, J.E. 82‑1169; Travelers Insurance Co. of Canada v. Corriveau, [1982] 2 S.C.R. 866, aff'g [1980] C.A. 4; Girard v. Lavoie, [1975] C.A. 904.
Statutes and Regulations Cited
Act respecting the Ministère du Revenu, R.S.Q. 1977, c. M‑31, s. 28.
Act to amend the Taxation Act and other legislation and to make certain provisions respecting retail sales tax, S.Q. 1989, c. 5, s. 250.
Charter of the Town of Beauport, S.Q. 1950-51, c. 91, s. 17.
Cities and Towns' Act, 1922, S.Q. 1922, c. 65, ss. 422, 441.
Cities and Towns' Act, R.S.Q. 1925, c. 102, ss. 433, 452.
Cities and Towns Act, R.S.Q. 1964, c. 193 (now R.S.Q. 1977, c. C‑19), ss. 426, 433, 452.
Cities and Towns Act, R.S.Q., c. C‑19, ss. 28(1), (3), 412(22), (41), (42), (44), 423, 429, 430, 431, 434, 436, 439, 442, 450, 585(7).
Civil Code of Lower Canada, arts. 13, 18, 356, 1053, 1056c, 1073, 1077.
Constitution Act, 1867, s. 92(13) .
Municipal Code of Quebec, R.S.Q., c. C‑27.1, arts. 724, 725, 772.
Municipal Code of the Province of Quebec, S.Q. 1870, 34 Vict., c. 68, s. 637.
Municipal Code of the Province of Quebec, R.S.Q. 1888, s. 6134.
Police Act, R.S.Q., c. P‑13, s. 2.1.
Quebec Act (U.K.), 14 Geo. 3, c. 83, s. VIII.
Revenue Department Act, R.S.Q. 1964, c. 66, s. 53.
Authors Cited
Archambault, Jean‑Denis. "La responsabilité délictuelle municipale: fondement et application au combat des incendies" (1981), 41 R. du B. 3.
Archambault, Jean‑Denis. "La responsabilité municipale dans le combat des incendies -- Malette c. Portage du Fort" (1984), 15 R.G.D. 107.
Archambault, Jean‑Denis. "Les sources juridiques de la responsabilité extra‑contractuelle municipale" (1985), 16 R.G.D. 101.
Baudouin, Jean‑Louis. La responsabilité civile délictuelle. Cowansville: Yvon Blais Inc., 1985.
Civil Code of Lower Canada: First, Second and Third Reports. Quebec: George E. Desbarats, 1865.
Côté, Pierre‑André. The Interpretation of Legislation in Canada. Translated by Katherine Lippel, John Philpot and Bill Schabas. Cowansville: Yvon Blais Inc., 1984.
Ducharme, Léo. L'administration de la preuve. Montréal: Wilson & Lafleur, 1986.
Dussault, René. Traité de droit administratif canadien et québécois, t. 2. Québec: Presses de l'Université Laval, 1974.
Fleming, John G. The Law of Torts, 6th ed. Sydney: Law Book Co., 1983.
Garant, Patrice. Droit administratif, 2e éd. Montréal: Yvon Blais, 1985.
Garant, Patrice. "Les sources du droit de la responsabilité de la puissance publique" (1986), 46 R. du B. 260.
L'Heureux, Jacques. "La responsabilité extra‑contractuelle des municipalités: un point de vue différent sur l'arrêt Ville de Beauport c. Laurentide Motels" (1987), 47 R. du B. 160.
L'Heureux, Jacques. "Sources du droit et règles applicables en matière de responsabilité extra‑contractuelle au Québec" (1985), 16 R.G.D. 131.
Langelier, F. Cours de droit civil de la province de Québec, t. 2. Montréal: Wilson & Lafleur, 1906.
Le nouveau Bescherelle 3: La grammaire pour tous. Paris: Hurtubise H.M.S., 1980.
McNicoll, Micheline. "La réparation: une question de contrôle judiciaire" (1986), 32 McGill L.J. 187.
McNicoll, Micheline. "La responsabilité civile délictuelle des municipalités en matière de combat des incendies" (1983), 24 C. de D. 379.
Mignault, P.‑B. Le droit civil canadien, t. 2. Montréal: C. Théoret, 1896.
Morin, Michel. "La Cour suprême et les motifs d'intervention d'une cour d'appel sur des questions de faits," [1985] R.D.J. 121.
Pigeon, Louis‑Philippe. Drafting and Interpreting Legislation. Toronto: Carswells, 1988.
Todd, Stephen. "The Negligence Liability of Public Authorities: Divergence in the Common Law" (1986), 102 L.Q.R. 370.
Walton, Frederick Parker. The Scope and Interpretation of the Civil Code of Lower Canada. Toronto: Butterworths, 1980.
APPEAL from a judgment of the Quebec Court of Appeal, [1986] R.J.Q. 981, 3 Q.A.C. 163, which reversed a judgment of the Superior Court (1980), 9 M.P.L.R. 184. Appeal allowed.
Gratien Boily and Louis Vallières, for the appellants.
Raynold Bélanger, Q.C., André Gagnon, Q.C., and Jean‑Charles Lord, for the respondent.
//Beetz J.//
The judgment of Beetz, McIntyre, Lamer, Wilson and La Forest JJ. was delivered by
Beetz J. -- I have had the advantage of reading the opinion of my colleague, Justice L'Heureux-Dubé, and I concur with her disposition of the appeal and with most of her reasons. However, because I have a different view of the construction of art. 356 C.C.L.C., I would like to address the question of the law applicable to municipal corporations in Quebec.
The issue that this case presents is whether the city of Beauport can be held responsible under the civil law for damage caused to property when the efforts of the municipality's fire fighters to extinguish a fire were unsuccessful.
So stated, the issue is deceptively simple. In fact, this case raises the difficult question of the coexistence and interaction of two separate systems of law in Quebec. The appellants claimed damages against the author of the fire, an individual, as well. This aspect of their claim was easily resolved: without dispute from any litigant, art. 1053 C.C.L.C., in other words, the civil law, applied. However, the city of Beauport is a municipality and therefore a political corporation, in the words of art. 356 C.C.L.C. Does the civil law apply to a municipality to determine its responsibility for damage caused by fire?
The process of answering this question must begin with art. 356 C.C.L.C.:
356. Secular corporations are further divided into political and civil; those that are political are governed by the public law, and only fall within the control of the civil law in their relations, in certain respects, to individual members of society.
Civil corporations constituting, by the fact of their incorporation, ideal or artificial persons, are as such governed by the laws affecting individuals; saving the privileges they enjoy and the disabilities they are subjected to.
This article, rather than setting out a simple rule of law, is directory in nature in that it indicates the law which applies to political corporations. According to art. 356, there are two bodies of law which apply to municipal corporations: the public law and the civil law. The public law of Quebec, it is agreed, consists of statute law and the common law as it applies to public bodies. The civil law, which is a body of private law, consists largely, although not exclusively, of the law enunciated in the Civil Code of Lower Canada and the Civil Code of Quebec.
Article 356 states that municipal corporations are governed by the public law (i.e., statute law and common law) except in their relations, in certain respects, to individual members of society. The task is then to determine if responsibility for damage caused by fire falls within the class of "relations, in certain respects, to individual members of society". Unfortunately, art. 356 does not give any indication of how to make this determination, nor even which body of law governs the question.
The learned authors who have wrestled with art. 356 and have attempted to pin the meaning of "in their relations, in certain respects, to individual members of society" to the ground form two camps, as my colleague observes. I will attempt to summarize the two theses without doing violence to either.
One thesis, advanced by Archambault in, inter alia, "La responsabilité délictuelle municipale: fondement et application au combat des incendies" (1981), 41 R. du B. 3, posits the principle that under art. 356 C.C.L.C. the public law is the legal regime of general application for municipal corporations; the civil law applies only exceptionally. Professor Archambault accepts, relying on an almost uniform jurisprudence, that the civil responsibility of municipal corporations falls within this exceptional regime. Nonetheless, the public law can displace the civil regime in certain circumstances (at pp. 40-41):
[TRANSLATION] Article 356 C.C. says that public law takes priority over civil law. When legislation simply authorizes or requires a municipal corporation to build a sidewalk or lay down a road, it exempts the corporation from the civil law obligations a private contractor has of keeping his property or service in good condition despite the vagaries of the weather and deterioration from use, and of making adequate provision for pedestrians and drivers. Under public law, the legislator considers that, when exercising its statutory powers as a public undertaking, the corporation is subject to no other obligations than the continuing obligations resulting from its decision to allow taxpayers to move about in the area. In the absence of contrary legislation, the only civil law obligation to which a municipal corporation is still subject is that of not causing damage beyond what may result from natural causes. Under public law, therefore, a municipal corporation cannot be held liable for damage due to natural conditions -- snow, water, wind and so on -- when, pursuant to a statutory power, it has acquired a public service that is designed to cope with the consequences of action by the elements but for whatever reason is unable to do so.
Though it may appear exceptional to the civil lawyer, this relative immunity applies in public law, and as such overrides the civil law obligations of the municipal corporation.
I cite Professor Archambault at length because it is at this point that his thesis differs from that of the second camp.
Professor Archambault extracts the rules relating to the relative immunity of municipal corporations from the classic common law case East Suffolk Rivers Catchment Board v. Kent, [1941] A.C. 74 (H.L.), which is considered to be an accurate statement of the common law position on the tortious liability of local authorities before the decision in Anns v. Merton London Borough Council, [1978] A.C. 728 (H.L.). The common law rules have application, in Professor Archambault's opinion, because they form part of the public law of Quebec. The Quebec Act of 1774, Professor Archambault explains, re-established the preeminence of the civil law in matters relating to property and civil rights. However, at the time of the enactment of the Quebec Act, the law of Quebec was the common law. A fundamental rule of the common law is that the common law governs, except in so far as it is derogated from by statute. The Quebec Act derogates from the common law, it is true, but only with respect to property and civil rights, thus leaving the common law to operate in all other areas, notably public law, until it too is derogated from by statute.
The effect of this first analysis, in the context of the case at bar, would be to exonerate the municipality from all liability, as did Nichols J.A. of the Court of Appeal, since the alleged fault of the municipality and its agents caused no more damage than that which would have been sustained in the absence of any public service.
The second camp in the debate over the meaning of art. 356 C.C.L.C. and the law applicable to the civil responsibility of municipal corporations counts among its members the authors McNicoll, L'Heureux and Garant, whose articles are cited in my colleague's reasons for judgment. Though each author adds his or her own nuances, they share the same essential understanding of the problem.
According to this second thesis, the principle that a municipal corporation can incur civil responsibility for damage caused to an individual is not a principle of civil law but of "public" common law. The applicable law in respect of the civil responsibility of municipal corporations is that enunciated in City of Kamloops v. Nielsen, [1984] 2 S.C.R. 2, in which Wilson J. for the majority adopted the reasoning of Lord Wilberforce in Anns v. Merton London Borough Council, supra.
In these cases, the authors of the second theory of municipal responsibility see the erosion of the old public law rule that a municipal corporation cannot be held responsible for damage caused to an individual unless it acts negligently in the performance of a statutory duty or, in the exercise of a statutory power, it causes damage by its negligence that would not have been caused had it done nothing. The erosion manifests itself in the replacement of the power/duty analysis by a new policy/operational analysis of statutory conferrals of power. Under this new paradigm, while a municipality cannot be held responsible for any "policy" decision it might make, policy decisions being decisions of a political nature such as the initial decision to exercise the power to establish a service, when the municipality moves into the "operational" sphere of the power, that is to say the practical execution of its policy decision, private law duties or obligations arise.
At this juncture, the adherents of the second theory contend, one leaves the common law to return to the civil law of Quebec. In the common law provinces, tort law will govern the liability of a municipality for negligence in the operational sphere. In Quebec, however, the responsibility of a municipal corporation falls to be governed by arts. 1053 et seq. C.C.L.C. and the concept of fault rather than the concepts of negligence and the duty of care.
Of course, the public law, in the form of statute law, may explicitly exonerate the municipality from responsibility for its fault. Failing the intervention of the legislator, however, the municipality is subject to the law enunciated in the Civil Code.
In large measure, I adhere to the second school of thought. My reasoning differs somewhat from that of authors McNicoll, L'Heureux and Garant, however, so I will attempt to set out my own thoughts on the matter of the civil responsibility of municipalities.
Article 356 C.C.L.C. states that political corporations are governed by the public law. This statement, though necessary, is no more than obvious. A political corporation, such as a municipal corporation, is entirely a creature of statute. Article 18 C.C.L.C. provides:
18. Every human being possesses juridical personality.
Whether citizen or alien, he has the full enjoyment of civil rights, except as otherwise expressly provided by law.
In contrast, a municipal corporation has no rights and no powers except those conferred by statute. A municipal corporation cannot exceed the powers conferred upon it by the Cities and Towns Act, R.S.Q. 1977, c. C-19, or other statute, on pain of nullity. In principle, therefore, municipal corporations are subject to the law which creates them, the public law.
The Commissioners who drafted the Civil Code of Lower Canada did not intend that it be otherwise. In Civil Code of Lower Canada: First, Second and Third Reports (1865), they write at p. 231:
It will be felt that it was necessary to treat only of those corporations which fall under the control of the civil law, those governed by the public and administrative law not falling within the jurisdiction of the Commissioners; it was equally necessary for them to limit themselves to laying down the general rules, without entering into the details, nor into the enumeration of those which are peculiar to each corporation, which are to be found in the charter of each of them, and which vary according to the circumstances, their nature and the object for which they are destined.
It is for these objects that it is at once declared as a principle, that each corporation is above all obliged to conform to the conditions which have been imposed upon it by its charter, and also by the general laws made for the government of all kinds of corporations; and this other principle that, as artificial persons, corporations, in their relations with the other members of society, are clothed with the same powers and are bound by the same obligations as natural persons are, in so far as they are not hindered or exempted therefrom, either by the nature of their constitution, or by a special or general law.
Municipal corporations, which now hold so important a place in this province, have only been introduced here within a few years (1840); the act which gave them to us (4 Vict. ch. 4) has been frequently modified by many different laws, which are all re‑united and put in order in chapter 61 of the Consolidated Statutes of Lower Canada. In this statute, which forms the charter, not of creation, but of government of all municipal corporations present and future, are to be sought the rules according to which they are formed, organized and conducted. [Emphasis added.]
These paragraphs make it clear that the Commissioners here refer to civil corporations only, not to political corporations. Moreover, the first underlined passage contains a statement inconsistent with its application to municipal corporations which do not, in any circumstances, enjoy powers not conferred upon them by statute. Certainly they do not enjoy the powers of natural persons, even in their relations with other members of society.
The fact that the powers and duties of municipal corporations are described and governed by the public law does not necessarily exclude all application of the civil law to those corporations. The question of when the civil law may apply to municipal corporations is, however, a question of public law, not of private law. I have posited that in principle the public law governs municipal corporations. This proposition is consistent with the wording of art. 356 C.C.L.C., which suggests that political corporations are subject to the civil law only exceptionally. It would be surprising if the law of exception, here the civil law, determined its own application. Moreover, the civil law is the "droit commun" of Quebec: by its very nature, then, it applies in the same fashion to all those who are subject to it. There is no rule of the civil law that could indicate when the civil law would apply and when it would not.
If, as I suggest, the question of when the civil law applies to municipal corporations is governed by the public law, then any plaintiff claiming damages against the city pursuant to arts. 1053 et seq. must demonstrate that as a matter of public law, arts. 1053 et seq. apply to his action. The public law of Quebec is acknowledged to be composed of two elements: statute and the common law. In the case at bar, the statutory component of the public law, the Cities and Towns Act, confers the power upon municipalities to establish waterworks and a fire-fighting service, but gives no express indication of whether a municipality can be held responsible for damages caused in the exercise of that power.
The second component of the public law is the common law. Two clarifications must be made at this point. First, only that part of the common law which is of public character is applicable. Because the common law makes, in principle, no distinction between public and private law, the identification of the "public" common law can be a difficult task. Nonetheless, because Quebec is a jurisdiction of two juridical regimes, the civil law and the common law, the identification must be made. Second, it is the common law as it exists at present that is applicable in Quebec under art. 356 C.C.L.C. I agree with my colleague that the contention that the "public" common law applicable in Quebec is that of 1866 is untenable.
The pertinent case law (East Suffolk Rivers Catchment Board v. Kent, supra, Anns v. Merton London Borough Council, supra, and City of Kamloops v. Nielsen, supra) is canvassed in my colleague's judgment and I will confine myself to a restatement of the common law rule concerning the liability of municipal corporations and other public authorities.
Where the legislator confers a power upon a public authority, the conferral of power is usually couched in terms of a discretion. The discretionary power is necessary to allow the public authority latitude in which to make decisions that can be categorized as policy decisions: decisions of a political nature for which the authority should be accountable not before the courts but before the electorate or the legislature. Anns v. Merton London Borough Council, supra, and City of Kamloops v. Nielsen, supra, indicate that the form such policy decisions may take varies, ranging from by-laws and resolutions to internal directives, administrative decisions and even a discretion in the execution of activities within the operational sphere. The only duty incumbent upon the authority in the policy sphere is to make its decisions responsibly and in accordance with the object of the Act which conferred the power. However, the discretion conferred by the legislator is not so broad as to exclude all liability for the authority's actions. Once the authority moves int