On June 13, 2024, the Superior Court dismissed an action for $18,550,000 in the matter of 9318-8548 Québec inc. v. Ville de Gatineau. The Court held that the defendant (“the City”), represented by a group of lawyers from RSS, had the power to sell a piece of land by mutual agreement, in spite of receiving a higher offer from the Plaintiff.
Facts
The Plaintiff alleged that the City sold a vacant piece of land to a third party for a substantially lower price than the price the Plaintiff reportedly offered to pay. Inter alia, the Plaintiff asserted that the City acted in bad faith by telling the Plaintiff’s representative that the property was not for sale when, in fact, the City was negotiating its sale with a third party. The Plaintiff purported that the City deliberately excluded it due to the existence of conflicts with the Plaintiff’s representative. Finally, the Plaintiff contended that it would have built and operated a “Super clinic” on the land, and generated $18,550,000 in revenues if the City had sold the property to it.
Decision
The Court first concluded that the Plaintiff did not have the legal standing to seek the City’s civil liability. The Court reiterated the principles set out by the Supreme Court of Canada in Brunette v. Legault Joly Thiffault, by which a Plaintiff has the burden to demonstrate that it personally sustained the alleged injury. The judge ruled that the Plaintiff’s representative’s actions towards the City could not bind the Plaintiff company prior to its constitution. Moreover, the Plaintiff’s representative’s actions were never ratified by the Plaintiff pursuant to article 319 of the Civil Code of Québec. The Plaintiff was not created for the purposes of the “Super clinic” project but for another similar project that allegedly replaced it pursuant to the City’s alleged false representations. The Plaintiff was not the owner of property on the other project and did not generate any rental revenues. It was only a shareholder of the company that owned the property.
The Court also considered that the Plaintiff failed to meet its burden of demonstrating that the City had committed a fault by selling the property at issue to a third party by mutual agreement. The Court concluded that the transaction was not illegal because the City complied with its obligations pursuant to article 28 of the Cities and Towns Act, as well as the provisions of the Municipal Aid Prohibition Act by selling the property in return for “valuable consideration.” The Court pointed out that the City had no legislative obligation to sell at “fair market value” despite the fact that the City sold the property for less than what the Plaintiff had offered. Instead, all elements of the transaction had to be considered, including the direct and indirect advantages from which the City could benefit. In this case, the City sold the property for nearly 4 times the price it paid for its acquisition. The decision to sell the property to one developer rather than another was taken to speed up construction of a Super clinic which would ultimately benefit its population.
The Court also considered that the sale to one developer rather than another is a core policy decision rather than an operational decision, which renders it immune from the standard applicable to negligence liability. The City’s decision was taken by its highest authorities to address an acute shortage of access to frontline healthcare services on its territory. The City chose to rely on a group of developers, who happened to be doctors, that had the support of public health authorities to carry out this project as soon as possible. The fact that the City did not consider the Plaintiff’s offer does not represent the implementation of the policy decision, but rather its immediate effect. Therefore, the Plaintiff had the burden of demonstrating that the decision was taken in bad faith to overturn the core policy immunity associated with the City’s decision, which it failed to do.
The judgment has not been appealed.
