Municipal Affairs

Expropriation is one of the most substantial powers a municipality has to achieve its public-interest objectives.1 The legislature has granted municipalities broad authority, allowing them to acquire any immovable, part of an immovable or servitude needed for “any municipal purpose” or for “industrial purposes.”2 Because municipalities have such latitude, the courts generally exercise judicial restraint and intervene only in cases of bad faith, injustice or abuse of process.3 That is why the decision in 9428-2506 Québec inc. v. Ville de Drummondville (“the Drummondville case”) is so noteworthy. The Court struck down the expropriation in the case, finding that the city administration had acted in bad faith even though it had complied with all formal requirements.4 In light of the court’s decision, this article examines the key factors that served to rebut the presumption that the city had exercised its power of expropriation in good faith. 1. Substitution for the owner The Court began by pointing out that a municipality cannot use its power of expropriation to substitute itself for an owner to pursue a project the owner already plans to develop. In the Drummondville case, the city wanted to develop an industrial park, but the plaintiff was already pursuing its own industrial project on the land in question. To justify its intervention, the city claimed that zoning restrictions prevented the land from being developed for industrial purposes. However, the Court dismissed the justification as [translation] “a pure pretext,”5 concluding that the city had unlawfully substituted itself for the plaintiff without demonstrating the necessity of acquiring the land for its own project.6 2. Expropriation as a bargaining tool The Court also reiterated that expropriation cannot be used as a pressure tactic in out-of-court settlement negotiations with a property owner. In the Drummondville case, the Court found that the city had used its expropriation power not out of genuine necessity, but as leverage to force the owner to reduce the size of its property, which constituted an unlawful use of that power.7 The Court denounced the expropriate-first-negotiate-later strategy, reiterating that [translation] “expropriation is not a bargaining tool.”8 3. Expropriation to benefit a third party Lastly, the Court stressed that the power of expropriation must always serve the public interest. A municipality cannot use expropriation for an improper collateral purpose that does not benefit the community.9 In the Drummondville case, the Court concluded that the city had provided no valid justification for disclosing a confidential expropriation plan to a third party three years before serving the notices of expropriation.10 In the Court’s view, the unwarranted disclosure of confidential information to a single party resulted in unfair treatment of other developers who lacked access to the information.11 Other facts, including the city’s disregard for its own wetland conservation studies to advance the third party’s project, further supported the finding of bad faith on the city’s part.12 Conclusion Ultimately, the Drummondville case serves as a reminder that good faith is crucial in exercising the power of expropriation and that, while good faith is presumed, the presumption can be rebutted by the circumstances surrounding the exercise of the power. Conduct revealing an improper, abusive or discriminatory purpose—as well as a municipality unwarrantedly substituting itself for an owner and resorting to expropriation as a bargaining tool—can demonstrate bad faith13. On October 2, 2026, the city appealed the decision.14 The final chapter in this case has yet to be written. For a more detailed discussion of expropriation, seeThe ABCs of Expropriation: an Overview of the Different Regimes, by Anne-Marie Asselin, Senior Associate. Cities and Towns Act, CQLR c. C-19 s. 570(1)(c); Act respecting municipal industrial immovables, CQLR c. I-0.1 s. 2(1) and s. 6(1). Pierre ISSALYS and Denis LEMIEUX, L’action gouvernementale : précis de droit des institutions administratives, 2020, Montréal, Éditions Yvon Blais, para. 3.19. 2026 QCCS 3363, para. 330. Ibid., para. 180. Ibid., paras. 201–202. Ibid., paras. 245 and 247–248. Ibid., para. 249. 9379-1242 Québec inc. v. Ville de Sept-Îles, 2024 QCCS 3611, para. 16. 2026 QCCS 3363, supra note 1, paras. 273–274. Ibid, para. 283. Ibid., paras. 309–310 and 328. Ibid., para. 330. Application for leave to appeal and notice of appeal, October 2, 2026, (C.A.) 500-09-032224-263.

What is expropriation? Expropriation is a legal process by which a public authority can compel a property owner to surrender private property for reasons of public interest. Governed by both provincial and federal legislation, expropriation is designed to facilitate infrastructure projects that are essential to society’s collective well-being. Although expropriation is necessary for urban development and land use planning, it must be done with due respect for the rights of landowners. For example, it must provide for the payment of fair and equal compensation that takes various factors into account, such as the market value of the property and the costs associated with moving it. The expropriation process is governed by strict rules intended to strike a balance between public needs and individual rights, and to guarantee fairness and transparency. Expropriation is an exceptional means of acquiring rights of ownership. It makes it possible for various government bodies to acquire land. The power to expropriate is necessary for projects of public interest, such as the construction of roads, schools and other public infrastructure. What property can be expropriated? Expropriation involves the ownership rights over immovable property or the dismemberment of the right of ownership attached to an immovable. The government can expropriate all rights of ownership covering immovable property, save for a few exceptions: The domain of the State cannot be expropriated, and the power to expropriate cannot be used in the presence of a reserve, which prohibits any construction, improvement or addition to an immovable for the term of the reserve, save for necessary repairs. Certain movable property can also be expropriated. In Quebec, the expropriation of rights in an immovable may include movables that are accessory to the immovable or used as part of the agricultural, commercial, industrial or institutional activities that the expropriated party carries out on the immovable. Federal and provincial jurisdiction over expropriation The Canadian Constitution does not assign exclusive jurisdiction over expropriation to any particular level of government—in our case the provincial or federal legislative authorities. Both have the power to expropriate in accordance with their respective areas of jurisdiction. Just like Quebec does, the other Canadian provinces have their own expropriation laws. In Quebec, article 952 of the Civil Code of Québec stipulates that no owner can be compelled to transfer their ownership except by expropriation in accordance with the law for public utility and in return for just and prior compensation. This provision points to the exceptional nature of expropriation, as, after expropriation, the owner is deprived of all of the attributes of its property. In fact, no one can expropriate without an enabling law. The legal framework regarding expropriation in Quebec has undergone major changes in recent years. The province’s main expropriation regime was formerly set out in the Expropriation Act, assented to in 1973. That law was replaced by the Act respecting expropriation (hereinafter the “ARE”) in 2023. The ARE establishes a new framework for the expropriation of rights, among other things.Significant changes were made to the Quebec regime, in particular in terms of procedure and indemnity calculation. Other Quebec laws also provide for expropriation by other entities, such as the Cities and Towns Act, the Municipal Code of Québec and the Act respecting municipal industrial immovables.   The federal power of expropriation is restricted to federal heads of power as set out in section 91 of the Constitution Act 1867. The power to expropriate granted by the Expropriation Act (hereinafter, the “Federal Act”) belongs to the federal Crown.1 *** In this text, we will examine the scope and implications of expropriation laws and distinctions between these laws to better understand them. We will begin by analyzing the legal provisions that define the circumstances under which expropriation is warranted. We will then review indemnity mechanisms and available recourses. We will finish by describing the administrative and judicial proceedings that govern the expropriation process. Our analysis will provide a better understanding of how these laws fit into the broader legal context. The ABCs of Quebec's expropriation regime  Quebec approach The ARE stipulates that every expropriation must be decided or authorized beforehand by the government, on the conditions that it determines. Once these authorizations have been obtained, the expropriating party may proceed with the expropriation by resolution, order or regulation. The power to expropriate may also be granted to other non-governmental entities, such as municipalities, metropolitan communities, school service centres or school boards, which are not required to obtain an authorization. In addition, certain public bodies, such as Hydro-Québec, have the power to expropriate. Under the terms of the ARE, if the expropriation concerns an entire lot, the expropriation procedure begins with the filing of an extract from the cadastre of Québec showing the expropriated immovable with the Administrative Tribunal of Québec (hereinafter, the “ATQ”). Expropriating more than one right requires the filing of a general plan. After the first filing, the expropriating party must send a notice of expropriation (hereinafter, the “expropriation notice”) to the holder of a right in the expropriated immovable. The date of service of the expropriation notice is the date of expropriation. This date is important—it is generally the cutoff date for calculating indemnity. The expropriation notice must contain certain mandatory information, including the description of the expropriated immovable, the purpose of the expropriation and the date on which the property is to be vacated. The vacancy date corresponds to the date on which all divested parties must have vacated the immovable and the date on which the expropriating party becomes the owner. In addition, an initial detailed declaration must accompany the expropriation notice, which must indicate the amount of indemnity the expropriating party is offering and be broken down according to the compensation items applicable to the divested party’s situation. The initial detailed declaration must also indicate at least the market value of the expropriated right. The introduction of the concept of “market value” is a departure from the previous law. Once the expropriation notice has been received, the expropriated party has four months to file its own detailed declaration with the ATQ, setting out the compensation items they wish to claim. They must also inform the expropriating party of the presence of lessees or occupants, and of leases and written agreements entered into with lessees of the expropriated immovable, within 30 days of the date of expropriation. The expropriating party must then serve a notice to vacate on the lessee or occupant in good faith, accompanied by the initial detailed declaration, indicating an amount at least equal to three months’ rent if the expropriated immovable contains the lessee’s or occupant’s residence. The expropriating party must register the expropriation notice in the land register no later than 30 days after the expropriation date. If the expropriating party fails to do so, any interested party may apply to have the registration of the expropriation notice cancelled. Compliance with this time limit is important, as damages may be awarded to the expropriated party to compensate for the injury resulting from failure to comply. Also, the expropriated party may contest the expropriation in the 30 days that follow the expropriation date and request the cancellation of the expropriation notice. The request must be served on both the expropriating party and the ATQ. The contestation process is set out below. The expropriating party takes possession of the property when it registers a notice of transfer in the land register, which corresponds to the vacancy date indicated in the expropriation notice. Such notice of transfer cannot be published before the initial provisional indemnity has been paid, or before the vacancy date. If these conditions are not met, the Land Registrar will refuse to register the notice. The divested party may, for serious reasons, apply to the Superior Court to remain in possession of the expropriated immovable for a certain amount of time, which may not exceed six months, but only if this does not cause serious prejudice to the expropriating party. Summary of changes regarding indemnification The coming into force of the ARE has changed the rules regarding indemnification. Under the previous law, the principle of indemnification was calculated based on “value to the owner,” whereas indemnification is now calculated on the property’s market value. This marks a significant change in direction for all judicial and administrative decisions. Previously, a presumption favouring compensation applied.2 Now, under the ARE, the indemnities awarded are governed by a specific analytical framework, with defined calculations and distinct compensation approaches. As it now applies, the ARE provides that the indemnity must be determined based on the expropriated property’s market value. The expropriating party has the burden of proving the market value of the expropriated right, while the expropriated party has the burden of proving all other elements constituting the final indemnity. Market value in this context corresponds to the most probable sale price of the right, established as at the date of expropriation according to the highest and best use of the right in a free and open market. The highest and best use corresponds to the use of the right as at the date of expropriation, or to the use determined by taking into account certain criteria. Different indemnities may be paid to compensate the expropriated party. An initial provisional indemnity corresponding to an amount at least equal to 100% of the market value indicated in the expropriating party’s detailed declaration must be paid to the divested party so that it may continue its activities and limit the inconveniences resulting from the expropriation. This indemnity is equal to 100% of the market value of the expropriated right. If the indemnity is insufficient, the expropriated party may apply for a supplemental provisional indemnity. The final indemnity, indicated in the detailed declaration, is made up of the immovable indemnity, the indemnity in reparation for injuries, the indemnity for loss of suitability value and the indemnity for trouble, nuisance and inconvenience.   Immovable indemnity   This indemnity consists of the market value of the expropriated right and, if applicable, one of the following indemnities determined in accordance with the divested party’s situation:  the displacement indemnity, in the case of an indemnity established according to the approach based on displacement of a structure; the redevelopment indemnity, in the case of an indemnity established according to the approach based on redevelopment of an immovable; the enterprise closure indemnity, in the case of an indemnity established according to the approach based on discontinuance of an enterprise; the equivalence indemnity, in the case of an indemnity established according to the approach based on relocation; indemnity for the replacement of buildings and improvements, established according to approach based on the re-establishment theory; indemnity for another use.These indemnitiesare determined in accordance with the different approaches set out in the ARE. Lessees and occupants in good faith are entitled to the redevelopment indemnity, enterprise closure indemnity or equivalence indemnity.   Indemnity in reparation for injuries   The indemnity in reparation for injuries corresponds to the actual cost at present value of material injuries directly caused by the expropriation and suffered by the expropriated party.   Indemnity for loss of suitability value   The Indemnity for loss of suitability value corresponds to the loss suffered by a divested party given the personal value the divested party attributes to the immovable and that a buyer normally does not take into account. This indemnity is capped at $32,422.00, subject to indexation.   Indemnity for trouble, nuisance and inconvenience   The indemnity for trouble, nuisance and inconvenience corresponds to the value of direct, material and certain damages sustained by the divested party and caused by the expropriation procedure, in particular for that party’s loss of time to prepare for the case and participate in meetings. This indemnity may only be claimed by certain divested parties and is capped at $10,807.00, subject to indexation.     The expropriated party has to prove which approach applies its case. Once the evidence is presented, the ATQ decides in accordance with the applicable approaches having been proven. Contestation In the 30 days following the date of expropriation, the expropriated party may contest the expropriating party’s right to expropriate and request the cancellation of the notice of expropriation by filing an application with the courts of the district in which the expropriated immovable is located. Said application must be served on the expropriating party and on the ATQ, and must be heard and decided urgently. The new law respecting expropriation provides that a contestation of the right to expropriate does not automatically stay the expropriation procedure, unless the court, at the request of the expropriated party, so orders. Previously, the situation was reversed—contesting the right to expropriate stayed the expropriation procedure. Although section 17 of the ARE does not set out any criteria applicable to an application for a stay, the Superior Court has indicated that the party seeking the stay must demonstrate that it has an arguable case, that it will suffer serious or irreparable harm if the stay is not granted, and that the balance of convenience tips in its favour.3 If the expropriated party’s application is granted, the expropriation notice registered in the land register will be cancelled, and the divested parties will be entitled to apply to the ATQ for damages to compensate for the prejudice resulting from the expropriation procedure. The ABCs of the federal expropriation regime  Federal approach to expropriation The Federal Act confers the power to expropriate to the Crown. The Federal Court has described the decision to expropriate as highly discretionary and political in nature.4 The Crown’s power to expropriate is, as such, very broad. It covers all land in Quebec. In the Federal Act, the term “land” is defined as including land, mines, buildings, structures, fixtures and objects that are immovable within the meaning of Quebec civil law. In certain situations, the Minister of Public Works and Government Services (hereinafter referred to as the “Minister”) may deem any land to be required for a public purpose. In this context, the Minister makes a formal request to the Attorney General to initiate the expropriation process. As soon as the Minister makes the request, the formal federal expropriation process is set in motion, and the Crown can take the steps necessary to expropriate the land in question. On receiving the Minister’s request, the Attorney General registers a notice of intention to expropriate with the office of the registrar in the registration division where the land is situated. The notice must contain a statement regarding the Crown’s intent to expropriate the right in question. It must also describe the land in question and indicate the nature of the right to be expropriated. Lastly, it must indicate the public work or other public purpose for which the right is required. After the notice is registered, the Attorney General must provide the Minister with a report setting out the names and last known addresses, if any, of persons appearing to have a right in the land. After registration of the notice, the Minister has 30 days to publish the notice of intention to expropriate in at least one issue of a publication in general circulation in the region where the land is located. In addition, a copy of the notice must be sent to the persons whose names appear in the Attorney General’s report as soon as possible after registration of the notice. The notice and any other document intended for a third party must be sent by registered mail to the latest known address. The Minister must then have the notice published in the Canada Gazette. The notice is deemed to have been given on the date of publication in the Canada Gazette. The Federal Court has described the power to expropriate conferred by the Federal Act as a broad discretionary power to assess and decide what is in the “public interest”, and what immovable real rights are required for this purpose. As such, contesting an expropriation can be difficult. The Federal Act provides that any person wishing to object to the expropriation may do so no later than 30 days from the day on which the notice of intention to expropriate is published in the Canada Gazette. They must give the Minister their notice of objection in writing, indicating their name, address and the nature and reasons for their objection, as well as the nature of their  interest in objecting to the proposed expropriation. At the end of the 30-day period, if an objection has been served, the Minister must order a public hearing on the objection received. The Attorney General must then appoint a hearing officer to conduct the hearing. The hearing officer must fix the date, time and place for the public hearing no later than seven days of their appointment, and must give every person who has served notice of objection to the Minister an opportunity to be heard. The hearing officer may also inspect the land to which the notice relates. The hearing will be conducted in the manner determined by the hearing officer. Once the hearing is over and no later than 30 days after their appointment, the hearing officer must submit a written report to the Minister on the nature and grounds of the objections made. After the public hearing, or if no objection is filed within 30 days, the Minister may confirm or abandon the intention to expropriate. However, if the Minister has not confirmed his intention on expiry of 120 days after the day notice was given, the Minister is deemed to have abandoned the intention. In the event of abandon, the Minister must have a notice of abandonment of the intention sent to the persons concerned and to the Attorney General. In the event of confirmation, the Minister must ask the Attorney General to register a notice of confirmation of intention to expropriate (hereinafter, the “confirmation notice”). Once the confirmation notice has been registered, the Minister must send a copy to all persons appearing to have a right in the land and to all persons having served an objection. Upon registration of a confirmation notice, the right becomes absolutely vested in the Crown. Within 90 days of the registration of the confirmation notice, the Minister must make a written offer of compensation to all persons who actually have an interest in the land. The Crown takes possession of the land once the procedure is complete. Amounts paid in compensation Compensation is paid to each person who, immediately before registration of a notice of confirmation, was the holder of an interest in the land to which the expropriation notice relates. The compensation amount is equal to the aggregate of the following amounts: The value of the expropriated right or interest on the date of its taking by the Crown: based on market value, i.e., the amount that would have been paid for the right or interest if it had been sold in the open market on the date of its taking by the Crown. The amount of the decrease in value of the remaining property of an owner: obtained by subtracting from the value of all the immovable real rights or interests in land that the holder had immediately before the taking of the expropriated right or interest the sum obtained by adding the value of the expropriated right or interest and the value of all the remaining immovable real rights or interests in land immediately after the time of taking of the expropriated right or interest. The reference date for calculating compensation is generally the date on which the confirmation notice was registered. The Crown also pays to each person entitled to compensation an amount equal to the appraisal, legal and other costs reasonably incurred by that person in asserting a claim for such compensation. The Federal Act provides a mechanism for negotiating compensation, when the person entitled to compensation and the Minister are unable to agree on the amount of compensation. After an offer of compensation has been made and within 60 days of the offer, either party may serve notice on the other to negotiate compensation. The awarding of compensation under the Federal Act therefore differs significantly from that under the ARE, although market value is also central to the indemnity awarded under the ARE. Railway companies The procedure is different for railway companies. They must first make a request to the federal Minister of Transport regarding the immovable real right or interest in land, which they have unsuccessfully attempted to purchase. The Minister of Transport then recommends expropriation to the Minister of Public Works and Government Services, who must then have the Crown expropriate the immovable real right that the railway company was unable to acquire. Conclusion There are a number of differences between the applicable regimes. A legislative duality such as this can result in inequity, leading to different results for expropriated parties in similar situations, and for expropriating parties. As we explained, the criteria used to assess compensation, the procedures used to determine compensation and the recourses available may vary considerably from one law to another. An expropriated party may therefore obtain different compensation depending on the applicable regime, even if the objective conditions regarding their expropriation are comparable to those of another expropriated party under a different regime. For more information, or if you have any further questions, please feel free to contact our team. We will be happy to assist you and provide you with the information you need regarding any expropriation procedure. This text only covers the Federal Act’s application in Quebec. Toronto Area Transit Authority v. Dell Holdings Ltd, [1997] 1 SCR 32. Société immobilière 2081-2083 Marie-Victorin inc. c. Ville de Varennes, 2024 QCCS 3969, para. 15. Vachon (Succession) v. Canada (Attorney General), 2024 FC 709.

As we keenly usher in 2025, we thought we would have a quick recap on changes affecting real estate law in Quebec in 2024. Let’s have a look back on the past year and on news deserving some attention and follow-up in 2025. This is not a comprehensive list, but a reminder that much has happened in the real estate sector. In terms of rental housing construction, the Real Property (GST/HST) Regulations introduced an enhanced GST rebate for residential rental properties, for construction beginning between September 14, 2023 and December 31, 2030, and whose end date is set no later than December 31, 2035. The procedure for authenticating a Canadian document to be used in a foreign country has been standardized for countries that are party to the Hague Apostille Convention Abolishing the Requirement of Legalisation for Foreign Public Documents. Bylaw 20-20-20 was amended to lighten the financial burden on real estate developers for the construction of affordable social housing in Montréal until the end of 2026. In terms of housing rental, the Act to limit lessors’ right of eviction and to enhance the protection of senior lessees has imposed a moratorium on the eviction of lessees by lessors who want to subdivide, expand or change the use of a dwelling, until June 2027, in addition to providing more protection for lessees aged 65 or over against eviction or repossession of a dwelling, when they have been living at the dwelling for at least 10 years and their income is equal or less than 125% of the income that would qualify them for low-rental housing based on applicable regulations. The Competition Act was amended to further regulate property controls, including the use of exclusivity clauses and restrictive covenants in existing commercial leases. The Competition Act was also amended to fight greenwashing. In the real estate industry, developers now have the burden to prove the environmental claims in respect to their properties. The increase in the inclusion rate for capital gains was announced in the federal budget in April 2024. The inclusion rate will go from 50% to 66.66% on all capital gains realized by corporations and trusts, in addition to individuals for the portion of capital gains exceeding $250,000 in a given year. Considering the potential change in government and the fact that these measures have no force of law, stay tuned for developments on this matter. Tax authorities plan to increase applicable withholding rates for the sale of a taxable Canadian property by a non-resident of Canada starting January 1, 2025. As a result, the withholding rates for disposals made as of that date have increased significantly further to the increase in the inclusion rate for capital gains. Again, there is, however, still uncertainty on whether this measure will come into force. Bill 86 amending, among other things, the Act respecting the preservation of agricultural land and agricultural activities and the Act respecting the acquisition of farm land by non-residents was tabled and introduced to the National Assembly of Quebec by the Minister of Agriculture, Fisheries and Food, André Lamontagne. The amendments aim, in particular, to control the acquisition of farm land and fight against the acquisition of farm land by foreign investors. Stay tuned for changes in this bill. The Act to amend various legislative provisions with respect to housing has “opened the door” for municipalities to authorize housing projects before February 21, 2027, that deviate from local planning bylaws, provided that established conditions are met. Municipalities have been granted discretionary power they can use to fast-track construction projects in 2025. Following this year full of developments in the real estate sector, our real estate law team is motivated and ready to answer all your questions and requests. Do you have any other topics in mind? Share them with us and feel free to contact us for a further discussion. Have a great 2025!

Introduction On June 14, 2024, the Superior Court of Québec issued a decision1 interpreting section 938.1.2.2 of the Municipal Code of Québec, which came into force in 2019. This provision gives a person interested in participating in the awarding process the opportunity to file a preliminary complaint about a requirement in the tender documents that they believe does not ensure the honest and fair treatment of tenderers. To our knowledge, this is the first time a court has considered the impact on a claim for damages for loss of profits2 when an unsuccessful tenderer fails to comply with this relatively new provision  The Superior Court concluded that a tenderer’s failure to submit a complaint in a timely manner should be considered as [translation] “a form of fin de non-recevoir, or at the very least, a break in the chain of causation between the alleged fault and the damages claimed” (paragraph 40). Facts The dispute at hand pitted Transport Martin Forget Inc. (“Transport Forget”) against the Municipality of Saint-Alexis (the “Municipality”). On May 6, 2019, the Municipality issued a call for tenders for a snow clearing and salting contract. Transport Forget submitted the lowest bid, which was $150,000 below that of the winning tenderer. Transport Forget was excluded from the call for tenders given its failure to comply with the tender specifications requiring it to provide a Régie du bâtiment du Québec (“RBQ”) licence number, together with an attestation that its licence was in good standing. Further to the Municipality’s refusal to award the contract to Transport Forget, it claimed $300,000 in damages for alleged loss of profits. Transport Forget believed that its tender was compliant, that the RBQ licence requirement imposed by the Municipality was frivolous and unreasonable, that the Municipality failed to uphold the principle of equal treatment of tenderers and that the complaint process provided for in section 938.1.2.2 of the Municipal Code of Québec did not deprive it of its rights. As for the Municipality, it considered the irregularity in Transport Forget’s tender to be major and Transport Forget’s failure to comply with the complaint process concerning this requirement—both reasonable and in the public interest—was fatal to its legal action. The evidence showed that the RBQ licence number provided in Transport Forget’s tender was invalid and that Transport Forget deliberately chose not to renew said licence before submitting its tender, as it was unsure as to whether it would win the bidding process and wished to avoid needlessly paying the $1,000 annual fee required for the licence renewal. Applicable principles In order to determine the outcome of this dispute, the Court analyzed the case based on the decision in Tapitec,3 a landmark ruling in tendering matters. It reiterated the Court’s view that the decisive factor in determining whether an irregularity is minor or major is the equal treatment of tenderers. It also pointed out that municipalities can set out conditions aimed at limiting the number of tenderers, provided that this is done for an important and legitimate purpose. As for section 938.1.2.2 of the Municipal Code of Québec, the Court viewed it as a mechanism for monitoring all contracts awarded by public bodies which is designed to establish a process to ensure compliance with the principles of integrity needed to protect the public interest. According to the Court, the legislator’s intention is also to protect small municipalities such as the one in question (with a population of approximately 1,500) from potential legal action following the opening of tenders by ensuring that issues concerning the principle of equal treatment of tenderers are resolved prior to the tendering process. Tenderers that fail to comply with this requirement will not be entitled to claim damages for loss of profits, as in this case, except where there has been fraud or blatant bad faith, as in cases of collusion. The purpose of the provision in question is to prevent a tenderer that is aware of the requirements set out in the tender documents from contesting such requirements after the fact. Decision The Court found that the requirement to hold an RBQ licence number was a condition intended to limit the number of tenderers, which the Municipality was entitled to do. Although the Court recognized that there is no correlation between being able to perform snow clearing operations and holding an RBQ licence, it accepted the evidence that this condition was an appropriate and quick way for the Municipality to ascertain the credibility and organizational skills of tenderers, which was a important and legitimate objective. The Court therefore concluded that this requirement of the tender specifications was neither frivolous nor arbitrary. The Court considered the irregularity in Transport Forget’s tender to be major. Although the obligation to hold a valid RBQ licence is neither a requirement of public policy nor a substantive requirement, it is intended precisely to proscribe the lack of seriousness shown by Transport Forget when it opted not to pay the renewal fees for its RBQ licence before submitting its tender. The Municipality exercised its administrative discretion in a reasonable manner and ensured that all tenderers were treated equally. The Court found that the Municipality was right to reject Transport Forget’s tender. Although the Court dismissed the claim, it did nevertheless consider section 938.1.2.2 of the Municipal Code of Québec. In the Court’s view, Transport Forget could have lodged a preliminary complaint about the validity of the condition imposed by the Municipality to hold an RBQ licence. Doing so would have given the Municipality the opportunity to amend its call for tenders before the opening of tenders. Transport Forget’s failure to do this rendered its claim for damages inadmissible. Commentary Tenderers for public calls for tenders issued by a municipality must be aware of section 938.1.2.2 of the Municipal Code of Québec4 and understand how to apply it in a timely manner. As demonstrated by the Superior Court’s interpretation of this section in the judgment in question, an unsuccessful tenderer that has not complied with the complaint process set out in said section and who intends to sue for damages for an alleged loss of profits could have their claim turned down on grounds of a fin de non-recevoir. Transport Martin Forget Inc. c. Municipalité de Saint-Alexis, 2024 QCCS 2208 We came across the decision in Sintra inc. c. Municipalité de Noyan, 2019 QCCS 4293 (CanLII), which also deals with this provision, but in the context of an application for an interim injunction from the lowest tenderer attempting to prevent the awarding of the contract to a third party: the Court dismissed the claim, in particular because the tenderer had not lodged a complaint about the process provided for the awarding of the contract, in accordance with section 938.1.2.2 of the Municipal Code of Québec, and concluded that the prima facie case requirement had not been met. Tapitec c. Ville de Blainville 2017 QCCA 317 We would also like to draw your attention to section 573.3.1.4 of the Cities and Towns Act, which is identical to section 938.1.2.2 of the Municipal Code of Québec. We have not found any decisions interpreting this section, so we urge tenderers to be cautious and comply with the complaint process applicable to calls for tenders issued by cities and towns, to avoid having their claim turned down on grounds of a fin de non-recevoir.