Longueuil (City) v. Lambert‑Picotte, [1991] 2 S.C.R. 401

Dame Jeanne D'Arc Lambert Appellant

v.

City of Longueuil Respondent

Indexed as: Longueuil (City) v. Lambert‑Picotte

File No.: 21151.

1991: January 31; 1991: June 27.

Present: Lamer C.J. and La Forest, L'Heureux‑Dubé, Sopinka, Gonthier, Cory and McLachlin JJ.

on appeal from the court of appeal for quebec

Expropriation ‑‑ Indemnity ‑‑ Whether a transaction or an agreement between parties as to indemnity in event of expropriation ‑‑ Whether Court of Appeal erred in intervening in Expropriation Tribunal's decision ‑‑ Expropriation Act, R.S.Q., c. E‑24, ss. 19, 68 ‑‑ Civil Code of Lower Canada, art. 1918.

Expropriation ‑‑ Indemnity ‑‑ Additional indemnity ‑‑ Provisional indemnity less than one third of final indemnity ‑‑ Whether granting of additional indemnity justified ‑‑ Whether provisional indemnity should be taken into account in calculation of additional indemnity ‑‑ Expropriation Act, R.S.Q., c. E‑24, s. 68.

In 1974, the City of Longueuil entered into negotiations with the appellant for the purchase of her land, to establish an outdoor recreation centre. After several meetings, the parties entered into an offer of sale setting the purchase price at $500,000. At this time, both parties were well aware that the appellant could not deliver clear title to the property because of an existing dispute between the appellant and another party. The City took no further action regarding the offer of sale. Rather, the City chose to file a notice of expropriation, one day after the expiration of the six-month deadline set out in the offer to execute the deed of sale. Paragraph 8 of the notice of expropriation indicated that expropriation was undertaken "without prejudice to its rights and remedies resulting from any deed or agreement already concluded with the expropriated party".

On a motion before the Superior Court, the City was granted "prior possession" of the property. The motion stated that the City had offered an indemnity of $500,000 but that the appellant had not yet accepted it. The City put $500,000 on deposit and, a year later, the appellant's motion to withdraw the money was granted without prejudice to her right to claim a greater indemnity in the expropriation proceedings. When the case was finally remitted to the Expropriation Tribunal, the City contended that there had been a transaction between the parties with regard to the value of the land upon expropriation. The Tribunal rejected this argument, set the value of the land at $1,714,936, and ordered the City to pay the appellant with an additional indemnity calculated on the total award. The Tribunal's decision was homologated by the Superior Court. The Court of Appeal set aside the Tribunal's decision. It held that, whether it was a transaction or a contract between the parties, a binding agreement existed between the parties as to the indemnity upon expropriation.

The present appeal is to determine whether, prior to the expropriation proceedings, the parties had entered into either a transaction or an agreement regarding the indemnity to be paid by the City on the expropriation of the land. A subsidiary issue concerns the discretion of the Expropriation Tribunal in awarding and calculating an additional indemnity on the total or defalcated award.

Held (Lamer C.J. and Sopinka J. dissenting): The appeal should be allowed.

(1) Whether there was a transaction or an agreement

Per La Forest, L'Heureux-Dubé, Gonthier, Cory and McLachlin JJ.: In order to reverse the conclusions of fact made by the Expropriation Tribunal, the Court of Appeal has to determine that the Tribunal had either grossly misconstrued the evidence so as to constitute an injustice, erred in law, or misapplied the law. The Expropriation Tribunal made no error in concluding that there was no transaction between the parties, because the requirements of art. 1918 C.C.L.C. were not met. At the time the offer was signed, there was no lawsuit, legal relationship, or contentious legal question between the parties which could be the subject of a transaction under art. 1918. In addition, there were no "concessions or reservations" made by either party to prevent future litigation over disputed rights. When the transaction allegedly occurred, the City had not yet passed a resolution, and therefore did not have the power, to expropriate the land. There was no evidence of a transaction in this case.

Per L'Heureux-Dubé, Gonthier, Cory and McLachlin JJ.: The Expropriation Tribunal correctly concluded that there was no agreement between the parties as to indemnity in the event of expropriation. The evidence does not support the existence of an oral agreement on the indemnity. The offer itself is silent and the testimony is inconclusive. Nothing in the written material filed in the record supports the City's contention that, prior or subsequent to the offer of sale, the parties even discussed, let alone agreed to, either the value of the land on expropriation or the indemnity to be paid in case of expropriation. Although a subsequent letter from the appellant's lawyer to the City's notary suggested the City could proceed by expropriation to obtain clear title, the letter did not allude to an agreement about the price to be paid. The caveat in paragraph 8 of the expropriation notice does not establish that there was an agreement regarding indemnity. There is no reference to an agreement, nor to the date, content or price of an indemnity. In its motion for prior possession, the City specifically admitted that there was no agreement, stating that the appellant had "not yet accepted" the City's offer. The City did not indicate its reliance on any agreement: the motion to allow the withdrawal of the $500,000 went uncontested, the motion to refer the matter to the Expropriation Tribunal to fix the indemnity was made on consent, and the City at no time protested the appellant's detailed claim for indemnity. Therefore, there was no agreement and the Court of Appeal erred in reversing the findings of the Expropriation Tribunal.

Accordingly the appeal should be allowed. The Expropriation Tribunal's award as to the value of the expropriated land was not challenged and must stand.

Per La Forest J.: Given its obvious advantage in weighing the evidence, there is no reason to depart from the Expropriation Tribunal's view that the representative of the City was persistent to the point of harassment in his dealings with the appellant. Assuming there could nonetheless be said to have been an agreement of sale, the method by which the City carried out the expropriation procedures clearly indicated that it did not intend to rely upon the offer of sale. The Court of Appeal's opinion that there was an agreement, which is based almost exclusively on paragraph 8 of the expropriation notice, goes against the weight of the evidence and the factual findings of the Tribunal. It is true that the renunciation of a right should never be presumed and must be interpreted narrowly. However, in this case, the City's actions have met that threshold and cannot be interpreted in any other manner than a renunciation of its rights under the offer of sale.

Per Lamer C.J. and Sopinka J. (dissenting): While the conditions for the existence of a transaction were not met in this case and even though the parties did not expressly enter into an agreement as to indemnity, there remained throughout a valid and enforceable agreement for the sale of the property. A court should not conclude that a party has tacitly renounced its rights by virtue of a binding and enforceable agreement unless the circumstances are such that any other conclusion would be implausible. The notion of renunciation must be interpreted narrowly. Here, the Expropriation Tribunal erred in concluding that the City renounced its rights under the agreement when it commenced the expropriation proceedings. The mere fact that the expropriation notice was sent one day after the expiry of the six‑month deadline for signing the deed of sale was insufficient to render the offer null. Unless this is expressly stipulated, the time allowed for signing the deed of sale is not generally a strict time limit. There was no express stipulation to that effect in this case. Further, the City did not renounce its rights under the offer when it did not attempt to enforce the agreement before proceeding with the expropriation. A mise en demeure is not always a necessary precondition to the exercise of rights under an agreement. In this case, the mise en demeure would have served no useful purpose given the well‑known fact that the appellant could not provide clear title. Finally, the expropriation notice did not constitute the notice of termination envisaged in the offer of sale. There was no mention in the expropriation notice of the City's intention to withdraw its acceptance under the offer. On the contrary, the City expressly reserved its rights under any agreement which may exist between the parties.

Given that there was no renunciation by the City, the Tribunal was bound to respect the agreement which had been entered into by the parties. It was not shown that the alleged harassment rendered the agreement null and void. The principle which is to guide the Tribunal in fixing the indemnity is the value of the property to the party being expropriated. Here, the maximum value of the property to the appellant was the price of $500,000 stipulated in the agreement of sale by which the appellant was still bound when the property was expropriated.

(2) Additional Indemnity

Per La Forest, L'Heureux-Dubé, Gonthier, Cory and McLachlin JJ.: The decision to grant an additional indemnity is discretionary under s. 68 of the Expropriation Act. The additional indemnity is a measure of damages, not of interest. While there are no exhaustive criteria for allowing such an indemnity, the main criteria are whether there has been undue delay, negligence by the expropriating party in completing the hearings, or an insufficient offer bearing no reasonable relation to the indemnity fixed. The conduct of the expropriating party may also be relevant. In the present case, the Expropriation Tribunal found that the difference between the provisional indemnity and the final indemnity was so large that it justified awarding an additional indemnity. There is no reason to interfere with its conclusion that the City sought to obtain the property on payment of a "trifling indemnity" which was "clearly insufficient".

Under s. 68, the Expropriation Tribunal also has discretion to deduct the provisional indemnity from the final indemnity in order to determine the amount of the additional indemnity. The Tribunal's interpretation of s. 68 was not agreed with on this issue. Since there are no exhaustive criteria, the discretion to make a deduction must be exercised with regard to the particular circumstances of each case. In this case, the parties have agreed that the provisional indemnity should be deducted in calculating the additional indemnity. The Tribunal's award should be reduced accordingly.

Cases Cited

By L'Heureux‑Dubé J.

Referred to: D. Dupéré Inc. v. Procureur général du Québec, C.A. Québec, No. 200‑09‑000397‑74, September 1, 1977; Cité de Ste‑Foy v. Société Immobilière Enic Inc., 1966 CanLII 41 (CSC), [1967] S.C.R. 121; Bellerose v. Talbot, [1957] Que. Q.B. 637, aff'd 1958 CanLII 39 (SCC), [1958] S.C.R. 261; Isabelle v. Procureur général du Québec, [1953] Que. Q.B. 747n; Ministre des Transports du Québec v. Texaco Canada Ltée, J.E. 83‑389; Robitaille v. Cité de Québec, [1948] Que. K.B. 787; Amusement Realty Corp. v. Minister of Roads of Quebec, [1949] Que. K.B. 562n; Yves Germain Inc. v. Ministre de la Voirie du Québec, [1974] C.A. 184; Labbé v. Ministre des Transports du Québec, [1980] C.A. 518; Lemieux v. Ville de Granby, [1980] R.P. 285; Procureur général du Québec v. Marois, J.E. 83‑475; Société d'aménagement de l'Outaouais v. Dumouchel, [1984] C.A. 571; Immeubles P.J. Ltée v. Laval (Ville de), J.E. 85‑676; Sylvestre v. Procureur général du Québec, [1980] C.A. 508; Club athlétique Champlain Ltée v. Ministre de la Voirie du Québec, [1979] C.A. 161; Louis Donolo Inc. v. Ville de Laval, [1979] R.P. 17; Allard v. Ville de Québec, [1978] T.E. 463; Anjou (Town) v. Krum (1990), 44 L.C.R. 266, 38 Q.A.C. 1; Ville de Montréal v. Lerner, [1979] C.A. 152; Corporation de la ville de Princeville v. Houle, [1985] T.E. 186; Commission scolaire de la Jeune Lorette v. Fédération des Caisses populaires Desjardins de Québec, C.A. Québec, No. 200‑09‑000354‑834, August 28, 1985; Cemp Investments Ltd. v. Lakeshore School Board, [1985] C.A. 584; Travelers Insurance Co. of Canada v. Corriveau, 1982 CanLII 222 (SCC), [1982] 2 S.C.R. 866; Ville de Laval v. Entreprises Lagacé Inc., T.E., No. 34‑001811‑76M, January 16, 1986; Restaurants et Motels Châtelaine International Ltée v. Procureur général du Québec, [1980] C.A. 511.

By La Forest J.

Referred to: Gingras v. Gagnon, [1972] C.A. 306.

By Sopinka J. (dissenting)

Sosiak v. Marto Construction Inc., [1976] C.A. 286; Lipari v. Hébert, C.A. Montréal, No. 1991 CanLII 3915 (QC CA), 500‑09‑000414‑888, February 19, 1991; Svatek v. Abony, [1986] R.D.I. 605; British and Beningtons, Ltd. v. North Western Cachar Tea Co., [1923] A.C. 48; MacKiw v. Rutherford, 1921 CanLII 656 (MB KB), [1921] 2 W.W.R. 329; Gingras v. Gagnon, [1972] C.A. 306; Corporation municipale de la ville de St‑Georges Ouest v. Comact Inc., [1980] C.A. 521; Anjou (Town) v. Krum (1990), 44 L.C.R. 266, 38 Q.A.C. 1; Hillingdon Estates Co. v. Stonefield Estates Ld., [1952] Ch. 627; Disposal Services Ltd. v. Municipality of Metropolitan Toronto (1973), 4 L.C.R. 242 (Ont. L.C.B.), aff'd (1973), 5 L.C.R. 91 (Ont. Div. Ct.).

Statutes and Regulations Cited

Civil Code of Lower Canada, arts. 1056c, 1918.

Expropriation Act, R.S.Q., c. E‑24, ss. 19, 20, 32 [am. 1983, c. 21, s. 7], 53.11 [ad. idem, s. 12], 68 [am. idem, s. 18].

Authors Cited

Dorion, Guy et Roger Savard. Loi commentée de l'expropriation du Québec. Québec: Presses de l'université Laval, 1979.

Giroux, Lorne. "L'expropriation en droit québécois" (1980), 10 R.D.U.S. 629.

Mignault, Pierre Basile. Le droit civil canadien, t. 8. Montréal: Wilson & Lafleur, 1909.

APPEAL from a judgment of the Quebec Court of Appeal (1988), 30 Q.A.C. 168, 40 L.C.R. 182, which set aside an order of the Expropriation Tribunal, [1984] T.E. 108. Appeal allowed, Lamer C.J. and Sopinka J. dissenting.

Viateur Bergeron, Q.C., for the appellant.

Guy Monette, Benoît Montgrain and Sylvie Gingras, for the respondent.

//Sopinka J.//

The reasons of Lamer C.J. and Sopinka J. were delivered by

Sopinka J. (dissenting) -- The issue raised in this appeal is whether, at the time of the expropriation proceedings brought by the respondent, the City of Longueuil, with respect to the immoveable property belonging to the appellant, Dame Jeanne D'Arc Lambert, the parties were bound by a transaction or agreement regarding the indemnity payable by the respondent upon expropriation. I have had the benefit of reading the reasons of my colleague L'Heureux-Dubé J. in this appeal and with respect, I am unable to agree with the conclusion she has reached. I agree that the conditions for the existence of a transaction within the meaning of art. 1918 C.C.L.C. are not satisfied on the facts of the case. I also agree that the parties did not expressly enter into an agreement as to the indemnity which was to be payable by the respondent upon expropriation. However, I am of the view that there remained throughout a valid and enforceable agreement for the sale of the property in question for the price of $500,000, and I would uphold the conclusion reached by the Court of Appeal that the Expropriation Tribunal was bound to take this into account in fixing the indemnity.

Facts and Proceedings

L'Heureux-Dubé J. has recited the facts and proceedings at length, and I propose to deal with them briefly, highlighting those aspects which I consider important for the resolution of the issue in the case.

In September 1974, a representative of the respondent commenced negotiations with the appellant with a view to purchasing the property in question. During these negotiations, the respondent was made aware of certain problems of title affecting the appellant's property. After several meetings, the appellant signed an offer for the sale of the property in favour of the City for a price of $500,000, dated January 30, 1975.

Paragraphs (c) and (f) of the offer of sale states as follows:

[translation] (c) If this offer is accepted by the said City, the notarial deed of sale giving effect hereto shall be executed and signed within six months of the date of such acceptance . . .

(f) All title deeds relating to the said immovable property shall be delivered by the vendor to the purchaser within ten (10) days of the date of acceptance of this offer by the said City. The legal advisers of the City shall have thirty (30) days from the date of delivery of the said title deeds to examine same. If defects in title are found, they shall be remedied by the vendor within fifteen (15) days of the date on which such disclosure is made to it, and in the event of its failing to do so, the purchaser may if it thinks fit, by means of notice to this effect which it shall send the vendor by registered mail, cancel and rescind its acceptance of this offer without any other formality or notice;

DURATION

This offer of sale must be accepted by August 1, 1975, at the latest, or it shall become ipso facto void without notice or putting in default.

On June 2, 1975, the respondent accepted the said offer by resolution of its Board.

On July 23, 1975, the appellant's lawyer wrote to the City indicating that it would be impossible, in light of the continuing litigation as to ownership of the property, for the appellant to provide clear title before the date of the expiry of the offer. The last paragraph of the letter offered a choice to the respondent:

[translation] The City of Longueuil must therefore discharge its responsibilities: either by obtaining this cancellation or by proceeding by expropriation. Our client can do nothing further.

On December 3, 1975, one day after the expiration of the six-month deadline provided for in paragraph (c) of the offer, the respondent served the notice of expropriation upon the appellant. Paragraph 8 of the notice explicitly states:

[translation] The object of the present proceeding by the expropriating party is to obtain possession of the premises and clear title as quickly as possible, and it is undertaken without prejudice to its rights and remedies resulting from any deed or agreement already concluded with the expropriated party . . .

The expropriation proceedings were then triggered and on January 13, 1976, upon application before the Quebec Superior Court, the City obtained "prior possession" of the property upon payment of $500,000. On February 14, 1977, the appellant filed a motion to withdraw the sum of $500,000. The litigation as to ownership of the property was settled by the appellant upon payment of $100,000 of the said $500,000 to the third party, Mibra Investment Corporation.

On August 1, 1977, the appellant brought a motion before the Quebec Superior Court to refer the case to the Expropriation Tribunal to fix the indemnity, and on September 26, 1977, the appellant filed a detailed claim for a total of $2,042,701.60 representing the value of the property at the time the respondent took possession. This claim was later increased to $3,175,000. On April 26, 1978, the respondent filed a specific offer of $500,000 as the indemnity to be set by the Expropriation Tribunal. On December 4, 1981, the respondent brought a motion before the Expropriation Tribunal for a declaration that there was a transaction between the parties as to the value of the land upon expropriation. This motion was dismissed without a hearing. The respondent then moved for the issuance of a writ of evocation by the Quebec Superior Court, upon which the parties agreed that the matter be referred to the Expropriation Tribunal for the resolution of all the issues, including the motion with respect to the declaration of a transaction.

Decision of Expropriation Tribunal, [1984] T.E. 108

Judge Dorion concluded on the facts of the case that there was no transaction within the meaning of art. 1918 C.C.L.C. On the other hand, Judge Dorion did not dispute the existence of an offer to sell the property in question for $500,000 which was duly accepted by the City by resolution (at p. 113):

[translation] It appears from the evidence that what the parties agreed on between themselves was, on the one hand, the purchase, and on the other, the sale of an immovable property for a price of $500,000, which was not to be paid until signature of a notarial contract. From the standpoint of law and precedent, therefore, the facts which occurred between the parties and were established in evidence support the conclusion that there was an offer of sale by the respondent, accepted by the applicant, the performance of which was subject to the requirement that a notarial contract would be drawn up at the time payment was to be made.

There is no doubt as to the existence of the offer of sale, the existence of its acceptance by the applicant is equally not in doubt and the fact that up to a certain point the applicant wished to give effect to it is also well established. [Emphasis added.]

However, while Judge Dorion did not challenge the existence of a valid offer of sale, he was of the view that the respondent had renounced its rights under the agreement when it commenced expropriation proceedings (at p. 114):

[translation] On December 3, 1975 the applicant served a notice of expropriation on the respondent. At that time it renounced the accepted offer of sale, or what it now claims was a transaction, and the effect of the position taken by it was to place the parties once again in the same position as before [the offer] was signed.

The Tribunal fixed the indemnity to be paid by the respondent to the appellant at $1,714,936 and ordered the payment of an additional indemnity calculated on the total award.

Superior Court (Vaillancourt J.)

The Superior Court homologated the decision of the Expropriation Tribunal as required by s. 68 of the Expropriation Act, R.S.Q., c. E-24.

Court of Appeal (1988), 30 Q.A.C. 168 (Jacques and Tourigny JJ.A. and Meyer J. (ad hoc))

In allowing the appeal, a unanimous Court of Appeal found there was a valid agreement which the Expropriation Tribunal was bound to take into account in fixing the indemnity. It held (at pp. 170-71):

[translation] Whether this is a transaction or a contract between the parties, an agreement was made between them as to the amount to be paid.

That leaves expropriation, as a remedy open to the City. Moreover, according to the evidence it was counsel for Mrs. Picotte [the appellant] who suggested this solution. While the City took the initiative of expropriation proceedings, it nonetheless stated in paragraph 8 of its notice that the purpose of the proceeding was to obtain possession of the immovable property as quickly as possible and that this proceeding "is undertaken without prejudice to its rights and remedies resulting from any deed or agreement already concluded with the expropriated party".

In such a context, does the notice of expropriation have the effect of completely overriding any agreement concluded between the parties? With respect for the contrary view, I do not think so. By alleging the existence of a binding agreement and by expropriating without prejudice to its rights, the City was simply exercising the only remedy available to it to give effect to the agreement, to rapidly take possession of the land required for the outdoor recreation area and to clarify the title.

I therefore conclude that, in these circumstances, the parties were agreed on the amount at issue and the Expropriation Tribunal should have taken this agreement and the special circumstances surrounding the title into account.

Analysis

In light of the above facts, I am of the view that the Expropriation Tribunal erred in law in concluding that the respondent renounced its rights under the agreement when it commenced the expropriation proceedings. In arriving at this result, I have considered the arguments put forth on behalf of the appellant to support the contention that the offer of sale had been terminated.

First, the appellant has suggested that the offer was no longer in force at the time of the notice of expropriation as the six-month deadline provided for in paragraph (c) of the offer had expired. In my view, this alone cannot be considered fatal to the survival to the agreement. As Lajoie J.A. wrote in Sosiak v. Marto Construction Inc., [1976] C.A. 286, at p. 289:

[translation] On this question of an accepted offer of purchase, the deadline stipulated for signature of the deed of sale as a rule is not in my view a strict one unless it is clearly indicated as being so, in cases where the parties have agreed that they would be released from their respective obligations solely by the passage of time if the deed was not signed.

In this case, it is significant that there was no express stipulation to the effect that the offer would become void if the six-month deadline was not met. The absence of such a provision is to be contrasted to the express stipulation that the offer would become "ipso facto" null and void if the offer were not accepted before August 1, 1975:

[translation] DURATION

This offer of sale must be accepted by August 1, 1975, at the latest, or it shall become ipso facto void without notice or putting in default.

The principle that the expiry of the date fixed for the signing of the deed of sale is not sufficient to render the offer null was confirmed once again by the Court of Appeal in its recent decision, Lipari v. Hébert, C.A. Montréal, No. 1991 CanLII 3915 (QC CA), 500-09-000414-888, February 19, 1991, at p. 2:

[translation] . . . the date set in the duly accepted offer of purchase as the date for signature of the deed of sale clearly cannot be regarded as in itself establishing a strict deadline unless this is expressly stated . . .

I conclude that the mere fact that the expropriation notice was sent on the day following the expiry of the six-month deadline is not sufficient to bring an otherwise valid agreement to an end.

Second, the appellant has argued that the respondent effectively renounced its rights under the offer as it did not attempt to enforce the agreement or put the appellant in default to execute the deed of sale before proceeding with the expropriation proceedings. The Expropriation Tribunal also considered this to be relevant in arriving at its conclusion (p. 114). On this point, I am in full agreement with the view expressed by Tourigny J.A. of the Court of Appeal who wrote (at p. 170):

[translation] With respect, I cannot follow the view of the Expropriation Tribunal which suggests that if, following the agreement, the city wished to rely on it, it had to do so by "appropriate judicial" action. It must be borne in mind that in the case at bar the action in execution of title was of no use, since there is no doubt that Mrs. Picotte's title deeds were not clear. [Emphasis added.]

With respect to the decision of the respondent to commence expropriation proceedings without first putting the appellant in default to execute the deed of sale, it is clear that a mise en demeure is not always a necessary precondition to the exercise of rights under an agreement. In Svatek v. Abony, [1986] R.D.I. 605, the Provincial Court held that it was not necessary for the plaintiff vendor of the immoveable property to put the defendant purchaser in default by means of a mise en demeure before instituting an action for damages based on the failure of the purchaser to proceed with the sale as agreed to in the offer of sale. In that case, the purchaser had clearly demonstrated that she was not intending to go through with the sale. The court stated (at p. 608):

[translation] The Tribunal is accordingly of the view that the plaintiff did not have to put the defendant-cross-plaintiff in default because of her actions, which left no doubt that she did not intend to sign the deed of sale in accordance with the duly accepted offer . . .

This principle of law, which is accepted by both the civil and common law, is based on the rule of common sense that the law does not require an act to be done which would serve no useful purpose. (See British and Beningtons, Ld. v. North Western Cachar Tea Co., [1923] A.C. 48 (H.L.), and MacKiw v. Rutherford, 1921 CanLII 656 (MB KB), [1921] 2 W.W.R. 329 (Man. K.B.).)

Similarly in the present case, a mise en demeure would have been of no avail, given the knowledge of both parties of the pending litigation with respect to title. In fact, the appellant's lawyer had clearly indicated that the appellant would not be able to provide clear title.

Finally, the appellant has argued that the expropriation notice constituted a termination of the agreement as provided for in paragraph (f) of the offer of sale. Paragraph (f) is worth repeating:

[translation] (f) All title deeds relating to the said immovable property shall be delivered by the vendor to the purchaser within ten (10) days of the date of acceptance of this offer by the said City. The legal advisers of the City shall have thirty (30) days from the date of delivery of the said title deeds to examine same. If defects in title are found, they shall be remedied by the vendor within fifteen (15) days of the date on which such disclosure is made to it, and in the event of its failing to do so, the purchaser may if it thinks fit, by means of notice to this effect which it shall send the vendor by registered mail, cancel and rescind its acceptance of this offer without any other formality or notice. [Emphasis added.]

In my view, the expropriation notice by no means constitutes the notice of termination envisaged in paragraph (f) of the offer, which, it should be noted, is a stipulation in favour of the respondent. There is no mention in the notice of expropriation of the respondent's intention to withdraw its acceptance under the offer of sale. On the contrary, as has been noted above, the respondent expressly reserved its rights under any agreement which may exist between the parties.

In these circumstances, I am of the view that the agreement between the parties for the sale of the property for the price of $500,000 continued to remain on foot. In considering whether there has been tacit renunciation on the part of the respondent, it is important to keep in mind that this notion must be restrictively interpreted. The court should not be quick to conclude that a party has renounced its rights by virtue of a binding and enforceable agreement unless the circumstances are such that any other conclusion would be implausible. This was made clear by the Court of Appeal in Gingras v. Gagnon, [1972] C.A. 306, at pp. 311-12:

[translation] As we know, tacit renunciation may be inferred from certain acts performed by the creditor: those acts must be such as to necessarily imply an intent to renounce the hypothec. They must be so unequivocal that it is impossible to interpret them in any other manner than as being a renunciation. It should be noted that renunciation is not presumed and must always be narrowly interpreted. [Emphasis added.]

In this case, I am unable to conclude that the circumstances are such that it would be "impossible to interpret them in any other manner" than to find renunciation on the part of the respondent.

Having concluded that there existed throughout a binding agreement between the parties, I agree with the Court of Appeal that the Expropriation Tribunal should have taken this into account in fixing the indemnity. Indeed, this factor is crucial in determining value. Instead, the Tribunal concluded (at p. 115):

[translation] It is clear here that the amount of $500,000 is not a fair and adequate indemnity and that it was only because of the harassment of Mr. Paré and the incomprehensible consent by his counsel that Mrs. Picotte resigned herself to signing the offer of sale. Fortunately the city of Longueuil decided to proceed by expropriation, and by so doing the applicant renounced the conclusion of a notarial deed of sale, as specified in the offer . . .

This conclusion contains two errors. First, there was no renunciation. Second, I cannot agree that the price was reached as a result of harassment. Indeed, had the third party's claim against the appellant been successful, the value of the property to the appellant could very well have been less than the price which the respondent was willing to pay. Moreover, as has been noted above, it was only with the $500,000 received from the respondent that the appellant was able to reach a settlement with the third party. In any event, it was not shown that the alleged harassment rendered the agreement of sale null and void.

Given that there was no renunciation by the respondent, the Tribunal was bound to respect the agreement which had been entered into by the parties. The principle which is to guide the Expropriation Tribunal in fixing the indemnity is the value of the property to the party being expropriated. In Corporation municipale de la ville de St-Georges Ouest v. Comact Inc., [1980] C.A. 521, the Court of Appeal affirmed this principle (at p. 524):

[translation] For expropriation purposes it is the value of the expropriated part of the property that must be determined in order to fix the indemnity, on the basis of its best possible use.

Comact Inc., and the principle articulated therein, was followed again by the Court of Appeal in its recent decision, Anjou (Town) v. Krum (1990), 44 L.C.R. 266, 38 Q.A.C. 1. Proulx J.A. stated (at p. 269 L.C.R.):

[translation] The principle of "value to the expropriated party" means that we must take into account the loss or injury suffered by the expropriated party but that this loss should not be considered in addition to the potential advantage to the expropriating party of acquiring the property. Otherwise the expropriated party would benefit at the expense of the expropriating party.

The operation of this principle can be illustrated by reference to the expropriation of a property which is subject to an agreement of purchase and sale to which the expropriating authority is not a party. In these circumstances, the vendor's interest is limited to the purchase price. If the market value of the property exceeds the purchase price, the difference is the value of the purchaser's interest. If the purchaser is the expropriating authority itself, then it is entitled to the excess and the vendor has no claim to it. See, for example, Hillingdon Estates Co. v. Stonefield Estates Ld., [1952] Ch. 627, and Disposal Services Ltd. v. Municipality of Metropolitan Toronto (1973), 4 L.C.R. 242 (Ont. L.C.B.), at p. 250, aff'd (1973), 5 L.C.R. 91 (Ont. Div. Ct.).

Applying the principle to the facts of this case, the maximum value of the property to the appellant was the price of $500,000 stipulated in the agreement of sale by which the appellant was still bound when the property was expropriated. Since the respondent is the expropriating authority and purchaser, the excess market value of the property accrues to the respondent and not the appellant. Accordingly, I would dismiss the appeal and affirm the judgment of the Court of Appeal, with costs to the appellant.

//La Forest J.//

The following are the reasons delivered by

La Forest J. -- I have had the advantage of reading the reasons of my colleagues, L'Heureux‑Dubé J. and Sopinka J. With respect, I would dispose of the appeal in the manner proposed by L'Heureux‑Dubé J., and I agree fully with what she has to say regarding the alleged "transaction" and additional indemnity.

So far as the alleged agreement is concerned, I see no reason to depart from the Tribunal's view that Paré, who acted on behalf of the City, was persistent to the point of harassment in his dealings with the appellant, given its obvious advantage in weighing the evidence. Assuming there could nonetheless be said to have been an agreement of sale, the method by which the City carried out the expropriation procedures, to my mind, clearly indicates that it did not intend to rely upon the offer. I base this conclusion upon several factors: (1) the City chose not to execute the offer to sell within the six-month period, but filed a notice of expropriation the day after that period expired; (2) in the notice of expropriation, the City referred to the $500,000 as an expropriation offer, and made no reference to the offer to sell; (3) in its January 1976 motion to gain possession of the property, the City stated that it had offered $500,000 and that this offer had not been accepted by Lambert; (4) on August 1, 1977, Lambert filed a motion indicating her refusal to accept the $500,000 price and asking that the matter be referred to the Expropriation Tribunal to determine the proper indemnity, and this motion was not contested by the City; (5) the City claimed that there was a binding transaction for the first time more than five years after the notice of expropriation was given, and almost three years after it gave its initial declaration regarding the appropriate indemnity to the Tribunal.

Weighing against these factors is the presence of paragraph 8 in the notice of expropriation, stating that the purpose of the expropriation procedure was to obtain possession and title as rapidly as possible, and that the expropriation was without prejudice to the City's prior rights. This paragraph was virtually the only factor relied upon by the Court of Appeal in finding that there was an agreement. With respect, I think the Court of Appeal's opinion goes against the weight of the evidence and the factual findings of the Tribunal. A much more plausible interpretation of what happened, in my view, is that the City decided to insist on the $500,000 price after the Tribunal determined the value of four other parcels of land connected with the same project in April 1981, and awarded the owners substantial indemnities.

Citing Gingras v. Gagnon, [1972] C.A. 306, the respondent argues that the renunciation of a right should never be presumed, and must be interpreted narrowly. In that case, Turgeon J.A. states, at pp. 311-12:

[translation] They [the actions of the parties] must be so unequivocal that it is impossible to interpret them in any other manner than as being a renunciation. It should be noted that renunciation is not presumed and must always be narrowly interpreted.

Conceding this point, I nonetheless believe that the City's actions in this case have met that threshold, and I would accordingly conclude that it renounced its rights under the offer of sale.

//L'Heureux-Dubé//

The judgment of L'Heureux-Dubé, Gonthier, Cory and McLachlin JJ. was delivered by

L'Heureux-Dubé J. -- This case concerns the expropriation by the respondent City of Longueuil (the "City") of an immoveable property belonging to the appellant, Dame Jeanne D'Arc Lambert, which the Expropriation Tribunal valued at $1,714,936 at the time the City took possession. The expropriation in question is governed by the Quebec Expropriation Act, R.S.Q., c. E-24 (the "Act").

The main issue in this appeal is whether, prior to the expropriation proceedings, the parties had entered into a binding transaction or agreement as to the indemnity ($500,000) to be paid by the City upon expropriation of the land. A subsidiary issue concerns the granting by the Expropriation Tribunal of an additional indemnity on the total compensation awarded.

Facts

In order to establish an outdoor recreation area, the City, on September 3, 1974, passed the following resolution authorizing its director of urban renewal to purchase the necessary property:

[translation] Be it unanimously resolved: --

"To mandate Mr. Roméo Paré, director of urban renewal, to negotiate the purchase of the land required for the outdoor recreation area and to obtain options for at least six months."

Paré began discussions with the appellant concerning the purchase of her property. Between September 1974 and January 1975, they met at least ten times. Paré's initial offer was approximately $0.04/ sq. ft., even though the City's own evaluators had assessed the value of the property at $0.35/ sq. ft. The size of the appellant's property was over 4,500,000 sq. ft. After negotiations, the offer was increased to approximately $0.10/ sq. ft., and, on that basis, an offer of sale of the property was signed by the appellant in favour of the City on January 30, 1975, for a price of $500,000.

According to the offer of sale:

[translation] (c) If this offer is accepted by the said City, the notarial deed of sale giving effect hereto shall be executed and signed within six months of the date of such acceptance . . .

(e) Transfer of possession and occupation of the immovable property sold to the purchaser shall take place at the time the deed of sale is signed;

(f) All title deeds relating to the said immovable property shall be delivered by the vendor to the purchaser within ten (10) days of the date of acceptance of this offer by the said City. The legal advisers of the City shall have thirty (30) days from the date of delivery of the said title deeds to examine same. If defects in title are found, they shall be remedied by the vendor within fifteen (15) days of the date on which such disclosure is made to it, and in the event of its failing to do so, the purchaser may if it thinks fit, by means of notice to this effect which it shall send the vendor by registered mail, cancel and rescind its acceptance of this offer without any other formality or notice;

DURATION

This offer of sale must be accepted by August 1, 1975, at the latest, or it shall become ipso facto void without notice or putting in default. [Emphasis added.]

On February 3, 1975, the City passed the following resolution:

[translation] That the Council receive the offer of Dame J.A. Lambert-Picotte [the appellant] dated January 30, 1975 for the sale to the City of Longueuil of lots . . . for the price and sum of $500,000.00. [Emphasis added.]

On May 20, 1975, the City passed another resolution authorizing it to acquire land in the area either by purchase or expropriation and, on June 2, 1975, the following resolution was adopted:

[translation] To accept the offer of M.J.A. Lambert-Picotte [the appellant] dated January 30, 1975 for the sale to the City of Longueuil of lots . . . for the price and sum of $500,000.00, the said sum to be payable in cash upon signature of the deed of sale. [Emphasis added.]

Notwithstanding the receipt and acceptance of the offer of sale, it was well known to both parties that the appellant could not deliver clear title to the property, since litigation was pending between the appellant and a third party, David Reich, who was alleging that he had bought the property from the appellant's common law spouse. On November 19, 1965, the Superior Court dismissed Reich's action. While he appealed the decision, Reich transferred his rights to Mibra Investment Corporation ("Mibra"). At the time the discussions took place between the appellant and Paré, judgment had not yet been rendered by the Court of Appeal, and, in fact, the appellant's title to the property was perfected only by a private settlement with Mibra, on February 14, 1977.

As Mibra's claim remained before the Court of Appeal after the City's acceptance of the offer of sale, the appellant's lawyer, on July 23, 1975, wrote the following letter to the notary mandated by the City to prepare the deed of sale:

[translation] As we explained to you in our telephone conversation of June 26 last, it is impossible for our client to sign a deed of sale in favour of the City of Longueuil for the lots mentioned in your letter, before the cancellation of both the promise of sale made to David Reich on November 9, 1954 and the transfer from the latter to Mibra Investment Corporation on September 27, 1966. This cancellation cannot be obtained without a hearing of the case between the parties in the Quebec Court of Appeal, pending since December 17, 1965. It is to be expected that it will be several months or even years before the case is concluded.

The City of Longueuil's representative, Mr. Paré, knew all these facts when the promise of sale was signed on January 30, 1975. Despite this, he insisted that Mrs. Lambert‑Picotte [the appellant] nevertheless sign the offer of sale, claiming that he had consulted the City of Longueuil's legal department and was sure that the City's lawyers could easily arrange to obtain the cancellation. We took the opposite view, but Mr. Paré assured us that there would be no problem.

The City of Longueuil must therefore discharge its responsibilities: either by obtaining this cancellation or by proceeding by expropriation. Our client can do nothing further.

The appellant testified before the Expropriation Tribunal that she signed the offer of sale, notwithstanding the fact that she was well aware that she could not deliver clear title to the property, because her lawyer told her that even if she signed, it was null. She recalled her lawyer's advice in these terms:

[translation] That commits you to nothing, don't worry, what they want to do, it is just an idea of their plan, it commits you to nothing, that's all.

Her lawyer also testified to the same effect:

[translation] I did say that it meant nothing to have something signed today, it was illegal and he [Paré] replied: "The City of Longueuil has good lawyers" . . . I said "If that is so, Mrs. Lambert, sign it, it means nothing".

The City took no further action regarding the offer of sale. On December 1, 1975, it chose to file a notice of expropriation, which was served on the appellant on December 3, 1975, one day after the expiration of the six-month deadline set in paragraph (c) of the offer of sale, rather than exercising its right to put the appellant in default as to her obligation to deliver clear title. Although mention was made in the notice of expropriation that the expropriation proceedings were [translation] "without prejudice to its rights and remedies resulting from any deed or agreement already concluded with the expropriated party", no specific agreement between the parties was alleged, referred to or tendered, and none accompanied the notice of expropriation. Quite the contrary, the notice specifically requested the appellant to indicate within 15 days whether or not she accepted the City's offer:

[translation] PLEASE BE ADVISED that, if within fifteen (15) days of service hereof, you have not accepted this offer of indemnity, the expropriating party will apply to the Superior Court for the district of Montréal to have its aforesaid rights of expropriation recognized;

On the expiry of this time period, this notice will be filed with the Registry of the Superior Court in Montréal, and if you do not appear within the time set, the expropriating party will proceed by default. [Emphasis added.]

The appellant did not respond to the notice within the set 15-day period, and, on January 13, 1976, upon uncontested application before the Quebec Superior Court, the City was granted "prior possession" of the property. The motion specifically referred to the offer of $500,000 and to the fact that the appellant had not accepted it:

[translation] 5. As appears in this notice of expropriation, the expropriating party offered the sum of $500,000.00 as an indemnity and the expropriated party has not yet accepted this offer; [Emphasis added.]

The amount of the offer was deposited on February 4, 1976. No further action was taken until February 14, 1977. In the meantime, on January 28, 1977, the Court of Appeal dismissed Mibra's claim to the property, allowing, however, Mibra's claim to conserve its registration of Reich's offer of sale. After the appellant settled her claim with Mibra, on February 14, 1977, she filed a motion to withdraw the deposit of $500,000 without prejudice to her right to claim a greater indemnity in the expropriation proceedings. The motion was granted on May 20, 1977.

On August 1, 1977, the appellant, alleging that she had refused the City's offer, brought a motion before the Quebec Superior Court to refer the case to the Expropriation Tribunal, so that the Tribunal could [translation] "fix the fair and equitable indemnity to which it [the appellant] is entitled". On August 9, 1977, this motion was granted by consent and, on September 26, the appellant filed a detailed claim for a total of $2,042,701.60, being, in her opinion, the value of the property at the time the City took possession. The City responded, on April 26, 1978, by filing its specific offer of $500,000 as the indemnity to be set by the Expropriation Tribunal. The appellant later increased her claim to $3,175,000, given the value determined by the Expropriation Tribunal on property expropriated in the same area, as per its decisions handed down on April 28, 1981. On December 4, 1981, for the first time since the filing of the notice of expropriation in 1975, the City brought a motion before the Expropriation Tribunal, to declare that there had been a transaction between the parties with regard to the value of the land upon expropriation. This motion was dismissed without a hearing. The City successfully moved for the issuance of a writ of evocation by the Quebec Superior Court, upon which the parties agreed that the matter be remitted to the Expropriation Tribunal in order that all the issues could be there decided, including the motion asking for a declaration that a transaction had been entered into between the parties as to the indemnity for the expropriated land.

The Expropriation Tribunal, having concluded that there was no such transaction, set the value of the land at $1,714,936, which it ordered the City to pay to the appellant together with an additional indemnity calculated on the total award. Both the compensation award and the additional indemnity were contested before the Court of Appeal, as they are before this Court, on the sole basis that the parties had entered into a transaction or reached an agreement as to an indemnity of $500,000 to be paid by the City upon expropriation of the appellant's property.

Judgments

Expropriation Tribunal, [1984] T.E. 108 (Judge Dorion, Montambeault (member))

With regard to the issue of transaction, the Tribunal found that the offer of sale did not meet the requirements of art. 1918 C.C.L.C., since it did not settle any litigation between the parties, whether existing or pending, as appears from this extract of Judge Dorion's reasons (at p. 112):

[translation] When . . . Roméo Paré, representing [the City], met on at least ten occasions with [the appellant], this was in no way because of the existence of a problem between the two parties and for the purpose of preventing future litigation between them. At that point, there was no legal relationship between [the City and the appellant].

The Tribunal held that, at the time Paré made the offer to the appellant, there could be no question of expropriation because the City was not authorized by resolution to do so. In fact, it was only in May 1975 that the Minister of Municipal Affairs and the Quebec Municipal Commission approved such expropriation.

Neither did the City's resolution to accept the offer of sale settle any present or potential litigation between the parties, since, in the words of Judge Dorion (at p. 113):

[translation] At the time the offer of sale R‑1 was signed, the City was aware of the title problems of [the appellant], who informed its representative, Mr. Paré. In spite of this, on June 2 following, the City passed its resolution R‑5 accepting this offer and making the existence of the contract of sale and payment of the price subject to the preparation of a notarial deed.

The Tribunal was also of the view that no concessions on rights or claims were made by any party, and, since this element of a transaction was lacking as well, it concluded that the offer of sale was a pure and simple agreement between the parties, independent of any litigation and thus not a transaction.

Assuming, however, that there was a transaction or an agreement between the parties, the Tribunal then asked itself whether the City had renounced its rights by instituting expropriation proceedings. It concluded that it did for the following reasons (at p. 115):

[translation] How can the expropriating party now claim that the Tribunal has no jurisdiction to fix the expropriation indemnity between it and the expropriated party, when it has itself instituted the expropriation proceeding, alleging an offer of $500,000 and its refusal by the expropriated party, and without its allegations the expropriation proceeding could not have been undertaken. How can it now ask, as it is doing in its motion, for the Tribunal to rule that it has no jurisdiction to fix an indemnity on the transaction concluded between the parties, when it has renounced this transaction, which in any case has not been proven, by instituting the expropriation proceedings, and when it has consented to the granting by the Superior Court of the motion to refer the matter to the Tribunal so it may fix the indemnity. [First and second emphasis added; third emphasis in original.]

The Tribunal also noted that, although the appellant was, before the institution of proceedings in expropriation, willing to execute the offer of sale, it was her inability to give clear title to the property that led to the City's decision not to pursue the offer of sale but, rather, to expropriate. As put by Judge Dorion (at p. 115):

[translation] It [the City] renounced making payment of the agreed sum of $500,000 upon signature of this notarial deed, as provided, once again, in Exhibit R‑1 [the offer of sale]. As to [the appellant], by following the expropriating party in the path of expropriation, she waived the right to require payment of the agreed sum of $500,000 for the sale of her property by mutual consent.

The parties consequently find themselves back in the same position as before the offer of sale, not only with regard to the giving of title but also with regard to the indemnity to be paid to the expropriated party.

Accordingly, the Tribunal set the indemnity to be paid by the City to the appellant at $1,714,936 and awarded an additional indemnity based on the total award, calculated on the difference between the legal rate of interest and that fixed according to s. 28 of the Act respecting the Ministère du Revenu, R.S.Q., c. M-31. In so doing, the Tribunal took into account, among other things, the City's initial low offer and Paré's harassment and misleading representations that other landowners were accepting $0.10/ sq. ft., while fully aware of the market value of $0.35/ sq. ft., as then established by the City's own evaluators.

Superior Court (Vaillancourt J.)

As required by s. 68 of the Act, the Superior Court did homologate the decision of the Expropriation Tribunal.

Court of Appeal (1988), 30 Q.A.C. 168 (Jacques and Tourigny JJ.A. and Meyer J. (ad hoc))

As contemplated in s. 32 of the Act, the City appealed the Expropriation Tribunal's decision to the Quebec Court of Appeal, which allowed the appeal. The Court held that the parties had agreed as to the purchase price. It further held that the City resorted to the expropriation mechanism solely to clarify the title, with the result that the Expropriation Tribunal had to take into account such an agreement. In this regard, it held (at pp. 170-71):

[translation] Whether this is a transaction or a contract between the parties, an agreement was made between them as to the amount to be paid.

That leaves expropriation, as a remedy open to the City. Moreover, according to the evidence it was counsel for Mrs. Picotte [the appellant] who suggested this solution. While the City took the initiative of expropriation proceedings, it nonetheless stated in paragraph 8 of its notice that the purpose of the proceeding was to obtain possession of the immovable property as quickly as possible and that this proceeding "is undertaken without prejudice to its rights and remedies resulting from any deed or agreement already concluded with the expropriated party".

In such a context, does the notice of expropriation have the effect of completely overriding any agreement concluded between the parties? With respect for the contrary view, I do not think so. By alleging the existence of a binding agreement and by expropriating without prejudice to its rights, the City was simply exercising the only remedy available to it to give effect to the agreement, to rapidly take possession of the land required for the outdoor recreation area and to clarify the title.

I therefore conclude that, in these circumstances, the parties were agreed on the amount at issue and the Expropriation Tribunal should have taken this agreement and the special circumstances surrounding the title into account.

The Court of Appeal did not pronounce on the issue of the additional indemnity, given its conclusion as to the existence of a binding agreement. It expressed the view, however, that such additional indemnity, when granted, could only be calculated on the difference between the provisional indemnity and the final award.

Analysis

Central to this case is the question of whether there was a transaction or agreement between the parties regarding the indemnity in the event of expropriation, since, in the absence of such agreement, the award as to the value of the land made by the Expropriation Tribunal is not in dispute. This question was the focus of both the Expropriation Tribunal order and the Court of Appeal judgment. Should it be found that no such agreement or transaction exists, the award stands.

Before discussing this issue, it may be appropriate, at the outset, to set out the legislative framework which governs this case. The functions and powers of the Expropriation Tribunal (now the Expropriation Division of the Court of Quebec) were spelled out in the Act, as it read at the time:

19. The principal function of the tribunal shall be to fix the amount of the indemnities arising from the establishment of reserves for public purposes and the expropriation of immoveables or immoveable real rights.

The tribunal shall also exercise the other powers conferred upon it by law. [Emphasis added.]

20. The tribunal shall have all the powers necessary to exercise its jurisdiction and it may in particular make any order it considers appropriate to safeguard the rights of interested parties. It shall determine the costs in every matter that it is called upon to decide.

Other powers include the fixing of the indemnity and the power to grant an additional indemnity:

68. The tribunal shall fix the amount of the final indemnity and adjudicate as to costs by a decision giving the reasons therefor, and must send a copy forthwith to the prothonotary.

Where the amount of the expropriation indemnity is less than the amount of the provisional indemnity, the tribunal shall order the restitution of the difference.

There may be added to the amount so awarded an indemnity computed by applying to such amount, from the date of taking possession of the expropriated property or from the date of the judgment homologating the order, whichever is earlier, a percentage equal to the excess of the rate of interest fixed under section 28 of the Act respecting the Ministère du Revenu (chapter M-31) over the legal rate of interest.

The order shall be homologated by the Superior Court, at the request of either party.

The role of the Expropriation Tribunal is perhaps best described by Montgomery J.A., in D. Dupéré Inc. v. Procureur général du Québec, C.A. Québec, No. 200-09-000397-74, September 1, 1977, at p. 1:

The duty of the Tribunal was then to fix the indemnity in accordance with section 57 of the Act. . . .

The Tribunal in such matters has a double responsibility: to avoid injustice to the expropriated party and to ensure that the public does not suffer by the payment of excessive indemnities. It was not, in my opinion, bound by the opinions of experts or by unaccepted offers.

It may also be appropriate to recall the principles which must guide appellate courts in such matters. The leading case is Cité de Ste-Foy v. Société Immobilière Enic Inc., 1966 CanLII 41 (CSC), [1967] S.C.R. 121, which dealt with an appeal from a decision of the predecessor of the Expropriation Tribunal, the Public Service Board. The Court had this to say, at p. 126:

[translation] In general it is the Board which fixes the indemnity in all cases of expropriation in the province of Quebec, unless otherwise specified by particular legislation. I consider that, in conferring this arbitral jurisdiction on the Board, the legislature recognized the expertise, skill and special experience of its members and intended these special qualifications to be used and put into effect in exercising this arbitral jurisdiction.

In allowing the appeal and reinstating the decision of the Board, the court noted, at p. 128:

[translation] [I]t has not been shown that the Public Service Board erred in law or made any manifest error of fact.

A long line of Quebec jurisprudence had already provided guidelines regarding the ability of appellate courts to intervene in decisions of expropriation tribunals. Bissonnette J.A., in Bellerose v. Talbot, [1957] Que. Q.B. 637 (aff'd 1958 CanLII 39 (SCC), [1958] S.C.R. 261), at p. 644, referred to his reasons in Isabelle v. Procureur général du Québec, [1953] Que. Q.B. 747n:

[translation] Before considering the claim of the expropriated party, it seems worth noting that the Court of Appeal hesitates to overturn the award of the Public Service Board and that its intervention is only justified where there has been an error of law or an application of an incorrect rule or unlawful or illegitimate principle, or an assessment of the evidence so mistaken that it must necessarily lead to an injustice. [Emphasis added.]

More recently, Turgeon J.A. reiterated the same caveat, in Ministre des Transports du Québec v. Texaco Canada Ltée, C.A. Québec, No. 200-09-000765-795, February 15, 1983 (summarized in J.E. 83-389), at pp. 6-7:

[translation] This Court has often held that it should not interfere with the Expropriation Tribunal's assessment of the evidence, unless there is an error of law or an application of an incorrect rule or unlawful principle, or an assessment of the evidence so mistaken that it must necessarily lead to an injustice.

(For earlier decisions, see also Robitaille v. Cité de Québec, [1948] Que. K.B. 787; Amusement Realty Corp. v. Minister of Roads of Quebec, [1949] Que. K.B. 562n; Bellerose v. Talbot, supra; and Yves Germain Inc. v. Ministre de la Voirie du Québec, [1974] C.A. 184. For more recent decisions, see Labbé v. Ministre des Transports du Québec, [1980] C.A. 518, at p. 519; Lemieux v. Ville de Granby, [1980] R.P. 285 (C.A.), at p. 286; Procureur général du Québec v. Marois, C.A. Québec, No. 200-09-000272-796, March 7, 1983 (summarized in J.E. 83-475), at p. 5; Société d'aménagement de l'Outaouais v. Dumouchel, [1984] C.A. 571, at pp. 571-72; and Immeubles P.J. Ltée v. Laval (Ville de), C.A. Montréal, No. 500-09-001185-792, May 7, 1985 (summarized in J.E. 85-676), at p. 4.)

Professor Giroux, "L'expropriation en droit québécois" (1980), 10 R.D.U.S. 629, makes the following observations, at p. 647:

[translation] The Court of Appeal has always exercised restraint in its interventions as an appellate tribunal in the decisions of the Expropriation Tribunal and the Public Service Board which it succeeded. The reason for this judicial restraint is that the Court of Appeal has recognized that, in making the members of the Tribunal responsible for fixing the indemnity to which an expropriated party may be entitled, the legislator intended that expropriation cases should be heard by people who have technical knowledge and specialized experience. For this reason the Tribunal's decisions on expropriation matters should only be altered in cases where the indemnity fixed is manifestly insufficient or excessive or when the decision is mistaken as to a principle of law. [References omitted.] [Emphasis added.]

In the present instance, the Expropriation Tribunal, after a full hearing of the parties and their witnesses, concluded that no prior transaction or agreement was entered into between the parties as to the indemnity upon expropriation. In order to reverse these conclusions of fact, the Court of Appeal had to demonstrate that the Tribunal had either grossly misconstrued the evidence so as to constitute an injustice, erred in law, or misapplied the law.

It is in this light that I intend to review the conclusions of both the Expropriation Tribunal and the Court of Appeal on the question of whether the parties entered into a transaction or an agreement regarding the indemnity to be paid by the City for the land to be expropriated. I point out immediately that we are not concerned here with the price agreed upon in the event of a sale by mutual agreement, since no such sale occurred.

It is not contested, in effect, that the parties entered into an agreement for the sale of the appellant's property, before the proceedings in expropriation were taken by the City. The offer of sale was duly signed by the appellant and accepted by the City within the prescribed time. Nor is it contested that, at the time the offer was made, both parties were considering the City's acquisition by mutual agreement and that only later on, due to the impossibility for the appellant to deliver clear title to the property, were expropriation proceedings commenced. The question is whether, on the facts of this case, the price of $500,000, agreed upon under a sale by mutual agreement, was, as the City contends, also binding between the parties in the event of expropriation.

The City makes two alternative submissions in that regard: first, that the parties entered into a transaction and second, that, absent a transaction, there was an agreement which the Expropriation Tribunal was not entitled to set aside. First, was there a transaction?

1. Transaction

Article 1918 C.C.L.C. defines a transaction as follows:

1918. Transaction is a contract by which the parties terminate a lawsuit already begun, or prevent future litigation by means of concessions or reservations made by one or both of them.

In the present case, there was no litigation between the parties in January 1975 when the offer of sale was signed. The City, therefore, argues that the undertaking at that time was to prevent future litigation, i.e. expropriation. The City relies on the evidence of Paré and that of the appellant to show that both parties knew that, if the offer to sell was not successful, the City would expropriate the land. This, in the City's opinion, constitutes the prevention of potential litigation and binds the appellant to the value as established in the offer of sale.

A transaction, however, must resolve litigious questions between parties at the time the contract is made. This is discussed by Mignault, Le droit civil canadien (1909), vol. 8, at pp. 302-3:

[translation] Commentators thus suggest that a transaction should be defined as a contract by which the parties make mutual sacrifices to resolve a question which seems litigious to them. [Emphasis added.]

In my view, in order for there to be a "litigious" question between the parties, there must be some juridical relationship between them which is in dispute, i.e. a contentious legal question that a court could decide. At the time of the agreement in the present appeal, there was no such relationship. The City had then no power to expropriate the appellant's property: the resolution that gave the City that power had not been passed at the time the offer to sell was signed. While Paré may have threatened possible expropriation, his mandate was only to attempt to purchase the property. There was thus no dispute, no litigious question, nor court proceedings between the parties that were susceptible of being decided by the courts at the time the offer to sell was signed. Judge Dorion was right, in my view, when he concluded (at p. 112):

[translation] Neither the facts alleged in the motion nor those entered in evidence establish the first element, which is that the transaction terminate a lawsuit already begun or prevent future litigation. It is apparent from the record that there was no lawsuit between [the City] and [the appellant] on the date of document R‑1 [the offer of sale] or the acceptance by the City.

And at pp. 112-13:

[translation] When, between September 1974 and January 30, 1975, the date on which R‑1 was signed, Roméo Paré, representing [the City], met on at least ten occasions with [the appellant], this was in no way because of the existence of a problem between the two parties and for the purpose of preventing future litigation between them. At that point there was no legal relationship between [the City and the appellant]. Exhibit R‑1 [the offer of sale] terminated no legal relationship between the two, nor did R‑5, the acceptance made later by the City, but only gave rise to a legal situation which had absolutely no existence before. [Emphasis added.]

It is also important to note the text of art. 1918 C.C.L.C. in so far as it concerns "concessions or reservations". The expression "by means of concessions or reservations made by one or both of them" is modified by the expression which precedes it; i.e. "terminate a lawsuit already begun, or prevent future litigation". The concessions or reservations must, therefore, be made in regard to the disputed rights which are the subject of the transaction. Here, there were no concessions by either party relating to their respective rights. The appellant agreed to sell her property and the City agreed to buy it, but there were no concessions or reservations to prevent future litigation, as is required by the very terms of art. 1918 C.C.L.C. As Judge Dorion concluded, at p. 113:

[translation] Nothing in Exhibit R‑1 [the offer of sale] or in Exhibit R‑5 [the City's acceptance of the offer] establishes that there were claims or rights between the two parties on which one of them made concessions or reservations.

The City submits that the negotiations as to the price of the property constitute concessions or reservations. Kaufman J.A., in Sylvestre v. Procureur général du Québec, [1980] C.A. 508, discussed the term "concessions" and correctly concluded that it must relate to the litigious rights that are the subject of the transaction, at p. 510:

I stress the words "concessions or reservations" for that, in my view, is precisely what happened: the Appellant's father was prepared to prevent future litigation by accepting 26 000$, and the Respondent agreed to pay this amount for the land . . . [Emphasis added.]

As mentioned above, there is no evidence to suggest that the price in the offer of sale was "to prevent future litigation". On the one hand, the City did not have the power to expropriate the appellant's land at the time the offer of sale was signed by the appellant, and, on the other, no other evidence was introduced to indicate that negotiations were undertaken and agreement reached in that connection.

No one contests the ability of parties in expropriation proceedings to enter into a transaction once proceedings have been instituted or even before (by way of example, see Sylvestre, supra; Club athlétique Champlain Ltée v. Ministre de la Voirie du Québec, [1979] C.A. 161; Louis Donolo Inc. v. Ville de Laval, [1979] R.P. 17 (C.A.); and Allard v. Ville de Québec, [1978] T.E. 463). On the facts of the present case, however, the evidence of such a transaction is simply nonexistent. I fully agree with the conclusion reached by the Expropriation Tribunal that there was no such transaction. The Expropriation Tribunal so found, on a careful analysis of the facts of the case, and in reference to proper principles of law. I can, therefore, find no error which could justify the overturning of its conclusion on this aspect of the case. The Court of Appeal did not examine this question in any depth and did not point to any error on the part of the Expropriation Tribunal, because it was of the view that (at p. 170):

[translation] Whether this is a transaction or a contract between the parties, an agreement was made between them as to the amount to be paid.

This leads us to the examination of the second proposition advanced by the City, namely that the parties had entered into a binding agreement as to the amount to be paid by the City in the event of expropriation.

2. Agreement

The City submits that, even if the offer of sale did not constitute a transaction, there was sufficient evidence to find that the parties had agreed on the price to be paid upon expropriation; on this view, the sole purpose of the expropriation proceedings was to clarify title, not to set the indemnity. The City advances three arguments in support of this proposition: first, that there was a verbal agreement, prior or subsequent to the signing of the offer of sale, as to the price to be paid upon expropriation; second, that the letter from the appellant's lawyer to the City's notary, suggesting expropriation, supports its contention and third, that the notice of expropriation, and, in particular, the reserve in paragraph 8, confirms such an agreement.

The Expropriation Tribunal, having examined the facts of this case in the context of the motion alleging the existence of a transaction, did not specifically address the issue of whether there was an agreement. The motion before it, of course, did not require such a finding. It seems that the City took a different position on appeal, as it did before us, and relied on the alleged agreement rather than on a transaction. The Court of Appeal found in favour of the City on that ground, basing its conclusion on the two following facts: the letter from the appellant's lawyer, and the reserve, in the notice of expropriation, that the proceedings were [translation] "without prejudice to its rights and remedies resulting from any deed or agreement already concluded with the expropriated party". In so doing, the Court of Appeal implicitly found that the Expropriation Tribunal erred in fixing an indemnity superior to the agreed price. The appellant proposes that the Court of Appeal was in error, while the City reiterates before us the arguments advanced before the Court of Appeal, arguments that I will now examine.

To start with, the offer of sale itself makes no mention whatsoever of a prior verbal agreement regarding expropriation, at that time or prior to the signing of the offer of sale. It is in standard form, and entitled "Offre de vente". The appellant simply promises to sell her property to the City, free of all charges, for a set price, should the City accept it. None of the conditions of the offer mention that expropriation proceedings were contemplated nor were to be resorted to in order to clarify title should the appellant vendor not be able to provide it, let alone mention the amount to be paid upon such expropriation. Had there been such an agreement, given that both parties were aware of the title problems, the offer of sale would have provided an excellent opportunity either to discuss or to mention this subsidiary agreement.

The acceptance of the offer of sale on the part of the City again provides no indication of the alleged agreement, and its resolution authorizing the acceptance of the offer makes no mention of it but simply reads:

[translation] To accept the offer of M.J.A. Lambert‑Picotte [the appellant] dated January 30, 1975 for the sale to the City of Longueuil of lots . . . for the price and sum of $500,000.00, the said sum to be payable in cash upon signature of the deed of sale.

In fact, the resolution specifically refers to a sale of the land at a price of $500,000, to be paid at the signature of the deed of sale, and not at any other time, such as upon expropriation. Despite the fact that there was no written agreement regarding the possibility of expropriation and that no mention to that effect was made in the offer, as evidence that there was such an agreement, the City relies on the testimony of its own representative, Paré, in particular, the following passage:

[translation]

Q.Now, when you mentioned a moment ago that there had been some question of title, what did Mrs. Picotte [the appellant] tell you?

A.That's when she told me what had happened twenty‑five (25) years before, how there was someone who had sold the land for her and was not entitled to do so. She described most of it to me, it was back on appeal, to which I said "If that's the problem, if you agree with our agreement, you can sign, I'll make a report to the Council for it to hear me", so that the legal department could take the necessary steps to go ahead with the expropriation and clear up the title.

Q.What was her reaction?

A.She said: "I'll talk to my lawyer, Mr. Boissonneault".

This testimony, however, was directly contradicted by the appellant:

[translation]

Q.Did you mention to Mr. Paré the problems you were having -- what you just said in court?

A.Yes, I mentioned to him that I was unable to sell, that I was not the real owner because, since it was in court, the real owner had to be determined in court.

Q.Did Mr. Paré say to you: if we agree on a price we will arrange matters to clarify the title and resolve the doubts about it?

A.No.

Q.He never said it was important to . . . (interrupted)

A. No. [Emphasis added.]

Although the Expropriation Tribunal was mainly concerned with the issue of transaction, it heard much evidence relating to the alleged agreement, some of it quite contradictory. It is on this same evidence that the City relies in attempting to prove the alleged agreement. Having reviewed such testimonial evidence in the light of the agreement argument and without pronouncing on the credibility of witnesses (the Expropriation Tribunal did not make an express finding of credibility), the evidence as a whole does not support the City's claim on a balance of probabilities, an onus it had to discharge in order to succeed.

Besides the silence of the offer of sale itself and the inconclusive testimonial evidence, nothing in the written material filed in the record supports the City's contention that prior to the offer of sale the parties even discussed, let alone agreed to, either the value of the land for purposes of expropriation or to the indemnity to be paid by the City in case of expropriation. This, in my view, puts this aspect of the City's argument to rest.

Absent such prior agreement, the City submits that there was a subsequent agreement to the same effect. It relies on two facts: first, on the appellant's lawyer's letter to the City's notary, which I reproduced earlier, and second, on the notice of expropriation. I will first deal with the appellant's lawyer's letter. While proposing expropriation as a way of acquiring clear title, such letter, the City submits, also supports its contention that the price agreed upon previously would also govern in the event of expropriation proceedings. The City argues, in its factum, at p. 13, that:

[translation] It is thus clear that the intention of the parties in proceeding by expropriation was to clarify the title, at a time when an agreement had been reached as to the amount.

Although the Expropriation Tribunal did not analyze the letter in the context of a possible agreement, it did discuss it (at p. 114):

[translation] Neither does the subsequent letter from the lawyer for Mrs. Picotte [the appellant] of July 23, 1975 . . . constitute a refusal by [the appellant] to give effect to her offer of sale.

The Court of Appeal, for its part, attached great significance to it (at p. 170):

[translation] That leaves expropriation, as a remedy open to the City. Moreover, according to the evidence it was counsel for Mrs. Picotte [the appellant] who suggested this solution.

The Court of Appeal inferred, from the text of the letter, that the parties had agreed on the indemnity of $500,000 in the event of expropriation. In my view, on the basis of that letter alone, no such inference can be drawn. Coupled with the whole of the evidence, this inference cannot stand.

While that letter makes it clear that the appellant's lawyer suggested that the City could proceed by way of expropriation to obtain clear title, that letter, in my view, suggests nothing else. In particular, the letter does not allude, in any form or manner, to an agreement as to the price to be paid, should the City choose the expropriation route. In the City's view, the mere initiative taken in suggesting expropriation proceedings confirms the agreement between the parties as to the price of $500,000. It is, in my view, totally irrelevant, absent other indicia of the will of the parties, that the lawyer suggested expropriation proceedings. These were already contemplated by the City at the outset and, then later, when such proceedings were specifically authorized by resolution. The resolution did not refer to any such agreement and contains no restriction as to the purpose of expropriation, for example, to clarify title only. Further, the City was not bound by such a letter and was well aware that there was no other way to obtain clear title within a relatively short period of time. The City did not seem willing to wait further before taking possession of the property, which was in fact its main interest in proceeding to expropriation.

While the letter in question may well have suggested that, had the appellant been able to deliver clear title, she would have been willing to abide by the agreement to sell by mutual consent, one may equally speculate whether, had the appellant's title been clear, she would have entered into the agreement at all. According to the evidence as found by the Expropriation Tribunal, the appellant signed, on the one hand due to the insistence of Paré, and on the other, on the advice of her lawyer that the offer of sale was null since she could not give clear title as stipulated in the offer. Given the discrepancy of more than one million dollars between the City's offer and the assessed value of the land at the time, as well as the misrepresentation by Paré in that respect (an express finding of the Expropriation Tribunal), it would be pure speculation to assume that an agreement for a sale price of $500,000 would ever have been entered into between the parties had the appellant's title been clear or, if so, whether such an agreement would have withstood judicial scrutiny. Given that context, the lawyer's suggestion regarding expropriation cannot be taken as meaning anything other than a suggested solution for the acquisition of the property by the City.

The appellant's counsel testified before the Expropriation Tribunal precisely on that issue:

[translation]

A.It [the letter from the City's notary regarding title problems] said that the notary wished to examine the title. Additionally, you will see that I gave -- I wrote the notary that it was not worth examining the title, it is easy to understand, Mrs. Lambert had proceedings in the Court of Appeal and as long as the Court of Appeal had not made a ruling, there was no use thinking about doing anything with Mrs. Lambert's land. [Emphasis added.]

And:

[translation]

A.I said to the notary: "There have been two times when the Superior Court by cancellation" -- that's what I said to Mr. Paré -- "to remove the promise of sale and the transfer of rights [of the third party contesting ownership], there has to be a cancellation in the Superior Court". It was then he said: "We have good lawyers", I knew he could not bypass the Court of Appeal, I said: "Proceed by cancellation in the Superior Court or by expropriation, let the City discharge its responsibilities, let it make its choice, but we cannot proceed as you suggest in your letter of July 16".

Q. One can't give you clear title, if you want clear title?

A.We cannot make a transaction with you, do business with you, that's what I had in mind.

A.So, you can see in this legal opinion what I am once again repeating, that we cannot do business. [Emphasis added.]

From this, I take it that, according to the appellant's counsel, from the beginning of the whole saga, there was no way an agreement could have been entered into between the parties and there was no point in pursuing that route. The whole affair was terminated as far as he was concerned.

It is difficult, if not impossible, to conclude, in light of the appellant's counsel's testimony and the whole of the evidence, that the letter in question can be read as an agreement as to the price to be paid by the City upon expropriation. Had this been the intent of the parties, nothing prevented them from entering into a further agreement to that effect prior to the expropriation or, for that matter, at any stage after the expropriation proceedings had been instituted.

In addition to that letter, the City relies on paragraph 8 of its notice of expropriation, which is worth reproducing here again:

[translation] The object of the present proceeding by the expropriating party is to obtain possession of the premises and clear title as quickly as possible, and it is undertaken without prejudice to its rights and remedies resulting from any deed or agreement already concluded with the expropriated party . . . [Emphasis added.]

Such a vague caveat as [translation] "without prejudice to its rights . . ." does not, in my opinion, by itself, establish that there was an agreement as to the indemnity. There is no specific reference to a particular agreement, no detail as to date, content, and most importantly, price. One would have expected that, in the normal course of things, a party claiming such an agreement would, at a bare minimum, explicitly allege the existence of that agreement, if not the specifics of the agreement. Not only did the City not refer to a specific agreement but, in its motion for prior possession, it specifically stated that there was no such agreement:

[translation] [T]he expropriating party offered the sum of $500,000.00 as an indemnity and the expropriated party has not yet accepted this offer; [Emphasis added.]

This judicial admission was never retracted. How, then, can the City now claim that the appellant had agreed, prior to the expropriation proceedings, to an indemnity of $500,000? In that context, the mere assertion, in the notice of expropriation, of [translation] "without prejudice . . ." smacks rather of the usual caution that lawyers insert in proceedings as a matter of course, and cannot, here, particularly in view of the subsequent events revealed by the evidence, be given the significance the City and the Court of Appeal attached to it.

In that respect, the appellant points out that the City renounced any right it might have claimed in the offer of sale by mutual consent when it instituted expropriation proceedings. The Expropriation Tribunal expressly found so (at p. 115):

[translation] It [the City] renounced making payment of the agreed sum of $500,000 upon signature of this notarial deed, as provided, once again, in Exhibit R‑1 [the offer of sale]. As to [the appellant], by following the expropriating party in the path of expropriation, she waived the right to require payment of the agreed sum of $500,000 for the sale of her property by mutual consent.

The parties consequently find themselves back in the same position as before the offer of sale, not only with regard to the giving of title but also with regard to the indemnity to be paid to the expropriated party.

The Court of Appeal disagreed in the following terms (at pp. 170-71):

[translation] While the City took the initiative of expropriation proceedings, it nonetheless stated in paragraph 8 of its notice that the purpose of the proceeding was to obtain possession of the immovable property as quickly as possible and that this proceeding "is undertaken without prejudice to its rights and remedies resulting from any deed or agreement already concluded with the expropriated party".

In such a context, does the notice of expropriation have the effect of completely overriding any agreement concluded between the parties? With respect for the contrary view, I do not think so. By alleging the existence of a binding agreement and by expropriating without prejudice to its rights, the City was simply exercising the only remedy available to it to give effect to the agreement, to rapidly take possession of the land required for the outdoor recreation area and to clarify the title.

The Court of Appeal seems to have relied on this sole piece of evidence to reverse the Expropriation Tribunal's conclusions on that point. There are, however, a number of other significant facts which had a bearing on the conclusion of the Expropriation Tribunal and which I will discuss here.

The notice of expropriation was a unilateral act on the part of the City. Whatever is alleged therein remains only the contention of one party, a contention that the other party may well not agree with. It is one thing for the City to assert that it wanted to expropriate in order to acquire [translation] "clear title" and to pretend that there was an agreement as to the indemnity; it is quite another, however, to conclude that the appellant agreed with such an affirmation. It becomes important, then, to examine what ensued, to shed light on the proper interpretation of the parties' intent, as regards that notice.

As I already mentioned, while reserving its rights to [translation] "any deed or agreement already concluded with the expropriated party", the City did not produce or refer in any detail to such an agreement. Besides, in its motion for prior possession, as already indicated, the City made particular mention of the appellant's refusal to accept the amount of $500,000 [translation] "as an indemnity", a fact that Judge Dorion did not fail to comment upon (at p. 115):

[translation] How is it reasonably possible to conclude that there can be any other legal solution [other than renunciation], when in its motion for prior possession in the expropriation proceeding the City of Longueuil mentions, in paragraph 4, that its right of expropriation is established in view of the failure by the expropriated party to contest within the time limits? In paragraph 5, it offers the sum of $500,000 as an indemnity and the expropriated party has not yet accepted this offer. In the conclusion of this motion it asks the Court to acknowledge the deposit of $500,000, "namely the amount of the indemnity offered". It should be noted that all the facts alleged in this motion are supported by the affidavit of counsel for the expropriating party, that the motion was not contested and that all the facts alleged in it are taken as proven. [First and second emphasis in original; third emphasis added.]

Further, the appellant, in February 1977, brought a motion before the Superior Court, to [translation] "withdraw the indemnity in accordance with s. 55 of the Expropriation Act", S.Q. 1973, c. 38. In this motion, the appellant specifically concluded that her request to withdraw the provisional amount offered be without prejudice to her right to claim a greater indemnity in the expropriation proceedings. If the City was intending to rely on its previous agreement as to the indemnity, an appropriate stance would have been to challenge this conclusion, allowing the withdrawal of the deposit only, under reserve of the alleged binding agreement. Instead, the motion went uncontested, with the appellant, consequently, having every reason to believe that the indemnity would be determined by the Expropriation Tribunal.

Perhaps most importantly, on August 1, 1977, the appellant moved, before the Superior Court, for the case to be referred to the Expropriation Tribunal, claiming:

[translation] 5. The expropriated party refuses to accept this offer and wishes to refer this case to the Expropriation Tribunal so the latter may fix the fair and equitable indemnity to which it is entitled; [Emphasis added.]

The motion concludes:

[translation] TO REFER this case to the Expropriation Tribunal so the latter may fix the indemnity to which the expropriated party is entitled; [Emphasis added.]

Here, the appellant unequivocally asked the Expropriation Tribunal to determine the proper value of the land, making no reference to any agreement, yet, again, the City did not oppose it. In fact, by judgment of the Superior Court, the motion was [translation] "granted by consent". I find it difficult to understand how the City could consent to a motion whose sole purpose was to have the Expropriation Tribunal determine the just value of the property, and then, four years later, claim that the parties had an agreement upon which the City intended to rely.

Finally, when the appellant filed her detailed claim, on September 26, 1977, the City did not register any protest. Nor did it make any mention of the alleged agreement when, on April 26, 1978, it filed its specific offer of $500,000 as the indemnity to be set by the Expropriation Tribunal, a fact upon which Judge Dorion comments (at p. 116):

[translation] Moreover, even three years after the expropriation file was opened, in filing its declaration of indemnity with the Tribunal on April 26, 1978, the expropriating party did not even allege that there had been a transaction, but behaved as if it were a genuine bona fide expropriating party offering an indemnity of $500,000 to be fixed by the Tribunal.

In none of the proceedings which followed the notice of expropriation was there any indication of an intention on the part of the City to rely on its alleged agreement. After choosing the path of expropriation, and travelling along it for six years without any sign of deviation, the City can hardly pretend now that an agreement was reached and that it was always its intention to rely on such agreement as to the indemnity in the event of expropriation. The reserve in the notice of expropriation, heavily relied upon by the Court of Appeal, when examined in the context of the whole of the evidence and, in particular, of the six years of expropriation proceedings, does not support its conclusion. On the contrary, it is fully supportive of the findings and conclusions of the Expropriation Tribunal.

Moreover, the City could not unilaterally change the terms of the agreement, the whole purpose of which was to acquire the property by mutual agreement. Nor can the City, which chose not to pursue the agreement, extract from it that part which suited itself, namely the very advantageous price, without the counterpart, the impossibility of obtaining clear title in that fashion. An agreement cannot be selectively enforced in that way. There is no indication whatsoever that the appellant agreed to modify the agreement of sale by mutual consent in that fashion. Given the above, the arguments advanced by the City in support of its allegations both as to the transaction and the agreement must fail.

On the whole, therefore, I conclude that the Court of Appeal was wrong in reversing the conclusions of fact of the Expropriation Tribunal since there was no error of law nor misconstruction of the evidence on its part. Accordingly, since the City could not establish that either a transaction or an agreement was entered into between the parties as to the indemnity in the event of expropriation of the appellant's property, the Expropriation Tribunal's award as to the value of the land expropriated, the calculation of which is not in debate before us, must stand. The question of whether, had such an agreement existed, the Expropriation Tribunal would have been bound by it and to what extent, must be left for another day. The subsidiary issue of the additional indemnity must now be examined.

Additional Indemnity

The authority of the Expropriation Tribunal to award an additional indemnity is found in s. 68 of the Act, the relevant parts of which I reproduce here for ease of reference:

68. The tribunal shall fix the amount of the final indemnity and adjudicate as to costs by a decision giving the reasons therefor, and must send a copy forthwith to the prothonotary.

There may be added to the amount so awarded an indemnity computed by applying to such amount, from the date of taking possession of the expropriated property or from the date of the judgment homologating the order, whichever is earlier, a percentage equal to the excess of the rate of interest fixed under section 28 of the Act respecting the Ministère du Revenu (chapter M-31) over the legal rate of interest. [Emphasis added.]

As I noted earlier, given its conclusion on the main issue, the Court of Appeal did not discuss the propriety, in this case, of awarding an additional indemnity to the appellant. It focussed only on the issue of calculation of such additional indemnity (at p. 170):

[translation] It would thus be necessary to take into account the provisional indemnity, if the additional indemnity were to be awarded.

There are two aspects of this issue which must be examined. First, was the Expropriation Tribunal correct in its decision to award an additional indemnity to the appellant? Second, what is the appropriate method of calculating the additional indemnity?

1. The granting of the additional indemnity

The decision to award an additional indemnity by the Expropriation Tribunal is discretionary. The use of the word "may", in s. 68 of the Act, is the clearest indication of that discretion. This issue was directly addressed by Proulx J.A., in the recent decision of Anjou (Town) v. Krum (1990), 44 L.C.R. 266, 38 Q.A.C. 1, speaking for a unanimous court, at p. 273 L.C.R.:

[translation] . . . the expropriation tribunal enjoys a discretion which the Court of Appeal can review only if the reasons for a decision are frivolous or if they are not supported by the evidence . . . .

Monet J.A., in Ville de Montréal v. Lerner, [1979] C.A. 152, made the same point, at p. 160:

[translation] The decisions of this Court have established that the trial judge has a discretionary power in the matter [the granting of an additional indemnity].

And, as Judge Dorion commented, in Corporation de la ville de Princeville v. Houle, [1985] T.E. 186, at p. 194:

[translation] Once again, this discretion as to whether or not the additional indemnity should be granted has always been recognized. It results from the very wording of the Act, where the second paragraph of s. 68 in 1981 read: "There may be added . . .".

I agree that the text is clear, the jurisprudence consistent and, therefore, I see no need to elaborate further.

Although s. 68 of the Act does not articulate the basis upon which such discretion must be exercised, the views expressed by Dorion and Savard, Loi commentée de l'expropriation du Québec (1979), have never been challenged. They set out the main criteria which must guide the Tribunal in the exercise of its discretion, at p. 220:

[translation] Though the Tribunal may award this indemnity ex officio, it is not awarded automatically: there must have been an undue delay, negligence by the expropriating party in completing the proceedings or an insufficient offer bearing no reasonable relation to the indemnity fixed.

The above position has been consistently upheld by the Quebec Court of Appeal (see Commission scolaire de la Jeune Lorette v. Fédération des Caisses populaires Desjardins de Québec, C.A. Québec, No. 200-09-000354-834, August 28, 1985, at p. 4; and Anjou (Town) v. Krum, supra), and has been followed in numerous decisions of the Expropriation Tribunal. The most extensive review of the issue, albeit on the occasion of the calculation of the additional indemnity, has been made by Judge Dorion in Corporation de la ville de Princeville, supra, where at p. 199, he awarded an additional indemnity on the basis that:

[translation] [T]he difference between the provisional and the final indemnities is such that there was a flagrant abuse by the expropriating party in taking possession of this property on payment of such a small indemnity.

Applying those criteria to the present case, the Tribunal found that the difference between the provisional indemnity of $500,000 and the final indemnity of $1,714,936 (the provisional indemnity was less than 30 percent of the final indemnity and was also contrary to s. 53.11 of the Act which mandates that the provisional indemnity be at least 70 percent of the municipal assessment of the property or the expropriating party's offer, whichever is greater) was so large as to justify awarding an additional indemnity. I would note, in this regard, the decision of the Court of Appeal in Cemp Investments Ltd. v. Lakeshore School Board, [1985] C.A. 584, where Nichols J.A., speaking for a unanimous court, concluded at p. 593:

[translation] A 60 per cent difference between the amount deposited and the indemnity is prima facie unreasonable.

In addition, Judge Dorion found, at p. 114, on the facts of the present case, that:

[translation] . . . Paré falsely represented on several occasions that all the adjoining owners had accepted 10¢ a sq. ft., which was absolutely untrue.

He also concluded:

[translation] It was after real harassment by the City's representative, Mr. Paré, and on the basis of very bad advice from her lawyer . . . that she [the appellant] resigned herself to signing this offer of sale . . . [Emphasis added.]

The City contends that no additional indemnity should have been granted because there was a serious legal issue as to the value of the property and its worth as evidenced in the alleged agreement. Given the findings of fact made in that respect and the amount of the indemnity set by Judge Dorion as representing the real value of the property, I see no reason to interfere with his conclusion that (at p. 123):

[translation] [T]he expropriating party undoubtedly sought to obtain the property of the expropriated party on payment of a trifling indemnity, which was clearly insufficient and in no way corresponded to the actual value of the immovable property. For this reason, and for the reason that the offer was trifling and insufficient and possession was granted on payment of an excessively low provisional indemnity, the Tribunal considers that it must award this additional indemnity here.

2. The calculation of the additional indemnity

This issue seems to have generated some controversy, at least between the Expropriation Tribunal and a recent decision of the Quebec Court of Appeal, and thus merits some comments here.

I agree with Judge Dorion's view, for the reasons he expressed at length in Corporation de la ville de Princeville, supra, at p. 197, that the additional indemnity is a measure of damages, not of interest. As put in Dorion and Savard, op. cit., at p. 219:

[translation] There seems to us to be no doubt that in the case of the last paragraph of s. 67 [now s. 68], as in that of art. 1056(c) of the Civil Code [of Lower Canada], this interest is an indemnity.

As noted in the above passage, s. 68 of the Act bears some similarity to art. 1056c C.C.L.C. The latter provision was discussed, by Chouinard J., in Travelers Insurance Co. of Canada v. Corriveau, 1982 CanLII 222 (SCC), [1982] 2 S.C.R. 866, at p. 871:

What is referred to as interest is more precisely damages due to delay, which the legislator chose to express in terms of a percentage of the capital amount awarded, computed on a yearly basis. It should be added that these damages are awarded for the delay from the time the action was instituted until judgment is rendered. Interest on the judgment itself, once it is rendered, is not at issue here.

Given that qualification, the following issue concerning the calculation of the additional indemnity arises: is the Expropriation Tribunal bound to award the additional indemnity on the total amount of the final indemnity or does it have the discretion to deduct, from the final indemnity, sums already paid to the expropriated party?

In the present case, Judge Dorion awarded the additional indemnity on the total indemnity, without deduction of the sums already paid to the expropriated party. The same issue arose in Corporation de la ville de Princeville, supra, where Judge Dorion conducted a thorough examination of the question, concluding, on the basis of a textual analysis, that the text of s. 68 of the Act mandated such a conclusion (see p. 198). Although, on the facts of that case, Judge Dorion may have been correct in concluding that there should have been no deduction, I cannot agree with his conclusion that s. 68 of the Act mandates that the additional indemnity be awarded on the total indemnity and thus that no deduction should be allowed to take into account the provisional indemnity paid.

In this regard, the decision of the Quebec Court of Appeal in Commission scolaire de la Jeune Lorette, supra, is apposite. In that case, the Expropriation Tribunal, like Judge Dorion in Corporation de la ville de Princeville, supra, awarded the additional indemnity on the total indemnity, on the basis that it had no discretion on the matter, concluding:

[translation] In the opinion of the Tribunal, there is no basis for deducting from this final indemnity the advances paid by the expropriating party in order to arrive at a calculation of the additional indemnity in accordance with s. 68 of the Expropriation Act. The Tribunal considers that it is not its function to amend the Act but that it must interpret it as enacted by the legislator.

The Court of Appeal disagreed with the Expropriation Tribunal's views on this issue. They held that the decision whether to deduct the sums already paid by the expropriating party from the final indemnity was discretionary, not mandatory. After a thorough analysis of the question, Vallerand J.A., with whom I concurred, concluded, at p. 8:

[translation] . . . I therefore conclude that the Tribunal is entitled to deduct the amount paid as a provisional indemnity when the time comes to calculate the additional indemnity. Having said that, the Court must now exercise the discretionary power which in the present case the Tribunal said it had no power to exercise. In light of all the circumstances and special features of the case, I consider that there are grounds in this case for deducting the payment already made. [Emphasis added.]

There seem to be conflicting decisions following that judgment. Some cases hold that there is no discretion regarding the calculation of the additional indemnity, concluding either that sums already paid must be deducted (see Ville de Laval v. Entreprises Lagacé Inc., T.E., No. 34-001811-76M, January 16, 1986, at p. 32), or that such sums cannot be deducted (see Corporation de la ville de Princeville, supra). It is difficult to fathom the source of this confusion, since the Court of Appeal in Commission scolaire de la Jeune Lorette, supra, made it clear that the decision to deduct sums already paid from the final indemnity was a discretionary one. I am still of the opinion that this view is the proper one.

The additional indemnity, as a measure of damages, can be imposed taking into account many factors besides delay. In particular, the conduct of the expropriating party may often be relevant. When the sole "damage" to be compensated is excessive delay on the part of the expropriating party, then it would be nonsensical to allow the additional indemnity on the total compensation awarded, since the expropriated party, who had earlier benefited by withdrawing the provisional indemnity offered, could use those funds throughout the years in which the expropriation proceedings took place. On the other hand, when additional indemnities are granted for factors which are not related to delay, it may make little sense to deduct sums already paid from the final indemnity when calculating the additional indemnity. A case in point arose in Restaurants et Motels Châtelaine International Ltée v. Procureur général du Québec, [1980] C.A. 511. In analyzing precisely that issue, Turgeon J.A., speaking for the court, based the award of the additional indemnity on the total indemnity, without any deduction of sums paid, because, at p. 517:

[translation] It must be borne in mind that the appellant expropriated party was deprived of its business on boulevard Laurier. As a growing chain, its location on boulevard Laurier gave it great prestige and good publicity. In losing that location it suffered a loss of prestige and publicity which is difficult to estimate and must be taken into account. In the circumstances, on the basis of s. 67 [now s. 68], I would award the appellant expropriated party the full amount of the additional indemnity claimed. [Emphasis added.]

In those circumstances, the discretion to grant the additional indemnity on the total amount awarded by the Expropriation Tribunal was well exercised. There are no exhaustive criteria, and the discretion as to the deduction must be exercised with regard to the particular circumstances of each case. In this regard, the very cogent analysis of Proulx J.A., in Anjou (Town) v. Krum, supra, commends itself. In that case, in light of actions by the city which affected the value of the expropriated party's property, Proulx J.A. confirmed the Expropriation Tribunal's decision to award the additional indemnity on the total indemnity. Addressing the issue of the calculation of the additional indemnity, Proulx J.A. concluded, at pp. 274-75 L.C.R.:

[translation] If, in principle, the additional indemnity were based on additional interest, it would seem to me to be strange to calculate interest on the amount of the instalment paid to the expropriated party since the expropriating party would then be paying interest on the amount paid to the expropriated party (in other words, the instalment) and the expropriated party would benefit at his expense. In such a case, it would be proper to deduct the provisional payment.

Instead, it is my view that an additional indemnity is a compensatory measure and that is what this court said implicitly in the decision in La Com'n Scolaire de la Jeune Lorette where it was held that "the tribunal may deduct the amount paid by way of provisional indemnity" from the total indemnity. In fact, the tribunal has the discretion to reduce the indemnity and it also has the jurisdiction not to do so.

The appellant again argues that, at best, an additional indemnity in this case is an indemnity for delay and that, therefore, it is unjust not to deduct the amount paid. As I have shown above, the appellant has failed to consider the other arguments accepted by the tribunal.

In my opinion, the appellant has not demonstrated that the tribunal has failed to exercise its discretion properly on this question and, therefore, this ground of appeal must be rejected. [Emphasis added.]

Since, in the present instance, both parties have agreed at the hearing that the provisional indemnity should have been deducted from the total indemnity in the calculation of the additional indemnity, there is no need to labour the point further. The Expropriation Tribunal's additional indemnity award should be reduced accordingly.

Conclusion

Given my conclusion that, on the facts of this case, the Expropriation Tribunal did not err in concluding that there was no transaction nor agreement between the parties as to the indemnity to be paid by the City to the appellant in the event of expropriation, I would allow the appeal and restore the order of the Expropriation Tribunal. I would, however, modify the award regarding the additional indemnity to the extent only of subtracting, in its calculation, the amount offered by the City as provisional indemnity ($500,000) from the final indemnity, the whole with costs to the appellant throughout.

Appeal allowed with costs, Lamer C.J. and Sopinka J. dissenting.

Solicitors for the appellant: Bergeron, Gaudreau & Pinet, Hull.

Solicitors for the respondent: Montgrain, McClure, St‑Germain, Marois, Chandonnet, Gibeau, Longueuil.