Willmor Discount Corp. v. Vaudreuil (City), 1994 SCC 84

Willmor Discount Corp. v. Vaudreuil (City), [1994] 2 S.C.R. 210

Willmor Discount Corporation Appellant

v.

City of Vaudreuil Respondent

Indexed as: Willmor Discount Corp. v. Vaudreuil (City)

File No.: 23220.

1994: February 1; 1994: May 5.

Present: Lamer C.J. and L'Heureux‑Dubé, Gonthier, Iacobucci and Major JJ.

on appeal from the court of appeal for quebec

Obligations ‑‑ Recovery of thing not due ‑‑ Appellant's immovables acquired by City following sale for taxes and resold to third party prior to judgment quashing tax by‑law and sale for taxes ‑‑ Whether appellant could bring action to recover thing not due.

Prescription ‑‑ Recovery of taxes ‑‑ Appellant's immovables acquired by City in 1972 following sale for taxes and resold to third party prior to judgment quashing tax by‑law and sale for taxes ‑‑ Restitution of immovables in kind impossible ‑‑ New action alleging fraudulent sale brought by appellant in 1984 and amended in 1987 to plead sale of another's property and claim payment of price received by City ‑‑ Whether appellant's new action prescribed ‑‑ Civil Code of Lower Canada, art. 2224 ‑‑ Cities and Towns Act, R.S.Q., c. C‑19, s. 586.

The respondent City put the appellant company's immovables up for sale at public auction for non‑payment of taxes imposed by two borrowing by‑laws. The appellant did not object to the sale and in December 1972, as there were no bidders, the City acquired the immovables for the amount of the taxes owing. In its action brought nearly a year later, the appellant asked the court to quash the borrowing by‑laws and the sale. The City sold the immovables to a third party in 1974 and they were resold several times in subsequent years. In 1978 the Superior Court declared the two borrowing by‑laws and the sale for taxes to be null and void. In December 1981 the Court of Appeal affirmed the nullity of one of the by‑laws and the nullity of the sale. In February 1984 the appellant brought a new action against the City for fraudulent sale and claimed damages from it. It amended its statement of claim in 1987 to plead a sale of another's property and claim payment of the price received. It also added an alternative conclusion claiming unjust enrichment. The Superior Court dismissed the action. It concluded that the constituent elements of recovery of a thing not due were not present and was of the view that the appellant's action should have been in damages but that that action was prescribed. The Court of Appeal affirmed this judgment.

Held: The appeal should be dismissed.

The basis of the action brought by the appellant in 1973 may be likened to the recovery of a thing not due. To determine whether the recovery of a thing not due is an appropriate remedy, it is necessary to consider whether the City received anything from the appellant in error or whether the latter paid a debt in the erroneous belief that it owed the debt. This question was decided by the Court of Appeal in 1981 and led to the quashing of one of the borrowing by‑laws and of the sale. There is thus res judicata between the parties on this point.

Although the Court of Appeal's judgment in 1981 gave the appellant the right to recover its immovables, the City no longer owned them at the time of the judgment and so was unable to restore them. Nor could the appellant claim them from the new owner, a bona fide purchaser, as the latter was not bound by this judgment. Registration of the judgment could not have enabled it to be set up against bona fide purchasers, even if it had been registered within the time limit prescribed by art. 2101 C.C.L.C., since it was rendered several years after the sale by the City. The appellant is therefore only entitled to claim restitution of its immovables by the City in a second stage by way of their monetary equivalent. The fact that the appellant did not rely on the provisions of art. 1051 C.C.L.C. to amend its pleadings is not fatal to it. When the proceedings were brought its action was well founded in law and in fact. The sale of the immovables during the proceedings does not alter the nature of the appellant's action to quash the sale of the immovables, and to be restored to its previous position.

The action brought by the appellant in 1984 for monetary reimbursement was prescribed. Although under art. 2224 C.C.L.C. the appellant benefited from the interruption of the prescription until the final judgment rendered by the Court of Appeal in December 1981 ‑‑ the right of action in the first and second actions was from the same source, namely the recovery of taxes ‑‑ that second action was distinct from the first since it was based on a new act, namely the sale of the immovables by the City to a bona fide third party. Although brought within the five‑year period provided for in art. 2260(8) C.C.L.C. for the recovery of taxes paid in error, the appellant's action for damages in 1984 was nonetheless subject to a six‑month prescription under s. 586 of the Cities and Towns Act. That action has thus been prescribed since late June 1982 and the subsequent amendment, relying on the sale of another's property, being itself outside the five‑year period, could not revive the right of action, which, as it was exercised out of time, also could not be a means of interrupting the prescription.

Finally, the appellant's arguments regarding unjust enrichment must also be dismissed. It was possible to bring an action based on unjust enrichment by way of an action to recover a thing not due. That action is prescribed under the particular provisions governing it.

Cases Cited

Referred to: Abel Skiver Farm Corp. v. Town of Ste‑Foy, 1983 CanLII 22 (SCC), [1983] 1 S.C.R. 403; Société nationale de fiducie v. Robitaille, [1983] C.A. 521; Marquis v. Lussier, 1960 CanLII 66 (SCC), [1960] S.C.R. 442; O'Neill v. Canadian International Paper Co., 1972 CanLII 164 (SCC), [1973] S.C.R. 802; Coupal v. Crispino, [1965] Que. Q.B. 189.

Statutes and Regulations Cited

Cities and Towns Act, R.S.Q., c. C‑19, ss. 530, 539, 586.

Civil Code of Lower Canada, arts. 1047, 1048, 1051, 1078.1, 2082, 2083, 2098, 2101, 2224, 2260(8), 2264, 2265.

Code of Civil Procedure, R.S.Q., c. C-25, arts. 199, 523.

Authors Cited

Baudouin, Jean‑Louis. Les obligations, 3e éd. Cowansville, Qué.: Yvon Blais, 1989.

Baudry‑Lacantinerie, Gabriel. Précis de droit civil. Paris: Librairie de la Société du Recueil Sirey, 1912.

Demogue, René. Traité des obligations en général, t. III. Paris: Rousseau, 1923.

Frenette, François. L'enregistrement des droits. Montréal: Librairie de l'Université de Montréal, 1980 (mise à jour juillet 1984).

LeBel, Louis. "L'appel des jugements interlocutoires en procédure civile québécoise" (1986), 17 R.G.D. 391.

Marler, William deMontmollin. The Law of Real Property. Toronto: Burroughs & Co., 1932.

Martineau, Pierre. La prescription. Montréal: Presses de l'Université de Montréal, 1977.

Mignault, Pierre Basile. Le droit civil canadien, t. 5. Montréal: Librairie de droit et de jurisprudence, 1901.

Pineau, Jean, et Danielle Burman. Théorie des obligations, 2e éd. Montréal: Thémis, 1988.

Planiol, Marcel, et Georges Ripert. Traité pratique de droit civil français, t. VII, 2e éd. Paris: L.G.D.J., 1954.

Traité de droit civil du Québec, t. 7 bis par Léon Faribault. Montréal: Wilson & Lafleur, 1957.

Traité de droit civil du Québec, t. 14 par Claude Demers. Montréal: Wilson & Lafleur, 1950.

APPEAL from a judgment of the Quebec Court of Appeal, 1992 CanLII 3255 (QC CA), [1992] R.D.J. 622, 57 Q.A.C. 64, affirming a judgment of the Superior Court.* Appeal dismissed.

Sandor J. Klein, for the appellant.

Pierre Le Page and Louise Comtois, for the respondent.

English version of the judgment of the Court delivered by

Gonthier J. ‑‑ The issue here is the right of a taxpayer to be reimbursed the price of his immovable property seized by the respondent City for failure to pay taxes and then sold by it, when the tax by‑law and sale for taxes were challenged in the courts and then quashed by judgment.

I ‑ Facts and Proceedings

In 1967 and 1969 Vaudreuil City Council passed two borrowing by‑laws ‑‑ by‑law 46 and by‑law 69 ‑‑ to finance public works and impose a special tax. Among the immovables so taxed was land owned by the plaintiff Willmor Discount Corporation ("Willmor"). For 1970, 1971 and 1972 Willmor paid no tax on the immovables affected by the by‑laws.

The Willmor lots were sold at public auction for non‑payment of taxes. The notice of sale was published in the Gazette officielle du Québec on November 18 and 25, 1972. Willmor did not object to the sale. On December 19, 1972, as there were no bidders, the City acquired the land for the amount of the taxes owing.

Nearly a year later, on December 10, 1973, Willmor brought an action to quash by‑laws 46 and 69 and quash the sale of the land. It did not exercise its right of redemption, which expired on December 19, 1973. Under s. 539 of the Cities and Towns Act, R.S.Q., c. C‑19, immovables purchased by the municipality had to be sold within a year after the redemption period expired, unless authorization was given by the Minister of Municipal Affairs. On July 24, 1974 the City sold the immovables to John Fisher et al. for $100,101. The latter resold them a few days later. They subsequently changed hands several times. Finally, in November 1979, Snowview Holdings Ltd. became the owner as a result of exercising a right of giving in payment.

On March 10, 1978, the Superior Court declared the two municipal by‑laws and the sale for taxes of December 19, 1972 to be null and void: J.E. 78‑347. The City appealed. On December 29, 1981 the Court of Appeal allowed the appeal in part, affirming the nullity of by‑law 69 and of the sale for taxes but reversing the Superior Court judgment with respect to by‑law 46: [1982] C.A. 120. The plaintiff failed to comply with art. 2101 C.C.L.C. requiring registration of the judgment within 30 days. It did register the judgment 11 months later, however, on November 12, 1982. Snowview Holdings Ltd. filed a motion to cancel the registration a few days later. On April 28, 1983, Willmor confessed judgment on the motion to cancel on account of the good faith of the purchaser and the fact that its title could be set up against Willmor. On May 2, 1983 the Superior Court rendered a judgment ordering the registration to be cancelled.

On February 21, 1984 Willmor brought an action alleging a fraudulent sale by the City and claiming $903,541.75 in damages. On October 30, 1987 the plaintiff amended its statement of claim to plead a sale of another's property and claim payment of the price of $100,101 received with interest and the indemnity provided for in art. 1078.1 C.C.L.C. It added an alternative conclusion claiming unjust enrichment.

The Superior Court dismissed the action [translation] "based on recovery of a thing not due and alternatively on unjust enrichment". It rejected the alternative conclusion to the claim as it had not been argued before the court. The Superior Court did not consider that the constituent elements of recovery of a thing not due were present. In its view, [translation] "the action should have been in damages and as we have seen it was prescribed".

The Court of Appeal unanimously dismissed Willmor's appeal: 1992 CanLII 3255 (QC CA), [1992] R.D.J. 622, 57 Q.A.C. 64. It affirmed the Superior Court's conclusion regarding recovery of a thing not due and dealt primarily with unjust enrichment. It refused to grant the relief sought by Willmor because of the subsidiary character of the remedy. In the opinion of the Court of Appeal the claim should have been based on the City's fault but it was prescribed.

II ‑ Issue

Is the appellant entitled to claim restitution of its immovable by way of its monetary equivalent?

III ‑ Analysis

1. Initial Action and Consequences of Court of Appeal Judgment of December 29, 1981

The action to quash the respondent City's by‑law, brought on December 10, 1973, asked the court to quash a tax assessment and sought recovery of the taxes paid accordingly. It further sought annulment of the sale for taxes following the seizure of the immovable and restitutio in integrum of the parties by the return of the property to Willmor. The judgments of the Superior Court and then the Court of Appeal allowing Willmor's claims gave the latter the right to recover its property. These decisions are now res judicata between the parties, the appellant and the respondent in this appeal. The judicial annulment of the sale divested the City of its title to the immovable property since, as Jean‑Louis Baudouin states (Les obligations (3rd ed. 1989), at p. 318), [translation] "[t]he principal manifestation of this [judicial] restitutio in integrum is of course the reciprocal restitution of objects or things received before the annulment judgment".

Accordingly, pursuant to the final judgment of the Court of Appeal on December 29, 1981 Willmor was entitled to return of the immovable. However, the City no longer owned the immovable at the time Willmor obtained judgment. It was thus impossible for the debtor to return the property. It was also impossible for Willmor to claim it from its new owner, a bona fide purchaser, as the judgment could not be set up against the latter.

The respondent relies on the late registration of the judgment, as the 30‑day time limit provided for in art. 2101 C.C.L.C. for registration of all judgments declaring the dissolution, nullity or rescission of a registered deed of conveyance or other title by which an immovable has been transmitted had not been complied with.

The judgment was not rendered until December 29, 1981, however, whereas the City had sold the immovables on July 24, 1974. As Frenette writes (L'enregistrement des droits (1984), at p. 39), [translation] "registration does not give effect to real rights. Their effect results from agreements or legal documents creating them". The parties are bound by virtue of the judgment, not the registration. The author adds: [translation] "[p]ublication subsequently widens the circle of those required to respect these rights". Moreover, registration does not of itself have retroactive effect. It only gives priority over rights registered subsequently, in accordance with the rule set out in art. 2098 C.C.L.C.:

2098. All acts inter vivos conveying the ownership of an immoveable must be registered.

In default of such registration, the title of conveyance cannot be invoked against any third party who has purchased the same property from the same vendor for a valuable consideration and whose title is registered. [Emphasis added.]

Claude Demers (Traité de droit civil du Québec (1950), t. 14) explains the effect of registration as follows, at p. 363:

[translation] Such registration thus gives priority to the party relying on it, priority over all titles registered after it, whatever their nature, whether they transfer a greater right or not . . . .

Speaking of the general principles of the registration of real rights, set out in arts. 2082 and 2083 C.C.L.C., Marler (The Law of Real Property (1932)) says the following, at p. 493:

. . . while every right has its full effect between the parties to it, their heirs and legal representatives from the moment of its creation, registration gives effect to it as to certain third parties also, in this sense that, if the right is one that should be and is registered, it is effective against those creditors who subsequently acquire rights, subject to be registered, in or against the immovable affected, or who, having such rights at the time of registration, registered them only subsequently or not at all.

Discussing the effects of registration deadlines specifically, Marler explains, at p. 521:

The effect of the delay is this, if the right is registered within the delay allowed, its registration retroacts to the day from which the delay commenced to run, against subsequent creditors . . . . But should the right not be registered within the delay, but subsequently, the general rule applies, and it takes effect only from the moment of its registration against creditors who register their claims subsequently. . . .

In the present case the judgment was rendered several years after the immovables were conveyed by the City and its registration could not have enabled it to be set up against bona fide purchasers.

2. Recovery of a Thing Not Due

The basis of the action brought by Willmor in December 1973 may be likened to the recovery of a thing not due. By its proceedings it is claiming reimbursement of its payment of taxes. The term "payment" is to be taken in its broad sense, namely the delivery to another ‑‑ voluntary or otherwise ‑‑ of a sum of money or a thing. The Civil Code of Lower Canada sets out the rules governing recovery of a thing not due in arts. 1047 and 1048:

1047. He who receives what is not due to him, through error of law or of fact, is bound to restore it; or if it cannot be restored in kind, to give the value of it.

If the person receiving be in good faith, he is not obliged to restore the profits of the thing received.

1048. He who pays a debt believing himself by error to be the debtor, has a right of recovery against the creditor.

Nevertheless that right ceases when the title has in good faith been cancelled or has become ineffective in consequence of the payment; saving the remedy of him who has paid against the true debtor.

The French and Quebec writers agree that recovery of a thing not due requires two conditions in addition to payment. The first is that [translation] "no debtor‑creditor relations in contract or by law should exist between the solvens and the accipiens with respect to the payment made" (Baudouin, supra, at p. 318). Demogue states, regarding the absence of a debt: [translation] "In defining the cases in which a thing is not due, we will say that there should not be between the accipiens and the solvens any debt corresponding to what was paid" (Traité des obligations en général (1923), t. III, at p. 144).

Was there a debt in the present case when the payment was made? It could be said that there was the appearance of a debt. Subsequent to the payment the debt was declared retroactively non‑existent by the judgment quashing the municipal by‑law that created it. The sale of the immovable property to the City, which constituted payment, was also quashed by the courts. The avoidance of a contract gives rise to a judicial restitutio in integrum by which the judge puts the parties back in the situation they were in prior to the execution of the contract. When an immovable is conveyed, the "vendor" recovers his property and reimburses to the purchaser the price the latter paid for it.

The other condition for an action to recover money not owed is that the payment must have been made by the solvens in error. As Mignault says (Le droit civil canadien (1901), t. 5, at p. 318), [translation] "[w]hatever results from an error cannot be allowed to remain. That is the approach always taken by the law". The error, for the solvens, is the belief that he has to pay. Baudouin, supra, at p. 319, states that the fact that the solvens [translation] "`paid' when no debt existed but with full knowledge of the facts" is not an error. For Planiol and Ripert payment in error may be [translation] "payment made with the intention of not acknowledging the debt" (Traité pratique de droit civil français (2nd ed. 1954), t. VII, at p. 28).

In Théorie des obligations (2nd ed. 1988), Pineau and Burman deal with error specifically in the context of payment of taxes, at p. 246:

[translation] Any alteration of the intent of the solvens, and in particular constraint, is treated like error: a solvens who, knowing he owes nothing, pays under threat may bring an action to recover a thing not due. . . .

There is one current situation, however, where such proof is easy: that is the case of payment of taxes required by the government or some public body; the "collectors" have means of "persuasion" such that the solvens cannot resist if he does not want to risk losing everything. In that sense it cannot be said that he pays voluntarily and that is why he should be able to recover.

There was clearly nothing voluntary about the payment made by Willmor.

As a general rule writers and the courts recognize that the payment of taxes collected illegally will provide a basis for recovery of a thing not due. Faribault (Traité de droit civil du Québec (1957), t. 7 bis) states (at pp. 128‑29): [translation] "Anyone who, by error of law or of fact, pays taxes which were illegally imposed may use the action condictio indebiti to obtain reimbursement of what he wrongfully paid. Our courts have applied this rule in a wide variety of circumstances." Some ten years ago this Court rendered judgment in Abel Skiver Farm Corp. v. Town of Ste‑Foy, 1983 CanLII 22 (SCC), [1983] 1 S.C.R. 403, where it recognized, at p. 423, that if taxes had been paid in accordance with assessment and collection rolls subsequently annulled, the remedies available to taxpayers were "actions which cannot be distinguished from actions to recover things not due".

The proceedings commenced in 1973 accordingly upheld Willmor's allegations. The taxes owed by it to the City were paid by the sale of its immovable property. It was of the view ‑‑ and the courts agreed with it ‑‑ that the taxes should not have been paid. It sought reimbursement.

Following the judgment of the Court of Appeal on December 29, 1981 Willmor was the holder of a right which it could assert only against one person, the City. As I have explained, restitution in kind is impossible since the person who now holds the right of ownership and the property is not bound by the Court of Appeal's judgment and the person bound by the judgment no longer holds the property or the right of ownership over it. What remedy does Willmor have to recover its property? Did it exercise that remedy in time? Those are the questions to be answered.

In rendering judgment on March 8, 1988 the Superior Court concluded that recovery of a thing not due was not the proper remedy in the case at bar and this was confirmed by the Court of Appeal.

Applying to the case the relevant rules under the Civil Code of Lower Canada, Vaillancourt J. gave the following explanation:

[translation] First, we do not see how it can be said that the defendant received the price of the sale by an error of law or even of fact at the time of the sale. So far as the City was concerned it was still the owner of the land sold: the sale was made deliberately with full knowledge of the facts and without any kind of error on its part. There can be no question here of any confusion, misunderstanding or mistake on the part of the defendant. . . .

. . . the solvens must have paid in error. Fisher did not pay in error. He did so deliberately and with full knowledge of the facts and his right to the immovables sold has proved quite unassailable, as it should be.

The Court of Appeal, affirming the opinion of the trial judge, wrote (at p. 624 R.D.J.):

I agree that there is no ground for ordering "répétition de l'indu". The price received by the City was not received "through error of law or of fact" and in any case was not received from Willmor. The conditions prescribed by articles 1047 and following of the Civil Code of Lower Canada for the existence of the quasi‑contract resulting from the reception of a thing not due are not fulfilled here.

Both courts concerned themselves with the relationship and the transaction between the City and the subsequent purchaser, Fisher. With all due respect, it is neither necessary nor relevant to analyze this relationship here, or even to consider the source of the money received by the City as consideration for the immovable property when it transferred the latter. To decide on the question of the recovery of a thing not due, we must consider, as we have done, whether the City received anything in error from Willmor or whether the latter paid a debt in the erroneous belief that it owed the debt. This question has already been decided, in the proceedings in 1978 and 1981 which led to the quashing of the municipal by‑law and of the sale. There is res judicata between the parties on this point. It is still necessary to decide what consequences follow with a view to restoring the parties to their previous positions, as restitution of the immovable in kind to Willmor has become impossible because of the sale of the property by the City to a third party. As things stood at the time judgment was rendered in its favour, Willmor could not have obtained a writ to have it executed. Accordingly the monetary equivalent is the only form of restitution which Willmor can claim. The issue is whether Willmor is in fact entitled thereto now and, if so, what amount of money it is entitled to.

As I mentioned earlier, following the Court of Appeal's judgment Willmor sought to recover the value of its immovable and other damages, plus interest, by bringing an action based on the fraudulent conveyance of the land by the City. More than three years later Willmor amended its statement of claim: it altered the amount claimed and alleged the sale of property of another, and alternatively unjust enrichment. The Superior Court granted the motion to amend.

Reviewing the sequence of events and of the various proceedings, I note that when Willmor brought its action to quash the by‑law and the sale, the immovable property was still in the hands of the City. It cannot therefore be blamed for having only sought to quash the sale. On the other hand, the sale by the City took place several years before the Superior Court rendered judgment. In oral submissions to this Court Willmor maintained that it was unaware of the sale. However, no evidence was submitted to the Court on this point by the parties. Had Willmor been aware, it could have raised this new legal fact by motion pursuant to art. 199 C.C.P. Perhaps it could even have filed a motion to amend its pleadings at the appeal stage, pursuant to art. 523 C.C.P.

In the provisions on recovery of a thing not due the Civil Code of Lower Canada states:

1051. If he who has unduly received the thing sell it, being in good faith, he is bound to restore only the price for which it is sold.

That is the article Willmor could have relied on in support of an amendment since it exactly covers the factual situation which developed during the proceedings.

Is the fact that Willmor did not rely on these provisions fatal to it? The answer must be no. When the proceedings were brought its action was well founded in law and in fact. The changing of the facts by the defendant during the proceedings does not alter the nature of the plaintiff's action to quash the sale of the immovable property, and to be restored to its previous position.

Willmor's original remedy is thus in a sense split in two. First, the courts have had to rule on recovery of taxes. As a result of the transformation of the ownership right into a sum of money by the City, a new action is required to give effect to the right Willmor was recognized as having.

3. Prescription

The Court must now rule on the time periods within which Willmor brought the action seeking monetary reimbursement for its payment of taxes.

The City alleges that the action to recover a thing not due, which the courts have recommended be brought within a reasonable time, is prescribed. It notes that, contrary to the position of Faribault, the Quebec courts have tended to criticize the 30‑year prescription for recovery of a thing not due. Thus in Société nationale de fiducie v. Robitaille, [1983] C.A. 521, the Court of Appeal, taking into account the facts, the circumstances and the nature of the claim before it, concluded that three years was a reasonable time in which to claim reimbursement of a notary's fees.

The City also relies on art. 2260(8) C.C.L.C., which applies specifically to the recovery of taxes and provides for a five‑year prescription. It is of the view that the time runs from the payment made in error, namely December 19, 1972, the date of the sale for taxes. Accordingly, it argues, the action brought on February 21, 1984 is prescribed. I cannot accept this reasoning, which confuses the present action with the action to recover taxes itself and which does not take account of the principles governing prescription and its interruption.

The action to recover taxes was brought by Willmor, a dissatisfied taxpayer, within the five‑year period imposed by art. 2260(8) C.C.L.C. In Abel Skiver Farm Corp. v. Town of Ste‑Foy, supra, Beetz J. noted at pp. 446‑47, that "[r]eimbursement of the tax paid in error is due from the moment the tax is paid, for from that time the taxpayer can legally claim to have the tax annulled and to be reimbursed". The point from which the prescription for claims to recover taxes runs is thus in the present case the day of the forced sale, namely December 19, 1972. The action to quash the municipal by‑laws and set aside the sale was brought on December 10, 1973, that is within the five‑year period and also within the one‑year period provided for in s. 530 of the Cities and Towns Act for an action to set aside a sale.

Article 2224 C.C.L.C. deals with the civil interruption of prescription:

2224. The filing of a judicial demand in the office of the court creates a civil interruption provided that demand is served within sixty days of the filing in accordance with the Code of Civil Procedure upon the person whose prescription it is sought to hinder.

Such interruption shall continue until final judgment and shall be effective for every party to the action for any right and recourse arising from the same source as the demand.

Martineau (La prescription (1977)) explains the effects of a prescription interruption as follows, at p. 333:

[translation] The prescription interruption affects the past but does not prevent a new prescription beginning to run.

The interrupted prescription ceases and all the time elapsed before the interrupting event occurred is lost. That time cannot be used in calculating the period of the new prescription: one starts from scratch.

When prescription is interrupted by a court action, [translation] "as long as the proceeding lasts the prescription cannot be completed: the effect of the interruption continues so long as the outcome of the action is unresolved" (idem, at p. 334).

Since the final judgment is that rendered by the Court of Appeal on December 29, 1981, the prescription begins to run again from that date. With regard to the length of the new prescription, art. 2264 C.C.L.C. provides:

2264. After renunciation or interruption, except as to prescription by ten years in favor of subsequent purchasers, prescription recommences to run for the same time as before, if there be no novation . . . .

Baudry‑Lacantinerie (Précis de droit civil (1912)) explains this as follows, at p. 831:

[translation] The new prescription which begins to run after the interruption is in principle of the same nature as the old prescription, and so remains subject to the same rules. . . . Thus if a prescription begins in the conditions required for expiry in ten to twenty years and it is interrupted, the new prescription will still be ten to twenty years . . . .

Did Willmor exercise its remedy in time? The Court is dealing here with a remedy which is in a way the second stage of an action to recover taxes. The final judgment rendered by the Court of Appeal on December 29, 1981 does not completely settle Willmor's fate. In my view all the conditions set out in the second paragraph of art. 2224 C.C.L.C. are met. The recovery of taxes is the "source" of the initial demand, to use the language of that article. It is also the source of the action to recover the price of the sale, substituted for ownership of the immovable under art. 1051, and the subject of the City's obligation. It should be noted that while the right of action here is of the same source as the action to quash the sale, that is, recovery of taxes, and so benefits from the interruption of the prescription, this second action is distinct from the first since it is based on a new act by the defendant City, the sale of the immovable to a bona fide third party. It is thus not an action in execution of the first judgment that is prescribed after 30 years pursuant to art. 2265 C.C.L.C., nor a matter which is res judicata under the first judgment, unlike the situations considered by Taschereau J. in Marquis v. Lussier, 1960 CanLII 66 (SCC), [1960] S.C.R. 442.

The claim for reimbursement on account of the sale of another's property was introduced by the amendment of October 30, 1987 to an action brought on February 21, 1984 ‑‑ and so within the five‑year period after the Court of Appeal's judgment ‑‑ which the Court of Appeal correctly characterized as an action in damages for fraudulent sale. The action was based on a delictual fault alleged against the City causing damage, not on the fact of the sale of the thing of another as such or on art. 1051 C.C.L.C. The conclusions were based only on allegations of damage caused by the fraudulent sale and in no way on the receipt by the City of the selling price for the immovable, unlike the action in O'Neill v. Canadian International Paper Co., 1972 CanLII 164 (SCC), [1973] S.C.R. 802, in which an amount was claimed both under a contract and for misrepresentation.

Although brought within the five‑year period, Willmor's action for damages was nonetheless subject to a six‑month prescription under s. 586 of the Cities and Towns Act:

586. Every action, suit or claim against the municipality or any of its officers or employees, for damages resulting from offences or quasi‑offences, or illegalities, shall be prescribed by six months from the day on which the cause of action accrued, any provision of law to the contrary notwithstanding.

The action for damages has thus been prescribed since June 1982 and the subsequent amendment, relying on the sale of another's property, being itself outside the five‑year period, could not revive the right of action, which, as it was exercised out of time, also could not be a means of interrupting the prescription.

It certainly could not be argued that as the amendment was allowed by a judgment which was not appealed, it in some way retroactively rectifies the claim so that it will be valid in its modified form from its date of origin within the five‑year prescription period to which it would thus be subject.

To argue this would be to ignore the fact that a judgment authorizing an amendment is essentially interlocutory and, as LeBel J.A. writes ("L'appel des jugements interlocutoires en procédure civile québécoise" (1986), 17 R.G.D. 391, at p. 402), does not have [translation] "a final effect on the proceeding. . . . Though amended, the action may still ultimately be dismissed; the final judgment will be able to correct this decision rendered in the course of the proceeding". The interlocutory judgment allowing the amendment cannot be binding on the judge of the merits. As Bissonnette J. noted, in Coupal v. Crispino, [1965] Que. Q.B. 189, at p. 192:

[translation] Accordingly, while the right to the amendment is, with one exception, absolute, the judge only has to consider whether the right exists, regardless of the validity of the amendment, as the effects of the latter are retroactive to the date of the proceeding of which it is a part. Also, as this amendment is open to challenge on other grounds, it seems more prudent to refrain from expressing an opinion on any eventual bar to the right of action, before the amendment itself.

Although the Superior Court and the Court of Appeal did not rule specifically on the amendment, this Court could not allow a prescribed remedy to be revived by means of a proceeding which furthermore is in itself belated.

4. Unjust Enrichment

The Court of Appeal dismissed Willmor's arguments regarding unjust enrichment based on Baudouins' comments, supra, at p. 335: [translation] "The action de in rem verso must also be dismissed when some other remedy was open to the impoverished party and he allowed it to be prescribed." In the present case it was possible to bring an action based on unjust enrichment by way of an action to recover a thing not due, namely, as we have seen, the payment of taxes through the forced sale of Willmor's immovables. That action is prescribed under the particular provisions governing it. It constitutes the only action for unjust enrichment in the case at bar.

IV ‑ Conclusion

I conclude that the action brought by Willmor, although well founded in law, is prescribed. In the circumstances, I am of the view that costs should not be awarded.

The appeal is dismissed without costs.

Appeal dismissed.

Solicitors for the appellant: Chait Amyot, Montréal.

Solicitors for the respondent: Hébert Denault, Montréal.

*Sup. Ct. Montréal, No. 500-05-002040-846, March 8, 1988 (Vaillancourt J.).