2014 QCCA 174, 2014 QCCA 174

Unofficial English Translation Communauté Oir Hachaim c. Boisbriand (Ville de) 2014 QCCA 174 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No.: 500-09-021784-111 (700-22-016505-074) DATE: JANUARY 31, 2014 CORAM: THE HONOURABLE ALLAN R. HILTON, J. A. JACQUES A. LÉGER, J. A. MARIE ST-PIERRE, J.A. OIR HACHAIM COMMUNITY COOPÉRATIVE D'HABITATION LUMIÈRE DE LA VIE DE BOISBRIAND CORPORATION HABITATION LUMIÈRE DE LA VIE INC.

COOPÉRATIVE D'HABITATION CENTRE DE LA FOI ÉTERNELLE TASHER CONGRÉGATION APPELLANTS – defendants and HASSIDIC RELIGIOUS COMMUNITY CENTRE COMMUNAUTÉ HÉBRAÏQUE YISROËL (formerly known as Communauté juive de Boisbriand) CONGRÉGATION BAIS ELIMELECH HASSIDIM HUMANITARIAN CENTER ASSOCIATION LOMDEI TORAH APPELLANTS – co-defendants v. VILLE DE BOISBRIAND RESPONDENT – plaintiff JUDGMENT

[ 1 ] On appeal from a judgment of the Court of Quebec, District of Terrebonne (the Honourable Judge Georges Massol) rendered on April 28, 2011, the conclusions of which provide the following: Grants the motion as amended; Orders Oir Hachaim Community, Coopérative d'Habitation Lumière de la Vie de Boisbriand, Corporation d'Habitation Lumière de la Vie inc., Coopérative d'Habitation Centre de la Foi Éternelle, Tasher Congrégation, Hassidic Religious Community Center, Communauté Juive de Boisbriand, Congrégration Bais Elimelech, Hassidim Humanitarian Center and Association Lomdei Torah to pay the plaintiff, indivisibly, the amount of one million, three hundred and fifty-three thousand, one hundred and forty-one dollars and seventy five cents ( $1,353,141.75 ), with interest on the amount of $ 823,113.01at the rate of 18% per year as of February 22, 2011; Reserves all of the plaintiffs’ recourses for the period after February 21, 2011; The whole with costs against the defendants and co-defendants in this case. [ 2 ] The Court is also seized of the respondent’s motion to dismiss the appeal ( articles 501 (4.1) and 5 C.C.P. ) and to declare that the appeal is abusive (

article 524 C.C.P. ); [ 3 ] For the reasons of Léger, J.A., with which Hilton and St-Pierre, JJ.A. agree, THE COURT : [ 4 ] GRANTS the motion to dismiss the appeal with costs in accordance with rule 62 of the Tariff of judicial fees of advocates ; [ 5 ] DISMISSES the appeal with costs for a judgment on the merits of the case in accordance with the Tariff of judicial fees of advocates , specifically rule 61; [ 6 ] DECLARES the appellants’ appeal dilatory and abusive in accordance with

article 524 C.P.C. and RESERVES the respondent’s right to claim any damages caused by the appeal from the appellants. ALLAN R. HILTON, J.A. JACQUES A. LÉGER, J.A. MARIE ST-PIERRE, J.A. Mtre Emil Vidrascu Mtre Luc Villiard Mtre Raphaël H. Shachter LAVERY, DE BILLY For the appellants Mtre Alain Longval Mtre Jean Prud’homme DUNTON RAINVILLE For the respondent Date of hearing: January 29, 2013 REASONS OF LÉGER, J.A. [ 7 ] This case is unique, to say the least, in that the Court simultaneously heard the appeal and the motion to dismiss the appeal (paragraphs 4.1 and 5 of

article 501 C.P.C. ) and to declare the appeal abusive (

article 524 C.P.C .) deferred by a previous panel. [1] [ 8 ] On the one hand, the appellants appeal a judgment [2] of the Court of Quebec (the Honourable Judge Georges Massol), rendered on April 28, 2011, which ordered them to pay the respondent $1,353,141.75, indivisibly, with interest at the rate of 18% per year as of February 22, 2011, on a part of this amount, to pay what they owe for the supply of drinking water to their private network, which the respondent (the City) has provided since July of 2005.

[ 9 ] On the other hand, the City, for its part, seeks the dismissal of the appeal and a declaration that the appeal is abusive. [ 10 ] The impugned judgment contains no error giving rise to this Court’s intervention. [ 11 ] That said, because I find that the appellants’ conduct throughout this legal saga, which began in June of 2007, can be characterized as blameworthy and the appeal is abusive and has no reasonable chance of success, I would grant the City’s motion to dismiss the appeal and declare the appeal abusive, in accordance with its conclusions including costs.

I would also dismiss the appeal with costs. I – THE CONTEXT [ 12 ] To fully understand the City’s motion to dismiss, it is necessary to review the background of the dispute that has opposed the parties since 2005, starting with the history outlined by the trial judge: [ translation ] [2] The plaintiff is a municipality located in the Lower Laurentians, constituted in the 1970s. [3] A few years earlier, the Hassidic Jewish Community had settled in the western part of the territory of the former municipality.

This territory was located away from the other developments and was characterized by a certain degree of autonomy as the block in which it was situated contained educational institutions specific to the Community, a synagogue, a butcher shop and private streets. [4] The Community nevertheless had to ensure a reliable water supply. [5] In this context, an agreement was signed on February 8, 1990 (Exhibit P-1) between the Ville de Boisbriand and the Community, which was represented by the six following corporations: 1. Le Grand Séminaire Rabbinique Tash de Montréal; 2.

Le Collège Rabbinique de Montréal Oir Hachaim D’Tash; 3. La Coopérative d’Habitation Lumière de la Vie de Boisbriand; 4. La Corporation d’Habitation Lumière de la Vie Inc.; 5. La Coopérative d’Habitation Centre de la Foi Éternelle; 6. Tasher Congregation [6] These six corporations represent the principal defendant parties in the action instituted by the plaintiff. [7] According to the terms and conditions of this agreement (Exhibit P-1), in force retroactively since January 1, 1990, the City undertook to:

a) Supply running water to all of the immovables owned by natural and legal persons who are members of what is known and commonly referred to as the Boisbriand Hasidic Jewish Community;

b) Install and maintain, in the area indicated on the plans appended to the agreement, a main [meter] connected to the water pipe supplying the territory in which the Community’s immovables are located;

c) Send an annual invoice to the owners of the immovables equipped with an individual meter installed after the effective date of the agreement; and

d) Send the Community a monthly invoice calculated in accordance with the consumption reading taken from the main meter, less the total consumption recorded by the new individual meters, the whole to be adjusted annually to take into account the actual consumption indicated on each of the new individual meters. [8]

Section 0.1 of the agreement provides:

[ translation ] WHEREAS the COMMUNITY and the CITY may conclude an agreement regarding the compensation to be paid in exchange for municipal services; [9]

Section 5.2, for its part, provides: [ translation ] The notices, invoices, and other documents to be sent to the COMMUNITY shall be addressed to “ Le Grand Séminaire Rabbinique Tash de Montréal ” , to the attention of its secretary, at 2 Beth Halevy Avenue, in Boisbriand; [10] The City’s covenants resulted in the adoption of two municipal regulations . [11] As mentioned in the motion to institute proceedings, at the time, five of the six co-signatories from the Community owned almost all the immovables located on the Community’s territory. [12] The water and sewer systems going to the immovables located on this territory are private and owned by the Community.

There were no individual water meters installed in the immovables, so that the collective nature of the compensation, agreed to in the 1990 agreement, was the simplest way to invoice water consumption. [13] The evidence reveals that, in accordance with

section 5.2 of the agreement, the invoices were initially sent to the Grand Séminaire Rabbinique Tash de Montréal, which by way of mergers through the years became the Oir Hachaim Community, the principal defendant to this action. [14] At the end of 2006, however, the invoices were instead addressed to the Hassidic Religious Community Centre (the “ HRCC ” ), co- defendant to this action and the corporation who inherited the rights of Oir Hachaim. [15] It is not disputed that the “ Community ” paid all the invoices up until the month of June of 2005.

From July of 2005, however, until the hearing of the action, the invoices remained unpaid, such that after the co-defendants and defendants were put on formal notice, the City was required to institute this action on June 26, 2007. [3] [ 13 ] This Court would clarify certain facts below and recount a few other significant elements. [ 14 ] In the early 1960s, before the City was created, the members of a Hassidic Jewish community (the “Community”) settled on a private territory away from other urban developments. From the outset, the infrastructure for their water supply system was private.

Over the years, they built schools, housing, businesses, and other immovables, some of which were religious in nature. For a long time, almost all the immovables belonged to the appellant-defendants. [ 15 ] In 1990, the City had to address the fact that the Community had a private water supply system and that not a single building on its territory was equipped with a water meter. The Community, for its part, wanted to ensure that its residents would have a reliable and abundant supply of drinking water.

In this context, the appellant-defendants, on behalf of the Community, and the City entered into the agreement on February 8, 1990 (the “Agreement”), which applied retroactively to January 1, 1987, and which established the legal framework for the City to supply their private water network with drinking water.

Section 3.5 of the Agreement provides that sections 481 and 504 of the Cities and Towns Act [4] (the “ C.T.A. ”) apply to the amount of compensation and interest to be paid on such compensation, when in arrears. [ 16 ] The private aqueduct supplying all of the Community’s immovables is connected upstream by only one junction to the City’s public system of drinking water.

This is the location of the main water meter (the only meter at the time) allowing the total volume of drinking water consumed by the Community from the City’s public system to be measured from time to time. [ 17 ] In short, in exchange for the payment of the compensation established in the Agreement, all the residents and immovables located in this private territory could benefit from drinking water supplied by the City’s public system, the cost of which is financed by its taxpayers. [ 18 ] Over the years, despite the expansion of the private water supply system, the City continued to supply drinking water because the Agreement was automatically renewed from year to year.

Until June of 2005, despite recurring late payments, the Community paid the invoices. [ 19 ] After the Agreement was executed, some owners of immovables located on the territory at issue installed individual water meters, as provided for in the Agreement. In June of 2005, sixty-one immovables were thus equipped with a meter, and the owners of these immovables paid their own share, which is what was done by the Coopérative d’habitation Centre de la foi éternelle , one of the appellant-defendants.

In this context, although the quantity of drinking water consumed by the Community was measured at the main meter, the City balanced this amount to avoid double billing, as revealed by the evidence submitted before the trial judge.

[ 20 ] This evidence also establishes that the City’s computer system does not allow it to indicate more than one addressee on an invoice, which explains why the name of only one recipient appears on the invoices addressed to the Community . [ 21 ] It is important that something be said of the supposedly cordial relationship that the appellants claim to have with the City. In a letter dated June 30, 2005, that it received from a so-called Mr.

Maskin on behalf of the B’nai Levy Foundation , with the cheques to cover the property taxes and [ translation ] “water taxes [sic]”, on a few of the immovables belonging to some of the appellants, [5] it states that [translation ] “... in the future, the Community and the members of its board of directors undertake to make serious efforts to pay their taxes promptly” .

The author thanks the Mayor for his patience and praises the professionalism of its [ translation ] “extraordinary team”, while stating his hopes that the Community can work with the City in the future on several projects and programs of common interest.

Unfortunately, this wish remains unanswered. [ 22 ] On November 2, 2006, a first demand letter was served on the appellant Oir Hachaim Community, claiming $141,492.09 from it and stating [ translation ] “[o]ur client informs us that pursuant to an agreement entered into with your community that came into force on January 1, 1987, the community agreed to pay an amount of compensation in exchange for municipal services , specifically, the supply of drinking water and water treatment” [6] [emphasis added].

A second demand letter was served on May 15, 2007, to all the appellants this time, ordering them individually to pay the most recent statement of account. As of this time, the amount claimed increased considerably as annual interest of 18% was added in accordance with the power conferred on the City by

section 481 of the C.T.A. and by Municipal Resolution No. 2003-12-726. [7] [ 23 ] On June 26, 2007, in order to recover the amounts due by the Community, the City filed its action against the appellant- defendants (signatories to the Agreement) as well as five co-defendants .

As specified by the trial judge, each of these five co-defendants who did not sign the Agreement either acquired ownership of one or more immovables serviced by the water supply system or merged with one of the original owners. [8] [ 24 ] On October 30, 2007, three of the appellant-defendants, the Coopérative d’habitation de la Lumière et de la vie de Boisbriand, the Corporation Lumière de la vie Inc., and the Coopérative d’habitation centre de la foi éternelle, sent the City a notice of non-renewal of the Agreement, effective December 31, 2007.

They explained that it would be [ translation ] “preferable if all the immovables that were not yet equipped with a water meter became so equipped so that their owners could be invoiced individually and separately for their consumption of water in accordance with the regulations in force” . They added that, in the event that such installations should fail to be completed by December 31, 2007, the Agreement would be renewed on a monthly basis, rather than annually, until all the immovables were equipped with meters.

On December 31, 2007, no individual meters had been installed on the immovables existing at the time the Agreement was signed, even though the Community continued to take its supply of drinking water from the City’s public system. In fact, at the time of the hearing before this Court, these installations had yet to be performed.

II – JUDICIAL HISTORY [ 25 ] We now reproduce the outline of the chronology of legal proceedings brought by the parties, as set out by the trial judge, up until the day of the hearing before him: [ translation ] [16] On June 26, 2007, the plaintiff Ville de Boisbriand instituted its action, claiming unpaid taxed in the amount of $355,575. [17] On December 2, 2008, it submitted an amended motion, increasing its claim to the amount of $628,863.37, pursuant to Exhibit P-4. [18] On February 16, 2010, following the presentation of a motion to dismiss, the plaintiff filed an update to Exhibit P-4, as noted in the minutes of this hearing. [19] On March 12, 2010, the parties presented their arguments on the municipality’s motion to dismiss. [20] On March 23, 2010, Diane Girard, J.C.Q., seized of that motion, established at the outset, at paragraph 1 of her judgment, that this claim totalled almost one million dollars.

She granted the motion to dismiss on the basis that no deposit was made for the amounts claimed, in violation of

section 252.1 of the Act Respecting Municipal Taxation . She also took the opportunity to provide a review of the case law on this issue. [21] On April 19, 2010, the defendants and co-defendants inscribed in appeal the decision rendered by Girard, J.C.Q., on March 23, 2010. The appeal addressed: 1. The Court’s power to remedy a ground; 2. The Court’s power to mitigate the effects of

section 252.1 of the Act Respecting Municipal Taxation .

[22] Mabaie Inc. v. Municipalité du Village de sur-le-lac was cited to this end. Girard, J.C.Q., was criticized for having failed to take these factors into account. [23] The inscription in appeal also cited Municipalité de Chertsey , rendered by our colleague Richard Landry, J.C.Q., in support of the proposition that the Court may suspend a sale for unpaid taxes in certain circumstances. [24] On August 30, 2010, the Court of Appeal rendered its judgment, and in a single paragraph, dismissed the appeal. It stated the following: [ translation ] The Court is of the view that the trial judgment is well founded. The judge applied

section 252.1 of the Act Respecting Municipal Taxation .

The appellants were not deprived of any of their rights. [25] On October 25, 2010, the plaintiff inscribed its case for proof and hearing before this Court. [26] On December 7, 2010, a notice of hearing was sent to the parties in regard to a hearing to be held on February 21. [27] On February 15, 2011, i.e. a few days before this hearing, the defendants submitted a motion to be relieved of their default. [ 26 ] Before considering the judgment a quo, a comment is in order in regard to the content of the interlocutory judgment [9] rendered by the Honourable Judge Diane Girard, J.C.Q., who granted the City’s motion to dismiss against the appellants’ defence. [ 27 ] Citing judgments by this Court, [10] Girard J.C.Q. ruled that the compensation claimed by the City must be regarded as a property tax, that it can be claimed from the subsequent owners of the immovables subject to tracing under

section 498 of the C.T.A. , and that consequently, any unpaid amounts claimed by the City must be fully paid before bringing legal proceedings in accordance with

section 252.1 of the Act Respecting Municipal Taxation (the “M.T.A.”) . [ 28 ] Citing Ville de Montréal v.

Technispect Inc. , [11] she explained the purpose of this exceptional rule in the area of municipal taxation: [ translation ] [24] Entries on the roll are presumed valid; even if subject to an application for review, a proposal for of correction, or a petition to have it set aside or quashed, the roll remains in force and enforceable with respect to the contesting taxpayer (sections 76, 183 and 252.1) […] [25] The immutability of the roll is justified by the need to protect the stability of municipal finances.

It also ensures the fair treatment of taxpayers, as among each other and in regard to the taxing authority. The roll, and thus the relative amount borne by each taxpayer, may only be amended in accordance with the strict rules applicable at each step and in every circumstance. This exercise cannot be taken lightly, nor done outside the framework imposed not only on the taxpayers, but also on the municipal administration. [26] This Court stated the following in Sears Canada Inc. v. St-Laurent (Ville de) : [ translation ] The objective of the M.T.A. is to ensure a source of financing for municipal expenses.

To this end, a roll comprised of units of assessment was created. During the period for which it is deposited, he roll may be amended only in accordance with the requirements set out by law. The main objective, which is very general, seeks to ensure public order by fairly distributing municipal expenses among the citizens. This objective must be considered with another, which is the stability of municipal finances, in regard to both the municipality and the taxpayers.

This is what the courts have characterized as the immutability of the roll. [ 29 ] Girard J.C.Q, ruled, at paragraph 11 of her reasons, that [ translation ] “the compensation for the service provided (water) is regarded as a property tax imposed on the units of assessment” and that the appellants did not comply with

section 252.1 of the M.T.A. Consequently, she dismissed the appellants’ defence and declared them all barred from pleading: [ translation ] [27] It is not contested that the meters were not installed before December 31, 2007, but the defendants submit that according to the regulations, the City was responsible for installing the meters. The Ville de Boisbriand disputes this. In any event, the individual meters

have not been installed and water continues to be supplied to the Community, which according to the documentation on file, has not requested that water cease to be supplied. The continuation of the service, without opposition, constitutes a tacit renewal of the agreement, at least on a month-to-month basis, as specified in paragraph 3 of the letter (Exhibit D-1). [28] The issue of responsibility for installing the water meters is not relevant at this stage given the continued water supply. [29] The argument that since the parties are bound by contract,

section 252.1 ( M.T.A. ) does not apply is not well founded in law as

section 244.7 ( M.T.A. ) specifically provides that the compensation required (by the contract) is regarded as a property tax imposed on an assessment unit. [30] The Court notes that the various grounds argued by counsel for the defendants actually constituted defences to the principal claim, but the motion to dismiss deals only with the obligation to pay the taxes despite the dispute. As the case law of our Court of Appeal is clear on this obligation, the motion to dismiss the defence is granted and the defence is dismissed in accordance with

article 167 ( C.C.P. ) with costs as if the motion had been presented within the time period set out at

article 159 of the Code of Civil Procedure . [ 30 ] Moreover, she specified that the Agreement was tacitly renewed as the appellants still benefit from the supply of water, which was also confirmed by the trial judge. Finally, she ruled on the issue of pursuing the action against all the appellants, specifying that it was brought against all of them, not only the appellant-defendants . [ 31 ] As previously discussed, Girard J.C.Q.’s judgment gave rise to an appeal that our Court summarily dismissed on August 30, 2010, in the following terms, reproduced here for convenience: [ translation ] The Court is of the view that the trial judgment is well founded. The judge applied

section 252.1 of the Act Respecting Municipal Taxation . The appellants were not deprived of any of their rights. [12] [ 32 ] The file was then referred back to the first instance. The City inscribed the case for proof and hearing ex-parte . [ 33 ] The case was set to be heard on February 21, 2011.

On this date, the appellants presented a preliminary motion [ translation ] “to be relieved of their default and preclusion of defence”, which the trial judge dismissed from the bench; in fact, in his judgment on the merits, the trial judge dwelt at length on this issue. [13] He noted that the appellants claimed to have deposited the amount of $500,000 in their trust account. The remittance of this amount to the City was, however, subject to certain conditions.

He added the following: [ translation ] [44] In short, the basic conditions were in no way respected and it is necessary to conclude that the attempt of the defendant-petitioners is futile and dilatory and must be dismissed. III – THE JUDGMENT A QUO [ 34 ] The judge reviewed the evidence tendered, including the testimony of Ms.

Francine Guénette of the City’s Assessment and Taxation Department. [ 35 ] After noting that the appellants were precluded from pleading, he nevertheless summarized their position and went over various arguments they had raised in their initial defence in May of 2008, including the use of the water by the City, the City’s failure to give notice of drops in pressure, waste and garbage collection, and their claim that the Agreement ended on October 30, 2007.

He noted that as of December 8, 2009, the new counsel of record added an argument on the absence of liability of the appellant-co-defendants, considering that they were not signatories to the Agreement. The judge also noted that in the motion to be relieved of their default that they presented before him, the appellants asserted that only two of them had been invoiced.

He added that during their arguments, counsel for the appellants pushed this argument further, going so as far as to specify that only the Oir Hachaim Community cold be held liable, as it was the only one, among the signatories to the Agreement, that had received the invoices. [ 36 ] He then separated the issues into the following two categories: the respective liability of the appellant-defendants and appellant- co-defendants and the form of the obligation. He found that the City had met its burden of establishing the amount of its claim and like his colleague Girard J.C.Q.

He concluded that the City’s continued supply of drinking water constituted a tacit renewal of the Agreement on a month-to-month basis. [ 37 ] Citing

section 498 of the C.T.A ., he was of the view that the tax claim could be brought against all the appellants, noting that the Court of Appeal, in its August 30, 2010, judgment, did not identify any error in Girard J.C.Q.’s judgment, which had discussed the issue. He then noted that the Agreement was entered into in accordance with

section 206 of the M.T.A ., which provides the possibility of establishing compensation, adding that such compensation is regarded as a property tax under

section 244.7 [14] of the M.T.A . Consequently, he concluded that it had the same conditions under which payment is due. [ 38 ] The judge then addressed the City’s good faith in its dealings with the Community, which always presented itself as forming a

whole. To illustrate his point, he noted that the term “Community” was used by Maskin in his letter of June 30, 2005, and in Guénette’s testimony to the effect that she received a cheque from Schwartz for more than $40,000 for thirty-nine unpaid property tax invoices. He noted that the position taken by the appellants in another case between the Community and the City concerning property transfer taxes, to which Guénette referred in her testimony.

In this other case, the appellants submitted that 90% of the membership of these entities was made up of the same individuals, such that they were related within the meaning of the law and could therefore reduce the amount of property transfer taxes. [ 39 ] The judge was of the view that the Community did everything possible to avoid its obligations once its relationship with the City became litigious, in particular by the improper use of the corporate vehicle under which the appellants were constituted.

He confirmed the City’s argument that there was a necessary interaction between the various appellant entities that are created, wound up, and that sell properties among each other. He added that the City filed a judgment annulling the letters patent of the Oir Hachaim Community, [15] which, he noted, is the only entity whose relationship with the City is clear.

He then concluded, in regard to the evidence as a whole, that the appellants’ conduct was lacking in good faith: [ translation ] [107] Conveniently, Oir Hachaim Community, radiated by this judgment, happens to be the only entity in regard to which counsel for the defendants did not have grounds to contest its legal connection! [108] The City was relying on E-1 (letter from the Community’s lawyers dated February 16, 1998) to the effect that Oir Hachaim would assume all the obligations of Grand Séminaire Rabbinique Tash de Montréal and of Collège Rabbinique de Montréal Oir Hachaim D'Tash; the City never received a letter stating otherwise. [109] In this context, it is worth citing a passage from the judgment of our colleague, the Honourable Richard Landry, in Municipalité de Chertsey . [16] [110] In that case, Landry J.C.Q. noted that for several years, the members of a corporation as well as other related companies regularly failed to pay their municipal taxes on time. [111] He added: [ translation ] They act as if the payment of municipal taxes is an optional obligation that they pay when convenient, or do not pay until the purchasers of the lots do so on their behalf after a number of years. [112] And then: [ translation] [165] Conducting themselves in this manner caused the City to mount a “monster” tax collection file in regard to Ares Group and its various entities.

The management of this file is excessively expensive because of the cost and energy required (extra work, hiring more employees, continuous review of the budget [31], the fees of various professionals, multiple legal proceedings), without forgetting the risk of errors and omissions created by a file that has become amazingly complex. Even more so in the case of a small municipality like Chertsey. [166] This conduct also indicates an abusive use of the judicial system to defer, as much as possible, the payment of the taxes due.

Some of taxes claimed have been owing since 1990, i.e. for 16 years! [190] From all of this, the undersigned has no difficultly concluding that the member of Ares Group did not act in good faith in regard to their legal obligation to pay their municipal taxes when due, thus violating the requirements of

article 6 of the Civil Code of Québec : 6. Every person is bound to exercise his civil rights in good faith. [191] Moreover, while any litigant has the fundamental right to contest, he or she must not abuse that right. I conclude, without hesitation, that the members of the group conducted themselves in an excessive, reckless and unreasonable manner, violating the requirements of

article 7 of the Code : 7.

No right may be exercised with the intent of injuring another or in an excessive and unreasonable manner which is contrary to the requirements of good faith. [205] The authors Martel characterize companies where one is simply the mirror of the other as [ translation ] “puppet companies”, and companies controlled by sole shareholders as [ translation] “alter egos” (at page I-43): [ translation ] The corporate veil may also be lifted when it creates an artificial separation between two companies and that, in fact, one of the companies is merely the puppet, [ translation ] "the alter ego", or the agent of the other, with no autonomous will or [ translation ] "thinking identity". [113] The evidence reveals that the City has previously had to sue the Community for non-payment of its taxes, as established by Exhibit P-9, in addition to enduring another delay in 2005 (Exhibit P-8). [114] The undersigned noted that in the twenty-nine articles of the Civil Code civil filed during arguments, four were missing: articles 6, 7 and 1375 in regard to the obligation to act in good faith and 1493 dealing with unjust enrichment argued by the plaintiff during the

defendants’ submissions. [Citations omitted] [ 40 ] Later, [17] the judge made remarks concerning certain particularities of this case. The appellant co-defendants did not own any of the immovables prior to 2007. This does not, however, exonerate them from liability, as they subsequently acquired immovables within the meaning of

section 498 of the C.T.A . As just seen, he noted the special case of the Oir Hachaim Community, discussed above, which was dissoluted by judgment dated November 24, 2006, while adding that this was not a issue for the moment but rather an issue related to the possible enforcement of the judgment. [ 41 ] With respect to the form of the obligation, the judge immediately set aside solidarity, which is not contemplated in the Agreement and cannot be presumed.

Yet, he characterized the obligation as indivisible, as its nature does not lend itself to division, in light of the impossibility of attributing the share of water used, despite the addition of some individual meters. He then noted the articles related to the prior claims of municipalities. [18] Finally, he granted the City’s amended motion to institute proceedings in its entirety.

IV – ADDITIONAL COMMENTS [ 42 ] Before starting the analysis, a few additional comments are in order. [ 43 ] As already noted, the preclusion from pleading ordered against the appellants does not cause them to lose their rights, but it is apparent that the exercise of their right to submit the grounds set out in their defence had been put on hold until such time as they pay their debt to the City.

This is clearly an exceptional situation, but one with effects, that illustrate eloquently, in my view, the Latin maxim Frustra legis auxilium quaerit qui in legem committit (written in big letters on the upper portion of the facade of the Ernest-Cormier building where our Court in Montreal sits, and which may be translated as follows: [ translation ] “Vainly does he who offends against law seek the help of law” invoked occasionally by the courts in regard to public order and preserving the integrity of the justice system. [19] [ 44 ] In this case, I am keeping in mind that Girard J.C.Q. granted the City’s motion very early on and declared the appellants barred from filing a defence, in accordance with a tax law.

She correctly reiterated the objective of ensuring fiscal fairness for all taxpayers. I also note that the appellants chose not to correct the situation despite the judgment of this Court rendered in August of 2010 confirming that judgment and that, this being the case, they must live with the consequences. [ 45 ] That being said, I will now consider the argument that the appeal is abusive and destined to fail, first in regard to the submissions put forth by the appellants in their inscription in appeal, and then, in regard to the grounds set out and detailed in their written pleadings.

Finally, I will end by discussing the City’s request to have the appeal declared abusive or dilatory in accordance with

article 524 C.C.P. as a result of the appellant’s reckless and blameworthy conduct.

V – ANALYSIS The appeal is abusive and destined to fail The inscription in appeal [ 46 ] So long as they have not paid the amounts claimed, the appellants are barred from pleading. [ 47 ] Despite the foregoing, the appellants insist and are again trying to introduce other evidence at paragraphs 15 to 29 of their inscription. [ 48 ] Before identifying this new evidence, it is worth listing the points, determinative on several fronts, that were the subject of admissions or a certain acknowledgment by the appellants, which: o never put into question the Agreement in regard to the objectives set out by the contracting parties, particularly in the

preamble; o never contested the legality or validity of the Agreement, the source and basis of which result from both

section 206 of the M.T.A . and the common intention of the parties to establish the legal, technical and financial rules allowing the Community to be supplied with drinking water for all the immovables on its territory through its private water supply system in exchange for compensation; and o also acknowledged that the co-defendants were bound by the Agreement . [ 49 ] Under the cover of so-called legal arguments, the appellants’ appeal is actually based on questions of mixed fact and law, and they are unable to identify any justification to intervene in the factual determinations of the trial judge, having failed to identify any palpable and overriding error. [ 50 ] Essentially, the appellants are trying to do indirectly that which they were barred from doing, while putting forth grounds based on facts in regard to which evidence was not submitted at first instance. [ 51 ] They ask the Court to take into account new facts, to review all of the evidence presented and to substitute its view for that of the trial judge, not to mention that several of the arguments presented were not even argued before him . [ 52 ] At paragraphs 11 to 15 of their inscription, the appellants address the distinction between those immovables that are of a religious nature and those that are not.

It is apparent that the arguments they raise in regard to sections 204, 205 and 206 of the M.T.A. are based on the assumption that there is a distinction between the various immovables of the Community, depending on whether or not

they are of a religious nature and whether or not they are taxable.

As the proposed distinctions were not supported at trial by the evidence required in this regard and were neither argued, nor admitted, this proposition is clearly inadmissible on appeal. [ 53 ] At paragraph 17 of their inscription, the appellants state that [ translation ] “... the municipality could tax the water they were consuming individually, but because that would require the municipality to provide individual water meters to these immovables, the Ville de Boisbriand preferred to include them indirectly in the agreement with the six entities mentioned above”.

This is a blatant attempt to contradict the Agreement, although they presented no evidence in this regard. [ 54 ] At paragraphs 18 and 19, the appellants argue that they terminated the Agreement in 2005, while attempting to justify why their private water supply system should nevertheless continue to be supplied with drinking water from the connection with the City’s public system .

This argument is without merit as the Agreement was tacitly renewed, as the trial judge ruled, and which conclusion is greatly supported by the evidence. [ 55 ] At paragraph 30 of the inscription, the appellants submit that the judge erred in extending the effects of the Agreement to the appellant co-defendants, which are not signatories and which were not invoiced for the water consumption of their immovables. They are incorrect in view of

section 498 C.T.A . as they are all possessors of immovables supplied by the City. [ 56 ] At paragraph 60, the appellants submit that the trial judge erred in law in ordering them to pay the judgment indivisibly. In the circumstances of this case, this argument is destined to fail. There is no doubt that the requirements of an indivisible obligation are met here. [ 57 ] Consequently, I am of the view that the appellants’ inscription in appeal does not contain any arguments that are serious, coherent, or even legally tenable. All the grounds submitted are destined to fail.

The grounds developed in the appellants’ written pleadings [ 58 ] The grounds raised by the appellants in their written pleadings require us to consider four issues: 1. Did the trial judge err in law by extending the effects of the Agreement to the appellant co-defendants? 2. Did the judge err in law by lifting the corporate veil in order to hold the appellant co-defendants liable for the obligations of the other appellants (defendants)? 3. Did the judge err in finding the appellants indivisibly liable for the payment? 4.

Did the judge err in law in ordering the appellants to pay interest at the rate of 18% per year? [ 59 ] They submit that the judge committed all these errors and that these are all errors of law. [ 60 ] They are mistaken. [ 61 ] Not only must we conclude that the judge did not commit these errors, but we must also conclude that what the appellants allege cannot be characterized as errors of law, as these are clearly (in the best-case scenario) questions of mixed fact and law, requiring deference in regard to the judge’s factual determinations unless palpable and overriding errors can be demonstrated. 1.

Does the Agreement also apply to the appellant co-defendants? [ 62 ] The appellants submit, firstly, that the judge erred in ruling that the Agreement also applies to the co-defendants even though they are not signatories. [ 63 ] In this regard, the judge stated: [ translation ] [79] In the amended defence dated February 4, 2010, the allegations contained in the original defence are repeated and certain arguments are added to the effect that the five co-defendants are not liable as they are not parties to the agreement (paragraphs 42.6 and following). … [86] Our colleague also noted that the defendants and co-defendants submit that they cannot be required to pay the taxes as they were never invoiced.

She addressed this at paragraph 21, citing

section 498 of the Cities and Towns Act , which provides: Municipal taxes, imposed on any immovable, may be collected from the tenant, occupant or other possessor of such immovable as well as from the owner thereof, or from any subsequent acquirer of such immovable, even where such tenant, occupant, possessor or acquirer is not entered on the valuation roll. In the case of any tax imposed on any partnership, in respect of the business of such partnership, such tax may be claimed and recovered in full from any member thereof.

[87] It is worth noting that in its August 30, 2010, judgment, the Court ruled that the trial judgment was well founded. [88] Even if the decision dealt mainly with the application of

section 252.1 of the Act Respecting Municipal Taxation , it should be noted that the Court of Appeal did not identify any errors in the other reasons provided by our colleague Girard J.C.Q. [89] Several factors weigh in favour of holding the defendants and co-defendants liable for the amounts invoiced. … [115] All the defendants and co-defendants must be held liable for the payment in accordance with the conditions set out below, either because they are signatories to the 1990 agreement, or because they possess property, at least as of 2007. [116] In the case of the co-defendants, it seems that they were not the owners of an immovable before 2007. [117] Nevertheless, their liability cannot be set aside because they are subsequent acquirers within the meaning of

section 498 of the Cities and Towns Act . [ 64 ] Contrary to what the appellants assert, the judge relied on the evidence, which established that these co-defendants were sued, since the interruption of payment, because they had become, at some point, directly or indirectly, the owners of an immovable benefitting from the Agreement. [20] [ 65 ] The argument submitted is therefore without merit. [ 66 ] The order against the appellant co-defendants is not the result of expanding the Agreement to include them; rather, it is the result of the nature of the claim by the City for municipal taxes, or at the very least, it can be regarded as such. [ 67 ] Moreover, it is clear that the characterization of the compensation for the supply of water as a tax within the meaning of the M.T.A. was bitterly debated during the hearing of the motion to dismiss. [ 68 ] There is nothing to support any other characterization of the compensation set out in the Agreement . 2.

Did the judge err in law by lifting the corporate veil? [ 69 ] The appellants submit the judge erred in lifting the corporate veil to hold the appellant co-defendants liable . [ 70 ] The judge did not do what the appellants suggest (lift the corporate veil). [ 71 ] He supported his finding that the City had always acted in good faith and believed to be dealing with the entire Community, after finding the appellant co-defendants liable pursuant to

section 498 of the M.T.A. , which is apparent and obvious from a simple reading of paragraphs 94 and 95 of his judgment. They provide: [ translation ] [94] From all the evidence, it appears that each of the defendants or co-defendants meets the connecting factors set out in

section 498 of the Cities and Towns Act or is bound under the agreement P-1. [95] Note, however, that at all times, the City authorities acted in good faith and believed to be dealing with the entire Boisbriand Hassidic Community.

Indeed, the agreement D-1 was entered into by the plaintiff City and the [ translation ] “Community”, represented by six corporations or congregations. [ 72 ] It is in this one instance, and then later, that the judge stated the following at paragraphs 96 to 108 of his judgment: [ translation ] [96] In her testimony, Guénette asserted that, especially these last few years, she had dealt mainly with a man named Schwartz. He, like others, claimed to be the Community’s spokesperson.

Schwartz would have recently handed over a cheque to her for over $40,000 following a dispute concerning thirty-nine unpaid property tax invoices. [97] As previously mentioned, on June 30, 2005, Robert Maskin, on behalf of the B'nai Levi Foundation, remitted a cheque for $403,004 to the Mayor of Boisbriand in payment of tax arrears, adding: [ translation ] Please note that going forward the Community and the members of its board of directors undertake to make sincere efforts to pay the taxes quickly. [Emphasis added; see Exhibit P-8] [98] The members of the Community, or its various branches, thus transacted indiscriminately with the city . [99] While the “ Community ” continued to honour its obligations, there was sufficient good faith between the parties in their dealings.

With time, the multiple changes in the numerous entities existing on the Community’s territory led the defendants and their representatives to start using the corporate structure to try to avoid their obligations . [100] At the hearing, it was established that several of the immovables owned by the defendants were gradually transferred to certain co-

defendants.

These entities then requested an exemption from the property transfer tax, invoking the fact that over 90% of the members of the entities involved in the transfer were the same and thus related within the meaning of the law. [101] As the City representatives could not obtain copies of the contracts involved from the members of the Community, despite multiple requests, the City was required to institute an action to collect the property transfer tax . [102] The matter was settled out of court in 2010, and the plaintiff agreed to write off over $945,000 in property transfer taxes. [103] The attorneys that represented the parties in that matter are the same as those who are involved in this case . [104] In other words, most of the corporations or organizations comprising the Community tried to have it both ways, benefiting from an exemption from property transfer tax and avoiding liability for the debts of the entities that they replaced through acquisition or merger . [105] During the hearing, counsel for the City tried to illustrate the complexity of the network of corporations and organizations created and dissolved as well as the endless research that this could require of the City. [106] Although there was no allegation to this effect included in the defendants’ defence proceedings or motions, nor any mention of it was made during oral arguments, the City’s attorney filed a judgment of the Superior Court rendered November 24, 2006, in which the Court cancelled the letters patent of November 5 and 11, 1997, pursuant to which Oir Hachaim Community was constituted, ordered their radiation, and declared that Le Grand Séminaire Rabbinique Tash de Montréal and Collège Rabbinique de Montréal Oir Hachaim D'Tash were reinstated in their original rights and obligations as established by letters patent dated November 5, 1997. [107] Conveniently, Oir Hachaim Community, radiated by this judgment, happens to be the only entity in regard to which counsel for the defendants did not have grounds to contest its legal connection! [108] The City was relying on E-1 (letter from the Community’s lawyers dated February 16, 1998) to the effect that Oir Hachaim would assume all the obligations of Grand Séminaire Rabbinique Tash de Montréal and of Collège Rabbinique de Montréal Oir Hachaim D'Tash; the City never received a letter stating otherwise. [Citations omitted] [ 73 ] The same goes with respect to his remarks set out at paragraphs 109 to 114 of the trial judgment, reproduced above under paragraph 39 of these reasons. [ 74 ] Once again, but from the perspective of the corporate veil argument, the appellants are trying to contest the decision of the trial judge, who concluded, correctly at law and not on the grounds of the corporate veil, that they were liable. [ 75 ] They submit that the various not-for-profit corporations must be considered as distinct legal entities, each with its own personality and independent existence, in support of the proposition that each has no knowledge, never had knowledge, and could not have had knowledge of what the others were doing, had done, or did not do.

There is no need to lift the corporate veil to conclude that the analysis proposed by the appellants in regard to invoicing and the receipt of invoices, is incongruous. [ 76 ] That said, even had there been any doubt remaining on this issue, which there is not, the appellants’ conduct throughout the course of this matter, seeking by all possible means to avoid their obligations, would in any event justify dismissing this argument. 3.

Did the judge err in law in finding the appellants indivisibly liable? [ 77 ] Next, the appellants claim that the trial judge erred in law in finding them all indivisibly liable for the payment. [ 78 ] They submit that an obligation is divisible in principle, in particular the obligation to pay an amount of money. They assert that the amounts claimed are neither tax, nor compensation.

Finally, they note that the Agreement does not provide for either solidarity or indivisibility. [ 79 ] This position must be dismissed. [ 80 ] First of all, the indivisible nature that the judge identified does not flow from the obligation to pay an amount of money, but rather from the inherent impossibility of allocating overall consumption to each of the immovables located on the Community’s territory (articles 1519 and 1520 C.C.Q. ). [ 81 ] In fact, overall consumption can be calculated only from the main water meter, which is why the City and the Community entered into the Agreement. [ 82 ] Indivisibility also flows from the fact that the amounts payable can be regarded as a tax. [ 83 ] Thus, the obligation is indivisible despite the absence of a specific clause to this effect in the Agreement and in the absence of solidarity. [ 84 ] In sum, the practical impossibility of allocating the consumption of drinking water for the Community’s entire private network of immovables is sufficient to render the Community’s covenant in the Agreement indivisible, not to mention the fact that the parties provided for the collective liability of the costs of consumption. [21] [ 85 ] This is the basis of the trial judge’s conclusion to the effect that the obligation is indivisible, as set out at paragraphs 131 to 136 of his judgment: [ translation ]

[131] An obligation may be characterized as indivisible, however, when, for example, owing to its nature, it is not susceptible of division (article 1519 C.C.Q. ). [132] In this case, although some individual meters were added over the years, it is impossible to determine and precisely allocate the users’ shares. [133] Other arguments weigh in favour of the indivisible nature of the obligation.

Article 2650 C.C.Q. provides: A claim to which the law attaches the right of the creditor to be preferred over the other creditors, even the hypothecary creditors, is a prior claim. The priority of a claim is indivisible. [134] The fifth paragraph of

article 2651 adds the following: The following are the prior claims and, notwithstanding any agreement to the contrary, they are in all cases collocated in the order here set out: … (5) claims of municipalities and school boards for property taxes on taxable immovables as well as claims of municipalities, specially provided for by laws applicable to them, for taxes other than property taxes on immovables and movables in respect of which the taxes are due.. » [135] This is completed by articles 2654.1 and 2656, which provide the following: 2654.1.

Prior claims of municipalities and school boards for property taxes constitute a real right. They confer on the holder of the claims the right to follow the taxable property into whosever hands it may be. 2656. In addition to their personal or, as the case may be, real right of action and the provisional measures provided in the Code of Civil Procedure (chapter C-25), prior creditors may exercise their remedies under the law for the enforcement and realization of their prior claim. [136] We must therefore conclude that the obligation is indivisible. 4.

Did the judge err in law in ordering the appellants to pay interest at the rate of 18% per year? [ 86 ] In support of this last ground, the appellants submit that

section 481 C.T.A. does not apply, given that the cash consideration contemplated by the Agreement (corresponding to the compensation claimed by the City) cannot be regarded as a tax. [ 87 ] Once again, this argument is without merit. [ 88 ] The appellants know, or should have known this, as the compensation due under the Agreement was regarded as a property tax in Girard J.C.Q.’s judgment and in the 2010 judgment of this Court. [ 89 ] The appellants also invoke

section 6.1 of the Agreement, according to which the City cannot claim any additional amounts from the Community, for its services, other than the amounts set out therein. [ 90 ] This argument is fallacious. [ 91 ]

Section 4.1 of the Agreement confirms that the appellants and their immovables are subject to applicable municipal regulations, including Regulation No. 302 (which became Regulation RV-991-21 in December of 2007), which provides that any amount due for the supply of drinking water (the water tax) shall bear interest in the manner provided by the law and the regulations. [22] [ 92 ] In other words, the interest charged on these overdue accounts is not an [ translation ] “other amount” within the meaning of the Agreement, but rather an amount due under its terms. [ 93 ] Finally, the appellants invoke

section 1.5.2 of the Agreement, which expressly provides that the amount adjusted annually by the City to take into account the actual consumption according to the individual meters will not bear interest, to criticize the trial judge for having applied the interest rate of 18% to the entire amount claimed by the City. This argument must also fail. [ 94 ] In

summary, the appellants’ arguments do not stand up to analysis, for the simple reason that the indivisibility of the residual water consumption imputed to them constitutes the very object of the Agreement, which states the willingness of the parties to centralize the billing.

Not only is the trial judge’s analysis supported by the evidence, but a contextual reading of the Agreement reveals that it is not the [ translation ] “tax bill” that does not bear interest, but only the amount of the annual adjustment, [ translation ] “ if any ”. [ 95 ] Finally, given all of the circumstances of this case and the appellants’ conduct throughout the duration of their long and tedious legal saga, they cannot claim to not owe interest merely because they did not receive individual invoices, considering that the Agreement provides that residual consumption will be subject to a single annual invoice. [ 96 ] As noted above, the indivisibility of the residual water consumption is the very object of the Agreement, as is the indisputable willingness of the parties to centralize billing, which the trial judge acknowledged. [23] Hiding behind corporate vehicles to justify not

having to pay interest, as a result of not being individually invoiced, is reckless and proceeds from blatant bad faith. The request under

article 524 C.P.C. [ 97 ] In considering the City’s request to have the appeal declared abusive under

article 524 C.P.C. , I note that the appellants: • applied and complied with the Agreement for over fifteen years; • sent the City, on October 30, 2007, [24] a notice of non-renewal of the Agreement that was to take effect on December 31, 2007, but never put into place alternative means of otherwise ensuring their supply of drinking water (for example, by digging one or several artesian wells); • took care never to ask the City to cease supplying drinking water to their private water supply system; • made sham offers and deposits; [25] the proposal was not only incomplete, but also conditional; • omitted or refused to offer the City the amounts owed to it since July of 2005; • ignored their obligation to comply with the requirements of

section 252.1 M.T.A. despite the August 2010 judgment; • used, without restraint or hesitation, their various entities to avoid their responsibilities to the City by creating or winding-up entities or by selling immovables among themselves. [ 98 ] All of the forgoing requires me to conclude that the appellants’ arguments are vacuous and their conduct towards the City is blameworthy. Indeed, since 2005, the City has been confronted by the appellants’ blatant refusal to make the payment in lieu of tax for the supply of drinking water. [ 99 ] The appellants simply ignored the various judgments rendered against them.

Since 2005, the taxpayers of the Ville de Boisbriand have borne the Community’s entire consumption of drinking water and its related costs. [ 100 ] Indeed, since June of 2005, the appellants have paid the City nothing, even though they acknowledge that the appellant defendants at least signed the Agreement and never contested its validity. [ 101 ] Basically, for over eight years, under various pretexts, including that the matter was in the hands of justice, the appellants have persistently arranged not to pay anything for a service that they collectively receive from the City . [ 102 ] There is no question of second guessing the private nature of the water supply system on the territory occupied by the appellants and the Collectivity (or Community), discussed above, let alone the validity of the Agreement and its tacit renewal. [ 103 ] Since 2005, millions of gallons of drinking water treated in the City’s public services were delivered to the appellant’s private system at great cost to the City’s taxpayers because the Community continues to use it without paying. [ 104 ] My comments as a whole illustrate the blameworthy conduct of the appellants in regard to both the legal system and the City . [ 105 ] In retrospect, there was certainly conduct marked by bad faith on the part of all the appellants throughout the duration of this too long legal saga, resulting in an unreasonable, even disproportionate, use of procedure .

I find that, since 2007, the appellants, collectively and individually, committed an abuse of right, within the meaning of

article 524 C.P.C. and that their conduct was blameworthy in every regard.

VI - CONCLUSION [ 106 ] The trial judge properly identified the abusive acts of the appellants and their excessive and dilatory manoeuvres in regard to the way they conducted themselves and managed their file. [ 107 ] The appellants could not claim that they did not understand and that they did not need to respect the obligations imposed of them under the judgment of Girard J.C.Q. and this Court’s judgment rendered in August of 2010. [ 108 ] The appellants always had, and continue to have, the option of seeking an alternative source to supply their drinking water, for example, with one or several artesian wells, should they wish.

On the other hand, if they wish to continue to benefit from the supply of drinking water from the City’s public system, they must pay for this service and comply with the legal consequences of the judgments rendered against them, as did the City, which never chose to take justice into its own hands, for example by unilaterally cutting the water supply. [ 109 ] I would therefore suggest that the Court declare the appeal abusive and dilatory under

article 524 C.P.C . [ 110 ] The City may claim, from the appellants, in accordance with paragraph 3 of

article 524 C.P.C. , the damages caused by the appeal (particularly reasonable extra-judicial fees), by motion addressed to the Superior Court or the Court of Quebec, according to the amount claimed. [ 111 ] For these reasons, I would grant the motion to dismiss the appeal with costs, dismiss the appellants’ appeal with costs, declare the appellants’ appeal dilatory and abusive, and reserve the City’s right to claim the damages caused by the appeal from the appellants, according to the assessment conducted by the competent court seized of the motion in question, if any.

JACQUES A. LÉGER, J.A. Any compensation required from a person under this division by reason of his being the owner of an immovable shall be regarded as a property tax imposed on the unit of assessment that includes the immovable. That presumption, however, does not apply if the owner of the immovable is not the person in whose name the unit of assessment that includes the immovable is entered on the roll.