2018 QCCA 1825, 2018 QCCA 1825

9202-0767 Québec inc. c. Prêtres de Saint-Sulpice de Montréal 2018 QCCA 1825 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-026183-160 (500-17-060351-106) DATE: November 2, 2018 CORAM: THE HONOURABLE MARK SCHRAGER, J.A. SIMON RUEL, J.A. STEPHEN W. HAMILTON, J.A. 9202-0767 QUÉBEC INC. APPELLANT/INCIDENTAL RESPONDENT – Plaintiff v.

LES PRÊTRES DE SAINT-SULPICE DE MONTRÉAL RESPONDENT/INCIDENTAL APPELLANT – Defendant JUDGMENT I- INTRODUCTION [ 1 ] This is an appeal from the judgment rendered on June 6, 2016 by the Superior Court, District of Montreal (the Honourable Donald Bisson) , [1] dismissing the Appellant’s action in reduction of the purchase price of an immovable property and in damages totalling $29,578,355.

The judge also granted the Appellant’s motion to revoke a judicial admission, which judgment is the subject of the incidental appeal herein but which need not be dealt with directly given the disposition of the principal appeal. [ 2 ] Amongst the numerous grounds of appeal raised, the Appellant purports to raise questions of law. However, as will be explained below, the submissions in law even if they might otherwise be correct (but without rendering any decision in such regard) do not have the factual foundation necessary for the appeal to succeed.

More specifically, the Appellant submits that pursuant to Articles 1716 and 1718 C.C.Q. the Respondent’s obligation to deliver the immovable it sold included an obligation to deliver a change in the municipal zoning by-laws, which would allow for the entire construction on the property contemplated by the Appellant. This follows from the Respondent’s representations throughout the process that the land was “constructible”. Furthermore, the Appellant submits that the Respondent undertook that the City of Montreal would modify the zoning by-law to permit the construction of the project as planned by the Appellant.

In such latter regard, the Appellant invokes

Article 1443 C.C.Q. , which provides, inter alia , that a party to a contract may promise that a “third person will undertake to perform an obligation”. II- FACTS [ 3 ] Following is a

summary of the detailed factual narrative presented by the judge. [ 4 ] The Respondent, a religious order, determined with the help of professional consultants, that it required approximately $40 million to answer its needs for the foreseeable future including caring for its aging members. It was decided to sell some of the immovable property the Respondent owned in the Montreal area. The building and surrounding lands situated on the slopes of Mount Royal and bearing civic address 3880 Chemin de la Côte des Neiges, was leased to another religious order which operated a junior college (CÉGEP) in the building.

The tenant gave notice that it had decided to relocate at the end of the 2006-2007 school year and so would not renew the lease. Thus, it was decided by the Respondent to sell this property. [ 5 ] The property included a multi-story building constructed as a seminary in 1894 as well as a freestanding sports complex housing a gymnasium and swimming pool added in 1984. [ 6 ] In 2005, the Respondent mandated professionals to assess the value of the property and its potential for development having regard to its architectural and patrimonial attributes.

The municipal zoning was “educational and cultural” (or in other words institutional); residential development was not permitted. Moreover, the property was located within a zone earmarked by provincial government decree for protection. [2] [ 7 ] The professionals assessed the value of the property at $19.3 to $25 million, which was considerably less than the municipal

evaluation of $31,472,000 for tax purposes. Such value was insufficient for the Respondent’s needs so that its consultants were instructed to market the property. Their mandate included forming a tripartite committee composed of themselves, representatives of the City of Montreal and representatives of the provincial government. Over the course of almost two years, this committee undertook studies of the possibilities to redevelop the property while respecting its patrimonial or heritage nature.

The studies sponsored by the committee for such purpose identified the extent of construction that would be possible while respecting this patrimonial and heritage character as well as the landscape of the property as the 65,300 square metres of land included considerable green space and wooded areas. The extent of projected construction included not only the renovation of the existing seminary building but also additional construction of residences on unbuilt land referred to in the exhibits and the judgment as “zones 4-A and 4-C”.

The term used in the studies and emphasized by the Appellant is that these areas were “constructible”. [ 8 ] Following the vacating of the property at the end of the school year in 2007, the Respondent decided to invite offers or expressions of interest to purchase. Its lawyer (Mtre Morin) met with 15 or 16 real estate developers to whom the aforementioned studies were made available. One of these developers was the Appellant who was represented by its principal, Mr. Tony Miceli, an experienced residential real estate developer.

His concept was to renovate the existing seminary building into apartments, replace the sports complex with residences and build new residential structures on zones 4-A and 4-C. [ 9 ] The call for submissions produced 13 proposals including a letter of intent from the Appellant. The Respondent considered that 11 of the 13 proposals were worth pursuing and thus, entered into a second round of submissions. While the prices offered were in the same range, the only [3] offer to purchase which was unconditional was that of the Appellant who proposed the purchase price of $45 million.

The written offer did not provide for any due diligence, the Appellant declaring itself in the documents as having already completed such process prior to submitting its offer. Specifically, zoning or the change of zoning to allow for the construction intended by the Appellant was not made a condition of the offer in any manner. Neither is such the subject of any mention in the notarial deed of sale or for that matter in any other document binding the parties. [ 10 ] Indeed, Mtre Morin testified that at one of a number of meetings with Mr.

Miceli between March and October 2008, he suggested that the latter consider inserting conditions pertaining to the zoning and permitted construction as had all but one of the other developers in their submissions. [4] He shared with Mr. Miceli the anecdote of another developer on another project who lost $1 million because of an anticipated change in zoning that had not materialized.

Mtre Morin added that the tripartite committee agreed that it was possible to build on zones 4-A and 4-C (or, in the context of Appellant’s submissions, the land was “constructible”) but there was no guarantee that the zoning would be changed to permit this. Mr. Miceli dismissed this with a reply to the effect that he had contacts and knew how to get things done at city hall. Mtre Morin’s testimony was not refuted by Mr. Miceli. [ 11 ] Mr. Miceli’s testimony indicated that Mtre Morin told him that by submitting an unconditional offer or an offer with few conditions, his would be the best proposal.

Mtre Morin does not really say the contrary. [ 12 ] With all of this, it was found as fact by the judge that the Respondent made no undertaking regarding a change in the zoning.

The findings of the tripartite committee that the land was “constructible” did not and could not bind the City of Montreal to alter the zoning. [ 13 ] The offer to purchase includes the following : 2.2.3 L’immeuble est vendu tel que vu et examiné par l’acheteur qui s’en déclare satisfait, sans garantie de qualité de quelque nature que ce soit, l’acheteur ayant renoncé à effectuer une vérification diligente autre que celle mentionnée ci-haut [an environmental Phase II study] avant de procéder à son offre et renonçant pour l’avenir à toute garantie de qualité; 2.2.4 La présente offre n’est soumise qu’à la condition de vérification des titres par le conseiller juridique de l’acheteur qui devra être effectué dans les trente (30) jours de l’acceptation finale de l’offre.

Si de l’avis de l’acheteur ou celui de son conseiller juridique, les titres sont affectés de défauts, l’acheteur aura quinze (15) jours après la période d’examen pour en aviser le vendeur et si ce dernier incapable ou refuse d’y remédier dans un délai de quinze (15) jours après réception de cet avis, l’acheteur peut à sa discrétion : 2.2.4.1.

Déclarer la présente offre et son acceptation nulle et non avenue et ce sans recours pour l’une ou l’autre des parties et le dépôt et les intérêts seront remis à l’acheteur, ou 2.2.4.2 accepter les défauts mentionnés au paragraphe 2.2.4 et procéder à l’achat. […] 6.2.1 L’immeuble dont il s’agit est situé dans l’Arrondissement Historique et Naturel du Mont-Royal et est sujet à un régime de protection spécial en vertu d’un Règlement de la Ville de Montréal actuellement objet de consultation publique à l’Office de consultation public de Montréal.

L’immeuble est situé dans la zone 0019 du règlement municipal en vigueur à Montréal et l’immeuble est conforme aux règlements municipaux en matière de zonage . Par ailleurs l’immeuble en soi n’a pas fait l’objet de classification ou d’avis d’intention de classification par le MCCCFQ; [...] 7.2 L’acheteur reconnaît le caractère patrimonial particulier de l’immeuble ayant pris connaissance des études faites par Beaupré Michaud architectes, Primula environnement, Ethnoscope et d’une étude de caractéristique paysagère de Vlan/Version Paysage.

Il reconnaît avoir déposé avec son offre un concept d’aménagement préparé par Daniel Arbour & Associés (dossier 18034H) en date du 17 juin 2008 et déclare, sous réserve des approbations de la Ville de Montréal et du Ministère de la Culture, des Communications et de la Condition féminine du Québec, qu’il tentera de réaliser l’aménagement de la propriété conformément à l’esprit du concept déposé. (Emphasis added)

These clauses are repeated in substance in the notarial deed of sale. Thus, not only is there no expression of the alleged obligation or representation arguably undertaken by the Respondent, the sale documents indicate the contrary. Zone 0019 does not permit residential occupation as indicated above. The only condition to which the sale is made subject is the title search. [ 14 ] After the signature of the deed of sale, the Appellant, with the cooperation and participation of the Respondent’s representatives, as requested by the Appellant, attempted to have the zoning changed.

However and despite the favourable opinion of the tripartite committee and different levels of the municipal bureaucracy, the only zoning change approved by city council allowed for conversion of the main seminary building into residential units and the demolition and replacement of the sports complex by a residential building. The construction of new residential units on zones 4-A and 4-C proposed by the Appellant was not approved. [ 15 ] Consequently, the Appellant sued for reduction in the purchase price and damages.

According to the Appellant, without the construction of the additional residences on zones 4-A and 4-C, the property was not worth the $45 million it paid but rather approximately $15 million. III- THE JUDGMENT [ 16 ] After a long and detailed recitation of the facts, the judge determined that the Respondent did not undertake to deliver any change in the zoning affecting the property nor promise that the City of Montreal would make any such amendment.

Though he could have stopped there, the judge continued and examined the legal arguments presented by the Appellant as well as the quantification of the damages and the motion to revoke an admission, the subject of the incidental appeal herein. IV- DISCUSSION [ 17 ] The contract documents (offers, schedules and notarial deed) contained no conditions, stipulations, representations or price adjustment clause revolving around a zoning change. No reading of these documents, particularly by an experienced developer like Mr.

Miceli, could lead to any other conclusion, the whole as correctly concluded by the judge. [5] [ 18 ] Moreover, no common intention of the parties arising from any verbal representation can be discerned from the testimony of Mr. Miceli, the only representative of the Appellant who interacted with the Respondent’s representatives, again as accurately observed by the judge. [6] [ 19 ] Following is the judge’s capsule

summary of Mr. Miceli’s testimony: [130] En effet, M. Miceli mentionne ceci : - Lors d’une rencontre en 2007, « JP Morin made it clear that there were new buildings to be added on [zones] 4a and 4c »; - Plus tard en 2007, « JP Morin tells me that they have settled areas for developments that everyone [les PSS [the Respondent], la Ville de Montréal et le ministère de la Culture du Québec] was ok with, areas 4a and 4c. »; - En 2007 et 2008, « I was told by JP Morin for the PSS and Charland that I can build in 4a and 4c, over the course of 2 years. They told me it is a formality for me [to get the zoning changed].

They said, you respect the studies and the summaries, and the right price and you will be the successful bidder, and the City will support your project. »; - « They told me that the PSS made an arrangement with the City of Montreal. The City does not want anything to be added to the existing Grand Séminaire, in exchange of being allowed to add buildings on the property [la Propriété]. »; - En fin mars ou début avril 2008, lorsque M. Miceli lit la synthèse qui accompagne l’appel de propositions , « I notice there are 3 logos, Montreal, Culture Quebec and PSS.

This confirmed what the PSS, JP Morin and Charland told me for 3 years. At page 16 [of P- 2, it is written] : zones 4a and 4c. Constructible. »; - Concernant la lettre d’intention de Québec Inc. et ses ajouts subséquents , « We did not make the sale conditional to obtaining the change in by-law for 4a and 4c. Because I was told it is a formality, they had done all the work »; - Juste avant de soumettre sa lettre d’intention en juin 2008, M. Miceli rencontre Me Jean-Pierre Morin et lui fait part du projet qui inclut des constructions sur les zones 4a et 4c. « JP Morin had no issue ».

This testimony was not considered sufficient by the judge to establish any formal verbal warranty or condition regarding zoning and binding the Respondent. The Appellant has not established any palpable and overriding error that would justify appellate intervention in this regard. [ 20 ] The judge observed that the Appellant could have made the zoning change a condition of the agreement or inserted a price adjustment clause in the documents to be triggered if appropriate zoning was not obtained within a given delay. [7] However, this is not what the Appellant did.

Rather, it assumed the risk that the zoning would be changed to allow construction on the property as Mr. Miceli envisaged. This was a calculated risk. Indeed, the Respondent agrees that all indications at the time confirmed that the desired zoning change was but a formality and would be obtained. The facts led in evidence and occurring after the signature of the notarial deed of sale confirm that the municipal administrative officers also agreed.

It appears however that for reasons which are not clear, the process stalled at the level of the executive committee and city council. [8] In any event, an offer without conditions or at least not conditional on a zoning change was the most advantageous to the Respondent and not surprisingly was accepted by it. However, the risk assumed (that the zoning modification would follow) ended adversely for the Appellant. It cannot, after the fact, seek to, in effect, insert conditions in

the written contract, which it chose not to insert, for strategic business reasons. It is not the courts’ mission to remake the bargain struck by the parties. The Appellant chose to gamble. Unfortunately for the Appellant, it lost. [ 21 ] The Appellant argues that the judge erred in law by deciding that a vendor’s obligation to deliver pertains to the current state of the property only and could not include some future element like new zoning.

This alleged error of law does not require examination given the judge’s conclusions that no obligation to deliver a property zoned residential was undertaken by the Respondent, which factual conclusion suffers from no error. * * * [ 22 ] Given the judge’s factual conclusions with which the Court agrees, as indicated above, it is not necessary to consider the other legal arguments presented nor the quantification of damages or the incidental appeal.

FOR ALL THESE REASONS, THE COURT: [ 23 ] DISMISSES the appeal with legal costs; [ 24 ] DECLARES the incidental appeal has no object and is DISMISSED , without legal costs. MARK SCHRAGER, J.A. SIMON RUEL, J.A. STEPHEN W. HAMILTON, J.A. Mtre Antonietta Melchiorre Mtre Mark M. Rosenstein LAPOINTE ROSENSTEIN MARCHAND MELANÇON For Appellant/Incidental Respondent Mtre André Morin Mtre Kathleen Désorcy PRÉVOST FORTIN D’AOUST For Respondent/Incidental Appellant Date of hearing: October 24, 2018