Can acquired rights to a derogatory use apply to an entire building?
Recently, in the decision 9056-3818 Québec inc. c. Ville de Montréal (arrondissement de Côte-des-Neiges–Notre-Dame-de-Grâce)[1], the Superior Court had the opportunity to confirm that acquired rights relating to a derogatory use cannot be applied to an entire building automatically, in the sense that the actual uses of the building’s premises must be taken into account to establish acquired rights.
In the 1990s, under the terms of an emphyteutic lease, a tenant undertook the obligation to erect a two-story building to be located in the zone currently known as zone 0034 of the borough of Côte-des-Neiges-Notre-Dame-de-Grâce (hereinafter "Borough"). On January 30th, 2004, the tenant transferred its rights in the lease to the plaintiff.
In April 2007, a modified by-law came into force. It stipulated that an establishment located in the zone 0034 could only be occupied by a "commercial" or a "public and institutional equipment" use if it was located in a building of a minimum height of four (4) floors. However, the plaintiff's building had only two (2) floors.
On January 8th, 2018, the plaintiff filed a lawsuit against the City of Montreal. The plaintiff requested to have its acquired rights recognized in order to exercise, in the building, a commercial use authorized by the municipal by-law for buildings of four (4) floors or more.
The sole issue to be determined by the Superior Court was whether the acquired rights are attached to each premise or to the building as a whole. According to the plaintiff, the building as a whole should benefit from acquired rights to exercise all the commercial uses authorized in the zone 0034 prior to the adoption of the modified by-law. However, according to the City of Montreal, the acquired rights are exclusively related to the uses actually carried out in each of the premises of the building in April 2007.
According to the Superior Court, one cannot base the existence of acquired rights on the mere general vocation of a property or building without taking into account its actual uses prior to the entry into force of a modified by-law. Thus, in the Court's opinion, if a building had several different uses prior to the entry into force of a modified by-law, each part of the building where different uses were exercised must be studied separately.
The Court also noted the fact that the plaintiff admitted that it was not impossible to find tenants who could carry on activities permitted by the modified by-law and noted that the plaintiff had not demonstrated that it was no longer able to rent the premises of its building for this purpose.
Furthermore, the Court held that a municipal council's desire to have acquired rights extinguished or voluntarily abandoned is not blameworthy or illegitimate. In fact, a municipal council can regulate and control the exercise of its acquired rights and thus affect their survival. In this case, the Superior Court was of the opinion that it must simply apply the text according to the clear will expressed by the Borough’s council, even if the provisions concerned could be considered severe or restrictive by some.
In doing so, the Superior Court distinguished the present case from the decision rendered by the Court of Appeal in Saint-Laurent (Ville de) c. 2426-4640 Québec inc.[2]. In the latter, the owners sought recognition of the existence of an acquired right to carry on commercial activities permitted by the former by-law in their buildings. Unlike the case at bar, the evidence in this case revealed that the land was located in an intensive commercial environment, which made it inconceivable for other uses to be exercised. In other words, in this other case, the Court of Appeal was of the view that the exceptional circumstances warranted judicial intervention because of the abusive and oppressive nature of the by-law, which caused an injustice amounting to expropriation without compensation.
By making this crucial distinction with respect to the evidence, the Superior Court rejected the plaintiff's application for a declaratory judgment seeking recognition of acquired rights to its entire building. It should also be noted that a declaration of appeal has been filed against this decision.