Sainte-Julie must compensate developer for unused land credits, Supreme Court rules

Sainte-Julie could not escape its obligation to compensate a developer simply because the future projects meant to use a bank of land credits never happened, the Supreme Court of Canada ruled on December 19, 2025.

In Sainte-Julie (City) v. Investissements Laroda inc., 2025 SCC 44, the court ordered the Quebec municipality to pay the market value, as of December 15, 2015, of 26,705.78 square metres of bulk land free of park fees within its territory. It did not set a final dollar amount. Instead, it returned that valuation question to the Superior Court, replacing the Court of Appeal’s $287,458.51 award based on 2001 assessment values.

Justice Suzanne Côté, writing for all nine judges, found that a 2001 agreement had replaced an earlier debt with a new contractual obligation. The parties had postponed when the city would have to perform that obligation; they had not made its existence depend on an event they regarded as uncertain. That distinction under Quebec civil law determined whether the city still owed compensation when the anticipated development failed to materialize.

A land bank intended for future projects

During the 1990s, Promotions M.G. Larochelle inc. completed several developments in Sainte-Julie. The rules then in force required transfers for parks, playgrounds or green spaces equal to 10 per cent of the development area, or an equivalent payment. When the parties reviewed the transfers, they found that the developer had conveyed 3,898.27 square metres more than required. The city said it could neither return that land nor reimburse its value at the time.

The municipality also wanted another parcel for public amenities, including a bicycle path, but lacked the funds to buy it. Their February 19, 2001 agreement created a land-area bank that combined the earlier excess transfer with credit for half of the additional 45,615-square-metre parcel. The agreement recognized a bank of 26,705.78 square metres, to be used against park obligations arising from future development approvals. It contained no fallback mechanism if the bank could not be used.

Laroda, which ultimately succeeded to Larochelle’s rights, owned land in the agricultural zone of the Du Moulin sector. Both sides were convinced that the necessary exclusion from that zone would be approved, as previous applications had been. But applications failed, and a later metropolitan land-use plan further constrained development. Attempts to acquire other land for use of the credits also failed.

On December 15, 2015, Laroda demanded that the city resolve the matter through a monetary offer. Discussions proved unsuccessful, and it sued on December 13, 2018. The trial judge dismissed the claim, treating the city’s obligation as conditional on future development approvals that had become impossible. The Court of Appeal disagreed and awarded compensation, but the Supreme Court found errors in parts of that court’s reasoning and valuation approach too.

An existing debt with performance deferred

The Supreme Court first addressed novation: replacing an existing obligation with a new and different one. Côté stressed that this cannot be presumed. The parties must clearly intend the substitution, although their conduct can establish that intention even without express wording in the contract.

Here, the agreement did more than extend the time for returning mistakenly transferred land. It replaced the original debt with a credit arrangement that also financed the city’s acquisition of additional land. The old obligation was extinguished, but a new one arose under the contract. That meant the remedy had to be assessed as performance of the new obligation, rather than simply returning property received in error.

The court then distinguished a conditional obligation from one subject to a suspensive term. In the latter situation, the obligation already exists, but the time when it can be enforced is deferred. What the parties themselves understood about the future event matters: an event can be objectively uncertain while both sides reasonably regard its occurrence as certain.

The evidence showed that both parties expected future developments to happen and intended the bank to defer the city’s performance until then. The trial judge had focused too narrowly on the objective uncertainty of approvals. The bank was also not limited to the Du Moulin project; it could have been used for other land within the municipality. Failed efforts to remove that particular land from the agricultural zone therefore did not, by themselves, determine when the city’s obligation became due.

Why the 2015 value governed

The Supreme Court applied article 1512 of the Civil Code of Québec to fix the time for performance. Fourteen years had passed between the agreement and Laroda’s demand letter, despite sustained efforts to use the bank. Considering the obligation and the parties’ circumstances, the court selected December 15, 2015. Laroda’s December 2018 action was consequently not time-barred.

The court rejected the Court of Appeal’s approach of using two Civil Code provisions together to fix that date. Article 1510 addresses an event expected at a determinable time whose occurrence has become impossible; article 1512 addresses different circumstances, including an agreed event whose timing remains undetermined. The provisions are mutually exclusive. This case fell under the first paragraph of article 1512.

Although the agreement did not expressly promise a cash reimbursement if the bank could not be used, the parties never intended a gift of the land. The city had used the property for public purposes and had sold part for a childcare centre. With specific performance unavailable in the circumstances, Quebec’s rules on performance by equivalence permitted damages to compensate Laroda for the lost value.

The measure was the bank’s market value when the obligation became due, not the 2001 assessment value sought by the city or the later trial-date value sought by Laroda. The evidence did not establish the required 2015 market value. The Supreme Court dismissed the city’s appeal, allowed Laroda’s cross-appeal in part, and sent only that valuation question back to the Superior Court. Laroda was awarded costs throughout, including expert fees.

Source: Sainte-Julie (City) v. Investissements Laroda inc., 2025 SCC 44, decided December 19, 2025 (official English translation).