Hydro-Québec v. Matta2020 SCC 37 (38254)

“On March 13, 2015, the Régie de l’énergie du Québec authorized Hydro‑Québec to construct a proposed electrical transmission line between the Chamouchouane transformer substation in Saguenay‑Lac‑St‑Jean and the Bout‑de‑l’Île transformer substation in Montréal. Hydro‑Québec realized that it would be easier to run the line through a corridor where it already had servitudes that had been established in the 1970s for a transmission line between the Jacques‑Cartier substation near Québec and the Duvernay substation in Laval. Hydro‑Québec’s acquisition of those servitudes had involved two steps. Having been authorized by order in council to acquire them by expropriation, it had first served and published notices of expropriation, after which it had signed, with the then owners, notarial agreements that described the servitudes being established and provided for various indemnities that would be payable, including for any work that might be carried out on the servient land.

Hydro‑Québec claimed that these servitudes authorized it to route up to three electrical transmission lines through the servient land. The current owners of the lots contested this claim; they submitted that the rights arising from the servitudes acquired when the Jacques‑Cartier–Duvernay line was constructed were limited to that one line only. They denied Hydro‑Québec’s employees access to their lots. Hydro‑Québec then applied for an injunction. The owners considered the proceedings abusive. In a cross‑application, they sought damages for unauthorized use of the servitudes following a reconfiguration of the Jacques‑Cartier–Duvernay line in the 1980s and for hardship and inconvenience caused by the existing infrastructure. The proceeding was split so as to have the hearing of the cross‑application postponed to a later date, depending on the outcome on the issue of the scope of the servitudes.

The trial judge ruled in Hydro‑Québec’s favour. He found that the servitudes at issue had originally been acquired by expropriation, but that the subsequent agreements had clarified their purpose and scope. In his view, the agreements were clear: they authorized Hydro‑Québec to erect three electrical transmission lines no matter what the origin or the destination of the electricity was. Having concluded that the servitudes established in favour of Hydro‑Québec authorized it to place three electrical transmission lines on the owners’ lots, the trial judge granted the injunction and dismissed the cross‑application.

The Court of Appeal allowed the owners’ appeal. It remarked that the trial judge’s decision to dismiss the cross‑application had been ultra petita, as the splitting of the proceeding meant that that matter had not been before him. In the Court of Appeal’s view, the servitudes at issue had been acquired by expropriation and should be characterized as servitudes established by operation of law. Their scope therefore had to be analyzed in light of the limits imposed by the order in council that authorized them. The Court of Appeal accordingly concluded that Hydro‑Québec could not rely on the servitudes in its favour for the construction of the new line and that it had to proceed by way of new expropriations or agreements.”

The SCC (7:0) allowed the appeal.

Justice Côté wrote as follows (at paras. 33, 35-37, 45-46, 50, 57-58, 59-61, 65):

“Absent a palpable and overriding error, an appellate court must refrain from interfering with findings of fact and findings of mixed fact and law made by the trial judge: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at paras. 10‑37; Benhaim v. St‑Germain, 2016 SCC 48, [2016] 2 S.C.R. 352. An error is palpable if it is plainly seen and if all the evidence need not be reconsidered in order to identify it, and is overriding if it has affected the result: H.L. v. Canada (Attorney General), 2005 SCC 25, [2005] 1 S.C.R. 401, at paras. 55‑56 and 69‑70; Salomon v. Matte‑Thompson, 2019 SCC 14, [2019] 1 S.C.R. 729, at para. 33. As Morissette J.A. so eloquently put it in J.G. v. Nadeau, 2016 QCCA 167, at para. 77, [translation] “a palpable and overriding error is in the nature not of a needle in a haystack, but of a beam in the eye. And it is impossible to confuse these last two notions”: quoted in Benhaim, at para. 39. The beam in the eye metaphor not only illustrates the obviousness of a reviewable error, but also connotes a misreading of the case whose impact on the decision is plain to see.

In the case at bar, the Court of Appeal made the two errors it is purported to have made.

First, it substituted its own opinion for that of the trial judge regarding a question of fact in reaching, I would add, a conclusion that was clearly contrary to the evidence. At para. 22 of its reasons, it wrote:

  • [translation] Because Order in Council 3360‑72, the plan, the notices of expropriation and prior possession, the agreements and the acquittances all refer to servitudes for the construction of transmission lines between Jacques‑Cartier and Duvernay, Hydro‑Québec cannot rely on these servitudes for the construction of the new Chamouchouane–Bout‑de‑l’Île line. [Emphasis added.]

This statement is incorrect. One need only read the words of the agreements and the acquittances to realize that they do not contain even the most obscure allusion to a line between the Jacques-Cartier and Duvernay substations. The error is especially significant given that it is intimately linked to the findings on the main issue in the case: the scope of the servitudes established in favour of the appellant.

Second, the Court of Appeal compromised the fairness of the proceeding by drawing conclusions regarding the application of Order in Council 720‑2016, of which it took judicial notice after the hearing without notifying the parties. The court wrote:

  • [translation] On August [9], 2016, after the proceedings began, the government issued another order in council to enable Hydro‑Québec to acquire the necessary servitudes for the construction of the Chamouchouane–Bout‑de‑l’Île line. Hydro‑Québec therefore has the authority to acquire servitudes for the construction of the new line, but must follow the appropriate procedure, that is, either proceed by expropriation or obtain conventional servitudes. [Emphasis added; footnote omitted.]

The disagreement between the courts below with regard to the characterization of the servitudes at issue essentially rests on the characterization of the post‑expropriation agreements. The Court of Appeal recognized that publishing a notice of expropriation does not bar the expropriating party and the expropriated party from subsequently negotiating conventional servitudes, but it concluded that the appellant and the respondents’ predecessors in title had negotiated nothing of the sort, given that their agreements referred to servitudes acquired by expropriation and that such references would preclude the servitudes being characterized as conventional servitudes: para. 21.

The characterization of the agreements at issue is so intimately linked to the assessment of the facts that I see this more as a question of mixed fact and law than as a pure question of law: Uniprix inc. v. Gestion Gosselin et Bérubé inc., 2017 SCC 43, [2017] 2 S.C.R. 59, at paras. 38 and 42; Churchill Falls (Labrador) Corp. v. Hydro‑Québec, 2018 SCC 46, [2018] 3 S.C.R. 101, at para. 49. With respect, I find that the Court of Appeal erred in interfering with the trial judge’s conclusions in the absence of a palpable and overriding error. There is no such error in Sansfaçon J.’s conclusion, which is perfectly justifiable in light of the evidence.

I find that Sansfaçon J. was correct in concluding that the agreements at issue are servitude agreements.

Servitude agreements are subject to the rules applicable to the interpretation of contracts: Centre de distribution intégré (CDI) inc. v. Développements Olymbec inc., 2015 QCCA 1463, 59 R.P.R. (5th) 1, at para. 17; 151692 Canada inc. v. Centre de loisirs de Pierrefonds enr., 2005 QCCA 376, [2005] R.D.I. 237, at para. 30; Normand, at p. 329; see also Uniprix, at paras. 34‑41. If their words are clear, effect must be given to the clearly expressed intention of the parties. If, however, the agreements, read as a whole, are vague, ambiguous or incomplete, the common intention of the parties must be sought: art. 1425 C.C.Q.

But there is no need to go to that second step in this case, as Sansfaçon J. has already found that the agreements were clear: para. 38. Whether a contract is clear or ambiguous is, in the context of an appeal, a question of mixed fact and law for which the applicable standard for intervention is palpable and overriding error: Uniprix, at para. 41. Because no such errors have been established, the scope of the servitudes must be determined in light of the words of the agreements at issue.

In substance, the agreements grant the appellant:

  • servitudes allowing it to place, replace, operate and maintain up to three electrical transmission lines;
  • servitudes for tree cutting and pruning;
  • servitudes of right of way; and
  • servitudes of non‑construction.

They do not mention any restrictions regarding the origin or destination of the electricity. The argument that the servitudes are limited to the line between the Jacques‑Cartier and Duvernay substations must therefore fail. Moreover, the respondents’ suggestion that a restrictive interpretation of the powers of expropriation is required cannot be accepted either. What we must rule on here is not the exercise of a public power, but the scope of contractual agreements.

The servitudes on the respondents’ lots authorize the appellant to construct the Chamouchouane–Bout‑de‑l’Île line. As I mentioned above, there is no need to refer to the provisions of the notices of expropriation: the agreements must prevail. I wish to be clear, however, that had it been necessary to do so, my conclusion would have been the same. I agree with Sansfaçon J. that the reference in the preamble of the notices of expropriation to Order in Council 3360‑72 and the Jacques‑Cartier–Duvernay line has no impact on the description of the scope of the servitudes: trial reasons, at paras. 34 and 36.

…As I explained above, the servitudes at issue must be analyzed in light of the agreements subsequent to the notices of expropriation, and those agreements contain no restrictions as to the origin of the electricity. They grant the right to [translation] “place, replace, maintain and operate, on the said servient land, three (3) high‑ or low‑voltage electrical transmission line(s), and communication lines”. The servitudes concern the lines crossing the servient land, not the substations located at either end of those lines. I see nothing in the words of the agreements that would explicitly or implicitly prevent the appellant from redirecting one of its lines toward another substation. The right to operate electrical transmission lines clearly includes the right to make modifications such as the one that was made in the early 1980s.”