Reaction to the Court of Appeal’s decision Forcier & Frères ltée v. Town of Malartic

On May 12, 2023, the Court of Appeal of Québec renders a judgment on the appeal by the appellant, Forcier & Frères, of a Superior Court decision dismissing its civil liability action against the respondent, Town of Malartic1.

Context of the case

In 2005, Town of Malartic is experiencing water supply issues. The respondent thus mandates experts who are able to locate an alternative groundwater source. The source is located in the right of way of a borrow pit quarried by many regional businesses. 

The expert opinions show that the water quality of this alternative source is excellent, although threatened by surface contamination and notably by gravel quarrying operations in the sector. Consequently, the respondent choses to adopt a first resolution, under which the Town will cease to retain the services of businesses quarrying at the borrow pit. It is subsequently cancelled and followed by a new resolution on November 28, 2007, at the center of this litigation, under which the Town will no longer use, for its needs in gravel, the gravel quarried from the said borrow pit. A provision to that effect is also included in tender contracts.

In 2008, a second expert opinion mentions that because of the continued operations in the borrow pit, the groundwater is at significant risk of contamination. In response, the respondents file an injunction against all businesses that continue to quarry gravel from the borrow pit. The provisional injunction is granted but not the permanent injunction. As of 2013, only the appellant pursues its quarry operations in the borrow pit, and files a motion in civil liability against the respondent.

The heart of the Court of Appeal’s decision

This judgement of the Court of Appeal is especially important since it is the first in Québec to apply Nelson (City) v. Marchi2, with regards to the distinction between policy and operational decisions in municipal law.

The issue at the heart of this judgment is to determine whether, in concluding that the Town’s decisions were core policy decisions, and that the respondent was not acting in bad faith or irrationally in making these decisions, the Superior Court committed a reviewable error. 

Developments in case law have led to the finding that a public authority benefits from immunity on core policy decisions, decisions as to a course or principle of action that are based on public policy considerations, such as economic, social and political factors3.

Thus, in order to determine whether public law immunity is applicable in this case by determining whether the decisions made by the respondent are policy decisions, the Court of Appeal refers, in particular, to the four factors listed by the Supreme Court in Nelson, namely (1) level and responsibilities of the decision-maker; (2) the process by which the decision was made; (3) the nature and extent of budgetary considerations; and (4) the extent to which the decision was based on objective criteria4. 

The Court then applies the four criteria to the facts at hand. The Court first notes that the decisions in dispute were made by the municipal council, the main decision-making body of the town, and composed of members who have the obligation to act in the best interest of the town population. 

The Court describes the process followed to arrive at such decisions, namely a long environmental assessment and the consideration of alternatives to ensure the protection of groundwater located in the sector of the borrow pit. The decisions made by the respondent were not aimed solely towards the appellant but were rather general and prospective in their application; criteria which, moreover and according to Nelson, militate in favor of core policy decision5. 

With regard to budgetary considerations, the Town considered the economic constraints related to possible contamination of the groundwater source. If confronted to such a situation, the respondent would not have the financial resources to ensure the construction of a drinking water plant.

Finally, it is apparent that to make its decisions, the Town weighed competing interests namely between mineral resources and drinking water resources, the latter being considered more important by the respondent, which is reflected in its decisions.

In brief, the Court of Appeal concluded that when deciding to no longer source gravel in the borrow pit sector by adopting its second resolution, the Town made a policy decision. Including a clause to the same effect in its tender contracts is only the reflection of this policy decision, and not its operational implementation. The Court concludes by specifying that the Town did not act in bad faith or irrationally, whereas the scientific evidence clearly establishes that the water table is vulnerable, and that the respondent only acted to protect it and according to interests that it deemed more important, namely drinking water resources.

Advice to cities and towns for their decision management

In light of the decision rendered by the Court of Appeal of Québec and its application of the criteria established in Nelson, some advice can be useful to cities and towns in order to ensure that their decisions benefit from immunity under public law by qualifying its decisions as core policy decisions.

First, the cities and towns must make sure that decisions of central importance pertaining to social, policy or economical considerations are made by the municipal council or the person to whom this power was delegated. This way, the cities and towns will ensure to reduce the risk of attracting liability to the decision-maker when such a person’s role is far-removed from government officials or implementation.

We also recommend that the objective criteria considered to lead to the decision of the municipal council be clearly detailed in the resolution.

A final piece of advice following the judgment rendered by the Court of Appeal that can be given to cities and towns regarding their decision-making, is to favor decisions that are not only prospective, but also of general application, rather than aiming at a particular case. This way, the decision will be closer to a core policy decision, rather than operational.

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[1] Forcier & Frères ltée v. Town of Malartic, 2023 QCCA 746.

[2] Nelson (City) v. Marchi, 2021 CSC 41 (”Nelson”)

[3] Respondent’s brief, p. 11-12.

[4] Nelson, prec., note 2, par. 68, cited in Forcier & Frères ltée v. Town of Malartic, prec., note 1, par. 14

[5] Nelson, prec., note 2, par. 63.