Commented decision: Director of Criminal and Penal Prosecutions v. Gestion Gilles Laurence Ltée, 2025 QCCA 75
Background
Real estate developers (“Developers”) are planning to develop new residential areas in the City of Sainte-Adèle (“City”). To carry out their projects, they must obtain the permits required under the urban planning regulations set by the Land Use Planning and Development Act. In this context, they sign a memorandum of understanding (“MOU”) with the City. Under this MOU, the Developers undertake to build streets on their land and to transfer them to the municipality free of charge once they are built, subject to certain conditions and the City’s eventual decision to municipalize them. To carry out the work, the developers retain the services of general contractors duly licensed by the Régie du bâtiment du Québec (RBQ).
Following an investigation, the public prosecutor issues statements of offence to the developers by sending them statements of offence. The Developers are charged for violating the Building Act (Act) by acting as contractors, specifically by having street construction work carried out without themselves holding a licence.
This case raises fundamental questions: were the Developers acting as contractors or as owner builders? And depending on the classification, were they required to hold a licence? The Quebec Court of Appeal was called upon to rule on these issues. Before examining its decision, it is important to review the position taken by the courts in this case.
The position of the Court of Quebec
The Court of Quebec concludes that the developers acted as contractors and not as owner builders. In its view, developers who own land and hire a duly licensed general contractor to perform civil engineering work as part of a residential development must be considered contractors within the meaning of the Act. It emphasizes that the streets built were intended to be transferred to the City. The work was therefore carried out for the benefit of the City. In these circumstances, the developers should have held a licence. It found them guilty of the alleged offences and ordered each of them to pay a fine. Dissatisfied with this decision, the developers appealed the case.
The position of the Superior Court
The Superior Court allows the developers' appeal and they are acquitted. It concludes that the Court of Quebec committed errors in law in assuming that the streets would eventually be transferred to the City. According to the evidence, several conditions set out in the memorandum had not been met, including the requirement that 25% of the buildings in the residential development be constructed. Furthermore, the City had not exercised its discretion to municipalize the streets.
The Superior Court holds instead that the developers were authorized to build the streets on their own land, after obtaining the necessary authorizations. They were therefore to be considered owner builders. Because they had retained the services of duly licensed general contractors to perform the work, they benefited from the exception provided for in the Act and were not required to hold a licence themselves. Disagreeing with this judgment, the public prosecutor appeals to the Quebec Court of Appeal.
The position of the Court of Appeal
The Court of Appeal upholds the Superior Court's judgment and the developers' acquittal. However, it is divided on the issues to be decided.
The majority
According to the majority, the work was carried out in the interest of the developers. At the time of the alleged offences, they were authorized by the City to build streets on their land. As such, they were acting as owner builders and could have the work carried out by general contractors duly licensed in accordance with the Act. They were therefore exempt from the requirement to hold a license.
The majority adds that by entrusting the work to duly licensed general contractors, the object of the Act to ensure the quality of the work, the competence, the protection of the public, the probity, and the solvency of contractors is respected.
Finally, the majority specifies that the residential development project was initiated, prepared, and presented by the developers to the City. It was their project, not the City's. It thus shares the Superior Court's analysis, concluding that the work was carried out on behalf of the developers. The public prosecutor's appeal is dismissed and the developers' acquittal upheld.
The minority
Unlike the majority, the dissenting judge takes a restrictive approach. He would have allowed the public prosecutor's appeal and reinstated the judgment of the Court of Quebec. In his opinion, the developers acted as contractors and could not use the exception for owner builders. He argues that the construction of the streets was ultimately intended to be transferred to the City and that, in this context, the work was carried out for the benefit of the City. A licence was therefore required in the circumstances.
The application for leave to appeal to the Supreme Court
Based on the dissenting judge's reasons, the public prosecutor filed an application for leave to appeal the judgment of the Quebec Court of Appeal to the Supreme Court of Canada. The Supreme Court dismisses the application, bringing the case to a definitive end.
Conclusion
The status of a real estate developer under the Building Act is determined on the basis of the facts specific to each case. This assessment must be conducted in a comprehensive and rigorous manner when it requires the examination of several relevant elements, including: the evidence presented, the memorandum of understanding entered into with a city, the requirements of the Building Act and the Land Use Planning and Development Act, certain provisions of the Civil Code of Québec, as well as the applicable urban planning and construction regulations. In this context, caution and diligence are required. Incorrect classification of status can have significant criminal consequences depending on the circumstances.
If you have any questions or would like information about compliance to the Building Act, please contact our construction department team.
