The Supreme Court of Canada recently denied a Quebec municipality leave to appeal from an interesting decision of the Quebec Court of Appeal (“QCCA”) in the areas of agribusiness, municipal zoning, and administrative law.[1] As a result, the Court of Appeal’s remarks in Champag inc. v Municipality of Saint-Roch-de-Richileu on the interplay between administrative law, agricultural law and public/municipal law stand as the “final word”; they deserve careful consideration for the applicability of the decision to the common law provinces.[2]
Background – Building Permit Applications Denied
Champag inc. is located in Verchères, Quebec. It has over 150 employees and produces more than 150,000 pounds of mushrooms per week. In a strategic business move, Champag sought to reduce its supply and transport costs by producing a soil substrate to be used in the mushroom cultivation process itself rather than continuing to source the product from Southwestern Ontario. To this end, Champag identified a suitable location to set up its substrate production center within the “permanent agricultural zone” of a neighbouring municipality, Saint-Roch-de-Richelieu (“SRR”).
Champag made a series of applications for building permits to the municipality in May and July 2017. SRR refused both of Champag’s applications. The municipality classified Champag’s soil production process as an industrial rather than an agricultural activity.
Application for Judicial Review Dismissed
Champag made an application for judicial review of the refusal to the Superior Court of Quebec, seeking an order compelling SRR to issue either of their desired permits. Champag took the position that its proposed activity was agricultural in nature and fell within the allowable activities of the agricultural-zoned property. SRR argued that Champag’s soil production process was “composting” (i.e., industrial) rather than agricultural. The Superior Court dismissed Champag’s application and upheld the municipality’s rejection of Champag’s permit application.
Champag’s Appeal Allowed
On appeal, the QCCA allowed Champag’s appeal, overturned the Superior Court’s dismissal of the application for judicial review, and mandated SRR to issue a permit to Champag for its proposed mushroom substrate production facility. The QCCA decision raises important considerations about judicial review of municipal building permit decisions, exercises of municipal discretion, and zoning decisions comparing industrial to building permit decisions.
Judicial Review of Municipal Permitting Decisions on Trial De Novo Basis: The QCCA noted that while the Supreme Court of Canada’s decision in Vavilov[3] established a presumption of review under a standard of reasonableness, in decisions involving municipalities the courts are not required to show deference to the decisions of officials in matters of acquired rights[4] - that is, situations in which an applicant seeks to acquire rights through the issuance of a permit pursuant to a local by-law (e.g. building permits, occupancy permits, liquor licenses, etc.). The QCCA relied on its decision in 9071-6754 Quebec Inc. v. Quebec City from earlier in 2020, which held that questions relating to the decisions of municipal officials exercising a related power (conduct which is predetermined by objective conditions set by the legislature) falls to the courts.[5] The QCCA concluded that judicial review of municipal decisions is generally to be conducted on a trial de novo basis.[6]
Municipal Discretion on Implementation of By-Laws Limited: The QCCA also took issue with SRR’s exercise of discretion to deny Champag’s permit. The court agreed that the adoption and modification of municipal by-laws generally falls within the discretionary power of a municipal council. At the implementation stage, however, all discretion of the municipality must be set aside in favour of equality before the law.[7] Consequently, the QCCA found that if the contents of Champag’s application complied with SRR’s zoning and construction by-laws on a yes/no basis, SRR was obligated to issue the permit pursuant to section 120 of the Act respecting development and town planning.[8] On the facts, the court held that Champag’s second permit application did contain the information necessary to enable SRR to issue the permit (i.e., site plans, documents and the requisite fee). As such, the QCCA held that SRR lacked the discretion in the circumstances to deny Champag’s permit application under the relevant statute.
Classification of Proposed Activities - Industrial vs. Agricultural: The QCCA rejected the Superior Court’s reasoning process applied to classify Champag’s proposed activity as industrial rather than agricultural. The Superior Court committed a reviewable error in compartmentalizing the proposed activity and analyzing each step in isolation from one another. The QCCA stated that in order to determine whether an activity is agricultural, one must look at the purpose, since the use implies an end (i.e., the activity tends towards a goal).[9] In this case, Champag’s end result was a substrate used in mushroom production – an undeniably agricultural activity. That the production of the mushroom substrate involved a composting process – arguably industrial – did not diminish the agricultural nature of the goal.
The QCCA also found that the Superior Court erred in relying on Agrigesco inc[10] to support his conclusion that Champag’s proposed activity could not be agricultural because it planned on externally sourcing more than 50% of the materials used in its substrate production process;[11] the quantum of externally sourced materials did not in itself serve to deprive Champag’s proposed activity of its fundamentally agricultural character.
Implications
While the QCCA decision in Champag is not automatically relevant across the country, the reasoning in each of these three areas is persuasive. Champag could stand as an important post-Vavilov administrative law decision in the context of applications for judicial review of municipal planning decisions. The decision also carries important public law implications, requiring these as it seems to restrict the broad discretion of municipalities implementing municipal by-laws requiring them to expressly include an obligation to ensure equality before the law.
In the agribusiness context, Champag is important for farmers and agricultural businesses when defining their actions and processes, which may involve “industrial”, “commercial”, and “agricultural” aspects. If the actions and processes are all means to an agricultural end, Champag provides authority for a holistic approach to zoning and permit decisions which may prove favourable to farmers and agricultural businesses. With increases in environmental regulations and pressures from neighbouring residential areas, we can expect farmers and agricultural businesses to face increasing scrutiny from municipal and regulatory authorities when seeking permits to expand their activities by adopting new technology and processes to increase productivity. The decision in Champag may assist farmers and agricultural businesses by defining their activities and processes as primarily agricultural and, as such, foregoing the need to seek zoning by-law amendments or official plan amendments when the activities are to be carried out in agriculturally-zoned areas in service of an agricultural end.
[1] Saint-Roch-de-Richelieu (Municipality) c. Champag Inc., 2020 CanLII 78417 (S.C.C).
[2] Champag inc. v. Municipality of Saint-Roch-de-Richelieu, 2020 QCCA 613 [QCCA Decision].
[3] Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65.
[4] QCCA Decision, at para. 24, citing Schiller v. Bousquet, 2017 QCCA 276, at para. 38 [Schiller], citing Immeubles Jacques Robitaille inc. v Quebec City, 2014 SCC 34, at paras. 24-26 [IJR].
[5] QCCA Decision, at para. 27, citing 9071-6754 Quebec Inc. v. Quebec City, 2020 QCCA 344, at para. 21; see also Schiller, at para. 39.
[6] QCCA Decision, at para. 24, citing Schiller, at para. 50.
[7] QCCA Decision, at para. 26, citing IJR, at para. 24.
[9] QCCA Decision, at para. 36, citing Veilleux c. Quebec (Commission de protection du terrioire agricole), 1989 1 S.C.R. 839, at para. 44.
[10]Agriesco inc., 2001 CanLII 48464 (Q.C. C.P.T.A.Q).
[11] QCCA Decision, at para. 38.
