Executive Summary: Key Legal and Evidentiary Issues

• Dispute involved an engineering firm claiming additional payment for supervision services on a municipal construction project.

• Central issue was whether a binding contract existed for the disputed third phase of the project and whether it was validly modified.

• Plaintiff argued for increased compensation through a revised amendment and alternatively through restitution for services rendered.

• The court found the parties were bound by a fixed-price contract that was never lawfully amended.

• Plaintiff’s unilateral termination of the contract without serious cause led to justified replacement by the municipality.

• Allegations of municipal bad faith were unsubstantiated and dismissed, along with all monetary claims and interest.

Facts and procedural background

In Parallèle 54 Expert-Conseil inc. v. Municipalité de Notre-Dame-de-Lourdes, 2025 QCCQ 1267, the plaintiff engineering firm Parallèle 54 sued the municipality for $8,709.28, claiming unpaid amounts for work performed during the supervision phase of a residential infrastructure project known as “Ombre du clocher.” It also sought $10,000 in damages for alleged abuse and bad faith. Parallèle 54 had originally submitted a service proposal including three project phases: preliminary studies, plans and specifications, and site supervision. The third phase became the subject of the dispute.

After an initial offer covering all three phases was accepted by the municipal council, the contract was voided due to a veto by the mayor. A revised offer removing the third phase was then submitted and accepted. Subsequently, the municipality reinitiated the third phase after receiving environmental approvals, and Parallèle 54 resumed work on site supervision. Later, the firm submitted amendments seeking to increase the originally proposed price of $6,500 to over $12,000, arguing that more work had been required than anticipated.

Legal analysis and court findings

The court first examined whether a valid contract existed for the third phase. It found that the municipal council’s resolution, though conditional, became effective once the required environmental authorization was granted. Therefore, Parallèle 54 was already contractually obligated under a fixed-price agreement to perform the supervision services for $6,500. The plaintiff’s arguments that no contract existed, or that the contract was replaced or modified through informal exchanges with municipal staff, were rejected. The court emphasized that under Quebec municipal law, only the council may bind the municipality through resolution. No such resolution had been passed to approve any modification increasing the contract price.

Parallèle 54 alternatively argued that it was entitled to payment under the principle of restitution of prestations (reception of benefits without legal basis), referencing the Octane decision. The court rejected this as well, finding that the services had been performed under a valid contract and not by mistake or in the absence of obligation. Furthermore, the court noted that the plaintiff had unilaterally withdrawn from the project, failing to complete the supervision work without serious justification. This action allowed the municipality to withhold part of the final payment to cover completion costs with another provider.

The court also dismissed claims of abuse and bad faith, finding no evidence that the municipality acted with dishonesty or malice. The dispute arose from a misunderstanding of municipal contracting rules and limitations—not from wrongful intent. Finally, the court denied Parallèle 54’s claim for contractual interest, since the invoices submitted exceeded the agreed contractual amount and were therefore unjustified.

Conclusion

The Court of Québec dismissed all claims brought by Parallèle 54 and ordered it to pay legal costs. The ruling reaffirmed strict rules governing public contracts, emphasizing that only formal resolutions by a municipal council can create or modify binding agreements. It also reinforced the immutability of fixed-price contracts and the limited circumstances under which price adjustments or restitution may be allowed. The municipality’s conduct was found appropriate and within the boundaries of lawful contract administration.