Executive Summary: Key Legal and Evidentiary Issues

• Characterization of the municipal charge under Règlement 973 as either a valid regulatory “redevance” or an unconstitutional indirect tax beyond municipal (and provincial) competence
• Whether the judicial review application attacking Règlement 973 was filed within a “reasonable time,” or whether delay could bar the challenge where true jurisdiction/competence is in issue
• Scope of a motion to dismiss (demande en irrecevabilité): whether the Superior Court could decide the tax vs regulatory charge issue on the merits at a preliminary stage without evidence
• Alleged discriminatory nature of Règlement 973 in its application to Groupe CRH Canada Inc. and whether that issue should proceed to a full hearing
• Interpretation of the temporal reach of Règlement 973, particularly whether it applies immediately to materials brought to the site for rehabilitation and restoration before cessation of extraction
• Appropriateness and availability of a declaratory judgment in the circumstances, including whether there is a genuine interpretive difficulty justifying declaratory relief

Facts of the case

Groupe CRH Canada Inc. operates a quarry in the territory of the Ville de Varennes, in the province of Québec. As part of its long-term operations, the company not only extracts aggregates but must eventually undertake works to rehabilitate and restore the site, including bringing in materials and using local road infrastructure. The municipality adopted Règlement 973, a by-law creating a charge described as a “redevance” (fee) to fund the repair and maintenance of certain municipal roads used in connection with re-development and restoration works within the city. This charge is specifically intended “au paiement d’une redevance destinée à la réfection et à l’entretien de certaines voies publiques dans le cadre des travaux de réaménagement et de restauration de la Ville” and was adopted on 6 November 2023. The quarry operations and the associated truck traffic are directly affected by the new regime.

Groupe CRH Canada Inc. considered that the financial burden imposed on it by Règlement 973 was both legally invalid and unfair in its design and application. The company therefore turned to the courts, filing an application for judicial review (pourvoi en contrôle judiciaire) in the Superior Court of Québec, district of Richelieu, seeking to have the by-law annulled or, at least, declared inapplicable to its situation except in a very narrow temporal window tied to the final cessation of extraction activities.

Regulatory framework and policy terms at issue

At the heart of the dispute is the legal characterization of the financial exaction created by Règlement 973 and the legislative authority upon which the municipality relied. The Ville de Varennes invoked article 500.6 of the Loi sur les cités et villes as the enabling provision. That article allows a municipality to adopt by-laws imposing “redevances” to finance a regulatory scheme falling within its areas of jurisdiction, which include, notably, road management and maintenance (voirie). Règlement 973 was drafted to operate as a fee regime attached to the use and impact on certain designated roads in the context of redevelopment and restoration works. The City presented the charge as a regulatory levy tightly connected to the cost of maintaining and repairing the local road network used by heavy vehicles associated with quarry-related activities, especially in the rehabilitation phase.

For the municipality, the by-law implements a classic user-pay policy: those whose activities cause particular wear and tear to specific segments of public infrastructure should contribute to its upkeep. The City maintained that it was acting squarely within its municipal competences and that article 500.6 provided all necessary authority to adopt Règlement 973.

Position of Groupe CRH Canada Inc.

Groupe CRH Canada Inc. advanced a two-pronged challenge. First, in terms of constitutional and administrative law, it argued that the charge in Règlement 973 was not a genuine regulatory “redevance” at all but, properly characterized, a tax. In particular, it argued that the charge bore no real connection to a structured regulatory regime; instead, it operated as a revenue-raising measure that shifted general financial burdens onto a specific operator. On that view, the charge amounted to an indirect tax, which falls under federal jurisdiction and cannot be imposed by a municipality (and, depending on the characterization, may also exceed provincial authority). The company therefore sought annulment of the by-law on the basis of an absence of competence to enact such a tax.

Second, Groupe CRH Canada Inc. alleged that Règlement 973 was discriminatory in how it applied or in its design, although the Superior Court judge did not reach the merits of that allegation. The company also sought, in the alternative, a declaratory judgment clarifying the temporal reach of the by-law. It argued that, even if valid, Règlement 973 should only apply at the time of the “cessation définitive” of its extraction activities. Put differently, it contended that materials brought onto the site for rehabilitation or restoration before actual cessation should not be caught by the charge.

The City’s motion to dismiss in Superior Court

Rather than immediately defending the by-law on the merits, the Ville de Varennes brought a motion to dismiss (demande en irrecevabilité) under article 168 of the Code de procédure civile. The City argued that the judicial review application was late and therefore inadmissible. Relying on article 529, paragraph 3 C.p.c., it maintained that applications for judicial review must be brought within a “délai raisonnable,” which Québec case law often equates, in practice, to approximately 30 days in many administrative contexts. In the City’s view, this requirement applied because the challenge concerned only the “conditions d’exercice” of a power, not a true absence of competence.

To sustain that procedural argument, the City contended that the case did not involve a lack of jurisdiction in the strict sense, but rather a dispute over how the municipality exercised an undisputed power to regulate road-related impacts through a fee scheme. The late filing, it said, should therefore be fatal. As to the allegation of discrimination, the City took the position that even that line of argument did not raise an issue of competence; it merely affected the manner in which a valid power was exercised. Finally, the City asserted that no genuine interpretive ambiguity surrounded the by-law, such that a free-standing declaratory judgment was inappropriate.

The Superior Court judgment

The Superior Court judge, the Honourable Antoine Aylwin, issued a brief decision siding with the City at this preliminary stage. First, he concluded that the judicial review did not truly attack the competence of the municipality to adopt a by-law imposing fees for materials transported to a quarry or sand pit. In his view, the challenge related instead to “les modalités ou les conditions d’exercice” of that power. On that basis, he found that the case was governed by the “reasonable time” requirement applicable to judicial review and that the delay was excessive. The result was to grant the motion in irrecevabilité and dismiss the judicial review application as untimely.

In addition, the judge accepted that article 500.6 of the Loi sur les cités et villes did authorize the adoption of a by-law imposing fees for a regulatory regime related to municipal competences, and that road management (voirie) is such a regime. He stated that the applicant had not persuaded him that the charge was an indirect tax, especially given its stated function of financing that regulatory scheme. In doing so, he effectively characterized the charge as a regulatory fee rather than a tax at the preliminary, admissibility stage, and without a full evidentiary record.

On the declaratory relief aspect, the judge held that the conditions for a declaratory judgment were not met. He did not see any real interpretive difficulty that would justify maintaining a stand-alone declaratory conclusion; he considered that the by-law did not suffer from ambiguity. In particular, he reasoned that redevelopment and restoration projects could certainly include works carried out before exploitation ends, because the objective is a future result and not necessarily only future works after cessation. He also noted that accepting the company’s reading would allow it to prolong operations artificially until after full restoration, thereby avoiding the fee entirely—an outcome he considered to be inconsistent with both the text and intent of Règlement 973. In short, he refused the declaratory relief and dismissed the judicial review in its entirety.

Appeal to the Court of Appeal

Groupe CRH Canada Inc. appealed to the Québec Court of Appeal. Its main contention was that the Superior Court had gone too far in its preliminary assessment, effectively deciding the central merits question—the legal nature of the charge and the municipality’s authority—on a motion to dismiss, without giving the company a chance to present evidence and full argument on the tax versus regulatory fee distinction. That issue, the appellant argued, is precisely the sort of question that should be decided at trial or on the merits, after proper proof, and not as a mere gateway procedural matter.

The Court of Appeal, constituted by Justices Yves-Marie Morissette, Stéphane Sansfaçon and Christine Baudouin, heard argument from counsel for Groupe CRH Canada Inc. and the Ville de Varennes. The hearing record shows the bench questioning counsel on the Bricon decision and the absence of a fully developed constitutional debate, on the nature of municipal royalties or redevances, on the entry into force of the by-law, and on issues such as the sharing of royalty funds between municipalities and potential abuse or fraud on the law through continuation of operations. After a relatively short but focused hearing, the Court rendered a unanimous decision.

Errors identified by the Court of Appeal

The Court of Appeal held that, in resolving the key issue of how to characterize the charge imposed by Règlement 973—whether a “taxe” or a “redevance réglementaire”—the Superior Court judge had “empiété sur le fond.” In other words, he had crossed the line from admissibility into the heart of the merits. By prematurely deciding that the charge was a regulatory fee supporting a road-related regulatory scheme, the judge deprived Groupe CRH Canada Inc. of its right to present evidence addressing the jurisprudential criteria used to distinguish a tax from a regulatory charge. Those criteria, drawn from authorities such as Confédération des syndicats nationaux v. Canada (Procureur général) and Constructions Bricon ltée, require a contextual, fact-sensitive analysis, not a summary conclusion at the threshold.

Because the characterization of the charge lies at the core of whether the municipality (and the province) had constitutional authority to impose it, the Court of Appeal found that this preliminary conclusion improperly colored the entire admissibility analysis. It led the judge to apply the “reasonable delay” requirement to what might, depending on the proper characterization, be a true jurisdictional challenge, for which courts are more reluctant to bar access on delay alone. In the Court’s view, by deciding that question too quickly and without evidence, the judge both exceeded what is appropriate on a motion in irrecevabilité and potentially misapplied the rules on delay in judicial review.

The Court of Appeal also indicated that the same concern applies to the treatment of the discrimination allegation and the conclusion regarding the temporal scope of Règlement 973. The judge’s reasoning on the declaratory relief—especially his conclusion that there was no interpretive ambiguity and that the by-law necessarily applies immediately to materials brought in for rehabilitation—again trespassed onto issues better decided on a full record. The conditions for a declaratory judgment are ordinarily evaluated by the trial judge on the merits, unless the claim is clearly frivolous or manifestly ill-founded, which was not the case here. Classifying the claim as inadmissible at the outset effectively pre-empted any real debate on both the alleged discrimination and the temporal application of the by-law.

Outcome and implications

The Québec Court of Appeal unanimously allowed the appeal. It set aside (infirme) the Superior Court judgment that had granted the City’s motion in irrecevabilité and dismissed the judicial review. It rejected the Ville de Varennes’s preliminary motion to dismiss the judicial review for lateness and remitted the file to the Superior Court so that the case could proceed on the merits. Importantly, the Court of Appeal did not itself decide whether Règlement 973 is a valid regulatory fee or an unconstitutional indirect tax, nor did it determine whether the by-law is discriminatory or how exactly it should apply over time to rehabilitation works. Those issues remain open for full argument and evidentiary development before the Superior Court.

In its formal dispositive orders, the Court of Appeal awarded costs in favour of Groupe CRH Canada Inc., specifying that the appeal is allowed, the Superior Court judgment is reversed, the City’s motion to dismiss is rejected, and the matter is returned for continuation, “le tout, avec frais de justice tant en première instance qu’en appel.” Accordingly, the successful party in this appellate decision is Groupe CRH Canada Inc. The judgment does not state any specific amount for damages or quantified costs; the total monetary figure corresponding to the costs award cannot be determined from this decision alone.