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Factual background and municipal assessment
Kristina and Claudia Panzera acquired an immovable in Montréal composed of five separate lots. Following this transfer, the Ville de Montréal issued a real estate transfer duty bill (droit de mutation immobilière) under the Loi concernant les droits sur les mutations immobilières (LDMI). The duty is calculated as a percentage of the highest of three amounts: the consideration paid, the consideration stipulated, or the fair market value of the immovable at the time of transfer, as provided in article 2 LDMI. The Panzera sisters considered that the transfer of at least part of the property was exempt from the payment of transfer duties because of the nature of the transferor and the structure of the transaction. One of the lots had been held in a fiducie (trust) and transferred to them in circumstances they claimed fell within an LDMI exemption for transfers from a trust to specified beneficiaries. They nonetheless paid the assessed amounts under protest while contesting the validity and scope of the municipal assessment.
Proceedings before the Superior Court
The plaintiffs instituted proceedings before the Superior Court by way of a modified originating application framed as an action for “recouvrement de montants payés en trop et en jugement déclaratoire.” They sought two main forms of relief. First, they asked for a declaration on the proper interpretation of article 1.1 and paragraph 20(e.1) LDMI, provisions that grant an exemption from payment of transfer duties in certain trust-related transfers. Second, they demanded reimbursement (repetition de l’indu) of the portion of the transfer duties they alleged had been overpaid (“trop-perçu”) to the City. At first instance, the Superior Court (Lucas J.) accepted in part the Panzera sisters’ position. It annulled the transfer duty account sent by Ville de Montréal and ordered the City to refund the sums the plaintiffs had paid under protest, on the basis that one of the five lots comprising the transferred immovable was exempt from the transfer duty. The plaintiffs, however, considered that the judgment did not go far enough, as they also argued for a 50% exemption on two additional lots among the five, and they remained dissatisfied with the partial nature of the relief granted.
Appeal and cross-appeal to the Court of Appeal
Ville de Montréal appealed the Superior Court judgment. The City challenged both the annulment of its transfer duty account and the order compelling it to refund the amounts paid under protest. For their part, Kristina and Claudia Panzera filed an incidental (cross) appeal. They contended that, beyond the exemption for a single lot recognized at first instance, they should also benefit from a 50% exemption on two of the remaining lots, thus further reducing or eliminating the duty payable. Before the appeal was heard, the Court of Appeal raised, of its own motion, a question as to the jurisdiction (compétence d’attribution) of the Superior Court to entertain the underlying claim. This concern focused on the second paragraph of article 36 of the Code of Civil Procedure (C.p.c.), which assigns exclusive jurisdiction to the Court of Québec for claims relating to the recovery of property taxes, other taxes, or any amount owed to a municipality under an Act, as well as applications for the reimbursement of an overpayment (“trop-perçu”) by a municipality. The Court directed the parties’ attention in particular to its earlier decision in Ville de Terrebonne c. Immeubles des Moulins, where similar jurisdictional issues under article 36 C.p.c. had been considered.
Key statutory framework and exemption provisions
The dispute is anchored in two intersecting legislative schemes: the LDMI, which establishes transfer duties on immovables, and the C.p.c., which allocates jurisdiction between the Superior Court and the Court of Québec. Under the LDMI, municipalities levy a transfer duty when an immovable is conveyed, based on percentages applied to the relevant value base. However, the LDMI also contains exemptions. Article 1.1 and paragraph 20(e.1) LDMI (as referenced in the judgment) grant an exemption from transfer duties where an immovable is transferred by a fiducie (trust) to particular categories of persons, such as certain beneficiaries, provided prescribed conditions are satisfied. The plaintiffs’ position before the Superior Court, and on their incidental appeal, was that the specific trust-related transfer at issue met those conditions—fully for one lot and, at least partially, for two others. The City, by contrast, maintained its original or nearly original position that the LDMI did not justify such broad exemptions. The determination of whether the conditions in article 1.1 and paragraph 20(e.1) LDMI were met, and to what extent, lay at the heart of the plaintiffs’ substantive tax challenge.
Jurisdictional analysis under article 36 C.p.c.
At the hearing in the Court of Appeal, Ville de Montréal candidly acknowledged that the matter should have been brought in the Court of Québec, not the Superior Court. The City accepted that it had mistakenly assumed that including a declaratory component in the pleadings was sufficient to anchor the Superior Court’s jurisdiction. In its view on appeal, the combined claim—for a declaration on the scope of the LDMI exemption and for reimbursement of alleged overpayments of transfer duties—fell squarely within the second paragraph of article 36 C.p.c. The Court of Appeal agreed with that analysis. It reasoned that the Panzera sisters’ claim was, in substance, a demand for the reimbursement of a sum collected by a municipality under a law—in this case, transfer duties under the LDMI—on the basis that the amount collected exceeded what was legally due. That type of “trop-perçu” is precisely within the ambit of article 36 C.p.c. The plaintiffs argued that the word “trop-perçu” in article 36 C.p.c. should be interpreted narrowly and restricted to the “trop-perçu” regimes expressly referenced in the Loi sur la fiscalité municipale (LFM). They further submitted that, because article 36 C.p.c. derogates from the Superior Court’s general jurisdiction, it should be read restrictively so as to confine the Court of Québec’s exclusive jurisdiction to certain enumerated tax recovery scenarios, leaving broader legislative-interpretation debates, even where reimbursement is sought, to the Superior Court. The Court of Appeal rejected this restrictive reading. It held that article 36 C.p.c. covers not only classic property tax disputes but also other “sums” payable under a law to a municipality, such as transfer duties. Applying the reasoning from its previous decision in GBI Experts-conseils c. Ville de Montréal, the Court confirmed that “somme due” or “trop-perçu” in article 36 C.p.c. denotes a sum exigible under a statute, including taxes, fees, and similar public law charges, and not just sums arising from other civil contexts like contractual overpayments. While GBI had excluded a collusion-based civil claim from the reach of article 36 C.p.c., the present case matched the statutory tax-like paradigm envisaged by the provision.
Treatment of prior case law and interpretive approach
The Court of Appeal addressed the plaintiffs’ attempt to distinguish or revisit its earlier ruling in Ville de Terrebonne c. Immeubles des Moulins. In Ville de Terrebonne, the Court had held that a claim for reimbursement of municipal taxes alleged to have been overcharged, even when accompanied by a request for a declaration on the meaning of the underlying fiscal legislation, falls within the exclusive jurisdiction of the Court of Québec under article 36 C.p.c. The plaintiffs in the present case acknowledged that Ville de Terrebonne pointed in the opposite direction from their jurisdictional argument but contended that it had been wrongly decided and should be departed from. The Court declined to do so. It emphasized that a party cannot avoid the jurisdictional effect of article 36 C.p.c. simply by presenting the action as declaratory in form when the true object of the claim is the reimbursement of sums collected by a municipality as taxes or analogous amounts. The Court further observed that, if the plaintiffs’ reading were accepted, they would effectively be required to split their cause of action—seeking a declaration from the Superior Court while pursuing reimbursement in the Court of Québec—an outcome that would undermine the Code’s objectives of accessibility, promptness, and procedural economy. On that basis, the Court concluded that the jurisdiction conferred by article 36 C.p.c. on the Court of Québec necessarily includes the power to interpret the very legislative provisions that authorize the municipality to collect the amounts in dispute, including LDMI exemptions and other tax rules.
Effect of absence of subject-matter jurisdiction
Because jurisdiction ratione materiae is a matter of public order, the Court of Appeal underscored that it may and must be raised at any stage, even where both parties have tacitly proceeded as if the Superior Court were the proper forum. The Court cited its own past pronouncements confirming that the parties’ silence or acquiescence cannot cure an absence of subject-matter jurisdiction. Applying that principle, the Court determined that the Superior Court simply lacked authority to adjudicate the plaintiffs’ claim for reimbursement of overpaid transfer duties and the associated declaratory relief under the LDMI. The proper venue was, and remains, the Court of Québec. The Court therefore allowed Ville de Montréal’s principal appeal in part, set aside the Superior Court’s judgment, and referred (“renvoie”) the matter to the Court of Québec for inquiry and hearing on the merits. Because the jurisdictional defect meant that the Superior Court should never have ruled on the substantive LDMI exemption questions, the Court of Appeal declined to address those underlying tax issues and their evidentiary underpinnings, leaving them to be resolved in the proper forum.
Disposition of the incidental appeal and costs
The Panzera sisters’ incidental appeal—which sought a broader application of the LDMI exemption, including a 50% exemption on two further lots—was dismissed as moot once the Court concluded that the Superior Court lacked jurisdiction. Without a valid first-instance judgment on the merits, there was no proper basis for the incidental appeal. As to costs, the Court recognized that both sides had contributed to the jurisdictional misstep: the plaintiffs commenced their action in the wrong forum, and Ville de Montréal failed to contest jurisdiction at first instance. In these circumstances, the Court ordered that each party bear its own costs in both the Superior Court and the Court of Appeal, expressly stating that the matter was disposed of “sans frais de justice en première instance et en appel.”
Overall outcome and monetary consequences
In the end, Ville de Montréal emerges as the successful party at the appellate level on the decisive jurisdictional question, securing the annulment of the Superior Court judgment that had invalidated its transfer duty account and ordered a refund. However, the Court of Appeal does not itself resolve the underlying tax dispute regarding the proper application of the LDMI exemption to the five lots, nor does it determine how much transfer duty was legitimately owed or should be repaid. Instead, it remits the case to the Court of Québec, which will decide, on the merits, whether the transfer falls within the LDMI exemptions and in what amount. Because the appellate judgment orders that there be no costs in either instance and does not fix or confirm any sum of taxes, damages, or reimbursement, the total monetary award in favour of the successful party cannot be determined from this decision; no specific amount of transfer duty, refund, or costs is granted or ordered in this appellate ruling.
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Court of Appeal of QuebecCase Number
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