Executive Summary: Key Legal and Evidentiary Issues

• Dispute over whether the City of Laval’s conduct regarding a long-running residential/commercial development project gives rise to contractual or extra-contractual liability, affecting the applicable prescription period.
• Contested starting point of prescription (limitations), with competing dates advanced between 2006 and 2025, and whether the developers could reasonably know the alleged fault, damage and causal link.
• Legal effect of an “approval in principle” by municipal resolution and whether it created an enforceable agreement or merely initiated an administrative planning process.
• Allegations that the City deliberately delayed the project and its administrative processing to bring it under a more restrictive new planning regime (CDU-1 and PAE), raising issues of bad faith and abuse of municipal discretion.
• Sufficiency of the pleadings: whether the detailed factual allegations of delays, communications, and handling of the file can, if proven, support a finding of fault and loss of profit in a claim exceeding 140 million dollars.
• Procedural question of whether these complex factual and mixed fact-and-law issues can be resolved on a preliminary motion to dismiss, or must instead be determined at a full trial on the merits.

Background and parties

Dalad inc. (formerly Labron) is a real estate developer that, in the early 2000s, conceived a residential development of roughly one hundred units in the Laval-Ouest area of the City of Laval. Construction Immoplex inc. is a related company responsible for the residential construction of Dalad’s projects. Their counterpart is the City of Laval, which controls the planning, zoning and municipal services necessary to make such a project viable. The litigation arises from the developers’ allegation that the City unjustifiably delayed, stalled, and ultimately obstructed the full realization of their residential and commercial development project (MOP-17100), thereby causing a very substantial loss of profit. The total claimed amount is 140,865,360?$, broken down into 111,840,360?$ allegedly lost by Dalad and 29,025,000?$ allegedly lost by Construction Immoplex, based on profits they say would have been realized if the project had proceeded in a timely fashion.

Development project and early municipal approvals

The project’s administrative life begins in or around 2004. In October 2004, Dalad submitted a request for municipal services (DSM) relating to the MOP-17100 project. The request concerned the extension of several local streets and municipal services required to serve the planned development. In January 2005, the City produced a technical report for the extension of these streets, evaluating the cost of works and related engineering and laboratory services. Shortly thereafter, on 26 January 2005, the City’s executive committee adopted a resolution approving, “in principle,” the request for municipal services tied to MOP-17100. This approval in principle was expressly conditional on the approval of a site plan and architectural treatment of the buildings, and stated that the work would proceed under a private project management framework governed by municipal regulation L-10485. The model contemplated collaboration between the promoter and the City to complete the municipal services needed for the development. In April 2005, a further resolution specified that a copy of the site plan and architectural treatment had to be sent to the City’s engineering and urban planning departments for approval. Dalad subsequently provided concept street plans and site plans, and by July 2005 the executive committee reportedly confirmed that the project complied with then-applicable regulations and authorized environmental compensation measures and the issuance of an attestation of conformity. Dalad then applied to the provincial Ministry of the Environment for a certificate of authorization (CA-22), which was required in light of the presence of wetlands on the site.

Environmental constraints and evolving project design

In 2006, a significant issue emerged concerning a section of the planned street grid crossing a wetland area. Meetings were held between Dalad, the Ministry and the City to discuss solutions, and it appears the Ministry was open to adjustments rather than closing the door on the project altogether. The concept of the project needed to be modified to address the environmental constraint, but there is no clear indication, at least on the pleadings, that the project was definitively refused. Through 2006 the City received engineering location plans and, by November 2006, the Ministry reportedly confirmed that the proposed protection of the wetland was acceptable. In March 2007, the City provided Dalad a preliminary project concept. However, the developers allege that the official concept plans for the project were never finalized by the City’s municipal services, leaving the project administratively in limbo despite environmental issues having been addressed.

Long period of administrative delays and re-engagement

The file then enters a long period of intermittent activity. Around 2011–2012, Dalad revisited the wetlands assessment on the subject lots. A 2012 meeting record suggests the City wanted to model the network regarding possible overflows and a retention basin. Dalad followed up in June 2013, seeking to reactivate the project, and in early 2014 the City indicated a desire to resolve the CA-22 issue and complete its infrastructure report by the summer of 2014. In January 2015, Dalad wrote to the City conveying its understanding that the project was “frozen” for at least three years, suggesting ongoing uncertainty rather than a clear refusal. In 2016, the City implemented a new administrative system for handling DSMs, and Dalad confirmed its intention to initiate a new DSM under this framework in October 2016. The City then provided the necessary forms and, in December 2016, prepared a location plan showing the entire project. Throughout early 2017, the City supplied Dalad with technical documents, required environmental characterization studies, and other information needed to advance the DSM through the various municipal services. An ecological characterization study was delivered by WSP in January 2018. Yet by mid-2019, the City advised that the inter-departmental analysis of the DSM had not even begun, citing a need for all required documents; only the WSP environmental study was under review. Discussions continued into late 2019 and 2020 regarding planning calendars and future re-planning of the sector, with the City indicating that re-planning would only occur after the adoption of new urban planning regulations. In May 2021, the City informed promoters, including Dalad, that the municipal council had begun adopting a new urban planning code.

Shift to a new planning regime and ongoing communications

In January 2022, the City told Dalad it would not provide any preliminary opinion because the sector would be subject to a “plan d’aménagement d’ensemble” (PAE), a form of detailed sectoral planning under the new regime. In November 2022, the City’s new urban planning regulation, CDU-1, came into force. Around that time, Dalad’s counsel wrote to the City stressing the history of the project, its long-standing approval in principle, the resolution authorizing works to serve the sector, and the view that the project could and should proceed under the pre-existing regulatory framework. The letter expressed the position that obstacles to the project had been cleared and no longer justified further delay. The City’s legal counsel replied in late 2022, assuring a follow-up, and in December 2022 stated that the City was still consulting its internal services and expected to revert with its position in January 2023, at which point a meeting might be scheduled. A meeting eventually took place in March 2023, but Dalad alleges that the City refused to discuss the project. The developers then wrote again in June 2023, complaining of the City’s failure to respond since November 2022 and asserting that the City had been slow to address the file since 2017 despite the project having been, in their view, approved as early as 2016. In its response of 26 June 2023, the City maintained that it had not authorized the project, denied any inaction, insisted that the project must now be processed through a PAE, and provided the relevant PAE request form (DO-PAE). Later in 2023 and 2024 the City sent information on initiating an SZD sector process and the contents of a PAE, indicating that any future development would proceed under the new planning regime. Meanwhile, Dalad alleges that the City tolerated or even encouraged public use of its lands as a kind of de facto green space, including promoting a community cleanup activity in collaboration with “friends of the Boisé Saint-Antoine” on the project lands and allowing walking trails to remain there without the owners’ authorization.

Mise en demeure and crystallization of the dispute

On 21 January 2025, Dalad served a formal demand (mise en demeure) on the City, requiring it to clearly state its intentions regarding the project under what Dalad considered the truly applicable regulation, namely the older regulation L-2000, not the new CDU-1 and PAE framework. The City replied on 3 February 2025, stating in clear terms that it had not authorized the development project. While acknowledging discussions over the years, the City emphasized that no agreement for the implementation of municipal services had been signed and that the necessary documentation had not been submitted by Dalad. For the developers, this letter marked the first unequivocal statement that the City was not treating the project as approved or moving it forward under the prior regime. On 13 June 2025, Dalad and Construction Immoplex filed their originating application (later modified), claiming approximately 140.9?million dollars in lost profits. The City responded with a modified motion to dismiss (moyen d’irrecevabilité) on 22 August 2025, arguing that the action should be struck without a trial.

City’s preliminary motion: prescription and lack of legal foundation

The City’s motion advanced two main arguments. First, it argued that any recourse against it was extra-contractual, because no contract had ever been concluded between the parties, and thus subject to the six-month prescription period under section 586 of the Loi sur les cités et villes. On this view, the approval in principle given in 2005 did not amount to a binding agreement; it simply started a process that required formal approval by the executive committee of any finalized project and the signing of a municipal services agreement, which never occurred. The City pointed to several “possible” starting points for prescription: as early as 2006, when the Ministry allegedly refused the project as initially submitted, or later dates such as November 2022 (entry into force of CDU-1), December 2022 (City email suggesting the project was now subject to CDU-1 and a PAE), or June 2023 (City letter stating the project was not authorized and must go through a PAE). On each of these dates, the City argued, the developers either knew or should have known the elements of their claim (fault, damage, causal link), and in any event were out of time by June 2025 if a six-month period applied. Second, the City maintained that even if all of the plaintiffs’ factual allegations were assumed true, they could not legally support the conclusions sought. Municipal planning, including street openings and infrastructure, lies within the City’s discretionary public-law powers. The City has no obligation to conclude a municipal services agreement or to approve a project merely because discussions occurred or a resolution approving a project “in principle” was adopted. The City argued that the plaintiffs were effectively challenging policy and planning decisions in an area in which the City enjoys public-law immunity, that they lacked any enforceable contractual right, and that their allegations of delay in order to bring the project under a new, more restrictive regime did not amount to a legally actionable fault in these circumstances.

Developers’ response: contractual framework and bad-faith delay

The developers countered that their claim is fundamentally contractual in nature, arising from an “entente” they say was formed through the City’s resolutions, approvals, and conduct over many years. On that basis, they argued the ordinary three-year prescription for civil liability should govern, not the six-month period applicable to extra-contractual municipal liability. They stressed, among other things, the fees paid at the City’s request, the detailed technical report produced by the City, the approval in principle under regulation L-10485 with specific terms (private project management and collaboration), and the subsequent requirement and provision of site and architectural plans. In their view, these steps, taken together, were not mere informal discussions but formed part of a contractual framework that gave rise to legitimate expectations that the project would proceed under the prior regulatory regime. Alternatively, even if the relationship is characterized as extra-contractual, they maintained that the starting point of prescription should be much later—either 21 January 2025 (mise en demeure) or 3 February 2025 (City’s clear denial of authorization)—because only then did they have sufficient clarity about the City’s position to know they had a concrete cause of action. On the substance, the developers argued that their detailed allegations—spanning multiple paragraphs and supported by numerous exhibits—describe a pattern of inequitable, dilatory conduct by the City: repeated postponements, unfulfilled assurances of follow-up, failure to finalize concept plans, refusal to move forward under the old regime despite obstacles allegedly being resolved, and a deliberate strategy to wait for the new CDU-1 and PAE framework to come into force before finally insisting that the project be processed under that more restrictive regime. They also relied on case law indicating that a municipality can be liable if it unjustifiably delays or obstructs a project to the point of effectively destroying its viability, especially when an approval of conformity or principle has already been granted.

Applicable test on a motion to dismiss

The Superior Court began by restating the governing principles under article 168(2) of the Code of Civil Procedure. On a motion to dismiss for absence of legal foundation, the court must assume the truth of the factual allegations and supporting exhibits of the originating application, though not the legal characterizations placed on those facts by the plaintiff. The task is not to assess the chances of success at trial but to ask whether, if the alleged facts are eventually proven, they are capable of giving rise to the conclusions sought. There is a strong principle of prudence: courts should avoid prematurely terminating actions, especially where complex factual or mixed fact-and-law questions cannot be resolved from the face of the pleadings alone. In cases where issues such as bad faith, prescription starting points, and the nature of the legal relationship (contractual versus extra-contractual) depend on contested factual contexts, the proper course is generally to let the matter proceed to a full hearing so that evidence can be adduced and assessed. The Court also noted that when the alleged fault is bad faith or an abuse of rights by a public body, the plaintiff bears a heavy burden of proof, but that burden should be evaluated by the trial judge after hearing evidence, not at the preliminary stage.

Court’s analysis of prescription

On prescription, the Court held that both the characterization of the recourse (contractual or extra-contractual) and the starting date of prescription are “highly contested” and depend on facts that cannot be properly weighed without evidence. While the City contended that the project effectively died in 2006 when the Ministry raised the wetland issue, the documentary record referred to in the pleadings showed that the Ministry remained open to solutions and that the project was not clearly terminated. Similarly, later correspondence—especially the developers’ letter of 2 November 2022 and the City’s responses in November and December 2022—could reasonably be read, at this stage, as confirming that the project was still being treated as active and that the City was still engaging with the developers to determine the way forward. Even the City’s June 2023 communication, although asserting that the project had not been authorized and must go through a PAE, ended by asking what the developer’s intentions were, which could support the developers’ understanding that the file remained open. The Court accepted, for the purposes of the motion, the developers’ allegation that it was only with the City’s letter of 3 February 2025, clearly denying that the project had ever been authorized and emphasizing the lack of a signed agreement and missing documentation, that the developers fully appreciated the existence and scope of their potential claim. If that allegation is ultimately proven, the action filed in June 2025 would fall within both a three-year period and even a six-month period calculated from early February 2025. In light of this, and analogizing to other cases where courts have declined to decide prescription on a preliminary motion when the start date was fact-sensitive, the Court concluded that it would be premature to rule the claim prescribed. Determining both the true legal nature of the relationship and the precise moment when the developers knew or should have known the elements of their claim is a matter for the trial judge, after a full evidentiary hearing.

Court’s analysis of the alleged absence of legal foundation

On the City’s second argument—that the allegations cannot, even if true, support the conclusions sought—the Court again sided with letting the case proceed. The developers’ modified originating application, together with its attached exhibits, was found to contain sufficiently detailed allegations of conduct that, if accepted as true at trial, could amount to a fault under Quebec civil law, whether contractual or extra-contractual. These included allegations of inequitable treatment, lack of good faith, strategic delay to take advantage of regulatory change, failure to move forward on previously approved principles, and inconsistent messaging that led the developers to continue investing time and resources over two decades. The Court distinguished the authorities relied on by the City, noting that many of them arose after full trials on the merits, where courts evaluated testimony and documents to decide whether a municipality had breached any duty of fairness or good faith. Those decisions do not stand for the proposition that such arguments can never succeed; rather, they show that the outcome depends heavily on facts. Here, the plaintiffs claim more than a mere disappointment that the City exercised its planning discretion; they allege a pattern of bad-faith handling of their specific file. Given the applicable standard on a motion to dismiss, the Court held that it could not conclude at this stage that the developers’ allegations were incapable of supporting their claim for damages. A trial is necessary to determine whether the City’s conduct was within the bounds of lawful municipal discretion or whether it crossed the line into actionable bad faith or abuse.

Outcome and implications

In the result, the Superior Court rejected the City of Laval’s motion to dismiss. The Court held that it would be imprudent and premature to declare the developers’ modified originating application inadmissible at this stage. Instead, the case must proceed to a full trial, where the judge on the merits will determine: (i) whether the recourse is contractual or extra-contractual and what prescription period applies; (ii) the correct starting point of prescription in light of the evolving communications and conduct between 2004 and 2025; and (iii) whether the City’s handling of the project constitutes a legally cognizable fault that caused the substantial loss of profits claimed. The Court also extended the time limit for inscription for trial to 22 May 2026 and ordered the parties to file a new case protocol by 23 January 2026. The successful parties in this judgment are Dalad inc. and Construction Immoplex inc., who obtained the dismissal of the City’s preliminary motion and were awarded their legal costs (“frais de justice”) in connection with this motion; however, the judgment does not specify any exact monetary amount for those costs, and no damages or loss-of-profit sums have yet been granted or quantified in their favour at this procedural stage.