Executive Summary: Key Legal and Evidentiary Issues

• Trigone challenged four provisions of the Regulation respecting the guarantee plan for new residential buildings, alleging an unlawful sub-delegation of RBQ's regulatory power to GCR.
   
• GCR sought dismissal of the application on the basis that Trigone lacked the legal interest required to contest the provisions.
   
• Questions arose as to whether Trigone's continued liability under existing bonds and premiums, despite the loss of its contractor licences, preserved a direct and personal interest.
   
• Whether the "GCR Quality" rating, which incorporates financial ratios beyond those listed in the Regulation, exceeded GCR's administrative mandate was also in dispute.
   
• The reasonableness standard of review, as confirmed in Auer v. Auer, governed the court's assessment of the subordinate legislation's validity.
   
• A separate request by GCR for a declaration of abuse of process, and associated extrajudicial fees, required the court to assess whether Trigone's proceeding was reckless or frivolous.
   

Facts of the case

Habitations Trigone inc. and its affiliated companies (collectively "Trigone") had operated for more than 25 years in the promotion and construction of new single-family homes. As a licensed contractor, Trigone was subject to the Building Act and its Regulation respecting the guarantee plan for new residential buildings, and adhered to the guarantee plan administered exclusively, since 2014, by La Garantie de construction résidentielle ("GCR") under the oversight of the Régie du bâtiment du Québec ("RBQ").

In March and April 2017, GCR requested additional bonds and supporting documents from Trigone in connection with the registration of new homes, prompting Trigone to question the analytical grid GCR used to determine required bond amounts. GCR responded by letter dated April 20, 2017, explaining that bond amounts were set according to its "GCR Quality" rating, which had been assigned to accredited contractors since May 2016 based on financial statements and inspection reports. On May 3, 2017, GCR issued ten decisions refusing Trigone's applications for Plan membership on certain projects. RBQ subsequently notified Trigone of its intention to withdraw certain licence subcategories. Trigone filed arbitration requests on May 12, 2017, but later withdrew them and supplied the additional bonds GCR had requested.

Separately, Trigone's contractor licences were withdrawn in September 2021 following a decision of the RBQ Board of Regents, upheld by the Administrative Labour Tribunal in July 2022, after which Trigone ceased new home construction activities. GCR brought a motion to dismiss Trigone's judicial review application, arguing lack of legal interest and abuse of process.

Policy and legislative provisions at issue

Trigone's application targeted portions of sections 50, 84, 85 and 88 of the Regulation. Section 50 sets minimum premium amounts payable per guarantee certificate ($1,285.57 for detached, semi-detached or row single-family homes, and $1,897.74 for certain multi-family buildings held in divided co-ownership), indexed annually to the Consumer Price Index, without fixing a maximum. Sections 84 and 85 establish minimum bond values ($70,000 or $100,000 for newer contractors; $55,000 or $70,000 for contractors operating four years or more) and five financial criteria a contractor must meet: working capital ratio, debt ratio, net worth, gross profit and net profit. Section 88 allows GCR to impose additional conditions, including a higher bond, where a contractor fails to meet these criteria or where its solvency is otherwise in question.

Trigone argued that by setting only minimums, without corresponding maximums, RBQ had effectively handed GCR unconstrained discretion to set premiums and bonds — an unlawful sub-delegation of RBQ's exclusive regulatory power under section 130 of the Act. Trigone made a parallel argument regarding the "GCR Quality" rating, which factors in a liquidity ratio and an inventory/sales ratio in addition to the five ratios enumerated in sections 84 and 85, contending that GCR had thereby appropriated RBQ's role of defining financial criteria. GCR and RBQ countered that the Regulation, along with RBQ's "Policy on Pricing and Recognition of Construction Quality," constrained GCR's discretion within objectives tied to public protection and the Plan's sustainability. GCR further argued that an arbitration clause under section 106 of the Regulation offered Trigone an alternative, effective forum, and disputed Trigone's standing given its lost licences.

Reasoning and analysis

Justice Charette first addressed legal interest, finding that Trigone retained a legal, direct and personal interest despite the loss of its licences, since certain previously constructed buildings remained covered by bonds under the Plan, and Trigone could still be affected by any finding of invalidity relating to the ten decisions refusing it Plan membership. The court also rejected GCR's argument that Trigone's private status precluded it from challenging regulatory validity, holding that Trigone's status as an entity subject to the Act and Regulation gave it a genuine interest and raised a serious question. On the arbitration argument, the court held that the arbitrator's jurisdiction under section 106 was limited to claims under the Plan and admission disputes, and did not extend to the broader question of the regulatory provisions' validity, which remained the primary issue Trigone raised.

Turning to substance, the court applied the reasonableness standard confirmed in Auer v. Auer, under which subordinate legislation benefits from a presumption of validity that the challenging party must rebut, and must be interpreted purposively and read in a manner that upholds its validity where reasonably possible. Applying this framework, the court found that section 50's minimum premium requirements aligned with RBQ's 2011 legislative amendment removing a maximum premium cap — a change intended to let RBQ tie premiums to actuarial risk — and with RBQ's own pricing policy, which explicitly bases premiums on contractor and project risk. The court concluded this represented structured discretion, not an unconstrained grant of regulatory power.

The court applied similar reasoning to sections 84, 85 and 88, finding that the minimum bond thresholds and GCR's power to impose heightened conditions for at-risk contractors served the Plan's core purpose of protecting new home buyers and ensuring GCR's own solvency, rather than constituting a sub-delegation of RBQ's authority. On the "GCR Quality" rating, the court held that GCR's addition of two supplementary financial ratios fell within its mandate to assess contractor risk under RBQ's pricing policy, and that it was not the court's role to assess the rating's merits, only its consistency with the legislative and regulatory framework — with which it found the rating consistent. Finally, on abuse of process, the court found that Trigone's application raised legitimate legal and factual questions and that no evidence supported a finding of recklessness, such that even had Trigone lacked standing, no abuse of process would have been found.

Ruling and overall outcome

The court dismissed Trigone's amended originating application challenging the validity of sections 50, 84, 85 and 88 of the Regulation and the "GCR Quality" rating, finding none of the challenged provisions or practices constituted an unlawful sub-delegation of RBQ's regulatory authority. Legal costs on this application were awarded in favour of RBQ and GCR, the successful defendants; no specific monetary amount of costs was stated in the judgment. The court also dismissed GCR's separate amended motion to dismiss and for a declaration of abuse, awarding legal costs on that motion in favour of Trigone; again, no specific dollar figure was quantified.