Executive Summary: Key Legal and Evidentiary Issues

• The Court of Québec granted Papier Masson leave to appeal two questions arising from the TAQ's economic obsolescence ruling.
   
• Gatineau's incidental application for leave to appeal the recognition of economic obsolescence was dismissed.
   
• Justice Tremblay found that excluding the profitability variation parameter raised a serious question of principle.
   
• Isolating the land from economic obsolescence under a vacant-land valuation fiction was deemed a question of general interest.
   
• No final ruling was made on the applicable obsolescence rate or the resulting valuation amount at this stage.
   
• Costs were reserved to follow the outcome of the underlying appeal.
   

Facts of the case

Commandité Papier Masson WB Ltée and the Ville de Gatineau both sought leave to appeal a July 25, 2025 decision of the Immovable Property Affairs Division of the Administrative Tribunal of Québec (TAQ), concerning the value entered on the 2021 and 2024 triennial rolls for Papier Masson's newsprint mill. The sole issue before the TAQ was whether the mill was affected by economic obsolescence and, if so, its quantification. Papier Masson claimed an obsolescence rate of 25%, while Gatineau had applied a rate of 10% on the 2021 roll and disputed the existence of obsolescence altogether before the TAQ. The disputed amounts were $7,965,979 for the 2021 roll and $9,724,636 for the 2024 roll. Relying on expert economic and appraisal evidence, the TAQ found that the newsprint industry was affected by economic obsolescence and set the rate at 17.6% for 2021 and 10.3% for 2024, applying it only to the buildings and not the land.

Policy and legislative provisions at issue

Leave to appeal is governed by section 159 of the Act respecting administrative justice, which permits leave where a proposed ground raises a question of principle, a new question of law, a controversial question with conflicting case law, or a matter of general interest exceeding the parties' own stakes, or where a serious error would otherwise cause a flagrant injustice. The mill's assessment falls under the Regulation respecting the method of assessing single-purpose immovables of an industrial and institutional nature, given its status as a single-purpose industrial property. Also at issue was the Québec Property Assessment Manual's principle that land is valued as if vacant and put to its highest and best use, and the Manual's Addendum, which Papier Masson argued requires external obsolescence to be applied across all components of a property, including land.

Reasoning and analysis

Justice Tremblay assessed each of Papier Masson's two proposed grounds separately. On the first, concerning the TAQ's exclusion of the profitability variation component from its expert's obsolescence formula, the judge found that the ground pitted a specialized tribunal's discretion to weigh expert methodology against the principle that a decision-maker cannot substitute conjecture for missing evidence. Because the TAQ's rationale rested on the possibility, rather than proven fact, that newsprint mills had lower depreciation expenses than the broader sector, the judge considered this to raise a serious question of principle warranting appellate review. On the second ground, concerning the TAQ's exclusion of the land from obsolescence, the judge found that treating the land as vacant under a zoning-based rationale, for a single-purpose immovable where land and buildings form an integrated economic unit, and departing from the Addendum's guidance without stated justification, raised a genuine and controversial question of interest. Turning to Gatineau's incidental application challenging the recognition of obsolescence itself, the judge found that the TAQ had properly applied established case law, including Windsor (Ville de) c. Domtar inc., which ties external obsolescence to demonstrated decline in demand for the specific product manufactured by a single-purpose facility. Since the TAQ's findings were grounded in evidence specific to the newsprint market and the mill's exclusive production of newsprint, Gatineau's proposed ground did not meet the threshold for leave.

Ruling and overall outcome

The Court granted Papier Masson's application for leave to appeal on both proposed questions: whether the TAQ erred in excluding the profitability variation parameter, and whether it erred in finding that economic obsolescence does not affect the land. Gatineau's incidental application for leave to appeal was dismissed. The judgment stands as the notice of appeal upon payment of registry fees, and the file was referred for a case management conference. As this was a procedural ruling on leave to appeal rather than a final determination on the merits, no monetary award was ordered; legal costs were reserved to follow the outcome of the appeal itself.