Court of Appeal of Quebec

Régie du bâtiment du Québec c. Garantie des bâtiments résidentiels neufs de l'APCHQ inc.

500-09-027298-181

Savard, Ruel, Cotnam

Appeal from a judgment of the Superior Court granting an application to dismiss a proceeding for authorization to grant a hypothec on assets in a guarantee plan for new residential buildings. Allowed in part.

The appellant, who entrusted the provisional administration of the guarantee plan to the impleaded party, negotiated with the latter to obtain a hypothec on certain claims and the universality of the claims, including those arising from the presence of pyrrhotite. It sought the Superior Court’s authorization to create this hypothec. The trial judge concluded that the appellant had not proved that there was a genuine problem in determining the rights, powers, or obligations conferred on the parties by a juridical act.

The judge erred by failing to consider the principal subject matter the application, which sought to authorize the impleaded party, as administrator of the property of others, to charge the assets under its administration with a hypothec. Initially, the proceeding was non-contentious (art. 302 of the Code of Civil Procedure (CQLR, c. 25.01)). The Court’s authorization was not required to subject the claims being administered to a hypothec. On this ground alone, the application should have been declared moot. Because the judge ruled on the merits of the case in an obiter dictum, the parties ask the Court to decide whether the hypothec is lawful.

The validity of a hypothec depends on the capacity of the grantor to alienate the property being hypothecated. Subject to art. 1315 of the Civil Code of Québec (S.Q. 1991, c. 64) (C.C.Q.), the ordinary law does not prohibit the creation of the hypothec under consideration. Moreover, an analysis of the Building Act (CQLR, c. B-1.1) and the Regulation respecting the guarantee plan for new residential buildings (CQLR, c. B1.1., r. 8), indicates a will by the legislator to foster the reimbursement of public funds that are put at the disposal of the guarantee fund, particularly through the exercise of subrogatory actions.

Although the protocol agreed upon by the appellant and the impleaded party provides that the latter undertakes not to charge any of the property it administers, currently or in the future, with any hypothec or other pledge, that does not prevent the possibility of granting hypothecs.

Moreover, there is no basis for the unseizability of the hypothecated property, which is defined as the existing claims and the universality of the claims.

Furthermore, in accordance with the hypothec, the appellant could exercise the rights it already has by subrogation directly against the contractors or the administrator, or collect the fruit of the rights that are still administered by the impleaded party and that it does not hold. There can therefore be no confusion between the hypothecary creditor and the grantor for at least a portion of the claims being administered. The hypothec is not extinguished.

Also, because there is no additional consideration for the hypothec, it would be constituted with a liberal intention, and it will therefore be an act by gratuitous title, contrary to art. 1315 C.C.Q. However, at the provisional administration stage, the assets under management, subject to the claims, are essentially made up of the amounts advanced by the appellant from public funds. The Building Act has a social objective, that is, to protect the owners who have purchased a guarantee plan, but also shows the state’s wish to recoup the sums it has invested. Laws of specific application must take precedence over laws of general application. The hypothec under consideration may therefore lawfully be granted, without requiring the Court’s authorization.

*Summary by SOQUIJ
Text of the decision: Http://citoyens.soquij.qc.ca

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