Earlier this year, the Québec Court of Appeal (the “Court”) handed down its decision in Procureur général du Québec c. Metellus (“Metellus”), in which it considered whether the abolition of the taxi-owner permit regime constituted disguised expropriation giving rise to a right to compensation. In doing so, the Court addressed the consequences of the 2022 Supreme Court of Canada decision in Annapolis for Québec expropriation law.
Background
The appeal arose against the backdrop of a series of legislative changes in recent years that ultimately ended the monopoly held by taxi-owner permit holders over the industry. Uber’s arrival in Québec was central to the narrative.
In the wake of those legislative changes, the Québec government introduced financial measures to assist the taxi industry. As of March 2026, the government had paid members of the class, represented by Mr. Dama Metellus, over $873 million in compensation.
Judgment on the merits
The trial judge ordered the Attorney General of Québec (the “AGQ”) to pay class members nearly $144 million, plus interest at the statutory rate and additional indemnity. This was in addition to the $873 million already paid out by the Québec government to compensate taxi-owner permit holders. The judge found that the government owed this compensation as a result of the expropriation of taxi-owner permit holders.
However, she refused to award punitive damages to the class members under sections 6 and 49 of the Charter of Human Rights and Freedoms, because the criteria that undergird such an action were unmet.
Appeal of the judgment on the merits
The AGQ appealed, arguing that the trial judge erred in law when she found that taxi-owner permit holders had been subject to disguised expropriation. The AGQ submitted that the judge had conflated the economic losses resulting from the overhaul of the legal framework governing the taxi industry with the government’s removal of all reasonable uses of a property right.
Mr. Metellus also appealed, arguing that the damages awarded at trial were insufficient because they did not amount to full compensation. He further argued that the judge erred in refusing to order the AGQ to pay punitive damages.
Court of Appeal decision
The Court allowed the AGQ’s appeal and dismissed Mr. Metellus’s appeal.
It framed the questions as follows:
- Did the government’s abolition of the taxi-owner permit regime constitute expropriation within the meaning of article 952 of the Civil Code of Québec?
- If so, are class members entitled to compensation in addition to that provided for by law and government programs, and, if so, what is the just compensation to which they are entitled?
- Did the judge make a reviewable error in dismissing the respondent’s claim for punitive damages?
The Court began by reviewing the fundamental principles of expropriation law in Québec.
It noted that expropriation law is inseparable from the right to property protected by section 6 of the Charter of Human Rights and Freedoms, the attributes of which are set out in article 947 of the Civil Code of Québec.
The Court defined expropriation as “the exercise of power by a public authority to deprive an owner of the enjoyment of the attributes of their property rights for legitimate public purposes, provided that just and prior compensation is paid to the owner.”
This definition aligns with the three criteria undergirding expropriation set out in article 952 of the Civil Code of Québec: (i) a transfer of ownership to a public authority, (ii) for a public purpose, and (iii) in exchange for just and prior compensation.
The Court noted that expropriation may occur in two ways: first, by following the steps prescribed by law, particularly the Act respecting expropriation; or, second, in a disguised manner, where a legislative or regulatory act has the effect of depriving the owner of all reasonable use of their property. Québec case law is replete with decisions where municipal zoning by-laws were so restrictive that they amounted to indirect expropriation.
The Court addressed the significance of the Annapolis decision in Québec civil law. In that decision, the Supreme Court clarified the two criteria that must be met for a court to find that a constructive taking by a public authority has occurred under common law.
First, the public authority must acquire a beneficial interest in the property or flowing from it; and second, the state action must remove all reasonable uses of the property.
The debate focused on the role of the first criterion in Québec expropriation law. The Court noted that the test for disguised expropriation under Québec law is not the same two-part test that applies at common law. However, the wording of article 952 of the Civil Code of Québec supports the conclusion that there must be a benefit to the government or the public more broadly for expropriation to occur.
Accordingly, the Court held that, for there to be expropriation under Québec law, there must be a removal of all reasonable uses of the property and a corresponding acquisition by the public authority. The Court explained that, in matters of real property expropriation, there is a presumption of fact based on the nature of the property that relieves the expropriated party of the burden of proving the corresponding acquisition or enrichment. However, this presumption appears to be rebuttable, as the Court specified that the presumption “does not eliminate acquisition, in whatever form, as an essential characteristic”.
The Court noted that the presumption applies only in cases involving the expropriation of immovable property. A party alleging expropriation of movable property must show that the expropriating party derives an advantage or benefit from it, as was the case in Manitoba Fisheries Ltd. v. The Queen.
The Court allowed the AGQ’s appeal and found that the trial judge had erred in law in finding that the government had expropriated taxi-owner permit holders, for three reasons.
First, the Court found that the permit itself did not confer a property right subject to expropriation by the government. The Court held that the degree of legislative regulation governing permits was so significant “that it precludes recognizing the traditional attributes of a property right.” The Court viewed the permit as more akin to an important and specific right of use or privilege conferred by the government.
Second, the Court determined that even if the permit conferred a property right subject to expropriation, the legislative changes did not remove all reasonable uses of the permit. Rather, they repealed an economic privilege—a monopoly—that taxi-owner permit holders had enjoyed. The evidence showed that owners could still carry out commercial activities consistent with the nature and character of the permit. The Court accepted the AGQ’s argument that Mr. Metellus was complaining about the loss in value of the permits rather than the loss of the permits themselves.
Third, the Court found that, in this case, the abolition of the permits as they had existed did not confer any revenue, advantage, or other benefits on the government. As such, this essential condition for expropriation was not met.
Conclusion
Metellus marks an interesting and important development in Québec expropriation law. Beyond resolving the dispute between the parties, its central significance lies in clarifying the impact of the Annapolis decision in Québec.
Without adopting the common law’s two-part test, the Court of Appeal nevertheless held that, for a Québec court to find disguised expropriation, the expropriating authority must derive an advantage or benefit from it.
This advantage or benefit need not necessarily accrue to the expropriating authority itself; it may accrue to the community. Consider, for example, land expropriated by a municipality and developed into a park. The benefit does not accrue to the municipality itself—a legal entity under public law—but rather to the municipality’s residents.
While the advantage or benefit accruing to the expropriating authority is presumed in matters involving immovable property, the party claiming to have been expropriated must prove it when the expropriation concerns movable property.
Indeed, Metellus increases the burden on the party claiming to have been expropriated. In addition to showing that the legislative or regulatory act effectively nullifies the property right by preventing any reasonable use of the property, the party must also demonstrate that the expropriating authority derives an advantage or benefit from it.
Finally, it should be noted that Mr. Metellus has filed an application for leave to appeal to the Supreme Court of Canada. The Court will decide in the upcoming months whether to hear the appeal.