Hydro-Québec can rely on existing servitudes to build new transmission lines, Supreme Court rules

Hydro-Québec may rely on its existing servitudes to build new transmission lines in the province, a unanimous Supreme Court ruled on Friday. The decision restores the Quebec public utility company’s permanent injunction permitting them access to privately owned land in order to build a new hydro line.

In a 7-0 decision in Hydro-Québec v. Matta, the Supreme Court found that the trial judge was correct in characterizing the post-expropriation agreements that Hydro-Québec had with private landowners as servitude agreements (or “easement” agreements in common law jurisdictions).

The decision ends a battle between a small handful of private landowners in Quebec and the public utility company, which has endeavoured to establish another electric-power transmission line between the Chamouchouane substation in Saguenay–Lac-Saint-Jean and the Montreal metropolitan loop.

But it has greater implications for Hydro-Québec, much of whose electricity transportation network is built on private land, and for electricity providers across Canada.

“For Hydro-Québec, it means that basically the servitudes on private lands upon which half of its network is built are confirmed to be secure, legal, and may not be challenged after the fact,” says Claude Marseille, a civil litigator and partner at Blake, Cassels & Graydon LLP in Montreal who represented the appellant Hydro-Québec before the Supreme Court.

The intervener Canadian Electricity Association found the appeal had national ramifications, far beyond Hydro-Québec and civil law servitudes, said Marseille; “according to them, the scope and the interpretation of utility rights-of-way that have the same underlying interpretive issues also applied outside Quebec.”

Hydro-Québec claimed that servitude agreements negotiated with landowners in 1972 — which gave it rights-of-way for the purpose of building hydro lines between power substations — authorized it to route up to three electrical transmission lines through the servient land, whether or not the original substations remained the same. The original substations were Jacques‑Cartier near Quebec City and Duvernay in Laval.

In 1982, Hydro-Québec redirected various power lines in the province, and from that time on the Jacques‑Cartier–Duvernay transmission line, on the land Hydro-Québec had expropriated in 1972, was redirected to the La Vérendrye substation. The landowners were not informed of those changes.

In 2015, the Quebec government authorized Hydro-Québec’s project to build the Chamouchouane-Bout-de-l’Île transmission line, which was to be routed partly on the site of the servitudes acquired in 1972 and parallel to the line already built. This new line was intended to secure Montreal’s electricity capacity in the aftermath of the province’s great ice storm of 1998 that caused a massive power outage.

The landowners claimed that the rights arising from the servitudes acquired when the Jacques‑Cartier–Duvernay line was constructed were limited to that one line only between those two substations, and they subsequently blocked access to Hydro-Québec for the purposes of constructing a second line.

During the trial the landowners learned for the first time of the redirection of the Jacques‑Cartier–Duvernay line, and amended their proceedings to claim that not only could Hydro-Québec not add a second line over their properties, but that Hydro-Québec had illegally modified the old line that connected the Jacques-Cartier and the Duvernay substations, which was specified in the expropriation orders. They also claimed damages for the unintended use of the original rights.

The majority of the Quebec Court of Appeal, in overturning the trial judge’s decision in favour of Hydro-Québec, agreed and ordered that “Hydro-Québec had to remedy the situation 37 years after the fact,” says Marseille.

But the Court of Appeal was wrong, the Supreme Court found.

“Having unduly limited the appellant’s rights on the respondents’ land to the Jacques‑Cartier–Duvernay line, the Court of Appeal concluded that the redirection of that line to the La Vérendrye substation in the early 1980s was incompatible with the servitudes,” wrote Justice Suzanne Côté in her reasons, with Chief Justice Richard Wagner and Justices Rosalie Abella, Michael Moldaver, Andromache Karakatsanis, Russell Brown and Sheilah Martin agreeing.

“The appellant submits that this conclusion seriously compromises the principle of stability of real rights on which the evolution of its system depends, especially given that redirecting an electrical transmission line to another substation has no effect on the situation of the servient land. As for the respondents, they see this change as a substitution for the dominant land.”

The Court of Appeal erred in concluding that the appellant “’is using the line for a purpose other than the one provided for in the act of servitude,’” Justice Côté found. “The servitudes at issue must be analyzed in light of the agreements subsequent to the notices of expropriation, and those agreements contain no restrictions as to the origin of the electricity. They grant the right to … “place, replace, maintain and operate, on the said servient land, three (3) high‑ or low‑voltage electrical transmission line(s), and communication lines.”

A servitude acquired by expropriation is, according to the Civil Code, established by the operation of law, but neither law nor public order bars the expropriating party and the expropriated party from clarifying or modifying a servitude by mutual agreement. This means that notices of expropriation do not preclude parties from negotiating conventional servitudes as a matter of law, as had occurred in this case. And because servitudes (or easements elsewhere in Canada) are registered in land titles, any owner buying property with servitudes would be notified of such prior to purchase, and “the value of the property will be discounted accordingly,” Marseille notes.

“We argued that Hydro-Québec is building a huge network here, crucial to the economy of Quebec,” he adds. “The real rights that were established over a period of 50 years [since 1972 is] a principle that the Supreme Court has accepted now, of the stability of real rights. … And the Court of Appeal cannot come [along with] a decision 50 years after the fact and change the landscape.”

The decision also recognizes the need for Hydro-Québec – and other electricity providers – to “constantly improve its infrastructure” and replace aging power stations with new ones, he adds.