Contractors, subcontractors, and suppliers performing work on immovables owned by a public legal person cannot necessarily rely on a legal construction hypothec. Unlike in the private sector, the availability of this protective mechanism depends on the public entity involved and, in some cases, the particular immovables concerned. It is therefore essential to understand the circumstances in which this security is available and when it is not.
Section 916 of the Civil Code of Québec provides that no one may appropriate the property of public legal persons. This provision reflects the broader principle that State property is exempt from seizure, which may suggest that a legal construction hypothec is never available when an immovable belongs to such an entity.
The legal framework is, however, more nuanced. In many cases, a legal construction hypothec may be allowed, depending on the constituting statute of the public entity and on whether the immovable is dedicated to a public purpose.
THE IMPORTANCE OF THE CONSTITUTING STATUTE
Section 300 of the Civil Code of Québec establishes that public legal persons are primarily governed by their own enabling legislation. The Civil Code of Québec therefore applies only on a supplementary basis.
In practical terms, this means that the analysis must always begin with the constituting statute of the entity in question. Certain public legal persons are expressly authorized under their enabling legislation to hypothecate their property.
Take the Université du Québec à Montréal (“UQAM”), for example. Pursuant to the Act Respecting the Université du Québec[1], UQAM is a legal person empowered to hypothecate its movable and immovable property in order to secure repayment of its borrowings or the performance of its obligations.
This power to grant hypothecs is significant because, where an organization is authorized to voluntarily grant a hypothec, it becomes difficult to argue that its property enjoys absolute immunity from a legal construction hypothec, provided that the conditions prescribed by the Civil Code of Québec have been met.
ANALYZING WHETHER AN IMMOVABLE IS DEDICATED TO A PUBLIC PURPOSE
In addition to the constituting statute, Québec courts have also recognized that certain immovables owned by public legal persons may be subject to a legal construction hypothec where they are not dedicated to a public purpose.
A frequently cited decision of the Québec Court of Appeal concerning the interpretation of section 916 of the Civil Code of Québec and the concept of property “dedicated to a public purpose” is Bâtiments Kalad'Art inc. v. Construction D.R.M. inc[2].
In that case, the Court highlighted a key principle underlying the immunity from seizure enjoyed by certain public property: the theory of dual public ownership. Under this theory, property owned by a public legal person falls into one of two categories: property forming part of the “public domain,” which is exempt from seizure, and property forming part of the “private domain,” which may be seized and, consequently, may be encumbered by a hypothec.
The key factor distinguishing these two categories is whether the property is “dedicated to a public purpose.” Property is considered dedicated to a public purpose when it is intended for public use, is essential to the functioning of the public entity, or is made available for the benefit of the community.
With respect to the expression “dedicated to a public purpose,” the Court emphasized that it must be interpreted broadly by considering both the use of the property and its essential nature. Consequently, an immovable may be considered dedicated to a public purpose even where it is not directly accessible to the public or does not provide an immediate service to the population.
Under this interpretation, a municipal park that is directly accessible to the public, as well as infrastructure such as a water distribution system or a fire station, which serves the public indirectly, constitute property that is dedicated to a public purpose and therefore form part of the “public domain.” Because such immovables are devoted to the use and benefit of the public at large, they cannot be encumbered by a legal construction hypothec.
That said, it is important to note that the public-interest mission of a public entity does not automatically mean that every immovable it owns is dedicated to a public purpose and therefore exempt from seizure. The fact that an organization pursues a public mission, such as a hospital or a school, does not mean that all of its immovables form part of the “public domain” and benefit from immunity from seizure.
Courts have repeatedly concluded that certain property owned by such institutions may instead fall within the “private domain,” particularly where it is used only by a limited group of individuals or where it is not essential to the community as a whole. In such circumstances, the property may be hypothecated and seized[3]. For example, in École de technologie supérieure v. Société d'ingénierie CIMA, the school hired engineers for the construction of a campus in Montréal. The Court upheld the legal hypothec registered by the engineers against the immovable owned by the school, treating it as property that could be seized[4].
Accordingly, whether an immovable forms part of the “public domain” depends on its actual use and function. Only property genuinely intended for public use – such as roads, parks, and public infrastructure – and therefore dedicated to a public purpose benefits from immunity from seizure. Property that is used in a more limited manner, even where it is connected to a public mission, falls within the “private domain” and remains may still be seized and made subject to enforcement measures enforcement measures.
CONCLUSION
For all parties involved in construction or renovation projects affecting immovables owned by public legal persons, it is strongly recommended that they determine, before work begins, whether the immovable may be charged with a legal construction hypothec. As discussed above, this assessment requires a careful examination of the applicable legislative framework as well as an analysis of whether the property is dedicated to a public purpose.
Conducting this review in advance is an essential step in protecting your claim and avoiding potential complications.
Our team at BLP is well positioned to advise and assist you in this regard.
[1] Loi sur l’Université du Québec, RLRQ, c. U-1, art. 4.
[2] Bâtiments kalad'art inc. c. Construction D.R.M. inc., 2000 CanLII 20287 (QC CA), par. 18 à 27.
[3]Construction Pépin & Fortin inc. c. Fernand Breton (1975) inc., 2014 QCCS 6405 (CanLII), par. 22 citant Maçonnerie Demers inc. c. Agence métropolitaine de transport, [2004] R.D.I. 288 (C.A.).
[4] École de technologie supérieure c. Société d'ingénierie CIMA, 1997 CanLII 8299 (QC CS), par. 76 à 112.