Executive Summary: Key Legal and Evidentiary Issues

• Legality of operating a first-transformation wood industry (granule and plank production) in an AF4 agroforestry zone where such industrial use is not listed as a permitted main use.
• Weight of prior municipal penal convictions and repeated inspection reports in proving a continued non-conforming (dérogatoire) use despite the owner’s assertion that production had ceased.
• Characterization of the dome-shaped metal building as an industrial, not agricultural, accessory building and its non-conformity with zoning and permit conditions, including lack of access to a qualifying public or private road.
• Validity and timeliness of the defendant’s attempt, via counterclaim, to annul zoning and urban planning instruments on grounds of incoherence with the regional planning scheme and plan d’urbanisme.
• Scope and effect of the access servitude restricted to “fins agricoles” and its inability to support an industrial use or qualify as a “rue privée existante” protected by acquired rights.
• Allegation of disguised expropriation arising from demolition and use cessation orders, and the court’s rejection of any compensable expropriation where the purchaser bought subject to an existing, unchanged regulatory regime.

Factual background and the parties’ positions
The dispute arises in the Municipality of Ulverton, Quebec, between the Municipalité d’Ulverton and 2968-8777 Québec inc., whose principal business is the exploitation of timberlands. In 2009, 2968 acquired lot 3 511 441 (the Property) in Ulverton, an AF4-zoned agroforestry area. The company’s owner, Mr. Bernard Mathieu, engaged in sylviculture on the land and claimed to cultivate vegetables and berries on roughly two acres. Around 2019, Mr. Mathieu decided to recover and “valorize” wood residues on the Property by transforming them into wood pellets, with some ancillary production of boards. To do this, he wanted to establish an industrial first-transformation operation on the Property. This type of industrial activity, however, was not then permitted in the AF4 zone under the municipal Zoning By-law No. 389-2006. Despite knowing that the use was not allowed, Mr. Mathieu initiated discussions with the municipality seeking regulatory changes. In July 2019, Ulverton introduced a draft by-law that would have allowed first-transformation forest product industries in most agroforestry zones and in all “agroforestry dynamic” zones, including AF4. Citizen opposition mobilized quickly, a public consultation was held in August 2019, and by November 2019 the proposed by-law was withdrawn. Mr. Mathieu was informed that the project had been abandoned, yet in mid-November 2019 he went ahead and constructed a dome-shaped metal building on the Property without a permit. In January 2020 he filed a new request to rezone AF4 to allow the industrial wood-transformation use. The municipal council refused the request in March 2020, notably citing environmental protection.
Following this, municipal inspectors conducted several site visits. On 14 February 2020 an inspector noted the building had been constructed without a permit and that a first-transformation forest products industry was in operation. Mr. Mathieu was contacted and asked to apply for a building permit. He responded on 20 February 2020, acknowledging he had built between 11 and 15 November 2019 and filing his permit application. The municipality ultimately refused the permit in March 2020 and issued an infraction notice in March 2020, directing removal of the construction by 30 April 2020. Subsequent inspections in September 2020, April 2022 and November 2023 repeatedly confirmed the same allegedly non-conforming industrial use and presence of the building. In parallel, Ulverton laid penal charges. In September 2021, the municipal court convicted 2968 on two of three counts: operating a first-transformation forest products industry on the Property and erecting a building there without a proper permit or adjacency to a compliant road. 2968 appealed but later discontinued its appeal. Meanwhile, in 2022 and 2023, Mr. Mathieu made further attempts to obtain zoning changes or permits, all of which were refused. Ulverton then commenced this Superior Court proceeding in December 2023 seeking (1) an order to cease the non-conforming industrial use and (2) demolition of the building and restoration of the site. 2968 responded with a defence and counterclaim attacking the zoning and planning framework, and, in the alternative, asserting being the victim of disguised expropriation.

The regulatory framework and key clauses at issue
The Property lies in zone AF4 under Ulverton’s Zoning By-law No. 389-2006, which is supported by a zoning plan and a grid of permitted uses by zone. In AF4, the grid authorizes certain principal uses such as single-family dwellings, country inns, specific agro-tourism hospitality uses, public utility infrastructure, agro-food first-transformation industry, and various categories of agriculture, including sylviculture. Notably, an “industrie de première transformation de produits forestiers” is not a permitted use in AF4 and has never been added for that zone, even after various regulatory discussions. The by-law defines “industrie de première transformation de produits forestiers” broadly as the production of semi-finished or finished products from raw forest products sourced from logging operations, whether or not linked to a forest farm. This definition clearly encompasses pellet manufacturing and related board production.
Zoning By-law No. 389-2006 also contains interpretive rules around streets and access. A key constraint is that a construction permit can only be issued where the lot is adjacent to a public street, a qualifying private street, or a private street protected by acquired rights. The separate By-law on the Conditions for Issuance of Building Permits No. 394-2006 requires the same adjacency test: the land for any proposed construction must be adjacent to a public street or to a private street that is either compliant with the subdivision by-law or protected by vested rights. In this case, the Property is reached via an access servitude from chemin Lyster – a strip of land 50 feet wide granted as a right of way “pour des fins agricoles” (for agricultural purposes only). The servitude had never been recognized by resolution as a private road, nor was there proof that, at the time of the zoning by-law’s entry into force in 2007, the access physically met the criteria for a “rue privée existante” (including a four-metre passable carriageway and service to at least two principal buildings or distinct lots). The court held that the servitude therefore failed to qualify as a compliant or acquired-rights private street under the by-law definitions. Separate policy instruments – the regional planning scheme (schéma d’aménagement) and the municipal urban plan (Plan d’urbanisme No. 388-2006) – feature an overarching orientation that favours first-transformation forest product uses in agroforestry designations, and state that such industry is compatible with agroforestry land uses. 2968 relied on these statements to argue that the zoning by-law was incoherent and unreasonable because it allowed the industrial use in only one agroforestry-dynamic zone (AFD12) even though many zones, including AF4, shared similar designations. The court emphasized that the planning scheme and urban plan do not themselves create rights; they guide councils, while only the zoning by-law imposes binding norms. A zoning regime may legitimately be more restrictive than the broad policy orientations of planning documents so long as it does not contradict them. The judge found no conflict of norms and concluded that any decision to authorize forest-product industry in more zones was a political question for elected officials, not for the court.
Another important legal lens was the Superior Court’s discretionary power under article 227 of the Loi sur l’aménagement et l’urbanisme (LAU). That provision states that the court “may” order the cessation of a use incompatible with zoning or construction regulations, making the remedy discretionary rather than automatic. The Quebec Court of Appeal’s decision in Montréal (Ville) c. Chapdelaine sets strict criteria for declining to order cessation or demolition: there must be exceptional, rare circumstances; the contravening party must have acted diligently and in good faith, without prior knowledge of the non-conformity; and the municipality must have contributed by inexcusable delay or positive misleading conduct, among other conditions. The judge held that none of these exceptional elements were present. 2968 bought the Property after the regime was in place, verified its intended use with the municipality, later discovered its project was non-compliant, and still pushed ahead with construction and industrial operations, fully aware of the prohibitions. Finally, the contract of sale for the Property contained a clause in which the purchaser accepted the land “as is” and declared that it had itself verified with the competent authorities that its intended destination was compliant with existing laws and regulations. The court treated this clause as a clear acknowledgment that compliance risks lay with the buyer.

Non-conforming use and evidentiary findings
On the core issue of whether 2968 was engaging in a non-conforming use, the court marshalled a series of evidentiary elements. Municipal letters from February and March 2020 explicitly informed Mr. Mathieu that a first-transformation forest-products industry was operating on the Property without authorization, and that the building lacked a permit. Subsequent inspection reports in 2020, 2022, and 2023 consistently recorded that pellet production and related industrial activity were ongoing. The prior municipal penal conviction from September 2021 – for operating the forest products industry without permission and erecting the building without a compliant road adjacency – was treated as a juridical fact. It gave rise to a presumption of correctness of the underlying factual findings, which 2968 failed to rebut. The court noted that 2968 had every opportunity to overturn that determination on appeal but chose to discontinue its appeal.
At trial, Mr. Mathieu asserted that pellet and board production had ceased in 2021 and that the Property was now being used only for agricultural production (tomatoes, vegetables, strawberries on roughly two acres). The judge found this evidence unconvincing, describing the proof as “contre-sens” to his claim: the site was still filled with bags of pellets, granulators, wood dryers, and sawdust both inside and outside the building. The defence offered no detailed evidence of a genuine shift to an authorized agricultural use (such as production records, scale, or commercial arrangements), and the agricultural activity was treated as minimal and unsubstantiated compared with the visible industrial installations. In addition, the replacement of one use by another was never cogently established. Overall, the court held that 2968 had been and remained engaged in a prohibited industrial first-transformation use in AF4, and that this non-conformity was ongoing at the time of hearing.

Validity of the zoning and planning regime and the counterclaim
In its counterclaim, 2968 sought annulment of the AF4-related provisions of the Zoning By-law No. 389-2006 and of the corresponding sections of the Plan d’urbanisme, alleging incoherence and conflict with the schéma d’aménagement. It argued that the policy orientation favouring first-transformation forest-product uses in agroforestry designations could not be squared with a zoning regime that confined such industrial use to a single zone (AFD12) across the municipality. It portrayed this as a regulatory incoherence so severe as to render the by-law unreasonable and ultra vires. The court rejected this argument on both procedural and substantive grounds. Procedurally, any challenge to the legality or reasonableness of by-laws and planning instruments had to be raised promptly by way of judicial review within strict time limits following adoption or application of the contested measure. 2968 bought the Property in 2009, long after the zoning by-law came into force in 2007 and years after the urban plan had been adopted in its current form, yet took no timely legal steps to challenge these instruments. Instead, it tried to raise its attack eighteen years after the zoning by-law’s adoption and more than a decade after the current urban plan, by tacking the claim onto this civil enforcement action as a counterclaim. The court considered this grossly out of time and noted that 2968 had provided no explanation for the delay. Substantively, the judge stressed the presumption of validity of municipal by-laws adopted in the public interest and the need for judicial deference to municipal councils. Courts should intervene only where a by-law falls outside the range of “possible, acceptable outcomes” for a reasonable decision-maker. Here, the council’s choice to allow the forest-product industry only in limited zones, rather than across all agroforestry areas, sat comfortably within that permissible range. The planning scheme’s orientation and the urban plan’s statement that first-transformation forest-product industries are “compatible” with agroforestry do not compel the municipality to authorize that use in every eligible zone. Councils remain free, within reason, to restrict such uses to zones they deem appropriate. The court therefore dismissed the counterclaim and confirmed the validity and applicability of the AF4 zoning to 2968’s Property.

The building, access issues, and demolition
The dome-shaped metal building on the Property was erected without a construction permit between 11 and 15 November 2019, after the municipality had withdrawn the draft by-law that might have permitted the industrial use in AF4. 2968 attempted to justify the building on two main fronts. First, it argued that, because the Loi sur la protection du territoire et des activités agricoles (LPTAA) defines “agriculture” to include sylviculture and, in some circumstances, on-farm storage, processing and sale of agricultural products, the building should be treated as an agricultural accessory building. Under article 4.15 of Zoning By-law 389-2006, dome-shaped metal buildings are generally prohibited, but that article explicitly exempts accessory buildings used for agricultural purposes. 2968 contended that its sylvicultural work qualified as agriculture and that the building, therefore, should enjoy the agricultural exception. The court rejected this characterization. It concluded that the building’s actual use – housing a saw, wood dryers, pelletizers and associated equipment – was squarely industrial and directly linked to the prohibited first-transformation forest-product operation, not to ordinary agricultural exploitation of the land. A generic claim of “sylviculture” could not be invoked to shield a more specific, disallowed industrial activity that municipal zoning had chosen to regulate distinctly. In other words, the municipal by-law’s detailed categorization of uses prevails over a broad statutory definition when determining compliance with zoning rules.
Second, 2968 disputed the municipality’s position that no building permit could lawfully be granted because the Property was not adjacent to a qualifying street under the permit and zoning by-laws. It argued that the access servitude from chemin Lyster, granted over a 50-foot-wide strip of land, should either be treated as a private road or as a “rue privée existante” protected by acquired rights. However, the court found that the servitude had never been recognized by council resolution as a private road and that there was no evidence of compliance with all the criteria for an “existing private street” as of 7 February 2007 (the date the zoning by-law came into force), including the necessary width and service to at least two properties. The municipal penal conviction in 2021, finding that the Property was not adjacent to a compliant public or private street and that the construction was illegal on that ground, further undermined 2968’s position; the company offered no persuasive evidence to rebut that prior finding. The court also noted that, even if the servitude could have qualified as an existing private road in some sense, its deed restricted it to agricultural purposes, and thus it could not lawfully support an access serving a non-agricultural industrial operation.
Given these findings, the building was deemed a significant, non-conforming construction erected without a valid permit on land that lacked the required qualifying access. The judge concluded that, but for the lack of a permit, the municipality had rightly refused to grant one in 2020 and that continuing to tolerate the building would send an impermissible message that non-compliance can be rewarded. Applying the Chapdelaine framework once more, the court found no exceptional circumstances justifying refusal of demolition. The violation was recent, deliberate, and serious; the municipality had not slept on its rights; and demolishing the building would not unduly prejudice the broader zone or public interest. Accordingly, the court ordered 2968, its successors, and any current or future owner of the Property to demolish the building, including foundations, remove demolition debris, and clean up the land within 30 days of service of the judgment. If 2968 fails to do so, Ulverton is authorized to carry out the demolition and site restoration at 2968’s expense, with those expenses treated as municipal taxes secured on the Property.

Alleged disguised expropriation and claimed right to compensation
As a fallback, 2968 argued that if the court upheld the zoning regime, rejected its counterclaim and ordered demolition, the effect would be to leave the company “ligotée” – effectively stripped of meaningful use of the Property – amounting to a disguised expropriation. On this basis it asked the court to reserve its rights to claim compensation for expropriation without formal proceedings. The court firmly declined. It stressed that 2968 was not the owner when the zoning by-law and other planning tools were adopted; it knowingly acquired the land in 2009 subject to the existing restrictions, which had not subsequently been tightened in any way that specifically targeted 2968. The municipal regime had remained stable; there had been no new prohibition or down-zoning directed at the company, only enforcement of pre-existing rules. Any hardship 2968 now faced flowed from its own decision to invest in a non-permitted industrial project and to construct a substantial building without ensuring full regulatory compliance, despite a contractual obligation in the deed of sale to verify conformity of its intended use. Under the Supreme Court and Court of Appeal jurisprudence on disguised expropriation, there must be a substantial deprivation of the normal attributes of ownership caused by state action that effectively appropriates the property’s value or utility for public purposes. Here, the property could still be used for the many agricultural and related purposes allowed in AF4, and any burden on 2968 arose from its non-conforming industrial ambitions, not from a regulatory taking. The court therefore found no basis to reserve any future indemnity claim for disguised expropriation.

Final orders, successful party, and financial consequences
In its dispositive section, the Superior Court fully granted Ulverton’s application and dismissed 2968’s defence and counterclaim. It ordered 2968 and its successors, as well as any current or future owner of lot 3 511 441, to cease all non-conforming first-transformation forest-product industrial activities within 30 days of service of the judgment. It also ordered demolition of the building, removal of debris, and site cleanup within the same 30-day period, authorizing the municipality to step in and perform the work if 2968 fails to comply. Any costs incurred by Ulverton in carrying out demolition and cleanup are declared payable by 2968 and are assimilated to municipal property taxes secured on the land, recoverable under the usual tax enforcement mechanisms. The court further authorizes the eviction of 2968, its representatives, or any other occupant on the day of demolition, permits the municipality to dispose of any movable property remaining on the site, and allows bailiffs, with police assistance if needed, to enforce the judgment. An order of provisional execution is granted for the cessation-of-use portion, notwithstanding appeal. Finally, the judgment is rendered with costs (“avec frais de justice”) against 2968.
In sum, the successful party is the Municipalité d’Ulverton, which obtained comprehensive non-monetary relief enforcing its zoning and permit by-laws against 2968-8777 Québec inc. The court did not fix any specific dollar amount for damages, costs of demolition, cleanup, or legal costs; instead, those expenses are to be incurred as needed and later recovered as tax-like charges against the Property. Because the judgment does not specify any lump-sum or determinable monetary figure, the total amount ultimately payable in favour of the successful party cannot be determined from the decision itself.