Religious corporation loses battle over perpetual contracts

In 1945 a religious corporation acquired from the City of Sherbrooke a piece of land, adjoined to a property it already owned, to provide a resting place for weary nuns, or “religieuses fatiguées.”

It paid $200. But the contract includes a clause by which the City obtains the privilege to repurchase the land at the price sold in the event that the religious outfit decides to resell it.

Les Filles de la Charité du Sacré-Coeur-de-Jésus launched an action to have the right of pre-emption be declared null and void or, in the alternative, that a time limit be set for its lapse.

The Quebec Court of Appeal dismissed the appeal. Heeding guidance by the Supreme Court in Uniprix inc. v. Gestion Gosselin et Bérubé inc., 2017 SCC 43, the Appeal Court reaffirmed that the only perpetual contracts that are invalid as contrary to public policy are those where perpetuity “undermines” fundamental values of society.

“It is true that the appellant cannot freely dispose of this land, since it must allow the respondent to buy it if it decides to sell it, but this is not shocking,” said the Appeal Court in Filles de la Charité du Sacré-Coeur-de-Jésus c. Ville de Sherbrooke, 2022 QCCA 112.

“The appellant has, to date, used the land in the manner it intended at the time of purchase and can continue to do so since it is only if it decides to sell it that it will have to allow the respondent to buy it back. It is true that this limits one of the components of her right of ownership, in this case abusus, but this limit does not undermine a fundamental value of society, especially since many other dismemberments of the right of ownership are authorized in Quebec law.”

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