Developer Claude Lachance has lost a battle with the tax authorities. The Court of Quebec confirms his liability for the hundreds of thousands of dollars that his company failed to pay to the government.
Including interest and penalties, the bill comes to $822,685. The amount includes “taxes collected but not remitted” on fees, as well as unjustified tax refunds on personal expenses. Lachance has, however, filed a request to appeal the case, his lawyer said.
In the process, tax prosecutors highlighted “numerous failures” to meet “tax obligations” by his company, GCA Créateurs immobiliers. Lachance “did not act with a reasonable degree of care, diligence and skill,” Revenu Québec stated in its argument.
The developer is also contesting a federal assessment of $331,366, a dispute that is ongoing. If he also loses against Ottawa, that means the developer could have to pay more than $1.15 million to both levels of government.
In May, The Press had revealed the serial tax disputes of Lachance, a partner of the Fonds de solidarité FTQ. They plan to carry out together a project of “1.5 to 1.7 billion” south of the new station of the Réseau express métropolitain in L’Île-des-Sœurs, financed by the Caisse de dépôt et placement du Québec.
Read our article “The tumultuous rise of Claude Lachance”
Unsuccessful seizures
Before going after Lachance personally, Quebec and Ottawa both tried to recover the amounts owed directly from his company GCA. When they obtained the right to seize his assets in 2019, the total bill was close to $2 million, including penalties and interest.
However, they returned empty-handed: when the bailiff showed up at the company’s offices at Carré Westmount, it had “moved without leaving an address,” according to a report filed in court.
Quasi-public funding
These problems have not put off institutional investors and their quasi-public funds.
In April 2020, six months after the failed tax seizure, Lachance finalized its first partnership in L’Île-des-Sœurs with the Fonds FTQ, which has invested $50 million in its land to date. Together, they are to build four new residential and commercial buildings ranging from 10 to 26 storeys.
“We are continuing to follow the matter closely,” said spokesperson Patrick McQuilken, contacted to find out the Fund’s intentions following the latest developments proving Revenu Québec right.
On the financing side, the Caisse de dépôt took out mortgage guarantees totaling 300 million on the land held by Lachance and the Fonds FTQ, without disclosing the amounts actually advanced.
“We are following the matter closely, but have nothing to add at this time,” wrote Kate Monfette, spokesperson for the Quebecers’ nest egg, in an email to The Press. [Comme] As mentioned above, the loan was granted to a joint venture, one of the parties of which is a long-standing partner of the Caisse, the Fonds immobilier de solidarité FTQ.
Contacted by telephone, Claude Lachance hung up without making any comments.
A limited due diligence review
The due diligence review conducted by the Fonds de solidarité FTQ before investing with Claude Lachance in L’Île-des-Sœurs only focused on the developer himself and his Groupe Lachance, which owned the land. It did not focus on the company that ended up in litigation with the tax authorities.
“This review therefore did not cover GCA Créateurs immobiliers or other companies in which Mr. Lachance is involved,” explains the Fund’s spokesperson, Frédérique Lavoie-Gamache, in an email to The Press.
The due diligence review, based “on best market practices,” took place “between 2018 and 2019,” she said. At the time, Claude Lachance had already been fighting the tax for years.
The thread of events in ten dates
- 2015: Claude Lachance appeals Quebec contributions for undeclared income and unjustified reimbursements of personal expenses totaling more than $1.1 million, from 2007 to 2011.
- 2018: The FTQ Fund begins its due diligence review of Claude Lachance.
- April 2019: Lachance’s dispute with the tax authorities is settled amicably, for an unknown amount.
- October 2019: Quebec and Ottawa obtain judgments totaling nearly $1.9 million against GCA Créateurs immobiliers.
- April 2020: The FTQ Fund grants initial financing of $32.4 million for a Lachance property in L’Île-des-Sœurs.
- September 2020: The Caisse de dépôt et placement du Québec takes a guarantee of 96.5 million on the property, after initial financing.
- November 2020: Quebec and Ottawa attempt to enforce their judgments against GCA through seizures totaling nearly $2 million, but the bailiffs return empty-handed. The tax authorities immediately impose Lachance as administrator.
- November 2021: Lachance appeals these contributions.
- June 2024: Lachance loses his appeal before the Court of Quebec.
- July 2024: He requests that the case be taken to the Court of Appeal.