Allard Contractors Ltd. v. Coquitlam (District)

Allard Contractors Ltd. v. Coquitlam (District)
Collection
Supreme Court Judgments
Date
1993-11-18
Report
[1993] 4 SCR 371
Case number
22829
Judges
Lamer, Antonio; La Forest, Gérard V.; L'Heureux-Dubé, Claire; Sopinka, John; Gonthier, Charles Doherty; Cory, Peter deCarteret; McLachlin, Beverley; Iacobucci, Frank; Major, John C.
On appeal from
British Columbia
Subjects
Constitutional law
Municipal law
Notes
SCC Case Information: 22829
Decision Content
Allard Contractors Ltd. v. Coquitlam (District), [1993] 4 S.C.R. 371
Allard Contractors Ltd. Appellant
v.
The Corporation of the District of Coquitlam Respondent
and between
Thornhill Aggregates Ltd. Appellant
v.
The Corporation of the District of Maple Ridge Respondent
and between
Kirkpatrick Sand & Gravel Co. Ltd. Appellant
v.
The Corporation of the District of Maple Ridge Respondent
and between
Allard Contractors Ltd. Appellant
v.
The Corporation of the District of Coquitlam Respondent
and between
Kirkpatrick Sand & Gravel Co. Ltd. Appellant
v.
The Corporation of the District of Maple Ridge Respondent
and
The Attorney General of Canada,
the Attorney General for Ontario,
the Attorney General of Quebec,
the Attorney General of British Columbia
and the Attorney General for Alberta Interveners
Indexed as: Allard Contractors Ltd. v. Coquitlam (District)
File No.: 22829.
1993: May 26; 1993: November 18.
Present: Lamer C.J. and La Forest, L'Heureux‑Dubé, Sopinka, Gonthier, Cory, McLachlin, Iacobucci and Major JJ.
on appeal from the court of appeal for british columbia
Constitutional law ‑‑ Statutes ‑‑ Validity ‑‑ Municipal Act purporting to authorize variable fees for soil removal permits ‑‑ Whether provision ultra vires province as authorizing levy in nature of indirect taxation ‑‑ Whether volumetric permit fees ancillary to genuine licensing scheme ‑‑ Municipal Act, R.S.B.C. 1979, c. 290, s. 930(2) ‑‑ Constitution Act, 1867, s. 92(9) .
Municipal law ‑‑ Municipal by‑laws ‑‑ Validity ‑‑ Municipalities adopting soil removal by‑laws incorporating volumetric permit fees ‑‑ By‑laws distinguishing between commercial and non‑commercial use ‑‑ Whether by‑laws discriminatory ‑‑ Whether volumetric permit fees authorized by Municipal Act ‑‑ Municipal Act, R.S.B.C. 1979, c. 290, s. 930(2) ‑‑ Coquitlam By‑law No. 1841, 1988 ‑‑ Maple Ridge By‑law No. 3957‑1987.
Coquitlam passed a by‑law prohibiting the removal of soil and other substances from land within the municipality except as authorized by permit and establishing a flat rate permit fee. It later changed the permit fee from a flat rate to one dependent on the volume of material removed. The natural consequence of this change to a volumetric fee was a great increase in fees paid by commercial extractors. Maple Ridge also passed a by‑law incorporating a volumetric permit fee. Both by‑laws made exceptions for certain persons and usages, including an exception for those removing less than specified volumes of soil. Constitutional challenges were mounted, and the provincial Supreme Court quashed the by‑laws, but these judgments were reversed by the Court of Appeal. On appeal in the Maple Ridge case, the Supreme Court of Canada found that s. 930(d) of the Municipal Act did not authorize the imposition of volumetric fees. In response to that decision, the provincial legislature added s. 930(2), which authorized removal fees which impose "a charge for each volumetric unit . . . removed". Section 930(d) was renumbered s. 930(1)(d). In light of this amendment to the Municipal Act, the two municipalities re‑enacted their by‑laws. The provincial Supreme Court allowed the petitions brought by the appellant gravel pit operators seeking to have the by‑laws quashed. It found that s. 930 authorizes both a flat rate permit fee and a variable rate volumetric removal charge, but that it does not authorize a variable rate volumetric permit fee for removal. The municipalities amended their by‑laws to create separate flat rate permit fees and volumetric removal charges. The provincial Supreme Court upheld the amended by‑laws. On appeal, the Court of Appeal held that these various by‑laws were intra vires the respondent municipalities.
Held: The appeal should be dismissed.
The volumetric fees at issue are indirect in their general tendency, since they can be related to a unit of the gravel commodity or its price. Section 92(9) of the Constitution Act, 1867 , in combination with ss. 92(13) and (16) , comprehends a power of regulation through licences which is not confined to the requirement of direct taxation in s. 92(2) . In so far as it comprehends indirect taxation, however, the power has been limited such that it can only be used to defray the costs of regulation. The question to be asked is whether the variable fees can be supported as ancillary or adhesive to a valid provincial regulatory scheme.
The permit and removal fees at issue in this case were only intended to offset the costs of the regulatory scheme, including road repair. Section 930(2) of the Municipal Act is related to a system of road and gravel regulation, notwithstanding its statutory location and its lack of express reference to roads. This relationship is also evident in the by‑laws themselves, which constitute a complete and detailed code for the regulation of the gravel and soil extraction and removal trade. The fee provisions are related to these regulatory by‑laws. The purpose of the volumetric fees can be inferred from their statutory and by‑law context, and the extrinsic affidavit evidence presented in this case is merely additional proof that there was an intention to raise sufficient revenue to cover the costs of the regulatory scheme and the building and maintenance of roads over which gravel trucks would pass. While there was some evidence that considerably more moneys would be received from this volumetric levy than the amount actually required, it is not for this Court to undertake a rigorous analysis of a municipality's accounts. A surplus itself is not a problem so long as the municipalities made reasonable attempts to match the fee revenues with the administrative costs of the regulatory scheme, which is what occurred in this case. In so far as the volumetric fee can be considered a form of indirect taxation, it is supportable as ancillary or adhesive to a valid regulatory scheme. Since the volumetric fees are supportable under the licensing power of s. 92(9) viewed in conjunction with other heads of regulatory power in s. 92, particularly ss. 92(13) and (16), it is not necessary to consider arguments relating to s. 92A(4) of the Constitution Act, 1867 , dealing with the taxation of natural resources by the provinces.
The by‑laws are discriminatory in that they distinguish between commercial and non‑commercial use, but the discrimination is authorized by the Municipal Act. While s. 930(2) makes no explicit reference to discrimination based upon the commercial character of removal, authorization may be either express or implied as a necessary incident of powers delegated. Here s. 930(2) clearly authorizes discrimination based on volume, and it is implicit in this authorization that commercial and non‑commercial users will be treated differently. Licensing schemes of this kind generally make two kinds of exceptions as a matter of administration: there are de minimis exceptions implicit in the regulation, and exceptions are made for non‑profitable, incidental, or personal use. The concept of volumetric discrimination is a surrogate for discrimination based upon these considerations.
Finally, s. 930(2), together with s. 930(1)(d), is sufficient to authorize a volumetric permit fee.
Cases Cited
Distinguished: Canadian Pacific Air Lines Ltd. v. British Columbia, [1989] 1 S.C.R. 1133; disapproved: Colpitts Ranches v. Attorney‑General of Alberta, [1954] 3 D.L.R. 121; considered: Coquitlam v. LaFarge Concrete Ltd., [1973] 1 W.W.R. 681 (B.C.C.A.), rev'g [1972] 3 W.W.R. 539 (B.C.S.C.); referred to: Kirkpatrick v. Maple Ridge (Corporation of the District), [1986] 2 S.C.R. 124, rev'g (1983), 49 B.C.L.R. 134 (C.A.), rev'g (1980), 119 D.L.R. (3d) 598 (B.C.S.C.); Lees v. West Vancouver (1979), 15 B.C.L.R. 233; Montréal (City of) v. Arcade Amusements Inc., [1985] 1 S.C.R. 368; Bank of Toronto v. Lambe (1887), 12 A.C. 575; Air Canada v. British Columbia, [1989] 1 S.C.R. 1161; Attorney‑General for British Columbia v. Canadian Pacific Railway Co., [1927] A.C. 934; Canadian Pacific Railway Co. v. Attorney General for Saskatchewan, [1952] 2 S.C.R. 231; Attorney‑General for British Columbia v. Esquimalt and Nanaimo Railway Co., [1950] A.C. 87; Reference re Agricultural Products Marketing Act, [1978] 2 S.C.R. 1198; Reference re Exported Natural Gas Tax, [1982] 1 S.C.R. 1004; Lawson v. Interior Tree Fruit and Vegetable Committee of Direction, [1931] S.C.R. 357; Shannon v. Lower Mainland Dairy Products Board, [1938] A.C. 708; Reference re Farm Products Marketing Act, [1957] S.C.R. 198; Nelson v. City of Dartmouth (1964), 45 D.L.R. (2d) 183; Re Falardeau and Town of Hinton (1985), 21 D.L.R. (4th) 477; R. v. Greenbaum, [1993] 1 S.C.R. 674; R. v. Sharma, [1993] 1 S.C.R. 650.
Statutes and Regulations Cited
Constitution Act, 1867, ss. 92(2) , (8) , (9) , (13) , (16) , 92A(4) , (5) , Sixth Schedule.
District of Coquitlam By‑law No. 2041, 1971.
District of Coquitlam Soil Removal Regulation Bylaw No. 1841, 1988, ss. 4, 5, 11.
District of Coquitlam Soil Removal Regulation Bylaw No. 1914, 1988, ss. 3, 4, 5(e), (f), 13(a), 14 to 18, 20, 23.
District of Coquitlam Soil, Sand, Gravel, Rock or Other Substances of Which Land is Composed Removal Bylaw No. 1489, 1967.
Maple Ridge Soil Removal By‑law No. 2681‑1979.
Maple Ridge Soil Removal By‑law No. 3957‑1987, ss. 3, 4, 8, 16, Schedule D.
Maple Ridge Soil Removal By‑law No. 4109‑1988, ss. 2, 3, 4, 6, 7, 8, 15, 17, 18 to 23, 24, 25, 29, 31, 33, 34, Schedule "D", s. 1.
Mines Act, S.B.C. 1980, c. 28.
Municipal Act, S.B.C. 1957, c. 42, s. 873.
Municipal Act, R.S.B.C. 1960, c. 255, s. 868(d) [am. 1962, c. 41, s. 48; am. 1964, c. 33, s. 70].
Municipal Act, R.S.B.C. 1979, c. 290, ss. 528(b), 578(2)(a), 581, 651, 668(1), 669, 930 [am. 1987, c. 38, s. 27; am. 1989, c. 33, s. 9], 930.1 [ad. 1989, c. 33, s. 10].
Municipal Amendment Act (No. 2), 1987, S.B.C. 1987, c. 38, s. 27.
Municipal Amendment Act (No. 2), 1989, S.B.C. 1989, c. 33, ss. 9, 10.
Authors Cited
La Forest, G. V. The Allocation of Taxing Power Under the Canadian Constitution, 2nd ed. Toronto: Canadian Tax Foundation, 1981.
Magnet, Joseph Eliot. "The Constitutional Distribution of Taxation Powers in Canada" (1978), 10 Ottawa L. Rev. 473.
APPEAL from a judgment of the British Columbia Court of Appeal (1991), 61 B.C.L.R. (2d) 299, 5 B.C.A.C. 241, 11 W.A.C. 241, 8 M.P.L.R. (2d) 313, 85 D.L.R. (4th) 729, reversing a decision of Trainor J. (1988), 31 B.C.L.R. (2d) 309, 40 M.P.L.R. 96, additional reasons (1988), 31 B.C.L.R. (2d) 319 quashing certain municipal by‑laws, and affirming decisions of Paris J. (1989), 35 B.C.L.R. (2d) 386, 43 M.P.L.R. 201, and Callaghan J. upholding amended municipal by‑laws. Appeal dismissed.
William S. Berardino, Q.C., Charles F. Willms and Helen H. Low, for the appellants.
Paul T. McGivern, James M. Lepp and Loreen M. Williams, for the respondent the Corporation of the District of Coquitlam.
E. C. Chiasson, Q.C., and S. S. Antle, for the respondent the Corporation of the District of Maple Ridge.
Linda J. Wall, for the intervener the Attorney General of Canada.
Michel Yves Hélie, for the intervener the Attorney General for Ontario.
Monique Rousseau, for the intervener the Attorney General of Quebec.
George H. Copley, for the intervener the Attorney General of British Columbia.
Nolan D. Steed, for the intervener the Attorney General for Alberta.
The judgment of the Court was delivered by
Iacobucci J. -- This appeal is another chapter in the apparently ongoing saga of constitutional litigation concerning sand and gravel excavation. More specifically, this appeal concerns the constitutionality of s. 930(2) of the Municipal Act, R.S.B.C. 1979, c. 290. The principal issue to be addressed is whether s. 930(2), in so far as it purports to authorize variable fees, is ultra vires British Columbia as authorizing a levy in the nature of indirect taxation. Derivatively, the constitutionality of by-laws enacted by the respondent municipalities under the authority of the Municipal Act is at issue. In addition, two other issues relating to the by-laws arise. The first issue is whether the by-laws are discriminatory in the municipal law sense. The second is whether the by-laws, upon a true construction of the Municipal Act, are authorized by that statute.
I.Background
At first glance, the historical development of the statute and by-laws relevant to this appeal appears complex. However, this apparent complexity can be simplified if one realizes that the statute and by-laws have changed a number of times in response to judicial decisions. In order to demonstrate better the interrelationship between the process of amendment and events in the courts, I find it helpful to present an integrated picture of the two.
Although the original ancestor of s. 930(2) was s. 873 of the Municipal Act, S.B.C. 1957, c. 42, it was a later version of that provision which was the subject of the first relevant judicial comment. That later version came in the form of s. 868(d) of the Municipal Act, R.S.B.C. 1960, c. 255 (am. 1962, c. 41, s. 48; am. 1964, c. 33, s. 70), which stated:
868. The Council may by by-law regulate or prohibit
...
(d)the removal of soil, sand, gravel, rock, or other substance of which land is composed from any lands within the municipality, or within any area or areas within the municipality, and require the holding of a permit for such purpose and fix a fee for such permit, and different regulations and prohibitions may be made for different areas.
In 1967, pursuant to this section of the Municipal Act, the respondent Municipal District of Coquitlam (Coquitlam) passed By-law No. 1489, 1967, The District of Coquitlam Soil, Sand, Gravel, Rock or Other Substances of Which Land is Composed Removal Bylaw. That by-law set forth a prohibition against the removal of named substances from land within the Municipality, subject to other provisions of the regulatory code which authorized removal by permit holders. Under that portion of s. 868(d) which authorized Council to "fix a fee" for permits, an initial flat rate permit fee of 50 dollars per year was established.
In 1971, Coquitlam changed the amount of the permit fee from a flat rate to one dependent upon the volume of material removed by the permit holder: Coquitlam amending By-law No. 2041, 1971. The natural consequence of this change to a volumetric fee was a great increase in fees paid by commercial extractors. Not surprisingly, a constitutional challenge to the by-law was mounted. In LaFarge Concrete Ltd. v. Coquitlam, [1972] 3 W.W.R. 539 (B.C.S.C.), Gould J. quashed the by-law on the basis that the volumetric fee was a form of indirect taxation ultra vires the municipality. On appeal, however, in a judgment which will be the subject of further comment below, the decision of Gould J. was reversed and the volumetric fee was upheld: Coquitlam v. LaFarge Concrete Ltd., [1973] 1 W.W.R. 681 (B.C.C.A.).
In 1979, s. 868(d) of the Municipal Act was renumbered as s. 930(d) of the Municipal Act, R.S.B.C. 1979, c. 290 (the Municipal Act), but the subsection was otherwise left unaltered. Soon after, purporting to act under the authority of s. 930(d), the respondent Municipal District of Maple Ridge (Maple Ridge) passed By-law No. 2681-1979, Maple Ridge Soil Removal By-law. Like the Coquitlam by-law which had withstood challenge, the Maple Ridge by-law incorporated a volumetric permit fee.
Despite the similarity between the Maple Ridge by-law and the Coquitlam by-law, Murray J. in Re Kirkpatrick and District of Maple Ridge (1980), 119 D.L.R. (3d) 598 (B.C.S.C.), quashed the former on the basis that it involved a colourable attempt to levy indirect taxes. At the Court of Appeal, however, the finding of colourability was reversed, and Seaton J.A. for the Court refused to overrule the earlier LaFarge decision: Kirkpatrick v. Maple Ridge (1983), 49 B.C.L.R. 134 (C.A.). An appeal proceeded to this Court.
The same constitutional issues which arose in the LaFarge decision thus came before this Court in Kirkpatrick v. Maple Ridge (Corporation of the District), [1986] 2 S.C.R. 124. However, the constitutionality of the volumetric fee did not need to be determined in that case since this Court was of the opinion that s. 930(d) of the Municipal Act did not authorize the imposition of volumetric fees. In the words of La Forest J., this Court upheld the "notion that the power given by s. 930(d) to `fix a fee for the permit' (or licence, which is synonymous) ordinarily refers to a flat fee of some kind, as opposed to an increasing amount based on the measure of activities conducted under the licence" (p. 128).
In response to the decision of this Court in Kirkpatrick, the legislature of British Columbia amended s. 930 of the Municipal Act: Municipal Amendment Act (No. 2), 1987, S.B.C. 1987, c. 38, s. 27. The effect of this amendment was twofold. First, s. 930(d) was renumbered s. 930(1)(d), but was otherwise left intact. Second, s. 930(2) -- the provision which is the principal target of this appeal -- was added. It is important to note here the nature of its response to Kirkpatrick. In part, s. 930(2) set out that "[t]he council may, by bylaw, impose a fee for the removal referred to in subsection (1) (d) ... and the fee may impose a charge for each volumetric unit ... removed". In light of the amendment to the Municipal Act, the two respondent municipalities re-enacted their by-laws: Coquitlam By-law No. 1841, 1988; Maple Ridge By-law No. 3957-1988 (I refer to By-law No. 3957-1988, as did the parties in their pleadings, and as did the order of Trainor J. below, although I recognize that, in an appendix to the pleadings of the petitioner Kirkpatrick, the impugned by-law appears and it may be properly cited as By-law No. 3957-1987).
The re-enacted by-laws very quickly became the subject of petitions by the three appellants, each of whom operates a gravel pit. Thornhill Aggregates Ltd. (Thornhill) and Kirkpatrick Sand & Gravel Co. Ltd. (Kirkpatrick) are commercial extractors which operate in the District of Maple Ridge. Allard Contractors Ltd. (Allard) is a commercial extractor operating in the District of Coquitlam.
The appellants each brought separate petitions before Trainor J. of the British Columbia Supreme Court which sought to have the by-laws quashed. Thornhill and William Kirkpatrick (for whom the appellant Kirkpatrick was later substituted by order) each challenged Maple Ridge By-law No. 3957-1988. Allard challenged Coquitlam By-law No. 1841, 1988. A fourth petitioner, not before this Court, challenged the validity of a by-law passed by the District of Mission (Mission).
Trainor J. disposed of all four petitions in one judgment which will be described more fully below: (1988), 31 B.C.L.R. (2d) 309, 40 M.P.L.R. 96. Although he dealt in the alternative with arguments which are now before this Court, Trainor J. allowed the petitions on the ground that s. 930 of the Municipal Act had failed to respond adequately to the Kirkpatrick decision. Trainor J. stated (at p. 314 B.C.L.R.):
Section 930(2) is remedial legislation. The history of the problems between municipalities and gravel operators and the result of Kirkpatrick v. Maple Ridge were before the legislature. They knew that s. 930(1)(d) authorized only a flat fixed permit fee. I have no doubt that the object of the legislation, what was intended, was to give municipalities the authority to impose a volumetric or variable permit fee. The subsection does not do this expressly. Rather it authorizes imposing a fee for the removal of soil and then goes on to allow a charge for each volumetric unit removed.
In other words, Trainor J. held that s. 930 authorizes both a flat rate permit fee and a variable rate volumetric removal charge, but that it does not authorize a variable rate volumetric permit fee for removal. I will discuss this aspect of his decision near the end of these reasons.
Coquitlam, Maple Ridge and Mission appealed the decision of Trainor J., but the appeal of Mission was later abandoned. The municipalities also amended their by-laws to create separate flat rate permit fees and volumetric removal charges, in order to overcome the drafting flaw perceived by Trainor J. Notably, since the judgment of Trainor J. must now be reviewed by this Court, the unamended by-laws which were before him are reproduced in part below. In commentary, however, reference may be made to the amended versions for convenience. Aside from the narrow interpretive question resulting from the decision of Trainor J., there is no reason to distinguish the amended and unamended versions.
Like Southin J.A. below, I infer that another response to the decision of Trainor J. came in the form of ss. 9 and 10 of the Municipal Amendment Act (No. 2), 1989, S.B.C. 1989, c. 33. Pursuant to those sections, ss. 930(1)(d), (e) and 930(2) of the Municipal Act were repealed and a new provision, s. 930.1, was added. The general import of the new provision is that volumetric permit fees of the type quashed by Trainor J. are now specifically contemplated by the Municipal Act. Obviously, however, s. 930.1 does not resolve the question of whether such a fee is within the province's legislative competence, nor does it obviate the need to examine s. 930(2). In my view, nothing in the present appeal turns on the existence of s. 930.1.
As soon as they were in place, the by-laws enacted by the municipalities in response to the decision of Trainor J. were attacked. Allard brought a petition to quash Coquitlam's By-law No. 1914, 1988. That petition was dismissed by Paris J., for reasons described below: (1989), 35 B.C.L.R. (2d) 386, 43 M.P.L.R. 201. Allard appealed that dismissal. William Kirkpatrick brought a petition against Maple Ridge's By-law No. 4109-1988 which was heard by Callaghan J. Since the prior decision of Paris J. was acknowledged by counsel to govern the facts, Callaghan J. dismissed the petition. That dismissal was also appealed.
In the result, the Court of Appeal below faced five appeals, each of which raised substantially the same issues. Three of these were appeals from the decision of Trainor J., which decision had struck down both Coquitlam By-law No. 1841, 1988 at the instance of Allard, and Maple Ridge By-law No. 3957‑1988 at the instance of Thornhill and William Kirkpatrick. The other two were appeals from the decisions of Paris and Callaghan JJ. which upheld the amended by-laws, Coquitlam By-law No. 1914, 1988 and Maple Ridge By-law No. 4109-1988. The British Columbia Court of Appeal held that these various by-laws were intra vires the respondent municipalities ((1991), 61 B.C.L.R. (2d) 299, 8 M.P.L.R. (2d) 313, 85 D.L.R. (4th) 729, 5 B.C.A.C. 241, 11 W.A.C. 241) and it is an appeal from that result which has proceeded to this Court.
II.Relevant Constitutional, Statutory, and By-law Provisions
A.Constitutional Provisions
Constitution Act, 1867, ss. 92 and 92A :
92. In each Province the Legislature may exclusively make Laws in relation to Matters coming within the Classes of Subjects next herein-after enumerated; that is to say, --
. . .
2. Direct Taxation within the Province in order to the raising of a Revenue for Provincial Purposes.
. . .
8. Municipal Institutions in the Province.
9. Shop, Saloon, Tavern, Auctioneer, and other Licences in order to the raising of a Revenue for Provincial, Local, or Municipal Purposes.
. . .
16. Generally all Matters of a merely local or private Nature in the Province.
92A....
(4) In each province, the legislature may make laws in relation to the raising of money by any mode or system of taxation in respect of
(a) non-renewable natural resources and forestry resources in the province and the primary production therefrom...
. . .
whether or not such production is exported in whole or in part from the province, but such laws may not authorize or provide for taxation that differentiates between production exported to another part of Canada and production not exported from the province.
(5) The expression "primary production" has the meaning assigned by the Sixth Schedule.
. . .
THE SIXTH SCHEDULE
. . .
1. For the purposes of section 92A of this Act,
(a) production from a non-renewable natural resource is primary production therefrom if
(i) it is in the form in which it exists upon its recovery or severance from its natural state . . .
B.Statutory Provisions
Municipal Act, R.S.B.C. 1979, c. 290, s. 930, as amended by the Municipal Amendment Act (No. 2), 1987, S.B.C. 1987, c. 38, s. 27:
930.(1) The council may by bylaw regulate or prohibit
(a) the sale of wild flowers;
(b) sales by auction in a public market;
(c)boxing, wrestling, jujitsu and other professional athletic contests where an athletic commission has not been established;
(d)the removal of soil, sand, gravel, rock or other substance of which land is composed from any land in the municipality, or in any area in the municipality, and require the holding of a permit for the purpose and fix a fee for the permit, and different regulations and prohibitions may be made for different areas;
(e)the deposit of soil, sand, gravel, rock or other material on land in the municipality or in any area in the municipality, and require the holding of a permit for the purpose and fix a fee for the permit, and different regulations and prohibitions may be made for different areas....
. . .
(2) The council may, by bylaw, impose a fee for the removal referred to in subsection (1) (d) or for the deposit referred to in subsection (1) (e) and the fee may impose a charge for each volumetric unit, as provided in the bylaw, of soil, sand, gravel, rock or other substance removed or deposited and the volumetric fee may be different for different areas of the municipality.
C.By-laws
1.Maple Ridge Soil Removal By-law No. 3957-1987, ss. 3, 4, 8, 16 and Schedule D:
3. GENERAL
Soil removal from any lands within the Municipality is prohibited except from a designated area.
4. Soil removal from a designated area is prohibited until a permit for such soil removal is first had and obtained from the Engineer pursuant to the terms of this by-law.
...
8. EXEMPTIONS
Nothing in this by-law shall be construed so as to apply to:
a) Soil removal for other than commercial purposes where the amount thereof does not exceed seventy-five (75) cubic meters from any one parcel of land within the Municipality.
b) Any person lawfully engaged in the development or improvement of land within the Municipality or the construction of buildings on land within the Municipality where soil removal is necessary for such development, improvement or construction and where engineering drawings for such development or improvement have been approved by the Municipality or a building permit has been issued by the Municipality as the case may be.
c) Soil removal from any area within the Municipality by any florist, nurseryman or farmer for use by him on the same parcel of land from which the said soil was removed for the purpose of his bona fide business as a florist, nurseryman or farmer; provided however no soil removal shall be below the established grade of the street which abuts the area from which the soil is removed, or the established roadway from which access is provided from the area.
d) Soil removal required for the installation and maintenance of utilities or the construction of roads or other public works within public rights-of-way or registered easements.
...
16. FEES
The fee for each permit shall be fixed in accordance with Schedule "D" to this by-law and any such fee shall be payable to the Municipality.
SCHEDULE "D"
...
1. The permit fee shall be calculated on the basis of $0.20 for each cubic meter of soil estimated by the applicant to be removed from the designated area during the term of the permit; but in any event, the applicant's estimate of the soil to be removed as aforesaid shall not be less than the volume of soil removed from the designated area during the previous year.
2.District of Coquitlam Soil Removal Regulation Bylaw No. 1841, 1988, ss. 4, 5 and 11:
4. No person shall remove any Soil Substance from lands within the District of Coquitlam unless:
a) the removal of Soil Substance is incidental to building construction or landscaping activities and the quantity of Soil Substance removed in any one year period is less than 300 cubic metres;
b) a valid Conservation Permit or other valid permit is issued by the District of Coquitlam and this permit allows the removal of Soil Substance incidental to preload or other construction activities involving earthworks;
c) a valid Soil Substance Removal Permit has been issued by the District of Coquitlam authorizing the removal of the Soil Substance; or
d) the Soil Substance removal is incidental to construction or other activities carried out by or on behalf of the District of Coquitlam.
5. No Soil Substance Removal Permit shall be issued unless:
a) the Lands are located within the area outlined in Schedule "C" of the Northwest Coquitlam Official Community Plan as depicted in Appendix I and made part of this Bylaw; or
b) the Lands are located within the area outlined in Schedule "D" of the Northwest Coquitlam Official Community Plan as depicted in Appendix II and made part of this Bylaw...
11.a) The fee payable to the District of Coquitlam for each Soil Substance Removal Permit shall be a combination of:
i)an examination fee of One Hundred Dollars ($100.00) for each and every Soil Substance Removal Permit application; and
ii)the sum of Twenty-Six Cents ($.26) for each and every cubic metre of Soil Substance removed from the Lands under each Soil Substance Removal Permit.
III.Judgments Below
A.British Columbia Supreme Court (1988), 31 B.C.L.R. (2d) 309 (Trainor J.)
As already noted, the decision of Trainor J. quashed the challenged municipal by-laws upon the basis that the language in s. 930(2) of the Municipal Act did not authorize a variable volumetric permit fee for removal. Trainor J. came to this result based upon consideration of the rules of statutory interpretation in general, and the decision of this Court in Kirkpatrick v. Maple Ridge, supra, in particular. He dealt with other arguments only in the alternative.
1.The Indirect Taxation Argument
With respect to the argument that the permit fees constituted a form of indirect taxation ultra vires British Columbia, Trainor J. began by describing the decision of the British Columbia Court of Appeal in Coquitlam v. LaFarge Concrete Ltd., supra. He then followed the decision of that court in Kirkpatrick, supra, stating that the incidence of a variable permit fee is indirect. He concluded that since the permit fees were linked to the costs of the regulatory scheme, they were truly ancillary to that scheme. On this point, he stated (at p. 318):
Here the evidence indicates an intention to raise sufficient revenue to cover the costs of the regulatory scheme and the building and maintenance of roads over which gravel trucks would pass. Although there is some evidence that considerably more moneys would be received from this volumetric levy than the amount actually required for those purposes, it is not for me to attempt to measure those amounts with exactitude. My role is to determine whether this is a genuine licensing scheme regulating trade or a mere cloak for raising money for other purposes. The possibility of a surplus would not invalidate a scheme unless it is a colourable device for raising revenue by indirect taxation. There is no need to demonstrate how the moneys were used.
Although Trainor J. nowhere clearly stated his conclusion on this point, he would obviously have upheld the volumetric permit fees as ancillary to a genuine licensing scheme supportable by s. 92(9) of the Constitution Act, 1867 .
2.The Discrimination Argument
It was also argued before Trainor J. that the by-laws in question were discriminatory in the municipal law sense, since gravel operators were singled out from all users of municipal roads and required to pay the permit fees, and since this discriminatory treatment was not authorized by the Municipal Act. In response, Trainor J. indicated that the municipalities had been authorized by statute to regulate gravel deposit and removal, and he noted that the imposition of a permit fee is a recognized method of regulation. He then applied a test for discrimination derived from Lees v. West Vancouver (1979), 15 B.C.L.R. 233 (C.A.), drawing two relevant conclusions. First, he found that the by-laws did not discriminate in fact. Second, he denied that the municipalities had acted with an improper motive or without regard for the public interest.
Thus, although Trainor J. quashed the by-laws based upon his approach to the statutory interpretation issue, on the other issues before him, he would have found in favour of the municipalities.
B.British Columbia Supreme Court (1989), 35 B.C.L.R. (2d) 386 (Paris J.)
1.The Indirect Taxation Argument
The approach of Paris J. to the question of indirect taxation was more directly based upon the decision of the British Columbia Court of Appeal in Coquitlam v. LaFarge Concrete Ltd. than was that of Trainor J. After reviewing the LaFarge case, and quoting from cases cited therein, Paris J. stated (at p. 392):
It seems to me that the effect of those various pronouncements is that even if the levy imposed by a by-law such as the present one can be said to have the quality of an indirect tax, it is nonetheless justified if it is ancillary or adhesive to the scheme licensing and regulating the activity, in this case, the removal of soil and gravel from municipal property.
Therefore, like Trainor J., Paris J. found support for the variable permit fee within s. 92(9) of the Constitution Act, 1867 . Purporting to rely on the decision of this Court in Kirkpatrick, he held that "[a] levy which is a licensing fee may also have the quality of an indirect tax and still be valid by virtue of s. 92(9) so long as it is genuinely ancillary to a licensing or regulatory scheme" (p. 393).
Paris J. found further support for his conclusion on the indirect taxation issue from s. 92A(4) of the Constitution Act, 1867 . With respect to this support, he noted simply that s. 92A(4) specifically grants indirect taxation powers relating to non-renewable natural resources, and pointed out that such resources would include gravel and soil. He concluded, finally, that the power granted by s. 92A(4) was delegable to municipalities.
2.The Discrimination Argument
Paris J. considered that the circumstances before him were "on all fours with the circumstances before Trainor J." (p. 389). He agreed that the by-laws were authorized by s. 930 of the Municipal Act. Further, he found that there was no discrimination in the legal sense because the by-law before him applied equally to all members of the regulated group. Paris J. stated (at p. 389):
The fact that it would generate funds from gravel pit operators which will be partly or mostly used for highway repair and maintenance, but would not charge a levy to other highway users, does not make it discriminatory in the legal sense expounded in the jurisprudence dealing with the validity of municipal by-laws. That is because, as I have said, it applies equally and without discrimination to the members of the group upon which the municipality has been authorized by the enabling provincial legislation to impose a levy, namely, those who remove soil and gravel from municipal land.
Since the interpretive difficulties which faced Trainor J. had been resolved in the amended by-law, Paris J.'s analysis of the indirect taxation and discrimination arguments led him to dismiss the petition to quash that by-law.
C.British Columbia Court of Appeal (1991), 61 B.C.L.R. (2d) 299 (Macdonald, Southin, Taylor, Proudfoot and Hinds JJ.A.)
1.The Indirect Taxation Argument
The Court of Appeal below sat in a panel of five since the petitioners who appealed the decision of Paris J. wished that court to overrule its earlier decision in Coquitlam v. LaFarge Concrete Ltd. Writing for the court, however, Southin J.A. indicated (at p. 301) that it was unnecessary to consider LaFarge since the case had "been overtaken by a constitutional event", namely, the introduction of s. 92A into the Constitution Act, 1867 .
Southin J.A. proceeded to deal with the indirect taxation argument solely under s. 92A of the Constitution Act, 1867 . In construing that provision, Southin J.A. rejected interpretive arguments said to be based upon differences between the French and English versions of s. 92A(4) , at pp. 305-7; additional reasons (1991), 5 B.C.A.C. 241, at p. 252. In the result, s. 92A(4) was read to encompass a power of indirect taxation which is delegable to municipalities.
2.The Discrimination Argument
Using language from Montréal (City of) v. Arcade Amusements Inc., [1985] 1 S.C.R. 368 (at p. 405), Southin J.A. considered the relevant discrimination issue to be whether s. 930 authorized by-laws to be "partial and unequal in operation between different classes". As already noted, Southin J.A. was of the opinion that s. 930 established a form of indirect taxation. For this reason, she turned her attention to whether s. 930 authorized municipalities "to impose this taxation on one class of removers; i.e., commercial extractors, and to exempt others" (p. 311). Southin J.A. then concluded that "[h]aving regard to the history of the legislation in question, I am of the opinion that the Legislature not only intended to authorize such imposition and exemption but also has used apt words for the purpose" (p. 311).
3.The Statutory Interpretation Argument
Southin J.A. spent little time determining whether the by-laws before Trainor J. were authorized by the unamended Municipal Act, such that they could validly impose a volumetric permit fee. She first suggested that it was clearly the intention of the Legislature to authorize a volumetric impost. She then simply asked whether the by-laws were authorized to impose such an impost by way of permit fee. On this latter point, she concluded as follows (at p. 310):
On this point of construction, with the greatest respect, I do not agree with the learned judge. In this context, to say that the charge can be imposed but it cannot be imposed as part of the permit fee but only as a separate charge is to make a distinction without a difference.
The Court of Appeal thus reversed Trainor J. on the point of statutory interpretation, rejected the discrimination argument, and upheld s. 930 of the Municipal Act and the municipal by-laws under the indirect taxation power of s. 92A(4) of the Constitution Act, 1867 .
IV.Issues
On November 10, 1992, the Chief Justice stated the following constitutional question:
1. Is s. 930(2) of the Municipal Act, R.S.B.C. 1979, c. 290, beyond the legislative competence of the province to the extent that it authorizes variable fees?
In argument before this Court, the parties addressed four separate issues as follows:
1. Is s. 930(2) of the Municipal Act, to the extent that it authorizes variable fees, within the legislative competence of the Province of British Columbia pursuant to s. 92(9) of the Constitution Act, 1867 ?
2. Is s. 930(2) of the Municipal Act, to the extent that it authorizes variable fees, within the legislative competence of the province by virtue of s. 92A(4) of the Constitution Act, 1867 ?
3. If s. 930(2) of the Municipal Act is within the legislative competence of the province to the extent that it authorize