Abel Skiver Farm Corp. v. Town of Sainte-Foy

Abel Skiver Farm Corp. v. Town of Sainte-Foy
Collection
Supreme Court Judgments
Date
1983-04-26
Report
[1983] 1 SCR 403
Case number
15570
Judges
Beetz, Jean; Estey, Willard Zebedee; McIntyre, William Rogers; Chouinard, Julien; Lamer, Antonio
On appeal from
Quebec
Subjects
Municipal law
Decision Content
SUPREME COURT OF CANADA
Abel Skiver Farm Corp. v. Town of Sainte-Foy, [1983] 1 S.C.R. 403
Date: 1983-04-26
Abel Skiver Farm Corporation Appellant;
and
Town of Sainte-Foy Respondent;
and
Commission scolaire de Sainte-Foy Respondent;
and
The Attorney General of the Province of Quebec Intervener.
File No.: 15570.
1981: October 21; 1983: April 26.
Present: Beetz, Estey, McIntyre, Chouinard and Lamer JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR QUEBEC
Municipal law — Taxation — Land under cultivation — Exemption — Municipal and school taxes overpaid — Jurisdiction of assessors and board of revision — Action to set aside valuation and collection rolls — Action for repayment of taxes — Prescription — Cities and Towns Act, R.S.Q. 1964, c. 193, ss. 381, 485.1, 488, 494, 495, 496, 521, 522, 523, 524 — Education Act, R.S.Q. 1964, c. 235, ss. 428, 429, 430, 431 — Code of Civil Procedure, arts. 33, 35.3 — Civil Code, arts. 1047, 1049, 2260.8.
Appellant's land was valued, taxed and assessed like an ordinary immovable for the years 1965 to 1971. The land was leased (on an annual and renewable lease) to a third party who undertook to cultivate it. Appellant maintained that its land is land under cultivation within the meaning of s. 523 of the Cities and Towns Act and that it should have benefited from the special tax provisions contained in that section. In view of the failure by the Town and the Commission scolaire to observe s. 523, appellant asked in the Superior Court (1) that the valuation and collection rolls of the Town and the collection rolls of the Commission scolaire be annulled in respect of appellant for the relevant years, and (2) that it be reimbursed the taxes and assessments wrongly paid. Appellant did not make use of the revision and quashing provisions of the Cities and Towns Act. The Superior Court allowed the action against the Town and against the Commission scolaire, but the Court of Appeal set aside both judgments.
[page 404]
Held: The appeal should be allowed in part.
(1) To determine whether land was land under cultivation within the meaning of s. 523, the courts should consider only the physical fact of using the land or the fact that it was farmed. There was no reason to debate the status of the owner of the land, the income produced by it or any factors other than those mentioned by the section. In the case at bar, appellant's land was real estate under s. 523, since it met the standards set in that section: it was not only cultivated and wooded, but farmed as well. In order to avoid application of the tax exemption for land under cultivation provided for in the first paragraph of s. 523, the Town or the Commission scolaire had to prove that appellant acquired the land for one of the purposes mentioned in the last paragraph of the section. Neither the Town nor the Commission scolaire succeeded in discharging this burden. A farm lease did not constitute a real estate operation within the meaning of the last paragraph. In disregarding s. 523 and taxing beyond what the law allowed them, the Town and the Commission scolaire committed acts ultra vires giving rise to the direct actions in nullity based on art. 33 C.C.P. The fact that the Cities and Towns Act had provided a special appeal procedure to the council and the board of revision did not oust the superintending and reforming authority of the Superior Court. It did not matter whether the taxpayer neglected to use this procedure or, in so doing, lost his case. Article 35.3 C.C.P. (action to set aside in the Provincial Court) was not a bar to appellant's action, since s. 381 of the Cities and Towns Act expressly provided that the special recourse granted by that section shall not exclude or affect the action to annul in cases where it may be brought under art. 33 C.C.P.
(2) The legislator had specifically provided in art. 2260.8 C.C. that the action for the recovery of taxes paid in error is prescribed after five years. Prescription began to run from the moment the tax was paid, for at that time the taxpayer could legally claim to have the tax annulled and to be reimbursed. In the case at bar, the action brought against the Town was served on March 20, 1972, that is more than five years after payment by appellant of the municipal taxes for 1965 and 1966. The action for reimbursement was therefore prescribed in respect of these two years. The action against the Commission scolaire was served on July 6, 1972. However, the record did not establish the date of the payments made by appellant. It was for the party pleading prescription to prove the circumstances in which it was applicable. The Commission scolaire had not discharged this burden. Finally, ss. 428 to 431 of the
[page 405]
Education Act did not have the effect of denying an action to recover the school assessment paid in error.
Cousineau v. Cité de Chomedy, [1965] R.L. 162; Mangold v. Municipalité de la Paroisse de l'Île Bizard, [1967] R.L. 458; De Gaspé Beaubien v. Municipalité de la paroisse de Notre-Darne de l'île Perrot, [1970] R.L. 52; Darne Nique v. Ville de Boucherville, [1970] C.S. 619; Corporation de la paroisse Saint-Raphaël de l'Île Bizard v. Immeubles lie Bizard Ltée, [1971] C.A. 719; Laberge v. Cité de Montréal (1917), 27 Que., K.B. 1, approved; Poulin v. Corporation municipale de Ville de Saint-Georges, [1959] R.L. 449; Jobin v. Ville de Ste-Foy, [1963] R.L. 214; Cassulo v. Ville de Ste-Foy, [1965] R.L. 65; Abel Skiver Farm Corp. v. Ville de Ste-Foy, [1963] R.L. 221, not followed; Shannon Realties Ltd. v. Ville de St. Michel, [1924] A.C. 185; (1922) 64 S.C.R. 420, distinguished; Ehrensperger v. Ville de Laflèche, [1971] R.P. 372; Simard v. Cité de Chicoutimi-Nord, [1965] Que. Q.B. 473, disapproved; Séminaire de Chicoutimi v. City of Chicoutimi, [1973] S.C.R. 681; Donohue Bros. v. Corporation of the Parish of St. Etienne de La Malbaie, [1924] S.C.R. 511; Town of St-Bruno de Montarville v. Mount Bruno Association Ltd., [1971] S.C.R. 623; Bergeron v. St. Charles de Mandeville, [1953] Que. Q.B. 559; Toronto Railway Co. v. Toronto Corporation, [1904] A.C. 809; Canadian Oil Fields Co. v. Village of Oil Springs (1907), 13 O.L.R. 405; City of Victoria v. Bishop of Vancouver Island (1921), 59 D.L.R. 399; Montreal Light, Heat & Power Consolidated v. City of Westmount, [1926] S.C.R. 515; Canadian Allis-Chalmers Ltd. v. City of Lachine, [1934] S.C.R. 445; Bennett & White (Calgary) Ltd. v. Municipal District of Sugar City No. 5, [1950] S.C.R. 450; [1951] A.C. 786; Board of School Commissioners of the Municipality of Greenfield Park v. Hôpital Général de St-Lambert, [1967] Que. Q.B. 1; Richmond Pulp & Paper Co. of Canada Ltd. v. Corporation of the Town of Bromptonville, [1970] S.C.R. 453; Francon Ltée v. Montreal Catholic School Commission, [1979] 1 S.C.R. 891; Kew Property Planning and Management Ltd. v. Corporation of the Town of Burlington, [1980] 2 S.C.R. 598; Compagnie d'approvisionnement d'eau v. Ville de Montmagny (1915), 24 Que. K.B. 416; Aubertin v. Cité de Montréal (1925), 31 R.L. 163; Cité de Rivière-du-Loup v. Nadeau, [1948] Que. K.B. 778; Michaud v. Corporation municipale de la Ville de Matane, [1953] R.L. 329; Daoust v. Ville de Pincourt, [1971] R.P. 408; Boyce v. Cité de Québec (1929), 46 Que. K.B. 349; Protestant School Board of Greater Montreal v. Jenkins Bros. Ltd.; Commissaires d'Écoles pour la Cité de Lachine v. Jenkins Bros. Ltd., [1967] S.C.R. 739; Protestant School Board of Greater Montreal v. Grayron Industries Ltd., [1972] C.A. 368;
[page 406]
City of Toronto v. Olympia Edward Recreation Club Ltd., [1955] S.C.R. 454; Quance v. Thomas A. Ivey and Sons Ltd., [1950] O.R. 397; Re Minister of Municipal Affairs and l'Évêque catholique romain d'Edmundston (1972), 24 D.L.R. (3d) 534; Jones v. Edmonton Catholic School District No. 7, [1977] 2 S.C.R. 872; Tomko v. Labour Relations Board (N.S.), [1977] 1 S.C.R. 112; Attorney General of Quebec v. Farrah, [1978] 2 S.C.R. 638; Charrois v. Ville de Bélair, [1974] C.S. 595; Ville de Montréal v. Union nationale française, [1979] C.A. 184; Côté v. Corporation of the County of Drummond, [1924] S.C.R. 186; Lévy v. Ville de Vaudreuil, [1982] C.S. 162; F.W. Woolworth Co. v. Ville de Kirkland, J.E. 82-1028; Raymond Vaillancourt Ltée v. Ville de Jonquière, J.E. 82-303; Clercs de St-Viateur de Montréal v. Ville de Laval, J.E. 82-1026; Industrial Glass Co. v. Cité de LaSalle, [1969] Que. Q.13. 231, referred to.
APPEAL from three judgments of the Quebec Court of Appeal, [1979] C.A. 88, which reversed two judgments of the Superior Court. Appeal allowed in part.
Raynold Langlois and France Simard, for the appellant.
Alphonse Lacasse, for the respondent the Town of Sainte-Foy.
Jacques Flynn, Q.C., for the respondent the Commission scolaire de Sainte-Foy.
Jean-Félix Brassard, for the intervener.
English version of the judgment of the Court delivered by
BEETZ J.
I—Proceedings
Appellant brought an action in the Superior Court against the Town of Sainte-Foy and another action against the Commission scolaire de Sainte-Foy.
By the first action appellant asked the Court to set aside in respect of its property the valuation and collection rolls of the Town for 1965 to 1970 inclusive, and it claimed the sum of $13,421.04 in repayment of municipal taxes which it had wrongly paid pursuant to those rolls, with interest from
[page 407]
the date of each payment and costs.
By the second action, in which the Town of Sainte-Foy was mis en cause, appellant asked the Court to set aside the valuation rolls of the Town for 1965 to 1970 inclusive in respect of its property, and to set aside the collection rolls of the Commission scolaire in respect of the same property for 1965 to 1970-71 inclusive; and it claimed the sum of $25,219.47 in repayment of school assessments which it had wrongly paid pursuant to those rolls, including interest from the date of each payment, with interest on the whole from the date of service and costs.
The Town intervened in the second action, asking that it be dismissed.
Both actions were joined for purposes of proof and hearing.
By two judgments dated October 19, 1973, Barbès J. of the Superior Court allowed both actions with costs, almost entirely in accordance with their conclusions except for a small part of the amounts claimed, and he dismissed the intervention of the Town in the action brought against the Commission scolaire. The reasons for judgment rendered against the Commission scolaire refer to those of the judgment rendered against the Town.
By three judgments dated January 17, 1979, and for reasons common to them all, the Court of Appeal reversed the two judgments of the Superior Court. In its first judgment it allowed the intervention of the Town in the action brought against the Commission scolaire and dismissed the action. In this first judgment, it also dismissed without costs the intervention of the Attorney General of the Province of Quebec, who had intervened in the Court of Appeal because there Abel Skiver Farm Corporation was challenging the constitutionality of para. 3 of art. 35 of the Code of Civil Procedure. In its second judgment, the Court of Appeal dismissed the action brought against the Town of Sainte-Foy, and in its third judgment it dismissed the action brought against the Commission scolaire de Sainte-Foy.
[page 408]
Hence the appeal.
Appellant is asking that this Court set aside the three Court of Appeal judgments and restore the two judgments of the Superior Court.
The case arises out of the special tax provisions applicable to land under cultivation.
II—Circumstances giving rise to the case
1. Facts
The facts are not in dispute but the parties draw different conclusions from them.
As Turgeon J.A. of the Court of Appeal observed,
[TRANSLATION] From 1965 to 1970 inclusive, immovables of plaintiff-respondent having cadastre numbers 248 and 249 constituted a single piece of land under cultivation of 47.2 arpents.
Counsel for the parties made the following admissions in the Superior Court:
[TRANSLATION] The Corporation—that is, plaintiff Corporation — is the owner of land of over fifteen (15) arpents in area; this land is about fifty arpents, thirty (30) of which are an orchard producing a regular crop and twenty (20) are wooded, uncleared land.
The parties further produced by consent as Exhibits P-4 and P-5 two lease contracts by which Abel Skiver Farm, in the first lease, leased the land to Isidore Pollack and in the second lease leased the buildings.
The parties further admitted that if the tenant, Mr. Isidore Pollack, were called, he would give his titles and occupations as follows: lawyer, farmer and industrialist.
He would state that he occupies a house built on lots which are the subject of the dispute, but the value of which is greater than ten thousand dollars ($10,000).
He hired the services of an experienced man who acts as his foreman, Mr. Maurice Croteau, and the latter also hired an assistant; operation of the immovables which are at issue does not constitute his principal source of income.
As a matter of fact, his sole participation is limited to acts of supervision and direction: he takes decisions
[page 409]
regarding ... the purchase of equipment, developing the land and marketing; he does no physical work.
Additionally, the two men, his foreman and the assistant, work full-time on the farm, planting and tending the trees and the soil, and picking, watering, grading and storing fruit.
In the picking season, the foreman hires about twenty girls as well.
It was admitted that appellant did not, for any of the years at issue, appeal to the board of revision of the Town, the municipal council or the Provincial Court as provided for by ss. 495 et seq. of the Cities and Towns Act. Though it is not mentioned in the admissions, it also seems clear that appellant did not attempt to make use of the special recourse to set aside the procès-verbal, roll, resolution or other order of the municipal council in the Provincial Court, within three months of the coming into effect of the disputed instrument, as provided for by s. 381 of the Cities and Towns Act.
2. Legislation
Section 485, paragraph 1 of the Cities and Towns Act, R.S.Q. 1964, c. 193, indicates how the taxable property of a municipality is to be valued:
485. (1) The assessors shall each year, at the time and in the manner ordered by the council, assess the taxable property of the municipality, according to its real value.
Section 488 of the same Act indicates the immovables which are taxable. Its first paragraph reads in part as follows:
488. The taxable immoveables in the municipality shall comprise lands, constructions and workshops erected thereon and all improvements made thereto, as well as machinery and accessories which are immoveable by destination or which would be so if they belonged to the owner of the real property. The actual value of the whole shall be entered in the valuation roll in the name of the owner of the ground; .. .
Section 521 of this Act provides in its first paragraph:
[page 410]
521. The council may impose and levy, annually, on every immoveable in the municipality, a tax of not more than two per cent of the real value as shown on the valuation roll.
Finally, section 522 of this Act authorizes the municipal council to
. . impose the special tax for the payment of municipal works of any kind, including works of maintenance, according to either the municipal valuation or the area or the frontage of the taxable real estate subject to such tax...
The Commission scolaire is not subject in its assessments to the same limitation of 2 per cent of the real value, but in principle and apart from exceptions, the valuation of properties made by order of the municipal authorities should serve as a basis for the assessments to be imposed by school corporations and the collection rolls of school boards, pursuant to ss. 367 and 385 of the Education Act, R.S.Q. 1964, c. 235.
However, section 523 of the Cities and Towns Act, the chief section to be interpreted, makes special provision for land under cultivation:
523. All land under cultivation or farmed or used as pasture for cattle, as well as all uncleared land or wood lots within the municipality, shall be taxed to an amount of not more than one per cent of the municipal valuation, including all taxes, both general and special.
Such land cannot be valued at more than one hundred dollars per arpent if it has an area of fifteen arpents or more. Such evaluation shall include the house used as a farmer's dwelling, the value whereof not exceeding ten thousand dollars, as well as the barns, stables and other buildings used in connection with the said land. If the value of such house exceeds ten thousand dollars, it shall be included in the valuation only to the extent of the said sum and the excess, separately valued, shall be subject to the tax mentioned in the first paragraph of this section.
The council may cause to be added to the valuation roll, from time to time, by the assessors in office, on the valuation by them made, any portion of such land which has been detached therefrom as a building lot and shall thus have become liable to taxation after the closing of
[page 411]
the valuation roll, and may exact the said tax as upon all other lots entered on the roll.
The foregoing provisions of this section shall cease to apply to such lands and structures as soon as they are the subject of a transaction the effect of which is to transfer the ownership thereof to a person, firm or corporation acquiring the same for subdivision into lots, for housing, industrial or commercial development or for speculation or any real estate operations.
From 1959 to 1965 this special provision, which at the time was contained in s. 522 of the Cities and Towns Act, was further modified for the city of Sainte-Foy by s. 4 of the Act to amend the charter of the city of Sainte-Foy, 1958-1959 (Que.), c. 63, which added the following two paragraphs:
This section shall cease to apply to such lands and buildings as soon as they are the subject of a sale or promise of purchase or sale or of any other written agreement of alienation or disposal to any person or corporation whose principal occupation theretofore was not the cultivation of the soil or who or which does not himself or itself cultivate the soil thereon.
Notwithstanding the foregoing, only the land owned by a farmer or his heirs and not a corporation or a commercial or industrial firm may be regarded as a land under cultivation.
In 1965, at the request of the municipal council of the city of Sainte-Foy, the Lieutenant-Governor in Council amended the charter of the city of Sainte-Foy by repealing the two foregoing paragraphs, as authorized by para. 2 of s. 2 of the Cities and Towns Act. At the relevant times, therefore, the city of Sainte-Foy was subject to the unaltered s. 523 of the Cities and Towns Act.
Nevertheless, appellant's land was valued, taxed and assessed like an ordinary immovable for the years 1965 to 1971.
In taxation year 1965 it was the Revised Statutes of Quebec, 1941, which were in effect. The Revised Statutes, 1964 were in effect when municipal taxes for the taxation year 1966 were paid, on May 27, 1966, and for subsequent years. The present Code of Civil Procedure came into effect on September 1, 1966. However, these changes
[page 412]
need not detain us, for the relevant provisions were not substantially altered between 1965 and 1970. In these reasons, I will cite chiefly the text of the Revised Statutes, 1964 and the present Code of Civil Procedure. It should however be recalled that the Magistrate's Court is now known as the Provincial Court, and the Court of Queen's Bench as the Court of Appeal.
3. Valuations, taxes and assessments at issue
The following are the tables prepared by the trial judge of the valuations made by the assessors of appellant's land and buildings, appearing in the valuation roll, and the rate of tax charged by the Town for the relevant years, the amounts entered in the collection roll of the Town and the dates on which these taxes were paid:
[TRANSLATION] . . . from 1965 to 1970 inclusive, the buildings were valued at their real value, as follows:
Residence of tenant
Isidore Pollack (A)
(B) Other buildings
1965
$ 17,500.00
$8,890.00
1966
$ 17,500.00
$8.890.00
1967
$ 17500.00
$8,890.00
1968
$ 17,010.00
$8.510.00
1969
$ 17,010.00
$8,510.00
1970
$ 17,010.00
$8,510.00
And the land was valued at its real value:
Lot 248 (C)
Lot 249 (D)
Total
1965
$48,450.00
$55,060.00
$103.510.00
1966
$48,450.00
$55,060.00
$103,510.00
1967
$48,450.00
$55.060.00
$103,510.00
1968
$116,820.00
$133,910.00
$250,730.00
1969
$116,820.00
$135,910.00
$250,730.00
1970
$116,820.00
$135,910.00
$250,730.00
The real estate assessments on plaintiff's land and buildings, and the amounts paid by it in consequence, are stated in paragraph 8 of the statement of claim:
[page 413]
Tax rate
Value entered in
valuation roll
(A) (B) (C) (D)
Amount
entered in
collection roll
and paid by
plaintiff
Date of
payment
1965
0.8%
$129,900.00
$1,039.20
23-6-65
1966
0.8%
129,900.00
1,039.20
27-5-66
1967
0.8%
129,900.00
1,039.20
1-5-67
1968
7%
276,500.00
2,738.86
3-4-68
1969
0.9%
276,250.00
2,486.25
28-4-69
1970
1.1%
276,250.00
3,038.75
21-3-70
Moreover, on November 16, 1970 plaintiff paid a further amount of $2,039.58 in real estate taxes, this sum having been claimed by defendant in respect of 1968, 1969 and 1970, while defendant neglected to tax plaintiff's properties at their full value as a result of the expropriation proceedings under way at the time.
Plaintiff accordingly paid in real estate taxes, excluding all fixed charges imposed by the municipality, the total sum of $13,421.04.
Next there are the tables prepared by the trial judge of the values which the assessors should have entered in the roll and the taxes which the Town ought to have charged if s. 523 of the Cities and Towns Act had been applied:
[TRANSLATION]
Land and
buildings other
than owner's
residence: 47.2
arpents at $ 100.00
an arpent
Residence of tenant
Isidore Pollack for
the portion over
$10,000.00
Total
1965
$4.720.00
$7,500.00
$12,220.00
1966
4,720.00
7,500.00
12,220.00
1967
4,720.00
7,500.00
12.220.00
1968
4,720.00
7,010.00
11,730.00
1969
4,720.00
7,010.00
11,730.00
1970
4,720.00
7,010.00
11,730.00
And as section 523, cited above, provides, the rate of tax should not exceed one per cent of the municipal valuation, including all taxes, both general and special, so that it would have been legal to impose taxes based on the following data:
[page 414]
1965
$12,220.00
0.8%
$97.76
1966
12,220.00
0.8%
97.76
1967
12,220.00
0.8%
97.76
1968
11,730.00
0.8%
93.84
1969
11,730.00
0.9%
105.57
1970
11,730.00
11,730.00
1.0%
117.30
$609.99
The taxpayer paid plaintiff $13,421.04 instead of $609.99, an overpayment of $12,811.05, for which it sought in vain to obtain reimbursement before bringing this action on May 31 and August 13, 1971.
Finally, the following are the calculations by which the trial judge determined the amounts the Town should reimburse:
[TRANSLATION]
1965
Amount paid
$1,039.20
Amount to be
deducted
$97.76
Amount
reimbursable
$941.44
1966
1,039.20
97.76
941.44
1967
1,039.20
97.76
941.44
1968
2,738.86
93.84
2,645.02
1969
2,486.25
105.57
2,380.68
1970
3,038.75
117.30
2,921.45
The amounts that thus had to be reimbursed were paid on the following dates:
$941.44
on June 23, 1965
$941.44
on May 27, 1966
$941.44
on May 1, 1967
$2,645.02
on April 3, 1968
$2,380.68
on April 28, 1969
$2,921.45
on March 21, 1970
$2,039.58
on November 16, 1970
With regard to the action brought against the Commission scolaire, the trial judge summarized as follows the tax rate, the value entered in the valuation roll and the amount charged plaintiff-appellant and paid by it:
[TRANSLATION]
Tax rate
Value entered in Valuation roll
(A) (B) (C) (D)
Amount charged and
paid by plaintiff
1965-6
1.45%
$129,900.00
$1,883.56
1966-7
1.54%
129,900.00
2,000.86
1967-8
1.65%
203,075.00(*)
3,350.83
1968-9
1.80%
276,250.00
5,191.18
1969-70
1.75%
276,250.00
4,834.42
1970-71
1.75%
276,250.00
4,834.42
(*) The municipal valuation in 1967 was $129,900.00, and in 1968 it was $276,250.00; the tax was imposed on
[page 415]
an average value of approximately $203,075.00. Plaintiff accordingly claimed to have paid defendant $22,095.27 in school taxes.
If section 523 of the Cities and Towns Act had been applied, the following results would have been produced according to the trial judge:
[TRANSLATION]
Year
Taxable value
Rate
Amount
1965-66
$12,220.00
1.45%
$177.19
1966-67
12,220.00
1.54%
188.19
1967-68
11,975.00
1.65%
197.59
1968-69
11,730.00
1.80%
21 1.14
1969-70
11,730.00
1.75%
205.27
1970-71
11,730.00
1.75%
205.27
$1,184.65
The trial judge determined the amounts to be reimbursed by the Commission scolaire as follows:
[TRANSLATION] Plaintiff is entitled to be reimbursed $22,095.27, less $1,184.65, or $20,910.62, plus adjusted interest on the sum of $2,956.69, or a grand total of $23,867.31.
III—Judgments of the Superior Court and the Court of Appeal
The trial judge held that s. 523 of the Cities and Towns Act applies to appellant's land, and it should accordingly benefit from the advantages conferred by that provision:
[TRANSLATION] ... the property of plaintiff, leased to Mr. Isidore Pollack, who lives on it and farms it, is land under cultivation or farmed land, but a part of which is uncleared. Lots 248 and 249 therefore constitute real property covered by section 523 of the Cities and Towns Act.
The trial judge considered that the actions brought by appellant are actions in nullity based on art. 33 of the Code of Civil Procedure. Although these actions also sought reimbursement of the taxes and assessments wrongly paid, the trial judge expressed the view that they were not
[page 416]
strictly speaking actions to recover things not due, based on arts. 1047 et seq. of the Civil Code, because the monies paid were paid in accordance with the valuation and collection rolls in force.
The trial judge characterized s. 523 of the Cities and Towns Act as a partial tax exemption, requiring the Town to tax the properties in question in accordance with the exceptional provisions of that section. By ignoring the exemption rule, the Town imposed on the taxpayer a heavier burden than that which it was authorized to do by law. The trial judge characterized this as an abuse of the power of taxation, an ultra vires act and a [TRANSLATION] "flagrant injustice amounting to fraud".
However, although appellant asked to be reimbursed the full amounts paid to the Town and the Commission scolaire, the trial judge deducted the amounts which the latter could have claimed under s. 523 of the Cities and Towns Act.
Finally, the trial judge referred inter alia to Séminaire de Chicoutimi v. City of Chicoutimi, [1973] S.C.R. 681, to s. 381 of the Cities and Towns Act, and to para. 3 of art. 35 of the Code of Civil Procedure; he expressed the view that the latter two provisions are not a bar to the action in nullity based on art. 33 of the Code of Civil Procedure, and that if the action to set aside under s. 381 of the Cities and Towns Act had been brought in the Provincial Court, the latter would have had to refer it to the Superior Court, the judges of which are appointed by the federal government.
In the Court of Appeal, [1979] C.A. 88, Turgeon J.A. wrote the principal reasons. Mayrand J.A. concurred, adding certain observations of his own, and Rinfret C.J.Q. concurred in the view of the two other members of the Court.
Both Turgeon and Mayrand B.A. expressed the view that there is no basis in the record for concluding that the municipal and school authorities acted fraudulently. I should say at once that I entirely agree with their opinion on this point. Not only was there no proof of fraud or of any act
[page 417]
amounting to fraud, neither of the two actions contains any allegation to that effect.
Further, Turgeon and Mayrand M.A. suggest that appellant may have been negligent in not challenging the valuation roll at the outset by an appeal to the board of revision. With respect, I do not feel that the record supports a conclusion to this effect. Appellant had unsuccessfully challenged the valuation roll for the taxation year 1962: Abel Skiver Farm Corp. v. Ville de Ste-Foy, [1963] R.L. 221; in addition it successfully challenged the valuation roll for 1971, as to the land only. We have no information regarding the causes of its failure to act in the meantime.
Turgeon J.A. considered that it was the duty of the assessors of the Town to decide whether appellant's land could benefit from the special provisions of s. 523 of the Cities and Towns Act. He first made this observation regarding the last paragraph of s. 523, but he then extended it to all the provisions of this section [at pp. 89-90]:
[TRANSLATION] For this last paragraph of section 523 to apply, respondent, which was a corporation, had to establish that it had not acquired the land for subdivision into lots, for housing, industrial or commercial development, for speculation or for any real estate operations. This was a question of fact which the assessors could not assess if it was not submitted to them, and it was for respondent to bring the matter before the council if it wished to come within the special valuation provisions made by section 523 of the Cities and Towns Act.
In 1965, the valuation roll described the property of plaintiff-respondent as land and buildings, not mentioning that it was land partly under cultivation and partly uncleared. It was thus impossible for the assessors and the council to decide that respondent could be entitled to the special provisions of section 523.
Then, Turgeon J.A. characterized the relevant provision of s. 523, the second paragraph, not as the trial judge did, as a provision relating to the power of taxation, but rather as a provision relating to valuation, and he treated appellant's action
[page 418]
as an action to reduce the valuation [at pp. 90 and 93]:
[TRANSLATION] With respect, I do not share the view of the trial judge. The two lots of plaintiff-respondent were taxable, but under section 523 of the Cities and Towns Act they should not have been valued at their real value, but within the limits set by section 523, namely at a rate which I shall call preferential. The actions brought by plaintiff-respondent are not actions to set aside rolls, but actions to reduce the amount of the valuation.
[…]
... in the appeals at bar, we are not concerned with cases of the nullity of valuation and collection rolls, but of over-valuation of the land of plaintiff-respondent. The Court does not have before it an action to set aside, but actions to reduce taxes.
Turgeon J.A. accordingly concluded that the case was covered by Shannon Realties Ltd. v. Ville de St. Michel, [1924] A.C. 185; (1922) 64 S.C.R. 420, under its "valuation" aspect, and that appellant should have used the procedure for contesting the valuation roll contained in the Cities and Towns Act, including an appeal to the board of revision or the municipal council, and an appeal to the Provincial Court.
Turgeon J.A. further stated that in his view this was not a case covered by Donohue Bros. v. Corporation of the Parish of St. Etienne de La Malbaie, [1924] S.C.R. 511.
Turgeon and Mayrand JJ.A. further stressed, as the Court had done in Shannon, the importance of protecting the stability of municipal and school budgets.
Finally, Turgeon and Mayrand JJ.A. found no need to rule on the question of the constitutionality of art. 35 of the Code of Civil Procedure, para. 3, which was raised before them.
Turgeon J.A. simply observed that the Superior Court had jurisdiction prima facie, in view of the amounts at issue and the allegations of ultra vires.
[page 419]
IV—Is the land of appellant land under cultivation within the meaning of s. 523 of the Cities and Towns Act?
The evidence consisted solely of admissions and documents filed by consent, but respondents did not concede that appellant's land is land under cultivation within the meaning of s. 523.
As the trial judge observed, there was a time when it was thought, and the courts held, that land could not benefit from the provisions of s. 523 of the Cities and Towns Act unless it was owned by a professional farmer, who derived a significant portion of his income from farming the land: Poulin v. Corporation municipale de Ville of Saint-Georges, [1959] R.L. 449; Jobin v. Ville de Ste-Foy, [1963] R.L. 214; Abel Skiver Farm Corp. v. Ville de Ste-Foy (supra); Cassulo v. Ville de Ste-Foy, [1965] R.L. 65.
However, the view taken by the courts has changed. The more recent and prevailing tendency has been to consider, for the purposes of s. 523, only the physical fact of using the land or the fact that it is farmed, and not the status of its owner, except perhaps if there is an allegation of speculation within the meaning of the final paragraph of s. 523: Cousineau v. Cité de Chomedy, [1965] R.L. 162; Mangold v. Municipalité de la Paroisse de l'Île Bizard, [1967] R.L. 458; De Gaspé Beaubien v. Municipalité de la paroisse de Notre-Dame de l'Île Perrot, [1970] R.L. 52; Dame Béique v. Ville de Boucherville, [1970] C.S. 619; Corporation de la paroisse Saint-Raphael de l'Île Bizard v. Immeubles Île Bizard Ltée, [1971] C.A. 719.
Counsel for the Town in his submission asked the Court to return to the earlier line of authority.
It is possible that some of the judgments in this earlier line of authority contain conclusions which apply, taking into account the special charters such as that which applied to the Town of Sainte-Foy before 1965. We do not have to decide this. Having made that reservation, I do not feel there is any reason to return to the earlier line of authority, because only the more recent interpretation is in keeping with the wording of s. 523 and it
[page 420]
appears to me to have been approved by this Court in Town of St-Bruno de Montarville v. Mount Bruno Association Ltd., [1971] S.C.R. 623.
It is true that that case was primarily concerned with uncleared land or wood lots. However, the Magistrate's Court had held that s. 523 is intended to encourage agricultural or other cultivation, and that in order to be entitled to the benefits created by that provision, it is necessary to show that the land in question is farmed to earn an income from it. The Court of Appeal rejected this distinction in the following passage from Hyde J. cited at pp. 625-26 by Pigeon J., speaking for this Court:
With respect I see no justification for this qualification to Sec. 522.
The land in question is clearly a "wood lot" thereunder. We are not concerned with the question as to whether these wood lots are maintained for private or public pleasure, as parkland, green-belt, resource conservation, bird or game sanctuary or for pecuniary profit (other than that contemplated by the last paragraph of Sec. 522 as added by 8-9 Eliz. II c. 36 [sic]). It may well serve the public interest that it be preserved for several purposes.
Pigeon J. continues below at pp. 626-27:
In my opinion the basic rule of interpretation must govern this case: ascertaining the meaning of the words used by the legislature, rather than speculating as to its intentions. "Land under, cultivation or farmed or used as pasture for cattle", is mentioned first then the words are "as well as all uncleared land or wood lots". The second class of land is therefore completely independent of the first. The fact that land under cultivation is mentioned first does not warrant the statement that in this provision the notion of agriculture is paramount.
Subject to the last paragraph of s. 523, I am of the view that the correct rule is stated by Montgomery J.A. in the obiter dictum he wrote in Industrial Glass Co. v. Cité de LaSalle, [1969] Que. Q.B. 231, at pp. 236-37:
It is a type of land that is exempted, not a type of owner, and 1 regard it as in principle immaterial whether the
[page 421]
owner of the uncleared land or wood lot be a farmer, a businessman or a trading company[1].
There is accordingly no reason to make a distinction where s. 523 does not do so, and to debate the status of the owner of land under cultivation, the income produced by it or any factors other than those mentioned by the section.
However, the Commission scolaire maintained that it was for appellant to establish that it had not bought this land for subdivision into lots, housing, industrial or commercial development, for speculation or any real estate operations, as provided in the final paragraph of s. 523. As we saw above, the Court of Appeal held that appellant should have presented evidence of this to the assessors—a point to which I will return—; the Commission scolaire adopted the same argument regarding the burden of proof before the trial judge. The Commission scolaire further submitted that the land and the residence on it were leased by two separate leases, which were said to constitute "real estate operations"; and it further observed that for the taxation year 1971, appellant challenged the valuation roll for the land alone, not for the buildings; finally, it noted that the land in question was sold in 1972 for the sum of $649,519.06.
Accordingly, the Commission scolaire concluded in its submission on this point that it is [TRANSLATION] "questionable whether the facts clearly justify application of section 523".
It is true that appellant has the duty of establishing the circumstances enabling it to benefit from exceptional tax relief. However, having presented such evidence, appellant does not have to prove a negative proposition or to prove that it was not covered by the exception to the exception. Once it is admitted, as is the case here, that part of the land in question is partly cultivated and the other part wooded, in my view it is up to the Town or the Commission scolaire to prove, if they can, that the land was acquired for one of the purposes mentioned in the last paragraph of s. 523: Cousineau v. Cité de Chomedy (supra), at p. 188;
[page 422]
and it is not sufficient for them to raise a doubt in this regard.
It appears from the evidence in the record that neither the Commission scolaire nor the Town succeeded in discharging this burden.
The lease filed as Exhibit P-5, by which appellant leased the land and the buildings thereon to Isidore Pollack—and not the land alone, as is stated in the admissions—is an annual and renewable farm lease governed by the old arts. 1646 to 1654 of the Civil Code: the tenant undertakes to cultivate the land, in particular the orchard; the rent is payable in cash, at $350 a month and $1.00 per minot of apples harvested annually. Accordingly, the land in question is not only cultivated, it is also farmed as provided for in the first paragraph of s. 523 of the Cities and Towns Act. I doubt that a farm lease could constitute a real estate operation within the meaning of the final paragraph of this section: otherwise, there would be a contradiction between the two provisions. At least, a farm lease could not by itself create a presumption that the land was bought for one of the purposes mentioned in the final paragraph of s. 523.
The lease filed as Exhibit P-4 relates to the residence and the land surrounding it—and not solely to the buildings, as the admissions state. It is an ordinary annual, renewable lease, though the tenant undertakes to protect all trees, shrubs, plants and flowers. The record does not indicate why two separate leases were signed, and why appellant did not challenge the valuation of the buildings for th