Montréal (city) v. Canadian Broadcasting Corporation

Montréal (city) v. Canadian Broadcasting Corporation
Court (s) Database
Federal Court Decisions
Date
2007-07-05
Neutral citation
2007 FC 700
File numbers
T-631-05
Decision Content
Date: 20070705
Docket: T-631-05
Citation: 2007 FC 700
Ottawa, Ontario, the 5th day of July 2007
Present: The Honourable Mr. Justice Martineau
BETWEEN:
CITY OF MONTRÉAL
Applicant
and
CANADIAN BROADCASTING CORPORATION
Respondent
and
ATTORNEY GENERAL OF CANADA
Intervener
REASONS FOR ORDER AND ORDER
[1] The administrative decision whose lawfulness is challenged by the applicant was made in March 2005 by a manager of the respondent, Lise G. Powers (the tribunal). Except where otherwise indicated in these reasons, the amounts of the adjustments made by the tribunal to the applicant’s applications in lieu of payment of real property taxes for the years 2003, 2004 and 2005 are those found in the amended motion to institute proceedings filed by the respondent in the Quebec Superior Court (docket No. 500-17-019933-046) and served on the applicant on or about March 16, 2005 (the impugned decision).
[2] The applications for payment were submitted to the respondent in accordance with Part I of the Crown Corporation Payments Regulations, SOR/81-1030, as amended (CCPR). The adjustments found in the impugned decision were made by the tribunal on behalf of the respondent under the supposed authority of section 7 of the CCPR and section 4 of the Interim Payments and Recovery of Overpayments Regulations, SOR/81-226, as amended (the IPROR), which in the latter case allows recovery of an overpayment made to a taxing authority under the Payment in Lieu of Taxes Act, R.S.C. 1985, c. M-13 (the PLTA), or the IPROR.
[3] First of all, the tribunal reduced the amount of the payment in lieu of real property tax (PLRT) to be paid by the respondent for the 2003 and 2004 taxation years to $2,037,931.94 and $2,137,832.35 respectively. Secondly, the tribunal assessed the amount of the PLRT payable by the respondent for the 2005 taxation year at $1,947,397.80. Accordingly, the tribunal concluded that the total amount payable to the applicant as a PLRT for the years 2003, 2004 and 2005 was $6,123,162.09. On March 16, 2005, the amounts already paid by the respondent added up to $6,763,337.72. Accordingly, the respondent did not have to make any PLRT for the year 2005; instead, the applicant owes it $640,175.63 for the overpayment.
[4] In its originating notice filed in the Court on April 12, 2005, the applicant submits that the tribunal acted arbitrarily and unlawfully in not using the real property tax rate usually applicabe to non-residential immovables when calculating the effective rate specified in section 7 of the CCPR. Accordingly, the respondent acted arbitrarily and unlawfully in retroactively reducing the total payment of $4,357,107.74 already made to the applicant for the 2003 taxation year by an amount of $2,319,235.79 and the first instalment of $2,406,229.98 already paid to the applicant for 2004 by $2,611,883.54, and by claiming an amount of $640,175.63 from the applicant in March 2005 as an overpayment. In the alternative, the applicant submits that even if the respondent may apply a different real property tax rate, it cannot do so retroactively. In addition, the respondent breached the principles of procedural fairness in rendering the impugned decision.
[5] The relevant statutory and regulatory provisions are reproduced in the annex to these reasons.
1. Municipal tax rules in the province of Quebec
[6] The applicant is a legal person established in the public interest under the Charter of Ville de Montréal, R.S.Q., c. C-11.4 (the Charter), which specifies that the applicant is a municipality governed under the Cities and Towns Act, R.S.Q., c. C-19 (the CTA).
[7] Under section 485 of the CTA, a municipal council may, subject to the Act respecting municipal taxation, R.S.Q. c. F-2.1 (the AMT), impose and levy annually on all taxable immovables in the territory of the municipal territory a tax based on their value as shown on the assessment roll.
[8] For these purposes, under the AMT, all immovables situated in the territory of a local municipality are entered on the property assessment roll, except for those described in sections 63 to 68 of the AMT, which are not entered on the roll (section 31 of the AMT). In practice, the tax base, that is, the basis for real property taxation, is established by registering immovables on the roll. Any challenge regarding an entry on the property assessment roll may be brought before the Administrative Tribunal of Québec (ATQ) if the person applying for review has not entered into an agreement with the assessor on an alteration to the roll (sections 138.4 and 138.5 of the AMT).
[9] That being said, wherever the law provides that only part of the value of an immovable is taxable or that it is exempt from property taxes, the roll must state the taxable value of the immovable or the fact that it is exempt, as the case may be. Where applicable, the entry must be accompanied with a reference to its legislative source (section 55 of the AMT). More specifically, the AMT provides that immovables included in a unit of assessment entered on the roll in the name of the Crown or of a Crown corporation are exempt from all municipal or school property taxes (section 204, paragraphs 1 and 1.1 of the AMT). The provincial exemption is consistent with section 125 of the Constitution Act, 1867 (U.K.), 30 & 31 Vict., c. 3, reproduced in R.S.C. 1985, App. II, No. 5, which provides that no property or lands belonging to Canada or any province shall be liable to taxation.
[10] When a non-taxable immovable included in a unit of assessment entered on the roll in the name of the Crown or of a Crown corporation is occupied by a person other than the Crown or a Crown corporation, the property taxes to which that immovable would be subject without that exemption are levied on the lessee or, if there is no lessee, on the occupant, and are payable by the lessee or the occupant. However, the rule does not apply where, according to federal law, a payment in lieu of real property tax (PLRT) is paid in respect of the immovable (section 208 of the AMT). (In this case, the AMT uses the term “subsidy”, which until 2001 was used in federal legislation).
[11] Finally, every local municipality may, by by-law, impose a business tax on any person entered on its roll of rental values carrying on, for pecuniary gain or not, an economic or administrative activity in matters of finance, trade, industry or services, a calling, an art, a profession or any other activity constituting a means of profit, gain or livelihood, except an employment or charge. The tax is imposed, according to the roll, on the occupant of each business establishment on the basis of its rental value, at the rate fixed in the by-law (section 232 of the AMT). However, no business tax may be imposed by reason of any activity carried on by the Crown or a Crown corporation (section 236 of the AMT).
2. Federal program for payment in lieu of property tax PLPT)
[12] As noted in the preceding, section 125 of the Constitution Act, 1867 is intended to prevent inroads, by way of taxation, upon the property one level of government, by another level of government. Thus, the immunity conferred by this provision must override the express powers of taxation contained in subsections 91(3) and 92(2) of the Constitution Act, 1867 (Re Exported Natural Gas Tax, [1982] 1 S.C.R. 1004, at pages 10765 and 1067).
[13] Although it is true that the Crown and its agents are exempted from paying any form of property tax on their properties, they are nonetheless on equal footing with other property owners insofar as access to vital municipal services are concerned. Accordingly, in 1939, the Rowell-Sirois Royal Commission on Dominion-Provincial Relations recommended that the federal government voluntarily pay real property taxes on Crown property.
[14] However, it was not until 1951 that Parliament enacted the Municipal Grants Act, S.C. 1950-51, c. 54, which allowed the federal government to pay grants to municipalities in lieu of real property taxes. This Act was amended several times and became the Payments in Lieu of Taxes Act, R.S.C., 1985, c. M-13, as amended (the PLTA). In 1967, the federal cabinet issued a directive to the effect that all Crown corporations were also to make payments in lieu of taxes, and in 1980 the PLTA was amended to include all entities now designated as Crown corporations. These Crown corporations are listed in schedules III and IV to the PLTA.
[15] The purpose of the PLTA is to provide for the fair and equitable administration of payments in lieu of taxes (PILT) to taxing authorities, including municipalities, on a voluntary basis (sections 2.1 and 15 of the PLTA). It should be noted that this legislative scheme is distinct from those which may exist in each province with respect to the provincial Crown. For example, in Quebec, payments in lieu of taxes are also made by the provincial government (sections 254 to 258 of the AMT).
[16] In the case at bar, the applicant is a “taxing authority” within the meaning of the PLTA, and the respondent’s name appears in Schedule III to the PLTA.
[17] For the purposes of applying the PLTA and the CCPR, PILTs may be paid in respect of any immovable and real property meeting:
(a) the definition of “federal property”, in the case of a PILT made by the Minister of Public Works and Government Services Canada (the Minister) (section 2 of the PLTA); or
(b) the definition of “corporation property”, in the case of a PILT made by a corporation included in Schedule III or IV to the PLTA (section 2 of the CCPR).
[18] The PLTA refers to three types of PILTs:
(a) payments in lieu of a real property tax (PLRT),
(b) payments in lieu of a frontage or area tax (PLFAT), and
(c) payments in lieu of a business occupancy tax (PLBOT).
[19] PLRTs and PLFATs are made to taxing authorities by the Minister and by the corporations listed in schedules III and IV to the PLTA (section 3 and paragraph 11(1)(a) of the PLTA and section 6 of the CCPR). However, only the corporations included in Schedule IV to the PLTA make PLBOTs to taxing authorities (paragraph 11(1)(b) of the PLTA and section 15 of the CCPR).
[20] The conditions for PLRTs and PLFATs made by the Minister are specified in the PLTA itself (see sections 3 to 8 of the PLTA, which must be read together with the definitions in section 2 of the PLTA).
[21] Needless to say, the Canadian government is the biggest land owner in the country. In practice, managers from the Department of Public Works and Government Services Canada (PWGSC) administer the PILT Program for federal properties managed by federal departments (department properties). In 2004, PWGSC paid approximately $426 million to some 1,300 taxing authorities, which obviously excludes payments made by Crown corporations not under the Minister’s responsibility.
[22] Accordingly, the conditions governing PLRTs and PLFATs made by the corporations included in schedules III and IV to the PLTA are specified in Part I of the CCPR (see sections 5 to 13 of the CCPR, which must be read together with the definitions in section 2 of the CCPR). However, the conditions governing PLBOTs made by corporations included in Schedule IV of the PLTA are specified in Part II of the CCPR (see sections 14 to 18 of the CCPR, which must also be read together with the definitions in section 2 of the CCPR).
3. Time and manner of payments in lieu of taxes
[23] As has already been noted, in principle, the PLTA does not confer any right to a payment (section 15 of the PLTA). However, in practice, the fact that an application for payment has been made pursuant to the PLTA—and, where applicable, the CCPR— creates a legitimate expectation on the part of the taxing authority to the effect that its application will be dealt with in accordance with the law by the Minister or the corporation included in Schedule III or IV of the PLTA, as the case may be. Therefore, once the amount of the payment has been calculated in accordance with the PLTA or the CCPR, the taxing authority may expect to receive payment within the time limits prescribed by regulation.
[24] There is no doubt that in all municipalities in which the federal government or its agents have a significant presence, the failure to make a PILT which these municipalities reasonably expect to receive may have considerable negative consequences.
[25] In 1995, the Joint Technical Committee on Payments in Lieu of Taxes complained that the federal government was not obliged to comply with the municipalities’ invoicing schedules for real property taxes and had not adopted a payment timetable of its own to give municipalities some assurance as to their cash flow. Several municipalities were running deficits because the due dates for final payments were not being respected. They then had to make up for these deficits by seeking provisional financing or by dipping into reserve funds (Federation of Canadian Municipalities, Treasury Board Secretariat and Public Works and Government Services Canada, Report of the Joint Technical Committee on Payments in Lieu of Taxes, Ottawa, December 28, 1995, at pages 3 and 11. (Chairman: James Knight)).
[26] I note that paragraphs 10(b) and (c) of the PLTA provide that the Minister may make regulations respecting the making of an interim payment in respect of a payment under the PLTA and respecting the recovery of any overpayments made to a taxing authority, including recovery by way of set-off against other payments under the PLTA. These last two aspects are effectively governed by sections 3 and 4 of the IPROPR, on which the respondent relies in this case. In the case of corporations included in schedules III and IV to the PLTA, it is the Governor in Council (not the Minister) who has the authority under paragraphs 9(1)(f) and (g) of the PLTA to make regulations respecting the payments to be made by these corporations. This aspect is effectively governed by section 12 of the CCPR.
[27] Moreover, to give municipal administrations greater stability in terms of budgeting and taxation, the PLTA and the CCPR were respectively amended in 2000 and 2001 (An Act to amend the Municipal Grants Act, S.C. 2000, c. 8 and Regulations Amending Certain Regulations made under the Payments in Lieu of Taxes Act and Schedules I to III to that Act, SOR/2001-494 (November 8, 2001)). For example, paragraph 12(1)(b) of the CCPR specifies that a corporation must make a payment in lieu of real property taxes (PLRT) or in lieu of frontage or area tax (PLFAT) within 50 days after receipt of an application for the payment. In addition, where a corporation is unable to make a final determination of the amount of a payment, subsection 12(2) of the CCPR provides that the corporation shall make, within that time, an interim payment that corresponds to the estimated total payment to be made.
4. Calculation of the amount of the payment in lieu of real property taxes (PLRT)
[28] Under paragraph 11(1)(a) of the PLTA, corporations included in Schedule III or IV of the PLTA shall, if they are exempt from real property taxes, comply with any regulations made by the Governor in Council under paragraph 9(1)(f) of the PLTA respecting any payment that they may make in lieu of a real property tax (PLRT) or a frontage or area tax (PLFAT). In Part I of the CCPR, which regulates these two types of PILT, the term “corporation” means every corporation included in Schedule III or IV to the PLTA (section 5 of the CCPR).
[29] More specifically, section 6 of the CCPR specifies that the PLRT made by a corporation is made without any condition, in an amount that is not less than the amount referred to in section 7 of the CCPR. Under subsection 7(1) of the CCPR, the amount of the PLRT shall not be less than the product of the following two factors:
(a) the corporation effective rate in the taxation year applicable to the corporation property in respect of which the payment may be made; and
(b) the corporation property value in the taxation year of that corporation property.
[30] Section 2 of the CCPR defines the expressions “corporation effective rate” and “corporation property value” as follows:
(a) “Corporation effective rate” is defined as “the rate of real property tax or of frontage or area tax that a corporation would consider applicable to its corporation property if that property were taxable property”; and
(b) “Corporation property value” is defined as “the value that a corporation would consider to be attributable by an assessment authority to its corporation property, without regard to any mineral rights or any ornamental, decorative or non-functional features thereof, as the basis for computing the amount of any real property tax that would be applicable to that property if it were taxable property”.
[31] Where the real property tax rate includes school taxes, a special rate calculated according to paragraphs 7(2)(c) and (d) of the CCPR can be substituted for the corporation effective rate in paragraph 7(1)(a) of the CCPR. In addition, under section 9 of the CCPR, there may be deducted from the payment described in section 7 of the CCPR an amount corresponding to certain special services provided or financed by the corporation or an amount equal to any cancellation, reduction or refund in respect of a real property tax that would be applicable to its corporation property if it were taxable property.
[32] The “assessment authority” to which section 2 of the CCPR refers means an authority that has power by or under an Act of Parliament or the legislature of a province to establish the assessed dimension or assessed value of real property or immovables (subsection 2(1) of the PLTA). In Quebec, the competent authority under provincial legislation is the assessor appointed under the AMT. For the 2003, 2004 and 2005 taxation years, the property value of the properties in issue is therefore the value entered on the property assessment roll (as corrected, where appropriate, by the competent provincial authority).
[33] On this point, I note that the PLTA was amended in 2000 to add section 11.1, which provides for the appointment of an advisory panel tasked with giving advice to the Minister in the event that a taxing authority disagrees with the property value, property dimension or effective rate applicable to any federal property. The advisory panel may also recommend to the Minister that a payment be supplemented if it has been unreasonably delayed. In addition, the CCPR were amended to specify that section 11.1 of the PLTA applies to a corporation as if the reference to “the Minister” were a reference to “a corporation” and any reference to “federal property” were a reference to “corporation property” (section 12.1 CCPR). However, when the tribunal made the impugned decision, the advisory panel provided for in section 11.1 of the PLTA had not yet been appointed by the Governor in Council. Normally, the advisory panel would have been able to take charge of this case and advise the Minister on the applicable effective rate, since there was at the time a disagreement with the applicant as to the effective rate applicable to the corporation properties.
[34] Before going any further, let us review. Upon application by a taxing authority, a corporation must first of all determine if this application actually does concern property subject to a payment and then refer to the property value and to the applicable effective rate. The product of these two amounts is the amount of the payment which must be made by the corporation within 50 days following receipt of the application (sections 2, 5, 6, 7 and 12 of the CCPR). Finally, I note that the adjustments to the effective rate and the possible deductions from the amount of the payment specified in subsection 7(2) and section 9 of the CCPR do not apply in this case.
5. Properties involved in this case
[35] The respondent is a corporation incorporated under the Broadcasting Act, S.C. 1991, c. 11 as amended (the BA), and an agent of Her Majesty in right of Canada.
[36] The respondent may acquire any real or personal property it deems necessary or convenient for carrying out its objects, and this property belongs to Her Majesty (subsection 47(3), sections 48 and 49 of the BA). It must be presumed that the properties belonging to Her Majesty are occupied and operated by the respondent exclusively on behalf of Canada (City of Halifax v. Halifax Harbour Commissioners, [1935] S.C.R. 215 ; Re the City of Toronto and the Canadian Broadcasting Corporation, [1938] O.W.N. 507 (Ont. C.A.)).
[37] The immovables or real property of the respondent that are the subject of this dispute are located in the sector corresponding to the former city of Montréal (Montréal sector), that is: 1400 René Lévesque Boulevard East; 2120 Pierre Dupuy Avenue and the lot in the Port of Montréal, which the respondent moved out of in 2004; and the Wolfe lot on the island of Montréal.
[38] These immovables or real property are occupied exclusively by the respondent and therefore are not taxable. All these immovables are entered on the property assessment roll as required by provincial law (sections 31, 55 and 204 of the AMT). As already noted, the tribunal uses the value entered on the roll as the basis for calculating the real property tax which would otherwise be applicable to the properties in question if they were taxable by law. The assessed value of these immovables ranged from $105 million to $118 million over the period from 2003 to 2005.
[39] On this point, at the hearing before this Court, the applicant submitted a decision of the ATQ dated July 21, 2006, which held that the real value of the assessment unit for the immovable located at 1400 René Lévesque Boulevard East to be entered on the roll was $100,000,000 for the period from January 1, 2004 to January 19, 2004, and $98,800,000 for the period from January 20, 2004 to December 31, 2006 (Société Radio-Canada c. Ville de Montréal (July 21, 2006), No. SAI‑M‑105370-0505 (Administrative Tribunal of Québec)).
[40] In the case at bar, the dispute between the parties concerns the decision of the tribunal to apply in the respondent’s case an effective real property tax rate different from the one applicable to non-residential immovables under the applicant’s by-laws.
6. Tax by-laws of the applicant
[41] In 2003, the applicant made sweeping changes to its real property tax rates following the municipal mergers that occurred on the island of Montréal.
[42] For all fiscal years prior to 2003, the applicant used one general real property tax rate applicable to all immovables and added a special additional real property tax (surtax) on non-residential buildings. The applicant’s tax structure also provided for business, water and services taxes levied directly on occupants of non-residential immovables carrying out commercial or professional activities on the premises.
[43] In the sector corresponding to the former city of Montréal, the general real property tax rate in 2002 was 1.9702, and the tax rate on non-residential immovables was 0.3348 per $100 of assessment. In 2002, the business tax rate was 12.99%. For comparison purposes, in 2002, the business tax generated revenues equivalent to a real property tax rate of 1.6360 per $100 of assessment. Therefore, in that year, the combined rate for non-residential immovables (general real property tax, non-residential immovables tax and business tax equivalent) was 3.9410 per $100 of assessment (2003 budget, table 35 at page 89).
[44] When it tabled its 2003 budget, the applicant decided to harmonize the tax structure of the new city of Montréal, opting for a variable property tax rate system. Among other things, this change in rates allowed the new city of Montréal to do away with an outdated and inequitable method of taxation and simplify the management of tax income (see the budget adopted by Montréal city council on December 18, 2002, 2003 budget, at pages 31-32 and at pages 77 et seq.).
[45] In practice, this harmonization had the following effects.
[46] First of all, the applicant abolished the business tax. In 2002, this tax on occupants of non-residential immovables was levied by only 10 of the 28 former municipalities. Its repeal in 2003 entailed an increase in the real property tax applicable to non-residential immovables located in a sector corresponding to one of the 10 municipalities in question.
[47] In the other 18 municipalities where there was no business tax, there was no noticeable tax impact. Such was the case with non-residential immovables in the Montréal-Est sector, where the business tax had been abolished in 1993. In 2002, in the former city of Montréal‑Est, the general real property tax rate was 1.4878 per $100 of assessment, while the tax on non-residential immovables was 2.7875 per $100 of assessment. Therefore, the combined tax rate for non-residential immovables was 4.2753 per $100 of assessment in 2002 (2003 budget, table 5 at page 89).
[48] Secondly, the introduction of a variable property tax rate system means that, in 2003, the revenues from the various real property taxes, such as the tax on non-residential immovables and the surtax on serviced vacant lots, could no longer be distinguished from eachother. Therefore, in 2003, the new real property tax for non-residential immovables in the Montréal sector was at a rate of 4.1722 per $100 of assessment. In comparison, in the Montréal-Est sector, this tax was at a rate of 4.2353 per $100 of assessment in 2003 (2003 budget, table 35, at page 89).
[49] Thirdly, to ensure an orderly transition, the applicant offered tax subsidy programs to compensate for some of the shifts in the tax burden brought about by these changes to the taxation system. To this end, by-laws granting subsidies or tax credits based on the general property tax that came into force before January 1, 2003, and under which an amount of subsidy was paid after December 31, 2002, must be read as granting a subsidy based on the basic rate of the variable-rate general property tax (section 2 of By-law 02-253 of the applicant, entitled By‑law concerning certain subsidy by-laws).
[50] Fourthly, according to the applicant’s budget estimates, in 2003, the change in the tax system allowed approximately $8.1 million in additional revenue to be entered into the books for PILTs from the federal government (2003 budget, pages 34 and 88). In fact, according to the evidence on the record, the new real property tax rate set by the applicant in 2003 represents an approximately $7.5 million increase for the federal government (excluding Crown corporations) in terms of payments made directly by the Minister. In the case of the respondent, the change in tax system represents an increase of $2,319,235.79, $2,611,883.54 and $2,582,969.40 for the years 2003, 2004 and 2005 respectively.
[51] To this very day, the variable-rate property tax system is still in force, and the applicant has used it in every fiscal year since 2003, including 2004 and 2005, the years which are the subject of this review. As a result, every year, the application has adopted a tax by-law requiring that a variable-rate general property tax be levied on and collected for every taxable immovable that is entered on the property assessment roll and located in one of the sectors described in section 149 of the Charter.
[52] The properties in question are in the sector identified in by-laws 02-249, 03-201 and 04-166 under the name of the former local municipality listed in section 5 of the Charter, in this case, the former city of Montréal (Montréal sector).
[53] In the case at bar, section 3, item 13 of the By-law concerning taxes (fiscal 2004) (By‑law 02-249), the general property tax rates applied in 2003 to the assessed value of the immovables concerned in the Montréal sector were as follows:
(a) non-residential immovables: 4.1722%
(b) immovables containing six or more dwelling units: 2.0992%
(c) serviced vacant lots: 3.9044%
(d) residual: 1.9522%.
[54] Under section 3, item 13 of the By-law concerning taxes (fiscal 2004) (By‑law 03-201), the general property tax rates applied in 2004 to the assessed value of the immovables concerned in the Montréal sector were as follows:
(a) non-residential immovables: 4.0547%
(b) immovables containing six or more dwelling units: 1.9917%
(c) serviced vacant lots: 3.6064%
(d) residual: 1.8032%.
[55] Finally, under section 3, item 13 of the By-law concerning taxes (fiscal 2005) (By‑law 04‑166), the general property tax rates applied in 2005 to the assessed value of the immovables concerned in the Montréal sector were as follows:
(a) non-residential immovables: 3.8812%
(b) immovables containing six or more dwelling units: 1.8455%
(c) serviced vacant lots: 3.2546%
(d) residual: 1.6273%.
[56] However, since 2004, the applicant has levied and collected a special variable-rate water tax on every immovable entered on the property assessment roll. In 2004 and 2005, the rate applicable to non-residential immovables was 0.04% and 0.0720% respectively (section 4, item 1 of By-law 03-201 and section 5, item 1 of By-law 04-166). The respondent does not contest that this special tax constitutes a form of property tax.
7. Decisions rendered by the tribunal in 2003, 2004 and 2005
[57] In January 2003, 2004 and 2005, Diane Loiseau, a revenue analyst working for the applicant, sent the respondent a number of PILT application under the PLTA and the CCPR for the 2003, 2004 and 2005 taxation years in respect of the respondent’s immovables or real property entered on the property assessment roll (the 2003, 2004 and 2005 applications).
2003 Taxation Year
[58] The 2003 application totals $4,357,107.73 and was based on the non-residential immovables rate of 4.1722% per $100 of assessment, which was applied to the value of the respondent’s immovables entered on the real property assessment roll. The respondent paid this amount in two instalments of $2,178,553.87, in March and September 2003.
[59] On November 25, 2003, an additional PILT application totalling $15,777.53 was sent to the respondent following changes made to a building occupied by the respondent during the 2002 and 2003 taxation years. In March 2004, the applicant claimed a $46,704.97 supplement in lieu of interest in connection with the second instalment, which it claimed was late. According to the applicant, the respondent did not pay these two amounts.
2004 Taxation Year
[60] The 2004 application totals $4,812,459.96 and was based on a combined rate of 4.0947% per $100 of assessment applied to the value of the respondent’s immovables entered on the property assessment roll. The rate indicated by the applicant in its 2004 application is composed of the non-residential immovables rate of 4.0547%, plus the special water tax rate of 0.04% (section 3, item 13 and section 4, item 1 of By-law 03-201).
[61] The respondent made a first payment of $2,406,229.98 in February 2004. Subsequently, on March 31, 2005, following some changes made to the property assessment roll, Ms. Loiseau adjusted the total amount claimed for the 2004 taxation year to $4,749,715.89, which reduced the total amount claimed for the second instalment to $2,343,485.91. According to the applicant, the respondent did not pay the second instalment.
2005 Taxation Year
[62] The 2005 application totals $4,636,645.03 and was based on a combined rate of 3.9532% per $100 of assessment applied to the value of the respondent’s immovables entered on the property assessment roll. The rate indicated by the applicant in its 2005 application was composed of the non-residential immovable rate of 3.8812%, plus the special water tax rate of 0.0720% (section 3, item 13 and section 5, item 2 of By-law 04-166). Subsequently, on March 31, 2005, following some changes made to the property assessment roll, Ms. Loiseau adjusted the total amount claimed for the year 2005 to $4,530,367.20.
[63] This being said, in the impugned decision, the tribunal retroactively reduced the amount of the payments for 2003 and 2004 to $2,037,931.94 and $2,137,832.35 respectively. In addition, it calculated the amount of the PLRT payable by the respondent for 2005 to be $1,947,397.80, which is the amount claimed in the 2005 application. On this basis, the respondent claims $640,175.63 as an overpayment received by the applicant (that is, $6,763,337.72 minus $6,123,162.09).
8. The present application and related litigation
[64] The reasons given by the tribunal to justify the retroactive revision in March 2005 of the effective real property tax rates, and thus of the PLRTs already made in 2003 and 2004, are found in a motion for declaratory judgment filed by the respondent in the Superior Court in March 2004 and amended in March 2005. Essentially, the respondent is of the opinion that the real property tax rates for the years 2003, 2004 and 2005 include a portion related to the former business tax repealed in 2003.
[65] Given that the respondent was not legally required to make a PLBOT, it was decided that an equivalent amount would be subtracted from the effective rate. On this basis, in her affidavit dated November 22, 2005, Ms. Powers explains that the respondent is subject only to the rates of 1.9522, 1.8032 and 1.6273 per $100 of assessment under section 3, paragraph 1, item 13(d) of by-laws 02‑249, 03-201 and 04-166. These are the rates applicable to the “residual” class.
[66] On February 1, 2006, the Court dismissed the respondent’s motion seeking a declaration that the Court does not have jurisdiction to hear this application for judicial review and, in the alternative, the dismissal of the application on the ground that it was not filed within the time limit prescribed by law, or a stay of proceedings pending the Superior Court’s ruling on the respondent’s motion for declaratory judgment (City of Montréal v. Canadian Broadcasting Corporation, 2006 FC 113).
[67] Although this application for judicial review only concerns the decision rendered by the tribunal in March 2005 for the 2003, 2004 and 2005 taxation years, it must be noted that the applicant filed another application for judicial review, in docket No. T-761-06, against a decision of the tribunal rendered in April 2006 for the 2006 taxation year.
[68] A brief analysis of the notice of application filed by the applicant in T-761-06 shows that once again the dispute mainly concerns the effective rate applicable to the respondent’s properties. The notice of application also mentions a review procedure before the ATQ undertaken by the respondent in April 2005 under the AMT to change the value of this property as entered on the assessment roll. However, since the filing of the application for judicial review in T-761-06, the ATQ rendered a decision on this issue on July 21, 2006, such that the effective value of the respondent’s properties for the period from January 1, 2004 to December 31, 2006 no longer appears to be in dispute.
[69] Following a direction issued on July 25, 2006, by the undersigned justice, the parties agreed that the application for judicial review filed in T-761-06 be stayed pending a final decision in this file. The Court gave effect to the wills of the parties’ agreement and ordered a stay of proceedings in T-761-06 on August 4, 2006.
[70] It was therefore on this basis that this application was heard by the Court in January and February 2007. Consequently, the Court expects the parties to apply the principles set out in the present decision to the other related files in which there is a dispute between them on the matter of the effective real property tax rate or about the issue of compensation (set-off). This being said, a party may undertake or continue any application for judicial review before the Court and any proceeding before the advisory panel, the Administrative Tribunal of Québec or any other body or tribunal having jurisdiction in connection with any dispute for any given taxation year concerning property value, property dimension, claims that a payment should be supplemented because of unreasonable delay, or any amendment to an entry on the property assessment roll.
9. Issues and positions of the parties
[71] The issue to be decided today is whether the tribunal exceeded its jurisdiction, breached a principle of procedural fairness, acted unlawfully, or otherwise rendered a decision based on an error in law or an erroneous finding of fact made in a perverse or capricious manner or without regard for the material before it:
(a) by determining that the property tax rate that would be applicable to the respondent’s property, if it were taxable property, corresponds to the rate applicable to the “residual” category, rather than the rate applicable to the “non-residential immovables” category, these rates being set by the applicant’s by-laws (the effective real property tax rate issue);
(b) by retroactively reducing the amounts already paid to the applicant by the respondent as payments in lieu of real property tax (PLRT) for the 2003 and 2004 taxation years, and by claiming $640,175.63 as an overpayment for the year 2005 (the compensation issue).
[72] For the purposes of the hearing, this application was joined with the application made by the applicant in T-795-04, in which the legality of a decision rendered in March 2004 by a manager of the Montréal Port Authority is also the subject of an application for judicial review before this Court.
[73] The oral and written submissions made by counsel for the applicant in both files, on the one hand, and by the respondent in this file and the respondent in the other, tend to overlap or complement each other. Therefore, as regards the effective real property tax rate, it seems to me to be easier to group the various submissions together and apply them mutatis mutandis to the particular situation in each of these two files.
(a) The effective real property tax rate issue
[74] First of all, the applicant and the respondent do not agree on the effective real property tax rate that would be applicable to the non-taxable properties in question if they were taxable for the purposes of calculating the amount due under the PLTA and the CCPR for each of the taxation years in question.
[75] The applicant submits that by not using the real property tax rate usually levied on owners of non-residential immovables, the tribunal acted arbitrarily and capriciously, and that its decision is based on an error in law and is contrary to the law and the obligations imposed on the respondent by the PLTA and the CCPR.
[76] The applicant submits that the respondent must comply to section 7 of the CCPR, which provides that the PLRT shall not be less than the product of the corporation effective rate and the corporation property value in the taxation year of that corporation property. In this case, the only adjustments allowed are those authorized by regulation at subsection 7(2) and section 9 of the CCPR. Furthermore, under section 2 of the CCPR, the “corporation effective rate” is either the real property tax rate or the frontage or area tax rate applicable to the corporation property if it were taxable. Therefore, the applicant submits that the respondent had no choice but to apply the rates applicable to non-residential properties entered on the assessment roll, as set out in the applicant’s by-laws.
[77] In contrast, the respondent argues that it has the discretion to choose a different real property tax rate and to make retroactive adjustments to the PLRT for the 2003 and 2004 taxation years while not having to make a PLRT for the 2005 taxation year. Accordingly, the respondent submits that the expression “that a corporation would consider applicable” in section 2 of the CCPR must be interpre