Montreal (City) v. Old Port of Montréal Corporation Inc.

Montreal (City) v. Old Port of Montréal Corporation Inc.
Court (s) Database
Federal Court Decisions
Date
2021-07-30
Neutral citation
2021 FC 806
File numbers
T-1262-14
Notes
A correction was made on November 29, 2022A correction was made on February 22, 2023.
Reported Decision
Decision Content
Date: 20210730
Docket: T-1262-14
Citation: 2021 FC 806
[english translation]
Montréal, Quebec, July 30, 2021
PRESENT: The Honourable Mr. Justice Pamel
BETWEEN:
CITY OF MONTRÉAL
Applicant
and
OLD PORT OF MONTRÉAL CORPORATION
Respondent
and
ATTORNEY GENERAL OF CANADA
Intervener
JUDGMENT AND REASONS
I. Introduction 3
II. A brief history 6
III. Issues 9
IV. The relevant legislation 10
V. Discussion 11
A. Preliminary issues 11
B. The applicable standard of review 13
C. The interpretation of the PILT Act 20
D. The merits of the case 24
1. Does the property in dispute between the parties constitute federal property within the meaning of the PILT Act? 25
a) The exclusions at issue 27
i. Urban parks – paragraph 2(3)(c) of the PILT Act 27
a. The Old Port site as a whole 33
b. The quays, promenades and buildings 39
i. The Old Port Promenade and the Promenade des Artistes 40
ii. The Clock Tower Quay 41
iii. The Bonsecours Basin Pavilion, including buildings 4 and 5, namely, the Terrasse Bonsecours and the pavilion (Chalet Bonsecours) 41
iv. The Jacques Cartier Quay 42
a. The Jacques Cartier Quay Promenade 43
v. The King Edward Quay 43
a. The King Edward Quay Promenade 44
vi. The Alexandra Quay 44
c. The parking areas 45
ii. Any structure or work – paragraph 2(3)(a) of the PILT Act 46
a. The Jacques Cartier Quay’s elevated walkway 47
b. The parking areas 48
iii. Snow sheds – paragraph 2(3)(b) – Schedule II – item 12 51
iv. Public highways 56
b) Conclusion on exclusions 62
2. Are the OPMC’s parking lots subject to the Parking Lot By-law? 63
a) Is the City authorized to levy this tax? 64
b) Are the parking lots situated outside the areas in which this tax is applicable? 68
3. Is the OPMC’s land situated in deep water? 70
4. Was it open to the OPMC to effect compensation between the amount it had allegedly overpaid in 2013 and the payments for the following years? 77
5. The land under the right-of-way for the railway tracks and rail yard 80
6. Conclusion and discretion with respect to measurement 84
7. Costs 88
VI. APPENDIX 90
I.
Introduction
[1] The Tavern on the Green restaurant in New York City is an entertainment venue, a veritable landmark, but it would be difficult to argue that its commercial nature strips Central Park of its essence as a park. Would adding a zoo strip the park of this essence? If not, what would happen to the park if one were to add an IMAX theatre, a science centre, a Ferris wheel, a night club, a spa and grounds for the Cirque du Soleil? Have we crossed the Rubicon and transformed the space from a park into an entertainment site? If so, at what moment did this occur? At what point did we cease to see the Tivoli Gardens, with their pretty flowers, bandstands, rides and boat tours on the lake as a garden with a handful of amusements and begin to see it as one of the largest amusement parks in Copenhagen? I know that the moment of this mutation cannot be pinned down to the second, but, to paraphrase the immortal words of Justice Potter Stewart, I may not be able to define the tipping point very precisely, but I know it when I see it.
[2] Crown properties are immune from taxation. To balance tax fairness for municipalities with the preservation of this constitutional immunity from taxation, and to compensate for the taxes that the municipalities would otherwise have levied, the federal government created a regime of discretionary and voluntary payments in lieu of taxes [PILTs] within the meaning of the Payments in Lieu of Taxes Act, RSC 1985, c M-13 [PILT Act]. When the properties covered by the PILT scheme belong to a federal Crown corporation, the latter becomes responsible for the management of the regime set out in the PILT Act.
[3] The Old Port of Montréal Corporation [OPMC], a corporation exclusively controlled by the Canada Lands Company Ltd. mentioned in Schedule III to the PILT Act, is such a corporation. All of the Old Port of Montréal site [Old Port site] belongs to it, except for the Alexandra Quay, which the OPMC leased from the Port of Montréal until December 31, 2015. Each year, the OPMC receives a PILT request from Ville de Montréal [City], a legal person established in the public interest incorporated under the Charter of Ville de Montréal, RSQ, c C‑11.4 [City Charter], and a taxing authority within the meaning of the PILT Act with the power to collect taxes and other charges from owners of real property situated in its territory. In response to this request, the OPMC sends to the City each year a decision in which it provides a summary explanation of the amount of its PILT and, if applicable, the exclusions from the concept of “federal property” that it relies on to establish the amount of the payment.
[4] Since 2014, there has been disagreement between the City and the OPMC as to the property value and the composition of the “federal property” within the meaning of the PILT Act of lots 1 180 167, 4 132 346, 4 132 347, 4 132 348, 4 132 350, 4 132 354, 4 132 355, 4 132 356, 4 171 037 and 4 171 038 in the Quebec cadastre, namely, the Old Port site. One of the OPMC’s arguments is that the Old Port site, as a whole, including the Alexandra Quay, is a park (and therefore not “federal property” within the meaning of the PILT Act) and that it should therefore not be required to make PILTs for this territory on the basis of an exemption set out in the PILT Act. In the alternative, the OPMC argues that several other features of the Old Port site do not meet the definition of “federal property” in the PILT Act in accordance with other exemptions set out in that act and that these features are therefore not covered by the PILT scheme.
[5] Because of this position, taken between 2014 and 2020, the City is seeking judicial review of the annual decisions rendered by the OPMC determining the amount of the PILT owing [the OPMC decisions], which the City deemed insufficient and unreasonable. At the request of the parties, the Court ordered the consolidation of proceedings in dockets T-1262-14, T‑2147-14, T‑635-15, T-613-16, T-592-17, T-714-18, T‑650‑19 and T‑836‑20 so that these could be handled in a single hearing.
[6] To be clear, the parties are not asking the Court to decide the effective rate to be applied to the properties, or the property value of these properties given that these issues must be determined at a later stage. What must be considered here is the establishment by the OPMC of the Old Port site’s property base; the issues involve (i) the interpretation of the concept of “federal property” within the meaning of the PILT Act so that the features constituting the properties subject to PILTs might be determined, (ii) the applicability of the By-law concerning property taxes on parking lots, adopted each year by the City for fiscal years 2013 to 2017 [Parking Lot By-law], and (iii) the OPMC’s position that certain parts of the Old Port are situated [translation] “in deep water”.
[7] Finally, I must address the issue of the OPMC’s right to effect compensation between its alleged overpayment for the 2013 fiscal year and the payments for subsequent years.
[8] I should note that I have made visits to the Old Port site myself over the course of many years, visits that I have appreciated; I have taken boat trips on the river, attended movies and concerts and enjoyed a glass or two at the Belvedere at private events. The parties even organized a visit to the Old Port site for me before the hearing in this case so that I might understand the features of the Old Port site being debated here.
[9] The parties agree that some features of the Old Port site—such as the linear park and most of the Bonsecours Basin—are indeed parks by nature and have been developed as such. These features do not, therefore, fall within the definition of “federal property” within the meaning of the PILT Act. That said, I am of the view that, as a whole, the Old Port site is not a “park” within the meaning of the PILT Act. Moreover, and with some exceptions, I am persuaded that it was unreasonable for the OPMC to decide that the controversial features of the Old Port site did not fall within the definition of “federal property” set out in the PILT Act.
[10] For the reasons that follow, I allow the application for judicial review, with costs.
II. A brief history
[11] At the end of the 18th century, those who frequented what we now know as De la Commune Street in Old Montréal could not enjoy the current attractions of the Old Port site, such as the science centre, the IMAX theatre or even the parkades. In fact, it would have been impossible for them even to walk where those attractions are located since, at that time, there was nothing but the St. Lawrence River beyond this street.
[12] All that changed in the early 19th century when Montréal merchants, mainly lumber merchants, began to extend the solid ground with landfill to build quays in front of their warehouses on De la Commune Street.
[13] Toward the end of the 19th century and beginning of the 20th century, with the development and expansion of the Port of Montréal, the entrance of which was marked by the historic Clock Tower, and to serve larger ocean-going vessels with deeper draughts and ensure better protection against ice and flooding, the old quays were filled in and new cribs were installed when the quays were raised. This cribwork, which is also under the sidewalk and roadway of the Old Port promenade towards De la Commune Street, remains to this day one of the components of the quays forming the foundation of the Old Port site. These quays are composed of cribwork made of timber, poured concrete and various other materials, and they extend the solid ground by more than 300 metres into what had previously been the St. Lawrence River.
[14] The OPMC was founded in 1981, a few years after the eastward shift of most of the harbour activities of the Port of Montréal and following the federal government’s announcement of its intention to redevelop the old section of the port located in Old Montréal. Although Her Majesty the Queen owned the land currently known as the Old Port site, the PILTs were managed by the Minister of Public Works and Government Services Canada [PWGSC]—now called the Minister of Public Services and Procurement Canada—who is an intervener in this case. At the time, the City and PWGSC were in agreement on which portions of the Old Port site were subject to PILTs and which were excluded.
[15] On November 2, 2009, ownership of the Old Port site was transferred from Her Majesty the Queen in right of Canada to the OPMC, at which time PWGSC ceased managing its PILTs. However, the Attorney General of Canada is nevertheless intervening in this case as a representative of PWGSC on the basis that the issues require a decision regarding key concepts for the PILT program that PWGSC must administer on a regular basis throughout the country.
[16] The Crown corporations listed in schedules III and IV to the PILT Act (including the OPMC) manage their own PILT programs directly and are fully responsible for determining the property base, the value of the property constituting it and the applicable effective rate. PWGSC has no power of supervision or direction with respect to the management of PILT programs by these Crown corporations.
[17] It was following the transfer of ownership of the property at issue to the OPMC that the trouble regarding PILTs began. The difficulties came to a head when, starting in the 2014 taxation year, the OPMC began to rely on new exemptions from the concept of federal property and to claim that some of its lots were situated in deep water and should therefore be subject to a nominal assessment.
[18] For the City, this position sharply reduced the property base and the value of the property that was previously subject to PILTs, resulting in a decrease in PILTs from more than $3.7 million in 2013 to about $500,000 annually for the years 2014 to 2019. At the same time, the OPMC reassessed the amount of the PILTs that should have been paid in 2013, taking into account its new reasons, and effected compensation between the so-called overpayment of 2013 and the annual amounts paid by the OPMC to the City as PILTs from 2014 to 2020, resulting in an additional reduction of those amounts.
[19] Moreover, as of 2015, the OPMC advanced the position that the Parking Lot By-law was inapplicable to parking areas situated on quays, as the latter were, in its view, situated in the St. Lawrence River and therefore beyond the By-law’s territorial limits.
[20] The OPMC continues to hold these positions, and each of the OPMC’s annual decisions regarding PILTs is subject to an application for judicial review by the City. In this case, therefore, the issue is whether the positions adopted by the OPMC are reasonable.
III. Issues
[21] The five issues are the following:
What is the applicable standard of review?
Does the disputed property constitute federal property within the meaning of the PILT Act?
Are the OPMC’s parking lots subject to the Parking Lot By-Law?
Is the OPMC’s land situated “in deep water”?
Was it open to the OPMC to effect compensation between the amount it had allegedly overpaid in 2013 and the payments for the following years?
IV. The relevant legislation
[22] The provisions applicable to this case can be found in the appendix to this decision.
[23] Under the federal PILT program, which is governed by the PILT Act and its regulations, the federal Crown agrees to pay, subject to certain conditions, payments in lieu of taxes to municipalities on its “federal properties” within the meaning of the PILT Act. The purpose of this legislative scheme is to administer payments in lieu of taxes fairly and equitably while at the same time preserving the fiscal immunity set out at section 125 of the Constitution Act, 1867, 30 & 31 Victoria, c 3 [the Constitution]. This dual objective was eloquently described by Justice LeBel in a unanimous decision of the Supreme Court in Montréal (City) v Montreal Port Authority, 2010 SCC 14 (CanLII), [2010] 1 SCR 427 [MPA 2010]:
[20] It is clear from the PILT Act that Parliament intended to uphold the immunity of federal Crown property from taxation. Section 15 of the Act provides that “[n]o right to a payment is conferred by this Act.” Parliament therefore did not intend to give municipalities the status of creditors of the Crown for payments in lieu of taxes. Instead, it has, through the PILT Act, established a system in which municipalities expect to receive payments but the payments are made within the statutory and regulatory framework that Parliament established without renouncing the principle of immunity from taxation. Thus, the PILT Act is designed to reconcile different objectives — tax fairness for municipalities and the preservation of constitutional immunity from taxation — that can be attained only by retaining a structured administrative discretion where the setting of the amounts of payments in lieu is concerned. For the purpose of establishing those amounts, the PILT Act must define the relationship between the system for setting payments in lieu, on the one hand, and the provincial and municipal tax systems, which can vary from place to place in Canada, on the other.
[Emphasis added.]
[24] According to section 15 of the PILT Act, no right to a payment is conferred by this scheme. Nor does the Act subject the Crown to provincial legislation or municipal by-laws governing taxes or property taxes (MPA 2010 at paras 12 to 24).
[25] The Crown Corporation Payments Regulations, SOR/81-1030 [CCPR], adapt the PILT scheme for the Crown corporations and other federal bodies enumerated in Schedule III to the PILT Act (Crown corporations), to which the OPMC belongs given its connection to the Canada Lands Company.
[26] Sections 5 and 6 of the CCPR state that Crown corporations pay PILTs in respect of any property that would be federal property if it were under the management, charge and direction of a federal minister. Therefore, like the minister, the Crown corporation (the OPMC) must also determine whether the immovable that is the subject of the application received from the taxing authority meets the definition of “federal property” within the meaning of the PILT Act.
V. Discussion
A. Preliminary issues
[27] In its memorandum, the City submits that the doctrine of promissory estoppel applies to the OPMC, with the effect that it was not open to the latter to change position in 2014 and decide not to pay PILTs on certain property previously included in the concept of federal property. It appears that, prior to 2014, the City and the OPMC applied the agreement that had been reached by the parties as to which areas should or should not be considered “urban park” not subject to PILTs. However, it is not necessary to address this issue, as the City withdrew this argument at the hearing.
[28] Moreover, considering that the dispute spans several years and that during this period the uses of the immovables and real property making up the Old Port site have changed, as has the operator in the case of the Alexandra Quay, with the consent of the parties, I will render my decision by considering the Old Port site on the basis of the state of the immovables and real property under the OPMC’s control at the time of its 2014 decision.
[29] Over the years, and even at the hearing before me, the parties have found common ground, and several exemptions claimed by the OPMC, or that the City believed the OPMC was claiming, have been dropped, such as the Lachine Canal Historic Site and the Bonsecours Basin. It is therefore unnecessary to discuss these exclusions here. I will therefore address only the issues that remain controversial.
[30] Finally, despite the fact that at the hearing, the parties and the Court engaged in debates on interesting questions of law regarding what constitutes the subsurface of the Old Port site and regarding the historical provenance of the riverbed on which the quays were built, from the City’s perspective, the foundations of the Old Port site are of no importance. For tax purposes, the City is interested in the surface of the land rather than what makes up the land below the surface. According to the City, when land is created—in this case the Old Port site—whether it is by way of simple landfill, mixed landfill or cribwork, or anything else—this land becomes, for the purposes of municipal taxation and PILTs, taxable federal property or property for which PILTs may be paid. I accept the City’s position on this point with respect to the application of the PILT Act.
B. The applicable standard of review
[31] The parties agree that the applicable standard of review is reasonableness. I concur. Reasonableness is presumed to be the standard of review, and I can identify in this case none of the exceptions to this presumption that would require the application of the standard of correctness (Canada (Minister of Citizenship and Immigration) v Vavilov, 2019 SCC 65 at paras 23, 31 and 53 [Vavilov]); MPA 2010 at paras 36–38; Halifax (Regional Municipality) v Canada (Public Works and Government Services), 2012 SCC 29 at paras 43–44 [Halifax]).
[32] The Attorney General points out that the issues to be resolved here are of considerable importance to the PILT program, while the case law is negligible or even non-existent with respect to several of the issues raised in this case. At the hearing, it was asked whether, given the lack of jurisprudence interpreting the exceptions to the concept of federal property according to the PILT Act and the need for generalized standards in the administration of the PILT program across the country, the issues raised in this case could be considered general questions of law of central importance to the legal system as a whole, making the standard of correctness appropriate (Vavilov at paras 58 to 62). I am of the view that this is not the case.
[33] Fundamentally, this case involves the interpretation of concepts contained in the PILT Act, and the issue of whether the OPMC’s interpretation of these concepts was reasonable. There is indeed very little case law on how to interpret the exemptions from the concept of federal property under the PILT Act; that said, this case is essentially one of statutory interpretation. As the Supreme Court observed in Vavilov, “the mere fact that a dispute is ‘of wider public concern’ is not sufficient for a question to fall into this category” (Vavilov at para 61). In fact, in MPA 2010, the Supreme Court held that the reasonableness standard applied in determining whether the port’s silos fell within the exemption for “reservoirs” listed in Schedule II to the PILT Act (MPA 2010 at para 48).
[34] In Vavilov, the Supreme Court clearly described the principles of judicial review that apply when an administrative decision maker interprets a legislative provision in the course of rendering a decision:
[121] The administrative decision maker’s task is to interpret the contested provision in a manner consistent with the text, context and purpose, applying its particular insight into the statutory scheme at issue. It cannot adopt an interpretation it knows to be inferior — albeit plausible — merely because the interpretation in question appears to be available and is expedient. The decision maker’s responsibility is to discern meaning and legislative intent, not to “reverse-engineer” a desired outcome.
. . .
[124] Finally, even though the task of a court conducting a reasonableness review is not to perform a de novo analysis or to determine the “correct” interpretation of a disputed provision, it may sometimes become clear in the course of reviewing a decision that the interplay of text, context and purpose leaves room for a single reasonable interpretation of the statutory provision, or aspect of the statutory provision, that is at issue: Dunsmuir, at paras. 72-76. One case in which this conclusion was reached was Nova Tube Inc./Nova Steel Inc. v. Conares Metal Supply Ltd., 2019 FCA 52., in which Laskin J.A., after analyzing the reasoning of the administrative decision maker (at paras. 26-61 (CanLII)), held that the decision maker’s interpretation had been unreasonable, and, furthermore, that the factors he had considered in his analysis weighed so overwhelmingly in favour of the opposite interpretation that that was the only reasonable interpretation of the provision: para. 61. As discussed below, it would serve no useful purpose in such a case to remit the interpretative question to the original decision maker. Even so, a court should generally pause before definitively pronouncing upon the interpretation of a provision entrusted to an administrative decision maker.
. . .
[131] Whether a particular decision is consistent with the administrative body’s past decisions is also a constraint that the reviewing court should consider when determining whether an administrative decision is reasonable. Where a decision maker does depart from longstanding practices or established internal authority, it bears the justificatory burden of explaining that departure in its reasons. If the decision maker does not satisfy this burden, the decision will be unreasonable. In this sense, the legitimate expectations of the parties help to determine both whether reasons are required and what those reasons must explain: Baker, at para. 26. We repeat that this does not mean administrative decision makers are bound by internal precedent in the same manner as courts. Rather, it means that a decision that departs from longstanding practices or established internal decisions will be reasonable if that departure is justified, thereby reducing the risk of arbitrariness, which would undermine public confidence in administrative decision makers and in the justice system as a whole.
[Emphasis added.]
[35] That said, the parties do not fully agree on how the standard of reasonableness is to be applied, and specifically on the degree of deference owed to the OPMC in this case or the scope of the findings that could reasonably be made by the OPMC when it rendered the impugned decisions. I must point out, however, that in a post-Vavilov world, in seeking to determine whether a given decision is reasonable, one must no longer consider whether it falls within a “‘range’ of possible conclusions that would have been open to the decision maker”, but rather “whether the decision bears the hallmarks of reasonableness — justification, transparency and intelligibility — and whether it is justified in relation to the relevant factual and legal constraints that bear on the decision” (Vavilov at paras 83 and 99). As Justice LeBel observed in MPA 2010, “[t]he concept of ‘reasonableness’ . . . also encompasses a quality requirement that applies to those reasons and to the outcome of the decision-making process ” (MPA 2010 at para 38).
[36] The City argues that the degree of deference to be granted to the OPMC’s decisions must take into account the fact the OPMC possesses no specialized expertise or qualifications when it comes to applying the PILT Act and interpreting the term “federal property”. The City also submits that the OPMC is not acting, in the words of Justice LeBel in MPA 2010 at paragraph 14, “as [would] good residents of the municipalit[y]” given that it has demonstrated in its decisions a certain [translation] “zeal for cutting costs to the maximum extent possible” by raising the most unlikely grounds for exemption from the concept of “federal property”.
[37] I must admit that I find this situation, in which the decision maker certainly has a direct interest in the outcome of the decision, rather strange. Given the realities of annual budgets and financial performances and expectations, it is easy for a perceived conflict of interest to arise in the decision-making process, no matter how hard the decision maker tries to be fair and equitable. This impression may become even stronger in cases where, as here, the decision maker makes a new determination that differs suddenly and drastically from what had previously been a well-established protocol between the decision maker and the person affected by the decision, the OPMC and the City in this case, as to what constitutes federal property within the meaning of the PILT Act.
[38] On this same point, and regardless of the fact that the City has dropped its promissory estoppel argument, the fact remains that “[w]here a decision maker does depart from longstanding practices or established internal authority, it bears the justificatory burden of explaining that departure in its reasons. If the decision maker does not satisfy this burden, the decision will be unreasonable” (Vavilov at para 131).
[39] The Supreme Court has clearly stated that the purpose of the PILT Act “is to provide for the fair and equitable administration of payments in lieu of taxes” and that although the Act “confirms both the principle that federal property is immune from taxation and the voluntary nature of payments in lieu, the intention was that the calculation of such payments would be consistent with the objective of equity and fairness in dealing with Canadian municipalities” (MPA 2010 at para 43). However, while fairness and good faith on the part of federal Crown corporations are cornerstones of the PILT program, there is no evidence that the OPMC had a hidden agenda when it made its decisions.
[40] It appears that the trigger for the OPMC’s increased focus on whether it was correctly applying the exemptions to federal property under the PILT Act was the coming into force of the Parking Lot By-law, imposed by the City starting in 2011. This by-law was adopted to increase the tax burden on operators of outdoor parking facilities within the City’s territory. Because the OPMC has large outdoor parking lots, the introduction of this tax caused the amount of PILTs sought by the City each year to increase by 50%. It was at this point that the OPMC began to conduct analyses to determine whether certain exemptions that had not previously been invoked with respect to PILTs could be used.
[41] While I must admit that some of the exemptions invoked by the OPMC stretch the imagination, I am not prepared to conclude that the OPMC exhibited an excessive amount of zeal in applying the exemptions to the concept of federal property within the meaning of the PILT Act.
[42] However, given that it departed from a long-standing practice (followed by the OPMC and previously by PWGSC) regarding how the Old Port site should be treated for PILT purposes, I find that it was incumbent on the OPMC to justify this departure, which would have reduced “the risk of arbitrariness” (Vavilov at para 131).
[43] As for the issue of the degree of deference I must give to the OPMC’s decisions, the Supreme Court has made it clear that, while an administrative decision maker’s expertise is no longer relevant to the determination of the standard of review, “expertise remains a relevant consideration in conducting reasonableness review” (Vavilov at paras 31, 58).
[44] The Minister of PWGSC is responsible for administering the PILT Act. PWGSC is intervening in this case because, in its view, the decision that I will render will set precedents with respect to several concepts at issue, such as the concepts of “park”, “road”, “public highway” and “snow shed” and the treatment of parking areas. PWGSC therefore wishes to intervene with respect to these concepts and the aspects of the PILT program that come up regularly in its decisions.
[45] According to the testimony of Colin Boutin, National Manager, Policy and Strategic Initiatives—PWGSC’s PILT program—filed in support of the intervener’s position, the PILT program is administered by PWGSC on behalf of all federal departments. According to Mr. Boutin, the objective is to make fair, equitable and predictable PILTs resembling the taxes paid by owners of taxable property with comparable property, to local taxing authorities whose tax jurisdiction includes federal properties. Each year, PWGSC deals with hundreds of PILT applications, valued at close to $600 million and involving, in 2016–2017, approximately 1,250 taxing authorities across the country, except, as in this case with the OPMC, for amounts paid by Crown corporations that own property and manage their own PILT programs; in such cases, PWGSC has no authority over the Crown corporations’ decisions.
[46] According to the evidence, if anyone has expertise in applying the PILT Act, it is PWGSC rather than the OPMC. In fact, the OPMC’s annual PILT decisions are prepared on the basis of assessment reports prepared by external evaluators mandated by the OPMC to assess and identify the OPMC immovables that constitute “federal property” within the meaning of the PILT Act, in light of the exclusions set out in subsection 2(3) of the PILT Act, thereby enabling the OPMC to determine the PILT to be made each year.
[47] In the circumstances, it is not necessary to accord a high level of deference to the OPMC’s decisions, particularly when the issues submitted to this Court involve the interpretation of concepts contained in the PILT Act.
C. The interpretation of the PILT Act
[48] Before discussing the exclusions at issue, I will set out the approach to statutory interpretation that will guide my consideration of the PILT Act, as the parties have argued in favour of different interpretive methods.
[49] The OPMC cites Johns-Manville Canada v The Queen, [1985] 2 SCR 46, as well as Québec (Communauté urbaine) v Corp. Notre-Dame de Bon-Secours, [1994] 3 SCR 3, in support of its position that the residual presumption in favour of the taxpayer applies here, and that the PILT Act must be interpreted in favour of the “taxpayer” because it has certain tax aspects, like the Income Tax Act, RSC 1952, c 148. The OPMC argues that there is a parallel between the concepts of a taxpayer’s tax base and federal property, and another between the concepts of taxes and PILTs. The OPMC also submits that, in both cases, several exceptions apply to what may be taxed (or with respect to what it is possible to make a PILT).
[50] I cannot accept the OPMC’s argument. There is no doubt that some aspects of the PILT Act are similar to elements that may be found in a taxation statute, because the very purpose of the Act, to put it simply, is to make payments to municipalities in lieu of taxes normally collected, while preserving the Crown’s constitutional immunity from taxation. To achieve this, the PILT Act must necessarily be similar, to some extent, to a taxation statute.
[51] However, while there are similarities, the approach chosen to meet this objective is not at all in the nature of a tax: this is precisely what Parliament wished to avoid. Obviously, a taxation statute necessarily includes an obligatory collection of the amount owing. However, as stated above, the method adopted by Parliament in this case was to create a regime of discretionary and voluntary payments in lieu of taxes to avoid creating an obligation to the taxing authority.
[52] Thus, the mandatory nature of the payments owing under a taxation statute conflicts with the immunity from taxation set out in the Constitution and the discretionary nature of PILTs (section 125 of the Constitution; section 3 of the PILT Act). In other words, the State (in this case the City) is not reaching into the pocket of the taxpayer (in this case the OPMC as a Crown corporation), unlike the usual situation with taxation statutes. On the contrary, it is the OPMC as “taxpayer” that decides how much “tax” to pay—a situation that most taxpayers would surely envy.
[53] Although sections 2.1 and 3 of the PILT Act state that the Minister (or Crown corporation) “may” make a PILT in the spirit of fairness to municipalities and that under Canadian administrative law, this power must be exercised reasonably, the power dynamic between the taxing authority and the “taxpayer” remains radically different from that which would exist in the context of a taxation statute. I also note that section 15 of the PILT Act provides that no right to payment is conferred by this Act. The parties are, in the context of the PILT Act, on equal footing. With all due respect to the taxing authorities, I do not believe that one could honestly claim the same to be true of their relationship with taxpayers.
[54] Accordingly, I cannot accept the OPMC’s position that the principle of interpreting taxation statutes in favour of the “taxpayer” applies here.
[55] The City, on the other hand, argues in favour of interpreting the exclusions from the concept of federal property in a purposive and restrictive manner (that is, as exceptions). I agree. In my view, the following comments by the Supreme Court in Vavilov are applicable:
[118] This Court has adopted the “modern principle” as the proper approach to statutory interpretation, because legislative intent can be understood only by reading the language chosen by the legislature in light of the purpose of the provision and the entire relevant context: Sullivan, at pp. 7-8. Those who draft and enact statutes expect that questions about their meaning will be resolved by an analysis that has regard to the text, context and purpose, regardless of whether the entity tasked with interpreting the law is a court or an administrative decision maker. An approach to reasonableness review that respects legislative intent must therefore assume that those who interpret the law — whether courts or administrative decision makers — will do so in a manner consistent with this principle of interpretation.
[Emphasis added.]
[56] It appears to me that while the process of determining PILTs does imply a certain discretion on the OPMC’s part, the resulting decisions should nevertheless not distort the language chosen by Parliament; an administrative decision must always be “justified in relation to the facts and law that constrain the decision maker” (Vavilov at para 85). A discretionary power is not absolute and untrammelled because it is constrained by the scheme and object of the statute that confers it (CUPE v Ontario (Minister of Labour), [2003] 1 SCR 539 at para 107).
[57] Moreover, the “exercise of this power must be reasonable in light of the circumstances of each case and the need to preserve the fiscal stability of municipalities” (Trois-Rivières (City) v Trois-Rivières Port Authority and Canada (Attorney General) 2015 FC 106 at para 64 [Trois-Rivières (City)]).
[58] Recall that the Supreme Court also teaches that the PILT Act and its regulations “define the scope of the discretion and the principles governing the exercise of the discretion, and they make it possible to determine whether it has in fact been exercised reasonably” (MPA 2010 at para 33). Furthermore, as the Supreme Court observes in Vavilov at paragraphs 108 to 110:
That administrative decision makers play a role, along with courts, in elaborating the precise content of the administrative schemes they administer should not be taken to mean that administrative decision makers are permitted to disregard or rewrite the law as enacted by Parliament and the provincial legislatures. Thus, for example, while an administrative body may have considerable discretion in making a particular decision, that decision must ultimately comply “with the rationale and purview of the statutory scheme under which it is adopted” . . . Although a decision maker’s interpretation of its statutory grant of authority is generally entitled to deference, the decision maker must nonetheless properly justify that interpretation. Reasonableness review does not allow administrative decision makers to arrogate powers to themselves that they were never intended to have, and an administrative body cannot exercise authority which was not delegated to it. . . . What matters is whether, in the eyes of the reviewing court, the decision maker has properly justified its interpretation of the statute in light of the surrounding context. It will, of course, be impossible for an administrative decision maker to justify a decision that strays beyond the limits set by the statutory language it is interpreting.
[Emphasis added.]
[59] Section 12 of the Interpretation Act, RSC 1985, c I-21, reads as follows:
Enactments deemed remedial
Principe et interprétation
Every enactment is deemed remedial, and shall be given such fair, large and liberal construction and interpretation as best ensures the attainment of its objects.
Tout texte est censé apporter une solution de droit et s’interprète de la manière la plus équitable et la plus large qui soit compatible avec la réalisation de son objet.
[60] The words of the Act, including in this case the exclusions from the concept of federal property, must be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act and the intention of Parliament, even when a provision seems clear and conclusive (Bell ExpressVu Limited Partnership v Rex, [2002] 2 SCR 559; Pharmascience Inc. v Binet, [2006] 2 SCR 513). Exceptions, in this case exceptions to the concept of federal property, must be interpreted narrowly (Corporation d'Urgences-santé c Syndicat des employées et employés d'Urgences-santé (CSN), 2015 QCCA 315 at para 47; Québec (Procureur général) c Paulin, 2007 QCCA 1716 at paras 30 et seq).
[61] Ultimately, the modern approach to statutory interpretation is the appropriate framework for considering the exemptions claimed by the OPMC. The PILT Act must be interpreted like any other statute, harm