Montréal (City) v. Montréal Port Authority

Montréal (City) v. Montréal Port Authority
Court (s) Database
Federal Court Decisions
Date
2007-07-05
Neutral citation
2007 FC 701
File numbers
T-795-04
Notes
Digest
Decision Content
Date: 20070705
Docket: T-795-04
Citation: 2007 FC 701
Ottawa, Ontario, the 5th day of July 2007
Present: The Honourable Mr. Justice Martineau
BETWEEN:
CITY OF MONTRÉAL
Applicant
and
MONTRÉAL PORT AUTHORITY
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 2004 by a manager of the respondent, Sylvie Vachon (the Tribunal). Except where otherwise indicated in these reasons, the amounts of the adjustments made by the Tribunal to the applicant’s application for payment in lieu of real property tax for the year 2004 are those found in a letter to the applicant, dated March 19, 2004, with which a cheque issued by the respondent in the amount of $1,326,497.53 was enclosed (the impugned decision).
[2] The application for payment was submitted to the respondent in accordance with Part I of the Crown Corporation Payments Regulations, SOR/81-1030, as amended (the CCPR). The adjustments found in the impugned decision were made by the Tribunal on behalf of the respondent under the supposed authority of the CCPR. The Tribunal assessed the amount of the payment in lieu of real property tax (PLRT) to be paid by the respondent for the 2004 taxation year at $1,326,497.53. This amount includes $1,196,305.49 for the sector corresponding to the former city of Montréal (Montréal sector) and $130,192.04 for the sector corresponding to the former city of Montréal-Est (Montréal-Est sector).
[3] In its notice of application filed in Court on April 21, 2004, the applicant submits that the respondent arbitrarily and unlawfully subtracted the following amounts from the payment involving the Montréal sector:
(a) the amount of $737,889.67 to be paid at the real property tax rate usually applicable to non-residential properties (the effective real property tax rate issue);
(b) the amount of $1,247,355.98 representing the additional amount to be paid at the effective rate applicable to the piers and silos that were excluded from the calculation (the exclusion of piers and silos issue).
[4] The relevant statutory and regulatory provisions are reproduced in the annex to these reasons.
1. Municipal tax rules in the province of Quebec
[5] 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 by the Cities and Towns Act, R.S.Q., c. C-19 (the CTA).
[6] Under section 485 of the CTA, a municipal council may, subject to the Act respecting municipal taxation, R.S.Q. c. F-21 (the AMT), impose and levy annually on all taxable immovables in the territory of the municipality a tax based on their value as shown on the assessment roll.
[7] 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).
[8] 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.
[9] 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).
[10] 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).
[11] There is nothing that would lead me to conclude that the assessment value of the silos and piers appearing in the property assessment roll is erroneous. In fact, at paragraph 33 of the respondent’s memorandum dated April 5, 2005, it is stated that [translation] “in this case, the ‘property value’ of the immovables in question is not contested”.
[12] Having said this, I do not believe that an application for review of an entry on the property assessment roll is the only way to contest the assessed value of an immovable or of real property in the case of property belonging to the federal Crown. In my opinion, where a dispute arises, the respondent may always refer the issue of the “property value” to the advisory panel under section 11.1 of the PLTA to obtain its advice (section 12.1 of the CCPR). Whether the respondent decides to follow or to ignore the advice of the advisory panel, nothing prevents the applicant from filing an application for judicial review to have the legality of the decision made by the respondent reviewed, which is exactly what the applicant did in the case at bar.
2. Federal Payments in Lieu of Taxes (PILT) Program
[13] As noted in the preceding, section 125 of the Constitution Act, 1867 is intended to prevent inroads, by way of taxation, upon the property of 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).
[14] 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.
[15] 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.
[16] 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).
[17] 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.
[18] 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).
[19] Incidentally, I note that the applicant and the respondent do not agree on the application of these two definitions, particularly with regard to the scope of the exemption in paragraph 2(3)(b) of the PLTA, which excludes from the definition of “federal property” any structure, work, machinery or equipment that is included in Schedule II to the PLTA. I will come back to this contentious issue later on when discussing the exclusion of the piers and silos.
[20] 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).
[21] 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).
[22] 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).
[23] 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.
[24] 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
[25] 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 specified in the PLTA or the CCPR.
[26] 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.
[27] In 1995, the Joint Technical Committee on Payments in Lieu of Taxes complained that the federal government was not obliged at that time 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)).
[28] 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 Interim Payments and Recovery of Overpayments Regulations, SOR/81-226, as amended (IPROR), which are not invoked by the respondent in this case. In the case of corporations included in schedules III and IV to the PLTA, it is the Governor in Council and 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.
[29] 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)
[30] 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).
[31] 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.
[32] 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”.
[33] 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.
[34] 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. In the case at bar, there is no immediate litigation between the parties concerning the property value of the properties in question, including value indicated by the applicant regarding the piers and silos.
[35] This being said, the present dispute between the parties is based first and foremost on the Tribunal’s decision to apply to all of the respondent’s properties which were subject to a PLRT an effective real property tax rate different from the one applicable to non-residential immovables under the applicant’s by-laws. It must also be determined whether the piers and silos were legally excluded from the calculation of the amount of the PLRT to be paid under sections 6 and 7 of the CCPR.
[36] 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.
[37] 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, 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 are inapplicable in this case.
5. Properties involved in this case
[38] The respondent is a corporation incorporated by letters patent issued by the Minister of Transport under the Canada Marine Act, S.C. 1998, c. 10, as amended (the CMA). It is an agent of Her Majesty in right of Canada only for the purposes of engaging in the port activities referred to in paragraph 28(2)(a) of the CMA.
[39] The respondent manages numerous immovables and real property belonging to Her Majesty (sections 7, 12, 44 and 45 of the CMA). 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.)).
[40] The immovables or real property of the respondent are located in the following two sectors:
(1) Montréal sector: these properties are located along the Saint Lawrence River and the Lachine Canal in a vast area bounded by the Bonaventure Expressway, Mill Street, Pierre-Dupuis Avenue and the Bickerdike Terminal, stretching into the eastern part of Montréal (sections 24 to 93 and 111);
(2) Montréal-Est sector: these properties are also located along the Saint Lawrence River and are mainly occupied by refineries (sections 94 to 110 of the Port of Montréal).
The immovables or real property that are the subject of the present dispute are located in the Montréal sector and are not rented by the respondent.
[41] All these immovables are entered on the property assessment roll as required by provincial law (sections 31, 55 and 204 of the AMT). As one would expect, 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. It should be noted that the lessees of the Port of Montréal pay real property tax directly to the applicant for the land belonging to Her Majesty which they directly occupy (section 208 of the AMT), while the PLRT made by the respondent strictly concerns the immovables which are not rented. However, in the case of occupants with a lease of one year or less, a PLRT is made by the respondent.
[42] In the case at bar, on March 19, 2004, the respondent sent the applicant a cheque for $1,326,497.53 representing, in the respondent’s opinion, 100% of the amounts due to the applicant for a PLRT for the 2004 taxation year. The applicant contests this. In effect, the applicant alleges that the respondent used an incorrect effective rate and arbitrarily excluded the piers and silos from the payment.
6. Tax by-laws of the applicant
[43] In 2003, the applicant made sweeping changes to its real property tax rates following the municipal mergers that occurred on the island of Montréal.
[44] 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.
[45] 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, page 89).
[46] 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.).
[47] In practice, this harmonization had the following effects.
[48] 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. In the other 18, there was no noticeable tax impact.
[49] Such was the case with non-residential immovables in the Montréal-Est sector, where the business tax had been abolished many years ago. 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).
[50] 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 each other. 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).
[51] 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).
[52] 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 Crown in terms of payments made by the Minister in respect of the department’s federal properties. In the case of the respondent, the change in the tax system represents an annual increase varying between $750,000 and $1,000,000 (excluding the silos and piers).
[53] 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, the year which is 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.
[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] 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, the rate applicable to non-residential immovables was 0.04% (section 4, item 1 of By-law 03-201). The respondent does not contest that this special tax constitutes a form of property tax.
7. Decision rendered by the Tribunal in 2004
[56] In January 2004, Diane Loiseau, a revenue analyst working for the applicant, sent the respondent a PILT application under the PLTA and the CCPR for the 2004 taxation year in respect of the respondent’s immovables or real property entered on the property assessment roll (the 2004 application). The 2004 application added up to a total of $3,177,045.08 (excluding the Montréal‑Est sector).
[57] The 2004 application is in compliance with By-law 03-201.
[58] In the case at bar, under section 3, item 13 of By-law 03-201, the general property tax rates applied in 2004 on the assessed value of the immovables located 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%.
[59] Under section 3, item 14 of By-law 03-201, the general property tax rates applied in 2004 to the assessed value of the immovables located in the Montréal-Est sector were as follows:
(a) non-residential immovables: 4.3944%
(b) immovables containing six or more dwelling units: 1.5343%
(c) serviced vacant lots: 2.9376%
(d) residual: 1.4688%.
[60] Therefore, the rate indicated the applicant in its 2004 application was made up of:
(1) the rate of 4.0547% (Montréal sector), or of the rate of 4.3944% (Montréal-Est sector);
(2) the rate of 0.04% for the special water tax (section 4, item 1 of By-law 03-201).
[61] Sylvie Vachon, Vice-President, Administration and Human Resources, Montréal Port Authority (the Tribunal), responded to this application for payment in a letter dated March 19, 2004. In this letter, a cheque in the amount of $1,326,497.53 was enclosed, on the following basis:
(1) $1,196,305.49 for the Montréal sector; and
(2) $130,192.04 for the Montréal-Est sector. This figure also included certain adjustments to PLRTs from previous years, the legality of which is not contested in the present application for judicial review.
[62] In the case of the Montréal sector, the rate used by the Tribunal for the year 2004 was 2.4115 per $100 of assessment, while the rate used in the Montréal-Est sector was 4.4344 per $100 of assessment. In both sectors, the Tribunal added a rate of 0.04 per $100 of assessment to each rate, to account for the special water tax.
[63] Accordingly, the Tribunal subtracted $1,985,245.66 from the $3,177,045.08 (excluding the Montréal-Est sector) claimed by the respondent as a PLRT, for the following reasons:
(1) According to the Tribunal, the tax rate of 2.4115% per $100 excludes the tax equivalent of the former business occupancy tax. Accordingly, the Tribunal subtracted $737,889.67 from the payment;
(2) In addition, the Tribunal was of the opinion that the respondent did not have to make any payment in respect of the piers and silos entered on the applicant’s assessment roll. For this reason, the Tribunal subtracted $1,247,355.98 from the amount claimed by the applicant as a PLRT.
[64] According to the evidence on the record, the Tribunal based its position on a memorandum dated March 17, 2004, written by the director of the respondent’s Real Property Department, Benoit Rheault. In this memorandum, he states that, compared with 2002, the impact of including the equivalent of the business tax, which was approximately $776,039 in 2003, would be nearly $746,113 in 2004, for a cumulative total of $1,522,152. On the basis of the information in the applicant’s 2003 budget, the director of the Real Property Department used a ratio of real property tax/business tax equivalent to 58.49%/41.51%. The special water tax (0.04%) was not considered in the calculation of the proportion of the real property tax (58.49%). Rather, it was added to the weighted rate used (4.0547 per $100 of assessment x 58.49% = 2.3715 per $100 of assessment) for a total of 2.4115 per $100 of assessment in the Montréal sector. With regard to the portion of the taxes attributed to the piers and silos, the director of the Real Property Department noted that, had it not been for the respondent’s decision to withdraw the piers and silos from the assessment roll and to cease making, retroactively to 1999, any PLRTs on these infrastructures, the portion of the property taxes attributed to these items alone would have been $687,364 in 2003 and $687,878 in 2004, excluding the impact of the business tax or its equivalent.
8. The present application and related litigation
[65] Although this application for judicial review strictly concerns the Tribunal’s decision for the 2004 taxation year, it is important to note that the dispute over the calculation of the effective real property tax rate also includes the 2003 and 2005 to 2007 fiscal years. In the case of the exclusion of the silos and piers, the fiscal years concerned are 1999 to 2003 and 2005 to 2007. Accordingly, the overall financial stakes for these two public bodies are considerable.
[66] On October 8, 2003, the applicant first applied to the advisory panel, submitting all the unresolved disputes it then had with the respondent. In addition to the issue of the effective real property tax rate and the exclusion of silos and piers, the respondent also refused to pay the applicant any compensation for ending the freeze on PLRTs for the year 1993 ($2,581,977.12 in capital). The advisory panel has yet to render a decision.
[67] On February 20, 2004, the applicant applied to the Court of Quebec, claiming $3,795,144.66 from the respondent for the 1993 and 1999 to 2003 fiscal years. The applicant’s action was dismissed on June 9, 2004, by Mr. Justice Jacques Désormeau, who allowed the respondent’s declinatory exception to the effect that the Court of Quebec did not have jurisdiction. However, he referred the matter to the Superior Court (Ville de Montréal c. Administration portuaire de Montréal, Court of Quebec, No. 500-22-094380-048, June 9, 2004). On January 21, 2005, the Quebec Court of Appeal upheld the dismissal of the action, but on the ground that neither the Court of Quebec nor the Superior Court had jurisdiction in this matter. In its judgment, the Court of Appeal stated that the applicant should instead apply to the Federal Court to have any decision made by the respondent under the supposed authority of the PLTA and CCPR set aside (Ville de Montréal c. Administration portuaire de Montréal, 2005 QCCA 31, [2005] Q.J. No. 263 (Que. C.A.) (QL), leave to appeal to S.C.C. refused [2005] S.C.C.A. No.126). Meanwhile, on October 22, 2004, Prothonotary Richard Morneau of this Court dismissed the respondent’s motion to strike the present application for judicial review on the grounds that it is not covered in subsections 18.1(3) and (4) of the FCA and that the applicant must first apply to the advisory panel provided for in section 11.1 of the PLTA (City of Montréal v. Montréal Port Authority, 2004 FC 1476). This decision was not appealed.
[68] The applicant did not file an application for judicial review in this Court against the decisions of the Tribunal regarding the 1993 and 1999 to 2003 fiscal years. However, in addition to the year 2004, applications for judicial review were also filed in this Court for the 2005 (Docket No. T-682-05), 2006 (Docket No. T-722-06), and 2007 (Docket No. T-558-07) fiscal years.
[69] The parties agreed in writing that the Federal Court order a stay of proceedings in dockets T-682-05 and T-722-06 while the final decision in this case is pending. In fact, in Docket T-682-05, the parties filed an agreement dated December 14, 2005, in which the following is stated: [translation] “The undersigned lawyers, on behalf of the parties, agree to be bound, for the purposes of the settlement of the application for judicial review, by the final decision to be rendered in Docket T-795-04”. At that time, there was not yet any application concerning the 2007 fiscal year (Docket T-558-07).
[70] It was therefore on this basis that this application was heard by the Court in January and February 2007. Accordingly, the Court expects the parties to apply the principles stated 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 the exclusion of the silos and piers. 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 determining that the piers and silos are included in Schedule II of the PLTA (the exclusion of piers and silos issue).
[72] For the purposes of the hearing, this application was joined with the application made by the applicant in T-631-05, in which the legality of a decision rendered in March 2005 by a manager of the Canadian Broadcasting Corporation is also the subject of an application for judicial review before this Court.
[73] On one hand, I am satisfied that the Court has exclusive jurisdiction to review the impugned decision rendered in March 2004 by the Tribunal (see City of Montréal v. Canadian Broadcasting Corporation, 2006 FC 113 and the case law cited in this decision). On the other hand, considering the special circumstances of this matter, this is not a case where exhausting all available remedies beforehand will lead to the dismissal of an application for judicial review (City of Montréal v. Montréal Port Autho