Montréal Port Authority v. Montréal (City)

Montréal Port Authority v. Montréal (City)
Court (s) Database
Federal Court of Appeal Decisions
Date
2008-09-19
Neutral citation
2008 FCA 278
File numbers
A-413-07
Notes
Digest
Decision Content
Date: 20080919
Dockets: A-413-07
A-427-07
Citation: 2008 FCA 278
CORAM: LÉTOURNEAU J.A.
NOËL J.A.
TRUDEL J.A.
BETWEEN:
A-413-07
MONTRÉAL PORT AUTHORITY
Appellant
and
CITY OF MONTRÉAL
Respondent
and
ATTORNEY GENERAL OF CANADA
Intervener
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A-427-07
CANADIAN BROADCASTING CORPORATION
Appellant
and
CITY OF MONTRÉAL
Respondent
and
ATTORNEY GENERAL OF CANADA
Intervener
Hearing held at Montréal, Quebec, on September 8, 2008.
Judgement delivered at Ottawa, Ontario, on September 19, 2008.
REASONS FOR JUDGEMENT BY: LÉTOURNEAU J.A.
CONCURRED IN BY: NOËL J.A.
TRUDEL J.A.
Date: 20080919
Dockets: A-413-07
A-427-07
Citation: 2008 FCA 278
CORAM : LÉTOURNEAU J.A.
NOËL J.A.
TRUDEL J.A.
BETWEEN:
A-413-07
MONTRÉAL PORT AUTHORITY
Appellant
and
CITY OF MONTRÉAL
Respondent
and
ATTORNEY GENERAL OF CANADA
Intervener
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
A-427-07
CANADIAN BROADCASTING CORPORATION
Appellant
and
CITY OF MONTRÉAL
Respondent
and
ATTORNEY GENERAL OF CANADA
Intervener
REASONS FOR JUDGMENT
LÉTOURNEAU J.A.
[1] For reference purposes, I include a table of contents of the topics discussed:
Table of Contents
Paragraph
Issues 2
Background facts and relevant legislation 8
Federal Court decision 17
Standard of review applicable to decisions of MPA and CBC and to decision of Federal Court 18
Could MPA and CBC change effective rate applied by City to their non-residential immovables? 18
(a) Existence of discretion 18
(b) Legality of exercise of discretion by appellants 25
(c) Reasonableness of decisions made by appellants 34
(d) Conclusion on exercise of discretion and validity of decisions made by appellants 38
Refusal to exclude effective value of silos from amount of payment in lieu of real property tax 40
(a) Ordinary meaning of words 40
(b) Parliament’s intent 42
(c) Ejusdem generis rule 43
Did Federal Court rule ultra petita? 45
Could the CBC either recover the overpayment from the City or set off the amounts already paid for the 2003 and 2004 taxation years and those which after revision of the effective rate, it considered having to pay for the 2003, 2004 and 2005 taxation years? 46
(a) Recovery of overpayment 47
(b) Compensation 48
Conclusion 52
Issues
[2] These are two appeals (A-413-07 and A-427-07) from decisions of a judge of the Federal Court which raise both common issues and issues specific to each of the two appellants. A joint hearing of the two appeals was held before us.
[3] The following common issues were submitted to us:
(a) the standard of review applicable to decisions rendered by the Montréal Port Authority (MPA) and the Canadian Broadcasting Corporation (CBC), respectively, which were subject to judicial review in the Federal Court;
(b) whether the MPA and CBC could exclude the amount of the former business tax, which used to exist as such and which is now included by the City of Montréal (City) in its real property tax rate, from the calculation of the effective rate applicable to their non-residential immovables.
[4] The City amended its tax structure for fiscal year 2003, following the municipal mergers that occurred on the island of Montréal. I hasten to add that those amendments to the tax structure are the crux of these cases.
[5] In addition to the common issues, the MPA submits that in its case, the Federal Court erred in ruling ultra petita on the City’s application by granting the City more than it was seeking. I will deal with this issue in more detail below.
[6] The MPA also submits that the Federal Court erred in law when it refused to exclude the silos from the amount of the payment in lieu of real property tax. According to the MPA, the silos are excluded from the definition of “federal property” within the meaning of paragraph 2(3)(b) of the Payments in Lieu of Taxes Act, R.S.C., 1985, c. M-13 (PLTA).
[7] Finally, as an issue which is unique to it, the CBC asserts that it had the authority either to recover the overpayment from the City or to effect compensation between the amounts it had already paid for the 2003 and 2004 taxation years and the amounts it considered that it should have to pay for the 2003, 2004 and 2005 taxation years on the basis of the calculation it made after having revised the real property tax rate that the City had established in its by-law. The CBC sees this as an error by the Federal Court judge, who concluded that because it was bound by the tax rate established by the City, the CBC could neither retroactively revise the decisions that it had made previously on this issue nor legally effect compensation for the 2004 and 2005 taxation years.
Factual background and relevant legislation
[8] It is not necessary to repeat in minute detail the facts giving rise to these two cases. Suffice it to say that the issues between the parties are based on the following amendment made by the City to the structure and rate of its real property tax.
[9] Before the 2003 fiscal year, a special tax for non-residential immovables was added to the general real property tax. That special tax took the form of a surtax.
[10] In addition, the City’s tax system provided for a business, water and utilities tax for occupants of non-residential immovables. This tax was levied on them for carrying out commercial or professional activities on the premises.
[11] Intent on harmonizing its taxation system following the municipal mergers, the City abolished its business tax, which at that time was levied by only 10 of the 28 former municipalities.
[12] However, after abolishing that tax, the City increased the real property tax applicable to this category of immovables where they were located within a sector corresponding to one of the 10 municipalities in which the business tax was levied.
[13] Before this change in tax structure, the business tax was a specific, separate tax that was clearly identifiable and could be easily distinguished from the real property tax. Afterward, according to the City, this was no longer necessarily the case, because the business tax disappeared and was incorporated into the real property tax.
[14] This is the basis of the submissions of the appellants: they were exempted from paying the business tax under subsection 236(1) of the Act respecting municipal taxation, R.S.Q., c. F-2.1 (AMT).
[15] That subsection reads as follows:
236. No business tax may be imposed by reason of
(1) an activity carried on by
(a) the State or the Crown in right of Canada, a mandatary of the Crown in right of Canada, the Société immobilière du Québec, the Corporation d’hébergement du Québec, the Régie des installations olympiques, the Agence métropolitaine de transport, the Société de la Place des Arts de Montréal or the École nationale de police du Québec;
236. La taxe d’affaires ne peut être imposée en raison :
1. d’une activité exercée par :
a) l’État ou la Couronne du chef du Canada, un mandataire de la Couronne du chef du Canada, la Société immobilière du Québec, la Corporation d’hébergement du Québec, la Régie des installations olympiques, l’Agence métropolitaine de transport, la Société de la Place des Arts de Montréal. ou l’École nationale de police du Québec;
[16] According to the figures provided by the Federal Court, the change made by the City to its tax structure resulted in an annual increase varying from $750,000 to $1,000,000 for the MPA, excluding the silos and jetties. For the CBC, this increase amounted to $2,319,235.79, $2,611,883.54 and $2,582 ,69.40 for the years 2003, 2004 and 2005 respectively.
[17] To complete the picture, I should add, as the judge of the Federal Court did at paragraph 8 of his reasons for decision in the case involving the MPA, that the immovables belonging to the Crown or a Crown corporation are exempt from all municipal or school property taxes under subsections 204(1) and (1.1) of the AMT:
CHAPTER XVIII
FISCAL PROVISIONS
DIVISION I
TAXABLE IMMOVABLES
§ 1. — Rule
Taxable immovables.
203. An immovable entered on the property assessment roll is taxable and its taxable value is that entered on the roll under sections 42 to 48, unless the law provides that only a part of that value is taxable.
§ 2. — Exceptions
Immovables exempt from tax.
204. The following are exempt from all municipal or school property taxes:
1) an immovable included in a unit of assessment entered on the roll in the name of the State or of the Société immobilière du Québec;
1.1) an immovable included in a unit of assessment entered on the roll in the name of the Crown in right of Canada or a mandatary thereof;
CHAPITRE XVIII
DISPOSITIONS FISCALES
SECTION I
IMMEUBLES IMPOSABLES
§ 1. — Règle
Immeuble imposable.
203. Un immeuble porté au rôle d’évaluation foncière est imposable et sa valeur imposable est celle inscrite au rôle en vertu des articles 42 à 48, sauf si la loi prévoit que seule une partie de cette valeur est imposable.
§ 2. — Exceptions
Immeubles exempts de taxes.
204. Sont exempts de toute taxe foncière, municipale ou scolaire:
1) un immeuble compris dans une unité d’évaluation inscrite au nom de l’État ou de la Société immobilière du Québec;
1.1) un immeuble compris dans une unité d’évaluation inscrite au nom de la Couronne du chef du Canada ou d’un mandataire de celle-ci;
[18] However, because it benefits from municipal services, the federal government made a commitment under the PLTA to compensate municipalities and make “payments in lieu of taxes” to them. This obligation extends to Crown corporations listed in schedules III and IV to the PLTA. The Crown Corporation Payments Regulations, SOR/97-103 (Regulations) implement the PLTA. I will note at once that the appellants are among the corporations listed in Schedule III because, as we will see further on, the status and treatment of corporations will differ, depending on whether a corporation is listed in Schedule III or Schedule IV.
[19] I will reproduce certain general provisions of the PLTA and the Regulations that are necessary to understand the submissions of the parties. I will complete the picture further on by adding other provisions that are relevant to the issue at hand.
PLTA
2. (1) In this Act,
“real property tax” means a tax of general application to real property or immovables or any class of them that is
(a) levied by a taxing authority on owners of real property or immovables or, if the owner is exempt from the tax, on lessees or occupiers of real property or immovables, other than those lessees or occupiers exempt by law, and
(b) computed by applying a rate to all or part of the assessed value of taxable property;
2. (1) Les définitions qui suivent s’appliquent à la présente loi.
«impôt foncier » Impôt général :
a) levé par une autorité taxatrice sur les immeubles ou biens réels ou les immeubles ou biens réels d’une catégorie donnée et auquel sont assujettis les propriétaires et, dans les cas où les propriétaires bénéficient d’une exemption, les locataires ou occupants autres que ceux bénéficiant d’une exemption;
b) calculé par application d’un taux à tout ou partie de la valeur fiscale des propriétés imposables.
“effective rate” means the rate of real property tax or of frontage or area tax that, in the opinion of the Minister, would be applicable to any federal property if that property were taxable property;
“property value” means the value that, in the opinion of the Minister, would be attributable by an assessment authority to federal 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;
(3) For the purposes of the definition “federal property” in subsection (1), federal property does not include
(a) any structure or work, unless it is
(i) a building designed primarily for the shelter of people, living things, fixtures, personal property or movable property,
(ii) an outdoor swimming pool,
(iii) a golf course improvement,
(iv) a driveway for a single-family dwelling,
(v) paving or other improvements associated with employee parking, or
(vi) an outdoor theatre;
(b) any structure, work, machinery or equipment that is included in Schedule II;
9. (1) The Governor in Council may make regulations for carrying out the purposes and provisions of this Act and, without restricting the generality of the foregoing, may make regulations
…
(f) respecting any payment that may be made in lieu of a real property tax or a frontage or area tax by any corporation included in Schedule III or IV and, without limiting the generality of the foregoing, providing that any payment that may be made shall be determined on a basis at least equivalent to that provided in this Act;
(g) respecting any payment that may be made in lieu of a business occupancy tax by every corporation included in Schedule IV;
10. The Minister may make regulations
(a) establishing a form of application for a payment under this Act;
(b) respecting the making of an interim payment in respect of a payment under this Act; and
(c) respecting the recovery of any overpayments made to a taxing authority, including recovery by way of set-off against other payments under this Act to the taxing authority.
PAYMENTS BY CROWN CORPORATIONS
11. (1) Notwithstanding any other Act of Parliament or any regulations made thereunder,
(a) every corporation included in Schedule III or IV shall, if it is exempt from real property tax, comply with any regulations made under paragraph 9(1)(f) respecting any payment that it may make in lieu of a real property tax or a frontage or area tax; and
(b) every corporation included in Schedule IV shall, if it is exempt from business occupancy tax, comply with any regulations made under paragraph 9(1)(g) respecting any payment that it may make in lieu of a business occupancy tax.
«taux effectif » Le taux de l’impôt foncier ou de l’impôt sur la façade ou sur la superficie qui, selon le ministre, serait applicable à une propriété fédérale si celle-ci était une propriété imposable.
«valeur effective » Valeur que, selon le ministre, une autorité évaluatrice déterminerait, compte non tenu des droits miniers et des éléments décoratifs ou non fonctionnels, comme base du calcul de l’impôt foncier qui serait applicable à une propriété fédérale si celle-ci était une propriété imposable.
(3) Sont exclus de la définition de « propriété fédérale » au paragraphe (1) :
a) les constructions ou ouvrages, sauf :
(i) les bâtiments dont la destination première est d’abriter des êtres humains, des animaux, des plantes, des installations, des biens meubles ou des biens personnels,
(ii) les piscines extérieures,
(iii) les améliorations apportées aux terrains de golf,
(iv) les entrées des maisons individuelles,
(v) l’asphaltage des stationnements pour employés et les autres améliorations s’y rattachant,
(vi) les amphithéâtres de plein air;
b) les constructions, les ouvrages, les machines ou le matériel mentionnés à l’annexe II;
9. (1) Le gouverneur en conseil peut, par règlement, prendre toutes mesures utiles à l’application de la présente loi et, notamment :
[…]
f) régir les paiements à verser par les personnes morales mentionnées aux annexes III ou IV en remplacement de l’impôt foncier ou de l’impôt sur la façade ou sur la superficie et prévoir, entre autres, que leur base de calcul sera au moins équivalente à celle prévue par la présente loi;
g) régir les paiements à verser par les personnes morales mentionnées à l’annexe IV en remplacement de la taxe d’occupation commerciale;
10. Le ministre peut, par règlement :
a) établir la formule de demande à employer pour les paiements visés par la présente loi;
b) régir tout versement provisoire relatif à un paiement visé par la présente loi;
c) régir le recouvrement des trop-payés à une autorité taxatrice, y compris par déduction sur les paiements à verser à celle-ci en vertu de la présente loi.
SOCIÉTÉS D’ÉTAT
11. (1) Par dérogation à toute autre loi fédérale ou à ses règlements :
a) les personnes morales mentionnées aux annexes III ou IV qui sont exemptées de l’impôt foncier sont tenues, pour tout paiement qu’elles versent en remplacement de l’impôt foncier ou de l’impôt sur la façade ou sur la superficie, de se conformer aux règlements pris en vertu de l’alinéa 9(1)f);
b) les personnes morales mentionnées à l’annexe IV qui sont exemptées de la taxe d’occupation commerciale sont tenues, pour tout paiement qu’elles versent en remplacement de celle-ci, de se conformer aux règlements pris en vertu de l’alinéa 9(1)g).
SCHEDULE II
(Section 2)
10. Reservoirs, storage tanks, fish-rearing ponds, fishways
12. Snow sheds, tunnels, bridges, dams
ANNEXE II
(article 2)
10. Réservoirs, réservoirs d’emmagasinage, viviers, passes à poissons
12. Abris contre la neige, tunnels, ponts, barrages
Regulations
INTERPRETATION
2. In these Regulations,
“corporation property” means
(a) except in Part II, any real property or immovable owned by Her Majesty in right of Canada that is under the management, charge and direction of a corporation included in Schedule III or IV to the Act, or that has been entrusted to such corporation;
(a.1) except in Part II,
(i) any real property or immovable that is owned by Her Majesty in right of Canada and that is managed by a port authority included in Schedule III to the Act, and
(ii) any real property or immovable, other than any real property or immovable owned by Her Majesty in right of Canada, that is held by a port authority included in Schedule III to the Act, on which the port authority engages in port activities referred to in paragraph 28(2)(a) of the Canada Marine Act and in respect of which the port authority is exempt from real property tax; and
(b) in Part II, any real property or immovable occupied or used by a corporation included in Schedule IV to the Act in respect of which occupancy or use the corporation is exempt from business occupancy tax; (propriété d’une société)
“corporation effective rate” means 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; (taux effectif applicable à une société)
“corporation property value” means 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. (valeur effective de la propriété d’une société)
PART I
PAYMENTS IN LIEU OF A REAL PROPERTY TAX OR A FRONTAGE OR AREA TAX
General
5. In this Part, “corporation” means, in respect of any payment that may be made by it, every corporation included in Schedule III or IV to the Act.
Calculation of Payments
7. (1) Subject to subsection (2), a payment made by a corporation in lieu of a real property tax for a taxation year shall be not less than the product of
(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.
DÉFINITIONS
2. Les définitions qui suivent s’appliquent au présent règlement.
«propriété d’une société»
a) Sauf à la partie II, l’immeuble ou le bien réel qui appartient à Sa Majesté du chef du Canada et dont une société mentionnée aux annexes III ou IV de la Loi a la gestion, la charge et la direction, ou l’immeuble ou le bien réel confié à une telle société;
a.1) sauf à la partie II,
(i) l’immeuble ou le bien réel qui appartient à Sa Majesté du chef du Canada et dont une administration portuaire mentionnée à l’annexe III de la Loi a la gestion,
(ii) l’immeuble ou le bien réel, autre qu’un immeuble ou un bien réel qui appartient à Sa Majesté du chef du Canada, qu’une administration portuaire mentionnée à l’annexe III de la Loi détient, sur lequel elle exerce des activités portuaires visées à l’alinéa 28(2)a) de la Loi maritime du Canada et à l’égard duquel elle est exemptée de l’impôt foncier;
b) dans la partie II, l’immeuble ou le bien réel occupé ou utilisé par une société mentionnée à l’annexe IV de la Loi bénéficiant, à l’égard de celui-ci, d’une exemption de la taxe d’occupation commerciale. (corporation property)
«taux effectif applicable à une société» Le taux de l’impôt foncier ou de l’impôt sur la façade ou sur la superficie qui, de l’avis de la société, serait applicable à sa propriété si celle-ci était une propriété imposable. (corporation effective rate)
«valeur effective de la propriété d’une société» La valeur qui, de l’avis de la société, serait déterminée par une autorité évaluatrice, abstraction faite de tous droits miniers et de tous éléments décoratifs ou non-fonctionnels, comme base du calcul de l’impôt foncier applicable à sa propriété si celle-ci était une propriété imposable. (corporation property value)
PARTIE I
PAIEMENTS VERSÉS EN REMPLACEMENT DE L’IMPÔT FONCIER OU DE L’IMPÔT SUR LA FAÇADE OU SUR LA SUPERFICIE
Dispositions générales
5. Dans la présente partie, « société » s’entend, à l’égard de tout paiement qu’elle peut verser, de toute société mentionnée aux annexes III ou IV de la Loi.
Calcul des paiements
7. (1) Sous réserve du paragraphe (2), un paiement versé par une société en remplacement de l’impôt foncier pour une année d’imposition ne doit pas être inférieur au produit des deux facteurs suivants :
a) le taux effectif applicable à la société dans l’année d’imposition en cause à l’égard de la propriété de celle-ci pour laquelle le paiement peut être versé;
b) la valeur effective de la propriété de la société pour cette année d’imposition.
Deductions
9. In determining the amount of a payment for a taxation year under section 7, there may be deducted
(a) if there is in effect a special arrangement for the provision or financing of an education service by the corporation, the amount established by that arrangement;
(b) if there is in effect a special arrangement for an alternative means of compensating a taxing authority, or a body on behalf of which the authority collects a real property tax, for providing a service, the amount established by that arrangement;
(c) if a taxing authority, or a body on behalf of which the authority collects a real property tax, is, in the opinion of the corporation, unable or unwilling to provide the corporation property with a service, and no special arrangement exists, an amount that, in the opinion of the corporation, does not exceed reasonable expenditures incurred or expected to be incurred by the corporation to provide the service; and
(d) an amount that, in the opinion of the corporation, is equal to any cancellation, reduction or refund in respect of a real property tax that the corporation considers would be applicable to the taxation year in respect of its corporation property if it were taxable property.
10. Despite section 8, in determining the amount of a payment referred to in that section, a corporation may deduct an amount that does not exceed reasonable expenditures incurred or expected to be incurred by Her Majesty in right of Canada or that corporation or any other corporation to provide corporation property with the service or work to which the frontage or area tax is related.
Déductions
9. Dans le calcul du paiement visé à l’article 7 pour une année d’imposition donnée, peut être déduit :
a) au titre d’un service d’enseignement que la société fournit ou finance, aux termes d’une entente spéciale en vigueur, la somme calculée conformément à celle-ci;
b) au titre d’un autre service pour lequel l’autorité taxatrice ou l’organisme pour le compte duquel elle perçoit un impôt foncier sont dédommagés en vertu d’une entente spéciale en vigueur, la somme calculée conformément à celle-ci;
c) au titre d’un service — non visé par une entente spéciale — que, selon la société, l’autorité taxatrice ou l’organisme pour le compte duquel elle perçoit un impôt foncier ne veulent ou ne peuvent pas fournir à une propriété de la société, une somme qui, selon la société, ne dépasse pas les frais raisonnables qu’elle a engagés ou estime devoir engager pour fournir le service;
d) une somme égale, selon la société, à tout remboursement, suppression ou réduction de l’impôt foncier qui, pour l’année d’imposition, s’appliquerait, selon elle, à ses propriétés si celles-ci étaient des propriétés imposables.
10. Par dérogation à l’article 8, dans le calcul du paiement visé à cet article, une société peut déduire une somme qui ne dépasse pas les frais raisonnables que Sa Majesté du chef du Canada ou la société ou toute autre société a engagés ou estime devoir engager pour fournir à la propriété le service ou les installations correspondant à l’impôt sur la façade ou sur la superficie.
PART II
PAYMENTS IN LIEU OF A BUSINESS OCCUPANCY TAX
General
14. In this Part, “corporation” means, in respect of any payment that may be made by it, every corporation included in Schedule IV to the Act.
15. The payment made by a corporation in lieu of a business occupancy tax in respect of any corporation property occupied by it that would be federal property if it were under the management, charge and direction of a minister of the Crown is made without any condition, in an amount that is not less than the amount it would be required to pay if it were not exempt from the tax.
15.1 In respect of a taxation year starting on or after January 1, 2000, subsections 3(1.1) and (1.2) and paragraph 3.1(b) of the Act apply to a corporation with respect to business occupancy taxes as if any reference in those provisions to “the Minister” were a reference to “a corporation”, any reference to “federal property” were a reference to “corporation property” and the reference to “the real property tax or the frontage or area tax on the property” were a reference to “the business occupancy taxes payable with respect to the property”.
16. Despite section 15, in determining the amount of a payment referred to in that section for a taxation year, a corporation may deduct an amount that is equal to any cancellation, reduction or refund in respect of a business occupancy tax that would be applicable to the taxation year in respect of corporation property if it were taxable property.
PARTIE II
PAIEMENTS EN REMPLACEMENT DE LA TAXE D’OCCUPATION COMMERCIALE
Dispositions générales
14. Dans la présente partie, « société » s’entend, à l’égard de tout paiement qu’elle peut verser, de toute société mentionnée à l’annexe IV de la Loi.
15. Le paiement effectué par une société en remplacement de la taxe d’occupation commerciale à l’égard d’une propriété occupée par elle qui serait une propriété fédérale si un ministre fédéral en avait la gestion, la charge et la direction n’est assorti d’aucune condition et ne doit pas être inférieur à la somme qu’elle serait tenue de payer si elle n’était pas exemptée de cette taxe.
15.1 Les paragraphes 3(1.1) et (1.2) et l’alinéa 3.1b) de la Loi s’appliquent à la société pour toute année d’imposition débutant le 1er janvier 2000 ou après cette date en ce qui touche la taxe d’occupation commerciale, les mentions de l’impôt foncier ou de l’impôt sur la façade ou la superficie, du ministre et des propriétés fédérales valant respectivement mention de la taxe d’occupation commerciale, de la société et des propriétés de la société.
16. Par dérogation à l’article 15, dans le calcul d’un paiement visé à cet article pour une année d’imposition, une société peut déduire une somme égale à tout remboursement, suppression ou réduction de la taxe d’occupation commerciale qui s’appliquerait pour cette année d’imposition à sa propriété si celle-ci était une propriété imposable.
Interim Payments and Recovery of Overpayments Regulations
1. [Repealed]
INTERPRETATION
2. In these Regulations, “Act” means the Payments in Lieu of Taxes Act.
INTERIM PAYMENTS
3. When, in respect of an application made by a taxing authority under section 3 of the Act, a final determination of the amount of the payment cannot be made within 50 days after receipt of the application, or within 90 days in the case of an application made for the first time, the Minister may
(a) estimate, on the basis of the information available to the Minister, the amount that may be paid to the taxing authority under section 3 of the Act; and
(b) make an interim payment to the taxing authority in an amount that does not exceed the amount referred to in paragraph (a).
RECOVERY OF OVERPAYMENTS
4. If any payment made to a taxing authority under the Act or these Regulations is greater than the amount that may be paid to the taxing authority under section 3 of the Act, the amount of the overpayment and interest on that amount prescribed for the purpose of section 155.1 of the Financial Administration Act may be
(a) set off against other payments that may otherwise be paid to the taxing authority under section 3 of the Act or these Regulations; or
(b) recovered as a debt due to Her Majesty in right of Canada by the taxing authority.
Règlement sur les versements provisoires et les recouvrements
1. [Abrogé]
DÉFINITION
2. Dans le présent règlement, « Loi » s’entend de la Loi sur les paiements versés en remplacement d’impôts.
VERSEMENTS PROVISOIRES
3. S’il est impossible de déterminer de façon définitive le montant du paiement dans les cinquante jours suivant la réception de la demande présentée en vertu de l’article 3 de la Loi par l’autorité taxatrice ou, dans le cas de la demande présentée pour la première fois, dans les quatre-vingt-dix jours suivant sa réception, le ministre peut :
a) estimer, en se fondant sur les renseignements dont il dispose, la somme pouvant être versée à l’autorité taxatrice en vertu de cet article;
b) faire, à l’égard du paiement, un versement provisoire ne dépassant pas la somme visée à l’alinéa a).
RECOUVREMENT DE TROP-PERÇU
4. Si le montant d’un paiement versé à une autorité taxatrice au titre de la Loi ou du présent règlement est plus élevé que ce qui aurait dû être versé en vertu l’article 3 de la Loi, le trop-perçu et les intérêts fixés en vertu de l’article 155.1 de la Loi sur la gestion des finances publiques peuvent être, selon le cas :
a) portés en diminution de tout autre paiement pouvant être versé à l’autorité taxatrice en vertu de cet article ou du présent règlement;
b) recouvrés à titre de créance de Sa Majesté du chef du Canada.
[Emphasis added.]
[20] The Attorney General of Canada intervened both here and in the Federal Court. He was of the opinion that in each of these cases, the decisions made by the MPA and the CBC to lower the effective tax rate claimed by the City are not those that the Minister of Public Works and Government Services Canada (Minister) would have made in the same circumstances because, in the Attorney General’s view, they appear to be contrary to the PLTA and the Regulations. This position is surprising in terms of its relevancy, because it is the appellants, not the Minister, who are responsible for managing the properties at issue. It is the MPA and the CBC, which are Crown corporations listed in Schedule III to the PLTA, that have the authority to deal with and actually do themselves deal with the applications for payments in lieu of taxes forwarded to them by municipalities. As we will see later on, this position is also surprising on the merits, given the PLTA and the Regulations.
[21] Basically, the Attorney General of Canada supports the final decision of the Federal Court. In that decision, he sees no error of law warranting our intervention.
Federal Court decision
[22] In both cases, the Federal Court allowed the applications for judicial review brought by the City. The Court quashed the decisions of the MPA and the CBC revising the effective tax rate used by the City to determine the amount “in lieu of taxes”. At the same time, the Court ruled that the MPA and the CBC could not make any adjustments for the taxation years after 2002. In addition, it refused the CBC the right to claim an amount of $640,175.63 as an overpayment to the City or to effect compensation with the amounts still owed to it.
[23] Finally, the Federal Court referred the cases back to the MPA and the CBC respectively with an order to render a new decision in accordance with the PLTA and the Regulations and pay the resulting amounts owing. The Court stated the effective rates applicable to the value of the immovables of the MPA and the CBC entered on the property assessment role. However, it refused to exclude the silos belonging to the MPA from the calculation of the amount of the payment in lieu of real property tax. The Court made no order as to costs.
Standard of review applicable to decisions of MPA and CBC and to decision of Federal Court
[24] Rather than deal with this issue in the abstract, I will conduct an analysis applied to each of the issues in these appeals. This approach will have the dual advantage of providing greater clarity and avoiding repetition.
Could MPA and CBC change effective rate applied by City to their non-residential immovables?
(a) Existence of discretion
[25] As is generally the case, the taxing authority, in this case, the City, determines the effective value of federal properties and sets the effective rate of taxation applicable to those properties. It then forwards an application for payment to the Minister or Crown corporation, as the case may be. In this case, this application was sent to the appellants.
[26] To facilitate consultation, I once again reproduce the definitions of “corporation effective rate” and “corporation property value” while underlining the words “that a corporation would consider”, which are found in these definitions of general application in section 2 of the Regulations:
“corporation effective rate” means 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; (taux effectif applicable à une société)
“corporation property value” means 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. (valeur effective de la propriété d’une société )
«taux effectif applicable à une société» Le taux de l’impôt foncier ou de l’impôt sur la façade ou sur la superficie qui, de l’avis de la société, serait applicable à sa propriété si celle-ci était une propriété imposable. (corporation effective rate)
«valeur effective de la propriété d’une société» La valeur qui, de l’avis de la société, serait déterminée par une autorité évaluatrice, abstraction faite de tous droits miniers et de tous éléments décoratifs ou non-fonctionnels, comme base du calcul de l’impôt foncier applicable à sa propriété si celle-ci était une propriété imposable. (corporation property value)
[Emphasis added.]
[27] Likewise, for the same reasons, I once again reproduce section 7 of the Regulations. This section uses the two definitions mentioned above. It also determines the minimum amount of the payment in lieu of taxes by reference to the corporation effective rate and the corporation property value:
7. (1) Subject to subsection (2), a payment made by a corporation in lieu of a real property tax for a taxation year shall be not less than the product of
(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.
7. (1) Sous réserve du paragraphe (2), un paiement versé par une société en remplacement de l’impôt foncier pour une année d’imposition ne doit pas être inférieur au produit des deux facteurs suivants :
a) le taux effectif applicable à la société dans l’année d’imposition en cause à l’égard de la propriété de celle-ci pour laquelle le paiement peut être versé;
b) la valeur effective de la propriété de la société pour cette année d’imposition.
[Emphasis added.]
[28] For the meaning of the words “de l’avis de la société”, sometimes rendered in English as “that a corporation would consider”, other times as “in the opinion of the corporation”, see section 9 of the Regulations. In its definitions, the PLTA has similar provisions in which the terminology refers to an effective rate or to an effective value which “in the opinion of the Minister” (in French, “selon le minister”) would be applicable to a federal property.
[29] Do those expressions in the PLTA and the Regulations grant discretion to a Crown corporation or the Minister, as the case may be? If so, what is the scope of this discretion? If not, what meaning and utility must be ascribed to them?
[30] According to counsel for the City, those terms do not grant Crown corporations any jurisdiction or discretion to interfere with the amount of the effective rate and the effective value of federal property determined by the assessing authority. They are used in the PLTA and the Regulations to allow the Minister or a Crown corporation to verify whether the right rate was applied to them (for example, the rate for non-residential immovables, the one for residential immovables or the one for the residual category) and to correct any clerical errors or miscalculations.
[31] The Federal Court agreed with this submission by counsel for the City. Although this is the very foundation of both cases, the Federal Court dealt with the matter in only two paragraphs, which I reproduce:
112 I do not think that the use of the term “that a corporation would consider applicable” in the definition of “corporation effective rate” in section 2 of the CCPR confers the power to ignore the real property tax rate which usually applies to non-residential immovables. In my opinion, the use of the expression “that a corporation would consider applicable” simply reflects the fact that it is the corporation which determines the effective real property tax rate by referring to the real property tax rate prescribed by the taxing authority. If the Governor in Council had intended to grant the absolute discretion which the respondent claims with respect to determining the effective rate, he could have done so by using much broader terms, such as “the rate it considers to be reasonable”.
113 It goes without saying that the Tribunal must exercise its jurisdiction within the limits of the law. If the discretion granted to the respondent’s manager is to be discussed here, I would say that it is a “bound” discretion. Accordingly, the Tribunal cannot ignore the real property tax rate which would otherwise apply to the respondent’s property if it were taxable property. The definition of “corporation effective rate” in the CCPR must be read in its entirety. In short, what must be determined is the real property tax rate “that a corporation would consider applicable to its corporation property if that property were taxable property”.
[Emphasis added.]
[32] I do not think that the scope of these terms is restricted to simply verifying that the rate applied is in fact, for example, the real property tax rate and to correcting clerical errors and miscalculations. No enabling statutory provision is required to allow the Minister or a Crown corporation to report errors of this sort