Ottawa, Ontario, February 1, 2006
PRESENT: THE HONOURABLE MR. JUSTICE MARTINEAU
BETWEEN:
Applicant
and
and
ATTORNEY GENERAL OF CANADA
Intervener
REASONS FOR ORDER AND ORDER
[1] The administrative decision whose lawfulness is challenged in this case by the applicant establishes the amount of the payment in lieu of real property tax (PLRT) that the respondent considers is payable by the applicant for the 2004 taxation year, pursuant to the Payments in Lieu of Taxes Act, R.S.C. 1985, c. M-13, as amended (the PLTA) and the Crown Corporation Payments Regulations, SOR/81-1030, as amended (the CCPR).
[2] At the case management conference held with the undersigned presiding, the parties agreed that it would be appropriate for the Court to make a preliminary determination regarding its jurisdiction and, if need be, its discretion to dismiss an application for judicial review when there is an effective alternative solution to resolve the dispute between the parties.
Statutory and regulatory background
[3] The respondent is a Crown corporation incorporated by Letters Patent issued by the Minister of Transport under the Canada Marine Act, S.C. 1998, c. 10 (the CMA). It is an agent of her Majesty only for the purposes of the port activities contemplated by paragraph 28(2)(a) of the CMA. It was assigned to manage many immovables and federal real properties, which remain the property of Her Majesty (sections 7, 12, 44 and 45 of the CMA). Those immovables are exempt from any taxes under section 125 of The Constitution Act, 1867 (U.K.), 30 & 31 Victoria, c. 3, reprinted in R.S.C. 1985, App. II, No. 5. For the purposes of applying this constitutional exemption, the properties in question must also be 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.)).
[4] The PLTA (enacted for the first time in 1950 as the Municipal Grants Act) provides for equitable payments for municipalities in lieu of taxes for federal property located on their territory. The purpose of the PLTA is to provide a distinct legislative scheme according to which the Crown agrees to pay to the relevant taxing authorities, including the municipalities, payments in lieu of taxes. The PLTA does not have the effect of making the Federal Crown subject to provincial or municipal legislation in matters involving taxation or real property tax and it does not confer any right to payment (sections 2, 3 and 15 of the PLTA).
[5] In the context of this case, the respondent is exercising jurisdiction over subject matter which would normally belong to the Minister of Public Works and Government Services (the Minister) pursuant to section 3 of the PLTA. Note that in 1967, the Cabinet instructed Crown Corporations to make the payments in lieu of taxes on a basis similar to the one which applied to federal property contemplated by legislation. From a formal point of view, since 1980, section 9 of the PLTA has provided that the Governor in Council can enact regulations governing payments in lieu of taxes to be paid by the corporations mentioned in Schedules III and IV of the Act.
[6] Paragraph 11(1)(a) of the PLTA provides that the corporations mentioned in Schedules III and IV, including the respondent, shall comply with any regulations made under paragraph 9(1)(f) respecting any payment that it may make in lieu of a real property tax (PLRT) or a frontage or area tax (PLFAT). Paragraph 9(1)(f) of the PLTA provides that the basis for the payment applicable to the corporations mentioned in Schedules III and IV of the PLTA shall be at least equivalent to the one provided by law.
[7] Further, paragraph 11(1)(b) provides that corporations listed in Schedule IV shall comply with any regulations made under paragraph 9(1)(g) of the PLTA respecting any payment that it may make in lieu of a business occupancy tax (PLBOT). On that point, section 15 of the CCPR provides that the PLBOT must not be less than the amount the corporation would be required to pay if it were not exempt from that tax.
The dispute
[8] The current dispute with the respondent involves primarily two points:
(a) Excluding certain real property in calculating the amount of PLRT;
(b) Determining the effective rate applicable in calculating the amount of PLRT.
[9] First, in calculating the amount of PLRT due to the applicant, the respondent excluded certain real property (piers and silos). Since this property is registered on its real property tax roll, the applicant contends that they must be considered under sections 6 and 7 of the CCPR in calculating the amount of PLRT. On the other hand, the respondent considers that it need not include them because there is no payment in lieu of taxes in respect of structures and works listed in Schedule II of the PLTA; that is the case for wharves, piers and reservoirs (silos) which are listed in Schedule II of the PLTA. As we can see, it essentially involves questions of law bearing on the effect of the entry on the assessment roll and the description of the property in question for the purposes of applying the PLTA and the CCPR.
[10] Second, the applicant and the respondent do not agree on determining the effective rate applicable for the purposes of calculating the amount of PLRT. For all of the previous fiscal years before 2003, the applicant used a general property tax rate applicable to all immovables and added an additional real property tax specific to non-residential immovables in the form of a surtax. For the occupants of these immovables it provided a business tax, water tax and service tax, which was imposed on them directly because they were carrying on commercial or professional activities on the premises. When the 2003 fiscal year arrived, the surtax on non-residential immovables became a tax on the same immovables and the business tax had a real property tax equivalent to replace the revenues that it generated. This use of a variable property tax rate continued during the 2004 fiscal year and the applicant continued to use it for the 2005 fiscal year.
[11] With respect to the second aspect, it is therefore a matter of whether a corporation referred to in Schedule III of the PLTA may be called to make a PLRT for a business occupancy tax which was included in a variable property tax. The respondent, whose name appears in Schedule III of the PLTA, never made payments in lieu of the business occupancy tax (PLBOT). Since only the corporations mentioned in Schedule IV of the PLTA are legally bound to make a payment in lieu of a business occupancy tax (PLBOT), the respondent considers that it has the power to make adjustments on the effective rate indicated at section 7 of the CCPR. To the contrary, the applicant submits that in discarding the real property tax rate imposed equally on all owners of non-residential immovables, the respondent acted in a perverse and capricious manner. Again, these are essentially issues involving the interpretation and the effect of the PLTA and the CCPR.
The issue of jurisdiction
[12] The issue of jurisdiction was raised by the Court itself. First, different answers have been given by this Court in relation to whether or not a port authority has the status of a federal board, commission or other tribunal when it is exercising management and other powers conferred to it under the CMA (DRL Vacations Ltd. v. Halifax Port Authority, [2005] F.C.J. No. 1060 (F.C.) (QL); Halterm Ltd. v. Halifax Port Authority, [2000] F.C.J. No. 937 (F.C.T.D.) (QL)). Second, in docket T-631-05, the Canadian Broadcasting Corporation filed a motion to dismiss the applicant's application for judicial review on the grounds that the Court had no jurisdiction under sections 2, 18 and 18.1 of the Federal Courts Act, R.S.C. 1985, c. F-7, as amended (the FCA) to examine the lawfulness of a decision establishing the amount of PLRT that it considers payable to the applicant under the PLTA and the CCPR (see the decision rendered simultaneously in City of Montréal v. Canadian Broadcasting Corporation, 2006 FC 113, docket T-631-05).
[13] The parties agree that the Court has jurisdiction to hear this application for judicial review. I agree with them. According to the definition that we find at subsection 2(1) of the FCA, a "federal board, commission or other tribunal" designates "any body, person or persons having, exercising or purporting to exercise jurisdiction or powers conferred by or under an Act of Parliament or by or under an order made pursuant to a prerogative of the Crown . . ." In the context of this case, the respondent is exercising a statutory jurisdiction which normally belongs to the Minister in accordance with section 3 of the PLTA. In deciding the effective base tax rate that it intended to pay as well as the effective value of its property, the respondent is exercising its jurisdiction under the PLTA and the CCPR and not carrying on a commercial activity incidental to its responsibilities. The respondent cannot benefit from the Crown's immunity from taxation without bearing its disadvantages. Further, the payment made in accordance with the PLTA is not a tax or a current activity of businesses operating in the area of ports. For example, if the respondent were a private business operating in the port, like a stevedore, it could not have unilaterally decided to pay only half of the amounts claimed by the applicant under the pretext that the new tax rate claimed included a portion of business taxes.
[14] I agree that it is certainly conceivable that the respondent is not a federal board, commission or other tribunal when it makes commercial decisions in the context of activities provided under the CMA. That does not mean however that the respondent could never be a federal board, commission or other tribunal and there is case law acknowledging this status when it is exercising port activities designated as being of a "public" nature (DRL Vacations Ltd. v. Halifax Port Authority, [2005] F.C.J. No. 1060 (C.F.) (QL); Halterm Ltd. v. Halifax Prot Authority, [2000] F.C.J. No. 937 (F.C.T.D.)(QL), hereinafter DRL Vacations Ltd. and Halterm Ltd.). Also, in this case, I do not believe that the specific characteristics of the respondent are determinative for the purposes of qualifying the jurisdiction and the special powers that the respondent, like the other corporations mentioned in Schedule III of the PLTA, exercises pursuant to the PLTA and the CCPR.
[15] The PLTA is an example of cooperative federalism. Even if these immovables are exempted from real property tax, frontage or area tax, or even a business occupancy tax, the government of Canada, which is the country's most important real property owner, nevertheless assumes and pays its fair share of the costs of the local government in communities where it owns immovable property (see Federation of Canadian Municipalities, the Treasury Board Secretariat, and Public Works and Government Services, Report of the Joint Technical Committee on Payments in Lieu of Taxes, December 28, 1995, at page 2).
[16] Whether or not the payment of a PLRT is a discretionary act pursuant to section 15 of the PLTA, this does not change anything about the fact that that is exercising jurisdiction arising from the PLTA for the purposes of the definition "federal board, commission or other tribunal" that is found at section 2 of the FCA. The CCPR provides inter alia that:
(a) The effective rate applicable to a "corporation" is the rate of real property tax or the frontage or area tax that a corporation would consider applicable to its property if that property were taxable property (definition of "corporation effective rate", section 2);
(b) The corporation property value means the value that a corporation would consider, to be attributable by an assessment authority to its corporation property as the basis for computing the amount of any real property tax that would be applicable to that property if it were taxable property (definition of "corporation property value", section 2);
(c) The term "corporation" means, in respect of any payment that may be made by it, every corporation included in Schedule III or IV to the Act (including the respondent) (section 5);
(d) The payment made by a corporation in lieu of a real property tax . . . in respect of any corporation property 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 referred to in sections 7 to 11 (section 6);
(e) Therefore, the PLRT must not be less than the product of the applicable effective rate and the corporation property value (section 7).
[17] It is clear that all of the acts or proceedings, just like the decisions and orders of a federal board, commission or other tribunal, are subject to judicial review (see Morneault v. Canada (Attorney General), [2001] 1 F.C. 30 (F.C.A.); Larny Holdings Ltd. (c.o.b. Quickie Convenience Stores) v. Canada (Minister of Health) [2003] 1 F.C. 541. The reviewing power of the Federal Court is not limited only to decisions in the strict sense but applies to any unlawful situation or refusal by the administrative authority to fulfill a mandatory act (see subsection 2(1) definition of "federal board, commission or other tribunal", paragraph 18.1(3)(b) and paragraph 18.1(4)(f) of the FCA; Messageries Publi-Maison Ltée v. Société canadienne des postes), [1996] R.J.Q. 547 (C.A.Q.)). Therefore, the applicant may certainly address this Court to verify whether the decision in this case is consistent with the statutes and with all applicable regulations (see Gestion Complexe Cousineau (1989) Inc. v. Canada (Minister of Public Works and Government Services), [1995] 2 F.C. 694 (C.A.); Saint-Romuald (Town) v. Canada (Attorney General), [1997] F.C.J. No. 1553 (F.C.T.D.) (QL)).
[18] In this case, the decision of the Federal Court of Appeal in Gestion Complexe Cousineau (1989) Inc., supra, is determinative. Décary J.A. notes at paragraphs 7 et seq.:
The phrase "powers conferred by or under an Act of Parliament" found in the definition of a "federal board, commission or other tribunal" is particularly broad and is not subject to the limitation suggested by the Minister. In the case at bar I do not have to consider whether the Minister is a servant of Her Majesty or whether the act done by him is binding on Her Majesty. I also do not have to examine whether the Minister is part of the federal government in the ordinary sense of that phrase or whether the act done falls within the jurisdiction of the Parliament of Canada as opposed to the provincial legislatures. These points are not in dispute. Further, I do not need to engage in a constitutional analysis of the concept of "the Crown's inherent administrative power", since the Minister's power to enter into the acquisition of real property by lease may no longer be described as an inherent power once the Governor in Council, with the authority of legislation, has seen fit to codify it in language containing no ambiguity: "a Minister may enter into an acquisition". It may well be, as the respondents argued, that this conferring of power by the combined effect of a statute and regulation was not necessary, but strictly speaking I am only required to consider whether there is a "[power] conferred by or under an Act of Parliament" within the meaning of the definition of "federal board, commission or other tribunal", and I can only conclude that there is.
It should be borne in mind that what is at issue here is determining whether a litigant has access to this Court's power of review in connection with a legislative provision-paragraph 18(1)(a) of the Federal Court Act-by which Parliament sought to make the federal government subject to the Court's superintending and reforming power. As I see it, there is no reason to try and distort the usual meaning of the words or strive to divest them of all practical meaning by resort to fine distinctions suited to constitutional analysis, which would have a sterilizing effect contrary to the intent of Parliament.
When it amended paragraph 18(1)(a) of the Federal Court Act in 1990 [See Note 9 below] to henceforward permit judicial review of decisions made in the exercise of a royal prerogative, [See Note 10 below] Parliament unquestionably made a considerable concession to the judicial power and inflicted a significant setback on the Crown as the executive power, if one may characterize making the government still further subject to the judiciary as a setback. [See Note 11 below] What appears from this important amendment is that Parliament did not simply make the "federal government" in the traditional sense subject to the judiciary, but intended that henceforth very little would be beyond the scope of judicial review. That being so, I must say I have some difficulty giving to s. 18(1)(a) an interpretation which places Ministers beyond the scope of such review when they exercise the most everyday administrative powers of the Crown, though these are also codified by legislation and regulation.
With respect, that would be to take an outmoded view of supervision of the operations of government. The "legality" of acts done by the government, which is the very subject of judicial review, does not depend solely on whether such acts comply with the stated requirements of legislation and regulations. . . .
[Emphasis added.]
[19] In the matter of Saint-Romuald (Town), supra, the municipality involved had brought a statement of claim against the Crown pursuant to section 17 of the FCA. It appears that the government had decided at the time to not pay the entire amount that the municipality was claiming from it for the taxation years 1994 and 1995 after a surtax was imposed on the non-residential immovables situated within its territory. The municipality therefore asked the Court to order the Crown to pay it the amounts that it considered were due.
[20] Considering the Crown's immunity from taxation and the fact that section 15 of the PLTA does not confer any right to the municipality to make a payment in lieu of taxes, the Court allowed a motion to strike by the Attorney General of Canada. In such a case, the appropriate recourse is an application for judicial review:
Did the Minister err in exercising his discretion under the Municipal Grants Act by refusing to make grants to the town in lieu of the surtax? Did the Minister err in law in deciding to refuse to make a grant in relation to the surtax? While these questions are apposite, they fall instead within the sphere of judicial review. I obviously do not have to answer these questions, but it appears to me that if the town has a remedy, it is instead by way of an application for judicial review against the Minister's refusal to make it a grant in lieu of the surtax for 1994 and 1995.
[Emphasis added.]
[21] The Court's approach in Saint-Romuald (Town), is consistent with the case law of the Federal Court of Appeal, as well as that of the Court of Appeal of Quebec, to the effect that litigants who want to attack the decision of a federal agency do not have the freedom to opt between proceeding by judicial review and proceeding by an action in damages: the litigant must proceed by judicial review to have the decision set aside (Tremblay v. Canada (2004), 244 D.L.R. (4th) 422 (F.C.A.), leave to appeal to the S.C.C. denied, [2004] C.S.C.R. No.307 (S.C.C.) (QL); Grenier v. Canada, [2005] F.C.J. No. 1778 (F.C.A.) (QL); Ville de Montréal v. Administration Portuaire de Montréal, [2005] J.Q. No. 263 (C.A.Q.) (QL)).
[22] In this case, the applicant is seeking various forms of declaratory relief to the effect that the impugned decision is contrary to the law and to the obligations imposed on it by the PLTA and the CCPR. At this stage, it is unnecessary to decide on the merits or to ask whether all of the relief sought by the applicant is contemplated by subsections 18(1) and 18.1(3) of the FCA. It is sufficient to observe that a decision by a federal board, commission or other tribunal is reviewable on the grounds, inter alia, that the decision is unlawful (paragraph 18.1(4)(f) of the FCA). Clearly, none of what has been stated above prevents the respondent from arguing later on that the decision at issue is discretionary, that it is not perverse or capricious, and that it was made in accordance with the statutes and all of the applicable regulations.
Issue of exhausting remedies
[23] According to the terms of section 11.1 of the PLTA, the Governor in Council shall appoint an advisory panel of at least two members - including a chairperson - from each province and territory with relevant knowledge or experience. The mandate of this panel is to give 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, or claims that a payment should be supplemented (subsection 11.1(2) of the PLTA and sections 12.1 and 17.1 of the CCPR).
[24] The issue of exhausting remedies was raised earlier by the respondent, that filed a motion to strike raising, inter alia, this ground. That motion was dismissed by Prothonotary Richard Morneau, for whom the benefit of going before the panel is dubious (see Froom v. Canada (Department of Justice), [2004] 2 F.C.R. 154 at page 17; Violette v. New Brunswick Dental Society, [2004] N.B.J. No. 5 (N.B.C.A.) (QL) at page 3). He adds: "This conclusion of course will not be binding on the judge of the merits, who with a different burden of proof may arrive at some other conclusion on this point" (see City of Montréal v. Montréal Port Authority, [2004] F.C.J. No. 1799 (F.C.) (QL) at paragraphs 21-22).
[25] Given that the Court has the discretion to refuse to hear an application for judicial review when there is an effective alternative solution to resolve the dispute between the parties, it is appropriate to consider the application of the exhaustion of remedies theory recognized in the case law (see Harelkin v. University of Regina, [1979] 2 S.C.R. 561; Canadian Pacific Ltd v. Matsqui Indian Band, [1995] 1 S.C.R. 3; Fast v. Canada (Minister of Citizenship and Immigration), [2001] F.C.J. No. 1776 (F.C.A.) (QL)).
[26] Today, the respondent chose not to raise the issue of the exhaustion of remedies and this Court has before it the submissions and additional evidence that was in fact submitted by the intervener.
[27] First, it is worthwhile to note that it was only in May 2005 that the Governor in Council appointed this panel (see P.C. 2005-0990, C. Gaz. 2005.I.2165). It was therefore impossible for the applicant to file an application with the panel before filing this application for judicial review.
[28] Second, it is not strictly speaking an appeal from the respondent's decision. Indeed, the PLTA and the CCPR do not specify whether an application for advice from the panel may be initiated by a taxing authority or whether it can only be initiated by a federal agency. In any event, the provisions that apply in this case do not indicate whether or not the panel's advice is binding (section 11.1 of the PLTA and sections 12.1 and 17.1 of the CCPR); at first glance, this does not appear to be the case.
[29] Thirdly, on the panel's web site, under the heading "mandate", there is a note to the effect that the panel has no mandate to hear matters related to the interpretation of the Act (PLTA). An example is given regarding whether or not the Act applies to a specific property. These issues would be legal and would be the responsibility of the Federal Court (or rather the Department of Justice). I take it that because of the training and the relevant experience of its members, the panel's mandate bears essentially on the technical aspects relating to property value, property dimension, the effective rate applicable to any federal property, or claims that a payment should be supplemented.
[30] Fourth, the primary allegations that the applicant has made against the respondent are based on actions which were supposedly contrary to the law. These are therefore legal questions which require an extensive analysis of the purpose and the effect of the provisions of the PLTA and CCPR.
[31] In this case, all of the parties agree today that the exhaustion of remedies before the panel, even if the possibility has existed since May 2005, cannot be grounds for justifying that the Court exercises its discretion to not hear this application for judicial review on the merits. The questions of law referred to earlier are serious and complex, and for the time being, they seem to be undistinguishable from the technical aspects falling under the specific expertise of the panel. At this stage, I find that it would be inappropriate to dismiss or stay these proceedings in order to enable the parties to seek the panel's advices, when the questions of law referred to above have not been addressed (DRL Vacations Ltd., supra; David Bull Laboratories (Canada) Inc. v. Pharmacia Inc., [1995] 1 F.C. 588 (F.C.A.)). The issue of exhausting remedies is therefore decided in favour of calling the parties to a hearing on the merits of the matter after they have completed or submitted their respective records according to the schedule already set by the Court.
ORDER
THE COURT DECLARES AND ORDERS:
- The respondent is a federal board, commission or other tribunal within the meaning of section 2 of the Federal Courts Act when it makes a decision or performs an act under the Payments in Lieu of Taxes Act and the Crown Corporation Payments Regulations following a request for payment by a taxing authority;
- The Federal Court has exclusive original jurisdiction pursuant to sections 18 and 18.1 of the Federal Courts Act to hear and decide any application for judicial review involving the lawfulness of any act or any decision contemplated by paragraph 1 above;
- The parties will be called to a hearing on the merits of the matter after they have completed or submitted their respective records according to the schedule already set by the Court.
Certified true translation
Kelley A. Harvey, BCL, LLB
FEDERAL COURT
SOLICITORS OF RECORD
DOCKET: T-795-04
STYLE OF CAUSE: City of Montréal v. Montréal Port Authority et al.
PLACE OF HEARING: Montréal, Quebec
DATE OF HEARING: January 16 and 17, 2006
REASONS FOR ORDER: MARTINEAU J.
DATE OF REASONS: February 1, 2006
APPEARANCES:
| Luc Lamarre
|
FOR THE APPLICANT |
| Gilles Fafard
|
FOR THE RESPONDENT |
| Nathalie Benoît
|
FOR THE INTERVENER |
SOLICITORS OF RECORD:
| Brunet Lamarre Montréal, Quebec
|
FOR THE APPLICANT |
| De Grandpré Chait L.L.P. Montréal Quebec
|
FOR THE RESPONDENT |
| John H. Sims, Q.C. Deputy Attorney General of Canada |
FOR THE INTERVENER |