Date: 20060201
Docket: T-631-05
Citation: 2006
FC 113
Ottawa,
Ontario, February 1, 2006
PRESENT:
THE HONOURABLE MR. JUSTICE MARTINEAU
BETWEEN:
CITY
OF MONTRÉAL
Applicant
and
CANADIAN
BROADCASTING CORPORATION
Respondent
and
ATTORNEY GENERAL OF CANADA
Intervener
REASONS FOR ORDER AND ORDER
[1]
The
administrative decision whose lawfulness is challenged in this case by the
applicant establishes for each of the 2003, 2004 and 2005 taxation years, the
amount of the payment in lieu of real property tax (PLRT) that the respondent
considers is payable to the applicant 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]
By notice
of motion raising various preliminary exceptions, the respondent is seeking the
summary dismissal or, alternatively, a stay of the proceedings relating to this
application for judicial review. The motion is brought on consent of all the
parties, as well as the undersigned Judge who is the case management judge in
this matter.
[3]
The
respondent’s submissions can be summarized as follows:
(a) First, the
Court does not have 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 the decision challenged by the applicant in this case (the issue
of jurisdiction);
(b) Alternatively,
the application for judicial review was not filed within the 30-day time limit
prescribed by subsection 18.1(2) of the FCA (the issue of prescription);
(c) Alternatively,
the Court should order that these proceedings be stayed pursuant to
subsection 50(1) of the FCA on the grounds that they duplicate the motion
for declaratory judgment that the respondent brought earlier before the
Superior Court of Quebec (the issue of lis pendens).
[4]
For the
following reasons, it is my opinion that the Federal Court has exclusive
original jurisdiction pursuant to sections 2, 18 and 18.1 of the FCA to
examine the lawfulness of the decision by the respondent; that this application
for judicial review was filed within the time limit prescribed by subsection
18.1(2) of the FCA; and finally, that this is not a case where this Court
should order the proceedings be stayed pursuant to subsection 50(1) of the
FCA.
[5]
The issue
of the exhaustion of remedies, which was also raised by the Court of its own
initiative, is decided in favour of calling the parties to a hearing on the
merits of the matter when the parties have completed or filed their respective
records according to the schedule already established by the Court. It is
sufficient to refer the parties to the specific reasons accompanying the
simultaneous order in City of Montréal v. Montréal Port Authority et
al., 2006 FC 114, docket T‑795‑04.
Statutory and regulatory
background
[6]
The
respondent is a Crown corporation, an agent of the Crown, established under the
Broadcasting Act, S.C. 1991, c. 11, as amended (the BA). It is the
national public broadcaster and must offer radio and television services made
up of very broad programming which teaches, informs, enlightens and entertains.
In carrying out its objects and exercising its powers, the corporation enjoys
freedom of expression and journalistic, creative and programming independence
(subsections 3(1), 46(1), 46(5), and 47(1) of the BA). It may acquire any
real or personal property that it deems necessary or convenient for carrying
out its objects and that property belongs to Her Majesty
(subsections 47(3), sections 48 and 49 of the BA). 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.)).
[7]
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).
[8]
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.
[9]
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.
[10]
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 (PLBOC). On that
point, section 15 of the CCPR provides that the PLBOC must not be less
than the amount the corporation would be required to pay if it were not exempt
from that tax.
The dispute
[11]
The
current proceedings with the respondent involve determining the effective rate
applicable for the purposes of the PLRT following the amendments brought by the
applicant to its real property tax rates. Those rates are now differentiated
according to whether it involves owners of residential immovables or
non-residential immovables. In 2003, when it presented its budget, the
applicant harmonized the tax structure of the new City of Montréal.
[12]
For all of
the fiscal years prior to 2003, the applicant used the general real property
tax rate applicable to all immovables and added an additional real property tax
specifically for non-residential immovables in the form of a surtax. For the
occupants of those immovables, it provided a business tax, a water tax and
service tax which was imposed on them directly based on the carrying on of a
business or professional activity on the premises. When the 2003 fiscal year
arrived, the surtax on non-residential immovables became a tax on the same
immovables and there was a real property tax equivalent to the business tax
which served to replace the revenues generated by it. The variable real
property tax rate was carried through to the 2004 fiscal year and the applicant
continued to do so for the 2005 fiscal year.
[13]
Essentially,
what the applicant is disputing is the respondent’s power to retroactively
revise the amount of PLRT already paid for the taxation years 2003 and 2004 and
to not pay PLRT for the 2005 taxation year. 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 (PLBOC), the respondent considers that it has
the power to retroactively adjust the PLRT for each of the taxation years 2003
and 2004 and that it did not have any PLRT owing for the taxation year 2005. 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. Accordingly, the
applicant is seeking various forms of declaratory relief on the basis that the
impugned decision is contrary to the law and to the obligations imposed on it
by the PLTA and the CCPR.
The issue of jurisdiction
[14]
As a first
argument, the respondent contends that the decision to make a payment in lieu
of taxes to a taxing authority like the applicant is not a normative act of
public authority. Insisting on its status as a Crown Corporation, agent of the
Crown, the respondent is of the opinion that such a payment is rather a
discretionary administrative act in the normal course of its commercial
operations and accessory to its objects as a national public broadcaster
pursuant to section 46 of the BA. Arguing that it is therefore not a
federal board, commission or other tribunal, the respondent accordingly called
upon this Court to decline jurisdiction (see Canada Metal Co. Ltd et al. v.
Canadian Broadcasting Corp. et al. (1975), 65 D.L.R. (3d) 231 (Ont. C.A.); Wilcox
v. Canadian Broadcasting Corporation, [1980] 1 F.C. 326; Turmel v.
Canada (Canadian Broadcasting Corp.) (1987), 14 F.T.R. 24 (F.C.T.D.)).
[15]
I cannot
agree with the respondent’s submissions. 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
broadcasting. For example, if the respondent were a private broadcaster, 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.
[16]
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 BA, which in its subsection 46(5)
enshrines the respondent’s independence. That does not mean however that it
could never be a federal board, commission or other tribunal according to the
case law (DRL Vacations Ltd. v. Halifax Port Authority, [2005] F.C.J. No. 1060;
Halterm Ltd. v. Halifax Port Authority, [2000] F.C.J.
No. 937 (QL)). 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.
[17]
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).
[18]
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 this 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).
[19]
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
(C.A.); Larny Holdings Ltd. (c.o.b. Quickie Convenience Stores) v. Canada
(Minister of Health) [2003] 1 F.C. 541 (F.C.T.D.). 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 (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)).
[20]
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.]
[21]
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.
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.]
[23]
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)).
[24]
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.
The issue of prescription
[25]
According
to the respondent, the application for judicial review is prescribed since it
was not filed within the 30 days following the date that the respondent served
on it its motion for declaratory judgment asking the Superior Court of Quebec
to declare void the real property tax accounts issued by the applicant for
taxation years 2003 and 2004.
[26]
I cannot
agree with the respondent’s arguments. The originating motion referred to
earlier was served on the applicant on March 26, 2004 and was filed with
the Superior Court on March 30, 2004. The evidence indicates that at
the time these proceedings were commenced, the respondent had already paid two
instalments for the 2003 taxation year and its first instalment for the 2004
taxation year. With respect to the second instalment for the 2004 taxation
year, the deadline had been deferred to February 28, 2005. There was then
no amount claimed by the applicant from the respondent that was past due. In
those circumstances, the applicant was not legally bound to file before this
Court an application for judicial review against earlier decisions that had
then been in its favour.
[27]
Furthermore,
I agree with the applicant that it was only beginning on
March 16, 2005, when the respondent’s amended originating motion was
served, that the 30-day time limit indicated under subsection 18.1(2) of the
FCA began to run. It was on that occasion that the applicant learned that the
respondent would not be paying its second instalment for the 2004 taxation year
or the two instalments for the 2005 taxation year. Further, as indicated at
paragraph 24.1 of its amended pleading, the respondent proceeded to
“recalculate” the amount of PLRT that it considered payable for each of the
2003, 2004 and 2005 taxation years. At the end of that exercise, the amended
originating motion referred to the respondent’s decision to subtract the
amounts so obtained from the amounts already paid to the applicant in 2003 and
2004 and to ask the applicant to repay the amount of $640,175.63.
[28]
There is a
certain parallel between the situation in this case and Krause v. Canada
(C.A.), [1999] 2 F.C. 476 (F.C.A.), decided by the Court of Appeal in 1999.
At page 492, Stone J.A. wrote the following at paragraphs 23 and 24:
I agree with these submissions. In my view,
the time limit imposed by subsection 18.1(2) does not bar the appellants from
seeking relief by way of mandamus, prohibition and declaration. It is true that
at some point in time an internal departmental decision was taken to adopt the
1988 recommendations of the Canadian Institute of Chartered Accountants and to
implement those recommendations in each fiscal year thereafter. It is not,
however, this general decision that is sought to be reached by the appellants
here. It is the acts of the responsible Ministers in implementing that decision
that are now claimed to be invalid or unlawful. The duty to act in
accordance with subsections 44(1) of the PSSA and 55(1) of the CFSA arose
"in each fiscal year." The charge is that by acting as they have in
the 1993-1994 and subsequent fiscal years the Ministers have contravened the
relevant provisions of the two statutes thereby failing to perform their
duties, and that this conduct will continue unless the Court intervenes with a
view to vindicating the rule of law. The merit of this contention can only be
determined after the judicial review application is heard in the Trial
Division.
I am
satisfied that the exercise of the jurisdiction under section 18 does not
depend on the existence of a "decision or order." In Alberta
Wilderness Assn. v. Canada (Minister of Fisheries & Oceans), (1997), 26
C.E.L.R. (N.S.) 238 (F.C.T.D.), at pp. 241-242; revd on other grounds; Alberta
Wilderness Assn. v. Canada (Minister of Fisheries and Oceans), [1999] 1 F.C.
483 (C.A.), Hugessen J. was of the view that a remedy envisaged by that section
"does not require that there be a decision or order actually in existence
as a prerequisite to its exercise." In the present case, the existence of
the general decision to proceed in accordance with the recommendations of the
Canadian Institute of Chartered Accountants does not, in my view, render the
subsection 18.1(2) time limit applicable so as to bar the appellants from
seeking relief by way of [page493] mandamus, prohibition and declaration.
Otherwise, a person in the position of the appellants would be barred from the
possibility of ever obtaining relief under section 18 solely because the
alleged invalid or unlawful act stemmed from a decision to take the alleged
unlawful step. That decision did not of itself result in a breach of any
statutory duties. If such a breach occurred it is because of the actions
taken by the responsible Minister in contravention of the relevant statutory
provisions.
[Emphasis
added.]
[29]
By filing
its notice of application for judicial review on April 8, 2005, the applicant
was still within the 30-day time limit provided under subsection 18.1(2) of the
FCA. Therefore, the respondent’s second preliminary exception must also be
dismissed.
The issue of lis pendens
[30]
The
respondent acknowledges that there is no lis pendens in the strict sense
of the term between this application for judicial review and the motion for
declaratory judgment before the Superior Court which had been referred to
above, but invites this Court in the alternative to stay these proceedings
pursuant to subsection 50(1) of the FCA on the grounds that another court,
equally competent, had been previously invited to decide the same substantive
issue.
[31]
As it was
decided above, the Federal Court has exclusive original jurisdiction pursuant
to sections 2, 18 and 18.1 of the FCA to hear and decide this application
for judicial review. Further, this is not a case involving an exception where
the validity or constitutional applicability of a federal statute that a
federal board, commission or other tribunal must apply is already being
disputed before the Superior Court (see Canada (Attorney General) v. Law
Society of British Columbia, [1982] 2 S.C.R. 307; Canada (Canada
Industrial Relations Board) v. Paul L’Anglais Inc., [1983] 1
S.C.R. 147, confirming [1981] C.A. 62 (C.A.Q.)). Accordingly, I am not
persuaded that the Court should exercise the discretionary power to stay
conferred to it under subsection 50(1) of the FCA.
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;
- This application for judicial review
was filed within the time limit provided under subsection 18.1(2) of the Federal
Courts Act;
- It is not appropriate to stay the
proceedings relating to this application for judicial review;
- The respondent’s motion involving
the preliminary exceptions is dismissed; with costs in the cause.
- 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.
“Luc
Martineau”
Certified
true translation
Kelley
A. Harvey, BCL, LLB
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