Abel Skiver Farm Corp. v. Town of Sainte-Foy, [1983] 1 SCR 403

SUPREME COURT OF CANADA

Abel Skiver Farm Corp. v. Town of Sainte-Foy, [1983] 1 S.C.R. 403

Date: 1983-04-26

Abel Skiver Farm Corporation Appellant;

and

Town of Sainte-Foy Respondent;

and

Commission scolaire de Sainte-Foy Respondent;

and

The Attorney General of the Province of Quebec Intervener.

File No.: 15570.

1981: October 21; 1983: April 26.

Present: Beetz, Estey, McIntyre, Chouinard and Lamer JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR QUEBEC

Municipal law — Taxation — Land under cultivation — Exemption — Municipal and school taxes overpaid — Jurisdiction of assessors and board of revision — Action to set aside valuation and collection rolls — Action for repayment of taxes — Prescription — Cities and Towns Act, R.S.Q. 1964, c. 193, ss. 381, 485.1, 488, 494, 495, 496, 521, 522, 523, 524 — Education Act, R.S.Q. 1964, c. 235, ss. 428, 429, 430, 431 — Code of Civil Procedure, arts. 33, 35.3 — Civil Code, arts. 1047, 1049, 2260.8.

Appellant's land was valued, taxed and assessed like an ordinary immovable for the years 1965 to 1971. The land was leased (on an annual and renewable lease) to a third party who undertook to cultivate it. Appellant maintained that its land is land under cultivation within the meaning of s. 523 of the Cities and Towns Act and that it should have benefited from the special tax provisions contained in that section. In view of the failure by the Town and the Commission scolaire to observe s. 523, appellant asked in the Superior Court (1) that the valuation and collection rolls of the Town and the collection rolls of the Commission scolaire be annulled in respect of appellant for the relevant years, and (2) that it be reimbursed the taxes and assessments wrongly paid. Appellant did not make use of the revision and quashing provisions of the Cities and Towns Act. The Superior Court allowed the action against the Town and against the Commission scolaire, but the Court of Appeal set aside both judgments.

[page 404]

Held: The appeal should be allowed in part.

(1) To determine whether land was land under cultivation within the meaning of s. 523, the courts should consider only the physical fact of using the land or the fact that it was farmed. There was no reason to debate the status of the owner of the land, the income produced by it or any factors other than those mentioned by the section. In the case at bar, appellant's land was real estate under s. 523, since it met the standards set in that section: it was not only cultivated and wooded, but farmed as well. In order to avoid application of the tax exemption for land under cultivation provided for in the first paragraph of s. 523, the Town or the Commission scolaire had to prove that appellant acquired the land for one of the purposes mentioned in the last paragraph of the section. Neither the Town nor the Commission scolaire succeeded in discharging this burden. A farm lease did not constitute a real estate operation within the meaning of the last paragraph. In disregarding s. 523 and taxing beyond what the law allowed them, the Town and the Commission scolaire committed acts ultra vires giving rise to the direct actions in nullity based on art. 33 C.C.P. The fact that the Cities and Towns Act had provided a special appeal procedure to the council and the board of revision did not oust the superintending and reforming authority of the Superior Court. It did not matter whether the taxpayer neglected to use this procedure or, in so doing, lost his case. Article 35.3 C.C.P. (action to set aside in the Provincial Court) was not a bar to appellant's action, since s. 381 of the Cities and Towns Act expressly provided that the special recourse granted by that section shall not exclude or affect the action to annul in cases where it may be brought under art. 33 C.C.P.

(2) The legislator had specifically provided in art. 2260.8 C.C. that the action for the recovery of taxes paid in error is prescribed after five years. Prescription began to run from the moment the tax was paid, for at that time the taxpayer could legally claim to have the tax annulled and to be reimbursed. In the case at bar, the action brought against the Town was served on March 20, 1972, that is more than five years after payment by appellant of the municipal taxes for 1965 and 1966. The action for reimbursement was therefore prescribed in respect of these two years. The action against the Commission scolaire was served on July 6, 1972. However, the record did not establish the date of the payments made by appellant. It was for the party pleading prescription to prove the circumstances in which it was applicable. The Commission scolaire had not discharged this burden. Finally, ss. 428 to 431 of the

[page 405]

Education Act did not have the effect of denying an action to recover the school assessment paid in error.

Cousineau v. Cité de Chomedy, [1965] R.L. 162; Mangold v. Municipalité de la Paroisse de l'Île Bizard, [1967] R.L. 458; De Gaspé Beaubien v. Municipalité de la paroisse de Notre-Darne de l'île Perrot, [1970] R.L. 52; Darne Nique v. Ville de Boucherville, [1970] C.S. 619; Corporation de la paroisse Saint-Raphaël de l'Île Bizard v. Immeubles lie Bizard Ltée, [1971] C.A. 719; Laberge v. Cité de Montréal (1917), 27 Que., K.B. 1, approved; Poulin v. Corporation municipale de Ville de Saint-Georges, [1959] R.L. 449; Jobin v. Ville de Ste-Foy, [1963] R.L. 214; Cassulo v. Ville de Ste-Foy, [1965] R.L. 65; Abel Skiver Farm Corp. v. Ville de Ste-Foy, [1963] R.L. 221, not followed; Shannon Realties Ltd. v. Ville de St. Michel, [1924] A.C. 185; (1922) 64 S.C.R. 420, distinguished; Ehrensperger v. Ville de Laflèche, [1971] R.P. 372; Simard v. Cité de Chicoutimi-Nord, [1965] Que. Q.B. 473, disapproved; Séminaire de Chicoutimi v. City of Chicoutimi, [1973] S.C.R. 681; Donohue Bros. v. Corporation of the Parish of St. Etienne de La Malbaie, [1924] S.C.R. 511; Town of St-Bruno de Montarville v. Mount Bruno Association Ltd., [1971] S.C.R. 623; Bergeron v. St. Charles de Mandeville, [1953] Que. Q.B. 559; Toronto Railway Co. v. Toronto Corporation, [1904] A.C. 809; Canadian Oil Fields Co. v. Village of Oil Springs (1907), 13 O.L.R. 405; City of Victoria v. Bishop of Vancouver Island (1921), 59 D.L.R. 399; Montreal Light, Heat & Power Consolidated v. City of Westmount, [1926] S.C.R. 515; Canadian Allis-Chalmers Ltd. v. City of Lachine, [1934] S.C.R. 445; Bennett & White (Calgary) Ltd. v. Municipal District of Sugar City No. 5, [1950] S.C.R. 450; [1951] A.C. 786; Board of School Commissioners of the Municipality of Greenfield Park v. Hôpital Général de St-Lambert, [1967] Que. Q.B. 1; Richmond Pulp & Paper Co. of Canada Ltd. v. Corporation of the Town of Bromptonville, [1970] S.C.R. 453; Francon Ltée v. Montreal Catholic School Commission, [1979] 1 S.C.R. 891; Kew Property Planning and Management Ltd. v. Corporation of the Town of Burlington, [1980] 2 S.C.R. 598; Compagnie d'approvisionnement d'eau v. Ville de Montmagny (1915), 24 Que. K.B. 416; Aubertin v. Cité de Montréal (1925), 31 R.L. 163; Cité de Rivière-du-Loup v. Nadeau, [1948] Que. K.B. 778; Michaud v. Corporation municipale de la Ville de Matane, [1953] R.L. 329; Daoust v. Ville de Pincourt, [1971] R.P. 408; Boyce v. Cité de Québec (1929), 46 Que. K.B. 349; Protestant School Board of Greater Montreal v. Jenkins Bros. Ltd.; Commissaires d'Écoles pour la Cité de Lachine v. Jenkins Bros. Ltd., [1967] S.C.R. 739; Protestant School Board of Greater Montreal v. Grayron Industries Ltd., [1972] C.A. 368;

[page 406]

City of Toronto v. Olympia Edward Recreation Club Ltd., [1955] S.C.R. 454; Quance v. Thomas A. Ivey and Sons Ltd., [1950] O.R. 397; Re Minister of Municipal Affairs and l'Évêque catholique romain d'Edmundston (1972), 24 D.L.R. (3d) 534; Jones v. Edmonton Catholic School District No. 7, [1977] 2 S.C.R. 872; Tomko v. Labour Relations Board (N.S.), [1977] 1 S.C.R. 112; Attorney General of Quebec v. Farrah, [1978] 2 S.C.R. 638; Charrois v. Ville de Bélair, [1974] C.S. 595; Ville de Montréal v. Union nationale française, [1979] C.A. 184; Côté v. Corporation of the County of Drummond, [1924] S.C.R. 186; Lévy v. Ville de Vaudreuil, [1982] C.S. 162; F.W. Woolworth Co. v. Ville de Kirkland, J.E. 82-1028; Raymond Vaillancourt Ltée v. Ville de Jonquière, J.E. 82-303; Clercs de St-Viateur de Montréal v. Ville de Laval, J.E. 82-1026; Industrial Glass Co. v. Cité de LaSalle, [1969] Que. Q.13. 231, referred to.

APPEAL from three judgments of the Quebec Court of Appeal, [1979] C.A. 88, which reversed two judgments of the Superior Court. Appeal allowed in part.

Raynold Langlois and France Simard, for the appellant.

Alphonse Lacasse, for the respondent the Town of Sainte-Foy.

Jacques Flynn, Q.C., for the respondent the Commission scolaire de Sainte-Foy.

Jean-Félix Brassard, for the intervener.

English version of the judgment of the Court delivered by

BEETZ J.

I—Proceedings

Appellant brought an action in the Superior Court against the Town of Sainte-Foy and another action against the Commission scolaire de Sainte-Foy.

By the first action appellant asked the Court to set aside in respect of its property the valuation and collection rolls of the Town for 1965 to 1970 inclusive, and it claimed the sum of $13,421.04 in repayment of municipal taxes which it had wrongly paid pursuant to those rolls, with interest from

[page 407]

the date of each payment and costs.

By the second action, in which the Town of Sainte-Foy was mis en cause, appellant asked the Court to set aside the valuation rolls of the Town for 1965 to 1970 inclusive in respect of its property, and to set aside the collection rolls of the Commission scolaire in respect of the same property for 1965 to 1970-71 inclusive; and it claimed the sum of $25,219.47 in repayment of school assessments which it had wrongly paid pursuant to those rolls, including interest from the date of each payment, with interest on the whole from the date of service and costs.

The Town intervened in the second action, asking that it be dismissed.

Both actions were joined for purposes of proof and hearing.

By two judgments dated October 19, 1973, Barbès J. of the Superior Court allowed both actions with costs, almost entirely in accordance with their conclusions except for a small part of the amounts claimed, and he dismissed the intervention of the Town in the action brought against the Commission scolaire. The reasons for judgment rendered against the Commission scolaire refer to those of the judgment rendered against the Town.

By three judgments dated January 17, 1979, and for reasons common to them all, the Court of Appeal reversed the two judgments of the Superior Court. In its first judgment it allowed the intervention of the Town in the action brought against the Commission scolaire and dismissed the action. In this first judgment, it also dismissed without costs the intervention of the Attorney General of the Province of Quebec, who had intervened in the Court of Appeal because there Abel Skiver Farm Corporation was challenging the constitutionality of para. 3 of art. 35 of the Code of Civil Procedure. In its second judgment, the Court of Appeal dismissed the action brought against the Town of Sainte-Foy, and in its third judgment it dismissed the action brought against the Commission scolaire de Sainte-Foy.

[page 408]

Hence the appeal.

Appellant is asking that this Court set aside the three Court of Appeal judgments and restore the two judgments of the Superior Court.

The case arises out of the special tax provisions applicable to land under cultivation.

II—Circumstances giving rise to the case

1. Facts

The facts are not in dispute but the parties draw different conclusions from them.

As Turgeon J.A. of the Court of Appeal observed,

[TRANSLATION] From 1965 to 1970 inclusive, immovables of plaintiff-respondent having cadastre numbers 248 and 249 constituted a single piece of land under cultivation of 47.2 arpents.

Counsel for the parties made the following admissions in the Superior Court:

[TRANSLATION] The Corporation—that is, plaintiff Corporation — is the owner of land of over fifteen (15) arpents in area; this land is about fifty arpents, thirty (30) of which are an orchard producing a regular crop and twenty (20) are wooded, uncleared land.

The parties further produced by consent as Exhibits P-4 and P-5 two lease contracts by which Abel Skiver Farm, in the first lease, leased the land to Isidore Pollack and in the second lease leased the buildings.

The parties further admitted that if the tenant, Mr. Isidore Pollack, were called, he would give his titles and occupations as follows: lawyer, farmer and industrialist.

He would state that he occupies a house built on lots which are the subject of the dispute, but the value of which is greater than ten thousand dollars ($10,000).

He hired the services of an experienced man who acts as his foreman, Mr. Maurice Croteau, and the latter also hired an assistant; operation of the immovables which are at issue does not constitute his principal source of income.

As a matter of fact, his sole participation is limited to acts of supervision and direction: he takes decisions

[page 409]

regarding ... the purchase of equipment, developing the land and marketing; he does no physical work.

Additionally, the two men, his foreman and the assistant, work full-time on the farm, planting and tending the trees and the soil, and picking, watering, grading and storing fruit.

In the picking season, the foreman hires about twenty girls as well.

It was admitted that appellant did not, for any of the years at issue, appeal to the board of revision of the Town, the municipal council or the Provincial Court as provided for by ss. 495 et seq. of the Cities and Towns Act. Though it is not mentioned in the admissions, it also seems clear that appellant did not attempt to make use of the special recourse to set aside the procès-verbal, roll, resolution or other order of the municipal council in the Provincial Court, within three months of the coming into effect of the disputed instrument, as provided for by s. 381 of the Cities and Towns Act.

2. Legislation

Section 485, paragraph 1 of the Cities and Towns Act, R.S.Q. 1964, c. 193, indicates how the taxable property of a municipality is to be valued:

485. (1) The assessors shall each year, at the time and in the manner ordered by the council, assess the taxable property of the municipality, according to its real value.

Section 488 of the same Act indicates the immovables which are taxable. Its first paragraph reads in part as follows:

488. The taxable immoveables in the municipality shall comprise lands, constructions and workshops erected thereon and all improvements made thereto, as well as machinery and accessories which are immoveable by destination or which would be so if they belonged to the owner of the real property. The actual value of the whole shall be entered in the valuation roll in the name of the owner of the ground; .. .

Section 521 of this Act provides in its first paragraph:

[page 410]

521. The council may impose and levy, annually, on every immoveable in the municipality, a tax of not more than two per cent of the real value as shown on the valuation roll.

Finally, section 522 of this Act authorizes the municipal council to

. . impose the special tax for the payment of municipal works of any kind, including works of maintenance, according to either the municipal valuation or the area or the frontage of the taxable real estate subject to such tax...

The Commission scolaire is not subject in its assessments to the same limitation of 2 per cent of the real value, but in principle and apart from exceptions, the valuation of properties made by order of the municipal authorities should serve as a basis for the assessments to be imposed by school corporations and the collection rolls of school boards, pursuant to ss. 367 and 385 of the Education Act, R.S.Q. 1964, c. 235.

However, section 523 of the Cities and Towns Act, the chief section to be interpreted, makes special provision for land under cultivation:

523. All land under cultivation or farmed or used as pasture for cattle, as well as all uncleared land or wood lots within the municipality, shall be taxed to an amount of not more than one per cent of the municipal valuation, including all taxes, both general and special.

Such land cannot be valued at more than one hundred dollars per arpent if it has an area of fifteen arpents or more. Such evaluation shall include the house used as a farmer's dwelling, the value whereof not exceeding ten thousand dollars, as well as the barns, stables and other buildings used in connection with the said land. If the value of such house exceeds ten thousand dollars, it shall be included in the valuation only to the extent of the said sum and the excess, separately valued, shall be subject to the tax mentioned in the first paragraph of this section.

The council may cause to be added to the valuation roll, from time to time, by the assessors in office, on the valuation by them made, any portion of such land which has been detached therefrom as a building lot and shall thus have become liable to taxation after the closing of

[page 411]

the valuation roll, and may exact the said tax as upon all other lots entered on the roll.

The foregoing provisions of this section shall cease to apply to such lands and structures as soon as they are the subject of a transaction the effect of which is to transfer the ownership thereof to a person, firm or corporation acquiring the same for subdivision into lots, for housing, industrial or commercial development or for speculation or any real estate operations.

From 1959 to 1965 this special provision, which at the time was contained in s. 522 of the Cities and Towns Act, was further modified for the city of Sainte-Foy by s. 4 of the Act to amend the charter of the city of Sainte-Foy, 1958-1959 (Que.), c. 63, which added the following two paragraphs:

This section shall cease to apply to such lands and buildings as soon as they are the subject of a sale or promise of purchase or sale or of any other written agreement of alienation or disposal to any person or corporation whose principal occupation theretofore was not the cultivation of the soil or who or which does not himself or itself cultivate the soil thereon.

Notwithstanding the foregoing, only the land owned by a farmer or his heirs and not a corporation or a commercial or industrial firm may be regarded as a land under cultivation.

In 1965, at the request of the municipal council of the city of Sainte-Foy, the Lieutenant-Governor in Council amended the charter of the city of Sainte-Foy by repealing the two foregoing paragraphs, as authorized by para. 2 of s. 2 of the Cities and Towns Act. At the relevant times, therefore, the city of Sainte-Foy was subject to the unaltered s. 523 of the Cities and Towns Act.

Nevertheless, appellant's land was valued, taxed and assessed like an ordinary immovable for the years 1965 to 1971.

In taxation year 1965 it was the Revised Statutes of Quebec, 1941, which were in effect. The Revised Statutes, 1964 were in effect when municipal taxes for the taxation year 1966 were paid, on May 27, 1966, and for subsequent years. The present Code of Civil Procedure came into effect on September 1, 1966. However, these changes

[page 412]

need not detain us, for the relevant provisions were not substantially altered between 1965 and 1970. In these reasons, I will cite chiefly the text of the Revised Statutes, 1964 and the present Code of Civil Procedure. It should however be recalled that the Magistrate's Court is now known as the Provincial Court, and the Court of Queen's Bench as the Court of Appeal.

3. Valuations, taxes and assessments at issue

The following are the tables prepared by the trial judge of the valuations made by the assessors of appellant's land and buildings, appearing in the valuation roll, and the rate of tax charged by the Town for the relevant years, the amounts entered in the collection roll of the Town and the dates on which these taxes were paid:

[TRANSLATION] . . . from 1965 to 1970 inclusive, the buildings were valued at their real value, as follows:

And the land was valued at its real value:

	Lot 248 (C)	Lot 249 (D)	Total
1965	$48,450.00	$55,060.00	$103.510.00
1966	$48,450.00	$55,060.00	$103,510.00
1967	$48,450.00	$55.060.00	$103,510.00
1968	$116,820.00	$133,910.00	$250,730.00
1969	$116,820.00	$135,910.00	$250,730.00
1970	$116,820.00	$135,910.00	$250,730.00

The real estate assessments on plaintiff's land and buildings, and the amounts paid by it in consequence, are stated in paragraph 8 of the statement of claim:

[page 413]

 

	Tax rate	Value entered in valuation roll (A) (B) (C) (D)	Amount entered in collection roll and paid by plaintiff	Date of payment
1965	0.8%	$129,900.00	$1,039.20	23-6-65
1966	0.8%	129,900.00	1,039.20	27-5-66
1967	0.8%	129,900.00	1,039.20	1-5-67
1968	7%	276,500.00	2,738.86	3-4-68
1969	0.9%	276,250.00	2,486.25	28-4-69
1970	1.1%	276,250.00	3,038.75	21-3-70

Moreover, on November 16, 1970 plaintiff paid a further amount of $2,039.58 in real estate taxes, this sum having been claimed by defendant in respect of 1968, 1969 and 1970, while defendant neglected to tax plaintiff's properties at their full value as a result of the expropriation proceedings under way at the time.

Plaintiff accordingly paid in real estate taxes, excluding all fixed charges imposed by the municipality, the total sum of $13,421.04.

Next there are the tables prepared by the trial judge of the values which the assessors should have entered in the roll and the taxes which the Town ought to have charged if s. 523 of the Cities and Towns Act had been applied:

[TRANSLATION]

	Land and buildings other than owner's residence: 47.2 arpents at $ 100.00 an arpent	Residence of tenant Isidore Pollack for the portion over $10,000.00	Total
1965	$4.720.00	$7,500.00	$12,220.00
1966	4,720.00	7,500.00	12,220.00
1967	4,720.00	7,500.00	12.220.00
1968	4,720.00	7,010.00	11,730.00
1969	4,720.00	7,010.00	11,730.00
1970	4,720.00	7,010.00	11,730.00

And as section 523, cited above, provides, the rate of tax should not exceed one per cent of the municipal valuation, including all taxes, both general and special, so that it would have been legal to impose taxes based on the following data:

[page 414]

 

1965	$12,220.00	0.8%	$97.76
1966	12,220.00	0.8%	97.76
1967	12,220.00	0.8%	97.76
1968	11,730.00	0.8%	93.84
1969	11,730.00	0.9%	105.57
1970	11,730.00 11,730.00	1.0%	117.30	$609.99

The taxpayer paid plaintiff $13,421.04 instead of $609.99, an overpayment of $12,811.05, for which it sought in vain to obtain reimbursement before bringing this action on May 31 and August 13, 1971.

Finally, the following are the calculations by which the trial judge determined the amounts the Town should reimburse:

[TRANSLATION]

The amounts that thus had to be reimbursed were paid on the following dates:

With regard to the action brought against the Commission scolaire, the trial judge summarized as follows the tax rate, the value entered in the valuation roll and the amount charged plaintiff-appellant and paid by it:

[TRANSLATION]

	Tax rate	Value entered in Valuation roll (A) (B) (C) (D)	Amount charged and paid by plaintiff
1965-6	1.45%	$129,900.00	$1,883.56
1966-7	1.54%	129,900.00	2,000.86
1967-8	1.65%	203,075.00(*)	3,350.83
1968-9	1.80%	276,250.00	5,191.18
1969-70	1.75%	276,250.00	4,834.42
1970-71	1.75%	276,250.00	4,834.42

(*) The municipal valuation in 1967 was $129,900.00, and in 1968 it was $276,250.00; the tax was imposed on

[page 415]

an average value of approximately $203,075.00. Plaintiff accordingly claimed to have paid defendant $22,095.27 in school taxes.

If section 523 of the Cities and Towns Act had been applied, the following results would have been produced according to the trial judge:

[TRANSLATION]

Year	Taxable value	Rate	Amount
1965-66	$12,220.00	1.45%	$177.19
1966-67	12,220.00	1.54%	188.19
1967-68	11,975.00	1.65%	197.59
1968-69	11,730.00	1.80%	21 1.14
1969-70	11,730.00	1.75%	205.27
1970-71	11,730.00	1.75%	205.27	$1,184.65

The trial judge determined the amounts to be reimbursed by the Commission scolaire as follows:

[TRANSLATION] Plaintiff is entitled to be reimbursed $22,095.27, less $1,184.65, or $20,910.62, plus adjusted interest on the sum of $2,956.69, or a grand total of $23,867.31.

III—Judgments of the Superior Court and the Court of Appeal

The trial judge held that s. 523 of the Cities and Towns Act applies to appellant's land, and it should accordingly benefit from the advantages conferred by that provision:

[TRANSLATION] ... the property of plaintiff, leased to Mr. Isidore Pollack, who lives on it and farms it, is land under cultivation or farmed land, but a part of which is uncleared. Lots 248 and 249 therefore constitute real property covered by section 523 of the Cities and Towns Act.

The trial judge considered that the actions brought by appellant are actions in nullity based on art. 33 of the Code of Civil Procedure. Although these actions also sought reimbursement of the taxes and assessments wrongly paid, the trial judge expressed the view that they were not

[page 416]

strictly speaking actions to recover things not due, based on arts. 1047 et seq. of the Civil Code, because the monies paid were paid in accordance with the valuation and collection rolls in force.

The trial judge characterized s. 523 of the Cities and Towns Act as a partial tax exemption, requiring the Town to tax the properties in question in accordance with the exceptional provisions of that section. By ignoring the exemption rule, the Town imposed on the taxpayer a heavier burden than that which it was authorized to do by law. The trial judge characterized this as an abuse of the power of taxation, an ultra vires act and a [TRANSLATION] "flagrant injustice amounting to fraud".

However, although appellant asked to be reimbursed the full amounts paid to the Town and the Commission scolaire, the trial judge deducted the amounts which the latter could have claimed under s. 523 of the Cities and Towns Act.

Finally, the trial judge referred inter alia to Séminaire de Chicoutimi v. City of Chicoutimi, [1973] S.C.R. 681, to s. 381 of the Cities and Towns Act, and to para. 3 of art. 35 of the Code of Civil Procedure; he expressed the view that the latter two provisions are not a bar to the action in nullity based on art. 33 of the Code of Civil Procedure, and that if the action to set aside under s. 381 of the Cities and Towns Act had been brought in the Provincial Court, the latter would have had to refer it to the Superior Court, the judges of which are appointed by the federal government.

In the Court of Appeal, [1979] C.A. 88, Turgeon J.A. wrote the principal reasons. Mayrand J.A. concurred, adding certain observations of his own, and Rinfret C.J.Q. concurred in the view of the two other members of the Court.

Both Turgeon and Mayrand B.A. expressed the view that there is no basis in the record for concluding that the municipal and school authorities acted fraudulently. I should say at once that I entirely agree with their opinion on this point. Not only was there no proof of fraud or of any act

[page 417]

amounting to fraud, neither of the two actions contains any allegation to that effect.

Further, Turgeon and Mayrand M.A. suggest that appellant may have been negligent in not challenging the valuation roll at the outset by an appeal to the board of revision. With respect, I do not feel that the record supports a conclusion to this effect. Appellant had unsuccessfully challenged the valuation roll for the taxation year 1962: Abel Skiver Farm Corp. v. Ville de Ste-Foy, [1963] R.L. 221; in addition it successfully challenged the valuation roll for 1971, as to the land only. We have no information regarding the causes of its failure to act in the meantime.

Turgeon J.A. considered that it was the duty of the assessors of the Town to decide whether appellant's land could benefit from the special provisions of s. 523 of the Cities and Towns Act. He first made this observation regarding the last paragraph of s. 523, but he then extended it to all the provisions of this section [at pp. 89-90]:

[TRANSLATION] For this last paragraph of section 523 to apply, respondent, which was a corporation, had to establish that it had not acquired the land for subdivision into lots, for housing, industrial or commercial development, for speculation or for any real estate operations. This was a question of fact which the assessors could not assess if it was not submitted to them, and it was for respondent to bring the matter before the council if it wished to come within the special valuation provisions made by section 523 of the Cities and Towns Act.

In 1965, the valuation roll described the property of plaintiff-respondent as land and buildings, not mentioning that it was land partly under cultivation and partly uncleared. It was thus impossible for the assessors and the council to decide that respondent could be entitled to the special provisions of section 523.

Then, Turgeon J.A. characterized the relevant provision of s. 523, the second paragraph, not as the trial judge did, as a provision relating to the power of taxation, but rather as a provision relating to valuation, and he treated appellant's action

[page 418]

as an action to reduce the valuation [at pp. 90 and 93]:

[TRANSLATION] With respect, I do not share the view of the trial judge. The two lots of plaintiff-respondent were taxable, but under section 523 of the Cities and Towns Act they should not have been valued at their real value, but within the limits set by section 523, namely at a rate which I shall call preferential. The actions brought by plaintiff-respondent are not actions to set aside rolls, but actions to reduce the amount of the valuation.

[…]

... in the appeals at bar, we are not concerned with cases of the nullity of valuation and collection rolls, but of over-valuation of the land of plaintiff-respondent. The Court does not have before it an action to set aside, but actions to reduce taxes.

Turgeon J.A. accordingly concluded that the case was covered by Shannon Realties Ltd. v. Ville de St. Michel, [1924] A.C. 185; (1922) 64 S.C.R. 420, under its "valuation" aspect, and that appellant should have used the procedure for contesting the valuation roll contained in the Cities and Towns Act, including an appeal to the board of revision or the municipal council, and an appeal to the Provincial Court.

Turgeon J.A. further stated that in his view this was not a case covered by Donohue Bros. v. Corporation of the Parish of St. Etienne de La Malbaie, [1924] S.C.R. 511.

Turgeon and Mayrand JJ.A. further stressed, as the Court had done in Shannon, the importance of protecting the stability of municipal and school budgets.

Finally, Turgeon and Mayrand JJ.A. found no need to rule on the question of the constitutionality of art. 35 of the Code of Civil Procedure, para. 3, which was raised before them.

Turgeon J.A. simply observed that the Superior Court had jurisdiction prima facie, in view of the amounts at issue and the allegations of ultra vires.

[page 419]

IV—Is the land of appellant land under cultivation within the meaning of s. 523 of the Cities and Towns Act?

The evidence consisted solely of admissions and documents filed by consent, but respondents did not concede that appellant's land is land under cultivation within the meaning of s. 523.

As the trial judge observed, there was a time when it was thought, and the courts held, that land could not benefit from the provisions of s. 523 of the Cities and Towns Act unless it was owned by a professional farmer, who derived a significant portion of his income from farming the land: Poulin v. Corporation municipale de Ville of Saint-Georges, [1959] R.L. 449; Jobin v. Ville de Ste-Foy, [1963] R.L. 214; Abel Skiver Farm Corp. v. Ville de Ste-Foy (supra); Cassulo v. Ville de Ste-Foy, [1965] R.L. 65.

However, the view taken by the courts has changed. The more recent and prevailing tendency has been to consider, for the purposes of s. 523, only the physical fact of using the land or the fact that it is farmed, and not the status of its owner, except perhaps if there is an allegation of speculation within the meaning of the final paragraph of s. 523: Cousineau v. Cité de Chomedy, [1965] R.L. 162; Mangold v. Municipalité de la Paroisse de l'Île Bizard, [1967] R.L. 458; De Gaspé Beaubien v. Municipalité de la paroisse de Notre-Dame de l'Île Perrot, [1970] R.L. 52; Dame Béique v. Ville de Boucherville, [1970] C.S. 619; Corporation de la paroisse Saint-Raphael de l'Île Bizard v. Immeubles Île Bizard Ltée, [1971] C.A. 719.

Counsel for the Town in his submission asked the Court to return to the earlier line of authority.

It is possible that some of the judgments in this earlier line of authority contain conclusions which apply, taking into account the special charters such as that which applied to the Town of Sainte-Foy before 1965. We do not have to decide this. Having made that reservation, I do not feel there is any reason to return to the earlier line of authority, because only the more recent interpretation is in keeping with the wording of s. 523 and it

[page 420]

appears to me to have been approved by this Court in Town of St-Bruno de Montarville v. Mount Bruno Association Ltd., [1971] S.C.R. 623.

It is true that that case was primarily concerned with uncleared land or wood lots. However, the Magistrate's Court had held that s. 523 is intended to encourage agricultural or other cultivation, and that in order to be entitled to the benefits created by that provision, it is necessary to show that the land in question is farmed to earn an income from it. The Court of Appeal rejected this distinction in the following passage from Hyde J. cited at pp. 625-26 by Pigeon J., speaking for this Court:

With respect I see no justification for this qualification to Sec. 522.

The land in question is clearly a "wood lot" thereunder. We are not concerned with the question as to whether these wood lots are maintained for private or public pleasure, as parkland, green-belt, resource conservation, bird or game sanctuary or for pecuniary profit (other than that contemplated by the last paragraph of Sec. 522 as added by 8-9 Eliz. II c. 36 [sic]). It may well serve the public interest that it be preserved for several purposes.

Pigeon J. continues below at pp. 626-27:

In my opinion the basic rule of interpretation must govern this case: ascertaining the meaning of the words used by the legislature, rather than speculating as to its intentions. "Land under, cultivation or farmed or used as pasture for cattle", is mentioned first then the words are "as well as all uncleared land or wood lots". The second class of land is therefore completely independent of the first. The fact that land under cultivation is mentioned first does not warrant the statement that in this provision the notion of agriculture is paramount.

Subject to the last paragraph of s. 523, I am of the view that the correct rule is stated by Montgomery J.A. in the obiter dictum he wrote in Industrial Glass Co. v. Cité de LaSalle, [1969] Que. Q.B. 231, at pp. 236-37:

It is a type of land that is exempted, not a type of owner, and 1 regard it as in principle immaterial whether the

[page 421]

owner of the uncleared land or wood lot be a farmer, a businessman or a trading company[1].

There is accordingly no reason to make a distinction where s. 523 does not do so, and to debate the status of the owner of land under cultivation, the income produced by it or any factors other than those mentioned by the section.

However, the Commission scolaire maintained that it was for appellant to establish that it had not bought this land for subdivision into lots, housing, industrial or commercial development, for speculation or any real estate operations, as provided in the final paragraph of s. 523. As we saw above, the Court of Appeal held that appellant should have presented evidence of this to the assessors—a point to which I will return—; the Commission scolaire adopted the same argument regarding the burden of proof before the trial judge. The Commission scolaire further submitted that the land and the residence on it were leased by two separate leases, which were said to constitute "real estate operations"; and it further observed that for the taxation year 1971, appellant challenged the valuation roll for the land alone, not for the buildings; finally, it noted that the land in question was sold in 1972 for the sum of $649,519.06.

Accordingly, the Commission scolaire concluded in its submission on this point that it is [TRANSLATION] "questionable whether the facts clearly justify application of section 523".

It is true that appellant has the duty of establishing the circumstances enabling it to benefit from exceptional tax relief. However, having presented such evidence, appellant does not have to prove a negative proposition or to prove that it was not covered by the exception to the exception. Once it is admitted, as is the case here, that part of the land in question is partly cultivated and the other part wooded, in my view it is up to the Town or the Commission scolaire to prove, if they can, that the land was acquired for one of the purposes mentioned in the last paragraph of s. 523: Cousineau v. Cité de Chomedy (supra), at p. 188;

[page 422]

and it is not sufficient for them to raise a doubt in this regard.

 

It appears from the evidence in the record that neither the Commission scolaire nor the Town succeeded in discharging this burden.

The lease filed as Exhibit P-5, by which appellant leased the land and the buildings thereon to Isidore Pollack—and not the land alone, as is stated in the admissions—is an annual and renewable farm lease governed by the old arts. 1646 to 1654 of the Civil Code: the tenant undertakes to cultivate the land, in particular the orchard; the rent is payable in cash, at $350 a month and $1.00 per minot of apples harvested annually. Accordingly, the land in question is not only cultivated, it is also farmed as provided for in the first paragraph of s. 523 of the Cities and Towns Act. I doubt that a farm lease could constitute a real estate operation within the meaning of the final paragraph of this section: otherwise, there would be a contradiction between the two provisions. At least, a farm lease could not by itself create a presumption that the land was bought for one of the purposes mentioned in the final paragraph of s. 523.

The lease filed as Exhibit P-4 relates to the residence and the land surrounding it—and not solely to the buildings, as the admissions state. It is an ordinary annual, renewable lease, though the tenant undertakes to protect all trees, shrubs, plants and flowers. The record does not indicate why two separate leases were signed, and why appellant did not challenge the valuation of the buildings for the taxation year 1971. As the residence in question is that of the tenant farmer who undertook to cultivate the land, I do not, in view of the state of the evidence in the record, find anything strange in regarding this residence as the house used as a farmer's dwelling, within the meaning of the second paragraph of s. 523.

The remainder of the documentary evidence shows that appellant was incorporated by letters patent on October 28, 1952 for agricultural purposes, that it bought lots 248 and 249 on November 4, 1952 for a price not mentioned in the record

[page 423]

(as also there is no mention of the other terms and circumstances of that purchase), and that it has leased them to Isidore Pollack for farming since 1954.

In light of this documentary evidence and the admissions cited above, the trial judge concluded that appellant's land is real estate under s. 523 of the Cities and Towns Act. This conclusion was not questioned by the Court of Appeal and, for my part, I cannot see that it is in error.

V—Appropriate procedure

1. Nature of the proceedings brought by appellant

There are two aspects to the proceedings brought by appellant. First, appellant asked that the valuation and collection rolls of the Town and the collection rolls of the Commission scolaire be annulled in respect of appellant for the relevant years, in view of the failure by the Town and the Commission scolaire to observe s. 523 of the Towns and Cities Act. Second, it asked to be reimbursed the taxes and assessments wrongly paid.

The first aspect of these proceedings makes them direct actions in nullity based on art. 33 of the Code of Civil Procedure and they are within the jurisdiction of the Superior Court under the superintending and reforming power which it exercises over the courts of Quebec, except for the Court of Appeal, and over bodies politic and corporate in the province.

In their second aspect, these proceedings are in my opinion — and I say so with respect—actions which cannot be distinguished from actions to recover things not due, at least once they have been obtained by the same proceedings, annulment of the relevant rolls: Faribault, Traité de Droit civil du Québec, t. 7 bis, at pp. 128-29. However, the conclusions to recover things not due do not stand by themselves. Dismissing the conclusions in nullity would logically entail dismissing the conclusions to recover things not due.

The primary issue is therefore to decide whether, in light of the rules established by judicial decisions, a direct action in nullity is the appropriate

[page 424]

remedy for appellant in connection with the failure to observe the provisions of s. 523.

2. Review of principles

The principles established by the courts indicate that two assumptions must be distinguished.

On the first assumption, a municipality, in assessing a taxable item applies an incorrect method or an erroneous rule of valuation, which leads for example to an over-valuation and, as a consequence, an increased amount of tax. In this case, the taxpayer must resort to the generally expeditious means to challenge the valuation roll which are provided in municipal statutes, as for example in the case at bar, an appeal to the board of revision provided for in s. 495 of the Cities and Towns Act, then an appeal to the Provincial Court, provided for in s. 504, and finally, when the real estate tax based on the municipal valuation in question is over five hundred dollars, an appeal to the Court of Appeal as provided by s. 514.

A taxpayer who neglects or refrains from making use of these expeditious and special actions may not challenge the valuation roll in the Superior Court, in whole or in part, as plaintiff or defendant, except perhaps in the case of fraud: Shannon (supra); Bergeron v. St. Charles de Mandeville, [1953] Que. Q.B. 559.

On the second assumption, the municipality values for tax purposes and taxes a tax-exempt item. The courts then conclude that it has done acts which are ultra vires both as to valuation and taxation, and that these acts may be challenged in the ordinary superior courts of law, such as the Superior Court, in an action or a plea, in whole or in part if the subject-matter is divisible. On this assumption it does not matter that the taxpayer omitted to make use of the expeditious and special actions provided by law, if they were available; it also does not matter, if such actions were used, that they failed: Toronto Railway Co. v. Toronto Corporation, [1904] A.C. 809; Canadian Oil Fields Co. v. Village of Oil Springs (1907), 13 O.L.R. 405; City of Victoria v. Bishop of Vancouver Island (1921), 59 D.L.R. 399; Donohue Bros. (supra); Montreal Light, Heat & Power Consolidated v. City of Westmount, [1926] S.C.R. 515;

[page 425]

Canadian Allis-Chalmers Ltd. v. City of Lachine, [1934] S.C.R. 445, at p. 455; Bennett & White (Calgary) Ltd. v. Municipal District of Sugar City No. 5, [1950] S.C.R. 450; [1951] A.C. 786; Board of School Commissioners of the Municipality of Greenfield Park v. Hôpital Général de St-Lambert, [1967] Que. Q.13. 1; Richmond Pulp & Paper Co. of Canada Ltd. v. Corporation of the Town of Bromptonville, [1970] S.C.R. 453; Francon Ltée. v. Montreal Catholic School Commission, [1979] 1 S.C.R. 891; Kew Property Planning and Management Ltd. v. Corporation of the Town of Burlington, [1980] 2 S.C.R. 598.

It must accordingly be determined which of these two assumptions applies. In disregarding s. 523 of the Cities and Towns Act, did the Town and the Commission scolaire apply an incorrect method or an erroneous rule of valuation, or did they disregard an exemption and tax beyond what the law allowed them? In particular, does s. 523 relate to the power of valuation or to the power of taxation?

3. Characterization of s. 523 of the Cities and Towns Act

The first two paragraphs of s. 523 are those chiefly in question.

To begin with, the first paragraph describes what land under cultivation is, for the purposes of the section as a whole. The remainder of the first paragraph unquestionably relates to the power of taxation, and as an exception to ss. 521 and 522, it limits the rate to an amount not exceeding 1 per cent of the municipal valuation, including all taxes, general and special.

In this regard, the Town of Sainte-Foy clearly exceeded its powers in taxing the immovables of appellant at 1.1 per cent for the taxation year 1970. This excess of power only involves excess tax of $1 1.73 in so far as the immovable is treated as land under cultivation, and the de minimis rule would have to be applied if this were the only amount at issue; but this amount should be awarded to appellant if the latter is entitled to the remainder. This is what the trial judge did. In this

[page 426]

case, it is not the valuation roll which is void, it is the collection roll, and not as a result of the nullity of the valuation roll, as in the other cases, but because of the rate of taxation.

The second paragraph of s. 523 appears at first sight to relate to valuation. However, this appearance does not withstand further analysis, when we go beyond the forms of these provisions and examine their concrete effects.

The second paragraph of s. 523 applies differently to the land, the house used as a farmer's dwelling, and the barns, stables and other buildings used in connection with the said land.

In the case of a barn, stables and other buildings used in connection with land of fifteen arpents or more, the concrete effect of the provision—at least when the limit of $100 an arpent is reached for the land alone—is to exempt them totally from tax, general or special, school as well as municipal, whatever their value, and notwithstanding s. 488. Moreover, this complete exemption is entirely contained in the second paragraph of s. 523. It does not depend on the first. In my view, if the Town's assessors value such buildings for taxation purposes separately, when the buildings are not in fact taxable, even if they are worth millions, they exceed their powers.

What of the house used as a farmer's dwelling on land of fifteen arpents or more? This too is in effect entirely exempt from tax, general or special, municipal or school, notwithstanding s. 488, provided its value does not exceed $10,000. Here again, the complete exemption depends solely on the second paragraph of s. 523, and owes nothing to the first. Aside from the preliminary valuation, which makes it possible to determine that the value of the house is not more than $10,000, this house is not within the jurisdiction of the assessors. If the latter value it separately and place this value on the valuation roll, when the house is not in fact taxable, they are exceeding their powers.

[page 427]

What if the house is worth more than $10,000? In that case the tax is calculated as follows for municipal purposes: $10,000 is subtracted from the real value of the house, and the result is multiplied by the tax percentage up to a maximum of 1 per cent. I feel that this is a case of a partial exemption the effect of which cannot be measured without taking into account both the first and second paragraphs of s. 523. An exemption, although partial, remains an effective limit on the power of taxation and partakes of its nature. As the exemption is only partial and the house remains taxable, the latter undoubtedly does not completely escape the jurisdiction of the assessors; in my view, however, the latter exceed their powers when they value it as if it were fully taxable, without taking into account the relief prescribed by law.

Finally, what of the land, when it measures fifteen arpents or more? In this case, if it is worth more than $100 an arpent, the law arbitrarily sets the tax basis at $100 an arpent, while maintaining the tax rate at a maximum of 1 per cent for municipal purposes, including all taxes, both general and special. This appears to be another case of a partial exemption the effect of which for municipal purposes cannot be measured without taking into account the combined effect of the first two paragraphs of s. 523. Aside from the preliminary valuation, used to determine whether the land is worth more than $100 an arpent, this land falls completely outside the jurisdiction of the assessors: once the $100 limit has been reached, the Act directs the assessors to halt their valuation and enter the value which it has itself set in order to alleviate the farmer's tax burden. The provision leaves the assessors no discretion in the matter, which is characteristic of an exemption, and they exceed their powers if they value the land as if it were taxable at its real value. The effect of the second paragraph would be identical if it provided that the land "shall not be taxable at a value of more than" $100 an arpent, as does the next section of the Cities and Towns Act, s. 524, which provides that, in certain circumstances, a golf course "shall not be taxable at a value of more than" $500 an arpent.

[page 428]

I cannot agree with the following propositions, contained in the submission of the Commission scolaire, and apparently accepted by the Court of Appeal:

[TRANSLATION] Section 523 C.T.A. lays down a rule of taxation and a rule of valuation. Here, only the rule of valuation is at issue.

On the contrary, it seems to me that the first two paragraphs of s. 523 establish an integrated tax system for land under cultivation, the farmer's house and buildings used in connection with the land. The purpose of this special tax system is to alleviate the tax burden on land under cultivation, by limiting proportionally the taxing power of towns and school boards. Essentially, this provision creates a tax exemption or relief, complete or partial depending on the immovable in question, the source and scope of which is contained in the first paragraph of s. 523, in the second, or in both. If the first paragraph reduces the maximum rate of the municipal tax, the second determines the limited extent to which the land, the house and the other buildings are subject to the tax on which a ceiling has thus been placed. The second paragraph also determines the limited extent to which the land, house and other buildings are subject to school assessment.

In my view, and I say so with respect, the Court of Appeal wrongly likened the function of the assessors in the case at bar to that in issue in Shannon (supra).

There were two aspects to the Shannon case. On the one hand, a complete valuation roll was being challenged on the ground that the assessors had grossly over-valued a number of immovables in the municipality, and had not observed the principle of uniform valuation. On the other hand, the taxpayer complained of being deprived of the benefits of a special provision relating to land under cultivation made by the Charter of the Town of Saint-Michel.

A majority of this Court, upheld by the Judicial Committee, found that the direct action in nullity was not admissible to contest the valuations made in accordance with erroneous rules or incorrect

[page 429]

methods, as the law had created special mechanisms for contestation by appeal.

The valuation which was in question in Shannon was the type of judgment which assessors make on one or more items, using methods and rules which are always arguable, to set a value which will always remain an approximation. Valuation is not an exact science, and experience shows that it can lead to very different results depending on the techniques used. Valuation in this ordinary sense was in issue in Shannon.

That is not the case here.

Appellant is not disputing that the value set by the Town's assessors for its land, house and other buildings is the real value. It is not challenging the valuation methods used in setting that value. Its complaint is that the assessors did not carry out specific mathematical calculations which had nothing to do with valuation strictly speaking, but which the law required them to make so that the taxpayer could benefit from the tax relief granted to it. More specifically, in the case of the land appellant complained that the assessors had not simply multiplied the number of arpents by $100, thereby concluding their assessment function; they had not deducted $10,000 from the value of the house, which is extraneous to the assessment function; and they had not completely refrained from valuing the other buildings used in connection with the land.

Furthermore, in Shannon the taxpayer's land was land under cultivation which had been taxed as ordinary land, when it should have been taxed in accordance with a provision of the Charter of the Town of Saint-Michel, reading in part as follows (1915 (Que.), c. 109, s. 28):

5731. All land under cultivation . . . shall be taxed .. . to an amount proportionate to one-fourth of its value as entered on the valuation roll, upon the condition that such proportionate amount shall not exceed one hundred

[page 430]

and fifty dollars per acre, including the buildings there-on constructed.

The land in question had been taxed on a value exceeding one-fourth of its real value. The Town of Saint-Michel had sued the taxpayer for this tax, and the action was still pending. This Court and the Judicial Committee held that the provision related to the power of taxation and that the taxpayer could plead it as a ground of defence to the action brought against it by the Town.

It is true that the wording of this provision of the Charter of the Town of Saint-Michel related to the power of taxation more expressly than s. 523 of the Cities and Towns Act taken as a whole. However, this wording is similar to that of s. 524 of the Cities and Towns Act, cited in part above, which permits the making of a partial tax exemption for golf courses, similar in its effects, as I have indicated, to the tax exemption created for land under cultivation by s. 523. The forms and techniques used to create the exemption may vary but the purpose contemplated remains the same, and that is still exemption.

The description of s. 523 of the Cities and Towns Act as a tax-exempting section is also that generally assigned by the courts.

Thus, in Industrial Glass Co. v. Cité de LaSalle (supra), Casey J.A. observed in this regard at p. 235:

As I read it the purpose of the section is to create an exemption for land that is being used or that is being held in reserve, directly or indirectly, for agricultural (in the broadest sense) purposes.

In the same case, Montgomery J.A. refers to it on p. 236 as a "partial exemption".

In Town of St-Bruno de Montarville v. Mount Bruno Association Ltd. (supra) Pigeon J., speaking for the Court, referred at p. 627 to "the partial exemption of uncleared land", the "maximum valuation of the land (second paragraph)", and finally the "special taxation system for 'uncleared land or wood lots' ".

[page 431]

It is true that in these cases the Court did not have to characterize s. 523 of the Cities and Towns Act in order to decide whether the taxpayer could rely on that section through a direct action in nullity. There are not many cases on this point, but in general and aside from certain exceptions, such authority as exists considers that where there has been a breach of s. 523 there is a basis for a direct action in nullity.

In Laberge v. Cité de Montréal (1917), 27 Que. K.B. 1, an action was brought to have the municipal valuation of an immovable declared illegal as being in breach of a provision like that of s. 523 of the Cities and Towns Act. The Superior Court had allowed an inscription in law against the whole of this action on the ground that the appropriate remedy was the appeal procedure provided for by the Charter of the City of Montreal. The Court of Appeal reversed this judgment and dismissed the inscription in law, as it considered the valuation made in breach of the provision to be ultra vires and held that this ultra vires act was a basis for a direct action in nullity. Pelletier J.A. wrote, at p. 3:

[TRANSLATION] If these properties are land under cultivation, the board of assessors had no right whatever to value them at over $100 an arpent, and if it did so, it clearly exceeded its powers.

Cross J.A. wrote at p. 5:

It is well that a clear idea should be formed of the nature of the appellant's action. If the ground of the action were merely that the land had been valued too high, it would be right to say that the Superior Court in this action is not to decide whether the valuation is too high or not. The ground of the action includes a complaint that the valuation has been made in disregard of a statutory enactment specially declaring what the valuation is to be.

If the fact be proved, I consider it clear that the Superior Court can set aside what has been done in disobedience of the enactment.

After referring to the maximum value of $100 an arpent, Cross J.A. continued at p. 7:

... the Legislature has taken the matter, for so much, out of the hands of the assessors and of all concerned with making or revising the roll and has given to the owner of lands of the description in question a common

[page 432]

law right of action to have the special statutory enactment carried into effect or at least have set aside what may have been done in disregard of it.

It is true that Laberge v. Cité de Montréal is prior to Shannon (supra), and that certain of the reasons relied on in that case no longer apply after Shannon. It is also true that Brodeur J., a judge who was part of the majority of this Court in Shannon, classified Laberge with the cases which he disapproved at p. 454, such as Compagnie d'approvisionnement d'eau v. Ville de Montmagny (1915), 24 Que. K.B. 416, a case in which a valuation roll was set aside on a direct action on the ground of under-valuation. However, Idington J., another judge of the majority in Shannon, distinguished between Laberge and the line of authority rejected by Shannon, such as Compagnie d'approvisionnement d'eau v. Ville de Montmagny (supra). At page 428, Idington J. observed:

And when we come to the case of Laberge v. La Cité de Montréal, we find another basis of right asserted by the appellant, namely the general exemption. In joining in that judgment the late Mr. Justice Cross expressly excludes the case of a mere error in the amount of assessment, and rests his judgment upon the case therein presented of partial exemption created by a statutory provision for a term of years which seems to have arisen out of circumstances very similar to those which gave rise to the partial exemption in question herein.

I therefore feel that Laberge v. Cité de Montréal is correct in its conclusions and in several of its reasons. See also Aubertin v. Cité de Montréal (1925), 31 R.L. 163; Cité de Rivière-du-Loup v. Nadeau, [1948] Que. K.B. 778; Michaud v. Corporation municipale de la Ville de Matane, [1953] R.L. 329.

I only know of one judgment that squarely adopts the opposite view. This is a judgment of the Superior Court in Ehrensperger v. Ville de Laflèche, [1971] R.P. 372: in that case the Court held that a breach of s. 523 of the Cities and Towns Act was not a basis for a direct action in nullity of the valuation roll, except in a case of

[page 433]

serious injustice amounting to fraud. With respect, I think that this judgment is wrong.

Reference may also be made to Daoust v. Ville de Pincourt, [1971] R.P. 408, in which the Superior Court in a case of this type allowed a declinatory exception and dismissed the action to set aside the valuation roll in the Provincial Court. However, as the headnote mentions, the constitutional aspect of the question was not raised. I will return to this below.

The Court of Appeal also referred to Boyce v. Cité de Québec (1929), 46 Que. K.B. 349, in which the taxpayer complained, inter alia, that he had not been given the benefit of a provision of the Charter of Quebec City, fixing the rate of assessment of vacant land used for farming purposes for ten years. The Court of Appeal dismissed the action, observing that it had not been brought within the deadlines stated in the Charter, but this was an obiter dictum as the Court of Appeal had first held that the taxpayer's land was not vacant land used for farming.

Finally, the Court of Appeal referred to Protestant School Board of Greater Montreal v. Grayron Industries Ltd., [1972] C.A. 368. A piece of land had been valued as if it measured 1,820,718 square feet, when it was in fact 567,000 square feet less. The taxpayer who had paid the tax contended he had been taxed on what did not exist. The Court of Appeal dismissed this claim, holding that the taxable asset existed, and that it was simply a valuation error. Fixing the measurements of land fell within the administrative powers of assessors, and their error could therefore be treated as an error of valuation. That case is quite different from the one at bar.

4. Jurisdiction of assessors and board of revision

What I have just said regarding Protestant School Board of Greater Montreal v. Grayron Industries Ltd. leads me to discuss the two propositions, cited above, of the Court of Appeal, namely that (a) the question of whether appellant's land should benefit from the special provisions of s. 523 of the Cities and Towns Act is a question of fact, and (b) this question falls within

[page 434]

the powers of assessors — and of the board of revision. These two propositions are another way of saying that the only remedies open to appellant were to bring the question before the assessors, and if it did not succeed in persuading them, to then follow the special appeal procedure prescribed by the Cities and Towns Act.

It may readily be admitted that appellant could perhaps have obtained satisfaction by using these appeal procedures. Its success before the board of revision in respect of taxation year 1971 indicates this possibility. The latter is also indicated by a case like Town of St-Bruno de Montarville v. Mount Bruno Association Ltd. (supra), where the Town and the taxpayer came up to this Court. The taxpayer was successful in this Court, as it had been in the Court of Appeal. See also Protestant School Board of Greater Montreal v. Jenkins Bros. Ltd.; Commissaires d'Écoles pour la Cité de Lachine v. Jenkins Bros. Ltd., [1967] S.C.R. 739.

However, the question of whether appellant's land should benefit from the provisions made by s. 523 of the Cities and Towns Act is not in my opinion, and I say so with respect for the opposite view, merely a question of fact.

Undoubtedly in order to decide whether a piece of land is land under cultivation, it is necessary to arrive at certain preliminary findings of fact. Thus, it is necessary to decide whether the land is in fact physically cultivated or uncleared. However, the discussions found in the authorities cited above, and relating to the status of the owner of the land, the proportion of his income derived from cultivation of the land or the agricultural use of uncleared land illustrate quite clearly that the question is essentially one of law: it must be decided whether the land is land under cultivation within the meaning of s. 523.

This question is no different from that involved in considering, for example, whether the machines in a pulp mill, electric meters or a game of skittles are movables or immovables, as was the case in Donohue Bros. (supra), Montreal Light, Heat & Power (supra) and in City of Toronto v. Olympia Edward Recreation Club Ltd., [1955] S.C.R. 454

[page 435]

, respectively.

The answer to this first question determines whether the items at issue are taxable or tax-exempt. The courts have held that this second question is also one of law: Olympia (supra); Jenkins Bros. (supra), at p. 742.

The second proposition of the Court of Appeal regarding the powers of assessors and the board of revision must be examined in terms of the nature of these two indissolubly linked questions.

The courts have consistently held, as indicated above, that when the question is whether an immovable is taxable or exempt, in whole or in part, the fact that the municipal taxing statute has provided a special appeal procedure does not oust the superintending and reforming authority of the Superior Court, and it does not matter whether the taxpayer neglected to use this procedure or, in using it, lost his case. Strictly speaking, to reverse the findings of the Court of Appeal one could simply cite these precedents, but this would be an incomplete approach and an argument from authority. It is better to explain the reasons underlying the precedents.

Assessors and the members of a body like the board of revision have powers that are essentially administrative. They are generally not lawyers, and they are not a superior court. It has been questioned whether it is or could be part of their functions to decide a question of law like that of the taxable nature of an immovable, a question which was within the scope of the superior courts in 1867, or to exercise, by appeal or otherwise in respect of this question, a superintending power like that exercised by the board of revision over the Town's assessors.

The subject is a complex one, with constitutional ramifications. It has resulted in marked differences of opinion which are stated in the judgments in such cases as Quance v. Thomas A. Ivey and Sons Ltd., [1950] O.R. 397; Bennett & White (supra);

[page 436]

Olympia (supra); and Re Minister of Municipal Affairs and L'Évêque catholique romain d' Edmundston (1972), 24 D.L.R. (3d) 534. See also "Municipal Tax Assessment and Section 96 of the British North America Act: The Olympia Bowling Alleys Case", by Bora Laskin C.J., while a professor, (1955) 33 Can. Bar. Rev. 993.

I am not persuaded that these differences have been completely resolved and it is not possible to do so in the case at bar, where they have scarcely been touched upon. I propose to deal with the point only to the extent that it is necessary to do so in order to weigh the second proposition of the Court of Appeal.

I have already cited above the text of the first paragraph of s. 485 of the Cities and Towns Act concerning the duties of assessors. Section 494 of the same Act provides that the valuation roll, signed by at least two assessors and the clerk, shall be deposited in the office of the council and public notice given of such deposit. That notice shall state that the roll remains open to the examination of interested parties for the next thirty days after the deposit. Section 495 then indicates the cases in which there can be an appeal to the council or the board of revision, and s. 496 defines the powers of the council and the board of revision:

495. During such time any person who thinks himself entitled to complain, for himself or for another, of the roll as drawn up, may appeal therefrom to the council or board of revision by giving for that purpose a written notice to the clerk or to the secretary of the board of revision, stating the grounds of his complaint, and, if he complains that the valuation of the property is too high, he shall mention, in the notice, the amount of the valuation considered by him to be just.

496. After the expiration of the thirty days mentioned in section 492 the council, at its first general sitting, or the board of revision at a meeting held on the day and at the time stated in a public notice of at least five days, shall take into consideration and decide all the complaints made under section 495.

After having heard the parties and their witnesses, under oath administered by its presiding officer, as also the assessors if they wish to be heard, and the witnesses produced on behalf of the municipality, the council or

[page 437]

the board of revision shall maintain or alter the roll, as it may deem just.

In my view, these provisions are sufficiently general to allow a taxpayer like the appellant to complain of the roll as drawn up on the ground that' the roll deprives it of the exemption to which it is entitled under s. 523 of the Cities and Towns Act, and the members of the council or the board of revision must take this complaint under consideration.

With such a complaint before them, the members of the council or the board of revision cannot avoid making a decision without compromising the integrity of their administrative functions. They must therefore respond in order to exercise the latter in accordance with the law, as much as they are able to do and as everyone must do.

However, they cannot make an error in this regard, because their administrative authority depends on the correctness of the reply which they give to these questions of law. If they make an error, they remain subject to the superintending and reforming power of the Superior Court.

Further, when they respond, they exercise a function which is incidental to their administrative duties, and it does not follow from the fact that they must comply with the law and have occasion to express that law that they must do so as would a court of law. Their response accordingly does not have the final nature of res judicata.

This is why it is still open to the taxpayer to start over by a direct action in nullity in the Superior Court, even when he has brought a complaint to the council or board of revision and that complaint has been decided by one or the other of those bodies.

It is also why the courts have not required the taxpayer to proceed before the administrative tribunals: they have concluded that in this matter of taxation and exemption a taxpayer retains the right to go directly to a judicial forum like the Superior Court, which has the power to decide the matter with the force of res judicata.

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I know that this approach is closer to that of the minority than of the majority judges in Olympia (supra), which involved legislation even more explicit than ss. 495 and 496 of the Cities and Towns Act regarding the jurisdiction of administrative bodies. On the other hand, it is closer to that of the majority judges of this Court in Bennett & White (supra), which seems to me to have been approved by the Judicial Committee on this point. Furthermore, and as this Court observed in Jones v. Edmonton Catholic School District No. 7, [1977] 2 S.C.R. 872, at pp. 892-93, cases like Olympia (supra) should be seen in the light of subsequent decisions such as Tomko v. Labour Relations Board (N.S.), [1977] 1 S.C.R. 112, and I would now add, of what Pigeon J. wrote on behalf of three judges of this Court in Attorney General of Quebec v. Farrah, [1978] 2 S.C.R. 638, at pp. 656-61.

I would, however, refrain from expressing any opinion on the question of whether a taxpayer can come to the Superior Court by a direct action, once an appellate level above that of the board of revision has been reached, such as the Court of Appeal or this Court, or once such jurisdictions have made a ruling.

To summarize, therefore, I conclude that the limited jurisdiction of the assessors and the board of revision regarding application of s. 523 of the Cities and Towns Act in no way excludes recourse to the Superior Court by a direct action in nullity.

I would add, however, that this limited jurisdiction of the officers of the Town is the same whether the first or second paragraph of s. 523 is in issue: in both cases they may be called on to decide whether a piece of land is land under cultivation within the meaning of the provision; it could not logically be held that they cannot be in error with regard to the first paragraph, since it deals exclusively with taxation, but could be in error in exercising their jurisdiction regarding the second paragraph, on the ground that this concerns valuation. The question is identical in both cases, and in

[page 439]

my view this identity confirms the inter-related nature of the two paragraphs and the unity of the exceptional tax provisions made by s. 523.

5. Petition to quash in the Provincial Court and the constitutional question

In addition to the procedure for appeals to the council or board of revision, and thence to the Provincial Court, the Cities and Towns Act provides in s. 381 a special recourse to set aside in the Provincial Court:

381. Any procès-verbal, roll, resolution or other order of the council may be set aside by the Magistrate's Court of the district in which the municipality is wholly or partly situated, by reason of illegality, in the same manner, within the same delay and with the same effect as a by-law of the council, in accordance with sections 411 to 422 inclusively. They shall be subject to the provisions of section 393.

The special recourse granted by this section shall not exclude or affect the action to annul in cases where same may be brought under the provisions of article 50 of the Code of Civil Procedure.

Under sections 411 et seq. of the same Act, this special recourse may be exercised by a petition within three months of the coming into effect of the disputed document.

Reference should also be made to a part of art. 35 of the present Code of Civil Procedure:

35. Saving the right of evocation provided for in article 32, and subject to the jurisdiction assigned to the municipal courts, the Provincial Court also has jurisdiction, to the exclusion of the Superior Court, in all suits, whether personal or hypothecary:

[…]

3. to annul or set aside a valuation roll of immoveables which are taxable for municipal or school purposes, whatever be the law governing the municipal or school corporation concerned.

Respondents complained that appellant had neglected to make use of this special recourse.

The constitutional validity of art. 35.3 of the Code of Civil Procedure has been questioned more than once, both before and after Séminaire de Chicoutimi v. City of Chicoutimi (supra). See, for example, the opinions of Casey and Montgomery JJ.A. in Simard v. Cité de Chicoutimi-Nord, [1965] Que. Q.B. 473, at pp. 476-77.

[page 440]

See also the judgment of Desmeules J. in Charrois v. Ville de Bélair, [1974] C.S. 595, a case which is singularly like Laberge v. Cité de Montréal (supra). Finally, see the partially dissenting opinion of Turgeon J.A. in Ville de Montréal v. Union nationale française, [1979] C.A. 184, at pp. 185-91.

As mentioned above, appellant challenged the constitutionality of art. 35.3 of the Code of Civil Procedure in the Court of Appeal. The Attorney General intervened in the Court of Appeal and in this Court. In the submission which he filed in this Court, the Attorney General maintained that there is no reason to make a ruling on the constitutionality of the disputed provision. In general he supported the position of appellant, that the Superior Court has jurisdiction to set aside because it is a case of acts ultra vires done by respondents in breach of tax exemptions. He referred in particular to the second paragraph of s. 381 of the Cities and Towns Act, which expressly provides that the special recourse granted by that section "shall not exclude or affect the action to annul in cases where same may be brought under the provisions of article 50 [now 33] of the Code of Civil Procedure".

The provision in art. 35.3 of the Code of Civil Procedure is subsequent to s. 381 of the Cities and Towns Act: An Act to amend the Code of Civil Procedure, 1955-56 (Que.), c. 34, s. 2. It was art. 57 of the preceding Code of Civil Procedure. Speaking of the effect of that art. 57 on the second paragraph of s. 381 of the Cities and Towns Act Rinfret J., as he then was, said the following for the Court of Appeal in Simard v. Cité de Chicoutimi-Nord (supra), at pp. 474-75:

[TRANSLATION] Plaintiffs correctly argued that the second paragraph of section 381 has not been amended or repealed, that it is fully in effect. Defendant replied with, 1 feel, even greater force that the last part of art. 57, "whatever be the law governing the municipal or school corporation", overrides the second paragraph of section 381, and must be given priority.

[page 441]

Rinfret J. concluded that an action to have the valuation roll of a city or town declared void for fraud or an abuse of power amounting to fraud was within the jurisdiction of the Magistrate's Court, under art. 57 of the Code of Civil Procedure, and excluded that of the Superior Court under art. 50, notwithstanding s. 381 of the Cities and Towns Act. This decision can perhaps only be explained because, as Montgomery J.A. points out at p. 477, the constitutional question was not formally raised. However, and I say so with respect, this decision seems to me questionable even from the standpoint of statutory interpretation alone.

When there are two legislative enactments which at first sight appear to conflict with each other the courts, quite apart from any constitutional aspect, must try to reconcile them before giving priority to the more recent enactment, and giving it the effect of a total or partial implicit repeal of the older provision. A fortiori the courts must attempt such a reconciliation of the provisions when the conflict between them risks giving an unconstitutional meaning to the new provision.

I do not think it can be assumed that, in amending art. 57—now 35—of the Code of Civil Procedure, the legislator intended to override the last paragraph of s. 381 of the Cities and Towns Act, since he left that provision intact.

The words "whatever be the law governing the municipal or school corporation" should not be interpreted as if they read "notwithstanding any provision to the contrary". These words really apply to school and municipal laws as a whole, such as the many special charters, the Education Act, the Municipal Code and the Cities and Towns Act which may contain provisions creating remedies similar to this special remedy in s. 381 of the last-named Act. The effect of art. 35.3 of the Code of Civil Procedure would seem to be to give the Provincial Court exclusive jurisdiction over such of these remedies as can be described as actions to quash or set aside the valuation rolls of immovables that are taxable for municipal or school purposes, but for causes other than those giving rise to the action in nullity in cases where it is available under art. 33 of the Code of Civil

[page 442]

Procedure. For example, there may be cases of actions to set aside valuation rolls for over-valuation, under-valuation or lack of uniformity, in respect of complete rolls or parts thereof.

I therefore tend to the view that the Attorney General is correct in relying on the last paragraph of s. 381 of the Cities and Towns Act.

In any case, art. 35.3 of the Code of Civil Procedure would be clearly unconstitutional if it had the effect of transferring from the Superior Court to the Provincial Court the traditional power of the Superior Court to declare ultra vires and void, on a direct action in nullity, valuation rolls prepared in breach of tax exemptions. It must therefore be interpreted as if it did not have that effect. Accordingly, it is not a bar to the action brought by appellant in the Superior Court against the valuation roll of the Town.

VI—Does the Education Act deny an action for recovery against the Commission scolaire?

In the Court of Appeal, Turgeon J.A. cites a passage from Protestant School Board of Greater Montreal v. Grayron Industries Ltd. (supra), in which Montgomery J.A., speaking for himself and for Rinfret J.A., wrote at p. 371:

Even if respondent could now attack the valuation roll, which it does not seem to have attempted to do, I question whether it could recover school taxes already paid. See in this connection secs. 428-31 of the Education Act and particularly secs. 429 and 430..

The provisions of the Education Act referred to by Montgomery            are the following:

8.—Amendments of Assessments, and Special Assessments for certain Purposes

428. Whenever a general or special assessment imposed by a school board in any school municipality is annulled, such school board shall forthwith, in a summary manner, cause an assessment roll to be made, which new assessment shall have effect in such municipality for the whole time, past and future, for which the

[page 443]

assessment so annulled or set aside would have been in force if it had been valid.

429. Every assessment annulled shall be declared invalid for the future only.

430. The fact that an assessment is annulled shall not invalidate payments already made, nor shall it affect any judgment already rendered to compel a ratepayer to make any such payment.

431. If a special assessment be annulled as mentioned in the preceding sections, the ratepayers who have paid their share of such assessment shall not have the right to be reimbursed; but in any subsequent assessment imposed for the same purpose, they shall be credited with the sums paid on the assessment so annulled.

In my opinion it would be excessive if these provisions had to be interpreted, as has been suggested, as an outright denial of the action for recovery of taxes from which the taxpayer is exempt, and which he has paid through an error of law or fact. The law certainly did not intend that a neglectful taxpayer who fails to pay his school taxes should be in a better position than someone who has acted promptly and fulfilled his obligations once the notice of assessment is given: especially as s. 392 of the Education Act authorizes school boards to encourage promptness by allowing a discount not exceeding 5 per cent to any taxpayer who pays the amount of his taxes within a certain time limit.

Sections 428 to 431 of the Education Act must be interpreted in light of each other and in particular in light of s. 428.

The purpose of these provisions is to establish a procedure for replacing the annulled assessment, with retroactive effect, in order to offset at least in part the effect of the annulment on the finances of the school municipality.

When an assessment is annulled, under s. 428 the school board shall cause a new assessment to be made, which retroactively replaces the annulled assessment. Sections 429 and 430 indicate the consequences of this substitution.

If the taxpayer is still required to pay school taxes under the new assessment, and has already paid the taxes imposed by the annulled assessment

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owing to the annulment having effect only for the future, the payments already made continue to be valid and are allocated to payment of the new assessment which is substituted for the old. Otherwise, if the payment was invalid, a taxpayer could inter alia be required to pay interest, since the new assessment is retroactive and he would be late in payment.

If the taxpayer did not pay, in whole or in part, the school taxes he was required to pay under the old assessment, he must under the new assessment pay the amounts specified therein, possibly with interest.

However, subject to the qualification in s. 431, ss. 428 et seq. do not authorize a school board to retain monies which it was not entitled to collect as school taxes under either the old or the new assessments.

If the school board has wrongfully collected the taxes of a taxpayer who is wholly or partly exempt, the new assessment does not change the situation, as it must be in accordance with the whole or partial exemption. There would then be no title justifying the amount overpaid. In my view, in such a case the taxpayer would be entitled to claim reimbursement.

The special provision of s. 431 regarding the special assessment denies the right to reimbursement, but it is the only one of these provisions which has this legally remarkable effect: however it is explicit, and it is offset by a credit for the future with regard to any subsequent special assessment imposed for the same purpose.

A contrario, it should be said that if the legislator had intended that the taxpayer should not be entitled to reimbursement for general taxes wrongly paid, he would have said so quite clearly.

The earlier legislation is of assistance in understanding the meaning of ss. 428 to 431, in particular that contained in the Revised Statutes of the Province of Quebec of 1888, s. 2142, the Consolidated Statutes for Lower Canada of 1861, c. 15, s. 81, and the Act of the Union Parliament of 1849, 12 Vict., c. 50, s. 17.

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It is unnecessary to quote all of these. I shall simply cite the 1861 legislation:

81. Whenever an assessment maintained by the School Commissioners or Trustees in any School Municipality is annulled or set aside, the said Commissioners or School Trustees shall forthwith, in a summary manner, cause a new assessment to be made, which new assessment shall be made and take effect in such Municipality for the whole time, as well past as to come, for which the assessment so annulled or set aside would have been in operation and in force if it had been valid:

2. But such annulling or setting aside of the said assessment shall not have the effect of invalidating any payments made under the authority of the assessment so annulled or set aside, which payments shall go towards the discharge of a new assessment for the period for which they have been made, the assessment so annulled or set aside being declared invalid for the future only, and not with regard to any judgments then already rendered to enforce such payments;

3. …

It is essentially the same idea as is stated more elliptically in ss. 428 to 431 of the Education Act.

I am therefore of the opinion that ss. 428 to 431 of the Education Act do not have the effect of denying an action to recover a school assessment paid in error.

VII—Prescription

Under article 2242 of the Civil Code, a direct action in nullity is prescribed by thirty years. See also Côté v. Corporation of the County of Drummond, [1924] S.C.R. 186.

Respondents however cited, in response to appellant's conclusions claiming the amount wrongfully paid, the five-year prescription stated by para. 8 of art. 2260 of the Civil Code:

2260. The following actions are prescribed by five years:

[…]

8. For recovery of taxes or assessments paid by error of law or of fact.

I feel that respondents are correct on this point. The only difficulty seems to be to determine when the prescription begins to run.

[page 446]

Dealing with recovery of monies wrongfully paid in general, Léon Faribault states in the Traité de Droit civil du Québec, t. 7 bis at pp. 124-25, that the action condictio indebiti is prescribed by thirty years, even when that action cannot be brought before annulment of a contract the rescission of which must be requested within a shorter time period, for he says [TRANSLATION] "the right to request recovery of the amount wrongfully paid cannot exist before such annulment has been made". The same writer goes on to say:

[TRANSLATION] . . . when the right to bring this action is subordinate to the annulment of a contract, its prescription cannot begin to run until the day it is annulled.

I am not sure that one should generalize as Faribault does: if he is right, the right to recover monies wrongfully paid would be prescribed by sixty years in some cases, that is thirty years to obtain nullity of the instrument under which the payment was made, and thirty years to claim restitution of what was paid under the annulled instrument.

Whatever the position regarding the particular case mentioned by Faribault, the ambit of his observations should not be extended to a situation like that in the case at bar, where the legislator has specifically indicated, for the recovery of taxes paid in error, a shorter time limit than for the action in nullity: that would frustrate or avoid the intent of the legislator, who has dispensed with the prescription period of the ordinary law. Applying the rule stated by Faribault literally in the case at bar would mean in practice that an action for recovery would be prescribed by thirty-five years, not by five years as intended by the law.

The view taken by Professor Martineau, writing in La prescription, P.U.M., 1977, p. 298, seems preferable:

[TRANSLATION] A taxpayer who has paid in error taxes or assessments he did not owe may require reimbursement within five years of payment.

This opinion is in accord with the general rule that prescription runs from the time the debt is payable. Reimbursement of the tax paid in error is due from the moment the tax is paid, for from that time the taxpayer can legally claim to have the tax

[page 447]

annulled and to be reimbursed. The judgment granting the annulment is retroactive to the day when the action was brought. In so far as it may be necessary for the taxpayer to have the tax annulled in order to obtain his reimbursement he must act with despatch, otherwise the five-year prescription will have expired and, in this case, extinguished the action for recovery.

It has also been questioned whether, because of the rule contra non valentem agere non currit praescriptio, the prescription should not begin to run from the time the creditor discovers the error which has caused the overpayment. In his text cited above, at p. 220, Professor Martineau correctly rejects this solution:

[TRANSLATION] Admitting ignorance as a cause of suspension would amount for all practical purposes to dispensing with the rule that prescription runs against everyone. Inaction by the person having a right most often results from ignorance of his right. As a general rule, those who are ignorant of their rights are the ones who neglect to act to protect them. Giving them the benefit of a suspension would mean that the application of prescription would be very limited. This seems contrary to the nature of this institution and the intent of the legislator: the latter intended that suspension should occur exceptionally, and that in this area there should be a restrictive interpretation in order to give the rules of prescription as wide an application as possible.

In two recent judgments, the Superior Court interpreted para. 8 of art. 2260 of the Civil Code as I have done. They were Lévy v. Ville de Vaudreuil, [1982] C.S. 162, and F.W. Woolworth Co. v. Ville de Kirkland, J.E. 82-1028. It appears that these two judgments have been appealed and I refer to them only for the purposes of prescription.

In imposing this short prescription, the legislator has provided, inter alia, relative protection for municipal and school finances. On the same point, I would also say that the stability of those finances is not endangered when the case concerns, not a general challenge to the valuation roll, as in Shannon (supra), but a challenge to that roll in respect of a taxpayer which is based on an exemption, always of a more or less exceptional nature.

[page 448]

The action brought by appellant against the Town was served on March 20, 1972, that is more than five years after payment of the municipal taxes for 1965 and 1966. The action for reimbursement of the overpaid taxes is therefore prescribed in respect of these two years, and the amount of the order made against the Town must be reduced by $1,882.88, that is twice the amount of $941.44 overpaid, on June 23, 1965 and May 27, 1966.

The action brought by appellant against the Commission scolaire was served on July 6, 1972. However, though the record indicates the various amounts paid by appellant, it does not establish the dates of those payments. Presumably appellant paid its school taxes during the taxation year for each of those taxes, as it did with its municipal taxes. In that case, its action for recovery would be prescribed for the taxation year 1965-66, and perhaps for the taxation year 1966-67; but those are mere conjectures, and we have no certain knowledge. It is also conceivable that appellant delayed in making these payments.

Prescription cannot be presumed. It is for the party pleading and benefiting from it to prove the circumstances in which prescription is applicable. In my view, the Commission scolaire has not discharged the burden of proof in this regard and there is no reason to reduce the amount of the award made against it.

VIII—Other matters

It may be questioned whether appellant is entitled to interest against the Town for the period before May 31, 1971. The record contains a notice sent to the Town on that day by counsel for the appellant concerning the overpaid taxes. It must be assumed that before that notice, at least, the Town was in good faith, and could retain the interest pursuant to arts. 1047 and 1049 of the Civil Code: they provide that a person receiving in good faith what is not due to him is not obliged to restore the profits of the thing received, whereas if he is in bad faith, he is required to restore the sum paid or thing received, with the interest and profits which it ought to have produced. See also Raymond Vaillancourt Ltée v. Ville de Jonquière, J.E. 82-303;

[page 449]

Clercs de St-Viateur de Montréal v. Ville de Laval, J.E. 82-1026.

Appellant claimed this interest from the date of each payment and the trial judge allowed it without discussing the point. The Court of Appeal did not have to advert to it and the point was not raised in this Court. As it is not a matter of public policy, I do not think it is for this Court to intervene in this regard to vary the judgment of the Superior Court against the Town.

The same question could be raised regarding the action brought against the Commission scolaire. In this case, the trial judge capitalized the earlier interest in an amount of $2,956.69 which he added to the principal amount, and then made the interest run on the whole from the date of service. The record does not contain any notice sent to the Commission scolaire, other than the service itself. The matter of interest was also not raised for the Commission scolaire, and again I would not intervene any more than in the case of the Town.

The Court of Appeal made the following observations regarding the disposition of the case in the judgments of the Superior Court [at p. 90]:

[TRANSLATION] As appellants correctly observed, if the Superior Court judgments are interpreted literally, plaintiff-respondent would owe no tax for 1965 to 1970 inclusive, since the rolls are void in respect of its lots 248 and 249.

This is an indirect way of saying that the actions brought by appellant are actually actions to reduce the valuation.

As we have seen above, this is only apparently true since it is a partial, not a total, exemption—except for certain buildings—so that the immovables at issue must remain registered on the valuation roll but in keeping with the exemption of s. 523 of the Cities and Towns Act.

In these circumstances, and as appellant did not dispute the real value assigned to its immovables by the assessors, it could perhaps have limited itself to claiming that the valuation and collection

[page 450]

rolls in question be declared void in respect of lots 248 and 249, where for example as regards the Town for 1970, they exceeded the sum of $11,730 and the 1 per cent rate. In acceding to such conclusions, the Superior Court would not have usurped the function of the assessors, but using their own data, would have made the specific mathematical calculations prescribed by the Act to give the taxpayer the benefit of its exemption. In Montreal Light, Heat & Power Consolidated (supra), the Court held to be invalid in toto in respect of an electrical system a valuation roll which did not permit the making of a distinction between the value of the tax-exempt meters and the rest of the system, which was taxable: the courts were unable to undertake such a differentiation of the roll without themselves making a valuation. However, they would undoubtedly have only declared the role to be void in so far as it was, if it had been divisible. One could perhaps reason by analogy and a contrario in the case at bar.

In any case, I do not think that at this stage of the proceedings there is any reason to alter the declarations of nullity made by the trial judge. The record does not contain copies of the valuation rolls and collection rolls at issue, or extracts from those rolls. Moreover, for what is at issue, namely recovery of the overpayment, the trial judge gave effect to his declarations of nullity only to the extent that there was in fact nullity.

IX—Conclusions

For all these reasons, I consider that the following conclusions should be made:

The appeal should be allowed in part;

The three judgments of the Court of Appeal should be set aside;

The judgment of the Superior Court allowing the action against the Commission scolaire de Sainte-Foy and dismissing the intervention by the Town of Sainte-Foy should be restored;

The judgment of the Superior Court against the Town of Sainte-Foy should be restored in part: the

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sum of $12,811.05 should be replaced by $10,928.17 and the following terms deleted:

$941.44 on June 23, 1965;

$941.44 on May 27,.1966;

The whole with costs in all courts.

However, no costs will be awarded for or against the Attorney General of the Province of Quebec.

Appeal allowed in part.

Solicitors for the appellant: Langlois, Drouin & Associés, Quebec City.

Solicitors for the respondent the Town of Sainte-Foy: Gagné, Letarte, Royer, Gauthier, Lacasse & Boily, Quebec City.

Solicitors for the respondent the Commission scolaire de Sainte-Foy: Flynn, Rivard & Associés, Quebec City.

Solicitors for the intervener: Jolin, Boucher & Brassard; Jean-K. Samson and Jean-François Jobin, Sainte-Foy.