Colt Industries (Canada) Ltd. et al. v. School Commissioners, [1976] 1 SCR 117

Supreme Court of Canada

Colt Industries (Canada) Ltd. et al. v. School Commissioners, [1976] 1 S.C.R. 117

Date: 1974-10-01

Colt Industries (Canada) Ltd. et al. Appellant;

and

The School Commissioners for the Municipality of St-Joseph de Sorel and Tracy Respondents.

Profis Holdings Ltd. Appellant;

and

Beloit Sorel Walmsley Ltd. Appellant in continuance of suit;

and

The School Commissioners for the Municipality of St-Joseph de Sorel and Tracy Respondents.

Quebec Iron & Titanium Corporation Appellant;

and

The School Commissioners for the Municipality of St-Joseph de Sorel and Tracy Respondents.

1974: February 14; 1974: October 1.

Present: Judson, Ritchie, Pigeon, Beetz and de Grandpré JJ.

ON APPEAL FROM THE COURT OF QUEEN’S BENCH, APPEAL SIDE, PROVINCE OF QUEBEC

Taxation—Valuation for school tax—Machinery declared non-taxable by one municipality in the school territory—Basis of valuation for entire school territory—Education Act, R.S.Q. 1964, c. 235, s. 373.

The territory of respondent school board takes in that of the two municipalities of St‑Joseph de Sorel and Tracy. The latter adopted, under the Cities and Towns Act, as amended in 1959, a by-law providing that machinery was not included in taxable immovables. This was effective for school as well as for municipal purposes. When the school commissioners carried out the examination of the valuation rolls of each municipality as prescribed by s. 373 of the Education Act, they

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amended them so as to establish on the basis of its real value the valuation of the taxable property of all the parts of the school municipality. Appellants appealed from respondents’ resolution homologating the rolls as amended. Those appeals were dismissed. Hence the appeals to this Court.

Held: The appeals should be dismissed.

In the part of the text of s. 373 of the Education Act that prescribes what the commissioners must do, the legislator states: “to re-establish on the basis of its real value the valuation of the taxable property”. The law intended only to provide for taxation according to the real value established on the same basis, of such immovables as are taxable in each municipality. This leaves to each town the option of enacting that, within its territory, machinery shall not be included in taxable immovables; however, there is no indication of any intention to give priority to the decision of any one town so far as the taxation of machinery is concerned. Under the Act, respondents were required to amend the valuation roll so as to establish on the basis of its real value the valuation of the taxable property of all parts of the school municipality, which they did.

So far as the other questions raised are concerned, appellants have not shown that the unanimous conclusions of the courts of Quebec were in error.

Richmond Pulp v. Bromptonville, [1970] S.C.R. 453; Protestant School Board of Greater Montreal v. Jenkins Bros. Ltd., [1967] Que. Q.B. 19, upheld [1967] S.C.R. 739 referred to.

APPEALS from judgments of the Court of Queen’s Bench, Appeal Side, Province of Quebec, affirming the judgments of the Provincial Court for the district of Richelieu. Appeals dismissed.

Richard Riendeau, for appellant, Colt Industries.

Paul-Emile Blain, Q.C., for appellant, Beloit Sorel Walmsley Ltd.

Charles Gonthier, Q.C., for appellant, Quebec Iron & Titanium Corp.

Jacques Viau, Q.C., for the respondents.

The judgment of the Court was delivered by

PIGEON J.—These three appeals really raise only one question. As its name indicates, the territory of the respondent school board takes in that of two municipalities: the towns of St‑Joseph de Sorel

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and Tracy. The latter adopted, as it was authorized to do by the amendment made in 1959 to s. 488 of the Cities and Towns Act (now R.S.Q. c. 193), a by-law providing that machinery was not included in immoveables taxable in the municipality. This was effective, for school as well as for municipal purposes, as this Court held in Richmond Pulp v. Bromptonville[1]. What then was the position when the school commissioners carried out the examination of the valuation rolls prescribed by s. 373 of the Education Act (now R.S.Q. c. 235)?

373. The commissioners or trustees of a school municipality the territory of which wholly or partly covers that of several municipalities shall, before fixing the rate of their annual assessment or of any special assessment, at a meeting called for such purpose, after public notice, examine the valuation roll in force in each of such municipalites. If they find that the property pursuant to the said rolls is valued on an equal basis, they shall homologate such valuation rolls or the parts which concern them. However, if they find that the valuation made in such municipalities is not uniform, they shall amend such various rolls so as to re-establish on the basis of its real value the valuation of the taxable property of all the parts of the school municipality. The valuation rolls or the parts which concern them thus amended shall be homologated.

The collection rolls of the said school commissioners or trustees shall be made according to the valuation rolls thus homologated.

It will be seen that the rolls are not to be homologated unless the commissioners “find that the property pursuant to the said rolls is valued on an equal basis”. “However, if they find that the valuation… is not uniform, they shall amend such various rolls so as to re-establish on the basis of its real value the valuation of the taxable property of all the parts of the school municipality.” Does this mean they must make the adjustments required to tax at its real value taxable property throughout the territory without allowing for the fact that in one of the two municipalities the valuation entered on the roll does not include the value of machinery, since it is not taxable in that municipality?

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In Protestant School Board of Greater Montreal v. Jenkins Bros. Ltd.[2], this Court affirmed the decision of the Court of Appeal[3] holding that the School Board, in arriving at a uniform valuation for school purposes, should have excluded the value of the machinery included in the municipal valuation established by a city in which it was taxable, whereas it was not taxable in the City of Montreal. The provision interpreted in that case was quoted verbatim in the following passage from the reasons of Pratte J. (at p. 25):

[TRANSLATION] It must, however, be accepted that the Legislature has indicated the intention that there shall be a uniform basis of valuations in all municipalities subject to the jurisdiction of the Greater Montreal School Board. This clearly appears from s. 3 of 11 Geo. VI, c. 81 (as replaced by s. 5 of 4-5 Eliz. II, c.124, and amended by s. 7 of 10‑11 Eliz. II, c. 17). That provision reads as follows:

3. If the valuations, or any one of them, appearing on the valuation roll of any such municipality are not established on a basis equal to the basis of the valuations made in the city of Montreal, the Protestant School Board of Greater Montreal shall, by resolution, direct amendments to the valuation roll of all or any immoveable properties entered on the protestant and neutral panels in such municipality other than the city of Montreal, and direct that such amended valuation roll shall replace for all purposes of assessment and collection of school taxes in respect of immoveable properties entered on the protestant and neutral panels, the valuation roll theretofore in use by such municipality.

The Act containing this provision does not indicate what is meant by “basis of the valuations”; and, in the absence of enactments clarifying the intent of the Legislature the meaning of the phrase might be discussed endlessly. The fact is, however, as we shall see, that the Legislature has expressed its intent on this question quite clearly in a statute dealing specifically with the valuation of property subject to the school tax. As we know, one of the basic principles of real property taxation is that the taxable property shall be valued at its real value (Cities and Towns Act, s. 485; Municipal Code, s. 650). Now, if we turn to s. 367 of the Education Act (R.S.Q. 1941, c. 59 (R.S.Q. 1964, c. 235)), we find that it is this real value which is to be used as the “basis of the valuations”. Accordingly it seems logical to

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conclude that what the Legislature intended by enacting s. 3 of 11. Geo. VI, c. 81 was that, in all municipalities within the jurisdiction of the Greater Montreal School Board, the real value of immoveables should be arrived at in accordance with the rules followed in the valuation of immoveables located in Montreal, especially those respecting the elements to be included in determining the value. I do not see how the uniformity desired by the Legislature can otherwise be achieved.

Similarly, Montgomery J.A. made the following observations, which were quoted and unanimously approved by this Court (at p. 29):

It may be that the primary purpose of the Legislature, in enacting 11 Geo. VI, c. 81, was to provide additional revenues for respondent, but it seems also to have been the intention of the Legislature to spread the burden of taxation for school purposes more evenly among the owners of properties on the protestant and neutral panels in the various municipalities subject to respondent’s jurisdiction. This intent is particularly clear from the recent amendments to the above Act made by 10-11 Eliz. II, c. 17, which in its title and preamble makes no reference to appellant but is entitled merely “An Act respecting valuation for school purposes”. Before this Act, respondent had a discretionary power to revise the valuation rolls of the municipalities other than the City of Montreal. After section 7 came into force on December 1st, 1962, (a few months before the date of the resolution in question), respondent no longer had this discretion. It was obliged to revise these valuation rolls if they were not established on a basis equal to the basis of valuations made in Montreal, even if such revision were to its disadvantage.

I am satisfied that it was the intention of the Legislature that, so far as possible, equality should be established among the owners of properties on the protestant and neutral panels in all territories subject to respondent’s jurisdiction. This intention is partly defeated by giving a restricted meaning to the term “basis of the valuation”, limiting it to the rules followed in determining values per square foot of land and per cubic foot of building space and ignoring the various legal provisions as to the accessories to be included in the value of the immoveable.

It must be noted that it was by this same “Act respecting valuation for school purposes” that the Quebec Legislature made in the general statute on

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school taxes, the Education Act, the changes the effect of which is to be determined in the case at bar, and gave the special statute governing school taxes in Greater Montreal the form in which it was interpreted by the courts in Jenkins. In that case this Court, adopting the reasons of Montgomery J.A., found that this legislation was intended to establish equality of treatment between taxpayers for school taxation purposes. Accordingly, this Court held that the phrase “basis of the valuation” did not refer only to the rules to be followed in determining the value of land by the square foot, and that of buildings by the cubic foot, but included the provisions determining which appurtenances should be included in the value of immoveables. In the Charter of the City of Montreal, 1960 (1959-60, c. 102), these provisions are found in s. 781, the first paragraph of which reads as follows:

781. The immoveables shall include the lands, the buildings and all that is affixed or appertaining to a building or to a lot so as to form part thereof, but shall not include machines and motors, tools and drive-shafts used for industrial purposes, with the exception of machines producing motive power.

It will be noted that this provision deals specifically with the same subject-matter as s. 488 of the Cities and Towns Act. The decision in Jenkins was therefore that the legislation on school taxes in Greater Montreal had sufficiently indicated the intention to make the treatment of all taxpayers uniform, for the phrase “basis of the valuation” to be interpreted as covering, not only the method of valuation, but also the fixing of what should be included in the valuation as forming part of the immoveables.

However, the wording of s. 373 of the Education Act is quite different from the wording of s. 3 of the Act in question in Jenkins. In the latter case the standard prescribed by the Legislature was “the basis of the valuation made in the City of Montreal”. There was nothing to prevent the Court from including in the meaning of this phrase a determination of the content as well as of the rules to be applied to quantify it in dollars. Here, in that part of the provision which lays down what

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the commissioners must do, the Legislature says: “to re-establish on the basis of its real value the valuation of the taxable property”. It is just not possible to read into this procedure anything but a determination of the value of what is taxable.

It is true that the Act states, in the preceding sentence: “If they find that the property pursuant to the said rolls is valued on an equal basis, they shall homologate such valuation rolls…”. That portion of the section would obviously lend itself to the interpretation adopted in Jenkins. However, it must be remembered that such interpretation was adopted, not as the only possible meaning, but as the one which was proper in the context. Here, the word “basis” occurs a few lines further on, in the most important part of the section, that relating to the procedure at issue in this case. In this sentence the word “basis” is part of the phrase “basis of its real value”, and this phrase is then linked to the phrase “valuation of the taxable property”. As a consequence it is impossible, in my view, to interpret this provision in the same way as the section construed in Jenkins.

Even though it may seem anomalous to place a different interpretation on two provisions relating to the “basis of valuation”, which have derived their present form from the same statute, it must be recognized that the two situations are totally different. With respect to Greater Montreal the Legislature has adopted a fixed rule: the basis of the valuations made in the City of Montreal where machinery, apart from one rare exception, is not taxable. The rule laid down by the general law, on the other hand, is: the real value of taxable immoveables. The result respecting machinery is to leave to each city the option of enacting that, within its territory, machinery shall not be included in taxable immoveables.

If appellants’ reasoning were correct it would mean that every town, whatever its relative size, whose territory is in whole or in part included in that of a school board which takes in several towns, would have the right to decide that, for school taxation purposes, machinery is not taxable

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in all those other towns. Such a result would certainly not prevent the application of an explicit enactment, but it does illustrate the difference with the situation resulting from the provision interpreted in Jenkins. That provision was read as intended to give priority for school purposes throughout the metropolitan territory to the legislation concerning the taxation of machinery in the City of Montreal. The general law, however, intended only to provide for taxation, according to the real value established on the same basis, of such immoveables as are taxable in each municipality; there is no indication of any intention to give priority to the decision of any one town so far as the taxation of machinery is concerned. As Montgomery J.A. observed in the case at bar:

Under the special statutes applicable in the Jenkins Bros case, the duty of the school board was to establish a valuation uniform with that of the City of Montreal. In the present case it is the Education Act (now R.S.Q. c. 235) that applies, and under sec. 373 of that Act Respondents were required to amend the valuation roll “so as to re‑establish on the basis of its real value the valuation of the taxable property of all parts of the school municipality”. This they proceeded to do.

So far as the other questions raised are concerned, I think it suffices to say that appellants have not shown that the unanimous conclusions of the courts of Quebec were in error. I agree with the following observations of Montgomery J.A.:

I am not impressed by the argument that in fact machinery and accessories were not valued for purposes of municipal taxation in St. Joseph. The valuation of the properties of Appellants seems to have been made by the council of St. Joseph on an approximate basis without any detailed valuation being made of anything so that it is difficult to say with any certainty whether any particular asset was included in the valuation or not. Actually, the figures cited by the trial judge demonstrate that the valuation of Appellants’ properties was made on approximately the same basis as that of other properties in the municipality, if machinery and accessories be included, so that the increasing of all valuations by the same percentage, as decided by Respondents, gives a reasonably equitable result.

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In the circumstances it is not necessary for disposing of the case at bar, to decide whether, as counsel for the School Board maintains, changes in the valuation roll required by s. 373 of the Education Act to re-establish the valuation on the basis of the real value of the taxable property can only be made by applying a uniform factor fixed by an overall calculation for all the immoveables included in each municipality.

On the whole, I would dismiss the appeals with costs; however, as the three cases were argued concurrently, counsel fees to which respondents are entitled against appellants shall be taxed as for a single case.

Appeals dismissed with costs.

Solicitors for the appellant, Colt Industries (Canada) Ltd.: McMaster, Meighen, Minnion, Patch, Cordeau, Hyndman & Legge, Montreal.

Solicitors for the appellant, Profis Holdings Ltd., and for the appellant in continuance of suit, Beloit Sorel Walmsley Ltd.: Blain, Piché, Godbout, Emery & Blain, Montreal.

Solicitors for the appellant, Quebec Iron & Titanium Corporation: Laing, Weldon, Courtois, Clarkson, Parsons, Gonthier & Tétrault, Montreal.

Solicitors for the respondents: Viau, Bélanger, Hebert, Mailloux, Beauregard, Paquet & Pinard, Montreal.