New Mount Sinai Hospital v. Toronto, [1973] SCR 541

Supreme Court of Canada

New Mount Sinai Hospital v. Toronto, [1973] S.C.R. 541

Date: 1973-02-28

New Mount Sinai Hospital (Plaintiff) Appellant;

and

The Corporation of the City of Toronto (Defendant) Respondent.

1972: June 20, 21; 1973: February 28.

Present: Judson, Ritchie, Hall, Spence and Laskin JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.

Taxation—Exemption—Municipality imposing special sewer levy—Whether authorizing by‑laws in conflict with s. 3(7) of The Assessment Act, R.S.O. 1970, c.32.

The appellant hospital applied for an order declaring that it was exempt from a special sewer charge imposed by the City of Toronto under the authority of certain by-laws and for an order that the sum of $698.80 paid by the hospital be repaid to it. The by-laws were enacted under the authority of The City of Toronto Act, 1961-62 (Ont.), c. 171, s. 1.

The judge of first instance held that the special sewer charge levied by the city was not a tax levied by authority of The Municipal Act, R.S.O. 1970, c. 284, and consequently the hospital was not exempt. He, therefore, dismissed the application. The Court of Appeal dismissed an appeal and subsequently granted the hospital leave to appeal to this Court.

Held (Judson J. dissenting): The appeal should be allowed.

Per Ritchie, Hall, Spence and Laskin JJ.: The issue was whether the by-laws enacted pursuant to The City of Toronto Act were in conflict with s. 3(7) of The Assessment Act, R.S.O. 1970, c. 32. Under the said s. 3(7), the hospital, which was a public hospital receiving aid under The Public Hospitals Act, R.S.O. 1970, c. 378, was exempt from taxation. The special sewer levy was a tax. The exemption granted by s. 3(7) could only be taken away by a specific enactment of the Legislature of Ontario.

Per Judson J., dissenting: The general rule under The Assessment Act is that all real property in Ontario is liable to assessment and taxation, subject to a large number of exemptions from taxation. The appellant undoubtedly qualified for exemption from this taxation under subs. 7 of s. 4, R.S.O. 1960, c. 23.

[Page 542]

However, a single charge such as the one here in question was not assessment and taxation within the meaning of s. 4 of The Assessment Act. If there was to be any exemption, it must be contained within the enabling Act or the by-law passed pursuant to it.

[City of Ottawa v. Royal Trust Co., [1964] S.C.R. 526, applied; Township of Scarborough v. Scarborough Lawn Cemetery Co. Ltd., [1945] O.W.N. 655, referred to.]

APPEAL from a judgment of the Court of Appeal for Ontario[1], dismissing an appeal from an order of Osler J. Appeal allowed, Judson J. dissenting.

A.B. Rosenberg, Q.C., and J.P. Quinn, for the appellant.

D.C. Lyons, for the respondent.

JUDSON J. (dissenting)—I agree with the judgments of the Ontario Courts delivered in this matter. The Court of Appeal accepted the reasons of Osler J., who held that while the special charges on new buildings or extensions which would impose a heavy load on sewer or water systems were taxes, they were not the taxes dealt with in the exempting provisions of The Assessment Act.

The general rule under The Assessment Act is that all real property in Ontario is liable to assessment and taxation, subject to a large number of exemptions from taxation. New Mount Sinai Hospital undoubtedly qualifies for exemption from this taxation under subs. 7 of s. 4, R.S.O. 1960, c. 23. This assessment is required each year and in 1968 had to be at the actual value of the land. Now under a recent amendment the assessment must be at market value.

The City of Toronto Act, 1961-62 (Ont.), c. 171, authorizes the imposition of a special charge on certain buildings which make necessary additional water or sewage capacity. The

[Page 543]

proceeds must be used for this purpose only and the charge is made a lien on the land. The by-law passed pursuant to the Act sets the special charge at 20 cents for each square foot of floor area. It exempts the first 3,300 square feet and, as required by the enabling Act, it has no application to any single family, double or duplex building.

A single charge of this nature, is not, in my opinion, assessment and taxation within the meaning of s. 4 of The Assessment Act, R.S.O. 1960, c. 23. If there is to be any exemption, it must be contained within the enabling Act or the by-law passed pursuant to it. I note that the City of Ottawa has an identical special Act but the by-law considered in City of Ottawa v. Royal Trust Co.[2], did contain a wide exemption in favour of any building used for educational, religious or charitable purposes, which is entitled to exemption from all kinds of municipal taxation. I note also that the general legislation enacted in 1965 and now s. 359 of The Municipal Act, R.S.O. 1970, c. 284, exempts from the charge “every building exempt from taxation under any general or special Act.” But the position of the City of Toronto remains untouched under its special Act. Unless this Act is amended or unless the city chooses to grant the exemption in its by-law, as did the City of Ottawa, there is no exemption from this charge.

The Court of Appeal, in addition to adopting the reasons of Osler J., was unanimous in holding that the principles expressed in Township of Scarborough v. Scarborough Lawn Cemetery Co. Ltd[3], applied. I agree with and would adopt the reasons of Robertson C.J.O. in that case.

I would dismiss the appeal.

[Page 544]

The judgment of Ritchie, Hall and Spence JJ. was delivered by

HALL J.—By originating notice dated October 7, 1970, the hospital asked for an order declaring that it was exempt from a special sewer charge imposed by the City of Toronto under the authority of certain by-laws and for an order that the sum of $698.80 paid by the hospital be repaid to it.

The application was heard by Osler J. who held that the special sewer charge levied by the city was not a tax levied by authority of The Municipal Act of Ontario, R.S.O. 1970, c. 284, and consequently the hospital was not exempt. He, therefore, dismissed the application, with costs if asked. The hospital appealed to the Court of Appeal for Ontario which sustained Osler J., again with costs if demanded. Subsequently, on April 29, 1971, the Court of Appeal granted the hospital leave to appeal to this Court.

The city purported to impose the special sewer levy under its By-laws 22778 or, alternatively, 341-67. These two by-laws are identical, No. 341-67 having been made necessary by the amalgamation of the City of Toronto with the Villages of Forest Hill and Swansea. The by‑laws were enacted under the authority of The City of Toronto Act, 1961-62 (Ont.), c. 171, s. 1 of which reads:

1. (1) Subject to the approval of the Ontario Municipal Board first being obtained, the council of the Corporation may pass by-laws for imposing upon the owners of high-rise or other buildings, as defined by the by-law, for the erection or enlargement of which a building permit was or is issued subsequent to the 6th day of March, 1962, or of any class or classes of such buildings, that impose or may impose a heavy load on the sewer system or water system, or both, by reason of which expenditures are or may be required to provide additional sanitary or storm sewer or water supply capacity, which, in the opinion of the council, would not otherwise be required, a special charge or charges over and above all other rates and

[Page 545]

charges to pay for all or part of the cost of providing the additional capacity.

(2) The proceeds of the charge or charges authorized by subsection 1 shall be used for the purpose therein referred to and not otherwise.

(3) Any charge or charges imposed under subsection 1 are a lien upon the land on which the building is erected and may be collected in the same manner and with the same remedies as provided by The Assessment Act for the collection of real property taxes.

(4) There shall be an appeal to the court of revision of the City of Toronto from any charge or charges authorized by subsection 1, and the provisions with respect to appeals to the court of revision and section 51 of The Local Improvement Act apply mutatis mutandis.

(5) This section does not apply to single-family, double or duplex buildings.

By-law No. 341-67 provides in part as follows:

3. (1) Subject to subsections 2 and 3 hereof and section 5, a charge is hereby imposed on the owner or owners of every building in the City of Toronto for the erection or enlargement of which a building permit is issued subsequent to the 31st day of December, 1966 (other than a building in respect of which a charge was imposed under section 3 of By-law No. 22778 of the Corporation by reason of a building permit for the erection or enlargement thereof having been issued during the period next following the 31st day of December, 1966 to the time at which this by-law comes into force) of 20 cents for each square foot of gross floor area of such erection or enlargement as the case may be;

(2) Subject to subsection (3) in calculating the charge under subsection 1, each building, as described therein, is entitled to and shall be credited with an exemption of 3,300 square feet to be deducted from the gross floor area of such erection or enlargement as the case may be;

(3) The exemption granted in subsection 2 hereof in the case of an enlargement of a building shall apply only to the first enlargement thereof and shall not be

[Page 546]

granted where there has been an exemption in respect of the initial erection of the building.

…

4. (3) The charge imposed by this by-law is a lien upon the land on which the building is erected and shall be collected by the City Treasurer in the same manner and with the same remedies as provided by The Assessment Act for the collection of real property taxes.

The hospital, which is a public hospital receiving aid under The Public Hospitals Act, R.S.O. 1970, c. 378, claims exemption under s. 3 of The Assessment Act, R.S.O. 1970, c. 32, which reads:

3. All real property in Ontario is liable to assessment and taxation, subject to the following exemptions from taxation:

(7) Every public hospital receiving aid under The Public Hospitals Act with the land attached thereto, but not land of a public hospital when occupied by any person as tenant or lessee.

(a) Land owned and used by such a public hospital for farming purposes shall be deemed attached to the hospital within the meaning of this paragraph, notwithstanding that it is separated therefrom by a highway.

The issue here is whether the by-laws enacted pursuant to The City of Toronto Act are in conflict with s. 3(7) of The Assessment Act. Section 3(7) of The Assessment Act is clear and unambiguous. Under it the hospital is exempt from taxation. The special sewer tax or levy here is a tax. See City of Ottawa v. Royal Trust Company[4].

In my view the exemption granted by s. 3(7) of The Assessment Act could only be taken away by a specific enactment such as is to be found in ss. 62 and 63 of The Local Improvement Act, R.S.O. 1970, c. 255, which read:

62. Land on which a church or place of worship is erected or that is used in connection therewith, the land of a university, college or seminary of learning,

[Page 547]

whether vested in a trustee or otherwise and the land of a board of an elementary or secondary school, as defined in The Schools Administration Act, is liable to be specially assessed for local improvements, notwithstanding the provisions of The Assessment Act.

63. Land exempt from taxation for local improvements under any general or special Act shall nevertheless, for all purposes, except petitioning for or against undertaking a work, be subject to the provisions of this Act and shall be especially assessed; but the special assessments imposed thereon that fall due while such land remains exempt are not collectable from the owner thereof, but shall be paid by the corporation.

The Legislature of Ontario has not enacted any similar provision denying public hospitals the exemption they enjoy under The Assessment Act. Repeal of the right to exemption must be plainly expressed. Judson J. in the City of Ottawa v. Royal Trust Company case expressed the principle as follows at p. 534:

The Court of Appeal also says that this legislation must be strictly construed against the city because it is a private Act and a taxing Act. The principles have often been stated. Those who promote a private Act ought to see that the powers they wish to obtain are plainly expressed. Those who seek to tax must point to clear, unambiguous words which impose the tax. If these are not to be found or where the meaning of the statute is in doubt, there is no tax. I am using my own words but I do not wish to be taken in any way as departing from the usual formulae.

This principle is also set out in s. 12 of The Interpretation Act, R.S.O. 1970, c. 225, which reads:

12. No Act of the nature of a private Act affects the rights of any person, or body corporate, politic or collegiate, such only excepted as are therein mentioned or referred to.

[Page 548]

The City of Toronto Act does not mention or refer to public hospitals granted exemption by s. 3(7) of The Assessment Act.

The situation in the present appeal differs from that which obtained in the City of Ottawa case. That was an application to quash a similar by-law. The validity of the by-laws is not questioned here nor is the right of the City of Toronto to levy the special assessment authorized by the by-laws against the owners of all buildings mentioned in the by-laws except those which are exempt from assessment and taxation under s. 3(7) of The Assessment Act.

I would, accordingly, allow the appeal with costs throughout and declare that the hospital is exempt from the special sewer charges made by the City of Toronto and that the City of Toronto do repay to the hospital the sum of $698.80 together with interest thereon from the date of payment.

LASKIN J.—I agree with my brother Hall that this appeal should be allowed. Two factors move me to add these reasons in supplement to his. First, Gale C.J.O., in his reasons granting leave to appeal to this Court, noted that not only was there an important principle of law involved but questions of public interest also arose for consideration in view of the fact that other public institutions would be affected so that large sums of money were at issue. Second, the Ontario Court of Appeal, in denying exemption to the appellant hospital, relied on an earlier judgment of its own in Township of Scarborough v. Scarborough Lawn Cemetery Co. Ltd.[5], and I wish to comment on it.

I doubt whether any rule can be stated as to when an ongoing tax exemption given by a general public statute will be negated in a particular case by a special statute couched in terms broad enough to cover the tax exempt institution. The approach to such problems is, however, clear enough, and it has been set out

[Page 549]

in the reasons of my brother Hall. The Scarborough case appears to be one where that approach was rejected in favour of one that is its reverse.

In the Scarborough case, a special Act empowered the appellant municipality to acquire and operate a waterworks system, to issue debentures for the cost thereof and to impose a special levy upon all real property in the benefited sections or areas of the municipality to pay off the debentures. The respondent cemetery company, seeking to resist the special levy, relied unsuccessfully on the general tax exemption of cemetery lands under the Ontario Assessment Act. Robertson C.J.O., with whom Gillanders J.A. agreed, indicated that rates collected to meet the cost of a special service were not taxes such as those envisaged by The Assessment Act, and he said further that the terms of the special Act were the only ones to be considered in deciding who was to pay for the authorized works. He is then reported as saying further:

I know of no warrant for carrying into the procedure under this special Act, the exemptions from assessment provided by The Assessment Act, when there is nothing in the special Act to say so.

This is not a proposition which I can accept, and it would not, for the reasons stated by my brother Hall, be an adequate support for the judgment of the Ontario Court of Appeal in the present case.

McRuer J.A., as he then was, pointed out in concurring reasons in the Scarborough case that (1) the Legislature had provided a special scheme for the construction of water works in the municipality as a special service to property owners in the defined areas, and (2) the clear intention was that no portion of the cost of the work should fall on that portion of the municipality that was not within an area served by the work. In his view, the special Act was inconsistent with an intention that the general exemptions in The Assessment Act should apply. I take it, therefore, that he was satisfied that

[Page 550]

there were sufficient indicia in the special Act to oust any exemption given by The Assessment Act.

The common features of the Scarborough case and the present case are the imposition of a special charge on property owners benefiting from proposed works and the want of any express recognition of general tax exemptions. There are, however, differences as well. One is in the characterization of the special levy, that is whether it was a tax or a service charge. Unlike the position apparently taken in the Scarborough case, the levy in the present case was treated as a tax by the judge of first instance, and there was no dissent from this in the Ontario Court of Appeal other than by its reference to the Scarborough case, which would not necessarily be on that point. The reasons of my brother Hall are on the footing that a tax is involved here, and I am of the same opinion. Again, the exclusion of single family, double or duplex buildings from liability to the special rate in the present case diminished the stringency of the special Act here as compared with that in the Scarborough case which was treated as inexorably commanding that all directly benefited property owners and no others must pay the special levy.

At bottom, the differences may be too slight to warrant different conclusions in the two situations, and the relevant question can only be whether there is incompatibility between the recognition of the hospital’s existing exemption in the face of the terms of a subsequent special Act which does not refer to exemptions. I do not think that there is that incompatibility here. Another feature of The City of Toronto Act that is worth mentioning is its reference in s. 1(1) to “a special charge or charges over and above all other rates and charges”. This suggests that only property already taxable is to be subjected to the special levy. I may add that I would find it incongruous to allow the city to escape from

[Page 551]

tax exemptions by proceeding under its special Act when it could not do so if it had exercised the like power under the authority of s. 379(e) of the Ontario Municipal Act, albeit this was enacted later but before either of the two by-laws in question was passed.

Appeal allowed with costs, JUDSON J. dissenting.

Solicitors for the appellant: Rosenberg, Walsh, Smith, Paton & Kroul, Toronto.

Solicitor for the respondent: W.R. Callow, Toronto.