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SUPREME
COURT OF CANADA
Between:
Catalyst
Paper Corporation
Appellant
and
Corporation
of the District of North Cowichan
Respondent
Coram: McLachlin C.J. and LeBel, Deschamps, Fish, Abella, Rothstein
and Cromwell JJ.
Reasons
for Judgment:
(paras. 1 to 37)
|
McLachlin C.J. (LeBel, Deschamps, Fish,
Abella, Rothstein and Cromwell JJ. concurring)
|
Catalyst Paper Corp. v. North Cowichan (District), 2012 SCC
2, [2012] 1 S.C.R. 5
Catalyst
Paper Corporation Appellant
v.
Corporation
of the District of North Cowichan Respondent
Indexed as: Catalyst Paper Corp. v. North Cowichan
(District)
2012 SCC 2
File No.: 33744.
2011: October 18; 2012: January 20.
Present: McLachlin C.J. and LeBel, Deschamps, Fish, Abella,
Rothstein and Cromwell JJ.
on appeal from the court of appeal for british columbia
Municipal law — Bylaws — Validity — Standard of
review applicable to municipal taxation bylaw — What standard of reasonableness
requires in context of judicial review of taxation bylaw — Community Charter,
S.B.C. 2003, c. 26, s. 197.
One
of C’s four mills is located in the District of North Cowichan on Vancouver
Island. C seeks to have a municipal taxation bylaw set aside on the basis that
it is unreasonable having regard to objective factors such as consumption of
municipal services. The District argued that reasonableness must take into
account not only matters directly related to the treatment of a particular
taxpayer, but a broad array of social, economic and demographic factors
relating to the community as a whole. The chambers judge upheld the bylaw. The
Court of Appeal dismissed the appeal.
Held:
The appeal should be dismissed.
The
applicable standard of review is reasonableness. The power of the courts to
set aside municipal bylaws is a narrow one, and cannot be exercised simply
because a bylaw imposes a greater share of the tax burden on some ratepayers
than on others. The critical question is what factors the court should
consider in determining what lies within the range of possible reasonable outcomes.
Courts reviewing bylaws for reasonableness must approach the task against the
backdrop of the wide variety of factors that elected municipal councillors may
legitimately consider in enacting bylaws, including broad social, economic and
political issues. Only if the bylaw is one no reasonable body informed by
these factors could have taken will the bylaw be set aside.
The
fact that wide deference is owed to municipal councils does not mean that they
have carte blanche. Reasonableness limits municipal councils in the
sense that the substance of their bylaws must conform to the rationale of the
statutory regime set up by the legislature. The range of reasonable outcomes
is circumscribed by the purview of the legislative scheme that empowers a
municipality to pass a bylaw. Municipal councils must also adhere to
appropriate processes and cannot act for improper purposes.
The
bylaw falls within a reasonable range of outcomes. The bylaw does not constitute
a decision that no reasonable elected municipal council could have made.
The District Council considered and weighed all relevant factors. The process of
passing the bylaw was properly followed. The reasons for the bylaw were clear and
the District’s policy had been laid out in a five‑year plan. The
District’s approach complies with the Community Charter, which permits
municipalities to apply different tax rates to different classes of property. The
Community Charter does not support C’s contention that property value
taxes ought to be limited by the level of service consumed. Although the bylaw
favours residential property owners, it is not unreasonably partial to them.
Cases Cited
Applied:
Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190; referred
to: Thorne’s Hardware Ltd. v. The Queen, [1983] 1 S.C.R.
106; Bell v. The Queen, [1979] 2 S.C.R. 212; O’Flanagan v. Rossland
(City), 2009 BCCA 182, 270 B.C.A.C. 40; Westcoast Energy Inc. v. Peace
River (Regional District) (1998), 54 B.C.L.R. (3d) 45; Canadian National
Railway Co. v. Fraser‑Fort George (Regional District) (1996), 26
B.C.L.R. (3d) 81; Hlushak v. Fort McMurray (City) (1982), 37 A.R. 149; Ritholz
v. Manitoba Optometric Society (1959), 21 D.L.R. (2d) 542; Canada (Citizenship
and Immigration) v. Khosa, 2009 SCC 12, [2009] 1 S.C.R. 339; Pacific National Investments Ltd. v.
Victoria (City), 2000 SCC
64, [2000] 2 S.C.R. 919; Kruse v. Johnson, [1898] 2 Q.B. 91; Associated Provincial
Picture Houses, Ltd. v. Wednesbury Corp., [1948]
1 K.B. 223; Lehndorff United Properties (Canada) Ltd. v. Edmonton (City) (1993), 146 A.R. 37, aff’d (1994), 157 A.R.
169; Immeubles Port Louis Ltée v. Lafontaine (Village), [1991] 1 S.C.R.
326.
Statutes and Regulations Cited
Community Charter, S.B.C. 2003,
c. 26, ss. 197, 199(b).
District of North Cowichan, Bylaw No. 3385, Tax Rates Bylaw,
2009.
Municipal Finance Authority Act, R.S.B.C.
1979, c. 292, s. 14.1(3)(b) [ad. 1983, c. 24, s. 35].
Municipal Finance Authority Act Regulation, B.C. Reg. 63/84.
APPEAL
from a judgment of the British Columbia Court of Appeal (Newbury, Huddart and Saunders JJ.A.), 2010 BCCA 199, 286 B.C.A.C. 149, 484 W.A.C.
149, 5 B.C.L.R. (5th) 203, 318 D.L.R. (4th) 350, 92 R.P.R. (4th) 1, 69 M.P.L.R.
(4th) 163, [2010] 7 W.W.R. 259, [2010] B.C.J. No. 700 (QL), 2010
CarswellBC 958, affirming a decision of Voith J., 2009 BCSC 1420, 98 B.C.L.R. (4th) 355, 88
R.P.R. (4th) 203, 66 M.P.L.R. (4th) 35, [2010] 7 W.W.R. 220, [2009] B.C.J. No. 2033
(QL), 2009 CarswellBC 2763. Appeal dismissed.
Roy W. Millen, Joanne
Lysyk and Alexandra Luchenko, for the appellant.
Sukhbir Manhas and Reece
Harding, for the respondent.
The
judgment of the Court was delivered by
[1]
The Chief
Justice — Catalyst Paper is the largest specialty paper
and newsprint producer in western North America. One of its four mills is
located in the District of North Cowichan, on the southeastern shore of
Vancouver Island. Nearby forests offer a plentiful supply of wood for
Catalyst’s operations, while proximity to the ocean offers cheap transportation
of supply and product. Labour was historically supplied by small neighbouring
communities. Catalyst footed a large portion of the District’s modest property
tax levy, without demur.
[2]
In recent decades, the picture has changed.
Attracted by the beauty of the Cowichan coast and the benignity of its climate,
new residents began flocking to the District. One after another, new
subdivisions sprang up. As the population increased, so did the need for new
roads, water lines, schools, hospitals and the usual array of municipal
services that accompany urban growth.
[3]
As more people came to the District, residential
property values skyrocketed, while the value of Catalyst’s property remained relatively
stable. The District was concerned that taxing residential property at a rate
that reflected its actual value relative to the value of other classes of
property in the District would result in unacceptable tax increases to
residents, hitting long-term fixed-income residents hard. Instead, the
District responded to the demographic shift by keeping residential property
taxes low and increasing the relative tax rate on Catalyst’s property. The
total assessed value of residential property in North Cowichan increased 271%
between 1992 and 2007, when the mean assessed value of a home in the District
reached about $300,000. While residential properties account for almost 90% of
the total value of property in the District, the taxes payable in respect thereof
constitute only 40% of tax revenue. The tax rate for Class 1 (residential)
property in 2009 was set at $2.1430 per $1,000, while the tax rate for Class 4
property (major industry), such as Catalyst’s, was set at $43.3499 per $1,000.
The ratio between residential property and major industrial property was thus
1:20.3 — dramatically higher than the 1:3.4 ratio that until 1984 was
prescribed by regulation for all municipalities in British Columbia. The rate
currently is among the highest in the province.
[4]
Catalyst, not surprisingly, was unhappy with
this state of affairs. Not only is it required to foot a grossly
disproportionate part of the District’s property tax levy, it obtains little in
exchange in terms of services. It has its own sewer and water systems, and its
own deep-sea port. Exacerbating the situation is the fact that in recent
years, Catalyst’s operation has been losing money. Catalyst cannot pick up its
operation and move elsewhere. Its choices are to stay and pay, or to close the
mill.
[5]
To avert this fate, Catalyst has been pressuring
the District to lower its tax assessment since 2003. It has had modest
success. The District has conducted studies into the problem. It accepts that
existing Class 4 tax rates in North Cowichan are at undesirable levels. The
work of the District’s Property Tax Restructuring Committee, the reports of its
financial officer, Mr. Frame, and the District’s Financial Plan Bylaw, all
recognized that existing Class 4 rates are significantly higher than they
should be. As Mr. Frame put it, they “have gotten off track”.
[6]
Acknowledging the problem, the District has
embarked on a gradual program to reduce the rates on Class 4 property, has
shifted some special costs to residents ($400,000 for a swimming pool), and in
2008 allocated a $300,000 budget reduction to Class 4 alone. This resulted in
the property taxes paid by Catalyst declining from 48% in 2007 to 44% in 2008,
to the current 37%. However, for Catalyst, this gradual approach is too
little. Having exhausted recourse to the District, its only alternative, it says,
is to seek relief from the courts.
[7]
This raises the issues of when courts of law can
review municipal taxation bylaws and what principles guide that review.
Catalyst argues that courts can set aside municipal bylaws on the ground that
they are unreasonable, having regard to objective factors such as consumption
of municipal services. The District of North Cowichan, on the other hand,
argues that the judicial power to overturn a municipal tax bylaw is very
narrow; in its view, courts cannot overturn a bylaw simply because it places a
disproportionate burden on a taxpayer.
[8]
The British Columbia Supreme Court (2009 BCSC
1420, 98 B.C.L.R. (4th) 355) and the Court of Appeal (2010 BCCA 199, 286
B.C.A.C. 149) upheld the impugned bylaw. Catalyst now appeals to this Court.
[9]
I conclude that the power of the courts to set
aside municipal bylaws is a narrow one, and cannot be exercised simply because
a bylaw imposes a greater share of the tax burden on some ratepayers than on
others.
Analysis
A. Judicial Review of Municipal Bylaws
[10]
It is a fundamental principle of the rule of law
that state power must be exercised in accordance with the law. The corollary
of this constitutionally protected principle is that superior courts may be
called upon to review whether particular exercises of state power fall outside
the law. We call this function “judicial review”.
[11]
Municipalities do not have direct powers under
the Constitution. They possess only those powers that provincial legislatures
delegate to them. This means that they must act within the legislative
constraints the province has imposed on them. If they do not, their decisions
or bylaws may be set aside on judicial review.
[12]
A municipality’s decisions and bylaws, like all
administrative acts, may be reviewed in two ways. First, the requirements of
procedural fairness and legislative scheme governing a municipality may require
that the municipality comply with certain procedural requirements, such as
notice or voting requirements. If a municipality fails to abide by these
procedures, a decision or bylaw may be invalid. But in addition to meeting
these bare legal requirements, municipal acts may be set aside because they
fall outside the scope of what the empowering legislative scheme contemplated.
This substantive review is premised on the fundamental assumption derived from
the rule of law that a legislature does not intend the power it delegates to be
exercised unreasonably, or in some cases, incorrectly.
[13]
A court conducting substantive review of the
exercise of delegated powers must first determine the appropriate standard of
review. This depends on a number of factors, including the presence of a
privative clause in the enabling statute, the nature of the body to which the
power is delegated, and whether the question falls within the body’s area of
expertise. Two standards are available: reasonableness and correctness. See,
generally, Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190, at para. 55. If the applicable standard of review is
correctness, the reviewing court requires, as the label suggests, that the
administrative body be correct. If the applicable standard of review is
reasonableness, the reviewing court requires that the decision be reasonable,
having regard to the processes followed and whether the outcome falls within a
reasonable range of alternatives in light of the legislative scheme and
contextual factors relevant to the exercise of the power (Dunsmuir, at
para. 47).
[14]
Against this general background, I come to the
issue before us — the substantive judicial review of municipal taxation
bylaws. In Thorne’s Hardware Ltd. v. The Queen, [1983] 1 S.C.R.
106, at p. 115, the Court, referring to delegated legislation, drew a
distinction between policy and legality, with the former being unreviewable by
the courts:
The Governor in Council quite obviously
believed that he had reasonable grounds for passing Order in Council P.C.
1977-2115 extending the boundaries of Saint John Harbour and we cannot enquire
into the validity of those beliefs in order to determine the validity of the
Order in Council.
(See also pp. 111-13.)
However, this attempt to maintain a clear distinction between policy and
legality has not prevailed. In passing delegated legislation, a municipality
must make policy choices that fall reasonably within the scope of the authority
the legislature has granted it. Indeed, the parties now agree that the tax
bylaw at issue is not exempt from substantive review in this sense.
[15]
Unlike Parliament and provincial legislatures
which possess inherent legislative power, regulatory bodies can exercise only
those legislative powers that were delegated to them by the legislature. Their
discretion is not unfettered. The rule of law insists on judicial review to
ensure that delegated legislation complies with the rationale and purview of
the statutory scheme under which it is adopted. The delegating legislator is
presumed to intend that the authority be exercised in a reasonable manner.
Numerous cases have accepted that courts can review the substance of bylaws to
ensure the lawful exercise of the power conferred on municipal councils and
other regulatory bodies (Bell v. The Queen, [1979] 2 S.C.R. 212; O’Flanagan v.
Rossland (City), 2009 BCCA 182, 270 B.C.A.C. 40; Westcoast
Energy Inc. v. Peace River (Regional District) (1998), 54 B.C.L.R. (3d) 45
(C.A.); Canadian National Railway Co. v. Fraser-Fort George (Regional
District) (1996), 26 B.C.L.R. (3d) 81 (C.A.); Hlushak v. Fort McMurray
(City) (1982), 37 A.R. 149 (C.A.); Ritholz v. Manitoba Optometric
Society (1959), 21 D.L.R. (2d) 542 (Man. C.A.)).
[16]
This brings us to the standard of review to be
applied. The parties agree that the reasonableness standard applies in this
case. The question is whether the bylaw at issue is reasonable having regard
to process and whether it falls within a range of possible reasonable outcomes (Dunsmuir,
at para. 47).
[17]
Where the parties differ is on what the
standard of reasonableness requires in the context of this case. This is
the nub of the dispute before us. Catalyst argues that the issue is whether
the tax bylaw falls within a range of reasonable outcomes, having regard to
objective factors relating to consumption of municipal services, factors
Catalyst has outlined in a study called the “Consumption of Services Model”.
The District of North Cowichan, on the other hand, argues that reasonableness,
in the context of municipal taxation bylaws, must take into account not only
matters directly related to the treatment of a particular taxpayer in terms of
consumption, but a broad array of social, economic and demographic factors
relating to the community as a whole. The critical question is what factors
the court should consider in determining what lies within the range of possible
reasonable outcomes. Is it the narrow group of objective consumption-related
factors urged by Catalyst? Or is it a broader spectrum of social, economic and
political factors, as urged by North Cowichan?
[18]
The answer lies in Dunsmuir’s recognition
that reasonableness must be assessed in the context of the particular type of
decision making involved and all relevant factors. It is an essentially
contextual inquiry (Dunsmuir, at para. 64). As stated in Canada
(Citizenship and Immigration) v. Khosa, 2009 SCC 12, [2009] 1 S.C.R. 339, at para. 59, per
Binnie J., “[r]easonableness is a single standard that takes its colour from
the context.” The fundamental question is the scope of decision-making power
conferred on the decision-maker by the governing legislation. The scope of a
body’s decision-making power is determined by the type of case at hand. For
this reason, it is useful to look at how courts have approached this type of
decision in the past (Dunsmuir, at paras. 54 and 57). To put it in
terms of this case, we should ask how courts reviewing municipal bylaws pre-Dunsmuir
have proceeded. This approach does not contradict the fact that the ultimate
question is whether the decision falls within a range of reasonable outcomes.
It simply recognizes that reasonableness depends on the context.
[19]
The case law suggests that review of municipal
bylaws must reflect the broad discretion provincial legislators have
traditionally accorded to municipalities engaged in delegated legislation. Municipal
councillors passing bylaws fulfill a task that affects their community as a
whole and is legislative rather than adjudicative in nature. Bylaws are not
quasi-judicial decisions. Rather, they involve an array of social, economic,
political and other non-legal considerations. “Municipal governments are
democratic institutions”, per LeBel J. for the majority in Pacific National Investments Ltd. v.
Victoria (City), 2000 SCC
64, [2000] 2 S.C.R. 919, at para. 33. In this context,
reasonableness means courts must respect the responsibility of elected
representatives to serve the people who elected them and to whom they are
ultimately accountable.
[20]
The decided cases support the view of the trial
judge that, historically, courts have refused to overturn municipal bylaws
unless they were found to be “aberrant”, “overwhelming”, or if “no reasonable
body” could have adopted them (para. 80, per Voith J.). See Kruse
v. Johnson, [1898] 2 Q.B. 91 (Div. Ct.); Associated Provincial
Picture Houses, Ltd. v. Wednesbury Corp., [1948] 1 K.B. 223 (C.A.);
Lehndorff United Properties (Canada) Ltd. v. Edmonton (City) (1993), 146
A.R. 37 (Q.B.), aff’d (1994), 157 A.R. 169
(C.A.).
[21]
This deferential approach to judicial review of
municipal bylaws has been in place for over a century. As Lord Russell C.J.
stated in Kruse v. Johnson:
. . . courts of justice ought to be
slow to condemn as invalid any by-law, so made under such conditions, on the
ground of supposed unreasonableness. Notwithstanding what Cockburn C.J. said
in Bailey v. Williamson [(1873), L.R. 8 Q.B. 118, at p. 124], an
analogous case, I do not mean to say that there may not be cases in which it
would be the duty of the Court to condemn by-laws, made under such authority as
these were made, as invalid because unreasonable. But unreasonable in what
sense? If, for instance, they were found to be partial and unequal in their
operation as between different classes; if they were manifestly unjust; if they
disclosed bad faith; if they involved such oppressive or gratuitous
interference with the rights of those subject to them as could find no
justification in the minds of reasonable men, the Court might well say,
“Parliament never intended to give authority to make such rules; they are
unreasonable and ultra vires.” But it is in this sense, and in this sense
only, as I conceive, that the question of unreasonableness can properly be
regarded. A by-law is not unreasonable merely because particular judges may
think that it goes further than is prudent or necessary or convenient, or
because it is not accompanied by a qualification or an exception which some
judges may think ought to be there. [Emphasis added; pp. 99-100.]
These
are the general indicators of unreasonableness in the context of municipal
bylaws. It must be remembered, though, that what is unreasonable will depend
on the applicable legislative framework. For instance, Lord Russell C.J.’s
reference to inequality in operation as between different classes is inapt in
the context of many modern municipal statutes, which contain provisions that
expressly allow for such inequality. Subsection 197(3) of the Community
Charter, S.B.C. 2003, c. 26, which allows municipalities to set different
tax rates for different property classes, is such a provision.
[22]
Catalyst argues that Dunsmuir has changed
the law and that the traditional deferential approach to the review of
municipal bylaws no longer holds. The bylaw, it argues, must be demonstrably
reasonable, having regard to objective criteria relating to taxation. The
reasonableness standard in Dunsmuir, it says, means that all
municipal decisions, including bylaws, must meet the test of demonstrable
rationality in terms of process and outcome. It follows, Catalyst argues, that
a municipality cannot tax major industrial property owners at a substantially
higher rate than residential property owners, in order to avoid hardship to
long-term or fixed-income residents in a rising housing market. Rather, the
municipality should confine itself to objective factors, such as those set
forth in Catalyst’s “Municipal Sustainability Model”, in fixing the property
tax rates of different classes of property owners.
[23]
This argument misreads Dunsmuir. As
discussed above, Dunsmuir described reasonableness as a flexible
deferential standard that varies with the context and the nature of the
impugned administrative act. In doing so, Dunsmuir expressly stated
that the approaches to review developed in particular contexts in previous
cases continue to be relevant (Dunsmuir, at paras. 54 and 57). Here the
context is the adoption of municipal bylaws. The cases dealing with review of
such bylaws relied on by the trial judge and discussed above continue to be
relevant and applicable. To put it succinctly, they point the way to what is
reasonable in the particular context of bylaws passed by democratically elected
municipal councils.
[24]
It is thus clear that courts reviewing bylaws
for reasonableness must approach the task against the backdrop of the wide
variety of factors that elected municipal councillors may legitimately consider
in enacting bylaws. The applicable test is this: only if the bylaw is one no
reasonable body informed by these factors could have taken will the bylaw be
set aside. The fact that wide deference is owed to municipal councils does not
mean that they have carte blanche.
[25]
Reasonableness limits municipal councils in the
sense that the substance of their bylaws must conform to the rationale of the
statutory regime set up by the legislature. The range of reasonable outcomes
is thus circumscribed by the purview of the legislative scheme that empowers a
municipality to pass a bylaw.
[26]
Here the relevant legislation is the Community
Charter. Section 197 gives municipalities a broad and virtually
unfettered legislative discretion to establish property tax rates in respect of
each of the property classes in the municipality, unless limited by
regulation. The intended breadth of the legislative discretion under the
current legislative scheme is highlighted by the fact that the government of
British Columbia ceased to impose regulatory limits on the ratios between tax
rates in 1985. Section 199(b) of the Community Charter allows the Lieutenant
Governor in Council to make regulations on the relationships between Class 1
and Class 4 tax rates, and no regulation of this sort has been reintroduced
since the repeal of the 1984 regulation, which prescribed a 1 to 3.4 ratio
between residential and major industry tax rates (B.C. Reg. 63/84, adopted
pursuant to s. 14.1(3)(b) of the Municipal Finance Authority Act, R.S.B.C.
1979, c. 292, the predecessor of s. 199(b) of the Community Charter).
Special provisions of the Community Charter relating to parcel
taxation, local area services, business improvement areas, or property value
tax exemptions address particular concerns and do not detract from the broad
power of British Columbia municipalities to vary rates between different
classes of property.
[27]
Nor does the Community Charter support
the contention that property value taxes ought to be limited by the level of
service consumed. Section 197 authorizes the imposition of a tax, not a fee.
The distinguishing feature between the two is that a tax need bear no
relationship to the costs of the service being provided, while the opposite is
true for a fee. The ratio of service consumption to the different property
classes will differ depending on the service. In light of this, a requirement
that municipalities impose property value taxes having in mind the level of
services consumed would prevent municipalities from ever exercising their
authority under s. 197(3)(b).
[28]
Another set of limitations on municipalities
passing bylaws flows from the need for reasonable processes. In determining
whether a particular bylaw falls within the scope of the legislative scheme,
factors such as failure to adhere to required processes and improper motives
are relevant. Municipal councils must adhere to appropriate processes and
cannot act for improper purposes. As Gonthier J. stated for the Court in Immeubles
Port Louis Ltée v. Lafontaine (Village), [1991] 1 S.C.R. 326, “[a]
municipal act committed for unreasonable or reprehensible purposes, or purposes
not covered by legislation, is void” (p. 349).
[29]
It is important to remember that requirements of
process, like the range of reasonable outcomes, vary with the context and
nature of the decision-making process at issue. Formal reasons may be required
for decisions that involve quasi-judicial adjudication by a municipality. But
that does not apply to the process of passing municipal bylaws. To demand that
councillors who have just emerged from a heated debate on the merits of a bylaw
get together to produce a coherent set of reasons is to misconceive the nature
of the democratic process that prevails in the council chamber. The reasons
for a municipal bylaw are traditionally deduced from the debate, deliberations
and the statements of policy that give rise to the bylaw.
[30]
Nor, contrary to Catalyst’s contention, is the
municipality required to formally explain the basis of a bylaw. As discussed
above, municipal councils have extensive latitude in what factors they may
consider in passing a bylaw. They may consider objective factors directly
relating to consumption of services. But they may also consider broader
social, economic and political factors that are relevant to the electorate.
[31]
This is not to say that it is wrong for
municipal councils to explain the rationale behind their bylaws. Typically, as
in this case, modern municipal councils provide information in the form of
long-term plans. Nor is it to say that municipalities performing decisional or
adjudicative functions are exempt from giving reasons as discussed above.
B. Application: Is the Bylaw
Unreasonable?
[32]
To summarize, the ultimate question is whether
the taxation bylaw falls within a reasonable range of outcomes. This must be
judged on the approach the courts have traditionally adopted in reviewing
bylaws passed by municipal councils. Municipal councils passing bylaws are
entitled to consider not merely the objective considerations bearing directly
on the matter, but broader social, economic and political issues. In judging
the reasonableness of a bylaw, it is appropriate to consider both process and the
content of the bylaw.
[33]
I turn first to process. Catalyst does not
allege that the voting procedures of the District were incorrect; nor does it
allege bad faith. Its contention is rather that the District’s process is
flawed because it provided neither formal reasons for the bylaw, nor a rational
basis (viewed in terms of Catalyst’s “Consumption of Services Model”) for its
decision. This contention cannot succeed. As discussed above, municipal
councils are not required to give formal reasons or lay out a rational basis
for bylaws. In any event, as the trial judge found, the reasons for the bylaw
at issue here were clear to everyone. The District’s policy had been laid out
in a five-year plan. Discussions and correspondence between the District and
Catalyst left little doubt as to the reasons for the bylaw. The trial judge
found that the District Council considered and weighed all relevant factors in
making its decision. If Catalyst has a complaint, it is not with the
procedures followed, but with the substance of the bylaw.
[34]
This brings us to the content of the bylaw at
issue. There can be no doubt that the impact of the bylaw on Catalyst is
harsh. The ratio between major industrial rates and residential rates imposed
is among the highest in British Columbia (only two municipalities exceed it)
and far outside the pre-1985 norm. In Catalyst’s present economic situation,
the consequences are serious — indeed, Catalyst suggests that the industrial
rate threatens the continued operation of its mill in the District.
[35]
However, countervailing considerations exist —
considerations that the District Council was entitled to take into account.
The Council was entitled to consider the impact on long-term fixed-income
residents that a precipitous hike in residential property taxes might produce.
The Council has decided to reject a dramatic increase and gradually work toward
greater equalization of tax rates between Class 4 major industrial property
owners and Class 1 residential property owners. Acknowledging that the rates
from Class 4 are higher than they should be, the Council is working over a
period of years toward the goal of more equitable sharing of the tax burden.
Its approach complies with the Community Charter, which permits
municipalities to apply different tax rates to different classes of property.
Specifically, nothing in the Community Charter requires the
District to apply anything like Catalyst’s “Consumption of Services Model”.
Indeed, the compelling submission made by Mr. Manhas, counsel for the respondent,
was that it would be “statutorily ultra vires for [the municipality] to
impose property value taxes on the basis of consumption alone under section
197(3)(b)” (transcript, at p. 54). The bylaw favours residential property
owners, to be sure. But it is not unreasonably partial to them.
[36]
Taking all these factors into account, the trial
court, affirmed by the Court of Appeal, concluded that the bylaw fell within a
reasonable range of outcomes. I agree. The adoption of the Tax Rates Bylaw,
2009, Bylaw No. 3385, does not constitute a decision that no reasonable
elected municipal council could have made.
[37]
I would dismiss the appeal with costs.
Appeal
dismissed with costs.
Solicitors
for the appellant: Blake, Cassels & Graydon, Vancouver.
Solicitors for the
respondent: Young, Anderson, Vancouver.