Ottawa, Ontario, February 1, 2006
PRESENT: THE HONOURABLE MR. JUSTICE MARTINEAU
BETWEEN:
Applicant
and
CANADIAN BROADCASTING CORPORATION
and
ATTORNEY GENERAL OF CANADA
Intervener
REASONS FOR ORDER AND ORDER
[1] The administrative decision whose lawfulness is challenged in this case by the applicant establishes for each of the 2003, 2004 and 2005 taxation years, the amount of the payment in lieu of real property tax (PLRT) that the respondent considers is payable to the applicant pursuant to the Payments in Lieu of Taxes Act, R.S.C. 1985, c. M-13, as amended (the PLTA) and the Crown Corporation Payments Regulations, SOR/81-1030, as amended (the CCPR).
[2] By notice of motion raising various preliminary exceptions, the respondent is seeking the summary dismissal or, alternatively, a stay of the proceedings relating to this application for judicial review. The motion is brought on consent of all the parties, as well as the undersigned Judge who is the case management judge in this matter.
[3] The respondent’s submissions can be summarized as follows:
(a) First, the Court does not have jurisdiction under sections 2, 18 and 18.1 of the Federal Courts Act, R.S.C., 1985, c. F-7, as amended (the FCA), to examine the lawfulness of the decision challenged by the applicant in this case (the issue of jurisdiction);
(b) Alternatively, the application for judicial review was not filed within the 30-day time limit prescribed by subsection 18.1(2) of the FCA (the issue of prescription);
(c) Alternatively, the Court should order that these proceedings be stayed pursuant to subsection 50(1) of the FCA on the grounds that they duplicate the motion for declaratory judgment that the respondent brought earlier before the Superior Court of Quebec (the issue of lis pendens).
[4] For the following reasons, it is my opinion that the Federal Court has exclusive original jurisdiction pursuant to sections 2, 18 and 18.1 of the FCA to examine the lawfulness of the decision by the respondent; that this application for judicial review was filed within the time limit prescribed by subsection 18.1(2) of the FCA; and finally, that this is not a case where this Court should order the proceedings be stayed pursuant to subsection 50(1) of the FCA.
[5] The issue of the exhaustion of remedies, which was also raised by the Court of its own initiative, is decided in favour of calling the parties to a hearing on the merits of the matter when the parties have completed or filed their respective records according to the schedule already established by the Court. It is sufficient to refer the parties to the specific reasons accompanying the simultaneous order in City of Montréal v. Montréal Port Authority et al., 2006 FC 114, docket T‑795‑04.
Statutory and regulatory background
[6] The respondent is a Crown corporation, an agent of the Crown, established under the Broadcasting Act, S.C. 1991, c. 11, as amended (the BA). It is the national public broadcaster and must offer radio and television services made up of very broad programming which teaches, informs, enlightens and entertains. In carrying out its objects and exercising its powers, the corporation enjoys freedom of expression and journalistic, creative and programming independence (subsections 3(1), 46(1), 46(5), and 47(1) of the BA). It may acquire any real or personal property that it deems necessary or convenient for carrying out its objects and that property belongs to Her Majesty (subsections 47(3), sections 48 and 49 of the BA). Those immovables are exempt from any taxes under section 125 of The Constitution Act, 1867 (U.K.), 30 & 31 Victoria, c. 3, reprinted in R.S.C. 1985, App. II, No. 5. For the purposes of applying this constitutional exemption, the properties in question must also be occupied and operated by the respondent exclusively on behalf of Canada (City of Halifax v. Halifax Harbour Commissioners, [1935] S.C.R. 215; Re the City of Toronto and the Canadian Broadcasting Corporation, [1938] O.W.N. 507 (Ont. C.A.)).
[7] The PLTA (enacted for the first time in 1950 as the Municipal Grants Act) provides for equitable payments for municipalities in lieu of taxes for federal property located on their territory. The purpose of the PLTA is to provide a distinct legislative scheme according to which the Crown agrees to pay to the relevant taxing authorities, including the municipalities, payments in lieu of taxes. The PLTA does not have the effect of making the Federal Crown subject to provincial or municipal legislation in matters involving taxation or real property tax and it does not confer any right to payment (sections 2, 3 and 15 of the PLTA).
[8] In the context of this case, the respondent is exercising jurisdiction over subject matter which would normally belong to the Minister of Public Works and Government Services (the Minister) pursuant to section 3 of the PLTA. Note that in 1967, the Cabinet instructed Crown Corporations to make the payments in lieu of taxes on a basis similar to the one which applied to federal property contemplated by legislation. From a formal point of view, since 1980, section 9 of the PLTA has provided that the Governor in Council can enact regulations governing payments in lieu of taxes to be paid by the corporations mentioned in Schedules III and IV of the Act.
[9] Paragraph 11(1)(a) of the PLTA provides that the corporations mentioned in Schedules III and IV, including the respondent, shall comply with any regulations made under paragraph 9(1)(f) respecting any payment that it may make in lieu of a real property tax (PLRT) or a frontage or area tax (PLFAT). Paragraph 9(1)(f) of the PLTA provides that the basis for the payment applicable to the corporations mentioned in Schedules III and IV of the PLTA shall be at least equivalent to the one provided by law.
[10] Further, paragraph 11(1)(b) provides that corporations listed in Schedule IV shall comply with any regulations made under paragraph 9(1)(g) of the PLTA respecting any payment that it may make in lieu of a business occupancy tax (PLBOC). On that point, section 15 of the CCPR provides that the PLBOC must not be less than the amount the corporation would be required to pay if it were not exempt from that tax.
The dispute
[11] The current proceedings with the respondent involve determining the effective rate applicable for the purposes of the PLRT following the amendments brought by the applicant to its real property tax rates. Those rates are now differentiated according to whether it involves owners of residential immovables or non-residential immovables. In 2003, when it presented its budget, the applicant harmonized the tax structure of the new City of Montréal.
[12] For all of the fiscal years prior to 2003, the applicant used the general real property tax rate applicable to all immovables and added an additional real property tax specifically for non-residential immovables in the form of a surtax. For the occupants of those immovables, it provided a business tax, a water tax and service tax which was imposed on them directly based on the carrying on of a business or professional activity on the premises. When the 2003 fiscal year arrived, the surtax on non-residential immovables became a tax on the same immovables and there was a real property tax equivalent to the business tax which served to replace the revenues generated by it. The variable real property tax rate was carried through to the 2004 fiscal year and the applicant continued to do so for the 2005 fiscal year.
[13] Essentially, what the applicant is disputing is the respondent’s power to retroactively revise the amount of PLRT already paid for the taxation years 2003 and 2004 and to not pay PLRT for the 2005 taxation year. Since only the corporations mentioned in Schedule IV of the PLTA are legally bound to make a payment in lieu of a business occupancy tax (PLBOC), the respondent considers that it has the power to retroactively adjust the PLRT for each of the taxation years 2003 and 2004 and that it did not have any PLRT owing for the taxation year 2005. To the contrary, the applicant submits that in discarding the real property tax rate imposed equally on all owners of non-residential immovables, the respondent acted in a perverse and capricious manner. Accordingly, the applicant is seeking various forms of declaratory relief on the basis that the impugned decision is contrary to the law and to the obligations imposed on it by the PLTA and the CCPR.
The issue of jurisdiction
[14] As a first argument, the respondent contends that the decision to make a payment in lieu of taxes to a taxing authority like the applicant is not a normative act of public authority. Insisting on its status as a Crown Corporation, agent of the Crown, the respondent is of the opinion that such a payment is rather a discretionary administrative act in the normal course of its commercial operations and accessory to its objects as a national public broadcaster pursuant to section 46 of the BA. Arguing that it is therefore not a federal board, commission or other tribunal, the respondent accordingly called upon this Court to decline jurisdiction (see Canada Metal Co. Ltd et al. v. Canadian Broadcasting Corp. et al. (1975), 65 D.L.R. (3d) 231 (Ont. C.A.); Wilcox v. Canadian Broadcasting Corporation, [1980] 1 F.C. 326; Turmel v. Canada (Canadian Broadcasting Corp.) (1987), 14 F.T.R. 24 (F.C.T.D.)).
[15] I cannot agree with the respondent’s submissions. According to the definition that we find at subsection 2(1) of the FCA, a “federal board, commission or other tribunal” designates any body, person or persons having, exercising or purporting to exercise jurisdiction or powers conferred by or under an Act of Parliament or by or under an order made pursuant to a prerogative of the Crown . . .” In the context of this case, the respondent is exercising a statutory jurisdiction which normally belongs to the Minister in accordance with section 3 of the PLTA. In deciding the effective base tax rate that it intended to pay as well as the effective value of its property, the respondent is exercising its jurisdiction under the PLTA and the CCPR and not carrying on a commercial activity incidental to its responsibilities. The respondent cannot benefit from the Crown’s immunity from taxation without bearing its disadvantages. Further, the payment made in accordance with the PLTA is not a tax or a current activity of businesses operating in the area of broadcasting. For example, if the respondent were a private broadcaster, it could not have unilaterally decided to pay only half of the amounts claimed by the applicant under the pretext that the new tax rate claimed included a portion of business taxes.
[16] I agree that it is certainly conceivable that the respondent is not a federal board, commission or other tribunal when it makes commercial decisions in the context of activities provided under the BA, which in its subsection 46(5) enshrines the respondent’s independence. That does not mean however that it could never be a federal board, commission or other tribunal according to the case law (DRL Vacations Ltd. v. Halifax Port Authority, [2005] F.C.J. No. 1060; Halterm Ltd. v. Halifax Port Authority, [2000] F.C.J. No. 937 (QL)). Also, in this case, I do not believe that the specific characteristics of the respondent are determinative for the purposes of qualifying the jurisdiction and the special powers that the respondent, like the other corporations mentioned in Schedule III of the PLTA, exercises pursuant to the PLTA and the CCPR.
[17] The PLTA is an example of cooperative federalism. Even if these immovables are exempted from real property tax, frontage or area tax, or even a business occupancy tax, the government of Canada, which is the country’s most important real property owner, nevertheless assumes and pays its fair share of the costs of the local government in communities where it owns immovable property (see Federation of Canadian Municipalities, the Treasury Board Secretariat, and Public Works and Government Services, Report of the Joint Technical Committee on Payments in Lieu of Taxes, December 28, 1995, at page 2).
[18] Whether or not the payment of a PLRT is a discretionary act pursuant to section 15 of the PLTA, this does not change anything about the fact that this is exercising jurisdiction arising from the PLTA for the purposes of the definition “federal board, commission or other tribunal” that is found at section 2 of the FCA. The CCPR provides inter alia that:
(a) The effective rate applicable to a “corporation” is the rate of real property tax or the frontage or area tax that a corporation would consider applicable to its property if that property were taxable property (definition of “corporation effective rate”, section 2);
(b) The corporation property value means the value that a corporation would consider, to be attributable by an assessment authority to its corporation property as the basis for computing the amount of any real property tax that would be applicable to that property if it were taxable property (definition of “corporation property value”, section 2);
(c) The term “corporation" means, in respect of any payment that may be made by it, every corporation included in Schedule III or IV to the Act (including the respondent) (section 5);
(d) The payment made by a corporation in lieu of a real property tax . . . in respect of any corporation property that would be federal property if it were under the management, charge and direction of a minister of the Crown is made without any condition, in an amount that is not less than the amount referred to in sections 7 to 11 (section 6);
(e) Therefore, the PLRT must not be less than the product of the applicable effective rate and the corporation property value (section 7).
[19] It is clear that all of the acts or proceedings, just like the decisions and orders of a federal board, commission or other tribunal, are subject to judicial review (see Morneault v. Canada (Attorney General), [2001] 1 F.C. 30 (C.A.); Larny Holdings Ltd. (c.o.b. Quickie Convenience Stores) v. Canada (Minister of Health) [2003] 1 F.C. 541 (F.C.T.D.). The reviewing power of the Federal Court is not limited only to decisions in the strict sense but applies to any unlawful situation or refusal by the administrative authority to fulfill a mandatory act (subsection 2(1) definition of “federal board, commission or other tribunal”, paragraph 18.1(3)(b) and paragraph 18.1(4)(f) of the FCA; Messageries Publi-Maison Ltée v. Société canadienne des postes), [1996] R.J.Q. 547 (C.A.Q.)). Therefore, the applicant may certainly address this Court to verify whether the decision in this case is consistent with the statutes and with all applicable regulations (see Gestion Complexe Cousineau (1989) Inc. v. Canada (Minister of Public Works and Government Services), [1995] 2 F.C. 694 (C.A.); Saint-Romuald (Town) v. Canada (Attorney General), [1997] F.C.J. No. 1553 (F.C.T.D.) (QL)).
[20] In this case, the decision of the Federal Court of Appeal in Gestion Complexe Cousineau (1989) Inc., supra, is determinative. Décary J.A. notes at paragraphs 7 et seq.:
The phrase "powers conferred by or under an Act of Parliament" found in the definition of a "federal board, commission or other tribunal" is particularly broad and is not subject to the limitation suggested by the Minister. In the case at bar I do not have to consider whether the Minister is a servant of Her Majesty or whether the act done by him is binding on Her Majesty. I also do not have to examine whether the Minister is part of the federal government in the ordinary sense of that phrase or whether the act done falls within the jurisdiction of the Parliament of Canada as opposed to the provincial legislatures. These points are not in dispute. Further, I do not need to engage in a constitutional analysis of the concept of "the Crown's inherent administrative power", since the Minister's power to enter into the acquisition of real property by lease may no longer be described as an inherent power once the Governor in Council, with the authority of legislation, has seen fit to codify it in language containing no ambiguity: "a Minister may enter into an acquisition". It may well be, as the respondents argued, that this conferring of power by the combined effect of a statute and regulation was not necessary, but strictly speaking I am only required to consider whether there is a "[power] conferred by or under an Act of Parliament" within the meaning of the definition of "federal board, commission or other tribunal", and I can only conclude that there is.
It should be borne in mind that what is at issue here is determining whether a litigant has access to this Court's power of review in connection with a legislative provision-paragraph 18(1)(a) of the Federal Court Act-by which Parliament sought to make the federal government subject to the Court's superintending and reforming power. As I see it, there is no reason to try and distort the usual meaning of the words or strive to divest them of all practical meaning by resort to fine distinctions suited to constitutional analysis, which would have a sterilizing effect contrary to the intent of Parliament.
When it amended paragraph 18(1)(a) of the Federal Court Act in 1990 [See Note 9 below] to henceforward permit judicial review of decisions made in the exercise of a royal prerogative, [See Note 10 below] Parliament unquestionably made a considerable concession to the judicial power and inflicted a significant setback on the Crown as the executive power, if one may characterize making the government still further subject to the judiciary as a setback. [See Note 11 below] What appears from this important amendment is that Parliament did not simply make the "federal government" in the traditional sense subject to the judiciary, but intended that henceforth very little would be beyond the scope of judicial review. That being so, I must say I have some difficulty giving to s. 18(1)(a) an interpretation which places Ministers beyond the scope of such review when they exercise the most everyday administrative powers of the Crown, though these are also codified by legislation and regulation.
With respect, that would be to take an outmoded view of supervision of the operations of government. The "legality" of acts done by the government, which is the very subject of judicial review, does not depend solely on whether such acts comply with the stated requirements of legislation and regulations. . . .
[Emphasis added.]
[21] In the matter of Saint-Romuald (Town), supra, the municipality involved had brought a statement of claim against the Crown pursuant to section 17 of the FCA. It appears that the government had decided at the time to not pay the entire amount that the municipality was claiming from it for the taxation years 1994 and 1995 after a surtax was imposed on the non-residential immovables situated within its territory. The municipality therefore asked the Court to order the Crown to pay it the amounts that it considered were due.
[22] Considering the Crown’s immunity from taxation and the fact that section 15 of the PLTA does not confer any right to the municipality to make a payment in lieu of taxes, the Court allowed a motion to strike by the Attorney General of Canada. In such a case, the appropriate recourse is an application for judicial review:
Did the Minister err in exercising his discretion under the Municipal Grants Act by refusing to make grants to the town in lieu of the surtax? Did the Minister err in law in deciding to refuse to make a grant in relation to the surtax? While these questions are apposite, they fall instead within the sphere of judicial review. I obviously do not have to answer these questions, but it appears to me that if the town has a remedy, it is instead by way of an application for judicial review against the Minister's refusal to make it a grant in lieu of the surtax for 1994 and 1995.
[Emphasis added.]
[23] The Court’s approach in Saint-Romuald (Town), is consistent with the case law of the Federal Court of Appeal, as well as that of the Court of Appeal of Quebec, to the effect that litigants who want to attack the decision of a federal agency do not have the freedom to opt between proceeding by judicial review and proceeding by an action in damages: the litigant must proceed by judicial review to have the decision set aside (Tremblay v. Canada, [2004] 244 D.L.R. (4th) 422 (F.C.A.), leave to appeal to the S.C.C. denied, [2004] C.S.C.R. No.307 (S.C.C.) (QL); Grenier v. Canada, [2005] F.C.J. No. 1778 (F.C.A.) (QL); Ville de Montréal v. Administration portuaire de Montréal, [2005] J.Q. No. 263 (C.A.Q.) (QL)).
[24] In this case, the applicant is seeking various forms of declaratory relief to the effect that the impugned decision is contrary to the law and to the obligations imposed on it by the PLTA and the CCPR. At this stage, it is unnecessary to decide on the merits or to ask whether all of the relief sought by the applicant is contemplated by subsections 18(1) and 18.1(3) of the FCA. It is sufficient to observe that a decision by a federal board, commission or other tribunal is reviewable on the grounds, inter alia, that the decision is unlawful (paragraph 18.1(4)(f) of the FCA). Clearly, none of what has been stated above prevents the respondent from arguing later on that the decision at issue is discretionary, that it is not perverse or capricious, and that it was made in accordance with the statutes and all of the applicable regulations.
The issue of prescription
[25] According to the respondent, the application for judicial review is prescribed since it was not filed within the 30 days following the date that the respondent served on it its motion for declaratory judgment asking the Superior Court of Quebec to declare void the real property tax accounts issued by the applicant for taxation years 2003 and 2004.
[26] I cannot agree with the respondent’s arguments. The originating motion referred to earlier was served on the applicant on March 26, 2004 and was filed with the Superior Court on March 30, 2004. The evidence indicates that at the time these proceedings were commenced, the respondent had already paid two instalments for the 2003 taxation year and its first instalment for the 2004 taxation year. With respect to the second instalment for the 2004 taxation year, the deadline had been deferred to February 28, 2005. There was then no amount claimed by the applicant from the respondent that was past due. In those circumstances, the applicant was not legally bound to file before this Court an application for judicial review against earlier decisions that had then been in its favour.
[27] Furthermore, I agree with the applicant that it was only beginning on March 16, 2005, when the respondent’s amended originating motion was served, that the 30-day time limit indicated under subsection 18.1(2) of the FCA began to run. It was on that occasion that the applicant learned that the respondent would not be paying its second instalment for the 2004 taxation year or the two instalments for the 2005 taxation year. Further, as indicated at paragraph 24.1 of its amended pleading, the respondent proceeded to “recalculate” the amount of PLRT that it considered payable for each of the 2003, 2004 and 2005 taxation years. At the end of that exercise, the amended originating motion referred to the respondent’s decision to subtract the amounts so obtained from the amounts already paid to the applicant in 2003 and 2004 and to ask the applicant to repay the amount of $640,175.63.
[28] There is a certain parallel between the situation in this case and Krause v. Canada (C.A.), [1999] 2 F.C. 476 (F.C.A.), decided by the Court of Appeal in 1999. At page 492, Stone J.A. wrote the following at paragraphs 23 and 24:
I agree with these submissions. In my view, the time limit imposed by subsection 18.1(2) does not bar the appellants from seeking relief by way of mandamus, prohibition and declaration. It is true that at some point in time an internal departmental decision was taken to adopt the 1988 recommendations of the Canadian Institute of Chartered Accountants and to implement those recommendations in each fiscal year thereafter. It is not, however, this general decision that is sought to be reached by the appellants here. It is the acts of the responsible Ministers in implementing that decision that are now claimed to be invalid or unlawful. The duty to act in accordance with subsections 44(1) of the PSSA and 55(1) of the CFSA arose "in each fiscal year." The charge is that by acting as they have in the 1993-1994 and subsequent fiscal years the Ministers have contravened the relevant provisions of the two statutes thereby failing to perform their duties, and that this conduct will continue unless the Court intervenes with a view to vindicating the rule of law. The merit of this contention can only be determined after the judicial review application is heard in the Trial Division.
I am satisfied that the exercise of the jurisdiction under section 18 does not depend on the existence of a "decision or order." In Alberta Wilderness Assn. v. Canada (Minister of Fisheries & Oceans), (1997), 26 C.E.L.R. (N.S.) 238 (F.C.T.D.), at pp. 241-242; revd on other grounds; Alberta Wilderness Assn. v. Canada (Minister of Fisheries and Oceans), [1999] 1 F.C. 483 (C.A.), Hugessen J. was of the view that a remedy envisaged by that section "does not require that there be a decision or order actually in existence as a prerequisite to its exercise." In the present case, the existence of the general decision to proceed in accordance with the recommendations of the Canadian Institute of Chartered Accountants does not, in my view, render the subsection 18.1(2) time limit applicable so as to bar the appellants from seeking relief by way of [page493] mandamus, prohibition and declaration. Otherwise, a person in the position of the appellants would be barred from the possibility of ever obtaining relief under section 18 solely because the alleged invalid or unlawful act stemmed from a decision to take the alleged unlawful step. That decision did not of itself result in a breach of any statutory duties. If such a breach occurred it is because of the actions taken by the responsible Minister in contravention of the relevant statutory provisions.
[Emphasis added.]
[29] By filing its notice of application for judicial review on April 8, 2005, the applicant was still within the 30-day time limit provided under subsection 18.1(2) of the FCA. Therefore, the respondent’s second preliminary exception must also be dismissed.
The issue of lis pendens
[30] The respondent acknowledges that there is no lis pendens in the strict sense of the term between this application for judicial review and the motion for declaratory judgment before the Superior Court which had been referred to above, but invites this Court in the alternative to stay these proceedings pursuant to subsection 50(1) of the FCA on the grounds that another court, equally competent, had been previously invited to decide the same substantive issue.
[31] As it was decided above, the Federal Court has exclusive original jurisdiction pursuant to sections 2, 18 and 18.1 of the FCA to hear and decide this application for judicial review. Further, this is not a case involving an exception where the validity or constitutional applicability of a federal statute that a federal board, commission or other tribunal must apply is already being disputed before the Superior Court (see Canada (Attorney General) v. Law Society of British Columbia, [1982] 2 S.C.R. 307; Canada (Canada Industrial Relations Board) v. Paul L’Anglais Inc., [1983] 1 S.C.R. 147, confirming [1981] C.A. 62 (C.A.Q.)). Accordingly, I am not persuaded that the Court should exercise the discretionary power to stay conferred to it under subsection 50(1) of the FCA.
ORDER
THE COURT DECLARES AND ORDERS:
- The respondent is a federal board, commission or other tribunal within the meaning of section 2 of the Federal Courts Act when it makes a decision or performs an act under the Payments in Lieu of Taxes Act and the Crown Corporation Payments Regulations following a request for payment by a taxing authority;
- The Federal Court has exclusive original jurisdiction pursuant to sections 18 and 18.1 of the Federal Courts Act to hear and decide any application for judicial review involving the lawfulness of any act or any decision contemplated by paragraph 1 above;
- This application for judicial review was filed within the time limit provided under subsection 18.1(2) of the Federal Courts Act;
- It is not appropriate to stay the proceedings relating to this application for judicial review;
- The respondent’s motion involving the preliminary exceptions is dismissed; with costs in the cause.
- The parties will be called to a hearing on the merits of the matter after they have completed or submitted their respective records according to the schedule already set by the Court.
Certified true translation
Kelley A. Harvey, BCL, LLB
FEDERAL COURT
SOLICITORS OF RECORD
DOCKET: T-631-05
STYLE OF CAUSE: City of Montréal v. Canadian Broadcasting Corporation et al.
PLACE OF HEARING: Montréal, Québec
DATE OF HEARING: January 16 and 17, 2006
REASONS FOR ORDER: MARTINEAU J.
DATE OF ORDER: February 1, 2006
APPEARANCES:
|
Patrice Brunet
|
FOR THE APPLICANT |
|
Sylvie Gadoury
|
FOR THE RESPONDENT |
|
Nathalie Benoît
|
FOR THE INTERVENER |
SOLICITORS OF RECORD:
|
Brunet Lamarre Montréal, Quebec
|
FOR THE APPLICANT |
|
Sylvie Gadoury Montréal, Quebec
|
FOR THE RESPONDENT |
|
John H. Sims, Q.C. Deputy Attorney General of Canada
|
FOR THE INTERVENER |