Halifax (Regional Municipality) v. Canada (Public Works and Government Services) , 2012 SCC 29, Halifax (Regional Municipality) v. Canada (Public Works and Government Services), 2012 SCC 29, 2012 SCC 29 (2012)

Docket Number:33876
 
FREE EXCERPT

SUPREME COURT OF CANADA

Citation: Halifax (Regional Municipality) v. Canada (Public Works and Government Services), 2012 SCC 29

Date: 20120615

Docket: 33876

Between:

Halifax Regional Municipality

Appellant and

Her Majesty The Queen in Right of Canada, as represented by the Minister of Public Works and Government Services

Respondent

- and -

City of Toronto, Federation of Canadian Municipalities, Association of Canadian Port Authorities and City of Québec

Interveners

Coram: McLachlin C.J. and LeBel, Deschamps, Fish, Abella, Rothstein, Cromwell, Moldaver and Karakatsanis JJ.

Reasons for Judgment:

(paras. 1 to 59)

Cromwell J. (McLachlin C.J. and LeBel, Deschamps, Fish, Abella, Rothstein, Moldaver and Karakatsanis JJ. concurring)

Note: This document is subject to editorial revision before its reproduction in final form in the Canada Supreme Court Reports.

halifax (regional municipality) v. canada

Halifax Regional Municipality Appellant v.

Her Majesty The Queen in Right of Canada,

as represented by the Minister of Public

Works and Government Services Respondent and

City of Toronto,

Federation of Canadian Municipalities,

Association of Canadian Port Authorities and

City of Québec Interveners

Indexed as: Halifax (Regional Municipality) v. Canada (Public Works and Government Services)

2012 SCC 29

File No.: 33876.

2011: December 12; 2012: June 15.

Present: McLachlin C.J. and LeBel, Deschamps, Fish, Abella, Rothstein, Cromwell, Moldaver and Karakatsanis JJ.

on appeal from the federal court of appeal

Crown law -- Real property and immoveables -- Taxation -- Payments in lieu of taxes -- Minister's valuation of Halifax Citadel National Historic Site millions of dollars lower than value determined by local assessment authority -- What is the scope of Minister's discretion to determine "property value" for purposes of making payments in lieu of taxes -- What standard of judicial review applies to determination -- Was Minister's determination of property value reasonable? -- Payments in Lieu of Taxes Act, R.S.C. 1985, c. M-13, ss. 2(1) and 4(1) -- Assessment Act, R.S.N.S. 1989, c. 23, s. 42(1).

Under the Payments in Lieu of Taxes Act (the Act), the Minister of Public Works and Government Services may make payments in lieu of taxes (PILTs) with respect to federally owned property, which is constitutionally exempt from provincial and municipal property taxation. The Minister made PILTs to Halifax with respect to the Halifax Citadel National Historic Site on the basis of a valuation of the site with which Halifax disagreed. Halifax and the Minister were able to agree on the value of the eligible improvements on the site, but not on the value of the structures called casemates and demi-casemates or of the land on the Citadel site. The matter was referred to a dispute advisory panel, which advised the Minister that the land beneath the casemates and demi-casemates should be valued at $1,550,000 while the 42 acres of land beneath a grassy slope called the glacis should be valued at a nominal $10. It also provided a valuation for the casemates and demi-casemates. The Minister accepted the Panel's advice and made further PILTs in accordance with it. Halifax applied for judicial review in the Federal Court, saying the valuation of the land and of the casemates and demi-casemates was unreasonable and the court agreed. This decision was reversed with respect to the land by a majority of the Federal Court of Appeal. The present appeal relates only to the valuation of the land.

Held: The appeal should be allowed and the matter remitted to the Minister for redetermination.

The Minister's role under the Act is not to review the assessment authority's assessment; the Minister's function with respect to the value of federal property is to reach an opinion about the value that would be attributed by an assessment authority if the property were taxable. This is done in the context of exercising the discretion to make a PILT that must not exceed the product of the effective rate of tax and the property value as per the Act. While the view of an assessment authority is an important reference point for the Minister, in reaching his or her opinion the Minister is entitled to make an independent determination of the value that would be attributed to the federal property by a local assessment authority.

The Minister's opinion must be informed by the tax system that would apply to the federal property in issue if it were taxable. Provided that the Minister applies the correct legal test, his or her exercise of discretion is judicially reviewed for reasonableness.

The Minister's decision in this case is unreasonable. It is unreasonable, first, because the manner in which the Minister formulated his opinion was inconsistent with his obligation to form an opinion about the value that would be established by an assessment authority. The Minister attributed nominal value to the land under the glacis solely on the basis of the impossibility of developing it. Not only did the Minister not adopt the approach which the relevant assessment authority actually would apply to value the property, but he also had evidence before him, apparently not contradicted, that other Canadian assessment authorities would not attribute nominal value to land on the basis of use restrictions resulting from a national historic site designation. And there was no evidence that any assessment authority would do so. The Minister cannot base his valuation on a fictitious tax system that he himself has created, but that is exactly what happened in this case.

The Minister's opinion is also unreasonable on a second ground: in coming to his decision the Minister frustrated the purposes and policies of the Act. The Minister adopted a categorical approach to valuation under which federal property is valueless if its status as a national historic site prevents its development or commercial use. In doing so he defeated Parliament's purpose in including national historic sites within the PILT scheme. The Minister's approach had the effect of frustrating the very legislative scheme under which the power is conferred.

The Minister's position is also at odds with the broader policy of the Act, which is to treat municipalities fairly. It can hardly be thought either fair or equitable to conclude that 42 acres in the middle of a major metropolitan centre has no value for assessment purposes.

Cases Cited

Applied: Montréal (City) v. Montreal Port Authority, 2010 SCC 14, [2010] 1 S.C.R. 427; referred to: Lake v. Canada (Minister of Justice), 2008 SCC 23, [2008] 1 S.C.R. 761; Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190; Newfoundland and Labrador Nurses' Union v. Newfoundland and Labrador (Treasury Board), 2011 SCC 62, [2011] 3 S.C.R. 708; Notre-Dame-de-l'île-Perrot (Paroisse de) v. Société générale des industries culturelles, [2000] R.J.Q. 345; Québec (Communauté urbaine) v. Fondation Bagatelle Inc., 2001 CanLII 15060; Gander International Airport Authority Inc. v. Gander (Town), 2011 NLCA 65, 313 Nfld. & P.E.I.R. 125; Ontario (Public Safety and Security) v. Criminal Lawyers' Association, 2010 SCC 23, [2010] 1 S.C.R. 815; Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817; Oakwood Development Ltd. v. Rural Municipality of St. François Xavier, [1985] 2 S.C.R. 164; Committee for the Equal Treatment of Asbestos Minority Shareholders v. Ontario (Securities Commission), 2001 SCC 37, [2001] 2 S.C.R. 132; C.U.P.E. v. Ontario (Minister of Labour), 2003 SCC 29, [2003] 1 S.C.R. 539.

Statutes and Regulations Cited

Assessment Act, R.S.N.S. 1989, c. 23, s. 42(1).

Canada National Parks Act, S.C. 2000, c. 32.

Constitution Act, 1867, s. 125.

National Historic Sites of Canada Order, C.R.C., c. 1112, Sch., s. 1.

Payments in Lieu of Taxes Act, R.S.C. 1985, c. M-13, ss. 2(1) "effective rate", "federal property", "property value", (3), 2.1, 3(1)(a), 4(1), 11.1, 15, Sch. II, s. 4.1 [ad. SOR/2001-494, s. 23].

Regulations Amending Certain Regulations made under the Payments in Lieu of Taxes Act and Schedules I to III to that Act, SOR/2001-494, s. 23.

APPEAL from a judgment of the Federal Court of Appeal (Blais C.J. and Evans and Sharlow JJ.A.), 2010 FCA 196, [2012] 1 F.C.R. 304, 405 N.R. 133, 321 D.L.R. (4th) 638, 7 Admin. L.R. (5th) 213, 71 M.P.L.R. (4th) 176, 94 R.P.R. (4th) 15, [2010] F.C.J. No. 950 (QL), 2010 CarswellNat 2417, reversing in part a decision of Phelan J., 2009 FC 670, 346 F.T.R. 264, 61 M.P.L.R. (4th) 187, 85 R.P.R. (4th) 52, [2009] F.C.J. No. 842 (QL), 2009 CarswellNat 2045. The appeal should be allowed and the matter remitted to the Minister for redetermination.

Daniel M. Campbell, Q.C., and Joseph F. Burke, for the appellant.

Ginette Gobeil and René LeBlanc, for the respondent.

Diana W. Dimmer and Angus S. MacKay, for the intervener the City of Toronto.

Marie-France Major, for the intervener the Federation of Canadian Municipalities.

Harley J. Harris and Michael F. Robson, for the intervener the Association of Canadian Port Authorities.

Richard Grondin and Éric Boisvert, for the intervener the City of Québec.

The judgment of the Court was delivered by

Cromwell J. -

I. Introduction

[1] The Minister of Public Works and Government Services has determined that roughly 40 acres of the Halifax Citadel National Historic Site of Canada has only nominal value for the purposes of municipal taxation. The main issue on this appeal is whether the Minister's determination was reasonable. In my respectful view it was not.

[2] Property owned by the Federal Crown is constitutionally exempt from provincial and municipal taxation. However, in the interest of fairness, Parliament has established a regime of discretionary payments in lieu of taxes ("PILTs") to provinces and municipalities: Payments in Lieu of Taxes Act, R.S.C. 1985, c. M-13. The Minister has discretion to make these payments and as to their amount. However, any payment must not exceed what, in the Minister's opinion, would be payable if the applicable local rate...

To continue reading

REQUEST YOUR FREE TRIAL