Calgary (City) v. Canadian Natural Resources Ltd. et al., (2010) 496 A.R. 162 (QB)

• Judge: McIntyre, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: April 21, 2010
• Citations: (2010), 496 A.R. 162 (QB);2010 ABQB 417

Calgary v. Cdn. Natural Resources (2010), 496 A.R. 162 (QB)

MLB headnote and full text

Temp. Cite: [2010] A.R. TBEd. JL.015

The City of Calgary (applicant) v. Canadian Natural Resources Limited, Suncor Inc., Encana Corporation, Husky Oil Operations Ltd., Howard Mackie, Borden Ladner, Northstar Energy Corporation and the Municipal Government Board (respondents)

(0701 13230)

The City of Calgary (applicant) v. Canadian Natural Resources Limited, Suncor Energy Inc., Encana Corporation, Husky Oil Operations Ltd., Devon Canada Corporation, BP Canada Energy Co., Ackers and Allard and the Municipal Government Board (respondents)

(0801 08608; 2010 ABQB 417)

Indexed As: Calgary (City) v. Canadian Natural Resources Ltd. et al.

Alberta Court of Queen's Bench

Judicial District of Calgary

McIntyre, J.

June 18, 2010.

Summary:

The City of Calgary assessed the business tax owing by the respondents under 2005 and 2006 bylaws. The Assessment Review Board substantially confirmed the assessments. The Municipal Government Board issued two orders, each allowing the respondents' appeals. The City applied for judicial review of both orders. By consent, the applications were ordered consolidated. The core issue was whether tenant improvement allowances should be deducted from the actual rents the City used in determining typical market rents for business tax assessment purposes. The issue turned on the meaning of the phrase "net annual rental value" used, but not defined, in s. 374(1)(b)(i.1) of the Municipal Government Act. Both the 2005 and 2006 bylaws defined "net annual rental value" as including "leasehold improvements".

The Alberta Court of Queen's Bench dismissed the applications.

Administrative Law - Topic 2088

Natural justice - Constitution of board or tribunal (considerations incl. bias) - Bias - Apprehension of - The City of Calgary applied for judicial review of two Municipal Government Board orders - The Board had province-wide jurisdiction to hear appeals of business and property tax assessments - The City contended that it was denied natural justice by the Board's refusal to recuse two of the three board members who previously ruled on the same issue - The Alberta Court of Queen's Bench held that the Board's decision was correct - The authorities suggested that a second hearing before the same adjudicator, in and of itself, did not give rise to a reasonable apprehension of bias in the minds of reasonable people - The mere fact the same Board members sat on a previous panel with similar issues did not give rise to a reasonable apprehension of bias - On occasion, it was reasonable that Board members would have to hear similar or even identical issues - See paragraphs 132 to 136.

Administrative Law - Topic 2159

Natural justice - Administrative decisions or findings - Effect of prior decisions - The City of Calgary applied for judicial review of two Municipal Government Board (MGB) Orders - The validity of municipal bylaws arose in both Orders - The City asserted that the MGB's use of Order 094/07 as "precedent" in Order 068/08 was denial of natural justice - The taxpayers conceded that the previous Order was considered by the MGB, but contended that it was not treated as a "controlling precedent" - The MGB referenced its previous Order to affirm that it had jurisdiction to consider the validity of a City bylaw - The Alberta Court of Queen's Bench found no breach of natural justice - "The strictly financial nature of MGB proceedings have been found to attract a lesser degree of natural justice than cases involving personal health, safety and security ... Furthermore, the MGB has broad powers to determine its own procedures ... This does not mean that the MGB may haphazardly adopt previous decisions. Rather, when similar issues arise, the MGB is not barred from considering, and if appropriate adopting, the reasoning of an earlier panel on that issue" - See paragraphs 137 to 141.

Real Property Tax - Topic 3578

Valuation - Business property - Rental or income value - Meaning of "net annual rental value" - The City of Calgary applied for judicial review of two Municipal Government Board orders - The core issue turned on the meaning of the phrase "net annual rental value" (NARV) used, but not defined, in s. 374(1)(b)(i.1) of the Municipal Government Act - The City's business tax bylaws defined NARV as including "leasehold improvements" - The Board ruled that "net annual rental value" had to be interpreted as requiring an assessment of property value based on the value to the owner or landlord - It ruled that "leasehold improvements" did not typically add value to the owner - As a result, there was an inconsistency between the bylaws, which treated leasehold improvements as adding value to a landlord or owners' property, and the Act - Applying s. 13 of the Act, the bylaws were of no effect to the extent of the inconsistency - Section 374(2)(d), giving the municipality the authority to include "any other information considered appropriate" in its business tax bylaw, could not be interpreted as giving the municipality the power to define NARV in a manner that was inconsistent with the purpose of the Act - The Alberta Court of Queen's Bench held that the Board's interpretation of "net annual rental value" was correct, that it was correct in concluding that the bylaws were inconsistent with the Act and that tenant improvements did not increase the amount that a hypothetical landlord could ask a hypothetical tenant to pay for the leased premises - See paragraphs 90 to 110.

Real Property Tax - Topic 7003

Assessment appeals (incl. complaints) - General principles - Scope of appeal or standard of review - The City of Calgary applied for judicial review of two Municipal Government Board (MGB) orders - The application raised the issue of the standard of review to be applied by the MGB to decisions of the Assessment Review Board (ARB) - The Alberta Court of Queen's Bench stated that "Alberta jurisprudence favours the view that a standard of review analysis should be undertaken by the MGB in reviewing decisions of the ARB" - If a standard of review analysis was necessary, balancing the four factors to be considered under Dunsmuir, the court found that the MGB's "much broader jurisdiction to hear appeals, and to consider new evidence on appeal, and its supervisory role in determining fair and equitable property tax assessment, establishes that the proper standard of review is correctness. The MGB applied the correctness standard in this case; the same standard that a pragmatic and functional analysis mandates" - See paragraphs 21 to 26.

Real Property Tax - Topic 7105

Assessment appeals (incl. complaints) - Provincially or municipally appointed tribunal or board - Jurisdiction - General - The City of Calgary applied for judicial review of two Municipal Government Board (MGB) Orders - The validity of municipal bylaws arose in both Orders - A preliminary issue was whether the MGB had the authority to decide questions of law, and if so, whether that authority extended to municipal bylaws - The Alberta Court of Queen's Bench stated that "[t]he jurisdiction of an administrative tribunal to decide any question of law depends on the explicit or implicit jurisdiction from its empowering statute" - The empowering legislation for the MGB was the Municipal Government Act and associated regulations - Section 8(2) of the Assessment Complaints and Appeals Regulation implied that the MGB had authority to decide questions of law that arose in the course of its proceedings - The authority to determine questions of law extended to the validity of bylaws - The validity of the bylaws was directly related to the enabling statute for the MGB - See paragraphs 75 to 83.

Real Property Tax - Topic 7105

Assessment appeals (incl. complaints) - Provincially or municipally appointed tribunal or board - Jurisdiction - General - The City of Calgary applied for judicial review of two Municipal Government Board (MGB) Orders - The validity of municipal bylaws arose in both Orders - A preliminary issue was whether the MGB's authority to decide questions of law extended to municipal bylaws - The City argued that ss. 536(1) and 537 of the Municipal Government Act provided the proper method for challenging a bylaw; i.e., that the jurisdiction of the court was exclusive for bylaw challenges under the Act - The Alberta Court of Queen's Bench held that the MGB had jurisdiction to consider the validity of the bylaws - That jurisdiction was not diminished by ss. 536(1) and 537 - Those sections provided an unexclusive alternative to judicial review for a party seeking a declaration of invalidity by application to the court - Further, in order to avoid the application of bylaws that were inconsistent with the Act, the MGB had to consider the validity of an impugned bylaw - Additional support for that proposition was found explicitly in s. 13 of the MGA: "If there is an inconsistency between a bylaw and this or another enactment, the bylaw is of no effect to the extent of the inconsistency" - See paragraphs 84 to 88.

Real Property Tax - Topic 7161

Assessment appeals (incl. complaints) - Applications or appeals to the courts - Appeal on a question of law - [See both Real Property Tax - Topic 7105 ].

Real Property Tax - Topic 7220

Assessment appeals (incl. complaints) - Practice - Judicial review - The City of Calgary applied for judicial review of two Municipal Government Board (MGB) orders - The core issue turned on the meaning of the phrase "net annual rental value" (NARV) in s. 374(1)(b)(i.1) of the Municipal Government Act - The City's business tax bylaws defined NARV as including "leasehold improvements" - The application raised the issue of the standard of review to be applied to the MGB's decision that the bylaws were inconsistent with the Act - The Alberta Court of Queen's Bench stated that "[a] review of the most recent Alberta Court of Appeal decisions on the issue reveals that judicial precedent has not determined, in a satisfactory manner, the degree of deference to be accorded to decisions of the MGB" - The court concluded that "[e]ach case raised different issues, which justified choosing different standards of review. I find that the nature of the issue before the Board in Strathcona is analogous to the nature of the issue before the MGB in this case. Both were pure issues of law and are therefore subject to a correctness standard of review" - A contextual standard of review analysis resulted in the same conclusion - See paragraphs 36 to 60.

Real Property Tax - Topic 7220

Assessment appeals (incl. complaints) - Practice - Judicial review - The City of Calgary applied for judicial review of two Municipal Government Board orders - The core issue turned on the meaning and application of the phrase "net annual rental value" (NARV) in s. 374(1)(b)(i.1) of the Municipal Government Act - The City passed business tax bylaws defining NARV as including "leasehold improvements" - The application raised the issue of the standard of review to be applied to the Board's decision that tenant improvements did not typically increase value and should therefore be deducted from NARV - The Alberta Court of Queen's Bench found that a reasonableness standard of review was applicable - Section 506 of the Act stated that there was no appeal from a decision of the Board and had been characterized as a weak privative clause attracting a moderate degree of deference - The issue of the effect of leasehold improvements on the value of leasehold property required the determination of issues of mixed law and fact - Deference also supported the legislative purpose of the Act - The expertise of the Board relative to the court on issues of property valuation and assessment also indicated that deference be given - See paragraphs 62 to 68.

Words and Phrases

Net annual rental value - The Alberta Court of Queen's Bench considered the meaning and application of the phrase "net annual rental value" used, but not defined, in s. 374(1)(b)(i.1) of the Municipal Government Act, R.S.A. 2000, c. M-26 - See paragraphs 90 to 110.

Cases Noticed:

Workers' Compensation Board (Alta.) v. Workers' Compensation Board Appeals Commission (Alta.) (2005), 371 A.R. 318; 354 W.A.C. 318; 2005 ABCA 276, refd to. [para. 19].

College of Hearing Aid Practitioners of Alberta v. Zieniewicz et al., [2003] A.R. Uned. 678; 24 Alta. L.R.(4th) 59; 2003 ABCA 346, refd to. [para. 23].

Plimmer v. Chief of Police et al. (2004), 354 A.R. 62; 329 W.A.C. 62; 2004 ABCA 175, refd to. [para. 23].

Boardwalk Reit LLP v. Edmonton (City) et al. (2008), 437 A.R. 347; 433 W.A.C. 347; 2008 ABCA 220, consd. [para. 48]; refd to. [para. 24].

New Brunswick (Board of Management) v. Dunsmuir, [2008] 1 S.C.R. 190; 372 N.R. 1; 329 N.B.R.(2d) 1; 844 A.P.R. 1; 2008 SCC 9, appld. [para. 25].

Alberta (Minister of Municipal Affairs) v. Telus Communications Inc. - see Alberta (Minister of Municipal Affairs) v. Municipal Government Board (Alta.) et al.

Alberta (Minister of Municipal Affairs) v. Municipal Government Board (Alta.) et al. (2002), 312 A.R. 40; 281 W.A.C. 40; 2002 ABCA 199, leave to appeal refused (2003), 314 N.R. 208; 346 A.R. 400; 320 W.A.C. 400 (S.C.C.), consd. [para. 40]; refd to. [para. 24].

ATCO Gas and Pipelines Ltd. v. Energy and Utilities Board (Alta.) et al. (2008), 433 A.R. 183; 429 W.A.C. 183; 2008 ABCA 200, refd to. [para. 28].

College of Physicians and Surgeons (B.C.) v. Dr. Q. - see Dr. Q., Re.

Dr. Q., Re, [2003] 1 S.C.R. 226; 302 N.R. 34; 179 B.C.A.C. 170; 295 W.A.C. 170; 2003 SCC 19, refd to. [para. 33].

Ryan v. Law Society of New Brunswick, [2003] 1 S.C.R. 247; 302 N.R. 1; 257 N.B.R.(2d) 207; 674 A.P.R. 207; 2003 SCC 20, refd to. [para. 34].

Alberta Union of Provincial Employees et al. v. Lethbridge Community College, [2004] 1 S.C.R. 727; 319 N.R. 201; 348 A.R. 1; 321 W.A.C. 1; 2004 SCC 28, refd to. [para. 38].

Alliance Pipeline Ltd. v. Alberta (Minister of Municipal Affairs) et al. (2006), 376 A.R. 44; 360 W.A.C. 44; 2006 ABCA 9, consd. [para. 45]; refd to. [para. 38].

Calgary (City) v. Municipal Government Board (Alta.) et al. (2004), 339 A.R. 393; 312 W.A.C. 393; 2004 ABCA 10, consd. [para. 41].

University of Alberta v. Edmonton (City) et al. (2005), 363 A.R. 378; 343 W.A.C. 378; 2005 ABCA 147, consd. [para. 42].

Alberta (Minister of Municipal Affairs) v. Municipal Government Board (Alta.) et al. (2005), 388 A.R. 284; 2005 ABQB 866, affd. (2007), 417 A.R. 112; 410 W.A.C. 112; 2007 ABCA 217, consd. [para. 44].

Alberta (Minister of Municipal Affairs) v. Alberta Oil Sands Pipeline Ltd. et al. (2007), 436 A.R. 89; 2007 ABQB 652, refd to. [para. 46].

Calgary (City) v. Municipal Government Board (Alta.) et al. (2008), 432 A.R. 202; 424 W.A.C. 202; 2008 ABCA 187, consd. [para. 47].

Strathcona No. 20 (County) v. Assessment Appeal Board (Alta.) and Shell Canada Ltd. (1995), 165 A.R. 300; 89 W.A.C. 300 (C.A.), consd. [para. 50].

Canadian Freightways Ltd. v. Calgary (City) (1967), 58 W.W.R.(N.S.) 601; 61 D.L.R.(2d) 253 (Alta. T.D.), refd to. [para. 60].

Calgary (City) v. Municipal Government Board (Alta.) et al., [2004] A.R. Uned. 488 (Q.B.), refd to. [para. 64].

697604 Alberta Ltd. v. Calgary (City) et al., [2005] A.R. Uned. 537; 2005 ABQB 512, refd to. [para. 66].

Calgary (City) v. Northland Properties Ltd. et al., [2003] A.R. Uned. 443; 2003 ABQB 668, refd to. [para. 66].

Moreau-Bérubé v. New Brunswick (Judicial Council) - see Conseil de la magistrature (N.-B.) v. Moreau-Bérubé.

Conseil de la magistrature (N.-B.) v. Moreau-Bérubé, [2002] 1 S.C.R. 249; 281 N.R. 201; 245 N.B.R.(2d) 201; 636 A.P.R. 201; 2002 SCC 11, refd to. [para. 69].

Workers' Compensation Board (N.S.) v. Laseur - see Workers' Compensation Board (N.S.) v. Martin et al.

Workers' Compensation Board (N.S.) v. Martin et al., [2003] 2 S.C.R. 504; 310 N.R. 22; 217 N.S.R.(2d) 301; 683 A.P.R. 301; 2003 SCC 54, refd to. [para. 76].

R. v. Conway (P.) (2010), 402 N.R. 255; 263 O.A.C. 61; 2010 SCC 22, refd to. [para. 76].

Chan v. Minister of Employment and Immigration, [1994] 2 F.C. 612; 73 F.T.R. 279 (T.D.), refd to. [para. 83].

Lewis v. Pincher Creek No. 9 (Municipal District) (2005), 375 A.R. 331; 2005 ABQB 201, refd to. [para. 85].

Bell ExpressVu Limited Partnership v. Rex et al., [2002] 2 S.C.R. 559; 287 N.R. 248; 166 B.C.A.C. 1; 271 W.A.C. 1, refd to. [para. 90].

Port Alberni (City) Assessor v. MacMillan Bloedel Industries Ltd. (1972), 28 D.L.R.(3d) 688 (B.C.C.A.), affd. [1974] S.C.R. 83, consd. [para. 97].

Hudson's Bay Co. Ltd. and Simpsons-Sears Ltd. v. Calgary (City) and Assessment Appeal Board (Alta.) (1980), 23 A.R. 181 (C.A.), consd. [para. 99].

Committee for Justice and Liberty Foundation et al. v. National Energy Board et al., [1978] 1 S.C.R. 369; 9 N.R. 115, refd to. [para. 134].

Arthur v. Minister of Employment and Immigration, [1993] 1 F.C. 94; 147 N.R. 288; 98 D.L.R.(4th) 254 (F.C.A.), refd to. [para. 135].

Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817; 243 N.R. 22, refd to. [para. 138].

Koroz v. Canada (Minister of Citizenship and Immigration) (2000), 261 N.R. 71; 100 A.C.W.S.(3d) 315 (F.C.A.), refd to. [para. 140].

Statutes Noticed:

Municipal Government Act, R.S.A. 2000, c. M-26, sect. 13 [para. 87]; sect. 374(1)(b)(i.1) [para. 7, Appendix A]; sect. 536, sect. 537 [para. 84].

Authors and Works Noticed:

Jones, David Phillip, and de Villars, Anne S., Principles of Administrative Law (4th Ed. 2004), p. 123 [paras. 60, 81].

Mullan, David J., Administrative Law, § 216 [para. 135].

Counsel:

Susan E.A. Trylinski, for the applicant;

Andrew Sims, Q.C., for the respondent, Municipal Government Board;

Gilbert J. Ludwig and James B. Laycraft, Q.C., for the respondents, Canadian Natural Resources Limited, Suncor Inc., Encana Corporation, Husky Oil Operations Ltd., Howard Mackie, Borden Ladner, Northstar Energy Corporation, Suncor Energy Inc., Devon Canada Corporation, BP Canada Energy Co., Ackers and Allard.

These applications for judicial review were heard on April 21, 2010, by McIntyre, J., of the Alberta Court of Queen's Bench, who delivered the following judgment and reasons for judgment, dated at Calgary, Alberta, on June 18, 2010.