Court of Appeal Decision of the Week

Municipal Law: Assessment; Taxation of Governmental Bodies (here, a School Board)

Case: Prairie Valley School Division No. 208 v Pilot Butte (Town), 2016 SKCA 103 (CanLII)

Keywords: Special Assessment; Indirect Tax; The Local Improvements Act, 1993, SS 1993, c L-33.1

Synopsis:

A municipality, the Town of Pilot Butte, initiates a project to upgrade its water distribution system; work is approved pursuant to s. 8 of The Local Improvements Act, 1993, SS 1993, c L-33.1. The Town enacts a bylaw with a view to levying the cost of the project as a special assessment on lands benefited by the project (set at $196,218.78 payable immediately or over 10 years at 6% interest).

As an owner of affected lands, Prairie Valley School Division No. 208 (“Prairie Valley”) receives the notice of assessment and unsuccessfully appeals to the Board of Revision. Following an application for judicial review in the Court of Queen’s Bench, and subsequent appeal to the Appeals Committee, Prairie Valley further appeals (pursuant to an order of Ottenbreit J.A. granting leave to appeal).

The Court of Appeal describes the “bottom line question” on appeal as follows: “whether the Appeals Committee erred in holding that the Land is subject to a special assessment imposed by Pilot Butte in relation to a water infrastructure project.” Prairie Valley raises the following arguments:

  1. is the Land owned by the Crown?
  2. is the Land held in trust?
  3. did the Appeals Committee misinterpret the concept of “equity”?
  4. is the special assessment an indirect tax?

The Court of Appeal dismisses the appeal; concludes the Appeals Committee made no error in finding the land was not exempt from the special assessment on the basis Prairie Valley is an agent of the Crown, that the land is not held in trust, that the Appeals Committee did not err in its treatment of the concept of “equity” in the Improvements Act, and that the special assessment is not an indirect tax.

Importance:

Is the Land Owned by the Crown?

Prairie Valley argued the land in question was the property of the Provincial Crown and, pursuant to s. 30(1)(a) of the Improvements Act, exempt from taxation for local improvements:

The following lands are exempt from taxation for local improvements:

(a) land that is the property of the Crown, including land held by a person in trust for the Crown…

The Court of Appeal found this argument unpersuasive, stating that “the Minister’s order of April 19, 2005” (see para. 15) had vested the land in Prairie Valley; and that s. 343 of The Education Act, 1995, SS 1995, c E-0.2 expressly vests all land acquired by a school division in the board of education of that division. The Court of Appeal also found s. 63 of the Education Act gives boards of education a distinct legal personality from the Crown – that they are deemed to be corporations. As such, the Court of Appeal stated the land was properly understood to be the property of Prairie Valley and not exempt from taxation under s. 30(1)(a) of the Improvements Act (see para. 15).

The Court of Appeal rejected the submission Prairie Valley should be considered an agent of the Crown and exempt from the special exemption on that basis. Despite the list of features in the Education Act and regulations demonstrating the Minister’s authority over the operations of Prairie Valley, the Court concluded “…at the end of the day, I find it unnecessary to determine whether this level of control renders Prairie Valley an agent of the Crown by virtue of common law principles” (see para. 23).

The Court found it “entirely clear” that the statutory scheme did not contemplate an exemption from special assessments for boards of education:

Significantly, s. 297 of The Municipalities Act expressly provides that the property exempt from municipal taxation under s. 292 is not thereby exempt from special assessments for local improvements. Then, as explained above, the Improvements Act goes on, in s. 30, to provide an exemption from assessments only for “land that is the property of the Crown, including land held by a person in trust for the Crown.” It does not provide an exemption for property owned or occupied by school divisions. (see para. 26).

This interpretation of the statutory scheme led the Court to express the view it was “of no consequence” whether Prairie Valley was an agent of the Crown.

Counsel for the Appellant: S. Maureen Jickling (Saskatchewan School Boards Association, Regina)

Counsel for the Respondent: Jeffrey Grubb, Q.C., and Andrea Johnson (Miller Thomson, Regina)

Counsel for the Intervener: Thomson Irvine (Minister of Justice (SK), Regina)

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Posted: Wednesday, September 07, 2016