Calgary (City) v. Alberta (Municipal Government Board), 2010 ABQB 719

Court of Queen ’ s Bench of Alberta Citation: Calgary (City) v. Alberta (Municipal Government Board), 2010 ABQB 719 Date: 20101119 Docket: 0801 13148 Registry: Calgary Between: The City of Calgary Applicant - and - The Municipal Government Board and BTC Properties II Ltd. also known as “ BTC PROPERTIES II LTD. ” Respondents _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice B. E.

Romaine _______________________________________________________ [ 1 ] The City of Calgary applies for judicial review of Municipal Government Board Order 057/08 (the Impugned Order). The issue is whether BTC Properties II Ltd. was properly assessed for business tax on parking facilities located in each of three office buildings owned by it. This largely depends upon whether BTC or the tenants renting the parking operated a business in the parking facilities. I. BACKGROUND

[ 2 ] Prior to 2003, it was not the City’s practice to assess business tax on parking space or facilities associated with office buildings and rented to the tenants of those buildings. This changed as a result of the MGB’s decision in Tonko Development Corporation v. Calgary (City) , MGB 078/03 in which various parking operators, both property owners and third parties operating under leases or other agreements with the owners, challenged 2002 business tax assessments relating to numerous parking facilities operated by them. One basis for the challenge was that the assessments were inequitable.

The MGB found that the parking operators were assessable but agreed that the assessments were inequitable and reduced each to $1.00. The MGB found a systemic inequity resulting from the fact that the owners/landlords of parking facilities in office buildings were competing businesses but were not being assessed.

As a result, the City began assessing both parking operators and owners/landlords of office building parking facilities for 2003 business tax. [ 3 ] BTC and numerous other parking operators and owners/landlords appealed the 2003 assessments, and like assessments for the 2004, 2005 and 2006 taxation years, to the Calgary Assessment Review Board (ARB). [ 4 ] On further appeal to the MGB, BTC’s 2004 assessments on the subject parking facilities were affirmed.

BTC’s grounds for appeal of the 2004 assessments were the same as its grounds for appeal of the 2005 and 2006 assessments, the appeals under review in the present case. The 2004 assessments were affirmed on the basis that there was insufficient evidence to decide the matter: Altus Group Calgary v. Calgary (City), MGB 016/06. In the Impugned Order, the MGB granted BTC’s 2005 and 2006 appeals.

The MGB distinguished its decision affirming the 2004 assessments on the basis, in this case, BTC had brought forth considerable evidence, in the form of the leases governing the subject parking facilities, to support its appeals: Impugned Order p. 13. [ 5 ] This judicial review relates to BTC’s appeal to the MGB of its 2005 and 2006 business tax assessments on the subject parking facilities. The facilities are underground parkades located in each of three multi-storey, multi-tenanted office buildings in the Calgary core and beltline areas.

The buildings are owned by BTC and are referred to respectively as the IBM Building, the Energy Plaza Building and the BP Centre Building. The parking facilities in each of the buildings were rented at all material times exclusively to the business tenants of the buildings. [ 6 ] BTC, as well as numerous other owners/landlords and parking operators of parking facilities, appealed their 2005 assessments to the ARB. BTC’s Issue Statement raised the following grounds of appeal: Issue - Assessment incorrectly determined.

Support - Bylaw 8M2005 does not identify parking as an assessable use, the bylaw is applied inconsistently within the same property. Current application of the NARV assigns a Business Asmt. and tax to vacant space... Issue - Incorrect Person Assessed. Support - The owner of the premises has been levied the assessment and tax instead of the occupant and the associated business... Issue - The NARV is unsupported by evidence and market fact. Support - No evidence is provided by the assessment office to substantiate how the NARV is achieved...

Issue - Some assessed occupancies are tax exempt.... [ 7 ] BTC’s appeal was heard in conjunction with appeals on approximately 40 other properties. On August 24, 2005, the ARB affirmed the 2005 assessments. Each of the ARB decisions relating to each of the three parking facilities is one page in length and states the following under the

section entitled “Decision with Reasons”: ...It is the Board’s decision that in most instances it is the owners or landlord and not the tenant who is the properly assessed person. The owner has care and control of the parking spaces and receives the revenue. Although the development permit requires that parking be provided, it does not indicate who shall manage the parking spaces.

With regards to the allegation that many similar parking facilities have not been assessed, the Board finds there is inconclusive evidence to support this position... [ 8 ] BTC, and numerous other owners/landlords and operators of parking facilities, also appealed their 2006 assessments to the ARB. BTC’s Issue Statement raised the following grounds of appeal: (1) the NARV for the facilities may be incorrect for a number of reasons; and (2) the City erred in assessing and levying a business tax in respect of the parking facilities for the subjects as: (

i) Bylaw 9M2006 does not contemplate a business tax assessment of the subjects; (ii) City applied the bylaw in a manner that was incorrect and contrary to its purpose and intent in respect of the assessed person. BTC’s appeal to the ARB was heard in conjunction with approximately 47other appeals. The ARB affirmed the 2006 assessments. No formal decision was rendered other than a one page form letter mailed May 24, 2006 indicating that the assessment was confirmed.

[ 9 ] BTC and other parking operators and owners/landlords appealed both the 2005 and 2006 ARB decisions to the MGB. The 2005 Applications for Assessment Appeal state the grounds for appeal as follows: (1) the assessment is incorrectly determined and NARV is unsupported by evidence and market fact; (2) “incorrect assessed person”; and (3) “the owner of the property should not be the assessed person under bylaw 8M2005". The 2006 Application for Assessment Appeal reasons for appeal were as follows:

(1) Bylaw 9m2006 does not specifically address assessment of parking facilities; Bylaw is applied inconsistently and contrary to intent and purpose; (2) incorrect stall counts are assessed;

(3) NARV may not represent actual rents (net) the subject achieves; (4) comparison analysis identifies potential inequity in treatment of similar situations. [ 10 ] The MGB hearing took place over four days, on January 14, 16, 17 and 18, 2008. Prior to the hearing, all property owners except BTC withdrew their 2005 and 2006 appeals. At the hearing, the MGB received and reviewed the ARB Record, heard evidence from BTC’s two witnesses and the City’s witness, examined building leases provided by BTC, and heard extensive argument from both the City and BTC.

On May 26, 2008, the MGB rendered the Impugned Order allowing the appeals and setting the assessments to nil. It stated in its reasons that while BTC was not the proper assessed person, the tenants of the buildings may be. [ 11 ] On January 19, 2009, the MGB denied the City’s request to reconsider the Impugned Order: see Calgary (City) v. BTC Properties II Ltd., MGB 006/09. II. LEGISLATION A. MUNICIPAL GOVERNMENT ACT [ 12 ] The imposition of business tax is authorized under the Municipal Government Act , R.S.A. 2000, c. M-26 (MGA),

Part 10, Division 3. [ 13 ] Business tax must be imposed under a business tax bylaw.

Section 371 of the MGA gives the City power to pass a business tax bylaw.

Section 372 of the MGA gives the City power to impose a business tax bylaw on all businesses operating in the municipality unless the business was exempt from tax.

Section 373 of the MGA requires the person operating the business to pay the business tax. [ 14 ]

Section 374 of the MGA specifies the contents of the bylaw. The business tax bylaw is to contain assessments of businesses to be prepared and recorded on a business assessment roll: s. 374(1). The bylaw is to specify one or more methods to be used to prepare business tax assessments. One method, the method chosen by the City in the present case, is on “a percentage of the net annual rental value of the premises” (the “NARV method”): s. 374(1)(b)(i.1). The bylaw is also to specify the basis upon which a business tax may be imposed by prescribing, for the NARV method, “the percentage of the net annual rental value”: s. 374(1)(c)(i.1). [ 15 ] “Business” is defined under s. 1(1) (

a) of the MGA as follows: (

i) a commercial, merchandising or industrial activity or undertaking; (ii) a profession, trade, occupation, calling or employment, or (iii) an activity providing goods or services, whether or not for profit and however organized or formed, including a co-operative or association of persons; [ 16 ] ARB functions and decisions are dealt with in

Part 11 of the MGA .

Section 460 specifies the types of complaints that can be made to the ARB and includes complaints about matters shown on an assessment or tax notice including a description of a property or business (s. 460 (5)(a)); the name and mailing address of an assessed person or taxpayer (s. 460(5)(b)); an assessment (s. 460(5)(c)); and

whether the property is assessable (s.460(5)(i)). [ 17 ]

Part 11, s. 467 of the MGA deals with decisions of the ARB: 467

(1) An assessment review board may make any of the following decisions: ... (

b) make a change with respect to any matter referred to in section 460(5); (

c) decide that no change to an assessment roll or tax roll is required.

(2) An assessment review board must not alter any assessment that is fair and equitable, taking into consideration assessments of similar property or businesses in the same municipality. [ 18 ]

Part 12, s. 499(1) of the MGA deals with appeals to the MGB: 499

(1) On concluding a hearing the Board may make any of the following decisions: ... (

d) make any decision that the assessment review board could have made, if the hearing relates to the decision of an assessment review board;

(2) The Board must not alter (

a) any assessment that is fair and equitable, taking into consideration assessments of similar property in the same municipality, and... [ 19 ] In proceedings before the MGB, the MGB is not bound by the rules of evidence and may hear new evidence: s 496 (1). B. CALGARY BUSINESS TAX BYLAWS 8M2005 AND 9M2006 [ 20 ] The City passed the business tax bylaws in question, Bylaws 8M2005 and 9M2006 (the Bylaws). They are identical. There is no dispute that the Bylaws complied with the foregoing provisions of the MGA . [ 21 ] NARV is defined under s. 3(

e) of each Bylaw as “the typical market annual rental value of the Premises exclusive of operating costs, but inclusive of the costs of leasehold improvements”. [ 22 ] Section 4(2) of each Bylaw states that the business assessments are based on 100 percent of the NARV of the premises. [ 23 ] The definition of “business” in s. 3 (

c) of the Bylaws is the same as the definition of “business” in s. 1(1) (

a) of the MGA . [ 24 ] The term “premises” is not defined in the MGA but is defined in s. 1(

g) of the Bylaws as follows:

1(g) “Premises” means any space occupied or used for the purpose of or in connection with a Business, and without limiting the generality of the foregoing includes: (

i) land and buildings or part of buildings on such land; and (ii) any store, office, warehouse, factory, facility, hotel, motel, enclosure, yard or other space. [ 25 ] Section 18(1) of each Bylaw states that if a business would not have been subject to the imposition of business tax under the Municipal Taxation Act , R.S.A. 1980, c. M-31 (MTA), it continues to be non-taxable. III. ISSUES 1. What is the appropriate standard of review? 2. Applying the appropriate standard of review, did the MGB err in its findings? IV. DISCUSSION AND ANALYSIS A. STANDARD OF REVIEW 1.

Position of parties [ 26 ] The City’s approach appears to be that where a party alleges that an administrative decision maker’s reasons are not only unreasonable or incorrect, but also inadequate, a double-barrelled approach to the standard of review analysis may be employed. It challenges the MGB’s decision based on procedural unfairness, applying a correctness standard of review, and on a reasonableness/correctness standard of review applying the analysis in Dunsmuir v.

New Brunswick , 2008 SCC 9 , [2008] 1 S.C.R. 190. [ 27 ] The City argues that the appropriate standard of review is correctness based on three alleged errors made by the MGB. First, it argues that the MGB’s decision is procedurally unfair because its reasons are so deficient as to constitute an error of law. Second, it argues that it was procedurally unfair for the MGB to decide that the tenants had exclusive use of the parking premises and imply that they were liable for the business tax when the tenants were not represented at the MGB hearing.

Third, it argues that the MGB’s decision exempted BTC from the payment of business tax and that decisions regarding exemption from tax are outside the MGB’s jurisdiction. In the alternative, the City argues that if a judicial review analysis under Dunsmuir is conducted, applying either a correctness or reasonableness standard, the MGB’s reasons and decision should be quashed and the matter returned to a different hearing panel of the MGB for rehearing. It argues that if a correctness standard is applied, the reasons and decision of the MGB are not correct.

It argues that if a reasonableness standard is applied, the reasons and decision of the MGB are not reasonable because the reasons are not transparent or intelligible and do not provide appropriate justification for the MGB’s conclusions. [ 28 ] The MGB made submissions to the Court confined to explaining the Record, addressing the standard and scope of judicial review, and explaining the MGB’s practices and policies within its statutory mandate relative to the matters in issue.

It took no position on the correctness, reasonableness or fairness of its decision. [ 29 ] The MGB resists the application of a parallel judicial review analysis. It submits that the requirement to give reasons should

not be so expanded that it “eats up” the judicial review analysis of the substantive reasons required under Dunsmuir. It argues that aparallel review goes directly against the Supreme Court of Canada’s intention in Dunsmuir to simplify the judicial review analysis. Itsubmits that the standard to be applied depends, in part, on the characterization of the issues before the MGB, which it characterizes asissues of fact and mixed law and fact attracting a reasonableness standard of review. It submits that the issue before the MGB waswhether BTC was assessable for business tax on the parking facilities.

This required the MGB to interpret the MGB and the Bylaws andmake findings of fact and law related to whether parking facilities are assessable, whether BTC was operating a business in the City ofCalgary, and whether it was operating its business in the parking facilities. [30] The MGB challenges the characterization of its decision to reduce the business tax assessment to nil as a jurisdictional issue.It argues that the MGA specifically gives the MGB the authority to deal with assessment appeals.

It submits that the issue before theMGB was not whether it had jurisdiction to exempt BTC from tax or to hear an appeal which could result in an exemption. The issuewas whether BTC was assessable under the MGB, which is wholly within its jurisdiction to decide. It also submits that it did not decide,in the tenants’ absence, that the tenants were assessable for business tax on the parking facilities. It left that issue open. [31] BTC submits that the standard of review is reasonableness. It characterizes the issue as one of mixed law and fact.

It submitsthat the MGB embarked on a fact finding mission and then applied those facts to the legislative scheme and the Bylaws. It considered theevidence and business tax assessment policy and equity. It submits that this was a classic case of applying the facts and findings to thelaw. 2. Law re standard of review for procedural fairness issues [32] Generally, the standard of review for issues of procedural fairness and the legal obligation to give reasons is correctness:Clifford v. Ontario (Attorney General), 2009 ONCA 670, 98 O.R. (3d) 210, leave to appeal to the SCC dismissed [2009] S.C.C.A.

No.461; Alberta Liquor Store Association v. Alberta (Gaming and Liquor Commission), 2008 ABQB 595, 450 A.R. 1 at para. 56. InClifford, the Court held at paras. 22 - 23 that if there is a legal obligation to give reasons, there can be no deference granted to atribunal’s decision to not give reasons. a. Doctrine of legitimate expectations [33] The Supreme Court of Canada expanded the duty of procedural fairness in Baker v. Canada (Minister of Citizenship andImmigration), (SCC), [1999] 2 S.C.R. 817, [1999] S.C.J. No. 39.

Reasons are required from tribunals such as the MGBwhere the decision has an important significance for the individual or if there is a statutory right of appeal. In doing so, the SupremeCourt of Canada commented on the doctrine of legitimate expectations, at para. 26: [...] the legitimate expectations of the person challenging the decision may also determine what procedures the duty of fairness requiresin given circumstances. Our Court has held that, in Canada, this doctrine is part of the doctrine of fairness or natural justice, and that itdoes not create substantive rights [citations omitted].

As applied in Canada, if a legitimate expectation is found to exist, this will affectthe content of the duty of fairness owed to the individual or individuals affected by the decision. If the claimant has a legitimateexpectation that a certain procedure will be followed, this procedure will be required by the duty of fairness: [citations omitted].Similarly, if a claimant has a legitimate expectation that a certain result will be reached in his or her case, fairness may require moreextensive procedural rights than would otherwise be accorded [citations omitted].

Nevertheless, the doctrine of legitimate expectationscannot lead to substantive rights outside the procedural domain.... [Emphasis added] [34] The doctrine of legitimate expectations provides that a certain process will be followed rather than assuring a particular result.Further, in certain cases, more extensive procedural rights are afforded, however, the doctrine of legitimate expectations does not produceor deal with substantive rights. Put another way, a decision maker’s discretion to reach a certain result is unfettered by the doctrine oflegitimate expectations.

Examples of procedural rights arising from this doctrine include the right to make representations and the right tobe consulted: Moreau-Bérubé v. New Brunswick (Judicial Council), 2002 SCC 11, [2002] 1 S.C.R. 249 at para. 78. The City cites Edisonv. Canada, 2001 FCT 734, 208 F.T.R. 58 at para. 23 which confirms that legitimate expectations arise “where an individual relies onprocedural norms established by past practice or published guidelines...”. [35] Baker expanded a tribunal’s duty to give reasons but also confined the application of the doctrine of legitimate expectations to

procedural rights. The City cannot use this doctrine to argue for a different determination outside of the procedural domain. b.

Difference between adequacy of reasons and the substantive decision made [ 36 ] The difference between challenging the procedural fairness of a decision based on the inadequacy of reasons under Baker and challenging the substantive decision applying the Dunsmuir standard of review analysis has recently been analysed by the Ontario and the Newfoundland and Labrador Courts of Appeal. [ 37 ] In its 2009 decision in Clifford , the Ontario Court of Appeal found that where a lack of procedural fairness based on the inadequacy of reasons is alleged, two separate analyses must be conducted for judicial review purposes.

The initial threshold review requires an analysis of whether the administrative body has satisfied its procedural fairness obligation to give reasons. The second review requires an analysis of whether the administrative body’s substantive reasons and decision are reasonable or correct applying the Dunsmuir analysis. The Court stated at paras. 31 - 32: In addition, in my view, it is important to differentiate the task of assessing the adequacy of reasons given by an administrative tribunal from the task of assessing the substantive decision made.

A challenge on judicial review to the sufficiency of reasons is a challenge to an aspect of the procedure used by the tribunal. The court must assess the reasons from a functional perspective to see if the basis for the decision is intelligible. This is to be distinguished from a challenge on judicial review to the outcome reached by the tribunal. That may require the court to examine not only the decision but the reasoning offered in support of it from a substantive perspective.

Depending on the applicable standard of review, the court must determine whether the outcome and the reasoning supporting it are reasonable or correct. That is a very different task from assessing the sufficiency of the reasons in a functional sense. [ 38 ] Jeffrey J. recently adopted and applied the foregoing passage from Clifford in Calgary (City) v. Calgary Firefighters Assn. , 2010 ABQB 226 , [2010] A.J. No. 367 at para. 28 . [ 39 ] The majority of the Newfoundland and Labrador Court of Appeal subsequently took a different approach in Newfoundland and Labrador (Treasury Board) v.

Newfoundland and Labrador Nurses' Union, 2010 NLCA 13 , 294 Nfld. & P.E.I.R. 161, leave to appeal to the SCC granted [2010] S.C.C.A. No. 137. The majority decision frames the issue as whether the trial division judge erred in concluding that the arbitrator’s decision was unreasonable because the decision-making process lacked justification, transparency and intelligibility. This is the test for reasonableness developed in Dunsmuir .

The Court split on the issue of whether it must conduct both a procedural fairness analysis as to the adequacy of the reasons and a separate Dunsmuir analysis as to the reasonableness or correctness of the substantive reasons.

Welsh J., for the majority, preferred a simplified approach, stating at para. 12: Finally, a comment may be of assistance regarding the interplay between adequacy of reasons in the context of procedural fairness and the first prong of the Dunsmuir analysis, this is, the aspect of reasonableness directed to the process of articulating the reasons , requiring justification transparency and intelligibility in the decision-making process. Clearly, the Dunsmuir analysis requires a consideration of the reasons provided by the tribunal.

A failure to give reasons, or inadequate reasons, would be decisive in the reasonableness assessment . A complete lack of or inadequate reasons could not be said to provide the justification, transparency and intelligibility in the decision-making process required to satisfy reasonableness under the Dunsmuir analysis. Unless legislation eliminates the necessity for reasons, reasonableness is the standard required to be met by a tribunal.

Since reasons, including adequacy thereof, constitute a component of reasonableness, a separate examination of procedural fairness is an unnecessary and unhelpful complication . [Emphasis added] [ 40 ] Cameron J., in dissent, appeared to prefer the two-step approach applied in Clifford , stating at para. 38 : The distinction between the first part of a Dunsmuir review for reasonableness of a decision of an arbitrator (a substantive review) and a review of adequacy of reasons in response to a claim based on procedural fairness turns on the purpose of the review.

The two procedures often use the same vocabulary: words such as "transparency" and "intelligibility" appear in the discussions of both. The

difference is that a substantive review is concerned with the reasonableness of the decision and, to that end, it looks at the reasons articulated. A procedural fairness review examines the fairness of the process . It is directed to the ability to discern the reasons without reference to the question of whether the decision falls within the range of acceptable outcomes. In my opinion, where procedural fairness requires reasons be provided, Dunsmuir has not changed how a reviewing court would approach the task of reviewing adequacy of reasons.

Issues of procedural fairness do not involve any deferential standard of review [citations omitted]... [ 41 ] Thus, the approach to judicial review of this type of issue is different. The majority of the Newfoundland and Labrador Court of Appeal took a more simplified approach than the two-pronged approach adopted by the Ontario Court of Appeal. It found, in effect, that Baker is subsumed in Dunsmuir . There is no need to assess every decision firstly on whether the reasons are adequate applying a correctness standard and secondly on whether the reasons are reasonable or correct applying the Dunsmuir analysis.

Welsh J. notes that if there is a total lack of reasons or inadequate reasons, justification, transparency and intelligibility cannot exist within the decision-making process. [ 42 ] In my view, the requirement in Baker to give reasons does not occupy precisely the same ground as the Supreme Court of Canada’s framework for analysing the sufficiency of reasons in Dunsmuir . However, there is some crossover since both involve an evaluation of the justification, transparency and intelligibility of the reasons.

As the issue is not settled in Alberta, I will conduct two separate reviews, although I agree with the view of the majority of the Newfoundland and Labrador Court of Appeal which is consistent with the Dunsmuir goal of clarity and simplicity. [ 43 ] It is noteworthy that the Supreme Court of Canada in Law Society of New Brunswick v.

Ryan , 2003 SCC 20 , [2003] 1 S.C.R. 247 at paras. 55-56 had the following to say on the topic of the reasonableness standard of review: A decision will be unreasonable only if there is no line of analysis within the given reasons that could reasonably lead the tribunal from the evidence before it to the conclusion at which it arrived. If any of the reasons that are sufficient to support the conclusion are tenable in the sense that they can stand up to a somewhat probing examination, then the decision will not be unreasonable and a reviewing court must not interfere (see Southam at para. 56).

This means that a decision may satisfy the reasonableness standard if it is supported by a tenable explanation, even if this explanation is not one that the reviewing court finds compelling (see Southam , at para. 79). ...At all times, a court applying a standard of reasonableness must assess the basic adequacy of a reasoned decision remembering that the issue under review does not compel one specific result... [ 44 ] This description of reasonableness can be taken as a description of the process for determining whether the reasons given by the tribunal are sufficient, whether the basis for the decision is intelligible and thus whether the process was fair, the first step in the two- step analysis adopted in Clifford .

To isolate the first step and characterize it as being subject to some standard of “correctness” rather than “reasonableness” is to bring “correctness” in through the back door in an analysis that does not require such a standard, as reasons that do not meet such a test would surely, as Welsh J. has put it in Law Society of New Brunswick, be unreasonable. 3. Law re standard of review for substantive issues a.

General principles [ 45 ] The Supreme Court reconsidered the analytical process employed by a court to ascertain the appropriate standard of review in the judicial review of administrative tribunal decisions in Dunsmuir . Where a standard of review analysis is required, a two-step process is now to be applied: Dunsmuir at paras. 62 and 64 . [ 46 ] First, the court determines whether the standard has been settled by the jurisprudence. Judicial precedent must have “determined in a satisfactory manner” the degree of deference to be accorded to “a particular category of question”.

It is not necessary to perform a fresh standard of review analysis in every case if the standard has already been set for the type of question in issue: Dunsmuir at paras. 57, 62 .

[47] Second, if the standard of review has not been satisfactorily determined, the court must perform a contextual standard ofreview analysis to determine whether the administrative decision maker should be given deference and a reasonableness standardapplied. This involves the consideration of the following four factors: (1) presence of a privative clause; (2) purpose of the administrativedecision maker as determined by its enabling legislation; (3) nature of the question(

s) at issue; (4) expertise of the administrative decisionmaker: Dunsmuir at paras. 53 - 57 and para. 64. [48] An exhaustive review of these factors is not required in every case and no one factor is determinative. The applicable factorsmust be weighed together to determine the proper level of deference required and thereby the appropriate standard of review: Dunsmuirat para. 56. Where the reviewing court determines that little or no deference is called for, a correctness standard of review is applied.

Where thereviewing court determines that considerable deference is called for, a reasonableness standard of review is applied. [49] In Dunsmuir, the Supreme Court of Canada gave guidelines as to the types of issues that normally attract a reasonablenessstandard of review and those that attract a correctness standard of review: at paras. 53 - 54: Where the question is one of fact, discretion or policy, deference will usually apply automatically (Mossop at pp. 599-600; Dr. Q, atpara. 29; Suresh, at paras. 29-30).

We believe that the same standard must apply to the review of questions where the legal and factualissues are intertwined with and cannot be readily separated. Guidance with regard to the questions that will be reviewed on a reasonableness standard can be found in the existing case law.Deference will usually result where a tribunal is interpreting its own statute or statutes closely connected to its function, with which itwill have particular familiarity: Canadian Broadcasting Corp. v. Canada (Labour Relations Board), (SCC), [1995] 1S.C.R. 157, at para. 48; Toronto (City) Board of Education v.

O.S.S.T.F., District 15, (SCC), [1997] 1 S.C.R. 487, atpara. 39. Deference may also be warranted where an administrative tribunal has developed particular expertise in the application of ageneral common law or civil law rule in relation to a specific statutory context: Toronto (City) v. C.U.P.E., at para. 72. Adjudication inlabour law remains a good example of the relevance of this approach. The case law has moved away considerably from the strictposition evidenced in McLeod v. Egan, (SCC), [1975] 1 S.C.R. 517, where it was held that an administrative decisionmaker will always risk having its

interpretation of an external statute set aside upon judicial review. [50] A correctness standard necessarily applies where the nature of the issue before the tribunal is one of constitutionalinterpretation involving “true questions of jurisdiction” that arise where the tribunal must “explicitly determine whether its statutorygrant of power gives it the authority to decide a particular matter”: Dunsmuir at para. 59; where the issue is a general question of law of“central importance to the legal system as a whole and outside the adjudicator’s specialized areas of expertise”: Dunsmuir at paras. 55and 60; and, where the issue involves the jurisdictional lines between two or more competing specialized tribunals: Dunsmuir at para. 61.It is noteworthy that the issue of adequacy of reasons does not fit well into any of these categories. [51] The expertise of a tribunal is determined relative to the expertise of the court.

Determining expertise requires the court toidentify the nature of the issue before the tribunal, characterize the expertise of the tribunal relative to the nature of the issue, considerthe court’s own expertise relative to the nature of the issue, and determine whether the tribunal has relatively more expertise than thecourt with respect to the issue. The reviewing court determines the expertise of the tribunal by considering both the general expertise ofthe tribunal as well as its expertise regarding the issue under appeal or judicial review.

Greater deference is indicated if the tribunal ismore expert than the court and the issue under appeal or judicial review falls within the tribunal’s greater expertise: Dr. Q v.

College ofPhysicians and Surgeons of British Columbia, 2003 SCC 19, [2003] 1 S.C.R. 226. [52] The Supreme Court of Canada explained the reasonableness standard in Dunsmuir at para. 47: Reasonableness is a deferential standard animated by the principle that underlies the development of the two previous standards ofreasonableness: certain questions that come before administrative tribunals do not lend themselves to one specific, particular result.Instead, they may give rise to a number of possible, reasonable conclusions. Tribunals have a margin of appreciation within the range ofacceptable and rational solutions.

A court conducting a review for reasonableness inquires into the qualities that make a decisionreasonable, referring both to the process of articulating the reasons and to outcomes. In judicial review, reasonableness is concernedmostly with the existence of justification, transparency and intelligibility within the decision-making process. But it is also concernedwith whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law.

b. Existing Case Law [ 53 ] The existing case law indicates that a reasonableness standard of review should be applied to the MGB’s decision in this case. [ 54 ] One of the issues before the MGB was whether the parking facilities were occupied or used for the purpose of or in connection with BTC’s business. Where the issue before the MGB was whether various properties used to provide food and beverage services were “...used in connection with educational purposes and held by . . . the board of governors” of a university under s. 362(1) (d) (

i) of the MGA , the Alberta Court of Appeal applied a reasonableness standard of review: University of Alberta v. Edmonton (City) , 2005 ABCA 147 , 363 A.R. 378. The Court ruled that the nature of the problem was one of mixed fact and law, and that a moderate level of deference was called for. [ 55 ] In Calgary (City) v.

Municipal Government Board (Alta.) , 2008 ABCA 187 , 432 A.R. 202 ( Hudson’s Bay decision), the MGB interpreted s. 460(3) of the MGA , specifically whether a party was “an assessed person” that could make a complaint as to “any assessed property or tax”, even though it did not own the property assessed. The Alberta Court of Appeal ruled that the nature of the issue involved the

interpretation of the MGA and was subject to a reasonableness standard of review. c. Standard of Review Analysis [ 56 ] In the event that a standard of review analysis is required, it also leads to the application of a reasonableness standard of review. [ 57 ]

Section 506 of the MGA states that there is no appeal from a decision of the MGB and has been characterized as a weak privative clause attracting a moderate degree of deference: Alberta (Minister of Municipal Affairs) v. Telus Communications Inc., 2002 ABCA 199 , 312 A.R. 40 at para. 3 , leave to appeal to S.C.C. refused, [2002] S.C.C.A. 440. [ 58 ] The purpose of the MGB is to supervise the assessment of real property for municipal taxation purposes with the objective of ensuring that all property in the Province subject to municipal taxation is fairly and equitably assessed. Where the MGB applies its expertise to assess the economic and operational realities which, in turn, impact upon its

interpretation of the MGA , a reasonableness standard is applied. The assessment of economic and operational realities is a factual assessment which the MGB is uniquely equipped to make: Telus . [ 59 ] The nature of the question before the MGB involved the

interpretation of the MGA and the Bylaws and fact finding with regard to that

interpretation. This can be characterized as an issue of mixed law and fact; however, the issues before the MGB were primarily factual. It was required to determine whether BTC occupied or used the subject parking facilities for its business. This required the MGB to examine the provisions of the leases applicable to the buildings and the facts regarding the occupation and use of the parking facilities. A reasonableness standard of review is indicated. [ 60 ] The expertise of the MGB relative to the courts on issues of property valuation and assessment also indicates that deference be given to the MGB.

In Telus , the Court ruled that the MGB “may have developed, through experience, a level of expertise in the area of property assessment...”. The Court also considered the chambers judge’s comment that the MGB had been given “an important expert role to play in determining whether it would be fair and equitable in light of the taxation of other linear property to include feature software in the definition of ‘telecommunications system’”.

In assessing the relative expertise of the MGB and the reviewing court, the Court of Appeal ruled that the MGB was “uniquely equipped to assess the factual context and its expertise in that regard” was owed greater deference. As a result, the Court of Appeal ruled that, as the nature of the issue before the MGB was one of mixed law and fact, the standard of review was patent unreasonableness: Telus at paras. 33 - 34. [ 61 ] Alberta courts have found that the MGB has “a particular expertise in appreciating the impact of various possible

interpretations of the statutory provisions on its ability to fulfill its mandate to administer the appeal process relating to the taxation of property fairly and equitably”: Calgary (City of) v. Northland Property Ltd. , 2003 ABQB 668 , [2003] A.J. No. 970 at para. 13 .

d. Conclusion [ 62 ] Balancing the foregoing factors to be considered in a standard of review analysis, I find that a reasonableness standard of review is applicable. In this case, the MGB interpreted the provisions of the MGA and the Bylaws, made findings of fact, and applied the facts and its findings to the law. I do not agree with the City’s argument that the MGB’s decision to reduce the tax assessment to nil has the effect of granting a tax exemption to BTC and that this is a matter outside the MGB’s jurisdiction.

The issue was whether the City had properly assessed BTC for business tax under the MGA and the Bylaws. This was an issue which was clearly within the jurisdiction of the MGB. B. APPLICATION OF STANDARD OF REVIEW 1. Application of standard of review to substantive issues [ 63 ] A court conducting a review for reasonableness inquires into the qualities that make the decision reasonable. An administrative body’s decision will be reasonable if two conditions are satisfied. First, justification, transparency and intelligibility must exist in the decision making process.

Second, the decision must fall within a range of possible, acceptable outcomes which are defensible given the law and the facts: Dunsmuir . If the process employed by the administrative body and the outcome “fit comfortably with the principles of justification, transparency and intelligibility, it is not open to a reviewing court to substitute its own view of a preferable outcome.”: Canada (Citizenship and Immigration) v. Khosa , 2009 SCC 12 , [2009] 1 S.C.R. 339 at para. 59 . [ 64 ] The law applicable to the MGB’s Impugned Order is the MGA and the Bylaws and the case law interpreting it.

Further, although this Court is not bound by decisions of the MGB, it is informed by them. [ 65 ] Business tax is assessable against those who operate a “business” in “premises” in the City of Calgary. To determine whether BTC was assessable for business tax on the subject parking facilities, the MGB was required to consider whether the subject parking facilities were “premises” as defined in the Bylaws; whether BTC was operating a “business” as defined in the MGA and the Bylaws; and whether the subject parking facilities were spaces being occupied or used by BTC to operate its business. a.

Decision that parking facilities are taxable under the Bylaws [ 66 ] The MGB found that the definition of “premises” includes parking facilities. [ 67 ] The City’s position was that the term “premises” as defined in the Bylaws should be interpreted expansively as encompassing parking spaces and entire parking facilities. [ 68 ] BTC argued that it was not the intention of the legislature or the City that parking facilities be assessed for business tax. It argued that business tax is in essence an occupancy tax and was intended to be a tax levied on the premises from which a business operates.

BTC pointed to several provisions of the MGA , for example, s. 379 (3) (a), which provides for supplemental assessments where the business “moves into new premises” or “increases the storage capacity or floor space of the premises occupied for the purpose of a business...” It also referred to s. 2 of the Bylaws which states that the purpose of the Bylaws is to “...authorize the assessment, supplementary assessment and taxation of Businesses operating in Premises within the City...”. [ 69 ]

Section 1(

g) of the Bylaws states: 1(g) “Premises” means any space occupied or used for the purpose of or in connection with a Business, and without limiting the generality of the foregoing includes:

(

i) land and buildings or part of buildings on such land; and (ii) any store, office, warehouse, factory, facility, hotel, motel, enclosure, yard or other space . [Emphasis added] [ 70 ] The term “space” has been interpreted by the MGB as having its common meaning and including “...space, whether that space is used for parking of vehicles or for retail space”: Tonko at p. 14. [ 71 ] In Tonko , the MGA found that the term “premises” should be given a broad and expansive

interpretation based on the purpose of business tax assessment under the MGA and business tax bylaws.

Section 372 of the MGA authorizes the City to impose a business tax on all businesses. The Bylaws do not exempt any businesses and more specifically, do not exempt parking businesses. It found that the purpose of the business tax bylaw was to apply to all businesses and the definition of “premises” should be read in a manner that achieves that purpose: Tonko at p. 14. [ 72 ] In Tonko , the MGB also found that the phrase “used for the purpose of or in connection with a Business” is to be interpreted as providing the flexibility needed to apply a business assessment to the entire space occupied or used.

The MGB found that where a parking business is being operated from premises in the City, the entire parking facilities, including the physical parking spaces in which vehicles are parked, may be assessed for business tax. A business tax bylaw must apply to all businesses operating in the municipality and must therefore be adaptable to a wide variety of business circumstances: Tonko at p. 18. [ 73 ] In the Impugned Order, the MGB concluded that “premises” includes parking facilities.

It adopted the reasoning from a passage in Tonko as support for its conclusion, stating at pp. 13 - 14 of the Impugned Order: Tonko Development Corporation et al. v. City of Calgary (MGB 078/03) on page 14 reads as follows: This broad and expansive

interpretation of the definition is supported by an examination of the purpose of a business assessment in the Act and the Bylaw.

Section 372 of the Act authorizes a municipality to impose a business tax on all businesses operating within the municipality with the exception of businesses that are exempt. Section 4(1) of the Bylaw 3M2002 requires that every person who operates a business in a premises within the city shall be assessed for the purposes of imposing a business tax. The MGB interprets this to mean all businesses. Bylaw 3M2002 has no

section which identifies businesses which are exempt, and more specifically does not exempt a business which operates parking facilities. Thus, the MGB comes to the conclusion that the purpose of the bylaw is to apply to all businesses and that the definition of premises should not be read in a restrictive manner in order that this purpose cannot be achieved. While recognizing that it is not bound by its previous decisions, the MGB still accepts the reasoning in the passage above. Thus, if a parking business is operated on the premises, it is taxable.

The parties disagree over whether a parking business was in operation . [Emphasis added] [ 74 ] The MGB concluded that the MGA and the Bylaws were intended to impose a business tax on all businesses operating in premises in the City, including parking businesses. This was a reasonable conclusion, consistent with the plain meaning and purpose of the business tax provisions of the MGA and Bylaws. It is also evident from the MGB’s reasoning how it came to this conclusion. The question was whether BTC was operating a business in the subject parking facilities. b.

Decision that BTC did not operate a parking business in the parking facilities [ 75 ] The MGA and the Bylaws provide that business tax is assessable on those operating a business in premises in the City of Calgary. The MGB found that BTC did not operate a parking business in the subject parking facilities.

(

i) Position of the Parties [ 76 ] The City argued that this issue had been decided in Tonko and affirmed in a line of subsequent MGB decisions. It argued that prior to Tonko , the standard practice had generally been to include a charge for parking in the rent for office space. As a result, the business assessment on the office space captured the NARV of office and parking space. The MGB had decided in Tonko and subsequent decisions that the practice had changed. Owners/landlords of parking in office buildings were now charging a separate and additional rent for parking, over and above the rent for office space.

As a result, they were operating parking rental businesses separate from their office rental businesses. The City argued that the leases in question and the evidence of the City’s witness, the City’s former tax assessment officer, supported the City’s position that there is a separate market for parking and office space.

It argued that since the building leases charged a separate and additional rent for parking, BTC was operating a separate parking business in the subject parking facilities and was therefore assessable for business tax on those facilities. [ 77 ] The City argued that the decisive factor was that BTC charged its tenants a separate and additional fee for parking and was thus in the business of selling parking. It did not matter whether the parking was rented to the tenants, their employees or the public.

What mattered was that the owner/landlord generated a separate revenue stream from the rental of its parking space and was thus in the business of renting parking space, in addition to its business of renting office space. [ 78 ] BTC argued that it had always been a standard industry practice in the office building lease market to charge a separate and additional rent for parking space. It argued that the fact that the building leases charged a separate amount for parking over and above the rent for the office space was irrelevant.

The relevant factor was whether BTC carried on its business in the parking facilities. It referred to s. 4(1) of the Bylaws as the “liability-creating” section, which states that every person “who operates a Business in Premises within the City shall be assessed...” for business tax. It argued that this contemplates a tax on the space in which the business operates and that BTC did not operate its business in the physical parking spaces, but rather in the offices from which it managed its business.

It argued that, in its previous decisions upholding business tax assessments on parking facilities or spaces, the MGB had misdirected itself by failing to address this initial question. It had rather jumped straight to the issue of whether the parking facilities were occupied or used for the purpose of or in connection with the business. It argued that if that was the test, a business tax would apply to all types of space such as vacant space and storage space. The City was not assessing these spaces.

The issue was not whether the parking owners/landlords required the space for their businesses but whether they operated their businesses in the space. BTC argued that because the MGB had misdirected itself, it had upheld assessments of business tax on parking facilities, although the parking owners and operators did not operate their businesses in those facilities.

If a business does not operate its business in the premises, it is not necessary to take the next step and determine whether the premises are “occupied or used for the purpose of or in connection with a Business.” [ 79 ] BTC argued that owners/landlords of office buildings are in the business of renting space, and that the tenants of those office buildings are engaged in the businesses carried on in their respective office spaces. It submitted that, as a result, neither the owners/landlords nor the tenants of the office buildings operated their businesses in the parking facilities.

It argued, in the alternative, that if anyone was operating a business in the parking facilities, it was the tenants. (ii) Law and Prior MGB Decisions [ 80 ] Section 372(1) of the MGA states that a business tax bylaw authorizes the City to impose a tax in respect of all “businesses operating in the municipality”.

Section 4 of the Bylaws requires every person operating a “...Business in Premises within the City” to be assessed for the purpose of imposing a business tax. [ 81 ] In Bryce, Kipp & Co., Agent for Campeau Corporation v. Calgary (City of) (23 January 1987), AAAB Order 05/87, the Alberta Assessment Appeal Board (AAAB) allowed the owner’s appeal of the 1986 business tax assessed against parking spaces associated with a commercial office building owned by it and rented to tenants of the office space in the building.

The AAAB found that the owner was in the business of developing and operating office buildings, rather than the parking business. It also found that the owner did not occupy the parking spaces and did not carry on a business in the parking spaces.

The parking spaces were rented to the building tenants, and the AAAB found that this would lead one to believe that the tenants occupied the spaces. [ 82 ] BTC argued that the AAAB’s decision in Bryce/Campeau was based on the finding that the office tenants occupied the parking stalls, and not on the fact that the lease payments covered both the office and parking space. BTC referred to a passage in Bryce/Campeau noting that the tenants paid for parking separate from and in addition to the rent paid for the office space. Based on BTC’s

interpretation of Bryce/Campeau , the fact that BTC’s lessees paid for parking space in addition to and separate from the office

space had no bearing on whether or not BTC was operating a parking business in the subject parking facilities. The relevant fact in Bryce/Campeau was the AAAB’s finding that the tenants occupied both the office space and parking space and therefore, that if anyone was assessable for business tax on the parking space, it was the tenants. BTC argued that the City and the MGB had subsequently misinterpreted the findings in Bryce/Campeau .

This was evident from the City’s position, in Tonko, that it was not its practice to assess owners/landlords of office buildings on parking space, because the rent for parking was captured in the NARV of the office space. This was obviously wrong, as the industry practice was to charge tenants a separate amount for parking over and above the amount charged for office space. [ 83 ] The City agreed that the AAAB had decided in Bryce/Campeau that the owner of the building was not assessable for parking space in the building because it did not operate a business in the parking facilities.

However, it submitted that the case did not turn on whether or not there was a separate and additional charge for parking. It argued that the parking rental market had changed since 1986. In 2005 and 2006, when the subject assessments were made, the City had more information, gathered partly from the Assessment Request for Information (ARFI) forms provided to the City by property owners, that led the City to the conclusion that the owners/landlords of parking facilities in office buildings operated parking rental businesses separate from their office rental businesses.

This was not only based on the fact that the owners/landlords charged a separate fee for parking but also on the fact that they occupied and used the parking for their parking businesses. [ 84 ] As noted earlier, the MGB began assessing owners/landlords of office buildings for business tax on the parking facilities in their buildings as a result of the MGB’s decision in Tonko .

In Tonko , various parking facility operators, such as Impark, successfully challenged 2002 business tax assessments on parking facilities owned or operated by them on the basis that a number of competing businesses were not being assessed business taxes on their parking facilities. The competing businesses referred to were principally owners/landlords of parking facilities associated with office buildings. There was evidence that the City assessed only the parking space in those buildings that was allocated to public parkers, but not that allocated to building tenants.

The City submitted that the owners/landlords were not assessed for tenant parking space because it was assumed that the rent paid by the tenants for office space included rent for the tenants’ associated parking space. As a result, it was the City’s view that the assessment for the parking space was included in the assessment for the office space. The MGB found that the parking operators/owners had led sufficient contradictory evidence to show that parking space was not included within the office space rental values. Rather, it was often the practice to charge additional rent to tenants for parking.

Since the City had not varied the NARV applied to premises where rent for parking space was charged for separately from rent for office space, the MGB found a systemic inequity in the application of the business tax bylaw. The MGB distinguished Bryce/Campeau on the basis that when it was decided, it was customary to include a charge for parking in the rent for the office space. [ 85 ] Subsequent to Tonko , the City began to assess certain property owners, including office building owners, for business tax on their associated parking facilities, and those owners launched a succession of appeals.

In many cases, the MGB upheld the business tax assessments. One of the grounds upon which the MGB upheld these assessments was that market conditions had changed. It was no longer a standard practice to include rent for parking space in the rent for office space. The market for parking space was now generally separate from the market for office space. If property owners charged separately for parking, they were operating separate parking businesses in their parking facilities and were to be assessed separate business taxes on those facilities: see, for example, BTC v.

Calgary (City of), MGB Order 116/03; Fortune Properties Holdings Ltd. v. Calgary (City of) , MGB 055/05; Various Owners, represented by Derbyshire Viceroy Consultants Ltd. v. Calgary (City of), MGB Order 124/05; Queen Creek Land Co. Ltd. v. Calgary (City of), MGB 007/06; Various Owners represented by Deloitte & Touche LLP Property Tax Services v. Calgary (City of), MGB Order 064/07. (iii) Evidence [ 86 ] It is not in dispute that approximately 58 individual leases were in effect at all material times in the three buildings.

Nor is it in dispute that BTC submitted only six of those leases in evidence to the MGB and that three of those were incomplete. Under the leases, the building tenants were charged a separate and additional charge for parking, over and above that charged for office space. [ 87 ] The MGB heard evidence from BTC’s witnesses, Mr. Kerslake and Mr. Fairgrieve-Park. Mr. Kerslake represented the Altus Group, the company representing BTC on the appeal. Mr.

Kerslake’s testimony was that he had been involved in commercial real estate in Alberta for over 30 years, and that he was an accredited appraiser with the Appraisal Institute, AACI, and had done extensive commercial real estate valuation work in Alberta and specifically in Calgary. Mr. Fairgrieve-Park was an experienced property manager in the office leasing market in Calgary and elsewhere and the senior vice-president of operations for BTC responsible for property operations and property management. [ 88 ] The MGB also heard evidence from the City’s witness, Ms. Hess, the City’s manager of business. Ms.

Hess was previously

the City’s manager for commercial and multi-residential assessment and in that position was responsible for conducting the business assessments and property assessments for multi-residential and commercial properties from 2001 through 2005. [ 89 ] Both of BTC’s witnesses testified that although BP Centre and Energy Plaza had been built in the early 1980s, the City had never assessed the owners/landlords for the parking facilities until 2003. Mr. Kerslake testified that it was the City’s practice to assess a parking owner/operator only on the parking space that was rented to the public on an hourly basis.

In his experience, it was not the City’s practice to assess parking owners/operators for space rented to building tenants. The reason, in his opinion, was that owners renting parking space to their tenants were not operating a parking business. Only where the owner/landlord was charging non-tenants for hourly parking was the owner/landlord assessable for parking. It was Mr. Kerslake’s understanding that owners/landlords provided parking to their building tenants as part their space leasing businesses.

The parking was therefore incidental to their space leasing business and was not a stand-alone parking business. [ 90 ] The leases in evidence charged for parking in addition to office space. Mr. Kerslake’s and Mr. Fairgrieve-Park’s evidence was that it was always the practice of owners/landlords to charge separately for parking and that this continued to be the standard practice at all material times. It was therefore Mr. Kerslake’s opinion that this factor did not affect whether an owner/landlord was assessable for business tax on the parking facilities. [ 91 ] Ms.

Hess testified that it was the practice in the 1980's and up until 2002 to include parking in the rent paid for the office space. However, Ms. Hess testified that subsequent to Tonko , the City updated its information on the circumstances under which office building parking was operated and this information revealed that office building owners/landlords were charging a separate and additional rent for their parking space, over and above that charged for their office space. This information was relied upon as a basis for the subsequent business tax assessments on office building owners/landlords. [ 92 ] It was Ms.

Hess’s evidence that the City also based its business tax assessments on information contained in the ARFIs sent out to all property owners in the City. Ms. Hess testified that the ARFIs submitted on the subject parking facilities did not indicate that the parking was occupied or used by the tenants. (iv) MGB’s Decision [ 93 ] The MGB found that BTC was in the business of leasing space but that it was not in the parking business.

It stated that this conclusion was based on an examination of the provisions of the leases and other evidence provided by BTC. [ 94 ] The MGB acknowledged that it had found in previous decisions that building owners/landlords were operating parking businesses separate from office lease businesses in the same premises, but distinguished those cases based on the differing terms of the leases or agreements governing the parking in those cases.

It stated at p 14: With respect to the other provisions in the leases, the MGB recognizes that many arguments brought up by the Respondent, such as the fact that parking is charged separately from the office space, and the degree of control were accepted in previous orders; however, in this case the MGB finds that the other provisions in the leases are more indicative that the parking space being part and parcel of the agreement between the parties for office space .

After examining the leases in their entirety, the MGB concludes that the parking is incidental, and is provided to complement the leasing of office space, rather than being operated as a secondary business. [Emphasis added] [ 95 ] The other lease provisions considered significant were those giving the tenants the right to additional parking space, and in two cases, giving the tenants the first option on additional parking and tying the allotment of parking space to the square footage of the office space leased.

The MGB also found that the access and maintenance provisions of the subject leases indicated that the parking was incidental to BTC’s office leasing business and that the tenants were the end users and controlled access to the parking facilities. It stated at p. 14: ...When the access and maintenance provisions are examined, they indicate that while the landlord is responsible for the maintenance and upkeep, it is the tenant who is the end user, and who generally controls the general access to the parkade. These are all factors that indicate that the parking is incidental to the office lease.

[ 96 ] Although the MGB did not expressly state what other evidence it relied upon, it did state that “[i]n coming to this conclusion, the MGB placed weight on the fact that the parking agreements are solely with the tenants with no public access (other than visitor parking and parking for deliveries to the office space) ...”: at p. 14. This evidence did not relate to various provisions of the leases provided by BTC but to the fact that the parking was in fact rented to and used exclusively by the tenants of the buildings.

This was not the case in some of the previous MGB decisions in which the owners of buildings were found to be operating a separate parking business: see Tonko and BTC v. Calgary , MGB Order 116/03. [ 97 ] The MGB agreed with BTC that the leases in question incorporated the prior practice of encompassing both the office space and the parking facilities in one premises and that the parking was provided to complement the leasing of office space rather than being operated as a separate business.

It stated at p 14: The MGB concludes from a careful examination of the leases for the subject office buildings and other evidence provided that the Appellant is not operating a parking business. Rather, the Appellant’s business is that of leasing space, which encompasses space in both the office portion and the parking facility. The primary relationship between the tenants and the Appellant arises from the lease agreement for the office space. The MGB notes that is consistent with the previous practice of landlords, as noted in the Respondent’s position above . [Emphasis added] (

v) Conclusion [ 98 ] The MGB’s conclusion that BTC was not operating a parking business in the subject parking facilities was consistent with a reasonable

interpretation of the MGA and the Bylaws. The MGB recognized that the City only had the power to assess business tax on those operating a business in the parking facilities. It based its decision on the evidence before it, including an evaluation of the provisions of the leases presented to it and the testimony of expert practitioners in the office leasing market. It considered the fact that the leases governed both the office space and the parking space, obligated BTC to provide parking in proportion to the office space leased, and in two cases gave the tenant the first option of obtaining parking.

The MGB also considered it significant that the tenants were, in fact, the sole occupiers or users of the parking. The MGB heard arguments from both parties as to the law and the facts over four days of hearings and can be taken to have considered those arguments. It would have been helpful if the MGB had more extensively referred to the specific lease provisions and other evidence that it relied upon, but the fact that it did not does not make the decision unreasonable.

Based on the law, evidence and arguments made by the parties, it was reasonable for the MGB to conclude that the provision of parking was complementary to the lease of the office space and that BTC did not operate a separate parking business. It is also clear from its reasons how it came to that conclusion. c. Decision that the parking facilities were not premises occupied or used by BTC for its business and that the tenants occupied and used the parking (

i) Position of Parties [ 99 ] The Bylaws define “premises” as including “... any space occupied or used for the purpose of or in connection with a Business...”. [ 100 ] This issue revolves around whether parking facilities or parking spaces in office buildings that are rented exclusively to the building tenants are occupied or used by the building owners/landlords or the building tenants. [ 101 ] The City argued that both the tenants and BTC occupied and used the parking premises, which required the MGB to apply the paramount occupancy test in Gottardo, infra, to determine who was the proper person to be assessed for business tax purposes.

It argued that while the office spaces were demised to the tenants, the parking spaces were shared. It submitted that the parking spaces were more in the nature of common areas to which the tenants had access. There was no expectation of privacy or exclusive possession of the parking spaces, as there was for the tenants’ office space. The majority of the parking spaces were unreserved, and if reserved, could be moved by the owner/landlord. The majority of the parking spaces were also accessed by multiple tenants on a random basis.

[102] BTC argued that it did not “occupy or use” the parking facilities for the purpose of or in connection with its business because itdid not operate a parking business and did not operate its business in the parking facilities. It also argued that the tenants had exclusiveuse of the parking, and as a result, it was not necessary to apply the tests articulated in Gottardo to determine who had paramountoccupancy. It argued that the paramount occupancy test need only be applied where more than one business occupies or uses thepremises for their business.

As a result, the issue of who had paramount occupancy of the parking premises did not arise. Only thetenants occupied or used the parking facilities. [103] BTC argued that many of the MGB’s previous decisions finding that owners/landlords or parking operators were operatingparking businesses in parking facilities could be distinguished on the basis that in those cases all or part of the parking was rented to thepublic. In this case, BTC rented the parking space exclusively to those renting its office space.

Further, in this case, one lease coveredboth the office space and the parking space and obligated BTC to allocate parking to its office tenants. Former decisions did not dealwith the specific facts in this case. (ii) Law and MGB Orders [104] Where two or more parties have access to space, “occupancy” is established for municipal tax purposes, by determining whohas paramount occupancy of the space. [105] In Qu’Appelle Developments Ltd. v. Regina (City) (1989), (SK CA), 77 Sask. R. 20, 20, [1989] S.J.

No. 386(C.A.), the issue was whether the lessee of parking space or the parkade owner/operator “occupied” the parking facilities and was thusassessable for business tax. The term “occupied” was not defined, as it is in the subject Bylaws, to include premises “used for thepurpose of or in connection with a business” however, the Court gave the term an expansive

interpretation. It ruled that the term“occupy” was not confined to physical occupancy but extended also to the exercise of power over as well as control and or use ofproperty. [106] BTC distinguished Qu’Appelle on a number of grounds, including the fact that the parking was rented to individuals whoworked in nearby buildings as well as to other persons, rather than to business tenants of the building associated with the parking. Theywere rented on a first-come-first-served basis.

It was argued that in contrast, the leases governing the subject parking facilities grantedexclusive occupancy and use of the parking stalls to the business tenants in the building. [107] The test to determine who has “occupancy” of premises for municipal tax purposes was further refined in Gottardo Properties (Dome) Inc. v.

Toronto (City), (ON CA), 111 O.A.C. 272, 162 D.L.R. (4th) 574 as the person with paramountoccupancy, at para 40: The principle of paramount occupancy holds that when two persons occupy or use the same land at the same time assessability dependson who has the paramount occupancy or use of the land for its business. [108] In Gottardo, the Ontario Court of Appeal applied a three-part test to determine whether the owner or licensee of stadium boxesused to entertain business clients had paramount occupancy of the boxes.

The first consideration, although not a determining factor, waswho had the greater physical presence in the premises. The Court found that the physical presence of the licensee of the stadium boxeswas transitory. The second consideration was what controls were imposed by one occupant over the other’s use of the premises and whatwas the purpose and effect of those controls. In Gottardo, the court noted that it is expected that the owner will retain some measure ofcontrol, such as the right of access and other restrictions normally attached to a licence.

The third consideration was the relativesignificance of the activities carried out on the premises to the primary business of each of the competing occupants. [109] BTC distinguished Gottardo on its facts. Those renting the stadium boxes used the boxes to entertain clients of their businesses.BTC submitted that a key factor in the court’s conclusion that the owner/landlord had paramount occupancy of the boxes was that itcontinued to operate a food and beverage service in the boxes while they were rented.

BTC submitted that the ongoing business beingconducted in the boxes by the owner/landlord was the critical fact that compelled the Court to take the analysis further than decidingwho occupied the premises, to deciding who had paramount occupancy. BTC argued that unlike the owner/landlord in Gottardo, BTChad no ongoing business interest in the subject parking facilities. The subject leases gave exclusive occupation and use of the parking tothe tenants. The primary purpose of the parking was for the use of the tenants, while it was incidental to BTC’s business.

Further, andmost importantly, BTC argued that the Gottardo test was only applicable where two or more businesses occupied or used a space fortheir businesses. If BTC did not operate a parking business and did not operate its business in the subject parking facilities, and if the

parking was exclusively occupied and used by the office tenants, there was no need to apply the paramount occupancy test. [ 110 ] BTC argued that the present case was similar to Bryce/Campeau .

There, the AAAB concluded that the owner/operator of an office building did not operate a parking business but was in the business of leasing space, that the tenants of the office space occupied and used the parking space, and that if anyone was assessable for business tax on the parking space, it would appear to be the tenants. [ 111 ] The City argued that the MGB was required and had failed to apply the Gottardo test and that applying the test, the parking premises were occupied or used for the purpose of or in connection with BTC’s business.

It argued that the parkers in the subject parking facilities, who were mostly employees of the tenants, had a transitory physical presence in the facilities, but neither BTC nor the tenants had a physical presence. It argued that the leases gave BTC significant control by giving it the right to impose rules regarding entry and exit machinery, to control access hours, to restrict use, to move the reserved parking stalls and to require the tenants to provide it with lists of parkers or vehicles using the facilities.

It argued that the collection of rent in exchange for access to the facilities was integral to BTC’s parking business. It submitted that the leases provided by BTC were additional evidence that BTC was the proper assessed person for business tax purposes.

The leases charged the tenants separately for the parking space and the office space, did not include parking in the definition of the leased premises and showed the significant control that BTC exercised over the parking facilities. [ 112 ] The City argued that the MGB has repeatedly applied Qu’Appelle and Gottardo to determine which of two or more persons “occupy or use” parking facilities for their business and are thereby assessable for business tax, and that it should continue to apply the principles in those cases. [ 113 ] In Tonko , the MGB relied on Qu’Appelle to support its conclusion that the office building owners/landlords were in the parking business and occupied or used the parking facilities for their businesses. [ 114 ] In BTC Properties II Ltd. v.

Calgary, MGB Order 116/03, the MGB granted Impark’s appeal of 2002 business tax assessments on a parkade managed by it, but owned by BTC. Impark operated the parkade under a management agreement rather than a lease. All parties agreed that a business was being operated in the parkade. The main issue was who had paramount occupancy of the parkade for their business operations - the commercial tenants renting space in the parkade, Impark (the parkade operator) or BTC (the parkade owner). The MGB found that the tenants were not the paramount occupants of the premises.

It based its decision on the fact that the “use of the parking stalls by the tenants is transient and temporary in nature, as the use of the stalls is random and without specific assignment, nor of unrestricted use/access.”: at p. 19. The lessees’ occupation was distinguished from lessees who had exclusive possession of leased premises. Here, both Impark and BTC could access the entire parkade at any time whether or not there were vehicles parked there. The MGB found that the facts were very similar to those in Qu’Appelle and placed considerable weight on that decision.

The MGB found that the principles in Gottardo also supported its decision. [ 115 ] The final issue was whether BTC or Impark was the paramount occupant of the parking facilities. Based on a review of the management agreement between Impark and BTC, the MGB found that BTC had paramount occupancy. The level of control exercised by Impark was limited to managing the parkade.

While Impark had day-to-day control over the parkade, its management was subject, “at all times, to the satisfaction and final approval of [BTC] with respect to car parking and operating policies.” BTC had ultimate control over the most significant aspects of the arrangement including the hours of operation, the approval of parking fees, responsibility for operating and capital costs, the right to review policies and the right to terminate the management agreement with Impark. Although Impark could restrict access, it was only because it was given that power by BTC under the management agreement.

The fact that Impark received a percentage of the revenue after it reached a certain point was characterized by the MGB as compensation for the added services required to manage the parkade when the number of parkers increased. [ 116 ] In Various Owners, Deloitte & Touche LLP Property Tax Services v. Calgary, MGB Order 124/05, various property owners, including BTC, again appealed 2004 business tax assessments on parking space owned by them. The parking space was associated with the owners’ respective office buildings and leased to commercial tenants of its buildings.

There was no dispute that the property owners were operating a business and that the definition of “premises” was broad enough to include parking spaces occupied or used for the purpose of or in connection with a business. The issue was whether the parking spaces were occupied or used for the purpose of or in connection with the property owners’ businesses or the tenants’ businesses: at p. 4. [ 117 ] The MGB examined the tenant leases entered as evidence.

It noted that one lease used the words “for the exclusive use of the Lessee” but could not find that the owners had given the tenants exclusive occupation or demised the parking to the tenants, because it had been given only two pages of the lease. It conceded that “there may be leases that are exceptions to the finding that property owners

have paramount occupancy.” It noted that the office space and the parking space were dealt with separately in the lease. It noted that the rent charged for parking was additional to the rent charged for the office space. [ 118 ] The MGB applied the Qu’Appelle and the Gottardo tests to determine who had paramount occupancy and use of the of the parking facilities. First, the tenants’ physical occupancy of the parking stalls was transitory in nature. Second, the owners exercised greater control over the parking premises.

The leases gave the owners the right to limit access, move parkers from stall to stall, terminate the parking leases separately from the office leases, determine hours of access for unreserved stalls, and close the parkade for purposes of maintenance and access at all times. T

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