Edmonton (City) v. Governors of the University of Alberta, 2013 ABQB 440

Court of Queen’s Bench of Alberta Citation: Edmonton (City) v. Governors of the University of Alberta, 2013 ABQB 440 Date: 20130802 Docket: 1203 12678 Registry: Edmonton Between: The City of Edmonton Applicant - and - Governors of the University of Alberta and Altus Group Limited As Agent for the Assessed Person Named Above and the City of Edmonton Composite Assessment Review Board Respondents _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice Donald Lee _______________________________________________________ Introduction and

Summary of Conclusion [ 1 ] The City of Edmonton seeks leave to appeal a decision of the City of Edmonton Composite Assessment Review Board (CARB) that upheld a complaint filed by Altus Group Limited (Altus), acting as agent for the assessed person Governors of the University of Alberta (University). The complaint dealt with the 2012 Assessment Notice for Tax Roll 9937133 (Property), a combined shopping mall and student residence located on the University of Alberta campus known as HUB Mall. The CARB found that the entire property was exempt from tax under s. 362(1) (

d) of the Municipal Government Act , R.S.A. 2000, c.M-26 ( MGA ), as property used “in connection with educational purposes”.

[ 2 ] Under the MGA, this Court may grant leave to appeal only on questions of law that are of sufficient importance to merit an appeal and which have a reasonable chance of success. The City alleges that the CARB applied an incorrect test when interpreting whether the property was used in connection with educational purposes. The CARB asked whether the property was used for the purposes of achieving educational purposes “in a practical and efficient manner”, a test suggested by the Court of Appeal when interpreting s. 362(1) (

d) of the MGA in University of Alberta v. Edmonton (City), 2005 ABCA 147 ( Aramark ) . The City argues that the test must be something more than convenience and should address numerous factors, like whether the business in question is operated similarly both on and off campus, is operated for profit, is primarily aimed at students, or offers students price subsidies. [ 3 ] In my view, the City has raised a question of law—“What is the correct test to be applied when determining whether a property is used in connection with educational purposes?”.

However, given the Court of Appeal’s decision in Aramark , I conclude that the appeal is unlikely to succeed and leave to appeal is denied. This decision should not be taken as suggesting that judicial review on the question of mixed fact and law – whether the CARB properly applied the test to these facts?—is unlikely to succeed. That is a different question entirely. Facts [ 4 ] The Property was demised into approximately 70 Commercial Retail Units (CRUs), which are occupied by tenants providing a wide range of goods and services.

At the CARB hearing, Altus argued that the entire Property should be exempt from taxation under s. 362 (l)(

d) of the MGA . Edmonton argued that only certain portions of the Property were exempt, while other portions of the Property were taxable as not used in connection with educational purposes as required by the legislation. [ 5 ] During the Hearing, Altus made the following admissions under cross-examination by the City. -There are no restrictions on users of the mall.

Anyone can use the services provided by the CRUs located there. -There was no evidence to show that CRUs located in the mall must give special treatment to students. -There was no evidence to show how much the student population uses any of the particular CRUs located in the mall. -Some of the CRUs advertise to both University and non-University patrons. -There is an LRT station directly below HUB Mall that services the wider community. -There is a central bus depot directly outside HUB Mall that services the wider community. -There is residential housing within two to three blocks of HUB Mall. [ 6 ] In addition, the City raised the following facts in its submission at the Hearing which were not contested by Altus: -The Complainant provided no leases or lease details for any of the tenants in HUB Mall.

There is no evidence of any special requirements of the tenancies geared towards the student population. -There is no evidence that any or all tenants specially cater to students by way of discounts, subsidies, special product lines, etc.

-There is no evidence as to how any individual tenant is connected to educational purposes.

The argument of the Complainant appears to be that all the tenants, no matter the use, should be exempt. -The Complainant previously entered into an agreement with the City of Edmonton with the purpose of distinguishing between those areas that are tenanted and taxable within the mall, versus the areas that were tenanted but exempt. [ 7 ] The CARB held that the entire Property met the requirements for exemption on that basis that it was used in connection with educational purposes and held by the board of governors of a university.

Subsequently, the City filed this Originating Application for leave to appeal and an application for judicial review. [ 8 ] Notwithstanding that the City seeks both leave to appeal and judicial review in its Originating Application, at this time the City is only seeking leave to appeal, in accordance with the Court of Queen's Bench decision in Associated Developers Ltd. v. Edmonton (City) , 2011 ABQB 592 (Associated Developers) .

Therefore, the only issue in this application is whether this Court should grant the City leave to appeal on the ground that the CARB erred in interpreting and/or applying section 362(1) (

d) of the MGA . Issues [ 9 ] Sections 470 and 470.1 of the MGA provide an avenue to appeal a decision of the CARB on questions of law or jurisdiction to the Court of Queen's Bench. An applicant for leave to appeal must show, for each ground, that there is: A. a question of law or jurisdiction; B. that is of sufficient importance to merit an appeal; C. with a reasonable chance of success. [ 10 ] Sections 688 and 689 of the MGA , which apply to appeals to the Court of Appeal from decisions of the Subdivision Development Appeal Board (SDAB), have similar wording to sections 470 and 470.1 of the MGA .

The City submits that case law from SDAB leave to appeal and appeal applications can also be reviewed for guidance in this application. Analysis Parties’ Submissions The City [ 11 ] Pursuant to section 470(5) of the MGA , leave to appeal may be granted if the appeal involves a question of law or jurisdiction of sufficient importance to merit an appeal and has a reasonable chance of success.

[12] The City submits that this application raises a question of law - the CARB erred in interpreting and/or applying section 362(1)(d)of the MGA, relying on Dunsmuir v. New Brunswick, 2008 SCC 9 , [2008] 1 S.C.R.190 at para. 66; McCauley CommunityLeague v. Edmonton (City), 2010 ABCA 215 at paragraphs 11 to 26 [13] The Supreme Court of Canada provided guidance in defining questions of law, fact and mixed fact in Canada (Director ofInvestigation and Research) v.

Southam Inc., [1977]1 S.C.R. 748 at para. 35: Briefly stated, questions of law are about what the correct legal test is; questions of fact are questions about what actually took placebetween the parties; and questions of mixed law and fact are questions about whether the facts satisfy the legal tests. [14]

Section 362(l)(

d) of the MGA states: 362(1) The following are exempt from taxation under this Division: ... (

d) property, other than a student dormitory, used in connection with educational purposes and held by any of the following: (

i) the board of governors of a university, technical institute or public college under the Post-secondary Learning Act; [15] The CARB was required to interpret the legislation to ascertain the legal test for what constitutes "used in connection witheducational purposes." [16] The City also argues that in addition to determining the correct legal test, the CARB was also required to correctly apply thelegal test to each of the CRU spaces located within the Property.

Even if the CARB determines the correct legal test, the failure tocorrectly apply it is also an error of law justifying the granting of leave to appeal in the City’s opinion. [17] The City submits that this application is of sufficient importance to merit an appeal because there is some objective importancefor the appeal. The Alberta Court of Appeal, in Omega2 Corp v.

Edmonton (City), 2005 ABCA 449 at paragraph 9, confirmed that "anissue may be of sufficient importance to merit an appeal if it is important for jurisprudential purposes." Further, in 845971 Alberta Ltd. v.Grand Prairie (City) (Subdivision & Development Appeal Board), 2010 ABCA 135, at paragraph 8, Berger J.A. stated that, "sufficientimportance must be determined on an objective scale and not on the basis of the subjective importance of the matter to the Applicant." [18] The City submits that the ground of appeal raised in this application is of sufficient importance because it raises issues ofprecedential value that will be important in future cases dealing with how educational exemptions may be considered by the CARB.

Thisdetermination is of ongoing significance to every municipality and every Composite Assessment Review Board in Alberta. It isimperative that there be consistency among the CARBs throughout the province in interpreting the legislation as it pertains toexemptions. [19] The City submits that this application, and any corresponding appeal, has a reasonable chance of success, noting that the standardof review will affect the analysis of whether this application has a reasonable chance of success.

The City submits that the applicablestandard of review is correctness. [20] While the CARB is a specialized tribunal relating to assessment matters, it was called upon in the Hearing to consider theinterpretation of exemptions provisions, which are found in

Part 10 of the MGA. The City asserts that this is a completely different partof the MGA than the CARB normally concerns itself with, namely

Part II. Justice Cote, in Boardwalk Reit LLP v. Edmonton (City),2008 ABCA 220, at paragraphs 19 to 31, decided that the Municipal Government Board (MGB) cannot be considered to have particularexpertise in interpreting sections of the MGA outside of its home part, and stated as follows at paragraph 24:

This is not a regulatory tribunal interpreting its "home" statute. It is true that over the years Alberta's Legislature has amalgamated more and more Acts in the municipal field, so today almost all municipal legislation is in the enormous Municipal Government Act, which touches on almost every conceivable aspect of local government. Many a former Act is now one "Part" of it. But out of 18 "Parts" in the Act, only one (Part 12) deals with the Municipal Government Board. None of the sections in issue or discussed here is in that

Part 12. The Municipal Government Board and the parties never mentioned

Part 12 (except possibly the weak privative clause s.506). This case is not even about that Board's home Part. [ 21 ] The City argues that this reasoning applies equally to the CARB. In addition, although the CARB has great familiarity in dealing with the valuation of properties, it is seldom called upon to consider specific exemptions provisions, and accordingly has little experience in that area.

As the CARB is interpreting provisions of the MGA outside its own part, less deference is warranted. [ 22 ] In addition, the City submits that this ground of appeal is also subject to a correctness standard of review as a result of a Pushpanathan analysis. [ 23 ] First, there is no privative clause within the MGA . The absence of a privative clause typically indicates that less deference is owed to the decision maker. Less deference is also warranted where, as here, there is a statutory appeal clause within the relevant legislation and the questions being determined fall within that clause.

Importantly, this ground of appeal falls squarely within

section 470 of the MGA as it involves an error of law. [ 24 ] Additionally the City argues, the correctness standard is applicable because this ground of appeal raises an error of law not within the specialized expertise of the CARB. This is consistent with the reasoning of the Supreme Court of Canada in Dunsmuir at paragraphs 51 to 64 , and the Alberta Court of Appeal in both Boardwalk at paragraphs 19 to 31, and Maduke v. Leduc (County) No 25, 2010 ABCA 331 at paragraph 6 , where the Court stated: Questions of law that engage the specialized expertise of the SDAB warrant some degree of deference.

Questions of law that are of general application for which the SDAB has no special expertise are reviewed for correctness: Canada Lands Co. v. Edmonton (City) , 2005 ABCA 218 (Alta.C.A.) at paras. 7-10 . [ 25 ] The City submits that a correct legal

interpretation requires a purposive analysis of section 362(1) (

d) of the MGA : R. Sullivan, Sullivan on the Construction of Statutes , 5th ed. (Markham: Ontario, 2008) at 255-256, 264-266. The CARB did not appear to either conduct a purposive analysis or any other type of analysis. For example, there is no analysis in the Decision regarding the difference in the wording of the educational exemption currently found in section 362(1)(

d) of the MGA and the wording of the educational exemption found in its predecessor legislation, the Municipal Taxation Act , nor any analysis of the difference in wording between the terms "educational purposes" used in Alberta and "university purposes" used in British Columbia legislation. [ 26 ] The nature of the question as to what constitutes "used in connection with education purposes" is solely a question of legal

interpretation, including choosing and applying the proper legal tests. Since this is purely a question of law, less deference is warranted: Boardwalk at paragraph 20. [ 27 ] The City further submits that any reasonable

interpretation of section 362(1) (

d) of the MGA leads to the conclusion that it is the actual use of the CRUs within the Property that must be considered, and that meaning must be given to "used in connection with educational purposes". Based on this analysis, the City submits that the standard of review is correctness, and that this ground of appeal has a reasonable chance of success. Even if the standard of review is reasonableness, the City submits that this ground of appeal has a reasonable chance of success. Altus and CARB [ 28 ] Altus and CARB argue that the

interpretation of s. 362(1)(

d) is a clear question of mixed fact and law, and that the Decision was correctly decided. In any event, the Decision certainly meets the standard of reasonableness. It is not realistic that the City will succeed in establishing a different test for s. 362(1) (

d) than a "practical and efficient" test adopted by the CARB.

[29] First the present CARB Decision relies on Aramark, a Court of Appeal decision binding on the CARB and on the Court ofQueen's Bench. The guidelines set out in Aramark at paragraphs 16 and 17 are: In our view, the "necessary and integral part" test is too restrictive and does not accord with the plain wording of the statute. Section362(1)(

d) requires a property to be "used in connection with educational purposes". The requirement that the service be a "necessary andintegral part of the provision of education" would only capture a subset of properties used in connection with educational purposes. Forexample, an essay editing service or a library photocopy service might not be a necessary and integral part of the provision of education,yet they might well be connected with educational purposes. No Alberta precedent establishes a definitive test for "used in connection with" in the context of s. 362(1)(d).

Perhaps a helpfulconsideration to apply is whether the properties are used "for the purpose of achieving [educational purposes] in a practical and efficientmanner". See Centenary United Church (Trustees of) v. Ontario Regional Assessment Commissioner, Region 19 (1979), (ON SC), 27 O. R. (2d) 790 (Ont. Co. Ct.)) at 798. [30] Given the preponderance of authority that supports the test adopted by the CARB in the decision, some of which is binding bothon the CARB and this Court, Altus submits that the leave to appeal application should not succeed.

Discussion Does the City raise a question of law? [31] I conclude that the question of the correct test is a question of law. While I agree with Altus that the decision in Aramark isbinding, the question raised here is whether the CARB identified the correct test to determine whether the properties are used inconnection with educational purposes. The CARB identified the test here as whether the properties are used for educational purposes ina practical and efficient manner. This represents an extricable question of law. In Aramark, however, the Court of Appeal was decidingan appeal of a judicial review.

The question was virtually identical -- whether properties on the university providing food and beverageservices were exempt from taxation – but the judicial review covered the entire question, not just a question of what is the correct test. [32] I distinguish this decision from The City of Edmonton v. The City of Edmonton Composite Assessment Review Board andCanada Safeway Limited et al, 2012 ABQB 154. Justice Germain confirmed that the analysis of complaints by an ARB to see if theycomply with the legislative requirements is "necessarily, an analysis of mixed law and fact...

Any court that reviews the CARB'sconclusion will also have to follow the same process and examine whether these particular complaints (facts) meet the legislative schemeand criteria (law)". There, no extricable question of law could be drawn, while in this case the City has identified a specific question,namely what test should the CARB have applied. [33] To the extent that the City suggests the question of law also involves an analysis of how the CARB applied the test, I mustdisagree. The City argues that the CARB should have considered the actual use of the CRU’s and the facts admitted by theRespondents.

The application of these facts to the test, however, would raise a question of mixed fact and law. The only question of lawraised here is whether the test of “practical and efficient use” is the correct test for determining whether the properties are used inconnection with an educational purpose.

Is there a reasonable chance of success? [34] I choose not to address the question of whether the issue raises a question of sufficient importance, as I believe that leave toappeal must be denied because there is no reasonable chance that an appeal on this question of law could succeed. [35] The Court of Appeal in Aramark gave guidance for the legal test for s. 362(1)(

d) of the MGA. In the present CARB Decision, atparas. 46 to 56, the CARB adopted that test as set out in Aramark, namely that the use of the property be used for the purposes of"achieving educational purposes in a practical and efficient manner".

[ 36 ] The City asserts that the standard of review is correctness. I disagree. The Supreme Court of Canada in Dunsmuir held that the correctness standard will apply where where the question at issue is one of general law "that is both of central importance to the legal system as a whole and outside the adjudicator's specialized area of expertise" (at para 60). In my view, the

interpretation of exemptions falls clearly within the CARB’s expertise and is part of its delegated duties. Moreover, the question of the correct test to be applied when determining whether a tax exemption applies to university property under Alberta legislation is not a question of general law of central importance to the legal system. [ 37 ] Further, in Dunsmuir , at para and 54, the Supreme Court of Canada held: 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 it will have a particular familiarity...Deference may also be warranted where an administrative tribunal has developed particular expertise in the application of a general common law or civil law rule in relation to a specific statutory context. (emphasis added) [ 38 ] In Alberta (Information and Privacy Commissioner) v. Alberta Teachers' Association 2011 SCC 61 , the Supreme Court of Canada reiterated and extended the analysis set out in Dunsmuir at paragraphs 30 and 34 .

Speaking for the majority, Rothstein J. stated: ...In one sense, anything a tribunal does that involves the

interpretation of its home statute involves the determination of whether it has the authority or jurisdiction to do what is being challenged on judicial review. .. it is sufficient in these reasons to say that, unless the situation is exceptional, ... the

interpretation by the tribunal of "its own statute or statutes closely connected to its function, with which it will have a particular familiarity" should be presumed to be a question of statutory

interpretation subject to deference on judicial review. [ 39 ] Thus, as the Respondents submit, the Board was interpreting its own statute or a statute closely connected to its function in making the Decision, and the standard of review is presumed to be reasonableness. I note also that the Court of Appeal in Aramark applied a reasonableness standard to the very similar issue at stake here. [ 40 ] The City argues that s. 362(1) of the MGA is not part of the Board's home legislation because this provision is found in

Part 10 of the MGA whereas the Board normally concerns itself with

Part 11 of the MGA . [ 41 ] In making that argument, the City relies on two decisions of the Court of Appeal of Alberta: Boardwalk Reit LLP v. Edmonton (City) , 2008 ABCA 220 ( Boardwlk ) and Maduke v. Leduc (County No. 25) , 2010 ABCA 331 ( Maduke) . For example, in Boardwalk , the issue was whether the MGB misinterpreted s. 295(4) of the MGA . The Court held that the standard of review was correctness, in part because s. 295(4) did not form part of the MGB's home legislation, as s. 295(4) was not located in

Part 12 of the MGA , the part of the legislation that was the MGB’s home legislation. [ 42 ] However as the Respondents noted other decisions of the MGB involving

interpretation of legislation not found in

Part 12 of the MGA have been reviewed on the reasonableness standard. For example, in Calgary (City) v. Alberta (Municipal Government Board), 2010 ABQB 719 (aff’d 2012 ABCA 13 ) one of the issues was whether the subject parking facilities were occupied or use for the purpose of, or in connection with, the Applicant's business. To answer this question, the MGB was required to interpret a bylaw which had been enacted pursuant to ss 371-374 of the MGA , found in

Part 10 of the Act. This Court reviewed the existing case law regarding the standard of review of a decision of this nature and also conducted a standard of review analysis; under both approaches, this Court held that the standard of review was reasonableness. This Court's decision was upheld by our Court of Appeal. [ 43 ] Thus a decision is not reviewed on the standard of correctness simply because the applicable Board is interpreting legislation found outside the particular Part of the MGA which deals with that Board. [ 44 ] On a reasonableness standard, I find it unlikely that an appeal would be successful because the Court of Appeal in Aramark

suggested the test ultimately used by the CARB. The fact that this was a “suggestion” and therefore, arguably, obiter , does not render the decision unreasonable. In fact, it was eminently reasonable to adopt a test set out by the Court of Appeal. Even if the standard of review was correctness, an express Court of Appeal statement of the test, while obiter has persuasive authority. The Supreme Court of Canada in R. v. Henry , 2005 SCC 76 noted: All obiter do not have, and are not intended to have, the same weight.

The weight decreases as one moves from the dispositive ratio decidendi to a wider circle of analysis which is obviously intended for guidance and which should be accepted as authoritative . Beyond that, there will be commentary, examples or exposition that are intended to be helpful and may be found to be persuasive , but are certainly not "binding" in the sense the Sellars principle in its most exaggerated form would have it. The objective of the exercise is to promote certainty in the law, not to stifle its growth and creativity. (emphasis added) [ 45 ] Thus, on either standard, the CARB chose the correct test.

However, the question of whether it applied the test reasonably to the facts at issue is a question of mixed fact and law, and would be the basis of the City’s judicial review. I take no stand on that question. Conclusion [ 46 ] I dismiss the application for leave to appeal. Heard on the 5 th day of March, 2013. Dated at Edmonton, Alberta this 2 nd day of August, 2013. Donald Lee J.C.Q.B.A. Appearances: Steve Lutz City of Edmonton for the City of Edmonton Stephanie A. Wannke Ogilive LLP

for the Respondent Altus and the University of Alberta Katherine L. Hurlburt Emery Jamieson LLP for the Respondent City of Edmonton Assessment Review Board