Shepherd’s Care Foundation v Edmonton (City), 2014 ABQB 733

Court of Queen ’ s Bench of Alberta Citation: Shepherd’s Care Foundation v Edmonton (City), 2014 ABQB 733 Date: 20141217 Docket: 1303 12777 Registry: Edmonton Between: Shepherd’s Care Foundation Applicant - and - City of Edmonton and City of Edmonton Composite Assessment Review Board Respondent _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice G.A. Campbell _______________________________________________________ I.

Introduction [ 1 ] Shepherd’s Care Foundation (the Applicant ) seeks leave to appeal a decision of the Composite Assessment Review Board (the Board ) of the City of Edmonton (the City ) pursuant to s 470 of the Municipal Government Act , RSA 2000, c M-26 (the MGA ).

[ 2 ] For the reasons that follow, I find the Applicant has failed to establish the requirements for leave to appeal. II. Background [ 3 ] The Applicant owns and operates Shepherd’s Care Vanguard (the Property ), a facility in Edmonton that provides senior citizens with living accommodation and other services. It brought a complaint before the Board about the 2012 and 2013 property tax assessments issued by the City. The City determined that most of the Property was exempt from taxation.

However, it concluded that 15 suites (the Remaining Units ), which were rented at or above market rates and for which the Applicant received no funding from Alberta Health Services ( AHS ), did not meet the requirements for exemption from taxation under s 362(1)(n)(iv) of the MGA and ss 1(1), 3, 5, 6 and 11 of its associated regulation, the Community Organization Property Tax Exemption Regulation ( COPTER ), Alta Reg 281/98. [ 4 ] The dispute between the Applicant and the City centered on whether the Remaining Units are “subsidized accommodation” within the meaning of s 1(1)(d.1) of COPTER so as to qualify for tax-exempt status. [ 5 ] The Board held its assessment review hearing on July 2, 2013. [ 6 ] In its decision dated August 1, 2013 (the Decision), the Board confirmed the City’s revised 2012 property tax assessment with an exemption percentage of 91.79% and the City’s 2013 property tax assessment with its recommended revised exemption percentage of 91.79%. [ 7 ] The Board found the Remaining Units met all the criteria for tax-exempt status under the MGA but one: the Remaining Units were not “subsidized accommodation” within the meaning of s 1(1)(d.1) of COPTER .

In coming to this conclusion, the Board relied on evidence that the Remaining Units were either vacant or rented to residents not designated by AHS, and that AHS clawed back money on a monthly basis, unit-by-unit, for those units not occupied by AHS designated residents.

Although the Applicant urged the Board not to consider the Remaining Units on a unit-by-unit basis, the Board found at para 39 of its decision that the manner in which AHS distributed ongoing operating funds carried tax consequences and concluded (at para 39 of the Decision): …this unit-by-unit method of determining the amount of ongoing operating funds also carries a consequence, tax exemption.

The unit- by-unit funding determines whether an individual suite is subsidized accommodation. [ 8 ] The Board rejected the Applicant’s argument that the exemption status of the Property should be determined for the Property as a whole. In so doing, the Board relied on ss 367 and 368 of the MGA and s 3 of COPTER . These provisions contemplate apportionment of the tax exemption where the use of a property is mixed; property is exempt from taxation proportionate to the amount of time and space used for an exempt purpose, while the remainder of the property is taxable.

The Board accepted the City’s argument that if only one of the units received AHS funds, surely the other 114 units would not be tax-exempt as part of the same property. [ 9 ] The Board also found of interest the provisions of the Municipal Affairs Grants Regulation , Alta Reg 123/2000 ( MAGR ), a regulation under the Government Organization Act , RSA 2000, c G-10. MAGR allows the Minister to award grants in place of taxes for seniors’ accommodation units owned by non-profit organizations.

The Board referenced MAGR ’s definition of “senior’s accommodation unit” noting that this definition supported its conclusion that the words “facility” and “accommodation” can have singular or plural meanings, depending on the context, and that the use of the word “facility” in s 1(1)(d.1)(

i) in COPTER did not necessarily mean the Property as a whole. III. Grounds of Appeal [ 10 ] The Applicant seeks leave on what can be distilled down to two issues: 1) Did the Board err in law or jurisdiction in interpreting s 1(1)(d.1)(

i) of COPTER ? 2) Did the Board err in law or jurisdiction and breach its duty of procedural fairness in considering and relying on MAGR in reaching its Decision? IV. Applicable Legislation [ 11 ] The following sections of the MGA , COPTER , and MAGR are relevant to this leave application: MGA 362(1) The following are exempt from taxation under this Division: … (

n) property that is (iv) held by a non - profit organization and used to provide senior citizens with lodge accommodation as defined in the Alberta Housing Act , … and that meets the qualifications and conditions in the regulations and any other property that is described and that meets the qualifications and conditions in the regulations;

367 A property may contain one or more parts that are exempt from taxation under this Division, but the taxes that are imposed against the taxable part of the property under this Division are recoverable against the entire property. 368(1) An exempt property or part of an exempt property becomes taxable if (

a) the use of the property changes to one that does not qualify for the exemption, or (

b) the occupant of the property changes to one that qualifies for the exemption.

(2) A taxable property or part of a taxable property becomes exempt if (

a) the use of the property changes to one that qualifies for the exemption, or (

b) the occupant of the property changes to one who qualifies for the exemption. COPTER 1(1) In this Regulation, (d.1) “subsidized accommodation” means (

i) rental accommodation where the Government of Alberta sets the rent at a maximum amount, sets the rent at a percentage of household income or provides the facility with ongoing operating funds, 3 An exemption under section 362(1)(n)(

i) to (iv) of the Act or

Part 3 of the Regulation applies only to the part of a property that qualifies for the exemption. MAGR

Schedule 2 1(1) For the purpose of this section, … (b) “senior’s accommodation unit” means a housing facility that is occupied by a senior citizen who rents or leases the facility and that is part of a property complex (

i) in which or in any part of which that senior citizen has no fee simple or life estate interest, (ii) that may provide housekeeping, meals or other services to the senior citizen, (iii) that is operated and held by a non - profit organization, and (iv) that is not exempt from taxation under section 362(1)(n)(iii) or (iv) of the Municipal Government Act or under a regulation made pursuant to

section 370(

c) of that Act. V. Requirements for Leave to Appeal [ 12 ] To grant leave, I must be satisfied the appeal meets the three requirements set out in s 470 (5) of the MGA : 1) It involves a question of law or jurisdiction; 2) It is of sufficient importance to merit an appeal; and, 3) It has a reasonable chance of success. [ 13 ] Prior to addressing the questions for which the Applicant seeks leave to appeal, I will set out the legal principles informing my analysis. A. Question of Law or Jurisdiction [ 14 ] The Applicant must establish that its grounds of appeal raise a question of law or jurisdiction.

Questions of mixed fact and law must not be treated as questions of law; however, if a pure question of law can be extricated from a question of mixed fact and law, then leave to appeal can be granted on that question of law. [ 15 ] The distinction between what is a question of law and what is a question of mixed fact and law is often difficult and not readily apparent.

It is crucial to correctly characterize the true nature of the proposed grounds of appeal since leave to appeal cannot be granted on questions of mixed fact and law: Alberta (Municipal Affairs) v TransCanada Keystone Pipeline Limited Partnership , 2011 ABQB 460 at para 8 [ TransCanada Keystone ]. [ 16 ] Justice Nation commented on the challenges inherent in making these distinctions in Altus Group Ltd. v Calgary (Composite Assessment Review Board) , 2011 ABQB 739 at paras 20-21 :

There has been considerable judicial analysis of exactly what is a question of law, as opposed to a question of mixed law and fact. This isbecause Courts of Appeal, as well as Courts involved in judicial review, and interpreting situations where there is a limited right toappeal, all have to battle with this distinction. … Generally stated, an incorrect statement of the legal standard, or test, or an application of incorrect factors in applying the law to thefacts is clearly an error of law. The law must not only be correctly stated, but that correct

interpretation of the law must be appliedto the facts, when engaged in applying the law to the facts. Where there is a discretion involved in applying the law to the facts, theapplication of the discretion is not a question of law, but a question of mixed law and fact.

However, if a wrong legal principle is usedin the application of the law to the facts, or in the exercise of the discretion, there is an error of law. [Emphasis added.] [17] The Supreme Court of Canada in Canada (Director of Investigations & Research Competition Act) v Southam Inc, (SCC), [1997] 1 SCR 748 at para 35 provided guidance on the distinction between questions of law, questions of mixed factand law, and questions of fact as follows: 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 fact and law are questions about whether the facts satisfy the legal tests. [18] A question as to the correct meaning of a term in the MGA is a question of law: Edmonton (City) v Edmonton (City)Composite Assessment Review Board, 2012 ABQB 118 at para 33 [Jorgenson].

Likewise, a breach of procedural fairness or of the rulesof natural justice raises a question of law: Edmonton (City) v Alberta (City of Edmonton Composite Assessment Review Board), 2012ABQB 171 at para 11. [19] It is not enough, however, simply to identify an error of law or jurisdiction. The applicant for leave must also show that thealleged error of law or jurisdiction would have affected the result. If the alleged error would not affect the result, then the test for leave isnot satisfied: Globexx Properties Ltd v Edmonton (City), 2011 ABQB 464 at para 38. B.

Sufficient Importance [20] A question of law or jurisdiction will be of sufficient importance to merit an appeal if it is important for jurisprudentialpurposes or if there is something novel or unsettled about the question. Sufficient importance must be determined objectively and not onthe Applicant’s subjective views of the importance of the question: Jorgenson at para 35. [21] The question of sufficient importance is the least onerous of the requirements for leave to appeal. C.

Reasonable Chance of Success [22] In seeking leave to appeal, an applicant need only establish a prima facie or arguable case that the question on appeal willhave a reasonable chance of success. An application for leave does not consider the merits of the appeal: TransCanada Keystone at para32. [23] To determine whether there is a prima facie or arguable case, it is helpful to consider the applicable standard of review onappeal: 845971 Alberta Ltd v Grande Prairie (City) Subdivision & Development Appeal Board, 2010 ABCA 135 at para 8.

It should gowithout saying that if leave is granted, the Court hearing the ultimate appeal will determine the appropriate standard of review. [24] The Supreme Court of Canada ruled in Dunsmuir v New Brunswick, 2008 SCC 9 at para 34 [Dunsmuir] that there are onlytwo standards of review: correctness and reasonableness.

In deciding which standard of review is applicable, the Court provided thefollowing guidance (at para 51): ... questions of fact, discretion and policy as well as questions where the legal issues cannot be easily separated from the factual issuesgenerally attract a standard of reasonableness while many legal issues attract a standard of correctness. ... [25] The Supreme Court explained that a measure of deference is appropriate where a particular decision has been delegated to anadministrative decision maker rather than the courts. This deference extends not only to facts and policy but to a tribunal’s

interpretationof its constitutive statute and related enactments because “there might be multiple valid

interpretations of a statutory provision or answersto a legal dispute and that courts ought not to interfere where the tribunal’s decision is rationally supported”: Dunsmuir at para 41. [26] The Court described deference as follows (Dunsmuir at para 54): …Deference will usually result where a tribunal is interpreting its own statute or statutes closely connected to its function, with which itwill have a particular familiarity … Deference may also be warranted where an administrative tribunal has developed particular expertisein the application of a general common law or civil law rule in relation to a specific statutory context. … [27] The Court described the test for reasonableness as follows (Dunsmuir at para 47): … In judicial review, reasonableness is concerned mostly with the existence of justification, transparency and intelligibility within thedecision-making process.

But it is also concerned with whether the decision falls within a range of possible, acceptable outcomes whichare defensible in respect of the facts and law. [28] In Alberta (Information and Privacy Commissioner) v Alberta Teachers’ Association, 2011 SCC 61, Justice Rothstein, writingfor the majority, summarized at para 30 the standard of correctness, which generally applies to questions of law or jurisdiction: …[d]eference will usually result where a tribunal is interpreting its own statute or statutes closely connected to its function, with which itwill have particular familiarity…” This principle applies unless the

interpretation of the home statute falls into one of the categories ofquestions to which the correctness standard continues to apply, i.e., “constitutional questions, questions of law that are of central

importance to the legal system as a whole and that are outside the adjudicator’s expertise, … ‘[q]uestions regarding jurisdictional lines between two or more competing specialized tribunals’ [and] true questions of jurisdiction or vires . … VI. Analysis A.

Interpretation of Section 1(1)(d.1)(

i) of COPTER 1) Is this a question of law or jurisdiction? [ 29 ] The Applicant submits the question of whether the Board misinterpreted the phrase “provides the facility with ongoing operating funds” in the definition of “subsidized accommodation” in s 1(1)(d.1)(

i) of COPTER is a dispute about statutory

interpretation and thus a question of law: Jorgenson at para 11 . The Applicant argues the Board failed to apply a purposive analysis to the MGA and incorrectly interpreted the

definitions of terms in the provisions it applied. The Applicant notes there is no factual dispute; it is common ground the Property received ongoing operating funds from the Province. What is in dispute is whether the Remaining Units satisfied the criteria of being a “facility” that receives “ongoing operating funds” from the Province to qualify as “subsidized accommodation” under s 1(1)(d.1)(

i) of COPTER . To this end, the Applicant also argues the Board inappropriately considered and placed undue reliance on the definition of “senior’s accommodation unit” in MAGR in determining the meaning of “facility” in COPTER and thereby applied the incorrect legal test. [ 30 ] The City submits that this question, which involves the

interpretation and application of s 1(1)(d.1)(

i) of COPTER , is “necessarily an analysis of mixed law and fact” because it involves an analysis of whether particular facts comply with legislative requirements: Edmonton (City) v Edmonton Composite Assessment Review Board and Canada Safeway , 2012 ABQB 154 at para 50 . The City submits the Board examined the unit-by-unit basis upon which AHS provided funding and ruled on whether these facts permitted the Remaining Units to meet the definition of “subsidized accommodation” in s 1(1)(d.1) of COPTER . [ 31 ] After considering the parties’ arguments, I find this is a question of law.

The Board was tasked with determining whether the Remaining Units were “subsidized accommodation” within the meaning of s 1(1)(d.1) of COPTER . To do so, the Board was required to determine whether the undisputed facts met the statutory requirements of being rental accommodation for which the Province “provides the facility with ongoing operating funds”. There is no dispute that the Applicant receives some ongoing operating funds from the Province. The Applicant argues the Board applied incorrect factors in applying the law to the facts, which amounts to an error of law.

The question is whether the Board correctly interpreted the legislation to understand the words “provides the facility with operating funds” to mean provides each unit of the facility with ongoing operating funds as opposed to provides the facility as a whole with ongoing operating funds. This is a question of law. 2) Is the question of sufficient importance to merit an appeal? [ 32 ] The Applicant argues that settling the

interpretation of what is “subsidized accommodation” and in particular, what is meant by the phrase “provides the facility with ongoing operating funds,” will be of jurisprudential importance in clarifying what the Board should consider when determining whether a non-profit seniors’ care facility is exempt from taxation.

Further, the Applicant asserts this decision will have a financial impact on a large number of non-profit seniors’ care facilities throughout Alberta, including a number of the Applicant’s other seniors’ care facilities. [ 33 ] The City argues the Decision is unlikely to affect many other seniors’ care facilities, if any, because it is uncommon for a seniors’ care facility to rent any units at market rates. The City points to the Board’s characterization of the Remaining Units as “an experiment devised by others in more prosperous times.

The experiment failed, or health care funding was redirected, or both.” The City submits the Courts already have considered apportionment of the tax exemptions based on the amount of space and time a property is used and so the question is of little jurisprudential value. [ 34 ] I accept the Applicant’s arguments on this point and conclude that the question of what is “subsidized accommodation” or more specifically, the meaning of the phrase “provides the facility with ongoing operating funds” has precedential value.

This is a question likely to affect the tax-exempt status of other non-profit seniors’ care facilities in this province and the future availability of affordable seniors’ care. 3) Does the appeal have a reasonable chance of success? [ 35 ] The standard of review on appeal informs the analysis of the reasonable chance of success. The Applicant submits the appropriate standard of review on this question is correctness. First, it argues the Board based its decision on its

interpretation of a provision of MAGR , which is neither its home statute nor a regulation constituted under its home statute, the MGA . Second, the Board relied on the definition of “senior’s accommodation unit” set out in MAGR to assist in its

interpretation of the meaning of “subsidized accommodation”, more specifically, “facility” in COPTER . In so doing, the Applicant submits the Board misinterpreted s 1(1)(d.1)(

i) of COPTER because the objective and purpose of MAGR and COPTER and the MGA differ. MAGR , the Applicant argues, is legislation designed to provide financial grants to seniors’ care providers that previously received financial assistance through other means, whereas the MGA provisions are intended to provide exemptions from taxation for certain seniors’ care facilities.

Third, the Board improperly relied on the AHS’s method of providing financial funding in reaching its conclusion on the meaning of “provides the facility with ongoing operating funds” as part of the definition of “subsidized accommodation”. [ 36 ] The Applicant submits that even if the applicable standard of review is reasonableness, this ground of appeal has a reasonable chance of success because it is unreasonable to interpret “facility” to be “a particular unit in the Property.” The Applicant contends that a plain reading of the phrase “provides the facility with ongoing operating funds” means that if the Property as a whole receives ongoing operating funds from AHS, the “facility” is receiving such funds, thereby making the whole facility “subsidized accommodation” for the purposes of the tax exemption.

[37] The City and the Board submit the appropriate standard of review is reasonableness. They argue the Board based its Decisionon its

interpretation of the phrase “subsidized accommodation” in COPTER, as well as s 3 of COPTER and ss 367 and 368 of the MGA,all of which form part of the Board’s home statute and regulation, not on MAGR. The Board’s references to MAGR were obiter dicta. [38] I am satisfied that for the purposes of this application, the most likely standard of review on appeal would be reasonableness.The Board is an expert tribunal that regularly hears and decides complaints about tax assessments and has acquired significant expertisein this area.

This case is about a tax assessment, more specifically, it is about whether certain parts or the whole of the Property isexempt from taxation under the MGA. In considering the complaint, the Board considered provisions of the MGA, COPTER and MAGR. [39] The MAGR is closely related to the MGA because s 1(1)(

b) of

Schedule 2 of MAGR defines “senior’s accommodation unit”,which is a similar type of property as “senior citizens ... lodge accommodation” in s 362(1)(n)(iv) of the MGA. Furthermore, theprovision in MAGR expressly references s 362(1)(n)(iv). I find the question in this appeal involves an

interpretation of the Board’s homelegislation or closely related legislation. [40] Second, deference is owed to the Board as an expert tribunal. The

interpretation of whether a property is exempt from taxationis clearly within the Board’s expertise and is part of its purpose and duties. More specifically, the

interpretation of the phrase “subsidizedaccommodation” falls within the Board’s expertise and is not of centralized importance to the legal system. [41] Third, this Court has decided on at least two occasions that reasonableness is the standard of review on a leave application fora decision regarding the tax-exempt status of a particular property: 1311387 Alberta Ltd v City of St Albert and Composite AssessmentReview Board (26 April 20112), Edmonton, Action No 1103 19411 (QB); Edmonton (City) v Governors of the University of Alberta,2013 ABQB 440. [42] In carrying out its analysis, the Board considered the meaning and scope of the phrase “provides the facility with ongoingoperating funds” as part of the definition of “subsidized accommodation”.

The Board considered how the AHS provided its ongoingoperating funding and noted it did so monthly on a unit-by-unit basis. The Board then concluded it must consider each Remaining Unitindividually to see if it met the test for tax-exempt status.

The Board noted that ss 367 and 368 of the MGA and s 3 of COPTER, whichprovide for a property to be partially exempt from taxation, with taxable status apportioned according to use or occupant, providedfurther support for its conclusion that the Remaining Units’ tax-exempt status must be assessed individually. [43] In my view, these reasons explain how the Board concluded that the Remaining Units are not “subsidized accommodation;”the reasons are justifiable, transparent and intelligible and fall within a range of possible, acceptable outcomes.

I find it unlikely that anappeal on this question, reviewed against a standard of reasonableness, would be successful. B. Procedural Fairness 1) Is this a question of law or jurisdiction? [44] The Applicant submits the Board’s failure to advise the parties of its intention to consider and ultimately rely on the definitionof “senior’s accommodation unit” in s 1(1)(

b) of MAGR is a breach of procedural fairness and the rules of natural justice and thus aquestion of law. [45] The City and the Board concede that alleged breaches of procedural fairness or the rules of natural justice are questions oflaw. 2) Is the question of sufficient importance to merit an appeal? [46] The parties agree the question of whether the Board’s actions in referring to MAGR in its Decision was a breach of proceduralfairness is a question of sufficient importance to merit appeal. 3) Does the appeal have a reasonable chance of success? [47] The Applicant argues there was a denial of natural justice and procedural fairness because the Board relied on MAGR inmaking its Decision without giving the parties a chance to speak to it.

Although MAGR was included in the materials filed by theApplicant, the Board did not ask the parties to make submissions on the relevance of the definition of “senior’s accommodation unit” inMAGR to the terms and provisions at issue in COPTER. The Applicant contends the Board used MAGR for a purpose other than that forwhich it was provided. [48] The City and the Board assert the references in the Decision to MAGR were obiter dicta.

Ultimately, the Board did not rely onthe definition of “senior’s accommodation unit” in MAGR to come to its conclusion that the Remaining Units were not subsidizedaccommodation under COPTER. The City and the Board assert that, at most, the Board simply found additional support for itsinterpretation of COPTER in MAGR and that MAGR was not the sole ground upon which the Board based its Decision.

The Boarddistinguished the cases provided by the Applicant, stating the Board did not order a remedy outside of the parties’ submissions, it did notpermit argument on a new ground, nor did it dismiss a jurisdictional issue without hearing any submissions: Business WatchInternational Inc v Alberta (Information and Privacy Commissioner), 2009 ABQB 10; Carlin v Registered Psychiatric Nurses’ Assn(Alberta), (AB KB), 1996 40 Alta LR (3d) 206. [49] Questions of natural justice and procedural fairness are subject to the standard of review of correctness: Mission Institution vKhela, 2014 SCC 24 at para 79.

Correctness gives no deference to the decision maker; the reviewing court will make its own decision onwhether the Board’s decision was correct in law. I must determine whether, if leave is granted, there is a reasonable chance thereviewing court will find there was a breach of procedural fairness. [50] A tribunal is entitled to use its own expertise and knowledge in making its decisions, without limiting itself to the authorities,

argument or legislation raised in the submissions of the parties, provided no new ground is raised: IWA v Consolidated –BathurstPackaging Ltd, (SCC), [1990] 1 SCR 282 at 338-339. It may refer with approval to or rely on a decision or legislativeprovision that was not discussed at the hearing in support of its decision. To do so is not a denial of natural justice or procedural fairness. [51] In this case, the parties made extensive submissions on the proper

interpretation of the term “subsidized accommodation” in s1(1)(d.1) of COPTER, which was at the heart of the complaint before the Board. In its Decision, the Board compared the definition of“senior’s accommodation unit” in MAGR to the definition of “subsidized accommodation” in COPTER. It did so to illustrate that thewords “facility” and “accommodation” were capable of a singular or plural meaning, depending on the context, which supported itsconclusion that the Remaining Units should be considered on a unit-by-unit basis in determining their tax-exempt status.

While neitherparty specifically addressed this provision of MAGR in their arguments, the Board’s use of MAGR did not raise any new issue or groundon any matter that had not been extensively argued. [52] In the result, I see no reasonable chance of success for this ground of appeal. VII. Ruling [53] The application for leave to appeal is dismissed. [54] If the parties are not in agreement on the issue of costs, they may speak to me within 30 days of the release of this decision. Heard on the 18th day of March, 2014. Dated at the City of Calgary, Alberta this 5th day of December, 2014. G.A. Campbell J.C.Q.B.A.

Appearances: Carol M Zukiwski Reynolds, Mirth, Richards & Farmer LLP for the Applicant Steve J Lutes City of Edmonton Law Branch for the Respondent City of Edmonton Kate L. Hurlburt Emery Jamieson LLP for the Respondent City of Edmonton Composite Assessment Review Board