Sant Nirankari Mission of Canada Inc v Edmonton (City), 2016 ABQB 699

Court of Queen’s Bench of Alberta Citation: Sant Nirankari Mission of Canada Inc v Edmonton (City), 2016 ABQB 699 Date: 20161209 Docket: 1603 01201 Registry: Edmonton Between: The Sant Nirankari Mission of Canada Inc Applicant - and - The City of Edmonton and the City of Edmonton Composite Assessment Review Board Respondents _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice J.M.

Ross _______________________________________________________ Introduction [ 1 ] The Sant Nirankari Mission of Canada Inc [Applicant or the Mission], a religious organization, has brought this application for leave to appeal the decision of the City of Edmonton Composite Assessment Review Board [CARB or the Board], dated December 22, 2015 [Board Decision], regarding its determination of the tax exempt status of the property located at 9420-35 Avenue, in the City of Edmonton, Alberta [the Property]. [ 2 ] The Board Decision confirmed the 2015 calculation by the Respondent City of Edmonton [the City] that 16.585% of the Property was tax exempt.

Background Facts

[ 3 ] The Property consists of land that is approximately 186,580 square feet (4.26 acres) in size. There is a building on the property, which contains the Mission’s meeting space and offices. There is also a site where a new building is under construction.

The remainder of the Property includes a parking area, open areas which are used for outdoor Mission activities, and treed areas. [ 4 ] From 1992 to 2011, the Property as a whole was designated by the City, pursuant to the Municipal Government Act , RSA 2000, c M-26 , s 362(1)(k), as “property held by a religious body” and determined to be “used chiefly for divine service, public worship or religious education,” or “used only as a parking area in connection with those purposes.” This resulted in 100% exemption. [ 5 ] Starting in 2012, the City determined that 17.83% of the Property did not meet the requirements of an exemption under the MGA and was therefore taxable. [ 6 ] In 2015, the City increased the taxable portion of the Property to 83.415%.

The tax exempt portion was determined to be 16.585% of the Property. Board Decision [ 7 ] The Board noted that it was required to apply s 362(1)(

k) of the MGA . [ 8 ] The Board reviewed the City’s submissions and summarized referenced decisions of this Court regarding the

interpretation of s 362(1)(k) (paras 47-48): 47 [T]he Respondent referred the Board to a Court of Queen’s Bench of Alberta decision: Edmonton (City) v. North Pointe Community Church , 2008 ABQB 110 (Alta. Q.B.). The Respondent referenced the case [that] a church building owned by (North Pointe) be exempt from taxation on certain land during its construction and before it was used chiefly as a place for divine service, public worship or religious education.

The decision by the Judge was not to exempt the building under construction as it did not meet one of the three requirements of divine service, public worship or religious education. The Respondent stated that the subject was the same as North Pointe (under construction). 48 The Respondent referenced paragraphs [49] and [50] of the North Pointe case law. The purpose of s. 362(1)(

k) is to exempt from taxation: property held by a religious body and used chiefly for divine service, public worship or religious education ... • [49] The [MGB] stated clearly that it “did not consider the occasional religious services on the land to qualify it in accordance with s. 362 (1)(

k) of the Act. Equally clearly, it later stated that it “was aware that no uses had been made of the property since the start of work on developing the church building, other than holding of the occasional religious service.” These two statements can only mean that the MGB found that the property was not actually used chiefly for divine service, public worship or religious education prior to July 2006. • [50] One might argue that some use, however sparse or sporadic, can mean that a property is “used chiefly” under s. 362 (1) (k).

However, whether the word “chiefly” is determined by proportion, time, area of the building used or number of people attending functions, it is clear from the MGB’s decision that it found the limited use to which the property was put prior to July 2006 could not be considered a “chief” use ( Catholic Archdiocese of Edmonton v. Edmonton (City ), 1998 ABQB 35 (Alta. Q.B.) , 1998 ABQB 35, paras. 13-15 ). Indeed, the MGB specifically found that the occasional religious services on the land did not qualify it under s. 362 (1)(

k) of the [MGA] (MGB Reasons at para.34). This aspect of the decision cannot be said to be unreasonable. [ 9 ] In concluding that the use of the Property for outdoor activities did not meet the requirements for an exemption, the Board stated (at paras 58-59): 58 The Board notes that s. 362(1)(

k) of the MGA clearly points out that any exemption regarding property held by a religious body must be used chiefly for (1) divine service, (2) public worship or (3) religious education. The Board notes that case law regarding North Pointe states that lands used occasionally or sporadically for (1) divine service, (2) public worship or (3) religious education are not exempt and therefor taxable.

The Board was persuaded by the [City’s] case law detailing the definition of “used chiefly” and the subject property and its outdoor events do not meet the definition of “used chiefly.” 59 The Board has no quarrel with the [Mission] that all social, cultural, sports, blood banks and food drives are a part of the religious activities of the [Mission]. However, the Board had to review s. 362(1)(

k) of the MGA and determined that the limited number of outdoor events and outdoor activities for the year did not meet the definition of “used chiefly” for divine service, public worship or religious education. [ 10 ] The Board also noted the City’s submission on its calculation of the taxable portion of the Property (at para 34): The City has taken the position that it is only the area or combination of parcels that is required to site the present church structures that are used chiefly for religious purpose that is exempt from taxation.

The City has granted an exemption for all the area required to site the present structures and meet zoning bylaw requirements for the structure housing the religious activity. [ 11 ] The Board concluded that the City’s calculation was appropriate (at para 61): The Board was persuaded the City treated all religious structures that had excess land or large tracts of land in a fair, consistent and equitable manner. The Respondent utilized the religious structure footprint, which includes the main floor and added the garage to arrive at 2,508sf.

The Respondent does not utilize lower floors, mezzanines, or additional floors to arrive at the religious structure foot print. Front and side set backs were calculated at 2,190sf. In addition, the number of parking stalls required is 21(7,497sf). The Respondent has also allowed 7,500sf for a grace area. The total 2015 exemption is 19,695sf (2,508sf+2,190sf+7,497+7,500).

Proposed Grounds of Appeal [ 12 ] The Applicant seeks leave to appeal based on three proposed grounds of appeal: i. Did the Board err in the

interpretation of s 362(1)(

k) of the MGA ?; ii. Did the Board err by following a City of Edmonton policy which was not found in the legislation? iii. Did the Board provide adequate reasons? Law [ 13 ] The relevant MGA sections provide: 362(1) The following are exempt from taxation under this Division: ... (

k) property held by a religious body and used chiefly for divine service, public worship or religious education and any parcel of land that is held by the religious body and used only as a parking area in connection with those purposes; ... 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.” ... 468

(1) Subject to the regulations, an assessment review board must, in writing, render a decision and provide reasons, including any dissenting reasons, (

a) within 30 days from the last day of the hearing, or (

b) before the end of the taxation year to which the complaint that is the subject of the hearing applies, whichever is earlier. ... 470(5) On hearing the application and the representations of those persons who are, in the opinion of the judge, affected by the application, the judge may grant permission to appeal if the judge is of the opinion that the appeal involves a question of law or jurisdiction of sufficient importance to merit an appeal and has a reasonable chance of success. Ground 1: Did the Board err in the

interpretation of s 362(1)(

k) of the MGA ? [ 14 ] The Board’s determination that the use of the Property for outdoor events and outdoor activities did not meet the requirements of s 362(1)(

k) involved a question of mixed fact and law, which is not subject to appeal, unless the Board made an error regarding an extricable question of law: Pembina Institute for Appropriate Development v Alberta (Energy Resources Conservation Board ), 2009 ABCA 322 at para 7 , 2009 CarswellAlta 1519 . Further, the question of law must be sufficiently important to merit an appeal, and the appeal must have a reasonable chance of success: MGA , s 470(5). [ 15 ] The Board noted that under s 362(1)(

k) of the MGA , “any exemption regarding property held by a religious body must be used chiefly for (1) divine service, (2) public worship or (3) religious education.” Following Edmonton (City) v North Pointe Community Church , 2008 ABQB 110 , 444 AR 390 [ North Pointe ], the Board held that “lands used occasionally or sporadically for (1) divine service, (2) public worship or (3) religious education are not exempt and therefor taxable.” The Applicant does not point to any error in this articulation of the legal test. [ 16 ] The Board accepted that the outdoor events and activities of the Mission were “religious activities.” The Applicant submits that this is a factual finding that the outdoor events and activities were examples of divine service, public worship or religious education.

In my view, that is the only sensible

interpretation of the Board’s reference to religious activities in the context of its consideration of the legal test as articulated by it. [ 17 ] The Board went on to find that “the limited number of outdoor events and outdoor activities for the year did not meet the definition of ‘used chiefly’ for divine service, public worship or religious education.” The Applicant submits that given its factual finding regarding the religious nature of the outdoor activities, the Board must have erred in its

interpretation of the term “used chiefly.” The Applicant submits that the Board’s failure to articulate its definition of “used chiefly,” and its failure to compare the use of lands in the case before it with the use considered in North Pointe and Catholic Archdiocese of Edmonton v Edmonton (City of) , 1998 ABQB 35 , 217 AR 390 (WL) [ Catholic Archdiocese ], indicate that the Board erred in law. [ 18 ] I do not agree. Essentially, the Applicant’s position is that the Mission’s outdoor events and activities clearly occurred on

more than an occasional or sporadic basis, and that the Property as a whole, or at least including the area used for outdoor activities, is “used chiefly” for religious activities. That is an issue of mixed fact and law. While the

interpretation of the exemption provision is an issue of law, the determination of whether a particular property meets the exemption requirements is a question of mixed fact and law: Edmonton (City) v Edmonton Composite Assessment Review Board , 2015 ABQB 103 at para 56 , 610 AR 241. A question of mixed fact and law does not support the granting of leave to appeal under s 470(5) of the MGA . [ 19 ] Even if there were an extricable question of law relating to the

interpretation of the phrase “used chiefly” in s 362(1)(k), I would also have to be satisfied that the question had “sufficient importance to merit an appeal” and “a reasonable chance of success.” I am not satisfied that either of these requirements for leave to appeal is met. [ 20 ] The meaning of the phrase “used chiefly” has already been considered by the courts in North Pointe and Catholic Archdiocese .

The Board expressly referenced relevant portions of these cases cited by the City, and subsequently stated that it was “persuaded by the [City’s] case law detailing the definition of ‘used chiefly’, and the subject property and its outdoor events do not meet the definition of ‘used chiefly.’ [ 21 ] Although the Board Decision did not set out its definition of “used chiefly” or discuss the application of the facts of the case to the definition in the case law, that omission does not indicate a lack of understanding of the established meaning of the phrase, especially in light of its express reference to North Pointe . [ 22 ] In Catholic Archdiocese at paras 13-15, Veit J observed and held that: [13] It is true that the Board did not, in its written reasons, set out its definition of “chiefly”.

On the other hand, the Board did make specific reference to the provisions of the legislation.... [14] There is no basis for concluding that the Board ignored its obligation to assess “chief” uses.

On the contrary, it seems obvious that the Board considered all of the evidence before it concerning the use that was made of the Centre and came to the conclusion that the uses for an exempt purpose were “limited”. [15] Whatever is the correct definition of “chiefly” (i.e. whether chief is based on time, or percentage of the building used, or number of people attending functions) that definition would be the opposite of “limited”. The Board has not demonstrably made an incorrect definition of “chiefly”. [ 23 ] These statements apply equally here.

It is indisputable that the Board was aware of its obligation to apply s 362(1)(

k) and the established test of “used chiefly.” It also seems clear that the Board did consider the evidence before it concerning the nature and extent of outdoor events and activities, and concluded that “the limited number of outdoor events and outdoor activities for the year did not meet the definition of “used chiefly” for divine service, public worship or religious education.” [ 24 ] The City submits that, because the

interpretation of the phrase “used chiefly” in section 362(1)(

k) has already been settled by the courts, and because the Board applied the established definition, an appeal based on this question of law lacks sufficient importance to merit an appeal. I agree. [ 25 ] Subsequent to the hearing of this appeal the Supreme Court of Canada released its decision in Edmonton (City ) v Edmonton East (Capilano) Shopping Centres Ltd , 2016 SCC 47 , 402 DLR (4th) 236 [ Capilano ]. The parties were given an opportunity to provide further written submissions regarding the standard of review. The Applicant filed a further submission on November 18, 2016.

The Board also provided a brief communication. It is now common ground that the applicable standard of review regarding this ground of appeal is reasonableness, as the Board was tasked with interpreting s 362(1)(

k) of the MGA , a statute that is “closely connected to its function, with which it will have particular familiarity”: Capilano at paras 23, 26 . [ 26 ] The standard of review is relevant to the assessment of the third aspect of the test for leave to appeal, whether the appeal would have a reasonable chance of success.

As the reasonableness standard of review calls for deference to the Board, and in light of the features the Board Decision referred to above, I conclude that the first proposed ground of appeal lacks a reasonable chance of success. [ 27 ] Leave to appeal regarding the first proposed ground is denied. Ground 2: Did the Board err by following a City of Edmonton policy which was not found in the legislation? [ 28 ] In assessing whether there is a question of law based on the second proposed ground of appeal, it is important to compare the provision of the MGA , s 362(1)(

k) with the City’s “policy.” The City describes this as a “methodology,” not a policy. The Board concluded that the City appropriately calculated the exempt portion of the Property. [ 29 ] The MGA , s 362(1)(

k) exempts from taxation a “property held by a religious body and used chiefly for divine service, public worship or religious education and any parcel of land that is held by the religious body and used only as a parking area in connection with those purposes.” [ 30 ] In contrast, the City calculated the tax exempt portion of the Property by commencing with the footprint of the building used for religious purposes, and adding additional amounts for setbacks, parking stall requirements, and a grace area.

The City advises that the calculation process provided for four seats per parking stall to reflect a by-law requirement. [ 31 ] The acceptance by the Board of the City’s approach to calculating the exempt portion of the Property could potentially conflict with s 362(1)(

k) of the MGA in two ways.

[ 32 ] The first potential conflict would arise if outdoor areas of the Property were “used chiefly” for religious purposes.

This potential conflict does not arise, as the Board concluded that the outdoor areas of the Property were not so used. [ 33 ] The second potential conflict arises if the City’s calculation of parking requirements differs from evidence before the Board as to “any parcel of land that is held by the religious body and used only as a parking area in connection with those [religious] purposes.” [ 34 ] In this case, the Mission provided evidence before the Board regarding use of the Property for parking (see the Record, pages 1-10 and 197-212).

The Board decision to restrict the area of parking to 21 stalls as calculated by the City does not address either the wording of s 362(1)(

k) or the evidence before it regarding the use of the Property for parking. [ 35 ] Given the potential inconsistency between the City’s calculation of parking and the MGA , s 362(1)(k), I am of the view that the second proposed ground of appeal constitutes a question of law: Parada v. Alberta (Appeals Commission for Alberta Workers’ Compensation) , 2011 ABCA 44 at para 26 , 499 AR 169. [ 36 ] As to whether the question is of sufficient importance to merit an appeal, the issue of whether the City’s standard form calculation of an area for parking is more restrictive than s 362(1)(

k) has potentially far ranging ramifications, applying not only to the Mission, but in all cases of, as the Board described it, “religious structures that had excess land or large tracts of land.” The question has broad implications for all religious bodies in the City. I conclude that the second proposed ground of appeal is sufficiently important to merit an appeal. [ 37 ] On the issue of reasonable chance of success, given the Board’s failure to address the criteria in s 382(1)(

k) and the evidence before it regarding parking, I conclude that there is a reasonable chance that the Board’s decision in this regard does not meet the standard of reasonableness. [ 38 ] Leave to appeal is granted regarding the second proposed ground of appeal. Ground 3: Did the Board provide adequate reasons? [ 39 ] The Applicant contends that it was not sufficient for the Board to state that it relied on the reasoning in the North Pointe case, and that the Board ought to have demonstrated “a river of logic” that connects the Board’s

interpretation of the legislation, its findings of fact, and its application of the law to the facts. [ 40 ] In Capilano at paras 37-38 , the majority of the Supreme Court wrote: [37] When procedural fairness requires a tribunal to provide some form of reasons, a complete failure to do so will amount to an error of law ( Newfoundland and Labrador Nurses’ Union v.

Newfoundland and Labrador (Treasury Board) , 2011 SCC 62 , [2011] 3 S.C.R. 708, at paras. 20-22 ). [38] However, when a tribunal’s failure to provide any reasons does not breach procedural fairness, the reviewing court may consider the reasons “which could be offered” in support of the decision. In appropriate circumstances, this Court has, for example, drawn upon the reasons given by the same tribunal in other decisions and the submissions of the tribunal in this Court. [ 41 ] The Board issued written reasons, satisfying the requirement in s 468(1) of the MGA.

Consequently, the Board did not breach procedural fairness and did not commit an error of law. [ 42 ] As the third proposed ground of appeal does not raise a question of law, leave to appeal on this ground is denied. Disposition [ 43 ] In the result, the application for leave to appeal on the the first and third proposed grounds of appeal is denied. The application for leave to appeal on the second proposed ground is allowed. [ 44 ] The parties may speak to costs if they are unable to agree. Heard on the 16 th day of August, 2016; further written submission filed on the 18 th day of November, 2016.

Dated at the City of Edmonton, Alberta this 9 th day of December, 2016. J.M. Ross J.C.Q.B.A.

Appearances: Carol Zukiwski Reynolds Mirth Richards & Farmer LLP for the Applicant Cameron Ashmore City of Edmonton Law Branch for the Respondent, The City of Edmonton Kate Hurlburt Emery Jamieson for the Respondent, The City of Edmonton Composite Assessment Board