2021 FC 806, 2021 FC 806

T-1262-14 2021 FC 806 City of Montréal ( Applicant ) v. Old Port of Montréal Corporation ( Respondent ) and Attorney General of Canada ( Intervener ) Indexed as: Montréal (City) v. Old Port of Montréal Corporation Inc . Federal Court, Pamel J.—Montréal, November 23–25, 2020; July 30, 2021.

Crown — Real Property — Judicial review of annual decisions rendered by respondent between 2014, 2020 determining amount of discretionary, voluntary payments in lieu of property tax (PILTs) owing deemed inadequate, unreasonable by respondent — PILT program balancing tax fairness for municipalities with preservation of Crown’s constitutional immunity from taxation — Payments in lieu of taxes to municipalities on “federal properties” within meaning of Payments in Lieu of Taxes Act ( PILT Act ) made by Crown to municipalities — Respondent sending applicant each year decision providing explanation of amount of PILT, exclusions from concept of “federal property” relied on — Disagreement in present case as to property value, composition of “federal property” within meaning of PILT Act of Old Port of Montréal site — Respondent relying on new exemptions from concept of federal property and claiming some lots situated in deep water, therefore subject to nominal assessment — Respondent also raising exemption based on concept of snow sheds under PILT Act , s. 2(3) (b),

Schedule II, item 12, arguing By-law Concerning Property Taxes on Parking Lots (Parking Lot By-law) inapplicable to parking areas situated on quays because beyond By-law’s territorial limits — Applicant submitting several exemptions from concept of federal property unreasonably relied upon by respondent — Controversial features of site including quays, Montréal Science Centre, indoor, outdoor parking lots — Whether disputed property constituting federal property within meaning of PILT Act ; whether respondent’s parking lots subject to Parking Lot By-Law; whether respondent’s land situated “in deep water”; whether respondent could effect compensation between amount allegedly overpaid in 2013, payments for following years — By using word “park” in PILT Act , s. 2(3) (

c) Parliament did not intend to include every site of shared use or activity — Parliament instead referring to natural urban park, developed as such for benefit of community — Not incompatible with use [ translation ] “for educational, recreational and scientific purposes” — No reason for not including certain buildings incidental to park in meaning of word “park” — Park as whole must be considered as well as how park, building relate to each other — Old Port site crossed threshold to become entertainment venue destination, therefore not constituting park within meaning of PILT Act — Neither buildings nor parking lots characterized as parks as per s. 2(3)(c) — PILT Act making no distinction, at s. 2(3) (a), between underlying land, surface — Commercial use to which federal property put not relevant under PILT Act — Parkades, indoor parking lots included in s. 2(3)(a)(i), concept of federal property — Not all buildings with roof on Old Port site snow shelters under PILT Act — Not what Parliament intended when including term “snow shed” in PILT Act ,

Schedule II, item 12 — Items in PILT Act ,

Schedule II mentioning several things sharing common characteristics — Respondent engaged in questionable mental gymnastics, unreasonably attempting to slot parkades, indoor parking lots into exceptions to concept of federal property, thereby disregarding purpose of PILT Act — Automatically excluding federal highway from PILT base simply because providing access to private property contrary to intent of PILT Act , text of s. 2(3) (g) — Respondent respected neither principles of statutory

interpretation applicable to PILT Act nor intent of Parliament — Respondent unreasonably exercised discretionary power to make PILTs — Unreasonable for respondent to conclude that if parking areas belonged to private owner and were taxable, tax rate applicable excluded tax imposed by Parking Lot By-law — PILT Act , s. 3 allowing for payments in lieu of any taxes applicable within areas in which federal properties at issue situated — Parking Lot By-law must be taken into account when respondent exercising discretion in calculating annual PILT — For PILT purposes, no reason to treat Old Port site differently just because built with fill up to certain point in St.

Lawrence River — Quays permanently fixed to dry land, cannot be removed, site of important immovables — Unreasonable, contrary to spirit of fairness in PILT Act to assess land at issue as deep-water lots of nominal value — Respondent cannot rely on Interim Payments and Recovery of Overpayments Regulations , s. 4 , as source of entitlement to recover alleged overpayment of 2013 — Respondent’s decision to make no PILT with respect to “land” covered by right-of-way for railway tracks, rail yard unreasonable — Annual decisions rendered by respondent determining amount of PILT owing set aside, matter remitted to respondent for redetermination — Application allowed.

Construction of Statutes — Applicant challenging annual decisions rendered by respondent between 2014, 2020 determining amount of discretionary, voluntary payments in lieu of property tax (PILTs) owing — PILT program balancing tax fairness for municipalities with preservation of Crown’s constitutional immunity from taxation — Payments in lieu of taxes to municipalities on “federal properties” within meaning of Payments in Lieu of Taxes Act ( PILT Act ) made by Crown to municipalities — Disagreement as to property value, composition of “federal property” within meaning of PILT Act of Old Port of Montréal site — Parties arguing in favour of different interpretive methods — Therefore necessary to set out appropriate method — Principle of interpreting taxation statutes in favour of “taxpayer” not applicable in present case — Approach chosen to meet objective of PILT Act not at all in nature of a tax — Parties, in context of PILT Act , on equal footing — Resulting decisions should not distort language chosen by Parliament — Modern approach to statutory

interpretation appropriate framework for considering exemptions claimed by respondent.

This was an application for judicial review of the annual decisions rendered by the respondent between 2014 and 2020 determining the amount of discretionary and voluntary payments in lieu of taxes (PILT) owing, deemed insufficient and unreasonable by the applicant. To balance tax fairness for municipalities with the preservation of the Crown’s constitutional immunity from taxation set out at

section 125 of the Constitution Act, 1867 , and to compensate for the taxes that the municipalities would otherwise have levied, the federal government created a regime of PILTs within the meaning of the Payments in Lieu of Taxes Act ( PILT Act ). Under the PILT program, the federal Crown agrees to pay, subject to certain conditions, payments in lieu of taxes to municipalities on its “federal properties” within the meaning of the PILT Act . When the properties covered by the PILT scheme belong to a federal Crown corporation, the latter becomes responsible for the management of the regime set out in the PILT Act .

Each year, the respondent, which is a Crown corporation, receives a PILT request from the applicant. In response to this request, it sends to the applicant each year a decision in which it provides a

summary explanation of the amount of its PILT and, if applicable, the exclusions from the concept of “federal property” that it relies on to establish the amount of the payment. Since 2014, there has been disagreement between the parties as to the property value and the composition of the “federal property” within the meaning of the PILT Act at the Old Port of Montréal site. One of the respondent’s arguments was that the Old Port is a park and therefore not “federal property” within the meaning of the PILT Act .

What had to be considered was the establishment by the respondent of the Old Port site’s property base. The difficulties came to a head when, starting in the 2014 taxation year, the respondent began to rely on new exemptions from the concept of federal property and to claim that some of its lots were situated in deep water and should therefore be subject to a nominal assessment. Moreover, as of 2015, the respondent argued that the By-law Concerning Property Taxes on Parking Lots (Parking Lot By-law) was inapplicable to parking areas situated on quays, as the latter were situated in the St.

Lawrence River and therefore beyond the By-law’s territorial limits. Essentially, the applicant submitted that several of the exemptions from the concept of federal property had been unreasonably relied upon by the respondent because they do not result from a reasonable

interpretation of the PILT Act . The applicant added that it was unreasonable for the respondent to conclude that its land was situated in deep water and that its value should therefore be assessed at a nominal amount, as this position has no legal merit, and the Parking Lot By-law is fully applicable to the Old Port site, as this site is not situated in the St. Lawrence River, which is the boundary of the territorial application of this by-law. The main controversial features of the site include pavilions, quays, the Montréal Science Centre, the IMAX cinema, indoor and outdoor parking lots, and a food court.

The respondent claimed, relying on the Canada National Parks Act and the Saguenay-St. Lawrence Marine Park Act , that the entirety of the Old Port site is a park within the meaning of the PILT Act , and that this “park” designation covers the Old Port site’s more imposing buildings. The respondent added that the parking areas, food courts and restrooms as well as the land, promenades, roads and public highways are covered by the exemption because they are incidental and necessary to the park’s operation. The respondent raised an exemption based on the concept of snow sheds under paragraph 2(3)(

b) and item 12 of

Schedule II to the PILT Act . It submitted that its uncovered outdoor parking areas and its parkades and indoor parking lots, as site improvements, constitute “structure[s] or work[s]” within the meaning of paragraph 2(3)(

a) of the PILT Act and are therefore excluded from the concept of federal property. It also submitted that because the Parking Lot By-law is a property tax levied on the surface area of the parking area and not on the value of the underlying land, if the improvements to the parking area—the paving and the gravel beneath it—are excluded from the concept of federal property, the City can no longer levy this tax on parking areas.

The key issues were whether the disputed property constitutes federal property within the meaning of the PILT Act ; whether the respondent’s parking areas are subject to the Parking Lot By-law; whether the respondent’s land is situated “in deep water”; and whether it was open to the respondent to effect compensation between the amount it had allegedly overpaid in 2013 and the payments for the following years. Held , the application should be allowed. The parties in this case argued in favour of different interpretive methods. It was therefore necessary to set out the approach to statutory

interpretation before discussing the exclusions at issue. The principle of interpreting taxation statutes in favour of the “taxpayer” did not apply here. Some aspects of the PILT Act are similar to elements that may be found in a taxation statute. However, the approach chosen to meet this objective (i.e., make payments to municipalities in lieu of taxes normally collected while preserving the Crown’s constitutional immunity from taxation) is not at all in the nature of a tax: this is precisely what Parliament wished to avoid.

Unlike the usual situation with taxation statutes, it is the respondent as “taxpayer” that decides how much “tax” to pay. The power dynamic between the taxing authority (here, the applicant) and the “taxpayer” remains radically different from that which would exist in the context of a taxation statute. The parties are, in the context of the PILT Act , on equal footing. While the process of determining PILTs does imply a certain discretion on the respondent’s part, the resulting decisions should nevertheless not distort the language chosen by Parliament. Ultimately, the modern approach to statutory

interpretation was the appropriate framework for considering the exemptions claimed by the respondent. When Parliament used the word “park” at paragraph 2(3) (

c) of the PILT Act , it did not intend to include every site of shared use or activity, such as a research park, industrial park, parking lot ( parc de stationnement or parc d’automobiles in French), amusement parks, building inventory ( parc immobilier in French) or even container yard ( parc à conteneurs in French) as the respondent submitted. If Parliament had wished to exclude these types of parks from the concept of federal property, it would have done so explicitly.

When using the word “park” on its own, Parliament is instead referring to a natural urban park, developed as such for the benefit of the community. This is not incompatible with use [ translation ] “for educational, recreational and scientific purposes”. Nor is there any reason that certain buildings incidental to a park cannot be included in the meaning of the word “park” in the PILT Act . It is important to look not only at the buildings in question, but also at the park as a whole and how the buildings and park relate to each other.

The respondent’s approach of comparing the applicant’s so-called municipal parks with the Old Port site was not very useful, since municipal parks are subject to an entirely different tax regime than that to which the Old Port site is subject. Given the manner in which the Old Port site has been developed, with its infinite offerings of attractions occupying a disproportionate space compared with what one would expect in a traditional park, the Old Port site has crossed the threshold to become an entertainment venue and therefore does not constitute a park within the meaning of the PILT Act .

At no point in its decisions did the respondent truly attempt to define what a park is under paragraph 2(3) (

c) of the PILT Act . It should have provided reasons for its decision if it wished to depart from its long-standing practice of treating the Old Port site, as a whole, as not being excluded from the concept of federal property. It follows that neither the buildings nor the parking lots can be characterized as parks as per paragraph 2(3)(c). The Old Port site as a whole does not constitute a park; accordingly, parking areas whose purpose is to serve this site cannot be considered parks. The respondent is deemed to be a private

owner for PILT purposes, but this is relevant to the calculation of the effective tax rate and the property value applicable to these assets, not to the question of which assets are compensable or which are included in the property base. The PILT Act is a complete code establishing which types of property are and are not included in the concept of federal property and therefore which are subject to PILTs. The distinction made by the respondent between the surface area of the parking area and the value of the underlying land is artificial and a misinterpretation of the plain words of the PILT Act .

Surfaces and surface areas are irrelevant. The only concepts we are dealing with here are works and underlying land; the PILT Act makes no distinction, at paragraph 2(3) (a), between the underlying land and its surface. The purpose of this paragraph is simply to exclude structures and works found above the surface of the land. Nor is the commercial use to which the federal property is put relevant under the PILT Act . Given the plain meaning of the terms “movable property”, “building” and “shelter”, the parkades and indoor parking lots are indeed covered by subparagraph 2(3)(a)(

i) and included in the concept of federal property. The respondent’s parkades and indoor parking lots provide shelter against snow. However, the mere fact that a property provides shelter against snow does not automatically make it a “snow shed” within the meaning of the PILT Act . If that were the case, every building with a roof on the Old Port site would be a snow shed under this statute. This is certainly not what Parliament intended when it included the term “snow sheds” in item 12 of

Schedule II to the PILT Act . When an item in

Schedule II mentions several things, they share common characteristics. The respondent has engaged in some questionable mental gymnastics, unreasonably attempting to slot the parkades and indoor parking lots into one of the exceptions to the concept of federal property, and has, in so doing, disregarded the purpose of the PILT Act . Automatically excluding a federal highway from the PILT base simply because it also provides access to private property seems to be contrary to the intent of the PILT Act and to the text of paragraph 2(3) (

g) itself. This paragraph provides that public highways are to be classified as federal property if their primary function is to provide immediate access to real property or immovables owned by the Crown. With some exceptions, the respondent respected neither the principles of statutory

interpretation applicable to the PILT Act nor the intent of Parliament. As a result, its exercise of its discretion to pay PILTs was unreasonable. Concerning the applicability of the Parking Lot By-law, the issue here was whether it was reasonable for the respondent to conclude that if the parking areas had belonged to a private owner and been taxable, the tax rate applicable to them would have excluded the tax imposed by the Parking Lot By-law. The response to this question must be negative.

Section 3 of the PILT Act allows for payments in lieu of any taxes applicable within the areas in which the federal properties at issue are situated. This is a territorial condition rather than a material or formal condition.

Section 151.9 of the Charter of Ville de Montréal prohibits the imposition of a tax in respect of certain persons. It is only if the applicant imposes a tax on the OPMC that this

section and

section 125 of the Constitution are applicable. The Parking Lot By-law must be taken into account when the respondent exercises its discretion in calculating the annual PILT; otherwise, the end result will be a fictitious tax rate for the PILTs, as not all the taxes making up the effective rate would be taken into account. For PILT purposes, there is no reason to treat the Old Port site differently just because it was built with fill south of De la Commune Street up to a certain point in the St.

Lawrence River, and after that point with the addition of cribwork to reinforce the structure rather than occupying the surface of the riverbed with fill only. The property value of the OPMC’s “land” must be calculated as if the land were situated on the quays—the usable surface—just as if it were situated on any infilled area within the City’s territory. These quays are permanently fixed to dry land, cannot be removed and are the site of important immovables that support lucrative commercial activities, such as parkades and indoor parking lots, the Science Centre and the IMAX theatre.

Therefore, it would be unreasonable and contrary to the spirit of fairness in the PILT Act to assess the land at issue as deep-water lots of nominal value. Whether the acts of assignment of the Old Port site from Her Majesty the Queen to the respondent refer to the land as the riverbed or the surface of the quays is immaterial. Any such designation was made for the purpose of identifying the property being assigned, not for determining the value attributable to the land. The respondent cannot rely on

section 4 of the Interim Payments and Recovery of Overpayments Regulations as the source of an entitlement to recover the alleged overpayment of 2013. The Crown Corporations Payments Regulations allow for the recovery of certain payments made by Crown corporations. However, this possibility is clearly limited to interim payments made in the context of a challenge, which is not the case here.

Its final payment having been made for the year 2013, it was unreasonable for the respondent to re- evaluate this decision the following year and effect compensation between the so-called overpayment and the PILTs due for the years from 2014 until the balance of the overpayment was exhausted in 2020. The respondent’s decision to make no PILT with respect to the “land” covered by the right-of-way for the railway tracks and rail yard was neither intelligible nor transparent; it was therefore unreasonable.

The annual decisions rendered by the respondent between 2014 and 2020 determining the amount of the PILT owing were set aside, and this matter was remitted to the respondent for redetermination. STATUTES AND REGULATIONS CITED Act respecting municipal taxation , CQLR, c. F-2.1, ss. 46 , 204 , 208 . By-law Concerning Property Taxes on Parking Lots , (fiscal year 2013) (12-057), Council of the City of Montréal, adopted December 17, 2012, s. 11. By-law Concerning Property Taxes on Parking Lots , (fiscal year 2014) (14-008), Council of the City of Montréal, adopted February 24, 2014, s. 11.

By-law Concerning Property Taxes on Parking Lots , (fiscal year 2015) (14-046), Council of the City of Montréal, adopted December 10, 2014, s. 11. By-law Concerning Property Taxes on Parking Lots , (fiscal year 2016) (15-093), Council of the City of Montréal, adopted December 9, 2015, s. 11. By-law Concerning Property Taxes on Parking Lots , (fiscal year 2017) (16-067), Council of the City of Montréal, adopted December 14, 2016, s. 11.

Canada Marine Act, S.C. 1998, c. 10, ss. 6(1), 7(1), Sch.,

Part 1, Item 4. Canada National Parks Act, S.C. 2000, c. 32, ss. 4(1), 8(2). Charter of Ville de Montréal, metropolis of Québec, CQLR, c. C-11.4, ss. 149–151.6, 151.8, 151.9. Cities and Towns Act, CQLR, c. C-19, s. 500.1. Civil Code of Québec, CQLR, c. CCQ-1991, art. 900. Compendium of Tariffs of Private Transportation by Taxi, R.R.Q., c. S-6.01, r. 4, s. 8. Constitution Act, 1867, 30 & 31 Vict., c. 3 (U.K.) (as am. by Canada Act 1982, 1982, c. 11 (U.K.),

Schedule to the Constitution Act,1982, Item 1) [R.S.C., 1985, Appendix II, No. 5], s. 125. Crown Corporation Payments Regulations, SOR/81-1030, ss. 5, 6, 7, 12. Federal Real Property and Immovables Act, S.C. 1991, c. 50, s. 2 “immovable”, “real property”. Income Tax Act, R.S.C. 1952, c. 148. Interim Payments and Recovery of Overpayments Regulations, SOR/81-226, ss. 3, 4.

Interpretation Act, R.S.C., 1985, c. I-21, ss. 8.1, 8.2, 12. Payments in Lieu of Taxes Act, R.S.C., 1985, c. M-13, ss. 2(1) “effective rate”, “federal property”, “property value”,(3), 2.1, 3, 4, 11(1),11.1, 15, Sch. II, III, IV. Saguenay-St. Lawrence Marine Park Act, S.C. 1997, c. 37, s. 4. CASES CITED applied: Montréal (City) v. Montreal Port Authority, 2010 SCC 14, [2010] 1 S.C.R. 427; Canada (Minister of Citizenship and Immigration) v.Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653. Distinguished: Montréal (City) v.

Montreal Port Authority, 2010 SCC 14, [2010] 1 S.C.R. 427 (as to the use of the existing tax system to interpret,qualify or modify the exceptions to the concept of “federal property”); Trois-Rivières (City) v. Trois-Rivières Port Authority,2015 FC 106. referred to: Halifax (Regional Municipality) v. Canada (Public Works and Government Services), 2012 SCC 29, [2012] 2 S.C.R. 108; Johns-Manville Canada v. The Queen, (SCC), [1985] 2 S.C.R. 46, (1985), 21 D.L.R. (4th) 210; Québec (Communautéurbaine) v. Corp. Notre-Dame de Bon-Secours, (SCC), [1994] 3 S.C.R. 3, 63 Q.A.C. 161; C.U.P.E. v.

Ontario (Ministerof Labour), 2003 SCC 29, [2003] 1 S.C.R. 539; Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, [2002] 2 S.C.R. 559;Pharmascience Inc. v. Binet, 2006 SCC 48, [2006] 2 S.C.R. 513; Corporation d’Urgences-santé c. Syndicat des employées et employésd’Urgences-santé (CSN), 2015 QCCA 315; Québec (Procureur général) c. Paulin, 2007 QCCA 1716, [2008] R.J.Q. 16; City ofMontréal v. Montréal Port Authority, 2007 FC 701, 314 F.T.R. 250; Pfizer Co. Ltd. v. Deputy Minister of National Revenue, (SCC), [1977] 1 S.C.R. 456, (1975), 68 D.L.R. (3d) 9; Gravel v.

City of St-Léonard, (SCC), [1978]1 S.C.R. 660, (1977), 17 N.R. 486; Catalyst Paper Corp. v. North Cowichan (District), 2012 SCC 2, [2012] 1 S.C.R. 5; Montréal PortAuthority v. Montréal (City), 2008 FCA 278, revd on other grounds 2010 SCC 14, [2010] 1 S.C.R. 427; Cold Lake (City) v. Canada(Public Services and Procurement), 2021 FC 405. AUTHORS CITED Merriam-Webster Dictionary, “park”, online: <http://merriam-webster.com>. Oxford English Dictionary Online, Oxford University Press, “park”.

APPLICATION for judicial review of annual decisions rendered by the respondent between 2014 and 2020 determining the amount ofdiscretionary and voluntary payments in lieu of taxes (PILTs) owing, deemed inappropriate and unreasonable by the applicant.Application allowed. APPEARANCES Louis Béland for applicant. François Barette for respondent. Isabelle Mathieu-Millaire and Lindy Rouillard-Labbé for intervener.

SOLICITORS OF RECORD Dufresne Hébert Comeau Inc. , Montréal, for applicant. Fasken Martineau DuMoulin LLP , Montréal, for respondent. Deputy Attorney General of Canada for intervener. The following is the English version of the reasons for judgment and judgment rendered by P amel J.: TABLE OF CONTENTS I. Introduction II. A brief history III. Issues IV. The relevant legislation V. Discussion A. Preliminary issues B. The applicable standard of review C. The

interpretation of the PILT Act D. The merits of the case 1. Does the property in dispute between the parties constitute federal property within the meaning of the PILT Act? (

a) The exclusions at issue i. Urban parks — paragraph 2(3)(

c) of the PILT Act a. The Old Port site as a whole b. The quays, promenades and buildings i. The Old Port Promenade and the Promenade des Artistes ii. The Clock Tower Quay iii. The Bonsecours Basin Pavilion, including buildings 4 and 5, namely, the Terrasse Bonsecours and the pavilion (Chalet Bonsecours) iv. The Jacques Cartier Quay a. The Jacques Cartier Quay Promenade v. The King Edward Quay a. The King Edward Quay Promenade vi. The Alexandra Quay c. The parking areas ii. Any structure or work — paragraph 2(3)(

a) of the PILT Act a. The Jacques Cartier Quay’s elevated walkway b. The parking areas iii. Snow sheds — paragraph 2(3)(b) —

Schedule II — item 12 iv. Public highways (

b) Conclusion on exclusions 2. Are the OPMC’s parking lots subject to the Parking Lot By-law? (

a) Is the City authorized to levy this tax?

(

b) Are the parking lots situated outside the areas in which this tax is applicable? 3. Is the OPMC’s land situated in deep water? 4. Was it open to the OPMC to effect compensation between the amount it had allegedly overpaid in 2013 and the payments for the following years? 5. The land under the right-of-way for the railway tracks and rail yard 6. Conclusion and discretion with respect to measurement 7. Costs VI. Appendix 1.

Introduction [Table of Contents] [ 1 ] The Tavern on the Green restaurant in New York City is an entertainment venue, a veritable landmark, but it would be difficult to argue that its commercial nature strips Central Park of its essence as a park. Would adding a zoo strip the park of this essence? If not, what would happen to the park if one were to add an IMAX theatre, a science centre, a Ferris wheel, a nightclub, a spa and grounds for the Cirque du Soleil? Have we crossed the Rubicon and transformed the space from a park into an entertainment site? If so, at what moment did this occur?

At what point did we cease to see the Tivoli Gardens, with their pretty flowers, bandstands, rides and boat tours on the lake as a garden with a handful of amusements and begin to see it as one of the largest amusement parks in Copenhagen? I know that the moment of this mutation cannot be pinned down to the second, but, to paraphrase the immortal words of Justice Potter Stewart, I may not be able to define the tipping point very precisely, but I know it when I see it. [ 2 ] Crown properties are immune from taxation.

To balance tax fairness for municipalities with the preservation of this constitutional immunity from taxation, and to compensate for the taxes that the municipalities would otherwise have levied, the federal government created a regime of discretionary and voluntary payments in lieu of taxes (PILTs) within the meaning of the Payments in Lieu of Taxes Act , R.S.C., 1985, c. M-13 ( PILT Act ).

When the properties covered by the PILT scheme belong to a federal Crown corporation, the latter becomes responsible for the management of the regime set out in the PILT Act . [ 3 ] The Old Port of Montréal Corporation (OPMC), a corporation exclusively controlled by the Canada Lands Company Ltd. mentioned in

Schedule III to the PILT Act , is such a corporation. All of the Old Port of Montréal site ( Old Port site) belongs to it, except for the Alexandra Quay, which the OPMC leased from the Port of Montréal until December 31, 2015. Each year, the OPMC receives a PILT request from Ville de Montréal (City), a legal person established in the public interest incorporated under the Charter of Ville de Montréal , metropolis of Québec , CQLR, c.

C-11.4 ( City Charter ), and a taxing authority within the meaning of the PILT Act with the power to collect taxes and other charges from owners of real property situated in its territory. In response to this request, the OPMC sends to the City each year a decision in which it provides a

summary explanation of the amount of its PILT and, if applicable, the exclusions from the concept of “federal property” that it relies on to establish the amount of the payment. [ 4 ] Since 2014, there has been disagreement between the City and the OPMC as to the property value and the composition of the “federal property” within the meaning of the PILT Act [ subsection 2(1) ] of lots 1 180 167, 4 132 346, 4 132 347, 4 132 348, 4 132 350, 4 132 354, 4 132 355, 4 132 356, 4 171 037 and 4 171 038 in the Quebec cadastre, namely, the Old Port site.

One of the OPMC’s arguments is that the Old Port site, as a whole, including the Alexandra Quay, is a park (and therefore not “federal property” within the meaning of the PILT Act ) and that it should therefore not be required to make PILTs for this territory on the basis of an exemption set out in the PILT Act .

In the alternative, the OPMC argues that several other features of the Old Port site do not meet the definition of “federal property” in the PILT Act in accordance with other exemptions set out in that act and that these features are therefore not covered by the PILT scheme. [ 5 ] Because of this position, taken between 2014 and 2020, the City is seeking judicial review of the annual decisions rendered by the OPMC determining the amount of the PILT owing (the OPMC decisions), which the City deemed insufficient and unreasonable.

At the request of the parties, the Court ordered the consolidation of proceedings in dockets T-1262-14, T-2147-14, T-635-15, T-613-16, T- 592-17, T-714-18, T-650-19 and T-836-20 so that these could be handled in a single hearing. [ 6 ] To be clear, the parties are not asking the Court to decide the effective rate to be applied to the properties, or the property value of these properties given that these issues must be determined at a later stage. What must be considered here is the establishment by the OPMC of the Old Port site’s property base; the issues involve (

i) the

interpretation of the concept of “federal property” within the meaning of the PILT Act so that the features constituting the properties subject to PILTs might be determined, (ii) the applicability of the By-law Concerning Property Taxes on Parking Lots , adopted each year by the City for fiscal years 2013 to 2017 (Parking Lot By-law), and (iii) the OPMC’s position that certain parts of the Old Port are situated [translation] “in deep water” . [ 7 ] Finally, I must address the issue of the OPMC’s right to effect compensation between its alleged overpayment for the 2013 fiscal year and the payments for subsequent years. [ 8 ] I should note that I have made visits to the Old Port site myself over the course of many years, visits that I have appreciated; I have taken boat trips on the river, attended movies and concerts and enjoyed a glass or two at the Belvedere at private events.

The parties even organized a visit to the Old Port site for me before the hearing in this case so that I might understand the features of the Old Port site being debated here. [ 9 ] The parties agree that some features of the Old Port site—such as the linear park and most of the Bonsecours Basin—are indeed parks by nature and have been developed as such. These features do not, therefore, fall within the definition of “federal property” within the meaning of the PILT Act . That said, I am of the view that, as a whole, the Old Port site is not a “park” within the meaning of the PILT Act .

Moreover, and with some exceptions, I am persuaded that it was unreasonable for the OPMC to decide that the controversial

features of the Old Port site did not fall within the definition of “federal property” set out in the PILT Act . [ 10 ] For the reasons that follow, I allow the application for judicial review, with costs. II. A brief history [Table of Contents] [ 11 ] At the end of the 18th century, those who frequented what we now know as De la Commune Street in Old Montréal could not enjoy the current attractions of the Old Port site, such as the Science Centre, the IMAX theatre or even the parkades.

In fact, it would have been impossible for them even to walk where those attractions are located since, at that time, there was nothing but the St.

Lawrence River beyond this street. [ 12 ] All that changed in the early 19th century when Montréal merchants, mainly lumber merchants, began to extend the solid ground with landfill to build quays in front of their warehouses on De la Commune Street. [ 13 ] Toward the end of the 19th century and beginning of the 20th century, with the development and expansion of the Port of Montréal, the entrance of which was marked by the historic Clock Tower, and to serve larger ocean-going vessels with deeper draughts and ensure better protection against ice and flooding, the old quays were filled in and new cribs were installed when the quays were raised.

This cribwork, which is also under the sidewalk and roadway of the Old Port promenade towards De la Commune Street, remains to this day one of the components of the quays forming the foundation of the Old Port site. These quays are composed of cribwork made of timber, poured concrete and various other materials, and they extend the solid ground by more than 300 meters into what had previously been the St.

Lawrence River. [ 14 ] The OPMC was founded in 1981, a few years after the eastward shift of most of the harbour activities of the Port of Montréal and following the federal government’s announcement of its intention to redevelop the old

section of the port located in Old Montréal. Although Her Majesty the Queen owned the land currently known as the Old Port site, the PILTs were managed by the Minister of Public Works and Government Services Canada (PWGSC)—now called the Minister of Public Services and Procurement Canada—who is an intervener in this case.

At the time, the City and PWGSC were in agreement on which portions of the Old Port site were subject to PILTs and which were excluded. [ 15 ] On November 2, 2009, ownership of the Old Port site was transferred from Her Majesty the Queen in right of Canada to the OPMC, at which time PWGSC ceased managing its PILTs.

However, the Attorney General of Canada is nevertheless intervening in this case as a representative of PWGSC on the basis that the issues require a decision regarding key concepts for the PILT program that PWGSC must administer on a regular basis throughout the country. [ 16 ] The Crown corporations listed in schedules III and IV to the PILT Act (including the OPMC) manage their own PILT programs directly and are fully responsible for determining the property base, the value of the property constituting it and the applicable effective rate.

PWGSC has no power of supervision or direction with respect to the management of PILT programs by these Crown corporations. [ 17 ] It was following the transfer of ownership of the property at issue to the OPMC that the trouble regarding PILTs began.

The difficulties came to a head when, starting in the 2014 taxation year, the OPMC began to rely on new exemptions from the concept of federal property and to claim that some of its lots were situated in deep water and should therefore be subject to a nominal assessment. [ 18 ] For the City, this position sharply reduced the property base and the value of the property that was previously subject to PILTs, resulting in a decrease in PILTs from more than $3.7 million in 2013 to about $500,000 annually for the years 2014 to 2019.

At the same time, the OPMC reassessed the amount of the PILTs that should have been paid in 2013, taking into account its new reasons, and effected compensation between the so-called overpayment of 2013 and the annual amounts paid by the OPMC to the City as PILTs from 2014 to 2020, resulting in an additional reduction of those amounts. [ 19 ] Moreover, as of 2015, the OPMC advanced the position that the Parking Lot By-law was inapplicable to parking areas situated on quays, as the latter were, in its view, situated in the St.

Lawrence River and therefore beyond the By-law’s territorial limits. [ 20 ] The OPMC continues to hold these positions, and each of the OPMC’s annual decisions regarding PILTs is subject to an application for judicial review by the City. In this case, therefore, the issue is whether the positions adopted by the OPMC are reasonable. III. Issues [Table of Contents] [ 21 ] The five issues are the following: 1. What is the applicable standard of review? 2. Does the disputed property constitute federal property within the meaning of the PILT Act ? 3. Are the OPMC’s parking lots subject to the Parking Lot By-Law? 4.

Is the OPMC’s land situated “in deep water” ? 5. Was it open to the OPMC to effect compensation between the amount it had allegedly overpaid in 2013 and the payments for the following years? IV. The relevant legislation [Table of Contents] [ 22 ] The provisions applicable to this case can be found in the Appendix to this decision. [ 23 ] Under the federal PILT program, which is governed by the PILT Act and its regulations, the federal Crown agrees to pay, subject

to certain conditions, payments in lieu of taxes to municipalities on its “federal properties” within the meaning of the PILT Act . The purpose of this legislative scheme is to administer payments in lieu of taxes fairly and equitably while at the same time preserving the fiscal immunity set out at

section 125 of the Constitution Act , 1867 , 30 & 31 Vict ., c. 3 (U.K.) (as am. by Canada Act 1982 , 1982, c. 11 (U.K.),

Schedule to the Constitution Act , 1982 , Item 1) [R.S.C., 1985, Appendix II, No. 5] (the Constitution). This dual objective was eloquently described by Justice LeBel in a unanimous decision of the Supreme Court in Montréal (City) v. Montreal Port Authority , 2010 SCC 14 , [2010] 1 S.C.R. 427 ( MPA 2010 ) [at paragraph 20]: It is clear from the PILT Act that Parliament intended to uphold the immunity of federal Crown property from taxation.

Section 15 of the Act provides that “[n]o right to a payment is conferred by this Act.” Parliament therefore did not intend to give municipalities the status of creditors of the Crown for payments in lieu of taxes. Instead, it has, through the PILT Act , established a system in which municipalities expect to receive payments but the payments are made within the statutory and regulatory framework that Parliament established without renouncing the principle of immunity from taxation.

Thus, the PILT Act is designed to reconcile different objectives — tax fairness for municipalities and the preservation of constitutional immunity from taxation — that can be attained only by retaining a structured administrative discretion where the setting of the amounts of payments in lieu is concerned . For the purpose of establishing those amounts, the PILT Act must define the relationship between the system for setting payments in lieu, on the one hand, and the provincial and municipal tax systems, which can vary from place to place in Canada, on the other. [Emphasis added.] [ 24 ] According to

section 15 of the PILT Act , no right to a payment is conferred by this scheme. Nor does the Act subject the Crown to provincial legislation or municipal by-laws governing taxes or property taxes ( MPA 2010 , at paragraphs 12–24). [ 25 ] The Crown Corporation Payments Regulations , SOR/81-1030 ( CCPR ), adapt the PILT scheme for the Crown corporations and other federal bodies enumerated in

Schedule III to the PILT Act (Crown corporations), to which the OPMC belongs given its connection to the Canada Lands Company. [ 26 ] Sections 5 and 6 of the CCPR state that Crown corporations pay PILTs in respect of any property that would be federal property if it were under the management, charge and direction of a federal minister. Therefore, like the minister, the Crown corporation (the OPMC) must also determine whether the immovable that is the subject of the application received from the taxing authority meets the definition of “federal property” within the meaning of the PILT Act . V.

Discussion [Table of Contents] A. Preliminary issues [Table of Contents] [ 27 ] In its memorandum, the City submits that the doctrine of promissory estoppel applies to the OPMC, with the effect that it was not open to the latter to change position in 2014 and decide not to pay PILTs on certain property previously included in the concept of federal property. It appears that, prior to 2014, the City and the OPMC applied the agreement that had been reached by the parties as to which areas should or should not be considered “urban park” not subject to PILTs.

However, it is not necessary to address this issue, as the City withdrew this argument at the hearing. [ 28 ] Moreover, considering that the dispute spans several years and that during this period the uses of the immovables and real property making up the Old Port site have changed, as has the operator in the case of the Alexandra Quay, with the consent of the parties, I will render my decision by considering the Old Port site on the basis of the state of the immovables and real property under the OPMC’s control at the time of its 2014 decision. [ 29 ] Over the years, and even at the hearing before me, the parties have found common ground, and several exemptions claimed by the OPMC, or that the City believed the OPMC was claiming, have been dropped, such as the Lachine Canal Historic Site and the Bonsecours Basin.

It is therefore unnecessary to discuss these exclusions here. I will therefore address only the issues that remain controversial. [ 30 ] Finally, despite the fact that at the hearing, the parties and the Court engaged in debates on interesting questions of law regarding what constitutes the subsurface of the Old Port site and regarding the historical provenance of the riverbed on which the quays were built, from the City’s perspective, the foundations of the Old Port site are of no importance. For tax purposes, the City is interested in the surface of the land rather than what makes up the land below the surface.

According to the City, when land is created—in this case the Old Port site—whether it is by way of simple landfill, mixed landfill or cribwork, or anything else—this land becomes, for the purposes of municipal taxation and PILTs, taxable federal property or property for which PILTs may be paid. I accept the City’s position on this point with respect to the application of the PILT Act . B. The applicable standard of review [Table of Contents] [ 31 ] The parties agree that the applicable standard of review is reasonableness. I concur.

Reasonableness is presumed to be the standard of review, and I can identify in this case none of the exceptions to this presumption that would require the application of the standard of correctness ( Canada (Minister of Citizenship and Immigration) v. Vavilov , 2019 SCC 65 , [2019] 4 S.C.R. 653 ( Vavilov ), at paragraphs 23 , 31 and 53); MPA 2010 , at paragraphs 36–38; Halifax (Regional Municipality) v.

Canada (Public Works and Government Services) , 2012 SCC 29 , [2012] 2 S.C.R. 108, at paragraphs 43–44 ). [ 32 ] The Attorney General points out that the issues to be resolved here are of considerable importance to the PILT program, while the case law is negligible or even non-existent with respect to several of the issues raised in this case.

At the hearing, it was asked whether, given the lack of jurisprudence interpreting the exceptions to the concept of federal property according to the PILT Act and the need for generalized standards in the administration of the PILT program across the country, the issues raised in this case could be considered general questions of law of central importance to the legal system as a whole, making the standard of correctness appropriate ( Vavilov , at paragraphs 58–62 ). I am of the view that this is not the case. [ 33 ] Fundamentally, this case involves the

interpretation of concepts contained in the PILT Act , and the issue of whether the OPMC’s

interpretation of these concepts was reasonable. There is indeed very little case law on how to interpret the exemptions from the concept

of federal property under the PILT Act; that said, this case is essentially one of statutory

interpretation. As the Supreme Court observedin Vavilov, “the mere fact that a dispute is ‘of wider public concern’ is not sufficient for a question to fall into this category” (Vavilov, atparagraph 61). In fact, in MPA 2010, the Supreme Court held that the reasonableness standard applied in determining whether the port’ssilos fell within the exemption for “reservoirs” listed in

Schedule II to the PILT Act (MPA 2010, at paragraph 48). [34] In Vavilov, the Supreme Court clearly described the principles of judicial review that apply when an administrative decisionmaker interprets a legislative provision in the course of rendering a decision [at paragraphs 121, 124 and 131]: The administrative decision maker’s task is to interpret the contested provision in a manner consistent with the text, context and purpose,applying its particular insight into the statutory scheme at issue. It cannot adopt an

interpretation it knows to be inferior — albeitplausible — merely because the

interpretation in question appears to be available and is expedient. The decision maker’s responsibility isto discern meaning and legislative intent, not to “reverse-engineer” a desired outcome. … Finally, even though the task of a court conducting a reasonableness review is not to perform a de novo analysis or to determine the“correct”

interpretation of a disputed provision, it may sometimes become clear in the course of reviewing a decision that the interplay oftext, context and purpose leaves room for a single reasonable

interpretation of the statutory provision, or aspect of the statutory provision,that is at issue: Dunsmuir, at paras. 72-76. One case in which this conclusion was reached was Nova Tube Inc./Nova Steel Inc. v.Conares Metal Supply Ltd., 2019 FCA 52, in which Laskin J.A., after analyzing the reasoning of the administrative decision maker (atparas. 26-61 ), held that the decision maker’s

interpretation had been unreasonable, and, furthermore, that the factors he hadconsidered in his analysis weighed so overwhelmingly in favour of the opposite

interpretation that that was the only reasonableinterpretation of the provision: para. 61. As discussed below, it would serve no useful purpose in such a case to remit the interpretativequestion to the original decision maker. Even so, a court should generally pause before definitively pronouncing upon the

interpretationof a provision entrusted to an administrative decision maker. … Whether a particular decision is consistent with the administrative body’s past decisions is also a constraint that the reviewing courtshould consider when determining whether an administrative decision is reasonable. Where a decision maker does depart fromlongstanding practices or established internal authority, it bears the justificatory burden of explaining that departure in its reasons. If thedecision maker does not satisfy this burden, the decision will be unreasonable.

In this sense, the legitimate expectations of the partieshelp to determine both whether reasons are required and what those reasons must explain: Baker, at para. 26. We repeat that this does notmean administrative decision makers are bound by internal precedent in the same manner as courts.

Rather, it means that a decision thatdeparts from longstanding practices or established internal decisions will be reasonable if that departure is justified, thereby reducing therisk of arbitrariness, which would undermine public confidence in administrative decision makers and in the justice system as a whole.[Emphasis added; italics in original.] [35] That said, the parties do not fully agree on how the standard of reasonableness is to be applied, and specifically on the degree ofdeference owed to the OPMC in this case or the scope of the findings that could reasonably be made by the OPMC when it rendered theimpugned decisions.

I must point out, however, that in a post-Vavilov world, in seeking to determine whether a given decision isreasonable, one must no longer consider whether it falls within a “‘range’ of possible conclusions that would have been open to thedecision maker”, but rather “whether the decision bears the hallmarks of reasonableness — justification, transparency and intelligibility— and whether it is justified in relation to the relevant factual and legal constraints that bear on the decision” (Vavilov, at paragraphs 83and 99).

As Justice LeBel observed in MPA 2010, “[t]he concept of ‘reasonableness’ … also encompasses a quality requirement thatapplies to those reasons and to the outcome of the decision-making process” (MPA 2010, at paragraph 38). [36] The City argues that the degree of deference to be granted to the OPMC’s decisions must take into account the fact the OPMCpossesses no specialized expertise or qualifications when it comes to applying the PILT Act and interpreting the term “federal property”.The City also submits that the OPMC is not acting, in the words of Justice LeBel in MPA 2010, at paragraph 14, “as [would] goodresidents of the municipalit[y]” given that it has demonstrated in its decisions a certain [translation] “zeal for cutting costs to themaximum extent possible” by raising the most unlikely grounds for exemption from the concept of “federal property”. [37] I must admit that I find this situation, in which the decision maker certainly has a direct interest in the outcome of the decision,rather strange.

Given the realities of annual budgets and financial performances and expectations, it is easy for a perceived conflict ofinterest to arise in the decision-making process, no matter how hard the decision maker tries to be fair and equitable.

This impressionmay become even stronger in cases where, as here, the decision maker makes a new determination that differs suddenly and drasticallyfrom what had previously been a well-established protocol between the decision maker and the person affected by the decision, theOPMC and the City in this case, as to what constitutes federal property within the meaning of the PILT Act. [38] On this same point, and regardless of the fact that the City has dropped its promissory estoppel argument, the fact remains that“[w]here a decision maker does depart from long-standing practices or established internal authority, it bears the justificatory burden ofexplaining that departure in its reasons.

If the decision maker does not satisfy this burden, the decision will be unreasonable” (Vavilov, atparagraph 131). [39] The Supreme Court has clearly stated that the purpose of the PILT Act “is to provide for the fair and equitable administration ofpayments in lieu of taxes” and that although the Act “confirms both the principle that federal property is immune from taxation and thevoluntary nature of payments in lieu, the intention was that the calculation of such payments would be consistent with the objective ofequity and fairness in dealing with Canadian municipalities” (MPA 2010, at paragraph 43).

However, while fairness and good faith onthe part of federal Crown corporations are cornerstones of the PILT program, there is no evidence that the OPMC had a hidden agendawhen it made its decisions. [40] It appears that the trigger for the OPMC’s increased focus on whether it was correctly applying the exemptions to federalproperty under the PILT Act was the coming into force of the Parking Lot By-law, imposed by the City starting in 2011. This by-law

was adopted to increase the tax burden on operators of outdoor parking facilities within the City’s territory. Because the OPMC has largeoutdoor parking lots, the introduction of this tax caused the amount of PILTs sought by the City each year to increase by 50 percent.

Itwas at this point that the OPMC began to conduct analyses to determine whether certain exemptions that had not previously beeninvoked with respect to PILTs could be used. [41] While I must admit that some of the exemptions invoked by the OPMC stretch the imagination, I am not prepared to concludethat the OPMC exhibited an excessive amount of zeal in applying the exemptions to the concept of federal property within the meaningof the PILT Act. [42] However, given that it departed from a long-standing practice (followed by the OPMC and previously by PWGSC) regardinghow the Old Port site should be treated for PILT purposes, I find that it was incumbent on the OPMC to justify this departure, whichwould have reduced “the risk of arbitrariness” (Vavilov, at paragraph 131). [43] As for the issue of the degree of deference I must give to the OPMC’s decisions, the Supreme Court has made it clear that, whilean administrative decision maker’s expertise is no longer relevant to the determination of the standard of review, “expertise remains arelevant consideration in conducting reasonableness review” (Vavilov, at paragraphs 31 and 58). [44] The Minister of PWGSC is responsible for administering the PILT Act.

PWGSC is intervening in this case because, in its view,the decision that I will render will set precedents with respect to several concepts at issue, such as the concepts of “park”, “road”, “publichighway” and “snow shed” and the treatment of parking areas.

PWGSC therefore wishes to intervene with respect to these concepts andthe aspects of the PILT program that come up regularly in its decisions. [45] According to the testimony of Colin Boutin, National Manager, Policy and Strategic Initiatives—PWGSC’s PILT program—filed in support of the intervener’s position, the PILT program is administered by PWGSC on behalf of all federal departments.According to Mr.

Boutin, the objective is to make fair, equitable and predictable PILTs resembling the taxes paid by owners of taxableproperty with comparable property, to local taxing authorities whose tax jurisdiction includes federal properties.

Each year, PWGSCdeals with hundreds of PILT applications, valued at close to $600 million and involving, in 2016–2017, approximately 1 250 taxingauthorities across the country, except, as in this case with the OPMC, for amounts paid by Crown corporations that own property andmanage their own PILT programs; in such cases, PWGSC has no authority over the Crown corporations’ decisions. [46] According to the evidence, if anyone has expertise in applying the PILT Act, it is PWGSC rather than the OPMC.

In fact, theOPMC’s annual PILT decisions are prepared on the basis of assessment reports prepared by external evaluators mandated by the OPMCto assess and identify the OPMC immovables that constitute “federal property” within the meaning of the PILT Act, in light of theexclusions set out in subsection 2(3) of the PILT Act, thereby enabling the OPMC to determine the PILT to be made each year. [47] In the circumstances, it is not necessary to accord a high level of deference to the OPMC’s decisions, particularly when the issuessubmitted to this Court involve the

interpretation of concepts contained in the PILT Act. C. The

interpretation of the PILT Act [Table of Contents] [48] Before discussing the exclusions at issue, I will set out the approach to statutory

interpretation that will guide my considerationof the PILT Act, as the parties have argued in favour of different interpretive methods. [49] The OPMC cites Johns-Manville Canada v. The Queen, (SCC), [1985] 2 S.C.R. 46, (1985), 21 D.L.R. (4th) 210,as well as Québec (Communauté urbaine) v. Corp. Notre-Dame de Bon-Secours, (SCC), [1994] 3 S.C.R. 3, (1994), 63Q.A.C. 161, in support of its position that the residual presumption in favour of the taxpayer applies here, and that the PILT Act must beinterpreted in favour of the “taxpayer” because it has certain tax aspects, like the Income Tax Act, R.S.C. 1952, c. 148.

The OPMC arguesthat there is a parallel between the concepts of a taxpayer’s tax base and federal property, and another between the concepts of taxes andPILTs. The OPMC also submits that, in both cases, several exceptions apply to what may be taxed (or with respect to what it is possibleto make a PILT). [50] I cannot accept the OPMC’s argument.

There is no doubt that some aspects of the PILT Act are similar to elements that may befound in a taxation statute, because the very purpose of the Act, to put it simply, is to make payments to municipalities in lieu of taxesnormally collected, while preserving the Crown’s constitutional immunity from taxation. To achieve this, the PILT Act must necessarilybe similar, to some extent, to a taxation statute. [51] However, while there are similarities, the approach chosen to meet this objective is not at all in the nature of a tax: this isprecisely what Parliament wished to avoid.

Obviously, a taxation statute necessarily includes an obligatory collection of the amountowing. However, as stated above, the method adopted by Parliament in this case was to create a regime of discretionary and voluntarypayments in lieu of taxes to avoid creating an obligation to the taxing authority. [52] Thus, the mandatory nature of the payments owing under a taxation statute conflicts with the immunity from taxation set out inthe Constitution and the discretionary nature of PILTs (section 125 of the Constitution;

section 3 of the PILT Act). In other words, theState (in this case the City) is not reaching into the pocket of the taxpayer (in this case the OPMC as a Crown corporation), unlike theusual situation with taxation statutes.

On the contrary, it is the OPMC as “taxpayer” that decides how much “tax” to pay—a situation thatmost taxpayers would surely envy. [53] Although sections 2.1 and 3 of the PILT Act state that the Minister (or Crown corporation) “may” make a PILT in the spirit offairness to municipalities and that under Canadian administrative law, this power must be exercised reasonably, the power dynamicbetween the taxing authority and the “taxpayer” remains radically different from that which would exist in the context of a taxationstatute. I also note that

section 15 of the PILT Act provides that no right to payment is conferred by this Act. The parties are, in thecontext of the PILT Act, on equal footing. With all due respect to the taxing authorities, I do not believe that one could honestly claimthe same to be true of their relationship with taxpayers.

[54] Accordingly, I cannot accept the OPMC’s position that the principle of interpreting taxation statutes in favour of the “taxpayer”applies here. [55] The City, on the other hand, argues in favour of interpreting the exclusions from the concept of federal property in a purposiveand restrictive manner (that is, as exceptions). I agree. In my view, the following comments by the Supreme Court in Vavilov areapplicable [at paragraph 118]: This Court has adopted the “modern principle” as the proper approach to statutory

interpretation, because legislative intent can beunderstood only by reading the language chosen by the legislature in light of the purpose of the provision and the entire relevant context:Sullivan, at pp. 7-8. Those who draft and enact statutes expect that questions about their meaning will be resolved by an analysis that hasregard to the text, context and purpose, regardless of whether the entity tasked with interpreting the law is a court or an administrativedecision maker.

An approach to reasonableness review that respects legislative intent must therefore assume that those who interpret thelaw — whether courts or administrative decision makers — will do so in a manner consistent with this principle of

interpretation.[Emphasis added.] [56] It appears to me that while the process of determining PILTs does imply a certain discretion on the OPMC’s part, the resultingdecisions should nevertheless not distort the language chosen by Parliament; an administrative decision must always be “justified inrelation to the facts and law that constrain the decision maker” (Vavilov, at paragraph 85). A discretionary power is not absolute anduntrammelled because it is constrained by the scheme and object of the statute that confers it (C.U.P.E. v.

Ontario (Minister of Labour),2003 SCC 29, [2003] 1 S.C.R. 539, at paragraph 107). [57] Moreover, the “exercise of this power must be reasonable in light of the circumstances of each case and the need to preserve thefiscal stability of municipalities” (Trois-Rivières (City) v.

Trois-Rivières Port Authority), 2015 FC 106, 474 F.T.R. 196 (Trois-Rivières(City)), at paragraph 64). [58] Recall that the Supreme Court also teaches that the PILT Act and its regulations “define the scope of the discretion and theprinciples governing the exercise of the discretion, and they make it possible to determine whether it has in fact been exercisedreasonably” (MPA 2010, at paragraph 33). Furthermore, as the Supreme Court observes in Vavilov, at paragraphs 108–110: ….

That administrative decision makers play a role, along with courts, in elaborating the precise content of the administrative schemesthey administer should not be taken to mean that administrative decision makers are permitted to disregard or rewrite the law as enactedby Parliament and the provincial legislatures. Thus, for example, while an administrative body may have considerable discretion inmaking a particular decision, that decision must ultimately comply “with the rationale and purview of the statutory scheme under whichit is adopted” …. …. Although a decision maker’s

interpretation of its statutory grant of authority is generally entitled to deference, the decision makermust nonetheless properly justify that

interpretation. Reasonableness review does not allow administrative decision makers to arrogatepowers to themselves that they were never intended to have, and an administrative body cannot exercise authority which was notdelegated to it.… …. What matters is whether, in the eyes of the reviewing court, the decision maker has properly justified its

interpretation of the statutein light of the surrounding context. It will, of course, be impossible for an administrative decision maker to justify a decision that straysbeyond the limits set by the statutory language it is interpreting. [Emphasis added.] [59]

Section 12 of the

Interpretation Act, R.S.C., 1985, c. I-21, reads as follows: Enactments deemed remedial 12 Every enactment is deemed remedial, and shall be given such fair, large and liberal construction and

interpretation as best ensures theattainment of its objects. [60] The words of the Act, including in this case the exclusions from the concept of federal property, must be read in their entirecontext and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act and the intention ofParliament, even when a provision seems clear and conclusive (Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, [2002] 2S.C.R. 559; Pharmascience Inc. v. Binet, 2006 SCC 48, [2006] 2 S.C.R. 513).

Exceptions, in this case exceptions to the concept offederal property, must be interpreted narrowly (Corporation d’Urgences-santé c. Syndicat des employées et employés d’Urgences-santé(CSN), 2015 QCCA 315 , 2015 CarswellQue 1018 (WL Can.), at paragraph 47; Québec (Procureur général) c. Paulin, 2007QCCA 1716 , [2008] R.J.Q. 16, at paragraphs 30 et seq). [61] Ultimately, the modern approach to statutory

interpretation is the appropriate framework for considering the exemptions claimedby the OPMC. The PILT Act must be interpreted like any other statute, harmoniously with its object of administering PILTs fairly andequitably, within the larger context of the need to reconcile “different objectives — tax fairness for municipalities and the preservationof constitutional immunity from taxation” (section 2.1 of the PILT Act; MPA 2010, at paragraphs 20 and 43). D.

The merits of the case [Table of Contents] [62] Essentially, the City submits that several of the exemptions from the concept of federal property, which forms the property baseon which PILTs may be paid, have been unreasonably relied upon by the OPMC because they do not result from a reasonableinterpretation of the PILT Act.

Moreover, the City argues that the City could not effect compensation between the 2013 payment and thepayments for subsequent years, as the 2013 payment was final. [63] The City adds that it was unreasonable for the OPMC to conclude that its land was situated in deep water and that its valueshould therefore be assessed at a nominal amount, as this position has no legal merit.

[ 64 ] Finally, according to the City, the Parking Lot By-law is fully applicable to the Old Port site as this site is not situated in the St. Lawrence River, which is the boundary of the territorial application of this by-law. [ 65 ] Before me, the City has also noted that there is an additional consideration in this debate, relating to the rail yard. The City submits that the rail yard issue was never fully fleshed out by the OPMC, the latter merely having stated in its decisions that the rail yard and the servitude—the railway right-of-way—interfered with the operation of the park.

However, the OPMC did not express a view on the issue of whether or not there should be compensation. Therefore, according to the City, the OPMC did not rely on an exclusion, per se , from the concept of federal property, and this point was never fully elaborated on in its decisions, although it does appear to be mentioned as a consideration for the purposes of the OPMC’s final decision regarding the payment of PILTs. 1.

Does the property in dispute between the parties constitute federal property within the meaning of the PILT Act ? [Table of Contents] [ 66 ] For the purposes of this decision, the disputed features of the site are the following: - The Bonsecours Basin Pavilion, including buildings 4 and 5, namely, the Terrasse Bonsecours and the pavilion (Chalet Bonsecours); - The Jacques Cartier Quay, including the Jacques Cartier Pavilion commercial building, warehouse and restrooms, buildings 2, 2A and 3; - The Jacques Cartier Quay’s elevated walkway; - The King Edward Quay, including buildings 13 to 18, namely: • King Edward Quay Promenade; • Central street (King Edward Quay Street); • Montréal Science Centre, building 13; • IMAX theatre, building 14; • Outdoor parkades on King Edward Quay, building 15; • Food court, building 16; • Parking and Belvedere, building 17; • Elevated walkway between Science Centre and food court, building 18; - The outdoor parking lots of the Clock Tower Basin; - The outdoor parking lots of the Clock Tower Quay; - The outdoor street parking on the Port Road; - The outdoor parkades on Alexandra Quay; - The indoor parking lots of hangar 16 of the Clock Tower Quay, building 20; - The indoor parking lots of the Alexandra Quay (inside hangars 4 and 6); - The land underlying the Clock Tower Quay, Jacques Cartier Quay, King Edward Quay and Alexandra Quay; - The public highways of the Old Port , namely, the southern portion of De la Commune Street, the Clock Tower Quay entrance, the Bonsecours Basin entrance, the Jacques Cartier Quay entrance, the King Edward Quay entrance, the Clock Tower Basin and Clock Tower Quay street, the Port Road, the Alexandra Quay entrance, the Saint-Pierre entrance, the Old Port Promenade and the Promenade des Artistes. - The land covered by the right-of-way for the railway tracks and rail yard in the Old Port site, the surface area of which OPMC estimates to be approximately 41,560.5 square meters or 447,353 square feet. (

a) The exclusions at issue [Table of Contents] i. Urban parks— paragraph 2(3) (

c) of the PILT Act [ 67 ] As indicated above,

section 3 of the PILT Act governs the potential payment of PILTs to the applicable taxing authority for federal properties situated within its boundaries. Paragraph 2(3) (

c) of the PILT Act excludes the following from the definition of federal property : Definition 2 … Property not included in the definition federal property (3) …

… (

c) any real property or immovable developed and used as a park and situated within an area defined as urban by Statistics Canada, as of the most recent census of the population of Canada taken by Statistics Canada, other than national parks of Canada, national marine parks of Canada, national park reserves of Canada, national marine park reserves of Canada, national historic sites of Canada, national battlefields or heritage canals; [Emphasis added.] [ 68 ] Although the concepts “immovable” and “real property” are not defined in the PILT Act , they are defined in

section 2 of the Federal Real Property and Immovables Act , S.C. 1991, c. 50 . Essentially, “immovable” is a civil law concept applicable in Quebec, while “real property” is a common law concept applicable in the other provinces (see sections 8.1 and 8.2 of the

Interpretation Act ). As the Old Port site is situated in the province of Quebec, we must turn to the Civil Code of Québec , CQLR, c. CCQ-1991 , which states, at

article 900 , that land, and any constructions and works of a permanent nature located thereon, are “immovables” . Accordingly, and unlike the case for most of the other exclusions from the concept of federal property set out in the PILT Act , the exclusion of “parks” covers both the land underlying them and any constructions or permanent works located on them. [ 69 ] The PILT Act does not define “park” .

However, a site must meet the following three criteria to be considered a park within the meaning of paragraph 2(3) (c): • it must be situated within an area defined as urban by Statistics Canada; • it must have been developed as a park; and • it must be used as a park by the public. [ 70 ] Relying on subsection 4(1) of the Canada National Parks Act , S.C. 2000, c. 32 ( National Parks Act ) and

section 4 of the Saguenay-St. Lawrence Marine Park Act , S.C. 1997, c. 37 ( Marine Park Act ), the OPMC proposes the following definition of “park” : [translation] A space developed for the public for its benefit, education and enjoyment, with the intention that it be used primarily for educational, recreational and scientific purposes. [ 71 ] According to the OPMC, the entirety of the Old Port site is intended for this purpose, making it fit the definition of “park” within the meaning of the PILT Act .

The “park” designation covers not only the green spaces developed with trees, benches and ponds—spaces already recognized as parks by the City—but also the Old Port site’s more imposing buildings, such as the Montréal Science Centre and the IMAX theatre, since these buildings are used for educational, recreational and scientific purposes.

The OPMC argues that most of Montréal’s large parks include such buildings, for instance, the various buildings of the Botanical Garden. [ 72 ] The OPMC also argues that the parking areas, food courts and restrooms as well as the land, promenades, roads and public highways are covered by the exemption because they are incidental and necessary to the park’s operation, and therefore essential for enabling six million visitors to access the Old Port site annually, or about 16,000 visitors per day on average.

The OPMC submits that all parks require parking for access, and that all of Montréal’s large parks, for example, have parking areas. [ 73 ] I cannot accept the OPMC’s reasoning. First, neither the National Parks Act nor the Marine Park Act defines the word “park” . However, I acknowledge that Canada’s national parks and national marine parks are examples of immovables developed and used as parks as they are specifically covered by paragraph 2(3) (

c) of the PILT Act . [ 74 ] To take our national parks as an example, these are vast expanses of land and water set aside for the conservation and enhancement of their ecosystems and wildlife, where visitors can relax and breathe clean air, and where commercial development, if any, is limited. At the very least, commercial activity is never the primary objective. Any buildings used for educational or scientific purposes, like

interpretation or observation centres, are built and developed so as to ensure that the link with nature is not disrupted. Usually, they are even designed to highlight the natural surroundings and help visitors better understand the environment in which they find themselves and the fauna living there. [ 75 ] The Canadian Oxford English Dictionary Online defines the word “park” as “a piece of land [usually] with lawns, gardens, etc. in a town or city, maintained at public expense for recreational use” .

Merriam-Webster , in its online dictionary, defines the word “park” as “a piece of ground in or near a city or town kept for ornament and recreation … [;] an area maintained in its natural state as a public property” . [ 76 ] As I shall demonstrate, it is possible to build many phrases with the work “park” . However, the context of the PILT Act is important, and I do not believe that when Parliament used the word “park” at paragraph 2(3) (

c) of the PILT Act , it intended to include every site of shared use or activity, such as a research park, industrial park, parking lot ( parc de stationnement or parc d’automobiles in French), amusement parks, building inventory ( parc immobilier in French) or even container yard ( parc à conteneurs in French), as the OPMC appears to be submitting. If that were the case, most of the downtown core of any city, as long as it is operated by a federal Crown corporation, would be excluded from the application of the PILT Act as a commercial, real estate or industrial park.

If Parliament had wished to exclude these types of parks from the concept of federal property, it would have done so explicitly. [ 77 ] When using the word “park” on its own, Parliament is instead referring to a natural urban park, developed as such for the benefit of the community.

It is understandable that Parliament would intend to exclude this kind of park (not only the buildings situated on it, but also the land on which it is situated) from PILTs, as such parks represent a service provided by the Minister or the Crown corporation to the municipality, namely, providing access to peaceful green space for urban citizens, rather than using the land for, say, commercial development. This

interpretation of the purpose of the provision is confirmed by the fact that paragraph 2(3)(

c) excludes from the concept of federal property only those parks situated in urban areas, therefore only parks situated in densely populated zones. The wording of this provision does not exclude rural parks. [ 78 ] As for the plain and ordinary meaning of the words, I do not believe that a reasonable person would imagine that I was heading

to an IMAX theatre, food court or science centre if I said I was going to the park. [ 79 ] Therefore, the word “park” appearing in paragraph 2(3) (

c) fundamentally designates land and implies nature and the outdoors. This is not, as the OPMC claims, incompatible with use [translation] “for educational, recreational and scientific purposes” . Nor is there any reason that certain buildings incidental to a park cannot be included in the meaning of the word “park” in the PILT Act . As I have stated above, a park can include certain dependencies necessary to its operation, such as benches, playgrounds and play structures, swings, trails, picnic tables, interpretive panels about nature, a pergola, and even restrooms and parking areas.

In my view, this finding does not exclude the possibility of recognizing a commercial space situated in a park as being an integral part of the park, if that space were complementary. For example, a museum dedicated to the park could, depending on the facts of the case, be sufficiently incidental to the park to be included within the designation. However, as I wrote in the introduction to these reasons, these commercial activities must not distract from the essential nature of a park. [ 80 ] It appears to me that, basically, a park within the meaning of paragraph 2(3) (

c) of the PILT Act is supposed to be “developed and used as a park” so that it can be sought out by the public as a refuge from the hustle and bustle of daily urban life, a bubble of tranquility, so to speak.

If a building or commercial development is part of this environment, it must have a relationship of dependency with the park, to a certain degree, and also be developed and used in a way that is proportional and complementary to the primary use—such a development might facilitate or add to the use, understanding and appreciation of the park. [ 81 ] Apart from some of the rail yard land, which I will address separately, the OPMC is including all of the disputed features of the Old Port site in the concept of “park” as it appears in paragraph 2(3) (

c) of the PILT Act .

These remaining features can be grouped into three major categories: (1) the Old Port site as a whole, except for the western portion of the Old Port that forms part of the Lachine Canal National Historic Site, including the grounds, promenades, roads, public highways and the underlying land; (2) the quays and buildings, such as the Science Centre, IMAX theatre, Bonsecours Pavilion, food court and restrooms, and including the commercial building and warehouse of the Jacques Cartier Pavilion and the Belvedere portion of the parking lot, namely building 17, on King Edward Quay; and (3) the outdoor and indoor parking lots and the parkades. a.

The Old Port site as a whole [Table of

[…]