Governors of the University of Alberta v Edmonton (City), 2022 ABKB 725

Court of King’s Bench of Alberta Citation: Governors of the University of Alberta v Edmonton (City), 2022 ABKB 725 Date: 20221101 Docket: 2103 15293 Registry: Edmonton Between: The Board of Governors of the University of Alberta Applicant - and - The City of Edmonton and the Edmonton Composite Assessment Review Board Respondents Corrected judgment: A corrigendum was issued on November 8, 2022; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Reasons for Judgment of the Honourable Justice M. J. Lema _______________________________________________________

Table of Contents A. Introduction . 3 B. Legislative provision . 3 C. Background . 4 D. Standard of review .. 5 E. Analysis . 7 City’s preferred

interpretation features standard grammar . 7 University’s

interpretation requires additional words . 8 Sibling provisions do not support the CARB’s

interpretation . 8 “University” exemption effectively parallels its five closest-sibling provisions . 10 CARB did not address the object or purpose of these exemption provisions . 11 No general exemption for educational-purpose activities . 12 Historical approach to university-property exemption had no “use” dimension . 13 University’s

interpretation would create uncertainty re scope of “educational purposes” . 14 Boys Scouts case distinguishable . 15 Other “in connection with educational purposes” cases do not assist the University . 15 F. Timing Aspect 16 G. Conclusion . 19 A. Introduction [ 1 ] This is a judicial review of municipal-tax statutory

interpretation. [ 2 ] In 2021, the University of Alberta (the University) licensed the Edmonton Police Service (EPS) to use its Michener Park (decommissioned residence) property for training purposes. [ 3 ] Did that combination of EPS use and University ownership make the property eligible for the tax exemption in para 362(1) (

d) of the Municipal Government Act , RSA 2000, c M-26 ( MGA ) (“property … used in connection with educational purposes and held by … [a university]”? [ 4 ] The question reduces to whether the “educational purposes” contemplated by the exemption are necessarily the University’s purposes, versus potentially also those of a third party (here, the EPS). [ 5 ] The City of Edmonton (the City) assessed the property as non-exempt.

The University appealed to the Edmonton Composite Assessment Review Board (CARB), which found a partial exemption (for the portions of 2021 during which the property was available for EPS training). [ 6 ] The City applied for judicial review of that decision. [ 7 ] I find that the CARB’s decision was unreasonable, with the only reasonable

interpretation being that the educational purposes in question must be those of the University itself i.e., the purposes of a third party do not count in this legislative formula. B. Legislative provision [ 8 ] Here is the full provision: 362(1) The following are exempt from taxation under this Division:

(

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

i) the board of governors of a university , polytechnic institution or comprehensive community college under the Post-secondary Learning Act ; (ii) the governing body of an educational institution affiliated with a university under the Post-secondary Learning Act ; (iii) a students association or graduate students association of a university under the Post-secondary Learning Act ; (iv) a students association of a polytechnic institution or comprehensive community college under the Post-secondary Learning Act ; (

v) the board of governors of the Banff Centre under the Post-secondary Learning Act ; C. Background [ 9 ] Paragraph 362(1)(

d) requires satisfaction of the following elements: 1) the property must not be a dormitory; 2) the property must be held by the board of governors of a university; and 3) the property must be used in connection with educational purposes. [ 10 ] The University confirms that the property ceased to be a dormitory in August 2020. [ 11 ] The parties agree that the Michener Park property was in 2021 (and still is) held by the Board of Governors of the University of Alberta. [ 12 ] They also agree that the EPS’s use of the property, under a license from the University, for tactical-team training, was for an “educational purpose.” [ 13 ] The key issue is whether that EPS use satisfies the “used in connection with educational purposes” element of the exemption i.e., whether the contemplated use is only that of the University itself, versus potentially also use by a third party. [ 14 ] The City argued before the CARB that the provision necessarily refers to the University’s own uses: The use by EPS does not assist students of the University; it assists members of EPS for on-the-job training.

The [University’s]

interpretation suggests that any type of education, whether connected to the university or not, would be exempt. The [City] argued that in order to be exempt, the educational purposes have to be tied to the University. The Act does not say that any property held by the university is exempt; it is limited by the type of activity taking place, and the [City] submits that s. 362(1)(

d) does not apply when it is neither the University providing, nor university students benefitting from the training. [CARB decision’s synopsis of City’s position] [ 15 ] The University argued (as detailed in its brief) that the EPS’s “educational purposes” were sufficient to engage the exemption. [ 16 ] The CARB framed the issue as follows: Is EPS training a use in connection with educational purposes as contemplated by the Act , or must the use be in connection with educational purposes of the University? [ 17 ] It answered that question as follows: The Board considers EPS training to be a use in connection with educational purposes.

The Act uses different words for different categories of exemptions, and the Board is of the opinion that if the legislature had intended s. 362(1)(

d) apply only to property used for educational purposes of the university, it would have been worded differently. The

section states “used in connection with educational purposes and held by …” which suggests a broader

interpretation than that suggested by the [City]. [ 18 ] On this judicial review, the University argued that this

interpretation is reasonable and that the Court must accordingly defer to it. [ 19 ] I acknowledge that the University’s proposed

interpretation of the provision is one way to read it i.e., the “used in connection with educational purposes” element stands alone i.e., is not modified by the word “by”, such that the test here is whether the use, by any user , is for educational purposes and, separately, whether the property is “held by [a university].” [ 20 ] Is it a reasonable

interpretation? [ 21 ] The answer is no. The rationale for the CARB decision and the outcome to which it led are unreasonable The CARB failed to consider the grammatical structure of para 362(1)(

d) and, above all, its context and purpose, which approach is unreasonable in the circumstances. See Canada (Minister of Citizenship and Immigration) v Vavilov , 2019 SCC 65 at para 83 and 122 . [ 22 ] The only reasonable

interpretation of the exemption is that the “educational purposes” contemplated must be those of a university itself i.e., third-party purposes do not qualify.

D. Standard of review [23] The standard of review is presumptively reasonableness. In Vavilov at para 7, the Supreme Court of Canada stated: The first aspect is the analysis for determining the standard of review. It has become clear that Dunsmuir’s promise of simplicity andpredictability in this respect has not been fully realized. In Dunsmuir, a majority of the Court merged the standards of “patentunreasonableness” and “reasonableness simpliciter” into a single “reasonableness” standard, thus reducing the number of standards ofreview from three to two: paras. 34-50.

It also sought to simplify the analysis for determining the applicable standard of review: paras.51-64. Since Dunsmuir, the jurisprudence has evolved to recognize that reasonableness will be the applicable standard for mostcategories of questions on judicial review, including, presumptively, when a decision maker interprets its enabling statute: see,e.g., Alberta (Information and Privacy Commissioner) v. Alberta Teachers’ Association, 2011 SCC 61, [2011] 3 S.C.R. 654; Mouvementlaïque québécois v. Saguenay (City), 2015 SCC 16, [2015] 2 S.C.R. 3, at para. 46; Canadian National Railway Co. v.

Canada (AttorneyGeneral), 2014 SCC 40, [2014] 2 S.C.R. 135, at para. 55; Canadian Artists’ Representation v. National Gallery of Canada, 2014 SCC42, [2014] 2 S.C.R. 197, at para. 13; Smith v. Alliance Pipeline Ltd., 2011 SCC 7, [2011] 1 S.C.R. 160, at paras. 26 and 28; Canada(Citizenship and Immigration) v. Khosa, 2009 SCC 12, [2009] 1 S.C.R. 339, at para. 25; Dunsmuir, at para. 54. [emphasis added] [24] In Vavilov at para 116, the Court provided guidance on judicial review involving statutory

interpretation: Where reasonableness is the applicable standard on a question of statutory

interpretation, the reviewing court does not undertake a denovo analysis of the question or “ask itself what the correct decision would have been”: Ryan, at para. 50. Instead, just as it does whenapplying the reasonableness standard in reviewing questions of fact, discretion or policy, the court must examine the administrativedecision as a whole, including the reasons provided by the decision maker and the outcome that was reached. [25] The majority judgment in Vavilov at para 124 recognized that some questions of statutory

interpretation may have only onecorrect (and thus only one reasonable) answer: … [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 theinterplay of text, context and purpose leaves room for a single reasonable

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

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

interpretationthat that was the only reasonable

interpretation of the provision: para. 61. [emphasis added] [26] In Pincher Creek (Town) v Alberta (Municipal Government Board), 2007 ABCA 360 at paras 13-14, the Alberta Court ofAppeal took a similar approach: In our view, the analysis would lead to a standard of review of reasonableness on this question rather than one of correctness. However,this distinction is of little consequence to the result because even on a reasonableness standard the MGB’s

interpretation cannotstand. The MGB failed to draw any distinction between the word control and physical control. It cannot be said on any reasonableinterpretation of the relationship between the Health Region and Vista Villages, including a review of their agreement, that thehealth region is in physical control over the property. If the MGB’s decision was intended to expand the definition beyond the requirement for physical control, it ought to have said so andgiven reasons why it was entitled to do so. We do note however, the

section is clear: the control must relate to the physical propertyitself. [emphasis added] [27] As did Macklin J in Edmonton (City) v North Pointe Community Church, 2008 ABQB 110 at para 58: I conclude that the

interpretation and application by the MGB of the statutory provision to the facts was both unreasonable andincorrect. Having concluded that the sporadic use prior to July 16, 2007 did not mean the property was “used chiefly” for divine service,public worship or religious education, there is no line of analysis that could reasonably lead from the evidence before the MGB to theconclusion it reached. [emphasis added] [28] For the reasons outlined below, I find that, on the question of whether “educational purposes” are necessarily those of theUniversity itself, there is only one correct (and reasonable)

interpretation. E. Analysis [29] The accepted and guiding principle of statutory

interpretation is Driedger’s “modern principle”. In Rizzo & Rizzo Shoes Ltd(Re), (SCC) at para 21, the Supreme Court of Canada adopted it: Today there is only one principle or approach, namely, the words of

an Act are to be read in their entire context and in their grammaticaland ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament. [30] Guided by that principle, I turn to the

interpretation of para 362(1)(d). City’s preferred

interpretation features standard grammar

[31] The provision’s wording does not preclude, and is in fact consistent with, the City’s suggested

interpretation. [32] Consider the base phrase “used and held by [a university].” Prepositional ellipsis explains the absence of an express “by”after “used”. Instead of the longer and arguably more awkward “used by and held by [a university]”, the more streamlined phrase (“usedand held by [a university]”) is naturally read with both verbs (“used” and “held”) modified by the one preposition (“by”): see RockshieldEngineered Wood Products Inc v United Steelworkers Local 1-2010, (ONLA) (para 10 discussion and acceptanceof implied preposition).

Additionally, in The King v Board of Commissioners of Public Utilities, (NBCA) at 142, theCourt stated: The only instance in which [the word “for”] is not so repeated, is where the words it is intended to govern form a class; in which case anellipsis is not only grammatically permissible but is of usual occurrence in the best English prose. [33] Same here: the “class” here is the set of verbs “used” and “held.” Ellipsis is not only permissible but natural and expected,with “by” modifying both verbs though featured only once. [34] The insertion of the phrase “in connection with educational purposes” does not change this understood connection between“used” and “by.” Again, prepositional ellipsis explains why an initial “by” is not needed after “purposes”, with the single “by” stillmodifying both “used” and “held.” [35] In other words, the plain and natural reading of the provision, even without an express “by” after “purposes”, is that both the“use” and “holding” must be by a university i.e., with the single “by” modifying both verbs. [36] In fact, the eliding of the initial preposition is vastly more common in legislative drafting i.e., than the style in which it isexpressed explicitly.

A CanLII search for legislation featuring the phrases “owned by and used by”, “held by and used by”, “used byand owned by”, or “used by and held by” yielded only a single statute (the now-repealed Municipal Assessment Act, RSM 1988, M266).A QuickLaw search revealed no such legislation. [37] By contrast, a CanLII search for legislation featuring the phrases “owned and used by”, “held and used by”, “used and ownedby”, or “used and held by” (i.e., featuring the noted prepositional ellipsis) yielded 55 statutes (QuickLaw: 25). [38] By extension, if the provision featured other “verb elements” (e.g., “property used in connection with educational purposes,purchased, maintained, insured, and held by [a university]”, the same (prepositional ellipsis) would presumably have been used i.e., thatwording instead of the awkward “property used in connection with education purposes by, purchased by, maintained by, insured by, andheld by [a university].” [39] All to say: the CARB was off target in saying that, if Alberta intended to restrict “educational purposes” to the University’salone, it would have used different language.

Alberta actually used the customary style (initial preposition elided) in legislating here i.e.,the natural and expected grammatical eliding of the understood “by” after “purposes.” [40] Read in this customary way, both the “used in connection with educational purposes” and “held” elements are modified by theword “by” i.e., the use in that fashion and the holding must both be by the University. In other words, a third-party user’s “educationalpurposes” do not count. University’s

interpretation requires additional words [41] Contrary to the University’s submission, it is not necessary to add any words or phrases to the provision to achieve theinterpretation urged by the City. As explained, the grammatical and natural reading is that both the “[using] …” and “[holding]” must be“by” the University. [42] It is actually the University’s

interpretation (going against that grain) that requires the addition of words. Effectively, theUniversity’s

interpretation requires this wording: “property used by any person in connection with educational purposes and held by [auniversity].” Or “property used in connection with educational purposes by any person and held by [a university].” Or something else toconvey that the grammatical and natural reading (both “use” and “holding” required to be “by the university”) was not intended i.e., thatany person’s “educational-purpose’ use of the property would attract the tax exemption. Sibling provisions do not support the CARB’s

interpretation [43] As noted, the CARB stated (in part) that: The Act uses different words for different categories of exemptions, and the Board is of the opinion that if the legislature had intended s.362(1)(

d) apply only to property used for educational purposes of the university, it would have been worded differently. … [44] It appears the CARB was referring to the 14 other exemption categories in ss 362(1). [45] However, the Board did not outline those other exemptions, sort them by common exemption formula, or explain whichformula(

s) the Legislature should or could have used i.e., to confirm or signal that the City-urged

interpretation was that intended by theLegislature. [46] As explained below, the other exemptions indeed feature a variety of “use and holding” formations. But the vast majorityfeature core wording identical or akin to the university exemption or arguably even less restrictive wording i.e., permitting uses by non-holders. The single exemption with ostensibly more restrictive wording (for airports) is actually simply another way of requiring “useand holding” overlap i.e., is not actually more restrictive than the university example.

[ 47 ] Here are the other exemptions, grouped as applicable. [ 48 ] Two exemptions (Crown-owned and municipality-owned property – paras 362(1)(

a) and (b)) do not have a “use” element. Same for “regional service commission” property (para 362(1)(f)). Accordingly, they shed no light on the interpretive issue here (whether “use” and “holding” must be by same person). [ 49 ] Paragraph 362(1)(

p) refers to a use (“municipal seed cleaning plant”) but not to ownership or holding.

Accordingly, it too sheds no light here. [ 50 ] Five of the other exemptions feature the same formula as the university exemption (which itself extends to other post- secondary institutions and affiliated organizations): • “property … used in connection with school purposes and held by [ a school division or other schooling authorities or entities] (para 362(1)(c)); • “property … used in connection with hospital purposes and held by a hospital board … (para 362(1)(e)); • “property … used in connection with health region purposes and held by a health region …” (para 362(1) (g.1); • “property used in connection with nursing home purposes and held by a nursing home …” (para 362(1)(h)); and • “property used in connection with library purposes and held by a library board … (para 362(1)(j). [ 51 ] Structured in the same way as the “university” exemption (para 362(1)(d)), these siblings offer no incremental light on the

interpretation point here. [ 52 ] The “religious body” and “senior citizen lodge accommodation” exemptions (paras 362(1)(

k) and (m)) both flip the sequence of the “use” and “holding” elements: “property held by a religious body and used chiefly for divine service …” and “property held by [certain entities] and used to provide [accommodation].” [ 53 ] In its apparent compare-and-contrast exercise, the CARB did not point to these as models of “use and holding overlap” drafting i.e., that Alberta would have used this variant if it intended such overlap for universities. [ 54 ] In any case, it is not obvious that this formation requires a use-and-holding overlap.

If anything, with the “by” preposition moved to the initial verb (“held”), it arguably no longer modifies the second verb (“used”), arguably opening up the “use” dimension to any user.

If anything, this variant is arguably less restrictive (on use) than the university example. [ 55 ] The “cemetery” exemption (para 362(1)(l)) contemplates only one (obvious) use, and only by the cemetery owners; accordingly, it too does not illuminate the current issue. [ 56 ] Paragraph 362(1)(n) (non-profit-organizations) is multi-pronged: • the first branch has no “use” element; • the second and fourth branches feature the same (“held by … and used”) variant as the religious body and lodge-accommodation exemptions noted above; • the third branch features the same structure as the university and five sibling provisions noted above; and • the fifth branch features a different variant (“held by and used in connection with a society …”) but not one which obviously requires complete or at least more overlap between holder and user i.e., than the university exemption. (Such overlap would have resulted from wording such as “ held by and used by a society.”) [ 57 ] The only other provision – para 362(1)(o) (airports) – features a different variation again, namely, property: • “ owned by a municipality and used solely for the operation of an airport by the municipality ; or • held under a lease, licence or permit from a municipality and used solely for the operation of an airport by the lessee, licensee, or permittee .” [ 58 ] The italicized elements restrict the airport operation to the municipality itself (in the first branch) or the lessee, licensee or permittee itself (in the second branch).

That is, this variant expressly requires an overlap between the holder and user. [ 59 ] However, the express “use” restriction is needed (i.e., assuming a “full overlap” legislative intention) because of the placement of the “by” preposition here i.e., after the first verb. [ 60 ] If the provision had followed the “university” exemption pattern – i.e., “property used solely for the operation of an airport and owned by a municipality” – the express “use” restriction (“by the municipality”) would not have been necessary. [ 61 ] In other words, the airport example is simply another way to require overlap between the holder and the user, with the different wording explained by the different sentence structure. [ 62 ] Both variants – university and airport – require use-and-holding overlap.

The former relies on prepositional ellipsis to require such overlap, with the “by” element only required to be expressed once albeit modifying both verbs. The latter, with different prepositional placement, requires an express use restriction.

[ 63 ] The CARB did not actually point to the airport variant as the, or a, more restrictive model Alberta could or should have used to require use-and-holding overlap. [ 64 ] In any case, as explained, it is equally, not more, restrictive. [ 65 ] All to say: the CARB’s unexplained invocation of the other exemptions falls flat.

On examination, none of them compel or even signal the conclusion that Alberta would or even could have used a different variant (among those in s 362) to require use-and- holding overlap. [ 66 ] Notably, the CARB did not actually suggest alternative wording i.e., by which the Legislature could have made it plainer that both the use and holding had to be by, or at least in connection with, a university. “University” exemption effectively parallels its five closest-sibling provisions [ 67 ] The University argued that the “university” exemption is different from its closest siblings (schools, hospitals, etc.), with the latter featuring repetition of the core element (e.g., “ school purposes ” and “held by a school division”, “ hospital purposes ” and “held by a hospital board ”, etc.), and the “university” exemption lacking this repetition i.e., with use of the phrase “ educational purposes ” i.e., not “ university purposes .” [ 68 ] However, the (effectively immaterial) difference is explained by the compound nature of the latter exemption i.e., with its references not only to universities but to colleges, technical institutes and similar or affiliated institutions.

The phrase “educational purposes” was necessarily broader than “university purposes”, to capture all of these educational institutions. [ 69 ] Nothing turns on this asserted difference in these provisions. CARB did not address the object or purpose of these exemption provisions [ 70 ] Above all, the CARB’s brief reasons do not refer to the purpose of the MGA ’s tax-exemption provisions. [ 71 ] Such provisions have a purpose.

Per Jewers J, in his review of the similar legislation in Manitoba in 3325806 Manitoba Ltd v Winnipeg City Assessor , 2005 MBQB 111 at para 29 , aff'd in 3325806 Manitoba Ltd v Winnipeg City Assessor , 2006 MBCA 4 : All real property owners must pay municipal taxes but the legislature in its wisdom has selected a number of organizations and then has conferred on them the considerable privilege of either not having to pay any taxes whatsoever or greatly reduced taxes .

The Court of Appeal [in Winnipeg (City) Assessor v Manitoba , 1997 CarswellMan 96 at para 23] has said that it is easy to understand why these organizations are exempted. There may not be any general principle or principles at play but in each case the legislature has determined that the exempt organization has some characteristic or quality which renders it worthy of a tax break . … [emphasis added] [ 72 ] Further on purpose in this context, in Alberta Association for Community Living v Alberta (Municipal Government Board) , 2000 ABQB 263 at para 42 , Bielby J (as she then was) stated: The wording of s. 6(1)(

a) is somewhat opaque. The City, however, was able to refer to no traditional aid to statutory

interpretation which supported resolving any ambiguity in favor of requiring the Applicant to directly occupy the entire building. Indeed, had we turned to legislative purpose as an aid to

interpretation, it would have been difficult to divine why the Legislature would have wished to limit a property tax exemption to charities which owned a building as opposed to those which were tenants.

The apparent social purpose of assisting charitable work is achieved equally by granting a tax exemption to a charity-owner who occupies its entire building directly or where it allows other charities to use portions of the building for similar purposes without profit . [emphasis added] [ 73 ] Alberta presumably decided to exempt universities and similar post-secondary institutions because of their core or inherent characteristics i.e., as educational institutions serving the public good by teaching across a wide swath of disciplines, researching, and serving as general repositories of human knowledge. [ 74 ] The CARB did not explain how or why, in light of that presumed purpose, the “educational purposes” required by para 362(1) (

d) could be those of any person i.e., not simply those purposes pursued by universities and similar institutions themselves. [ 75 ] Taking the University’s approach, the “educational purposes” of a given user, allowed to lease, license or otherwise use the Michener Park property or other university lands, could be anything under the sun, from the EPS tactical-team training actually pursued here, to piano lessons, driving instruction, dog training, “de-taxer” seminars, and infinite other pursuits that might qualify generically as for “educational purposes” but have nothing to do with the mandate of a university or advancement of university’s objectives and, in turn, society’s objectives for universities. [ 76 ] In Vavilov at para 121 , the Court stated: 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 — albeit plausible — merely because the

interpretation in question appears to be available and is expedient. The decision maker’s responsibility is to discern meaning and legislative intent, not to “reverse-engineer” a desired outcome. [ 77 ] This is the fatal flaw in the CARB’s approach: it advanced, and approved, a superficially plausible

interpretation of para 362(1)(d), but one divorced from any sense or appreciation of the rationale for the tax exemption in the first place.

[ 78 ] Echoing Bielby J, it is “difficult to divine” why the Legislature would have intended that any educational pursuit under the sun, unrelated to university education, would spark a tax exemption if it happened to occur on university lands. [ 79 ] If it had actually intended that third-party education pursued on university property, having no connection to university education, would trigger a tax exemption, an unexpected and in fact startling result, the Legislature would have said so expressly. [ 80 ] The obvious rationale for the tax emption in para 362(1)(

d) is societal support for universities and other post-secondary institutions as they pursue their educational purposes . [ 81 ] Recognizing third-party educational purposes, unrelated to university education, under para 362(1)(

d) would untether the provision from that obvious purpose. [ 82 ] All to say: the “educational purposes” contemplated in the provision are necessarily those of the university or (as applicable) other post-secondary institution.

No general exemption for educational-purpose activities [ 83 ] There is no general “educational purposes” exemption. [ 84 ] If the EPS had leased or licensed property from a private property owner (i.e., someone not eligible for an MGA tax exemption), its tactical-team-training use would not have changed the non-exempt character of that property. [ 85 ] That owner would still have had to pay municipal taxes; presumably the owner may have attempted, and perhaps been successful, in negotiating with EPS for rent for these training purposes, in part to pay or help pay those taxes. [ 86 ] Turning back to the Michener Park lands, and before the making of the license agreement with EPS, no tax exemption was applicable i.e., with the lands not being used (after 2020) for the University’s own educational purposes, and them having the non- exempt status of residence lands (before 2020). [ 87 ] What policy rationale exists for the combination of these otherwise taxable pursuits or states producing tax-exempt status?

Police tactical training does not inherently attract tax-exempt status i.e., for the property on which it occurs, and the university’s “just holding for now” use of Michener Park did not, on its own, engage the para 362(1)(

d) exemption.

Why should putting together those two non-exempt activities or states yield a tax exemption? [ 88 ] I do not see any sound reason. [ 89 ] It would also be hard to explain to owners of businesses like driving schools and music instruction, who may own their own (taxable) business properties or lease (taxable) business premises from others and who bear property taxes directly or indirectly (e.g. via rent), why their competitors who might arrange to lease or license university lands for their operations should or at least could benefit from municipal-tax-free premises i.e. if their “educational-purpose” operations could yield tax-exempt status for otherwise taxable university lands.

Historical approach to university-property exemption had no “use” dimension [ 90 ] Under the Municipal Taxation Act (repealed in 1994 when the MGA was introduced), the “university” exemption had no “use” dimension: as long as a university held the property, it was tax-exempt. [ 91 ] Presumably the drafters of the MTA contemplated that any and every use of property by a university warranted municipal tax exemption i.e., there was no need to expressly limit the exemption to lands used for or in connection with university purposes. [ 92 ] With the new (in 1994) MGA came the “used in connection with educational purposes” requirement. [ 93 ] The Legislature obviously decided that the “university” exemption should not apply if, for whatever reason, university-owned lands were not being used for educational purposes. [ 94 ] Given the conclusion above on the underlying statutory purpose here (i.e., supporting universities as they pursue their educational activities), that educational-purpose limit was designed to sift out university uses without educational purposes i.e., not to dilute the educational-purpose requirement to recognize any such purposes under the sun, whether or not connected to university purposes. [ 95 ] Again, in the absence of a general “property used for educational purposes” exemption (i.e., regardless of the underlying land ownership or holding), it is difficult – actually impossible – to see why third-party uses unconnected to university education would have any relevance here. [ 96 ] It is this simple: university property used in connection with the university’s educational purposes is tax-exempt.

If the property is not so used by the university, it is not. [ 97 ] In this case, before decommissioning, the Michener Park lands, as a “dormitory” property, were not tax exempt, given the express carve-out in para 362(1)(

d) for such properties. [ 98 ] After decommissioning the dormitory provision no longer applied. [ 99 ] As a result, the only question was whether the property was being used for or in connection with university education

purposes. [ 100 ] The University acknowledged that that the property as not being so used. Its own “use” here was licensing the property to the EPS for the tactical training i.e., with the University effectively operating as a landlord or licensor of property unconnected to university education. [ 101 ] Such use clearly precludes a tax exemption. University’s

interpretation would create uncertainty re scope of “educational purposes” [ 102 ] Under the City’s (correct)

interpretation of para 362(1)(d), the “educational purposes” are those of a given university or other post-secondary institution. [ 103 ] Debates over whether a given use by a university qualifies are likely to be rare. [ 104 ] Questions may emerge about whether a given activity is “in connection with” such purposes, as in cases about university cafeterias and other commercial businesses on campuses. [ 105 ] But what is or is not an “educational purpose” in this context will typically be straightforward, with universities and similar institutions governed by the Post-Secondary Learning Act and subject to the limits it imposes on their activities. [ 106 ] If the University’s suggested

interpretation were adopted, a wide world of “educational purposes” would be opened up.

Municipalities, assessment review boards, and the courts would inevitably be called on to gauge whether a given activity, pursued on university property albeit unconnected with university purposes, was sufficiently “educational” to qualify. [ 107 ] The University noted in its oral argument that the police training here was for the public benefit. [ 108 ] But (as noted) such training is not inherently tax exempt i.e., in the sense of attracting a tax exemption wherever it is performed. [ 109 ] And the logical extension of the University’s argument is that any third-party use, unconnected with university-education purposes, will suffice. [ 110 ] The Legislature did not define “educational purposes” or otherwise provide guidance about what will qualify. [ 111 ] The reason is that no such guidance was required, given the necessary focus on a university’s own activities. [ 112 ] Debates may ensue over whether a given property is being sufficiently “used” e.g., in construction contexts e.g., is the Faculty of X Building now sufficiently occupied and used?

Or over whether university property held in reserve (e.g., “fallow lands”) are being sufficiently “used” to attract an exemption. [ 113 ] But debates over what exactly qualifies as an “educational purpose” will be rare. [ 114 ] Compared to the situation where the full galaxy of “educational purposes” could be relevant e.g., with decision makers having to explore whether a given pursuit has sufficient “social utility” to warrant the label, and thus, the tax exemption. [ 115 ] The Legislature did not provide guidance on the latter point, because it did not have to: “educational purposes” are necessarily the university’s own.

Boys Scouts case distinguishable [ 116 ] The University invoked the Municipal Government Board decision in Loyal Order of Moose v County of Red Deer , MGB79- 98, which examined the third branch of para 362(1)(n): property that is (iii) used for a charitable or benevolent purpose that is for the benefit of the general public, and owned by (

b) by a non-profit organization …. [ 117 ] The MGB found that, while the Loyal Order of the Moose’s uses of the property (which it owned) did not qualify as “charitable or benevolent”, a Boy Scout troop’s occasional use of the property did.

In other words, the use of this third-party non-owner was sufficient to anchor a partial tax exemption for the property. [ 118 ] I find that case distinguishable: • given that some non-profit organizations have purposes other than “charitable or benevolent”, this provision necessarily contemplates users (with such purposes) beyond the non-profit organization itself; • the phrase “that is for the benefit of the general public” signals a wider “user group” i.e., than simply the owner itself; and • in any case, the comma after “public” indicates that the prepositional connection to “by” is limited to the ownership i.e., we are not in prepositional ellipsis territory here i.e., where “by” is necessarily understood as also modifying “used.”

Other “in connection with educational purposes” cases do not assist the University [ 119 ] The City cited two cases examining whether certain on-campus food services or restaurant operations qualified as “connected with” educational purposes: Edmonton (City) v Governors of the University of Alberta , 2013 ABQB 440 (Lee J denying City leave to appeal MGB decision that HUB Mall exempt as representing “property … used in connection with educational purposes”) and University of Alberta v Edmonton (City) , 2005 ABCA 147 (same issue focusing on various food preparation and sales area in various university buildings). [ 120 ] Both concerned activities not having educational purposes themselves.

The issue was whether they were sufficiently “connected with” such activities. [ 121 ] The University argued that these cases do not assist the City here, since they did not examine direct educational-purpose activities or whether such activities explored by third parties might qualify as the “educational purpose” here. [ 122 ] I agree with the University that these decisions did not explore either of those aspects.

Accordingly, they do not directly assist the City here. [ 123 ] But neither do they assist the University: both cases featured either express or implicit recognition that the “educational purpose” element was satisfied and that it was the University’s own such purposes that qualified. The focus then shifted to whether the food services were sufficiently connected to those core university purposes. [ 124 ] In the end, these cases did not have to grapple with whether a third-party user’s activities might qualify as “educational purposes.” [ 125 ] Instead, they are simply examples of para 362(1)(

d) operating in its defined sphere i.e., the University’s own educational purposes and activities connected to those purposes. F. Timing Aspect [ 126 ] The City and the University both addressed a separate issue in their written materials and oral arguments, namely, that the CARB erred in focusing on the MGA ’s “assessment year” provisions instead of those addressing the “taxation year” and, as a result, focusing on 2020 instead of 2021.

Effectively, they agreed on that this threshold error, albeit offering slightly different arguments. [ 127 ] During oral argument, I ruled that the CARB had indeed erred in focusing on the assessment (instead of the taxation) year and thus in examining the 2020 state of affairs instead of those in 2021. [ 128 ] On this point, I adopt and approve the City’s analysis at paras 38 to 47 of its brief: Both parties to the complaint raised by the University are in agreement that the correct way to look at the exemption was to look at the use of the Property during the taxation year.

During the hearing the CARB asked a number of questions about whether exemptions were based on the assessment or the taxation year. Answers were given and clarifications made, and the CARB seemed satisfied with the answers. Notwithstanding that the CARB did not ask for further argument or explanation on this issue, the CARB Decision reasoned as follows: ...In this regard, the parties appear to have conflated the taxation year (2021) with the assessment year (2020).

Section 1 (

e) of the Matters Relating to Assessment and Taxation Regulation, 2018, AR 203/2017 ( MRAT ), identifies the 3 “assessment year” as the year prior to the taxation year.

Section 6 of MRAT states that “any assessment prepared in accordance with the Act must be an estimate of the value of a property on July 1 of the assessment year.” Similarly, section 289(2)(

a) of the MGA , as referred to on page 113 of exhibit R-1, states that “each assessment must reflect… the characteristics and physical condition of the property on December 31 of the year prior to the year in which a tax imposed under

part 10 in respect of a property…” Accordingly, any information provided by the parties regarding 2021 would be relevant to the 2022 taxation year, and not the matter currently before the Board. All of the legislative sections that are referenced by the CARB relate to the valuation of the Property during the assessment process. The CARB does not consider or reference a number of key provisions in the legislation that deal with the exemption process and did not examine the legislation as a whole or in a purposive manner. In fact, there is no where in the MGA which states that tax exemptions are based on the assessment year. The sections that the CARB fail to review include

Section 368 of the MGA , which indicates that when there are changes to the exemption status of a Property, the municipality must change the exemption on the property. Assessments are mailed out on a property after the assessment year. Since assessments must be mailed after the condition date of December 31, the only changes that

Section 368 could be referencing are those that take place during the taxation year.

Section 368 would therefore not be required if only evidence during the assessment year was relevant. The

interpretation that exemptions apply to the use of the property during the taxation year is also consistent with other provisions in the MGA and the regulations.

Section 364.1 and 364.2 of the MGA both talk about canceling exemptions for the taxation year. For example,

section 364.1 reads as follows:

(7) The certificate must set out (

a) the taxation years to which the exemption or deferral applies, which must not include any tax year earlier than the tax year in which the certificate is issued,

(

b) in the case of a partial exemption, the extent of the exemption, and (

c) all criteria, conditions and taxation years specified in the bylaw in accordance with subsection (3).

(8) If at any time after an exemption or deferral is granted under a bylaw under this

section a designated officer of the municipality determines that the property did not meet or has ceased to meet a criterion referred to in subsection (3)(

b) or that a condition referred to in subsection (3)(

d) has been breached, the designated officer must cancel the exemption or deferral for the taxation year or years in which the criterion was not met or to which the condition applies. The provisions of COPTER also make it clear that exemptions are cancelled if all conditions are no longer met during the taxation year. The wording in all these sections is consistent with the view that the use of the property during the taxation year is relevant. For example,

Section 16 of COPTER states:

(6) If a municipality grants an exemption to a non-profit organization and later determines that the organization did not meet the conditions that applied to the organization for the exemption for all or part of the taxation year, the municipality may in the taxation year cancel the exemption for all or part of the taxation year, as the case may be, and require the organization to pay property tax in respect of the property for the period that the exemption is cancelled. In addition,

Section 305, which requires the correction and alteration of the assessment roll in various circumstances deals with exemptions separately from assessment errors. 305

(3) If exempt property becomes taxable or taxable property becomes exempt under

section 364.1, 364.2 or 368, the assessment roll must be corrected for the current year only and an amended assessment notice must be prepared and sent to the assessed person.43 Further, an analysis of the legislative policy behind exemptions also demonstrates the error of the CARB. Many exemptions under

Section 362 are clearly intended to give tax relief for certain types of uses that provide some sort of public use or benefit, such as non- profit charitable purposes, some types of senior’s subsidized housing, schools, churches, libraries and cemeteries If such an entity were using the property, and met the requirements, there would be some relief from municipal taxation, in the tax year. In contrast, the reasoning of the CARB would, at times, grant an exemption to the wrong entity or fail to grant an exemption for a year after an exempt use started. This would defeat the policy behind granting an exemption.

Since the reasoning of the CARB suggests that an owner of property today will have an exemption of the property based on the use of the property in the prior year, it would ignore what happens during the taxation year, such as ownership changes, which lead to changes of property use. Two examples of how the CARB decision would operate illustrate how the CARB decision leads to an absurd result which defeats the policy intention. Example 1: An owner, A, an exempt entity, sells property to B, a taxable entity, on December 31 of the assessment year.

B would benefit from a full year of exemption, based on the past use during the assessment year, even though they are a taxable entity during the current taxation year. Example 2: An owner C, a taxable entity, sells property to owner D, an exempt entity, on December 31 of the assessment year. D will be taxed for a full taxation even though they would otherwise be exempt since the prior owner was not exempt during the assessment year.

The City therefore submits that in determining that they could only consider evidence about the use of the Property during the assessment year, the CARB failed to fully review the legislation in its entire context harmoniously with the scheme of the MGA ,44 and failed to consider the policy implications of their decision.

The decision of the CARB on this issue would create an absurdity that is not in accordance with the legislation and is therefore unreasonable and should be remitted back to a newly constituted CARB for reconsideration. [footnotes omitted] [ 129 ] I also adopt and approve the University’s submissions at paras 53-57 of its brief: In January 2022, subsequent to the Decision, the same Board considered the same issue raised in the Timing Decision in Gold Bar Properties Ltd. as represented by CVG Canadian Valuation Group Ltd v The City of Edmonton .25 In that case, the Board reached the opposite conclusion from the Timing Decision in the current case.

There, the owner of a piece of land argued that the lands were exempt from taxation during the 2021 Taxation Year as a result of the lands being used by the University of Alberta during 2020. The Owner argued that the use of the lands during the previous year (i.e., the Assessment Year) determined the taxation status for the corresponding Taxation Year. In that case, the Board correctly identified that exemptions are determined on the basis of the use of the land during the Taxation Year, and not the Assessment Year.

The use of the lands between January 1 and December 31 of a given year determines the exemption status for that same year: Logically a tax exemption would only be applied during the tax year, otherwise there would be no purpose or benefit to receiving an exemption. Sections 330 and 368 of the MGA specifically deal with the type of situation found in this complaint.

Section 330 of the MGA allows corrections to be made to the tax roll in the current year only, in this case, the 2021 tax roll. Subsection (3) of

section 330 of the MGA directs that if exempt property becomes taxable under

section 368 of the MGA , the municipality must correct the tax roll and send an amended tax notice to the taxpayer. [para 30] In the present case, the Board appears to have conflated the concept of an exemption with the concept of an assessment. While an assessment is applied prospectively based on the state of the property the previous year, an exemption can only apply to the time in which the conditions for an exemption are met. This was the Board’s analysis in the Gold Bar Properties decision. While the Board is not formally bound by its other decisions, the fact that the Board reached the opposite conclusion on essentially the

same issue supports the conclusion that the Timing Decision in the current case was seriously flawed. G. Conclusion [ 130 ] The University argued that: … The Court’s role is to review the reasons given by the administrative decision maker and determine whether the decision is based on an internally coherent chain of reasoning and is justified in light of the relevant legal and factual constraints. [citing Vavilov at para 83] [ 131 ] For the reasons outlined above, I find no “internally coherent chain of reasoning” on the statutory

interpretation issue here. [ 132 ] On the question of whether the “educational purposes” are necessarily those of the University alone, the CARB effectively said only this: The existing wording of para 362(1)(

d) supports the University’s view. The City-urged

interpretation would require different wording. [ 133 ] But the CARB did not explain what that different wording would or should have been. [ 134 ] And it erred in reading the existing wording as precluding the City’s

interpretation, which is actually the natural and expected reading of the provision. [ 135 ] And the CARB did not lift its eyes to the statutory purpose of the exemption and explain why Alberta would or even might have wanted tax-exempt status to flow for any “educational purpose” under the sun and whether pursued by the University itself or any third party. [ 136 ] The only reasonable (and correct)

interpretation of para 362(1)(

d) is that “educational purposes” are necessarily those of a university or other post-secondary institution itself. [ 137 ] Accordingly, the CARB erred in not adopting and applying this

interpretation. [ 138 ] With this as the only available

interpretation, and with the University acknowledging that the “educational purposes” here were not its own (instead those of the EPS), the exemption was not warranted for any portion of the 2021 taxation year. [ 139 ] In light of this decision, it is not necessary to explore the “demolition as use” and “allocation as between uses” issues. [ 140 ] I accordingly find for the City and direct that the Michener Park property be re-assessed for 2021 as non-exempt, given the unavailability of the para 362(1)(

d) exemption and no other exemption sought by the University. [ 141 ] The City advised that it was not seeking costs of the application. Accordingly, each party shall bear its own costs. [ 142 ] I thank the City and University counsel for their helpful briefs and oral arguments. Heard on the 27 th day of October, 2022 Dated at the City of Edmonton, Alberta this 1 st day of November, 2022 . M. J. Lema J.C.K.B.A. Appearances: Cameron Ashmore City of Edmonton Law Branch for The City of Edmonton Matthew Turzansky

Field LLP for the Governors of the University of Alberta Kate Hurlburt Emery Jamieson LLP for The Edmonton Composite Assessment Review Board [watching brief] _______________________________________________________ Corrigendum of the Reasons for Judgment of The Honourable Justice M. J. Lema _______________________________________________________ Added new heading “Timing Aspect” and paragraphs 126-129 below that heading.