Winnipeg School Division v. Winnipeg Date:, 2014 MBCA 50

Citation: Winnipeg School Division v. Winnipeg Date: 20140526 City Assessor, 2014 MBCA 50 Docket: AI 13-30-08015 IN THE COURT OF APPEAL OF MANITOBA Coram: Madam Justice Barbara M. Hamilton Mr. Justice Marc M. Monnin Madam Justice Diana M. Cameron BETWEEN : WINNIPEG SCHOOL DIVISION ) M. Buchart ) for the Appellant ) (Applicant) Respondent ) J. A. Mercury and ) A. Glinter - and - ) for the Respondent ) THE ASSESSOR FOR THE CITY OF ) Appeal heard: WINNIPEG ) March 4, 2014 ) ) Judgment delivered: (Respondent) Appellant ) May 26, 2014 CAMERON J.A.

Introduction and Issue [ 1 ] This is an appeal by the assessor for the City of Winnipeg (the assessor) from the decision of the motion judge that the Winnipeg School Division (the WSD) need not pay property tax with respect to a school parking lot. [ 2 ] The issue in this case arises from the fact that, while the parking lot is situated only a short distance away from the school, it is separated from the school by an apartment building that does not belong to the WSD.

The motion judge held, and it is not disputed on appeal that, because the apartment building separates the two pieces of property, the parking lot does not fall within the definition of contiguous land found in s. 1(1) of The Municipal Assessment Act , C.C.S.M., c. M226 (the MAA ), in relation to the school. [ 3 ] It is uncontested that the school falls within the real property tax exemption found in s. 22(1)(

d) of the MAA and that the total area of the property in question, inclusive of the school and parking lot, does not exceed the 4.047-hectare maximum eligible for exemption. It is also uncontested that the parking lot is used exclusively by the school staff. [ 4 ] The assessor argues that, in order for the parking lot to fall within the exemption allowed to public schools under the MAA , it must be contiguous to the land on which the school stands. The WSD argues that, because the parking lot falls within the 4.047-hectare exemption, there is no requirement that it be contiguous. [ 5 ] Both parties agree, as do I, that the issue in this case involves a question of statutory

interpretation and is to be reviewed on the standard of correctness. The Legislation [ 6 ] Section 22(1) (

d) of the MAA provides for partial exemptions from real property taxation to public schools within the meaning of The Public Schools Act , C.C.S.M., c. P250 (the PSA ): Real property partial exemptions 22(1) Subject to sections 25 and 26, real property is exempt from taxation levied by a municipality, other than for local improvements, where the real property

(

d) is used for a public school within the meaning of The Public Schools Act or a private school within the meaning of The EducationAdministration Act [C.C.S.M., c. E10], to a maximum exemption of 4.047 hectares; [7] Section 1(1) of the PSA defines a “school site” as: “school site” means, subject to the regulations, the area of land required set aside or used by a school division or a school district for theschool building, teachers’ residence, students’ residence, offices, or playground, or any one or more of them and includes any area ofland required set aside or used for parking purposes; [emphasis added] [8]

Section 24 of the MAA, on which the assessor relies, reads as follows: Contiguous land exemption 24 An exemption applicable to real property under subsection 22(1) or

section 23 extends to include land that is contiguous to the realproperty. Decision of the Motion Judge [9] The motion judge held that the parking lot fell within the exemption provided for under s. 22(1)(

d) of the MAA. Inreaching this conclusion, she engaged in a comprehensive analysis of the legislation. She correctly noted that taxation statutes, like otherstatutes, are to be interpreted in accordance with the modern approach to statutory

interpretation (see paras. 11-14). Succinctly stated,“the words of

an Act are to be read in their entire context, in their grammatical and ordinary sense harmoniously with the scheme of theAct, the object of the Act, and the intention of Parliament” (at para. 11). (See Rizzo & Rizzo Shoes Ltd. (Re), (SCC),[1998] 1 S.C.R. 27 at para. 21; Québec (Communauté urbaine) v. Corp. Notre-Dame de Bon-Secours, (SCC), [1994] 3S.C.R. 3 at 18; and Thunderbird Holdings Ltd. v.

Manitoba et al., 2013 MBCA 78 at paras. 36, 90, 299 Man.R. (2d) 60.) [10] The motion judge stated that, in her view, it was significant that s. 24 of the MAA “states that the exemption ‘extends toinclude’ contiguous land, not that it is ‘limited to’ such land” (at para. 19). [11] She proceeded to consider the legislative intent of the MAA, noting that, while the general purpose of taxationlegislation is to raise revenue, exemptions provided in taxation legislation evidence a public interest in giving relief to certainorganizations which outweighs the public interest in the generation of revenue (see paras. 21-25). [12] In analyzing the purpose of the legislative provisions in question in this case, the motion judge considered Hansardexcerpts preceding the enactment of the current exemption.

She observed that the legislation preceding ss. 22(1)(

d) and 24 of the MAAallowed only a four-acre exemption for school property, but that upon proper approval, up to 4.047 hectares (which is the equivalent of10 acres) could be exempted if the property was shown to be “contiguous” (see para. 26). She quoted the Minister of RuralDevelopment, the Hon. Jack Penner’s introduction of the legislation (Manitoba, Legislative Assembly, Debates and Proceedings(Hansard), 34th Leg., 2nd Sess., Vol.

XXXVIII, No. 1 (8 November 1989) at 2652) and noted that he addressed land holdings associatedwith schools (at p. 2654) (at para. 28): After explaining the revision of the exemptions for farm property, Minister Penner said, at p. 2654: .... Land holdings associated with schools and hospitals are quite different today than they were when the original Act was created.

Wehave therefore increased the land exemption associated with these buildings to more realistically reflect the size of today’s schools andhospitals, and the new provision directs a flat [4.047-hectare] exemption be provided for all institutions. [emphasis in original] [13] She concluded that the above evidenced a deliberate decision by the Legislature to increase the exemption for allschools to 4.047 hectares and it “removed the reference to contiguous land and placed it in a free standing section” (at para. 29).

[ 14 ] In her view, if the intention of the Legislature was to allow each school a maximum 4.047-hectare exemption, then it was not necessary to restrict the exemption to contiguous land in order to ensure the end result (see para. 33). Critical to her decision was her conclusion that the history and context of the legislation clearly showed that (at para. 36): … [T]he concern of the legislators was directed to the use of the land for public schools, rather than the location.

The expansion of the allowable exemption to “a flat [ 4.047 hectares] ” indicates that the word “extends” in s. 24 was not meant to restrict the exemption to contiguous land but to expand it to include contiguous land. So, for example, a school located on a [ 4.047-hectare] piece of land would have an exemption for the entire property even if the school building only occupied a part of it.

This would reflect the comments of the Minister that “land holdings associated with schools … are quite different today than they were when the original Act was created” and as a result a flat [ 4.047-hectare] exemption is appropriate. [emphasis added] Analysis [ 15 ] In my view, the assessor has not shown that the motion judge erred in her

interpretation of the relevant legislation. The motion judge gave considered and comprehensive reasons in her analysis of the relevant legislation and its application to the facts. I agree with her reasons and would adopt them with a few additional comments. [ 16 ] In reaching her conclusion, the motion judge rejected the assessor’s argument that the change in legislation did not impact the requirement that the property be contiguous in order to qualify for the exemption. In doing so she considered the cases of Sanwestern

(1988) Ltd. v. MacDonald (Rural Municipality) et al. , 2001 MBQB 271 , 159 Man.R. (2d) 90, and South Westman Regional Health Authority Inc. v. Souris (Town) et al. , 2002 MBCA 67 , 163 Man.R. (2d) 294, that were relied on by the assessor.

She rightly distinguished Sanwestern on the basis that the “off-site classroom” in question in that case was found not to fall within the definition of “public school” because it was an adult education center for which many of the students were not eligible to attend public school and many of them paid a fee to attend the classes offered. [ 17 ] Regarding South Westman , she observed (at para. 31): .... … [T]he issue was whether the property that housed the applicant’s administrative offices fell within the exemption allowed to hospitals under s. 22(1) (

e) of the MAA (which uses the same language as the exemption for public schools under s. 22(1) (d)). The Health Authority’s administrative offices serviced a number of hospitals and personal care homes in southwestern Manitoba. Huband J.A. (writing the majority reasons) held that the administrative offices were not exempt because they served both exempt (hospitals) and non-exempt (personal care homes) properties. In concurring reasons, Steel J.A., agreed with Huband J.A. but also found that the offices were not exempt because they were not located on contiguous land. She said: 16 A more reasonable

interpretation, looking at the Act as a whole, is that the definition of “hospital” in s. 1(1) is inclusive in nature. The maximum area exemption allowed under s. 22(1) (

e) implies that the free-standing buildings included in the definition of a hospital are part of an integrated operation located on a continuous and unbroken piece of land. 17 The

interpretation that “other buildings” must be on part of the overall integrated complex of the hospital is reinforced by s. 24 of the Act .

Section 24 recognizes that real property within the 4.047 hectare maximum can include not only “other buildings” necessary or usual to the operation of a hospital, but also vacant land abutting these buildings. This

section extends the hospital exemption under s. 22 to land contiguous to the exempt real property. .... 18 It must have been the intention of the Act to exempt hospitals where the services are all situated in one location; otherwise, s. 24 would have no purpose. The land in question in this case is not contiguous to the real property, but rather, is far removed from it and, consequently, does not come within the parameters of s. 22(1) (e). [emphasis added] [ 18 ] The motion judge noted that the reasons of Steel J.A. were not concurred in by the majority of the court.

She noted that, in any event, the case was distinguishable on the basis that the property in question was far removed from the hospital. Further, there was concern that the logical extension of the Health Authority’s argument was that each building would be entitled to its own maximum exemption, thereby making the maximum area meaningless (see para. 32). [ 19 ] The motion judge held, and I agree, that the decision of Steel J.A. must be read in the context of the facts of that case.

I would also add that Steel J.A.’s comments must be considered in the context of other cases that were being advanced by various health authorities which were attempting to expand the nature of the exemption. For example, in St. Boniface General Hospital v. Winnipeg City Assessor , 2003 MBCA 87 , 177 Man.R. (2d) 168, the issue was whether a hospital that delivered insured hospital services from more

than one stand-alone building was entitled to one real-property exemption for each hospital building or for the entire complex. In that case, Steel J.A., writing for the court, upheld the decision of Beard J. (as she then was), who relied on South Westman to conclude that “the free-standing buildings … are part of an integrated operation” ( 2002 MBQB 245 at para. 6 , 167 Man.R. (2d) 282) and, therefore, only entitled to one exemption. Further, I would note that, in St.

Boniface General Hospital , neither Beard J. nor Steel J.A. commented upon the issue of the buildings being on a contiguous piece of land. [ 20 ] In essence, the motion judge applied the reasoning in St. Boniface General Hospital when she concluded that “it is each institution (each hospital or school), not each building associated with it, that is allowed a total of 4.047 hectares” (at para. 34).

I also agree with her comment that, “[I]f the intention is that each hospital (or school) is only allowed a maximum [4.047-hectare exemption], then any land over and above that area is not exempt, contiguous or not” (at para. 33). [ 21 ] In this case, the WSD is not attempting to rely on the legislation to expand its exemption of the maximum allowable size nor is it attempting to classify the parking lot as property that would invoke a new exemption. [ 22 ] The assessor argues that, in accord with the comments in South Westman , to adopt an

interpretation of s. 22(1) of the MAA that excludes a requirement that the property be contiguous, renders s. 24 of the MAA meaningless. I disagree. While it is not necessary to delineate the entire scope of s. 24 of the MAA for the purposes of this decision, in South Westman , Steel J.A. identified one such purpose when she stated (at para. 17): ….

Section 24 recognizes that real property within the 4.047 hectare maximum can include not only “other buildings” necessary or usual to the operation of a hospital, but also vacant land abutting these buildings. …. [emphasis added] [ 23 ] In my view, one must interpret s. 24 of the MAA in light of the purpose and context of the exemption in question. In this case, in consideration of s. 22(1) (

d) of the MAA , the exemption for contiguous property could apply up to the maximum of 4.047 hectares where the contiguous property is not “used for a public school within the meaning of [the PSA ],” provided that it is not used in a manner inconsistent with the purpose and objectives of the PSA and the public policy addressed by that exemption. Therefore, s. 24 of the MAA is not meaningless. [ 24 ] Finally, while it was not argued in this appeal, the

interpretation of ss. 22(1) (

d) and 24 of the MAA endorsed in these reasons is supported by a comparison of the French and English versions. [ 25 ] The French and English versions of section 22(1) (

d) of the MAA state: Real property partial exemptions 22(1) Subject to sections 25 and 26, real property is exempt from taxation levied by a municipality, other than for local improvements, where the real property (

d) is used for a public school within the meaning of The Public Schools Act or a private school within the meaning of The Education Administration Act , to a maximum exemption of 4.047 hectares; Exemptions partielles 22(1)

Sous réserve des articles 25 et 26, les biens réels sont exempts de la taxe municipale, à l’exception de la taxe pour les travaux d’améliorations locales, dans les cas suivants :

d) ils sont utilisés pour les besoins d’une école publique au sens de la

Loi sur les écoles publiques ou d’une école privée au sens de la Loi sur l’administration scolaire , la superficie maximale exemptée étant de 4,047 hectares ; [ 26 ] The English version indicates that real property is tax exempt where it is “used for a public school” within the meaning of the PSA . The French version indicates that real property is tax-exempt where it is “used for the needs of a public school” within the meaning of the PSA .

Reading the two versions together in a harmonious manner demonstrates that real property used for the operation of a public school is tax exempt to the maximum exemption of 4.047 hectares. [ 27 ] The French and English versions of s. 24 of the MAA indicate:

Contiguous land exemption 24 An exemption applicable to real property under subsection 22(1) or

section 23 extends to include land that is contiguous to the real property. Exemption de biens-fonds contigus 24 L’exemption applicable aux biens réels prévue au paragraphe 22(1) ou à l’article 23 vise également les biens-fonds contigus aux biens réels. [emphasis added] [ 28 ] As the language of both versions clearly suggests, s. 24 is not a provision which limits the application of s. 22(1) , but is a provision which is meant to extend the exemption to include contiguous land (in English), or is a provision indicating that the exemption equally embraces contiguous land (in French).

Read in conjunction with s. 22(1)(d), the intent of s. 24 is to extend the exemption to include contiguous land that is not “used for a public school” or is not “used for the needs of a public school” as discussed in the PSA , as those uses are already exempt pursuant to s. 22(1) (d). So, land used for the school building, teachers’ and students’ residences, playgrounds and parking lots, would all be land that is “used for a public school” or “used for the needs of a public school” pursuant to the PSA.

Section 24 exempts additional land abutting or contiguous to the already-exempt real property which, although is not currently being used for the “needs” of the school, may be held for other reasons, as I have already discussed. Decision [ 29 ] In conclusion, based on the reasons given by the motion judge, as well as those articulated above, I would dismiss the appeal with costs. J.A. I agree: J.A. I agree: J.A.