2020 MBCA 39, 2020 MBCA 39

Citation: ImagineAbility Inc v City of Winnipeg, Date: 20200327 2020 MBCA 39 Docket: AI19-30-09243 IN THE COURT OF APPEAL OF MANITOBA Coram: Mr. Justice Michel A. Monnin Madam Justice Jennifer A. Pfuetzner Madam Justice Janice L. leMaistre BETWEEN : IMAGINEABILITY INC. ) K. B. Bomback ) for the Appellants (Applicant) Respondent ) ) J. A. Mercury and - and - ) A. J.

Meyers ) for the Respondent the assessor for the city of ) winnipeg and the city of ) Appeal heard: WINNIPEG ) October 23, 2019 ) (Respondents) Appellants ) Judgment delivered: ) March 27, 2020 On appeal from 2019 MBQB 8 pfuetzner JA [ 1 ] This is an appeal by the respondents, the City of Winnipeg (the City) and the Assessor for the City (the Assessor), of an order of mandamus granted by a judge in the Court of Queen’s Bench (the reviewing judge) requiring the tax collector for the City to correct the 2017 tax roll for the property leased by the applicant, ImagineAbility Inc. (ImagineAbility), to reflect the fact that it is exempt from school tax and to refund the school taxes paid for 2017 with interest. [ 2 ] The central issue in this appeal is whether the decision of the Assessor not to direct the tax collector to correct the tax rolls and to issue a retroactive tax refund for a previous taxation year under

section 340 of The City of Winnipeg Charter , SM 2002, c 39 (the Charter ), was unreasonable. [ 3 ] For the reasons that follow, I would allow the appeal. The reviewing judge erred in law by failing to apply a reasonableness standard of review to the decision under review. When considered in light of the proper standard of review, I am not persuaded that the decision of the Assessor was unreasonable. Background [ 4 ] ImagineAbility is a charitable organisation that assists people with intellectual disabilities to obtain employment and to participate in other activities.

ImagineAbility has operated out of leased premises in the City (the property) since October 2010. Under the terms of the lease, ImagineAbility is responsible for paying all municipal and school taxes assessed in connection with the property. [ 5 ] ImagineAbility was unaware until sometime in 2017 that it could claim an exemption from school taxes under section 23(1) (

e) of The Municipal Assessment Act , CCSM c M226 (the MAA ), which provides that real property is exempt from school tax where it is “owned by or is held in trust for and is used by a charitable organization primarily for the purpose of giving relief or assistance to aged, indigent or sick persons, to a maximum exemption of 0.81 hectare”. [ 6 ] Accordingly, after it received its 2018 realty assessment from the City, ImagineAbility appealed the assessment to the Board of Revision. It requested that the classification of the property be changed from fully taxable to school tax exempt, relying on section 23(1) (

e) of the MAA . [ 7 ] After filing the appeal, in late December 2017, ImagineAbility contacted the Assessor to advise him of the property’s use since October 2010. ImagineAbility requested that the Assessor notify the tax collector for the City of the change in use of the

property and that a refund of school taxes paid for the 2016 and 2017 taxation years be issued pursuant to section 340(4) of the Charter . [ 8 ] In the meantime, in January 2018, ImagineAbility’s 2018 assessment appeal was resolved. The Board of Revision, by order, granted a school tax exemption for the 2018 taxation year following the joint recommendation of the Assessor and ImagineAbility. [ 9 ] After receiving the Board of Revision’s order, ImagineAbility again contacted the Assessor and requested a refund of school taxes paid for the 2016 and 2017 taxation years.

Decision of the Assessor [ 10 ] On April 3, 2018, the Assessor wrote to ImagineAbility in response to its request for school tax refunds for the 2016 and 2017 taxation years. The Assessor characterised the request as follows: As a result of a 2018 Board of Revision appeal which extended to this property a school tax exemption under s.s. 23(1) of the [ MAA ], you have requested that: (

i) the exemption be applied retroactively to the 2016 and 2017 taxation years, and; (ii) the tax rolls for those years be amended pursuant to s. s. 340(1) of the City of Winnipeg Charter and the appropriate tax refunds be issued accordingly. [ 11 ] The Assessor then concluded: Appeal decisions rendered, or recommendations and agreements approved, by the Board of Revision are given effect for the assessment year under appeal and for subsequent years.

Therefore, I am unable to approve your request for a retroactive exemption and resulting tax refund in respect of this property for 2016 and 2017. [ 12 ] An unusual aspect of this case is that, as I will describe, further reasons for decision were provided by the Assessor as part of the ensuing court proceedings. Proceedings in the Reviewing Court [ 13 ] After making additional, unsuccessful attempts to receive a refund of school taxes for 2016 and 2017, ImagineAbility ultimately filed a notice of application in the Court of Queen’s Bench on June 28, 2018.

It sought “judicial review of a decision made by the Assessor” and an order in the nature of mandamus compelling the Assessor to report the change in use to the tax collector; an order compelling the tax collector to change the tax rolls for 2016 and 2017; and an order compelling the tax collector to issue refunds of school taxes paid for those years. [ 14 ] In response to ImagineAbility’s notice of application, the City filed an affidavit of the Assessor in which he indicated that he also holds the office of tax collector for the City and in which he provided further background and reasons for his decision.

The Assessor was examined on his affidavit prior to the hearing of the application. In his examination, the Assessor undertook to provide a response to a written request by ImagineAbility for school tax exemptions and refunds for the 2016 and 2017 taxation years. [ 15 ] In his written response, the Assessor stated, in part: In general, our customary practice has been to deny requests for retroactive exemptions.

In keeping with this general practice, I am unable to approve your request for a retroactive exemption and resulting school tax refund in respect of this property for 2016 and 2017. [ 16 ] ImagineAbility filed, and relied upon, evidence of the Assessor’s

interpretation of

section 340 of the Charter in another matter. In 2007, the individual who held the offices of Assessor and tax collector in the present case prepared a report for the Executive Policy Committee for the City explaining how

section 340 of the Charter applied to circumstances faced by the Winnipeg Central Mosque. Property owned by the Winnipeg Central Mosque in 2007 was subject to a tax sale due to unpaid taxes from 2004 to 2006. That property was assessed as fully taxable for those years, although the Mosque was entitled to an exemption as a place of worship. The City granted the Mosque an exemption from taxation retroactive to January 1, 2005. The report explains the basis of the exemption as follows: The [ Charter ] provides the basis, and the time periods, within which the tax collector can correct the tax roll.

Pursuant to subsection 340(1) of the [ Charter ], the tax collector can only correct the tax roll for the current and preceding year. In this particular case, as a result of the exemption status, the property taxes owing for 2006 and 2005 were adjusted (reversed) . . .. However, the taxes for 2004 cannot be adjusted as the [ Charter ] prevents the tax collector from making an adjustment beyond the two year period. [ 17 ] All of this material was before the reviewing judge.

Section 340 of the Charter

[ 18 ] At issue in this appeal is the

interpretation of

section 340 of the Charter , which states: Cancellation or reduction of taxes 340(1) The tax collector must correct the tax rolls for the year and cancel or reduce taxes before or after the tax rolls have been prepared, if the city assessor reports one of the following changes has occurred: (

a) real or personal property has become entitled to an exemption from taxation because of a change in its owner or its use; (

b) the assessment of real or personal property is required to be reduced because of a change in its physical condition; (

c) the business assessment of a business is required to be reduced because of a reduction in the size of the premises occupied or used for the purpose of the business; (

d) a change has been made in the classification of property under [the MAA ] or a regulation made under that Act; (

e) a business has become entitled to an exemption from taxation because of a change in its proprietor or the use of its premises; (

f) a business has ceased to be operated and is no longer subject to business assessment. Amended tax notice 340(2 ) If a correction to a tax roll results in a decrease in taxes imposed on real or personal property or a business for a year, the city must send the person in whose name the property or premises is assessed an amended tax notice that (

a) shows the taxes payable after the correction; and (

b) includes a reference to the right to apply for revision of assessment as provided in

section 329 (revision of assessment). Refunds 340(3) If taxes for the year on the property or business in excess of the amount shown on the amended notice are paid, the city must refund to the person in whose name the property or premises is assessed the excess, with interest at the rate prescribed under clause 343(1)(c) (repayment of taxes paid under protest) of The Municipal Act calculated for the period from the day the excess was paid to the day the refund is made. Period of refunds 340(4 ) The period for which the city must pay a refund under subsection (3) begins on the later of (

a) the day a change referred to in subsection (1) occurred; and (

b) January 1 of the year before the year in which the city assessor reports a change referred to in subsection (1) occurred. Decision of the Reviewing Judge [ 19 ] After setting out the background to the dispute, the reviewing judge proceeded to interpret

section 340 of the Charter , finding (at para 12): Where the tax collector has corrected the tax rolls to reflect a change in the tax status of a property, the City “must” refund any excess

taxes paid (s. 340(3)).

However, the refund is limited to taxes paid in two years – the year the assessor reported the change in status tothe tax collector and the previous year (s. 340(4)). [20] In dismissing the City’s argument that, “even where the assessor has reported a change to the tax collector and the taxcollector has corrected the tax roll, the taxpayer is only entitled to a refund from the date the taxpayer sought the correction” (at para 29),the reviewing judge concluded, “Quite simply, no reading of the legislation supports this position” (at para 30). [21] The reviewing judge found that, “[u]nder s. 340, the duty on the tax collector to change the tax rolls and on the City torefund taxes is triggered when the city assessor “reports” a change in tax status” (at para 43).

As for the timing of the triggering event inthe present case, the reviewing judge determined, “I cannot find that the tax collector/city assessor had knowledge of the change in use ofthe property before January 2018” (at para 44). [22] Importantly, the reviewing judge concluded, “The tax collector had a duty to correct the tax rolls for 2017 and for 2018. . .. Under s. 340(4), the refund to which ImagineAbility is entitled is limited to taxes paid in 2018 (the year the assessor knew/reportedthe change in use) and the year before” (at para 45).

As for the remedy, the reviewing judge stated, “I am issuing an order of mandamusrequiring the tax collector to correct the tax roll for 2017. That will trigger a duty on the City to refund the taxes for that year withinterest as provided in s. 340(3)” (at para 49). Positions of the Parties [23] The City argues that the reviewing judge erred in failing to apply the standard of review of reasonableness to theAssessor’s decision and submits that the Assessor’s decision was reasonable.

The City submits that the Assessor has discretion not onlyto determine if the information provided by a taxpayer supports eligibility for an exemption, but also to determine the effective date ofthe exemption for purposes of reporting to the tax collector. [24] In addition, the City maintains that the requirements for an order of mandamus were not met. In its notice of appeal, theCity asserted that the Municipal Board, rather than the reviewing judge, has jurisdiction to review the Assessor’s decision.

However,this argument was not pursued at the hearing of the appeal and I would dismiss this ground of appeal. [25] ImagineAbility characterises the Assessor’s refusal to grant a retroactive tax exemption and to direct the tax collector tocorrect the tax rolls for 2016 and 2017 as a case of inaction in the face of a statutory requirement to act. It asserts that neither theAssessor nor the tax collector has any discretion under

section 340 of the Charter. ImagineAbility reframes the issues on appeal as (1)what is the standard of review of an order of mandamus; and (2) did the reviewing judge properly interpret and apply

section 340 of theCharter. ImagineAbility submits that deference is owed to the reviewing judge’s decision to issue an order of mandamus. Analysis Nature of the Proceeding [26] The first step in analysing this appeal is to clarify the nature of the proceeding before the reviewing judge. [27] The position taken by the City on appeal—that this is a judicial review of a decision of an administrative decision-maker to which the standard of reasonableness applies—was not argued before the reviewing judge.

ImagineAbility argued, as it doesbefore this Court, that the present case does not involve the exercise of discretion by either the Assessor or the tax collector. As such, itsubmitted before the reviewing judge that the question of the appropriate standard of review (correctness or reasonableness) does notarise. The City submitted to the reviewing judge that the case involves purely a question of statutory

interpretation and the standard ofreview is correctness. In effect, both parties characterised the issue for the reviewing judge as one of statutory

interpretation for her toundertake as a matter of first instance. [28] The difficulty with ImagineAbility’s position—that neither the Assessor or tax collector has any discretion under theCharter—is that it relies on a particular

interpretation of the Charter. However, the Assessor has also undertaken an

interpretation of theCharter and is clearly of the view that he does have the discretion to determine the effective date of an exemption under section 340(1)(a), which is limited only by the time frame set out in section 340(4)(

b) of the Charter. [29] As an administrative decision-maker interpreting what is unquestionably his home statute, the focus of the exerciseshould be on the validity of the Assessor’s

interpretation. This brings the matter squarely within the parameters of judicial review. [30] The conclusion that this proceeding is a judicial review is inescapable, particularly as ImagineAbility’s notice ofapplication stated that it was seeking judicial review of a decision made by the Assessor. [31] ImagineAbility maintains that the role of this Court on the appeal is solely to review the reviewing judge’s discretionarydecision to issue a mandamus order.

However, as noted by Beard JA in Bourgouin v Rosser (Rural Municipality) et al, 2014 MBCA103, “An application for the remedy of an order in the nature of mandamus is an application for judicial review of a decision of a publicofficial or statutory decision maker” (at para 15). [32] Mandamus itself is an extraordinary remedy that is only ordered if there is a legal right that cannot be enforced inanother way (see Apotex Inc v Canada (Attorney General), (FCA), 1993 CarswellNat 820 at para 55 (FCA); Blencoev British Columbia (Human Rights Commission), 2000 SCC 44 at paras 149-50; and Guy Régimbald, Canadian Administrative Law, 2nded (Markham: LexisNexis, 2015) at 559-60). [33] In my view, the administrative decision-maker’s duties and obligations under the governing statute must be assessed onthe proper standard of review and a breach of those duties and obligations must be found before the Court can turn to consider theappropriate remedy.

Standard of Review to Be Applied by This Court [ 34 ] The standard of review that this Court is to apply on an appeal from a decision of a judge conducting a judicial review is set out in Dr Q v College of Physicians and Surgeons of British Columbia , 2003 SCC 19 (at para 43 ): . . . The role of the Court of Appeal was to determine whether the reviewing judge had chosen and applied the correct standard of review, and in the event she had not, to assess the administrative body’s decision in light of the correct standard of review, reasonableness.

At this stage in the analysis, the Court of Appeal is dealing with appellate review of a subordinate court, not judicial review of an administrative decision. As such, the normal rules of appellate review of lower courts as articulated in Housen [ Housen v Nikolaisen , 2002 SCC 33 ], apply. The question of the right standard to select and apply is one of law and, therefore, must be answered correctly by a reviewing judge. . . .

Discussion and Decision [ 35 ] In the present case, the reviewing judge did not refer anywhere in her lengthy reasons to the fact that she was conducting a judicial review nor did she undertake any analysis of the standard by which she should be reviewing the decision of the Assessor. As I have mentioned, neither party took the position before her that she was conducting a judicial review to which a reasonableness standard of review might apply.

Rather, as was the case in Bourgouin , the reviewing judge approached her analysis “as a matter of first instance” and was, “effectively, applying the standard of correctness” ( Bourgouin at para 17 ). [ 36 ] After the hearing of this appeal, the Supreme Court of Canada released its reasons in Canada (Minister of Citizenship and Immigration) v Vavilov , 2019 SCC 65 .

The majority wrote (at para 23): Where a court reviews the merits of an administrative decision (i.e., judicial review of an administrative decision other than a review related to a breach of natural justice and/or the duty of procedural fairness), the standard of review it applies must reflect the legislature’s intent with respect to the role of the reviewing court, except where giving effect to that intent is precluded by the rule of law.

The starting point for the analysis is a presumption that the legislature intended the standard of review to be reasonableness. [emphasis added] [ 37 ] There is nothing in the circumstances of this case that would rebut the presumption of a reasonableness review. [ 38 ] The reviewing judge erred in law in not applying a reasonableness standard of review to the Assessor’s decision. Accordingly, I will now undertake a fresh review of the Assessor’s decision applying the correct standard. [ 39 ] Vavilov provides guidance on how to conduct a reasonableness review.

Several aspects of that decision are relevant to the approach to be taken in this case. First, “the focus of reasonableness review must be on the decision actually made by the decision maker, including both the decision maker’s reasoning process and the outcome” (at para 83). [ 40 ] The context in which the particular decision-maker operates is important. There is an extremely broad range of work performed by administrative decision-makers. “Their decisions vary in complexity and importance, ranging from the routine to the life- altering” ( ibid at para 88).

In addition, “the particular context of a decision constrains what will be reasonable for an administrative decision maker to decide in a given case” (at para 89). [ 41 ] In a case such as this, where the Assessor’s reasons are very brief, “[a] reviewing court must bear in mind that the written reasons given . . . must not be assessed against a standard of perfection. . . .

The review . . . can be divorced neither from the institutional context in which the decision was made nor from the history of the proceedings” ( ibid at para 91). [ 42 ] Moreover, the majority wrote (at para 94): The reviewing court must also read the decision maker’s reasons in light of the history and context of the proceedings in which they were rendered. For example, the reviewing court might consider the evidence before the decision maker, the submissions of the parties, publicly available policies or guidelines that informed the decision maker’s work, and past decisions of the relevant administrative body.

This may explain an aspect of the decision maker’s reasoning process that is not apparent from the reasons themselves . . . .. [emphasis added] [ 43 ] Finally, the burden is on the party challenging the decision to show that it is unreasonable ( ibid at para 100).

[ 44 ] As previously indicated, the Assessor denied ImagineAbility’s request for a retroactive school tax exemption and declined to direct the tax collector to amend the tax rolls for 2016 and 2017 pursuant to section 340(1) of the Charter . As a result, ImagineAbility did not receive retroactive school tax refunds for those years.

On the scale of importance and complexity, I would categorise this decision as being close to “routine” as opposed to “life-altering”. [ 45 ] The record (including the Assessor’s affidavit, the transcript of his examination and his report on the Winnipeg Central Mosque) shows that the Assessor is of the view that he has discretion whether to direct the tax collector to amend the tax rolls for the year prior to the tax year at issue.

It is also clear from the record that the Assessor’s general practice is not to exercise his discretion to retroactively amend the tax rolls in respect of prior years if such an amendment will result in a refund of tax that has already been paid. His

interpretation of the Charter is that he has the discretion to voluntarily direct the amendment of the tax rolls subject to the limitation set out under section 340(4) (

b) of the Charter , that is, the tax rolls cannot be amended farther back than January 1 of the prior year. [ 46 ] A corollary aspect of the Assessor’s

interpretation of the Charter is that, if he directs the correction of the tax rolls for the current year, section 340(4) (

b) of the Charter does not mandate that the prior year’s tax roll must also be amended where the facts giving rise to the entitlement to an exemption arose at an earlier time. [ 47 ] The relevant part of section 340(1)(

a) provides that: 340(1) The tax collector must correct the tax rolls for the year . . . if the city assessor reports one of the following changes has occurred: (

a) real or personal property has become entitled to an exemption from taxation because of a change in its owner or its use; [emphasis added] [ 48 ] In my view, it is reasonable to interpret the “change” that triggers the amendment to the tax rolls to be the determination by the Assessor that the property has become entitled to an exemption from tax. [ 49 ] Moreover, I am not convinced that

section 340 of the Charter has the effect of reaching back into time to trigger a refund of tax for a prior year where the tax rolls were not changed, nor am I convinced that the Charter mandates such a change. [ 50 ] In the present case, the tax collector amended the tax rolls only for the 2018 taxation year because the Assessor determined that the property should be entitled to an exemption from school tax effective from 2018, but not prior.

The fact that the change in use of the property occurred in 2010 is of no moment. [ 51 ] ImagineAblity has failed to discharge the burden on it to show that the Assessor’s decision is unreasonable. [ 52 ] I wish to make a brief comment on an issue raised at the hearing of this appeal. While ImagineAbility did not concede that the Assessor has any discretion under

section 340 of the Charter , it alleged that the Assessor has been making decisions to grant retroactive tax exemptions in connection with other properties in an arbitrary or unfair manner. There is no evidence of this in the record. The two other instances referred to in the record where retroactive tax changes were made involve circumstances very different from this case. First, in respect of the Winnipeg Central Mosque, it is clear that the retroactive amendment of the tax rolls did not result in a refund of tax already paid.

The Winnipeg Central Mosque had not paid its tax assessments, resulting in tax sale proceedings. The second instance involved property in the City owned by CancerCare Manitoba, which is fully exempt from municipal taxation under

section 21 (

b) of the MAA , but which had been assessed for tax in error by the City. [ 53 ] In conclusion, I would allow the appeal with costs in this Court and in the Court below. JA I agree: JA I agree: JA