Federated Co-operatives Ltd v Manitoba (Provincial Municipal Assessor) et al, 2021 MBCA 106

Citation: Federated Co-operatives Ltd v Manitoba (Provincial Municipal Assessor) et al, 2021 MBCA 106 Date: 20211230 Docket: AI20-30-09402 IN THE COURT OF APPEAL OF MANITOBA BETWEEN : ) M. Newman and ) D. A. Favreau ) for the Applicant ) federated co-operatives ltd. ) D. G. Guénette ) for the Respondent (Appellant) Applicant ) The Provincial Municipal ) Assessor - and - ) ) T. D.

Gisser, Q.C. provincial municipal assessor and ) for the Respondent THE MUNICIPAL BOARD OF MANITOBA ) The Municipal Board ) of Manitoba (Respondents) Respondents ) ) Chambers motion heard: ) November 25, 2021 ) ) Decision pronounced: ) December 30, 2021 Corrected Judgment: A corrigendum was issued on January 13, 2022; the corrections have been made to the text and the corrigendum is appended to this judgment. monnin JA [ 1 ] The appellant (Federated) seeks leave to appeal a decision of the respondent, The Municipal Board of Manitoba (the Board), rendered December 24, 2019, whereby the Board found that a large horizontal propane storage tank (the tank) located on Federated’s property in the Rural Municipality of Rosser was assessable under The Municipal Assessment Act , CCSM c M226 (the Act ) (see Federated Co-operatives Ltd v Rosser (Rural Municipality) Assessor , [2019] MMBO No 3 (QL) (the Board’s decision)).

The sole issue before the Board was whether or not the tank was assessable under the Act , all other aspects of the assessment having been agreed to by the parties. [ 2 ] An appeal to this Court from a decision of the Board lies pursuant to

section 63 of the Act which limits the appeal to a question of jurisdiction or a point of law. In addition, leave is required from a judge of this Court and the principles which a judge will take into account on the leave application can be paraphrased as follows: (

a) The question involved must be one only of jurisdiction or of law and not one which involves the Court in an assessment or analysis of conflicting factual issues. (

b) The matter must be one which warrants the attention of the Court (i.e., it must be of importance, not just for the immediate case, but in determining similar disputes which may arise in the future). (

c) There must be an arguable case of substance—one with a reasonable prospect of success; an arguable case is one which meets the criteria set out in Sattva Capital Corp v Creston Moly Corp , 2014 SCC 53 . (See Pelchat v Manitoba Public Insurance Corp and Automobile Injury Compensation Appeal Commission , 2006 MBCA 90 .) Proceedings Before the Board [ 3 ] Federated operates a propane distribution centre from the location where the tank is situated. The exact role the tank plays in the operation of the centre was a matter of dispute. Federated’s position was that it was essentially a storage tank used

infrequently when the distribution vehicles could not obtain the propane directly from the pipeline terminal located elsewhere in the City of Winnipeg. The Board, in its decision, expressed some doubt as to whether the tank was not used more frequently than offered by Federated and, therefore, a more central part of the operation. In any event, the Board recognized that the issue before it was whether the tank met the definition of “improvement” under the Act and should therefore be assessable. [ 4 ] The definition in the Act of an “improvement” for this Court’s purposes is as follows (at section 1(1)):

Definitions 1(1) In this Act , . . . “improvement” means (

a) a building, fixture or structure that is erected or placed in, on, over or under land, whether or not the building, fixture or structure is affixed to the land and is capable of being transferred without special mention by a transfer of the land, and includes . . . (

c) plant, machinery, equipment and containers that are used in the retail marketing of oil and oil products, . . . [ 5 ] In

summary, in its arguments before the Board, the respondent, the Provincial Municipal Assessor (the Assessor), took the position that the size of the tank, the difficulty of moving it and its role in the operation of the centre satisfied the requirements of the Act to make it a structure and, therefore, an improvement for the purposes of assessment. [ 6 ] In response, Federated’s position was that the tank was not permanently affixed to the property and could be moved when required. It argued that it was merely a storage facility and not an essential part of the operation of the centre. It also argued that it did not meet the common law

definitions of what is a structure in accordance with the line of cases which has been accepted by the Supreme Court of Canada. [ 7 ] The Board essentially accepted the Assessor’s arguments. Two aspects of its decision are to be noted. The Board stated (at paras 53, 58-59): The Owner’s representatives have attempted to make much of the fact that the Tank is not affixed to the land. However, the Board is persuaded that the definition of “improvement” directs the Board to disregard the question of whether a building, fixture or structure is affixed to the land .

Therefore, the Tank can be a structure, and therefore an improvement, without technically being affixed. The Board is of the view that there is an integral connection between the Tank and building and a high degree of permanence in its location. The propane distribution center can only function as a propane distribution center with the Tank. The Tank is not designed to be moved in the normal course of use and is not intended to be moved as long as the distribution center is operational.

After reviewing the evidence and submissions of the Parties, the Board finds the highest best use of the Property is as a liquid propane gas distribution center, and the Tank on the land can be regarded as one unit of occupation. In the Board’s opinion, the Tank is a structure that falls within the meaning of “improvement” under the Act and, therefore, is assessable and its value should be included in the real property assessment of the Property. [emphasis added]

Decision [ 8 ] Federated raises a number of legal issues for which it argues leave should be granted. While I find only one of those capable of meeting the requirement for leave, I will briefly discuss the others. [ 9 ] The first and major thrust of Federated’s position before the Board and before me was that a line of cases, starting with the decision in Cardiff Rating Authority v Guest Keen Baldwins Iron and Steel Co Ltd , [1949] 1 All ER 27 (CA (Eng)), provides a legal test as to how a structure is to be determined at common law for assessment purposes.

It submits that Cardiff has been accepted by the Supreme Court of Canada and a number of other appellate jurisdictions in Canada. It was cited to the Board and it was a relevant authority which the Board was bound to consider in its

interpretation of the term structure in the Act . [ 10 ] The Assessor’s position before the Board and before me was essentially that the wording of the statute took priority over case law, as this Court had determined in Maple Leaf Foods Inc v Winnipeg (City) Assessor , 2008 MBCA 96 , and that the Board was not bound to accept a test other than what was set out in the specific wording of the statute. [ 11 ] I agree that the Board’s choice not to be bound by a legal test arguably set by Cardiff and other cases does not raise an error of law as I agree that the wording of the statute provides the guidance for the Board. [ 12 ] Similarly, Federated argued that the Board erred in applying the Maple Leaf decision in its analysis, arguing that it was distinguishable from the facts before it.

In Maple Leaf , this Court found that certain pieces of equipment, which were not an integral part of the buildings, were nevertheless structures for the purposes of assessment because their placement and operation were necessary for the proper operation of the plants operated by the owner, Maple Leaf, as “one unit of occupation” (at para 96).

In its decision, the Board made allusion to the tank being necessary for the operation of the propane centre in its “highest [and] best use” (at para 59). [ 13 ] I sympathize with Federated’s position, as the evidentiary basis for the Board’s conclusion that the tank was a necessary component in the operation of the centre was not very compelling. However, there was evidence by which the Board could make that determination.

Therefore, it would make this issue a question of mixed fact and law without any extricable issue of law, a matter in which this Court will usually not involve itself. [ 14 ] Similarly, Federated argues that the Board’s conclusion, that the highest and best use of the property was as a liquid propane gas distribution centre, was an irrelevant factor since there had been no evidence brought forward by either party respecting the issue of highest and best use.

The Assessor argues that this was simply the Board determining that the tank was part and parcel of the equipment necessary for the proper operation of the facility as a propane gas distribution centre. Again, this is a matter of factual determination in which this Court will not become involved. [ 15 ] Additionally, Federated argues that the Board considered whether the tank was equipment or a container used in the retail marketing of oil, falling within one aspect of the definition of improvement in the Act (see clause (

c) at para 4 herein). While this issue had been raised by the Assessor in previous correspondence to the Board, it had withdrawn its reliance upon that part of the definition for the purposes of the hearing. Nevertheless, the Board addressed it, concluding that it did not have sufficient information or evidence as to the source of the propane and, hence, whether it fell within the definition. It accordingly said that it was unable to make a determination on the matter. Federated argues that this reveals a critical error in the Board’s

interpretation as it failed to appreciate that the burden of proof was on the Assessor and not on Federated. As such, it should have dismissed that ground. [ 16 ] I agree that the Board’s reasoning does seem to indicate that it did not appreciate that the failure to provide sufficient evidence meant that the Assessor could not satisfy the Board that the tank was an improvement as a result of it being used in the retail marketing of oil or oil products. However, at the end of the day, since the issue had been withdrawn, it is not an error which justifies granting leave as the Board did not rely upon it to reach its final decision. [ 17 ] Next, Federated argues that the Board erred in its

interpretation of the definition of improvement in the Act when it held that it was directed to disregard whether or not something was affixed to the land. In my view, this

interpretation of the definition is arguably incorrect.

If the Board reached its conclusion based on that view, then this potential error of law would have a material consequence. [ 18 ] I am aware that, in other parts of its decision, the Board does turn its attention to whether the tank is capable of being moved; however, the degree to which it is affixed to the land has been found in Canadian common law to be a factor in determining whether it is an improvement to the land and, therefore, capable of assessment. [ 19 ] If the Board feels itself directed not to consider the level of affixation to the land as a factor in its assessment of what is a structure, then the potential legal error is also of consequence to further cases. [ 20 ] Therefore, I am of the view that the Board’s decision may contain an error of law which may have led it to a decision which should be reviewed by this Court. [ 21 ] Counsel for the Assessor and the Board argue that, even if there was an erroneous

interpretation of the definition set out in the Act , it did not have any consequence to the Board’s ultimate determination which was based on a number of factors before it. I agree that, at the end of the day, the Board might have reached the same conclusion, but the wording of its decision suggests that it may not have given appropriate weight to a factor that was relevant to its determination.

I express no further comment given that this matter will now be proceeding before a panel of this Court. [ 22 ] I grant leave to appeal the Board’s decision on the following issue: Did the Board err in law in determining that whether or not the tank was affixed to the land and to what degree were irrelevant considerations to its conclusion that it was an improvement, as contemplated by The Municipal Assessment Act , CCSM c M226 ?

CREST JA COURT OF APPEAL PROVINCE OF MANITOBA WINNIPEG R3C OP9 CORRIGENDUM January 13, 2022 TO WHOM IT MAY CONCERN: Re: Federated Co-operatives Ltd v Manitoba (Provincial Municipal Assessor) et al 2021 MBCA 106 Docket No. AI20-30-09402 Released: December 30, 2021 The attached decision replaces the previous decision which was released December 30, 2021.

Paragraph 22 has been replaced with the following: [22] I grant leave to appeal the Board’s decision on the following issue: Did the Board err in law in determining that whether or not the tank was affixed to the land and to what degree were irrelevant considerations to its conclusion that it was an improvement, as contemplated by The Municipal Assessment Act , CCSM c M226 ?