Aquila Holdings Ltd. v. 101211085, 2017 SKCA 66

Court of Appeal for Saskatchewan Docket: CACV2903 Citation: Aquila Holdings Ltd. v Edenwold (Rural Municipality) , 2017 SKCA 66 Date: 2017-08-28 Between: Aquila Holdings Ltd. and 101211085 Saskatchewan Ltd. Appellants (Appellants) And Rural Municipality of Edenwold No. 158 Respondent (Respondent) Before: Richards C.J.S., Ottenbreit and Caldwell JJ.A. Disposition: Appeal dismissed Written reasons by: The Honourable Chief Justice Richards In concurrence: The Honourable Mr. Justice Ottenbreit The Honourable Mr.

Justice Caldwell On Appeal From: AAC 2015-0151, Regina Appeal Heard: March 14, 2017 Counsel: Fred Zinkhan for the Appellant D. Neil Robertson, Q.C., for the Respondent Richards C.J.S. I. Introduction [ 1 ] Aquila Holdings Ltd. and the Rural Municipality of Edenwold entered into a tax exemption agreement with respect to a commercial property. [ 2 ] Two years later, the Municipality said the agreement had been terminated. This led Aquila and 101211085 Saskatchewan Ltd. (101 Sask), which had by then acquired the property, to appeal the property tax assessment to the Board of Revision.

The Board said the appeal had been filed too late and rejected it. Aquila and 101 Sask appealed that decision to the Assessment Appeals Committee of the Saskatchewan Municipal Board. The Committee concluded that the appeal to the Board of Revision had been filed in time because a special rule applied to appeals about tax exemptions.

However, the Committee also found that it had no jurisdiction to deal with the subject matter of the appeal because it concerned an exemption granted by an agreement rather than one expressly prescribed by The Municipalities Act , SS 2005, c M-36.1. [ 3 ] Aquila and 101 Sask appeal from the Committee’s decision. As presented, this case raises two main issues: (

a) did the Committee have jurisdiction to deal with the appeal? and (

b) did the Committee misapprehend the appeal period that applies to assessment appeals concerning tax exemption issues? [ 4 ] As explained below, I conclude that the Committee erred both in finding that it had no jurisdiction to deal with Aquila and 101 Sask’s appeal and in finding that a special appeal period applies to appeals based on a claim that property is exempt from taxation. [ 5 ] In the end, it is clear that the Board of Revision correctly found that Aquila and 101 Sask’s appeal had been filed outside the applicable appeal period. As a result, their appeal to this Court must be dismissed.

II. background [ 6 ] Ron Carson is a former owner of shares of Carson Energy Services Ltd. and the current owner of the shares of Aquila and 101 Sask. [ 7 ] In 2011, Aquila purchased land in the Municipality. 101 Sask was incorporated to construct a building on part of that land. Mr. Carson was the sole director, officer and shareholder of 101 Sask. [ 8 ] 101 Sask paid for the construction of the building. By virtue of an agreement of purchase and sale dated May 1, 2012, Aquila sold the building and the land on which it was situated to 101 Sask.

Title was transferred on October 3, 2014. [ 9 ] Meanwhile, on April 23, 2013, the Municipality and Aquila had signed a tax exemption agreement (Agreement) with respect to the building. The material parts of the Agreement read as follows: TAX EXEMPTlON AGREEMENT THIS AGREEMENT IS MADE IN DUPLICATE BETWEEN: The Rural Municipality of Edenwold No. 158 Box 10, Balgonie, SK S0G 0E0

(hereinafter referred to as “the Municipality”) – And – Aquila Holdings Ltd. Box 160, Lampman, SK S0C 1N0 (hereinafter referred to as “the Developer”) WHEREAS the Developer has constructed a commercial building on NW 22-17-18-W2, Parcel No. 110908065; and, WHEREAS the Council of the Municipality desires to grant a taxation exemption to the Developer for the purposes of economic development; and, WHEREAS Sections 295(2) and 298(5) of The Municipalities Act provide the authority to exempt taxes; THE PARTIES HERETO AGREE AS FOLLOWS: 4.

The taxes levied with respect to a portion of the commercial improvement assessment on NW 22-17-18-W2, Parcel No. 110908065 as shown on Assessment Number 000422200 of the Municipality's tax roll, shall be exempt from taxation. 5. This Agreement shall continue in force for the years 2013 to 2017, inclusive. 6.

This Agreement shall apply to the business’s newly constructed primary building only, and shall be terminated upon any changes to the property that would affect the assessment (ie, additions) thereof or any change in the ownership of the property. … [ 10 ] The Municipality’s authority to enter into the Agreement is grounded in s. 295 of The Municipalities Act . In relevant part, it provides as follows: 295(1) A council may exempt any property from taxation in whole or in part with respect to a financial year.

(2) Subject to

section 298, a council may: (

a) enter into an agreement with the owner or occupant of any property for the purpose of exempting that property from taxation, in whole or in part, for not more than five years; and (

b) in an agreement entered into pursuant to clause (a), impose any terms and conditions that the council may specify. … [ 11 ] The Municipality honoured the tax exemption contemplated by the Agreement for 2013 and 2014. [ 12 ] In 2015, the Municipality took the position that the tax exemption was no longer applicable to the building because, as per clause 6 of the Agreement, there had been a “change in the ownership of the property” when it had been transferred from Aquila to 101 Sask. III. the proceedings below [ 13 ] Aquila and 101 Sask appealed the loss of the tax exemption to the Board of Revision.

The Board refused to hear their appeal on the ground that their notice of appeal had been filed too late. Aquila and 101 Sask appealed this decision to the Committee. [ 14 ] The Committee held that, for appeals based on a claim that property is tax exempt, the appeal period runs from the date of the owner’s receipt of the tax notice not, as is the normal case, from the date when the assessment notice is mailed. It found that, on the facts of this case, the appeal had been commenced within 30 days of the date when Mr.

Carson received the tax notice. [ 15 ] However, the Committee then went on to conclude that it had no authority to consider the substance of the appeal. Its thinking on this front appears to have turned on the idea that the tax exemption in issue was not “statutory” in nature but, rather, one founded on an agreement between Aquila and the Municipality. IV. the statutory scheme [ 16 ] In order to put the issues raised by this appeal in context, it may be useful to briefly outline the key sections of The Municipalities Act that establish the regime whereby property is assessed and taxed.

Significantly, that regime involves a very specific timeline and is aimed at confirming a municipality’s property tax base by September of each year. The relevant provisions are found in Parts X and XI of the Act : Assessment

s. 204(1) the assessment roll is to be prepared by the municipality no later than May 1. s. 213(1) the assessment roll is made available for public inspection from the day it is completed to the last day for lodging an assessment appeal. s. 214(1) the municipality prepares an assessment notice for each property on the assessment roll. s. 216(1) assessment notices are sent to assessed persons within 15 days after the assessment roll is completed. s. 217(1) within 15 days of the completion of the assessment roll, the municipality publishes a notice indicating assessment notices have been sent and the last day on which assessment appeals may be lodged. s. 226(1) notices of appeal are to be filed within 30 days after the day on which the notice of assessment is mailed or, if no notice is mailed, within 30 days of the date of publication pursuant to s. 217. s. 229(2) if a hearing is required, the secretary of the board of revision serves a notice of hearing on the appellant property owner and the assessor at least 30 days before the hearing. s. 230(1), (2) the appellant files and serves written materials at least 20 days before the hearing; other parties must file and serve at least 10 days before the hearing. s. 240(4), (4.1) the board of revision hears and decides appeals within 90 days after the date on which the municipality published a notice pursuant to s. 217, except in years where there is a general revaluation. s. 241 the assessor makes changes in the assessment roll resulting from appeals and agreements. s. 258 the assessor makes a return to the Saskatchewan Assessment Management Agency showing changes since the last roll was confirmed; the Agency confirms the assessment roll by issuing a certificate.

Taxation s. 263 the municipality prepares the tax roll on or before August 15 based on the assessment roll. s. 267(1), (4) tax notices are sent to taxpayers before September 1 (although the assessment notice and tax notice for a property may be sent together or combined). [ 17 ] The Municipalities Act provides for two sorts of exemptions from property taxation. First, ss. 292 to 294 list a number of specific kinds of property that are exempt. These include, by way of example, property held by the Crown, places of public worship, property owned by school divisions, cemeteries, public libraries, and so forth.

In addition, as noted above, s. 295 provides that a council may exempt any property from taxation for a single year or, by agreement, for up to five years on such terms and conditions as the council may specify. [ 18 ] As required by s. 295(3) of The Municipalities Act , exempt properties remain assessable and continue to appear on the assessment roll. V. Standard of REview [ 19 ] The parties properly agree that the applicable standard of review in this case is correctness. This view has been recently confirmed in Gary L. Redhead Holdings Ltd. v Swift Current (Rural Municipality) , 2017 SKCA 47 .

VI. analysis [ 20 ] I propose to deal first with the question of whether the Committee had jurisdiction to deal with the substance of the appeal presented to it. I will then consider the issue of whether there is a special appeal period for cases based on claims that the property in issue is tax exempt. A. The Scope of the Right of Appeal [ 21 ] As noted above, the Committee held that, because the tax exemption claimed by Aquila and 101 Sask was based on the Agreement, it had no authority to deal with the substance of their appeal.

It appears to have concluded that its jurisdiction in relation to tax exemptions is limited to matters concerning exemptions in respect of those kinds of property specified in The Municipalities Act itself, presumably those properties listed in ss. 292 to 294. The Committee reasoned as follows: [18] Legislation provides that a municipality may enter into an agreement to exempt a specific property from taxation. In the same respect, the municipality could choose not to enter into an agreement.

The Committee finds the appellant has no legal right or entitlement to something that is completely within Council’s discretion to give. The exemption under dispute is not a statutory exemption where, if the property owner successfully made the case, he would be legally entitled to the exemption.

[19] Even if the RM was wrong in cancelling the tax exemption agreement, and the Committee is not necessarily saying that is the case, we have no authority to compel the Council to do something the Act says Council “may” do by reinstating the agreement. [20] The Committee believes the validity of the agreement is a civil matter of contract law.

The question of the legality of the RM cancelling the agreement is also a matter for the courts (contract law). … [23] … this is not a statutory exemption being sought; the Committee has no authority to require the RM to provide an agreement that is entirely within the discretion of Council to offer. The appeal is dismissed. [ 22 ] The parties all take the position that the Committee erred in concluding as it did.

They do so for good reason. [ 23 ] The scheme and wording of The Municipalities Act makes it clear that the question of whether a property is tax exempt is one that can be appealed to a board of revision and then, if necessary, to the Committee. [ 24 ] Sections 215(1) (

a) and 295(3) of The Municipalities Act require that the exempt status of a property be shown on the assessment roll and on assessment notices. Those provisions read as follows: 215(1) An assessment notice or an amended assessment notice must contain all of the following: (

a) the same information that is required to be shown on the assessment roll; … 295(3) If a council exempts property from taxation pursuant to subsection (1) or (2), the assessment for that property must appear on the assessment roll in each year of the exemption. The 2015 assessment notice for the property at issue in this appeal contained a notation that the property enjoyed no exemptions. [ 25 ] Sections 225(1) (

a) and (b)(ii) of The Municipalities Act provide for a right of appeal to the board of revision from an assessment where a person with an interest in the property believes an error has been made in the content or preparation of the assessment notice: 225(1) An appeal of an assessment may only be taken by a person who: (

a) has an interest in any property affected by the valuation or classification of any property; and (

b) believes that an error has been made: … (ii) in the preparation of or the content of the relevant assessment roll or assessment notice. Consequently, in light of the requirement to show the tax exempt status of a property on the assessment notice, an alleged error in an assessment notice with respect to that status can form the basis of an appeal. [ 26 ] The existence of a right of appeal in relation to tax exemptions is confirmed by various other provisions of the governing legislation. Section 228(1) (

b) of The Municipalities Act provides that the parties to an appeal to a board of revision may agree to “a change in the taxable or exempt status of a property from that shown on the assessment roll”. This provision would not have been included in the Act if there were no appeals concerning the tax exemption status of properties. Similarly, s. 240(1) of The Municipalities Act provides that a board of revision, after hearing an appeal, may change “the liability to taxation … of the subject property”.

This too assumes the existence of appeals involving the question of whether property is tax exempt. [ 27 ] I also note s. 296 of The Municipalities Act . It expressly contemplates appeals on the question of whether a property is exempt from taxation: 296(1) If a person considers that an error has been made in determining that any property is liable to taxation, that person may appeal that matter to the board of revision.

(2) Sections 225 to 257 apply, with any necessary modification, to an appeal made pursuant to subsection (1). Appeals pursuant to s. 296 may be taken by any person who “considers that an error has been made” and not, as is the case with s. 225(1), only by a person who has an “interest” in the property. Nonetheless, the wording of s. 296 makes it entirely clear that appeals may be based on the question of whether a property is tax exempt. [ 28 ] Accordingly, boards of revision are empowered to hear appeals concerning tax exemptions.

It follows from this that the Committee is also entitled to hear appeals of this sort because, as per s. 246 of The Municipalities Act , “any party to an appeal before a board of revision has a right to appeal to the appeal board … respecting a decision of a board of revision”. [ 29 ] Nothing in the wording or organization of The Municipalities Act suggests there should be some sort of distinction between appeals involving exemptions prescribed by ss. 292 to 294 of that Act and those involving exemptions put in place by agreement pursuant to s. 295.

For its part, the Committee, in reaching the view that there is a distinction between these two kinds of exemptions, appears to have been particularly influenced by the fact that s. 295 of The Municipalities Act confers authority to enter into property-specific exemption agreements in discretionary terms. In other words, s. 295 provides that a council “may” enter such agreements. This

apparently led the Committee to circumscribe its jurisdiction on the theory that, in the face of this discretionary authority, no property owner is entitled to demand an exemption and the Committee has no right to compel a municipality to grant an exemption. [ 30 ] With respect, this is faulty reasoning. It is true, of course, that a municipality may or may not decide to enter into an agreement with a property owner pursuant to s. 295 . But, that is not the point. In this case, the Municipality did enter into an exemption agreement.

As a result, the Committee was not required to second-guess the Municipality’s exercise of discretion in that regard or to decide whether the Municipality should have signed the Agreement. Rather, the question before the Committee was whether, having entered into the Agreement, the Municipality could nonetheless require Aquila or 101 Sask, as the case might be, to pay property taxes.

Aquila and 101 Sask were entitled to base an appeal on that issue. [ 31 ] In the end, therefore, I conclude that the Committee erred in deciding that it had no authority to deal with the substance of the appeal presented to it by Aquila and 101 Sask. B. The Applicable Appeal Period [ 32 ] In analyzing the question of whether Aquila and 101 Sask had filed their notice of appeal within the applicable appeal period, the Committee observed that taxation is an issue separate from assessment.

Then, relying on the erroneous assumption that an assessment notice need not include the tax exemption status of a property, the Committee concluded that the “source document” for initiating appeals in tax exemption cases is the tax notice , not the assessment notice . [ 33 ] With respect to the specifics of this case, the Committee appears to have found that a tax notice, dated August 14, 2015, had been received by Mr. Carson on August 26, 2015.

Given that Aquila and 101 Sask’s notice of appeal was filed within 30 days of the receipt of the tax notice, the Committee held that the appeal had been initiated within the applicable appeal period. [ 34 ] The Municipality argues, correctly in my respectful view, that the Committee erred in concluding appeals concerning exemptions from tax liability are governed by an appeal period different than the one applicable to other property tax appeals. [ 35 ] The standard time period in which an appeal to a board of revision may be filed is specified in s. 226 of The Municipalities Act as being within 30 days after the day on which the notice of assessment is mailed.

In relevant part, s. 226 says this: 226(1) A notice of appeal must be filed, together with any fee set by the council pursuant to

section 224, at the address shown on the assessment notice: (

a) within 30 days after the day on which the notice of assessment is mailed to the person; or (

b) if no notice of assessment is mailed to the person, within 30 days after the later of: (

i) the date on which the notice stating that the assessment notices have been sent is published pursuant to

section 217; and (ii) the date on which the notice of a bylaw dispensing with the preparation of assessment notices is published pursuant to

section 217.

(1.1) Notwithstanding clauses (1)(

a) and (b), in the year of a revaluation pursuant to The Assessment Management Agency Act , a notice of appeal must be filed, together with any fee set by the council pursuant to

section 224, within 60 days after the date mentioned in those clauses. … [ 36 ] The Municipalities Act contains no provision that speaks expressly to the appeal period for proceedings concerning whether a property is exempt from taxation. Rather, as noted above, s. 295(3) states that exempt properties remain assessable and “must appear on the assessment roll in each year of the exemption”.

Section 205(

h) indicates that the assessment roll must show “if the property is exempt from taxation, a notation of that fact” and s. 215(1)(

a) requires that an assessment notice “must contain … the same information that is required to be shown on the assessment roll”. Then, as explained earlier, ss. 225(1) (

a) and (b)(ii) indicate that, where a person with an interest in a property believes an error has been made “in the preparation of or the content of the … assessment notice”, that person may appeal to the board of revision. In other words, it is apparent that the status of a property as being exempt from taxation (or not) is part and parcel of the assessment notice and is subject to appeal by a person with an interest in the property in the regular way and pursuant to the regular rules, i.e., within 30 days after the notice of assessment is mailed. [ 37 ]

Section 296 of The Municipalities Act is also relevant here. It allows any person who believes an error has been made in relation to a tax exemption (not just a person with an interest in the property) to appeal that issue. As will be recalled, s. 296 reads as follows: 296(1) If a person considers that an error has been made in determining that any property is liable to taxation, that person may appeal that matter to the board of revision.

(2) Sections 225 to 257 apply, with any necessary modification, to an appeal made pursuant to subsection (1). [ 38 ] Section 296(2) is of particular note because it provides, in effect, that an appeal concerning whether a property is exempt from taxation is to be entertained pursuant to the same statutory requirements as any other appeal.

These requirements include s. 226 which indicates that, in the ordinary course, an appeal to the board of revision is to be filed within 30 days of the date on which the notice of assessment is mailed. [ 39 ] I do not accept the submission of Aquila and 101 Sask to the effect that one of the “necessary modification(s)” referred to in s. 296(2) is that the appeal period for issues concerning tax exemptions begins to run only when a tax notice is received. The entire scheme of Parts X and XI of The Municipalities Act is to the effect that issues concerning tax exemptions are to be processed on appeal in the

same way as other assessment issues. The idea that tax exemption appeals are subject to a special 30-day appeal period beginning on the date the tax notice is received is not a “necessary modification” of ss. 225 to 257. It is a major departure from those sections and involves a wholly novel idea that appears to have been developed to fit the circumstances of this case. It is also problematic for a number of reasons, not the least of which is that, as per s. 296(1), persons other than those with an interest in a property may appeal a tax exemption issue.

Such individuals do not receive tax notices and hence, for them, the event said by Aquila and 101 Sask to trigger the running of the 30-day appeal period would never occur. [ 40 ] I also am unconvinced by the final submission advanced by Aquila and 101 Sask.

They suggest that the appeal period for tax exemption issues must begin to run from the date the tax notice is received because, otherwise, a property owner would have no way to seek relief in a situation where a tax exemption agreement was negotiated after the assessment roll was finalized and a subsequent tax notice failed to reflect the existence of that agreement, i.e., if the appeal period ran from the date on which the assessment notice had been mailed, that period would already have expired by the time the property owner received the tax notice and realized there was a problem.

This argument has several frailties. First, as a practical matter, a municipality that had just signed an exemption agreement would surely be unlikely to act in direct contradiction of that agreement and insist on the payment of taxes it had only recently agreed not to collect. Second, a situation unfolding along such timelines would presumably be an extremely unusual state of affairs and, as such, it is not something that should be readily used to drive the

interpretation of The Municipalities Act . Third, and in any event, in the absence of full argument on the point, I am not prepared to assume that a property owner in the hypothetical situation advanced by Aquila and 101 Sask would be left without a remedy of any sort. [ 41 ] Accordingly, and in the end, I conclude the Committee erred in deciding that the appeal period in this case began to run when the tax notice was received by Mr.

Carson. [ 42 ] The next question, obviously, is whether Aquila and 101 Sask’s notice of appeal was filed with the Board of Revision within the applicable appeal period, i.e., within 30 days of the date on which the notice of assessment was mailed. The Committee, given the approach it took, did not deal with that issue directly. However, the essential facts are unavoidable. The assessment notice indicates that it was mailed on April 24, 2015. As a result, the appeal period would have expired in May of 2015. The Committee did not indicate or find exactly when the notice of appeal to the Board of Revision was filed.

However, counsel for Aquila and 101 Sask indicated at the Committee hearing that the notice was filed on September 15, 2015. It is entirely clear, therefore, that the notice of appeal was not filed within the 30 days of the date when the notice of assessment was mailed and that the Board of Revision was correct in finding it had been filed too late.

VII. conclusion [ 43 ] I conclude that the Committee erred both in finding that it had no jurisdiction to deal with the appeal brought by Aquila and 101 Sask and in finding that a special appeal period applies to cases based on a claim that property is exempt from taxation. In fact, and as found by the Board of Revision, Aquila and 101 Sask filed their appeal with the Board of Revision after the applicable appeal period had expired. [ 44 ] Aquila and 101 Sask’s appeal is dismissed. The Municipality does not seek costs. “Richards C.J.S.” Richards C.J.S.

I concur. “Richards C.J.S.” for Ottenbreit J.A. as per authorization I concur. “Caldwell J.A.” Caldwell J.A.