Frenchman Butte (Rural Municipality) v Husky Energy Inc., 2019 SKCA 91

Court of Appeal for Saskatchewan Docket: CACV3266 Citation: Frenchman Butte (Rural Municipality) v Husky Energy Inc. , 2019 SKCA 91 Date: 2019-09-18 Between: Rural Municipality of Frenchman Butte No. 501 (as represented by the Saskatchewan Assessment Management Agency) Appellant (Respondent) And Rural Municipality of Turtle River No. 469 (as represented by the Saskatchewan Assessment Management Agency) Appellant (Appellant) And Husky Energy Inc. Respondent (Appellant/Respondent) Before: Whitmore, Ryan-Froslie and Leurer JJ.A. Disposition: Appeal dismissed Written reasons by: The Honourable Mr.

Justice Leurer In concurrence: The Honourable Mr. Justice Whitmore The Honourable Madam Justice Ryan-Froslie On Appeal From: Saskatchewan Municipal Board Assessment Appeals Committee, AAC 2017-0061 and AAC 2017-0062, Saskatoon Appeal Heard: April 5, 2019 Counsel: Jeffrey Grubb, Q.C., and Amy Groothuis for the Appellants Patrick McDonald, Q.C., and Gilbert Ludwig, Q.C., for the Respondent Leurer J.A. I.

Introduction [ 1 ] This appeal raises the question as to whether certain oil storage tanks and chemical storage tanks , owned by the respondent, Husky Energy Inc. [Husky], are subject to taxation pursuant to The Municipalities Act , SS 2005, c M-36.1 [ Act ]. [ 2 ] The general rule for municipal taxation is that all property (which includes improvements) is subject to assessment. The Act also has specific rules that deal with properties associated with the production of resources. One such provision is s. 199(4) of the Act , which states:

(4) Resource production equipment that is used in association with a petroleum oil or gas well at which there has been no production in the 12-month period ending September 1 of the previous year, other than production during testing, is to be assessed at only a nominal amount for the current year. [ 3 ] In a decision dated June 8, 2018 [ Committee Decision ], the Assessment Appeals Committee of the Saskatchewan Municipal Board [Committee] determined that Husky’s tanks located on three specific properties are resource production equipment, or “RPE”, associated with non-producing oil wells, and therefore “not subject to assessment” for the 2017 assessment year ( Committee Decision at para 51).

Saskatchewan Assessment Management Agency [SAMA], on behalf of the Rural Municipality of Frenchman Butte No. 501 and the Rural Municipality of Turtle River No. 469 [RMs], appeals the Committee Decision . [ 4 ] I would dismiss SAMA’s appeal with a single set of costs in favour of Husky . My reasons for reaching this conclusion follow. II. Background [ 5 ] Husky is the owner of the three properties at issue in this appeal. In addition to its land, each property consists of two or more “oil and gas buildings”, as well as items of equipment and storage tanks: (

a) Property 1: LSD 2 of 15-51-24 W3, located in the Rural Municipality of Frenchman Butte No. 501, consists of three oil and gas buildings, one 750 blue barrel [bbl] lap welded steel tank, three 3,000 imperial gallon chemical storage tanks, and testing equipment; (

b) Property 2: LSD 6 of 24-49-20 W3, located in the Rural Municipality of Turtle River No. 469, consists of two oil and gas buildings, four 750 bbl lap welded steel tanks, one 300 imperial gallon chemical storage tank, and testing equipment; and (

c) Property 3: LSD 13 of 19-48-20 W3, also located in the Rural Municipality of Turtle River No. 469, consists of two oil and gas buildings, one 750 bbl lap welded steel tank, three 1,000 imperial gallon chemical storage tanks, and a test separator. [ 6 ] It is common ground that the oil tanks stored oil brought to the surface from nearby oil wells and the chemical storage tanks were associated with readying extracted oil for transportation. In addition, “[t]he facts placed before the Boards were none of the wells

associated with the oil storage tanks on the properties were producing. All of the wells met the non-producing standard.” ( Committee Decision at para 32). [ 7 ] In 2017, SAMA assessed the three properties using the cost approach to value. In line with the approach historically taken, SAMA assessors determined that the tanks were to be taken into account when determining the value of the three properties for the purposes of municipal taxation. The result was an assessed value of $267,300 (for Property 1), $283,800 (for Property 2) and $284,200 (for Property 3). [ 8 ] Husky was dissatisfied with these assessments.

It appealed SAMA’s assessments to the Board of Revision [Board] for the rural municipality in which each property was located. Husky’s principal contention was, as it remains in this Court, that because the tanks are fixtures by which oil wells were operated, and the wells associated with the properties were not in production, the tanks should each have a $0 assessment. [ 9 ] The Board for the Rural Municipality of Frenchman Butte No. 501, in which Property 1 is located, dismissed Husky’s appeal, thereby upholding SAMA’s original assessment [ Frenchman Butte BOR Decision ].

The Board for the Rural Municipality of Turtle River No. 469, in which Property 2 and Property 3 are located, reached the opposite conclusion [ Turtle River BOR Decision ]. That Board held that the two properties in that rural municipality each had an assessed value of $0. [ 10 ] Husky appealed the Frenchman Butte BOR Decision to the Committee.

SAMA, on behalf of the Rural Municipality of Turtle River No. 469, appealed the Turtle River BOR Decision to the Committee. [ 11 ] Both appeals came before the Committee at one hearing, with the intent that the Committee’s decision would apply to the property assessments in respect to all three properties. III. Committee Decision (AAC 2017-0061 and AAC 2017- 0062) [ 12 ] The Committee observed that neither Board “included analysis to the degree it can be said that adequate reasons were provided” (at para 8).

As a result, the Committee’s reasons were structured based on the arguments of the parties, as if the decision was to be made by the Committee as a decision-maker of first instance. [ 13 ] The Committee concluded that the general rules respecting the identification and assessment of property under the Act have been displaced by specific provisions dealing with resource properties.

The Committee stated that it saw “the intent of the legislators [ sic ] as providing an exemption from assessment for RPE [resource production equipment], including structures by which petroleum oil is stored, if the RPE is associated with a non-producing petroleum oil well” (at para 40).

The Committee further held that, insofar as the Saskatchewan Assessment Manual (2015 Base Year) [ Manual ] may conflict with this conclusion, the Manual is subordinate to the Act : “where the Act and the Manual are not complementary, the wording of the Act prevails” at para 50). [ 14 ] The Committee conducted a review of the record to determine what parts of the three properties were properly characterized as resource production equipment.

Based on the conclusion that none of the petroleum oil wells associated with the appealed properties was a producing well, the Committee attributed nominal value to the resource production equipment, effectively removing the value of this equipment from the assessed value of the property.

In this regard, the Committee concluded that the oil storage tanks, chemical storage tanks , vessels and miscellaneous meters, switches and valves, are resource production equipment (and therefore not subject to assessment), but the buildings on the properties were not resource production equipment (and therefore subject to assessment). [ 15 ] The assessed values through the three stages of proceedings leading to this appeal are as follows: SAMA Assessment 1 Boards of Revision Committee Property 1 $267,300 $267,300 $99,400 Property 2 $283,800 $0 2 $22,300 Property 3 $248,200 $0 2 $97,500 1 SAMA acknowledges that these amounts are in error, as certain ancillary items should not have been subject to assessment. 2 Husky acknowledges that it was in error for the Board of the Rural Municipality of Turtle River No. 469 not to assess the value of the land and buildings, and therefore these $0 values are in error. [ 16 ] SAMA, on behalf of the RMs, now appeals the decision of the Committee to remove the oil storage tanks and the chemical storage tanks from the assessed value of the three properties.

SAMA does not appeal the decision of the Committee to remove the vessels, miscellaneous meters, switches and valves from the assessed value of the three properties. IV. Issue [ 17 ] SAMA has been granted leave to appeal from the Committee Decision , pursuant to s. 33.1 of The Municipal Board Act , SS 1988-89, c M-23.2 , on the following issue: Did the Committee err in law “by finding oil storage tanks and chemical storage tanks are resource production equipment pursuant to [the Act ] and the [ Manual ] and are therefore exempt from assessment”?

V. Analysis A. Standard of review [ 18 ] The parties agree that the standard of review applicable to this appeal is correctness: Gary L. Redhead Holdings Ltd. v Swift Current (Rural Municipality) , 2017 SKCA 47 at para 88 , [2017] 9 WWR 296 ; Corman Park (Rural Municipality) v 618421 Saskatchewan Ltd. , 2018 SKCA 29 at para 3 , 73 MPLR (5th) 1. B. Statutory provisions [ 19 ] The following are the provisions of the Act most directly engaged by this appeal: 2(1) In this Act : … (e) “ building ” means any structure used or occupied or intended for supporting or sheltering any use or occupancy and includes a trailer, mobile home or portable shack that: (

i) is situated within the municipality for a period of more than 30 days; and (ii) is not: (

A) in storage; or (

B) a travel trailer; … (q) “ improvement ” means: (

i) a building or structure erected or placed on, over or under land or over or under water but does not include machinery and equipment unless the machinery and equipment is used to service the building or structure; (ii) anything affixed to or incorporated in a building or structure affixed to land but does not include machinery and equipment unless the machinery and equipment is used to service the building or structure; (iii) the resource production equipment of any mine or petroleum oil or gas well; and (iv) any pipeline on or under land; … (t) “ land ” does not include improvements; … (gg) “ property ” means, for the purposes of sections 9 and 39 and Parts X and XI, land or improvements or both; … (nn) “ resource production equipment ” includes fixtures, machinery, tools, railroad spur tracks and other appliances by which a mine or petroleum oil or gas well is operated, but does not include tipples, general offices, general stores, rooming houses, public halls or yards; … Property assessable 194

(1) All property in a municipality is subject to assessment.

(2) An assessment must be prepared for an improvement whether or not it is complete or capable of being used for its intended purpose. … Assessment rules re resource production equipment 199

(1) In assessing the value of property, the assessor shall not take into account machinery and equipment that is used in association with a pipeline and is located on the land or within the improvement.

(2) Subject to subsections (3) and (4), in the case of petroleum oil and gas wells: (

a) account is to be taken in the assessment of any resource production equipment by which petroleum oil and gas are: (

i) produced to the surface, including for its enhanced recovery;

(ii) stored, except at a battery site; (iii) transported from a well site to a battery or gas handling site; or (iv) compressed, except for gas that is for the most part a by-product of petroleum oil production; and (

b) no account is to be taken in the assessment of resource production equipment at a battery or gas handling site by which: (

i) petroleum oil and gas are separated, treated, processed, dehydrated or stored or are transported within the site; or (ii) petroleum oil and gas waste products are disposed of.

(3) Surface casing, production casing, or any other liner casing used in conjunction with producing oil or gas or in disposing of oil, gas,water or any other substance is not to be taken into account in an assessment.

(4) Resource production equipment that is used in association with a petroleum oil or gas well at which there has been no production in the12-month period ending September 1 of the previous year, other than production during testing, is to be assessed at only a nominal amountfor the current year.

(5) Subject to subsection (6), resource production equipment used in association with a petroleum oil or gas well is to be assessed in theyear after production operations at the well are suspended or abandoned.

(6) Resource production equipment is only to be assessed if it was used in association with a petroleum oil or gas well that was inproduction for more than 29 days.

(7) In the case of a mine, resource production equipment by which a mineral resource is extracted and produced, but not processed orrefined, is to be taken into account in an assessment.

(8) For the purposes of this section, the Lieutenant Governor in Council may make regulations: (

a) identifying resource production equipment or classes of resource production equipment to be taken into account in an assessment; (

b) identifying resource production equipment or classes of resource production equipment not to be taken into account in an assessment. C. Proper

interpretation of the Act [20] SAMA and Husky agree that under the Act, subject to an exception to which I will shortly turn, resource production equipmentis subject to municipal taxation. The steps leading to this conclusion are simple: (

a) all “property” in a municipality is subject toassessment (s. 194(1)); (

b) property includes land or “improvements” (s. 2(1)(gg)); (

c) improvements means (among other things)“resource production equipment” (s. 2(1)(q)(iii)). The exception, also agreed to by SAMA and Husky, is that resource productionequipment associated with non-producing petroleum oil or gas wells is not assessable, or is subject to nominal assessment (ss. 199(4) and(6)). [21] In the context of the three properties at issue in this appeal, SAMA also accepts that the Committee properly concluded thatvarious vessels and miscellaneous meters, switches and valves, are resource production equipment and that the three properties werenon-producing the previous year.

As a result, SAMA also agrees that in determining the assessed value of the properties, these items areto be assessed at nominal value. However, SAMA says that Husky’s tanks are different. Specifically, SAMA’s contention is that Husky’stanks do not fall within the definition of resource production equipment. [22] The determination of this appeal therefore devolves to a rather narrow issue, namely one of the proper

interpretation of thephrase “resource production equipment” as it is used in the Act. [23] The Supreme Court of Canada has, on numerous occasions, reiterated Driedger’s “modern approach” to statutory

interpretation(E.A. Driedger, Construction of Statutes, 2d ed (Toronto: Butterworths, 1983) at 87): 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.

See: Rizzo & Rizzo Shoes Ltd. (Re), (SCC), [1998] 1 SCR 27 at para 21 [Rizzo & Rizzo]; and ATCO Gas & PipelinesLtd. v Alberta (Energy & Utilities Board), 2006 SCC 4 at para 37, [2006] 1 SCR 140. [24] I have no hesitation in concluding that, if the words used within the statutory definition of “resource production equipment” aregiven their ordinary meaning and read in isolation, Husky’s tanks would qualify as “resource production equipment”.

Although quotedearlier, I reproduce again the statutory definition of this phrase: (nn) “resource production equipment” includes fixtures, machinery, tools, railroad spur tracks and other appliances by which a mine orpetroleum oil or gas well is operated, but does not include tipples, general offices, general stores, rooming houses, public halls or yards; [25] This inclusive definition contemplates that an item will qualify as resource production equipment if it is: (

a) a fixture,machinery, tool, railroad spur track, or appliance; (b) “by which a mine or petroleum oil or gas well is operated”; and (

c) not a tipple,general office, general store, rooming house, public hall or yard. All three preconditions have been met here. In its factum, SAMAdescribes the tanks as “fixtures, of a permanent nature, attached via industrial pipes to adjacent buildings”. The factual finding by theCommittee is that the oil tanks did not “have any other use but to store petroleum oil produced to the surface” from nearby oil wells (atpara 31). It is common ground that the chemical storage tanks were associated with readying extracted oil for transportation. No partysuggested that the tanks qualify as a tipple, general office, general store, rooming house, public hall or yard. (Because the term may not be

commonly seen, I would point out that, in its factum, SAMA describes a tipple as a structure used at a mine to load extracted product.) Therefore, Husky’s tanks on the three properties in question meet all the criteria for resource production equipment as set out in s. 2(1) (nn). [ 26 ] SAMA argues that this analysis is insufficient to determine the issue in this appeal.

SAMA advances several arguments. [ 27 ] SAMA argues in its factum that “an oil storage tank and/or a chemical storage tank may be present but are not required to be present, in order for an oil or gas well to operate and produce its product” (all emphasis in original). The hypothetical example given is the possibility that the oil from the wells could flow to a pipeline or battery site, which each have their own unique assessment rules. [ 28 ] Respectfully, SAMA seeks to impose a requirement into the definition of resource production equipment that is not present in s. 2(1)(nn).

The statutory definition does not refer to fixtures that are “required” for the operation of the mine or petroleum oil or gas well. Rather, the definition refers to fixtures, and so on, “by which the mine or petroleum oil or gas well is operated” (emphasis added). The statutory focus is on the actual use to which the fixture is put. The Act does not direct, nor do I see a purpose that would be served by implying, a particular method of operation of an oil or gas well before an item qualifies as resource product equipment.

Instead, resource production equipment is identified by its actual use in the operation of the mine or petroleum oil or gas well. [ 29 ] However, SAMA suggests that the broader statutory context supports its position. To understand SAMA’s argument, it is necessary to recall that all property in a municipality is to be assessed (s. 194(1)), and property means land, or improvements or both (s. 2(1)(gg)).

SAMA asserts that tanks are assessable as an improvement because they are “structures” or other “building” (i.e., an improvement pursuant to s. 2(1)(q)(i), as opposed to “resource production equipment” within s. 2(1)(q)(iii)). SAMA argues the four subclauses of s. 2(1)(q), which define “improvement”, must be read disjunctively “as it makes no logical sense to read the definition as requiring an improvement to fit within all four categories of the items listed” (emphasis in original).

SAMA invokes the presumption against tautology, which presumes that legislative drafters avoid superfluous words, and the corresponding presumption that the use of different words or a different form of expression indicates a different meaning was intended. [ 30 ] The lynchpin of this part of SAMA’s argument is an understanding of the word “structure” as exemplified in the decision of Denning L.J. (as he then was) in Cardiff Rating Authority v Guest Keen Baldwin’s Iron & Steel Co.

Ltd ., [1949] 1 KB 385 at 396 (CA) : A structure is something which is constructed, but not everything which is constructed is a structure. A ship, for instance, is constructed, but it is not a structure. A structure is something of substantial size which is built up from component parts and intended to remain permanently on a permanent foundation; but it is still a structure even though some of its parts may be moveable as, for instance, about a pivot.

Thus a windmill or a turntable is a structure. (Emphasis in original) [ 31 ] This definition was adopted in Great Lakes Power Limited v Municipal Property Assessment Corporation , 2012 ONSC 2390 at para 51 , 21 RPR (5th) 269 [ Great Lakes Power ]. SAMA asserts that a “tank is an object constructed from several parts, placed on land, meant to shelter moveable product – in the present case, oil”. SAMA further argues that the word “and”, as used in s. 2(1)(q), is to be read disjunctively.

I accept that the word “and” is capable of being disjunctive, however SAMA’s premise—that the definition of “improvement” contains self-contained categories—is otherwise flawed. Moreover, SAMA’s argument proceeds on a premise of consistency that the Act does not display. [ 32 ] The definition of “resource production equipment” specifically excludes improvements that can only be understood as constituting “structures”, namely “general offices”, “general stores”, “rooming houses” and “public halls”.

There would be no need to exclude these items from the definition of “resource production equipment” if the phrase did not encompass improvements that could also qualify as “structures”. In other words, in the context of s. 2(1)(nn), the presumption against tautology works against SAMA’s position since the express exclusion of items which would be structures from the statutory definition presupposes that some structures would (absent the express exclusion) qualify as resource production equipment.

Even within s. 2(1)(q)(i), into which definition SAMA argues Husky’s tanks fall, the Act refers to a “building or structure” (emphasis added), notwithstanding that the Act defines “building” as a type of “structure” (“‘building’ means any structure…”: s. 2(1) (e)). [ 33 ] Overall, I do not see in the statutory definition of “improvement” the consistency that would support SAMA’s contention that the four subclauses of s. 2(1)(q), which define “improvement”, are to be read in a way that they are watertight. [ 34 ] I am therefore not persuaded that it helps with a proper understanding of “resource production equipment” that, without the definition of that phrase, Husky’s tanks might be considered to be a “structure” or that Husky’s tanks might be considered both a “structure” and a fixture “by which a … petroleum oil or gas well is operated” (s. 2(1)(nn)). [ 35 ] To this point, I have approached the issue in this appeal by examining only the words found within the statutory

definitions. I find within these words the idea that resource production equipment is identified by the use of the improvement in the operation of a mine or petroleum oil or gas well. However, an examination of the statutory

definitions is too narrow a focus. According to the modern principle, “statutory

interpretation cannot be founded on the wording of the legislation alone” ( Rizzo & Rizzo at para 21 ). Of course, this is consistent with the direction given by the Legislature itself, in s. 10 of The

Interpretation Act, 1995 , SS 1995, c I-11.2 , which provides as follows: 10 Every enactment shall be interpreted as being remedial and shall be given the fair, large and liberal construction and

interpretation that best ensure the attainment of its objects. (See now: The Legislation Act , SS 2019, c L-10.2, s. 2 - 10(2) .)

[ 36 ] It is necessary to look up from a simple examination of the words used in the statutory

definitions and to examine how the defined terms work in the broader scheme of the Act . When account is taken of the rest of the Act , the conclusion that Husky’s tanks constitute resource production equipment becomes even clearer. [ 37 ]

Section 199 of the Act deals with the assessment of pipelines, mines, and petroleum oil and gas wells. Section 199(6) provides that resource production equipment associated with a petroleum oil or gas well “is only to be assessed” if it was “in production for more than 29 days”. SAMA has provided no explanation for this provision other than what appears from a plain reading of it: until this minimal temporal threshold of production is met, notwithstanding that resource production equipment falls within the definition of “property”, such property is not subject to assessment at all.

I find this important, because it reinforces that resource production equipment must be put to economic use before it is to be considered for municipal taxation. [ 38 ] Once resource property has achieved more than 29 days of production on one occasion, the Act sets out specific assessment rules for the pipeline, mine, or petroleum oil or gas well. Section 199(2) reads as follows:

(2) Subject to subsections (3) and (4), in the case of petroleum oil and gas wells: (

a) account is to be taken in the assessment of any resource production equipment by which petroleum oil and gas are: (

i) produced to the surface, including for its enhanced recovery; (ii) stored, except at a battery site; (iii) transported from a well site to a battery or gas handling site; or (iv) compressed, except for gas that is for the most part a by-product of petroleum oil production; and (

b) no account is to be taken in the assessment of resource production equipment at a battery or gas handling site by which: (

i) petroleum oil and gas are separated, treated, processed, dehydrated or stored or are transported within the site; or (ii) petroleum oil and gas waste products are disposed of. [ 39 ] Three features of this provision are of immediate importance. Of first note are the active verbs used in s. 199(2)(a): “produced”, “stored”, “transported”, “compressed”. These verbs all relate to the operation of the petroleum or gas well. This reinforces the idea that the identification of resource production equipment is achieved by its connection to the actual operation of a petroleum oil or gas well.

Second, the special rules surrounding the assessment of battery sites reinforce a broader decision by the Legislature to grant special treatment to the property associated with the production from oil and gas wells. Third, and most relevant to the question raised in this appeal, the Act directs that account is to be taken in the assessment of resource production equipment by which petroleum oil and gas are “ stored , except at a battery site” (s. 199(2)(ii), emphasis added). SAMA has identified no usual or ordinary means for the storing of petroleum oil produced from a well other than a tank.

I cannot reconcile the specific legislative direction that “account is to be taken” of the resource production equipment by which the production from an oil or gas well is to be stored with SAMA’s argument that storage tanks are not resource production equipment.

Instead, the inevitable legislative signal is that a tank used for such purpose is resource production equipment. [ 40 ] The legislative direction contained in s. 199(2)(a), that “account is to be taken in the assessment of any resource production equipment by which petroleum oil and gas” is stored (i.e., tanks), is expressly made subject to ss. 199(3) and (4). Only s. 199(4) is relevant to this appeal. It provides as follows:

(4) Resource production equipment that is used in association with a petroleum oil or gas well at which there has been no production in the 12-month period ending September 1 of the previous year, other than production during testing, is to be assessed at only a nominal amount for the current year. [ 41 ] Section 199(4) provides a further indication that the value of resource production equipment for assessment purposes is tied to the continued use of that equipment to produce oil or gas.

All of this leads to the conclusion that SAMA’s arguments, premised on the tanks at issue in this appeal being structures or a type of building, misses the point of the legislation. The question is not whether tanks may otherwise be a structure or a building.

Rather, the issue is whether the tanks qualify as resource production equipment, in which case the specific rules that relate to the taxation of mines and petroleum oil and gas wells apply. [ 42 ] Husky argued, and SAMA did not suggest otherwise, that the rules found in s. 199 relating to the assessment of resource properties are unique within the assessment scheme in this province, as the Act does not otherwise distinguish the value of improvements that are put into actual use and those which are not.

In my respectful view, the Committee correctly identified the legislative purpose inherent in these interrelated positions when it stated as follows: [33] We see the intent of the legislation, and of the legislators, as follows. If RPE is used to store petroleum oil associated with a producing oil well, then it is to be assessed. If RPE used to store petroleum oil is associated with a non-producing well … no account in assessment is to be taken. It appears the intent of the legislators was based on economics. If wells are producing, then associated RPE is subject to assessment and, by extension, taxation.

If wells are not producing or the RPE is located at a well site where certain processes take place, the RPE is not subject to assessment. [ 43 ] There could be several policy reasons underpinning this legislative purpose. It might be that the Legislature took the view that if a resource is not being produced from a petroleum oil or gas well, then the resource production equipment adds no value to that property. It may be that the Legislature simply engaged in an economic trade-off to encourage oil production. The policy reason underpinning the legislative purpose is not important.

What is important is that this understanding of the legislative scheme finds harmony between the words of the Act on the one hand, and its object and scheme on the other.

[44] I appreciate that, on the reading I give to s. 199, when a petroleum oil or gas well falls into non-production, such that s. 199(4)becomes applicable, the effect is to remove the value of the resource production equipment from the assessment roll. SAMA suggeststhere will be calamitous effects associated with this

interpretation. On the other hand, the definition of resource production equipment inother ways expands the scope of what is assessable property. In this regard, excluded from the definition of an improvement found in ss.2(1)(q)(

i) and (ii) is “machinery and equipment unless the machinery and equipment is used to service the building or structure”. Thedefinition of resource production equipment specifically includes “machinery, tools … by which a mine or petroleum oil or gas well isoperated” (at s. 2(1)(nn)). In the result, the definition of resource production equipment, in conjunction with s. 199, has features that areboth additive and subtractive to the value of the assessment base. [45] Nothing in the various decisions relied on by SAMA point in a different direction.

Instead, each of these decisions needs to beunderstood in the various different statutory contexts in which they were made. For example, in Minister of Municipal Affairs (N.B.) vCanaport Ltd., (SCC), [1976] 2 SCR 599 [Canaport], the Supreme Court of Canada dealt with the question as to whethera variety of different types and sizes of tanks were to be treated as “buildings” for the purpose of the New Brunswick property taxationstatute. That statute had no equivalent to Saskatchewan’s definition of resource production equipment, or s. 199 with its unique rules.

Assuch, Canaport is of no assistance to the determination of this appeal. For similar reasons, Irving Oil Co.

Ltd. v Minister of MunicipalAffairs (N.B.), (SCC), [1977] 1 SCR 310, Nabisco Brands Ltd. v Ontario (Regional Assessment Commissioner, Region15) (1988), (ON CA), 64 OR (2d) 135 (CA) [Nabisco Brands], Great Lakes Power Limited v Municipal PropertyAssessment Corporation, 2012 ONSC 2390, 21 RPR (5th) 269, and The Executive Director of Assessment v Irving Oil Limited, 2005NBCA 39, 282 NBR (2d) 275, provide no assistance to SAMA in this case. [46] In previous decisions, the Committee had relied on Canaport and Nabisco Brands to support a conclusion at odds with thedecision under appeal in this case.

I agree with Husky when it argues that decisions of the Committee do not acquire validity by virtue ofbeing previously followed by other committees. The important point is that none of these previous committee decisions were subject to anappeal to this Court and, in any event, they are not binding on this Court. [47] SAMA helpfully traced the history of property taxation of resource properties in this province.

As early as 1920, landcontaining coal and upon which a mine was operated was “assessed for the purposes of a school district at its value as a mine inclusive ofplant and equipment”: The Rural Municipality Act, RSS 1920, c 89, s. 233(6). In the years that followed, the applicable legislation wasrefined. By 1946, features of the legislation began to resemble the current Act. In that year, The Rural Municipality Act, 1946, SS 1946, c32, introduced a definition of “plant and equipment” (s. 286.11(a)): 11. (

a) the plant and equipment of a mine shall be assessed at its fair value. For the purpose of this paragraph “plant and equipment”includes buildings, fixtures, machinery, tools, railroad spur tracks and other appliances by which the mining is accomplished but does notinclude tipples, general offices, general stores, rooming houses, public halls or yards. (

b) plant and equipment assessable under this paragraph shall not be assessed for business purposes; … [48]

Section 285.13(

a) of The Rural Municipality Act, RSS 1953, c 140, added explicit reference to the taxation of plant andequipment at petroleum oil or gas wells. [49] So far as concerns the issues in this appeal, there was little further change in the relevant statutory language until 1989. TheRural Municipality Act, 1989, SS 1989, c R-26.1 [1989 Act], introduced

definitions of “building” and “improvement” and moveddefinition of “plant and equipment” from the substantive body of the legislative text to the

definitions section: (c) “building” means any structure used or occupied or tended for supporting or sheltering any use or occupancy and includes a trailer,mobile home or portable shack that is: (

i) not in storage; (ii) situated within the municipality for a period of more than 30 days; or (iii) not licensed pursuant to clause 213(1)(d); … (m) “improvement” means: (

i) a building or structure erected or placed on, over or under land or over or under water, but does not include machinery and equipment,other than machinery and equipment used in connection with the handling or storage of fuel or fertilizer, unless the machinery andequipment is used to service the building or structure; (ii) anything affixed to or incorporated in a building or structure affixed to land, but does not include machinery and equipment unless themachinery and equipment is used to service the building or structure; (iii) the plant and equipment of any oil or gas well or mine in the municipality; and (iv) any pipeline on or under land in the municipality; … … (cc) “plant and equipment” means buildings, fixtures, machinery, tools, railroad spur tracks and other appliances by which a mine orpetroleum oil or gas well is operated, but does not include tipples, general offices, general stores, rooming houses, public halls or yards; … [50] The legislative provisions respecting assessments of improvements in the 1989 Act read in part as follows:

(1) Subject to subsection (2), improvements are to be assessed at their fair value.

(2) Improvements consisting of buildings are to be assessed at not more than 50% of their fair value.

(3) The dominant and controlling factor in the assessment of improvements is equity.

(4) Improvements are to be assessed apart from the land on which they are situated.

(5) The value at which any: (

a) improvement other than a building is assessed is to bear a fair and just proportion to the value at which other improvements in the municipality other than buildings are assessed; (

b) building is assessed is to bear a fair and just proportion to the value at which other buildings in the municipality are assessed.

(6) In determining the fair value of any improvement, the assessor shall take into consideration and be guided by any applicable formula, rule or principle set out in the assessment manual prepared for assessors and approved by the agency and any circumstances that may affect its value.

(7) Railway superstructure on land owned or occupied by a railway company shall not be assessed. [ 51 ] As a result, as of the 1989 Act , “plant and equipment” were assessed as an improvement and improvements consisting of buildings were assessed at not more than 50% of their fair value. However, this rule was not inviolable.

For example, pursuant to s. 285(7), “[r]ailway superstructure on land owned or occupied by a railway company” was not to be assessed. [ 52 ] In 1996, the Legislature made what SAMA accurately describes as “large scale amendments” to the legislation: The Rural Municipality Amendment Act, 1996 , SS 1996, c 58 [ 1996 Amendment Act ]. These legislative changes form the foundation of the provisions of the Act relevant to this appeal. The 1996 Amendment Act modified the definition of the term “improvement”, as it appeared in the 1989 Act , to replace “plant and equipment” with “resource production equipment”.

The definition of resource production equipment was identical to that which appears in the current Act . A new provision, s. 283.2 , was added to the 1989 Act that largely parallels s. 199 in the current Act . [ 53 ] Between 1989 and the dates relevant to this appeal, three other changes were made to this provision. First, The Rural Municipality Amendment Act, 2000 , SS 2000, c 25 , changed the reference date for determining non-production and added the equivalents to what are now ss. 199(5) and (6) .

Second, grammatical changes were made as part of a broader reworking of the legislation when the current Act was introduced in 2005. As part of this, s. 283.2 became s. 199. Finally, in 2006, s. 199 was amended by striking out “land or improvements” and substituting “property”: The Municipalities Amendment Act, 2006 , SS 2006, c 7, s. 20 . [ 54 ] SAMA attempts to draw several points from this history.

First, SAMA observes that by virtue of the 1996 Amendment Act , the concept of “plant and equipment” was replaced with “resource production equipment”, and the concept of “buildings” was no longer found in the definition of the new phrase. SAMA says this implies that buildings were still assessable, and oil tanks should be assessed as buildings. However, as pointed out by Husky, The Saskatchewan Industrial Assessment Manual

Schedule of Values for Assessment Purposes , 1st ed ([Regina]: Saskatchewan Assessment Authority, 1982) treated both oil storage and chemical storage tanks as oil and gas field equipment. Oil and gas field buildings, on the other hand, were separately identified and rated as such.

I agree, therefore, with Husky when it points out that “[a]gainst this background, the removal of ‘buildings’ from what is included in resource production equipment, would not affect the status of oil field tanks”. [ 55 ] The second point SAMA attempts to draw comes from the responses of the Minister of Municipal Government to questions posed during a committee meeting discussing the 1996 Amendment Act . The Minister was asked to explain “[w]hat sort of equipment would be included in your definition of resource production equipment”, and to give examples.

The Minister responded as follows (Saskatchewan, Legislative Assembly, Debates and Proceedings ( Hansard ), 23rd Leg, 1st Sess (May 9, 1996) at 1500 (Carol Teichrob)): Hon. Mrs. Teichrob: — Mr. Chairman, there is on

section 3 (

f) where it refers to machinery … this could be, when it’s resource production equipment, it could be pumps, jacks, flow lines, anything to do with the production of the resource — that would be in the definition of machinery. Then there’s other, you know, there’s batteries, tanks, everything, you know, that’s not machinery. But the machinery could be jacks, compressors, you know, the like. [ 56 ] SAMA acknowledges that the exchange “is admittedly not a straightforward extrapolation of what is and is not considered ‘resource production equipment’”.

Nonetheless, SAMA contends that the Minister’s comments support the contention that resource production equipment is not intended to encompass tanks. SAMA asserts that it is instructive that the Minister grouped tanks with batteries as “being something opposite or not included within [the definition of] machinery”. Respectfully, the Minister’s comments provide no support at all for the idea that tanks cannot constitute resource production equipment. Resource production equipment is defined as including “fixtures, machinery, tools, railroad spur tracks and other appliances”.

Although asked about resource production equipment generally, the Minister’s answer relates only to “machinery”. As I have explained, Husky tanks fall within the definition of resource production equipment because they are fixtures. The Minister did not say or suggest that tanks might not constitute resource production equipment, just that tanks were not “machinery”.

Moreover, I do not know how the Minister could have suggested that tanks would not qualify as resource production equipment when one of the provisions introduced by the 1996 Amendment Act states explicitly that “resource production equipment by which petroleum oil and gas … is stored … is to be taken into account in an assessment” (s. 283.2(2) (a)(ii)). [ 57 ] In conclusion, in my respectful view, the Committee was correct when it concluded that Husky’s tanks associated with the three subject properties qualified as “resource production equipment”.

The Committee Decision not only comports with the words of the Act , when they are read in their entire context and in their grammatical and ordinary sense, but this

interpretation sits comfortably with the Legislature’s evident intent and the statutory scheme as a whole.

[ 58 ] I would clarify one aspect of the Committee Decision . At various junctures in its decision, the Committee spoke as if Husky’s tanks “should not be assessed”. As I interpret the Act , once a petroleum oil or gas well has met the minimal production threshold set out in s. 199(6) , resource production equipment is assessed .

Pursuant to s. 199(4), if there has been no production in the 12-month period ending September 1 of the previous year, other than production during testing, resource production equipment is to be assessed, but the value to be attached to the resource production equipment is to be a nominal amount for the current year. [ 59 ] Based on all of this, in my respectful view, the Committee was correct when it determined that, for 2017, Husky’s tanks should be assessed on the basis that they were resource production equipment that had nominal value. VI.

Conclusion [ 60 ] For the reasons give above, I would dismiss the appeal with a single set of costs in favour of Husky. “Leurer J.A.” Leurer J.A. I concur. “Whitmore J.A.” Whitmore J.A. I concur. “Whitmore J.A.” For Ryan-Froslie J.A.