ASSESSOR OF AREA 23 - KAMLOOPS GREATER VANCOUVER SEWERAGE & DRAINAGE DISTRICT & VILLAGE OF CACHE CREEK

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1 The following version is for informational purposes only, for the official version see: for Stated Cases see also: for Property Assessment Appeal Board Decisions SC 437 AA23 v GVS & D Dist. & Cache Creek ASSESSOR OF AREA 23 - KAMLOOPS v. GREATER VANCOUVER SEWERAGE & DRAINAGE DISTRICT & VILLAGE OF CACHE CREEK Supreme Court of British Columbia (L000222) Vancouver Registry Before the HONOURABLE MADAM JUSTICE LOO G. McDannold for the Appellant B.T. Gibson for the Respondent, Greater Vancouver Sewerage & Drainage District C.S. Murdy for the Respondent, Village of Cache Creek Vancouver, June 7, 2000 Tax Exemption Statutory Interpretation Greater Vancouver Sewerage and Drainage District Act Section 65 The Greater Vancouver Sewerage and Drainage District (GVS & DD) was responsible for the management of solid waste disposal for the Greater Vancouver Regional District (GVRD). The GVS & DD hauled solid waste from the GVRD to a landfill in Cache Creek. The GVS & DD owned the subject property in Cache Creek located across the Trans Canada Highway adjacent to the landfill which was used by its trucking contractor for administrative offices, trailer parking and refueling. The Property Assessment Appeal Board held those lands to be exempt from taxation pursuant to Section 65(2) of the GVS & DD Act. The Assessor appealed arguing that on an examination of the history of the legislation, the scheme of the Act, and the intention of the legislature that it was not intended to grant the GVS & DD a province wide tax exemption for any lands which it owned outside of the GVRD. HELD: Appeal Dismissed. The intention of the legislature was that the GVS & DD could own and operate works outside of the GVRD and be exempt from taxation. The Court rejected the Assessor s argument that such an interpretation created an absurdity and was contrary to the intention of the legislature. Reasons for Judgment June 22, 2000 This is a Stated Case filed by the Property Assessment Appeal Board (the "Board") pursuant to s. 65(3) of the Assessment Act, R.S.B.C. 1996, c. 20 at the request of the Appellant, Assessor of Area 23 Kamloops (the "Assessor"). The Board found that lands and improvements in the Village of Cache Creek owned by the Greater Vancouver Sewerage and Drainage District (the "GVSDD") are exempt from taxation under s. 65(2) of the Greater Vancouver Sewerage and Drainage District Act, S.B.C. 1956, c. 59 (the "GVSDD Act"). page 1

2 THE MATERIAL FACTS The material facts in the Stated Case are as follows: 1. The appeal before the Board was from the decision of the 1999 Property Assessment Review Panel. The issue before the Board was whether lands and improvements are exempt from taxation under s. 65(2) of the GVSDD Act. 2. The property comprises one legal parcel of approximately 27 acres in Cache Creek. It is owned by the GVSDD. 3. An 8.17 acre portion of the property is used by Wastech Services Ltd. ("Wastech") pursuant to an agreement with the GVSDD. It is used for administrative offices, vehicle servicing, and trailer parking and refuelling in support of a solid waste disposal facility operated by Wastech on behalf of the GVSDD located across the Trans Canada Highway. The buildings used by Wastech are owned by the GVSDD. Work at the site is performed by Wastech employees. 4. An area of the property (approximately 2.5 acres) is leased by Casadio and Sons Holding Ltd. ("Casadio"). Bobell Trucking ("Bobell") occupies approximately 2.15 acres pursuant to a licence acres, known as the remainder portion, are vacant land not used for any purpose. 6. Only the area used by Wastech and the remainder portion were in issue before the Board. 7. The GVSDD became the registered owner of the property in Prior to that time, the GVSDD was the beneficial owner of the property which was registered in the name of Wastech. 8. The GVSDD was created in 1956 by the GVSDD Act. Its original objects were, for the construction, maintenance, operation and administration of its major sewerage and drainage facilities in substantial accordance with a 1953 report of a board of engineers (the "Hyde Report"). Its objects were expanded by legislation in 1974 to include the disposal of all types of waste in substantial accordance with a report of a board of engineers (the "Bunnell Report"). The Greater Vancouver Regional District (the "GVRD") was incorporated in 1967 by letters patent. Its member municipalities include Burnaby, Coquitlam, Delta, New Westminster, North Vancouver (City and District), Port Coquitlam, Port Moody, Richmond, Surrey, Vancouver, West Vancouver, White Rock and the UBC Endowment Lands. It is an umbrella organization created under the Municipal Act that does the work of the GVSDD and other organizations. The GVSDD itself has no employees. 9. The GVSDD performs functions related to intermunicipal sewage, storm drainage and waste management in the lower mainland. The lower mainland municipalities participate in the services provided by the GVSDD, pay the cost of those services and receive the benefit of them. The GVSDD does not provide services to the Village of Cache Creek. The Village of Cache Creek and other communities in the area such as Ashcroft deposit waste at the Cache Creek Landfill. 10. The Cache Creek landfill was opened in Waste from the member municipalities of the GVRD is collected by municipal trucks or private contractors and taken to transfer stations in the lower mainland where it is sorted and then hauled by truck and trailer to Cache Creek. The GVSDD contracts with Wastech to receive and transport waste and operate and maintain the transfer stations and Cache Creek landfill as part of a comprehensive agreement for the provision of waste management in accordance with the Greater Vancouver Regional Solid Waste Management Plan. Wastech subcontracts with Bobell to haul the waste from the lower mainland transfer stations to the Cache Creek Landfill. The trailers used to transport the waste are owned page 2

3 by the GVSDD; the trucks that haul the trailers are owned by Bobell and the drivers are Bobell employees. 11. The Board found that the 8.17 acre portion of the property used by Wastech is exempt from taxation under section 65(2) of the GVSDD Act, but that the remainder portion is not exempt. 12. The Board ordered the Assessor to amend the 1999 Roll so as to exempt the 8.17 acre portion of land used by Wastech together with the improvements on it from taxation. I am told that paragraphs 4 and 5 of the Stated Case are no longer relevant. The questions for the opinion of this court are as follows: (a) Did the Board err in law in the interpretation of s. 65(2) of the GVSDD Act when it exempted a portion of land and improvements from taxation? (b) Did the Board err in law in granting a tax exemption pursuant to s. 65(2) of the GVSDD Act for land and improvements located in the Village of Cache Creek? THE GVSDD ACT The following sections of the GVSDD Act are relevant: Interpretation 2. In this Act, unless the context otherwise requires:- "Corporation" means the Greater Vancouver Sewerage and Drainage District constituted under this Act; "Member municipality" means a municipality that is a member of the Corporation; Area and membership 5. (1) The area of the corporation shall include the respective areas within the territorial limits of the following municipalities, which municipalities shall be the members of the Corporation, that is to say:- (a) City of Vancouver; (b) The Corporation of the District of Burnaby. (2) The University Endowment Lands as defined in the "University Endowment Lands Administration Amendment Act, 1950," being chapter 76 of the Statutes of 1950, shall also be deemed to be a part of the said area, subject to the limitations set out in this Act. page 3

4 Authentication of by-law 15. Every by-law shall be under the seal of the Corporation, and shall be signed by the Chairman, or by the person presiding at the meeting at which the by-law has been passed, and by the Secretary or Assistant Secretary. Tax exemption Powers 65. (1) All land and personal property owned by the Corporation, or held, occupied, or used by it, shall be exempt from taxation under the "Taxation Act". (2) Notwithstanding anything to the contrary in any general, public, private, or special Act, all sewers, drains, plants, buildings, structures, and other works of the Corporation shall be exempt from taxation by a municipality, either as land, improvements, personal property, or otherwise howsoever. (S.B.C. 1959, c. 101, s. 5). 7. (1) The Corporation has all the rights and is subject to all the liabilities of a corporation and (a) may sue and be sued; (b) may acquire, hold, and use any property of any nature whatsoever within or without its area for any of the purposes of its objects; (2) In addition to its other powers, the Corporation shall have the following powers:- (a) To finance, design, and construct sewerage and drainage facilities in addition to those requisite for its function for any member municipality at the sole and exclusive cost of such municipality and upon the request of such municipality; and (b) To finance, design, construct, maintain, operate, and administer sewerage and drainage facilities for the Crown within or without the area of the Corporation at the sole and exclusive cost of the Crown; and (c) To establish the uses to which its facilities may be put and by whom they may be used; and Further objects 7A. (5) In addition to its other powers, the Corporation shall have the following powers: (a) To finance, design, construct, maintain, operate, and administer waste disposal facilities for the Crown in right of the Province within or without the area of the Corporation at the sole and exclusive cost of the Crown; page 4

5 (f) To enter into agreements with a municipality and any other person relating to the removal and disposal of waste, within or without the area of the Corporation; [Emphasis added.] Under s. 5, which has never been amended, the area of GVSDD includes the territorial limits of its only two member municipalities: Vancouver and Burnaby. Section 66 provides that the Lieutenant-Governor in Council has the power to order a municipality to be a member. Since the hearing of this application, counsel have informed me that the only municipality to have been added as a member of the GVSDD is the Township of Langley which became a member on January 1, 1987 by Order-in-Council 2186 made December 10, ARGUMENT OF THE ASSESSOR AND CACHE CREEK The Assessor submits that when the GVSDD was incorporated, the legislature did not contemplate that it would own lands or works outside of Greater Vancouver, and therefore the legislature did not intend to grant the GVSDD a tax exemption for any land or works it owned outside of Greater Vancouver. The legislature intended to allow non-member municipalities in Greater Vancouver to benefit from GVSDD services, but not to impose property tax on those works installed to deliver the services. Counsel for the Assessor agrees that on a first reading, s. 65 seems clear and unambiguous, but submits that considering the entire Act and the intention of the legislature, the section is not clear. The Assessor, who was the Respondent on the appeal before the Board, says that its argument was accurately set out by the Board at pages 4-5 where it stated: In anticipation of the Respondent s argument that the legislation was never intended to give an exemption for GVSDD lands and improvements outside of its member municipalities in the lower mainland, the Appellant submits that the GVSDD Act expressly differentiates between "municipalities" and "member municipalities" and it is, therefore, not tenable to contend that the reference to "municipality" in section 65(2) is restricted to "member municipalities". Such an interpretation would be contrary to the general principles of statutory interpretation. Furthermore, the reference to the Taxation Act (now the Taxation (Rural Area) Act), which applies to unincorporated areas, indicates a clear intention that the GVSDD could own property outside its member municipalities. In answer to the Appellant s argument that the legislation did contemplate that the GVSDD could own land outside of member municipalities because of the reference in section 65(1) to the Taxation Act, the Assessor says the reference is there because of the inclusion in the GVSDD of the University Endowment Lands and because of the recommendation to build a sewage treatment facility on Crown land at Iona Island. page 5

6 The Assessor says it was the intention of the legislature that municipalities who benefit from the services provided by the GVSDD were not to impose property taxes on the works installed to deliver those services so that all participating municipalities would share the cost of providing a common service. The Assessor submits it is an absurd and unjust interpretation which the Appellant seeks, contrary to the intention of the legislation, and the principles of statutory interpretation enunciated by the Supreme Court of Canada in Quebec (Communaute Urbaine) v. Corp. de Notre Dame de Bon Secours [1994] 3 S.C.R. 3. The Assessor submits the Appellant can point to no valid legislative, social or policy reason to support the broad interpretation which it seeks. It is absurd and unjust that the Village of Cache Creek would lose tax revenue from a statutory corporation located hundreds of kilometers away from the lands and improvements in question and which delivers no services or benefits to the taxing jurisdiction. However, the Assessor maintains that the Board then erred in the following passages of its decision at pages 7-8, and 9: The Board finds, however, upon reviewing the whole of the GVSDD Act, that the Act clearly contemplated that the GVSDD could own property outside of its member municipalities. The following provisions speak to this possibility: 7. (1) The Corporation has all the rights and is subject to all the liabilities of a corporation and (b) may acquire, hold, and use any property of any nature whatsoever within or without its area for any purposes of its objects 7A. (5) In addition to its other powers, the Corporation shall have the following powers: (d) To purchase or otherwise acquire waste disposal facilities of member municipalities and others (f) To enter into agreements with a municipality and any other person relating to the removal and disposal of waste, within or without the area of the Corporation 24. The Corporation shall have power, within or without its area, at any time to enter upon any lands, streets, waters, or watercourses, without the consent of the owner thereof, for the purpose of making surveys and other examinations to determine whether or not the same are required in the carrying-out of its objects or the exercise of its powers. 26. The Corporation shall have power to expropriate any land, watercourse, sewer, or drain within its area or without its area after notice has been given to the municipality in which the land is situate for any of the purposes of its objects. At the end of the day, the legislation speaks for itself. If it was not intended to exempt land owned by the GVSDD outside of its member municipalities but used for the works of the GVSDD, the language adopted in the legislation does not carry out that intent. The legislation specifically defines and refers to "member municipalities" and the Board can page 6

7 only assume that when it means to say "member municipalities" it does so, and if the legislation says "a municipality" as it does in section 65(2), those words are not intended to mean "member municipalities". The Respondents are asking the Board to add words to the legislation. That task is not for the Board, but for the legislature itself. If the result is absurd and unjust as submitted by the Respondents, in light of the clear language of the legislation, it is a situation that the legislature will have to address. [Emphasis added by the Board.] The Assessor submits that by ignoring the legislative intent, the Board s interpretation of the statute leads to absurd results: it is absurd to grant the GVSDD a tax exemption throughout the Province, and it is absurd that Cache Creek loses tax revenue from a statutory corporation that is geographically located hundreds of kilometres away and delivers no benefits to Cache Creek. The Respondent Cache Creek supports the position of the Assessor. It maintains that its tax base is built on a finite amount of lands, and by granting the GVSDD a tax exemption, the lands are removed from the tax base. This significantly impacts on Cache Creek and its residents who receive no benefit from the operations of GVSDD, yet are required to provide a windfall to the residents of Greater Vancouver. Cache Creek says it is absurd to think that could have been contemplated by the legislature. The Assessor says that it is wrong to strictly construe the plain words of s. 65 because to do so results in a meaningless and absurd interpretation, and avoids the intention of the legislature. The Assessor relies on Quebec (Communaute Urbaine) v. Corp. Notre-Dame de Bon-Secours, [1994] 3 S.C.R. 3 (S.C.C.) at pages 15-16: In Canada it was Stubart Investments Ltd. v. The Queen, [1984] 1 S.C.R. 536, which opened the first significant breach in the rule that tax legislation must be strictly construed. This Court there held, per Estey J., at p. 578, that the rule of strict construction had to be bypassed in favour of interpretation according to ordinary rules so as to give effect to the spirit of the Act and the aim of Parliament: In The Queen v. Golden, [1986] 1 S.C.R. 209, at pp , Estey J. for the majority explained Stubart as follows: In Stubart the Court recognized that in the construction of taxation statutes the law is not confined to a literal and virtually meaningless interpretation of the Act where the words will support on a broader construction a conclusion which is workable and in harmony with the evident purposes of the Act in question. Strict construction in the historic sense no longer finds a place in the canons of interpretation applicable to taxation statutes in an era such as the present, where taxation serves many purposes in addition to the old and traditional object of raising the cost of government from a somewhat unenthusiastic public. And further, at page 20: The rules formulated in the preceding pages, some of which were relied on recently in Symes v. Canada, [1993] 4 S.C.R. 695, may be summarized as follows: page 7

8 - The interpretation of tax legislation should follow the ordinary rules of interpretation; - A legislative provision should be given a strict or liberal interpretation depending on the purpose underlying it, and that purpose must be identified in light of the context of the statute, its objective and the legislative intent: this is the teleological approach; - The teleological approach will favour the taxpayer or the tax department depending solely on the legislative provision in question, and not on the existence of predetermined presumptions; - Substance should be given precedence over form to the extent that this is consistent with the wording and objective of the statute; - Only a reasonable doubt, not resolved by the ordinary rules of interpretation, will be settled by recourse to the residual presumption in favour of the taxpayer. The Assessor submits that the decision of the Board offends the rule that interpretation of statutes should avoid absurd results, and relies on R. Sullivan, Driedger on the Construction of Statutes, 3 rd ed. (Toronto: Butterworths, 1994) at pages 85-86: Summary of the modern absurdity rule. The modern view of the "golden" rule may be summarized by the following propositions. (1) It is presumed that legislation is not intended to produce absurd consequences. (2) Absurdity is not limited to logical contradictions and internal incoherence; it includes violations of justice, reasonableness, common sense and other public standards. Also, absurdity is not limited to what is shocking or unthinkable; it may include any consequences that are judged to be undesirable because they contradict values or principles that are considered important by the courts. (3) Where the words of a legislative text allow for more than one interpretation, avoiding absurd consequences is a good reason to prefer one interpretation over the other. Even where the words are clear, the ordinary meaning may be rejected if it would lead to an absurdity. (4) The more compelling the reasons for avoiding an absurdity, the greater the departure from ordinary meaning that may be tolerated. However, the interpretation that is adopted should be plausible. However, immediately following that passage in Driedger, the author deals with the categories of absurdity, and at page 93 states: The court s jurisdiction to avoid absurdity parallels and complements its jurisdiction to promote legislative purpose. Whereas purposive analysis justifies the preference for interpretations that lead to good consequences, which are presumed to be intended, avoiding absurdity justifies the rejection of interpretations that lead to bad consequences, which are presumed to be unintended. page 8

9 ANALYSIS The GVSDD Act has the following provisions which are relevant to this Stated Case: Section 65(1) provides that all land owned by the GVSDD is exempt from taxation under the Taxation Act. Section 65(2) provides that the works of the GVSDD are exempt from taxation by a municipality. Sections 7 and 7A contemplate that the GVSDD would own works within and without its area, and would operate waste disposal facilities within and without its area. Similarly, s. 26 gives the GVSDD power to expropriate any land, watercourse, sewer or drain, within or without its area. It provides: Expropriation powers 26. The Corporation shall have power to expropriate any land, watercourse, sewer, or drain within its area or without its area after notice has been given to the municipality in which the land is situate for any of the purposes of its objects. [Emphasis added.] "Member municipality" is defined in s. 2 to include only the municipalities of Vancouver and Burnaby. Throughout the Act, there are references to the term "member municipality", rather than "municipality": See ss. 6(3), 7(2)(a), 7(3), 7(4), 7(5), 7A(4), 7A(5)(d), 8(3), 29(1), 29(2), 30, 32, 36(3), 54, 55, 56, 58.2(1), 58.2, 58.3, 58.4(5) and 59. For example, ss. 29, 32 and 56 provide as follows: Members sewers and drains 29. (1) A member municipality shall not construct a new sewer or drain or make any alteration, connection, or extension to an existing sewer or drain until it has submitted plans and particulars to the Corporation on forms supplied by the Corporation and the plans and particulars have been approved by the Corporation. (2) Subject to the direction, control, and regulation of the Corporation, every member municipality shall connect its sewers and drains with a sewer or drain of the Corporation. Filing plan of sewerage and drainage areas 32. The Corporation, on establishing a sewerage or drainage area, shall file in the Land Registry Office of the land registration district in which the lands comprised therein are situate a plan showing such sewerage or drainage area, and, on disestablishing or altering the boundaries of a sewerage or drainage area, shall in like manner file an amended plan showing the sewerage or drainage area as disestablished or altered. Each such plan or amended plan shall be sent to the member municipality in which the sewerage or drainage area is situate. Date of payment of annual estimate 56. The sums of money to be paid by the several member municipalities to the Corporation in any year pursuant to this Act shall be due and payable on the fifteenth day of August in such year, and, if not paid on the due date, shall bear interest therefrom until the date of payment at the rate of six per centum per annum. page 9

10 [Emphasis added.] Mr. Gibson, for the GVSDD, says that the Assessor has not focused on the correct issue. The question is not whether it was the intention of the legislature to deprive Cache Creek of tax revenue, but whether it was the intention of the legislature to exempt the works of the GVSDD from tax. The objects of the GVSDD include the disposal of all types of waste, a form of pollution control. There are a number of exemptions in s. 339 of the Municipal Act, R.S.B.C. 1996, c. 323, which apply to works used to control pollution. The exemptions apply throughout the Province. There is no suggestion that the exemptions only apply if the municipality in which the works are situate benefits from the works. Mr. Gibson uses the following as examples: works in the City of Vancouver which restrict air pollution are exempt from taxation even though the municipalities that primarily benefit from the works are in the Fraser Valley; water treatment facilities in Langley are exempt from taxation even though the municipalities that primarily benefit from the works are downstream; and hospitals and schools are exempt from paying tax, even though as Mr. Gibson points out, they may service residents from the entire Province. I find that the words of the statute are clear. Reading the Act as a whole, it is clear that the intention of the legislature was that the GVSDD could own and operate works outside of the Greater Vancouver Regional District and be exempt from taxation. I do not find that interpreting the legislation in this manner results in an absurd consequence. The legislation may impact on the taxing powers of a municipality that does not directly or indirectly benefit from the works of the GVSDD, but that, in my view, is not an absurdity. I do not find that the Board erred in its interpretation of s. 65(2) and therefore my answer to both questions 1 and 2 is no. page 10