Bowater Mersey Paper Company Ltd. v. Queens (Municipality)

Bowater Mersey Paper Company Ltd. v. Queens (Municipality) Court Court of Appeal Date 2000-06-08 Citation 2000 NSCA 78 Docket CA 161734 Judge/Registrar/Adjudicator Cromwell, Thomas A. (Honourable Justice); Flinn, Edward J. (Honourable Justice); Glube, Constance R. (Honourable Chief Justice) (CA) Document Type Decision Relations Library Sheet - Bowater Mersey Paper Company Ltd. v. Queens (Municipality) - 2000 NSCA 78 - 2000-06-08 - Library Sheet Decision Content Date: 20000608 Docket: CA 161734 NOVA SCOTIA COURT OF APPEAL [Cite as:, Bowater Mersey Paper Co. Ltd. v. Queens (Municipality), 2000 NSCA 78] Glube, C.J.N.S.; Flinn and Cromwell, JJ.A. BETWEEN: BOWATER MERSEY PAPER COMPANY LIMITED, a body corporate Appellant - and - REGION OF QUEENS MUNICIPALITY, a body corporate, continued by the Municipal Government Act, S.N.S. 1998, c. 18 Respondent REASONS FOR JUDGMENT Counsel: Alan J. Dickson and Karen A. Fitzner for the appellant Peter M. Rogers for the respondent Appeal Heard: June 8th, 2000 Judgment Delivered: June 8th, 2000 THE COURT: Appeal dismissed per oral reasons for judgment of Cromwell, J.A.; Glube, C.J.N.S. and Flinn, J.A. concurring. CROMWELL, J.A.: (Orally) [1] Bowater appeals an order of Edwards, J. dismissing its application for declaratory relief. [2] Bowater signed a tax agreement in 1985 with the County of Queens and the Village of Brooklyn. (The respondent, Region of Queens Municipality, came into existence in 1996 and is the successor to the municipalities named as parties to the 1985 agreement. Nothing turns on this successorship and I will use the term “municipality” to refer to the respondent or its predecessors according to the context.) [3] Briefly put, the amounts payable by Bowater for a twenty (20) year period were to be determined as follows. For the first five years (1985 - 1989), Bowater was to pay an amount equal to the commercial tax rate struck by the Municipality on the 1985 base assessment. For the remaining 15 years of the term of the agreement, Bowater was to continue to pay amounts calculated in that way plus an adjustment that would equal the increase (if any) in municipal revenue over 1985 levels from taxes on residential assessment for the given year. In other words, the base assessment for 1985 was “frozen” for 20 years and the amount payable was to be calculated on that base subject to an additional payment based on the increase, if any, in residential tax revenues. The agreement also provided for a stated minimum amount to be paid if the amount calculated under the other provisions of the agreement should be less than that minimum amount in any year. [4] It is a common ground that the authority for the Municipality to enter into the agreement is found in s. 207 of the Assessment Act, R.S. 1967, c. 14 as amended by S.N.S. 1975, c. 57, s. 9; S.N.S. 1976, c. 2, s. 21; S.N.S. 1978, c. 18, s. 37; S.N.S. 1982, c. 16, s. 10 which in 1985 read as follows: 207(1) Except as provided herein, and notwithstanding any general or special Act, no town or municipality shall grant an exemption from property taxes, fixed taxes or assessment or tax concession unless authorized by the Governor-in-Council. [5] The agreement was approved, as required, by the Governor in Council which specifically authorized the determination and imposition of taxes in accordance with the agreement “... in lieu of all rates and taxes imposed by [the Municipality]”. [6] While the relevant calculations are in dispute, it is common ground that the agreement was beneficial to Bowater at least until the 1994/95 taxation year. Bowater claims, and the chambers judge found as a fact, that in 1994/95, the agreement provided no advantage to Bowater and, from 1995/96 on, amounts payable under the agreement have exceeded the amount of municipal taxes that would have been payable but for the agreement. For the purposes of these reasons, I will assume that finding is correct. Bowater’s position before the chambers judge was that the agreement is no longer enforceable because there is no statutory authority for the Municipality to enter into or enforce an agreement which imposes higher taxes than would otherwise be owing under the Assessment Act. The judge rejected this position. Bowater appeals. [7] The crux of Bowater’s position is set out in § 37 of its factum: The appellant submits that to the extent the Municipality seeks to enforce the Tax Agreement to collect a greater amount of property tax from Bowater than would otherwise lawfully be payable under the Assessment Act, this is illegal and ultra vires the Municipality there being no statutory authority for the Municipality to collect such excess taxes, and therefore, the Tax Agreement is unenforceable for this purpose. [8] This position advanced on behalf of the appellant is supported by two related submissions. The first is that in order to be a tax concession agreement, the agreement must provide for the payment of a lesser amount than would be due but for the agreement. As expressed in the appellant’s factum: The continuance of a tax concession agreement is premised on the agreement continuing to be one which provides tax relief to the taxpayer. [9] We cannot accept this submission. There is no dispute here that the Municipality had the authority to enter into the agreement and thereby have the amounts payable determined by the agreement. It does not become unenforceable because the agreement turns out to be favourable to the Municipality. If the Municipality has the capacity to enter into such an agreement (as is conceded here) it has the capacity to enter into one that turns out to be favourable as well as one that turns out to be unfavourable. Assuming, as counsel for Bowater submits, that s. 207 of the Assessment Act of 1975, as amended, only authorizes agreements providing tax concessions, we are of the view that an agreement such as this one, which fixes the manner in which the amounts payable will be calculated for twenty (20) years, is such a concession. [10] The second submission is that it is ultra vires the Municipality to enforce a tax agreement because there is no authority to collect taxes in excess of those provided for by the Assessment Act. [11] In our view, this submission misstates the basis on which payments are due under the tax agreement and misapprehends the purpose of tax agreements. Tax agreements give the parties the option of, in effect, “contracting out” of the usual tax regime to which they would otherwise be subject. The stability and predictability which such an agreement offers to both the taxpayer and the Municipality are attended by the risk that, due to future events, the agreement may not turn out to be as beneficial as was anticipated. The payments under the agreement are, as the order in council made clear in this case, payments in lieu of taxes otherwise payable and the amounts are due under the terms of the agreement, not pursuant to the general authority to levy and collect taxes. [12] We conclude, therefore, that the agreement is not ultra vires. [13] In light of this conclusion, it is not necessary to consider the points raised by the respondent’s notice of contention. The appeal is dismissed. The respondent will have its costs fixed at $2500.00 plus disbursements. Cromwell, J.A. Concurred in: Glube, C.J.N.S. Flinn, J.A.