Old Port of Montréal Corporation Inc. v. Montréal (City)

Old Port of Montréal Corporation Inc. v. Montréal (City) Court (s) Database Federal Court of Appeal Decisions Date 2023-06-05 Neutral citation 2023 FCA 126 File numbers A-258-21 Decision Content Date: 20230605 Docket: A-258-21 Citation: 2023 FCA 126 [ENGLISH TRANSLATION] CORAM: GAUTHIER J.A. DE MONTIGNY J.A. LOCKE J.A. BETWEEN: OLD PORT OF MONTRÉAL CORPORATION INC. Appellant and CITY OF MONTRÉAL Respondent and ATTORNEY GENERAL OF CANADA Intervener Heard at Montréal, Quebec, on November 17, 2022. Judgment delivered at Ottawa, Ontario, on June 5, 2023. REASONS FOR JUDGMENT BY: LOCKE J.A. CONCURRED IN BY: GAUTHIER J.A. DE MONTIGNY J.A. Date: 20230605 Docket: A-258-21 Citation: 2023 FCA 126 CORAM: GAUTHIER J.A. DE MONTIGNY J.A. LOCKE J.A. BETWEEN: OLD PORT OF MONTRÉAL CORPORATION INC. Appellant and CITY OF MONTRÉAL Respondent and ATTORNEY GENERAL OF CANADA Intervener REASONS FOR JUDGMENT LOCKE J.A. I. Background [1] This is an appeal from a Federal Court decision (2021 FC 806, by Justice Peter G. Pamel—the FC decision). In that judgment, the Federal Court allowed the judicial review applications of the City of Montréal (the City) in respect of a number of decisions by the Old Port of Montréal Corporation (OPMC), a federal Crown corporation. The OPMC decisions in question dealt with payments in lieu of taxes (PILTs) under the Payments in Lieu of Taxes Act, R.S.C. 1985, c. M‑13 (the PILT Act). The Federal Court found that the OPMC had made a number of errors in its decisions. [2] In its decisions, which cite the Supreme Court of Canada in Montréal (City) v. Montréal Port Authority, 2010 SCC 14, [2010] 1 S.C.R. 427 (at paragraphs 12, 15, 20 and 21, in particular), the OPMC summarizes the payment system under the PILT Act as follows: [translation] In Canada, the federal Crown and its Crown corporations have constitutional immunity from taxation by municipal and provincial taxing authorities. Despite this immunity, the federal Crown and its Crown corporations make [PILTs] to the municipalities, on an ex gratia basis, under the [PILT Act] and its regulations, but only to the extent provided by this Act and its regulations. Certain immovables and certain situations are not subject to PILTs under the [PILT Act] and its regulations because Parliament felt it advisable that this be so, and section 15 of the [PILT Act] confirms that the Act does not confer upon a municipality any right to a payment. (See, for example, page 391 of the Appeal Book.) [3] Section 2.1 of the PILT Act states that its purpose is “to provide for the fair and equitable administration of payments in lieu of taxes”, and subsection 3(1) provides as follows: Authority to make payments Paiements 3 (1) The Minister may, on receipt of an application in a form provided or approved by the Minister, make a payment out of the Consolidated Revenue Fund to a taxing authority applying for it 3 (1) Le ministre peut, pour toute propriété fédérale située sur le territoire où une autorité taxatrice est habilitée à lever et à percevoir l’un ou l’autre des impôts mentionnés aux alinéas a) et b), et sur réception d’une demande à cet effet établie en la forme qu’il a fixée ou approuvée, verser sur le Trésor un paiement à l’autorité taxatrice : (a) in lieu of a real property tax for a taxation year, and a) en remplacement de l’impôt foncier pour une année d’imposition donnée; (b) in lieu of a frontage or area tax b) en remplacement de l’impôt sur la façade ou sur la superficie. [4] A number of the issues concern the definition of “federal property” in subsection 2(1) and certain exclusions to it identified in subsection 2(3) of the PILT Act. The relevant provisions of the PILT Act are reproduced in the Appendix to these reasons. [5] This appeal concerns the PILTs relating to the Old Port of Montréal site, the whole of which belongs to the OPMC, except for the Alexandra Quay, which the OPMC leased from the Port of Montréal until December 31, 2015. According to the City, this very popular area is the number one tourist destination in Quebec. [6] Every year, the City, a taxing authority within the meaning of the PILT Act, sends the OPMC a PILT request indicating the amount claimed and the basis of this claim. In response to the City’s request, the OPMC sends the City a decision establishing the amount of the PILT and setting out the reasons relied on to determine that amount. Since 2014, the parties have disagreed on the property value and the composition of the “federal property” of the Old Port site within the meaning of the PILT Act and, therefore, on the amount of the PILT. This is not surprising, considering that the PILT determined and paid in 2013 was approximately $3,700,000, while the PILT determined by the OPMC was less than $500,000—a substantial decrease. The amounts that the OPMC determined for the PILTs for subsequent years are similar to the 2014 amount. [7] This appeal involves the OPMC’s decisions for the years 2014 to 2020. While these decisions are similar in a number of respects, they are not identical. For each one, the City brought separate applications for judicial review before the Federal Court. However, a consolidation of proceedings was ordered, and a joint hearing was held. The following table identifies these decisions, their placement in the Appeal Book, and their Federal Court file numbers: Year Date of decision Appeal Book Application to the Federal Court 2014 April 22, 2014 (interim) September 19, 2014 (final) 390 397 T-1262-14 T-2147-14 2015 March 23, 2015 406 T-635-15 2016 March 18, 2016 415 T-613-16 2017 March 15, 2017 425 T-592-17 2018 March 19, 2018 435 T-714-18 2019 March 19, 2019 445 T-650-19 2020 March 20, 2020 456 T-836-20 [8] It is important to note that, in addition to determining the PILT for the year 2014, the two decisions from 2014 revised the PILT paid for the year 2013, which was initially set at $3,706,922.31 (see page 163 of the Appeal Book), to $819,000 in the interim decision of 2014 and to $502,200 in the final decision of that same year. The total reduction for the year 2013 is therefore approximately $3,200,000. [9] Given that this Court is required to focus on the OPMC’s administrative decisions (Agraira v. Canada (Public Safety and Emergency Preparedness), 2013 SCC 36, [2013] 2 S.C.R. 559 (Agraira) at paras 45 to 47), I will only briefly summarize the FC decision, whose reasons are long and detailed. [10] First, the Federal Court found that it was unreasonable for the OPMC to exclude the following from the concept of “federal property” within the meaning of the PILT Act: (i) the near-entirety of the areas accessible to the public as an “urban park” within the meaning of paragraph 2(3)(c); (ii) the parkades as a “structure or work” within the meaning of paragraph 2(3)(a); and (iii) the lands covered by the right-of-way for the railway tracks and rail yard as immovables or real property that are “occupied” within the meaning of paragraph 2(3)(h). Second, the Federal Court declared that it was unreasonable for the OPMC to exclude the parking lot tax imposed by the City from the PILT amounts. The Court then held that it was unreasonable to consider the land underlying the quays and piers to be land situated in deep water. Last, the Court found that it was unreasonable for the OPMC to set off the alleged overpayment of 2013 against the subsequent years. [11] In addition to the parties, the Attorney General of Canada (AGC) made submissions as an intervener before the Federal Court and this Court. [12] As stated earlier, the Federal Court allowed the City’s applications for judicial review and set aside the OPMC’s decisions, thereby referring the matter back to the OPMC for redetermination for “each of the years 2013 to 2020, in accordance with the reasons and findings” of the Court. The parties agree that each of the decisions at issue is unreasonable for one reason or another and, therefore, that they must be redetermined. However, the OPMC asserts that the Federal Court’s reasons and findings are incorrect because they include findings of fact and/or law that the Court did not have the authority to make. Therefore, the OPMC is essentially challenging the part of the disposition of the judgment requiring it to revisit its decisions “in accordance with the reasons and findings” of the Court. [13] This raises two points that are relevant to this appeal. First, although the City and the AGC may want this Court to rule on the correct interpretation of certain provisions of the PILT Act and the related regulations, as well as on the manner in which the OPMC should apply these provisions to the facts of this case, that is not the role of this Court. The OPMC is correct in arguing that Parliament has conferred on it the jurisdiction to interpret and apply these provisions to the facts of the case and that the courts must expect for its findings to be challenged by way of judicial review to determine whether they are reasonable. This Court can certainly indicate certain elements that should or should not be involved in a reasonable decision, but it generally cannot perform the analysis in the place of the decision maker, in this case the OPMC, and make specific, definitive conclusions (Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653 (Vavilov) at para. 116; Canada (Minister of Citizenship and Immigration) v. Mason, 2021 FCA 156 at paras 16 and 17). [14] Second, the appellate jurisdiction of this Court extends to the judgment rendered at trial, not the reasons for that judgment: see subsection 27(1) of the Federal Courts Act, R.S.C. 1985, c. F‑7, and Fournier v. Canada (Attorney General), 2019 FCA 265 at para. 28 and the authorities cited therein. The words “in accordance with the reasons and findings” in the disposition of the judgment do not necessarily confer the status of judgment on all of the Court’s reasons (Canada (Citizenship and Immigration) v. Yansane, 2017 FCA 48 at paras 19 and 25). [15] Accordingly, I would dismiss this appeal because I also find that the OPMC’s decisions were unreasonable. I would therefore refer the matter back to the OPMC for redetermination, just as the Federal Court ordered. That said, I will comment on numerous aspects of the reasons stated in the OPMC’s decisions and in the FC decision, because, although not technically bound by them, the OPMC will still have to take them into consideration when preparing its new reasons. Naturally, the OPMC should not reconsider aspects of the decisions at issue that have not been challenged by way of judicial review. II. Standard of Review [16] Since this appeal concerns a Federal Court judgment on applications for judicial review of the OPMC’s administrative decisions, the standard of review is that described in Agraira and Northern Regional Health Authority v. Horrocks, 2021 SCC 42: the Court must determine whether the Federal Court identified the appropriate standard of review and, if so, whether it applied it correctly. Therefore, this Court is stepping into the shoes of the Federal Court and is focusing on the administrative decisions. [17] The parties agree that the Federal Court identified the appropriate standard of review, that of reasonableness. This standard of review is described in detail in Vavilov, from which I reproduce the following excerpts: [83] … [T]he focus of reasonableness review must be on the decision actually made by the decision maker.... The role of courts in these circumstances is to review, and they are, at least as a general rule, to refrain from deciding the issue themselves. Accordingly, a court applying the reasonableness standard does not ask what decision it would have made in place of that of the administrative decision maker, attempt to ascertain the “range” of possible conclusions that would have been open to the decision maker, conduct a de novo analysis or seek to determine the “correct” solution to the problem.... [A]s reviewing judges, we do not make our own yardstick and then use that yardstick to measure what the administrator did.... [84] … A principled approach to reasonableness review is one which puts those reasons first…. [85] … [A] reasonable decision is one that is based on an internally coherent and rational chain of analysis and that is justified in relation to the facts and law that constrain the decision maker…. [86] … Reasonableness… “is concerned mostly with the existence of justification, transparency and intelligibility within the decision-making process”, as well as “with whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law”…. … [115] Matters of statutory interpretation are not treated uniquely and, as with other questions of law, may be evaluated on a reasonableness standard…. … [119] Administrative decision makers are not required to engage in a formalistic statutory interpretation exercise in every case…. … [121] The administrative decision maker’s task is to interpret the contested provision in a manner consistent with the text, context and purpose, applying its particular insight into the statutory scheme at issue. It cannot adopt an interpretation it knows to be inferior — albeit plausible — merely because the interpretation in question appears to be available and is expedient. The decision maker’s responsibility is to discern meaning and legislative intent, not to “reverse-engineer” a desired outcome. … [129] Administrative decision makers are not bound by their previous decisions in the same sense that courts are bound by stare decisis.... … [131] Whether a particular decision is consistent with the administrative body’s past decisions is also a constraint that the reviewing court should consider when determining whether an administrative decision is reasonable. Where a decision maker does depart from longstanding practices or established internal authority, it bears the justificatory burden of explaining that departure in its reasons. If the decision maker does not satisfy this burden, the decision will be unreasonable.… [18] Applying the standard of review is more complicated in this case, as the OPMC is both (i) the decision maker whose decisions are subject to judicial review, and (ii) the appellant who is arguing that certain aspects of those decisions are reasonable. As a result, this Court has before it not only the reasons the OPMC provided in its decisions at issue, but also additional arguments it has advanced before this Court and the Federal Court. It is important to keep in mind that the reasons set out in the decisions at issue are the ones subject to the deference described in Vavilov, not the additional arguments the OPMC has put forward before the courts. Furthermore, a decision maker may not “defen[d] its decision on a ground that it did not rely on in the decision under review”: Ontario (Energy Board) v. Ontario Power Generation Inc., 2015 SCC 44, [2015] 3 S.C.R. 147 at paragraph 64 (Ontario Power Generation). A decision maker can certainly offer interpretations of its reasons or conclusions, or make arguments implicit within its original reasons (Ontario Power Generation at paragraph 69), but it must not attempt to bootstrap its own decisions. III. Issues [19] The issues are essentially those that were before the Federal Court. They can be summarized as follows: Was it reasonable for the OPMC to find that no PILTs had to be paid in respect of the parking lot tax imposed by the City? Was it reasonable for the OPMC to exclude the following from the concept of “federal property” within the meaning of the PILT Act: The near-entirety of the areas accessible to the public, as an “urban park” within the meaning of paragraph 2(3)(c) of the PILT Act? The parkades, as a “structure or work” within the meaning of paragraph 2(3)(a) of the PILT Act? The lands covered by the right-of-way for the railway tracks and rail yard, as immovables or real property that are “occupied” within the meaning of paragraph 2(3)(h) of the PILT Act? Was it reasonable for the OPMC to consider the land underlying the quays and piers to be situated in deep water? Was it reasonable for the OPMC to set off the overpayments made to the City for the year 2013? IV. Analysis A. Parking lot tax imposed by the City [20] The OPMC argues that the tax imposed by the City under the By-law concerning property taxes on parking lots, which it adopts on an annual basis (parking lot tax), cannot be included in the PILT amount for two reasons: The provincial provisions authorizing this tax (sections 151.8 and 151.9 of the Charter of Ville de Montréal, metropolis of Québec, CQLR c. C‑11.4 (the Charter), until 2017, and sections 500.1 and 500.2 of the Cities and Towns Act, CQLR c. C‑19 (the CTA), as of 2017) prohibit its imposition against “the State, the Crown in right of Canada or one of their mandataries”; and This tax is not the type of traditional taxes covered by the PILT Act: a real property tax of general application, a frontage or area tax or a business occupancy tax (see Plessis‑Panet inc. v. Ville de Montréal, 2019 QCCA 1264 at paragraph 23). [21] The OPMC’s second argument can be dismissed outright. Each of the OPMC decisions at issue expressly acknowledges that the parking lot tax is a property tax within the meaning of the definition of “real property tax” at subsection 2(1) of the PILT Act (see the following pages of the Appeal Book: 391, 399, 408, 417–418, 427, 437–438, 448 and 459). Therefore, even if the PILT amount were limited to the traditional taxes to which the OPMC refers (which I do not confirm), the parking lot tax would be one such tax according to the decisions at issue. The OPMC argues the contrary before this Court, even though this argument was not included in the reasons for excluding this tax in its decisions. No deference applies to this argument. In fact, the argument is contradicted by the reasons set out in the decisions at issue. [22] We are not dealing here with decisions on PILTs for years subsequent to 2020, but if the OPMC ever changes its official stance and finds that the parking lot tax is not a tax covered by the PILT Act, it will have to explain this change in a justified, transparent and intelligible manner. [23] In terms of the first argument for not including the parking lot tax in the PILT calculation, it should be noted that the OPMC’s reasons have changed over the years. Prior to 2015, the OPMC excluded this tax because parking lots do not constitute federal properties, but without explaining why (see pages 396 and 404 of the Appeal Book). In 2015, OPMC added that (i) the parking lots are located on deep-water quays and therefore outside the sectors to which the parking lot tax applies, and that (ii) the City already imposes a general property tax with respect to parking lots (see pages 413, 422 and 433 of the Appeal Book). Then, in 2018 and 2019, the OPMC added that the City is not authorized to impose the parking lot tax on it (see pages 443 and 453 of the Appeal Book). Finally, in 2020, the OPMC added a reference to section 500.2 of the CTA to support what it had added in 2018 (see page 464 of the Appeal Book). Therefore, it was not until its official decision in 2020 that the OPMC raised the position that the statute enabling the City to impose parking lot tax prohibits imposing it on the State, the Crown in right of Canada or one of their mandataries, although the argument was perhaps considered as early as 2018. [24] Prior to 2018, the OPMC’s finding that the parking lot tax should not be included in the PILT amount was based solely on the parking lots’ location on deep-water quays and on the fact that the City already imposes a general property tax in respect of parking lots. I do not see how these facts are relevant to this case. It seems fairly clear that the City would be entitled to impose this tax on a private owner regardless of the fact that the parking lot is located on a quay or that the City already imposes a general property tax on it. [25] I now turn to the finding that section 500.2 of the CTA prohibits the imposition of a parking lot tax on a mandatary of the Crown. None of the OPMC’s decisions includes an analysis of the statutory interpretation of section 500.2. The City and the AGC argue that the prohibition set out in section 500.2 is merely an acknowledgement in the CTA of the constitutional immunity of the Federal Crown and its Crown corporations from taxation and that its purpose is not to limit the PILT. This seems reasonable to me. [26] The interpretation of section 500.2 that the OPMC puts forward before this Court is owed no deference. As for the interpretation proposed by the City, it is based primarily on the decision of the Court of Appeal of Quebec in Ville de Montréal c. Société québécoise des infrastructures, 2021 QCCA 731. That decision addresses the legislative amendment of 2017, which altered the basis on which the City is authorized to impose a parking lot tax. While this tax was originally based on the Charter, it is now based on the CTA. The Court of Appeal of Quebec expressed the view that the legislative amendment was intended not only to extend this authorization to all Quebec cities and towns, but also to clarify that the taxes authorized were not to be included in the amount that the Société québécoise des infrastructures was to pay in lieu of taxes. The Court of Appeal of Quebec noted that the last paragraph of section 500.2 of the CTA includes the following specification: “[a] tax imposed under section 500.1 does not give entitlement to payment of an amount determined under Division V of Chapter XVIII of the Act respecting municipal taxation (chapter F‑2.1)”. Division V contains section 254 et seq. of the Act respecting municipal taxation, CQLR, c. F‑2.1 (the AMT), which deal with payments by the Government of Quebec in lieu of taxes. [27] I agree with the City that, given the wording of section 500.2 of the CTA, which refers to the provincial system of payments in lieu of taxes, it is not clear that it also applies to the federal system set out in the PILT Act. The provincial legislature could have referred to it in this section, but it did not do so. [28] The OPMC adds that the PILT amount requested by the City increased significantly in 2013 as a result of an increase in parking lot tax. I am of the opinion that this change has little significance for two reasons. First, there is no mention of an increase in this tax in the reasons that the OPMC set out in its decisions. Second, even if this argument were allowed, I do not see how an increase in the PILT amount could justify an exclusion. I also note that the 2013 increase in the PILT amount requested by the City (which the OPMC claims to be $760,000) does not tally with the reduction in the PILT calculated by the OPMC (which is approximately $3,200,000). [29] As indicated above, it not this Court’s role to provide its own interpretation of section 500.2 of the CTA or to determine its effect on the PILTs in this case. However, I am satisfied that the OPMC’s decisions that are based, either explicitly or implicitly, on an interpretation of this section are not supported by adequate reasons and are therefore unreasonable in that regard. A reasonable decision should interpret section 500.2 of the CTA in a manner consistent with its text, context and purpose (following Vavilov at paragraph 121) and should explain why the purpose of this provincial statutory provision is to reduce a PILT by a federal entity, if that is indeed the case. [30] I also find that, as stated in paragraph 24 above, the two facts that the OPMC relies on to exclude the parking lot tax from the PILT amount are insufficient to justify this exclusion. This finding is therefore unreasonable. B. Exclusions to the concept of federal property (1) Urban park, paragraph 2(3)(c) of the PILT Act [31] The OPMC’s decisions deem all the [translation] “land and public attractions of the recreational and cultural site” of the Old Port, except for the western portion that forms part of the Lachine Canal National Historic Site, to be an urban park. They therefore exclude the site from the definition of federal property set out in paragraph 2(3)(c) of the PILT Act, which reads as follows: Property not included in the definition federal property Exclusions : propriété fédérale (3) For the purposes of the definition federal property in subsection (1), federal property does not include (3) Sont exclus de la définition de propriété fédérale au paragraphe (1) : … […] (c) any real property or immovable developed and used as a park and situated within an area defined as urban by Statistics Canada, as of the most recent census of the population of Canada taken by Statistics Canada, other than national parks of Canada, national marine parks of Canada, national park reserves of Canada, national marine park reserves of Canada, national historic sites of Canada, national battlefields or heritage canals; c) les immeubles et les biens réels aménagés en parc et utilisés comme tels dans une zone classée comme « urbaine » par Statistique Canada lors de son dernier recensement de la population canadienne, sauf les parcs nationaux du Canada, les parcs marins nationaux du Canada, les réserves à vocation de parc national du Canada ou de parc marin national du Canada, les lieux historiques nationaux, les champs de bataille nationaux et les canaux historiques; … […] [32] However, the OPMC provides no explanation in support of this finding. [33] The Federal Court devoted a substantial part of its reasons to this issue (see paragraphs 67 to 127 of the FC decision). It did not agree with the OPMC’s expanded application of paragraph 2(3)(c) of the PILT Act. The parties agree that the Federal Court was entitled to find that the OPMC’s decisions on this issue were unreasonable and that they had to be referred back for redetermination, sector by sector. The disagreement between the parties relates instead to the Federal Court’s consideration of what constitutes an urban park. [34] The Federal Court noted that the concept of “park” is not defined in the PILT Act, and it identified the following characteristics of a park: “developed as such for the benefit of the community” (paragraph 77 of the FC decision); “peaceful green space” (paragraph 77 of the FC decision); “land and implies nature and the outdoors” (paragraph 79 of the FC decision); “commercial activities must not distract from the essential nature of a park” (paragraph 79 of the FC decision); “can be sought out by the public as a refuge from the hustle and bustle of daily urban life, a bubble of tranquility, so to speak” (paragraph 80 of the FC decision); “[i]f a building or commercial development is part of this environment, it must have a relationship of dependency with the park, to a certain degree, and also be developed and used in a way that is proportional and complementary to the primary use—such a development might facilitate or add to the use, understanding and appreciation of the park” (paragraph 80 of the FC decision); “by using the word ‘park’ on its own, Parliament is referring ... to a natural park” (paragraph 84 of the FC decision); and “nature is the principal attraction, and the objective is to enhance it while creating a bubble of tranquility” (paragraph 87 of the FC decision). [35] The Federal Court applied these characteristics to justify its finding that not every sector of the Old Port site can be characterized as a park: “There may be pockets of tranquility within the site, such as green spaces, skating rinks and river boats, but these do not make the entire Old Port site a park; the Old Port site as a whole does not leave an impression of peaceful serenity on its visitors. It seems to me, rather, that the Old Port site has been developed as an urban entertainment destination, with vendors and kiosks scattered throughout to meet the needs of a paying public. In recent years, the Old Port site has been developed as an amusement park with its Ferris wheel, the IMAX theatre, spaces for taking in a concert, the Bota Bota spa, and the Cirque de Soleil every two years. The primary purpose of the site is therefore commercial” (paragraph 86 of the FC decision); “[D]evelopment is often gradual, and identifying the moment when the Rubicon has been crossed may not be obvious, but in my view, the Old Port site has definitely made this transition. While certain parts of the site could certainly be equated to parks, it cannot be said that the site as a whole currently constitutes a park within the meaning of the PILT Act” (paragraph 88 of the FC decision); “[G]iven the manner in which the Old Port site has been developed, with its infinite offerings of attractions occupying a disproportionate space compared with what one would expect in a traditional park, the Old Port site has crossed the threshold to become an entertainment venue and therefore does not constitute a park within the meaning of the PILT Act” (paragraph 96 of the FC decision); and “Even if it can be said that the Old Port site, as a whole, was once a park in the traditional sense, it seems to me that it ceased being a park some time ago. The commercial operations of the IMAX theatre, the Science Centre, the Bota Bota spa, the Ferris wheel and the developments on the Jacques Cartier Quay have caused it to lose the essence it may have had in the past” (paragraph 97 of the FC decision). [36] The OPMC claims that the Federal Court made its own yardstick and then used that yardstick to measure what the OPMC did, which is prohibited by Vavilov at para. 83. Even if it agrees that the urban park issue has to be redetermined, it does not accept the Federal Court’s discussion and findings in this regard. The AGC is of the same view. [37] In paragraph 102 of the FC decision, the Federal Court stated that the parties had asked it to determine whether certain parts of the Old Port could be considered urban parks within the meaning of paragraph 2(3)(c) of the PILT Act. It is therefore not surprising that the Federal Court attempted to meet their expectations in that regard. However, the OPMC and the AGC are correct that the role of a reviewing court sitting in judicial review is not normally to develop its own test and that its role in that regard was limited. [38] It is unnecessary for me to comment on all of the Federal Court’s findings on the urban park issue. It suffices to say that the OPMC is not bound by them. It can make its own findings, as long as its analysis is reasonable. The fact nevertheless remains that a number of the Federal Court’s comments on this issue could support a reasonable analysis. A reasonable analysis should, to be consistent with the teachings of the Supreme Court in Vavilov, develop an interpretation of the words “developed and used as a park” in paragraph 2(3)(c) of the PILT Act, apply it sector by sector, and provide a justified, transparent and intelligible explanation for each exclusion. A reasonable decision should also explain any departures from the findings of previous years. (2) The parkades, as a “structure or work” within the meaning of paragraph 2(3)(a) of the PILT Act [39] Paragraph 2(3)(a) of the PILT Act provides that, “[f]or the purposes of the definition federal property … does not include … (a) any structure or work ”. However, this paragraph provides a number of exceptions to this exclusion. Subparagraph 2(3)(a)(i) sets out one such exception: “a building designed primarily for the shelter of people, living things, fixtures, personal property or movable property”. [40] The OPMC excluded the parkades located on the King Edward Quay (in all of the decisions at issue) and on the Alexandra Quay (in some of the decisions) from the federal property of the Old Port site under paragraph 2(3)(a), without considering (or even acknowledging) the exception set out in subparagraph (i). [41] The Federal Court held that the OPMC’s application of these exclusions was unreasonable, and the OPMC does not dispute that the issue of these exclusions should be referred back to it for redetermination. However, the OPMC asserts that the Federal Court erred in making its own findings on the application of subparagraph 2(3)(a)(i) of the PILT Act in this case, because that is a task for the OPMC. [42] I agree with the Federal Court that it was unreasonable for the OPMC to exclude the parkades from the Old Port’s federal property without considering the exception of subparagraph 2(3)(a)(i). I also agree with the Federal Court’s observation that “the OPMC has not adequately explained the logic behind its new attitude towards its parking areas” (at paragraph 141 of the FC decision). However, in my view, the Federal Court went too far by conducting its own analysis and making its own findings on the interpretation of the terms “building”, “designed primarily” and “shelter” and their application in this case (see paragraphs 139 and 140 of the FC decision). This is indeed a task for the OPMC. [43] In its submissions before this Court, the OPMC argues that the exclusion set out in paragraph 2(3)(a) applies in this case because the exception in subparagraph 2(3)(a)(i) does not. It claims that the parkades are not designed primarily to shelter vehicles. It also appears to doubt that parkades are “buildings”. As stated above, the OPMC cannot add to the reasons it already provided in its official decisions. Therefore, its findings on the parkades remain unreasonable, and this issue must be referred back to the OPMC for redetermination. This is the case even if it can be expected to make findings consistent with its submissions before this Court. This redetermination, however, will have to satisfy the requirements of a reasonable decision. [44] I further note that, in some of the OPMC’s decisions, the same paragraph addressing the exclusion of the King Edward Quay parkade from the federal property describes it as a “snow shed” (see the decisions from the years 2017 to 2020). This description is supported by Basil Cavis, OPMC vice president, in paragraph 20 of his affidavit (see page 735 of the Appeal Book). The OPMC therefore appears to acknowledge that the parkades are used to shelter movable property, namely, vehicles. This apparent contradiction will have to be explained when the OPMC redetermines the PILTs. (3) The lands covered by the right-of-way for the railway tracks and rail yard, as immovables or real property that are “occupied” within the meaning of paragraph 2(3)(h) of the PILT Act [45] Railway tracks cross the Old Port site from its western boundary starting at the rail yard, which stretches to the Bonsecours Basin entrance, to its eastern boundary. These railway tracks and the rail yard belong to the OPMC but are operated by the Montréal Port Authority (MPA) and Canadian National (CN). This infrastructure is subject to a servitude of right-of-way for the railway tracks in favour of the MPA, as well as a servitude of tolerance to noise, air quality, odours, vibrations and visual factors to allow for rail transportation. [46] In its 2015 decision, the OPMC brought up for the first time this infrastructure's exclusion from the federal property of the Old Port on the basis of item 11 of Schedule II to the PILT Act, which is referred to in paragraph 2(3)(b). This exclusion, which covers the railway tracks (but not the land forming the right-of-way) was reiterated in the decisions of subsequent years. [47] In its 2016 decision, relying on section 208 of the AMT, the OPMC added that it did not owe any PILTs in relation to: [translation] (c) land forming the right-of-way for the railway tracks and rail yard, because the property taxes to which it could be subject without the exemption enjoyed by the OPMC must be imposed on its occupants and paid by them in accordance with the first paragraph of section 208 of the AMT. [48] Although this is not explicitly stated in its 2016 decision, the OPMC appears to suggest that the MPA and/or CN are the occupants of this land. [49] The first paragraph of section 208 of the AMT reads as follows: 208. Where an immovable that is not taxable under paragraph 1 or 1.1 of section 204 is occupied by a person other than a person referred to in that section or a corporation that is a mandatary of the State, unless its owner is the Société québécoise des infrastructures, the property taxes to which that immovable would be subject without that exemption are levied on the lessee or, if there is no lessee, on the occupant, and are payable by the lessee or occupant. However, that rule does not apply in the case of an immovable referred to in paragraph 1.1 of section 204 where, according to the legislation of the Parliament of Canada relating to subsidies to municipalities that are to stand in lieu of property taxes, and according to the instruments made under that legislation, such a subsidy is paid in respect of the immovable notwithstanding its being occupied as described in this paragraph. 208. Lorsqu’un immeuble non imposable en vertu du paragraphe 1° ou 1.1° de l’article 204 est occupé par un autre qu’une personne mentionnée à cet article ou qu’une société qui est mandataire de l’État, sauf si son propriétaire est la Société québécoise des infrastructures, les taxes foncières auxquelles cet immeuble serait assujetti sans cette exemption sont imposées au locataire ou, à défaut, à l’occupant, et sont payables par lui. Toutefois, cette règle ne s’applique pas dans le cas d’un immeuble visé au paragraphe 1.1° de l’article 204 lorsque, suivant la législation du Parlement du Canada relative aux subventions aux municipalités pour tenir lieu des taxes foncières et selon les actes pris en vertu de cette législation, une telle subvention est versée à l’égard de l’immeuble malgré l’occupation visée au présent alinéa dont il fait l’objet. [50] Subsections 204(1) and 204(1.1) of the AMT are reproduced here: 2. — Exceptions 2. — Exceptions 204. The following are exempt from all municipal or school property taxes: 204. Sont exempts de toute taxe foncière, municipale ou scolaire: (1) an immovable included in a unit of assessment entered on the roll in the name of the State or of the Société québécoise des infrastructures; 1° un immeuble compris dans une unité d’évaluation inscrite au nom de l’État ou de la Société québécoise des infrastructures; (1.1) an immovable included in a unit of assessment entered on the roll in the name of the Crown in right of Canada or a mandatary thereof; 1.1° un immeuble compris dans une unité d’évaluation inscrite au nom de la Couronne du chef du Canada ou d’un mandataire de celle-ci; [51] The addition made by the OPMC in 2016, which covers the land forming the right-of-way for the railway tracks rather than the railway tracks themselves, was reiterated in the decisions of subsequent years. [52] Starting in 2018, the OPMC added another new exclusion from federal property to its decisions: [translation] (v) the lands forming the right-of-way for the railway tracks and rail yard, as immovables or real property occupied by a person or body that is not a department within the meaning of paragraph 2(3)(h) of the [PILT Act]. [53] Once again, the OPMC appears to suggest that the MPA and/or CN are the occupants of the lands. [54] Paragraph 2(3)(h) of the PILT Act excludes “unless otherwise prescribed, any real property or immovable … occupied by a person or body, whether incorporated or not, that is not a department”. [55] The decisions of the years 2016 and following do not explain how the OPMC made these findings on the land forming the right-of-way for the railway tracks and rail yard. Nor do they explain how the situation differs from previous years. [56] The Federal Court held that section 208 of the AMT does not apply because of the exception in subsection 204(1.1) and because the MPA is a mandatary of the Crown in right of Canada (see paragraph 239 of the FC decision). [57] The Federal Court addressed the exclusion under paragraph 2(3)(h) of the PILT Act in paragraphs 241 and 242 of the FC decision, although it cited paragraph 2(3)(g), apparently in error. It noted that “the OPMC [had] not presented anything to [it] to support the idea that, in the case of a servitude, the owner of the dominant land in favour of whom the servitude has been granted is the ‘occupant’ of the servient land” and that the OPMC’s finding in this regard was unreasonable in this case. [58] The OPMC criticizes the Federal Court’s finding that the MPA is not the occupant of the railway tracks and rail yard. It also challenges the distinction that the Federal Court makes between the concept of “occupant” within the meaning of section 208 of the AMT and that within the meaning of paragraph 2(3)(h) of the PILT Act. In addition, the OPMC claims that [translation] “in observing that this portion of the site was fenced off and operated by the MPA and [CN] and that freight trains were frequently running there, the judge should have found that these entities occupied that portion of the Old Port”. [59] Although the Federal Court made other findings and the OPMC has provided other arguments, I am of the view that the above summary is sufficient to address the issue of whether the OPMC’s decisions in this regard are reasonable or unreasonable. [60] Like the Federal Court, I find that the OPMC’s decisions do not sufficiently explain how a servitude in favour of the MPA makes the MPA the occupant of the land in question. I am of the opinion that the Court was also correct in finding that section 208 of the AMT does not apply, due to the exception under subsection 204(1.1). The OPMC was unable to clarify why this exception does not apply in this case. Without something more, there is no reason to doubt that the MPA is a mandatary of the Crown in right of Canada. [61] Consequently, I agree with the Federal Court's finding that the OPMC’s exclusion of the land forming the right-of-way for the railway tracks and rail yard was unreasonable. It is therefore appropriate to refer this issue back to the OPMC for redetermination. If the OPMC wishes to maintain this exclusion, it will have to explain how the beneficiaries of a servitude are “occupants” of the land in question within the meaning of section 208 of the AMT and paragraph 2(3)(h) of the PILT Act. It will also have to explain why the exception in subsection 204(1.1) does not apply and why the MPA is not a department within the meaning of the PILT Act (in particular, a corporation established by or under an Act of Parliament) to which paragraph 2(3)(h) does not apply. A reasonable decision must also justify any departures from previous decisions. [62] Last, it would be appropriate to consider in this redetermination whether paragraph 3(1)(b) of the Payments in Lieu of Taxes Regulations, SOR/81‑29, is relevant to the OPMC’s PILT, as the AGC suggests, given that the MPA is referred to in Schedule III to the PILT Act. That paragraph reads as follows: Real Property and Immovables Leased to or Occupied by Non-departmental Bodies Immeuble ou bien réel pris à bail ou occupé par des organismes autres que les ministères 3 (1) The following classes of real property and immovables owned by Her Majesty in right of Canada and leased to or occupied by a person or a body, whether incorporated or not, that is not a department, are to be included in the definition federal property in subsection 2(1) of the Act, for the purposes of the Act: 3 (1) Tout immeuble ou bien réel qui appartient à Sa Majesté du chef du Canada et qui est pris à bail ou occupé par une personne ou par un organisme autre qu’un ministère, constitué en personne morale ou non, est à classer, pour l’application de la Loi, comme propriété fédérale au sens du paragraphe 2(1) de la Loi, s’il appartient à l’une des catégories suivantes : … […] (b) any real property or immovable that is under the management, charge and direction of a minister of the Crown and that is occupied by a corporation included in Schedule III or IV to the Act and in respect of which the corporation is exempt from real property tax; b) tout immeuble ou bien réel dont un ministre fédéral a la gestion, la charge et la direction, qui est occupé par une personne morale mentionnée aux annexes III ou IV de la Loi bénéficiant à son égard d’une exemption de l’impôt foncier; C. The land underlying the quays and piers [63] This issue concerns the value of the land underlying the quays and piers of the Old Port site, and not the value of the quays and piers themselves or of the buildings constructed on them. [64] In the decisions at issue, the OPMC assigned a nominal value of $1 to this land, based on the fact that, without the works built on it, it would be situated in deep water and would therefore be unusable. [65] The City posits that the land in question has not been in deep water for many decades and submits that it should be assessed as though it consisted of parcels of solid ground. The City refers to the act of assignment transferring the land in question from the Crown to the OPMC in 2009 (see page 998 of the Appeal Book), which describes it as parcels with individual cadastral numbers. [66] The Federal Court acknowledged that the area in question was made up of water in the early 19th century and that most of the Old Port site has been built up over the years by using landfill and building quays with cribwork and cement pillars. It nevertheless found that the property value of the land must be calculated as if the land were located on the quays and piers and “it would be unreasonable and contrary to the spirit of fairness in the PILT Act” to assess it with a nominal value. [67] I agree with the Federal Court. It is difficult to conceive how the land in question could be reasonably assessed as being situated in deep water. As the Federal Court stated in paragraph 216, the OPMC conceded before the Court that “if the land constituting the Old Port site had been composed only of landfill, it would be dry land for tax purposes”. In addition, in paragraph 212 of the FC decision, the Court affirmed the following: The fact that the quays are supported in part by cribwork filled with a combination of landfill and other materials rather than landfill alone has no impact whatsoever on this finding, given that the surface usable for commercial development is situated on the quays, above the water, in an area that is essentially an extension of Old Montréal. [68] It is not at all clear that the type of materials used to raise the land from deep water can affect the land’s property value. The quays and piers are clearly stable and permanent, just as though they were built entirely of landfill. I am of the view that their stability and permanence should be taken into account when determining the value of the underlying land. The OPMC appears to acknowledge this consideration in paragraph 100 of its memorandum. D. Set-off against overpayments [69] As stated in paragraph 8 above, the initial PILT amount paid by the OPMC in 2013 was $3,706,922.31. In its interim decision for the year 2014, the OPMC reduced this initial amount to $819,000 and indicated that the interim PILT amount for 2014 was $810,000. Because this amount was less than the PILT overpayment made in 2013, the OPMC requested reimbursement for the overpayment. The OPMC’s final decision for the year 2014 again reduced the PILT amount paid in 2013 (this time to $502,200), as well as the PILT amount for 2014 (to $497,700). As in the interim decision, the final 2014 decision sought reimbursement for the overpayment. The OPMC’s decisions for the subsequent years have been similar, each seeking reimbursement for the alleged overpayment for 2013. According to the OPMC, this amount had still not been reimbursed in 2020. [70] In its decisions, the OPMC justifies the recovery of the overpayment by relying on section 4 of the Interim Payments and Recovery of Overpayments Regulations, SOR/81‑226 (the IPROR). However, it should be noted from the outset that, in Montréal Port Authority v. Montréal (City), 2008 FCA 278 at paras 110 and 111 (Port Authority) (reversed by the Supreme Court in 2010 SCC 14 on another issue), this Court determined that the IPROR applies only to PILTs paid by the Minister, not to those paid by Crown corporations. The Federal Court stated that it was bound by this decision, and the OPMC completely disregarded it in its decisions. The absence of justification in this regard makes the decisions on this issue unreasonable (Vavilov at para. 112). [71] In its submissions before this Court and the Federal Court, the OPMC argues that it can set off the overpayment under another regulation, namely, the Crown Corporation Payments Regulations, SOR/81‑1030 (the CCPR). It is true that this Court stated in Port Authority that the CCPR (at the time SOR/97‑103) provides a separate mechanism by which Crown corporations may be entitled to a set-off (specifically subsection 12(2) of the CCPR). Therefore, the OPMC might be entitled to a set-off against an overpayment, if circumstances warrant. However, it is not up to the Federal Court or this Court to determine whether the conditions for applying this mechanism are met in this case. [72] At the hearing, the OPMC emphasized that the only issue we had to decide was whether the PILT paid in 2013 was interim or final. However, since the OPMC’s decisions are based solely on the IPROR, this issue is not relevant in proceedings before our Courts. It will be relevant only if the OPMC relies on the CCPR in the redetermined decisions and if they are subject to judicial review. [73] I also note that the parties have agreed before us that there was no admission on the OPMC’s part that the 2013 PILT was final, contrary to the Federal Court’s finding (see paragraph 221 of the FC decision). [74] I am satisfied that it was not reasonable for the OPMC to effect a set-off under section 4 of the IPROR. V. Conclusions [75] For the above reasons, I would dismiss this appeal with costs payable by the OPMC to the City, assessed at the upper scale of Column IV of Tariff B of the Federal Courts Rules, SOR/98‑106. The AGC, as intervener, would not be entitled to any costs. “George R. Locke” J.A. “I agree. Johanne Gauthier J.A.” “I agree. Yves de Montigny J.A.” APPENDIX Payments in Lieu of Taxes Act, R.S.C., 1985, c. M-13 Loi sur les paiements versés en remplacement d’impôts, L.R.C. (1985), ch. M-13 … […] Interpretation Définitions et interprétation Definitions Définitions 2 (1) In this Act, 2 (1) Les définitions qui suivent s’appliquent à la présente loi. … […] real property tax means a tax of general application to real property or immovables or any class of them that is impôt foncier Impôt général : (a) levied by a taxing authority on owners of real property or immovables or, if the owner is exempt from the tax, on lessees or occupiers of real property or immovables, other than those lessees or occupiers exempt by law, and a) levé par une autorité taxatrice sur les immeubles ou biens réels ou les immeubles ou biens réels d’une catégorie donnée et auquel sont assujettis les propriétaires et, dans les cas où les propriétaires bénéficient d’une exemption, les locataires ou occupants autres que ceux bénéficiant d’une exemption; (b) computed by applying a rate to all or part of the assessed value of taxable property; (impôt foncier) b) calculé par application d’un taux à tout ou partie de la valeur fiscale des propriétés imposables. (real property tax) frontage or area tax means any tax levied on the owners of real property or immovables that is computed by applying a rate to all or part of the assessed dimension of the property and includes any tax levied on the owners of real property or immovables that is in the nature of a local improvement tax, a development tax or a redevelopment tax, but does not include a tax in respect of mineral rights; (impôt sur la façade ou sur la superficie) impôt sur la façade ou sur la superficie Impôt frappant les propriétaires d’immeubles ou de biens réels et calculé par application d’un taux à tout ou partie des dimensions fiscales d’un immeuble ou d’un bien réel, y compris tout impôt pour amélioration locale, aménagement ou réaménagement, à l’exclusion des impôts relatifs aux droits miniers. (frontage or area tax) … […] Property not included in the definition federal property Exclusions : propriété fédérale (3) For the purposes of the definition federal property in subsection (1), federal property does not include (3) Sont exclus de la définition de propriété fédérale au paragraphe (1) : (a) any structure or work, unless it is a) les constructions ou ouvrages, sauf : (i) a building designed primarily for the shelter of people, living things, fixtures, personal property or movable property, (i) les bâtiments dont la destination première est d’abriter des êtres humains, des animaux, des plantes, des installations, des biens meubles ou des biens personnels, … […] (b) any structure, work, machinery or equipment that is included in Schedule II; b) les constructions, les ouvrages, les machines ou le matériel mentionnés à l’annexe II; (c) any real property or immovable developed and used as a park and situated within an area defined as urban by Statistics Canada, as of the most recent census of the population of Canada taken by Statistics Canada, other than national parks of Canada, national marine parks of Canada, national park reserves of Canada, national marine park reserves of Canada, national historic sites of Canada, national battlefields or heritage canals; c) les immeubles et les biens réels aménagés en parc et utilisés comme tels dans une zone classée comme « urbaine » par Statistique Canada lors de son dernier recensement de la population canadienne, sauf les parcs nationaux du Canada, les parcs marins nationaux du Canada, les réserves à vocation de parc national du Canada ou de parc marin national du Canada, les lieux historiques nationaux, les champs de bataille nationaux et les canaux historiques; … […] (h) unless otherwise prescribed, any real property or immovable leased to or occupied by a person or body, whether incorporated or not, that is not a department. h) les immeubles et les biens réels pris à bail ou occupés par une personne ou par un organisme autre qu’un ministère, constitué ou non en personne morale, sauf exception prévue par règlement du gouverneur en conseil. … […] Purpose Objet 2.1 The purpose of this Act is to provide for the fair and equitable administration of payments in lieu of taxes. 2.1 La présente loi a pour objet l’administration juste et équitable des paiements versés en remplacement d’impôts. … […] General Dispositions générales … […] No right conferred Absence de droit 15 No right to a payment is conferred by this Act. 15 La présente loi ne confère aucun droit à un paiement. … […] SCHEDULE II ANNEXE II … […] 11 Roads, sidewalks, aircraft runways, paving, railway tracks 11 Chemins, trottoirs, pistes d’envol ou d’atterrissage, pavements, voies ferrées FEDERAL COURT OF APPEAL NAMES OF COUNSEL AND SOLICITORS OF RECORD DOCKET: A-258-21 STYLE OF CAUSE: OLD PORT OF MONTRÉAL CORPORATION INC. v. CITY OF MONTRÉAL and ATTORNEY GENERAL OF CANADA PLACE OF HEARING: MontrÉal, Quebec DATE OF HEARING: November 17, 2022 REASONS FOR JUDGMENT BY: LOCKE J.A. CONCURRED IN BY: GAUTHIER J.A. DE MONTIGNY J.A. DATED: JUNE 5, 2023 APPEARANCES: Nicolas X. Cloutier Samuel Julien Mathieu Bernier-Trudeau For the appellant Louis Béland For the respondent Isabelle Mathieu‑Millaire Lindy Rouillard‑Labbé For the intervener SOLICITORS OF RECORD: McCarthy Tétrault L.L.P. Montreal, Quebec For the appellant DHC Avocats Montreal, Quebec For the respondent Shalene Curtis-Micallef Deputy Attorney General of Canada For the intervener