The following version is for informational purposes only, for the official version
see: http://www.courts.gov.bc.ca/ for Stated Cases
see also: http://www.assessmentappeal.bc.ca/ for Property Assessment Appeal Board Decisions
SC 502 City of White Rock v. AA14
Link to Property Assessment Appeal Board Decisions
CITY OF WHITE ROCK
v.
ASSESSOR OF AREA 14 – SURREY/WHITE ROCK
SUPREME COURT OF BRITISH COLUMBIA (L053051) Vancouver Registry
Before the HONOURABLE MR. JUSTICE N. SMITH
Date and Place of Hearing: June 9, 2006, Vancouver, BC
M. Woodward for the Appellant
J.H. Shevchuk for the Respondent
Exemption – "held by" – Community Charter, s. 220(1)(b)(i)
The property in question is owned by the Burlington Northern Santa Fe Railway ("BNSFR") and
leased by the City of White Rock. The property is used for parking, walkways and other amenities. The
lease between BNSFR and the City requires the City to pay rent and "all taxes, utilities and other
charges." The Assessor assessed the property as taxable in the name of BNSFR. Under the lease, the
City was liable for the property taxes on the property The City appealed the assessment, arguing that the
property should be exempt under section 220(1)(b)(i) of the Community Charter, as land and
improvements vested in or held by the municipality. The Property Assessment Appeal Board ("the
Board") dismissed the appeal. The City appealed to the BC Supreme Court asking three questions:
1. Whether the Board erred in its interpretation of s. 220(1)(b)(i) of the Community Charter, S.B.C. 2003,
c. 26 in failing to rule that the City's leasehold interest in the subject property meant that the subject
property was "held by" the City and that this made the subject property exempt from taxation in
accordance with s. 220;
2. Whether the Board erred in its interpretation of s. 220(1)(b)(i) of the Community Charter by mixing the
concepts of "assessability" and "taxability" of the subject property and in failing to apply and follow its
own decision in Area 06 v. Seven Hills Golf Course et al. (2005 PAABBC 20042009);
3. Whether the Board erred in its ruling that "The City can lease property from an assessable and taxable
body, use it for City purposes, and grant a permissive exemption of the owner's interest in taxation."
HELD: Appeal Dismissed.
The Court found that BNSFR, as the owner of the land, is the only party that the statutes makes
subject to assessment and taxation. Any liability that the City may have to pay taxes arises only out of
the lease agreement that it freely entered into.
The Court held that it was bound by Vancouver (City) v. Canada (Attorney-General), [1944] S.C.R. 23
because it was the interest of the fee simple owner that was taxable and not the Crown's interest.
The Court noted that the City has the flexibility to grant a permissive exemption under s. 224 of the
Community Charter to exempt the property. The Court held it is more in keeping with the legislative
scheme that such an exemption be a discretionary one based on how the property is used, rather than an
exemption that arises simply on the basis of ownership by operation of s. 220(1).
This Court concluded that this property is not exempt from taxation and that the Board's decision was
correct in the result, therefore, it answered all three questions "No".
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Reasons for Judgment
July 26, 2006
[1] A strip of land adjacent to the popular public beach in the City of White Rock is used for parking,
walkways and other amenities associated with the beach. The City leases that land and the question
before the court is whether it is exempt, or can be made exempt, from property taxes.
[2] The land in question is owned by the Burlington Northern Santa Fe Railway. The City leases it under
an agreement that provides that it is to be used exclusively for "public parking, restrooms, promenade and
other uses and facilities related to park purposes." The lease requires the City to pay rent and "all taxes,
utilities and other charges."
[3] The City received an assessment notice that values the land at more than $4.3 million. If the land is
taxed on the basis of that assessed value, the City would be paying some of the taxes to itself, but would
also have to pay taxes to the School Board and other agencies. The City appealed the assessment to the
Assessment Appeal Board, which ruled in favour of the Assessor. The matter now comes before the court
by way of a Stated Case under s. 65 of the Assessment Act, R.S.B.C. 1996, c. 20.
[4] The Stated Case asks the court to answer the following three questions:
1. Whether the Board erred in its interpretation of s. 220(1)(b)(i) of the Community Charter, S.B.C.
2003, c. 26 in failing to rule that the City's leasehold interest in the subject property meant that the
subject property was "held by" the City and that this made the subject property exempt from
taxation in accordance with s. 220.
2. Whether the Board erred in its interpretation of s. 220(1)(b)(i) of the Community Charter by mixing
the concepts of "assessability" and "taxability" of the subject property and in failing to apply and
follow its own decision in Area 06 v. Seven Hills Golf Course et al. (2005 PAABBC 20042009).
3. Whether the Board erred in its ruling that "The City can lease property from an assessable and
taxable body, use it for City purposes, and grant a permissive exemption of the owner's interest in
taxation."
The Statutory Provisions
[5] The Assessment Act makes all land and improvements in British Columbia liable to assessment
unless exempted by statute (s. 18.1). The Assessor must prepare an assessment roll each year and that
assessment roll forms the basis for property taxation (s. 3). Section 197(2) of the Community Charter
requires municipalities to impose a tax on all non-exempt land and improvements on the basis of their
assessed value. Section 220 of the Community Charter exempts certain kinds of properties from taxation,
including land "vested in or held by" a municipality. That section reads in part:
220 (1) Unless otherwise provided in this Act or the Local Government Act, the following property is
exempt from taxation to the extent indicated:
...
(b) land, improvements or both vested in or held by
(i) the municipality...
[6] The Community Charter also allows a municipality to enact tax exemptions for certain properties.
Section 224 reads, in part:
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224 (1) A council may, by bylaw in accordance with this section, exempt land or improvements, or
both, referred to in subsection (2) from taxation under section 197 (1) (a) [municipal property taxes], to
the extent, for the period and subject to the conditions provided in the bylaw.
(2) Tax exemptions may be provided under this section for the following:
...
(b) land or improvements that
(i) are owned or held by a municipality, regional district or other local authority, and
(ii) the council considers are used for a purpose of the local authority;
Question One:
[7] The City argues that when s. 220 of the Community Charter refers to land "vested in or held by" the
municipality, it must be referring to two different kinds of property interests. If "vested" means ownership,
then "held by" must be intended to extend the exemption to land controlled by a municipality under a legal
arrangement other than fee simple ownership of the land. The City says the intent of s. 220 is to exempt
land that is used for a variety of public purposes and the focus should be on the use, rather than the
ownership of the land. If the land is used for public purposes, the City argues it should be free to decide
whether it will buy or lease the land and there should be no tax consequences.
[8] If there was no binding authority on the matter, I would be attracted to the apparent logic of the City's
argument. However, the City's position is contrary to the Supreme Court of Canada's decision in
Vancouver (City) v. Canada (Attorney-General), [1944] S.C.R. 23.
[9] In that case, a railway leased one parcel of property jointly to the federal and provincial Crowns and a
second parcel to the federal Crown alone. The railway and the governments sought a declaration that the
buildings the governments had erected on the property were not assessable or taxable. They relied on a
provision of the governing legislation similar to s. 220 of the Community Charter. The legislation provided
an exemption from taxation for land and improvements "vested in or held by His Majesty".
[10] The majority of the Supreme Court of Canada said the exemption did not apply. Duff C.J. said the
railway was the owner of the fee simple interest and that was the interest that was taxable. If the
governments were responsible for paying all or part of the taxes, that was an obligation assumed under
the lease, not imposed by the statute. In concurring reasons, Rand J. said he assumed that the
exemption included a leasehold interest of the Crown, but that interest was not taxable in itself, although it
was included in the owner's interest. He said that if Crown chooses to acquire a property interest with
different tax consequences from another form of property interest, it must accept those consequences.
[11] The facts of this case are not distinguishable. The railway as the owner of the land is the only party
that the statute makes subject to assessment and taxation. Any liability that the City may have to pay
taxes arises only out of the lease agreement that it freely entered into.
[12] Vancouver (City) is binding on me and provides a complete answer to the City's position. I would add,
however, that the phrase "held by" appears in both s. 220 and 224 of the Community Charter. One
section provides an automatic exemption for land "vested in or held by" the municipality, while the other
allows the City to enact such an exemption for land "owned or held by" a municipality. If all property held
by a municipality is automatically exempt from taxation, the municipality does not need the power to make
it exempt. The only way to make sense of that apparent redundancy is to recognize that s. 224 is
intended to include a broader range of property for which the exemption is discretionary and based upon
how the property is used, rather than simply on who owns it.
Question two:
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[13] In Seven Hills, the Assessment Appeal Board considered property that a private owner had leased to
a society for use as a golf course and clubhouse. Section 809(4)(a) of the Local Government Act,
R.S.B.C. 1996, c. 323 allowed regional districts to grant a tax exemption for property used for public,
athletic or recreation purposes if the property was "owned or held by, or held in trust by the owner for, an
athletic or service organization." The Board decided that the phrase "held by" could include a leasehold
interest. It found that the land was therefore "held by" the society and the regional district could grant the
exemption.
[14] The Board distinguished Vancouver (City) on the basis that the Supreme Court of Canada did not
say that the land at issue was not "held by" the Crown, but rather that the exemption did not apply
because it was the interest of the fee simple owner that was taxable and not the Crown's interest.
[15] In this case, the Board noted that Seven Hills dealt with a provision similar to s. 224 of the
Community Charter, giving a taxing authority discretion to exempt otherwise taxable property. The section
had a different purpose from that of s. 220(1) of the Community Charter, which the Board said is to
ensure that the municipality occupying otherwise exempt property, such as property leased from another
level of government, is also exempt.
[16] The City also argued that the Board failed to see the distinction between assessment and taxation
that arises because s. 220 makes "property" exempt from taxation, rather than a particular interest. That
argument is inconsistent with Vancouver (City), which was binding on the Board and which the Board
correctly applied.
Question three:
[17] The City argued before the Board, as it argued before me, that it should have the flexibility to
determine how it can most efficiently and economically acquire and hold land for the provision of public
services. The Board said that flexibility is found in the discretion to grant a permissive exemption under s.
224 of the Community Charter. I agree that this is precisely the kind of situation that s. 224 addresses and
that there is nothing to prevent the City from passing the appropriate bylaw exempting this property from
taxation. It is more in keeping with the legislative scheme that such an exemption be a discretionary one
based on how the property is used, rather than an exemption that arises simply on the basis of ownership
by operation of s. 220(1).
Conclusion
[18] I conclude that the Board's decision was correct in the result and would answer the three Stated
Case questions as follows:
1. No
2. No
3. No
The Honourable Nathan H. Smith
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