The appellants, anchor tenants in shopping centres, challenged the constitutionality of shortfall recovery provisions in the Municipal Act.
These provisions allowed commercial landlords to recoup property tax shortfalls from tenants.
The appellants argued this constituted indirect taxation, which is ultra vires the Province under section 92(2) of the Constitution Act, 1867.
The Court of Appeal dismissed the appeal, holding that the provisions merely regulate the pre-existing transferability of a true land tax, which remains a valid direct tax.
