SUPERIOR COURT OF JUSTICE - ONTARIO
(DIVISIONAL COURT)
RE: 1518756 ONTARIO INC. and TORONTO PORT AUTHORITY, Applicant - and - MUNICIPAL PROPERTY ASSESSMENT CORPORATION, THE CITY OF TORONTO AND THE TORONTO PORT AUTHORITY, Respondents
BEFORE: CARNWATH, WILSON & KRUZICK JJ.
COUNSEL: Jeff Cowan, for the Applicant Chester Gryski, for the Respondents
HEARD AT TORONTO: October 30, 2008
E N D O R S E M E N T
THE COURT:
Nature of the Proceeding
1The broad issue before us is whether Pattillo J. erred when he found that the appellant’s ship, the Jadran, was a “structure” and the Toronto Port Authority lakebed on which it is located is “land”, so that both could be assessed for taxation purposes.
Disposition
2We find the application judge made no error in fact or law. The appeal is dismissed.
Background
3The appellant corporation owns the Jadran, a former cruise ship berthed in Lake Ontario, in the City of Toronto. It operates as Captain John’s, a floating restaurant and banquet facility. The Toronto Port Authority owns the lakebed beneath the ship. The appellant has a licence agreement with the Port Authority for the occupation of the space.
4Both the land, consisting of the lakebed and the Jadran, were assessed by the respondent, the Municipal Property Assessment Corporation, for taxation purposes.
5Pursuant to the Port Authority licence, the Jadran occupies a berthing space of approximately 15,000 square feet of the Yonge Street slip owned by the Port Authority.
6The Jadran was assessed as a “structure” by the respondent for $269,703, pursuant to s. 1(e) of the Assessment Act, R.S.O. 1990 c. A.31, as amended (the “Act”). The Port Authority’s berthing space was assessed as “land” for $774, 275.
7The questions raised by the Appellant on this appeal are whether the judge erred in finding that:
(1) The Jadran is a structure;
(2) The Jadran occupies land owned by the Port Authority; and,
(3) The appellant is in possession of that land.
Analysis
Standard of Review
8The standard of review is set out in Housen v. Nikolaisen (2002), 2002 SCC 33, 211 D.L.R. (4th) 577 (S.C.C.), [2002] S.C.J. No. 31. In summary, on a pure question of law, an appellate court is free to replace the opinion of the trial judge with its own. Thus, the standard of review on a question of law is that of correctness. The standard of review for findings of fact is that such findings are not to be reversed unless it can be established that the trial judge made a "palpable and overriding error": Stein v. Kathy K (The), [1976] 2 S.C.R. 802. Questions of mixed law and fact are subject to a more stringent standard of review applying a legal standard to a set of facts: Canada (Director of Investigation and Research Competition) v. Southam Inc., [1997] 1 S.C.R. 748.
The Jadran is a Structure
9The appellant argues the Jadran is a ship or vessel and not a structure within the meaning of s. 1(e) of the Act. The appellant argues the case of Herbstreit et al. v. Regional Assessment Commissioner, Assessment Region No. 15 (1982), 38 O.R. (2d) 642 (Co. Ct.), in which a floating restaurant was determined to be assessable as a structure placed on water, is either distinguishable from the case at bar or wrongly decided. In his review of this decision, the judge did not agree and we find no error in his analysis.
10“Structure” is defined in s. 1(e) of the Act as follows:
- In this Act,
“land”, “real property” and “real estate” include,
(e) all structures and fixtures erected or placed upon, in, over, under or affixed to a highway, lane or other public communication or water, but not the rolling stock of a transportation system; . . .
11The appellant argues that although the Jadran “is placed” upon water, it is not placed “permanently on a permanent foundation” as those words have been used in the jurisprudence.
12Pattillo J. determined that the Jadran was a structure within the definition of s. 1 of the Act since it was an item of substantial size that had been built or constructed and intended by the appellant to remain permanently in its location (paras. 36-37). He found that the Jadran need not be “permanently on a permanent foundation” in order to be a structure (paras. 26-31). Further, Pattillo J. found that the Jadran was placed on water over land, which was considered land under the Act (para. 44).
13In coming to his conclusions, the judge looked at the ordinary dictionary meaning of structure. He determined that it was “very broad”, but that the courts have defined it more narrowly. We find Pattillo J. was correct to apply a teleological or purposive approach to determining the appropriate meaning of “structure” within a taxing statute (para. 27).
14The appellant argues that there was no legislative intent to expand the definition of structure to include a ship or a vessel, and referred us to Star of Fortune Gaming Management (BC) Ltd. v. British Columbia (Assessor of Area No. 10 - Burnaby/New Westminster), 2002 BCSC 1002, [2002] B.C.J. No. 1563 (S.C.). Pattillo J. distinguished that case on its facts, finding that while the riverboat in that case was moored most of the time, it did disconnect and sail regularly. Similarly, the vessel in S.S. Marina Ltd. v. North Vancouver (City) (1974), 54 D.L.R. (3d) 13 (B.C.C.A.), which was solely used as a restaurant, was moved once a year to a shipyard for its annual overhaul, and the engines were still in place so that it could sail.
15Pattillo J. distinguished those cases on their facts. He found the reasoning in the case of Herbstreit et al., above, more appropriate to these facts. There, a floating restaurant was determined to be assessable as a structure placed on water. We do not accept the position of the appellant that the Herbstreit case is either distinguishable from the case at bar or wrongly decided. While the appellant argues that the Supreme Court of Canada jurisprudence as to the meaning of the term “structure” supports the appellant’s position, we disagree. We find that Pattillo J. was correct in his analysis of the decisions going back to Cardiff Rating Authority v. Guest Keen Limited, [1949] 1 All E.R. 27 (C.A.), as it was referred to in two separate Supreme Court of Canada decisions: R. v. Springman, [1964] S.C.R. 267 and British Columbia Forest Products Ltd. v. Canada (Minister of National Revenue-MNR), [1972] S.C.R. 101.
16We agree with the respondent that the Jadran has been located within its current premises, tied to the adjoining dock and connected to public utilities since 1977. The appellant had the intention that it remain on the current premises permanently. The case law upon which the appellant relies was correctly distinguished by Pattillo J.
17Pattillo J. was correct in finding that the Jadran was a structure within the meaning of s. 1(e) of the Act.
The Jadran Occupies Land Owned by the Port Authority
18The appellant submits that the Jadran occupies a berthing space in the water above the land owned by the Port Authority and, therefore, does not occupy the land itself.
19Section 3.1(9) of the Act provides, as follows:
3.1 All real property in Ontario is liable to assessment and taxation, subject to the following exemptions from taxation:
- Subject to section 27, land owned by a municipality, including an upper-tier municipality, a public commission or a local board as defined in the Municipal Affairs Act. The land is not exempt if occupied by a tenant who would be taxable if the tenant owned the land, except land owned by a harbour commission and used for parking vehicles for which a fee is charged.
20The appellant submits that it does not occupy the land owned by the Port Authority for two reasons: first, it sits on water; and second, as a licensee, it does not control or have exclusive possession of the land. As a result, it is argued the land is exempt from taxation, pursuant to the above s. 3.1(9) of the Act.
21We find that the judge on the application correctly referred to the licence agreement itself, which did not just include the surface water, but the land under the water, which is “land” pursuant to the definition in the Act.
22Pattillo J. was correct in finding the Jadran occupied land owned by the Port Authority.
The Appellant is in Possession of the Land
23The appellant argued it was not in possession of the land. In support of its position, the appellant relied on the decision of RivTow Industries v. British Columbia (Assessment Commissioner) (B.C.C.A.), [1986] B.C.J. No. 31. We agree with the finding of the judge that the RivTow case does not apply to the facts in this case. In RivTow, the lease was for the surface of the water. In the case before us, and as found by the application judge, “the Jadran sits on the water surface and occupies almost the entire portion of the licensed premises … hence the applicant Corporation, is in possession of the land” (para. 50).
24We were referred to the licence agreement, specifically to paragraphs 25 and 26, for the proposition that the Jadran does not occupy the land because it does not have control of the licenced premises. As was found by the judge on the application, we disagree and find that the Port Authority’s rights are very limited. In the end, as found by the judge, “the Port Authority cannot interfere unreasonably with the applicant Corporation’s lawful business conducted or to be conducted or its use or occupation of the premises” (para. 53).
25The judge found that pursuant to the licence agreement, this was not a tenancy in the usual sense, but he did find the appellant was a tenant within the meaning of the Act. We agree with the findings of the judge that the licence agreement does not remove exclusive control of the premises by the Jadran. The agreement gives limited right to interfere only in the event of the appellant not carrying on its business or occupying the premises in a lawful manner. We agree with Pattillo J.’s conclusion that the licence agreement does not give control of the land to the Port Authority. Rather, Jadran’s occupation of the land under the surface of the water essentially excluded the Port Authority from interference except in the limited right to do so should the appellant carry on business in an unlawful manner. We agree with Pattillo J.’s finding that the licence agreement does not give control to the Port Authority and that the exemption relied upon by the appellant does not apply.
26Pattillo J. was correct in concluding the applicant is in possession of the land (the lakebed) under the Jadran.
Conclusion
27We conclude the application judge made no error in fact or law. The appeal is dismissed.
28The appellant submits costs should be fixed in the amount of $2,500, while the respondent asks for $7,500. There shall be costs to the respondent fixed in the amount of $7,500, inclusive of fees, disbursements and GST, on a partial indemnity basis, payable in thirty days.
CARNWATH J.
WILSON J.
KRUZICK J.
DATE: March 18, 2009