CITATION: Walton International v. Farm Property Class Tax Rate Program, 2012 ONSC 4172

DIVISIONAL COURT FILE NO.: 382/11

DATE: 20120723

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

Aston, Sachs, Herman JJ.

BETWEEN:

Walton International Group Inc. and 1664531 Ontario Inc.

Applicants

– and –

Administrator, Farm Property Class Tax Rate Program, Ministry of Agriculture, Food and Rural Affairs

Respondent

Jeff G. Cowan, for the Applicants

Christopher P. Thompson, Kristopher Crawford-Dickinson, for the Respondent

HEARD at Toronto: June 15, 2012

HERMAN J.

Introduction and Background

[1] This is a stated case from the Agriculture, Food and Rural Affairs Appeal Tribunal (the “Tribunal”) which has been referred to the court under s.43 of the Assessment Act, R.S.O. 1990 c. A.31 and s. 31, para. 9 of O.Reg. 282/98 under that Act.

[2] The applicants had appealed the assessment of numerous properties on the basis that they should have been assessed in the farm property class under s. 8(2) of that regulation. The Tribunal adjourned that appeal without a fixed date pending this court’s determination on two stated questions. Those questions focus on what forms of land ownership meet the requirements of s. 8(2) of O.Reg. 282/98.

[3] With the assistance of counsel in framing the issues, the Tribunal stated the following two questions for determination by the court:

(i) Does the use of the phrase “land is owned by” in s. 8(2)(3) of O.Reg. 282/98 as it relates to real property include both beneficial and legal ownership; and

(ii) If the answer to question (i) is yes and “land is owned by” is found to include beneficial ownership, the following question must also be resolved:

Where more than 50% of the voting rights ordinarily exercisable at meetings of the shareholders of:

(a) a corporate landowner, or

(b) a corporate partner of a partnership that is the landowner (where more than 50% of the profit or loss of the partnership is allocated to the corporate partner);

are held by other corporations, if the voting shares of those other corporations are ultimately held by a parent corporation (through one or more subsidiary-parent corporate relationships where the parent holds 100% of the voting rights of the subsidiaries), and those voting rights are controlled by individuals who are either a Canadian citizen or lawfully admitted to Canada for permanent residence, amount to the beneficial ownership of the land by those individuals or the parent corporation, and therefore meets the ownership requirements of O.Reg. 282/98?

[4] The parties have provided a joint statement of fact which includes discussion of the statutory scheme that the court is being asked to interpret. The properties are all commercial investment properties held in one of two ownership models: a Corporate Ownership Model or a Partnership Ownership Model.

[5] No issue of the appropriate standard of review arises here because the Tribunal has not made any decision on the stated questions.

Issue 1:

Does the use of the phrase “land is owned by” in section 8(2)3 as it relates to real property include both beneficial and legal ownership?

[6] The issue is whether lands that are beneficially, but not legally, owned by Canadians, qualify for the farm property class. The effect of such a qualification is that the land receives favourable tax treatment.

[7] The applicants submit that the phrase “land is owned by” in s. 8(2)3 of O. Reg. 282/98 (the “Regulation”) includes beneficial owners. The respondent argues that the phrase is limited to legal ownership.

[8] For the reasons that follow, I conclude that the phrase “land is owned by” in s. 8(2)3 is restricted to land that is legally owned by the entities or individuals described in s. 8(2)3.

Legislative Scheme

[9] The assessment and taxation of land has two basic components: (i) assessing the value of the land, and (ii) determining the taxable rate for the land.

[10] Section 17 of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”) provides that “land shall be assessed against the owner”.

[11] Section 19 of the Act provides that “assessment shall be based on its current value”.

[12] In general, the value of the land is “the amount of money the fee simple, if unencumbered, would realize if sold at arm’s length by a willing seller to a willing buyer” (the Act, s. 1(1)).

[13] However, farmland receives special treatment, in that the current value of the land and any buildings on that land used for farming purposes is the value for farm purposes only (s. 19(5)).

[14] The Minister may, by regulation, define “farmlands” and “farm purposes”.

[15] Section 8(2) of the Regulation imposes several legal requirements that must be met in order for land to qualify as farmland. The only requirement that is at issue here is ownership. The parties agree that the properties in question satisfy the other requirements of the Regulation: all the properties have a farming business carried out on them; the persons carrying on the farming business have been issued the required registration number; and the properties have an annual gross income that is greater than $7,000.

[16] The issue, then, is the meaning of “land owned by” in s. 8(2)3 of the Regulation, which provides:

8. (2) Land used for farming, including outbuildings is farmland for a taxation year if the following requirements are satisfied:

9. The land is owned by,

i. an individual who is a Canadian citizen or has been lawfully admitted to Canada for permanent residence,

ii. a corporation that has issued and allocated shares to which are attached more than 50 per cent of the voting rights ordinarily exercisable at meetings of the shareholders and that are owned by individuals described in subparagraph i,

iii. a partnership of which more than 50 per cent of the income or loss of the partnership is allocated to partners who are persons described in subparagraph i or ii,

iv. a non-profit corporation without share capital, including a co-operative corporation under the Co-operative Corporations Act, more than 50 per cent of whose members are individuals described in subparagraph i,

v. a trust more than 50 per cent of whose beneficiaries are individuals described in subparagraph i, or

vi. a corporation that does not issue shares and does not have members.

[17] The Regulation further provides that, where there is a dispute over the classification of land, it will be determined by the Agriculture, Food and Rural Affairs Appeal Tribunal (O. Reg. 282/98, s. 31). The Tribunal may state a case in writing for the opinion of the Divisional Court upon any question that, in the Tribunal’s opinion, is a question of law (s. 31, para. 9).

Ownership structure of the applicant’s lands

[18] While the questions in the stated case are worded in a generic fashion, they are based on the properties directly or indirectly owned by Walton International Group Inc.

[19] The properties in question were purchased for commercial investment purposes. They are currently being used for farming but the long-term plan is to develop them for non-farming purposes.

[20] The properties are owned by one of two ownership models: the Corporate Ownership Model or the Partnership Ownership Model.

[21] Under the Corporate Ownership Model, three or four corporations are involved in the ownership structure. The Model operates as follows:

(a) Corporation B or a subsidiary and Corporation C own the property, and

(i) Corporation B or a subsidiary owns a very small undivided interest in the property (e.g. 5%), and

(ii) Corporation C (Syndicate Affiliate) owns the balance of the undivided interest in the property (e.g.95%);

(b) Corporation B owns all voting Class “A” Shares of its subsidiaries and of Corporation C;

(c) Canadian citizens or permanent residents own all non-voting Class “B” Shares of Corporation C;

(d) Corporation A owns all voting Class “A” Shares of Corporation B; and

(e) Canadian citizens own all voting Class “A” Shares of Corporation A.

(See Chart at Appendix A)

[22] Under the Partnership Ownership Model, four corporations and a limited partnership are involved in the ownership structure. The Model operates as follows:

(a) Corporation B or a subsidiary and Corporation D own the property through a Limited Partnership, and

(i) Corporation B or a subsidiary owns a very small undivided interest in the property (e.g. 5%),

(ii) Corporation D is the General Partner of a Limited Partnership which owns the balance of the undivided interest in the property (e.g. 95%), and

(iii) Units in the Limited Partnership are owned by Canadian citizens or permanent residents, and by Corporation C;

(b) Corporation B owns all voting Class “A” Shares of its subsidiaries and Corporations C and D;

(c) Corporation A owns all voting Class “A” Shares of Corporation B; and

(d) Canadian citizens or permanent residents own all voting Class “A” Shares of Corporation A.

(See Chart at Appendix B)

[23] If the phrase “land owned by” in s. 8(2)3 of the Regulation is restricted to legal ownership, then the land owned by either ownership model would not qualify for assessment as farm property. If, on the other hand, it includes beneficial ownership, the land might qualify, although that would depend on the answer to question 2.

Statutory Interpretation

[24] Thus, the resolution of the first question lies in the interpretation given to the words “land owned by” in s. 8(2)3 of the Regulation.

[25] Historically, there was a strict approach to the interpretation of taxing statutes. However, this is no longer the case. The “modern approach” applies to taxation statutes, as it does to other statutes. That approach has been articulated as follows:

[T]he words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament. (Placer Dome Canada v. Ontario (Minister of Finance), 2006 SCC 20 at para 21, citing Stubart Investments Ltd. v. The Queen, 1984 20 (SCC), [1984] 1 S.C.R. 536 at p. 538)

[26] In Placer Dome, the court considered the application of this approach to taxation statutes (at paras. 21-24). As a general proposition, taxpayers are entitled to rely on the clear meaning of the statute. Thus, where the words are precise and unequivocal, those words will play a dominant role. However, where the words give rise to more than one reasonable interpretation, there may be greater recourse to the context and purpose of the Act. The residual presumption in favour of the taxpayer applies only in the exceptional case, where the usual rules of interpretation have been applied to no avail.

[27] The parties have pointed to the following interpretive tools and rules to support their respective positions: (i) textual analysis; (ii) legislative purpose; (iii) legislative history; (iv) legislative context; (v) the administration of the Act; and (vi) case law.

Textual analysis

[28] The respondent relies on various sources in support of the proposition that the ordinary meaning of “owner” is “legal owner”. Black’s Law Dictionary 7^th Ed. West Group, St. Paul, Minnesota 1999 at p. 1130, defines “own” as “[t]o have or possess as property; to have legal title to” [emphasis added].

[29] Courts have also indicated that, “Ordinarily, the word ‘owner’ of land means the person who holds it in fee simple”. However, the ordinary meaning may be extended to include others depending on the subject matter and the context (Springhill (Town) v. McLeod, 1928 374 (NS CA), [1929] 1 D.L.R. 882 (N.S.C.A.) at p. 884).

[30] The respondent points, as well, to the text on property tax assessment, Jack Walker and Jerry Grad, Ontario Property Tax Assessment Act (Canada Law Book, 1998) at p. 2-6, in which the authors state that:

In the Act, “land” is to be assessed against the owner. Since the term “owner” is not defined in the Act, it has repeatedly been taken to refer to the legal owner.

Legislative Purpose

[31] The general purpose of the Act is to raise revenues through property taxation so that municipal governments can meet their expenditures. However, this purpose is not absolute. The public interest in the generation of revenues may be outweighed by the public interest in benefiting discrete groups or advancing purposes other than revenue generation.

[32] The parties agree that the primary purpose of the special treatment of farm property is to keep farmland owned by Canadian citizens or permanent residents in agricultural production as long as possible.

[33] They disagree, however, on the role of investment. The applicants, whose ownership models are designed to facilitate investment, contend that the purpose of the provision is also to encourage developers and investors to maintain that land in agricultural production as long as possible. The respondent submits, however, that its purpose is to make the ownership of farmland less enticing to investors, whose goal is to eventually take the land out of agricultural use and develop it for non-farming purposes.

[34] The decision in Slough Estates Canada v. Ontario (Regional Assessment Commissioner, Region No. 15) (2000), 2000 5705 (ON CA), 48 O.R. (3d) 84 (C.A.) at para. 20 would appear to support the applicants’ position. The issue in that case was whether land that was being held for development but was being used for farm purposes was to be assessed as farmland. Rosenberg J.A. discussed the policy underlying the provision:

In several decisions, the [Ontario Municipal] Board has recognized that the policy underlying s. 19(3) is to maintain farmland in production as long as possible, and to assist farmers as owners or tenants in this regard although the lands undergo a change of ownership and change of land use controls. The intent also appears to be to encourage developers and persons purchasing land with the intent of ultimately developing it to maintain land in agricultural production as long as possible. [underlining added]

[35] The respondent argues that this statement speaks to the legislative intent that land continue in agricultural use after it has been purchased, regardless of who purchases it. However, it does not suggest that the purpose of the provision is to encourage investors to buy the land.

[36] It is unfortunate that the Tribunal did not first bring its expertise to bear in interpreting its home statute. The court in Slough Estates, for example, had the benefit of decisions of the Board when it engaged in the exercise of statutory interpretation. In this case, we are left with the tests generally applicable to all statutes, without the benefit of the specialized expertise that might have better informed or shaped the interpretation.

Legislative History

[37] Each party points to the legislative history of the taxation of farmland in support of its respective position.

[38] The current regime for the tax treatment of farming land is a successor to the Farm Tax Rebate Program.

[39] The Farm Tax Rebate Program can be traced back to an Order-in-Council enacted in 1970. In 1998, the tax rebate system was replaced by the current scheme, which taxes farmlands at a lower rate, instead of providing rebates.

[40] The applicants point to the change in the term used for ownership. In order to be eligible under the Farm Tax Rebate Program, one had to be the “registered owner” of the land (Order-in-Council 3033/90, s. 4(1)). The current provision refers only to “land owned by” and does not define the term. The applicants argue that, had it been the intent to restrict the term to the legal owner, the term “registered owner” would have been retained.

[41] The respondent submits, however, that the change from “registered owner” in the Farm Tax Rebate Program to “land owned by” in the new scheme is not significant because assessments under the Act are always against the legal owner. Therefore, it was not necessary to use the term “registered owner” in s. 8(2)3 of the Regulation.

[42] At the same time, the respondent points to the change in the definition of “resident”. Under the Farm Tax Rebate Program, “resident” was defined to include a corporation, partnership or other organization in which the persons “directly or indirectly own more than 50 percent of the beneficial interests or assets of the corporation, partnership or other organizations” (Order-in-Council 3303/90; Order-in-Council 2545/92) [underlining added]. The respondent argues that, had there been an intention to include beneficial ownership in s. 8 of the Regulation, the language of direct or indirect ownership would have been retained.

Legislative context

[43] The applicants submit that each provision in the Act and the Regulation that refers to ownership should be read in its own context in order to determine whether the particular provision is restricted to legal ownership or includes beneficial ownership. In other words, depending on where in the legislative scheme it appears, the same word can have different meanings.

[44] The respondent maintains that the applicants’ proposed approach would introduce unacceptable uncertainty into the Act and Regulation.

[45] Tax provisions, like other legislative provisions, are to be interpreted in a textual, contextual and purposive way. Courts, have, however, noted the particular context of taxation statutes. In referring to the provisions of the Income Tax Act, R.S.C. 1985, c. 1(5^th Supp.), in Canada Trustco Mortgage Co. v. Canada, 2005 SCC 54, [2005] S.C.J. No. 56 at para. 12, McLachlin C.J. and Major J. noted:

The provisions of the Income Tax Act must be interpreted in order to achieve consistency, predictability and fairness so that taxpayers may manage their affairs intelligently.

[46] A similar sentiment was expressed by LeBel J. in Placer Dome at paras. 21-23, where he added that “The interpretive approach is thus informed by the level of precision and clarity with which a taxing provision is drafted”.

[47] The respondent relies on two principles of statutory interpretation: the presumption of consistent expression; and the presumption against tautology.

[48] In Sullivan on the Construction of Statutes at pp. 214-215, the author explains the presumption of consistent expression as follows:

It is presumed that the legislature uses language carefully and consistently so that within a statute or other legislative instrument the same words have the same meaning and different words have different meanings. Another way of understanding this presumption is to say that the legislature is presumed to avoid stylistic variation. Once a particular way of expressing a meaning has been adopted, it is used each time that meaning is intended. Given this practice, it makes sense to infer that where a different form of expression is used, a different meaning is intended.

[49] In keeping with the presumption of consistent expression, the respondent points to s. 9(2) of the Regulation, which specifically provides for beneficial ownership. The respondent argues that the inclusion of the term “beneficial” in s. 9(2) and its absence in s.8(2) support its position that s. 8(2) does not include beneficial ownership.

[50] Section 9(2) of the Regulation deals with managed forests property:

9.(2) Land that is covered by a forest, and including outbuildings used for forest operations, is eligible land if the following requirements are satisfied:

1. The land is owned by,

i. an individual who is a Canadian citizen or has been lawfully admitted to Canada for permanent resident,

i.1 two or more individuals as joint tenants or tenants in common if 50 per cent or more of the beneficial interest in the land is held by persons described in subparagraph i,

ii. a corporation that has issued and allocated shares to which are attached more than 50 per cent of the voting rights ordinarily exercisable at meetings of the shareholders and that are owned by individuals described in subparagraph i,

iii. a partnership of which more than 50 per cent of the income or loss of the partnership is allocated to partners who are persons described in subparagraph i or ii, …

[underlining added]

[51] The respondent argues that it is significant that the wording of ss. 8(2)3 and 9(2)1 was identical when they were first enacted in 1998. The addition of “beneficial interest” to s. 9(2)1 occurred in 2006 (s. 2(2), Reg. 406/06). The respondent submits that if ownership included beneficial ownership, the change would not have been necessary. Similarly, had there been an intention to include beneficial ownership in s. 8(2)3, the change would have been made.

[52] The applicants submit that s. 9(2)1 deals with a different context than s. 8(2)3. The reference to beneficial interest in the former provision is necessary in order to deal with the particular situation of joint tenants and tenants in common.

[53] The respondent also relies on the presumption against tautology. It is described in Placer Dome as follows:

Under the presumption against tautology, “[e]very word in a statute is presumed to make sense and to have a specific role to play in advancing the legislative purpose”: see R. Sullivan, Driedger on the Construction of Statutes (3^rd ed. 1994) a p. 159. To the extent that it is possible to do so, courts should avoid adopting interpretations that render any portion of a statute meaningless or redundant: Hill v. William Hill (Park Lane) Ltd., [1949] A.C. 530 (H.L.) at p. 546, per Viscount Simon. (at para. 45)

[54] The respondent argues that the applicants’ interpretation would render s. 8(1)3(v) redundant. That subparagraph provides that, in addition to land owned by individuals, corporations and partnerships, land that is owned by “a trust more than 50 per cent of whose beneficiaries are individuals described in subparagraph i [Canadian citizens and permanent residents]” may also qualify as farmland. If the phrase “land is owned by” extends to beneficial ownership there would be no need to include s. 8(1)3(v).

[55] The applicants contend that the added items in s. 8(1)3 are examples of types of ownership. The inclusion of these examples does not support the conclusion that ownership by corporations and partnerships is restricted to legal ownership.

[56] At the same time, the applicants point to s. 19(5.1) of the Act which, they say, is inconsistent with the scheme for the treatment of farmland if ownership does not include beneficial ownership. That provision deals with what occurs on the death or retirement of the owner of farmland. It states:

19.(5.1) Where the owner of farmlands entitled to the benefit of subsection (5) [for the determination of the current value of farmlands] dies or retires, the current value of the lands and buildings in respect of which subsection (5) applies shall be determined in the manner provided in subsection (5) for the period the lands are held by the owner after his or her retirement or held by his or her estate after his or her death, but in no case beyond the two years immediately following the owner’s death or retirement unless the lands are occupied by the surviving spouse of the deceased owner or by the retired owner.

[57] The applicants submit that this provision makes no sense if ownership is restricted to legal ownership, because a corporation or partnership does not die or retire. Therefore, the provision could never apply to a corporation or partnership. This is inconsistent with the overall scheme for the treatment of farmlands, which applies to lands owned by corporations and partnerships, as well as to lands owned by individuals.

[58] The respondent argues, on the other hand, that this particular provision is not intended to apply to corporations and partnerships because they do not need the benefit of s. 19(5.1). If a corporation or partnership owns the land and the person farming the land dies or retires, the corporation or partnership can lease the land to a new tenant in order to qualify for the farmland assessment.

Administration and Enforcement

[59] The respondent submits that legal ownership is consistent with the administration and enforcement of the Act. The assessment of the land is against the legal owner (s. 17(1)). The legal owner receives the assessment (s. 14). Finally, the enforcement of the taxes levied is based on a legal ownership model: the legal owner receives the tax bill; and the legal owner is responsible for paying the taxes.

Cases

[60] The applicants point to cases in which ownership, although not defined in the assessment legislation, was held to include beneficial ownership: Sawers v. City of Toronto, [1901] 2 O.R. 717 at 719-720 (C.A.), interpreting “owner” of assessed premises in the Assessment Act, R.S.O. 1897, ch. 224; Leistikow v. Ritchot (Municipality), 1923 388 (MB CA), [1923] 1 W.W.R. 1101 (Man. C.A.) 1101 at para. 6, interpreting “land owned by” in The Seed Grain Act, R.S.M. 1913, ch. 178; and First Place, Hamilton v Hamilton (City) (1979), 12 R.P.R. 121 (Ont. H.C.J.), interpreting “land owned by the institution” in The Assessment Act, R.S.O. 1970, c. 32.

[61] It is worth considering the most recent of these decisions, the First Place, Hamilton case, in more detail. Section 3 of The Assessment Act at that time provided various exemptions from taxation, including land owned by not-for-profit charitable and philanthropic institutions. The applicant was incorporated as a non-profit corporation. It constructed a building complex, which included residential apartments, retail store space, a community activity area and a place of worship for a church. The respondent city assessed all of the lands and buildings for taxation with the exception of the place of worship.

[62] Goodman J. held that the words “when the land is owned by the institution” in s. 3 ¶ 12 of the Act referred to beneficial ownership (at p. 136). There was a trust agreement between the applicant and the church congregation, whereby the land was vested in the applicant as trustee for the congregation. Goodman J. concluded that the church congregation, not the applicant, was the beneficial owner and the application for an exemption, therefore, had to fail.

[63] The respondent relies on the decision of the Court of Appeal in Carsons’ Camp Ltd. v. Municipal Property Assessment Corp., 2008 ONCA 17, [2008] O.J. No. 72 (C.A.). That decision involved the interpretation of “current value” in s. 19(1) of the Act. The issue was whether the assessed value upon which the owner of the land had to pay taxes included the value of third-party owned trailers that were placed upon or affixed to the land.

[64] The decision largely turns on the Court’s interpretation of “current value”, and whether it can include property that is placed on the land, but is not owned by the owner of the land. The Court of Appeal held that a number of the third-party owned trailers had been placed on the property with sufficient permanency to be considered part of Carsons’ land for the purpose of assessment under the Act.

[65] In his reasons, Rouleau J.A. addressed the meaning of “owner”:

Section 17(1) of the Act states that “land shall be assessed against the owner”. The term “owner” is not defined in the statute, but has been interpreted to mean the legal owner of the land: see McMaster University and City of Hamilton (Re) (1973), 1973 410 (ON CA), 1 O.R. (2d) 378 at 383 (C.A.), aff’d (1975), 16 N.R. 589 (S.C.C.).

[66] The applicants argue that the court in Carsons’ Camp was concerned with what was to be assessed, not who was to be assessed. Who owned the land was not an issue. Further, the Court of Appeal was commenting on the meaning of “owner” in the context of s. 17(1) of the Act, not s. 8(2)3 of the Regulation.

[67] In McMaster University and City of Hamilton, cited by the court in Carsons’ Camp, the issue was the entitlement of the university to an exemption from taxation in respect of lands and the buildings on the lands, which were the site of a student residence. In that case, the University had entered in an agreement with the Ontario Student Housing Corporation whereby the Housing Corporation undertook to develop and construct the student residence. It entered into a lease with the University on a 50-year basis with two renewal options of 5 years each. At the conclusion of the lease, the lands and buildings would revert to the University.

[68] The Act provided that land and buildings used for a university were exempt from taxation. The court found that the intention of the parties was to make the building available to the University for student housing. It further found that the land was occupied by the University for its own purposes, as well as owned by it. It was therefore exempt from taxation.

[69] In reaching this conclusion, Kelly J.A. referred to the definition of “owner” as follows:

In the Assessment Act, land, as defined by the Act, is to be assessed to either or both the owner and the tenant. …

As an owner is not defined in the Act I would take it that this term is used to refer to the legal owner. [paras. 16-17]

[70] As noted above, the court in First Place, Hamilton reached a different conclusion. Goodman J. distinguished the McMaster University case on the basis that the provision under consideration did not make ownership of the lands a pre-requisite to obtaining an exemption. Rather, the exemption was based on use and occupation. In his opinion, the conclusion reached by the court in McMaster University was based on its context, that is, the substance of the agreement between the University and the Housing Corporation.

Analysis

[71] The guiding principle of statutory interpretation is: “[T]he words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament” (Placer Dome, at para. 21).

[72] In interpreting taxation statutes, courts should aim to achieve “consistency, predictability and fairness” so that taxpayers are able to manage their affairs (Canada Trustco at para. 12).

[73] In general, the word “owner” refers to the legal owner of the land. This meaning may, however, be extended to include beneficial owners depending on the subject matter and the context.

[74] An examination of the legislative purpose provides little assistance in answering the stated question. It is clear that the purpose is to keep farmland in production as long as possible, whether that land is owned by farmers or investors. The ownership model, whether it be legal or beneficial, neither advances nor detracts from that purpose, except to the extent that more flexibility with respect to ownership models may make the ownership of farmland more attractive to investors.

[75] An examination of the legislative history also provides little assistance. Each party can point to a change in language between the former Order-in-Council and the current provision in support of its position.

[76] Each party was able to point to cases in support of its interpretation. However, the most recent authority from the Court of Appeal, that is, Carson’s Camp, indicates that the term “owner…has been interpreted to mean the legal owner of the land” (albeit in reference to s. 17(1) of the Act).

[77] In my opinion, the answer to the first question lies in a consideration of the principles discussed, above, under the heading “Legislative Context”, in particular, the presumption of consistent expression and the presumption against tautology. These presumptions are particularly important when construing a taxation statute, where there is a need for precision and clarity in order to ensure consistency, predictability and fairness.

[78] I do not agree with the applicants’ contention that “owner” may be given different meanings in the Act and the Regulation, depending on its context. To do so would promote uncertainty and unpredictability.

[79] It can be presumed that if a different term is used, such as “beneficial interest” in s. 9(2)1 of the Regulation, it is because a different meaning is intended. It can be presumed that no provision, such as the inclusion of a “trust” in s. 8(2)3, is unnecessary. In saying this, I reject the applicants’ submission that the list contained in s. 8(2)3(i) to (vi) is a list of examples. That is not the way the section is worded. It can also be presumed that if “owner” means legal owner in one section of the Act, such as s. 17(1), it has the same meaning elsewhere in the Act and the Regulation.

[80] I also do not agree with the contention that s. 19(5.1) is rendered meaningless if ownership is restricted to legal ownership. The provision is intended to apply to individuals, not to corporations or partnerships, because corporations and partnerships have no need for the provision.

Conclusion

[81] For the reasons set out above, the answer to the first question of the stated case is: the phrase “land owned by” in s. 8(2)3 of the Regulation as it relates to real property is restricted to legal ownership. It does not include both beneficial and legal ownership.

[82] Having reached this conclusion, it is not necessary to answer the second question posed in the stated case.

[83] The parties agreed that neither party would seek costs in view of the fact that this is a matter of first instance. No costs are awarded.

Herman J.

Aston J.

Sachs J.

Released: July 23, 2012

CITATION: Walton International v. Farm Property Class Tax Rate Program, 2012 ONSC 4172

DIVISIONAL COURT FILE NO.: 382/11

DATE: 20120723

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

Aston, Sachs, Herman JJ.

BETWEEN:

Walton International Group Inc. and 1664531 Ontario Inc.

Applicants

– and –

Administrator, Farm Property Class Tax Rate Program, Ministry of Agriculture, Food and Rural Affairs

Respondent

REASONS FOR DECISION

Released: July 23, 2012