COURT OF APPEAL FOR ONTARIO

CITATION: Graham v. Ontario, 2015 ONCA 627

DATE: 20150917

DOCKET: C59965

Laskin, MacPherson and MacFarland JJ.A.

BETWEEN

George Keith Graham and Karn Graham (and the persons listed on Schedule "A" hereto)

Applicants (Appellants)

and

Her Majesty the Queen in right of Ontario

Respondents (Respondents)

David Kirwin and Kenneth Peacocke, for the appellants

Lise Favreau and Judith Parker, for the respondent

Heard: September 15, 2015

On appeal from the order of Justice Andrew J. Goodman of the Superior Court of Justice, dated January 7, 2015.

ENDORSEMENT

[1] The appellants appeal the order of A.J. Goodman J. of the Superior Court of Justice dismissing their application and declaring that they are obligated to pay a portion of the grant in lieu of taxes paid by the Ministry of Natural Resources ("MNR") to the Municipality of Chatham Kent pursuant to the Municipal Tax Assistance Act ("MTAA").

[2] The appellants are owners of private cottages on leased land in Rondeau Provincial Park. The Crown makes payments in lieu of taxes ("PILT") to municipalities pursuant to s. 4(2) of the MTAA:

4(2) Every Crown agency, in respect of provincial property owned or occupied by it, may pay in each year to the municipality in which the property is situate an amount equal to the tax for municipal purposes that would be payable if the property were taxable.

[3] By virtue of s. 4(3) of the MTAA, the tenants of the Crown properties are required to pay the amounts paid by the Crown under s. 4(2), unless the parties agree otherwise:

4(3) Unless the parties have agreed otherwise, the tenant shall owe a debt to the Crown or Crown agency, as the case may be, equal to the amount paid under paragraph 2.

The amounts the tenants pay are based on the assessed values of their properties.

[4] The appellants contend that they come within the words "Unless the parties have agreed otherwise" in s. 4(3) of the MTAA. They submit that the letter of October 24, 1986, and the lease extension agreement of November 1987 amounted to an agreement to the contrary. They also rely on the conduct of the parties to corroborate the evidence of their agreement.

[5] The application judge rejected their argument. He concluded:

[51] I agree with the respondents that no extrinsic evidence can be considered that would add to, subtract from, vary, or contradict a contract that has been wholly reduced to writing, including evidence of the subjective intention of the parties. Nor can extrinsic evidence be used to prove the existence of a collateral contract which contradicts the express terms of the main contract. On this basis, reliance on any communications between the parties or statements about subjective intention to establish a term contrary to clause 7 of the Original Lease is not permitted.

[52] There is nothing in the Second Lease Extension dealing with taxes, rates, duties or assessments. Therefore, the Original Lease Agreement remained operative as it relates to this obligation. Stewart McLaren claims that the provision dealing with taxes in the Original Lease was "dropped in subsequent leases". I am not satisfied that the term dealing with taxes was removed in the manner suggested by the applicants.

[6] On this appeal, the appellants contest the conclusions set out in this passage. In our view, they cannot succeed. We agree with the application judge's conclusions and with his reasons in support of the conclusions. We would add that the trial judge considered all the documentary evidence relied on by the appellants. He found no agreement. This finding is entitled to deference: see Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53.

[7] The Crown is merely seeking to enforce its statutory rights under s. 4(3) of the MTAA. It is not claiming any back tax from years prior to 2013; rather it is relying on the MTAA on a go-forward basis because of a change in policy that led to a change in the relevant statute. This is what governments do; they change their policies and people are affected.

[8] The Crown gave notice to the tenants that this change was coming. It was not a bolt out of the blue. It was a change in taxation policy, backed by a statutory obligation of the tenants to pay, clearly communicated to the tenants. The tenants were fully informed of the proposed changes, given an opportunity to meet with MNR officials to discuss them, and provided with the right to seek reconsideration of, or appeal, their individual assessments. The appellants do not get a free ride now because the Crown let them enjoy their cottages free from municipal taxes for 30 or more years.

[9] The appeal is dismissed. The respondent is entitled to its costs of the appeal fixed at $10,000 inclusive of disbursements and HST.

"John Laskin J.A."

"J.C. MacPherson J.A."

"J. MacFarland J.A."