Clear Channel Outdoor Company Canada v. Municipal Property Assessment Corporation Clear Channel Outdoor Company Canada v. The Corporation of the City of Mississauga Clear Channel Outdoor Company Canada v. Greater Toronto Airports Authority
[Indexed as: Clear Channel Outdoor Co. Canada v. Municipal Property Assessment Corp.]
Ontario Reports
Ontario Superior Court of Justice, Divisional Court,
Pardu, Himel and Ramsay JJ.
November 12, 2013
117 O.R. (3d) 664 | 2013 ONSC 7014
Case Summary
Assessment — "Occupier" — Applicant installing and maintaining advertising displays at Pearson International Airport under licence agreement with airport authority — Applicant selling advertising to third parties from office in downtown Toronto and paying greater part of advertising revenue to airport authority — Applicant subject to assessment under s. 18 of Assessment Act as "occupier" of land owned by Crown — Doctrine of paramount occupancy not applying as applicant was sole occupier of advertising displays — Municipal Property Assessment Corporation not discriminating against applicant or acting for improper motive in assessing it — Assessment Act, R.S.O. 1990, c. A.31, s. 18. [page665]
The applicant installed and maintained advertising displays at Pearson International Airport under a licence agreement with the airport authority (the "GTAA"). The licence agreement described itself as a licence to occupy premises. The applicant sold advertising to third parties from an office in downtown Toronto and paid the greater part of the advertising revenue to the GTAA under the licence agreement. The applicant had no employees at the airport and used subcontractors to install, change and maintain the displays. The GTAA could change the locations of displays and had a right of approval over advertising and content. In 2011, the Municipal Property Assessment Corporation ("MPAC") issued a notice of assessment to the applicant under s. 33(1) of the Assessment Act retroactive to 2009. The applicant's application for a declaration that its property at the airport was not subject to assessment was granted and the assessment was quashed. The respondents appealed.
Held, the appeal should be allowed.
Per Ramsay J. (Pardu J. concurring): Under s. 18 of the Act, the applicant was subject to assessment and taxation as an "occupier" of land owned by the Crown. It had actual occupation of the premises in question (i.e., the locations of the displays). Occupation does not require physical presence. It had exclusive possession of the premises. No one else could display advertising where the applicant was displaying it. The fact that the locations could change at the discretion of the GTAA was not determinative. Any changes in locations did not prevent the applicant from conducting its business. The use of the premises was of value to the applicant because it earned fees from advertisers on account of it. The use had permanence. The licence had a term of years, and had in fact been extended for several more years. The doctrine of paramount occupancy did not apply as the applicant was the sole occupant of the advertising displays. In the alternative, if the applicant was not the sole occupant, it was the paramount occupier. Advertising was integral to its business; it was incidental to the GTAA.
The fact that advertisers in the Ottawa airport had not yet been assessed did not indicate that MPAC had discriminated against the applicant. There was no hint in the evidence of any ulterior or improper motive on the part of MPAC.
Per Himel J. (concurring): The GTAA simultaneously occupied the locations occupied by the applicant. It retained enough control over the advertising display locations to further its own purpose. However, the applicant was the paramount occupier. Any controls imposed by the GTAA on the applicant's use of the locations to display advertising did not materially affect its ability to do so. While advertising was integral to the applicant's business, it was merely incidental to the GTAA's business of operating the airport.
Exchange Corp. Canada v. Mississauga (City), [2012] O.J. No. 5953, 2012 ONSC 6221, 303 O.A.C. 1, 3 M.P.L.R. (5th) 219, 74 O.M.B.R. 339, 27 R.P.R. (5th) 252, 225 A.C.W.S. (3d) 236 (Div. Ct.); Gottardo Properties (Dome) Inc. v. Toronto (City), 1998 6184 (ON CA), [1998] O.J. No. 3048, 162 D.L.R. (4th) 574, 111 O.A.C. 272, 46 M.P.L.R. (2d) 310, 81 A.C.W.S. (3d) 409 (C.A.), consd
Air Canada v. Turner, 1984 319 (BC SC), [1984] B.C.J. No. 2766, [1984] 6 W.W.R. 346, 57 B.C.L.R. 322, 28 A.C.W.S. (2d) 325 (S.C.); Jonas v. Gilbert (1881), 1881 36 (SCC), 5 S.C.R. 356, [1881] S.C.J. No. 5; Reventlow-Criminil v. Streamtown (Regional Municipality) (1922), 1922 32 (SCC), 63 S.C.R. 8, [1922] S.C.J. No. 2, 65 D.L.R. 193, [1922] 2 W.W.R. 94, distd [page666]
Other cases referred to
Hospital for Sick Children v. Municipal Property Assessment Corp., [2012] O.J. No. 5304, 2012 ONSC 6112, 299 O.A.C. 374, 4 M.P.L.R. (5th) 73 (Div. Ct.); Housen v. Nikolaisen, [2002] 2 S.C.R. 235, [2002] S.C.J. No. 31, 2002 SCC 33, 211 D.L.R. (4th) 577, 286 N.R. 1, [2002] 7 W.W.R. 1, J.E. 2002-617, 219 Sask. R. 1, 10 C.C.L.T. (3d) 157, 30 M.P.L.R. (3d) 1, 112 A.C.W.S. (3d) 991; Marley and Sandwich (Re), [1932] O.J. No. 99, 41 O.W.N. 178 (C.A.); Mount Sinai Hospital v. Municipal Property Assessment Corp., [2003] O.J. No. 4295, [2003] O.T.C. 970, 43 M.P.L.R. (3d) 253, 126 A.C.W.S. (3d) 553 (S.C.J.); Westminster City Council v. Southern Railway Co., [1936] 2 All E.R. 322, [1936] A.C. 511 (H.L.)
Statutes referred to
Assessment Act, R.S.O. 1990, c. A.31, ss. 1 [as am.], 3(1), para. 24(v), 7 [as am.], 18 [as am.], 33 [as am.], (1) [as am.], (3) [as am.], 40 [as am.], 46(1) [as am.], (4) [as am.]
Authorities referred to
Widdicombe, David, David Trustram Eve, and Anthony Anderson, Ryde on Rating: The Law and Practice, 13th ed. (London: Butterworths, 1976)
APPEAL from an order quashing an assessment.
J. Bradford Nixon and David G. Fleet, for applicant (respondent) Clear Channel Outdoor Company Canada.
Shawn Douglas, for respondent (appellant) Municipal Property Assessment Corporation.
Brad Teichman and Christopher Tanzola, for respondent (appellant) the Corporation of the City of Mississauga.
Mahmud Jamal and Mary Paterson, for respondent (appellant) Greater Toronto Airports Authority.
[1] RAMSAY J. (PARDU J. concurring): — On December 10, 2012, Snowie J. granted the application of the respondent Clear Channel Outdoor Company Canada ("Clear Channel") under s. 46(1) of the Assessment Act, R.S.O. 1990, c. A.31 (the "Act") and declared that Clear Channel's property at the Lester B. Pearson International Airport in Mississauga is not subject to assessment for the purposes of municipal taxation. She also found that the Municipal Property Assessment Corporation ("MPAC") had acted arbitrarily and in a discriminatory fashion in assessing the property. She quashed the assessment for that reason as well. The City of Mississauga, MPAC and the Greater Toronto Airports Authority ("GTAA") appeal under s. 46(4) of the Act.
[2] The application proceeded on affidavits and transcripts of cross-examinations. There were no questions of credibility. The material facts were agreed. The deponents disagreed at times on the interpretation of the written licence agreement between Clear Channel and the GTAA. [page667]
[3] To reach her decision, the application judge was required to find whether Clear Channel was an occupant of the property. This question of fact involved interpreting the terms of the written licence agreement and applying the legal test for rateable occupancy and the doctrine of paramount occupancy. To the extent that Snowie J.'s analysis was based only on interpretation of the licence agreement, the standard of review should fall on the spectrum close to the standard of correctness: Exchange Corp. Canada v. Mississauga (City), [2012] O.J. No. 5953, 2012 ONSC 6221 (Div. Ct.). She was also required to take into account to a certain extent the written evidence about the actual implementation of the licence. Her conclusions on these questions of fact are to be reviewed on the standard of palpable and overriding error: Housen v. Nikolaisen, [2002] 2 S.C.R. 235, [2002] S.C.J. No. 31, 2002 SCC 33. In these circumstances, the standard of review should fall on the spectrum close to the standard of correctness.
[4] The judge was also called upon to decide whether the facts constituted arbitrary and discriminatory conduct on the part of MPAC, and what consequences would flow if they did. These are questions of law, and the standard of review is correctness: Housen, para. 8.
The Premises
[5] Pearson International Airport is located on land owned by the Crown in right of Canada in the City of Mississauga. The GTAA leases the land from the federal government and operates the airport.
[6] Clear Channel installs and maintains advertising displays at the airport under a licence agreement with the GTAA. These displays include baggage carts, plasma screens, display screens on pay phones and Internet terminals, backlit signs, hotel reservation boards, kiosks, posters and merchandise displays (such as a car sitting in the middle of a foyer or hall). The signs are attached to walls or ceilings. They are not locked. They can be removed with a screwdriver.
[7] Clear Channel sells advertising to third parties from an office in downtown Toronto. The greater part of the advertising revenue is paid to the GTAA under the licence agreement. Clear Channel has the exclusive right to place advertising in the jetways and fixed links but the GTAA can license other advertisers to put up displays elsewhere. Clear Channel has no employees at the airport. It uses subcontractors to install, change and maintain the displays. [page668]
[8] The licence agreement describes itself as a licence to occupy premises. It provides that Clear Channel shall have and hold the premises for a defined term, which can be shortened by the GTAA on notice. At the end of the term, Clear Channel agrees to surrender the premises peaceably. The licensed premises are defined as the locations of the advertising displays together. "Locations" are defined as the footprint or space within which an advertising display is located, as shown on a written schedule. Clear Channel uses these locations to sell the advertising. The "locations" are in the common areas of the airport, where the public can see them.
[9] The agreement expressly provides that no relationship exists between Clear Channel and the airport authority except that of licensor and licensee. Specifically, they agree that they are not to be considered principal and agent or partners in a joint venture. The application judge's characterization of the relationship as that of client and service provider is not consistent with the written agreement between the parties.
[10] In part of the airport, Clear Channel's licence is exclusive. In other parts, it is not. The airport authority is free to license other advertisers to place displays in these areas, and it has done so. Clear Channel pays 80 per cent of the advertising revenue to the airport authority. It keeps the balance, out of which it pays the expenses associated with installing and maintaining the advertising displays.
[11] The airport authority retains considerable control over the common areas and the advertising. It can change locations of displays and temporarily obstruct or cover them for operational purposes, such as temporary way-finding signage. The airport authority has a right of approval over advertising and content. The airport authority has the right to relocate advertising in some circumstances. It has exercised this right. In practice, whenever the airport has wanted a change it has got its way.
The Assessment
[12] As will be seen, the GTAA is exempt from municipal taxation. Its tenants, however, are not. Approximately 150 businesses located in the airport are assessed and taxed. MPAC never assessed indoor advertisers at the airport until 2011, when it issued a notice of assessment to Clear Channel under s. 33(1) of the Act retroactive to 2009.
[13] In March 2011, MPAC wrote to the GTAA asking for a copy of the licence agreement with Clear Channel. The GTAA did not send one. In September 2011, MPAC wrote to Clear [page669] Channel to ask for a copy of the licence agreement. Clear Channel did not send one. On October 9, 2011, MPAC sent Clear Channel a notice of assessment under s. 33(1) of the Act for property that had been omitted from the tax roll, retroactive to 2009. A few days later, Clear Channel let MPAC see the licence agreement. A notice of assessment for 2012 was later issued as well.
[14] The assessments were based on that portion of the GTAA's assessment that related to advertising displays. (GTAA was not taxable, but it was assessed. It would be required to pay taxes if it failed to make the payments in lieu of taxes mentioned in para. 24(v) of s. 3(1) of the Act.) Both notices were eventually replaced by notices under s. 33(3) that assessed the property as property that had previously been exempt. The replacement notices were issued within the two-year period provided in the Assessment Act. MPAC reduced the amounts assessed significantly on the basis that the original amounts were erroneously based on improvements, instead of amounts that were being transferred from an exempt entity to a taxable entity. The amounts of the assessment are the subject matter of separate proceedings before the Assessment Review Board under s. 40 of the Act.
[15] The communication that went back and forth between the parties during the relevant time period cannot be described as a consultation. MPAC issued the first notice of assessment without having read the licence agreement.
The Legislation
[16] The Assessment Act provides:
1(1) In this Act,
"land""real property" and "real estate" include,
(a) land covered with water,
(b) all trees and underwood growing upon land,
(c) all mines, minerals, gas, oil, salt quarries and fossils in and under land,
(d) all buildings, or any part of any building, and all structures, machinery and fixtures erected or placed upon, in, over, under or affixed to land,
(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; [page670]
"tenant" includes an occupant and the person in possession other than the owner;
3(1) All real property in Ontario is liable to assessment and taxation, subject to the following exemptions from taxation:
Land owned by Canada or any Province.
Land owned or leased by a designated airport authority within the meaning of the Airport Transfer (Miscellaneous Matters) Act (Canada) subject to the following:
i. The authority must be designated by the Minister for the purposes of this paragraph.
ii. The authority must make payments in lieu of taxes to the municipality in which the land is located at the times and in the amounts determined in accordance with the regulations.
iii. The authority must provide any relevant information requested by the Minister, the municipality or the assessment corporation as soon as is practicable.
iv. The exemption does not apply to any portion of the land leased by a tenant, other than a designated airport authority, to whom section 18 applies.
v. If the authority fails to comply with the requirements specified in subparagraph ii, the authority shall pay the taxes for municipal and school purposes that would be payable for the taxation year if the property was taxable and the tax roll for the municipality shall be amended accordingly.
This paragraph applies to the 2001 and subsequent taxation years.
17(1) Subject to section 18, land shall be assessed against the owner.
18(1) Despite paragraph 1 of subsection 3(1),
(a) the tenant of land owned by the Crown shall be assessed in respect of the land as though the tenant were the owner if rent or any valuable consideration is paid in respect of the land; and
(b) an owner of land in which the Crown has an interest shall be assessed in respect of the land as though a person other than the Crown held the Crown's interest.
33(1) The following rules apply if land liable to assessment has been in whole or in part omitted from the tax roll for the current year or for all or part of either or both of the last two preceding years, and no taxes have been levied for the assessment omitted: [page671]
The assessment corporation shall make any assessment necessary to correct the omission.
If the land is located in a municipality, the clerk of the municipality shall alter the tax roll upon receiving notice of the change, and the municipality shall levy and collect the taxes that would have been payable if the assessment had not been omitted.
If the land is located in non-municipal territory, the Minister shall alter the tax roll upon receiving notice of the change, and shall collect the taxes that would have been payable if the assessment had not been omitted
(1.1) Subsection (1) does not apply with respect to such land, during such period and in such circumstances as the Minister may prescribe.
(2) For the purposes of this section,
"omitted" includes the invalidation or setting aside of an assessment by any court or assessment tribunal on any ground except that the land is not liable to taxation.
(3) The following rules apply if land liable to taxation has been entered on the tax roll for the current year or for all or part of either or both of the last two preceding years as exempt from taxation, and no taxes have been levied on that land:
The assessment corporation shall make any assessment necessary to correct the omission. However, no change shall be made if a court or tribunal has decided that the land is not liable to taxation.
If the land is in a municipality, the clerk of the municipality shall alter the tax roll upon receiving notice of the change, and the municipality shall levy and collect the taxes that would have been payable if the land had been entered in the tax roll as being liable to taxation.
If the land is in non-municipal territory, the Minister shall alter the tax roll upon receiving notice of the change, and shall collect the taxes that would have been payable if the land had been entered in the tax roll as being liable to taxation.
The Judge's Reasons on Occupancy
[17] The application judge said, at para. 23 of her reasons"It is Clear Channel's position that it is not now nor has it ever been a tenant of the Crown as no interest in land passes to it pursuant to its licensing agreement with the GTAA and therefore its interest as a licensee of the GTAA is not assessable nor taxable." The judge then reviewed the evidence and set out her findings. Essentially, she found
(a) Clear Channel does not have a right of exclusive possession for its particular uses;
(b) it does not have the normal rights or obligation of a tenant;
(c) it does not have a demonstrated intention to create an estate in land; [page672]
(d) it is not an occupant because it has no control of the premises and exclusive control remains with the GTAA;
(e) it has no persons at the airport;
(f) it has no infrastructure at the airport;
(g) the locations are random and in flux;
(h) no rent as such is charged.
[18] The judge went on to consider the doctrine of paramount occupancy. She found that the GTAA is the paramount occupier and Clear Channel is the subordinate occupier.
[19] The judge distinguished the decision of this court in Exchange Corp. v. Mississauga (City) on the basis that Clear Channel is not an occupant or a tenant, but a true licensee and that Clear Channel's premises are in the exclusive control and management of the GTAA.
The Judge's Reasons on Discrimination
[20] The judge then dealt with the issue of discrimination. The judge observed that indoor signage had never been assessed anywhere in Ontario, including the Ottawa Airport, the Eaton Centre and Dundas Square. She found that MPAC had treated one taxpayer, Clear Channel, differently from all others. As such"MPAC's action is blatantly discriminatory, unfair and unequal and must be quashed in any event. Its action in assessing the property without reviewing the licensing agreement was arbitrary. Accordingly the assessment should be quashed in any event."
The Test for Rateable Occupation
[21] Under s. 18 of the Act, Clear Channel is subject to assessment and taxation if it meets three criteria:
(a) it is a tenant, occupier or person in possession of land, real property or real estate as those terms are defined s. 1 of the Act;
(b) the land is owned by the Crown; and
(c) it pays rent or other valuable consideration in respect of the land.
[22] All parties agree that Clear Channel's property at the airport meets the definition of land in s. 1 of the Act. It is long [page673] settled that an advertising display can be rateable: Marley and Sandwich (Re), [1932] O.J. No. 99, 41 O.W.N. 178 (C.A.).
[23] It is not in dispute that the airport is owned by the Crown. Clear Channel does not pay rent as such, as the judge correctly observed in a different context, but it pays a significant amount of money for the privilege of displaying its advertising. It must therefore be considered to pay valuable consideration in respect of the land.
[24] The decisive issue then is whether Clear Channel is a tenant, occupier or person in possession. Whether any legal interest in land passed to Clear Channel was not the test. The test was set out by Karakatsanis J. in Mount Sinai Hospital v. Municipal Property Assessment Corp., [2003] O.J. No. 4295, [2003] O.T.C. 970 (S.C.J.), at paras. 8-9; and applied by Laskin J.A. in Gottardo Properties (Dome) Inc. v. Toronto (City), 1998 6184 (ON CA), [1998] O.J. No. 3048, 162 D.L.R. (4th) 574 (C.A.) (see paras. 32, 33). It was reiterated by this court in Exchange Corp. v. Mississauga (City), at para. 34.
[25] According to these authorities, the essential elements of rateable occupation are (1) actual occupation; (2) exclusivity for the particular purposes of the possessor; (3) value or benefit to the possessor; and (4) permanence. Where two entities occupy the land in question at the same time, the court must go on to consider the doctrine of paramount occupancy.
Actual Occupation
[26] Actual occupation involves "acts of user, however slight, in respect of the land": David Widdicombe, Ryde on Rating: The Law and Practice, 13th ed. (London: Butterworths, 1976), p. 27. "Occupancy" and "use" have been used interchangeably in the case law: Gottardo, para. 28. Clear Channel used the premises to display advertising and therefore had actual occupation. Occupation does not require physical presence: Gottardo, para. 36. A bank machine is as rateable as a bank with tellers. As for the judge's finding that Clear Channel had no infrastructure at the airport, that was a palpable and overriding error. It owned the displays, and the displays were its infrastructure.
Exclusive Possession
[27] Clear Channel had exclusive possession of the premises for its purposes. The premises are the locations of the displays, not the airport or common areas of the airport as a whole. Clear Channel had exclusive use of the premises to which it was licensed. GTAA's residual control was not so extensive as to undermine Clear Channel's exclusive possession. Nobody else [page674] could display advertising where Clear Channel was displaying. The fact that the locations could change at the discretion of the airport authority is not decisive. In Mount Sinai Hospital v. Municipal Property Assessment Corp., the hospital was found to have occupancy of a number of parking spots in a garage, even though it did not have the right to specific spots. At any given time, it could use a certain number of the total spots in the garage. Here, in practice any changes in locations did not prevent Clear Channel from conducting its business. The chief executive officer of Clear Channel admitted as much in his deposition.
Value or Benefit to the Possessor
[28] The use was of value to Clear Channel, because it earned fees from advertisers on account of it.
Permanence
[29] The use had permanence. It was not transitory. The licence had a term of years, and it has in fact been extended for several more years.
[30] The property in question met the test for rateable occupancy. It is noteworthy that Clear Channel expressly agreed that it would be responsible for any municipal taxes payable if the licenced premises were separately assessed. Interpretation of the licence according to its terms in the context of the application of the licence by the parties and in accordance with the correct test for occupancy leads to the conclusion that Clear Channel was the occupier of the property that was assessed.
Paramount Occupancy
[31] The respondent now concedes in oral argument that Clear Channel was an occupant of the premises, but submits that its occupancy is subordinate to that of the GTAA, who is the paramount occupier and that the judge was right so to find. It relies on the decision of the Court of Appeal in Gottardo.
[32] In Gottardo, two companies used the same premises for different purposes. The premises were boxes at the SkyDome. Stadco, the owner of the Dome, licensed them to box holders. Gottardo and McDonald's were licensees. Licensees had the exclusive right to use the boxes during most events at the stadium. The question was whether the licensees had business occupancy that would make them liable for business tax under s. 7 of the Assessment Act. Having decided that the licensees used the SkyBoxes for business purposes, the Court of Appeal had to decide whether they had occupancy. The court held that [page675] they did, because they had enough exclusive use for their purposes -- promoting the interests of their respective businesses. But that was not the end of the inquiry because Stadco also had enough exclusive use for its purposes -- exhibiting events at the stadium. The decisive issue in that case, then, was whose occupation was paramount. Stadco's interest was held to be paramount. The SkyBoxes were integral to its business. The licensees did business elsewhere, and their use of the boxes for promotion and employee morale were incidental.
[33] Here, the premises in question are locations of advertising displays operated by Clear Channel. Clear Channel occupies the premises in question and the airport authority does not. They do not both conduct business in one box. Clear Channel's boxes are located within the airport authority's box, so to speak. The doctrine of paramount occupancy does not apply.
[34] In the alternative, if Clear Channel was not the sole occupier of the advertising displays it was the paramount occupier. Advertising is integral to Clear Channel's business. It is incidental to the airport authority.
The Exchange Corporation Case
[35] The application judge erred in distinguishing the Exchange Corp. case. Exchange Corporation was a tenant at law that operated a currency exchange from a room in the same airport under lease from the same airport authority. The location of the room within the airport could be changed in the airport authority's discretion. The legal relationship (landlord and tenant as opposed to licensor and licensee) and the nature of the business (currency exchange as opposed to advertising) are not material distinctions. The other differences between the cases are not great or significant. Both involve companies using parts of the airport to conduct business under written agreements that reserved significant control to the airport authority.
Arbitrary and Discriminatory Conduct
[36] Clear Channel argues that MPAC waited too long to assess its property, which has been in place since 2004. But once it started the process, it acted precipitously. It should have waited for Clear Channel to co-operate with its requests for information, even at the cost of missing the deadline for imposing an assessment for 2009.
[37] MPAC was not obliged to consult with Clear Channel before issuing a notice of assessment. Reading the licence agreement was not a condition precedent to issuing an assessment. [page676] Its omission to do so does not constitute arbitrary conduct. It did not have the agreement to read, although it had asked to see it. MPAC's decision to base the assessment on GTAA's assessment was reasoned, not arbitrary. In sum, MPAC proceeded as s. 33 of the Act permitted and required.
[38] The fact that advertisers in the Ottawa airport have not yet been assessed does not imply discrimination. Less so the fact that indoor advertising displays at the Eaton Centre and Dundas Square have not been assessed. Presumably, the Eaton Centre and Dundas Square are not exempt, so the owners would be assessed for the entire property.
[39] There is no hint in the evidence of any ulterior or improper motive on the part of MPAC. This is a significant distinction from the cases to which the application judge referred. The judge cited Air Canada v. Turner, 1984 319 (BC SC), [1984] B.C.J. No. 2766, [1984] 6 W.W.R. 346 (S.C.), in which the only parties taxed were three companies who had successfully challenged previous taxation. That B.C. Supreme Court decision cited Jonas v. Gilbert (1881), 1881 36 (SCC), 5 S.C.R. 356, [1881] S.C.J. No. 5, in which non-residents were taxed more than residents and Reventlow-Criminil v. Streamtown (Rural Municipality) (1922), 1922 32 (SCC), 63 S.C.R. 8, [1922] S.C.J. No. 2, in which land held by aliens was over-valued fraudulently. The effect of MPAC's actions was that Clear Channel was treated equally with the other 150 taxpaying concessionaires at the airport. The conclusion that the assessment was arbitrary and discriminatory was not available on the evidence.
[40] MPAC argued that quashing the assessment would not have been the proper remedy in any event. We do not need to decide.
Result
[41] The appeals are allowed, the decision under appeal is set aside and Clear Channel's application is dismissed with costs to the appellants collectively as agreed in the sum of $96,000 for the appeal and the application before Snowie J.
[42] HIMEL J. (concurring): -- I have had the benefit of reviewing the reasons of my colleagues and I concur with the result reached. However, I would respectfully approach the analysis somewhat differently.
[43] My colleague Ramsay J. aptly summarizes the facts and I need not restate them here. He also identifies the key legal issue, which is whether Clear Channel occupies the locations, [page677] i.e., the advertising displays. Whether an entity is an occupant is a question of fact. Determination of occupancy depends on an entity's right of regulation and control of the premises and requires consideration of actual occupation, exclusive possession, value or benefit to the possessor, and permanence: Hospital for Sick Children v. Municipal Property Assessment Corp., [2012] O.J. No. 5304, 2012 ONSC 6112 (Div. Ct.), at para. 10; Mount Sinai Hospital v. Municipal Property Assessment Corp., [2003] O.J. No. 4295, [2003] O.T.C. 970 (S.C.J.), at paras. 8-9. Clear Channel does occupy the locations according to this analysis; indeed, counsel for Clear Channel conceded such during argument.
[44] Where I differ from my colleagues, and where this case diverges from the case of Exchange Corp., is in my conclusion that the GTAA simultaneously occupies the locations for different purposes. Clear Channel's business is the presentation of advertising. The GTAA's business is the operation of the airport: Exchange Corp. Canada v. Mississauga (City), [2012] O.J. No. 5923, 2012 ONSC 6221 (Div. Ct.), at para. 42. Clear Channel's displays are embedded in or on a variety of fixtures and structures: baggage carts, plasma screens that also broadcast news content and passenger information, pay phones and Internet terminals, hotel reservation boards, as well as mounted signs in jetways and fixed links, and merchandise displays in concourses and foyers. These are the "locations" at issue. The GTAA retains enough control over the advertising display locations to further its own purpose. Beyond having the ability under the licence agreement to order changes to the locations, the GTAA is also simultaneously using and occupying these locations in different ways to further the operation of the airport. Airport passengers use the baggage carts to move luggage, look at the plasma screens and reservations boards for information relevant to travellers, use pay phones and Internet terminals to make calls and access the Internet, and walk through the jetways and concourses to move about the airport.
[45] In Exchange Corp., this court found that the GTAA was not a simultaneous occupant of the appellant's currency exchange kiosks that operated within the airport: Exchange Corp., at para. 41. The "locations" at issue here are of a much different factual nature than self-contained kiosks that conduct retail transactions. The factual situation here is closer to Gottardo, where both the boxholders and Stadco were using and occupying the boxes sufficiently to fulfil their different purposes. In Gottardo, the Court of Appeal held that"when two persons use the land at the same time but in different ways and for [page678] different purposes, assessable use goes beyond the notion of exclusivity and depends on whose use is paramount . . . The principle that governs assessability in cases where there are competing occupants is the principle of paramount occupancy": Gottardo Properties (Dome) Inc. v. Toronto (City), 1998 6184 (ON CA), [1998] O.J. No. 3048, 162 D.L.R. (4th) 574 (C.A.), at paras. 36 and 39. This principle was applied in Mount Sinai, where the case turned on the paramount occupancy of the hospitals. Because of the simultaneous occupancy of Clear Channel and the GTAA in this case, the analysis must proceed to determining which entity's occupancy is paramount.
[46] I also wish to add some comments on the issue of exclusive possession. In Mount Sinai, the criterion of exclusive possession was described by Karakatsanis J. (as she then was) as one of the four essential elements of rateable occupation, drawing on the jurisprudential analysis in David Widdicombe, et al., Ryde on Rating: The Law and Practice, 13th ed. (London: Butterworths, 1976), at pp. 26-27. Widdicombe's text characterized the element as "exclusivity for the particular purposes of the possessor" and that same wording was used by Karakatsanis J. in Mount Sinai. Under this characterization of the concept, it is often argued that occupation will be exclusive if an occupant has sufficient possession of the premises to achieve their particular purpose. This was argued by the respondents in this case, who assert that Clear Channel's possession of the locations is sufficient for their purpose, which is the display of advertising, and that the possession is exclusive because nobody else can display advertising in those locations. My colleagues accept this argument.
[47] The notion of exclusivity, however, was discussed and qualified by the Court of Appeal in Gottardo. The court explicitly recognized this characterization of the concept as explained by Widdicombe et al. but went on to note, at para. 34, that if this were the test it "would invariably be met because the lessee or licensee would never have acquired an interest in the land if the occupancy was insufficient for its purpose". At most, a finding of occupation sufficient for the purposes of the occupier can only be a threshold requirement for assessable occupancy, because any test of exclusive occupation must recognize that "another person may also be using the land in another way for its purposes": Gottardo, at para. 35. As discussed above, where there is a competing occupant that is simultaneously using the premises for its own different purpose, the court's analysis must determine whose occupancy is paramount. [page679]
[48] The relevant considerations for determining paramount occupancy were described in Gottardo, citing the leading English case of Westminster City Council v. Southern Railway Co., [1936] 2 All E.R. 322, [1936] A.C. 511 (H.L.), at para. 50:
The court must determine which of the two competing occupants had the greater business interest in using the land. Three main considerations bear on this determination: first, an occupant's physical presence on the land, second, any controls imposed by one occupant on the other occupant's use of the land and the purpose and effect of those controls and third, the relative significance of the activities carried out on the land to the primary business of each of the competing occupants.
[49] The court then applied the considerations. On the first consideration, the court held that the boxholders' physical presence in the boxes was more pronounced. On the second factor, however"[a] far more important consideration", the court held that Stadco retained significant control over the boxholders' use and occupation. The boxholders could not use their boxes without furthering the business interest of Stadco: Gottardo, at paras. 52 and 56. Finally, the SkyBoxes were integral to Stadco's business of exhibiting events and selling goods to patrons during those events. The licensees did business elsewhere, and their use of the boxes for promotion and employee morale was incidental to their primary businesses. Two of the three considerations favoured Stadco and, consequently, Stadco's occupation was held to be paramount.
[50] Here, the premises in question are the locations of Clear Channel's advertising displays. The first consideration is difficult to apply since Clear Channel's use and occupation of the locations is never any more "physical" than that of the GTAA's, at least not, for example, in the sense of physical use and occupation of a space by human beings for the purposes of being, for example, social, parking cars, selling wares or exchanging money as were the factual scenarios in Gottardo, Mount Sinai, Westminster City Council and Exchange Corp.
[51] Both the second and third considerations, however, are determinative of Clear Channel's paramount occupancy of the locations. Any controls imposed by the GTAA on Clear Channel's use of the locations to display advertising do not materially affect their ability to do so. Clear Channel's witness conceded as much. While in Gottardo the boxholders and their guests were necessarily consumers of Stadco's business, the reverse is true here. Many, if not all, passengers using the airport will be exposed to Clear Channel's displays at some point. Finally, while advertising is integral to Clear Channel's business, it is merely incidental to the GTAA's business of operating the airport. [page680]
[52] Accordingly, I conclude that Clear Channel's occupancy is paramount to that of the GTAA. As its occupancy is properly assessable under the Assessment Act, R.S.O. 1990, c. A.31, I would allow the appeal with costs to the appellants collectively as agreed in the sum of $96,000 for the appeal and the application before the application judge.
Appeal allowed.
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