CITATION: FLK Institute of Taoism v. MPAC, 2022 ONSC 57
DIVISIONAL COURT FILE NO.: 19-93-00
DATE: 2022/01/06
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
F.B. Fitzpatrick, S.T. Bale and Kristjanson JJ.
BETWEEN:
Fung Loy Kok Institute of Taoism
Applicant/Appellant
-and-
Municipal Property Assessment Corporation and Town of Mono
Respondents
AND BETWEEN:
FUNG LOY KOK INSTITUTE OF TAOISM and TAOIST TAI CHI SOCIETY OF CANADA
Applicants/Appellants
-and-
MUNICIPAL PROPERTY ASSESSMENT CORPORATION, THE CORPORATION OF THE CITY OF BRAMPTON, THE CORPORATION OF THE CITY OF HAMILTON, THE CORPORATION OF THE CITY OF KINGSTON, CITY OF OTTAWA, THE CORPORATION OF THE TOWN OF MARKHAM, THE CORPORATION OF THE TOWN OF NEWMARKET, THE CORPORATION OF THE TOWN OF RICHMOND HILL, THE CORPORATION OF THE CITY OF SAULT STE. MARIE, THE CORPORATION OF ST. CATHARINES, THE CORPORATION OF THE CITY OF WINDSOR, THE CORPORATION OF THE CITY OF STRATFORD, CITY OF TORONTO, CITY OF WOODSTOCK, THE CORPORATION OF THE CITY OF PETERBOROUGH, and THE CORPORATION OF NORFOLK COUNTY Respondents
D. Fleet, for Applicant/Appellant
K. Lunau, for Respondent MPAC
HEARD: October 19, 2021 at Brampton, by video conference
F.B. Fitzpatrick J.:-
Overview
[1] This is a statutory appeal pursuant to s. 46(4) of the Assessment Act, R.S.O. 1990, c. A31 (the Act). The appeal arises from an application for an exemption from municipal taxation under the Act. The Appellants (collectively “FLK”) appeal the decision of Miller J. dated August 30, 2019 dismissing their claim for an exemption for certain properties: Fung Loy Kok Institute of Taoism v. Municipal Property Assessment Corporation 2019 ONSC 5035.
[2] FLK challenges the decision of the application judge to deny certain FLK properties exempt status as FLK claims they are places of worship or used in connection with worship as defined in s. 3(1) 3(i) of the Assessment Act.
[3] FLK requests, inter alia, that the application judge’s decision be set aside, and that this Court grant the following relief:
-A declaration that a series of sites are exempt from taxation under s. 3(1) 3(i) of the Act;
-An order directing each Respondent municipality to pay FLK a tax refund corresponding to the taxes levied upon and paid by FLK in respect of the applicable properties; and,
-Costs in both this appeal and the original application.
Background
[4] FLK is a religious organization within the meaning of the Act. The Act provides that land that is owned by a religious organization is exempt from municipal taxation if it is a place of worship. A portion of a large FLK temple in Mono Ontario (the “Mono site”) was not assessed by the Respondent Municipal Property Assessment Corporation (“MPAC”) as exempt lands. FLK applied to have that status changed to exempt. Also, FLK owns nineteen other properties throughout Ontario which were denied exempt status by MPAC (the “Satellite Sites”).
[5] The application judge dismissed the application.
[6] The uses of the lands at issue were at the heart of the application. The lands fall into two different categories.
[7] The Mono site was granted an exemption by MPAC for the majority of the property following the issuance of the initial notice of application seeking a declaration for an exemption. However, three distinct areas of the property were deemed not to be exempt by MPAC. These were an overflow campground and residential suites, a contemplative garden and a sales area. The status for exemption of these areas was dealt with in the decision of the application judge.
[8] The second category of property were so called “Satellite Sites”. The Satellite Sites are lands where FLK conducts Taoist Tai Chi classes. Initial classes are given for free. After the first free class, participants pay a fee for subsequent classes. The application judge found these properties were not entitled to be classified as exempt under the Act.
Standard of Review
[9] There is no dispute that the appellate standard of review as set out in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235 applies. Namely:
i. on questions of law, the standard is correctness;
ii. on questions of fact, the standard is palpable and overriding error;
iii. on questions of mixed fact and law, there is a spectrum. Where there is an extricable legal principle, the standard of review is correctness. However, with respect to the application of the correct legal principles to the evidence, the standard is palpable and overriding error.
[10] In Solomon v. Matte-Thompson, 2019 SCC 14, at para 108, the Supreme Court of Canada stated “on questions of fact or of mixed fact and law, an appellate court cannot make its own findings and draw its own inferences unless the trial judge is shown to have committed a palpable and overriding error.”
Issues on this Appeal
[11] The appellants allege three errors of law committed by the application judge.
[12] First, FLK submits the application judge erred in applying the proper legal test for an exemption under the Act. Second, FLK submits the application judge applied an improper test in considering what constituted “worship” within the meaning of the Act. Third, FLK submits the application judge assessed the facts of the case through an impermissible Judaeo-Christian lens thereby committing an error of law.
Analysis
Issue 1: The legal test for an exemption
[13] The Act is directed at raising revenue for municipal governments from taxes on real property in the Province. The Legislature designed the Act to provide that all land in Ontario is liable to assessment and taxation except if it falls into express categories of exempt land. The exemption provisions exist at various places in the Act but are predominately contained in section 3. In this case, the exemption at issue is subparagraph 1 i of subsection 3(1) which states:
Land that is owned by a church or religious organization or leased to it by another church or religious organization that is,
i. a place of worship and the land used in connection with it.
[14] The application judge reviewed the evidence before her on the application. There were disputed facts in her view. Nevertheless, the parties agreed to proceed on the basis of a written record.
[15] FLK cites paragraph 73 of the decision as evidencing a palpable and overriding error by the application judge. In that paragraph the application judge stated:
[73] The exemption for places of worship is strictly construed. Holy Theotokos Convent v. Corporation of the Town of Whitchurch-Stouffville et al, 2007 4780 (ON SC), [2007] O.J. No. 542 (Sup. Ct).
[16] FLK argues that this paragraph indicates the application judge misdirected herself as to the basic test of statutory interpretation when dealing with a taxing statute such as the Act. FLK submits this reference to “strict construction” is contrary to the modern approach to statutory interpretation. In the past, courts constructed taxing statutes strictly. Historically this so called “strict” approach was taken by taxing authorities and government litigants, like MPAC. It was highlighted in the decision of the Ontario Court of Appeal in Ottawa Salus Corp. v Municipal Property Assessment Corp. (2004), 2004 14620 (ON CA), 69 O.R. (3d) 417, at para 14. In that decision, the Court of Appeal expressly disagreed with this strict approach. It adopted an interpretation of taxation laws in the context of exemptions from property tax for charitable organizations as set out by the Supreme Court of Canada in Québec (Communauté urbaine) v. Corp. Notre-Dame de Bon-Secours, 1994 58 (SCC), [1994] 3 S.C.R. 3.
[17] At paragraph 15 of Salus, the Court of Appeal quoted page 18 of Notre-Dame de Bonsecours:
I should like to stress that it is no longer possible to apply automatically the rule that any tax exemption should be strictly construed. It is not incorrect to say that when the legislature makes a general rule and lists certain exceptions, the latter must be regarded as exhaustive and so strictly construed. That does not mean, however, that this rule should be transposed to tax matters so as to make an absolute parallel between the concepts of exemption and exception. With respect, adhering to the principle that taxation is clearly the rule and exemption the exception no longer corresponds to the reality of present-day tax law, Such a way of looking at things was undoubtedly tenable at a time when the purpose of tax legislation was limited to raising funds to cover government expenses. In our time it has been recognized that such legislation serves other purposes and functions as a tool of economic and social policy. By submitting tax legislation to a teleological interpretation it can be seen that there is nothing to prevent a general policy of raising funds from being subject to a secondary policy of exempting social works. Both are legitimate purposes which equally embody the legislative intent and it is thus hard to see why one should take precedence over the other.
[18] The decision of the Ontario Superior Court in Holy Theotokos did not consider Notre-Dame de Bonsecours. Counsel for MPAC urges a closer reading of Holy Theotokos to support its argument that the application judge in the present case did not misapply the test set out in Notre-Dame de Bonsecours. MPAC argues the application judge’s comments reflect that when considering an exemption from taxation, it is appropriate to ensure that the applicant squarely and fully fits within the meaning of the exemption section. This is not an application of the strict construction approach. Rather it is to be contrasted with an interpretive approach that could be described as more broad and liberal.
[19] The granting of an exemption means other ratepayers will be picking up a burden left by the exempt property. While a legitimate social goal may be at issue, nevertheless a strict or careful approach is required as the exercise involves placing an additional burden on others. This is to be contrasted with the traditional approach which favoured revenue generation over the granting of exemptions. MPAC argues the application judge was simply stating that in considering a claim for exemption it is important for the ratepayer to demonstrate that the property falls within the four corners of the exempting provisions as advocated by the Court of Appeal in Salus. Otherwise, the application judge did not apply impermissible reasoning.
[20] I am persuaded by the MPAC argument in respect of issue 1. Paragraph 73 is contained under the heading “Law” in the judgment and there are a number of paragraphs down to paragraph 80 where statements of law are made by the application judge but also the parties’ submissions are set out in those paragraphs. The statement in paragraph 73 is followed by paragraph 74 which states:
[74] Land owned by religious organizations that is not used for worship is taxable but at a reduced tax rate.
[21] In my view, reading these paragraphs together or in context demonstrates that rather than committing an error of law, the application judge was emphasizing the point that a finding for an exemption for a place of worship, as contrasted to some other form of religious use, requires a factual analysis of what is actually going on at the subject property. The application judge was using the words “strict construction” as a term of contrast as opposed to a principle of statutory construction. This is because a consideration of an application for an exemption under the Act engages a primary purpose test, which is acknowledged as appropriate by both parties on this appeal. The primary purpose test in assessment cases is a rigorous analysis which is analogous to applying a strict construction principle of interpretation in the sense that the use of the property must fit in to the four corners of activities of “worship” in order for the exemption to apply.
[22] Use of a property as a place of worship is different than other uses to which religious organizations can put property. Evangelization efforts for example. This differentiation in the nature of religious activities has been accepted in the jurisprudence, for example in the decision London Youth for Christ v. MPAC, [2004] O.J. No 5775 where a youth centre was held not to be exempt as the activities there did not constitute worship.
[23] In my view, the statement in paragraph 73 does not constitute an error of law on the part of the applications judge as argued by FLK.
Issue 2: What constitutes “worship”?
[24] FLK focused most of its oral argument on this aspect of appeal. In particular, FLK spent a good deal of time in its submissions addressing the activity that occurs on the so-called Satellite Sites. These properties represent the vast majority of assessed value for the properties under consideration.
[25] FLK argues that adherents are “worshiping” when they are attending the Satellite Sites. They are practicing a religious rite in a consecrated place. This is “worship” because in the submission of FLK, they can say it is worship. What is in the minds of others who may also be participating in the Tai-Chi on the property for different reasons other than worship is irrelevant to a determination that the property is being used in a way that would attract an exemption under section 3(1) 3.(i). FLK argues it is not proper for the Court to go behind the assertions of persons making these kinds of claims of religious practice.
[26] FLK relies on the decision of the Supreme Court of Canada in Syndicat Northcrest v. Amselem, 2004 SCC 47, although this case was not argued before the application judge. In paras 50-51, the majority held:
In my view, the State is in no position to be, nor should it become, the arbiter of religious dogma. Accordingly, courts should avoid judicially interpreting and thus determining, either explicitly or implicitly, the content of a subjective understanding of religious requirement"obligation", precept"commandment", custom or ritual. Secular judicial determinations of theological or religious disputes, or of contentious matters of religious doctrine, unjustifiably entangle the court in the affairs of religion.
That said, while a court is not qualified to rule on the validity or veracity of any given religious practice or belief, or to choose among various interpretations of belief, it is qualified to inquire into the sincerity of a claimant's belief, where sincerity is in fact at issue: see Jones, supra; Ross, supra. It is important to emphasize, however, that sincerity of belief simply implies an honesty of belief: see Thomas v. Review Board of the Indiana Employment Security Division, supra.
[27] FLK argues that the application judge erred by concluding “worship” was not being conducted on the all the properties at issue. The application judge engaged in an impermissible inquiry by relying on the evidence of the affiant for MPAC which emphasized an evangelical nature of the activities on the sites as contrasted with acts of worship. “Evangelical” in the sense that participants doing Tai Chi were being exposed to the religious ritual but were not actively engaged in acts of worship. This came from evidence about the degree to which instructors at the sites focused on personal physical health of the participants rather than acts of worship.
[28] At paragraph 97 the application judge said:
While I accept, on all of the evidence, that the practice of Tai Chi is integral to FLK religion, the opposite is not necessarily so. The evidence does not support FLK's position that the satellite sites are used primarily for worship. The evidence supports MPAC's position that the persons engaged in the Tai Chi classes at these locations are not worshiping through Tai Chi, but that these classes and the facilities in which they are held are used in an evangelical way.
[29] FLK also relied on a recent decision of the Quebec Superior Court - Institut de taoisme Fung Loy Kok v. Villie de Montreal, 2021 QCCS 3873. The decision was released October 7, 2021 and was not before the application judge. Nevertheless, FLK argues that the Quebec Court’s approach, in accepting that FLK was entitled to a property tax exemption in Quebec, is persuasive that the application judge erred in her decision regarding the Ontario properties.
[30] MPAC argues that the application judge accepted that religious expression and activities occur at the Satellite Sites. However, in order to create an exemption for those properties, those activities must constitute acts of worship, a more narrow form of activity than the simple act of conducting a practice that has religious connotation. The primary purpose test requires an objective analysis. This is contrasted with FLK’s subjective argument – “if we say it is worship, it is”. MPAC notes the Quebec municipal tax regime is different than the Act and the recent Quebec case is distinguishable on that basis. Also, the Amselem decision focused on the specified Charter right of freedom of religion. In MPAC’s submission, this analysis is different that that which is appropriate for considering an entitlement to an exemption. There is no question in this case that FLK is entirely free to conduct religious practice on the sites at issue. However, the Legislature has used specific words to differentiate the taxation treatment of different uses of land by religious organizations. For example, the Legislature expressly separately exempted church yards (section 3(1) 3(ii)) and burying grounds (section 3(1) 3(ii)). Amselem gave a Charter analysis where a violation of Charter rights was in issue. The applicant did not raise a Charter section 2(b) issue before the application judge; it cannot be raised for the first time on appeal. In any event, Anselem did not address the exemption type issue before the applications judge.
[31] I am of the view the application judge applied an appropriate analysis when considering the issue of the activity that occurs at the Satellite Sites. She had evidence before her that contradicted the subjective evidence of the FLK expert about the nature of the activity put forward by FLK. There was an evidentiary basis, upon which she was entitled to rely, to find that the activity did not fit in the four corners of worship. It is not open for a court on a review to substitute its version of the facts for that of the original court unless the application judge committed a palpable and overriding error. I do not find such an error in the application judge’s reason for decision. I do not see any reason to engage in a further analysis of the evidence in pursuit of attempting to insert my view of the evidence above that of the application judge.
[32] Despite the increasing secularization of the mainstream of our society, protection of religious practices and freedom of religion remain important values in the Province. Nevertheless, the Act’s exemption for places of worship in the Act has been around for a very long time. The language of the Act in section 3(1) 3(i) has remained unchanged since at least 1952 (see Les Soeurs de la Visitation d’Ottawa v. City of Ottawa, 1951 109 (ON SC), [1952] O.R. 61 (S.C.O), aff’d 1952 283 (ON CA), [1952] O.W.N. 280 (C.A.). It is acknowledged that religious practices in this province have changed a great deal since that date. However, this case is not about validating or invalidating forms of religious practice. It is about deciding if a particular acknowledged religious practice, occurring at the Satellite Sites, constitutes acts of worship such that it can be granted an exemption.
[33] The statutory scheme of the Act dealing with exemptions for properties used by religious organizations differentiates types of religious conduct. What happens in a burying ground can objectively be seen to be a different type of experience than worship that occurs inside a religious building. An act of worship may well occur at a graveside or in a churchyard. Yet the other things that are easily understood to occur in a place like a graveyard would displace worship as a primary purpose. Accordingly, the Legislature decided to treat these areas separately and specifically exempt them in other subsections of section 3 of the Act. This militates against the subjective approach urged by FLK. I am persuaded by this aspect of MPAC’s argument and the focus of the decision under appeal which considered all the evidence concerning the Satellite Sites. While I appreciate the direction of the Supreme Court in Amselem, the case at bar does not require the court to engage in questions of religious doctrine or arbitrate disparate views among a particular religious group. The application judge was to consider a primary purpose test when considering the evidence about activities that occur on certain pieces of property. It was an objective exercise. The application judge had before her evidence that a different type of religious observance occurred on the sites that MPAC had agreed were exempt properties, as contrasted to what occurred at the Satellite Sites. This was a benchmark against which the application judge could compare what was occurring at the Satellite Sites. It is in this context that her comments in paragraph 97 are understood.
[34] The application judge found in paragraph 97 that “the evidence supports MPAC’s position that persons engaged in the Tai Chi classes at these locations were not worshipping through Tai Chi but that these classes and the facilities in which they are held are used in an evangelical way.”
[35] The application judge found that the act of worship required for the exemption did not occur on the Satellite Sites. The aspects of practice found on the exempt sites was not observed at the Satellite Sites. This is a finding that is entitled to deference. The application judge agreed with the MPAC position that people were not worshipping while doing Tai-Chi at the Satellite Sites. It was open for her to make that determination on the evidence before her. She found the acts to be in the nature of evangelization. Evangelization is a religious practice. However, it is not one that the Legislature has deemed to attract an exemption.
[36] Accordingly, I find that the application judge did not commit an error of law in assessing what occurred at the Satellite Sites and properly denied those properties an exemption under the Act.
Issue 3: The impermissible lens
[37] Counsel for FLK categorized this aspect as an independent issue in the appeal. However, now having fully considered the argument, it strikes me as a recast of the subjective line of argument which attacked the findings concerning the Satellite Sites. There is nothing in the judgment which indicates the application judge did anything other than assess the evidence in accordance with the established jurisprudence concerning the primary purpose test.
[38] The consideration of the activities on the three specific sites not considered Satellite Sites was, in my view, a particularly “religiously neutral” assessment of the facts before the application judge. The discussion of these areas occurs at paragraphs 37 through 39 and then from 81 through 86 of the judgment. In those paragraphs, the activities that occur there are discussed.
[39] Objectively, the commercial activity of the “sales area” (paras. 38 and 84 -86) most readily belies a factual finding that worship occurs at that site. The primary purpose of the area was selling things. That is not worship. Second, the Tent City area (paras. 39 and 81) used as an overflow campground also does not easily suggest a finding that it is a place of worship. The application judge relied on other jurisprudence which recognized that portions of religious properties where people sleep are not exempt from taxation except for the partial exemption given to residences of religious leaders. Worship requires one to be awake.
[40] The consideration of the Contemplative Garden area was recognized as having personal prayer activity but the application judge found that site was not entitled to exemption as a place of worship. The application judge had before her the decision in Les Soeurs de la Visitation d’Ottawa. MPAC submits that case distinguished acts of private prayer and meditation from those of worship to find that the property at issue was not exempt. The application judge followed that logic to find the Contemplative Gardens were not exempt.
[41] For these reasons, I find the application judge did not err in applying an improper analytical lens in her judgment.
Disposition
[42] For all the above reasons, I would dismiss the appeal.
[43] Counsel indicated they had agreed on costs for the successful party on the appeal, the costs to include both costs of the application and the appeal. Costs payable forthwith by FLK to MPAC in accordance with the agreement of counsel in the amount of $17,000, inclusive.
“F.B. Fitzpatrick J.”
“I agree. S.T. Bale J.”
“I agree. Kristjanson J.”
Released: January 6, 2022
CITATION: FLK Institute of Taoism v. MPAC, 2022 ONSC 57
DIVISIONAL COURT FILE NO.: 19-93-00
DATE: 2022/01/06
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
F.B. Fitzpatrick, S.T. Bale, F. Kristjanson JJ.
BETWEEN:
Fung Loy Kok Institute of Taoism
Applicant/Appellant
-and-
Municipal Property Assessment Corporation and Town of Mono
Respondents
AND BETWEEN:
FUNG LOY KOK INSTITUTE OF TAOISM and TAOIST TAI CHI SOCIETY OF CANADA
Applicants/Appellants
¬-and-
MUNICIPAL PROPERTY ASSESSMENT CORPORATION, THE CORPORATION OF THE CITY OF BRAMPTON, THE CORPORATION OF THE CITY OF HAMILTON, THE CORPORATION OF THE CITY OF KINGSTON, CITY OF OTTAWA, THE CORPORATION OF THE TOWN OF MARKHAM, THE CORPORATION OF THE TOWN OF NEWMARKET, THE CORPORATION OF THE TOWN OF RICHMOND HILL, THE CORPORATION OF THE CITY OF SAULT STE. MARIE, THE CORPORATION OF ST. CATHARINES, THE CORPORATION OF THE CITY OF WINDSOR, THE CORPORATION OF THE CITY OF STRATFORD, CITY OF TORONTO, CITY OF WOODSTOCK, THE CORPORATION OF THE CITY OF PETERBOROUGH, and THE CORPORATION OF NORFOLK COUNTY
Respondents
REASONS FOR DECISION
Released: January 6, 2022