Québec (Communauté urbaine) v. Corp. Notre‑Dame de Bon‑Secours, [1994] 3 S.C.R. 3

Corporation Notre‑Dame de Bon‑Secours Appellant

v.

Communauté urbaine de Québec and

City of Québec Respondents

and

Bureau de révision de l'évaluation

foncière du Québec Respondent

and

The Attorney General of Quebec Respondent

Indexed as: Québec (Communauté urbaine) v. Corp. Notre‑Dame de Bon‑Secours

File No.: 23014.

1994: May 25; 1994: September 30.

Present: La Forest, L'Heureux‑Dubé, Sopinka, Gonthier, Cory, McLachlin and Iacobucci JJ.

on appeal from the court of appeal for quebec

Municipal law ‑‑ Real estate valuation ‑‑ Tax‑exempt immovables ‑‑ Reception centres ‑‑ Whether appellant can qualify as reception centre and benefit from tax exemption ‑‑ Interpretation of tax legislation ‑‑ Act respecting Municipal Taxation, R.S.Q., c. F‑2.1, s. 204(14) ‑‑ Act respecting Health Services and Social Services, R.S.Q., c. S‑5, ss. 1(k), 12.

Taxation ‑‑ Legislation ‑- Rules for interpreting tax legislation.

The appellant is a non‑profit corporation created in 1964 for the purpose of providing low rental housing to indigent elderly persons. There are over 450 residents at the appellant's facilities, which have been in operation since 1969. Of this total, 20 are located in the shelter section, for which the appellant holds a permit issued pursuant to the Act respecting Health Services and Social Services ("A.H.S.S.S."). This permit authorizes it to operate a private reception centre for 20 persons. The government pays part of their room and board and exercises a measure of control to ensure that all the places in the shelter section are filled. The remainder of the facilities receive no government grant and are managed entirely by the appellant. The services offered are provided for all residents and the premises in general are designed to meet the special needs of the elderly. The criteria for admission are a minimum age of 60, a low income and physical and psychological autonomy. In 1982 an assessor found that 89 percent of the total area of the property was reserved for apartments and that the shelter section and the community services took up 11 percent. He therefore gave the appellant a real estate tax exemption for 1980 to 1984 of 11 percent. The appellant claimed the reception centre exemption provided for in s. 204(14) of the Act respecting Municipal Taxation ("A.M.T.") for all its facilities, in view of the nature of its mission, and filed a complaint with the Bureau de révision de l'évaluation foncière du Québec ("BREF"). The BREF allowed its complaint and found that the appellant's activities are those of a reception centre and exempted its facilities from all real estate taxes for 1980 to 1984. The Provincial Court affirmed that decision but the Court of Appeal reversed the judgment of the Provincial Court and held that the exemption did not apply to 89 percent of the appellant's surface area.

Held: The appeal should be allowed.

The principles that should guide the courts in interpreting tax legislation are as follows: (1) The interpretation of tax legislation is subject to the ordinary rules of interpretation; (2) A legislative provision should be given a strict or liberal interpretation depending on the purpose underlying it, and that purpose must be identified in light of the context of the statute, its objective and the legislative intent; (3) This teleological approach will favour the taxpayer or the tax department depending solely on the legislative provision in question, and not on the existence of predetermined presumptions; (4) Substance should be given precedence over form to the extent that this is consistent with the wording and objective of the statute; (5) Only a reasonable doubt, not resolved by the ordinary rules of interpretation, will be settled by recourse to the residual presumption in favour of the taxpayer.

In light of these rules of interpretation, the appellant may benefit from the tax exemption provided for in s. 204(14) A.M.T. for all its facilities. First, on the facts found by the BREF the appellant's facilities can be classified in their entirety as a reception centre within the meaning of ss. 1(k) and 12(b) A.H.S.S.S. To be treated as a reception centre an establishment must first offer certain services; it must then place these services at the disposal of persons whose condition requires them. Lodging is a service sufficient in itself to meet the requirements of the "services" part of the definition in s. 1(k). It is not necessary to offer the full range of services enumerated in that paragraph. For the "need" part, age is sufficient as such to justify a need to be treated or kept in a protected residence, regardless of any physical, personality, psycho‑social or family deficiency. The notion of care cannot be limited to a purely therapeutic aspect. As to the concept of a protected residence in s. 1(k), for which no definition is given in the A.H.S.S.S., it should not be given a narrower meaning than that of a residence providing a secure location adapted to the special physical and mental needs of the people for whom it was designed and whom it serves. Second, the appellant's entire facilities are used for the purposes provided by the A.H.S.S.S., as stipulated by s. 204(14). Just as the autonomy of elderly persons at the time of their admission cannot be the decisive test in determining the concept of need provided for in s. 1(k), it also cannot be used to determine whether the appellant's facilities are being used for the purposes provided by the A.H.S.S.S. The answer to that question will depend entirely on the finding that in fact these facilities are designed and adapted for accommodating the elderly with a real need, though that need may be variable in degree or immediacy. Here the BREF found that the services provided by the appellant, taken together with the needs of its residents, lead to the conclusion that it must be classified in its entirety as a reception centre for the purposes of the A.H.S.S.S. Though aware of the existence of s. 2 A.M.T., which allows the assessment unit to be divided, the BREF nevertheless considered that the appellant was operating facilities which as a whole met the two parts of the definition of a reception centre. The decision of the BREF, a specialized tribunal, discloses no error subject to review on appeal. Finally, a reception centre may be exempt from real estate taxes even if it does not hold a permit required by the A.H.S.S.S. Similarly, there is nothing to indicate that failure to observe the requirement provided for in s. 18.1 A.H.S.S.S. ‑‑ submission of admission criteria to the Conseil régional de la santé et des services sociaux or the Minister responsible, for approval ‑‑ will as such affect the status of an establishment as a reception centre. The decision of the BREF must therefore be restored.

Cases Cited

Distinguished: Services de santé et services sociaux ‑‑ 7, [1987] C.A.S. 579; referred to: Stubart Investments Ltd. v. The Queen, 1984 20 (SCC), [1984] 1 S.C.R. 536; The Queen v. Golden, 1986 50 (SCC), [1986] 1 S.C.R. 209; Ville de Montréal v. ILGWU Center Inc., 1971 188 (SCC), [1974] S.C.R. 59; Johns‑Manville Canada Inc. v. The Queen, 1985 43 (SCC), [1985] 2 S.C.R. 46; The Queen v. Imperial General Properties Ltd., 1985 7 (SCC), [1985] 2 S.C.R. 288; Bronfman Trust v. The Queen, 1987 76 (SCC), [1987] 1 S.C.R. 32; Symes v. Canada, 1993 55 (SCC), [1993] 4 S.C.R. 695; Ville de Québec v. Corp. Notre‑Dame de Bon‑Secours, Prov. Ct. Québec, No. 200‑02‑008522‑793, November 27, 1980, unreported.

Statutes and Regulations Cited

Act respecting Health Services and Social Services, R.S.Q., c. S‑5, ss. 1(a) [am. 1981, c. 22, s. 40], (b), (c), (k) [repl. 1979, c. 85, s. 82], 3, 9, 10 [am. 1981, c. 22, s. 41], 11, 12(a), (b), 18.1 [ad. idem, s. 43; am. 1983, c. 54, s. 72], 76, 82 [repl. 1981, c. 22, s. 63].

Act respecting Municipal Taxation, R.S.Q., c. F‑2.1, ss. 2, 204(14) [repl. 1980, c. 34, s. 27], (15).

Public Charities Act, R.S.Q. 1964, c. 216.

Authors Cited

Côté, Pierre‑André. The Interpretation of Legislation in Canada, 2nd ed. Cowansville: Yvon Blais, 1991.

Driedger, Elmer A. Construction of Statutes, 2nd ed. Toronto: Butterworths, 1983.

Morgan, Vivien. "Stubart: What the Courts Did Next" (1987), 35 Can. Tax J. 155.

APPEAL from a judgment of the Quebec Court of Appeal, 1992 2962 (QC CA), [1993] R.L. 68, 47 Q.A.C. 47, reversing a judgment of the Provincial Court rendered on May 19, 1987, affirming a decision of the Bureau de révision de l'évaluation foncière du Québec, [1985] B.R.E.F. 130. Appeal allowed.

André Bois and André Lemay, for the appellant.

Estelle Alain, for the respondents the Communauté urbaine de Québec and the City of Québec.

No one appeared for the respondent the Bureau de révision de l'évaluation foncière du Québec.

Alain Tanguay, for the respondent the Attorney General of Quebec.

English version of the judgment of the Court delivered by

Gonthier J. -- The issue in this case is whether the appellant, an institution devoted to the welfare of elderly persons living under the poverty line, may benefit from the tax exemption provided for in s. 204(14) of the Act respecting Municipal Taxation, R.S.Q., c. F‑2.1 ("A.M.T.") for all its facilities. There are two main questions: (1) What are the principles that should guide the courts in interpreting tax legislation? (2) In light of these principles, can the appellant qualify as a reception centre within the meaning of s. 12 of the Act respecting Health Services and Social Services, R.S.Q., c. S‑5 ("A.H.S.S.S."), referred to in s. 204(14) A.M.T.?

I ‑ Facts

The appellant, the Corporation Notre‑Dame de Bon‑Secours, is a non‑profit corporation created in 1964 for the purpose of providing low rental housing to indigent elderly persons. On June 16, 1967 the S{oe}urs de la Congrégration de Notre‑Dame conveyed to the appellant for one dollar the land on which it would erect the facilities for use in carrying out its mission, facilities to be known as "La Champenoise" (which we will use to refer to the appellant). Its construction began in 1968 and it was officially opened in November 1969.

There are 456 people at La Champenoise, with an average age of 83. The residents' annual income varies between $6,000 and $9,000 and 80 percent of the people at the establishment are women. Of the total number of residents, 20 are physically located in a single sector of the establishment known as the shelter section, for which La Champenoise holds a permit issued pursuant to the A.H.S.S.S. authorizing it to operate a private reception centre for 20 residents. The shelter section apartments are similar to those of other residents, except that they have no kitchenette. Part of the room and board of the residents of this section is borne by the government, which pays a per diem allowance. The government also exercises a measure of control to ensure that the 20 places are filled. The remainder of the facilities receive no government grant and are managed entirely by La Champenoise. Its administrators and managers work as volunteers.

In addition to the services of a resident priest, the chapel, an infirmary which is accessible 24 hours a day, the cafeteria and the social activities which La Champenoise provides for all residents, it should also be noted that the premises in general are physically designed to meet the special needs of the elderly. Thus, inter alia, there are ramps, there are no door sills, electrical outlets are 24 inches from the ground and bathrooms are equipped with support bars.

The criteria for admission to La Champenoise are a minimum age of 60, a low income and physical and psychological autonomy. The latter factor is not, however, a requirement for staying on in the establishment, since it appears that elderly persons may remain in the premises despite a subsequent deterioration in their health. In his testimony given in 1984 the director general of La Champenoise noted that places which became vacant were offered to applicants who had made their applications for admission in 1976: there was a considerable waiting list of 1,800 persons.

In 1982 an assessor from the Communauté urbaine de Québec visited La Champenoise to determine the proportion of the premises used as an apartment building and as a reception centre. He found that 89 percent of the total area of the property was reserved for apartments and that the shelter section and the community services took up 11 percent: he gave La Champenoise a real estate tax exemption for 1980 to 1984 only for this 11 percent. La Champenoise filed a complaint with the Bureau de révision de l'évaluation foncière du Québec ("BREF"), in which it claimed an exemption for all its facilities in view of the nature of its mission.

The real estate tax debt to date amounts to over $4.5 million and it goes without saying that the size of the amounts involved will have a determining effect on the viability of La Champenoise and the security of its 456 elderly residents.

II ‑ The Courts Below

Bureau de révision de l'évaluation foncière du Québec, [1985] B.R.E.F. 130

According to the respondents the City of Québec and the Communauté urbaine de Québec, holding a permit to operate a reception centre is an essential condition for benefiting from the tax exemption. It follows that as La Champenoise only holds a permit for 20 residents its entire facilities cannot be regarded as a reception centre. After reviewing the testimony and the applicable provisions of the A.H.S.S.S., Mr. Barbe, of the BREF, found that the activities of La Champenoise are those of a reception centre and that it was not necessary for it to hold a permit in order to be treated as such. He accordingly exempted the appellant's property from all real estate taxes.

Provincial Court (District of Québec, No. 200‑02‑004152‑858, May 19, 1987)

Aubé Prov. Ct. J. concurred in the findings of the BREF. He was of the view that the entire La Champenoise property constitutes a reception centre within the meaning of s. 1(k) A.H.S.S.S. and is used for the purposes provided by the Act. He took note of the parties' admission that the shelter section meets the conditions for the exemption provided for in s. 204(14) A.M.T. He also noted the presence of s. 2 A.M.T., which allows an assessment unit to be divided. In light of these observations, he nevertheless stated, at p. 12 of his reasons:

[translation] The evidence here is clear, however, that La Champenoise in fact forms a single well‑integrated unit and that there is a direct, permanent and necessary connection between the shelter section and the rest of La Champenoise.

In the presence of such a well‑established and well‑articulated overall reality, the court could not allow technical considerations to obscure the true nature of La Champenoise, namely that of a facility at which, for all practical purposes, all services are available to everyone.

The BREF's decision was upheld.

Quebec Court of Appeal (1992), [1992 2962 (QC CA)](/fr/qc/qcca/doc/1992/1992canlii2962/1992canlii2962.html), 47 Q.A.C. 47

In the opinion of Bisson C.J.Q., the outcome of the case depended on the answer to two questions. First, the nature of La Champenoise had to be determined. After examining certain definitions included in the A.H.S.S.S., including that of a "reception centre", Bisson C.J.Q. finally concluded, at p. 55, that [translation] "[t]he legal and factual existence of the respondent [La Champenoise] is far from establishing that it meets the definition of a reception centre, except with respect to the shelter section". He also noted that the solution of the matter had to be based on more fundamental questions than whether or not a permit was held, and so he did not consider it necessary to rule on the point.

The second question was to determine whether the property was used for the purposes provided by the A.H.S.S.S. To decide whether the La Champenoise facilities were used as a reception centre strictly speaking, Bisson C.J.Q. considered in particular the criteria for admission to the establishment. He noted that the evidence presented as to the La Champenoise admission criteria indicated that they did not meet the requirements of the definition of a reception centre. In the opinion of the Chief Justice, at p. 56, there had been an error in characterizing the facts:

[translation] Where the error was made was in making the availability of community services the test by which La Champenoise was regarded as a reception centre.

The fact that these community services are available to all residents ‑‑ tenants and sheltered persons ‑‑ does not mean that the residents are all in a condition, "by reason of their age or their physical, personality, psycho‑social or family deficiencies, . . . such that they must be treated, kept in protected residence or . . ." (s. 1(k)).

I note that the evidence showed that in order to obtain an apartment at La Champenoise residents had to be autonomous physically as well as mentally and financially, though in the latter case with limited means.

Finally, since the issue is whether to apply an exemption to the principle of real estate taxation, Bisson C.J.Q. was in favour of adopting a restrictive interpretation. With this in mind, he concluded at p. 56:

[translation] It is true that the respondent [La Champenoise] is a non‑profit corporation and engaged in an eminently praiseworthy undertaking, but this is not a basis for an interpretation that conflicts with the purpose contemplated by the legislature when it created the exemption.

I therefore conclude that 89 percent of the surface area of the property occupied by La Champenoise . . . was not used for the purpose provided in the [A.H.S.S.S.], and that proportion of it could not be regarded as a reception centre.

Bisson C.J.Q. accordingly applied s. 2 A.M.T., which allows a unit of assessment to be divided, and held that the exemption provided for in s. 204(14) of that Act did not apply to 89 percent of the surface area of La Champenoise.

III ‑ Issues

To determine whether La Champenoise may benefit from the tax exemption provided for in s. 204(14) A.M.T. for all its facilities, the Court must answer the following two questions:

1. What are the principles that should guide the courts in interpreting tax legislation?

2. In light of these principles, can La Champenoise qualify as a reception centre within the meaning of s. 12 A.H.S.S.S., referred to in s. 204(14) A.M.T.?

IV ‑ Relevant Legislation

At the relevant times the A.M.T. provided the following:

2. Unless otherwise indicated by the context, any provision of this act which contemplates an immoveable property, moveable property or unit of assessment is deemed to contemplate part of such an immoveable property, moveable property or unit of assessment, if only that part falls within the scope of the provision.

3. The following are exempt from all municipal or school real estate taxes:

(14) an immoveable belonging to a public establishment within the meaning of the Act respecting health services and social services (chapter S‑5), including a reception centre contemplated in section 12 of that act, used for the purposes provided by that act, and an immoveable belonging to the holder of a day care centre permit or nursery school permit contemplated in paragraph 1 or 2 of section 4 or 5 of the Act respecting child day care (chapter S-4.1), used for the purposes provided by that act;

The A.H.S.S.S. provided:

1. In this Act and the regulations, unless the context indicates a different meaning, the following expressions and words mean:

(a) "establishment": a local community service centre, a hospital centre, a social service centre or a reception centre;

(b) "public establishment": an establishment contemplated in sections 10 and 11;

(c) "private establishment": an establishment contemplated in sections 12 and 13;

(k) "reception centre": facilities where in‑patient, out‑patient or home‑care services are offered for the lodging, maintenance, keeping under observation, treatment or social rehabilitation, as the case may be, of persons whose condition, by reason of their age or their physical, personality, psycho‑social or family deficiencies, is such that they must be treated, kept in protected residence or, if need be, for close treatment, or treated at home, including nurseries, but excepting day care establishments contemplated in the Act respecting child day care (chapter S‑4.1), foster families, vacation camps and other similar facilities and facilities maintained by a religious institution to receive its members or followers;

3. The Minister shall exercise the powers that this Act confers upon him in order to:

(a) improve the state of the health of the population, the state of the social environment in which they live and the social conditions of individuals, families and groups;

(c) encourage the population and the groups which compose it to participate in the founding, administration and development of establishments so as to ensure their vital growth and renewal;

9. Every establishment is public or private.

10. The following are public establishments:

(a) every establishment constituted under this Act or resulting from an amalgamation or conversion made under this Act;

(b) every hospital centre or social service centre maintained by a non‑profit corporation;

(c) every establishment using for its object immovable assets which are the property of a non‑profit corporation other than a corporation incorporated under this Act.

11. Every reception centre maintained by a non‑profit corporation other than a corporation contemplated in section 10 is also a public establishment, subject to section 12.

12. However, a reception centre maintained by a non‑profit corporation other than a corporation resulting from an amalgamation or conversion made under this Act is a private establishment:

(a) if it is arranged to receive not more than 20 persons at one time; or

(b) if it was already constituted on 1 January 1974 and if it operates without recourse to sums of money derived from the consolidated revenue fund or if such sums do not cover more than 80% of the net amounts it would receive for its current operating expenses, if it were a public establishment;

V ‑ Analysis

A. Rules for interpreting tax legislation

In this Court the appellant argued that a provision creating a tax exemption should be interpreted by looking at the spirit and purpose of the legislation. In this connection it is worth looking briefly at the development of the rules for interpreting tax legislation in Canada and formulating certain principles. First, there is the traditional rule that tax legislation must be strictly construed: this applied both to provisions imposing a tax obligation and to those creating tax exemptions. The rule was based on the fact that, like penal legislation, tax legislation imposes a burden on individuals and accordingly no one should be made subject to it unless the wording of the Act so provides in a clear and precise manner. The effect of such an interpretation was to favour the taxpayer in the case of provisions imposing a tax obligation, and the courts placed on the tax department the burden of showing that the taxpayer fell clearly within the letter of the law. Conversely, a taxpayer claiming to benefit from an exemption had "to establish that the competent legislative authority, in clear and unequivocal language, [had] unquestionably granted him the exemption claimed" (Fauteux C.J. in Ville de Montréal v. ILGWU Center Inc., 1971 188 (SCC), [1974] S.C.R. 59, at p. 65). Any doubt was thus to be resolved in favour of the tax department. In view of this situation, it followed from the strict construction rule that in cases of doubt a presumption existed in the taxpayer's favour in taxing situations but against the taxpayer in those involving exemptions.

It should at once be noted that there is a risk of confusion between the rule that a taxing provision is to be strictly construed and the burden of proof resting upon the parties in an action between the government and a taxpayer. According to the general rule which provides that the burden of proof lies with the plaintiff, in any proceeding it is for the party claiming the benefit of a legislative provision to show that he is entitled to rely on it. The burden of proof thus rests with the tax department in the case of a provision imposing a tax obligation and with the taxpayer in the case of a provision creating a tax exemption. It will be noted that the presumptions mentioned earlier tend in more or less the same direction. This explains why these concepts have been at times superimposed to the point of being confused with each other. With respect, they are nevertheless two very different concepts. In any event, the rule of strict construction relates only to the clarity of the wording of the tax legislation: regardless of who bears the burden of proof, that person will have to persuade the court that the taxpayer is clearly covered by the wording of the legislative provision which it is sought to apply.

In Canada it was Stubart Investments Ltd. v. The Queen, 1984 20 (SCC), [1984] 1 S.C.R. 536, which opened the first significant breach in the rule that tax legislation must be strictly construed. This Court there held, per Estey J., at p. 578, that the rule of strict construction had to be bypassed in favour of interpretation according to ordinary rules so as to give effect to the spirit of the Act and the aim of Parliament:

. . . the role of the tax statute in the community changed, as we have seen, and the application of strict construction to it receded. Courts today apply to this statute the plain meaning rule, but in a substantive sense so that if a taxpayer is within the spirit of the charge, he may be held liable.

This turning point in the development of the rules for interpreting tax legislation in Canada was prompted by the realization that the purpose of tax legislation is no longer simply to raise funds with which to cover government expenditure. It was recognized that such legislation is also used for social and economic purposes. In The Queen v. Golden, 1986 50 (SCC), [1986] 1 S.C.R. 209, at pp. 214‑15, Estey J. for the majority explained Stubart as follows:

In Stubart . . . the Court recognized that in the construction of taxation statutes the law is not confined to a literal and virtually meaningless interpretation of the Act where the words will support on a broader construction a conclusion which is workable and in harmony with the evident purposes of the Act in question. Strict construction in the historic sense no longer finds a place in the canons of interpretation applicable to taxation statutes in an era such as the present, where taxation serves many purposes in addition to the old and traditional object of raising the cost of government from a somewhat unenthusiastic public.

Such a rule also enabled the Court to direct its attention to the actual nature of the taxpayer's operations, and so to give substance precedence over form, when so doing in appropriate cases would make it possible to achieve the purposes of the legislation in question. (See Johns‑Manville Canada Inc. v. The Queen, 1985 43 (SCC), [1985] 2 S.C.R. 46, and The Queen v. Imperial General Properties Ltd., 1985 7 (SCC), [1985] 2 S.C.R. 288.) It is important, however, not to conclude too hastily that this latter rule (giving substance precedence over form) should be applied mechanically, as it only has real meaning if it is consistent with the analysis of legislative intent. As Dickson C.J. noted in Bronfman Trust v. The Queen, 1987 76 (SCC), [1987] 1 S.C.R. 32, at pp. 52‑53:

I acknowledge, however, that just as there has been a recent trend away from strict construction of taxation statutes . . . so too has the recent trend in tax cases been towards attempting to ascertain the true commercial and practical nature of the taxpayer's transactions. There has been, in this country and elsewhere, a movement away from tests based on the form of transactions and towards tests based on what Lord Pearce has referred to as a "common sense appreciation of all the guiding features" of the events in question . . .

This is, I believe, a laudable trend provided it is consistent with the text and purposes of the taxation statute. Assessment of taxpayers' transactions with an eye to commercial and economic realities, rather than juristic classification of form, may help to avoid the inequity of tax liability being dependent upon the taxpayer's sophistication at manipulating a sequence of events to achieve a patina of compliance with the apparent prerequisites for a tax deduction.

This does not mean, however, that a deduction such as the interest deduction in s. 20(1)(c)(i), which by its very text is made available to the taxpayer in limited circumstances, is suddenly to lose all its strictures. [Emphasis added.]

In light of this passage there is no longer any doubt that the interpretation of tax legislation should be subject to the ordinary rules of construction. At page 87 of his text Construction of Statutes (2nd ed. 1983), Driedger fittingly summarizes the basic principles: ". . . the 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". The first consideration should therefore be to determine the purpose of the legislation, whether as a whole or as expressed in a particular provision. The following passage from Vivien Morgan's article "Stubart: What the Courts Did Next" (1987), 35 Can. Tax J. 155, at pp. 169‑70, adequately summarizes my conclusion:

There has been one distinct change [after Stubart], however, in the resolution of ambiguities. In the past, resort was often made to the maxims that an ambiguity in a taxing provision is resolved in the taxpayer's favour and that an ambiguity in an exempting provision is resolved in the Crown's favour. Now an ambiguity is usually resolved openly by reference to legislative intent. [Emphasis added.]

The teleological approach makes it clear that in tax matters it is no longer possible to reduce the rules of interpretation to presumptions in favour of or against the taxpayer or to well‑defined categories known to require a liberal, strict or literal interpretation. I refer to the passage from Dickson C.J., supra, when he says that the effort to determine the purpose of the legislation does not mean that a specific provision loses all its strictures. In other words, it is the teleological interpretation that will be the means of identifying the purpose underlying a specific legislative provision and the Act as a whole; and it is the purpose in question which will dictate in each case whether a strict or a liberal interpretation is appropriate or whether it is the tax department or the taxpayer which will be favoured.

In light of the foregoing, 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.

One final aspect requires consideration. In Johns‑Manville Canada, supra, this Court itself referred to a residual presumption in favour of the taxpayer, and were it not for certain qualifications that must be added, it would be difficult to justify maintaining this presumption in light of what was discussed earlier. Estey J. said the following at p. 72:

. . . where the taxing statute is not explicit, reasonable uncertainty or factual ambiguity resulting from lack of explicitness in the statute should be resolved in favour of the taxpayer. This residual principle must be the more readily applicable in this appeal where otherwise annually recurring expenditures, completely connected to the daily business operation of the taxpayer, afford the taxpayer no credit against tax either by way of capital cost or depletion allowance with reference to a capital expenditure, or an expense deduction against revenue. [Emphasis added.]

Earlier, at p. 67, he said the following:

On the other hand, if the interpretation of a taxation statute is unclear, and one reasonable interpretation leads to a deduction to the credit of a taxpayer and the other leaves the taxpayer with no relief from clearly bona fide expenditures in the course of his business activities, the general rules of interpretation of taxing statutes would direct the tribunal to the former interpretation.

Two comments should be made to give Estey J.'s observations their full meaning: first, recourse to the presumption in the taxpayer's favour is indicated when a court is compelled to choose between two valid interpretations, and second, this presumption is clearly residual and should play an exceptional part in the interpretation of tax legislation. In his text The Interpretation of Legislation in Canada (2nd ed. 1991), at p. 412, Professor Pierre‑André Côté summarizes the point very well:

If the taxpayer receives the benefit of the doubt, such a "doubt" must nevertheless be "reasonable". A taxation statute should be "reasonably clear". This criterion is not satisfied if the usual rules of interpretation have not already been applied in an attempt to clarify the problem. The meaning of the enactment must first be ascertained, and only where this proves impossible can that which is more favourable to the taxpayer be chosen.

The rules formulated in the preceding pages, some of which were relied on recently in Symes v. Canada, 1993 55 (SCC), [1993] 4 S.C.R. 695, may be summarized as follows:

‑ The interpretation of tax legislation should follow the ordinary rules of interpretation;

‑ A legislative provision should be given a strict or liberal interpretation depending on the purpose underlying it, and that purpose must be identified in light of the context of the statute, its objective and the legislative intent: this is the teleological approach;

‑ The teleological approach will favour the taxpayer or the tax department depending solely on the legislative provision in question, and not on the existence of predetermined presumptions;

‑ Substance should be given precedence over form to the extent that this is consistent with the wording and objective of the statute;

‑ Only a reasonable doubt, not resolved by the ordinary rules of interpretation, will be settled by recourse to the residual presumption in favour of the taxpayer.

B.Characterization of La Champenoise as a reception centre used for the purposes provided in the Act

Two reasons were given by Bisson C.J.Q. for allowing the respondents' appeal: first, the legal and factual existence of La Champenoise does not indicate that all its facilities can meet the definition of a reception centre; second, it is a mistake to conclude, as the courts below did, that the availability of the services offered means that the immovable is being used for the purposes provided by the A.H.S.S.S., as required by s. 204(14) A.M.T.

The first reason is based principally on analysis of s. 1(k) A.H.S.S.S. I reproduce it again here for the sake of convenience:

(k) "reception centre": facilities where in‑patient, out‑patient or home‑care services are offered for the lodging, maintenance, keeping under observation, treatment or social rehabilitation, as the case may be, of persons whose condition, by reason of their age or their physical, personality, psycho‑social or family deficiencies, is such that they must be treated, kept in protected residence or, if need be, for close treatment, or treated at home, including nurseries, but excepting day care establishments contemplated in the Act respecting child day care (chapter S‑4.1), foster families, vacation camps and other similar facilities and facilities maintained by a religious institution to receive its members or followers; [Emphasis added.]

Two parts of this definition may be considered: to be treated as a reception centre an establishment must first offer certain services; it must then place these services at the disposal of persons whose condition requires them. This is the part relating to need. It will be seen that for both parts the paragraph is worded disjunctively. For the "services" part, the words "or" and "as the case may be" clearly indicate that lodging is a service sufficient in itself to meet the requirements of the definition. There is no need to offer the full range of services mentioned in s. 1(k) A.H.S.S.S. in order to qualify as a reception centre; nonetheless, the evidence was that the La Champenoise population as a whole benefits from a large number of them. The paragraph is worded similarly for the "need" part, in that age is sufficient as such to justify a need to be treated or kept in a protected residence, regardless of any physical, personality, psycho‑social or family deficiency. The notion of care in this sense cannot be limited to a purely therapeutic aspect. As to the concept of a protected residence, for which no statutory definition is given, it should not be given a narrower meaning than that of a residence providing a secure location adapted to the special physical and mental needs of the people for whom it was designed and whom it serves.

The fact that La Champenoise requires its residents to be physically and psychologically autonomous on admission is an entirely different matter, and that leads me to discuss the second reason. I note that Bisson C.J.Q. mentioned that the availability of services should not be a basis for assessing the need of residents and, indirectly, determining whether the La Champenoise property was being used for the purposes provided in the A.H.S.S.S. I share this view. With respect, however, I consider that the need of an elderly person also cannot be determined by his or her autonomy. It can certainly be concluded from the definition of a reception centre that the autonomy of those referred to in s. 1(k) may be affected in varying degrees. That does not mean we can conclude that an autonomous person is not in need of care and protection, a fortiori if as in the case at bar the autonomy is only determined at the stage of admission and will inevitably diminish thereafter. Nowhere is it stated that the individual's need must be immediate. There is no bar to its being foreseeable.

With respect, the autonomy of elderly persons at the time of their admission cannot be the decisive test in determining the concept of need as provided for in s. 1(k) A.H.S.S.S. In the same way, it also cannot be used to determine whether La Champenoise's immovable is being used for the purposes provided by the Act, as prescribed in s. 204(14) A.M.T. The outcome of the latter analysis will depend entirely on the finding, whether satisfactory or otherwise, that in fact the institution is designed and adapted for accommodating the elderly with a real need, though that need may be variable in degree or immediacy.

Section 12(b) A.H.S.S.S., reproduced earlier and applicable to the situation of La Champenoise, might well have added to the previous test the requirement that the establishment be legally made a reception centre on January 1, 1974. The only date referred to by Mr. Barbe of the BREF in this matter is that of the incorporation of La Champenoise as a non‑profit corporation. It is implicit from his reasons that 1964 is the year to be considered in fixing a starting‑point for the activities of La Champenoise as a reception centre. He concludes, at p. 137 of the BREF's decision:

[translation] It appears from the evidence that these were "facilities where in‑patient . . . services are offered for the lodging, maintenance, keeping under observation, treatment . . . of persons whose condition, by reason of their age . . . is such that they must be treated, kept in protected residence . . .". The establishment is accordingly one that meets the legislative definition of a "reception centre".

These reasons are in accord with the findings of fact made by Judge Larochelle of the Provincial Court in a judgment allowing an application for an earlier exemption, included in the case on appeal with supporting testimony. It states:

[translation] Over this four‑year period, from 1972 to 1975 inclusive, [La Champenoise] as a non‑profit corporation always pursued its stated purposes and objectives, namely lodging and sheltering at a low cost elderly persons who are in need, while at the same time providing them with medical care and giving them every assistance and moral support made necessary by their state and condition, and did so consistently.

(Ville de Québec v. Corp. Notre‑Dame de Bon‑Secours, Prov. Ct. Québec, No. 200‑02‑008522‑783, November 27, 1980, at p. 10.)

The respondents argued that the appellant could not have been established as a reception centre on January 1, 1974 since at that time it was still covered by the Public Charities Act, R.S.Q. 1964, c. 216. With respect, that does not call into question the implicit conclusion of the BREF, since there is nothing to prevent La Champenoise from having in fact been able to meet the requirements of both statutes. This conclusion is all the more compelling when we consider that historically the A.H.S.S.S. was adopted in order to update certain older legislation, including the Public Charities Act, while preserving the fundamental principles contained in that legislation. From this perspective, it necessarily follows that the test to be adopted in determining whether the property is being used for the purposes provided in the Act must be limited to an assessment of the reception centre de facto.

Here we have these positive findings by the BREF that the services provided by La Champenoise, taken together with the needs of its residents, lead to the conclusion that it must be classified in its entirety as a reception centre for the purposes of the Act. It was objected that the BREF had not applied s. 2 A.M.T. and divided the unit of assessment. With respect, it is clear from the reasons of Mr. Barbe that that section was not overlooked. This is especially apparent in his decision when he notes, referring to the assessor's work, [translation] "[that the latter] established the percentage of the exemption but not the principle of an exempt part and a part subject to tax" (p. 134). Though aware of the existence of s. 2 A.M.T., the BREF nevertheless considered that La Champenoise was operating facilities which as a whole met the two parts of the definition of a reception centre. Moreover, it was in the best position to conclude, following a visit to the premises, that the undertaking was indivisible, and this conclusion was concurred in by Judge Aubé of the Provincial Court on appeal, as mentioned earlier. The primary area of expertise of this specialized tribunal is certainly not that of social services: I would note, however, that what was required here was to define a reception centre for tax purposes. That being so, there is no need to question its findings.

In this Court the respondents the Communauté urbaine de Québec and the City of Québec cited the decision in Services de santé et services sociaux ‑‑ 7, [1987] C.A.S. 579, in support of their arguments that La Champenoise could not be classified as a reception centre in its entirety. That decision was clearly made by a tribunal specializing in social services. With respect, the fact remains that that case cannot apply here. The Commission des affaires sociales ("the Commission") was required to interpret the concept of a reception centre in connection with the power of the Minister of Health and Social Services to relocate two elderly residents living in a home which had no permit within the meaning of s. 136 A.H.S.S.S. In addition to accommodation, the home provided food and care to the two residents, whose respective conditions required regular attention, one having difficulty in moving about and the other being subject to periods of confusion. The Commission reversed the Minister's decision and found that the home in question was not a reception centre within the meaning of s. 1(k) A.H.S.S.S. In a passage which I shall reproduce at length for greater clarity, the Commission said the following, at p. 582:

[translation] The activities described in this definition of a reception centre are in fact very broad and capable of being carried on in various locations where individuals are lodged. Offering in‑patient services for the lodging and maintenance of individuals is thus a task which in our society is far from being a function exclusive to reception centres. Even in the case of persons having certain problems or deficiencies, such centres do not have a monopoly.

There are in fact many places providing lodging to elderly persons whose autonomy is more limited and who, though not needing constant care, simply must live in places where . . . certain maintenance services are provided for them. In such places they may find someone capable of providing a form of assistance and help if required, not to mention out‑patient services which are provided to them in the same way as if they lived elsewhere.

Formerly, such persons found this type of lodging within an extended family unit. Now, this resource is less available and they must have access to different places.

In the Commission's opinion this is not the type of lodging contemplated by the relocation power conferred on the Minister by s. 182 [A.H.S.S.S.]. That power, which is special and exceptional, is an incidental measure for the purpose of penalizing a breach of the Act, namely the operation of an establishment without a permit (s. 136).

The establishment is truly a facility whose activities must be so arranged that relatively constant special care can be provided to the persons living there who require it. It is not a place the primary activity of which is to lodge and maintain persons who may occasionally need certain care and for whom it provides reassuring and beneficial surroundings.

The Minister's power of relocation should not be isolated but seen in its context. Otherwise it might be used to transfer one or more persons from locations where activities of the kind described in s. 1(k) are carried on and where care may be provided from time to time but which are not truly facilities for this purpose. Examples of this are families where an elderly or handicapped person lives. [Emphasis added; italics in original.]

There is no doubt that the factual background to that decision is completely different from the case at bar; the same is true of the section of the Act relied on in support of these arguments. The first passage underlined in the extract nevertheless suggests that the rental portion of La Champenoise might not be classified as a reception centre. That does not prevent me from coming to the opposite conclusion. The type of lodging referred to by the Commission is inconsistent with the concept of an organized institution. This follows from the last phrase underlined above, when the Commission mentions facilities which are not created for the purposes of providing the services described in s. 1(k) A.H.S.S.S. In the present case La Champenoise is an organized institution which was specifically created for the purpose of catering to the special needs of the elderly.

Another argument put forward by the respondents to show that La Champenoise cannot be classified as a reception centre in its entirety relies on the reasons of Bisson C.J.Q., when he noted that the composition of the board of directors and the criteria for admission to La Champenoise are not in accordance with the respective requirements of ss. 82 and 18.1 A.H.S.S.S. With respect, reading ss. 82 and 76 A.H.S.S.S. together with the heading of the division covering them clearly shows that s. 82 applies only to public establishments. Clearly, therefore, it cannot be made to cover La Champenoise. As for s. 18.1 A.H.S.S.S., which obviously applies to public and private establishments, it provides for the submission of admission criteria to the Conseil régional de la santé et des services sociaux or the Minister, as the case may be. There is nothing to indicate, however, that failure to observe this requirement will as such affect the status of an establishment as a reception centre.

The respondents submitted, finally, that a reception centre is not exempt from real estate taxes if it does not hold a permit required by Division VI of the A.H.S.S.S. As La Champenoise holds a permit for 20 residents, the tax exemption could not be valid for its facilities in their entirety but should be limited to the shelter section only. In support of this argument the respondents relied on s. 204(14) A.M.T., which does not define a reception centre as such but rather proceeds by way of a reference to s. 12 A.H.S.S.S. Such a reference, they argued, is not limited to the definition of a reception centre but also takes in the provisions of the Act governing the activities of this type of establishment. I shall again reproduce the paragraph for the sake of convenience:

204. The following are exempt from all municipal or school real estate taxes:

(14) an immoveable belonging to a public establishment within the meaning of the Act respecting health services and social services (chapter S‑5), including a reception centre contemplated in section 12 of that act, used for the purposes provided by that act, and an immoveable belonging to the holder of a day care centre permit or nursery school permit contemplated in paragraph 1 or 2 of section 4 or 5 of the Act respecting child day care (chapter S-4.1), used for the purposes provided by that act;

With respect, I cannot subscribe to the respondents' arguments. If the legislature had intended that the tax exemption of a reception centre should be subject to the existence of a permit issued by the proper authority, it would have said so expressly as it did for day-care centres. The same textual argument can be drawn from s. 204(15) A.M.T. with respect to educational institutions. Expressio unius est exclusio alterius. I accordingly share the findings of the BREF on this point.

VI ‑ Conclusion

In light of the rules of interpretation formulated in the first part of this analysis, it appears that on the facts found by the BREF the facilities of La Champenoise can be classified in their entirety as a reception centre within the meaning of ss. 1(k) and 12(b) A.H.S.S.S. Similarly, it appears that its property as a whole is used for the purposes provided by that Act, as stipulated by s. 204(14) A.M.T. The decision of the BREF, a specialized tribunal, discloses no error subject to review on appeal. I would accordingly restore the decision of the BREF that the La Champenoise property should be declared exempt from real estate taxes in its entirety for the 1980 to 1984 fiscal years inclusive.

VII ‑ Disposition

The appeal is allowed. The judgment of the Quebec Court of Appeal is set aside and the decision of the BREF is affirmed, the whole with costs before the BREF and in all courts.

Appeal allowed with costs.

Solicitors for the appellant: Tremblay Bois & Associés, Ste‑Foy.

Solicitors for the respondents the Communauté urbaine de Québec and the City of Québec: Alain, Tardif & Associés, Québec.

Solicitors for the respondent the Attorney General of Quebec: Rochette Boucher & Gagnon, Québec.