ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 10-50175
DATE: 2012/10/12

BETWEEN:

Développements Limoges Inc. Applicant

– and –

Municipal Property Assessment Corporation and The Nation Municipality Respondents

Paul K. Lepsoe, for the Applicant
Karey Lunau, for the Respondent, Municipal Property Assessment Corporation

HEARD: September 27, 2012

REASONS FOR DECISION ON MOTION

ANNIS J.

Introduction

[ 1 ] The applicant is the owner of lands to the east of Ottawa on which Calypso Theme Waterpark (“Calypso”) is situated. It seeks an exemption from taxation under the Assessment Act , R.S.O. 1990, c. A.31 (“the Act ”), for two of its amusement attractions referred to as “Jungle Run” and “Calypso Palace”. It also claims an exemption for the pump houses and other shelters in which machinery and equipment is contained that is used to operate the amusement attractions, including three waterslide attractions.

[ 2 ] The exemptions are sought pursuant to paragraph 23 of Section 3(1) of the Act . Although enacted in 1986, no jurisprudence was cited dealing with the provision, from which I assume that it has not previously been considered by the courts. It reads as follows:

Roller-coasters, monorails, slides, ferris wheels, merry-go-rounds or other similar mechanical amusement devices on which a person rides, including any machinery, equipment, rails, supports and trestles used for their operation and the foundations on which they rest, erected or placed upon, in, over, under or affixed to the land occupied by the operator of an amusement park.

[ 3 ] I conclude that the Jungle Run and Calypso Palace amusement attractions are exempt from taxation. I am not prepared to recognize, however, an exemption for the pump houses and other shelters, except for the specific foundations on which some of the equipment is seen to rest. My reasoning supporting these decisions follows.

Background Facts

[ 4 ] Calypso principally consists of the following:

(1) Seven (7) large waterslide attractions, each consisting of several individual slides;

(2) Two (2) slide attractions for children, consisting of fourteen (14) small waterslides;

(3) The “Jungle Run” water ride attraction;

(4) A wave attraction, “Calypso Palace”;

(5) Water filtration and pump houses for the above;

(6) Change rooms and lockers, bar, restaurants, beach volleyball, souvenir shop; and

(7) Picnic grounds, parking, and administration buildings.

[ 5 ] Calypso is located on Highway 417 in the municipality of La Nation, between Ottawa and Montréal. Calypso is the largest “theme” waterpark in Canada, i.e. , an amusement park where the focus of the facility is the water rides themselves. Calypso opened to the public in June 2010.

[ 6 ] An initial investment of several million dollars was made to build Calypso prior to its opening in 2010. For 2011, there was a further investment to provide, principally for an additional major waterslide attraction, Summit Tower. Calypso was further developed for 2012, to include additional water-based attractions. All of the facilities at Calypso are said to incorporate the latest and most advanced water ride technology.

[ 7 ] Calypso has already proven to be a major tourist destination and employer for rural Eastern Ontario. In its first two years of operation, in the summers of 2010 and 2011, Calypso attracted approximately 400,000 visitors and employed over 550 people.

[ 8 ] The Municipal Property Assessment Corporation (“MPAC”) acknowledges that Calypso is an amusement park within the meaning of paragraph 23 of Section 3 (1) of the Act .

Jungle Run

[ 9 ] Jungle Run is a principal attraction at Calypso. At the entrance to Jungle Run, participants are handed a flotation device by Calypso staff, or they can take one themselves. Participants then enter the water circuit on the device, and travel around the circuit on the device. The water is heated and filtered, and moves at a current of about one meter per second. The current is too strong for normal swimming. The current is mechanically produced. Diving into the water is not permitted.

[ 10 ] The entire circuit is approximately 700 meters in length. As they float along the way, the participants have various experiences including the following:

(1) floating through a “cave”;

(2) floating by “thick jungle”;

(3) floating through waterfalls;

(4) floating through “rain” in the rainforest; and

(5) floating past the sounds of jungle birds and other animals.

[ 11 ] The experience is therefore similar to, and based on a traditional amusement park ride, on a small rail-type wagon, sometimes with variously humorous or “scary” attractions along the way. However, in this case, rather than riding in a wagon, participants are moving on a flotation device.

Calypso Palace

[ 12 ] Calypso Palace is a “wave-pool”. In it, waves of about 1.5 meters in height, at a frequency of up to 25 waves a minute, are mechanically produced, generally on a cycle of eight minutes, followed by three minutes of calm water. A loud alarm notifies those in the water that the waves are about to re-start.

[ 13 ] The central idea of the attraction is to “ride the waves”. Due to the size and frequency of the wave action, casual swimming is essentially impossible. Diving into the water is not permitted.

Pump Houses for Jungle Run and Calypso Palace

[ 14 ] The current of the water in the Jungle Run circuit is mechanically produced. Specifically, the water’s current is produced through large electric pumps housed in three small dedicated buildings next to the attraction. Other machinery and equipment is located in and around the pump houses for water heating and filtration systems for the water in Jungle Run, and additional filtration for some of the waterslides.

[ 15 ] Similarly, the wave action in the water for Calypso Palace is mechanically produced by large electric pumps and other machinery and equipment housed in a dedicated building next to the attraction. In and around this pump house, there is also machinery and equipment for water heating and filtration systems for the water in Calypso Palace. Filtration for the water used in the new Summit Tower waterslide is also provided through this machinery and equipment.

Pump Houses for the Waterslides

[ 16 ] There are three filter and pump houses for the waterslides. They are located contiguous to the waterslides. Their purpose is to provide moving water, as well as to filter and heat the water. This involves extensive machinery and equipment both inside and next to these shelters.

Issues

(i) Whether Jungle Run and Calypso Palace are exempt from taxation because they are “mechanical amusement devices on which a person rides” that are similar to “roller‑coasters, monorails, slides, ferris wheels, merry-go-rounds” within the meaning of those words in paragraph 23 of Section 3(1) of the Act ?

(ii) Whether the buildings containing the machinery and equipment used to operate the water attractions are exempt from taxation because they are “machinery, equipment, rails, supports and trestles used for the operation” of mechanical amusement devices, including being “the foundations on which they rest, erected or placed upon, in, over, under or affixed to land” within the meaning of those words in paragraph 23 of Section 3(1) of the Act ?

Analysis

Principles of Interpretation of the Legislation

[ 17 ] The general principles governing the interpretation of tax legislation were aptly summarized by Ellies J. in the recent decision of Great Lakes Power Limited v. Municipal Property Assessment Corp. , 2012 ONSC 2390 , at paragraphs 26 to 30 , which I adopt and cite as follows:

[26] Taxing statutes such as the one at issue in this application are no longer subject to special rules of interpretation. In Québec (Communauté Urbaine) v. Corp. Notre-Dame de Bon-Secours, 1994 58 (SCC) , [1994] 3 S.C.R. 3 , the Supreme Court of Canada reviewed the jurisprudence regarding the interpretation of such statutes. After referring to Driedger’s “Modern Principle of Interpretation”, Gonthier, J. summarized the rules regarding the interpretation of taxing statutes on behalf of the court as follows (at p. 20):

− 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 statutes;

− Only a reasonable doubt, not resolved by the ordinary rules of interpretation, will be settled by resource to the residual presumption in favour of the tax payor.

[27] The court pointed out that rules of statutory interpretation should not be confused with the general rule that the burden of proof lies with the party claiming the benefit of a legislative provision to show that they fit within it. As Gonthier, J. pointed out (at p. 15):

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... 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 has sought to apply.

(See also The Religious Hospitallers of St. Joseph Housing Corp. v. Regional Assessment Commissioner, Region 1 1998 2943 (ON CA) , (1998), 42 O.R. (3 rd ) 532 (Ont. C.A.) , at p. 534 .)

[28] However, as the court subsequently clarified in Placer Dome Canada Ltd. v. Ontario (Minister of Finance), 2006 SCC 20 () , [2006] 1 S.C.R. 715 (at paragraph 27 ), Notre-Dame de Bon-Secours did not overrule the existing jurisprudence to the effect that there is no burden of proof regarding the proper manner in which to interpret a statutory provision, as opposed to the burden that rests on the party alleging that it fits within it.

[29] Placer Dome is also helpful in describing the role that the residual presumption in favour of the taxpayer plays in the interpretation of a taxing statute. At paragraph 24, Lebel, J. wrote on behalf of the court:

Although there is a residual presumption in favour of the taxpayer, it is residual only and applies in the exceptional case where application of the ordinary principles of interpretation does not resolve the issue: Notre-Dame de Bon-Secours, at p. 19. Any doubt about the meaning of a taxation statute must be reasonable, and no recourse to the presumption lies unless the usual rules of interpretation have been applied, to no avail, in an attempt to discern the meaning of the provision at issue.

[30] Lastly, in Notre-Dame de Bon-Secours , Gonthier, J. quoted from Driedger’s text, Construction of Statutes (2 nd Ed. 1983), concerning the “ordinary rules of construction” (at page 17):

“...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. [Emphasis added.]

Order/Declaration

[ 73 ] The Jungle Run and Calypso Palace amusement attractions are mechanical amusement devices on which a person rides under paragraph 23 of Section 3(1) of the Act and are, thereby, exempt from taxation.

[ 74 ] The equipment and machinery in the pump house and structures used to operate the Jungle Run and Calypso Palace amusement attractions and the waterslides at the park are part of, and included in, mechanical amusement devices and also exempt from taxation. The specific cement foundations used to support equipment seen in exhibit “Q” of Mr. Lauzon’s affidavit are also exempt from taxation.

[ 75 ] The pump houses and structures used to house the equipment and machinery that operate the amusement attractions are not exempt from taxation as they are land and buildings within the meaning of the Act .

[ 76 ] Any taxes levied against the property in respect of the exemptions described above are invalid. Amendments to the Assessment Roll are ordered to reflect the foregoing exemptions. The applicant shall be either refunded or credited any consequential overpayment of taxes, with interest as required.

[ 77 ] Costs of the application, as agreed upon by the parties, are awarded to the applicant in the all-in amount of $6,000.

Mr. Justice Peter Annis

Released: October 12, 2012