2016 ONSC 7741
COURT FILE NO.: 06-CV-308060
DATE: 20161209
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: UNIVERSITY OF ONTARIO INSTITUTE OF TECHNOLOGY, Appellant/ Moving Party
AND:
THE MINISTER OF FINANCE, Respondent/Responding Party
BEFORE: Stinson J.
COUNSEL: Dennis Wyslobicky, for the Appellant
Lori Patyk and Jessica Fiore, for the Respondent
HEARD at Toronto: October 5, 2016
ENDORSEMENT
Introduction
[1] This is a motion for summary judgment by the University of Ontario Institute of Technology ("UOIT") under Rule 20 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The motion arises in the context of an appeal by UOIT seeking a rebate of the sales tax it paid under the Ontario Retail Sales Tax Act, R.S.O. 1990, c. R.31 (the "RSTA") in respect of the construction of certain of its buildings and structures.
[2] The rebate is potentially available for charitable organizations pursuant to s. 14(1) of Regulation 1013, R.R.O. 1990 (the "Regulation") under the RSTA. UOIT is a charitable organization. However, s. 14(2)(a) of the Regulation states that the rebate is not available "with respect to a building or structure that ... is a university that receives financial assistance directly or indirectly from the province, …."
[3] UOIT constructed certain of its buildings and structures between 2002 and 2005, including four academic buildings, a library, communications infrastructure, and a twin pad arena. UOIT filed rebate claims in respect of the buildings and structures under s. 14(1) of the Regulation. The rebate claims were denied by Statements of Disallowance on the ground that s. 14(2)(a) of the Regulation applied, because it was a university. UOIT has appealed the denials to this Court.
[4] This motion addresses a preliminary issue arising in UOIT's rebate appeal. UOIT submits that it was not a "university", as defined in s. 1 of the Regulation, during the Rebate Period from 2002 to 2004 for which the rebates are claimed (the “Rebate Period”) with the result that its rebate claim is not subject to the s. 14(2)(a) exclusion. The Respondent, the Minister of Finance, submits that, at the relevant time, UOIT did fall within the definition of “university” and thus it is not permitted to seek a rebate.
[5] The parties agree that if UOIT was not a "university" as defined in s.1 of the Regulation during the Rebate Period, then an order should issue for summary judgment allowing UOIT's appeal, subject to the right of the Respondent to perform an audit to verify the quantum of the rebate that may be payable. If it is determined that UOIT was a "university" as defined, the parties agree that an Order should be issued finally determining that issue and that UOIT's appeal should then proceed on that basis.
The Regulation
[6] The rebate of sales tax sought by UOIT is provided for in s. 14 of the Regulation, which states as follows:
- (1) The Minister may rebate to the governing body of a religious, charitable or benevolent organization an amount as calculated under subsection (3) or (4), in respect of tangible personal property incorporated into a building or structure,
(a) owned by the organization; or
(2) Subsection (1) does not apply with respect to a building or structure that,
(a) is a university that receives financial assistance directly or indirectly from the province; ….
[7] The term “university” is defined in s.1 of the Regulation as follows:
“university” means a post-secondary educational institution that is, by an Act of the Assembly, authorized to grant degrees …;
Factual background
[8] UOIT was established as a new university under the University of Ontario Institute of Technology Act, 2002, S.O. 2002, c. 8, Sched. O (the "UOIT Act") effective June 27, 2002. That statute came into force that day, except for s. 6, which provides as follows:
The university may confer degrees, honorary degrees, certificates and diplomas in any and all branches of learning.
Section 6 did not come into force until August 22, 2007, which was subsequent to the Rebate Period; in other words, UOIT had no power to grant degrees under the UOIT Act in that time frame.
[9] As a new university whose statute did not yet authorize it to grant degrees, UOIT was required to apply to the Minister of Training, Colleges and Universities for the Minister’s consent to do so, under a statute known as the Post-secondary Education Choice and Excellence Act, 2000, S.O. 2000, c. 36 (“PECEA”). Several provisions of PECEA are relevant so I will quote them now:
(1) No person shall directly or indirectly do any of the following things unless the person is authorized to do it by an Act of the Assembly or by the Minister under this Act:
Grant a degree.
No person shall directly or indirectly do any of the following things unless the person is authorized to do it by an Act of the Assembly or by the Minister under this Act:
Operate or maintain a university.
Use or be known by a name of a university or any derivation or abbreviation of a name of a university.
Hold themself out to be a university.
Make use of the word university or any derivation or abbreviation of the word university in any advertising relating to an educational institution in Ontario.
(1) The Minister may give a written consent to a person who makes an application under section 5 to authorize the person to do one or more things described in sections 2 and 3.
(2) The Minister may attach such terms and conditions to a consent as the Minister considers appropriate, including a termination date after which the consent will cease to be effective unless renewed by the Minister.
(3) A person to whom a consent is given shall ensure compliance with all terms and conditions attached to the consent.
- (1) A person may apply to the Minister for a consent and for a renewal of a consent.
[10] Prior to August 22, 2007, when s. 6 of the UOIT Act came into force and UOIT became authorized under that statute to confer degrees, UOIT submitted more than 50 applications to the Minister under s. 5 of PECEA, in order to grant degrees. It received its first Minister’s consent on January 21, 2003. Thus, throughout the Rebate Period, UOIT’s only authority to grant degrees came via the Ministerial consent process.
Positions of the Parties
[11] Simply stated, UOIT asserts that, during the Rebate Period it was not authorized “by an Act of the Assembly” to grant degrees, since its degree-granting authority was based on Ministerial consent and not by a statute. As a consequence, it fell outside the definition of “university” contained in s. 1 of the Regulation and it is therefore entitled to the rebate.
[12] For its part, the Respondent submits that UOIT was at all relevant times a university and that it had authority to grant degrees under PECEA, which is an “Act of the Assembly” within the scope of the definition is s. 1 of the Regulation. As such, it is ineligible for the rebate and should not be permitted to receive one since it is already receiving public funding as a provincially-supported university.
Applicable principles of interpretation
[13] The parties are largely in agreement concerning the applicable principles that should be applied when interpreting a taxation statute. Their disagreement concerns the correct application of those principles to these facts and the conclusion that results. The following summary of these principles is largely derived from the Appellant’s Factum.
[14] The so-called "modern approach" to interpreting tax statutes has been expressed by the Supreme Court of Canada in a series of cases. Taxation statutes, like all statutes, are to be read according to a textual, contextual and purposive analysis to find a meaning that is harmonious with the legislation as a whole. However, the degree of precision and detail in taxation statutes often leads to an emphasis on textual interpretation. Where the words are precise and unequivocal, the ordinary meaning of those words will generally play a dominant role in interpretive process. Where there is ambiguity, context and purpose will play a greater role. See Canada Trustco Mortgage Co. v. Canada 2005 SCC 54, [2005] 2 S.C.R. 601, at paras 10- 13; Placer Dome Canada Ltd. v. Ontario (Minister of Finance), 2006 SCC 20, [2006] 1 S.C.R. 715, at paras. 21-23.
[15] In Placer Dome (at para. 23) the Supreme Court stated that unambiguous tax legislation is simply to be applied:
The interpretive approach is thus informed by the level of precision and clarity with which a taxing provision is drafted. Where such a provision admits of no ambiguity in its meaning or in its application to the facts, it must simply be applied. Reference to the purpose of the provision "cannot be used to create an unexpressed exception to clear language": see P. W. Hogg J. E. Magee and J. LL Principles of Canadian Income Tax Law (5th ed. 2005) at p. 569; Shell Canada Ltd. v. Canada, [1999] 3 S.C.R. 622. …
[16] In IBM Canada Ltd. v. Ontario (Minister of Finance) (2008), 2008 ONCA 216, 89 O.R. (3d) 641 (C.A.), Doherty J.A. stated (at para 28):
The approach to interpreting taxation statutes was considered in Placer Dome Canada Ltd v. Ontario (Minister of Finance), 2006 SCC 20, [2006] 1 S.C.R. 715 at paras. 21-24. As set out by LeBel J., the interpretation of a taxing statute begins with the words used in the statute. If the words are precise and unequivocal then the words used will dominate, and may well determine, the interpretative exercise. No statutory text is, however, an island to be considered in isolation. The purpose animating the legislation and the context in which the statute operates may assist in identifying the meaning of the text. The role of context and purpose in the interpretative process increases as the clarity of the language used decreases.
[17] In Imperial Oil Ltd. v. Canada, [2006] 2 S.C.R. 447, 2006 SCC 46, at para 26, the Supreme Court of Canada emphasized the importance of focusing on the actual words used in taxation statutes in order to allow taxpayers to conduct their affairs safely, cautioning as follows:
Despite this endorsement of the modern approach, the particular nature of tax statutes and the peculiarities of their often complex structures explain a continuing emphasis on the need to carefully consider the actual words of the ITA, so that taxpayers can safely rely on them when conducting business and arranging their tax affairs. Broad considerations of statutory purpose should not be allowed to displace the specific language used by Parliament. [Citation omitted]
[18] Taxation statutes generally contain explicit provisions dictating specific consequences, which invites ''a largely textual interpretation". These provisions in taxation statutes must be interpreted to achieve consistency, predictability and fairness which again underscores the dominance of the plain meaning of the words actually used in the process of interpretation. See Canada Trustco Mortgage Co. v. Canada, at paras 11-13; Quinco Financial Inc. v. Canada, [2014] F.C.J. No. 423, 2014 FCA 108 at paras 6, 8.
[19] Finally, any reasonable doubt not resolved by the above rules of interpretation for tax statutes must be settled by recourse to a residual presumption in favour of the taxpayer. See Placer Dome Canada Ltd. v. Ontario (Minister of Finance), at para 24.
Analysis
[20] UOIT submits that it was not a "university" within the definition of that term found in s. 1 of the Regulation during the Rebate Period because it was not authorized to grant any degrees whatsoever prior to January 21, 2003, and was only "authorized" to grant degrees for the balance of the Rebate Period "by the Minister" under PECEA, rather than "by an Act of the Assembly". For the reasons that follow, I agree with that submission. I reach that conclusion by applying the textual interpretation, since I find the applicable words to be precise and unequivocal.
[21] The Regulation contains its own definition of the term “university” and thus that definition must be applied when interpreting the scope of the rebate (or, more accurately, the exclusion from the rebate). By its own terms, that definition captures only a “post-secondary educational institution that is, by an Act of the Assembly, authorized to grant degrees.”
[22] According to the Canadian Oxford Dictionary, the ordinary meaning of the word “authorized” is “sanctioned formally.” The definition in the Regulation, therefore, requires consideration of the formal source of the institution's degree granting power.
[23] The limits of the authority for any institution to grant degrees are contained in PECEA. Section 2 of PECEA provides that no person shall grant a degree “unless the person is authorized to do it by an Act of the Assembly or by the Minister under this Act.” Thus, in addition to authority to grant degrees conferred “by an Act of the Assembly”, PECEA also expressly provides for degree granting authority to be conferred by consent of the Minister. In other words, the Legislature has created and has distinguished between two sources of degree granting authority.
[24] The applicable legislation therefore draws a distinction between two situations in which degree granting authority is created: one is conferred “by an Act of the Assembly” and one is conferred by the Minister under PECEA. This supports the conclusion that the phrase “by an Act of the Assembly” was intended to refer merely to specific statutes that contain provisions that, by themselves and in express language, confer such power on an institution, and not to statutes like PECEA, which engage a ministerial authorization process
[25] There are numerous situations in which degree-granting authority is expressly conferred by an Act of the Assembly. See, for example, the York University Act, 1965, S.O. 1965, c.143, the University of St. Michael's College Act, 2005, S.O. 2005, c. Pr7, s. 4 (2) and the enabling statutes for other Ontario universities (including UOIT, in s. 6 of the UOIT Act - now in force). In my view, the concept of degree-granting authority "by an Act of the Assembly" mentioned in PECEA refers to authorization to grant degrees by specific Acts of the Legislative Assembly, such as these. By its own terms, PECEA distinguishes that type of degree-granting authority from degree-granting authorizations "by the Minister" in s. 2 and s. 5 of PECEA.
[26] The Legislature chose to use the same language in PECEA and the Regulation. Both refer to authority to grant degrees conferred “by an Act of the Assembly.” Accordingly, the two enactments deal with the same subject matter and utilize the same language. The Legislature is presumed to know its own statute book. When statutes deal with and refer to the same subject (i.e. when they are in pari materia), identical phrases and expressions are presumed to have the same meaning. The presumption is that the legislation presents a coherent and consistent treatment of the subject. See Sullivan, Sullivan on the Construction of Statutes, 6th ed, (Markham: LexisNexis Canada Inc., 2014) at 416-424, and specifically paras 13.25, 13.26, 13.29 and 13.35.
[27] Following this analysis, the words “by an Act of the Assembly” as used in the definition of “university” in s. 1 of the Regulation (“an educational institution that is, by an Act of the Assembly, authorized to grant degrees”) should be interpreted to have the same meaning as the identical words contained in PECEA: in each case, they refer to the types of express statutory authority contained in institution-specific legislation mentioned above, such as the York University Act, 1965, etc.
[28] The respondent submits, however, that to allow an institution such as UOIT to claim a rebate would be illogical and inconsistent with the purpose of the Regulation, since it is already public-funded. The intention and context of the Regulation, the respondent argues, support an interpretation that would, during the Rebate Period, include UOIT as a post-secondary educational institution that is, by an Act of the Assembly – namely, PECEA – authorized to grant degrees
[29] I do not accept that argument. As I have observed, the words are “precise and unequivocal” and they should determine the interpretative exercise: IBM Canada Ltd. v. Ontario. Further, respondent’s submission would require me to delve into a not-so-clear analysis of the ins and outs of the relationship between tax policy and the schemes of public funding for new universities at various stages of their development. As the Supreme Court has cautioned, “the particular nature of tax statutes and the peculiarities of their often complex structures explain a continuing emphasis on the need to carefully consider the actual words” (Imperial Oil Ltd. v. Canada).
[30] It follows that, in my opinion, the term "university" as defined in s. 1 of the Regulation extends only to institutions that are expressly authorized to grant degrees by specific Acts of the Legislature, such as s. 6 of the UOIT Act. In the present case, UOIT’s degree-granting power at the relevant time derived from and was authorized by the Minister of Training, Colleges and Universities by means of Ministerial consent, and not by a statute.
Conclusion and Disposition
[31] I therefore conclude that, since UOIT did not have authority to grant any degrees prior to January 21, 2003 and was only authorized to grant degrees "by the Minister" under PECEA for the balance of the Rebate Period, rather than "by an Act of the Assembly", it did not fall within s. 1 and s.14 (2) of the Regulation during that time frame. It follows that an order should issue for summary judgment allowing UOIT's appeal, subject to the right of the Respondent to perform an audit to verify the quantum of the rebate that may be payable.
[32] By agreement of the parties there will be no order as to costs.
Stinson J.
Date: December 9, 2016