Court File and Parties

Court File No.: CV-25-0320-00 Date: 2025-09-05

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

THE CORPORATION OF THE TOWNSHIP OF NIPIGON

Jordan Lester, for the Applicant

Applicant

- and -

SIBLEY BASIN GROUP LTD. & 1621622 ONTARIO INC.

Alan Aubut, appearing in person, without counsel, on behalf of the respondent, Sibley Basin Group Ltd. No one appearing on behalf of the respondent, 1621622 Ontario Inc.

Respondents

HEARD: September 4, 2025, at Thunder Bay, Ontario

Mr. Justice S.J. Wojciechowski

Decision On Application

[1] This application was brought by the applicant, The Corporation of the Township of Nipigon ("Nipigon"), and sought a declaration that the Municipal Accommodation Tax By-law 1940 ("the Bylaw") was properly enacted by Nipigon, and that the respondents were in contravention of the terms of the Bylaw. In addition, Nipigon asked that the respondents remit the amounts owing under the Bylaw to Nipigon.

[2] At the outset of the hearing, while the Rules of Civil Procedure ("the Rules") require corporations to be represented by counsel, Nipigon did not object to Mr. Aubut's appearance on behalf of the respondent, Sibley Basin Group Ltd. ("Sibley Basin"). In addition, while the materials of Sibley Basin were filed without a supporting affidavit as is required by the Rules, Nipigon did not object to Mr. Aubut referencing these materials in making his submissions to the court.

[3] With respect to the respondent, 1621622 Ontario Inc. ("162"), no one appeared on behalf of 162 and no materials were filed on behalf of 162. Notwithstanding, no consent was filed by 162 to the relief sought by Nipigon, and Mr. Aubut confirmed that he was not appearing on behalf of 162 and any submissions he made were only made on behalf of Sibley Basin.

[4] By way of background, Nipigon enacted the Bylaw on August 13, 2024 pursuant to section 400.1 of the Municipal Act, 2001, S.O. 2001, c. 25 ("the Municipal Act, 2001"). The Bylaw imposes a tax on short term accommodation rentals, such as businesses which operate hotels or motels ("the MAT").

[5] Sibley Basin and 162 are businesses which are subject to the Bylaw.

[6] The purpose of the MAT which Nipigon collects is to promote and develop tourism within the region of Northwestern Ontario, including Nipigon. In cases where accommodation rentals are less than a period of thirty (30) days, accommodation providers must remit 4% of the purchase price for the accommodation. Customers are to pay the MAT to the accommodation provider at the time short term accommodation rentals are purchased, and the accommodation provider is then required to remit the amounts collected to Nipigon on a quarterly basis.

[7] Since the Bylaw was enacted, neither Sibley Basin nor 162 – both of which provide short term accommodation rentals as contemplated by the Bylaw – have remitted to Nipigon any MAT. As of the date of this hearing, Sibley Basin should have collected and remitted to Nipigon the sum of $5,110.66 in MAT, and 162 should have remitted $9,659.90 as MAT pursuant to the Bylaw.

[8] There were no submissions by Mr. Aubut that the calculations of Nipigon were incorrect insofar as the amount of MAT which was allegedly outstanding. In addition, Mr. Aubut submitted orally, as was set out in his written materials, that Sibley Basin did not dispute the authority of Nipigon to enact the Bylaw pursuant to the Municipal Act, 2001.

[9] In fact, Mr. Aubut submitted that Sibley Basin had collected the MAT pursuant to the terms of the Bylaw, but that Sibley Basin's costs incurred in calculating and collecting the MAT offset the amounts owed to Nipigon. It was not fair that Sibley Basin was forced to be a tax collector on behalf of Nipigon, and in that process had to incur costs which Nipigon was not willing to offset. Sibley Basin determined that the costs of collecting the MAT were 4% of accommodation rental charges, and thus a complete set off was appropriate, i.e., no remaining MAT was payable to Nipigon.

[10] Part of Mr. Aubut's submissions were that the Bylaw was flawed due to the failure of Nipigon to include a dispute resolution mechanism in the Bylaw pursuant to section 400.1(3)(g) of the Municipal Act, 2001. In addition, Nipigon did not enter into an agreement with Sibley Basin in accordance with section 400.5 of the Municipal Act, 2001. However, Mr. Aubut resiled from this position once he realized that only section 400.1(1) of the Municipal Act, 2001 contained mandatory provisions, and that sections 400.1(3)(g) and 400.5 were permissive and thus did not have to be included in the Bylaw.

[11] Another argument advanced by Mr. Aubut was that the members of the current municipal council for Nipigon were all appointed after duly elected council members were removed or replaced since the last election. He asserted that while the previous elected members were not in favour of a Bylaw imposing a MAT, the appointed members did nothing to educate themselves with respect to the pros and cons of such a municipal by-law, and without elected members considering the issue the Bylaw should not have been enacted.

[12] In discussing this issue with Mr. Aubut, he agreed that there was a process under the Municipal Act, 2001, which supported the mid-term appointment of councillors to replace duly elected members. When asked whether he had any evidence suggesting that the appointment process which resulted in the current municipal council was flawed in some way, he replied that he did not know since the appointment decisions were all made in camera. Accordingly, there was no evidence filed within this application process which suggested the current municipal council of Nipigon was improperly constituted so as to call into question Nipigon's authority to legally pass the Bylaw.

[13] Finally, Mr. Aubut claimed he was unable to verify the use to which the monies collected as MAT pursuant to the Bylaw would be spent, and asserted that there was no evidence that the goal of the Bylaw to put "heads into beds" was being fulfilled. However, he agreed that each year he was required to pay income tax to the provincial and federal governments, whether or not he agreed with their monetary and economic policies determining where and how the income tax collected and remitted would be spent.

[14] Bottom line, Mr. Aubut's arguments seemed to boil down to the fact that while he was not objecting to collecting the MAT in accordance with the Bylaw, it was only fair that Sibley Basin be compensated for its efforts in collecting and remitting the MAT to Nipigon. Everyone was entitled to a fair recognition of the value of their labour, so Sibley Basin was entitled to a percentage of the monies which were being collected as MAT.

[15] Mr. Lester, on behalf of Nipigon, submitted that Nipigon's authority to collect a MAT was rooted in the language of the Municipal Act, 2001, which was legislation enacted by a democratically elected provincial government. No similar authority has been legally created which permits Mr. Aubut to impose a fee upon Nipigon, and as such the argument that Sibley Basin is allowed to charge Nipigon for administering the collection and remittance of the MAT must fail.

[16] Secondly, if this court were to effectively agree with Sibley Basin and offset the MAT collected, this would effectively stay the collection and have a significant impact upon the public interest, as well as many other municipalities who have implemented their own scheme of MAT. While Sibley Basin may not agree that the MAT should be collected, nor that any MAT collected would serve the interests of Nipigon and Northwestern Ontario, the only way in which to address this issue is by making it a ballot box issue at the next municipal election. Ignoring the obligations to remit the MAT, or to impose self-serving fees, is not a proper response to the Bylaw and the corresponding MAT.

[17] After carefully considering the submissions of both parties, I agree with the position put forth by Nipigon.

[18] Sibley Basin does not dispute the authority of Nipigon to enact legislation pursuant to section 400.1 of the Municipal Act, 2001. Without any evidence to support that the Bylaw was not properly enacted, or that the Bylaw was not written in accordance with the terms of the Municipal Act, 2001, it stands as a properly constituted piece of municipal legislation which must be complied with and is capable of being enforced.

[19] Of significance to this court is that no language exists in the relevant provisions of the Municipal Act, 2001 which requires Nipigon to compensate rental accommodation providers for any efforts in calculating, collecting and remitting the MAT. While I make no finding whether section 400.5 of the Municipal Act, 2001 contemplates such a compensation arrangement which could apply to Sibley Basin and 162 – as obiter, it appears to apply to a third party organization created or hired by a municipality to monitor and administer the MAT program for the entire community, instead of applying to each business individually – section 400.5 is not mandatory, and entirely within the discretion of Nipigon to implement.

[20] There being no reason to deny the application of Nipigon, it is hereby ordered that:

(a) the respondent, Sibley Basin Group Ltd., shall pay to the applicant, The Corporation of the Township of Nipigon, $5,110.66 representing the amounts owing pursuant to By-law 1940; and

(b) the respondent, 1621622 Ontario Inc., shall pay to the applicant, The Corporation of the Township of Nipigon, $9,659.90 representing the amounts owing pursuant to By-law 1940.

[21] Nipigon was entirely successful with this application, and is presumptively entitled to its legal costs. After reviewing the Bill of Costs submitted on behalf of Nipigon, and considering the factors listed in Rule 57.01, as well as exercising my discretion pursuant to section 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43, the respondents, Sibley Basin Group Ltd. and 1621622 Ontario Inc., shall pay the applicant, The Corporation of the Township of Nipigon, the sum of $3,500 in costs, including fees, disbursements and HST, to be payable within thirty (30) days of this decision on a joint and several basis.

The Hon. Mr. Justice S.J. Wojciechowski

Released: September 5, 2025