Decision Date: June 16, 2014
Link: Case Summary Document
Citation: [2014] ONSC 3657 (Ontario Superior Court of Justice, Perell J, )

Summary:

This case dealt with the liability of the Young Men’s Christian Association of Greater Toronto (YMCA) for municipal rates on four properties it leased in Toronto. The case turned on the statutory interpretation of the word ‘of’ in the relevant legislation.

The YMCA was established pursuant to an Act to Incorporate the Toronto Young Men’s Christian Association (YMCA Act) 1923, an Act which had not been amended since its enactment. The YMCA is a registered charity under the Income Tax Act (Canada) and a non-profit corporation which focuses on community support in the Greater Toronto area. The mission of the YMCA is to provide individuals in the community with opportunities for personal growth, community involvement, and leadership. The three primary areas in which the YMCA now carries on its programs to achieve its purposes are: (1) employment preparation and training; (2) daycare/after-school care; and (3) promotion and protection of health.

Section 10 of the YMCA Act provides an exemption from property taxation as follows:

The buildings, lands, equipment and undertaking of the said association so long as and to extent to which they are occupied by, used and carried on for the purposes of the said association are declared to be exempted from taxation except for local improvements.

The Municipal Property Assessment Corporation (MPAC), which assesses rates in the City of Toronto, contended that the YMCA’s properties were only exempt if the properties were both occupied by the YMCA and ‘owned’ by the YMCA., i.e. MPAC’s position was that the exemption found in section 10 of the YMCA Act was only available for properties for which the YMCA was the owner of the title of the property in fee simple. The YMCA maintained that section 10 provided an exemption for properties both owned and leased by the YMCA.

The court said this question was a matter of statutory interpretation. This involved determining the intention of the legislature. The Assessment Act R.S.O. 1990, A. 31 provided that ‘land’, ‘real property’ and real estate’ were assessable for rates. His Honour said that therefore there was no dispute that the four leased properties would be assessable for rates unless the exemption in section 10 of the YMCA Act applied.

His Honour said that there was no doubt either that the four leased premises were ‘occupied by, used and carried on for the purposes of the YMCA’ and thus the issue to be decided in the case was whether the YMCA’s four leased premises were caught by the words ‘buildings, lands, equipment, and undertaking of the said association’ in section 10 of the YMCA Act.

On the interpretation of this clause, His Honour narrowed the issue further (at [20]-[22]):

…a lease is not “the equipment of the YMCA,” and literally speaking, a lease is not an “undertaking of the YMCA”. Literally speaking, a “building” can be leased, but a lease is not “a building of the YMCA.” Thus, the interpretative issue is narrowed further to become whether the YMCA’s four leases are “land of the YMCA.” There are two questions here: (1) Are leases “land”? and (2) Are the YMCA’s leases “land of the YMCA”?  The answer to the first question is “yes”. As a matter of real property law, a lease is “land”; i.e., a property interest recognized by the law of real property…

Thus, the question then became were the leases ‘land of the said association (i.e. the YMCA)’? The key word here was ‘of’. His Honour took a literal view (at [27]):

…I would interpret “land of the YMCA” in s. 10 of the YMCA Act to mean the same as the “YMCA’s land” and I would interpret “land of the YMCA” to mean “land owned by YMCA.” The reason for this last conclusion, which is the crucial step in the interpretative analysis, is that to lease land is not to own the land. To lease land is to own a leasehold interest in the land, but that is something different from owing the land.  This meaning of leasing land is its common, literal, and everyday meaning… This brings me to the ultimate conclusion of the interpretative analysis, which is to conclude that the YMCA’s four leases, while technically “land” are not “land of the YMCA.” Therefore, the YMCA’s leases do not qualify for the exemption found in s. 10 of the YMCA Act.

His Honour distinguished Kitchener-Waterloo Young Men’s Christian Assn. v. Municipal Property Assessment Corp [2007] O.J. No. 3176 (S.C.J.), which had been relied upon by the YMCA, as being based on different legislation (The Kitchener-Waterloo YMCA Act, 1928) with different wording. Therefore, as the four leased properties were not ‘owned’ by the YMCA they were not exempt from municipal rates. The YMCA’s appeal was dismissed.

The case may be viewed at: http://www.canlii.org/en/on/onsc/doc/2014/2014onsc3657/2014onsc3657.html

Implications of this case

This case involved statutory interpretation.  As the court said in this case (at [15]):

When a court is called upon to interpret a statute, its task is to discover the intention of the legislator as expressed in the language of the statute. The court’s approach to interpretation is teleological or purposeful, and to interpret a statute, the words of the statute are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the statute, the object of the statute, and the intention of the legislator. The court’s role is to interpret the statute not enact it; if the sense of the words of the statute is clear and unambiguous, the court must interpret the words literally and in accordance with their plain meaning even if the consequences are absurd or unjust. Recognition of the proper roles of the legislature and the judiciary requires that courts give effect to the plain meaning of the words of a duly enacted statute, and a court should not interfere merely because it does not approve of the result produced by the statute in a particular case.

The court in this case kept exactly to this proposition, interpreting the 1923 legislation literally. The message from the court appears to be that it might be time to amend the legislation to include both owned and leased (i.e. occupied) premises under the exemption as in the Kitchener-Waterloo YMCA case.