Executive Summary: Key Legal and Evidentiary Issues

• Scope of the “place of public worship” exemption under s. 262(1)(e) of The Cities Act for multi-use church properties that also host commercial and community activities.
• Proper interpretive test for s. 262(1)(e)(iii): whether property must be used exclusively, or only principally/predominantly, as a place of public worship to qualify for exemption.
• Characterisation of different parts of the property (church, independent school, day care, convenience store, long-term leases, and event rentals) and whether each portion is sufficiently connected to public worship.
• Weight and use of municipal zoning bylaw definitions (e.g., “place of worship”) when construing provincial tax exemption provisions, and the limits of relying on such bylaws.
• Evidentiary assessment of the predominant use of the Plaza 88/Event Centre spaces versus sporadic rental income, compared with the day care’s regular and open-to-public operations.
• Standard and scope of appellate review when a tribunal sets aside a Board of Revision decision, makes its own factual findings, and applies the statutory exemption regime.

Factual background and property configuration

Embassy Church Inc. is a religious organization incorporated in 1980 that owns a property at 888 Central Avenue in the downtown commercial zone of Prince Albert, Saskatchewan. The site includes a main two-storey building and a separate stand-alone convenience store building. Within the main building, Embassy operates multiple functions: a sanctuary and related church facilities, a registered independent school, the DaySpring Early Learning Centre day care, spaces leased on a long-term basis to third parties, and areas that can be rented by members of the public on a one-time basis for meetings, banquets, receptions, conferences, trade shows and similar events. The one-time rental component is marketed as “Plaza 88 Event Centre,” which is not a separate legal entity but a business name under which Embassy offers its surplus space for periodic event rentals. Financial statements show line items for “Plaza 88 Rental Income” and “DaySpring Fees,” with evidence that room rentals comprised only a modest fraction of Embassy’s total income and that the day care also received additional funding beyond parent fees. For the 2023 assessment year, the property’s assessed value was $2,847,700, a valuation that neither party disputed. The controversy centred on how much of that value should be exempt from municipal taxation under The Cities Act and The Cities Regulations. Historically, the bulk of the property had been treated as exempt. In 2021 and 2022, for example, a relatively small non-exempt assessed value stood alongside a much larger exempt portion. In 2023, however, the City’s assessor re-examined the file and dramatically reduced the exemption, treating only the independent school portion as exempt and classifying all remaining space, including the worship and other church-related areas, as taxable.

Tax assessment positions and initial proceedings

Embassy accepted that some portions of its property were properly taxable. It agreed the stand-alone convenience store and space leased on a long-term basis to unrelated third parties should be subject to tax. It also accepted the assessor’s characterization of the independent school as exempt under the school exemption in s. 262(1)(c) of The Cities Act. Embassy disputed, however, the refusal to extend a “place of public worship” exemption to the remainder of the main building, including spaces used for church services, ministries, internal programming, common areas, and the Plaza 88 event rentals. It further argued that the day care space should fall within the same worship-related exemption because it functioned as part of the church’s ministry, was used for Sunday school and childcare during services, and served many families connected to the congregation even though it was open to the broader public. The City, in contrast, took the position that all disputed areas (beyond the independent school) were essentially commercial in character. It emphasised the for-fee nature of the day care, its government licensing and subsidies, and its open-to-the-public enrolment. Likewise, it characterized Plaza 88 as a commercial event venue competing with taxable businesses, with rental income that, in its view, severed any connection to the “place of public worship” exemption. On appeal to the City’s Board of Revision, Embassy argued that the building’s dominant function remained congregational worship and related spiritual activities and that multi-use operations should be seen as modern expressions of church life rather than disqualifying commercial ventures. The Board dismissed Embassy’s appeal and effectively upheld the assessor’s restrictive approach, but its reasoning was sparse and, as later found, deficient in its explanation and engagement with the legislative framework.

Assessment Appeals Committee’s decision and interpretation of the exemption

Embassy appealed further to the Assessment Appeals Committee of the Saskatchewan Municipal Board. The Committee first reviewed the Board’s decision and concluded that it failed to provide adequate justification, transparent reasoning, or meaningful application of the statutory and regulatory provisions to the facts. Because the Board had not properly articulated how it applied the law or assessed the evidence, the Committee set the decision aside and proceeded to decide the matter afresh on the existing record. In its own analysis, the Committee identified the central legal issue as the proper application of the “place of public worship” exemption in s. 262(1)(e) of The Cities Act, read alongside relevant regulatory provisions. That section exempts “every place of public worship and the land used in connection with a place of public worship” if (1) the exempt area stays within defined land-area limits, (2) the property is owned by a religious organization, and (3) the exemption “does not apply to any portion of that place or land that is used as a residence or for any purpose other than as a place of public worship.” The Committee held that the operative question is the actual use of each portion of the property, not merely the church’s charitable motives or the ultimate use of revenue. It emphasised that the statute focuses on “any purpose other than as a place of public worship,” not on whether income is applied to religious work. The Committee also chose to look at the City’s zoning bylaw definition of “place of worship” as a non-binding interpretive aid. The zoning bylaw described a place of worship as the use of a building, or portion thereof, where people assemble for religious or spiritual purposes, including ancillary rooms for administration, childcare, religious instruction, kitchens and eating areas, and recreation. While acknowledging that zoning rules are enacted for planning rather than taxation, the Committee regarded this definition as a useful starting point for thinking about the functional boundaries of worship-related uses in a contemporary multi-purpose church facility.

Findings on Embassy’s operations and multi-use spaces

Based on the constitutional documents, affidavits, and testimony from Embassy’s pastor, the Committee concluded that Embassy is undeniably a church and that its overall operations are “church-like.” The evidence showed that the subject property is Embassy’s sole physical place of public worship and the base for its various spiritual and community activities. At the same time, the Committee recognized the property as a true multi-use facility. It noted Embassy’s deliberate strategy of using flexible spaces for multiple purposes, including worship services, small-group meetings, community outreach, and occasional rentals under the Plaza 88 brand. In assessing the Plaza 88-type spaces, the Committee accepted Embassy’s evidence that public worship remained the primary, dominant, and prevailing function of those areas. The event rentals were sporadic and incidental to the building’s general use as a church, and there was no evidence the rented spaces had been effectively converted into a dedicated commercial venue. The Committee also stressed that the mere fact that room rentals generated income did not, by itself, transform the predominant character of those spaces into a non-worship use. In contrast, the Committee drew a sharp distinction for the DaySpring Early Learning Centre. It found that the day care was a government-licensed and subsidized childcare facility, open to the general public regardless of religious affiliation, with consistent, dedicated hours of operation and fee-for-service charges. On that evidence, the Committee concluded that the day care area’s predominant use was as a day care, not as a place of public worship, even though the revenues supported Embassy’s broader religious work and even if the church considered the service part of its ministry.

Committee’s disposition on exemptions and taxability

Applying its interpretation of s. 262(1)(e), the Committee held that the City had erred by granting no place-of-worship exemption at all to the non-school portions of the property, given that worship and worship-related activities were clearly the dominant uses for large parts of the main building. It ordered that the dedicated leased spaces (long-term leases to unrelated third parties) and the stand-alone convenience store remained taxable, as did the DaySpring day care premises, because those areas were used for purposes other than public worship. The school portion continued to be exempt as a registered independent school under s. 262(1)(c). For the balance of the building—those spaces whose principal use was worship or closely integrated worship-related activities—the Committee directed that they be exempted as a “place of public worship” under s. 262(1)(e). It remitted the matter to the City’s assessor to implement the revised taxable-exempt status in good faith, leaving practical allocation questions about common areas such as hallways, washrooms, and parking lots to be resolved in line with standard assessment practice.

The appeal to the Court of Appeal and the Charter issue

The City applied to the Saskatchewan Court of Appeal for leave to appeal, and Embassy’s response was treated as a cross-application for leave. Leave was granted on a single question of law that combined grounds from both parties: what is the correct interpretation of s. 262 of The Cities Act and s. 16 of The Cities Regulations, and how should the statutory exemption operate where places of worship are used for multiple purposes, including childcare? At the appeal hearing, Embassy also attempted to raise a Canadian Charter of Rights and Freedoms issue, arguing that the City’s restrictive interpretation of s. 262(1)(e) could infringe freedom of religion under s. 2(a) and equality rights under s. 15. It sought a Charter-compliant interpretation of the exemption provision, but did not ask for a formal declaration of invalidity. The Court of Appeal declined to entertain the Charter arguments. It noted that the Charter issue had not been raised before the Committee, so there was no evidentiary record or prior decision on that point to review. The Court further observed that the merits of the Charter challenge appeared weak in light of existing Supreme Court of Canada jurisprudence. The Charter aspects were therefore left unaddressed and played no role in the Court’s ultimate analysis.

Appellate analysis of the statutory framework and key definitions

Turning to the statutory interpretation issue, the Court of Appeal accepted that two of the three statutory conditions in s. 262(1)(e) were straightforward: the land-area limits were not exceeded and the City conceded that Embassy is a religious organization. The controversy concentrated on s. 262(1)(e)(iii), which withholds the exemption from “any portion of that place or land that is used … for any purpose other than as a place of public worship.” The Court rejected the City’s argument that mixed-use spaces automatically fall outside the exemption and that any non-worship use, however occasional, defeats the exemption for that portion. While the City spoke in terms of “predominant use,” its analysis effectively demanded exclusive use as a place of public worship for an exemption to apply. The Court reviewed earlier Saskatchewan and Supreme Court authority on church-property exemptions, including cases decided under predecessor statutes. Historically, courts had held that exclusive use was not required and that the proper test was whether the principal, dominant, or prevailing use of the premises was for public worship. The Court acknowledged that legislative amendments now allow partial exemptions within a single building (so portions may be taxable and other portions exempt), but concluded that these changes did not overturn the core principle that predominance, not exclusivity, governs the availability of the exemption. It illustrated the absurdity of a strict exclusivity rule with a simple example: under the City’s approach, a one-off community bake sale in a church basement would destroy the tax exemption for that space. Such an outcome was inconsistent with the legislative purpose of facilitating religious organizations’ contributions to community life by easing their property tax burden. The Court also refined the definition of “place of public worship.” It agreed with the Committee’s core formulation—use of a building, or part of it, where people assemble for religious or spiritual purposes—but held that the Committee should not have relied on the City’s zoning bylaw definition as an interpretive tool for province-wide tax legislation. Instead, the Court adopted a slightly wider and more general definition: a place of public worship is the use of a property, or portion thereof, where people assemble for religious, spiritual, or analogous purposes. This definition, it held, better reflected the text, context, and purpose of the exemption within the statutory scheme.

Relationship between the Act and the Regulations

The Court parted company with the Committee on another interpretive point. The Committee had treated s. 16 and s. 17 of The Cities Regulations, dealing with multi-use properties and classification dates, as part of the legal framework for deciding the exemption issue. Section 16 allows the assessor to apportion assessed value among different property classes (such as residential, commercial, industrial) when part of a property has a clearly distinct use unconnected to the predominant use; s. 17 sets timing rules for classification. The Court of Appeal held that those regulatory provisions were not actually relevant to the case. The dispute did not concern the classification of the property into different classes; rather, it concerned whether a single-class property, already properly classified, qualified for a statutory exemption from taxation on certain portions. Apportionment among classes, as contemplated by the regulations, is a different exercise from deciding whether property used predominantly for worship is exempt under s. 262(1)(e). Accordingly, while the Court agreed with the Committee’s bottom-line interpretation of the exemption provision, it clarified that the Committee’s reliance on those particular regulatory sections was misplaced.

Application to Plaza 88, the day care, and other spaces

Having clarified the law, the Court then turned to how the Committee applied s. 262(1)(e) in the specific factual context. It emphasized that determining whether a given space is “principally used” as a place of public worship is a question of fact. Leave to appeal had not been granted on issues of factual misapprehension, and there was no basis to interfere with the Committee’s factual findings. For the Plaza 88/event-rental areas, the Committee had found that Embassy is a church, that its constitutional purposes and actual operations show the main and dominant use of the property to be public worship, and that the one-time rentals were sporadic and secondary. Embassy’s evidence on these points went largely unchallenged. On that factual foundation, the Court held that the Committee was entitled to treat those spaces as exempt; their principal use remained worship-related, even though they could occasionally be rented for business or social events. In relation to the DaySpring day care space, the Court endorsed the Committee’s conclusion that the predominant use was childcare, not worship. The day care was open to the public, served very young children through to school entry, operated during regular business-like hours, and charged for its services. There was nothing on the record to show it functioned as a worship venue in the sense required by the statutory definition, despite Embassy’s view of the program as a ministry. As a result, the day care portion did not qualify for the place-of-worship exemption and remained taxable.

Final outcome, successful party, and monetary consequences

Drawing these strands together, the Saskatchewan Court of Appeal held that the Committee had correctly interpreted s. 262(1)(e) of The Cities Act and properly applied it to Embassy’s multi-use property. It confirmed that the proper test is whether a given portion of property is principally used as a place where people assemble for religious, spiritual, or analogous purposes, not whether the use is absolutely exclusive or whether the income ultimately supports religious work. It also confirmed that some portions of a single building can be exempt while other portions remain taxable. On that basis, the Court dismissed the City of Prince Albert’s appeal and left intact the Committee’s directions: the independent school portion remains exempt as a registered independent school; the convenience store, long-term leased areas, and the DaySpring day care premises are taxable; and the remaining worship-dominated portions of the main building are exempt as a place of public worship, with common areas to be allocated in accordance with standard assessment practice. As the unsuccessful appellant, the City was ordered to pay costs to Embassy Church Inc. The Court fixed those costs in the reduced lump-sum amount of $3,000 to reflect Embassy’s failure to secure an exemption for the day care portion, and it awarded no costs on the leave application or in relation to the Attorneys General. The decision thus confirms Embassy Church Inc. as the successful party in the appeal, with the only quantified monetary award being $3,000 in costs; the ruling does not specify any precise dollar amount of tax saved or assessed under the revised exemption allocation, so the total financial impact beyond the costs order cannot be determined from the decision alone.