Executive Summary: Key Legal and Evidentiary Issues

• Vancouver challenged a Dispute Advisory Panel (DAP) decision that dismissed its application for review of federal property tax payments made by CMHC.

• The DAP refused to review the matter, stating the dispute was outside its statutory mandate under the Payments in Lieu of Taxes Act.

• Vancouver argued that deductions made by CMHC under section 9(c) of the Crown Corporation Payments Regulations affected the “corporation effective rate” and thus fell within DAP’s jurisdiction.

• The court found that the city’s objections primarily concerned the quantum of the deductions, not the applicable tax rate.

• The DAP’s reasoning, though brief, was found to be reasonable and legally sufficient based on the statutory scheme and materials filed.

• The court dismissed the application for judicial review with no costs awarded to either party.

Facts and outcome of the case

Background of the dispute

The City of Vancouver sought judicial review of a decision made by the Dispute Advisory Panel (DAP), which declined to consider the city’s application regarding payments in lieu of taxes (PILTs) owed by Canada Mortgage and Housing Corporation (CMHC) for federally managed properties on Granville Island. Between 2011 and 2022, Vancouver claimed it was owed over $4 million in PILTs under the Payments in Lieu of Taxes Act and the Crown Corporation Payments Regulations. CMHC only paid $406,461.86, citing deductions under section 9(c) of the regulations for services it self-funded rather than receiving from the city, such as infrastructure, maintenance, and capital improvements.

Vancouver’s position

Vancouver submitted the issue to the DAP, arguing that the deductions CMHC applied improperly reduced the PILT amounts and that this reduction effectively altered the applicable tax rate—referred to as the "corporation effective rate." The city provided detailed schedules showing the assessed values, tax rates, and discrepancies between the requested and received PILT payments. It argued that these deductions constituted “mitigation measures” and “discounts,” thus falling within the DAP’s jurisdiction as defined by both the Act and Rule 4.5 of the DAP’s Rules of Practice.

Decision by the DAP

The DAP rejected Vancouver’s application, reasoning that the city’s complaint concerned the reasonableness of CMHC’s deductions under section 9(c), which falls outside its advisory mandate. The DAP clarified that its statutory role is limited to disputes over “property value,” “property dimension,” or “effective rate” and does not extend to the review of discretionary deductions made by Crown corporations. Vancouver then sought judicial review of this decision in Federal Court.

Arguments before the court

Vancouver argued that the DAP misunderstood its jurisdiction and that the deductions impacted the corporation effective rate, bringing the issue within the DAP’s mandate. The city also raised concerns about procedural fairness, claiming it had a legitimate expectation that the DAP would interpret its mandate in line with Rule 4.5 and give it a chance to respond before declining jurisdiction.

CMHC maintained that the dispute was purely about discretionary deductions and had nothing to do with the statutory definition of “corporation effective rate,” which refers to the rate of tax that would apply if the property were taxable under the municipality’s scheme. CMHC emphasized that it had accepted the city’s assessed tax rates and values but reduced the payment based on services it had independently provided.

Court’s findings

The court ruled in favour of the respondents, finding the DAP’s decision reasonable and legally justified. It held that Vancouver’s application primarily addressed CMHC’s discretionary deductions, not a disagreement about the applicable tax rate or property value. The court also rejected the city’s argument that deductions inherently altered the effective rate, clarifying that deductions affect the amount payable, not the rate itself.

On procedural fairness, the court found that no hearing or additional participation was required at the preliminary stage. Vancouver had full control over its application to the DAP and had not made the detailed arguments at that stage that it later raised in court. The court also rejected the city’s claim of legitimate expectation based on Rule 4.5.

Outcome

The application for judicial review was dismissed. The court did not award costs or damages to either party, noting that neither side requested them.