Executive Summary: Key Legal and Evidentiary Issues

• Whether the federal government's refusal to pay a contribution aux fins de parc (CFP) qualifies under the Payments in Lieu of Taxes Act (LPCPRI)

• Assessment of whether the CFP constitutes a “real property tax” under the federal legislative scheme

• Determination of whether the federal Crown’s constitutional immunity from taxation applies to CFPs

• The reasonableness and legal justification of Services publics et approvisionnement Canada’s (SPAC) decision

• Interpretation of Quebec's Loi sur l’aménagement et l’urbanisme in the context of municipal charges

• Whether the Federal Court applied the correct standard of review in evaluating the administrative decision

Facts and outcome of the case

Background and dispute

In this case, the City of Laval challenged a decision by the federal government regarding a payment it claimed under the federal Loi sur les paiements versés en remplacement d’impôts (Payments in Lieu of Taxes Act). The dispute arose when the federal government, which owns land in Laval, applied for a construction permit in 2017 to build an immigration holding center. As part of the permitting process, Laval required a contribution aux fins de parc (CFP), a municipal charge meant to fund public spaces like parks.

The federal body responsible, Services publics et approvisionnement Canada (SPAC), refused to pay this CFP. Laval then sought a payment in lieu of tax (PRI), arguing that the CFP effectively replaced what would be municipal property taxes. SPAC rejected the request, asserting that the CFP was not a tax within the meaning of the federal statute. Laval sought judicial review, but the Federal Court dismissed the case. Laval then appealed to the Federal Court of Appeal.

The legal issues on appeal

The primary legal issue was whether SPAC’s refusal to pay the CFP under the PRI regime was reasonable and lawful. Laval argued that SPAC failed to properly analyze whether the CFP met the legal definition of a “real property tax” and relied too heavily on whether the CFP was technically a “tax.” Laval also claimed the federal agency improperly interpreted Quebec's planning legislation in reaching its conclusion.

In contrast, SPAC contended that the CFP is not a tax but rather a one-time contribution tied to the permit process. It pointed to the language of Quebec’s Loi sur l’aménagement et l’urbanisme, which explicitly states that a CFP is neither a tax, fee, nor tariff. SPAC maintained that it lacked legal authority to issue a PRI in such a case.

The court’s decision and reasoning

The Federal Court of Appeal upheld the lower court’s decision and dismissed Laval’s appeal. Writing for the Court, Justice Pamel concluded that SPAC’s decision was reasonable. The Court found that SPAC had appropriately assessed the CFP under the applicable legal framework and was justified in concluding that the CFP fell outside the scope of the PRI regime.

The Court rejected Laval’s argument that SPAC had wrongly equated “real property tax” with “tax.” It held that SPAC’s approach was consistent with the purpose of the PRI regime, which is to address municipal revenue loss due to federal tax immunity. The Court also supported SPAC’s use of Quebec’s statutory definition to interpret the nature of the CFP, noting that it aligned with relevant case law from the Quebec Court of Appeal and the Supreme Court of Canada.

Final outcome and costs

The appeal was dismissed, and the Court awarded costs to the federal government. The parties had previously agreed to a fixed amount, and the Court confirmed an award of $9,000 in costs against the City of Laval.