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Supreme Court of Canada

Taxation—Education—Claim of share of the surplus of the neutral school tax—Amendment to s. 16 of Geo. V, c. 45, providing that surplus be paid to commission for 1963-64 school year—Fiscal year of defendant for collecting school taxes made the calendar year by its Charter—Whether amendment applies to defendant for period from July 1 to December 31, 1963—Whether amendment to be given retroactive effect—An Act respecting the Protestant School Board of Greater Montreal, 1963, 11-12 Eliz. II, c. 74.

The plaintiff claimed from the defendant its share of the surplus of the neutral panel school tax for the first half of the 1963-64 school year, under the second paragraph of s. 16(2) of 15 Geo. V, c. 45, as amended, and particularly under an Act respecting the Protestant School Board of Greater Montreal, 1963, 11-12 Eliz. II, c. 74. That Act provided that from July 1, 1963, namely for the 1963-64 school

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year, the surplus of the catholic proportion of the neutral panel tax, instead of being refunded as in the past to the taxpayers, was to be paid to the Catholic Board. The defendant contended that under its charter school taxes in its territory are not assessed for the school year but for the calendar year, so that in December 1962, when it levied school taxes for 1963 the town levied only the net amount due by the ratepayers of the neutral panel according to the law then in force. The trial judge concluded that the 1963 Act did not apply to the town for the period of July 1 to December 31, 1963, and he dismissed the action. He also concluded that retroactive effect could not be given to the 1963 Act beyond July 1, 1963. This judgment was affirmed by the Court of Appeal. The school commission appealed to this Court.

Held: The appeal should be dismissed.

It cannot be said that one-half of the school taxes levied by the defendant for the 1963 calendar year is a tax levied for the 1963-64 school year. Under a 1935 amendment to the defendant’s charter, in the defendant’s territory the school tax is not assessed for the school year, but for the calendar year. It is thus assessed at the rate established for the school year which is current at the beginning of the calendar year. By the express will of the legislature, it is only after a six month delay that a change in the rate of the school tax assessment takes effect in the defendant’s territory.

APPEAL from a judgment of the Court of Queen’s Bench, Appeal Side, province of Quebec[1], affirming a judgment of Gold J. Appeal dismissed.

C. Vermette, for the plaintiff, appellant.

Jules Deschênes, Q.C. and Thomas Vien, Q.C., for the defendant, respondent.

The judgment of the Court was delivered by

PIGEON J.—An historical summary of the special legislation from which this litigation has arisen appears necessary.

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Since 1869, there exists in Montreal, pursuant to 32 Vict., c. 16, a special tax system for school purposes. Taxable property is inscribed on three panels:

Panel number one: immoveable property belonging to Roman Catholic proprietors.

Panel number two: immoveable property belonging to Protestants.

Panel number three: immoveable property belonging to “corporations, incorporated companies” or other taxpayers not classified as either Catholic or Protestant.

Proceeds from taxes levied on property listed under number three, ordinarily called the “neutral panel”, were shared between the Roman Catholic and Protestant school boards.

In 1925, a special act (15 George V, c. 45) established, for Montreal and some ten suburban towns, the Montreal Protestant Central School Board which, with the extension of its territory, later became the Protestant School Board of Greater Montreal. Section 16 of this act, which I shall call the “Act of 1925”, deeply modified not only the tax system of property belonging to Protestants in the city of Montreal and in the other municipalities subject to this special act, but also the tax system of property listed on the “neutral panel”. Instead of the tax contemplated in the legislation applicable to each municipality, paragraph 1 of that section assessed on the property belonging to Protestants a “Protestant School Tax” while paragraph 2 assessed on property “inscribed in the neutral panel” another tax at a uniform rate for the whole territory and provided for its apportionment as follows:

2. From and after the 1st of July, 1925, in the various cities, towns or other local municipalities mentioned in paragraph 1 of this section, there is hereby imposed a uniform tax at the rate of twelve mills in the dollar, upon all the immoveable property inscribed in the neutral panel of each such city, town or local municipality, to be apportioned between Protestant and Roman Catholic education as by law provided.

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Paragraph 4 decreed that failing other applicable legislation, “the neutral panel” would include all immoveable property which, according to the law in force in the city of Montreal, forms panel No. 3. Then, paragraph 5 enacted that the taxes thus imposed would be levied and collected by “the proper municipal authorities at the same time as the municipal taxes”, each municipality having to remit to the Central Board the Protestant school tax and the share of the tax from the “neutral panel” accruing for the benefit of Protestant education.

From the following year, the Legislature brought several changes to s. 16. The most important was motivated by the following fact. The Act of 1925, as appears from its title: An Act respecting Protestant schools in and around the city of Montreal, had been prepared solely from the Protestant point of view according to the report of a commission appointed for this purpose and mentioned in the preamble. The Protestant Central Board receiving all income accruing for the Protestant schools did not have to worry about the fact that in some municipalities where the “neutral panel” was particularly important, collections went beyond foreseeable expenses. It was a completely different matter on the Catholic side where school commissions remained independent one from the other. The solution which was arrived at consisted in enacting in substance, that retroactive to the day when Section 16 had taken effect, a Catholic school commission could not have a share of the tax collection on the “neutral panel” greater than that which would have been available if this tax were imposed at the rate applicable to property belonging to Catholic ratepayers in its territory. The text adds: “The surplus, if any, shall be forthwith returned to the ratepayers on the neutral panel in the same proportion in which it was paid in by them” (16 Geo. V, c. 47, s. 1).

The town of Montreal-East, the respondent, was a municipality where, because of the importance of the “neutral panel” and the small number of children registered in the Catholic schools, the reimbursement contemplated by the provision added to s. 16 in 1926, the “rebate”, was

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important. Since the Municipal administration knew the amount in advance having before it all the facts necessary for its computation, it only levied the net amount payable by the ratepayers inscribed on the “neutral panel” intead of levying the full amount and reimbursing the surplus.

It is unnecessary to review the numerous changes brought to bear on this special system. It is sufficient for the present to note that the Legislature eliminated the “rebate” by the Act 11-12 Eliz. II, c. 74, assented to July 11, 1963. In the new text of s. 16, the provision relating to the tax surplus of the “neutral panel” (second paragraph of sub-section 2) is the following:

The balance of the Neutral Panel tax, if any, shall be paid forthwith to the Catholic school boards whose territory is situated in the territory of the Protestant School Board of Greater Montreal in the following manner: the boards whose revenue for the preceding year per pupil enrolled in their schools is less than three hundred dollars shall receive one dollar for each pupil enrolled on the 30th of September of the current year for each hundred thousand dollars or fraction thereof of such balance; the remainder of such balance, if any, shall be paid to the Montreal Catholic School Commission and to the boards having a revenue per pupil of three hundred dollars or more but less than the revenue per pupil of the Montreal Catholic School Commission, and this proportionately to the number of pupils enrolled in the schools of such boards respectively on the 30th of September of the current year.

To base a claim on that provision, the appellant invokes s. 9 of the above-cited act of 1963 which reads as follows:

9. Section 1 of this act shall not apply to taxes to be levied for the school year 1963‑1964, except as regards the provisions of the second paragraph of sub-section 2 of section 16 of the act 15 George V, chapter 45, and its amendments.

Respondent’s defense which was upheld by the Provincial Court in a judgment unanimously affirmed by the Court of Appeal[2], is that under its charter school taxes in its territory are not

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assessed for the school year but for the calendar year. When, in December 1962, it levied school taxes at the same time as the municipal taxes for 1963, it deducted the “rebate” and levied only the net amount due by the ratepayers on the “neutral panel” according to the law then in force. It is only when it levied the municipal and school taxes for the year 1964 that it was able to take account of the change and it is therefore only for the second half of the 1963-1964 school year that the appellant and the other interested school boards received the “rebate” instead of the ratepayers. In fact, under the Education Act, R.S.Q. 1964, c. 235, s. 1, subs. 26°, “the words ‘school year’ mean the twelve months from the 1st of July of one year and including the 30th of June of the next year”.

The whole case therefore turns upon the interpretation to be given to s. 9 of the special act of 1963 in the light of its other section, the above-quoted provision of the Education Act and respondent’s charter. Appellant’s argument consists essentially in contending that the school tax is assessed by s. 16 of the Act of 1925 and subsequent amendments, especially the act of 1963, and that respondent’s charter determines only a mode of collection thereof. This argument has not been accepted by any of the judges who have previously considered this case.

Regarding respondent’s charter, the following observations appear pertinent: It is governed by the Cities and Towns Act, R.S.Q. 1964, c. 193, to the extent that this is not derogated from. Consequently, its financial year is the calendar year (s. 483). On the other hand, under s. 16 of the 1925 Act, the tax year for school tax purposes is the school year, that is the period beginning July 1st, and ending June 30th of the following year. After the enactment of the Act of 1925, respondent refused to comply with it under pretext that the levy on the “neutral panel” at the fixed rate would bring the Catholic school commissioners an amount exceeding their needs. On December 1st, it was told by the Superior Court that this was an objection to be put before the Legislature and not before the courts but

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that, in the meantime, it had to comply with the act as it stood (The Protestant Central School Board v. The Town of Montreal East[3]).

To obey the writ of mandamus, respondent had to levy the school tax in the month of December, 1925, while waiting for the Legislature to settle the question of the surplus as we have seen by establishing the “rebate”. It appears that after that respondent continued to levy only in the month of December the school tax for the school year beginning July 1st. In 1935, it obtained from the Legislature an amendment to its charter which added the following provision (25-26 Geo. V, c. 131, s. 4):

4. Notwithstanding any general law or special act to the contrary, the fiscal year of the town shall commence on the 1st of January and end on the 31st of December in each year, and the taxes and annual real estate contributions, including all school taxes that the town is obliged to collect, shall be deemed to be imposed, levied and due for the same term, and, for such purpose, the town is authorized to make a special collection roll of the said taxes for the current period from the 1st of July to the 31st of December, 1935, at the rate established by law or by the competent authority respecting the said school taxes for the year ending on the 30th of June, 1935, and to fix by by-law the due date of such taxes.

As can be seen, this enactment includes several things. It is not only decreed that all real estate taxes “including all school taxes that the town is obliged to collect, shall be deemed to be imposed, levied and due for the same term”, the calendar year, provision is also made for a special roll for school taxes “for the current period from the 1st of July to the 31st of December, 1935, at the rate established… for the year ending on the 30th of June, 1935”. This last part of the text clearly shows that in Montreal East, since 1935, school taxes are levied for each calendar year at the rate established for the school year beginning the preceding July 1st. In fact, to effect the change from the school year to the calendar year, the Legislature has decreed explicitly that after having levied the taxes provided by law for the 1934-35 school year,

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respondent would collect, for the last six months of the 1935 calendar year, school taxes not at the rate established for the current school year, but at the rate established for the preceding school year. Therefore, it is clear that, for the 1936 calendar year, the rate established for the 1935-36 school year was to be the basis of the levy and so forth. The evidence has shown that the law has always been applied in that manner.

In these circumstances, can it be said that one half of the school taxes levied by the respondent for the 1963 calendar year is a tax levied for the 1963-64 school year? I do not think so. As we have just seen, the effect of the 1935 Act is that in respondent’s territory the school tax is not assessed for the school year, but for the calendar year. It is thus assessed at the rate established for the school year which is current at the beginning of the calendar year. By the express will of the legislature, under the terms of a provision enacted several years after the enactment of the 1925 Act, it is only after a six month delay that a change in the rate of the school tax assessment takes effect in respondent’s territory.

In the Court of Appeal, Hyde J.A., with whom Casey J.A. agreed, said:

The 1935 amendment to the Town’s charter (Sec. 4 already recited) in fixing its fiscal year as the calendar year provides that all taxes “including all school taxes… shall be deemed to be imposed, levied and due for the same term”. That statute was assented to on April 11th, 1935. Unlike the 1963 Act, the legislature provided therein for the transitional period by authorizing the Town to make a special collection roll for the first half of what would have been the next fiscal year (1935-36), i.e., from July 1st to December 31st, 1935.

Having failed to make such a provision or otherwise clarified the question when enacting the 1963 Act, I see no authority for the Town to make another roll for the last six months of 1963, already covered by the roll for the 1963 calendar year or to impose and levy a special tax for that period which the recovery of the neutral panel rebate would involve.

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The school taxes as levied by the Town in December 1962 for the calendar year 1963 were as required by law. I agree with the trial judge that the deduction on the tax bills of the rebateable portion was a reasonable procedure having regard to the requirement of the 1925 Act that “the surplus, if any, shall be forthwith returned to the rate-payers on the neutral panel in the same proportion in which it was paid in by them”. As may be seen from the tax bill of Imperial Oil Limited above reproduced, the Town was dealing in large amounts and useless paper work and interest charges were avoided in this manner.

It would have made no difference to the legal rights of the parties if the Town had collected the full amount and then rebated the surplus. If at the end of the year the Town is left with insufficient funds to cover the comparatively small expenditures noted by the Catholic Board that is not its concern but the Town’s.

I also agree with the trial judge that no retrospective effect can be given to the 1963 Act beyond July 1st, 1963 and that to allow the Catholic Board’s claim this would have to be done.

This reasoning appears to me well founded and, except for the foregoing observations, I see nothing that can be usefully added. It follows that the appeal to this Court must be dismissed with costs.

Appeal dismissed with costs.

Solicitors for the plaintiff, appelant: Riel, Bissonnette, Vermette & Ryan, Montreal.

Solicitor for the defendant, respondent: T. Vien, Montreal.

 



[1] [1969] Que. Q.B. 281.

[2] [1969] Que. Q.B. 281.

[3] (1925), 64 S.C. 38.

 

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