Bich, Beaupré, Cournoyer

Appeals from a judgment of the Superior Court allowing in part an application for judicial review. The principal appeals are allowed and the incidental appeals are dismissed.

In the course of its activities, the respondent deals with niobium for the purpose of its transformation into ferroniobium, a process that requires a significant supply of water. It draws a part of this water directly from the Shipshaw river using a first pipe that is about 10 kilometres long (supply pipe), and it returns a quantity of water equal to this draw using a parallel pipe (discharge pipe).

The appellant cities considered these pipes to be immovables withing the meaning of the Act respecting municipal taxation (CQLR, c. F-2.1) and entered them on their triennial property assessment rolls. The respondent contested this entry, arguing that these systems and all their components were exempt under section 65 of the Act. The Administrative Tribunal of Québec (ATQ) found in favour of the respondent. On appeal, the Court of Québec determined that the immovables in question were not exempt and referred the case back to the ATQ for it to determine whether the discharge system fell within the exemption set out in subsection 1.1 of the first paragraph of section 65 of the Act, which covers systems used or intended for the purpose of the abatement or control of pollution. Finally, the Superior Court found that the Court of Québec had overstepped its role with respect to the supply system, but maintained its judgment in regard to the discharge system.

The grounds of the decisions rendered by the ATQ were insufficient on their face. Other than by  general and superficial statements, they did not resolve the principal issues in dispute and gave every reason to believe that the ATQ simply chose which of two opinions it preferred, without explaining this preference. In view of the ATQ’s insufficient reasons on the application of subparagraph 1 of the first paragraph of section 65 of the Act respecting municipal taxation, the Court of Québec had no choice but to engage in the review and reassessment exercise for which the Superior Court reproached it.

The judgment of the Court of Québec was reasonable. Considered as a whole, its very thorough grounds set out its decision-making process in a transparent, intelligible, and inherently coherent manner. As for section 65 of the Act, the Court of Québec did not err in setting out the applicable law, correctly recalling the meaning to be given to this provision and the conditions for its application, in light of the case law. To be used or intended for the purpose of industrial production within the meaning of subparagraph 1 of the first paragraph of section 65 of the Act, machines, apparatus, and their accessories must play an active role in such production, that is, they must be integrated into the process of transforming the material or merchandise.

In this case, the fact that water is essential to every step in the transformation process does not make the supply and discharge systems components of this industrial activity. That determination was one of the acceptable outcomes in view of the relevant legal and factual constraints. As for whether the discharge system could be covered by subparagraph 1.1 of the first paragraph of section 65 of the Act, referring the matter back to the ATQ, which did not rule on the issue, was indeed reasonable.

Text of the decision: http://citoyens.soquij.qc.ca