Property Taxes: The Big Picture

 

Update on Tuesday’s Divisional Court Hearing…

As detailed at our last AGM, and mentioned in a recent email, the RCA had a big day in court on Tuesday, January 14th.  The hearing was held at the venerable Osgoode Hall in downtown Toronto.  While legal matters are never easy for non-lawyers to understand (or explain!) here’s my take on what happened and why.  I would strongly encourage you to click on the many hyperlinks I’ve included in order to dig deeper into this legal application to clarify the laws that affect us.  Your Executive does not enter into court challenges lightly, but we strongly believe the risk of NOT taking this action far outweighed the time, expense & inconvenience of going ahead with it.

The Big Picture…

As leaseholders in Rondeau, we are rent-paying tenants and our landlord is the Queen in Right of the Province of Ontario, represented by the MNR.  The MNR is governed by the Provincial Parks & Conservation Reserves Act, which is a provincial law.  However Ontario also has the Residential Tenancies Act which is another provincial law of equal weight that governs all Landlord/Tenant relationships in the province.  The MNR claims the PP&CRA trumps the RTA, even though the RTA clearly says it will prevail in all Landlord/Tenant matters in Ontario without exception.  We think the RTA should cover Rondeau while the MNR thinks they’re exempt from it.  So with two provincial laws each claiming supremacy over the other, we asked Divisional Court to determine which one applies to us.

The Reason for the Application…

The PP&CRA contains no specifics on anything affecting our tenancies, which allows the MNR to administer it any way they want to.  The MNR told the Auditor General that our annual lease fees should be many times higher than we’re paying now (page #219), and our annual service fees should triple.  Include these new property taxes they’re trying to force on us, and of course our steadily-increasing annual park pass fees, and the total bill for most cottages tops $20,000/year.  It is clear to us that the MNR’s goal is to force us to abandon our cottages because nobody will be able to afford them anymore — which is the exact same stunt the MNR’s late Art Carr tried with us back in 1992.

The RTA, on the other hand, has clearly-defined limits on rent increases and taxes, in the range of 2% per year.  It even prohibits the landlord from surcharging tenants to access their properties.  (Imagine if every landlord in Ontario required an additional fee every time each tenant/guest needed to use the elevator.  As bizarre as that sounds, that’s exactly what the MNR has been doing to us for years.)  And, again, the RTA states that it will prevail in all landlord/tenant relationships in Ontario, period.

The Named Appellant…

On the advice of RCA lawyer David Kirwin, we needed to find one member to act as the Appellant who could provide a good reason for needing this to be heard.  Our Treasurer Len Copeland stepped up to the plate as his cottage needs a new roof and he wanted to know if he should buy the 3-year shingles or the 40-year shingles.  Mr Kirwin filed for the Divisional Court hearing nearly a year ago and it was accepted to be heard on Tuesday.

The Legal Arguments…

Mr Kirwin warned us in advance that this will not make riveting television.  No testimony, no witnesses, and no surprises.  Just two pairs of lawyers arguing legal principles and case law in Divisional Court in front of three Superior Court judges.  As you might imagine with three judges presiding this was a pretty big deal in legal circles;  we were challenging the scope & application of provincial law which will have far-reaching implications across Ontario.

Mr Kirwin, assisted by co-counsel Ken Peacock, spoke first.  He provided recent case law decisions that found the RTA covered situations virtually mirroring our own, so it seemed pretty clear-cut.  Plus the RTA clearly said it covered “all” landlord/tenant relationships in Ontario without exception, and the only Act that trumped it was theOntario Human Rights Code.  Mr Kirwin spoke for about an hour and represented himself — and his clients — exceptionally well.

The MNR lawyers then addressed the judges.  Their first argument was that Divisional Court didn’t have jurisdiction in this matter, at least not yet.  They said the “proper” way to decide this case was to have it heard by a Landlord/Tenant Tribunal first.  One of the judges then pointed-out that a lower court wouldn’t be able to rule because of the contradictory provincial laws, and if they tried there’d be an automatic appeal whatever the finding.  Then the appeal would have to be scheduled & heard and this would no-doubt end right back in front of this same Divisional Court — only it would take about two more years to get there.  The MNR lawyer said that expediency is not guaranteed and if it took years to get back to this same room then let it take years.

The judges took a short break and upon returning announced that they weren’t prepared to rule on the jurisdictional issue until they’d heard more legal arguments, so the case then started in earnest.

The second MNR lawyer then took over and argued that the government doesn’t have to follow the laws it creates for normal citizens.  Citing ancient English law from the 1500’s (seriously!) she said that the King or Queen has always been exempted from common law that they impose on the citizens, and as the MNR manages Rondeau for the Queen in Right of Ontario — the MNR didn’t have to obey the Residential Tenancies Act or any other provincial Act for that matter.  In effect, she was claiming that the government is not required to follow its own laws.  Believe it or not, she had several case law precedents supporting this position.  So even if the judges found that the RTA did in fact apply to us, the MNR was not obligated to follow it — so they could still jack our rent up by any amount they wanted to.

Also of great interest to those of us on the Board, the MNR lawyers relied a great deal on an application for protection the late RCA Director Wayne Wheeler made under the previous Tenant Protection Act.  We lost that challenge and a subsequent appeal to the decision, however the current RTA is much stronger than the old TPA was then.  There have also been several precedent-setting RTA decisions that mirrored our situation — which is why we made the decision to try again now under this new, more favorable law.

As expected, the judges did not issue a decision on anything on Tuesday.  They will deliver a written decision to both lawyers, hopefully within two weeks — but perhaps longer.  Mr Kirwin was not willing to place odds on a victory;  he said he never does that for any of his trials.  For the rest of us, the legal issues were so convoluted that we’re not able to even guess.

There are four possible outcomes:

  1. This Court has no jurisdiction to decide;  we go back down to a Landlord/Tenant hearing and then work our way back up to Divisional Court again, eventually
  2. This Court has jurisdiction;  PP&CRA trumps RTA
  3. This Court has jurisdiction;  RTA trumps PP&CRA, MNR ordered to adhere to the terms of the RTA
  4. This Court has jurisdiction;  RTA trumps PP&CRA, but MNR is above the law and doesn’t have to adhere to terms of RTA

Of these, we would consider #3 as a complete victory and #2 as a complete loss.  Both #1 & #4 will still give us followup options that we may consider exploring.

Closing Words…

I have no idea how this decision will go, but as usual the MNR is strongly opposing any attempt to make them play fair.  I use this word a lot when talking about the MNR and their senior staff, but it really was shameful to hear their lawyers argue that they didn’t have to follow the same rules they force everyone else to follow as John Salo sat and took it all in.  Arguing that they are all “above the law”.

No matter how this is decided, this day in court was necessary on many levels.  We showed the MNR that we demand to be treated fairly & respectfully, and that we will not stand idly by while they bend the laws to force us out of the park.  We had nine RCA members present at the hearing, including our President, Vice-President, Treasurer, and two Directors.  Special thanks to the three members at large who made the long trip to Toronto on a cold January day!  Our lawyer Mr Kirwin did his expected excellent job representing our community (although I still don’t understand a lot of what he said!)  But no matter what the verdict, we can all hold our heads high that we stood tall in a court of law and said “No, this isn’t fair!” to the Government of Ontario.  Fingers crossed that at least two of the three judges agree.

– Brian K. French
RCA Vice-President, on behalf of Dr Dave & Your Executive

 

PS — Please do not be unduly alarmed by the $20,000+ estimate quoted above.  The last time we got a lease extension the MNR bureaucrats tried the exact same thing, a 600% increase, and it was “a done deal and irrevocable”.  Well, turns out it wasn’t neither because we all settled on a 22.7% catch-up instead, followed by CPI -based increases applied at five-year intervals.  An entirely reasonable compromise for all parties.  Cooler heads prevailed then, and I think they will this time around too.  And someday soon we will actually be able to enjoy our cottages again.