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Court ruling may be harbinger for Castlegar/Celgar dispute

Kyra Hoggan
By Kyra Hoggan
October 16th, 2009

Photo: City councillor and major industry taxation task force member Russ Hearne.

A much-anticipated B.C. Supreme Court decision has been handed down in the matter of Catalyst Paper versus the City of North Cowichan, in a case closely mirroring one pending between Castlegar and its primary rate payer, Celgar.

Celgar, this summer, declined to pay its $3.6-million municipal tax bill, filing suit against the city instead in the B.C. Supreme Court.

While no court date has yet been set for the Celgar dispute, stakeholders have been closely watching proceedings in Catalyst Paper’s suits against several West Coast communities.

In an Oct.-16 ruling, the Honourable Mr. Justice Voith concluded that, “The petition is dismissed and the respondent is to receive its costs.”

In a 45-page decision, Voith countered North Cowichan’s contention that the court has little authority in the matter, “The respondent starts with the proposition that Catalyst is asking the court to engage in a process which is, in large measure, beyond its authority. It says the Bylaw can only be reviewed for compliance with formalities or, at most, can be reviewed to determine whether Council has exceeded the jurisdiction provided to it in s. 197 (of the Community Charter).”

Among other arguments asserting the court’s authority to review council decisions, Voith said, “… the powers of a municipality under its enabling legislation are not be construed as unlimited or unfettered, even if the words of the legislation on their face do not impose specific limits.”

Having said that, Voith did indicate the threshold for a court to overturn council decisions should be high, “Barring something aberrant or “overwhelming”, barring a decision “no reasonable body could come to”, a court will not revisit the outcomes or “outer boundaries” determined by Council to be appropriate. It will not substitute its own view of a more suitable outcome.”

Further, Voith said, “The reluctance of courts to question the rationality of municipal decisions or to second guess the range of permissible outcomes for such decisions has been expressed in the strongest of terms.”

In addressing one of Catalyst’s primary arguments, that the taxtation level far outstripped any service provision consumed by the Catalyst facility, Voith said this, “As a starting point it is important to emphasize that nothing in s. 197 (of the Community Charter) expressly requires the respondent to consider consumption patterns in fixing property taxes; whether for Class 4 property owners or otherwise.”

In a later portion of the ruling, Voith extrapolated on Catalyst’s presentation of an alternate, consumption-based taxation model: “The fact that the adoption of the Bylaw reflects the agreement of several members of Council is also significant. These individuals are likely to weigh the benefits and factors relevant to the Bylaw differently. The likely differences in their respective opinions, while leading to consensus on the Bylaw, also belies both the value and tenability of relying on a model that has a single focus – that of consumption – to establish the property tax rates for different property classes within a municipality. “

He also spoke to Catalyst’s contention that the taxation rates (as set out in the relevant bylaw) are unreasonable and unequitable.

“I am of the view that the Bylaw is rationally supported and that the effects or outcomes it creates are within the range of permissible outcomes. Accordingly the Bylaw is reasonable,” he said, further pointing to the city’s creation of a Property Tax Restructuring Committee, as well as long-term goals set by council to reduce Class 4 taxation rates in upcoming years. “Municipal recognition that Class 4 tax rates are “too high” is an acknowledgement that Council accepts the importance of reducing those rates. The pace at which and extent to which that reduction is to take place is a matter that lies within Council’s discretion. The wisdom of that decision is a matter that a court will not interfere with.”

Castlegar city councillor and member of the city’s major industry taxation task force, Russ Hearne, said he’s encouraged by both the ruling and the underlying rationale informing it, as many of the arguments addressed run tightly parallel with the Celgar/Castlegar situation.

“We, too, have recognized a need to lower our industrial tax rate, as we’ve been doing over the past several years, and have planned to continue doing (based on the city’s five-year plan),” Hearne said. “It also supports the argument we’ve made all along, that the consumption model doesn’t work – there’s a cost involved in being a member of a community. In Celgar’s case, that has to do with the services we provide that attract and retain residents, helping Celgar maintain a diverse and robust workforce.

“I’m pleased with this (court) outcome,” he added. “I look forward to the case with Celgar being resolved soon, and I think it’ll be along the same lines … but I recognize the need for council to work with Celgar to ensure we’re doing everything we can to support them as healthy and productive members of the community for years to come.”

The Source was unable to reach representatives of Celgar, or its parent company Mercer International, in time for this posting.

Categories: General

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