Ontario Civil


Assessment

EXEMPTIONS

Rail lands were not exempt from taxation by municipalities

Municipality was sole shareholder of corporation that owned railway that ran through municipality and three other municipalities. Operation of railway was left to operator who paid nominal amount of $1 as rent annually. Various other terms regarding railway were specified in agreements between municipality, users’ group, and operator. Municipality’s rights under one agreement were assigned to corporation. Corporation paid municipal taxes to all four municipalities for rail line. Corporation brought application for declaration that it was exempt from payment of municipal taxes pursuant to s. 315(1)1 of Municipal Act, 2001, and for order that municipal taxes paid be refunded. Application dismissed. Rail lands owned by corporation were not exempt from taxation by municipalities pursuant to s. 315(1)1 of act. Exemption in s. 315(1)1 of act applied to “land leased by the railway company to another person for rent or other valuable consideration”. Collection of agreements did not grant quiet possession of rail lands to users’ group. Corporation retained rights that owner in possession might exercise. Rail lands were therefore not lands “leased” to users’ group within meaning of s. 315(1)1 of act. Collection of agreements, when read as whole, created business relationship that most resembled joint venture. Further, users’ group did not pay rent or other valuable consideration to corporation as those terms were used and intended under s. 315(1)1 of act. Arrangements between corporation and users’ group were implemented to ensure rail users had benefit of rail line to keep their business operations in municipality.

Orangeville Railway Development Corp. v. Mississauga (City) (Sep. 14, 2015, Ont. S.C.J., Emery J., File No. Orangeville 281/13) 259 A.C.W.S. (3d) 414.

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