A‑400‑05
2006 FCA 252
620 Connaught Ltd., operating as Downstream Bar, 263053 Alberta Ltd., operating as Miss Italia Ristorante, 313769 Alberta Ltd. operating as Jasper House Bungalows, 659510 Alberta Ltd., operating as Buckles Restaurant & Saloon, Alex Holdings Ltd., operating as Something Else Restaurant, Athabasca Motor Hotel (1972) Ltd., operating as Athabasca Hotel, Lina and Claudio Holdings Ltd., operating as Beckers Gourmet Restaurant, Cantonese Restaurant Ltd., Earls Restaurant (Jasper) Ltd., Fiddle River Seafood Company Ltd., George Andrew & Sons Ltd., operating as Astoria Hotel Company, Limited, Glacier International Ltd., operating as Whistlers Inn, Husereau Restaurant, Jasper Inn Investments Ltd., operating as The Inn Restaurant, Kabos Holding Ltd., operating as Karouzos Steakhouse, Kontos Investments Ltd., operating as Kontos Restaurant, L & W Vlahos Holdings Ltd., operating as L & W Restaurant, La Fiesta Restaurant Ltd., Larry Holdings Ltd., operating as Mount Robson Restaurant, Maligne Tours Ltd., Sawridge Enterprises Inc., operating as Sawridge Inn & Conference Center, T.C. Restaurants Ltd., operating as Villa Caruso Steak House & Bar, and Tonquin Prime Rib Village Ltd. (Appellants) (Applicants)
v.
Attorney General of Canada, Minister of Environment, Superintendent of Jasper National Park and Parks Canada Agency (Respondents)
Indexed as: 620 Connaught Ltd. v. Canada (Attorney General) (F.C.A.)
Federal Court of Appeal, Linden, Nadon and Evans JJ.A.—Edmonton, May 31; Ottawa, July 6, 2006.
Administrative Law — Appeal from Federal Court decision dismissing application for judicial review seeking declaration licence fee payable by appellants invalid as tax — Appellants operating hotels, restaurants, bars serving alcoholic beverages — Requiring business licence for which must pay fee — Whether portion of licence fee based on percentage of annual purchases of alcohol tax — Legislation distinguishing between fees for services, use of facilities, fees for products, rights, privileges — Business licence fees payable by appellants for “right or privilege” provided by Parks Canada Agency — Relevant analytical framework found in criteria of S.C.C. decision Westbank First Nation v. British Columbia Hydro and Power Authority for identifying regulatory scheme, deciding whether fee necessarily incidental to it — Business licence fees payable by appellants imposed for primary purpose of financing, in part, regulatory scheme governing use, operation of National Park — Appeal dismissed.
National Parks — Appellants operating establishments in Jasper National Park, requiring business licence for which they must pay fee — Business licence fees imposed under Parks Canada Agency Act, s. 24 to defray cost, not of issuing licences and enforcement, but of operating national park — Regulation of use and operation of Jasper National Park relevant regulatory scheme for present purposes — Relationship between volume of business done by establishment serving alcohol, costs to Park — Fees for rights, privileges (including business licence fees) fixed under s. 24 not limited to cost of providing particular privilege.
This was an appeal from a Federal Court decision dismissing an application for judicial review requesting a declaration that the licence fee allowing the appellants to sell alcoholic beverages in their hotels and restaurants was invalid as a tax, at least to the extent that it is based on a percentage of the amount that licensees spend annually on purchasing alcohol, and ultra vires the Minister of Canadian Heritage. The appellants own hotels, restaurants and bars in Jasper National Park, which serve alcoholic beverages. To operate these establishments, they require a business licence, for which they must pay a fee calculated as a flat rate plus a percent of the purchase price of alcohol. Such fees are attributed to Jasper National Park, and defray its operating costs. The total forecasted expenditure for Jasper National Park in 2003‑2004 was $20.4 million, whereas the total amount collected in licence fees in that year from businesses selling alcohol there was approximately $87,625.
Alternatively one of the appellants, Athabasca Motor Hotel (1972) Ltd., alleged that the Crown and the Town of Jasper entered into an agreement in 2001, under which the Minister of Canadian Heritage transferred to the Town many of the local government functions previously performed by the Minister, including the fixing of business licence fees. Thus, it argued that the Minister ceased to have legal authority to impose and collect business licence fees for the operation of its hotel in the town of Jasper. The trial Judge held that the regulatory scheme relevant for the purpose of determining whether the fee was a regulatory charge or a tax by applying the test set out by the Supreme Court of Canada in Westbank First Nation v. British Columbia Hydro and Power Authority is that regulating the use of Jasper National Park, not the more limited and ancillary licensing scheme for the sale of alcohol in the Park. She concluded that there was a sufficient nexus between the licence fee and the scheme regulating the use of Jasper National Park to characterize the fee as a regulatory charge. Two issues were raised on appeal: (1) whether the portion of the licence fee based on a percentage of the appellants’ annual purchases of alcohol is a tax, and (2) whether the Agreement between the Minister and the Town of Jasper deprives the Minister of the statutory power to impose business licence fees on establishments operating in the town of Jasper.
Held, the appeal should be dismissed.
(1) A charge (including a fee) which is necessarily incidental to a regulatory scheme is not a tax, but a regulatory charge. The question was whether the business licence fees payable by the appellants were properly characterized as regulatory charges in pith and substance, even though they may also have some of the characteristics of a tax. The Parks Canada Agency Act and other federal statutes distinguish between fees for services and the use of facilities, on the one hand, and fees for products, rights and privileges, on the other. They expressly cap the amount chargeable for services or the use of facilities at the cost of providing them, but not the amount chargeable for providing products, rights and privileges. This reflects the principle of constitutional law that a fee for service which exceeds an amount that is reasonably related to the cost of providing the service is liable to be characterized as a tax. The business licence fees payable by the appellants were for a “right or privilege” provided by the Agency, that is, the licence authorizing them to sell alcohol in a national park. This is because the National Parks of Canada Business Regulations, subsection 4(2) provides that an application for a business licence must be accompanied by the applicable fee “fixed under section 24 of the Parks Canada Agency Act.” Business licence fees are imposed pursuant to section 24 to defray the cost, not of issuing licences and enforcement, but of operating a national park. The licence fees paid by the appellants were attributed to the operating budget of the very park, Jasper, in which the appellants conducted their businesses. It would be unduly narrow to identify the relevant regulatory scheme as the licensing requirements for the sale of alcoholic beverages in a national park and payment of the applicable fee. Such a fragmented approach would unduly restrict the ability of the Parks Canada Agency to recoup, on an equitable basis consistent with the statutory purposes of the legislation establishing and governing national parks, some of the operating costs of a park from those benefiting from conducting their business in a national park. The regulation of the use and operation of Jasper National Park was the relevant regulatory scheme for present purposes.
The relevant analytical framework is found in the Westbank criteria for identifying a regulatory scheme and deciding whether the fee is necessarily incidental to it. The first criterion is the presence of “a complete and detailed code of regulation”. The Canada National Parks Act and the Parks Canada Agency Act, together with the considerable body of regulations made under them, constitute “a complete and detailed code of regulation” applicable to the national parks, including Jasper National Park. Some provisions apply only to particular national parks, including Jasper. Moreover, each park has its own superintendent and staff, with responsibilities for developing park‑specific policies and for the day‑to‑day operation of the park. Accordingly, the first criterion was satisfied. The second criterion is whether the levy is imposed for “a specific regulatory purpose which seeks to affect the behaviour of individuals”. The more specific scheme for licensing the sale of alcohol is designed to affect the sale and consumption of alcoholic beverages in national parks, and the conduct of the customers. However, the fees are also imposed to raise revenue to defray the costs of the larger regulatory scheme, namely the operation of the Park itself. It is unclear whether the second Westbank criterion was satisfied. The third criterion is the presence of a proper estimation of the cost of the regulation. The costs of regulating the use of Jasper National Park were in excess of $20 million in 2003‑2004 and an amount of $87, 625 was collected in alcohol licensing fees from businesses operating in the Park. Thus, the third criterion was satisfied. The fourth criterion is the existence of “a relationship between the regulation and the person being regulated, where the person being regulated either causes the need for or benefits from it”. The amount that a restaurant, hotel or bar in Jasper National Park spends on the purchase of alcohol each year is a reasonable surrogate for the size of its business and the number of customers served. It was reasonably open to the Minister to have taken the view that there was a relationship between the volume of business done by an establishment serving alcohol, and costs to the Park. That the appellants may be charged a fee because they benefit from their location in the Park provides a nexus between the business licence fee paid by them and the regulatory scheme. Unlike fees for services, fees for rights and privileges (including business licence fees) fixed under section 24 of the Parks Canada Agency Act are not limited to the cost of providing a particular privilege. The business licence fees payable by the appellants, including the portion based on the volume of their purchases of alcohol, were imposed for the primary purpose of financing, in part, a regulatory scheme, namely, that governing the use and operation of Jasper National Park. Since the business licence fees are in pith and substance a regulatory charge, not a tax, the appellants’ challenge to their validity must fail.
(2) Article 6.3 of the Agreement between the Minister and the Town of Jasper provides that “nothing in this Agreement affects the operation of any regulation made under the Canada National Parks Act, until such regulation has been repealed or amended to the extent that it no longer applies to the Municipality of Jasper”. The appellant argued that this provision did not apply to business licence fees because they are fixed pursuant to Parks Canada Agency Act, section 24, not the Canada National Parks Act. Athabasca was challenging the power of the Minister to charge any licence fee for operating a business in the town of Jasper, not just the amount of the fee. The power to require payment of a business licence fee in Jasper Natonal Park is found in subsection 4(2) of the National Parks of Canada Business Regulations, which provides that an application for a licence must be accompanied by the applicable fee. As a result of Article 6.3, the Agreement does not affect the operation of that provision, which ties the issue of a licence to the payment of a fee. Nor does it transfer to the Town the Minister’s powers to issue business licences and to collect fees for granting them.
statutes and regulations judicially
considered
Agreement for the Establishment of Local Government in the Town of Jasper between Her Majesty and the Municipality of Jasper, signed by the Minister of Canadian Heritage and the Chairperson of the Jasper Town Committee on June 13 and 25, 2001, respectively, Art. 6.3.
Canada National Parks Act, S.C. 2000, c. 32, ss. 4(1), 8(1), 16(1).
Constitution Act, 1867, 30 & 31 Vict., c. 3 (U.K.) (as am. by Canada Act 1982, 1982, c. 11 (U.K.), Schedule to the Constitution Act, 1982, Item 1) [R.S.C., 1985, Appendix II, No. 5], s. 125.
Department of Canadian Heritage Act, S.C. 1995, c. 11, ss. 8, 9.
Department of Health Act, S.C. 1996, c. 8, ss. 6, 7.
Department of Human Resources Development Act, S.C. 1996, c. 11, ss. 8, 9.
Indian Act, R.S.C., 1985, c. I‑5.
National Parks General Regulations, SOR/78‑213, s. 39 (as am. by SOR/93‑167, s. 5).
National Parks of Canada Business Regulations, SOR/98‑455 (as am. by SOR/2002‑370, s. 1), ss. 3, 4(2) (as am. idem, s. 4).
Oceans Act, S.C. 1996, c. 31, ss. 47, 48.
Parks Canada Agency Act, S.C. 1998, c. 31, ss. 23, 24, 25.
cases judicially considered
applied:
Westbank First Nation v. British Columbia Hydro and Power Authority, [1999] 3 S.C.R. 134; (1999), 176 D.L.R. (4th) 276; [1999] 9 W.W.R. 517; 129 B.C.A.C. 1; 67 B.C.L.R. (3d) 1; [1999] 4 C.N.L.R. 277; 246 N.R. 201.
distinguished:
Eurig Estate (Re), [1998] 2 S.C.R. 565; (1998), 40 O.R. (3d) 160; 165 D.L.R. (4th) 1; [2000] 1 C.T.C. 284; 23 E.T.R. (2d) 1; 231 N.R. 55; 114 O.A.C. 55; Kingstreet Investments Ltd. v. New Brunswick (Department of Finance) (2004), 273 N.B.R. (2d) 6; 2004 NBQB 84; vard (2005), 285 N.B.R. (2d) 201; (2005), 254 D.L.R. (4th) 715; 8 B.L.R. (4th) 182; 2005 G.T.C. 1510; 2005 NBCA 56; leave to appeal to S.C.C. granted, [2005] 3 S.C.R. vi.
considered:
Ontario Home Builders’ Association v. York Region Board of Education, [1996] 2 S.C.R. 929; (1996), 137 D.L.R. (4th) 449; 35 M.P.L.R. (2d) 1; 4 R.P.R. (3d) 1; 201 N.R. 81.
referred to:
Sunshine Village Corp. v. Canada (Parks), [2004] 3 F.C.R. 600; (2004), 238 D.L.R. (4th) 647; 16 Admin. L.R. (4th) 242; 4 M.P.L.R. (4th) 174; 320 N.R. 331; 2004 FCA 166; Lawson v. Interior Tree Fruit and Vegetable Committee of Direction, [1931] S.C.R. 357; [1931] 2 D.L.R. 193; Re: Exported Natural Gas Tax, [1982] 1 S.C.R. 1004; (1982), 37 A.R. 541; 42 N.R. 361; Nanaimo Immigrant Settlement Society v. British Columbia (2004), 242 D.L.R. (4th) 394; 202 B.C.A.C. 172; 30 B.C.L.R. (4th) 195; 21 Admin. L.R. (4th) 13; 2004 BCCA 410; Mount Cook National Park Board v. Mount Cook Motels Ltd., [1972] NZLR 481 (C.A.).
authors cited
2003‑2004 Parks Canada Master List of Fees. Canada Gazette, Part 1, Supp., Vol. 137, No. 34, August 23, 2003.
APPEAL from a Federal Court decision (620 Connaught Ltd. (c.o.b. Downstream Bar) v. Canada (Attorney General) (2005), 274 F.T.R. 311; 2005 FC 886) dismissing an application for judicial review requesting a declaration that the licence fee to operate establishments in Jasper National Park was invalid as a tax and ultra vires the Minister of Canadian Heritage. Appeal dismissed.
appearances:
Jack N. Agrios, Q.C. and Janice A. Agrios, Q.C. for appellants (applicants).
Bruce F. Hughson for respondents.
solicitors of record:
Jack Agrios, Q.C., Edmonton, for appellants (applicants).
Deputy Attorney General of Canada for respondents.
The following are the reasons for judgment rendered in English by
Evans J.A.:
A. INTRODUCTION
[1]The appellants own all or nearly all the hotels, restaurants and bars in Jasper National Park serving alcoholic beverages. To operate these establishments they require a business licence, for which they must pay a fee. The question to be decided in this appeal is whether the portion of the licence fee based on a percentage of their annual purchases of alcohol is a tax. If it is, the parties agree that it is beyond the statutory power of the Minister of Canadian Heritage to fix licence fees, and is invalid.
[2]A charge (including a fee) which is necessarily incidental to a regulatory scheme is not a tax, but a regulatory charge: Westbank First Nation v. British Columbia Hydro and Power Authority, [1999] 3 S.C.R. 134. The appellants say that the impugned part of the business licence fee is not a regulatory charge because it does not satisfy the criteria in Westbank. In particular, they submit, there is no evidence that the amount of the fee payable by individual licensees is reasonably related to any financial burden which the operation of their businesses imposes on either the licensing scheme or the general administration of the Park.
[3]This is an appeal from a decision of Justice Snider of the Federal Court dismissing the appellants’ application for judicial review, in which they requested a declaration that the licence fee is invalid as a tax, at least to the extent that it is based on a percentage of the amount that licensees spend annually on purchasing alcohol. Her decision is reported as 620 Connaught Ltd. (c.o.b. Downstream Bar) v. Canada (Attorney General) (2005), 274 F.T.R. 311 (F.C.).
[4]Justice Snider held that the regulatory scheme relevant for the purpose of the Westbank test is that regulating the use of Jasper National Park, not the more limited and ancillary licensing scheme for the sale of alcohol in the Park. She found that the appellants’ businesses benefited from the general infrastructure of the Park, and that the total amount collected from them in fees was much less than the cost of operating the Park.
[5]Accordingly, she held, there is a sufficient nexus between the licence fee and the scheme regulating the use of Jasper National Park to characterize the fee as a regulatory charge. On this basis, she upheld the impugned portion of the fee and dismissed the application for judicial review.
[6]For the reasons given below, I agree with this result and would dismiss the appeal.
B. FACTUAL BACKGOUND
[7]Uncontradicted affidavit evidence explained that the Parks Canada Agency raises revenue to help defray the costs of its operations. The manager responsible for fees at each national park estimates the amount of revenue that will be raised at that park. Based on these estimates, the Agency calculates each year the amount of its revenue for the upcoming fiscal year, and receives funding in that amount as an advance pursuant to the Appropriation Acts.
[8]Like other agencies of the federal government, the Parks Canada Agency deposits its revenues, including business licence fees, into the Consolidated Revenue Fund, which are then credited against the advance made to the Agency. Discrepancies between its estimated and actual revenue are adjusted towards the end of the fiscal year.
[9]Each year, the Agency collects approximately $260,000 in licence fees from businesses selling alcohol in national parks, which are attributed to the particular national park where they were collected. Thus, the fees paid by the appellants for business licences are attributed to Jasper National Park, and defray its operating costs.
[10]The total forecasted expenditure for Jasper National Park in 2003‑2004 was $20.4 million. This includes items such as maintenance, security, on‑site heritage presentation programs, and town sites and highways supporting visits to the Park. In that year, the total amount collected in licence fees from businesses selling alcohol in Jasper National Park was approximately $87,625. There is no evidence in the record as to the amount of the total Park expenditure in 2003‑2004 attributable to its administration and enforcement of the liquor licensing program.
[11]The annual minimum fee for a business licence for the sale of alcohol in Jasper National Park in 2003‑2004 was $75, and $50 for clubs selling alcohol only to their members or guests: 2003-2004 Parks Canada Master List of Fees (Supplement, Canada Gazette, Part I, August 23, 2003). In addition, licensees were required to pay, as part of the fee, 2% of the gross value of the beer which they purchased in that year, and 3% of the purchase price of the wines and spirits. These fee levels have been in force since 1993.
[12]There is also evidence in the record describing the assessment and payment of the business licence fees for the sale of alcohol. Typically, the Agency sends an invoice to business owners in November. Many of the businesses are seasonal, and their season is over by November. The invoice is based on the average value of their alcohol purchases in previous years.
[13]Thus, on receipt of an invoice from the Agency in November 2002, a licensee would calculate the amount owing for the licence fee on the basis of the price of the alcohol purchased in the 2002 season, which might be more or less than the amount shown on the invoice. Payment of the fee would typically be made in the following spring when the 2003 licence was issued.
[14]One of the appellants, Athabasca Motor Hotel (1972) Ltd. (Athabasca), owns and operates the Athabasca Hotel in the town of Jasper. Athabasca relies on an alternative basis for invalidating the business licence fee which it is required to pay. It alleges that Her Majesty the Queen in right of Canada and the Town of Jasper entered into an agreement in 2001 [Agreement for the Establishment of Local Government in the Town of Jasper between Her Majesty and the Municipality of Jasper], under which the Minister of Canadian Heritage transferred to the Town many of the local government functions previously performed by the Minister, including the fixing of business licence fees. Accordingly, Athabasca argues, the Minister ceased to have legal authority to impose and collect business licence fees for the operation of its hotel in the town of Jasper.
C. LEGISLATIVE FRAMEWORK
[15]The Canada National Parks Act, S.C. 2000, c. 32, subsection 4(1), declares that Canada’s national parks are “dedicated to the people of Canada for their benefit, education and enjoyment”, and are to be maintained and used in a way that “leaves them unimpaired for the enjoyment of future generations”. Subsection 8(1) of the Act provides that the Minister (at the relevant time, the Minister of Canadian Heritage) is responsible for the “administration, management and control of parks”.
[16]Subsection 16(1) confers on the Governor in Council powers to make regulations respecting, among other things,
16. (1) . . .
(n) the control of businesses, trades, occupations, … and the places where such activities and undertakings may be carried on;
[17]The National Parks of Canada Business Regulations, SOR/98‑455 [as am. by SOR/2002-370, s. 1], (Business Regulations) require businesses conducted in a national park to be licensed, and provide for the payment of a fee [s. 4(2) (as am. idem, s. 4)]:
3. No person shall carry on, in a park, any business unless that person is the holder of a licence or an employee of a holder of a licence.
4. (1) . . .
(2) An application must be accompanied by the applicable fee fixed under section 24 of the Parks Canada Agency Act.
[18]The Parks Canada Agency Act, S.C. 1998, c. 31, referred to in subsection 4(2) of the Business Regulations provides for the fixing of licence fees as follows:
23. (1) The Minister may, subject to any regulations that the Treasury Board may make for the purposes of this section, fix the fees or the manner of calculating the fees to be paid for a service or the use of a facility provided by the Agency.
(2) Fees for a service or the use of a facility that are fixed under subsection (1) may not exceed the cost to Her Majesty in right of Canada of providing the service or the use of the facility.
24. The Minister may, subject to any regulations that the Treasury Board may make for the purposes of this section, fix the fees or the manner of calculating fees in respect of products, rights or privileges provided by the Agency.
25. (1) Before fixing a fee under section 23 or 24, the Minister must consult with any persons and organizations that the Minister considers to be interested in the matter.
(2) The Minister must publish any fee fixed under section 23 or 24 in the Canada Gazette within thirty days after fixing it.
(3) A fee fixed under section 23 or 24 stands permanently referred to the Committee referred to in section 19 of the Statutory Instruments Act to be reviewed and scrutinized as if it were a statutory instrument.
[19]Finally, the selling of alcohol in a national park is the subject of a discrete provision in the National Parks General Regulations, SOR/78‑213, (General Regulations) [s. 39 (as am. by SOR/93-167, s. 5)]:
39. No person shall sell any intoxicating beverage in a Park unless he has obtained a licence for such a sale under the National Parks Businesses Regulations and the sale
(a) is in accordance with the laws of the province in which the Park is situated; and
(b) has been approved by the director‑general.
D. ISSUES AND ANALYSIS
Issue 1: Is the portion of business licence fees which is based on the value of licensees’ annual purchases of alcohol a tax?
(i) Non‑contentious issues
[20]The parties agree that the power to fix licence fees conferred by sections 23 and 24 of the Parks Canada Agency Act does not include a power to impose a tax. Accordingly, the Parks Canada Master List of Fees is invalid if the portion of the business licence fees based on a percentage of the purchase of alcohol is properly characterized as a tax.
[21]Unlike most cases on the characterization of fees and other charges, this appeal raises no issue of constitutional law, because it is conceded that the legislation cannot be interpreted to confer a power on the Minister to impose a tax. Nonetheless, it is also agreed that the characterization of business licence fees for statutory vires purposes is governed by the legal tests for determining the constitutionality of a charge which is alleged to be a tax.
[22]It is also common ground between the parties that whether the Minister has statutory authority to base part of the business licence fee on the value of the licensee’s annual purchases of alcohol is to be determined on a standard of correctness. I agree: Sunshine Village Corp. v. Canada (Parks), [2004] 3 F.C.R. 600 (F.C.A.), at paragraph 10.
(ii) Taxes, fees for service and regulatory charges
[23]The Crown seems to have accepted that business licence fees have the four characteristics generally indicative of a tax set out in Lawson v. Interior Tree Fruit and Vegetable Committee of Direction, [1931] S.C.R. 357, at pages 362‑363. The fees are (i) enforceable by law, (ii) imposed pursuant to the authority of Parliament, (iii) levied by a public body, and (iv) imposed for a public purpose.
[24]However, a fee which has the above four characteristics will not be characterized as a tax if it is imposed “primarily for regulatory purposes, or as necessarily incidental to a broader regulatory scheme”: Re: Exported Natural Gas Tax, [1982] 1 S.C.R. 1004, at page 1070. The question is whether the business licence fees payable by the appellants are properly characterized as regulatory charges in pith and substance, even though they may also have some of the characteristics of a tax: Westbank, at paragraph 30.
[25]The Parks Canada Agency Act specifies two kinds of fee which the Minister may impose: fees for either a service or the use of a facility provided by the Agency (subsection 23(1)), and fees for products, rights or privileges provided by the Agency (section 24). Fees fixed under subsection 23(1) may not exceed the cost to Her Majesty “of providing the service or . . . facility”: subsection 23(2). A similar limitation is not found in section 24.
[26]Other federal statutes also distinguish between fees for services and the use of facilities, on the one hand, and fees for products, rights and privileges, on the other, in a manner similar to sections 23 and 24 of the Parks Canada Agency Act. They expressly cap the amount chargeable for services or the use of facilities at the cost of providing them, but not the amount chargeable for providing products, rights and privileges: see for example, Department of Canadian Heritage Act, S.C. 1995, c. 11, sections 8 and 9; Department of Health Act, S.C. 1996, c. 8, sections 6 and 7; Department of Human Resources Development Act, S.C. 1996, c. 11, sections 8 and 9; and Oceans Act, S.C. 1996, c. 31, sections 47 and 48.
[27]The business licence fees payable by the appellants are for a “right or privilege” provided by the Agency, that is, the licence authorizing them to sell alcohol in a national park, rather than for a service provided to licensees by the Agency, such as, for example, garbage collection. This is because subsection 4(2) of the Business Regulations provides that an application for a business licence must be accompanied by the applicable fee “fixed under section 24 of the Parks Canada Agency Act”.
[28]The fact that the foreword to the 2003-2004 Parks Canada Master List of Fees states that it contains the fees approved by the Minister for the 2003‑2004 season for “services provided at Canada’s national parks” [emphasis added] cannot alter the legal effect of subsection 4(2) of the Business Regulations, which provides that business licence fees are fixed under section 24. Other fees in the master list, such as for heritage presentations, would seem to be appropriately characterized as fees for services provided by the Agency, and thus presumptively fixed under section 23.
[29]In Westbank (at paragraph 30), the Court also distinguished among taxes, fees for services, and regulatory charges imposed to finance a regulatory scheme:
Although in today’s regulatory environment, many charges will have elements of taxation and elements of regulation, the central task for the court is to determine whether the levy’s primary purpose is, in pith and substance: (1) to tax, i.e., to raise revenue for general purposes; (2) to finance or constitute a regulatory scheme, i.e., to be a regulatory charge or to be ancillary or adhesive to a regulatory scheme; or (3) to charge for services directly rendered, i.e., to be a user fee.
Gonthier J. described (at paragraph 22) fees for services, or user fees, as “a subset” of regulatory charges.
(iii) Eurig Estate (Re)
[30]The appellants rely heavily on Eurig Estate (Re), [1998] 2 S.C.R. 565, for the proposition that the amount of a business licence fee must be reasonably related to the costs imposed on the Parks Canada Agency by the operation of the business. In Eurig, the Supreme Court of Canada characterized Ontario’s ad valorem probate fee as a tax, on the ground that the value of a deceased’s estate is unrelated to the cost of providing probate services. In addition to the four classic criteria of a tax set out in Lawson, Major J. said (at paragraph 21):
Another factor that generally distinguishes a fee from a tax is that a nexus must exist between the quantum charged and the cost of the service provided in order for a levy to be constitutionally valid.
[31]The appellants argue that there is no estimate of the cost of the business licensing scheme, and no nexus between the amount that licensees spend annually on the purchase of alcohol and the costs that their businesses impose on the Parks Canada Agency’s operation of Jasper National Park.
[32]In my opinion, this argument fails to take into account the fact that, unlike the present case, Eurig involved a fee for service. The cost of providing a service may be fairly readily calculated. If the fee for a service is not set at a level that is reasonably related to the cost of providing it, the fee is liable to be treated as a tax. The absence of a nexus between the “amount of the levy and the cost of the service for granting letters probate” was the basis of the Court’s conclusion that the probate fee was a tax: Eurig, at paragraph 23. The Court noted (at paragraph 20) that the purpose of probate fees was not to “offset the costs of granting probate”, but to “provide a surplus for general revenue”.
[33]Similarly, section 23 of the Parks Canada Agency Act and its analogues expressly cap the fixing of fees at the cost of a service or the use of a facility provided by the Agency. This reflects the principle of constitutional law that a fee for a service which exceeds an amount that is reasonably related to the cost of providing the service is liable to be characterized as a tax. Legislation, including section 24, does not limit the fee that may be charged for a right or privilege to the cost of providing it.
[34]Business licence fees are imposed pursuant to section 24 to defray the cost, not of issuing licences and enforcement, but of operating a national park. It will be difficult, if not impossible, to relate in any meaningful manner the fee payable for a licence to some portion of the operating cost of regulating the use of the national park which the fee helps to finance.
[35]By virtue of the broad grant of statutory discretion in section 24, and in the similar provisions of other legislation, fees for rights or privileges may be set at levels which reflect a broad range of policy considerations. Thus, business licence fees may be fixed with an eye to achieving an equitable distribution of the costs of maintaining a park among, for example, visitors, campers, fishers, the various types of business operating in the park, and the general body of taxpayers. However, since these fees are justified as a means of financing the regulatory scheme to which they are attached, the total amount collected may not exceed the operating cost of that larger scheme (namely, the regulation of the use of the park) to which they are necessarily incidental.
[36]Section 24 also includes fees for products provided by the Agency. Since these are not the subject of this appeal, it is not necessary to decide on what bases fees charged for their supply may lawfully be calculated.
[37]Since the business licence fees in the present case are not fees for service, the Eurig requirement of a nexus between the amount of the fees and the cost of providing the service is not determinative of whether the business licence fees paid by the appellants are a tax. The relevant analytical framework is found in the Westbank criteria for identifying a regulatory scheme and deciding whether the fee is necessarily incidental to it.
(iv) The Westbank criteria
[38]The Court established in Westbank (at paragraph 24) that the existence of a regulatory scheme for the purpose of determining whether a levy is a regulatory charge or a tax is identified by reference to the following non‑exhaustive list of criteria, not all of which must be met in any given case:
. . . (1) a complete and detailed code of regulation; (2) a specific regulatory purpose which seeks to affect the behaviour of individuals; (3) actual or properly estimated costs of the regulation; and (4) a relationship between the regulation and the person being regulated, where the person being regulated either causes the need for the regulation, or benefits from it.
[39]The Westbank Indian Band had enacted a by‑law providing that “land and interests in land are subject to taxation”. The by‑law was passed pursuant to a power delegated under the Indian Act [R.S.C., 1985, c. I-5] and was stated to be “for raising revenue for local purposes”.
[40]The issue before the Supreme Court of Canada was whether the by‑law applied to interests in land owned by B.C. Hydro, an agent of the Crown in right of British Columbia. If the by‑law imposed a tax, it did not apply, because section 125 of the Constitution Act, 1867 [30 & 31 Vict., c. 3 (U.K.) (as am. by Canada Act 1982, 1982, c. 11 (U.K.), Schedule to the Constitution Act, 1982, Item 1) [R.S.C., 1985, Appendix II, No. 5]] exempts lands owned by Canada or by any province from taxation. If, however, the by‑law imposed a regulatory charge necessarily incidental to a regulatory scheme, the land tax applied to B.C. Hydro’s land.
[41]The Court held that the levies were a tax because they were not attached to a detailed scheme and there was no estimate of costs. The Indian Act was held to be “insufficient to meet the requirements of a ‘regulatory scheme’ in the constitutional sense”: Westbank, at paragraph 38.
(a) which scheme: Jasper National Park or liquor licensing?
[42]Considered in isolation, the regulation of either Jasper National Park or the sale of alcohol in the Park could potentially qualify as a “regulatory scheme” to which the licence fees may be said to be attached for the purpose of making them “regulatory charges”, rather than taxes.
[43]The appellants say that the relevant scheme cannot be the administration of the Park because that is too broad. They argue that the Court in Eurig identified the probate function of the courts, not the administration of the courts in Ontario, as the relevant scheme for determining whether the probate fees reflected the costs of providing probate services. The impugned probate fees were found (at paragraph 20) to have been imposed to defray the costs, not of the probate function of the court, but of “court administration in general”. Further, the appellants argue, to identify the regulation of the use of the Park as the relevant scheme would be analogous to asserting that the entire operation of a municipality constituted the “regulatory scheme” to which a particular licensing fee was incidental.
[44]I do not agree. The fees in the present case were not attributed to the operations of the Department of Canadian Heritage at large nor even, more specifically, to the administration of the entire system of national parks. The licence fees paid by the appellants were attributed to the operating budget of the very park, Jasper, in which the appellants conducted their businesses. Any aspect of the operation of Jasper National Park which makes it more attractive to visitors, including on‑site heritage presentations, visitor services and through highways, increases the appellants’ potential customer base.
[45]In contrast, the appellants obtain only a very indirect benefit at best from the operation of other national parks and from the central administration of the responsible Department and the Parks Canada Agency. In my opinion, the analogies relied on by the appellants would be more persuasive if the Crown were arguing that the relevant regulatory scheme was the operation and administration of the national parks system as a whole.
[46]Eurig is distinguishable on the ground that any benefit which the appellants in that case received from the administration of the courts in general was remote. In addition, Eurig concerned a fee for service or user fee. In order to characterize the fee, the Court did not identify a regulatory scheme to which the fee was necessarily incidental, but asked only if it was reasonably related to the cost of providing the probate services for which it was paid.
[47]The Court stated in Westbank (at paragraph 39) that it was not influenced by the fact that the levy in question was imposed by the Band for “local purposes”, rather than for the Consolidated Revenue Fund. The Court also observed that, even though the probate fees in Eurig went to “court administration in general” rather than to the general purposes of the Province of Ontario, they were still characterized as a tax. However, if the “local purposes” to be financed by the tax were the purposes of the Band, the charge was more analogous to a levy imposed by a municipality for its general purposes than to the fees in the present case, which are fixed by the Minister and attributed to the particular park in the national parks system in which they were collected. In any event, the Court in Westbank found no scheme at all to which the charge could be incidental.
[48]The breadth of the relevant regulatory scheme was expressly considered in Ontario Home Builders’ Association v. York Region Board of Education, [1996] 2 S.C.R. 929, where the issue was whether an educational development charge, payable by applicants for a building permit, constituted an indirect tax, and was therefore outside the taxing powers of the provincial legislature. The charge had been imposed to defray some of the capital costs to the Board of providing additional schools to meet the needs of those moving into newly built housing.
[49]The question before the Court was whether the educational development charge was sufficiently connected to a valid provincial regulatory scheme so as not to be a tax. Writing for the majority, Iacobucci J. took a broad view of the relevant “regulatory scheme”, which he identified (at paragraph 86) as the province’s “comprehensive land use planning scheme.” In contrast, La Forest J. (at paragraph 123) defined the regulatory scheme more narrowly as the regulation of the construction of houses and other buildings, on the ground that builders were the persons statutorily required to pay the charge.
[50]In my opinion, the position advanced by the appellants in the present case is similar to that rejected by the majority in Ontario Home Builders. It is unduly narrow to identify the relevant regulatory scheme as the licensing requirements for the sale of alcoholic beverages in a national park and payment of the applicable fee. The logic of the appellants’ argument is that, under the single statutory umbrella of the legislation regulating Canada’s national parks, there are as many regulatory schemes as there are licensed activities for which a fee is charged. Such a fragmented approach would unduly restrict the ability of the Parks Canada Agency to recoup, on an equitable basis consistent with the statutory purposes of the legislation establishing and governing national parks, some of the operating costs of a park from those benefiting from conducting their business in a national park.
[51]Kingstreet Investments Ltd. v. New Brunswick (Department of Finance) (2004), 273 N.B.R. (2d) 6 (Q.B.); varied on appeal on another issue (2005), 285 N.B.R. (2d) 201 (C.A.); leave to appeal to the Supreme Court of Canada granted [2005] 3 S.C.R. vi, may appear to support the appellants’ contention that the scheme for licensing the sale of alcohol in national parks is the relevant “regulatory scheme”.
[52]The Court at first instance in Kingstreet Investments regarded the administration and enforcement of liquor licensing as “the regulatory scheme” to which liquor licence fees were attached. However, in that case, liquor licensing was not argued to be a part of some larger scheme. In the present case, of course, the larger “regulatory scheme”, of which licensing the sale of alcohol and the collection of the applicable fees is part, is the regulation of Jasper National Park.
[53]I agree with Justice Snider’s conclusion that, on the basis of the applicable legislation as administered, the regulation of the use and operation of Jasper National Park is the relevant regulatory scheme for present purposes.
(b) the four Westbank criteria
[54]I turn now to the question of whether the operation and regulation of the use of Jasper National Park meet the Wesbank criteria of a “regulatory scheme” to which the business licence fees payable by the appellants are “necessarily incidental”. Although not all of the Westbank criteria must be met for a levy to be a regulatory charge, rather than a tax, I shall consider them one by one.
[55]The first criterion is the presence of “a complete and detailed code of regulation”. In my view, the Canada National Parks Act and the Parks Canada Agency Act, together with the considerable body of regulations made under them, constitute “a complete and detailed code of regulation” applicable to the national parks, including Jasper National Park.
[56]Within this overarching statutory scheme, some provisions apply only to particular national parks, including Jasper. In addition to the employees who work at the national headquarters of the Department of the Environment and the Parks Canada Agency, the bodies now responsible for the statutory mandate respecting Canada’s national parks, each park has its own superintendent and staff, with responsibilities for developing park‑specific policies and for the day‑to‑day operation of the park. Accordingly, the first criterion is satisfied.
[57]The second criterion is whether the levy is imposed for “a specific regulatory purpose which seeks to affect the behaviour of individuals”. The purpose of the scheme regulating the use of Jasper and other national parks is set out in the Canada National Parks Act as follows:
4. (1) The national parks of Canada are hereby dedicated to the people of Canada for their benefit, education and enjoyment, subject to this Act and the regulations, and the parks shall be maintained and made use of so as to leave them unimpaired for the enjoyment of future generations.
The more specific scheme for licensing the sale of alcohol is designed to affect the sale and consumption of alcoholic beverages in national parks, and the conduct of the customers; the licence fees are part of this scheme. However, the fees are also imposed to raise revenue to defray the costs of the larger regulatory scheme, namely the operation of the Park itself. It is unclear whether the second Westbank criterion is satisfied.
[58]The third criterion is the presence of a proper estimation of the costs of the regulation. The costs of regulating the use of Jasper National Park, the relevant “regulatory scheme” for the purpose of the Westbank criteria, are published: they were in excess of $20 million in 2003‑2004. In that year, $87,625, or less than 0.5% of the total operating costs of the Park, were collected in alcohol licensing fees from businesses operating in the Park. It is irrelevant that there is no evidence in the record of the estimated costs of the sub‑scheme for licensing the sale of alcohol. Thus, the third criterion is satisfied.
[59]This leaves the fourth criterion: the existence of “a relationship between the regulation and the person being regulated, where the person being regulated either causes the need for or benefits from it”.
[60]The appellants say that the amount of a licence fee must be related to the costs which their businesses impose on the Park, and that there is no evidence of a rational relationship between the costs imposed on the Park by a business and the value of that business’s annual purchases of alcohol. They argue that an establishment catering to clients with a taste for fine wine may spend more on purchasing its supplies than a neighbouring bar spends on purchasing considerably larger quantities of beer and vin ordinaire. There is no reason to suppose, the appellants say, that the former business would impose greater costs on the Park, by way of policing, for example, than the latter.
[61]I cannot accept this argument. The amount that a restaurant, hotel or bar in Jasper National Park spends on the purchase of alcohol each year is a reasonable surrogate for the size of its business and the number of customers served. There may, of course, be establishments in the Park whose business comprises largely the sale of high‑priced drinks to a relatively small number of customers. However, these are likely to be the exception; a reasonable surrogate need not provide a perfect correlation.
[62]In my view, it was reasonably open to the Minister to have taken the view that there was a relationship between the volume of business done by an establishment serving alcohol, and costs to the Park. Given the tiny percentage of the Park’s operating costs that are defrayed by the appellants, it is not necessary for the Park authorities to quantify the costs attributable to the businesses. This would be an onerous and not very meaningful exercise. A certain degree of arbitrariness in the level of fees is inevitable. That the General Regulations provide specifically for the licensing of the sale of alcohol is a legislative recognition that this is a business which may present special dangers or impose additional costs on national parks.
[63]The lack of a relationship between the revenue raised from licence fees and the costs of the regulatory scheme was relied on in Kingstreet Investments as a reason for characterizing the fee as a tax. However, in that case, the licensing scheme cost less than $200,000 to administer, while over $2 million were collected in fees. Compare Nanaimo Immigrant Settlement Society v. British Columbia (2004), 242 D.L.R. (4th) 394 (B.C.C.A.). This is not the situation in the present case: far from it.
[64]The value of their purchases is also a reasonable proxy for the degree of benefit obtained by businesses selling alcohol in the Park. In this commercial context, it is reasonable to expect that the greater the volume of business, the greater the revenue.
[65]Counsel for the appellants argued that benefit to the licensees from the regulatory scheme is not a factor that may be taken into consideration under section 24. However, the fourth criterion in Westbank calls for a relationship between the regulation and the person being regulated, where that person either caused the need for the regulation “or benefits from it.” In the Ontario Home Builders case, Iacobucci J. noted (at paragraph 66) that the builders, upon whom the charge was imposed, derived a benefit from the provision of schools. He regarded this as a factor establishing the required relationship between the regulation and the person regulated.
[66]I infer from Westbank and Ontario Home Builders that the appellants may be charged a fee because they benefit from their location in the Park. This provides a nexus between the business licence fee paid by the appellants and the regulatory scheme. In addition, the exercise of the statutory discretion to fix the amount of the fees may take into account the extent of the benefit obtained from the regulatory scheme, without imposing a fee which is in pith and substance a tax. The extent of the benefit thus also provides a nexus between the amount of the fees and the regulatory scheme. See also Mount Cook National Park Board v. Mount Cook Motels Ltd., [1972] NZLR 481 (C.A.), at page 487.
[67]Further, unlike fees for services, fees for rights and privileges (including business licence fees) fixed under section 24 of Parks Canada Agency Act are not limited to the cost of providing a particular privilege. This is an indication that Parliament authorized the Minister to take into account other factors in fixing fees for rights or privileges, including their value to the grantee, provided that the total amount collected does not exceed the costs of the regulatory scheme which the fees are designed to help to defray.
[68]Counsel for the appellants submitted that this conclusion necessarily means that the only legal limit on the basis and amount of the fee that the Minister may fix for a business licence is the total cost of operating Jasper National Park. I do not agree.
[69]First, I have considered in these reasons only the particular fees at issue in this case. I am not deciding whether a licence fee would be characterized as a regulatory charge if the Minister imposed it on one of the traditional bases of taxation (such as, the profits of licensees or the value of the goods and services that they supplied). Whether it is a criterion of a tax that a levy is calculated by reference to the same basis as a traditional tax, or there is a colourable attempt to disguise this fact, is an issue that may have to be decided in another case. Second, the principles of administrative law curb abuses by Ministers of statutory powers, even if, like section 24, the enabling statute contains no express limitations on their scope.
[70]Applying the Westbank criteria to the statutory scheme and its administration, I have concluded that the business licence fees payable by the appellants, including the portion based on the volume of their purchases of alcohol, were imposed for the primary purpose of financing, in part, a regulatory scheme, namely, that governing the use and operation of Jasper National Park. Accordingly, since the business licence fees are in pith and substance a regulatory charge, not a tax, the appellants’ challenge to their validity must fail. That the fees may have some incidental characteristics of a tax is immaterial.
Issue 2: Does the Agreement between the Minister and the Town of Jasper deprive the Minister of the statutory power to impose business licence fees on establishments operating in the Town of Jasper?
[71]The argument that the Agreement between the Minister and the Town of Jasper removes the Minister’s power to charge fees for business licences concerns only one of the appellants, Athabasca. Justice Snider rejected this argument, largely on the ground that Article 6.3 of the Agreement provides that “[n]othing in this Agreement affects the operation of any regulation made under the Canada National Parks Act, until such regulation has been repealed or amended to the extent that it no longer applies to the Municipality of Jasper”.
[72]The appellants argue that this provision does not apply to business licence fees because they are fixed pursuant to section 24 of the Parks Canada Agency Act, not the Canada National Parks Act.
[73]I do not agree. Athabasca challenges the power of the Minister to charge any licence fee for operating a business in the Town of Jasper, not just the amount of the fee. The power to require the payment of a fee for a licence to operate a business in Jasper National Park is contained in subsection 4(2) of the Business Regulations and enacted pursuant to the Canada National Parks Act. The subsection provides that an application for a licence must be accompanied by the applicable fee. As a result of Article 6.3, the Agreement does not affect the operation of this provision, which ties the issue of a licence to the payment of a fee. The fact that subsection 4(2) also specifies that the “applicable fee” is fixed by the Minister under section 24 of the Parks Canada Agency Act is immaterial.
[74]This conclusion corresponds with the view of the parties to the Agreement, namely that it does not transfer to the Town the Minister’s powers to issue business licences and to collect fees for granting them. The evidence in the record is that the parties have been discussing the possible future transfer of this function.
E. CONCLUSIONS
[75]For these reasons, I would dismiss the appeal with costs.
Linden J.A.: I agree.
Nadon J.A.: I agree.