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Ontario Tax - Assessment - 'Places of Worship'. Fung Loy Kok Institute of Taosim v. Municipal Property Assessment Corporation
In Fung Loy Kok Institute of Taosim v. Municipal Property Assessment Corporation (Ont CA, 2024) the Ontario Court of Appeal dismisses an appeal (of an earlier appeal of an even earlier application) regarding the appellant's tax-exempt status. The central issue was whether - and which - real properties of the appellant were "places of worship", or instead ancillary social - and even retail - facilities (referred to as 'satellite sites'):(1) The governing legislation
[28] Section 3(1) of the Assessment Act provides that:All real property in Ontario is liable to assessment and taxation, subject to the following exemptions from taxation: [29] A series of paragraphs then follow that set out a list of exempted properties. The specific provision at issue in this case is para. 3(i), which exempts from taxation:3. Land that is owned by a church or religious organization or leased to it by another church or religious organization and that is,
i. a place of worship and the land used in connection with it, [30] The Act does not define either the term “worship” or the related phrase “place of worship”.
(2) Standard of review
[31] The dispute over whether FLK’s disputed properties are “places of worship” for the purposes of the Assessment Act is a question of mixed fact and law. The threshold interpretive issue of the meaning of the phrase “place of worship” in s. 3(1), para. 3(i) of the Act is an extricable question of law, reviewable on a correctness standard. However, the application judge’s conclusions with respect to the activities that take place on the disputed FLK properties involve findings of fact, which are entitled to appellate deference and reviewable only on the basis of palpable and overriding error: see e.g., Belwood Lake Cottagers Association Inc. v. Ontario (Environment and Climate Change), 2019 ONCA 70, 431 D.L.R. (4th) 318, at para. 37; Sarnia (City) v. River City Vineyard Christian Fellowship of Sarnia, 2015 ONCA 494, 336 O.A.C. 373, at para. 22.
(3) The meaning of “place of worship”
[32] In Re Singh and City of Sudbury (1975), 8. O.R. (2d) 377, at p. 380, Loukidelis D.C.J. interpreted the phrase “place of worship” in s. 3(1), para. 3(i) of the Assessment Act by adopting the Shorter Oxford Dictionary definition of “worship” as meaning:Reverence or veneration paid to a being or power regarded as supernatural or divine; the action or practice of displaying this by appropriate acts, rites or ceremonies. [33] FLK takes no issue with this definition, although it prefers the similar Merriam-Webster dictionary definition of worship as “reverence offered a divine being or supernatural power”; “an act of expressing such reverence”; or “a form of religious practice with its creed and ritual.” I see no substantial difference between these two dictionary definitions.
(4) The “primary purpose” test
[34] The parties agree that once “worship” has been defined, the question of whether a particular location qualifies as a “place of worship” requires a factual determination of whether it is “primarily used” for a purpose that falls within the definition of “worship”. As MacPherson J. (as he then was) explained for the Divisional Court in Buenavista on the Rideau v. Regional Assessment Commissioner, Region No. 2 (1996), 1996 CanLII 11792 (ON SC), 28 O.R. (3d) 272, 134 D.L.R. (4th) 278 (S.C.), at p. 276-77:[T]he test for determining whether an exemption should be granted is whether the primary purpose of the institution comes within the words defining the exemption in the Assessment Act. This is true with respect to s. 3 of the Assessment Act generally … [Citations omitted.] [35] As Doherty J.A. stated in Diocese of Toronto Camps (Anglican Church of Canada) v. Municipal Property Assessment Corp. (2004), 2004 CanLII 34918 (ON CA), 246 D.L.R. (4th) 170 (Ont. C.A.), at para. 12, the primary purpose test requires an objective determination of the principal purpose for which the land is used and occupied. The court continues at paras 45-82 to explore these issues on the facts of the case.
Next the court considered the taxability of 'satellite sites':(7) The International Centre’s Contemplative Garden and sales area
[83] FLK also challenges the application judge and Divisional Court’s conclusion that the International Centre’s Contemplative Garden and sales area are both taxable.
[84] With respect to the Contemplative Garden, FLK argues that the courts below erred by not finding it to be a “place of worship” in the face of “uncontradicted evidence … [which] demonstrates that the Taoist Contemplative Garden is a space open to the public where religious rituals are routinely practiced by groups of practitioners”.
[85] This submission substantially overstates the force of this evidence. Mr. Farano stated in his affidavit that the Contemplative Garden has a statue of Bodhisattva Guanyin, and that “[g]uests and FLK participants visit the statute to pay respect to Guanyin, make donations and to ask for her blessing”. However, on his evidence, organized public ceremonies to celebrate Guanyin are only held in the Contemplative Garden three times a year. While it may be accurate to describe a ceremony held thrice-yearly as “routine”, this evidence falls well short of establishing that the Contemplative Garden is primarily used for organized worship. To the contrary, Mr. Farano’s affidavit implies that it is not used in this manner on most days of the year.
[86] Like the Divisional Court, I am also not persuaded that the application judge erred by treating the Contemplative Garden as analogous to the convent gardens that were at issue in Holy Theotokos Convent v. Whitchurch-Stouffville (Town), which were found not to be “places of worship” for the purposes of s. 3(1), para. 3(i) of the Assessment Act, even though they contained religious icons and were used by the nuns for private prayer. Contrary to what FLK suggests, the decision in Holy Theotokos Convent did not turn on a finding that the convent gardens were not open to the public. Rather, the application judge in that case concluded at para. 7 of her reasons that:Even if members of the public frequent the sites where the icons are located on the convent grounds, this is not in my view a place for formal public worship, anymore than the other portions of the property, whether inside or outside the buildings, where no formal public worship is conducted. It was open to the application judge to draw a similar conclusion about the Contemplative Garden at the International Centre. This was a factual determination that is entitled to deference.
[87] With respect to the International Centre’s sales area, there is no suggestion that it is directly used for worship. As the Divisional Court observed, “the commercial activity of the ‘sales area’ … most readily belies a factual finding that worship occurs at that site”. FLK’s contention is that the sales area is nevertheless tax-exempt on the basis that it is “land used in connection with” the activities that take place elsewhere on the property, which MPAC agrees are “worship”.
[88] While FLK points out that some of the items sold in the sales area can be used by members and guests during the religious rituals that are conducted in other parts of the Centre, this is not true of many of the other items that are available for purchase (e.g., jars of honey).
[89] FLK argues that “MPAC and the courts” would not support denying a tax exemption to a “gift shop in a cathedral”, and that the Centre’s sales area should be afforded similar treatment. However, FLK has not presented any evidence about how gift shops at other religious facilities have been treated historically. The question of how a gift shop or similar store that is associated with a tax-exempt “place of worship” should be treated for property tax assessment purposes is fact-specific and context-driven. I am not satisfied that the application judge made any reversible errors in her analysis that would permit us to interfere with her determination that the sales area at FLK’s International Centre is “not primarily used for or in connection with worship”.
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