BC Religious Property Tax Exemption and No Power for Cryptocurrency
From the sanctified grounds of religious buildings to the surprising sanctuaries for fruit trees and bomb shelters, we probe the public policy implications when specific properties are relieved from bearing the tax burden, leaving others to shoulder the financial weight. Our discussion navigates the murky waters of the Rural Area Taxation Act, shedding light on the ripple effect tax exemptions have on society.
Also on the show, BC Hydro pulled the plug on a forestry company’s cryptocurrency aspirations.
Finally, a sexual assault conviction is overturned as a result of Crown Counsel cross-examining the accused on whether the complainant was attractive and the trial judge making their own assessment of the complaint’s attractiveness.
Legally Speaking with Michael Mulligan is live on CFAX 1070 every Thursday at 10:30 a.m. It’s also available on Apple Podcasts or wherever you get your podcasts.
Legally Speaking Feb 8, 2024
Adam Stirling [00:00:00] It’s time for our regularly scheduled segment. Joining us now Barrister and Solicitor with Mulligan Defence Lawyers it’s Michael Mulligan. Michael morning. Welcome to Legally Speaking. How are you doing?
Michael T. Mulligan [00:00:11] I’m doing great. Always good to be here.
Adam Stirling [00:00:12] All right. What is on the agenda for you and I today?
Michael T. Mulligan [00:00:16] The first case on the agenda today deals with the issue of who does and who does not pay property tax. And it’s a bit more complicated than many people would think. First of all, we’re all you know, we’re used to discussing property taxes that are imposed by municipalities, right? That process is going on right now with various municipalities. But don’t think that you can, avoid property taxes by simply getting out of all the municipalities these thought of that there’s no escape that we have in British Columbia an act, the Rural Area Taxation Act, which provides for the taxation of, real property, that’s not in any municipality at all. So, there’s no getting around it that way you can’t just don’t get far enough away. And the particular issue, that I was just dealt with, in court, by the B.C. Supreme Court was an appeal concerning whether, there should be, taxation applied to a 31-acre island located just off of, Schwartz Bay. It’s a, island, assessed it being worth $8.5 million. It’s called, Knapp Island. K-N-A-P-P island. And the particular issue there is that, that act that I mentioned, that the Rural Area Taxation Act provides a number of exceptions to who can avoid paying any property tax. And the exemptions are similar, but not exactly the same as the exemptions which exist in the community charter, which exempts a bunch of, categories of, property from paying any property tax in a municipality. And that act, by the way, is quite interesting what we’ve chosen to exempt, like we’ve exempt, exempt and some things which you would say, yeah, that’s kind of is obvious, like, you know, buildings owned by the municipality itself. They don’t have to pay them self-tax. That would be a ridiculous process. We’ve also exempted things like hospitals don’t have to pay property tax. Yeah, that probably makes sense. Everyone’s using those a public facility. Other unusual things though include fruit trees are exempt.
Adam Stirling [00:02:26] hmm.
Michael T. Mulligan [00:02:26] So you don’t pay property tax based on increased value created by fruit trees. We’ve also, oddly, exempted what amounts to things like bomb shelters. So, if you construct, something designed to provide protection either for people or, frankly, domestic animals, not farm animals, in the event of an emergency within the meaning of the Emergency and Disaster Management Act. No tax on the cost of that. So, if you want to have a super deluxe underground bomb shelter for you and your dog, you’re in good shape. Your property taxes can’t go up thanks to that exemption, to the community charter.
Adam Stirling [00:03:02] Waiting for some person to make their whole house the bomb shelter. But yes.
Michael T. Mulligan [00:03:06] Correct. There’s got to be some shack above ground and a palatial mansion below ground. No property tax. Just don’t get a farm animal in there. As long as it’s for you and your domestic animals, you’re in good shape.
Adam Stirling [00:03:16] Absolutely.
Michael T. Mulligan [00:03:18] That’s right. So, you might want to redesign that house. And so, one of the other exemptions that exists in the community charter, and has a similar provision in that, act that deals with, rural property, is an exemption for religious buildings.
Adam Stirling [00:03:38] hmm.
Michael T. Mulligan [00:03:38] That’s really interesting. The language is different for that exemption in the community charter from the areas outside of your municipality, they are similar, but not quite the same. Now, I should say on both fronts, it does raise a, I think, a really interesting public policy question people should think about, which would be should we be as a matter of public policy, exempting I mean, community charter exempts things like, buildings set apart for public worship in the land on which the building stands. And there’s at least similar exemption exists in that, for rural areas. But one of the things people should just think about, of course, is that when municipalities are setting their mill rate like their tax rate, they kind of figure out how much money they needed, and they set the tax rate accordingly. And if you exempt a bunch of things like fruit trees and bomb shelters from having to pay tax, well, that leaves everyone else’s tax rate is higher. And so, in Canada, of course, we have a constitutional right to freedom of conscience and religion. Right.
Adam Stirling [00:04:44] mm hmm.
Michael T. Mulligan [00:04:44] But part of that includes a freedom from being compelled to do religious things.
Adam Stirling [00:04:49] hmm.
Michael T. Mulligan [00:04:49] Right. And here, given how the legislation works, you are effectively compelled to subsidize, buildings for public worship, whether you like it or not, whether you agree with religion or not, whether you’re a member of any religion or not. You’re subsidizing them. That’s what’s going on, right. The same public services are being consumed, and if you don’t tax them, it’s going to come out somewhere. Just like if you don’t tax bomb shelters, everyone else’s taxes are just a little bit higher. So that’s something people should think about generally. Now, with all that background, the particular issue with respect to the 8.5-million-dollar island, near Schwartz Bay, involved whether that island amounted to a “place of public worship.” which is the language used in that Rural Area Taxation Act. And it was an interesting state of affairs. The island itself, was, owned by, the spouse or partner of, Shinto priest.
Adam Stirling [00:05:48] hmm.
Michael T. Mulligan [00:05:49] And, that person the partner had on that, island, for some time and then going back more than 20 years, and the, Shinto priest and his partner, had for many years lived on, Salt Spring Island, where they had a facility there, which was exempt from, taxation. And it, that area on Salt Spring, it was called, Bright Woods, and it was exempted, and it was a seven-and-a-half-acre site. And while meeting rooms and smaller rooms of a sacred forest and walking paths to the shrine, and nobody lived there.
Adam Stirling [00:06:24] hmm.
Michael T. Mulligan [00:06:24] And so that’s see it feel felt within it fell within that exemption under the community charter. So, it didn’t pay any tax. Well, they decided to shut down that facility and decommissioned it in 2021 and moved to this island. The island had facilities on it, which are related, to religious practices. And there was evidence about, the particular religion, which includes things like, trees being a particular importance to it, encourages, prayer practices, seated or walking, together or guided or not. And it encourages a relationship with nature. And there were things built on the island which were designed to facilitate all of that walking trails and buildings and water treatment facilities and various things.
Adam Stirling [00:07:16] Yes.
Michael T. Mulligan [00:07:18] And so when the couple moved there, they applied for the exemption under that, the terms of the act. And they say, okay, well, you know, this is, now our area, for, public worship, and so therefore, we wish they did not pay any tax on it, just like we didn’t pay any tax on Salt Spring Island in the facility there, they shut down. The challenge became, first of all, at the first level of assessment about the Property Assessment Appeal Board. They looked at what was this really an area for public worship? And they pointed out that, for example, for the last 20 years, all the same improvements existed on the island, but they were for private use. Guests could be invited there if the owners could go there if they wished. And they pointed out that the clean transition from private worship to public worship would not be apparent to anyone who was sailing past the island. Nothing changed. And for example, they pointed out, that in large type there was a big sign that the only way you could get to the island saying private harbour. That is the only access place, that is not compelling a piece of evidence. What you’re trying to argue that this was a public area for public works. There’s no other way to get to the island. And so.
Adam Stirling [00:08:39] Whoops.
Michael T. Mulligan [00:08:40] So they didn’t succeed? Whoops
Adam Stirling [00:08:41] I knew we forgot something.
Michael T. Mulligan [00:08:44] They should have taken down the sign. And so, the board found that the principal use of the improvements were for private worship, not public worship, because there was just no way somebody could conclude that they could go there.
Adam Stirling [00:08:56] Yeah.
Michael T. Mulligan [00:08:58] I guess it would be interesting if somebody did show up there and try to use the trails for the intended purpose, what the response would be. But there was no evidence about that. And so, the appeal to the BC Supreme Court was an appeal based. And I must say they didn’t disagree with those factual findings. I guess it’s pretty hard to disagree with obviously, there’s a sign there. And, you know, there just wasn’t a disagreement about those things.
Adam Stirling [00:09:21] Yeah.
Michael T. Mulligan [00:09:22] But they made an argument, premised on a principle that the Supreme Court has talked about when interpreting statutes, through the and the concept there is there should be a presumption against discrimination, when consider and when you’re interpreting, well, what does something mean. Right.
Adam Stirling [00:09:41] hmm.
Michael T. Mulligan [00:09:41] You should have, non-discriminatory, interpretation of things. Other people are treated the same way.
Adam Stirling [00:09:47] On interesting.
Michael T. Mulligan [00:09:47] People should be treated the same way. And so, their argument amounted to, oh, look, you know, this facility we had for some 20 years on Salt Spring Island, that that was sort of the equivalent. We really were moving our operation from there to the, the island. And so therefore the island ought to be treated the same way and that it would be, you know, you should not, discriminate between these two facilities. So that was really the essence of the argument. It did not succeed, in the B.C. Supreme Court on the judicial review. They found that that finding given a particular circumstance here, including, by the way, the couple lived on the island where they weren’t living, at the facility that used to exist on Salt Spring Island. This was their new residence.
Adam Stirling [00:10:31] hmm. yeah.
Michael T. Mulligan [00:10:31] They moved there. It was a house, and I think a couple of other places people could stay who were invited. Guests have got past the sign. And so, they found that that that principle really didn’t have any application here, and that this wasn’t an area for public worship. And so, they, they are going to need to pay tax on the $8.5 million assessed value of the private island. But again, the big policy thing to think about is that: what should be exempted? Should, areas for public worship be exempted at all? because that does, impose a burden, on people that aren’t using those things. And it’s sort of dissimilar to some of the other exemptions, that you would say well, like a hospital or the, you know, the municipal yard or the, you know, City Hall or something. Right. Well, this is just sort of a facility for everyone, you know, the, as I said, the concept of freedom of religion means that you also have freedom from being forced to participate in something,
Adam Stirling [00:11:32] hmm.
Michael T. Mulligan [00:11:32] And here, whether you like it or not, all across province of British Columbia, whether you’re in or outside of municipality, you are compelled to financially subsidies places of public worship. So, I hope people think about whether that’s appropriate or not, but in any case, there won’t be an issue with respect to the, the island owned by Schwartz Bay.
Adam Stirling [00:11:50] Michael Mulligan with Mulligan Defence Lawyers, Legally Speaking. We’ll continue right after this.
[00:11:56] COMMERCIAL.
Adam Stirling [00:11:56] Legally Speaking continues on Ceefax 1070 joined with Michael Mulligan for Mulligan Defence Lawyers. Up next, Michael, it says you’re a forestry company trying to diversify into, does that say cryptocurrency?
Michael T. Mulligan [00:12:08] That is a hard right turn from being a forestry company.
Adam Stirling [00:12:11] That is. That is. How did it go?
Michael T. Mulligan [00:12:14] Not well.
Adam Stirling [00:12:15] Oh.
Michael T. Mulligan [00:12:16] So you’re exactly right. This was a case involving forestry company that decided it wanted to, quote, diversify close quote, into cryptocurrency mining and not in a small way.
Adam Stirling [00:12:29] hmm.
Michael T. Mulligan [00:12:30] The forestry company, which interestingly, claimed that it was doing so in partnership with the First Nation. And I think it’s interesting in this judgement.
Adam Stirling [00:12:41] mm hmm.
Michael T. Mulligan [00:12:41] Wish to, construct, large facilities, data centers, in northern British Columbia, to be used for the purpose of cryptocurrency mining.
Adam Stirling [00:12:51] Interesting.
Michael T. Mulligan [00:12:51] And to do so, they needed power. A lot of power. Yup. And they filed an application to get hooked up to B.C. hydro, which you can do, and, B.C. hydro, has, broadly speaking, a monopoly over the provision of electrical power in British Columbia. And so, the starting point would be that if you need a hook up for electricity, they’ve got to provide it. Otherwise, your house or business is going to be pretty dark and, not working so well. Now, if you do that, you do have an obligation to pay for, system infrastructure that’s only for, you know, for your sole benefit. So, if you need some thick wires or new transformer poles put in or whatever, you could be on the hook for paying for it. But what happened here, is that the Lieutenant-Governor in council, B.C. government, issued an order in council, back in 2022, directing, that, the, B.C. hydro, stop hooking up cryptocurrency mining companies, to the power system. Why, you might ask? Well, to give you an idea, this particular project, there was an affidavit from the CEO of B.C. hydro indicated that the amount of power being requested here was 2.5 million megawatt hours of electricity per year.
Adam Stirling [00:14:18] wow.
Michael T. Mulligan [00:14:19] And you might wonder what it was 2.5 million megawatt hours per year. Well, to provide some scope and scale to that figure, the CEO indicated that BC’s Hydro’s nine largest customers, delivery no more than 500,000 megawatt hours of electrical power to each of the nine sites require, something of 1,000,000 megawatt hours per year. So, it would be like two and a half times the amount of power used by the current nine largest customers.
Adam Stirling [00:14:47] yep.
Michael T. Mulligan [00:14:47] Of B.C. hydro every year. There was some dispute about whether that would amount to setting up something in the order of half of the power that would be produced by site C. That’s a lot of power.
Adam Stirling [00:14:56] And this is for cryptocurrency.
Michael T. Mulligan [00:14:58] Cryptocurrency mining.
Adam Stirling [00:14:59] Great. Great.
Michael T. Mulligan [00:15:01] So you’re this half of Site C turned into, power supply for the cryptocurrency mining, venture by the forestry company. And so, they were told no. And, based on this order in council, which is what got challenged in court, and there were a couple of arguments that were made, or so a few arguments are made. One argument interesting, one was the sort of non-discrimination argument like we talked about in the, moving the religious Centre to the island by Schwartz Bay saying, well, hey, you shouldn’t discriminate against us. We’re just asking for power. You know, this, you know, B.C. Hydro’s its monopoly supplier of electricity in British Columbia. And so, it’s just not fair that, you can have an order in council just, singling out some particular industry, saying, you know, no power for cryptocurrency mining, but we’ll give power to whatever, you know, aluminum smelting or something else. Right. On that, basis, the court, you know, analyzed all of that, but ultimately concluded that this wasn’t the case of, sort of discrimination in that legal sense. The issue here was the concern about the cost of service, which is you what exactly would be implications of this enormous additional power draw, in terms of the cost of producing that power and what that would mean, we’d have to immediately start working another, dam to, you know, supply those needs. And so, it wasn’t found to be discriminatory. The other interesting argument was this one, and it’s interesting in the context of, the controversy lately about, proposed amendments by the government to the Land Act, arguing, that they need to be brought in, in line with the declaration of the Rights of Indigenous people Act. Right. And one of the other arguments the company made was, hey, you didn’t, consult, with First Nations before turning down this application.
Adam Stirling [00:16:59] Yeah.
Michael T. Mulligan [00:17:00] And they pointed to, the declaration of the Rights of Indigenous Peoples Act and said, hey. That says you should be doing that. What’s going on? You didn’t consult with our proposed with our partner here? Your decision to turn this down, should be, struck down on the basis that you failed to consult with them. That was an interesting argument. And it would be, I think, even more interesting if the Land Act proposals were, passed.
Adam Stirling [00:17:30] yeah.
Michael T. Mulligan [00:17:30] But, here the judge analyzing it concluded that, the applicant for this review, the particular applicant, was the forestry company wanting to become a cryptocurrency mining company on the side. And the applicant wasn’t the First Nation. And so, on that basis, the judge found, that, there just wasn’t enough evidentiary basis here to conclude that the First Nation, was part of this or what exactly their role would be, and it wasn’t them bringing the challenge to the you can’t plug in here order. And so, the judge found that the, the, DRIPA, Declaration of the Rights of Indigenous Peoples that did not, was not breached, when the government did not consult, with the proposed partner for the cryptocurrency mining facility. And so, the outcome of this is, no extension cord, to the site C dam, and the forestry company will have to come up with some other plan if they wish to diversify away from cutting down trees.
Adam Stirling [00:18:39] I’m just sitting here imagining the hardware that would work require 2.5 million megawatt hours a year. It’s. Yeah, it’s hilarious. But.
Michael T. Mulligan [00:18:48] You might have to go to Home Depot, get a really, really thick extension cord.
Adam Stirling [00:18:51] Well, I was just thinking, because I’m doing the math in my head, and I’m thinking, with how much computational horsepower could you actually corner global markets and make huge money? It’s one of those thought experiment type scale projects that I never thought anybody would actually be audacious enough to attempt or ask to attempt, as it were. We’ve got one more.
Adam Stirling [00:19:09] yeah.
[00:19:09] It says improper cross-examination by Crown about the attractiveness of a complainant in a sexual assault case and unbalanced scrutiny of evidence by a judge. And the result. Three minutes.
Michael T. Mulligan [00:19:21] Yeah, I think I could do it in three minutes. This is the key, sort of. Duncan. And it’s a sexual assault case where the Crown decided to cross-examine, the accused who testified and testified that he did not sexually assault the complainant. And the Crown embarked on a line of cross-examination about whether, the accused thought the woman was attractive, and whether she was pretty, or whether she was, I don’t know if he used sexy, but was cross-examining about that. And the accused was left sort of stumbling over, you know, I don’t think I should. That’s not appropriate. And the judge relied in part on, the, accused not saying yes, this person was attractive when the judge thought that the person was attractive. And so the judge and one of the reasons for convicting the accused was the judge concluded that they thought, they the judge, thought the, the, complainant was attractive, and found that the, accused not acknowledging that she was attractive, was an indication that he wasn’t telling the truth when he said that he didn’t sexually assault her. Very interesting reasoning. That has been considered in other cases.
Adam Stirling [00:20:36] hmm.
Michael T. Mulligan [00:20:36] The Ontario Court of Appeal, concluded a number of years ago that it was not appropriate for Crown to be asking questions about whether the accused thought somebody was pretty or attractive or sexually attractive. And that that’s not, relevant consideration to whether somebody committed a criminal act of sexual assault. And similarly, the B.C. Court of Appeal has cited that case and also concluded that it’s not appropriate to, for example, cross-examine somebody in a sexual assault case, an accused, about their sexual orientation. And the court of appeal in British Columbia approving of that Ontario case, saying you it’s not appropriate to be asking questions about whether you think the complainant is sexy.
Adam Stirling [00:21:22] hmm.
Michael T. Mulligan [00:21:23] Also confirmed that it’s not appropriate to, for example, ask somebody whether they’re, heterosexual, or homosexual. For example, in the context of an allegation of sexually assaulting a child. Finding is just not appropriate that somehow you would suggest that because somebody might, be a particular sexual orientation is more likely they would have sexually assaulted a child.
Adam Stirling [00:21:44] hmm.
Michael T. Mulligan [00:21:44] And so there’s been a lot of judicial cold water poured on that line of thinking, I think quite appropriately. And so here, the judge’s decision to, first of all, allow the crowd to engage in that line of cross-examination and then, in fact, relying upon it, in deciding not to accept the accused denial that. He committed the offence, was found on appeal to be inappropriate. And not a sound basis to, have rejected, his evidence and also not appropriate that the judge would be, using their own formulation about whether they thought the person was, attractive or pretty. And so, all of that, led to the result that the conviction has been overturned. And there been a new trial ordered.
Adam Stirling [00:22:37] Michael Mulligan with Mulligan Defence Lawyers, Legally Speaking.