On December 9, 2016, the Ontario Superior Court of Justice released a decision regarding whether or not the University of Ontario Institute of Technology (“UOIT”), a charitable organization, was entitled to rebates of Ontario retail sales tax (“RST”), which it paid on the cost of constructing new buildings on its campus.

The case turned on whether UOIT was a “university” during the period of time from 2002 to 2004 when it paid the RST in respect of which the rebate was sought (the “Rebate Period”). If UOIT was a “university”, it would not be entitled to the rebates. The reason is that, from a policy perspective, a university should not be entitled to RST rebates because it is already publicly-funded. In the government’s view, the receipt of a tax rebate would amount to an additional payment of public funds to the particular institution.

The relevant definition of what constitutes a “university” for purposes of obtaining RST rebates is found in a regulation to the Ontario Retail Sales Act (the “Regulation”). Under the Regulation, a “university” is a post-secondary educational institution authorized to grant degrees “by an Act of the Assembly.” An “Act of the Assembly” generally means legislation passed by the provincial legislature.

The facts showed that UOIT was established in 2002 pursuant to the University of Ontario Institute of Technology Act (the “UOIT Act”), an act of the provincial legislature; but it did not have authorization to grant degrees under that statute until 2007. UOIT’s authority to grant degrees during the Rebate Period came directly from the Minister of Training, Colleges and Universities under the Post-secondary Education Choice and Excellence Act (“PECEA”), who used his authority under PECEA to give consent to UOIT to award degrees.

In order to determine whether the PECEA, pursuant to which the Minister granted consent to UOIT, was “an Act of the Assembly” for the purposes of the definition of “university”, the Court looked at the specific language in PECEA. The language provides that no person can grant a degree “unless the person is authorized to do so by an Act of the Assembly or by the Minister under this Act.” According to the Court, this language suggested that the government intended to create two distinct sources of degree-granting authority: (1) by an Act of the Assembly with specific language that provides an institution with the power to grant degrees (e.g., the York University Act); or (2) by consent from the Minister granted under PECEA. Thus, if the definition of “an Act of the Assembly” was meant to include ministerial consent, there would be no need to specifically refer to two distinct sources of degree-granting authority.

The Court used its analysis of the language in PECEA to interpret the meaning of “an Act of the Assembly” in the definition of “university” in the Regulation. If the government had intended for degree granting authority “by an Act of the Assembly” to include authority by consent from the Minister under the PECEA, the government would have specifically said so in the Regulation. Based on this observation, the Court concluded that UOIT was not a “university” during the Rebate Period.

When judges and lawyers go through the exercise of interpreting the meaning of words in statutes, it is with a view to clarifying rules and making the application of rules more predictable. In the present case, clarifying the meaning of what constitutes a “university” for purposes of obtaining an RST rebate should help educational institutions and organizations determine what their RST rebate entitlements are and better support their claims for rebates if they are contested.

For the full text of the decision see here.