THE LEGAL ASPECT OF MAKING WATER RATES IN CANADA

THE LEGAL ASPECT OF MAKING WATER RATES IN CANADA

In a paper read before the Ontario Municipal association, Francis Mackelcan, city solicitor of Hamilton, Ontario, furnishes the following extracts from legal opinions on the question of water rates: “All incorporated companies supplying water to a municipality or its inhabitants have power to charge whatever rates they may deem tit for all water so supplied. No restriction is placed upon them, and they may regulate their rates to suit their own interests, and are not bound to make tneir charge equal or uniform to the different consumers. There is no reason why municipalities purchasing such waterworks or constructing them should not have the same wide discretion in regulating their water rates by virtue of their proprietary interest, which alone gives power to incorporated companies to fix the charges they shall make to the various consumers. In addition to their proprietary rights, municipalities are invested with sovereign legislative powers over the subject of water rates, by section 20, of the Municipal Waterworks act, which provides that the corporation shall regulate the distribution and use of the water in all places and for all purposes where the same may be required, and from time to time shall fix the prices for the use thereof, and the time of payment. Section 29 gives the municipal corporation power and authority to supply, upon special terms, any corporation or persons with water, although not resident within the municipality, and to exercise all other powers necessary for the carrying out of their agreement with such corporations or persons, and, also, gives the municipality power from time to time to make, and carry out any agreement which they may deem expedient for the supply of water to any railway company or manufactory. There is no provision with regard to water rates similar to that contained in the Assessment act, which directs that all taxes shall be levied upon the w’hole of the assessment for the various classes of property, according to the amounts assessed in respect thereof, and not upon any one or more kinds of property or assessment or in different proportions. In the case of Fortier vs. Lambe, it was strongly contended that the act of the legislature of Quebec, which imposed a license fee or tax on manufacturers and traders was invalid, because the license fee imposed by it upon the appellant was double that which was imposed upon some other classes of manufacturers and traders; but this contention was not upheld by the court. In giving judgment, Chief Justice Strong said:

‘The objection of want of uniformity which was so strongly pressed is no legal objection. Granting that the legislatures have the power of imposing such taxes, it is for them to say how it is to be distributed. We have not in the British North America act any such provision as that contained in the Constitution of the United States, which requires that all taxes, excises and imports shall be uniform throughout the United States. The cases cited in support of this contention were principally American authorities, which had reference to this express constitutional provision requiring uniformity. The appeal must be dismissed with costs.’ Justice Taschereau, in the same case, said: ‘The contention of the appellant, based on the ground that this tax has not been legally apportioned, and is null for want of uniformity and equality, is, in my opinion, untenable. Whatever political economists and other writers may say on this subject, I know of no law in the Dominion that in any way puts any restriction or limitation on the Federal or Provincial authorities in relation to taxation within their respective spheres. In the United States, a provision on the subject is to be found in the Federal Constitution, but there is no similar enactment in the British North America act. I would dismiss the appeal.’ * * * * In the case of the Attorney-General vs. Toronto, allusion is made to the provisions in the Municipal act, by which it is made obligatory on a municipal corporation which has constructed waterworks, where there is a sufficient supply of water, to furnish with water all buildings within the municipality situate upon land lying along anv supply pipe of the corporation, upon the same being requested by the owner or occupant or person in charge of the building, and this is made a reason for the conclusion that the obligation to supply the water also carries with it the consequence that the charge to all consumers must be uniform. But there is the same provision in the acts relating to private companies supplying water in any municipality, and this is not held to control their discretion so as to prevent them from regulating their charges to suit their own interests. But it is impossible to make charges for water absolutely equal or uniform, unless some means can be devised by which the same sum shall be charged for every gallon of water consumed; and this is out of the question, for a meter would then have to be placed in the house, office, room or other premises of every consumer of water, which would be a practical impossibility. It is not for drinking purposes or for consumption alone that large supplies of water are provided. F’ire protection forms a large element of the necessity for providing a plentiful supply of water, and no direct charge is made to any individual for water supplied for this purpose. Immense sums are saved in reduced insurance premiums by reason of the increased pressure of water for fire purposes provided by municipalities, and the only way in which this benefit can be paid for to the municipality which pays out large sums of money to provide it is to impose a water rate based on the assessed value of the property which receives the benefit of this protection from fire. The occupants of a large bank or office building may consume less water than is used in some cheap building, such as a boardinghouse, or for some purpose where water is freely used. Yet, under the method of imposing water rates which is almost universal, they pay in a much larger amount to the waterworks department, and get good value indirectly for the money so paid. The municipality should have the power to utilise their property for the general benefit of the city or town and the advancement of its growth. It may be to their interest to encourage the establishment of manufactories, and, as an inducement to manufacturers to locate or extend their works in the municipalities, they may deem it in the interest of the community as a whole, to charge a low rate to manufacturers who will develop or extend the industrial progress of the municipality. And, in doing this, they may be making a profit out of their water supply, instead of suffering a loss, as a large manufactory might bring into the municipality a great number of new inhabitants, who will be customers for water supply, which would be paid for at a higher rate than that which would be charged to the manufacturer who employs them, and from whom they receive the wages which enable them to rent houses, and become contributors to the waterworks revenues. Then there are some establishments which confer no general benefit upon a municipality, but consume large quantities of water, using it for purposes out of which large profits are made by the proprietors—the water so used being an essential factor in producing the articles sold by them, and, to some extent, forming part of the raw material from which they are made. As an instance of this kind may be mentioned, distilleries, breweries, and aerated water factories. Distillation is not a manufacture, but a process, in connection with which large quantities of water are used for cooling purposes. Water forms a large proportion of the product of breweries, and aerated waters consist of water charged with gas and containing mineral or other ingredients which form but a small proportion of their bulk. Is there any reason why a municipality providing water used in this way should not charge for it a price which, in the judgment of the council, is fair and reasonable and, to some extent, commensurate with the convenience and value of it to these users? A private company owning waterworks could charge upon this basis, and why should not a municipal corporation owning waterworks have the same right? A local municipal legislature should be permitted to use the same plenary or sovereign powers of legislation within the sphere of the subjects over which legislative power is assigned to it, and within the limit imposed by statute upon the exercise of such legislative power as are exercised by the local provincial legislatures within their respective spheres, and the limits imposed upon them with respect to such legislation. If not, what legislative or judicial body is to revise or amend such municipal legislation? The legislature which has conferred the power may take it away, or it may pass enactments which override or annul or vary the legislative acts of the municipal council. But there is no judicial power which can do this, if the municipal council is acting within its legislative sphere, and the statutory limits imposed upon its power to legislate on the subject. Could any judge, or bench of judges, amend or revise a tariff of water rates or charges, and substitute some other scale or method than that which has been adopted by the local governing body, or could such judge or court reject or annul such tariffs until one was submitted which met with the judicial approval? The judiciary would in such case be practically usurping the legislative powers of the municipality, without having the local knowledge to enable them to exercise these powers intelligently. There may be expressions of judicial opinion which go this length, but, if so, they should be overruled, and, if legislation is necessary for that purpose, such legislation should be passed. It has been recently held by one of our High Court judges that the rate or rent charged to consumers of water for the water supply to, and consumed by them, must be an equal rate charge to all consumers; but, as above pointed out, this is impracticable, and there is no legal or valid reason wny municipalities should be compelled to do or attempt to do that which is impossible, or why they should not be permitted to manage their own property and business concerns in such manner as they in their judgment and experience deem to be in the best interests of the municipality and its inhabitants.”

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