J. 1994 SH. No. 110280 IN THE SUPREME COURT OF NOVA SCOTIA BETWEEN: CAPE BRETON DISTRICT SCHOOL BOARD and HER MAJESTY THE QUEEN in the Right of the Province of Nova Scotia represented by the Minister of Education DECISION HEARD: at Halifax, Nova Scotia before the Honourable Justice Margaret J. Stewart on December 13, 1994 DECISION: February 10, 1995 COUNSEL: Peter Bryson Maureen Reid, for the Applicant Reinhold Endres, Q.C., for the Respondent Stewart, J.: The Applicant, Cape Breton District School Board (the "Cape Breton Board"), operates fifty‑five schools, providing public school education from Primary to Grade 12 for approximately eighteen thousand students. Included in the fifty‑five schools are six school buildings leased by the Cape Breton Board from the Catholic Episcopal Corporation of Antigonish or other entities of the Roman Catholic Church (the "Church"). It is the responsibility for payment of the leasing cost on these six school buildings that is now before the Court. The Cape Breton Board is seeking a declaration thata) the Province of Nova Scotia is responsible to provide school buildings required for the delivery of a basic Public School Program to the students of Nova Scotia andb) where it is necessary to lease school buildings for the delivery of the basicPublic School Program, the Province bears the responsibility for the negotiations and payment of rental costs associated with the leases. The issue is whether the Respondent, the Minister of Education (the "Minister") is required to reimburse the Cape Breton Board for the costs incurred by the Cape Breton Board in leasing these school buildings from the Church. Following Province wide amalgamation of school boards in January of 1982, the Cape Breton Board assumed leasing responsibilities for the six school buildings and in 1983, entered into various leasing arrangements for the buildings, pursuant to the authority provided in s. 33(7)(d) of the Education Act 1987, R.S.N.S. 1985, c. 136: school board may (d) enter into and carry out lease or agreement for the renting of buildings for school purposes, provided that no such lease or agreement shall be entered into that; (I) does not place the rented premises completely under the control of the board, or (ii) contains any undertaking or agreement that abridges or modifies any power or duty of the board. Unlike subsections (a) and (b) of s. 33(7) which deal with other school board powers, no approval of the Minister is required under subsection (d) before the Cape Breton Board may enter into lease. In the instant, the Cape Breton Board did, however, seek the approval of the Minister, not for the leasing itself but to ensure the Minister would permit the expenditure of capital funds on these leased facilities. Absent this approval by the Minister, the Cape Breton Board may not have decided to enter into these leases. The Minister, having confirmed that the leases represented long term asset for the benefit of the general populous, approved the use of capital funds on these facilities. The Cape Breton Board later sought reimbursement from the Minister for the payment of these lease expenses. Correspondence and reports between the Cape Breton Board and the Minister and the Department of Education over the last 10 years reflect the Cape Breton Board's steadfast position that the Province of Nova Scotia (the "Province") is responsible to provide school buildings to the Cape Breton Board for use in delivering the basic Public School Program. This responsibility can, in the submission of the Cape Breton Board, be best fulfilled, by either the Province negotiating and paying the rental cost directly to the Church or the Province reimbursing the rental expenses to the Cape Breton Board. The payment of leasing expenses by the Province is not unprecedented. From 1978 to 1982, the North Side‑Victoria Amalgamated School Board leased parish schools with the leasing costs being fully paid by the Province. On the other hand, at present, there are seven school buildings leased by two boards to deliver the basic Public School Program. Six of the buildings are involved in this application and the seventh, Shannon Park School, is leased by the Dartmouth District School Board. None of the leasing costs for any of these facilities have been or are now being paid by the Province. The Cape Breton Board submits, and agree, that the tenor of number of provisions in the Education Act, in particular s. 50(1) and s. 41(1), (2) and (3) is reflective of the Province assuming responsibility to supply adequate school facilities. When certain conditions are met, the Province is required to pay for all expenditures necessary to acquire property, construct, alter or add to buildings or furnish and equip such buildings for school purposes. Also, the Province is required to pay both the capital and interest costs on sums borrowed by Municipalities, School Boards and District School Boards to erect, acquire, purchase, etc., buildings for school purposes. The Minister contends that there is no provision in either the Education Act or the Regulations under the Act that require the Minister to pay or reimburse the Cape Breton Board's leasing expenses. The Minister is, therefore, under no obligation to reimburse board for leasing expenses. The Cape Breton Board does not seek reimbursement for rental costs in respect to leases for buildings used in delivering other than the basic Public School Program. The Cape Breton's request is based on the submission that the Province is statutorily mandated to provide free of cost the buildings required to deliver the basic Public School Program. The Cape Breton Board submits there is an inequity where it is required, in order to deliver the basic Public School Program, to lease buildings from third party, in this case the Church, while other boards are provided buildings free of rental cost. The Cape Breton Board must use portion of the education funds received from the Province, calculated under the general funding formula, for payment of rental costs whereas other boards are able to use these funds for educational services and programs on behalf of their students. Although the Province under the Education Act is required to pay the cost of providing school buildings, the Education Act stipulates it is the Minister, with the approval of the Governor in Council, who is to decide whether it is necessary for board to purchase or construct new school building. The Education Act also stipulates the procedure to be followed where the board seeks the approval of the Minister. Under the Education Act, board must comply with s. 50(1) and Regulation 15 (1) and (2) by reporting to the Minister the extent to which it is necessary for it to acquire new building or to remodel an existing building. The Minister, with the approval of the Governor in Council, determines whether to meet the request of the board. If the approval is granted, the Province is then responsible to purchase, acquire, or renovate the necessary building and to provide the same free of cost to the board. The cost of operating the building is met in the property service component of the general funding formula under which school boards are funded in the Province of Nova Scotia. Although leasing is not specifically listed in s. 50 (1) or the Regulations, it is clear that should the Minister decide to meet request by board, by providing school building leased from third parties then the cost of such leasing would be to the account of the Province and not the board. Otherwise, the Province, by leasing from third parties rather than constructing or purchasing school buildings, could abrogate its responsibilities to provide free school buildings. Such an interpretation would be inconsistent with the general tenor and purposes of the Education Act. Whether board leases the school building, the authority for which is provided in s. 33 (7)(d) or whether the Province leases the building and then provides it to the board for use in delivering the basic Public School Program, makes no difference in determining the responsibility of the Province to reimburse leasing expenses. The responsibility is created by the Education Act when the procedure provided for has been followed and the Minister, with the approval of the Governor in Council, has decided that the school building is necessary. Absent the report, under s. 50(1) and Regulation 15(1) and (2), there is no obligation on the Province to fund the cost of acquiring, constructing or leasing building for school purposes. Section 33(7)(d) of the Education Act provides board with the authority to lease facilities, without the Minister's approval or involvement. The section does not state that the leasing is at the expense of the Minister, nor does it imply that anyone, other than the leasing party, is to be responsible for the rental costs. The section does not restrict the leasing to buildings to be used for Public School Programs and would, therefore, include the leasing of chattels and other property necessary to enable board to meet its obligation. It is inconceivable, when read in light of the entire Act, which regularly requires the Minister's approval, that board could enter into any lease for the rental of buildings for school purposes, without the approval of the Minister but with the expectation that the Province would pay for the leasing expense. The Cape Breton Board acknowledges that in respect to the six school buildings in issue, there was no report made to or received by the Minister under s. 50 (1) or the Regulations and consequently there was no decision by the Minister, under these provisions,determining that the buildings were necessary in the circumstances. Although the Cape Breton Board engaged in long series of correspondence with the Province, it never reported to the Minister. The Province in responding to the Cape Breton Board's application has expressed concern that permitting the Cape Breton Board to lease buildings, without first reporting the Minister for approval could encourage boards to enter into leases, as they see fit, and without the Minister having the necessary control to prioritize and meet the needs of the various boards for school buildings in accordance with the Province's ability to fund such needs. Hence, the necessity for each board to communicate to the Minister, the extent of the board's requirement for additional new or renovated school buildings and for the Minister to exercise discretion in deciding which requests represent the greatest need. During the application, there was no suggestion any of the six buildings were not required to meet the basic needs of the students now attending the school. Whether the omission to file the report was caused by inadvertence, misunderstanding, or, as suggested by counsel intentionally in order to avoid confrontation with the Minister, it has, in effect, required the Cape Breton Board to use funds that could have been available to meet other educational programs and services in order to pay these leases. Although, because of the failure to follow the Education Act, the Province is not required, at least at this time, to pay the cost of these leases, it may be that the Minister may wish to reconsider whether, pending the possible filing of report by the Cape Breton Board, additional interim funding to the Cape Breton Board is warranted in these circumstances to cover the present and future costs of these leases. However, this is matter for the Minister and absent request by the Cape Breton Board and approval by the Governor in Council, not matter of obligation under the Education Act. In respect to the declaration sought by the Cape Breton Board, the Province is responsible to provide adequate school buildings for the delivery of basic Public School Program to the students of the Province. Where the Minister has received a request in the proper form and determined, with the approval of the Governor in Council, that it is necessary to lease a school building in order to meet the Province's statutory obligation then the cost of such a lease is the responsibility of the Province. The lease costs are to the same extent as would be the cost of supplying the building free of costs. It would not, of course, include those expenses associated with operating the building and which are funded by the property services component of the general funding formula for public school education. There shall be no costs.
The applicant sought a declaration that the province was responsible for providing school buildings for delivery of the public school program and that when buildings must be leased, the province bore the associated costs. The applicant, which leased six school buildings from the Roman Catholic Church, submitted the respondent was required to reimburse the applicant for leasing costs. For the respondent, that the Education Act requires a request be made of the Minister in proper form and receive Governor in Council approval. Because the applicant failed to report to the Minister, the respondent was not required to pay the leasing costs. Where the Minister received a request in the proper form and where it was determined leases were necessary, the leasing costs would be the respondent's responsibility.