Stephani v. Municipal Property Assessment Corporation, 2015 CanLII 48662

Assessment Review Board

Issue Date: August 6, 2015 File No.: WR 131487

Assessed Person(s): Diane Stephani Appellant(s): Arif Chaudhri Respondent(s): Municipal Property Assessment Corporation ("MPAC") Region 09, City of Toronto

Property Location(s): 274 Kennedy Avenue Municipality(ies): City of Toronto Roll Number(s): 1904-012-060-06700-0000 Appeal Number(s): 2984546, 3014465 and 3075154 (deemed 2015) Taxation Year(s): 2013, 2014 (and deemed 2015) Hearing Event No.: 578530

Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

Heard: March 12, 2015 in Toronto, Ontario

Appearances

Parties	Counsel/Representative
Diane Stephani, Arif Chaudhri	Arif Chaudhri
MPAC	Tony Racioppo and Erin Comeau
City of Toronto	No one appeared

Decision of the Board Delivered by Peter Andrews

Introduction

1The subject property, 274 Kennedy Avenue, is a two storey detached house located on a 4,200 square foot lot with an effective frontage of 35 feet ("ft.") and an effective depth of 120 ft. The property is improved with a 2,478 square feet ("sq. ft.") residence constructed in 1920 and renovated in 2008. The property has a 1,276 sq. ft. basement of which 893 sq. ft. are renovated. The property is assessed at $1,308,000 for the 2013, 2014 and 2015 taxation years.

2Tony Racioppo, appearing on behalf of MPAC, called one witness Erin Comeau. Mr. Comeau stated that the subject property has been assessed based on the evidence of the sales of similar properties in the vicinity of the subject property. In evidence Mr. Comeau provided the sales of six suggested comparable properties.

3Arif Chaudhri, appearing on behalf of his wife, argues that the correct assessment should be $1,071,000 based on the evidence of the average assessed value of three properties in the vicinity of the subject property.

4The Board must determine both the correct current value of the subject property and whether the assessment of the subject property so determined is equitable with the assessments of similar properties in the vicinity of the subject property.

Decision

5For the reasons stated below and as directed by s. 44.(3)(a) of the Assessment Act ("Act") the Assessment Review Board ("Board") finds that the current value of the subject property, as at the valuation day January 1, 2012, is $1,266,000.

6The Board finds that there is no evidence before it leading to the conclusion that the current value of the subject property, as determined above, requires a further adjustment in accordance with s. 44.(3)(b) of the Act.

7Accordingly the assessment of the subject property as at the valuation day, January 1, 2012, is reduced from $1,308,000 to $1,266,000.

Reasons for Decision

Current Value Analysis

8The initial task for the Board is to determine the current value of the subject property as required by s. 44.(3)(a) of the Act "...the Board shall...determine the current value of the land..."

9Section 19.(1) of the Act states that "...the assessment of land shall be based on its current value..." and section 1 of the Act defines current value as "...in relation to land, the amount of money the fee simple, if unencumbered, would realize if sold at arm's length by a willing seller to a willing buyer..."

10The best test of current value is an arm's length and market tested sale of the subject property on the valuation day, January 1, 2012 or close to it. If, as in this case, no such transaction took place, the next best measure of current value is arm's length and market tested sales of comparable properties in the same vicinity and market, on or close to the valuation day. This measure acts as a benchmark and a gauge of the accuracy for the assessed value of the subject property and comparable properties.

11To enable an estimate of value for the subject property to be derived from a comparable property there must be sufficient elements of similarity, in terms of physical factors such as total building area, land area, land frontage, age of construction, physical condition, etc.; and in terms of neighborhood characteristics such as access to amenities, type and nature of housing etc., so as to enable a direct comparison to be made between a suggested comparable property and the subject property.

12Further to be indicative of both the market and values on the valuation day a sale of a suggested comparable property should occur close to the valuation day. Generally the Board prefers the sale of properties that occur within six months on either side of the valuation day. When such evidence is either limited or not available, the Board has accepted sales of properties up to 18 months on either side of the valuation day, or in exceptional circumstances, greater time periods.

13Mr. Comeau provided the Board with six sales of suggested comparable properties which he argues are the most similar properties to the subject property in the vicinity of the subject property.

14Dr. Chaudhri provided the Board with three suggested comparable properties.

15In reviewing suggested comparable properties provided by the parties the Board placed particular weight on whether the house constructed on the property was of similar building total area to the subject property and on whether the house is newly renovated or newly constructed.

16The Board finds that MPAC suggested comparable properties; Sale Property A - 477 Glenlake Avenue, Sale Property B - 447 Glenlake Avenue, Sale Property E (also Appellant Property 2) – 45 Glenwood Avenue, Appellant Property 1 - 299 Kennedy Avenue and Appellant Property 3 - 187 Glendonwynne Road are comparable to the subject property in as far as they are houses that have been recently renovated (2005, 2010, 2011, 2012 and 2013) as has the subject property (2008). The challenge with these properties is that their building total areas are all smaller than the subject property (1,995, 2,166, 2,063, 1,975, and 2,235 - or an average of 2,079 sq. ft. versus 2,478 sq. ft. for the subject property). Based on the factors noted above it is logical to expect the subject property would sell for a greater value than any of these five properties. MPAC's Sale Property E - 45 Glenwood Avenue sold for $1,255,000 in April 2012 – the highest of the five sale values.

17The Board finds that MPAC suggested comparable properties; Sale Property C 535 Windermere Avenue; Sale Property D - 15 Evans Avenue and Sale Property F 358 Clendenan Avenue are not directly comparable to the subject property in as far as a house that has been recently constructed is not similar to a house that has been only renovated.

18Although not directly comparable to the subject property the Board notes that MPAC Sale Property D - 15 Evans Avenue was newly constructed in 2009, was sold in August 2011 for $1,278,000 and is of almost identical size to the subject property 2,449 versus 2,478 sq. ft. The Board finds that on a balance of probabilities a newly (2008) renovated house would not sell for more than a newly (2009) constructed house of equal size.

19The Appellant argues that 15 Evans Avenue is located in MPAC designated homogeneous neighborhood D17, while the subject property is located in homogeneous neighborhood D19. Accordingly, he suggests, 15 Evans Avenue cannot be comparable to the subject property. The Board places little weight on homogeneous neighborhoods and more weight on the location of a property relative to other suggested comparable properties and the subject property. Based on a review of the location of the subject property and the suggested comparable properties as demonstrated by the MPAC Market Analysis Map the Board is satisfied that 15 Evans Avenue lies within the vicinity of the subject property.

20The Board finds that the best evidence of the current value of the subject property is a range of value between the sale value of 45 Glenwood Avenue, which sold for $1,255,000 in April 2012, and the sale value of 15 Evans Avenue which sold for $1,278,000 in August 2011. The average of these two values is $1,266,000 which the Board finds to be the current value of the subject property.

21Dr. Chaudhri suggests that the correct current value for the subject property may be obtained by taking the average of the assessed values of his three chosen comparable properties; a value of $1,071,000. What Dr. Chaudhri proposes in effect is that the Board place more weight on the value at which properties have been assessed than the values at which they have sold. The Board does not agree. As referenced above the Board's first task is to determine the correct current value for the subject property as of the valuation day January 1, 2012. Current value is defined as "...in relation to land, the amount of money the fee simple, if unencumbered, would realize if sold at arm's length by a willing seller to a willing buyer..." The challenge for the parties is not to become entangled in a quest for flaws in the MPAC assessment model but rather to avail oneself of the market evidence of the actual sales of comparable properties.

Equity Analysis

22The Act was amended for taxation years beginning with 2009 to require the Board to lower an assessment below current value if required to make the assessment equitable with the assessments of similar properties in the vicinity.

23Section 44.(3)(b) of the Act states that "... the Board shall... have reference to the value at which similar lands in the vicinity are assessed and adjust the assessment of the land to make it equitable with that of similar lands in the vicinity if such an adjustment would result in a reduction of the assessment of land."

24To support the equity of assessment of the subject property, Mr. Comeau provided a study of the Assessment to Sales Ratios ("ASR") of 30 residential properties located within the vicinity of the subject property. The study has a range of individual ASRs from 0.85 to 1.18 and a median ASR of 1.00. Mr. Comeau suggests that a median ASR of 1.00 is indicative that similar properties in the vicinity of the subject property have been equitably assessed at their current values.

25Dr. Chaudhri states that he is "...satisfied that similar properties have been assessed at their current values and are equitable and no equity adjustment is required".

26Accordingly, the Board finds that there is no evidence before it leading to the conclusion that the current value of the subject property, as determined above, requires a further adjustment in accordance with s. 44.(3)(b) of the Act.

Costs

27At the commencement of the hearing Dr. Chaudhri raised the issue of a request for costs. The Board ruled that the issue be deferred until the end of the hearing at which time the Board would provide guidance as to procedures for making such a request. The Boards Rules of Practice and Procedure - Rules 133 to 139 provide such guidance including timing of a request and a response.

Rule 133 - Application, Scope of Costs Awards and Procedure for Request for Costs

Where a party believes that another party in the proceeding before the Board has acted unreasonably, frivolously, vexatiously, or in bad faith, that party may make a request to the Board for costs at the end of a hearing event. If the request for costs is not made before or when the Board renders its decision at the end of the hearing event, the party seeking costs must file the request, with notice to all other parties to the proceeding, no later than 30 days after the written decision or written reasons of the Board are issued.

The Board may also exercise its authority to award costs under these Rules from one party to another or others on its own initiative, after permitting the party against whom costs are proposed to make submissions.

The Board may decide the issues of costs based on the written material or the Board may require brief oral submissions. In its costs decision, the Board may order to whom and by whom the costs are to be paid and fix the amount of the costs.

Rule 134 - Party Requesting Costs

The party seeking a costs award must demonstrate to the Board's satisfaction that any requested costs are:

(a) directly and necessarily incurred in relation to the proceeding before the Board;

(b) reasonable in the circumstances;

(c) properly documented and verified; and

(d) consistent with the principles and criteria outlined in these Rules.

Rule 135 - What to File with a Costs Request

When filing a costs request with the Board, the party seeking a costs award shall provide:

(a) an explanation of how the requirements in Rules 133, 134 and 137 have been met; and

(b) a summary statement with a calculation of the amount of costs requested, including particulars of fees and disbursements for lawyers and consultants, supported by time dockets, invoices, receipts and a detailed description of activities; where invoices or receipts are not obtainable for good reasons, the Board may accept a written record of individual disbursements and associated dates.

Rule 136 - Responses to a Costs Request or Board's Costs Proposal

Where a party makes a costs request, any objection and associated argument by the party against whom costs are sought must be filed with the Board and given to the other parties within 14 days after the filing of the costs request or within such time as directed by the Board. The party seeking the costs then has 5 days or within such time frame as directed by the Board to file a reply.

Where the Board, on its own initiative, proposes to make a costs award, the party against whom costs are proposed must file any objection and associated argument and give them to the other parties within the time directed by the Board.

Rule 137 - Considerations by the Board

The Board in determining whether a party has acted unreasonably, frivolously, vexatiously, or in bad faith shall consider all of the circumstances, including, without limiting the generality of the foregoing:

(a) a party failing to attend a hearing before the Board or to send a representative when properly given notice, without contacting the Board and other parties to the hearing;

(b) a party failing to comply in a timely manner with a Procedural Order, case or appeal(s) management plan or direction of the Board where the result therefrom is undue prejudice or delay to another party or parties in the proceedings before the Board;

(c) a party failing to comply in a timely manner with the disclosure or discovery requirements set out in the Board's Rules of Practice or order or direction of the Board, including, without limiting the generality of the foregoing, the disclosure requirements respecting documents, particulars, or constitutional issues, provisions of responses to undertakings given on discovery including document disclosure; or

(d) a party knowingly presenting false or misleading evidence.

Rule - 138 When Costs may be Awarded

Where the Board finds that a party has acted unreasonably, frivolously, vexatiously, or in bad faith, the Board may order that party to pay the costs of another party or parties to the proceedings subject to Rule 139 respecting the amount of costs that may be ordered.

Rule 139 - Amount of Costs Awards

Where the Board determines that an order for costs may be made under Rules 133 to 138:

(a) the Board when determining the appropriate award of costs shall consider all the circumstances, including without limiting the generality of the foregoing, factors such as the seriousness of the misconduct, the amount of costs incurred by the party requesting costs, the conduct of the party requesting costs and offers to settle; and

(b) the amount of costs shall not exceed the sum of $1500.00 per day or up to $750.00 for each half day or less.

2015 Deemed Appeal

28An appeal for the 2014 taxation year is presently before the Board. Section 40.(26) provides that the appellant is deemed to have made the same appeal for the subsequent taxation year if the appeal is not finally disposed of before March 31 of the subsequent taxation year. The Board has not disposed of the 2014 appeal before March 31, 2015. For that reason, this decision also applies to the 2015 taxation year.

29Section 40.(26) of the Act directs:

Deemed appeals, 2009 and subsequent years

For 2009 and subsequent taxation years, an appellant shall be deemed to have brought the same appeal in respect of a property,

(a) in relation to the assessments under sections 32, 33 and 34 for the year; and

(b) in relation to the assessment, including assessments under sections 32, 33 and 34, for a subsequent taxation year to which the same general reassessment applies, if the appeal is not finally disposed of before March 31 of the subsequent taxation year or, if an assessment has been made under section 32, 33 or 34, before the 90th day after the notice of assessment was mailed.