T-Star Corp. and Nick Scampoli v. City of Vaughan, 2015 CanLII 52625

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

August 21, 2015

FILE NO.:

WR 132736

Assessed Person(s):

T-Star Corp.

Appellant(s):

T-Star Corp. and Nick Scampoli

Respondent(s):

City of Vaughan

Property Location(s):

8600 Dufferin Street

Municipality(ies):

City of Vaughan

Roll Number(s):

1928-000-210-03400-0000

Appeal Number(s):

3046515

Taxation Year(s):

2005

Hearing Event No.

582040

Legislative Authority:

Section 357.(8) of the Municipal Act, S. O. 2001, c. 25, as amended

Heard:

May 26, 2015 in Vaughan, Ontario

APPEARANCES:

Parties

Counsel

T-Star Corp. and Nick Scampoli

Richard Minster

City of Vaughan

Stephen Longo

DECISION OF THE BOARD DELIVERED BY SONIA LIGHT

BACKGROUND

1The subject property 8600 Dufferin Street is a corner property developed with a Tim Horton’s/Wendy’s restaurant building and a commercial office building constructed between 2001 and 2003. As a result of this development the property tax classification changed as well as its occupancy and the s. 331 process for “eligible properties” was triggered. This resulted in corresponding changes to the calculation of the realty taxes for the property.

2In 2003 and 2004 the City of Vaughan (“City”) issued Final Tax Bills reflecting incorrect values for the annualized taxes, tax cap amounts and adjusted taxes for the respective years. As a result, the taxes payable for these years were calculated incorrectly resulting in a shortfall of $203,145.85. The incorrect values apparently resulted from the “flagging” process used to identify “eligible” properties under s. 331 of the Municipal Act (“Act”).

3Around August 2005, the City in completing the s. 331 Act process for “eligible properties” applicable to the subject property, apparently became aware of the discrepancies in the 2003 and 2004 tax accounts, and sent letters to the Appellant that it would be debiting the accounts to recover the shortfall, and relied on s. 331 of the Act as the legislative authority for this action. However, the City did not also utilize a “belt and suspender approach” (espoused by its representative at the hearing) and apply pursuant to s. 359 of the Act to correct the alleged undercharge as a clerical or similar error within the deadline in that section, being December 31, 2005, for the 2004 taxation year.

4The City has taken the position that the incorrect values reflected on the 2003 and 2004 tax bills were not really errors as the values were based on the information available to it on the billing date and it was entitled to complete its billing process under s. 331 of the Act, and the s. 359 deadline of December 31, 2005 to correct undercharges, therefore did not apply.

5In February 2006, the Appellant applied under s. 334 and 357.(1)f of the Act for the cancellation and refund of the $203,145.85 amount charged by the City on August 30, 2005 respecting the shortfalls in the 2003 and 2004 final tax bills.

6The Appellant argues that the $203,145.85 it was billed in August 2005 constitutes a gross or manifest error that is clerical, factual or of a similar nature and not an error in judgment in assessing the property.

7The City argues that this is not a clerical error and consequently the application should be dismissed.

8At the outset, the Assessment Review Board (“Board”) was advised by the parties that this application involved a rehearing of this case and that Tabs 19, 20, 21 and 22 of Exhibit 1, filed by the Appellant relate to the previous hearing and the request for a review. The Board indicated that the material in these tabs would be disregarded and would not be reviewed by the Board in its deliberations.

ISSUE

9The Board must determine whether or not the amount of $203,145.85 charged in August 2005 to the Appellant by the City constituted an overcharge due to a gross or manifest error that is clerical or factual in nature or a similar error and should therefore be cancelled and refunded to the Appellant.

DECISION

10For the reasons stated below the Board finds that the Appellant was not overcharged due to a gross or manifest error that is clerical or factual in nature or a similar error.

11Accordingly, the application is dismissed.

REASONS FOR DECISION

Legislation

Municipal Act (“Act”), 2001 S. O. 2001 C.25.

12Section 329.(1) of the Act states:

Determination of maximum taxes

329. (1) Except as otherwise provided in this section and under sections 330 and 331, the taxes for municipal and school purposes for a taxation year to be levied on a property shall be the amount determined in accordance with the following:

330. Determine the taxes for the previous year in accordance with subsection (2).

331. Add 5 per cent of the amount determined under paragraph 1 to the amount determined under paragraph 1.

332. The amount determined under paragraph 2 shall be adjusted, in accordance with the regulations, in respect of changes in taxes for municipal purposes.

333. The taxes for the property for the taxation year shall be equal to the amount determined under paragraph 2 and adjusted under paragraph 3, if applicable. 2001, c. 25, s. 329 (1); 2002, c. 17, Sched. A, s. 54 (1).

13Section 329.(2) of the Act states:

Previous year

(2) The taxes for the previous year for a property shall be determined as follows:

1. Determine the taxes for municipal and school purposes that were levied on the property for the year.

2. If a supplementary assessment or change in classification is made under section 34 of the Assessment Act during the year or if an assessment or change in classification could have been made under section 34 of that Act and the appropriate change is made on the assessment roll for taxation in the taxation year, recalculate the taxes determined under paragraph 1 as if the increase in the assessment or change in classification, as the case may be, had applied to the property for all of the year.

3. If section 331 applied to the property for a part of the year, recalculate the taxes determined under paragraph 1 as if section 331 had applied to the property for all of the year.

4. If the assessment of a property whose classification is in the subclass for vacant land on the assessment roll for taxation in the taxation year increases as a result of an improvement to that property during the year and if no portion of any building on the property begins to be used for any purpose during the year, recalculate the taxes determined under paragraph 1 as if the increase in the assessment had applied to the property for all of the year.

5. If the council of a municipality cancels, reduces or refunds taxes under section 357 for the year on an application under clause 357 (1) (a), (b), (c), (d) or (f) or under section 358 for the year, recalculate the taxes determined under paragraph 1 as if the event that caused the cancellation, reduction or refund had occurred on January 1 of the year.

6. In respect of a property referred to in subsection 328 (2), the taxes for municipal and school purposes shall, for the purposes of paragraph 1, be the taxes that would have been levied on the property for the taxation year under that subsection.

7. For the purposes of paragraph 1, the taxes for municipal purposes in respect of a property that is referred to in subsection 328 (2) and for which the taxes were limited during the preceding year to two-thirds of the taxes for municipal purposes that would otherwise have been levied on the property but for that subsection, shall be the taxes for municipal purposes that will be levied on the property in the taxation year. 2001, c. 25, s. 329 (2); 2002, c. 17, Sched. A, s. 54 (2, 3).

14Section 329.(7)(a) and 329.(7)(b) of the Act states:

Same

(7) Despite subsection (6), the taxes for municipal and school purposes for the property for the taxation year or portion of the taxation year shall be recalculated under section 331 if,

(a) there was an additional assessment that relates to a new building or structure erected on the property that was, prior to the assessment, assessed for the taxation year as being in the subclass for vacant land under paragraph 2 of subsection 8 (1) of the Assessment Act; or

(b) as a result of an additional assessment for the taxation year or for the previous year and the taxation year or any portion thereof, the assessment of the property is increased by an amount equal to or greater than 50 per cent of the assessment on the assessment roll before the additional assessment was made. 2001, c. 25, s. 329 (7).

15Section 331.(2) and 331.(2)4 of the Act states:

Determination of taxes

(2) Despite any other provision in this Part, each local municipality shall determine the taxes for municipal and school purposes for each eligible property for the year or portion of the year as follows:

4. The taxes for municipal and school purposes for an eligible property for the year shall be the lesser of the amount determined for the year or portion of the year but for the application of this Part and the amount determined under paragraph 3. 2001, c. 25, s. 331 (2): 2002 c. 17, Sched. A, s. 55 (1).

16Section 331.(5), 331.(8) and 331.(9) of the Act states:

Determination of taxes for the subsequent year

(5) For the purposes of paragraph 2 of subsection 329 (2), taxes are to be recalculated as if the amount determined under paragraph 4 of subsection (2) of this section had been determined on a full year basis. 2001, c. 25, s. 331 (5).

List provided to municipality

(8) The assessment corporation shall provide a list of the comparable properties under subsection (6) or (7) with respect to an eligible property to the local municipality as soon as is practicable,

(a) after the return of the assessment roll for eligible properties that are on the assessment roll; or

(b) after the mailing of the notice of the assessment of the eligible property under section 33 or 34 of the Assessment Act. 2001, c. 25, s. 331 (8).

List to be mailed to the owner

(9) The local municipality shall mail to the owner of each eligible property the list of the comparable properties and the determination made under subsection (2) with respect to that eligible property within 60 days after the date the list is received by the local municipality. 2001, c. 25, s. 331 (9).

17Ontario Regulation 73/03 under s. 331 of the Municipal Act special rule eligible property 22.(2) 1., 2, 3, i and ii:

Special rule, eligible property under s. 331 of the Act

22. (2) Subject to subsection (3), the following properties are deemed to be eligible property for the purposes of section 331 of the Act:

23. A vacant parcel of land that is severed from a larger parcel of land or that is a lot in a subdivided parcel of land, if the taxation year is the first year for which the parcel is included as a separate parcel on the assessment roll.

24. Despite subsection 329 (10) of the Act, property to which section 447.70 of the Old Act or section 331 of the Act applied in the previous year as a result of an assessment made under subsection 34 (2) of the Assessment Act or a severance or subdivision, if clause 329 (7) (a) of the Act applies to the property for the taxation year.

25. Property in respect of which an assessment could have been made under section 34 of the Assessment Act in the previous year if,

i. making the assessment in the previous year would have resulted in the application to the property of clause 447.65 (8) (a) of the Old Act or clause 329 (7) (a) of the Act, and

ii. the appropriate change is made on the assessment roll for the taxation year. O. Reg. 450/03, s. 2.

18Section 334.(1) and 334.(2) of the Act states:

Application for cancellation, etc.

334(1) An application to the treasurer of a local municipality for the cancellation, reduction or refund of taxes levied in the year in respect of which the application is made may be made by a person who was overcharged by reason of a gross or manifest error that is a clerical error, the transposition of figures, a typographical error or similar type of error in the calculation of taxes under this Part. 2001, c. 25, s. 334 (1); 2002, c. 17, Sched. A, s. 56.

Procedures

(2) Section 357 applies to an application made under subsection (1). 2001, c. 25, s. 334 (2).

19Section 357.(1)(f), 357.(1)(3) and 357.(1)(4) of the Act states:

Cancellation, reduction, refund of taxes

357. (1) Upon application to the treasurer of a local municipality made in accordance with this section, the local municipality may cancel, reduce or refund all or part of taxes levied on land in the year in respect of which the application is made if,

(f) a person was overcharged due to a gross or manifest error that is clerical or factual in nature, including the transposition of figures, a typographical error or similar error but not an error in judgment in assessing the property; or

Timing

(3) An application under this section must be filed with the treasurer on or before February 28 of the year following the year in respect of which the application is made. 2001, c. 25, s. 357 (3).

Application by treasurer

(4) Despite subsections (2) and (3), an application under clause (1) (f) or (g) may be made by the treasurer of the local municipality on or before April 30 of the year following the year in respect of which the application is made if no application is made by a person described in subsection (2) within the deadline set out in subsection (3). 2001, c. 25, s. 357 (4).

20Section 359.(1)(2) and 359.(1)(2.1) of the Act states:

Increase of taxes

359. (1) Upon application made by the treasurer of the local municipality, a local municipality may increase the taxes levied on land in the year in respect of which the application is made to the extent of any undercharge caused by a gross or manifest error that is a clerical or factual error, including the transposition of figures, a typographical error or similar error, but not an error in judgement in assessing the land. 2001, c. 25, s. 359 (1); 2002, c. 17, Sched. A, s. 63 (1).

Exception

(2) An application cannot be made under subsection (1) if the treasurer has issued a tax statement under section 352 with respect to the taxes before notice is given under clause (3) (b). 2001, c. 25, s. 359 (2).

Deadline

(2.1) An application under this section must be made on or before December 31 of the year following the year in respect of which the application is made. 2002, c. 17, Sched. A, s. 63 (2).

Analysis

21Sections 357 and 359 of the Act provide the authority for a local municipality (or the Board on appeal) to correct clerical or factual errors in the tax roll for a prior year provided an application is made either by the Treasurer or the taxpayer within the prescribed time periods. The wording of s. 334 of the Act authorizing the application in respect of an overcharge contemplates errors that could be classified as inadvertent: “a clerical error, the transposition of figures, a typographical error or similar type of error in the calculation of taxes”. Further, the error should be apparent on its face: “gross or manifest”. This section does not contemplate errors in opinion or judgment calls based on the information then available. The absolute deadline for making an application to correct for an overcharge is April 30 for the prior taxation year and for correcting an undercharge is December 31 for the prior taxation year.

22The Treasurer did not apply by the relevant December 31 deadlines to correct either the 2003 or 2004 final tax bills and as mentioned above the City takes the position there were no clerical errors made requiring correction. Instead the City’s Tax Department sent letters on August 30, 2005 relying on s. 331 of the Act as authority to rectify the accounts in 2003 and 2004 and recover the respective undercharges. The Appellant responded that the City had no legislative authority for this action and was also legally barred by s. 359 of the Act from doing so and therefore claims that the City’s attempt to collect the undercharge constitutes an overcharge in 2005 due to a gross or manifest error that is clerical, factual or of a similar nature pursuant to s. 334 of the Act.

23However, whether or not the City lacked legislative authority to rectify the 2003 and 2004 prior year’s accounts by adding the charges in 2005 pursuant to s. 331 of the Act or otherwise, or was barred by s. 359 of the Act from doing so are legal questions and not clerical matters. Furthermore, the City’s August 30, 2005 letter to the Appellant is a deliberate request based on the City’s legal position and by no means an inadvertent clerical or factual mistake on the 2005 tax roll that the Board can simply correct.

24The Board has the same limited authority as the local municipality to cancel or refund taxes due to clerical, factual or similar errors in the taxation year immediately prior to the application. This authority provides a summary procedure for a municipality to correct obvious errors made through inadvertence but the procedure is not intended as a dispute resolution process for more complex matters. In this case, the Appellant did not demonstrate a gross or manifest clerical, factual, or similar error in the 2005 final taxation year. In fact, the parties agree that the value of the undercharge for 2003 and 2004 would be $203,145.85.

25There is clearly a legal dispute between the parties respecting the collectability of the amount at this time. However, the Board could not find a clerical error in the 2005 taxation year and accordingly is dismissing this appeal.