City of Ottawa v. Municipal Property Assessment Corporation, 2015 CanLII 82101

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

December 4, 2015

FILE NO.:

WR 134836

Assessed Person(s):

Medical Council of Canada

Appellant(s):

City of Ottawa

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”) Region 03

Respondent(s):

Medical Council of Canada

Property Location(s):

1021 Thomas Spratt Place

Municipality(ies):

City of Ottawa

Roll Number(s):

0614-116-506-00960-0000

Appeal Number(s):

3034678 and 3070890

Taxation Year(s):

2014 and 2015

Hearing Event No.

581534

Legislative Authority:

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

Heard:

September 15, 2015 in Ottawa, Ontario

APPEARANCES:

Parties

Counsel^+^/Representative

Medical Council of Canada

Joel Reinhardt^+^

MPAC

Laura Kelleher

City of Ottawa

Guy Tudino

DECISION OF THE BOARD DELIVERED BY DONALD WHITEHURST

INTRODUCTION - ISSUE

1Ontario Regulation (“O. Reg.”) 282/98 issued under the authority of the Assessment Act (“Act”) lists the classes of real property. The interpretation of the O. Reg. is often in dispute because classification impacts property taxes. The issue in this case is the interpretation of s. 3(1)(2)(iv) of the O. Reg.; more specifically, what are the meanings of the words "land" and "occupied".

2Section 3(1)(2)(iv) of O. Reg. 282/98 states:

(1) The residential property class consists of the following:

(2) Land not used for residential purposes that is,

(iv) land owned and occupied by a non-profit service organization, a non-profit private club, a non-profit cultural organization or a non-profit recreational sports club other than land used as a golf course or ski resort.

3The facts are listed below:

• The subject property ("SP") is a 3.9 acre vacant lot located in the south east end of the City of Ottawa ("City"). It was classified in the residential property class for the 2014 and 2015 taxation years.

• The Medical Council of Canada ("MCC") owns the SP.

• MCC is a non-profit service organization.

• The SP is vacant land as defined in the O. Reg.

• The current value assessment for the 2014 and 2015 taxation years is $1,580,000.

• The SP is located in an area zoned light industrial under the City's zoning By-laws.

4The City appealed the SP's assessment on the grounds that the property was incorrectly classified in the residential property class; that it should have been classified in the industrial property class according to s. 6(1)(2) of the O. Reg.

5Section 6 of O. Reg. 282/98 states:

6.(1) The industrial property class consists of the following:

2. Vacant land principally zoned for industrial development.

6MPAC and MCC both submitted that the SP was correctly classified in the residential property class because MCC, a non-profit organization, owns and occupies it.

7The parties did not call any witnesses. They each submitted a factum¹, dictionary definitions and some authorities² for the Assessment Review Board’s (“Board's”) consideration. Table 1 lists the issues that the Board must address before rendering a decision. The Board has to answer yes to all issues before it can find the SP is properly classified in the residential property class.

Table 1

Issues	Respondent MCC's Position	Respondent MPAC'S Position	Appellant City's Position	Board's Findings
Is MCC a non-profit service organization?	Yes	Yes	Yes	Yes
Is the SP owned by MCC?	Yes	Yes	Yes	Yes
Is the SP "vacant land"?	Yes	Yes	Yes	Yes
Is the SP "occupied" by MCC?	Yes	Yes	No	Yes
Does the Interpretation of "land" in s. 3(1)(2)(iv) include “vacant land”?	Yes	Yes	No	Yes

DECISION

8The Board confirms the SP's current value at $1,580,000 and its classification in the residential property class for the 2014 and 2015 taxation years.

REASON FOR DECISION

Legislation

9Section 1 of the Assessment Act defines 'land" as follows:

"land", "real property" and "real estate" include,

(a) land covered with water,

(b) all trees and underwood growing upon land,

(c) all mines, minerals, gas, oil, salt quarries and fossils in and under land,

(d) all buildings, or any part of any building, and all structures, machinery and fixtures erected or placed upon, in, over, under or affixed to land,

(e) all structures and fixtures erected or placed upon, in, over, under or affixed to a highway, lane or other public communication or water but to rolling stock of a transportation system.

10Section 1 of O. Reg. 282/98 states:

Vacant Land

(1) The following land, if it is not being used, is vacant land for the purposes of this Regulation:

1. Land that has no buildings or structures on it.

2. Land upon which a building or structure is being built.

3. Land upon which a building or structure has been built if no part of the building or structure has yet been used.

4. Land upon which a building or structure has been built if the building or structure is substantially unusable.

(2) For greater certainty, any occupation of a building or structure is a use for the purposes of paragraph 3 of subsection (1) and once a building or structure has been occupied the land upon which the building or structure is located cannot be vacant land unless the building or structure becomes substantially unusable.

(3) A portion of a parcel of land is vacant land for the purposes of this Regulation if,

(a) there is no building or structure on the portion of the parcel or there is a building or structure on the portion but no part of the building or structure has yet been used;

(b) there is a building or structure on the rest of the parcel; and

(c) the portion of the parcel is zoned for a kind of development that is different from the development on the rest of the parcel.

11Section 3(1)(2) (iv) and (ix) of O. Reg. 282/98 states:

(1) The residential property class consists of the following:

(2) Land not used for residential purposes that is,

iv. land owned and occupied by a non-profit service organization, a non-profit private club, a non-profit cultural organization or a non-profit recreational sports club, other than land used as a golf course or ski resort,

ix. vacant land principally zoned for residential development but not principally zoned for multi-residential development.

12Section 5(1)(1) of O. Reg. 282/98 states:

5.(1) The commercial property class consists of the following:

1. Land and vacant land that is not included in any other property class.

13Section 6.(1)(2) of O. Reg. 282/98 states:

6.(1) The industrial property class consists of the following:

2. Vacant land principally zoned for industrial development.

Appellant's (City of Ottawa) Position

14Guy Tudino appeared on behalf of the City of Ottawa. He submitted that the SP should not be classified in the residential property class because MCC does not occupy it. Mr. Tudino supported his submission by noting the parties agreed that the SP is vacant land as defined under the O. Reg.; consequently, the SP is not being "used". He therefore submitted that the SP is not being "occupied" as required by s. 3(1)(2)(iv) of the O. Reg. as there is no buildings, no leases and no use. Mr. Tudino supported his submission by citing two cases and providing definitions of the words "occupancy" and "occupy".

15Mr. Tudino also submitted that the provisions of s. 3.(1)(2) of the O. Reg. and different wording used in those provisions illustrate that the intent of the O. Reg. is to exclude vacant land in s. 3(1)(2) except for the specific mention of vacant land in s. 3(1)(2)(ix). He contended that interpreting s. 3(1)(2)(iv) to include the SP would be an absurd unintended consequence.

MPAC's Position

16Laura Kelleher appeared on behalf of MPAC. She presented her factum wherein she concluded that:

Much of the case law that exists on the nature of occupation for assessment purposes arises out of situations involving more than one entity and the issue is determining which of them is in occupation. This situation involves a single entity, the owner. Occupation and use are neither equivalent nor interchangeable terms. The user of property is not always its occupant in law. The occupant of the land does not always use the land. This is not absurd, but commonplace.

MPAC is of the view that its owner occupies the subject property since "occupied" in the legal sense demands control of property. Control typically arises from ownership of the property. In other words, the owner of the property possesses all the bundle of rights associated with the property unless they are given away. Since there is no question about any other entity having acquired any right of control and no other entity is physically or actually present on the premises, it is more than reasonable to attribute control of the premises to the owner.

... In this particular case, the owner satisfies the requirements for inclusion in the residential class under 3(1)(2)(iv) of O. Reg. 282/98 in that they both own and occupy the subject property. To make a determination otherwise, evidence will be required establishing that another entity occupies the land.

17In support of her submission, Ms. Kelleher cited the Ontario Court of Appeal decision of Stinson v. Middelton (Township); Wright v. Middelton (Township) 1949 CanLII 88 (ON CA), [1949] O.J. No. 449, [1949] O.R. 247 (“Stinson”).

MCC's Position

18Joel Reinhardt appeared on behalf of MCC. He stated that he agrees with MPAC's position and added that the City's position is based on a number of faulty assumptions that do not fit with the regulatory scheme of the Act. Mr. Reinhardt stated that the City wrongly assumed that reference to" vacant land" must be included in any classification applicable to the SP. He also submitted that the City failed to recognize the regulatory intent of s. 3(1)(2)(iv) of O. Reg. 282/98 is to provide favourable tax treatment of non-profit service organizations.

19Mr. Reinhardt pleaded that since the Act and the O. Reg. do not define "occupied", he believes that the definition of "occupier" in the Occupiers' Liability Act, R.S.O. 1990, c. O.2, and the definition of "occupancy" in Black's Law Dictionary (10th ed.), "is instructive in providing the generally accepted legal definition of the owner/occupier of a property" (Exhibit 4). He stated that the interpretation of "occupied" requires that MCC, a non-profit service organization, have "control over the condition of the premises and activities there carried on, with control over who is legally allowed to enter the subject property". Mr. Reinhardt concluded by stating that since MCC fulfills the requirements of s. 3(1)(2)(iv), the SP should remain in the residential property class.

Board's Analysis

20The Board, after carefully considering the submissions, the cases and definitions, finds the SP is properly classified in the residential property class. The Board's finding is based on its interpretation of the words "land" and "occupied" found in s. 3(1)(2)(iv).

21The word "occupied" is not defined in the Act or O. Reg. The Board must therefore interpret that word and, in doing so, it must have regard to the rules governing the interpretation of statutes. Section 10 of the Interpretation Act states in part:

Every Act shall be deemed to be remedial ... and shall accordingly receive such fair, large and liberal construction and interpretation as will best ensure the attainment of the object of the Act according to its true intent, meaning and spirit.

22It is clear from an examination of O. Reg. that the legislative intent of s. 3(1)(2) is to provide favourable tax treatment to certain types of non-residential land by including those properties in the residential property class. However, it is equally clear that s. 3(1)(2) imposes certain requirements before land may be included in that class; for s. 3(1)(2)(iv), the land must be owned and “occupied” by a non-profit service organization.

Does the word "Use" equate to the word "Occupy"?

23The Board does not agree with the Appellant’s submission that the word “use” should be equated with the word “occupy”. The Board makes this finding because it is of the view that the Legislature does not use redundant words when enacting legislation. These words are used together and describe the minimum requirements for assessing railway land under s. 30(2)(d) of the Act. This leads the Board to conclude that "use" and "occupy" should not be equated with each other as the Appellant suggests. Section 30.(2)(2) states:

30.(2) Assessment of railway land. – The land and property under subsection (1), other than clause (1)(a), shall be assessed as follows;

(d) the real property not designated in clauses (b) and (c) in actual use and occupation by the company, at its actual cash value as it would be appraised upon a sale to another company possessing similar powers, rights and franchises. (Emphasis added).

The meaning of the word "Occupied"

24The Board accepts MPAC's submission that in order for land to be "occupied", the occupant must have control of the property. This is supported by the decision of the Ontario Court of Appeal in Stinson, . In that case, the Court had to determine whether or not Mr. Stinson was a "tenant", and as such, whether crown land was assessable under the Assessment Act. Laidlaw J.A., after reviewing a number of authorities, stated that:

The decisions in the cases to which I have referred depend to some extent upon a consideration of the various objects and purposes of the statutes in which the language to be construed appears, or upon the provisions of an agreement under which one party has physical possession or use of premises. They do not conclusively determine the question now before the Court, but they provide some rules by which we may be guided to a certain extent, and which I briefly state in my own words as follows:

To be an "occupant" of premises, as that word is understood in law, a person must have control of them. (Emphasis added).

25The Court held that Mr. Stinson did not occupy the land as a tenant but occupied it as a servant of the Crown, and that the occupation and possession of the land remained in the Crown as owner. The Court’s decision is supported by Black's Law Dictionary which defines "occupant" as:

1. Someone who has possessory rights in, or control over, certain property or premises. 2. Someone who acquires title by occupancy.

26Since there was no evidence to suggest that MCC leased or assigned/transferred control of the SP, it follows that MCC, in its capacity as owner, occupies the SP.

Definition of "Land"

699958 Ontario Ltd. v. MPAC Reg. 9

27The City submitted that they believed that the word "land" in s. 3(1)(2) does not include vacant land because there is a provision for vacant land in s. 3(1)(2) and any other interpretation would produce an absurd result. The City offered 699958 Ontario Ltd. v. Municipal Property Assessment Corp., Region No. 9³ (“699958”) as authority. The Board finds that 699958 supra is distinguishable from the present case for the following reasons. In 699958 supra, Member Butterworth, as he then was, had to interpret s. 4(1) of O. Reg. 282/98. He found that the Legislature enacted s. 4(1) of O. Reg 282/98 because it determined:

[T]hat the public interest is outweighed by the creation of new multi-residential units from non-residential buildings in the City of Toronto and has encouraged this through the creation of a new tax class with demonstrably lower tax benefits. It is inconceivable that the Legislature would have intended to penalize conversions to the same type of accommodation through a misfortune of timing.

28In that case, the parties and the Board agreed that the ordinary interpretation of the section would result in a "bizarre result". Member Butterworth, after noting that Iacobucci J. in Rizzo & Rizzo Shoes Ltd.(Re), 1998 CanLII 837 (SCC), [1998] 1 S.C.R. 27 stated that the "legislature does not intend to produce absurd consequences", proceeded to interpret s. 4(1) so the "bizarre result" did not occur. The Board notes that, unlike 699958, supra, the Appellant was the only party to plead that it would be "absurd" to interpret s. 3(1)(2)(iv) to include the SP. Furthermore, the Board does not find that the ordinary interpretation of s. 3(1)(2)(iv) produces an "absurd result" to the extent that a literal interpretation of s. 4(1) did in 699958, supra. The Board therefore distinguishes 699958, supra on those grounds and finds that it is of no assistance in interpreting s. 3(1)(2)(iv) of O. Reg 282/98.

Definition of "Land"

Interpretation Act - Section 6

29The Board finds that the word "land" in O. Reg 282/98 includes "vacant land" for the purposes of the regulation because s. 6 of the Interpretation Act states that expressions in an Act has the same meaning in the regulation unless the contrary intention appears. Section 6 of the Interpretation Act reads as follows:

Where an Act confers power to make, grant or issue an order, warrant, scheme, letters patent, rule, regulation or by-law, expressions used therein, unless the contrary intention appears, have the same meaning as in the Act conferring the power.

30The Board notes that O. Reg. 282/98 is subordinate legislation delegated to the Minister in s. 7 of the Act. The City essentially pleaded that the differences in the wording of the various paragraphs of s. 3(1)(2) and, the wording of certain sections of the O. Reg., indicates that the Minister intended to exclude "vacant land" from the definition of "land" in s. 3(1)(2)(iv). MCC disagreed with the City's position and submitted that:

The definition of "vacant land" in s. 1(1) of the Regulation does not identify any class of property to which the land must belong. Land that fits the definition of "vacant" can be part of a number of sub-classes similar to the not-for-profit class. These analogous classes determine classification of the land by considering ownership only, and without reference to the use or vacancy of the land. These sub-classes include:

a) "land" owned by a religious organization" (s. 3(1)2);

b) "land" owned and occupied by a non-profit service organization, a non-profit service club, a non-profit cultural organization or a non-profit recreational sports club" (s. 3(1)2) ; and

c) "land" owned by a conservation authority (s. 3(1)2).

Vacant land that is zoned light industrial could fit (in) any of the above descriptions based on its ownership by the kind of organization to which it is the intent of the regulatory scheme to grant favourable tax treatment.

31The Board reviewed O. Reg 282/98 and prefers MCC's submission because it is not convinced that the Minister intended to exclude "vacant land" from the Act's definition of "land". In reaching its finding, the Board considered the fact that "vacant land" is specifically addressed in s. 3(1)(2)(ix), 4(1), 5(1)(1), 6(1)(2) and 13(2)(2) in the O. Reg. The Board notes that s. 3(1)(2)(ix), 4(1), and 6(1)(2) classify residual "vacant land" on the basis of zoning rather than on use. This is in keeping with the scheme of the Act in that all real property in Ontario is liable for assessment. It does not suggest a different interpretation of "land" in the O. Reg. from that of the Act.

32Section 13(2)(2) is the parking lots and vacant land property class and it takes vacant land out of the commercial land class. That section also does not suggest a different interpretation of "land".

33Section 5(1)(1) is a "catch all" section that ensures all land is liable for assessment. Although the parties did not plead that section per se, that section suggests that "vacant land" is not included in the definition of "land" because of the redundancy principle that the Board alluded to earlier in paragraph 23. Section 5(1)(1) states:

(1) The commercial property class consists of the following:

1. Land and vacant land that are not included in any other property class.

The Board must determine whether or not s. 5(1)(1) indicates the Minister intended to exclude "vacant land" from the definition of "land" in the O. Reg. The Board finds that it does not. This is because the definition of "land" is an important element in the Legislature's design/scheme of the Act. This leads the Board to conclude that, had the Minister intended to change the definition of "land" in the O. Reg., the Minister would have expressed his desire more clearly as opposed to using superfluous words. The Board therefore finds that the Minister did not use the words "vacant land" in s. 5(1)(1) to indicate a change in the definition of "land". It is more likely that the Minister included "vacant land " in s. 5(1)(1) to ensure all land is captured for assessment purposes.

CONCLUSION

34The Board, having found that the definition of the word "land" in s. 3(1)(2)(iv) includes "vacant land" and the SP is owned and occupied by a non-profit service organization, confirms the SP's classification in the residential property class for the 2014 and 2015 taxation years. Furthermore, the SP's current value assessment is confirmed at $1,580,000 as current value was not an issue at the hearing.

Footnotes

1. 1Exhibits 1, 3 and 4.
2. 2Corporation Notre-Dame de Bon-Secours v. Communauté urbaine de Québec 1994 CanLII 58 (SCC), [1994] 3 S.C.R 3, Stinson v. The Township of Middelton 1949 CanLII 88 (ON CA), [1949] O.R. 237-256 and 699958 Ontario Ltd v. MPAC Reg 9, 49 O.M.B.R. 111.
3. 3[2004] O.A.R.B.D. No. 593, 49 O.M.B.R. 111., 2004 CLB 14241.