Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: March 7, 2016

FILE NO.: DM 2016M15

Moving Party(ies): Municipal Property Assessment Corporation (“MPAC”) Region 01

Respondent(s): Douglas Lee Azar and Candice Jean Vetter

Respondent(s): Township of Russell

Property Location(s): 575 Route 100

Municipality(ies): Township of Russell

Roll Number(s): 0306-000-003-06900-0000

Appeal Number(s): 2993429 and 3002608

Taxation Year(s): 2013 and 2014

Hearing Event No.: 617131

Legislative Authority: Rule 145 of the Assessment Review Board Rules of Practice and Procedure

Heard: By written submissions

APPEARANCES:

Parties	Counsel+/Representative
Doulas Lee Azar and Candice Jean Vetter	Self-represented
MPAC	Don Mitchell+
Township of Russell	No one appeared

DISPOSITION OF THE BOARD DELIVERED BY SCOTT McANSH

DISPOSITION OF MOTION

1The Municipal Property Assessment Corporation (“MPAC”) was granted leave to bring this motion by Associate Chair Muldoon on June 3, 2015. MPAC argues that the decision of Member Levasseur (the “Member”) dated August 1, 2014, WR 125803 (the “Decision”) contains a number of errors and seeks three orders: (1) that the Decision be set aside; (2) that the 2013 assessment be confirmed at $293,000; and (3) that a new hearing be ordered for the 2014 and 2015 taxation years. The Respondents oppose this motion, stating that there are no errors in the Decision.

2Associate Chair Muldoon granted leave to argue two issues on this motion: “(1) whether the Member properly conducted the equity analysis; and (2) properly applied the decision to the 2014 taxation year.” For the reasons set out below, I find that the equity assessment was improperly conducted and that the application of the findings in the Decision to the deemed appeal for the 2014 taxation year was in error. As a result, I allow the motion and order a new hearing on the 2013, 2014 and 2015 taxation years before a differently constituted panel of the Assessment Review Board (the “Board”).

Rules

3Rule 145 of the Board’s Rules of Practice and Procedure sets out the grounds on which a motion for review may be granted. The moving party must establish a “convincing and compelling case” that the Member made certain listed errors. Here, MPAC alleges that the Member “violated the rules of natural justice or procedural fairness,” in violation of clause 145(b), and “made an error of law or fact such that the Board would likely have reached a different decision,” in violation of clause 145(c).

Decision Under Review

4The Decision concerned a single detached house in Russell Township. The Respondents’ arguments at the hearing primarily related to the value impact of the property’s proximity to two proposed landfill sites. The Member rejected the Respondents’ submissions that there was a decrease of value related to the proposed landfill sites. He held, at paragraph 37, that “we are dealing with rumors and suppositions” and relied exclusively on three comparable sales presented by MPAC in making his current value assessment.

5Using a time adjusted sale price per square foot methodology, the Member found that the comparable sales suggested a current value between $381,000 and $444,000, see paragraph 40. After noting that the returned value of $293,000 was significantly lower, and that the property before him was likely superior to the comparable sales, the Member found that the current value was $293,000.

6The Member then considered if the assessment of the property was equitable with similar properties in the vicinity, as required by clause 44(3)(b) of the Assessment Act (“Act”). In doing so, the member selected a subset of five of the 30 sales presented by MPAC to demonstrate that the assessment was equitable. The Member found that those five sales were close to the proposed landfill site, and were therefore “similar properties.” In analysing those properties, the Member found that they were assessed at 15% below their sale price. As a result, the Member applied a 15% reduction to the current value of $293,000 in order to make the assessment equitable with similar properties in the vicinity. As a result, the Member found the correct and equitable assessment to be $249,000 for the 2013 taxation year. He then applied his findings to the deemed 2014 taxation year appeal, which was not before him at the hearing.

Equity

7MPAC argues that the Member made two errors in his equity analysis. First, MPAC argues that, in looking at a subset of the equity data available, the Member denied the parties natural justice and procedural fairness. That is, MPAC suggests that the Member should have asked for submissions on his proposed equity assessment before making a final decision. Secondly, MPAC argues that the Member erred in applying an equity adjustment to the returned value of $293,000 rather than the current value of $381,000 to $444,000 which the Member found was indicated by the evidence.

Natural Justice

8MPAC notes that the Member was acting in a judicial capacity, which is quite correct. MPAC then relies on the statement of the Court of Appeal, in Asco Construction Ltd. v. Epoxy Solutions Inc., 2014 ONCA 535 at para. 8, that “the court should not decide matters on grounds which were not advanced by the parties.” That decision is, however, of no assistance to MPAC. The ground of the equity of the assessment was squarely before the Member both though the operation of clause 44(3)(b) of the Act and on the evidence presented by MPAC. No new grounds were introduced through the Member’s parsing of MPAC’s evidence. Rather MPAC appears to complain that they did not get the opportunity to argue against the Member’s weighing of their evidence.

9The weighing of evidence is, of course, a judicial function. The Divisional Court noted, in Marathon Realty Co. v. Ontario (Regional Assessment Commissioner, Region No. 7), [1979] O.J. No. 1090 (QL) at para. 33, that “the members of the Board do have a certain degree of expertise in assessment matters which assists in understanding, assessing and weighing evidence.” It is my view that preferring a subset of the evidence presented by MAPC is a proper function of this Board and the Member made no error in doing so.

10MPAC and the Respondents each knew, or ought to have known, the legislative test to be met. They had two days of hearings before the Member in which to make their positions on the issues known. Natural justice and procedural fairness are not denied through a Member preferring some evidence over other evidence without seeking submissions from the parties. To require that step would create great delay and greatly constrain the judicial functions of this Board. There was no denial of natural justice here.

Current Value

11MPAC’s second submission on the Member’s equity assessment is that he ought to have used the current value that he found to be supported by the evidence, and not the returned assessment, in making an equity determination. The statutory duty imposed on the Board is set out in s. 44.(3) of the Act, which states in part:

…in determining the value at which any land shall be assessed, the Board shall,

(a) determine the current value of the land; and

(b) 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 the land.

12There is no reference in clause 44.(3)(b) to current value. Rather, the Board is to look at the assessment of similar lands and adjust the assessment if necessary. A practice has developed at this Board to base equity assessments primarily on the assessment to sale ratio of a minimum of five similar properties in the vicinity. If the ratio between what a property is assessed at and what it sells for is 1.00 the assessment is incredibly accurate. As noted in the Decision, at paragraph 45: “there is an acceptance [sic] range of plus or minus 0.050.” That is, it is entirely acceptable that assessments be up to five per cent different from the sale price of properties. However, if property in the vicinity is being assessed more than five per cent lower than its sale price, that is a sign of consistent underassessment. In those circumstances, equity requires that the Board also reduce the assessment before it by a similar amount.

13It is significant that this practice relies on the relationship between the assessment of other properties and their sale value. Current value is defined in s. 1(1) of the Act as “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.” While there are some other considerations in the concept of current value, it amounts, for the purposes of an equity assessment, to the sale value of property. If we accept that current value and sale value are interchangeable terms in this context, what we are looking at in assessment to sale ratios is how well the assessment of other property reflects its current value. MPAC is required, pursuant to s. 19.(1) of the Act to assess land at its current value. Thus, an equity assessment is examining how well MPAC has performed that task in a particular area.

14The Member here weighed the evidence before him and found that properties similar to the one before him were assessed at 15% below their sale prices. He then reduced the assessment of the property before him, as returned, by 15%. This was clearly in error. If the assessments of other properties are below their current value, the assessment of the property before the Member was also likely below its current value. The Member had found the evidence likely indicated a current value of $444,000 and might support a current value of $381,000. The assessment of $293,000 was 23% to 34% below those current values. By reducing the assessment to $249,000, the Member brought that ratio down to 34% to 44% below current value. This was not an adjustment that was required to make the assessment equitable with similar properties in the vicinity.

15If the Member had properly applied the 15% adjustment to the current values indicated by the evidence he would have found an equitable assessment to be between $323,000 and $377,000. MPAC had not filed a notice of intent to seek a higher assessment, pursuant to Rule 30. As a result, had the Member properly applied the equity adjustment he determined appropriate, he would have confirmed the assessment at $293,000.

Deemed Appeal

16MPAC also argues that the Member improperly applied the assessment of $249,000 to the 2014 taxation year. MPAC does not dispute that there was a deemed appeal for the 2014 taxation year, pursuant to s. 40(26) of the Act. Rather, MPAC argues that because the returned assessment and assessment methodology changed between the 2013 and 2014 taxation years, the decision cannot be applied to both.

17MPAC presented the affidavit of the assessor at the hearing, who swears that he advised the Member of the change in methodology, and value for the 2014 taxation year, at the commencement of the hearing. The Respondents dispute this evidence.

18I have reviewed the valuation report filed by MPAC at the hearing and am satisfied that the Member was informed that the 2014 assessment was significantly higher than the 2013 assessment, being returned at $357,000. The Member did not provide any reasons as to how that different returned value would apply, simply stating at paragraph 49: “this decision also applies to the 2014 taxation year.” This is difficult to reconcile with the Member’s finding that the returned assessment was the current value. The Member’s review of the evidence would likely have supported the 2014 returned assessment of $357,000, leading to a significantly higher assessed value.

19A deemed appeal does not mean that the decision on the previous taxation year automatically applies to the deemed appeal. While there are many situations where that practice is appropriate and fair, this was not one of those situations. A significantly different returned value indicates some change that should preclude a member from applying previous taxation years by default. Considerations of res judicata may apply to taxation years in the same cycle, but that is an issue to be squarely addressed in a fair and transparent manner at a new hearing. That was not done here.

Remedy

20Given the errors I have outlined above, I set aside the Decision. The 2014 taxation year must be set for a new hearing as neither MPAC, nor the Respondents, had any opportunity to make submissions on the different returned assessment. MPAC argues that I should order that the 2013 taxation year be confirmed at $293,000. The Respondents argue that they should be given a chance to argue the 2013 taxation year again on the basis that they could make better arguments if there were a new hearing.

21While a desire to develop more convincing arguments is not a sufficient ground to warrant a new hearing, I will order a new hearing here. The equity error of the Member is clear, but the usual practice is to order a new hearing. There is no great economy in having me order that the 2013 assessment be confirmed, while ordering a new hearing for the 2014 taxation year. The 2013, 2014 and 2015 taxation years can proceed together. All deal with the same assessment day of January 1, 2012 and will therefore have nearly identical evidence. In those circumstances, fairness requires a new hearing.

22The motion is granted. The Decision is set aside and I order that a new hearing be held in relation to the 2013, 2014 and 2015 taxation years before a differently constituted panel of this Board