Chestnut Park Hospitality Inc. v. Municipal Property Assessment Corporation, 2016 CanLII 15606

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

March 24, 2016

FILE NO.:

DM 137536

Moving Party(ies):

Chestnut Park Hospitality Inc.

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”) Region 9

Respondent(s):

Liverton Hotels International

Respondent(s):

City of Toronto

Property Location(s):

108 Chestnut Street

Municipality(ies):

City of Toronto

Roll Number(s):

1904-066-120-02050-0000

Appeal Number(s):

3113729, 3113730 and 3113731

Taxation Year(s):

2010, 2011 and 2012

Hearing Event No.:

608263

Legislative Authority:

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

Heard:

December 3, 2015 in Toronto, Ontario

APPEARANCES:

Parties

Counsel

Chestnut Park Hospitality Inc.

Robert Butterworth and Courtney Toomath-West

Liverton Hotels International Inc.

Peter Milligan and James Walker

MPAC

Donald Mitchell

City of Toronto

No one appeared

DISPOSITION OF THE BOARD DELIVERED BY JOSEPH M. WYGER

DISPOSITION OF MOTION

INTRODUCTION

1Liverton Hotels International Inc. (“Liverton”), appealed the 2010, 2011 and 2012 current value assessment ("CVA") in the amount $19,834,000 on their hotel property on Chestnut Street in Toronto. Liverton sold the hotel to Chestnut Park Hospitality Inc. (“Chestnut Park”) on January 10, 2013 for $39,700,000. On January 23, 2013 the Municipal Property Assessment Corporation (“MPAC”) served Liverton with a Notice of Intention to Seek a Higher Assessment (“Notice”), seeking an increase to $30,567,000 along with a letter to the Assessment Review Board (“Board”) objecting to any withdrawal of the appeals. On February 5, 2013, Altus Group Tax Consulting Paralegal Professional Corporation (“Altus”) sent a letter to the Board requesting withdrawal of the appeals. On the same day, MPAC counsel sent a letter to the Board advising of the Notice and re-iterating its objection to any withdrawals. On March 18, 2013, the appeals came before a Board Member during a telephone conference call ("TCC"), although it is not clear what was discussed. Over two months later, the Board issued Acknowledgements of Withdrawals on May 24, 2013 and removed the appeals from its system. It is not clear why this occurred.

2The parties were advised by e-mail on August 31, 2015 that the Board had administratively re-instated the appeals, using new appeal numbers. Chestnut Park, with Liverton in support, brings this motion requesting an Order “cancelling the improperly re-instated appeals …”, citing jurisdiction, natural justice, procedural fairness, error of law, unreasonable exercise of discretion and severe prejudice. MPAC asks that the motion be dismissed on the basis that all of the Board’s actions were defensible under the Rules of Practice and Procedure (“Rules”), and the matter should proceed to a hearing on the merits.

3At the outset of the motion, I granted leave to Chestnut Park to be added as a party for the purposes of this motion, on consent of the other parties.

4For ease of reference, the chronology of events is listed below.

Chronology of Events

108 Chestnut Street – Subject Property ("SP")

Date

Event

Action

1

2010

CVA Appealed

Liverton appeals the SP's CVA in the amount of $19,834,000.

2

2013-Jan-10

Sale of the SP

Liverton sells the SP to Chestnut for $39,700,000.

3

2013-Jan-23

Notice of Higher Assessment

MPAC serves Liverton with a Notice of Higher Assessment.

4

2013-Jan-23

MPAC's letter to the Board

MPAC informs the Board that it objects to any withdrawal of the appeals.

5

2013-Feb-05

Letter to the Board

Altus requests a withdrawal of the appeals.

6

2013-Mar-18

TCC

Liverton appeals on the docket and discussed with Board member

7

2013-May-24

Board issues Acknowledge of Withdrawals

The Board removes the Liverton's appeals from its system.

8

2015-Aug-31

Re-instatement of Appeals

The Board administratively re-instated the appeals using new appeal numbers.

Chestnut Park’s Position

5Courtney Toomath-West and Robert Butterworth presented the case for Chestnut Park that the May 24, 2013 withdrawal of the appeals was a final decision of the Board. Ms. Toomath-West submitted that the Board, having discharged its statutory authority on the original appeals that were closed, has no jurisdiction (functus officio) under s. 40 to create what were in effect new appeals with new numbers. She argued that the “re-instatement” of the appeals some two and a half years later, with no notice or motion or hearing was beyond the jurisdiction of the Board, as Rules 141 through 146 of the Rules covering decision review were not complied with. She contended that the Statutory Powers Procedure Act (“SPPA”) contemplates that a review take place within a “reasonable time” after the decision is made. Further that the lack of notice of a request for re-instatement or notice of the re-instatement itself was a failure of procedural fairness.

6Ms. Toomath-West made the case that as the new owner, Chestnut Park will be responsible for the tax consequences of any assessment increase by reason of s. 306 of the City of Toronto Act, 2006, S.O. 2006, c. 11, Sched. A (“COTA”), which would result in litigation with the previous owner Liverton. The parties relied on a clear tax certificate, a paid-up tax account status, and the finality of the withdrawal decision, and both parties would be severely prejudiced by permitting the re-instatement to stand. In contrast, if the City were to be prejudiced by an undervaluation, then the City would be at the motion supporting MPAC, but instead advised the other parties by e-mail from counsel for the City that it would not be participating.

Liverton’s Position

7Peter Milligan and James Walker, appeared as counsel representing Liverton, the original owner during the tax years in question. Mr. Milligan sought the same order cancelling the re-instated appeals, on many of the same grounds as Chestnut Park. He emphasized both parties’ reliance on the finality assured by a clean tax certificate on the sale transaction, and the finality of the Board’s withdrawal decision which had closed the file on those appeals for over two years. His main concern was with the manner in which the administrative “re-instatement” occurred, being beyond the Board’s statutory authority to accept late appeals, extend filing dates, correct minor errors, review decisions or control it’s process. More specifically, that the withdrawal decision was a final decision and ought to have been challenged by MPAC or the City in full compliance with Rules 142 to 146 that deal with requests for review of such final decisions.

8Mr. Milligan asserted that the administrative re-instatement two and half years after the withdrawal decision was an unreasonable length of time. The Board’s review of the withdrawal decision was not in compliance with pre-2016 Rules 142 to 146, and the Board gave no indication that it undertook the requisite exercise of balancing the questions of timing, finality and fairness, with the need for correctness and the integrity of the roll. Neglecting to undertake such a full analysis constituted an error of law and resulted in an unreasonable exercise of the Board’s discretion, according to Liverton.

MPAC’s Position

9The assessing authority was represented by Donald Mitchell, who sought a dismissal of the motion. He characterized the withdrawal of the appeals as an administrative action of the Board and not a final decision subject to review under Rules 141 to 146. Both the withdrawal and the re-instatement of the appeals were administrative decisions, not requiring notice to, or submissions from the parties, and so are not subject to review under Rules 141 to 146.

10Mr. Mitchell asserted that the proper course was for Chestnut Park or Liverton to bring a motion for leave to withdraw after the Notice of increase was served, and that did not occur. Mr. Mitchell quoted numerous of the Board’s Rules, citing Liverton’s failure to comply with Rule 67 and improperly withdrawing the appeals as an abuse of process. He asserted that Rule 7 permitted the Board to “grant the necessary relief” to re-instate the appeals that were erroneously withdrawn as a result of that improper process. Alternatively, Mr. Mitchell proposed that even if the withdrawal was considered a decision, Rule 141(1) provides that the Board may vary, suspend or cancel decisions “on its own initiative”. Further that Rule 13 allows the Board to extend the timing requirements also on its own initiative so that two plus years later was within its authority.

11On the issue of potential prejudice, Mr. Mitchell offered the view that an increase in taxes does not automatically equal prejudice to either Chestnut Park or Liverton. He maintained that there would be no prejudice at all to Liverton as it will not be liable for any underpayment being no longer the owner of the property.

DISPOSITION OF MOTION

12The motion is granted. The withdrawal of the original appeals was an administrative error by the Board, but the re-instatement of the appeals after an unreasonable length of time without notice, submissions or reasons was an error of law and a denial of natural justice. Errors or miscues by the Board and others, affecting the finality of the roll and the fairness of the system would cause sufficient prejudice to the new owners who would be subject to legal liability to pay the property taxes for three years on a property they did not own. That prospect outweighs the generally desirable goal of getting the assessment correct and the integrity of the roll. Appeals Numbers 3113729, 3113730 and 3113731 are hereby canceled, and Appeal Numbers 2907822, 2708259 and 2370972 shall remain withdrawn.

REASONS FOR DISPOSITION OF MOTION

Legislation

13Section 306 of COTA states:

Adjustments to roll

306.(1) The treasurer shall adjust the tax roll for a year to reflect changes to the assessment roll for that year made under the Assessment Act after the tax roll is prepared. 2006, c. 11, Sched. A, s. 306 (1).

Consequences of adjustments

(2) Taxes for the year shall be collected in accordance with the adjusted tax roll as if the adjustments had formed part of the original tax roll and the City,

(a) shall refund any overpayment to the owner of the land as shown on the tax roll on the date the adjustment is made; or

(b) shall send another tax bill to raise the amount of any underpayment.

14Section 21.2 of SPPA states:

Power to review

21.2 (1) A tribunal may, if it considers it advisable and if its rules made under section 25.1 deal with the matter, review all or part of its own decision or order, and may confirm, vary, suspend or cancel the decision or order.

Time for review

(2) The review shall take place within a reasonable time after the decision or order is made.

Conflict

(3) In the event of a conflict between this section and any other Act, the other Act prevails. 1994, c. 27, s. 56 (36).

15Section 44.(1) of the Assessment Act states:

44.(1) Assessment may be open upon appeal. – Upon an appeal on any ground against an assessment, the Assessment Review Board or court, as the case may be, may reopen the whole question of the assessment so that omissions from, or errors in the assessment roll may be corrected, and the amount for which the assessment should be made, and the person or persons who should be assessed therefore may be placed upon the roll, and if necessary the assessment roll, even if returned as finally revised, may be opened so as to make it correct in accordance with the findings made on appeal.

Board’s Pre-2016 Rules

16Rules 141 through 146 of the pre-2016 Rules state:

141. Decisions Eligible for Review/Board’s Powers on Review

(1) The Board may review all or part of any final decision at the request of a party or upon its own initiative, and may:

(a) confirm, vary, suspend, or cancel the decision; or

(b) order a re-hearing before a different Member.

(2) The Board will not review:

(a) interim or interlocutory orders;

(b) interlocutory orders of costs awards;

(c) decisions on requests for review;

(d) decisions arising from re-hearings of matters resulting from a request for review.

142. Requirements to Consider a Request for Review/Refusal to Review

The Board may refuse a request to review an eligible decision if:

(a) the request is filed later than 30 days after the Board decision and written reasons issue, unless the Board determines that there is good reason to extend this time;

(b) in an incomplete request, the requester does not supply all of the information and materials required by Rule 145 within 21 days of the Board’s notice; or

(c) it is a second request by the same party raising the same or similar issues.

143. Contents of a Request

A request for review shall be made in writing to the Chair of the Board within 30 days of the issue of the Board’s decision, shall be copied to all parties, and shall include:

(a) the requester’s full name, address, telephone and fax number (if any) and e-mail address (if any);

(b) the full name, address, telephone and fax number (if any) and e-mail address (if any) of the requester’s representative (if any);

(c) the requester’s or representative’s signature;

(d) brief reasons for the request;

(e) the desired result;

(f) any documents which support the request, including copies of the original decision and new evidence that was not available at the hearing ;

(g) whether the requester has or will submit an application for leave to appeal or for judicial review to the court;

(h) a filing fee of $125.00 (cheque or money order payable to the Minister of Finance); and

(i) an affidavit stating the facts relied upon in support of the request.

144. Receipt of Request for Review

(1) Where a request for review has been received, the Board may:

(a) seek written submissions from the parties on the issue raised in the request;

(b) grant a motion to argue the question;

(c) grant a re-hearing without a motion; or

(d) confirm, vary, suspend or cancel the decision.

(2) The Board will determine initially whether the request has met one or more of the eligible grounds for such a review without providing notice to the other parties. The Board may review or grant a motion request without submissions from other parties.

145. Grounds for Review

(1) The Board may consider reviewing its decision if the grounds for the request raise a convincing and compelling case that the Board:

(a) acted outside its jurisdiction;

(b) violated the rules of natural justice or procedural fairness, including allegations of bias;

(c) made an error of law or fact such that the Board would likely have reached a different decision;

(d) should consider new evidence, which was not available at the time of the hearing, but that is credible and could have affected the result; or

(e) heard false or misleading evidence from a party or witness, which was discovered only after the hearing and could have affected the result.

146. Review Motions and Re-hearings Procedure

(1) Where the Board will hear a motion to argue the question or has granted a re-hearing, unless otherwise directed, the requester must:

(a) obtain a motion date or re-hearing date within 90 days of the Board letter granting the motion or re-hearing, or the decision will be nullified. (This means that the requester must secure a date for the motion or re-hearing within 90 days, not that the motion or re-hearing must be head within 90 days.) The requester must serve notice of the motion and any supporting material on the other parties who attended the hearing at least 30 days before the date set for the motion, unless the Board directs otherwise. The Rules regarding notices of response also apply to a review motion; and

(b) serve Notice of Motion and supporting materials on the other parties who attended the hearing, at least 30 days before the date set for the motion.

(2) At the motion hearing, the parties will be expected to address whether the request meets the grounds for review.

(3) Motions will generally be heard by a different Member than the one who made the original decision, unless the request is based on new evidence that was not available at the time of hearing, but is credible and could have affected the result; or is otherwise ordered by the Board.

(4) Other than as stated in this Rule, the general motions procedure applies to parties to review motions.

17Rules 30, 67, 68, 130 and 131 state:

30. Special Notice by Party of Request for Higher Assessment and/or Higher Tax Rate Property Class

(1) If a party intends to request a change in property class to a class with a higher tax rate or an assessment that would result in a higher assessment than that fixed by the Municipal Property Assessment Corporation, it must give notice in writing of its intention to all other parties and the Board. This notice must include the amount of the assessment and the class requested. This notice must be given at least 50 days before the hearing of the matter, unless otherwise directed by the Board. If this notice of higher assessment is not served, the Board may refuse to consider the request.

(2) Where a municipality objects to a settlement under section 39.1 of the Assessment Act it is not required to give notice of higher assessment unless it is seeking an assessment higher than that originally returned by the Municipal Property Assessment Corporation or a class that produces a higher tax rate.

(3) Where a municipality has not had notice of an appeal in time to allow for 50 days’ notice and where it wishes to seek a higher assessment or class change, the Board shall abridge the time for service of the notice of higher assessment or class change. At the request of any of the other parties, the Board may adjourn the matter.

67. Withdrawal of Appeal

An appellant may, by notice of withdrawal to the Board and the other parties, withdraw the appeal, as follows:

(a) in the case of an appeal under the Assessment Act where another party has given notice of its intention to request a higher assessment and/or higher tax rate property class with leave of the Board;

(b) in all other cases, including when an applicant has filed an appeal, as of right until a hearing has commenced. Once a hearing has commenced an appeal cannot be withdrawn without leave of the Board.

68. Disposition of Motion to Withdraw

On hearing a motion to withdraw under these Rules, the Board may:

(a) grant the request to withdraw, with or without conditions;

(b) refuse the request to withdraw and proceed immediately to hear the appeal; or

(c) adjourn the matter and set a new hearing date.

130. Correcting Minor Errors

The Board may at any time and without prior notice to the parties correct a technical or typographical error, error in calculation or similar minor error made in a decision or order, and may clarify a misstatement, ambiguity or other similar problem. There is no fee if a party requests this type of correction.

131. Processing Request as a Review Request

If a party requests a correction or clarification that in the Board’s opinion is a request for a substantive change in the decision, the Board will treat it as a request for review.

ISSUES

18A number of questions arise from the positions and submissions of counsel for all three parties:

1. Did the Board create new appeals or re-instate the same withdrawn appeals?

2. Was the withdrawal of the appeals a final decision, subject to review Rules 141 to 146, or an administrative action not subject to review?

3. Was the re-instatement a final decision, subject to review Rules 141 to 146, or an administrative action not subject to review?

4. Was the re-instatement within the Board’s jurisdiction to make?

5. Has the re-instatement caused potential prejudice to any party, and should it be cancelled or upheld after balancing the factors of finality and fairness to the taxpayer with getting the assessment correct and ensuring the integrity of the roll?

Analysis

1. Did the Board create new appeals or re-instate the same withdrawn appeals?

19No, the Board did not create new appeals. Counsel for Chestnut Park argued that the Board was functus officio with respect to the original appeals as evidenced by the fact the appeals with the original appeal numbers remain closed. Ms. Toomath-West characterized the so-called “re-instatement” of those appeals as the creation of new appeals, and that the Board had no jurisdiction under the Act to do so. There was no request or filing by Liverton to create appeals under s. 40 or under Rule 27 dealing with late appeals.

20I find that this argument turns largely on the fact that the “re-instated” appeals have different numbers from the original appeals. This is solely a result of the Board’s antiquated computer system which simply does not allow the resurrection of appeal numbers, once they have been closed. In the Board’s system however, the substantive files behind the original appeal numbers 2907822, 2708259 and 2370972 are retrieved by entering appeal numbers 3113731, 3113730 and 3113729. For all intents and purposes, the files are the same except for the numbers attached to them.

21If I agreed with Ms. Toomath-West that the new numbers meant new appeals, then the Board would be prevented from ever correcting it’s errors by re-instating any appeals. That would be an unfortunate interpretation based on a systemic inadequacy. The question of the Board being functus officio and our authority to resurrect dead appeals is another issue. If the Board does have the authority to re-instate appeals, this is what they would look like. The appeals before me now are not new appeals, but are the same in substance, if not in file number, as the original appeals.

2. Was the withdrawal of the appeals a final decision, subject to review Rules 141 to 146, or an administrative action not subject to review?

22The withdrawal of the appeals was an erroneous administrative action. An Acknowledgement of Withdrawal issued by the Board on May 24, 2013 for each of the three appeals for 2010, 2011 and 2012, and each was labeled “Decision No: 2606825". This by itself does not mean that every withdrawal requires an actual decision by the Board. The word “decision” connotes that some thought or judgment need be exercised to decide between different outcomes. The processing of a withdrawal as of right is usually a simple administrative action that flows almost automatically from a request by an Appellant. Rule 67 (a) changes the equation after a Notice seeking an increase is served because leave of the Board is required. The granting of leave requires a decision after a motion under Rule 68 to either permit or refuse the withdrawal request.

23In the subject case, a Notice to seek an increase was filed, so the withdrawal of the appeals should have required a decision. Unfortunately, the circumstances around which that “decision” was made leaves much to be desired. It was initiated by an improper request by the Appellant’s agent to the Board to withdraw, while the agent had the Notice of increase in hand. The proper motion to withdraw was not attempted. The appeals were discussed on a telephone conference call on March 18, 2013, before a Board Member. In spite of this, and despite Mr. Frank Shea’s attempts on behalf of MPAC, to have the Board not withdraw the appeals, the Board withdrew the appeals without further notice, submissions or evident reasons, doubtless in part due to its archaic information systems not preventing the withdrawal as it should have.

24At this point, MPAC could have raised the issue and have the Board re-instate the appeals in short order based on the recent error that the Appellant could not withdraw as of right. MPAC did not request an error correction at that time, largely due to the fact that Mr. Shea only became aware of the withdrawal over two years later in August of 2015, as he personally was not notified by the Board, and was carrying on as if the appeals were still alive.

25The withdrawal by the Board appears to have been an administrative action by a member of staff who was acting on the standard Altus letter requesting withdrawal dated February 5, 2013, evidently unaware either of the existence of the Notice seeking an increase or of the Rule requiring leave. The Board’s ossified computer system must share the blame, as it is tasked with flagging such an event, and failed to do so. In any event, it was not a considered decision by a Board Member, but rather an administrative action that would not normally give rise to a right of review.

3. Was the re-instatement a final decision, subject to review Rules 141 to 146, or an administrative action not subject to review?

26The re-instatement in this case was a decision subject to review. Unlike the processing of as-of-right withdrawals, the re-instatement of appeals requires the approval of and a decision by an adjudicator, usually a Vice-Chair or the Associate Chair. The re-instatement of appeals soon after it is discovered they were removed from the system in error, may be an “administrative” decision that is permitted under the Rules that Mr. Mitchell quoted, and would not normally be subject to a request for review. It is the passage of time and the potential for unintended consequences that moves a matter from simple administrative error correction to a decision requiring a consideration of competing interests and the possibility of prejudice. Authority for that proposition is found in the case of The Kensington Foundation v. Municipal Property Assessment Corp., [2013] (O.J. No. 5848) (“Kensington”).

Kensington

27Kensington dealt with the correction of a typographical error under Rule 142, known as the Board’s “slip rule”. A missing zero on a 2002 decision that reflected minutes of settlement, was corrected six years later by the Board using the rule that permits it to do so “…at any time and without prior notice to the parties…”. In amending the 2002 decision to add the zero, the Board did not employ Rule 143 whereby it could have treated the request for that correction as a request for review under Rule 146. This panel concluded that it did not have the authority to review the discretion used to select either Rule 142 or Rule 143 or to remove the zero from the corrected current value and return it to the incorrect value. The Divisional Court determined that “The Board should have conducted a full analysis of all the facts available in determining whether the 2008 amended decisions should have been confirmed, varied, suspended or cancelled under Rule 146.”

28In hindsight, it would have been preferable if the Board had conducted that full analysis using Rule 143 in 2008 before it amended those 2002 decisions. My previous understanding that the specific authority to administratively fix typos at any time and without notice was not reviewable, is not the correct interpretation. The Divisional Court in Kensington determined that such decisions are reviewable and require a full consideration of “the implications of a correction in the assessment”. It requires that the Board engage in a balancing exercise to take into account the important objective of a correct assessment “…while considering the relevant factors of timing, finality and possible prejudice.”

Block 9A

29I consider Kensington to be authority for the proposition that any decision of the Board whether characterized as administrative or adjudicative may be subject to review if there has been sufficient passage of time and there may be substantive tax consequences flowing from that decision. I am supported in that view by Member S. McAnsh in Block 9A Developments Ltd. v. Municipal Property Assessment Corp., Region 9, [2015] O.A.R.B.D. No. 170 (“Block 9A”) wherein he correctly informs that “It is not the Board’s practice to hear submissions on administrative decisions, such as re-instatement.” He continues: “In Kensington, the Divisional Court was clear that such decisions can be reviewed pursuant to Rule 146. That provision provides a clear and practical means of making submissions on those rare administrative decisions that prejudice the parties.” The re-instatement in question here, almost two and a half years after the appeals were expunged, and with a change in ownership, is a decision where the implications of a correction in the assessment ought to be given full consideration.

SPPA

30There was some discussion by counsel regarding the fact that if this was a review of the re-instatement decision, then the timelines under Rule 142 were not followed. A review request of an “adjudicative” decision is required to be made within 30 days of the Board decision and written reasons issue date, and requires the inclusion of items such as a filing fee, an affidavit and any documents in support, “…including copies of the original decision…”. A difficulty arises with so-called administrative decisions such as re-instatements or corrections under the slip rule because there are no written reasons and often no notices are given to the parties of the decision made.

31In the unusual situation of an “administrative” decision that may cause prejudice, the Board can rely on s. 21.2 of the SPPA which provides: “That the review shall take place within a reasonable time after the decision or order is made.” The clock for what is a reasonable time must of necessity commence only after the parties have actual notice of the decision, however that occurs, which in this case was August of 2015. I find that the three and half months that passed between that date and the hearing of this motion, to be within a reasonable length of time in these circumstances.

32The other non-compliance with the review rules is also hereby waived due to understandable uncertainty as to what is a reviewable decision and what is not. Further, Rule 141(1) gives the Board discretion to review “…upon its own initiative…”. The Board will exercise its broad powers to review the re-instatement decision and conduct a full analysis and balancing exercise as directed in Kensington.

4. Was the re-instatement within the Board’s jurisdiction to make?

33Yes, the Board had jurisdiction to re-instate the appeals and was not functus officio. The case of Armstrong v. Municipal Property Assessment Corp., Reg. No 17 [2013] O.A.R.B.D. No 194 (“Armstrong”) was a standard industrial appeal in which six different motions were argued prior to the substantive hearing commencing. One of the motions was by counsel for MPAC seeking a dismissal of the appeals that he argued had been validly withdrawn but were improperly re-instated by the Associate Chair. This panel considered that through the SPPA and the Board’s rules, the Chair had the discretion to re-instate appeals under the broad authority to control its practices and procedures. While characterizing the issue as “a substantive quasi-judicial matter that should have been the subject of a motion hearing where both parties could make submissions”, I concluded that I ought not to second-guess the exercise of that discretion by the Associate Chair.

34The Armstrong decision was prior to Kensington and Block 9A which hold that the discretion to re-instate ought to be second-guessed by way of review where it appears the passage of time and tax consequences raises the potential for prejudice. So, while the Board had the authority to re-instate the appeals, it appears now that this authority needs to be exercised quasi-judicially in some circumstances and ought to include notice to the parties and some opportunity to be heard.

5. Should the re-instatement stand?

35No, the re-instated appeals should not be permitted to stand for two reasons: natural justice and prejudice to the taxpayer.

Natural Justice and Procedural Fairness

36Since over two years had passed since the appeals were extinguished by the Board, and a new owner was in the picture, it was foreseeable that some party might argue prejudice if the Board were to resurrect the appeals ex parte. Even if the initial withdrawals were in error, a re-instatement so long after the fact could present substantive issues that ought to have been dealt with judiciously, with notice and submissions and reasons for the decision. In this case, the Board re-instated the Liverton appeals without any indication that a balancing exercise had been undertaken to take into account relevant factors of correctness of the roll, timing, finality, fairness and possible prejudice. The absence of this was a failure of natural justice in this instance.

Prejudice to the Parties

The City

37The City, which had the right to appeal the assessment as being too low, did not do so, and it declined to participate in this motion in support of MPAC’s request to increase the current value. I draw the inference that the City feels no prejudice from these appeals being set aside and a current value of $19,834,000 remaining in place as the 2008 value for taxation years 2010, 2011 and 2012.

MPAC

38The prejudice that the assessing authority concerns itself with is in permitting an incorrect assessment to stand as an infringement on the integrity of the roll, resulting in unfairness to other taxpayers who pay taxes on their full current values. The $19.8 million was MPAC’s returned value as of January 2008. After the property sold in January 2013 for $39.7 million, MPAC revised its estimate of the 2008 base value to $30.567 million and served a Notice seeking that increase within two weeks of the sale.

39In his affidavit, Paul Chmeleski relates other avenues that MPAC could have taken to amend the assessment, suggesting it should not now “…create a new procedure for MPAC to change an almost 8 year old assessment, when all proper and legal methods of recourse could have been exercised by MPAC and the property has long since changed hands.” The procedure Mr. Chmeleski refers to is requesting the Board to re-open the assessment under s. 44.(1) to consider an increase, by way of a Rule 30 Notice seeking same. The purpose of the s. 44.(1) provision giving the Board the discretion to re-open the whole question of the assessment, is “…so that omissions from, or errors in the assessment roll may be corrected…”

40There is some question as to whether a Member hearing the matter would consider a $10.7 million increase to constitute an attempt to correct an omission or error in the roll, given that it was seemingly initiated by a sale five years after the valuation day. It is not at all clear that an assessor’s change of opinion as to the valuation so late in the process indicates that the 2008 current value is significantly incorrect. The sale will no doubt affect the assessor’s opinion of value going forward as it should, but is of uncertain consequence five years on. On balance, I find that the integrity of the roll will not be unduly prejudiced by cancelling these appeals.

Liverton and Chestnut Park

41Mr. Mitchell, on behalf of the assessment corporation, argued that there was no prejudice to Liverton or Chestnut Park in allowing the appeals to proceed. In particular, Liverton would be in the same position it would have been in if it had followed the rules and not withdrawn them improperly. Further, because of s. 306(2) of COTA, Liverton would have no liability for any under-payment of past taxes as it no longer owns the property. Of course the flip side of that equation is that Chestnut Park would have liability for any under-payment of taxes, for years it did not own the property.

42Mr. Mitchell contended that the so-called prejudice to Chestnut Park is only that taxes on the correct current value may have to be paid by them. Again this panel took a similar view in Kensington: “On the matter of prejudice, the correction means simply that the parties will be put in the same tax situation as they would have been had there been no error.” The Divisional Court found that analysis wanting, allowing that “…the financial consequences to the taxpayer should be taken into account...”. That was in a case where the taxes to be paid were based on a correct current value agreed to by Kensington in Minutes of Settlement.

43Contrast that with this case where, 13 days after it purchases the property, Chestnut Park faces a potential tax liability based on an increase in the assessment from $19,834,000 to $30,567,000, going back to 2010 and including the three years that it did not own the property. Therein lies the potential for litigation between Liverton and Chestnut Park predicted by counsel for both parties. There are clearly unexpected and prejudicial financial consequences flowing from the reinstatements to Chestnut Park.

CONCLUSION

44This matter came before me after a series of errors and miscues: MPAC serves a dubious Notice of increase immediately following the sale; Liverton’s agent improperly requests withdrawal of the appeals; the Board’s computer and/or staff erroneously permits the withdrawal of the appeals despite MPAC’s objections; MPAC fails to act expeditiously to correct that error; Liverton’s agent continues to engage MPAC as if the appeals were not withdrawn; the Board re-instates the appeals years later in response to an MPAC request for an explanation; Liverton delays in challenging the re-instatement for several months.

45Chestnut Park, in effect an innocent third party, requests relief from being saddled with the burden of paying or litigating an unexpected tax liability as a result of this series of miscues by other actors. I agree that on balance, Chestnut Park would suffer undue prejudice from this state of affairs, and so I grant the relief requested, cancel the re-instatements and expunge the appeals.