Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: April 15, 2016

FILE NO.: DM 137686

Moving Party(ies): The Township of White River ("Township") and Municipal Property Assessment Corporation ("MPAC")

Respondent(s): White River Forest Products Limited

Respondent(s): Domtar Inc.

Property Location(s): Highway 17

Municipality(ies): The Township of White River

Roll Number(s): 5791-000-004-13900-0000

Appeal Number(s): 2999843, 2999842, 2999841 and 2999855

Taxation Year(s): 2009, 2010, 2011 and 2012

Hearing Event No.: 599130

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

Heard: November 24, 2015 in White River, Ontario

APPEARANCES:

Parties

Counsel

Township of White River

John L. O’Kane

MPAC

Jack Jamieson

White River Forest Products Limited

J. Paul R. Cassan

Domtar Inc.

Tara Saleh

DISPOSITION OF THE BOARD DELIVERED BY WARREN MORRIS AND JOSEPH WYGER

BACKGROUND

1The moving parties (the Township and MPAC) seek to cancel or quash the appeals for the taxation years 2009, 2010, 2011 and 2012.

2In 2008, Domtar Inc. (“Domtar”) was the owner of a sawmill on Highway 17 in the Township of White River (the “subject property”). In addition to appealing assessments from the 2005 base year cycle, Domtar appealed the assessment for the 2009 taxation year. In 2009, Domtar sold the subject property to White River Forest Products Limited (“WRFP”), a consortium made up of two private corporations, a corporation owned by Pic Mobert First Nations, and a corporation owned by the Township (the White River Community Development Corporation). One of the terms of the arrangements made between the parties was that the Township forgave a significant amount of tax arrears to the benefit of WRFP. The sale transaction closed on June 29, 2009.

3In 2010, Domtar, MPAC and the Township reached a settlement of all Domtar’s assessment appeals, including the appeal for the 2009 taxation year. One of the terms of the settlement was for the Township to issue Domtar a tax refund in the amount of $285,282.09. Another of the terms of settlement was that the 2009 appeal would be withdrawn. Although Domtar’s lawyers prepared a draft letter notifying the Assessment Review Board (the “Board”) of the withdrawal, they neglected to file the letter with the Board. Since the Board was unaware of the resolution/withdrawal of the 2009 appeal, the Board subsequently created deemed appeals for the 2010 and 2011 taxation years.

4On January 25, 2012, Domtar’s counsel noticed the omission and filed a request with the Board to withdraw the assessment appeals for the 2009, 2010 and 2011 taxation years. The Board processed the withdrawal requests on February 17, 2012. The then owner of the subject property, WRFP, was not given notice of the appeal withdrawals. Subsequently, WRFP became aware of the appeal withdrawals, and through its counsel wrote to the Board on December 23, 2013 requesting that the appeals be reinstated. It appears that on February 18, 2014, the Board reinstated the appeals for the 2009, 2010 and 2011 taxation years and also created an appeal for the 2012 taxation year that was not requested. The reinstatements were done without notice to or input from the Township, MPAC or Domtar.

Preliminary Issue – Jurisdiction Objection

5At the commencement of the motion, Paul Cassan, on behalf of WRFP, objected to the Board proceeding to hear the motion on the basis that the Board did not have jurisdiction. Mr. Cassan submitted that under Rule 141(2)(c) of the Assessment Review Board Rules of Practice and Procedure (the “Rules”), the Board cannot review decisions of requests for review. Further, contrary to Rule 142(a) requiring a request for review to be made within 30 days of the decision, the motion was not brought until more than a year after the appeals were reinstated. Mr. Cassan acknowledges that the December 23, 2012 letter did not conform to the strict letter of the Rules regarding a request for review, but notes that the Rules provide the Board broad authority to grant review requests without submissions from other parties. Finally, Mr. Cassan submitted that the proper procedure to review a review of decision would be an application for judicial review to the courts.

6The Township and MPAC submitted that WRFP’s December 23, 2012 letter to the Board was an informal request for reinstatement and did not constitute a request for review under the Board’s Rules 141 to 146. Firstly, MPAC argued that a request for review under the Rules must be a review of a formal decision of the Board, and the acceptance of a withdrawal of appeals by the Board is not a decision. The request letter included neither a filing fee nor an affidavit in support (Rule 143 (h) and (i)). Neither MPAC nor Domtar were given notice of the purported request for review. Finally, the December 23, 2012 letter was not made within 30 days of the Board’s “decision” to withdraw (Rule 142(a)).

7The Board finds that it has jurisdiction to hear this motion. The Board is satisfied that WRFP’s December 23, 2012 letter requesting the reinstatement of the appeals was not a request for review under the Rules for the reasons indicated by MPAC. The Board characterizes the letter as an informal request seeking direction and/or administrative relief. There does not appear to be any Rule that specifically addresses such a request. However, Rule 3, states:

…If these Rules do not provide for a matter of procedure, the Board may do whatever is necessary and permitted by law to enable it to effectively and completely adjudicate on any matter before it….

8As such, it is the Board’s view that it can exercise its broad powers under Rule 3 to proceed and hear this motion. WRFP’s jurisdiction objection is therefore denied.

DISPOSITION OF MOTION

9The Board grants the motion and hereby cancels/quashes the assessment appeals for the taxation years 2009, 2010, 2011 and 2012.

REASONS FOR DISPOSITION OF MOTION

Issues

1. Did Domtar have the legal authority to withdraw the 2009, 2010 and/or 2011 appeals after conveying the subject property to WRFP?

2. Has the late withdrawal and subsequent reinstatement prejudiced the parties and if so how shall the prejudice be balanced against the integrity of a correct assessment roll?

1. Did Domtar have the legal authority to withdraw the 2009, 2010 and/or 2011 appeals after conveying the subject property to WRFP?

10Yes. Domtar filed the appeal for the 2009 taxation year and was the statutory Appellant. There was no evidence presented at the motion to indicate that WRFP was made a party to the 2009 appeal. At any time, WRFP could have made efforts to be added as a party under s. 40(14) of the Act. No such efforts were made. Instead, WRFP has argued that it automatically became a party to the appeal(s) by virtue of being the owner. WRFP relies on s. 40.(28) of the Act which states:

(28) Change of ownership – For the purposes of subsections (24), (25) and (26), if an appeal is brought in respect of a property, the appellant is the owner of the property and there is a change of ownership before the appeal for the year is finally disposed of, the reference to the appellant in the subsection shall be deemed to be a reference to the owner of the property at the relevant time.

11This exact issue was dealt with by the Board in 2319839 Ontario Inc. v. Municipal Property Assessment Corp., Region No. 31, 2013 Carswell Ont 11780, [2013] O.A.R.B.D. No. 175, 79 O.M.B.R. 166. In a motion by a subsequent owner, Member J. L. Walker addresses s. 40(28) of the Act as follows:

[19] The section operates to continue the deeming of appeals during an assessment cycle but does not alter the parties to an appeal which predates the change in ownership. Mr. Jamieson submits, and the Board agrees that outside of the reference in s. 40.(28) the Act is silent with regard to the rights of new owners, not intruding upon the rights of buyers and sellers to deal with these issues as a matter of contract.

[20] This is not a situation where a prior owner has moved on and has either assigned its appeals to the purchaser or abandoned them.

[21] The Board cannot use its discretion under s. 40(14) of the Act to transfer an asset to 2319839 Ontario Inc. that it did not obtain when negotiating the purchase of the subject properties.

12In fact, the Asset Purchase Agreement dated June 19, 2009 between Domtar and WRFP, at subparagraph (h) of “Excluded Assets” specifically states that “…the rights to any and all municipal tax appeals … in connection with the White River Sawmill…” were retained by Domtar. The Board agrees with Member Walker that s. 40(28) does not operate to eliminate Domtar’s rights to those deemed appeals. Domtar retained its interest in those appeals which fall within “ the any and all municipal appeals excluded from the transaction”. We agree with Mr. O’Kane that the deeming provisions are in favour of the initial Appellant, and do not create appeal rights in anyone else. We agree with Mr. Jamiesons’s submission that the deeming of appeals does not follow the purchaser.

13Domtar had the right to withdraw the 2009, 2010 and 2011 appeals.

2. Has the late withdrawal and subsequent reinstatement prejudiced the parties and if so, how shall the prejudice be balanced against the integrity of a correct assessment roll?

14Whenever the Board is asked to exercise its discretion in favour of one party over another in circumstances such as these, there is a balance of interests and relative prejudice that must be considered. In this case, there was an error by Domtar counsel in delaying the delivery of the withdrawal. The Board might have anticipated that processing that withdrawal which included deemed appeals, years later and with a new owner in place, could result in consequences to parties. Similarly the Board’s decision to re-instate the appeals years after that, would have clearly foreseeable consequences that ought to have been anticipated and dealt with by sending Notices and inviting submissions.

15Now years after that, this panel must decide which party will suffer the most prejudice from our remedy for these errors and ill-advised decisions. WRFP maintains it has a good case for a lower assessment, and the integrity of a correct assessment roll requires that it be permitted to benefit from the deemed appeals, that it did not initiate and were not expecting. The Township of White River forgave substantial tax arrears and worked with WRFP to save the local mill, on condition those future appeals would not threaten its tax base further. Mr. O’Kane stated and the Board accepts that the settlement arrangements between the parties including substantial forgiveness of arrears were contingent on there being no 2008 base year appeals outstanding.

16The Board concludes that the greater prejudice would be in permitting WRFP to take advantage of errors made by others, to potentially benefit from further tax reductions that it had not expected, than to allow the Township the settlement that it made in good faith in an effort to save the sawmill. Neither those considerations nor the validity of the withdrawals appear to have been considered on the re-instatement, and so we exercise our discretion under Rule 3 to cancel the re-instatement of the appeals, and substitute this decision in its place.

CONCLUSION

17The circumstances surrounding this motion are both awkward and unfortunate. This motion came about due to a series of events leading to this matter being needlessly complex and long overdue. This motion could have been averted or determined at a much earlier stage had any of the parties, as well as the Board, acted more prudently and with more attention to procedural fairness. Domtar could have filed its withdrawal of appeal with the Board promptly in 2010 with Notice to the new owner, WRFP. The Board should have notified the new owner when the appeal(s) were being withdrawn in 2012. Had WRFP been notified of the withdrawals, either in 2010 or 2012, it would have been in a position to object and file a motion at that time, as opposed to years later. WRFP’s letter of December 23, 2013 (above characterized as “an informal request seeking direction and/or administrative relief”) was poorly managed by both WRFP and the Board. Firstly, when seeking such relief that directly impacts the rights of other parties, WRFP should have notified both MPAC and the Township. Secondly, it remains unclear why the Board granted WRFP’s request for reinstatement without Notice to or submissions from MPAC and the Township. Further, there does not appear to be any evidence that the Board provided reasons for its decision to reinstate the appeals.

18There is no doubt that justice would have been better served if a motion to determine whether these appeals should be reinstated had been heard years ago. The parties and the Board must strive to do better. The Board is currently reviewing its Rules in order to deal more effectively with reinstatement requests. At the end of the day, the Board has come to a decision by examining the rights of the parties and weighing the relative prejudice to the parties of the series of errors.

19The Board concludes that the re-instatement of the appeals was in error as Domtar had the right to withdraw the 2009 and the deemed appeals. That decision is hereby canceled, the withdrawals will stand and the appeals for the taxation years 2009, 2010, 2011 and 2012 will be deleted, canceled and/or removed.