Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: September 30, 2016

FILE NO.: WR 141544

Assessed Person(s): CHC Student Housing Oshawa 1, Dc Land Corp. and 1700 Simcoe Street (Ari) Ltd.

Appellant(s): City of Oshawa and 1700 Simcoe Street (Ari) Ltd.

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 13

Respondent(s): City of Oshawa

Property Location(s): 1700 Simcoe Street North and 1670 Simcoe Street North

Municipality(ies): City of Oshawa

Roll Number(s): 1813-070-003-09200-0000

Appeal Number(s): 2897272, 2897273, 2909950, 2953879, 3019115, 3047256, 3053884, 3053885, 3080337, 3080193, 3125573, 3125574, 3150130 and 3150131

Taxation Year(s): 2011, 2012, 2013, 2014, 2015, and 2016

Hearing Event No.: 625676

Legislative Authority: Sections 33, 34 and 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

Heard: June 22, 2016 in Oshawa, Ontario

APPEARANCES:

Parties

Counsel

1700 Simcoe Street (Ari) Ltd.

Phil Sanford

MPAC

Karey Lunau

City of Oshawa

Visha Sukdeo

DECISION OF THE BOARD DELIVERED BY JOSEPH M. WYGER

INTRODUCTION

1In north-central Oshawa, near the Ontario University Institute of Technology and Durham College at 1670/1700 Simcoe Street North, stands a recently constructed high-rise building housing 588 students. The building is comprised of 133 suites with a mix of two, three, four and five-bedrooms apartments. The number of occupants per suite equals the number of bedrooms in each suite and those occupants share the kitchen, bathroom, storage and laundry facilities within that suite. Each occupant has exclusive use of her/his bedroom which has a keyed lock on the door. The suite also has a lock on the entrance door and can be accessed exclusively by the suite occupants. There are no other shared facilities within the building.

2At issue is whether this student housing building should be in the residential or multi-residential tax class. The majority of the arguments focused on the meaning of the phrase “self-contained units.” The Act does not define what constitutes a self-contained unit and the case-law is not entirely on point. The taxpayer and MPAC argue that there are no self-contained units because the “units” are the individually rented bedrooms and they are incomplete for self-contained living. The City argues that the suites are the self-contained units, and that there are well in excess of six of them. The answer hinges largely on which physical space should be considered a unit, the individual exclusive use bedroom, or the suite itself.

3The Assessment Review Board (“Board”) must discern what the legislators might have intended with the phrase self-contained unit (“SCU”) in these factual circumstances.

DECISION

4I conclude that both the physical layout of the building and nature of the occupancy demonstrate that the 133 suites are self-contained units for the purposes of s. 4(1) of Ontario Regulation 282/98 (“O. Reg. 282/98”) and the property will be placed in the multi-residential tax class. As valuation was not an issue, the assessed values as returned are confirmed.

REASONS FOR DECISION

Agreed Statement of Facts

5Counsel provided an Agreed Statement of Facts with the proviso that they were not in agreement as to the relevance of all the facts. This proviso relates to paragraphs 4, 5 and 6 of the statement detailing how the Appellant constructed the purpose-built student housing with financial assistance by way of a deferral of development charges by the City of Oshawa, which had an expectation that it would be assessed as multi-residential.

6In order to assist the Appellant in establishing a different financial model, the City also approved a draft plan of condominium for the project, which was still required to be used for student housing for a minimum of 10 years. While Visha Sukdeo, counsel for the City invited me to give these arrangements some weight, Phil Sanford counsel for the owner, insisted they were irrelevant and that it would be an error of law to rely on them. I agree with Mr. Sanford that the intentions and expectations of parties are not evidence on which a classification can be based.

7The important facts from the agreed statement describe 133 suites with 588 bedrooms spread out among 2, 3, 4 and 5-bedroom suite types. Students access the main building entry door with a key card, and they access their suite with a combination lock. Bedroom doors have individual keys specific to each bedroom.

Appended to the agreed statement are floor plans and typical leases. A typical lease extract:

Location: __33 Taylorwood_____________

Apartment: __#

Exclusive Room: __#

Unit________Exclusive Room___________________ (hereinafter called the “premises”), upon the following terms and conditions:

The first page of a typical lease provides in bold-faced capital letters: “LANDLORD AGREES TO LEASE TO TENANT, AND TENANT AGREES TO LEASE FROM LANDLORD, THE PREMISES…”

Paragraph 1 entitled “LEASED PREMISES” provides that “…the Landlord hereby leases to the Tenant the Personal Space in the Premises hereinafter called the ‘Leased Premises’, together with the right to use the common areas of the Premises.”

Taxpayer’s Position

8The position of the building owners, CHC Student Housing Oshawa Inc. and 1700 Simcoe Street (ARI) Ltd. (“CHC”) was advanced by Mr. Sanford, who concurred with MPAC’s classification as residential. He characterized the issue in terms of the actual current use of the property as exclusive use bedroom units that are not self-contained, governing the classification versus the potential future use of the suites as self-contained units (“SCU”). He asserted that just because the suites are physically capable of being SCUs, that does not trump the actual current use based on contractual arrangements between the students and CHC.

9Mr. Sanford submitted that the “units” are the bedrooms. He relied on MPAC’s internal guideline definition of a SCU: “if the plumbing (bathroom facilities) and/or kitchen are shared, the unit is not self-contained.” Mr. Sanford maintained that because by terms of the lease, each tenant has exclusive use of her/his bedroom only, and the kitchen and bathrooms are shared within the suite, that the bedroom unit does not meet the definition of being self-contained.

10Mr. Sanford placed substantial emphasis on the fact that the lease arrangement centers on the exclusive use of the “personal space” bedroom, arguing that since that dwelling unit includes no exclusive use of a kitchen or bathroom, that dwelling unit is not complete or self-contained. He contended that the case-law, while not definitively on point, suggests that the issue turns on the exclusivity of the right to occupy: “meaning sole possession of the legal right to use as well as the right to exclude others from use, a unit cannot be considered to be self-contained”. CHC’s position is that its’ building has zero self-contained units.

11Other subparagraphs of s. 3(1), the provision that defines the residential class, describe different legal occupancy arrangements in large multiple person buildings, and specifically rule out those SCUs as being multi-residential, and include them as residential. Mr. Sanford relied on these exceptions for the proposition that the legal occupancy arrangement at CHC should be similarly ruled out of the multi-residential class.

MPAC’s Position

12The assessing authority was represented at the hearing by their counsel Karey Lunau, who defended the residential classification. She zeroed in on the central issue which was not the difficult task of determining what “self-contained” means, but rather which physical space constitutes a “unit”. Her submission was that the correct classification of the property turned on whether the “unit” in the phrase SCU is the bedroom in a suite or the entire suite itself. MPAC concedes that if the entire suite is considered a “unit”, that there is no doubt that it is “self-contained” in the sense that individuals could live there with all their eating, sleeping, lounging and bathroom needs included.

13Ms. Lunau agreed with CHC that both the physical layout and the nature of the occupancy need to be considered in answering the question of what is a “unit” for the purposes of s. 4(1). She pointed out some terms of the occupancy that informs the nature of the “unit”. A student has exclusive possession of their bedroom, but must share the rest of the suite with potentially unrelated tenants. Each student has a lock on their bedroom door. The termination of one tenancy does not terminate the tenancies of other suite occupants. The Landlord has the right to relocate a tenant.

14Ms. Lunau introduced the concept of “rateable occupation” from the House of Lords decision in Westminster City Council v. Southern Railway Company and others, [1936] 2 All E.R. 322 (H.L.). She proposed this precedent to justify MPAC’s written position: “A student is in rateable occupation only of the portion of the suite where the student has ‘sole and exclusive occupation’: their Bedroom. Therefore, the ‘unit’ for assessment purposes is the Bedroom, not the Suite”. Ms. Lunau submitted that the lock on each bedroom door is an indicator of the control that is a prerequisite for rateable occupation.

City of Oshawa’s Position

15The City’s position was argued by their counsel, Ms. Sukdeo. She disagreed with MPAC and CHC, and argued that multi-residential was the correct classification. She maintained that a plain reading of words in s. 4(1) is that land used for residential purposes that has seven or more SCUs, is multi-residential. Ms. Sukdeo contended that the use of the suites were for residential purposes, and it does not require an examination of how portions of the suite are used or how the occupancy is organized within the suite in order to determine classification. She maintained that a broad residential purpose was a sufficient marker for use.

16Ms. Sukdeo argued that the word “has” seven or more SCUs is a physical description of the building itself. The physical layout is similar to other multi-residential apartment buildings, and the choice of the commercial structure of private lease relationships does not affect the physical reality. Ms. Sukdeo objected to importing “exclusive use” into the Regulation. She asserted that to suggest that a building with 133 suites, housing 588 people, is not “multi-residential” is not in keeping with the spirit of the Act.

17Ms. Sukdeo submitted that a single occupant is not the only indicia of what is self-contained or is a unit. She points out that in the leases, the tenants rent the “premises” which is the suite, and two or three or four or five of them as the case may be, have exclusive use of the suite to the exclusion of all other students in the building. The kitchen and bathrooms are shared by the tenants within the suite, but those common areas are exclusive to that group, who are more probably friends or acquaintances, and not necessarily unrelated strangers.

18Ms. Sukdeo stated that rateable occupation was not the test and was not applicable because that concept deals with eligibility or liability to taxation and does not aid in the search for a meaning for a SCU.

LEGISLATION

19O. Reg. 282/98 s. 3(1) states:

Residential/Farm Property Class

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

4. Land used for residential purposes that is,

i. land that does not have seven or more self-contained units,

ii. a unit or proposed unit, as defined in the Condominium Act,

iii. land owned by a co-operative, as defined in the Co-operative Corporations Act, the primary object of which is to provide housing to its members or land leased by such a co-operative if the term of the lease is at least 20 years,

iv. subject to subsection (2), land with seven or more self-contained units owned by a corporation with or without share capital each shareholder or member of which has a right, by virtue of being a shareholder or member of the corporation, to occupy one of the units,

v. subject to subsection (2), land with seven or more self-contained units owned by individuals only, each of whom has an undivided interest in the land and a right, arising from a contract with the other owners, to occupy one of the units, if at least half the units are occupied by the owners with a right to occupy them,

vi. land with self-contained units, organized as what is commonly known as a timeshare, that,

A. is owned by persons, each of whom has an undivided interest in the land and a right to occupy a unit on a periodic basis for at least one week at a time, or

B. is leased by persons, for terms of at least 20 years, each of whom has a right to occupy a unit on a periodic basis for at least one week at a time,

vii. a group home as defined in subsection 166 (1) of the Municipal Act, 2001,

viii. a care home, as defined in the Residential Tenancies Act, 2006, that does not have seven or more self-contained units and that is not included in the commercial property class under paragraph 2 of section 5,

ix. land used for residential purposes on a seasonal basis, including campgrounds,

x. land with self-contained units, organized as what is commonly known as a life lease project, in respect of which individuals (referred to in this subparagraph as “purchasers”) have each entered into an agreement to purchase a right (referred to in this subparagraph as the “life lease interest”) to occupy a unit for residential purposes within the project, if,

A. the term, not including renewals, of the life lease interest is equal to or greater than 20 years or is equal to the lifetime of the purchasers,

B. the purchasers have made one or more payments to the owner of the land on account of the purchase, and

C. the purchasers have a right to sell, transfer or otherwise dispose of the life lease interest in a manner determined under the terms of the agreement for the purchase,

20Ontario Regulation 282/98 s. 4.(1) states:

Multi-Residential Property Class

4. (1) The multi-residential property class consists of the following:

5. Land used for residential purposes that has seven or more self-contained units other than land included in the residential/farm property class under paragraph 1 of subsection 3 (1).

6. Vacant land principally zoned for multi-residential development. O. Reg. 282/98, s. 4 (1).

(2) Land in the new multi-residential property class is not included in the multi-residential property class. O. Reg. 282/98, s. 4 (2).

ISSUES

21The positions of the parties can be distilled into four issues or questions with attendant sub-issues:

1. Does the distinction between the residential and multi-residential classes rely on the legal occupancy arrangements within the building? Does the exclusive use, control and occupation of bedrooms make them “units” that are not self-contained?

2. Which is the paramount consideration in defining what is a SCU, the physical layout or the nature of the occupancy, or some combination of both?

3. The statute excludes certain other living arrangements in buildings with more than seven SCUs from being considered multi-residential. Is this justification to similarly exclude the subject student accommodation?

4. What is the ordinary meaning of the phrase “Land used for residential purposes that has seven or more self-contained units” and the word “multi-residential”, in context and having regard to the scheme and object of the provision as the legislators might have intended?

DECISION

1. The distinction between the residential and multi-residential class does not rely on legal occupancy arrangements which divide a building into “units” which are not self-contained. It is the control and occupation by the group of tenants over the whole suite that fits the phrase SCU for the purposes of differentiating between the residential and multi-residential classes.

2. The phrase “…has seven or more self-contained units…” is a physical description. The paramount consideration in defining what is a SCU is the physical layout of the building rather than the choices that owners make in arranging the occupancies within them. I affirm Board case-law that physical capability or potential to be a SCU predominates over the nature of occupancy arrangements.

3. The fact that there are defined exclusions from the multi-residential class in the statute based on certain legal occupancy structures is good reason not to exclude the subject student occupancy arrangement, on the grounds that had the legislature so intended, that arrangement would also have been excluded by the regulation.

4. The 133 suites in the subject building fall within the ordinary meanings of the phrases “self-contained units” and “multi-residential.” I conclude that the legislature could not have intended that a building like the subject contains zero SCUs, but intended for this structure housing 588 persons to be defined and assessed as multi-residential.

Analysis – Case-law

22All three counsel presented case-law that while not directly on point, provided some insight into previous Board thinking on the topic of SCUs, and context for this analysis.

Lester Shoalts Ltd. v. Ontario Property Assessment Corp., Region No. 18 [2001] O.A.R.B.D. No. 365 (“Shoalts”)

23The independent living facility for seniors contained 45 units of either one or two bedrooms and was classified as multi-residential. Many services and amenities were provided to residents. The Board agreed with the assessor that “The physical characteristics of the units are similar to those of a small apartment” and that while there was potential to disable the cooking facilities within the unit, “…that action is a choice that may or may not be exercised.” The Member also noted that the extent to which residents availed themselves of services or amenities was “a choice made by each occupant”.

24I find this case assists the City’s argument that physical characteristics are more important to determining what is a SCU, than the choices made with respect to the living arrangements of the occupants.

Nowina v. Municipal Property Assessment Corp., Region No. 9 [2002] O.A.R.B.D. No 504 (“Nowina 2002”)

25In this case, one of the units in a seven suite building was not lived in, but used by another tenant for storage. It had no appliances or furniture but was capable of being used as a SCU. The Board determined that “use is not a determinative factor” and that if a unit is intended to be a residential unit then “it must be regarded as a residential unit”

Nowina v. Municipal Property Assessment Corp., Region No. 9 [2003] O.A.R.B.D. No. 469, 47 112 (“Nowina 2003”)

26In Nowina 2003, the same unit had no stove wiring in the kitchen or kitchen sink, no hot water in the bathroom and crumbling walls and ceiling. It had been “decommissioned” and was now used by other tenants for storage as well. It no longer met the requirements for habitable residential premises. MPAC took the position that it “considers potential use for a circumstance such as that applicable to Unit 1 to be determinative of a property’s classification as a self-contained unit.”

27A different panel of the Board than in Nowina 2002 was not convinced by Mr. Nowina that the increasingly decrepit Unit 1 was not a SCU. A key factor was the physical layout of the building. The Board found that there were more than six “separately discernable areas” within the building, which had separate entrances, and similar functional design as the other units. The panel placed some emphasis on the fact that Unit 1 had the same structural characteristics such as size and room layout and so was also a unit. The Board was clearly of the view that the unit had the potential to be a SCU and that non-user was one of choice and not capability.

28Mr. Sanford’s written material questioned the Nowina 2003 panel’s statement that MPAC’s guidelines for self-contained units “is in conflict with the Board’s understanding of the ordinary meaning of self-contained”. That understanding appears to include “storage units, commercial units, recreational units, or indeed units designated for a variety of purposes.” The Members suggested that the intent of the drafters was not to restrict the unit count only to residential units, stating that “A unit need not have a residential purpose, use or designation to be counted in determining the number of self-contained units that are in a building that is included in land used for residential purposes.”

29This panel would not extend the reach of the definition that far, but indeed restrict it to “residential units”. Otherwise a building with six residential apartments would attract the multi-residential classification if it had any other enclosed spaces that could be described as “units” such as laundry or storage rooms. In the context of multi-residential classification, the definition of SCU should permit the differentiation of a six-plex from a building with more than six residential apartments. It seems to me that including other non-residential enclosed spaces or units as SCUs simply makes the task more difficult and was not intended by the legislature. I am supported in this view by the panel in Amica (Whitby) Inc. v. Municipal Property Assessment Corp. Region No. 13 [2011] O.A.R.B.D. No. 283 (“Amica”) That panel was also reviewing Nowina 2003, and the Members saw no distinction between “self-contained unit and self-contained residential unit.”

30The Nowina 2003 panel’s digression into expanding the ambit of SCU was largely obiter dictum, but I find the reasoning on the key issue in Nowina 2003 supports the City’s position. The suites in the subject property have the physical potential and the capability to be SCUs with a simple change in the lease arrangements. The deliberate vacancy status of the unit in both Nowina cases and the occupancy arrangements in the subject property are examples of a landlord’s choice of how to let his property and are separate and apart from the physical facts in place.

Amelia Properties v. Municipal Property Assessment Corp., Region No. 18 [2003] O.A.R.B.D. No. 83 (“Amelia”)

31This was an appeal of the multi-residential classification of a retirement facility, during which the owner conceded that the units were normal self-contained apartment units, but because of the services provided, it was more like a care home. The Member found that the key consideration governing classification is “use”, but that there is no reference to the word “use” in the Regulation that may relate to activities, and that even increased services and activities in the future do not change the reality that “the units are potentially capable of being used in the same manner as those in apartment buildings.”

32I find this focus on the physical reality assists the City’s position that physical or potential capability to be an apartment is of more probative value to the definition of SCU than are the changeable occupancy arrangements.

T. Sangs Investments Ltd. v. Municipal Property Assessment Corp., Region No. 9 [2004] O.A.R.B.D. No. 229

33The 21-unit licensed rooming house was classified multi-residential, having many more of the attributes for a SCU than the property dealt with in Nowina 2003. A kitchen with a microwave, hot plate, refrigerator and sink cabinet was found to meet MPAC’s guidelines, which the Member accepted. I derive from this case again that a physical description was the determinative factor.

S D B Properties Inc. v. Municipal Property Assessment Corp., Region 09 [2010] O.A.R.B.D. No. 24

34The Appellant testified that one of the seven second floor residential units was very small and not lived in for many years, and had no bathtub or shower, and was used for storage. Deterioration over time was making the whole second floor uninhabitable and not worth fixing due to marginal rents in the area, so they were also “decommissioned” as tenants moved out.

35The Board accepted MPAC’s view that there were seven distinct residential units and that even small bachelorette type units with minimal cooking and bathroom facilities were SCUs. The Board concluded that the business decision to not renovate and to allow vacancies did not change their status as SCUs. This decision is in line with the Board’s previous jurisprudence that physical layout is key, potential for self-contained living is a factor, and the choices that owner’s make with respect to the nature of the human occupancy is at best secondary.

Amica (Whitby) Inc. v. Municipal Property Assessment Corp., Region No. 13 [2011] O.A.R.B.D. No. 283 (“Amica”)

36The six-storey retirement home contained suites with living, sleeping and bathroom facilities with limited kitchen facilities which the owner argued are not “independent cooking facilities” in accordance with MPAC’s guideline. Many services and amenities were provided to resident seniors, with meal plans being compulsory.

37MPAC argued that even a limited “kitchenette is a cooking facility” and that full kitchens are not the standard. Counsel for MPAC, Frank Shea argued that the “the cases support that only a potential to be ‘self-contained’ satisfies the test.” The Board in Amica found that cooking was predominantly conducted in the main kitchen and not in the units, and was satisfied that because the units function differently from normal self-contained apartment units they did not constitute SCUs.

38The Member in Amica also reviewed the dismissal of the leave application in Amelia wherein the leave judge stated that “The Board correctly determined that the governing consideration is the use to which the property is being put. In assessing use, the physical aspects of the property must be considered – it is my view that this is what the Board meant when it referred to the “potential” use of the units as ordinary apartments.”

39Mr. Sanford placed emphasis on the Board in Amica “confirming that the governing consideration is the use…”, but I see equally important considerations in the Member’s decision were the design of the units: “…units were not designed to be able to prepare and cook the menu from scratch…”; and “the units were designed to be used and, more importantly, are used by tenants taking their primary meals in the main dining facilities”; and “…these units not only function differently from normal self-contained apartment units, they were designed to function differently.” This focus on design underlines the importance of the physical layout.

40The Member in Amica looked at the use and the design in tandem as the leave judge in Amelia suggested. In the subject property, the only design feature that reflects the exclusive use of a bedroom is the lock on the bedroom door. I don’t consider the use for residential purposes to be having exclusivity behind a locked bedroom door. I find the real “use” here is complete residential living with suite-mates in a physical layout that was specifically designed for that.

41Mr. Shea, the lawyer arguing the case for MPAC in Amica, noted the 45 and 70 units in Shoalts and Amelia were confirmed by the Divisional Court to be multi-residential and suggested that this larger scale “pushed the properties into the multi-residential class.” The Board noted his contention that “there was something to the terms of scale and the 139 units in the property definitely put this property into the multi-residential property class.”

42The question of scale underlies Ms. Sukdeo’s contention that suggesting that a 133 suite building is not multi-residential offends the spirit of the Act. I will agree that at best that suggestion is counter-intuitive.

Kimwest (Ontario) Investments Ltd v. Municipal Property Assessment Corp., Region No. 27 [2015] O.A.R.B.D. No. 255

43A hotel property was converted to provide “self-contained residential suites to students.” Modular kitchenettes were added to the hotel rooms and include a sink and counter, microwave oven, electrical plug, refrigerator and pantry. Every second floor had a common area equipped kitchen and laundry. The Board reviewed the physical description of the converted units and found that “…though the facilities may be humble, they pass the test of being self-contained by providing kitchen and cooking facilities, independent eating, sleeping and bathroom accommodations along with controlled access, similar in function to a small apartment.” In the case before me, there is no doubt that the suites could function as apartments.

Yoseph Asgedom v. The Queen, 2016 ONSC 1959 (“Asgedom”)

44This case was a judicial review application in which the applicant challenged a conclusion with respect to eligibility requirements under Peel Region’s housing support legislation. The court found that applicants were required to live in a “self-contained unit” and quoted from the Lease: “furnished room in a private home…with shared kitchen, bathroom and laundry facilities.” It describes the washrooms and kitchen as ‘common areas’ and the lease limits the use of the laundry facilities to once a week. The applicant’s own letter of July 6, 2015, at Table “L” of Peel’s Application Record, describes his rent as ‘room rent’ and states “the house (or rooming house) is a shared accommodation located in Mississauga.”

45Mr. Sanford pointed to the essence of this decision being that a person who rents a bedroom but has only rights in common with others to washroom and kitchen areas does not lease a SCU, as the question turns on exclusivity. He maintained that in the absence of exclusivity, meaning sole possession of the legal right to use as well as the right to exclude others from use, a unit cannot be considered to be self-contained.

46I find Asgedom to be helpful in determining what is not a SCU: a bedroom in a rooming house. I am not so sure that a comparison of the subject property to a rooming house is apt, or that the essence of Asgedom helps to eliminate from consideration whether a high-rise building with 588 bedrooms within 133 apartments harbours any SCUs. The exclusivity of the use of a bedroom may not be the best test where there are 133 physical layouts that could be self-contained apartments. In that scenario, there is exclusivity that applies not only to the individual private space bedrooms, but the suite-mates also collectively enjoy exclusivity over the suite itself to the exclusion of all others, like any other apartment. The 2, 3, 4 or 5 suite-mates as a group collectively rent the “premises.”

Westminster City Council v. Southern Railway Company [1936] 2 All E.R. 322 (H.L.) (“Westminster”)

47This case is out of chronologic order, as it does not deal with SCUs like the others, but rather the concept of “rateable occupancy”. It underpins MPAC’s decision not to assess the subject property as multi-residential, on the grounds that the rateable or assessable “unit” is the private space bedroom and not the suite as a whole.

48Certain premises such as a bank, shops and various kiosks at an English railway station were let out to tenants under leases or licences. They were lock-up shops within the station premises. The issue was whether the tenants had such de facto and exclusive occupation of the premises that they were “so let out as to be capable of separate assessment.” The question was framed by the House of Lords in terms of whose position in relation to occupation is paramount, and whose position is subordinate and that consideration must be given to the position and rights of the parties in the premises in question, and in regard to the purpose of the occupation of those premises. “The rateability does not depend on the title to occupy, but on the fact of occupation.”

49The House of Lords reviewed these factors and contrasted them with the case of a lodging or rooming house where the owner and his lodger, who are both in a sense in occupation, but the occupation of the owner is paramount, that of lodger subordinate. Such was not the case before them where “the tenant was in sole occupation of his premises, and has full use of them to carry on his business.”, and so was capable of a separate assessment.

50Ms. Lunau referred to the Westminster test for rateable occupancy as being control of the premises. She contended that the locks on the bedroom doors were indicia of control of the premises and “therefore the unit for assessment purposes is the bedroom, not the Suite.” Left open is the question of collective control by the suite-mates over the lock on the door to the suite itself, and what their leases say about the “premises”, matters discussed later herein.

Walton International Group Inc. v. Ontario (Administrator Farm Property Class Tax Rate Program) [2012] O.J. No. 3617; 2012 ONSC 4172 (“Walton”)

51This case was presented by Ms. Sukdeo to provide some guidance on statutory interpretation. It dealt with the question of whether the phrase “land owned by” in s. 8(2) (3) of O. Reg 282/98 dealing with the farm tax credit, includes both beneficial and legal ownership. The Divisional Court, on a stated case, determined that it meant the legal ownership only, relying on the modern approach to statutory interpretation that the words of an Act are to be read in their entire context and in the grammatical and ordinary sense harmoniously with the scheme and object of the Act and the intention of the legislators.

52At paragraph 26 the Court relays the general proposition that taxpayers are entitled to rely on the clear meaning of the statute, where words that are precise and unequivocal play the dominant role. Of some application to the case before me, the Court continues: “However, where the words give rise to more than one reasonable interpretation, there may be greater recourse to the context and purpose of the Act.”

53While the case-law provides some context for deliberation, it does not provide the answer to the question of whether there are seven or more SCUs within the subject building. The four issues outlined earlier can be answered through an examination of the leasing contract, the real nature of the occupancies, the relevance of an 80 year old precedent to modern living arrangements, the ordinary meaning of “multi-residential”, and the intent and purpose of both s. 3(1) and s. 4(1) of the Act

ISSUES

1. Exclusive Use, Control and Occupation

54In reviewing the position and rights of the students in the lease governing the subject property, I find that the legal occupancy arrangement providing joint and exclusive occupation of the suite-mates over the suite is paramount to the single occupation of individuals over bedrooms. The individual bedrooms are not self-contained, but the use and occupation by the group of tenants over the whole suite better informs the interpretation of the phrase SCU.

The Lease

55The lease extracts are somewhat inconsistent in the use of the terms “Apartment”, “Unit” “Exclusive Room”, “Personal Space”, “Premises” and “Leased Premises”. In the body of lease, the term “premises” denotes the whole suite, while the term “personal space” denotes the exclusive use bedroom. Notable is that in bold capitals on page one is “…TENANT AGREES TO LEASE FROM LANDLORD, THE PREMISES…” A review of the “terms and provision” of the lease reveals that substantially all of them deal with the premises or suite, rather than the personal space bedroom. While the term “personal space” appears five times in the body of the lease, the term “premises” is repeated well over seventy times, including a provision that “…the Tenant, together with the Residential Parties jointly has exclusive control and possession of the common area space within the Premises.” The paramount concerns addressed by the written occupancy arrangement deal with the premises as a whole, meaning the suite.

56The parties to the lease go on to acknowledge that the Premises is specifically not a rooming house as defined by the laws of Ontario. So the occupancy arrangement contemplates that the “premises” is not an exclusive bedroom rooming house for the purposes of landlord and tenant law, but it is akin to an exclusive bedroom rooming house for the purposes of assessment law?

Rateable Occupancy and Use

57It is clear that use for residential purposes is a prerequisite to the classification of both the residential and multi-residential tax classes. The distinction between those two classes hinges on the number of SCUs that a building contains. Mr. Sanford argued that for the purposes of counting SCUs, the “current use” of people renting individual locked bedrooms supercedes the potential use of the suites themselves as SCUs.

58Both Ms. Lunau and Mr. Sanford maintained that the fact that students exercised exclusivity over the locked bedroom was a determining factor is defining what is a “unit” for the purpose of considering the phrase SCU. CHC’s position is proposed that because the bathroom and kitchen facilities are shared with other tenants who lease bedrooms in the Suite, the result is that the “unit” falls outside the MPAC definition of a SCU. Ms. Lunau grounded her argument on the basis that the exclusivity of the occupation of the bedrooms was the marker of rateable or assessable occupancy, and thus the bedroom was the “unit” when considering the phrase SCU. Ms. Sukdeo submitted that rateable occupancy dealt with liability or eligibility to taxation, and does not assist with the definition of SCU.

59The effect of assigning the individual bedrooms as units which are incomplete for living, renders the remaining eating, living and bathing areas similarly incomplete units, as they have no sleeping areas. It essentially divides the building into 588 incomplete bedroom units and 133 incomplete kitchen/living/bathing units. The building would have a total of 721 such non-self-contained “units” but zero complete SCUs. This feels intuitively like sleight of hand and borders perilously close to absurdity.

60The arrangement of individually leased bedrooms is not really the current “use”, it is simply a manner of structuring the residential use as between the occupants. It is equally arguable that the current and not potential “use” is that of suite-mates living together in an apartment that they jointly rent. Either of those scenarios fall within the requirement of “used for residential purposes.”

61CHC’s materials cite that “A dwelling unit is not self-contained if a bathroom and/or kitchen are shared. It is, in simple terms not ‘complete’.” This statement is simply not true because tenants of two, three and four bedroom apartments or houses throughout the province necessarily share bathrooms and kitchens, within complete dwelling units. I conclude that if rateable occupancy is a valid test, and exclusivity is a determining factor, then the occupancy and exclusivity of the group of tenants over the whole suite better informs the ordinary meaning of SCU, than does the exclusive control of individual bedrooms.

62It is clear that each tenant rents both the personal space bedroom, exclusive of all others, and also the rest of the premises jointly with suite-mates and also exclusive of all others. In terms of the Westminster discussion of paramount and subordinate occupancies, I note that there can be no occupancy of the bedrooms, without entry through the suite, the paramount occupancy in these circumstances.

63The test for what is a “unit” when considering the phrase SCU is not dependent on a sub-category of “use” laid out in a rental agreement. The exclusive occupation or control over premises or parts of them, is not a viable test for what is essentially a physical description. Regular apartments that are SCUs, generally have bedroom locks, and control, privacy and exclusive use is presumably either an express condition of the roommate agreement, or implied by the rules of civility. I do not think that codifying this convention in a lease and collecting rents on an individual room basis can change a building with 133 apartments into a building with zero apartments.

64Further having regard to the purpose of the occupation, the House of Lords confirmed that “The rateability does not depend on the title to occupy, but on the fact of occupation.” So while the title to occupy by way of the lease terms sets up an individual occupancy for part of the suite, the fact of the occupation which is paramount is the group of individuals living communally in premises designed just for that purpose. It is simply not clear to me why the test of rateable occupancy should apply only to define the “unit” that is not self-contained, rather than the “unit” which is.

2. Physical Layout versus Nature of the Occupancy

65After considering the case-law and having regard to the ordinary meaning of SCU, I conclude that SCU is a description of a physical space in the first instance, with predominance over the nature of the occupancy within that space.

Real Nature of the Occupancy

66Counsel defending the residential classification characterized the suite-mates as potential strangers, painting a picture of people being forced to share the kitchen and bathroom with unknown others, in support of the view that this living arrangement is not “self-contained”. Counsel for Oshawa suggested that suite-mates could be friends or even romantic partners, voluntarily and collectively sharing a living space which is self-contained for that group. Both or these scenarios are possible at the outer limits, but the reality of student occupancy likely resides in the middle.

67The reality is likely that groups of students living together is really not so different than other non-student roommates of two, three or four bedroom apartments who live together for whatever reasons in units that are self-contained. The exclusive use of a locked bedroom, being a common if not codified feature of these arrangements, is insufficient grounds on which to establish a classification for assessment purposes.

Physical Layout

68I affirm Board case-law confirming that physical layout is the key determining factor in what is a SCU, over occupancy arrangements. In doing so, I found it instructive to consider the possibilities of allowing the nature of the occupancy to govern the definition. CHC’s written submissions suggest there is no evidence they structured leases to obtain a particular tax treatment, and even if they did, it “would not be relevant to the Board’s decision-making.” Except if the precedent allowed other landlords to do the same thing and take apartment buildings out of the multi-res class, as the City forewarned in its’ written submissions.

69Consider for example the twice-stymied landlord in Nowina 2002 and 2003 with a seven unit building, trying to have it assessed as a lower taxed six-plex. Consider the possibility of an enterprising landlord of a seven-plex of two and three bedroom apartments, wishing to reduce his property taxes, electing to employ the theory advanced here. Instead of using Mr. Nowina’s approach, the landlord chooses to structure his lease for a single unit to rent the bedrooms individually to the occupants and puts keyed locks on the bedroom doors. Under the theory put forward by MPAC and CHC, that seventh apartment is no longer a SCU and the conversion to a six-plex is successful, with no loss of rent and a sizeable reduction in property taxes. These are unintended yet entirely foreseeable consequences of establishing that theory as a precedent.

70Consider what may happen with the subject building after the 10 year student accommodation requirement expires. Does it convert from a building with no SCUs to a building containing 133 SCUs simply because bedrooms are no longer rented individually to students? What if the enterprising landlord carries forward the same leasing arrangement with non-students, charging families or other ordinary roommates rent for the bedrooms rather than the whole suite. Does the building remain 133 suites/588 bedrooms in the residential class as long as this occupancy arrangement is in place? Seems unlikely that our lawmakers would countenance this sort of free-form subversion of the property tax system.

71These possibilities point out very clearly why the very changeable choice of occupancy arrangements cannot be the sole basis for determining the multi-residential class. SCU is a description of a physical space that contains the minimum amenities necessary for an individual or group of individuals to eat, sleep, lounge and use a bathroom. A landlord’s choice to leave vacant, allow to deteriorate or institute unusual occupancy arrangements, does not alter the character of a SCU. The 133 suites in the subject building are physically laid out as SCUs and are in fact being used as such by groups of students who simply pay rent in a manner that is out of the ordinary for most apartment buildings.

3 Statutory Exceptions

72Mr. Sanford asserted that legal occupancy arrangements can be determinative in some classification matters, and pointed to other types of properties that are specifically included in the residential class by the Act even though they have seven or more SCUs.

73Section 3(1)1(iv) includes in the residential class, seven or more SCUs owned by a corporation, each member of which has a right to occupy one of the units.

74Section 3(1)1(v) includes in the residential class, seven or more SCUs owned by individuals with undivided interests and contractual rights to occupy one of the units, where at least half are so occupied.

75Section 3.(1)(vi) includes as residential, seven or more SCUs, organized as what is commonly known as a timeshare, subject to conditions.

76Section 3(1)(x) includes as residential, seven or more SCUs organized in what is commonly known as a life lease project, subject to conditions.

77These are examples of buildings that would have been placed in the multi-residential class but for the specific inclusion of them in the residential class. Mr. Sanford used these to illustrate his point that the legal structure of the occupancy arrangements is often a determining factor in the classification of a property. He invited me to accept that the legal structure of the occupancy of the subject building similarly should take it out of the multi-residential class and into the residential class.

78I must decline to add the subject property’s occupancy structure to the exceptions cited. My understanding of statutory interpretation is that the very existence of these exceptions demonstrates the intention of the legislators to specifically address legal occupancy structures that warrant exclusion from the multi-residential class. The particular occupancy structure before me is not one that the legislators deemed to warrant special treatment, and I would be required to read in the exception to bring the property into the residential tax class.

79The legislators could have added to the residential class pursuant to s. 3(1) a provision, for example: Land with seven or more self-contained units, organized as what is commonly called student housing, in respect of which individual students have each entered into a lease for exclusive occupancy of a personal space, usually a bedroom.

80In the absence of such an amendment to the Regulation, the subject property is properly described as land having seven or more self-contained units.

4. Ordinary Meaning and Purpose of the Act

81The rules of statutory interpretation require me to read the words SCU in their entire context and in the grammatical and ordinary sense, harmoniously with the scheme and object of the Act and the intention of the legislators. The Divisional Court in Walton declared that a taxpayer is entitled to rely on the clear meaning of the statute, where the words are precise and unequivocal. “However where the words give rise to more than one reasonable interpretation, there may be greater recourse to the context and purpose of the Act.”

82The phrase SCU does not lend itself to a definition of unequivocal precision. In such an instance as I have here, where either of the opposing interpretations could rate as intelligible reasonable outcomes, greater recourse should be had to the context and purpose of the Act.

83The purpose of both s. 3(1) and s. 4(1) is to count the number of physical spaces in a building within which people have all they need to meet their residential purposes. The entire context of these provisions is that they provide a delineation of small apartment buildings like triplexes, fourplexes and sixplexes, from bigger apartment buildings of seven apartments or larger. The intention of the legislators is to permit different levels of taxation on either side of this delineation.

84These physical spaces where people can eat, sleep, lounge and bathe to the exclusion of others are ordinarily referred to as apartments. The root word “apart” and the modifier “self-contained” share some grammatical synomymity in the context of defining these physical spaces. This context would suggest the ordinary grammatical meaning of SCU is a physical layout that is ordinarily understood to be an apartment, like the ones in the subject building. The single bedroom theory fails to fit into the entire context, purpose or intention of these provisions designed to differentiate between two categories of apartment buildings.

85The entire context of SCU is also illuminated by a consideration of the ordinary meaning of the name of the class “multi-residential”. That word connotes many residences. I believe that this is what Mr. Shea for MPAC was arguing in Amica and with which I agree: the scale of the number of the residences puts the “multi” into “multi-residential”. I intuit that whether one is considering a building with 133 “units” or 588 “units”, both would seem to fit under an ordinary conceptualization of multiple residences.

CONCLUSION

86Earlier in this decision, I stated that the City’s intentions and/or expectations in structuring its contractual arrangements with the developer/landlord are no basis for determining classification, as to do so would be an error of law. So it is with a landlord’s intentions and/or expectations in structuring its contractual arrangements with the end users of the developed property, the tenants. The classification of multi-residential properties cannot be left to the machinations of any of the parties, but needs to be based on a more solid and predictable foundation, grounded in a common sense interpretation of ordinary meanings, overlaid by the context and purpose of the law.

87I conclude that the subject building has seven or more SCUs and is properly classified as multi-residential. The assessed values, not being in issue are confirmed.

2016 DEEMED APPEAL

88An appeal for the 2015 taxation year is presently before the Board. Section 40.(26) of the Assessment Act provides that the appellant is deemed to have made the same appeal for the subsequent taxation year if the appeal is not finally disposed of before March 31 of the subsequent taxation year. The Board has not disposed of the 2015 appeal before March 31, 2016. For that reason, this decision also applies to the 2016 taxation year.

89Section 40.(26) of the Act directs:

Deemed appeals, 2009 and subsequent years

(26) For 2009 and subsequent taxation years, an appellant shall be deemed to have brought the same appeal in respect of a property,

(a) in relation to the assessments under sections 32, 33 and 34 for the year; and

(b) in relation to the assessment, including assessments under sections 32, 33 and 34, for a subsequent taxation year to which the same general reassessment applies, if the appeal is not finally disposed of before March 31 of the subsequent taxation year or, if an assessment has been made under section 32, 33 or 34, before the 90th day after the notice of assessment was mailed.