Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: June 13, 2017

FILE NO.: WR 146192

Assessed Person(s): Breja Development

Appellant(s): Atlantic Coated Papers Ltd.

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

Respondent(s): Town of Whitby

Property Location(s): 1605 McEwen Drive

Municipality(ies): Town of Whitby

Roll Number(s): 1809-040-030-09810-0000

Appeal Number(s): 3053827, 3053828, 3053829, 3080331 and 3150112

Taxation Year(s): 2014, 2015 and 2016

Hearing Event No.: 667364

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

Heard: March 28, 2017 in Whitby, Ontario

APPEARANCES:

Parties Counsel⁺/Representative

Atlantic Coated Papers Ltd. C. Francis

MPAC R. Zamozniak

Town of Whitby No one appeared

DECISION OF THE BOARD DELIVERED BY JOSEPH M. WYGER

INTRODUCTION

1The s. 40 assessment appeal for the 2014 taxation year for the subject property’s 54,776 square foot, steel frame industrial building was heard on November 7, 2014 and the decision was released on February 2, 2016. The assessment which was based on a January 1, 2012 valuation, was reduced from $3,522,000 to $1,600,000. The member based her decision on the $1.6 million that the property sold for in September of 2013. The member wrote that an appeal for the subsequent taxation year had been deemed and so the decision also applied to the 2015 taxation year. In the interim, MPAC had issued s. 34 supplementary assessments (“supps”) to account for improvements to the property following the sale, which supps had not been appealed by the time of the hearing, and so were not before the member. These 2014 supps were subsequently appealed, and a separate s. 40 appeal was deemed for 2015 and is before me now as well as an appeal that has since been deemed for 2016.

2The Appellant said that 99% of the improvements to the property were carried out before the November 2014 hearing, were known to the member, and any value increase attributable to them was therefore included in the current value determined by the member based on the sale price. They argued that issue estoppel arises with respect to the 2015 and 2016 taxation years, since the question of the January 2012 value including improvements has been decided and there have been no further changes since the decision. The Appellant sought a value of $1.6 million for the 2015 and 2016 taxation years and a dismissal of the three supplementary assessments.

3The assessor argued that the sale price did not include the value of improvements made subsequent to the purchase, but prior to the hearing so issue estoppel does not apply. Further, that the 2015 s. 40 appeal that was deemed from the 2014 s. 34 appeals is validly before me because those supps were validly issued and those values were not considered by the member in the prior hearing. The appeals of the supplementary assessments were never litigated until now and so the deemed s. 40 appeal that arises from them for 2015 taxation includes a different issue than was before the Board at the 2014 hearing. MPAC sought a confirmation of the returned value of $3,515,000 for the 2015 and 2016 taxation years. It was unclear which of the three supps totaling $3,515,000 that MPAC wanted confirmed and added to the $1.6 million value already determined for 2014.

ISSUES

4Does the member’s statement that the decision on the 2014 s. 40 appeal applies to the 2015 appeal that was deemed from it, prevent me from considering the other s. 40 2015 appeal that was deemed from the s. 34 supps? If it does then the 2015 appeal deemed from the s. 34 supps should be dismissed and the assessment for 2015 should remain at $1.6 million.

5If the answer is no, the second question is whether the principle of issue estoppel applies to prevent me from considering the supplementary assessments and the resulting deemed 2015 s. 40 appeal? If it does, then the 2015 appeal deemed from the s. 34 supps should be dismissed and the assessment for 2015 should remain at $1.6 million.

DECISION

6The member’s statement applies within the context of the 2014 s. 40 appeal and the 2015 s. 40 that was deemed from it. It does not apply to prevent the consideration of the appeal arising from the 2014 s. 34 supps because that is a separate appeal dealing with different issues, and so is the separate 2015 s. 40 that was deemed from them.

7Issue estoppel does not prima facie apply to prevent a consideration of the issues raised within the appeal of the s. 34 supps, which by their very nature deal with issues that are different from issues raised within the 2014 s. 40 appeal, unless the issue of the improvement value was in fact fully litigated within that s. 40 appeal. I conclude that that issue was not fully litigated and so issue estoppel does not apply.

8I conclude that the value of the improvements caught by the s. 34 supps is $223,000 for the 2014 taxation year. This amount, when added to the $1,600,000 current value as unimproved, results in a total current value of $1,823,000 for the 2015 and 2016 taxation years apportioned $1,593,000 to the industrial class and $230,000 to the industrial excess land class.

9Therefore, the current value is reduced from $3,515,000 to $1,823,000 for the 2015 and 2016 taxation years. For appeal number 3053829, the supplementary assessment is reduced from $2,558,000 to zero. For appeal number 3053828, the supplementary assessment is reduced from $727,000 to zero. For appeal number 3053827, the supplementary assessment is reduced from $230,000 to $223,000 for 2014 taxation.

Legislation

10Section 19 of the Act states:

19.(1) Assessment based on current value. – The assessment of land shall be based on its current value.

11Section 40.(26) of the Act states:

40.(26) Deemed appeals, 2009 and subsequent years. – 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.

12Section 44.(3) of the Act states:

44.(3) Same, 2009 and subsequent years. – For 2009 and subsequent taxation years, in determining the value at which any land shall be assessed, the Board shall,

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

(b) have reference to the value at which similar lands in the vicinity are assessed and adjust the assessment of the land to make it equitable with that of similar lands in the vicinity if such an adjustment would result in a reduction of the assessment of the land.

Analysis - Member Applying Decision to 2015

13The member’s written statement that her decision for 2014 also applies to the deemed 2015 does not prevent a consideration of the other s. 40 2015 appeal that was deemed from the s. 34 supps. In the normal course, a member applying a decision to a subsequent taxation year that has been deemed makes sense as it is based on the same valuation date and nothing has changed in the interim. In this case however, some supplementary assessments were issued in June of 2014 and were appealed subsequent to the hearing of the s. 40. The supps are stand-alone assessments and if they demonstrate an increase in value, then that supersedes the application of a Board decision to a deemed appeal that was made without those supps being before the Board making that decision. It is unfortunate that the s. 34s were not on the docket for the same hearing event as the 2014 s. 40 appeal, as all of these matters could have been heard together in part to avoid the confusion that I have before me now.

Analysis - Issue Estoppel

14Issue estoppel does not apply in the circumstances of this case. The issue in the s. 40 appeal heard in November 2014 was the full current value of the property. The issue in the s. 34 appeals before me now is: “what is the value of improvements?” It cannot be said that this is the same issue that was litigated previously. The same applies to the deemed 2015 appeal before me.

15The principle of issue estoppel prohibits litigating an issue that has already been decided before between the same parties. The current value of the property as of January 1, 2012 was decided by the Board to be $1.6 million for the 2014 taxation year. Generally that value should be the same for subsequent taxation years based on the same valuation day on the grounds that once that issue has been decided, it should not be re-litigated. If there is any change or improvement to the property that might affect its value, then it cannot be said that the same issue is being decided because it is not the same property, but an improved property that is the subject-matter at issue.

16The Appellant argues that the value of any improvements after the purchase of the building was before the member and was considered in her decision, such that issue estoppel should apply. The assessor’s position was that work done after the purchase was not in issue at the hearing in November 2014. If the member’s decision on value included a consideration of the value of those improvements, then that value should not be re-litigated for the following taxation year because the issue of improvement value had been determined. There is good authority for the proposition, that for issue estoppel to apply, the question of improvement value must have been clearly put in issue. I find that it is not clear at all that this is the case here.

17In the written reasons, the topic of post-sale improvements is not addressed at all, lending credence to MPAC’s submissions. Further, it seems probable to me that if the member considered post-purchase improvements that MPAC submits exceeded $500,000, that the member would have made some mention of it. Further, if the member had addressed the issue and found some value to those improvements, it is also likely that some amount would have been added to the purchase price of the unimproved property. In using only the purchase price for the unimproved property and not mentioning any improvements, I find on a balance of probabilities that the value of those improvements was not litigated, and thus issue estoppel does not apply to that unanswered question.

Analysis - Value of Improvements

18The assessor provided a one page list of improvements totaling $537,500, unsupported by any other evidence. This list was based on an inspection of the property in March 2017, not from the June 2014 inspection which is the effective date of the three supplementary assessments, and after 99% of the work was done according to the Appellant. There is some confusion surrounding the value of these supps, none of which was issued with a valuation anywhere near the $537,500 that is now being asserted. One supp was for $230,000, another for $727,000 and a third supp for $2,558,000. The latter supp was explained as having to bring the assessment back from zero where it had resided on account of some vacancy issue, or something like that. MPAC’s Report marked Exhibit 1 makes no reference to the supps or the valuation of the improvements. I find these supplementary assessments to be of dubious validity and unsupported by evidence of improvements valued at the June 2014 effective dates.

19The principle of the corporate Appellant, David Granovski, testified at this hearing on the value of the improvements following the sale. I accept his evidence on these costs as he was involved in incurring and paying them. The total cost of the improvements was $223,000 which is a number that is very close to one of MPAC’s three supps, perhaps coincidentally or perhaps not. I conclude that this is the best evidence for the value of the post purchase improvements to the property, that the member would have added to the purchase price had it been before her. I will add it to the purchase price to arrive at a current value of $1,823,000 for the 2015 and 2016 tax years.

Analysis - Equity

20The Appellant did not make equity an issue, and MPAC did not provide any assessed values for similar properties in the vicinity, so I can make no finding that the current value I have determined is inequitable.

CONCLUSION

21The current value is reduced from $3,515,000 to $1,823,000 for the 2015 and 2016 taxation years. For appeal number 3053829, the supplementary assessment is reduced from $2,558,000 to zero. For appeal number 3053828, the supplementary assessment is reduced from $727,000 to zero. For appeal number 3053827, the supplementary assessment is reduced from $230,000 to $223,000.