Christopher Bernier v. Municipal Property Assessment Corporation, 2018 CanLII 107728

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

November 7, 2018

FILE NO.:

WR 152792

Assessed Person(s):

Christopher Bernier

Appellant(s):

Christopher Bernier, Church of Atheism of Central Canada

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”) Region 2

Respondent(s):

Township of Lanark Highlands

Property Location(s):

165 Hollie Drive

Municipality(ies):

Township of Lanark Highlands

Roll Number(s):

0940-004-035-13720-0000

Appeal Number(s):

3198555

Taxation Year(s):

2016

Hearing Event No.:

696166

Legislative Authority:

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

Heard:

April 5, 2018 in Lanark, Ontario

APPEARANCES:

Parties

Representative

Christopher Bernier, Church of Atheism of Central Canada

Self-represented

MPAC

Lincoln Pearce

Township of Lanark Highlands

No one appeared

DECISION OF THE BOARD DELIVERED BY JOSEPH JEBREEN

OVERVIEW

1Christopher Bernier appeals the assessment of his property located at 165 Hollie Drive in the Township of Lanark Highlands (the “Property”). MPAC submits that the correct January 1, 2012 current value of the property is $158,000, whereas Mr. Bernier takes the position that the correct current value is $148,000.

2For the reasons that follow, I find that the current value of the Property as of January 1, 2012 is $157,000 for the 2016 taxation year and I further find that no equitable adjustment is warranted. The assessment is therefore reduced from $158,000 to $157,000 for the 2016 taxation year.

BACKGROUND

3The Property consists of a rectangular lot with a single family dwelling and a detached garage. The area of the lot is 27,878 square feet with a frontage of 125 feet and a depth of 225 feet. The garage is 320 square feet and was built in 2006. The Property is serviced by a septic system and a drilled well.

4The single family residential dwelling is an 809 square foot bungalow built in 1987 with a basement. Approximately half of the basement is finished with a bedroom, recreational room and a bathroom. The pictures reveal an interior that is finished with an average quality.

5The Property is within Hall Subdivision and enjoys a 1/49^th interest in some common areas of the subdivision. That 1/49^th interest allows Mr. Bernier to enjoy access to a beach via a private path. He also has a 1/49^th interest in a large wooded area but this area does not have any trails.

ISSUES

6The first issue to decide is the current value of the Property. In other words, I must determine what the Property would have sold for in an arm’s length transaction on January 1, 2012. Once the current value has been determined, clause 44(3)(b) of the Assessment Act, RSO 1990, c. A.31 (the “Act”) requires that I “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” but only if that adjustment would result in a reduction of the assessment.

7Another issue was raised in this proceeding. MPAC raised a concern that the Appellant was introducing an appraisal report without the author being present at the oral hearing for cross-examination. The questions raised by this concern are the admissibility of such a report and, if admissible, the weight to be attributed to it.

LAW AND ANALYSIS

Current Value

8Subsection 40(17) of the Act states that MPAC has the burden of proving “the correctness of the current value of the land.” As this Assessment Review Board (“Board”) found in Jay Patry Enterprises Inc. v Municipal Property Assessment Corporation, Region 05, 2019 CanLII 39629 (ON ARB), 2018 CanLII 70338 (ON ARB) WR 152892 (“Patry Enterprises”) at paragraph 21, the burden is around “current value” and not the assessment. That is, MPAC is not required to prove the correctness of their returned assessment. It is required to prove the correctness of “the amount of money the fee simple, if unencumbered, would realize if sold at arm’s length from a willing seller to a willing buyer.”

9Patry Enterprises summarizes the procedure to follow in an appeal where current value is at issue, at paragraph 40:

…first look at MPAC’s evidence on its own and make a determination as to whether it can prove its suggested current value on a balance of probabilities. If MPAC meets its burden, the Board should review all of the evidence before it and determine the current value of the property. However, if MPAC has not met its burden, the taxpayer’s evidence must be analyzed to see if it is capable of proving that a particular current value is more likely than not. If there is no evidence in the record that is capable of proving current value, the Board should fix the assessment at the last uncontested assessed value.

10I will follow that procedure here.

Can MPAC’s evidence prove its suggested current value?

11As stated in Patry Enterprises at paragraph 23, in order for MPAC to meet its burden, MPAC’s evidence “must show how the current value MPAC is proposing is arrived at and why that value is correct. Without this bare minimum, the Board cannot possibly determine if MPAC’s proposed current value is correct.”

12Lincoln Pearce for MPAC submitted a Valuation Report to establish an opinion of current value. As with most residential properties, MPAC relies on the direct comparison approach to prove its suggested current value of $158,000 for the Property.

13To satisfy its burden when using the direct comparison approach, MPAC cannot simply present any properties. It must review the market data and select properties that are in fact comparable. In his Valuation Report, Mr. Pearce relies on five comparable properties in his current value analysis as summarized in the table below:

Property

Sale 1

Sale 2

Sale 3

Sale 4

Sale 5

Date sold

Aug 2012

May 2012

May 2010

Nov 2009

Jul 2010

Address

165 Hollie Drive

1517 3^rd Concession DA

1372 Dalhousie Concession 8

7331 McDonalds Corn Road

114 Willis Street

2729 Darling Road

Lot area (square feet)

27,878

42,689

78,408

117,612

22,216

62,291

Building area (square feet)

809

925

975

1023

961

1133

Year built

1987

1989

1991

1980

1985

1997

Basement finished area

(square feet)

420

0

0

0

0

0

Secondary structure

Detached garage

Carport

Detached garage

Detached garage and shed

Detached garage

Detached garage

Year built of secondary structure

2006

1989

1992

1987 and 1980

2013

1997

Area of secondary structure (square feet)

320

240

408

720 and 128

394

595

Sale price

$160,000

$162,000

$200,000

$115,600

$224,000

14Like the Property, all of MPAC’s comparable sales are detached bungalows serviced by hydro, a septic system, and a private well. The comparable sales are also located within Lanark Highlands Township. Although it would have been preferable to have comparable bungalow sales from Hall Subdivision, or other nearby similar subdivisions, the parties agree that this was not possible.

15Mr. Pearce opined that site area is a significant factor in comparing the properties. In his valuation report, Mr. Pearce states that Sales 1, 2 and 3 are similar, Sale 4 is inferior and Sale 5 is superior. However, in his oral testimony he found all five to be similar. Mr. Pearce also explained why he believes that the five comparable properties are similar to the Property. As detailed further below, I disagree with some of Mr. Pearce’s opinions regarding whether a particular comparable sale is similar. However, this is not considered in determining whether MPAC has met its burden.

16Mr. Pearce maintained that Sales 1 and 2 are the most similar and, based on the time adjusted sales of those properties of $157,622 and $160,547 respectively, Mr. Pearce concludes that the correct current value of the Property is $158,000.

17With this evidence, I find that MPAC has met its burden. Mr. Pearce clearly showed his pathway to arriving at the proposed current value of $158,000 and why, in his opinion, that value is correct. That is what is required as a minimum.

18I note that I am not making a finding that the correct January 1, 2012 current value is $158,000. Rather, at this stage of the analysis, I am simply finding that MPAC’s evidence, if believed, can prove its proposed current value.

What is the correct current value of the property?

19Following the framework in Patry Enterprises, if MPAC has met its burden, I must then determine current value based on all of the evidence before me.

20In response to MPAC’s evidence, Mr. Bernier first provided evidence relating to his purchase of the Property. As this Board has repeatedly held, the sale of a property on or close to the valuation date is the best evidence of current value.

21Mr. Bernier purchased the Property on March 30, 2015 for $160,000. This may be a good indicator of current value for the January 1, 2016 valuation date. However, the sale is more than three years away and too far removed from January 1, 2012 to be of probative value in this appeal.

22Mr. Bernier also entered into evidence the September 28, 2017 appraisal report of Colleen Hall-Clark, an appraiser from Rivington Appraisers Inc. (the “Appraisal Report”). Ms. Hall-Clark is a registered appraiser with the Appraisal Institute of Canada and signed the Board’s Acknowledgement of Expert’s Duty. MPAC took no issue with Ms. Hall-Clark’s credentials or experience as an appraiser. In fact, Mr. Pearce acknowledged her experience as an appraiser in the Property’s geographic area.

23The main issue raised by Mr. Pearce is that, as Ms. Hall-Clark was not present at the hearing, he was not able to challenge her Appraisal Report in cross-examination.

24If Mr. Pearce wanted to cross-examine Ms. Hall-Clark, there were procedures available to him under both the Statutory Powers Procedure Act (“SPPA”) and the Board’s Rules of Practice and Procedure (“Rules”). Pursuant to section 12 of the SPPA and Rule 51 of the Board’s Rules, Mr. Pearce could have requested that the Board summon Ms. Hall-Clark to give evidence at the hearing. Mr. Pearce did not request a summons and so cannot now raise the concern that she was not available for cross-examination.

25I find that the Appraisal Report is admissible evidence even though Ms. Hall-Clark was not present at the hearing for cross-examination. Pursuant to section 15(1) of the SPPA, I may admit as evidence at a hearing, any document or other thing, relevant to the subject-matter of the proceeding and may act on such evidence. The Appraisal Report is certainly relevant to the issue of the January 1, 2012 current value of the Property and I admit it on that basis.

26Mr. Pearce believes that Ms. Hall-Clark’s absence at the hearing should at the very least result in less weight being afforded to her Appraisal Report. I do not believe that an appraiser’s absence at a hearing necessarily results in her report being given less weight.

27The weight to be given to such a report will depend on the circumstances of the case and, in particular, the contents of the report. A report may have detailed opinions of value and the reasoned basis behind those opinions. In such cases, it may well be that a report could stand on its own without oral testimony.

28That is not the case here, however. As detailed below, I attribute no weight to the opinions in the Appraisal Report.

29In her Appraisal Report, Ms. Hall-Clark describes the Property including the lot and the structures in detail and then provides three comparable sales. The three comparable sales are the most recent and similar sales of bungalows surrounding the January 1, 2012 valuation date. Ms. Hall-Clark lists the relevant characteristics of Comparable #1, Comparable #2 and Comparable #3 and then makes dollar value adjustments to each comparable for each characteristic that is either superior or inferior to the Property.

30Although a quantitative direct comparison is preferable to a purely qualitative approach, I cannot blindly accept the dollar value adjustments proposed in the Appraisal Report. The Appraisal Report does not explain how the dollar value adjustments are obtained. There is no explanation regarding the amounts assigned to the adjustments as opposed to another dollar value.

31Another concern with the Appraisal Report is that some dollar adjustments seem to be missing. For example, in Comparable #3, Ms. Hall-Clark states that it is in similar condition to the Property but that it is 32 years older than the Property. There is no dollar value adjustment even though Comparable #3 is twice as old as the Property. It may be the case that Ms. Hall-Clark does not believe that such a dollar value adjustment is warranted, but without her testimony, I am not prepared to assume that is her opinion nor on what basis she holds that opinion.

32As pointed out by Mr. Pearce, Ms. Hall-Clark acknowledges at page 3 of her opinion that it was necessary to apply an appropriate adjustment “for the lack of a deeded access to a waterfront lot.” This refers to the fact that the Property provides Mr. Bernier with private access to a beach. However, there is no accompanying dollar value adjustment that is apparent in her analysis. Again, it may be that Ms. Hall-Clark considered such an adjustment, but I am not prepared to make that assumption.

33The Appraisal Report also does not confirm whether the comparable sales are all serviced by private wells and a septic system.

34For these reasons, I attribute no weight to the opinions in the Appraisal Report. I am not making a negative finding of credibility of the author of the report. I am finding that I cannot rely on the opinions in the Appraisal Report because the justifications for the opinions are missing and the author was not present at the hearing to explain her opinions. Nevertheless, the three comparable sales presented in the Appraisal Report may still be considered in determining current value. My qualitative analysis of these three comparable sales follows the comparable sales presented by MPAC.

35The details of MPAC’s five sales are summarized in the table at paragraph [13] above. I review and analyze the sales in descending order of sale price.

36Sale 5 is located at 2729 Darling Road and sold for $224,000 in July 2010. The superior features of Sale 5 are: (i) a site area of 62,291 square feet, or more than twice the size of the Property, (ii) the bungalow is 1,133 square feet as compared to the Property’s bungalow at 809 square feet, and (iii) it is built in 1997 whereas the Property is built in 1987. The inferior features of Sale 5 are: (i) the basement is unfinished whereas the Property has a half finished basement with a bathroom, and (ii) there is no private access to a beach. I find that Sale 5 is superior to the Property because of the significantly larger lot and larger, newer building. I also find that Sale 5 is not a good comparable because it is 40 kilometres away from the Property.

37Sale 3 is located at 7331 McDonalds Corner Road and sold for $200,000 in May 2010. The superior features of Sale 3 are: (i) a site area of 117,612 square feet, or more than four times the size of the Property, (ii) the bungalow is 1,023 square feet as compared to the Property’s bungalow at 809 square feet and (iii) a shed is on the property. The inferior features of Sale 3 are: (i) it is built in 1980 whereas the Property is built in 1987, (ii) the basement is unfinished whereas the Property has a half finished basement with a bathroom, and (iii) there is no private access to a beach. I find that Sale 3 is superior to the Property because of the significantly larger lot and larger building.

38Sale 4, located at 114 Willis Street, is more than two years away from the valuation date and so I do not rely on it. Sales that are too far removed from the valuation date are less accurate indicators of current value.

39Sale 2 is located at 1372 Dalhousie Concession 8 and sold for $162,000 in May 2012, only five months from the valuation date. The superior features of Sale 2 are: (i) a site area of 78,408 square feet, or nearly three times the size of the Property, (ii) the bungalow is 975 square feet as compared to the Property’s bungalow at 809 square feet and (iii) it is built in 1991 whereas the Property is built in 1987. The inferior features of Sale 2 are: (i) the basement is unfinished whereas the Property has a half finished basement with a bathroom, (ii) it only has one bathroom whereas the Property has two, and (iii) there is no private access to a beach. I find that Sale 2 is superior to the Property because of the significantly larger lot and larger, newer building.

40Sale 1 is located at 1517 3^rd Concession and sold for $160,000 in August 2012. The superior features of Sale 1 are: (i) a site area of 42,689 square feet, or approximately 50% larger than the Property, (ii) the bungalow is 925 square feet as compared to the Property’s bungalow at 809 square feet and (iii) it is built in 1989 whereas the Property is built in 1987. The inferior features of Sale 1 are: (i) the basement is unfinished whereas the Property has a half finished basement with a bathroom, (ii) it only has one bathroom whereas the Property has two, (iii) it has a carport whereas the Property has a detached garage, and (iv) there is no private access to a beach. Of the five sales presented by MPAC, I find that Sale 1 is most similar to the Property. The lot size, building size and year built are only slightly superior features which are effectively offset by the inferior features of an unfinished basement, one bathroom, carport and no access to a beach.

41The Appraisal Report listed three comparable bungalow sales, Comparables #1, #2, and #3, which I will refer to as Sales 6, 7, and 8 respectively.

42Sale 6 is located at 4495 Watson’s Corners Road and sold for $185,000 in July 2011. The superior features of Sale 6 are: (i) a significantly larger site area, (ii) the bungalow is 1,269 square feet as compared to the Property’s bungalow at 809 square feet, (iii) the bungalow is in superior condition as compared to the Property and (iv) it has a fully finished basement whereas the Property only has a half finished basement. The inferior features of Sale 6 are: (i) it is built in 1977 whereas the Property is built in 1987, (ii) it only has one bathroom whereas the Property has two, (iii) it has a carport whereas the Property has a detached garage, and (iv) there is no private access to a beach. I find that Sale 6 is superior to the Property because of the significantly larger lot and larger building that is in superior condition with a fully finished basement. The inferior features do not come close to offsetting these significant features.

43Sale 8 is located at 885 Dalhousie Concession 7 and sold for $154,000 in September 2011. The superior features of Sale 8 are: (i) a significantly larger site area, (ii) the bungalow is 1,154 square feet as compared to the Property’s bungalow at 809 square feet, and (iii) it has a fully finished basement whereas the Property only has a half finished basement. The inferior features of Sale 8 are: (i) it is built in 1955 whereas the Property is built in 1987, (ii) it only has one and a half bathrooms whereas the Property has two full bathrooms, (iii) it has a driveway whereas the Property has a detached garage and (iv) there is no private access to a beach. I find that Sale 8 is similar to the Property. Although the lot and building are significantly larger and the basement is fully finished, these superior features are offset by the combined effect of the significant age difference of the buildings, the lack of a garage and no private access to a beach.

44Sale 7 is located at 5407 County Road 511 and sold for $138,000 in December 2011. The superior features of Sale 7 are: (i) a larger site area, (ii) the bungalow is 1,500 square feet as compared to the Property’s bungalow at 809 square feet, and (iii) it is built in 1994 whereas the Property is built in 1987. The inferior features of Sale 7 are: (i) the basement is an unfinished slab whereas the Property has a half finished basement with a bathroom, (ii) it only has one bathroom whereas the Property has two, (iii) it is located on a highway, and (iv) there is no private access to a beach. I find that Sale 7 is inferior to the Property primarily because of its location on a highway. Further the basement is a completely unfinished slab and there is no private access to a beach. These features are not offset by the larger lot and larger building.

45The following table summarizes my analysis of the comparable properties in evidence from superior to inferior:

Address

Date Sold

Comparability

Sale Price

Sale 5

2729 Darling Road

July 2010

Superior

$224,000

Sale 3

7331 McDonalds Corn Road

May 2010

Superior

$200,000

Sale 6

4495 Watson’s Corners Road

July 2011

Superior

$185,000

Sale 2

1372 Dalhousie Concession 8

May 2012

Superior

$162,000

Sale 1

1517 3^rd Concession

August 2012

Similar

$160,000

Sale 8

885 Dalhousie Concession 7

September 2011

Similar

$154,000

Sale 7

5407 County Road 511

December 2011

Inferior

$138,000

46Based on the foregoing analysis, I find that the current value of the Property is between $154,000 (Sale 8) and $160,000 (Sale 1). The evidence does not support preferring the lower or upper end of this range. I therefore find that the January 1, 2012 current value is at the midpoint of the range and is therefore $157,000.

Time Adjustments

47Before concluding these reasons, I wish to address one final issue. MPAC presented a Sale to Assessment Ratio Study (“SAR Study”) in an effort to establish time adjustment factors. These time adjustment factors are then used by MPAC to adjust sale prices of the comparable properties in an attempt to reflect sale prices as of the valuation date.

48I agree that adjusting sale prices for time could provide more accurate sales prices for comparable properties. However, I cannot accept the time adjustments as presented for the following reasons.

49First, there is no indication of the type of properties selected for the SAR Study. MPAC states that its SAR Study is based on 481 sales from the Property’s neighbourhood and adjacent neighbourhood(s). The properties could be in a subdivision, rural, or on a highway; they could be large multimillion dollar mansions, simple bungalows, two or more storey homes, or even vacant properties; they could be in poor, average, or excellent condition; they could be built in the early 1900s or be brand new builds.

50Different classes of properties may have different rates of change and so different time adjustments. For example, rural bungalows may have a negative time adjustment factor whereas two storey detached homes in a subdivision may have a positive time adjustment factor over the same period. MPAC has not provided evidence to show that applying the same time adjustment factors to different properties is a valid method for adjusting sale prices. Further, in this case, MPAC did not provide any details of the 481 properties used in the SAR Study.

51Second, MPAC does not specify the geographic area to which its study is confined. At some point, a market trend is no longer relevant to a particular property if the geographic area is too far reaching. Different locations may also have different rates of change over time. Again, there is no evidence regarding the location of the 481 properties or that the geographic area chosen results in a reliable dataset which can be used to determine appropriate time adjustment factors.

52Third, MPAC’s methodology adjusts for time before adjustments are made for other possible elements affecting the sale prices. MPAC does not adjust the comparable sales prices for other possible factors which could entirely account for the price differences.

53Sale prices should only be adjusted for time if the prices have indeed changed as a function of time. If the prices have changed because of other factors such as the condition of the property, then no adjustment for time should be made. MPAC cannot eliminate other factors that could be the cause of the change in sale prices and, as a result, time adjustments may not be justifiable.

54For these reasons, I cannot rely on the SAR Study presented by MPAC and I do not use the time adjustment factors to adjust the sale prices of the comparable properties.

55I should not be taken as denying time adjustments generally. Time adjustments may be appropriate provided that they are supported by the evidence and the methodologies used can be justified.

Equity

56Neither party presented evidence regarding equity, and so I find that no equitable adjustment is warranted.

CONCLUSION

57The current value of the Property as of January 1, 2012 is $157,000 for the 2016 taxation year and no equitable adjustment is required. The assessment is therefore reduced from $158,000 to $157,000 for the 2016 taxation year.