Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: December 17, 2018 FILE NO.: DM 155293

Moving Party(ies): City of Toronto Respondent(s): Bela Acres Holding Inc. Property Location(s): 61 Hoyle Avenue Municipality(ies): City of Toronto Roll Number(s): 1904-103-770-02600-0000 Appeal Number(s): 3274356 Taxation Year(s): 2017 Hearing Event No.: 703477

Legislative Authority: Section 323(1)(e) of the City of Toronto Act, 2006, S.O. 2006, c. 11, Sched. A, as amended

Heard: In writing

APPEARANCES:

Parties City of Toronto Bela Acres Holding Inc.

Counsel⁺/Representative Jennifer Boyczuk⁺ John Ciccone

DISPOSITION OF THE BOARD DELIVERED BY SCOTT McANSH

1The City of Toronto (“Toronto”) seeks to have this appeal dismissed because the applicant is a corporation and not an individual. Bela Acres Holding Inc. (the “Company”) applied for relief from municipal taxation pursuant to clause 323(1)(e) of the City of Toronto Act, 2006, S.O. 2006, c. 11 (the “Act”). That clause permits tax relief when the “applicant is unable to pay taxes because of sickness or extreme poverty.” Toronto argues that only individual persons are entitled to that tax relief, and therefore the Company’s application should be dismissed.

2For the reasons that follow, I find that nothing in the Act prohibits corporate persons from applying pursuant to clause 323(1)(e) of the Act. I therefore dismiss Toronto’s motion and order that this appeal be set for a hearing on a date agreeable to the parties.

Background

3The Company purchased the property located at 61 Hoyle Avenue in 2003. It sold the property to John Ciccone on June 25, 2018. John Ciccone is the sole director and president of the Company. He indicates that the Company was used to purchase the property for use as a music studio. The commercial activity is carried on by Absolute Productions Inc. and Mr. Ciccone is also a director of that corporation. Mr. Ciccone states that he was the only individual working at the property in 2017, and had organized his affairs through these corporations based on the advice of his lawyer.

4The Company applied for tax relief for the 2017 taxation year on October 25, 2017. The hearing of that application was set before Member Cashin on July 3, 2018. Toronto raised its concern with the Company’s ability to claim relief due to sickness or extreme poverty. Member Cashin ordered that Toronto’s concern be heard as a motion. This is the resulting motion.

Law

5Clause 323(1)(e) permits tax relief when the “applicant is unable to pay taxes because of sickness or extreme poverty.” Subsection 323(2) sets out who can apply for that relief. That subsection states:

Application

(2) An application may only be made by the owner of the land or by another person who,

(a) has an interest in the land as shown on the records of the appropriate land registry office and the sheriff’s office;

(b) is a tenant, occupant or other person in possession of the land; or

(c) is the spouse of the owner or other person described in clause (a) or (b).

6The Company argues that it satisfies clauses (a) and (b). Toronto says that, read in context, only human persons can apply for relief for sickness or extreme poverty.

Corporate Applicants

7This motion turns on a proper interpretation of both subsection 323(2) and clause 323(1)(e) of the Act. In Rizzo & Rizzo Shoes Ltd. (Re), 1998 CanLII 837 (SCC), [1998] 1 SCR 27, the Supreme Court of Canada confirmed, at paragraph 21, that today “there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.”

8The ordinary reading of subsection 323(2) is that owner of land or another person listed can make an application. Section 85 of the Legislation Act, 2006, SO 2006, c 21, Sch F, provides definitions that apply in “every Act and regulation.” That section states that “person’ includes a corporation.” That is, the term person in subsection 323(2) includes a corporation.

9There are some small indications that only individuals can apply under section 323. Clause 323(2)(c) opens applications to spouses of owners and other eligible applicants. Corporations cannot marry so cannot have spouses. That is some indication that the Legislature intended that the relief in section 323 not be open to corporate persons. But it is not a strong indication. Some persons will have spouses, but it is not necessary that all applicants have a spouse.

10It is important to note that section 323 of the Act is identical to section 357 of the Municipal Act, 2001, S.O. 2001, c. 25. This Board has granted relief under section 257 of the Municipal Act, 2001 to corporate applicants, see for instance Canadian Property Holdings (Ontario) Inc. v Municipal Property Assessment Corporation Region 15, 2017 CanLII 78332 (ON ARB). That was not for sickness or extreme poverty, but it indicates that any limitation on corporate applicants is not imposed by subsection 323(2). The Company is the owner of the property and is a person so meets subsection 323(2). Any limitation must come from clause 323(1)(e) itself.

11Toronto argues that only human persons can apply for relief under clause 323(1)(e). It states that a corporation cannot be sick or in extreme poverty. It also submits that the policy behind the provision, which it says is to preserve home ownership in a case of true inability to pay taxes, cannot apply to corporations because a corporation does not need a home.

12The Company did not make submissions on the statutory interpretation problem. Rather it encourages me to look behind the corporate veil and consider Mr. Ciccone as the applicant. The Company also argues that Toronto’s motion should fail due to its technical nature. I do not agree with either submission. This is not a case in which it would be appropriate to pierce the corporate veil. That action is limited to special cases, none of which are applicable here. I also do not find this motion to be technical in nature. The Company owned the property in 2017 and the Act limits who can apply for relief to owners and other limited persons. The Company applied as owner, satisfying subsection 323(2).

13This Board has previously considered whether corporations can apply for relief pursuant to clause 323(1)(e) of the Act. In Sumin Auto Ltd. v. City of Toronto, WR 121685 (unreported), the Board rejected the application by a corporation but did not provide much analysis to support that conclusion, simply stating, at paragraph 12, that it is “inconceivable that a company would be unable to pay taxes because of sickness or extreme poverty because a company would be incapable of realizing a state of sickness or extreme poverty.” I am not bound by that decision, and do not find it persuasive.

14Clause 323(1)(e) requires that the applicant be unable to pay taxes. This Board has repeatedly held that the ability to pay threshold requires an applicant to “demonstrate that [it] is unable to meet the basic necessities of living such as housing, food, heating, hydro, water and clothing and at the same time meet their tax obligations,” see A.M. v Toronto (City), 2016 CanLII 42756 (ON ARB) (“A.M.”) at paragraph 29. Toronto argues that this standard cannot be meaningfully applied to corporations and so corporations should be prohibited from applying for relief.

15The only basic necessities of living for a corporation are the annual filing fees. There is nothing else required in order to keep a corporation “alive” or able to continue its existence. That is a very low threshold. This means that nearly any money that a corporation has is money available to pay taxes. There could, perhaps, be other arguments on what a corporation needs to survive. I would not want to limit how a corporation may attempt to prove that it cannot pay taxes, but I do not accept Toronto’s submission that a corporation cannot have an inability to pay taxes.

16There are, however, only two reasons that someone who cannot pay their taxes is entitled to relief under clause 323(1)(e): due to sickness or extreme poverty. It is not possible for a corporation to be sick because it has no corporal form. So the only plausible way that a corporation could be entitled to relief is if it satisfied this Board that it was in extreme poverty. Toronto’s application largely turns on the question of whether a corporation can be in extreme poverty.

17Poverty can be defined as “the state or condition of having little or no money, goods, or means of support.” Corporations can possess goods, so likely can experience poverty. In A.M. this Board held, at paragraph 29, that extreme poverty relief is “is only when it can be unequivocally demonstrated by evidence, that the individual is unable to meet the basic needs and have no other means of paying his property taxes.” As noted above, basic needs for a corporation may be more limited than for an individual, but there is a still a threshold on which this Board can determine when a corporate applicant is in extreme poverty.

18On policy grounds, there is no reason to exclude corporate applicants. Toronto argues that a corporation does not need a home, and that the only policy goal is to keep people in their home. I agree with Toronto that keeping people in their homes is a primary policy goal of clause 323(1)(e). However, there is no reason that does not include corporate persons. There is no compelling reason to dispossess a suffering business any more than a suffering individual. That is the implication of prohibiting corporate applicants and there is nothing in the Act that indicates that the relief is limited to homes, and not other types of property.

19Finally, the Legislature knows how to frame legislation to exclude corporate persons. Section 87 of the Legislation Act defines the “individual” as “a natural person” in every Act in Ontario. That term is used for non-corporate persons in both the Income Tax Act, R.S.O. 1990, c. I.2 and the Personal Health Information Protection Act, 2004, S.O. 2004, c. 3, Sched. A, among other statutes. The use of that term in clause 323(1)(e) would be a clear indication that corporate applicants are prohibited. The Legislature did not do so, which is some indication that there was no intention to remove corporate applicants.

CONCLUSION

20I find that nothing in the Act indicates that the Legislature intended to prohibit corporations from applying for relief from taxes due to an inability to pay due to extreme poverty. Toronto’s motion is therefore denied. The hearing of this appeal will be set on a date agreeable to the parties.