E. S. and F. S. v. Municipal Property Assessment Corporation, 2018 CanLII 80815

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: August 24, 2018

FILE NO.: ID 153097

Assessed Person(s): E. S. and F. S.

Appellant(s): E. S. and F. S.

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 09

Respondent(s): City of Toronto

Property Location(s): Address Withheld

Municipality(ies): City of Toronto

Roll Number(s): Roll Number Withheld

Appeal Number(s): 3253362

Taxation Year(s): 2016

Hearing Event No.: 684874 and 687565

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

Heard: August 29, 2017 and November 9, 2017 in Toronto, Ontario and in writing

APPEARANCES:

Parties	Counsel⁺/Representative
F. S. and Estate of E. S.	F. S. (son of E. S. and F. S.)
City of Toronto	Jared Wehrle⁺, Melanie Shankar

INTERIM DECISION OF THE BOARD DELIVERED BY SUBUOLA AWOLERI AND MARLENE CASHIN

INTRODUCTION

1This matter involves a preliminary motion in writing, in relation to an application to the Assessment Review Board (“Board”) to cancel, reduce or refund, all or part of the taxes levied on the subject property identified above, for the taxation year 2016, pursuant to s. 323.(1)(e) of the City of Toronto Act, 2006, S.O. 2006, c. 11. Sched. A, (“Act”).

The Application and Hearings of August 29, 2017 and November 9, 2017

2The son of E. S. and F. S. (“Son”) made an application with the City of Toronto (“City”) to cancel, reduce or refund, all or part of the taxes levied on the property. The application is dated February 27, 2017. At the time of the application, the property owners were identified as the Son’s parents (“E. S.” and “Mrs. F. S.”). The application included a handwritten note by the Son, stating that he was holding Powers of Attorney for his parents, and that they were on file with the City. The application also provided email addresses for each of the parents.

3At the August 29, 2017 hearing, Jared Wehrle, Counsel, appeared on behalf of the City to contest the application. Melanie Shankar, a Revenue Analyst with the City, appeared as a witness for the City. The Son appeared on behalf of his parents. At the outset of the hearing, the Son requested an adjournment of the proceeding, as he said that his father had died and he was waiting for a Certificate of Appointment of Estate Trustee from the Superior Court of Justice, which he said he would need in order to proceed with the hearing. The City did not object to the adjournment. The Board granted the adjournment.

4The hearing reconvened on November 9, 2017. At the outset of the hearing, Mr. Wehrle requested a clarification from the Son about who he would be representing in the proceeding. The Son confirmed to the Board that he intended to represent his mother, Mrs. F. S., and the Estate of his father, E. S.

5The Son provided a Certificate of Appointment of Estate Trustee With a Will, dated June 29, 2017, and a Statement of Proof of Death for E. S. from a Funeral Director, dated November 4, 2016. He also testified that Mrs. F. S. and the late E. S. owned an equal share of the subject property, as tenants in common. The significance being that, upon the death of E. S. his share of the property did not vest in his spouse, Mrs. F. S., rather, it immediately vested in his Estate.

6The City objected to the Son’s position that he was eligible to represent his father’s Estate, as Mr. Wehrle submitted that an estate is not eligible to make an application “to cancel, reduce or refund, all or part of the taxes levied” on a property, because of “sickness or extreme poverty.” The City presented a prior decision of the Board to support its position.

7The Board questioned why the Application had been processed and a hearing scheduled before the Board if there was an issue regarding the eligibility of the Son to represent the Estate of E. S. In response, Ms. Shankar testified that according to the statement of proof of death, E. S. died on February 18, 2016; when the Application was made to the City Treasurer, E. S. had been deceased for three hundred and seventy five (375) days. Ms. Shankar further testified that the City's Revenue Services Division had not been previously provided with Powers of Attorney for either E. S. or Mrs. F. S., despite the Son’s note on the Application that Powers of Attorney for his parents were on file with the City. Ms. Shankar said that the Proof of Death Statement for E. S. had also not been previously provided to the City’s Revenue Services Division. Accordingly, Ms. Shankar stated, the City would not have flagged the Application as being made in the name of a deceased person.

8The City submitted that the mention of Powers of Attorney for the parents, and two different email addresses for them in the application, suggested to the City that both property owners were alive.

9The Board noted that the Son had not had the opportunity to prepare a detailed response to the assertion by the City that an Estate is not eligible to make an application under s. 323.(1)(e) as no formal motion had been advanced by the City. The City did however, provide a copy of an email message to the Son, dated August 22, 2017, in which Mr. Wehrle, for the City, alerted the Son that “there may be an issue regarding the “standing” (or ability) of the Estate to apply for tax relief on the basis of extreme poverty or sickness.” The Son responded at the hearing that having been appointed as the trustee of the Estate of E. S., he could legally represent his father’s estate in any legal proceeding.

10In order to allow the Son, Mrs. F.S., the Estate of E. S. and the City to provide more fulsome submissions to the Board, the Board directed a motion to be considered in writing, to determine the following:

a) Who can make an application under s. 323.(1)(e) and (2) of the Act as it applies to this case; and,

b) Does the eligibility criteria of sickness and extreme poverty end upon death, or does it extend afterwards?

11The Board set dates for the serving and filing of documents on the motion, which were complied with by the parties. The submissions, analysis, and findings by the Board on the motion are set out below.

Finding on Processing and Scheduling of the Application

12On the preliminary question of why the Application had been processed and a hearing scheduled before the Board if there was an issue regarding the eligibility of the Son to represent the Estate of E. S., the Board accepts the explanation of the City that it was reasonable to believe that both of the Son’s parents were alive when the application was made.

13It is possible that the Son sent the Powers of Attorney for E. S. and Mrs. F. S. to a City department other than the Revenue Services Division, by mistake, or that the Son thought he sent the Powers of Attorney, but did not. In any case, the Board accepts the submission of the City that it was not wrong in processing the application, as both the mention of Powers of Attorney and the two different email addresses provided in the application, would lead to a reasonable conclusion that both of the Son’s parents were alive when the application was made.

ISSUES

14The issues before the Board on the motion are:

1. whether the Estate of E. S., can make an application to reduce, or refund all or part of the taxes levied on the subject property for the taxation year 2016, because of sickness or extreme poverty;

2. whether the eligibility to apply for a reduction, or refund of all or part of the taxes levied on a property, ends upon death; and

3. whether the Rules of Practice and Procedure, effective April 1, 2017, (“New Rules”) of the the Board apply in this case.

DECISION

15The Board determines that the Estate of E. S. is not eligible to make an application under s. 323.(1)(e) of the Act as the Estate is not a person, and the eligibility to apply for a reduction, or refund of all or part of the taxes levied on a property, ends upon death. The Application is to be amended to reflect Mrs. F. S. as the sole Applicant. The City is directed to notify the Board when the Application has been amended so that a hearing date can be set.

BOARD’S DISCUSSION, ANALYSIS AND FINDINGS

Issue 1: Whether the Estate of E. S. can make an application to reduce, or refund all or part of the taxes levied on the subject property for the taxation year 2016, because of sickness or extreme poverty

16The Estate of E. S. is not eligible to make an Application under s. 323.(1)(e) of the Act.

17Section 323.(1)(e) of the Act provides:

323 (1) Upon application to the city treasurer made in accordance with this section, the City may cancel, reduce or refund all or part of taxes levied on land in the year in respect of which the application is made if,

(e) the applicant is unable to pay taxes because of sickness or extreme poverty;

18The test under this section of the Act refers to whether an applicant is unable to pay his or her property taxes due to “sickness” or “extreme poverty.” If either sickness or extreme poverty exists, the applicant must then demonstrate a corresponding inability to pay some or all of the property taxes because of the sickness or extreme poverty.

19Section 323.(2) describes who can apply for relief under s. 323.(1):

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).

Submissions of the City

20The City submits that the Estate of E. S. cannot apply for relief under s. 323.(1)(e) as the section is clear on its face that only a person may apply. As it provides “an application may only be made by the owner of the land or by another person”, the operative word is “another”, and that read in its grammatical and ordinary sense, the language of s. 323.(2) indicates that the Legislature intended to restrict the ability to make an application under s. 323.(1)(e) to persons.

21An Estate is not a person, the City submits, it is a trust, and refers the Board to the case of Canada (Attorney General) v. Vincent Estate, [2005] F.C.J No. 1358 (CA) at paragraphs 14-16, where the Federal Court of Appeal held that an estate, not being a person, could not invoke Charter rights of the deceased person that they themselves did not invoke in their own lifetime. The City submits that the same principle holds true in this case, and that as the Estate of E. S. is not a person, it cannot claim a right that was not exercised by the deceased in their lifetime: to apply to the City under s. 323.(1)(e) for relief from taxes because of sickness or extreme poverty.

22The City further submits that this position is consistent with the intent of the relief requirements of s. 323.(1)(e), and says “if the purpose of the provision is to preserve home ownership in cases of a true inability to pay, an estate should not be able to apply for relief since an estate does not need a home.” By the same logic, the City says, an application cannot be advanced retroactively in the name of E. S. in his capacity as the owner of the subject property, as he was deceased before the application was made and therefore was not a "person" for the purposes of s. 323.(2). According to the City, at the time the application was made, the Estate, rather than E. S., was the owner of one-half of the subject property (E. S.’s share of the subject property having vested in the Estate immediately upon his death).

23The City submits that Mrs. F. S. can apply, because she is a person and because she has an interest in the subject property. The City points out that in considering applications under s. 323.(1)(e), the Board has previously held that it is the responsibility of both owners of the property to share the tax obligation, and further referred the Board to the case of S.C. v. Whitby (Town of), 2016 CanLII 11169 (ON ARB) at para. 39(iii), in support of this position. The City submits that since Mrs. F. S. co-owns the property with the Estate of E. S., the onus is upon the Son to demonstrate to the Board why both Mrs. F. S. and the Estate of E. S. cannot pay the property taxes.

24In support of its position that an Estate cannot make an application under s. 323.(1)(e) of the Act, the City provided the Board with the case I. v Toronto (City), [2016] O.A.R.B.D. No. 34 [(“I v. Toronto (City”)], where the Board allowed an application from S. I. who was the Trustee of the Estate of D.I., for the reason that S.I. was also an occupant of the subject property. In that case, the Board stated at paragraphs 14 and 15 respectively:

S.I. states that he is the occupant of the subject property and is eligible to make an application for relief. On the basis of the provisions set out in s. 323.(2)(b) of the Act, the Board finds that S. I. can make an application.

The Board notes that the property is currently the subject of legal settlement (Probate Proceedings). The Board believes that S. I. is confusing his role as Trustee of the Estate with that of his personal interest in the property.

25The City submits that the Board should also consider the case I. v. Toronto (City), for the proposition that an Estate Trustee is responsible for ensuring that the Estate, which has an interest in real property, meets its tax obligations. The Board in that case, held that the taxes for a property should be met from the proceeds and assets of the Estate, finding at paragraph 16 that: “The property tax debt is that of the Estate and... is recoverable from the proceeds of the estate when the estate settlement is finalized and completed.”

26In response to the Son’s submissions, regarding the definitions of “person” included in the Act and the Assessment Act R.S.O. 1990 c. A.31 (“Assessment Act”), the City's position is: (1) the City of Toronto Act, 2006 does not define "person" as including a trustee, and (2) the Assessment Act has no bearing on the application to reduce, cancel, or refund the 2016 property taxes for the subject property.

27The City submits that tax appeals and assessment appeals are not the same and that tax appeals are filed with the municipality to request tax cancellation or reductions in a given year for changes in property status or persons in situations of extreme poverty. The City notes that tax appeals impose statutorily defined limitations on who has the right to apply: an owner or spouse of the owner; another person who has an interest in the land as shown on the records of the land registry office; or, a tenant, occupant or other person in possession of the land.

28The City submits that assessment appeals are governed by separate legislation, and that unlike the situation with tax appeals, any person may file an assessment appeal with the Board in respect of any property. The City submits:

1. section 323.(1)(e) of the City of Toronto Act, 2006 governs the tax appeal for the subject property;

2. “person” is defined in Part I (“Interpretation”), s. 3(1) and specifically does not include an agent or trustee;

3. Part XIII ("Collection of Traditional Municipal Taxes") of the City of Toronto Act, 2006 does not provide for a separate or different definition of “person”;

4. it is s. 3(1) of the City of Toronto Act, 2006 which governs the Board's evaluation of the within application; and the Assessment Act definition of person is irrelevant because this is not an assessment appeal.

Submissions made on behalf of Mrs. F. S. and the Estate of E. S.

29The written submissions made on behalf of Mrs. F. S. and the Estate of E. S were brief, and did not respond separately to the two questions posed by the Board, therefore the submissions on both issues are summarized in this section only.

30The Son submits that he is not an occupant of the subject property, but that he is the Estate Trustee for the late E. S. and the Power of Attorney holder for Mrs. F. S. and is “appointed the agent for this matter.”

31The Son asserts that, as he is the Estate Trustee for E. S. and the Power of Attorney holder for Mrs. F. S., he is therefore eligible to apply on behalf of both of them for relief under s. 323 of the Act due to sickness or extreme poverty.

32In response to the issue raised by the City, that the application to the City was made 375 days after his father’s death, the Son submits that the application process for s. 323 of the Act requires that an application for any year must be filed by February 28th of the year following the taxation year. At the November 9, 2017 hearing, the Son testified that he understood that an application must be filed by February 28 of any given year, and not earlier. The City pointed out that the wording of s. 323.(3) says that “an application must be filed with the treasurer on or before the last day of February of the year following the year in respect of which the application is made.

33The Son says that he disagrees with the City’s contention that an Estate is not a person, that it is a Trust. He submits that the Act states that a “person” includes a municipality unless the context otherwise requires, and that the Assessment Act states that “person” includes “the corporation, partnership, bridge authority, agent or trustee, and the heirs, executors, administrators or other legal representatives of a person to whom the context can apply according to law.” The Son submits that, a “person”, “includes a natural person in the capacity of trustee, executor, administrator, or other legal representative noted above.”

34With regard to the City’s submission regarding who can make an application under s. 323.(1)(e) and (2) of the Act (the Estate of E. S. cannot, but Mrs. F. S. can), the Son submits that “this contention is now a moot point since [he] is an authorized representative for parties named as applicants and property owners.”

Findings on Issue 1

35An Estate may not apply for relief under s. 323.(1)(e) of the Act.

36The Son submits that he has been “appointed the agent for this matter”, and is therefore eligible to apply on behalf of the Estate of E. S. and on behalf of Mrs. F. S. for relief under s. 323 Act due to sickness or extreme poverty. The Board finds that there is no dispute that the Son has been appointed as the Estate Trustee for E. S. and is the Power of Attorney holder for Mrs. F. S., but that does not mean that the Son has been “appointed the agent for this matter” for both parties. Furthermore, the Applicant’s submission that the City’s contention that the Estate of E. S. cannot make an application, but Mrs. F. S. can make an application, is “now a moot point since the applicant is an authorized representative for parties named as applicants and property owners”, is incorrect. While it may be that the Applicant can represent both the Estate of E. S. and Mrs. F. S. in some proceedings or circumstances, the issue of whether an Estate can make an application under s. 323.(1)(e) and (2) of the Act, is what must be decided by this motion.

37In the Board’s view, the issue regarding the timing of the making of the application, and why the Son waited until his father had been deceased for 375 days before making the application for relief under s. 323 of the Act, is pertinent only in regard to the fact that the application was made on behalf of a person who was deceased. Whether the application was made one day after E. S.’s death or 375 days after his death, results in the same question for the Board, that being, whether or not an Estate can make an application for relief under s. 323.(1)(e) of the Act.

38The Son has submitted that a “person”, “includes a natural person in the capacity of trustee, executor, administrator, or other legal representative” pursuant to the Assessment Act, which states that “person” includes “the corporation, partnership, bridge authority, agent or trustee, and the heirs, executors, administrators or other legal representatives of a person to whom the context can apply according to law.” The Board finds that the Assessment Act does not apply in this circumstance, and agrees with the City’s submission that tax appeals and assessment appeals are not the same. Tax appeals are filed with the municipality to request tax cancellation or reductions for changes in property status or persons in situations of sickness or extreme poverty, and are limited to certain persons. However, assessment appeals are governed by separate legislation, and unlike with tax appeals, any person may file an assessment appeal with the Board in respect of the incorrect assessment or classification of a property.

39The Board finds that s. 3(1) of the Act governs the Board's evaluation of the subject application, as Part XIII ("Collection of Traditional Municipal Taxes") of the Act does not provide for a separate or different definition of "person." The word "person" as defined in Part I ("Interpretation"), s. 3(1) does not include an agent or Estate Trustee. Therefore an Estate Trustee may not apply for relief under s. 323.(1)(e) of the Act.

Issue 2: Whether the eligibility to apply for a reduction, or refund of all or part of the taxes levied on a property, ends upon death

40The eligibility to apply for a reduction, or refund of all or part of the taxes levied on a property ends upon death.

City Submissions

41The City submits that eligibility to apply for relief under s. 323.(1)(e) ends upon death. Only a person, it says, can make an application for relief from taxes because of extreme poverty or sickness under s. 323.(1)(e). An otherwise eligible applicant is, upon death, no longer a "person" in law and as such, they cannot advance an application.

42The City asserts that a deceased person cannot be sick or in extreme poverty. It reiterates the Board’s previous findings in numerous applications of this kind, that applicants seeking relief under s. 323.(1)(e) should clearly demonstrate that the applicant had no resources available to provide for the basic necessities of living and at the same time pay some or all of his/her property taxes. The City submits that such an analysis becomes meaningless in the case of a deceased person, who has no "necessities of living" for which to provide. It submits as well, that prejudice would result to the City if an application could be advanced by a deceased person, who cannot provide sworn evidence in support of their application, be cross-examined, or respond to questions from the Board.

43Upon death, the City says, a person ceases to be either sick or in extreme poverty, and these conditions do not pass to their Estate.

44As noted above, the Son did not make separate submissions on this issue, but combined his response to both issues, as set out above at paragraphs 30-34.

Findings on Issue 2

45On whether the eligibility to apply for a reduction, or refund of all or part of the taxes levied on a property ends upon death, the Board agrees with the City’s submissions that a deceased person has no "necessities of living" for which to provide. The Board also finds that, upon death, a person ceases to be either sick or in extreme poverty, and these conditions do not pass to their Estate.

46The Board therefore finds that the eligibility to apply under the Act for a reduction, or refund of all or part of the taxes levied on a property, ends upon death.

Issue 3: Whether the new Rules of the the Assessment Review Board apply in this case

47The question of which Rules of Practice and Procedure (“Rules”) of the Board apply to this matter was raised by the City in its Reply Submissions dated January 26, 2018, as there was a change to the Rules of the Board, effective April 1, 2017 (“New Rules”), which resulted in a change to the definition of the word “person.” Since neither party had raised the issue of the applicability of the Board Rules until the City’s Reply Submissions, the Son did not have an opportunity to make submissions on this issue.

48As the Board did not have to consider the Rules of the Board in order to make its determination on this motion, it makes no finding regarding the difference in definitions of “person” contained in the New Rules as compared to the rules previously in effect.

CONCLUSION

49Based on all the evidence before it, the Board concludes that the Estate of E. S. is not eligible to make an application under s. 323.(1)(e) of the City of Toronto Act, 2006, S.O. 2006, c. 11. Sched. A, as the eligibility to apply under the criteria of sickness and extreme poverty ends upon death. Mrs. F. S.’s eligibility to make an application under s. 323.(1)(e) was not contested in this motion, and has not been affected by the decision regarding the standing of the Estate of E. S.

ORDER

50Having made the findings set out above, the Board directs that this application under s. 323.(1)(e) for an order cancelling, reducing or refunding the property taxes for the for the subject property for the year 2016 is to be amended so that it reflects that the sole applicant is Mrs. F. S. The City is directed to notify the Board when the Application has been amended so that a hearing date can be set.

Application to be Amended