Janice Maude and Greg Maude v. Municipal Property Assessment Corporation, 2018 CanLII 80819

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: August 21, 2018

FILE NO.: WR 154593

Assessed Person(s): Janice Anne Maude

Appellant(s): Janice Maude and Greg Maude

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 07

Respondent(s): Township of Havelock-Belmont-Methuen

Property Location(s): 132 I 21 Kasshabog

Municipality(ies): Township of Havelock-Belmont-Methuen

Roll Number(s): 1531-010-009-40600-0000

Appeal Number(s): 3267851 and 3293078

Taxation Year(s): 2017 and 2018

Hearing Event No.: 702172

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

Heard: July 25, 2018 in Havelock, Ontario

APPEARANCES:

Parties	Representative
Janice Maude and Greg Maude	Self-represented
MPAC	Jacqueline Irwin
Township of Havelock- Belmont-Methuen	No one appeared

DECISION OF THE BOARD DELIVERED BY JEAN-PAUL PILON

INTRODUCTION

1Janice Anne Maude and Greg Maude (the “Appellants”) are the owners of 132 I 21 Kasshabog (the “Subject Property”), which is an island with a residence located in the Township of Havelock-Belmont-Methuen.

2Pursuant to the provisions of the Assessment Act, R.S.O. 1990, c. A. 31 (the “Act”), the assessment of land shall be based on its current value. The Act also provides that, for the 2017 to 2020 taxation years, MPAC is required to assess this value as of the valuation date, January 1, 2016 (“current value”).

3MPAC has assessed the current value of the Subject Property at $325,000.

4The Appellants filed an appeal for the 2017 taxation year with the Assessment Review Board (the “Board”), and have been deemed to have brought the same appeal with respect to the Subject Property for the 2018 taxation year pursuant to s. 40 of the Act. It was the Appellants’ position that MPAC’s assessment of current value is too high and that the correct current value is $245,889. They acknowledged at the hearing however that this submission was arrived at using their equity analysis described below. MPAC took the position at the hearing that its assessed value is correct.

5Pursuant to s. 40(11) of the Act, the Township of Havelock-Belmont-Methuen was a party to the proceeding and Wendelin McConnell attended part of the hearing only to observe.

6Section 44(3)(b) of the Act directs the Board to reduce the current value of the Subject Property if similar lands in the vicinity have been assessed at a lower value (“equitable reduction”). The purpose of this provision is to fairly distribute the municipal tax burden according to the value possessed by each ratepayer. MPAC took the position that an equitable reduction was not required. The Appellants asserted that an equitable reduction of $79,111 was required.

7At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds that the for the 2017 and 2018 taxation years, the current value of the Subject Property as of the valuation date, January 1, 2016, is $263,552 and that there should an equitable adjustment to $245,889.

RELEVANT LEGISLATION AND RULES

8The relevant sections of the Act are as follows:

1. “current value” means, in relation to land, the amount of money the fee simple, if unencumbered, would realize if sold at arm’s length by a willing seller to a willing buyer.

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

19.2(1) Valuation days – Subject to subsection (5), the day as of which land is valued for a taxation year is determined as follows:

4. For the period consisting of the four taxation years from 2017 to 2020, land is valued as of January 1, 2016.

40.(17) For 2009 and subsequent taxation years, where value is a ground of appeal, the burden of proof as to the correctness of the current value of the land rests with the assessment corporation.

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.

ISSUES

9The issues to be determined in this appeal are:

1. What is the correct current value of the Subject Property for the taxation years 2017 and 2018?; and

2. Whether there should be an equitable reduction of the current value of the Subject Property pursuant to s. 44(3)(b) of the Act, and, if so, what the amount of this reduction should be.

DISCUSSION, ANALYSIS AND FINDINGS

What is the correct current value of the Subject Property for the taxation years 2017 and 2018?

MPAC’s Evidence

10MPAC’s representative at the hearing referred to its Valuation and Equity Analysis Reports prepared in anticipation of the hearing.

11MPAC’s description of the property was not contested: it is an island including a single family dwelling accessible only by water with an area of 1.7 acres. The cottage situated on the island was effectively built in 1966 and has a building area of 898 square feet.

12In its Valuation Report, MPAC chose five proposed comparable properties it said are comparable to the Subject Property. All of them had been transferred in arms’ length sales transactions in the one year period preceding and following the January 1, 2016 valuation date. The Appellants did not dispute the minimal time adjustment sales (“TAS”) adjustments made by MPAC. It was noted that an “I” in a property address refers to an island, and “WAO” refers to water access only.

Valuation Report

Address	Attached to Mainland?	Subdivided Island?	Effective Frontage (in feet)	Building Quality	Actual Site Area (Acres)	TAS Sale Price	Assessed Value
Subject Property	No	No	355	4.5	1.72	N/A	$325,000
1. 132 I 21 Kasshabog	No	Yes	160	Not given, only a cabin on the property	0.72	$124,199	$137,000
2. 490 I 38 Kasshabog	No	Yes	180	4	0.99	$209,865	$251,000
3. 385 Kasshabog Lk WAO	Yes	No	135	5	1.18	$242,819	$255,000
4. 389 Kasshabog Lk WAO	Yes	No	95	5	0.79	$263,552	$271,000
5. 160 I 22 Kasshabog	No	Yes	280	3	0.8	$210,073	$196,000

13In one respect, the Subject Property is not comparable to MPAC’s five proposed comparable properties because the Subject Property is a single-owner island, where all of the others are either on mainland or are on islands that are subdivided. Otherwise, all but one of the proposed comparable properties include cottages of the same approximate age as the one on the Subject Property but they are of differing building quality, which MPAC’s representative testified affected its assessment of value, as do differences in frontage. MPAC’s representative further testified that single owner islands are assessed at a premium of 25% over islands that are subdivided.

14When asked for a specific example relating the assessed value of the Subject Property to these five proposed comparable properties, MPAC’s representative indicated that the fourth proposed comparable property is comparable in that it has only water access, even though it is a mainland property not on an island. MPAC’s representative testified if that property had been a single owner island, it would have had an assessment of $337,500. It was not explained why this amount exceeds 125% of the assessed value, which should have been the case in adding only the 25% premium.

Appellants’ Evidence

15The Appellants had only one proposed comparable property that had been sold for comparison which they described as 298 WAO. That sale transaction took place in 2013 though and, according to MPAC, it was not an arms’ length transaction. This was not considered a comparable property for that reason.

16The Appellants testified as to significant hardships in owning an island without road access, with the need to rent additional property for boat storage, mooring, parking, and further limitations on access depending on weather. They said these considerations should reduce, not increase, the value of the Subject Property.

17The Appellants also testified that MPAC’s fourth and fifth properties sold were incorrectly described as not having road access when they do have such access. MPAC’s representative testified in reply that these properties are accessible by road, but not lawfully as the roads run either over neighbouring properties, requiring consent, or that the roads in question have not been dedicated for public use.

Analysis

18It was not disputed that the direct comparison approach is the appropriate method in which to determine current value. As described in MPAC’s report, “the direct comparison approach estimates the current value of a subject property by adjusting the sale price of other sold properties for differences in property characteristics between the subject property and other sold properties.”

19The proposed comparable properties provided by MPAC are imperfect comparisons because of their material differences, where the Subject Property is a single owner occupied island and the others are either on shared islands or on the mainland with or without road access.

20The fourth proposed comparable property is the basis for MPAC’s assessment where its time adjusted sales price is $263,552. MPAC argued that the difference in assessment between the assessment for the fourth property and Subject Property’s assessment of $325,000 is due to the fact that the fourth property is on a shared island. There are other material differences, however, that would account for the difference in valuation: the substantial difference in effective (or useable) frontage or shoreline (95 ft. to 355 ft.), more than twice the site area of the entire property and a higher quality building. There was no evidence before the Board, however, to explain to what extent any of these material differences might have accounted for an assessment of $325,000, the correctness of which it was MPAC’s burden to prove. The evidence before the Board simply supported the conclusion on a balance of probabilities that the current value of the Subject Property is some indeterminate amount exceeding $263,552.

21The Appellants cited reasons why their island ownership causes hardship and should result in a decreased assessment but the Board finds these to be more in the nature of subjective concerns personal to them and unsupported by independent evidence that such issues should result in lower valuations.

22The Board finds there was no evidence presented to support any particular current value assessment above $263,552. The Board therefore finds the assessed value of the current value of the Subject Property to be $263,552.

Should there be an equitable reduction of the current value of the Subject Property pursuant to s. 44(3)(b) of the Act, and, if so, what the amount of this reduction should be?

Equity

23The purpose of an equitable reduction has been described by the Ontario Court of Appeal in Empire Realty Co. Ltd. and Assessment Commission for Metropolitan Toronto et al., [1968] 2 O.R. 388, 1968 CanLII 183:

A prime objective of municipal taxation is the equitable distribution of the burden according to the value of the property possessed by each ratepayer; in the system prevailing in Ontario, the tax levied on the ratepayer is determined by the application of a uniform mill rate upon the assessed value of the ratepayer’s taxable property set down in the assessment roll. If equity in taxation is to be achieved, it must result from equity in assessment.

24In addressing equity in assessment, the court noted that “an assessment made at the actual value of lands and buildings would be an unequitable assessment if all similar lands in the vicinity were assessed at some percentage of actual value substantially less than one hundred.”

25However, the goal of the Act is to determine the correct current value. Any equitable reduction in the current value results in an incorrect current value. Consequently, an equitable reduction should only be made where there is clear evidence to support such a reduction. The burden of proof rests with the Appellant to establish on a balance of probabilities is required.

Appellants’ Evidence

26The Appellants’s focus at the hearing was on their submission that the assessment should be reduced to make it equitable with assessed values for similar properties on Lake Kasshabog, and not properties within 20 kilometers of the Subject Property as put forward by MPAC.

27The Appellants provided the information that follows, partially reproduced from their written submission.

Written Submission

	Area (acres)	Year Built	Cottage Size (sq ft)	Assessed Value 2012	Assessed Value 2016
Subject Property	1.70	1955	898	233,000	325,000
1 Island 4-3 Kasshabog	1.07	1946	732	229,000	243,000
2 Island 22-8 Kasshabog	1.26	1965	875	243,000	263,000
3 Island 28-8 Kasshabog	1.14	1958	604	221,000	221,000
4 294 Kasshabog WAO	1.25	1955	919	258,000	271,000
5 Island 105-15 Kasshabog	1.22	1958	680	206,000	215,000
6 Island 280-33 Kasshabog	1.82	2008	878	218,000	219,000
7 Island 407 -38 Kasshabog	1.03	1953	1,069	230,000	263,000
8 Island 635-38 Kasshabog	1.50	1958	1,150	265,000	293,000
9 Island 640-38 Kasshabog	1.00	1952	848	213,000	225,000
Average (not including Subject Property)	1.25		862	231,144	245,889

28In their evidence, the Appellants testified that these properties are substantially similar to the Subject Property, evidence that was not contested other than on one point described below.

29The Appellants also testified that a former Member agreed with them in a previous decision of the Board, except for the sixth property above because, as noted in their written material, MPAC “was not aware of its waterfront quality.” The Appellants testified the waterfront for this property is in good condition in that it has no weeds, deep water or rock cliffs. The Appellants testified the cottage there built in 2008 sits on an island shared with only one property owner, and that the size of the property and the cottage as the same as in the Subject Property. They indicated in their material that they believe the sixth property to be superior to theirs.

MPAC’s Evidence

30MPAC’s representative testified that MPAC’s analysis, with a level of appraisal of 0.991 and a Coefficient of Dispersion of 13.6, falls within MPAC’s acceptable range to show that an equity adjustment is not necessary.

31In reply, MPAC’s representative also testified that the Appellants’ nine properties are on subdivided islands where the Subject Property was assessed at a premium of 25% because it is a single owner island.

Analysis

32With the Appellants having the burden of proof in the equity analysis, the question was whether their comparable properties are sufficiently similar to form the basis of an equity adjustment downward. For the reasons that follow, the Board finds they are.

33As noted above, in 2015 the Appellants and a different representative for MPAC were before the Board in an appeal of the Appellant’s assessment in the 2013, 2014 and deemed 2015 taxation years. At that hearing, they presented the exactly same properties to former Member Tchegus, successfully arguing that there should be an equity adjustment.

34Former Member Tchegus wrote at paragraph 32 of his decision, Maude v Municipal Property Assessment Corporation, Region 07, WR 130693, 2015 CanLII 64855:

Even Ms. Bolton (MPAC’s representative at that hearing) conceded that all but one of the Maudes’ properties used for comparison purposes were similar to the subject property. Removing the property with the cottage constructed in 2008, the average assessed value of the remaining eight properties is $233,125 or $233,000 rounded. Therefore, having regard to the assessments of similar lands in the vicinity, the Board finds it necessary to reduce the assessment of the subject property to $233,000 to make the assessment of the subject property equitable with those assessed values.

35MPAC then requested a review of decision which was denied by Associate Chair Muldoon in Maude v Municipal Property Assessment Corporation, RRD 2016M9, 2016 CanLII 28436. The review decision describes MPAC’s position in the review as being that “the Member erred by basing his determination of equity on a comparison of assessments of similar lands in the vicinity rather than a comparison between assessments and values.”

36The request for review was denied because a finding of equity is “within the purview of the Presiding Member”, that “with the exception of one property, MPAC agreed with the properties selected by Mr. Maude as comparables” and that “the comparable which was not agreed to by all parties was reject by the Board and did not fact in its calculation of equity.” The review decision concluded that because MPAC did not object to the consideration of those proposed comparable properties, the request for review would be denied.

37At this hearing, MPAC did object to consideration of the nine properties for a single reason: because they are on islands that are shared, rather than islands owned by a single owner like the Subject Property. As a result, MPAC argued the nine properties are substantially inferior to the Subject Property, and therefore assessed lower. The Appellants testified that they were surprised by the mention of a 25% premium to their property at the hearing that they had not been made aware of prior to the hearing despite their previous appeals and a Mandatory Meeting in these appeals. They also cited the absence of documentation or supporting evidence to prove that this reduction was MPAC’s standard practice.

38The Board finds that the nine properties should be considered in the equity adjustment because they are substantially similar to the Subject Property. It makes these findings for three reasons:

(a) Because the question of similarity was settled in a previous Board order that was upheld on review. The Board strives for consistency in its decisions and a decision reversing a previous one with exactly the same facts would be inconsistent;

(b) Because there was no evidence before the Board to support MPAC’s submission that shared islands, as the nine properties referred to by the Appellants, were assessed with a premium of 25%, where it was unmentioned by MPAC before the Member in the previous decision or prior to this hearing; and

(c) Because the only specific example of a property with a lower assessed value as a shared island was the fourth of MPAC’s proposed comparable properties in its Valuation Report, where it was determined that the property was inferior to the Subject Property for other reasons.

39The parties before Member Tchegus did not agree as to the inclusion of the Appellants’ sixth proposed comparable property in the equity analysis but there was no specific objection before the Board on this occasion, only the objection as to the inclusion of any of these properties in the consideration of equity. I therefore find the sixth property should be included as being similar. In any event, its inclusion would only result in an adjustment of approximately $3,000 downward from $249,000 rounded.

40The Board therefore finds that the Appellants have met their burden in the equity analysis on a balance of probabilities, and that the current value of the Subject Property should be reduced from $263,552 to $245,889, or $246,000 rounded.

DECISION

41The correct current value of the Subject Property is $263,552 for the 2017 and 2018 taxation years.

42An equitable reduction of the current value of the Subject Property pursuant to s. 44(3)(b) of the Act is required. The current value of the Subject Property is reduced to $246,000 for the 2017 and 2018 taxation years.