Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: September 10, 2018

FILE NO.: RD 2018M11

Assessed Person(s): 1763931 Ontario Limited

Appellant(s): 1763931 Ontario Limited

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 30

Respondent(s): City of Greater Sudbury

Property Location(s): 1933 Regent Street

Municipality(ies): City of Greater Sudbury

Roll Number(s): 5307-060-035-00100-0000

Appeal Number(s): 3029969

Taxation Year(s): 2014

Hearing Event No.: 701173

Legislative Authority: Rule 120 of the Assessment Review Board’s Rules of Practice and Procedure, as amended

Request for: A review of the Board’s Decision 2747262 issued on May 12, 2017

Heard: July 18, 2018 by teleconference

Parties

Counsel+/Representative

Submissions

1763931 Ontario Limited

Colin Francis

Requester

MPAC

Carl Davis+

Received

City of Greater Sudbury

Stefan Zhelev

Received

DECISION DELIVERED BY SCOTT McANSH AND ORDER OF THE BOARD

1There are two processes for resolving assessment disputes in Ontario: a request that MPAC reconsider the assessment, and an appeal to this Assessment Review Board (the “Board”). In this application, 1763931 Ontario Limited (the “Company”) reached a consent resolution with MPAC under both processes for the 2014 taxation year. Those resolutions differ greatly from each other. The question I am asked to resolve is which settlement applies when both processes are legally engaged. For the reasons that follow, I find that the request for reconsideration process must prevail.

2The Company is the owner of a shopping mall located at 1933 Regent Street in the City of Greater Sudbury (the “City”). The Company appealed the assessment of the mall for the 2013 taxation year to the Board. The next year, in early 2014, the Company filed with MPAC a request for reconsideration of the mall’s assessment, which resulted in signed minutes of settlement with MPAC for the 2014 taxation year. Also in 2014, the Company was deemed in law, pursuant to the provisions in the Assessment Act, RSO 1990, c A.31 (the “Act”), to have appealed the 2014 assessment because the 2013 appeal before the Board had not been disposed of before March 31, 2014.

3In January, 2017, the Company and MPAC reached a settlement on the assessed value of the mall for the 2013, 2014, 2015, 2016 and 2017 taxation years on different terms than the 2014 request for reconsideration settlement. When MPAC and the Company sent the proposed minutes of settlement to the City, it refused to sign the 2014 settlement on the grounds that the assessment for that tax year had already been resolved through the request for reconsideration process.

4In 2017, the parties sent the Board fully executed minutes of settlement for the 2013, 2015, and 2016 taxation year appeals that were open before the Board. The Board then issued decisions for the 2013, 2014, 2015, and 2016 taxation years, even though it had not been sent minutes of settlement for the 2014 appeal. The 2014 decision was at a higher value than the proposed 2017 settlement so the Company sought this review of the 2014 decision.

5The Company seeks to have the Board’s 2014 decision set aside. MPAC and the City agree that the Board’s decision is in error and should be set aside. The parties differ, however, in what should take the place of the incorrect decision. The Company says that its request for reconsideration settlement should be set aside and the 2014 appeal should proceed before the Board. MPAC and the City say that this Board cannot set aside a request for reconsideration settlement and that there can be no 2014 appeal because the issues for that taxation year have already been resolved through the request for reconsideration settlement.

ISSUES

6I must first decide if the Board’s 2014 decision ought to be set aside. I must then determine what should be done with the 2014 appeal that then remains before the Board.

7Determining how to manage the 2014 appeal requires an examination of this Board’s role in the request for reconsideration process and the interaction between that process and the deeming of appeals before this Board.

8The 2014 appeal may only be litigated if the 2014 request for reconsideration agreement is set aside. I must determine if this Board can intervene in a request for reconsideration settlement. The Company proposes two theories under which its request for reconsideration agreement can be set aside: a mistake in the contract, or that the settlement is a palpable error in the assessment roll.

DECISION

9For the reasons that follow, I find that the Board’s 2014 decision must be set aside. I also find that this Board has no legal authority to interfere with the Company’s 2014 request for reconsideration settlement. There is no legal basis on which this Board can interfere with a request for reconsideration settlement and the settlement is not a palpable error. The 2014 appeal must therefore be resolved on the same terms as the request for reconsideration agreement.

10I therefore reinstate the 2014 appeal and find that it has been resolved at an agreed value of $30,381,000.

Background

11The Company appealed the value of the mall in 2013, after an unsuccessful request for reconsideration with MAPC that taxation year. In early 2014 the Company contacted MPAC, raising concerns with the increase in value of one kiosk in the mall: Kiosk 19. MPAC suggested that the Company file a request for reconsideration for the 2014 taxation year to address that problem. The Company did so on March 27, 2014. MPAC offered to reduce the value of the property by $149,000 to address the issues with the assessment of Kiosk 19. That offer was accepted by the Company and MPAC sent minutes of settlement reducing the assessment of the entire property from $30,530,000 to $30,381,000. The Company executed those minutes on June 25, 2014, the Act made it so that the agreement between the Company and MPAC was entered on the assessment roll.

12Between the Company’s filing of the 2014 request for reconsideration and the settlement of the assessed value for that taxation year, an appeal of the 2014 assessment was deemed to have been filed by the Company. This is through the operation of clause 40(26)(b) of the Act, which states that “an appellant shall be deemed to have brought the same appeal in respect of a property… 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.” The 2013 taxation year and the 2014 taxation year share the January 1, 2012 valuation day, so the same general reassessment applies. Additionally, the 2013 appeal filed by the Company had not been disposed of by this Board before March 31, 2014. So on March 31, 2014, the Act deemed that the Company had appealed the 2014 assessment of the property.

13The Company was deemed to have filed appeals for the 2015 and 2016 taxation years as well because the appeals were not disposed of by the Board. The Company and MPAC negotiated a resolution to all four taxation years in January 2017, over two years after the Company had settled the 2014 assessment through the request for reconsideration process.

14The agreed values in 2017 were $27,072,000 for the 2013 taxation year, $23,489,000 for the 2014 taxation year, $23,489,000 for the 2015 taxation year, and $23,416,000 for the 2016 taxation year. MPAC and the Company sent proposed minutes of settlement for each taxation year to the City, as a party to the appeals. The City agreed with the values for 2013, 2015, and 2016 and signed those minutes. But the City refused to sign the 2014 minutes because the assessment roll for that taxation year had already been amended to reflect the 2014 request for reconsideration settlement. As result of that lack of agreement from a party, the Board was sent minutes only for the 2013, 2015, and 2016 taxation years. The Board was not sent minutes of settlement for the 2014 taxation year because there was not an agreement between all three parties for that taxation year.

15The Board released four decisions on May 12, 2017. The decisions for the 2013, 2015, and 2016 taxation years reflected the minutes of settlement that had been sent to the Board. The 2014 taxation year decision reduced the assessment to $27,072,000. That is the decision that the Company has challenged. The Board’s decision did not reflect the agreement between MPAC and the Company, or any other measure of value. It appears that the Board simply applied the 2013 settlement to the 2014 taxation year. However, that is not clear given that no reasons accompanied the decision.

16Rule 121 of the Board’s Rules of Practice and Procedure (the “Rules”) sets out the grounds on which a decision of the Board may be set aside. I am satisfied that the Board “made a significant error of… fact such that the Board would have reached a different decision,” which is one of the listed grounds. The decision by the Board to apply the 2013 settlement to the deemed 2014appeal had no basis in fact. There was no basis on which the Board could have decided what the assessment for 2014 should be. For the 2014 tax year, there was no agreement from the parties and no evidence on which the Board could make a determination. The fact that the parties settled the 2013 taxation year appeal does not automatically mean that settlement applies to a following deemed appeal. A deemed appeal is a separate appeal and must be resolved in the same way as any other appeal: through an agreement, or based on the evidence presented to the Board.

17Rule 123 sets out the remedies available if the factors in Rule 121 are met. The only appropriate remedy here is to cancel the 2014 decision. The 2014 decision is therefore cancelled.

The Interplay between Requests for Reconsideration Settlements and Deemed Appeals

18With the 2014 decision cancelled, the Company’s 2014 appeal remains active. The main question in this application is what should become of that appeal, given that the issues for the 2014 taxation year were resolved at the request for reconsideration stage. In order to answer that question, the interaction between requests for reconsideration and deemed appeals must be examined.

19Requests for reconsideration are governed by section 39.1 of the Act and are open on any matter that could form the basis of an appeal to this Board. A taxpayer is entitled to submit a request for reconsideration to MPAC each taxation year. A settlement between MPAC and the taxpayer must be entered on the assessment roll. Only the municipality, or the Minister, can appeal from that revised assessment, and must do so within 90 days. That process was added to the Act in 2008 to help resolve assessment appeals before they reach the Board.

20The deeming of appeals is set out in subsection 40(26) of the Act and does not reference the request for reconsideration provisions. The only requirements for an appellant to be deemed to have filed the next tax year’s appeal are that the same valuation day applies and the previous appeal was not disposed of before March 31 of the tax year. If those two conditions are met, clause 40(26)(b) creates a new appeal by operation of law.

21The Act is silent on what becomes of a deemed appeal when the taxpayer reaches a settlement with MPAC through the request for reconsideration process for the same tax year. In that situation a taxpayer has a legal appeal that it could not have legally have filed. Only the municipality or the Minister may appeal a request for reconsideration settlement, not the taxpayer. Yet that very appeal is created by operation of law.

22There is a clear policy basis for prohibiting taxpayers from appealing a request for reconsideration settlement. A settlement of the issues that could be appealed to this Board is a final determination of those issues. Finality is one of the two dominant purposes of the Act, the other being the correctness of the assessment roll, see Toronto (City) v. Municipal Property Assessment Corp., 2013 ONSC 6137, 2013 CarswellOnt 13617 (“Toronto”) at paragraph 30. Permitting an appeal of a consent resolution would undermine the principle of finality.

23A deemed appeal when there is a request for reconsideration settlement is an appeal that is effectively resolved near the moment of its creation. The issues in dispute in the appeal are resolved at in the request for reconsideration settlement because a request for reconsideration settlement can only be on the issues that can be subject to appeal. The parties are the same, with the municipality or Minister protected through their appeal rights from the settlement. To permit the deemed appeal to have a potentially different outcome from the request for reconsideration settlement would undermine the stability of the request for reconsideration process.

24The Company argues that a request for reconsideration could resolve one issue and a taxpayer could then appeal a separate issue to this Board for the same taxation year. I do not see how that is possible. A settlement is reached, or it is not. Like any negotiation, settlement comprises a series of compromises, a give and take on multiple issues. To say there is a settlement on one issue but not another provides a piecemeal approach to assessment litigation that is not consistent with the purpose of finality. A plain reading of the request for reconsideration provisions does not support multiple, single issue, appeals. The outcome of a settled request for reconsideration is that the assessment roll is altered to reflect that new settlement. The entire assessment is changed to the new value, not one issue. It is incumbent on the parties to make sure that they are satisfied with the new global value before executing minutes of settlement. A settlement at the request for reconsideration stage closes any further appeal by a taxpayer of that taxation year’s assessment, the only parties that can appeal after a request for reconsideration settlement are the municipality or the Minister. It is only when deeming takes place that the taxpayer even has the possibility of two attempts at the same assessment.

25MPAC argues that an appellant should be deemed to withdraw a deemed appeal when they execute request for reconsideration minutes of settlement for the same taxation year. MPAC had a statement to that effect in the 2014 minutes signed by the Company, but it no longer has that language in its proposed minutes of settlement. I find that a deemed withdrawal is something that can only properly be done by legislation. Rule 72 is clear that a withdrawal must be done with notice to the other parties. The Company never gave that notice, and I see no basis on which to impute that notice. The 2014 appeal was not withdrawn.

26The deeming provision of the Act was likely enacted to protect taxpayers from delays in this Board’s process. Deeming operates at law and a settlement at the request for reconsideration stage does not impact the deeming of an appeal for the taxation year. However, when a settlement is reached, the substance of the appeal has already been resolved by the same parties. The law has set out when parties are prohibited from re-litigating the same issue under the principle of issue estoppel. The Supreme Court of Canada set out the three preconditions to issue estoppel in Danyluk v. Ainsworth Technologies Inc. 2001 SCC 44, [2001] 2 SCR 460, 2001 CarswellOnt 2434, at paragraph 25: (1) the same question was decided; (2) the decision was final; and (3) the parties are the same. Those conditions are largely met here.

27The only matters that can be subject to a request for reconsideration are those that can be appealed to this Board. It can therefore only be the issues that would be argued in an appeal that are resolved in a request for reconsideration settlement. Neither the taxpayer nor MPAC can appeal from a request for reconsideration settlement, so it is final for those parties. The municipality and the Minister can appeal, however, so the settlement is not always final. But the Company’s settlement was not appealed, and is therefore final. Finally, the parties are nearly the same. The parties to an assessment appeal before the Board are the taxpayer, MPAC, and the municipality. A request for reconsideration settlement is between the taxpayer and MPAC, with the municipality having party like appeal rights. While the parties are not identical, they are sufficiently similar to treat the request for reconsideration settlement as a final determination of the assessment issues for that taxation year.

28While a request for reconsideration settlement may not strictly meet all of the conditions of issue estoppel, there is enough similarity that the principle of finality should be invoked. A deemed appeal cannot be barred, because it operates at law, but finality can be preserved if that appeal is resolved on the same terms as the request for reconsideration settlement reached for the same taxation year. I find that to be the proper disposition of a deemed appeal when there is a request for reconsideration settlement for the same taxation year.

Setting Aside the Request for Reconsideration Settlement

29The only way for the Company to litigate its 2014 appeal is if its 2014 request for reconsideration settlement is set aside. If that settlement stands, the appeal must be resolved on those same terms for the reasons set out above. The Company put forward two legal theories on why and how its 2014 request for reconsideration agreement should be set aside: (1) the common law contract doctrine of mistake; and (2) the palpable error provision of the Act. I do not find that the request for reconsideration agreement can be set aside under either theory.

Mistake

30At common law, contacts can be set aside if there is a mistake in what was agreed to by the parties. In DeCraemer v. DeCraemer, 2012 ONSC 1182, 2012 CarswellOnt 2385 at paragraph 47, Justice Bielby held that “In mutual mistake, the parties misunderstand each other and are at cross-purposes” and that “In a unilateral mistake, one only of the parties is mistaken.” The Company argues that it was mistaken when it signed the request for reconsideration minutes of settlement in June 2014.

31The Company says that its understanding of the arrangement was that it was addressing only the value of Kiosk 19 and that the other issues the mall may have had with the assessment remained open. It does not explain how it maintained that understanding while signing minutes of settlement that agreed that the assessed value of the entire mall for the 2014 taxation year was $30,381,000. There is no evidence, including any wording in the settlement agreement, that Company raised any other issues with the assessment of the mall before making that agreement. On the plain face of the agreement, the agreement settled the 2014 taxation year for the entire mall. It was not until over two years later that a much lower assessment for 2014 was agreed to by MPAC. I have no doubt that the Company regretted the 2014 request for reconsideration agreement in light of the new offer made by MPAC, but that does not mean that the Company was mistaken in its 2014 request for reconsideration agreement.

32The president of the Company swears that if he “had believed that our overall appeal of 2014 would be compromised in any way, [he] would never have agreed to nor executed the” 2014 request for reconsideration minutes of settlement. That statement is inconsistent with the plain wording of the minutes of settlement that “the property assessment be revised according to the settlement.” The Company argues that it was unrepresented at that time and places some significance on that fact, relying on Boardwalk Reit LLP v. Edmonton (City), 2008 ABCA 220, 2008 CarswellAlta 772 at paragraph 92. I interpret this case to say that all taxpayers should be treated equally, regardless of representation. For instance, the Alberta Court of Appeal notes, at paragraph 72, that “the legislation applies to all taxpayers, not just the ‘sophisticated.’” The Company should be presumed to know what it was doing, as should all other taxpayers. I do not accept that the 2014 request for reconsideration settlement was entered into under a mistaken belief about the settlement.

33MPAC argues that it does not matter if I decide that there is a mistake or not because this Board has no authority to set aside private contracts. MPAC is correct that this Board has no authority over private contracts. This Board can only exercise the powers conferred on it by statute, and there is nothing in the statute book conferring any jurisdiction over private contracts, or any legislated authority to intervene in a request for reconsideration settlement.

34There is competing jurisprudence from this Board on the role it may have in request for reconsideration settlements. Vice-Chair Mather held that the Board “does not have jurisdiction… to interfere with subsection 39.1 Assessment Act Minutes of Settlement,” in Mariani v. Puslinch (Township), [2007] O.A.R.B.D. No 437 (“Mariani”) at paragraph 113. The Company correctly argues that Mariani was a Municipal Act application so cannot be said to broadly apply. The Company did not, however, point to any specific legal authority for the Board to intervene in a request for reconsideration settlement.

35The Company correctly notes that legislation must be read with its purpose in mind. The Act has competing purposes of correctness and finality, see Toronto at paragraph 30. The Company states that this Board has preferred correctness in cases such as Bajus Consulting Inc v. Nielissen, [2013] O.A.R.B.D. No 123, where Member Wyger held, at paragraph 22, that “properties being assessed at their correct current values… would be in accordance with the scheme and purpose of the Act.” The Company also relies on the decision of the Ontario Municipal Board to reinstate an appeal withdrawn by counsel in Mississauga Business Park Inc v. Municipal Property Assessment Corp., Region No 15, [2004] O.M.B.D. No 474 (“Mississauga Business Park”). That Board held, at paragraph 31, that “determination of the farm assessment issue and its proper application should not be fettered by an inadvertence caused by a misapprehension on the part of a lawyer acting on behalf of landowners.” Finally, the Company notes that this Board has reinstated appeals that are withdrawn in error in order to achieve a correct assessment, for instance in Steeles-Keele Investments Ltd v. Municipal Property Assessment Corp., Region 14, [2014] O.A.R.B.D. No 452.

36The Company says that those cases show that getting the correct assessment is paramount. None of those cases alter the equal and competing purposes of the Act set out by Divisional Court in Toronto. Correctness is important, but finality is equally important.

37The Company says that the broad power to correct assessments can ground the Board’s involvement in a request for reconsideration settlement. I do not find that broad principles of correctness can create a power for the Board to do something that is not set out in the statute. This Board is a creature of statute and only has the powers that the Legislature has conferred upon it. There is nothing in the Act that permits this Board to intervene in a request for reconsideration settlement.

38The Company also argues that this Board can intervene in request for reconsideration settlements under its ability to control its processes, pursuant to section 25.0.1 of the Statutory Powers Procedure Act, RSO 1990, c S.22 (the “SPPA”). The Company notes that this Board has set aside request for reconsideration agreements in previous cases. In Norvaisa v. Municipal Property Assessment Corp., Region No 9, [2003] O.A.R.B.D. No 311 (“Norvaisa”) the Board set aside a request for reconsideration agreement because the taxpayer “stated that they did not understand this process.” It is interesting that the Board resolved the appeal on the same terms of the settlement in that case. The Company also presented Jolis Investments Ontario Ltd v. Municipal Property Assessment Corp. Region No 14, [2011] O.A.R.B.D. No 143 (“Jolis”) because there the taxpayer “contended that the erroneous RFR Minutes should be rescinded by reason of mutual mistake.” However, Member Wyger had “reservations regarding [the Board’s] authority to apply contract law principles to directly interfere with an RFR settlement even where that contract results in an incorrect classification” and did not interfere with the request for reconsideration settlement. Jolis is, therefore, of no assistance to the Company.

39Norvaisa does not explain the authority of the Board to set aside a request for reconsideration agreement. The Company put forward Armstrong Inc v. Municipal Property Assessment Corp., Region No 17, [2013] O.A.R.B.D. No 194 (“Armstrong”) for the proposition that there is a general power of the Board achieve justice. In that case Member Wyger was considering a challenge to an ex parte reinstatement of a withdrawn appeal and held, at paragraph 14, that “the SPPA, the Assessment Act and the Board’s Rules give the Associate Chair, and/or his designates some discretionary authority to accept late appeals, extend dates for filings, correct minor errors and review and cancel decisions, and to control the Board’s process.”

40Armstrong addresses specific powers that the Board exercises pursuant to specific provisions of the Rules and the legislation. The Board certainly has the power to control its own process, but that control is limited to matters before the Board. The request for reconsideration process explicitly excludes the Board so cannot be said to be a Board process. There is nothing in the legislation cited that confers on the Board a role in managing request for reconsideration settlements.

Palpable Error

41The Company’s second theory on setting aside the 2014 agreement is to consider the request for reconsideration settlement a palpable error in the assessment roll. This Board has remedial powers pursuant to section 40.1 of the Act if there is a palpable error in the assessment roll. I do not find that there is a palpable error in the assessment roll here.

42The Company put forward Cambridge Taylor Holdings Inc. v. Municipal Property Assessment Corp. Region No 21, [2013] O.A.R.B.D. No 85 as an instance where section 40.1 was used when MPAC had changed its opinion of value for certain taxation years. But there is more recent, well developed, jurisprudence from this Board on the proper application of section 40.1 of the Act. Member Wyger held, in Municipal Property Assessment Corp., Region 9 v. Chew, 2015 CanLII 78969 (ON ARB), [2015] O.A.R.B.D. No 296 (“Chew”) at paragraph 19, that “the enquiry into palpable error requires a consideration first of whether it is a true inadvertent and unintentional error, and second whether that error is palpable.” The Company’s alleged error does not meet either requirement.

43There is no way to construe the Company’s voluntary signing of the 2014 request for reconsideration minutes as an inadvertent error. MPAC notes that this Board has held that taxpayers must bear responsibility for its intentional actions, relying on Talon International Development Inc. v Toronto (City), 2018 CanLII 8115, which was affirmed on review in Talon International Development Inc. v Municipal Property Assessment Corporation, Region 09, 2018 CanLII 55827. The execution of minutes of settlement is not something that can be done inadvertently. There is an intentional aspect to such a settlement. The Company filed the request and accepted the outcome of that request. It is hard to see that as an error, let alone an inadvertent error.

44Nor can the error, if there is one, be considered a palpable error. Associate Chair Muldoon set out what a palpable error is in Hopper v Municipal Property Assessment Corporation, 2016 CanLII 24421, at paragraph 15. It is an error “that mischaracterizes the fundamental nature or legal character of the property.” The alleged error here is that there are two different opinions of assessed value and the wrong one was agreed to first. That does not touch the fundamental or legal character of the mall. The mall was the same structure, only MPAC’s opinion of value changed between 2014 and 2017. That is not a palpable error.

45Section 40.1 of the Act is not engaged here because the alleged error is neither inadvertent nor palpable.

CONCLUSION

46The Board erred in issuing the 2014 decision on the assessed value of the mall. There was no basis in fact or law on which the Board could have made that decision. The Company’s 2014 appeal must therefore be reinstated. However, given the Company’s settlement of those same issues in its 2014 request for reconsideration there is only one way that the 2014 appeal can be decided. There is no basis in law on which I can set aside the 2014 request for reconsideration settlement. I therefore find that the 2014 appeal is resolved on the same terms as the 2014 request for reconsideration at an assessed value of $30,381,000.