Bryfam Enterprises Inc. v. Municipal Property Assessment Corporation, 2019 CanLII 101162

Assessment Review Board Commission de révision de l’évaluation foncière

ISSUE DATE: October 25, 2019 FILE NO.: WR162392 Assessed Person(s): Bryfam Enterprises Inc. Appellant(s): Bryfam Enterprises Inc. Respondent(s): Municipal Property Assessment Corporation("MPAC") Region 32 Respondent(s): City of Thunder Bay Property Location(s): 344 Cougar Crescent Municipality(ies): City of Thunder Bay Roll Number(s): 5804-030-109-04809-0000 Appeal Number(s): 3341072, 3341071 and 3368342 Taxation Year(s): 2017, 2018 and 2019 Hearing Event No.: 722680 Legislative Authority: Sections 33 and 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended Heard: October 8, 2019 in Thunder Bay, Ontario

APPEARANCES:

Parties	Representative
Bryfam Enterprises Inc.	Tim Bryson; Tammy Bryson
MPAC	Justin Johnstone; Jodene Wylie
City of Thunder Bay	No one appeared

DECISION OF THE BOARD DELIVERED BY DAN WEAGANT

INTRODUCTION

1Bryfam Enterprises Inc. (the “Appellant”) filed an appeal of the assessment of the subject property, located at 344 Cougar Crescent (“subject property”). The subject property was purchased by the Appellant in 2013 to construct a single-family dwelling for sale on the open market. Construction of the single-family dwelling was started in 2013. At the time of the hearing, it was still incomplete.

2The Parties agree that the subject dwelling was 90% complete in 2017 and that it has not progressed since. In 2019, when MPAC completed the last of several inspections it conducted over the years, the subject dwelling was under construction. As a result, MPAC determined that the value of the property should include the added value of the dwelling under construction, as it existed in 2017, 2018 and 2019. It effected this change through omitted assessments, under s. 33 and 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended (the “Act”) for the 2017 and 2018 taxation years. This omitted assessment was then added to the previous, undeveloped lot value. The amount of the omitted assessment applied by MPAC for these two taxation years was $328,000. This added assessment resulted in a total value for the 2019 taxation year of $410,000 in the Residential property class.

3At the outset of the hearing, the Appellant advised that it had no issue with the methods of assessment, the effective dates, or the resultant values applied to the subject property by MPAC. The Appellant’s reason for the appeal was that, in its view the subject property was not and is not subject to assessment.

4The Assessment Review Board (the “Board”) must decide a number things in these appeals. Firstly, the Board must determine whether or not the value of the building, starting in 2017, is subject to assessment. Secondly, the Board must determine the current value of the subject property. Once that decision is made, the Board must then determine if the current value found needs to be reduced to reflect equitable assessment.

DECISION

5The Board finds that the subject property, including the partially completed dwelling thereon is subject to assessment as of January 1, 2017.

6On consent of the Parties, the Board finds that the current value of the subject property for the 2019 taxation year is $410,000. The Board also finds that:

• the value of the omitted assessment, commencing January 1, 2017 is $328,000; and
• the value of the omitted assessment, commencing January 1, 2018 is $328,000.

The Board also finds that there is no evidence to support a reduction in this amount to make it equitable with the assessments of similar lands in the vicinity.

7Accordingly, the assessment of 344 Cougar Crescent, for the 2017 and 2018 taxation years is increased from $82,000 to $410,000 in the Residential property Class. The Board also finds that the assessment for the 2019 taxation year is confirmed at $410,000 in the Residential property class.

Is the single-family dwelling subject to assessment for the 2017, 2018 and 2019 taxation years?

Appellant’s Submissions

8The Appellant submitted that, because the assessment of buildings under construction is not specifically addressed in the Act, the value added by the partially constructed building should not be assessed.

9In support of this assertion, the Appellant cited several documents published by MPAC that explain the process of the assessment of single-family dwellings and the process of assessment when a property transfers from a builder to a purchaser.

10The Appellant believes that the process described by these publications, where a builder takes possession of a lot, commences construction and then sells the house and lot to a buyer does not typically attract assessment.

11It asserts that this is the same process occurring on the subject property, with the only difference being the passage of time while the building is being completed.

12The house construction commenced in 2013. Owing to labour and finance issues, the Appellant explained that the construction of the house was delayed, progressed in fits and starts and, as of the date of the hearing, was still incomplete.

13The Appellant also submits that the house is not fit for occupancy and that this was the case in 2017 and 2018 and because it is not fit for occupancy, it cannot be sold and because it cannot be sold, it cannot attract assessment.

MPAC’s Submissions

14MPAC argued that the position taken by the Appellant has been addressed before, by this Board and the Courts. MPAC views the Appellant’s position to embrace either the concept that it is not subject to assessment because the subject property is exempt from assessment, or that single family dwellings under construction cannot be assessed until they are sold to an initial purchaser.

15On the point of buildings under construction being assessable, MPAC cited 1(1) of the Act (Definitions), which defines “land”, “real property” and “real estate” to include,

(a) land covered with water,

(b) all trees and underwood growing upon land,

(c) all mines, minerals, gas, oil, salt quarries, and fossils in and under land,

(d) all buildings, or any part of any building, and all structures, machinery and fixtures erected or placed upon, in, over, under or affixed to land,

(e) all structures and fixtures erected or placed upon, in, over, under or affixed to a highway, lane or other public communication or water, but not the rolling stock of a transportation system.

16MPAC submitted that the subject property includes the lot and the partially completed building. Since ‘any part of any building’ is considered ‘real property’ under the s. 1(1) definition, MPAC argued that the lot and the partially completed building is liable to assessment, in accordance with s. 3(1).

17On the point of ‘exemption’, MPAC cited s. 3(1) of the Act, which states:

“…All real property in Ontario is liable to assessment and taxation, subject to the following exemptions from taxation…”

MPAC’s position is that ‘buildings under construction’ are not included in the exemptions from taxation in s. 3(1) and therefore are subject to assessment.

18MPAC submitted that when it chooses to apply an omitted assessment it does so with the full context of the property in mind. Typically, when a builder enters into an agreement of purchase and sale and the construction of the dwelling is completed the process concludes within a few months. According to MPAC, it takes into account any other circumstances that my give rise to delay and acts accordingly. Mr. Johnstone referred to this consideration of time as being ‘reasonable’ in the circumstances. In this case, MPAC submits:

• a total of nearly six years has passed since construction was initiated;
• MPAC assessors have visited or inspected the subjected property eight times since construction began;
• In this case MPAC acted reasonably in applying omitted assessments to the subject property for the 2017 and 2018 taxation years; and
• The assessment applied includes a 10 % reduction to reflect the estimated value of the elements needed to complete the dwelling; a value the appellant consents to.

Board’s Analysis

19While the Appellant sought to create some uncertainty in the assessment of single-family dwellings under construction, it missed the fundamental components of the Act that lead to assessment.

20Its argument, that the dwelling under construction is not contemplated in legislation so it cannot be assessed, ignores the basic tenets of the Act that are set out in s. 1 and s. 3. These sections essentially say, in plain language, ‘everything is assessable, unless the Act says it is exempt. The Act does not exempt dwellings under construction.

21The Appellant’s submissions relating to MPAC’s publications do not constitute references to law. They constitute references to guides to future and current property owners to assist them with questions about how properties are assessed in Ontario, and what to do if a property owner has questions about that process. However, even if MPAC’s publications had the same legal weight as the Act, they still do not support the Appellant’s argument.

22The Appellant argued the property was not assessable at all. Logic would indicate then that any guidance document produced by MPAC as a reference on how a property is assessed is not a suitable resource to determine if property is to be assessed.

23The Board finds MPAC’s submissions on the interpretation and application of s. 1 and s. 3 of the Act to be most persuasive as the Act is the directive authority on Assessment in Ontario.

24This appeal requires the Board to determine if the subject building as it existed in 2017, 2018 and 2019 is subject to assessment. By applying s. 1(1) and s. 3(1) of the Act, the Board finds that the subject dwelling is subject to assessment for the following reasons:

• The definition of real property includes buildings or parts of buildings;
• The Act stipulates that any real property is assessible, unless it is exempt;
• Single family dwelling properties are not included in the land exempt from assessment or taxation.

25This is a clear path to determine what property in Ontario is assessable and what property in Ontario is exempt from assessment and taxation. Single family dwellings that are partially complete are not exempt. Therefore, the Board finds the completed part of the building, as of January 1, 2017, is assessable.

26At the hearing the parties agreed that, if the property was found to be assessible, the current value of the property for each of the 2017, 2018, and 2019 taxation years is $410,000 and that no equitable adjustment is required for any of these years. Based on the parties’ agreement, the Board finds the assessment of 344 Cougar Crescent, for the 2017 and 2018 taxation years is increased from $82,000 to $410,000 in the Residential property Class. The Board also finds that the assessment for the 2019 taxation year is confirmed at $410,000 in the Residential property class.