Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: October 22, 2019

FILE NO.: DM 2019M46

Moving Party(ies): Domtar Inc.

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region No. 03

Respondent(s): City of Ottawa

Property Location(s): 0 and 3 Booth Street

Municipality(ies): City of Ottawa

Roll Number(s): 0614-062-901-45000-0000 0614-062-901-45200-0000

Taxation Year(s): 2001 and 2002 (45000) 2001 to 2005 (45200)

Hearing Event No.: 717365

Legislative Authority: Section 40.1(b) of the Assessment Act, R.S.O. 1990, c. A.31, as amended

Heard: June 10, 2019 in Ottawa, Ontario

APPEARANCES:

Parties	Counsel
Domtar Inc.	Jamie Walker, Bob Butterworth, Q.C.
MPAC	Donald G. Mitchell
City of Ottawa	Lindsay Hinch

DISPOSITION OF THE BOARD DELIVERED BY JEAN-PAUL PILON

DISPOSITION OF MOTION

1Domtar Inc. (the “Moving Party”) filed this motion alleging that there are palpable errors in the assessment roll. The Moving Party requests an extension of time for bringing appeals and a direction that MPAC be the appellant for two properties located in Ottawa, known municipally as 0 Booth Street (with a roll number ending in 45000) and 3 Booth Street (with a roll number ending in 45200), pursuant to section 40.1(b) of the Assessment Act, R.S.O. 1990, c. A.31 (the ‘Act’). The taxation years which are at issue in this motion are 2001 and 2002 for the 0 Booth Street property, and 2001 to 2005 for the 3 Booth Street property. The Moving Party’s position in the motion is that as a result of the palpable errors in the roll, it was subject to double taxation.

2Both MPAC and the City of Ottawa (the “Municipality”), who would be parties to any appeals created if this motion was successful, participated in the motion hearing and opposed the relief requested by the Moving Party.

3For the reasons that follow, the Assessment Review Board (the “Board”) finds that the Moving Party has not proven that there are palpable errors in the roll relating to these properties for the taxation years in question. The Board therefore denies the Moving Party’s motion.

REASONS FOR DISPOSITION OF MOTION

Facts

The Moving Party

4The properties in this motion were previously part of the E.B. Eddy pulp and paper plant in the Ottawa River. The Moving Party owned these two properties during the years in question, and they were part of an operational hydro-electric generating station on Chaudière Island in Ottawa, in very close proximity to the Ontario-Québec border. Chaudière Hydro L.P. acquired all or part of the properties from the Moving Party in 2012.

5Effective January 1, 2001, the Act was amended to add section 3(1)28, which absolutely exempted hydro-electric generating stations from municipal taxation. This new section of the Act applied to the 2001 and later taxation years.

6Effectively replacing it was a Gross Revenue Charge (“GRC”), created pursuant to section 92.1 of the Electricity Act, 1998, c. 15, Sch. A. The GRC that was to be paid to the province was made up of two parts: first, a property tax component, which would be then paid to municipalities to replace the property tax revenue lost from the exemption, known as Compensatory Payment Plan (“CPP”) payments, and, second, a water rental component.

7It was not disputed that the Moving Party paid property tax in taxation years after the above exemption set out in the Act came into force. For the property at 0 Booth Street, property tax was paid in the 2001 and 2002 taxation years. For the 3 Booth Street property, property tax was paid in the 2001 to 2005 taxation years. In total, $266,226.89 was paid in property tax to the Municipality that need not have been, because from 2001 onward, hydro-electric generating stations were exempt from municipal taxation.

8According to the affidavit of Pierre Jetté, the Moving Party’s Director of Taxation sworn May 17, 2018, Minutes of Settlement were arrived at between the Moving Party and MPAC exempting the properties from taxation for the years subsequent to those at issue in this motion.

9For the years in question in this motion, however, the Moving Party did not pay the GRC.

10Mr. Jetté says in his affidavit that the Moving Party became aware in January, 2009 that it had not been assigned a GRC account, which was necessary for the GRC to be paid. The Moving Party then brought it to the attention of the appropriate government office at that time. Mr. Jetté’s affidavit goes on to say at para. 18 that in September, 2011, the Moving Party paid the GRC amounts due for the 2006 taxation year and later. It did not pay the GRC for the 2001 to 2005 taxation years at that time because property taxes had already been paid for those taxation years. After receiving notices of assessment dated October 31, 2011 for the GRC indicating that $558,670.27 was owing, $295,841.99 of which was penalties and interest, the Moving Party paid that amount under protest.

11In other words, for the years in question in this motion, the Moving Party paid both municipal property tax and the GRC.

12In October, 2012, the Moving Party obtained an extension of time to object to the notices of assessment made pursuant to the Electricity Act for the GRC. These objections were denied by the Ministry of Finance in December, 2012, and that decision was confirmed in February, 2013. The Moving Party then appealed those decisions to the Superior Court of Justice in February, 2013, and those appeals to that court have not yet been resolved.

13At the same time, in October, 2012, the Moving Party sought relief pursuant to the Corporations Tax Act, R.S.O. 1990, c. 40 pursuant to a provision that allowed the Minister to waive the GRC, penalties and interest if there were special circumstances. This request was denied by the Ministry of Finance, but not until nearly five years later, in August, 2017.

MPAC

14There were additional facts of relevance in MPAC’s motion record, which included the affidavit of John McEwen sworn on May 10, 2019. Of primary significance there was detail relating to appeals to the Board that had been filed by the Moving Party and EB Eddy Forest Products for some of the years in question.¹

15For 0 Booth Street, where the Moving Party seeks to create appeals for the 2001 and 2002 taxation years, appeals had been withdrawn for the same taxation years. Subsequent appeals for that property were resolved by Minutes of Settlement.

16For 3 Booth Street, where the 2001 to 2005 taxation years are at issue in this motion, EB Eddy Forest Products filed appeals for the 2001 and 2002 taxation years, and the Moving Party filed an appeal for the 2003 taxation year. No appeals for the 2004 and 2005 taxation years were filed for 3 Booth Street, but the Moving Party filed appeals in years subsequent, and outside of the scope of this motion. For this property, the appeals for the 2001 to 2003 taxation years had been withdrawn.

The Municipality

17The Municipality relied on the affidavit of Krista O’Brien sworn on June 4, 2019. Included in that affidavit were details about vacancy rebate applications that were received by the Municipality for the 3 Booth Street property for the 2001, 2002, 2004 and 2005 taxation years. Further, the affidavit says that the Moving Party owned and operated a hydro-generating station in Espanola where the GRC had been paid since 2001.

18Ms. O’Brien also says in her affidavit that, based on the limited documentation that remains available from that time period, she believed that the Municipality did not receive any retroactive CPP payments for the years in question in the motion. As a result, the property taxes that would have to be refunded, if the Moving Party was successful in its appeals, would need to be recovered from current municipal taxpayers.

19In its reply submission, the Moving Party pointed out that the Moving Party was not assessed for the GRC until 2011, where the Municipality’s documentation relating to its receipt of CPP payments from the province was dated 2009. The Municipality’s representative at the hearing indicated that the totality of the Municipality’s CPP payments in 2011 and 2012 remained static, which it argued was further indicative that no CPP payments were received by the Municipality for the Moving Party. That allegation does not appear to have been included in any of the affidavit evidence before the Board in this motion.

Legislation

20Section 40.1(b) of the Act provides:

Correction of errors

40.1 If it appears that there are palpable errors in the assessment roll,

(b) if alteration of assessed values or classification of land is involved, the Board may extend the time for bringing appeals and direct the assessment corporation to be the appellant.

21Section 3(1)28 of the Act provides:

Property assessable and taxable, exemptions

3(1) All real property in Ontario is liable to assessment and taxation, subject to the following exemptions from taxation:

Hydro-electric generating stations

28. A hydro-electric generating station, as defined in subsection 92.1 (24) of the Electricity Act, 1998 and land, buildings and structures used in connection with the generating station, as may be prescribed by the Minister, but not any portion of the land, buildings or structures used for any other purpose. This paragraph applies to the 2001 and subsequent taxation years.

22Section 41 of the Act provides:

Roll to be binding notwithstanding errors in it or in notice sent to persons assessed

41 The last revised assessment roll shall, subject to subsections 37 (5) and (6), be valid and bind all parties concerned, despite any defect or error committed in or with regard to the roll, or any defect, error or misstatement in the notice required by section 31 or the omission to deliver or transmit the notice, provided that the provisions of this section in so far as they relate to the omission to deliver or transmit the notice do not apply to any person who has given the assessment corporation the notice provided for in subsection 31 (4).

23Section 92.1(1) of the Electricity Act provides:

Tax and charges on hydro-electric stations

92.1 (1) The owner of a hydro-electric generating station shall pay in each year to Her Majesty in right of Ontario a tax computed at the rates specified in subsection (4) on the gross revenue from the generation of electricity.

Analysis

Jurisdiction

24To start, MPAC indicated in its material that it understood that the Moving Party was seeking an exemption from taxation pursuant to section 3(1)28 of the Act. MPAC and the Municipality both argued that the Board lacks the authority to grant that relief.

25It is, in fact, correct that the Board does not have any jurisdiction to determine whether a property is exempt from taxation, as was determined in a line of cases cited in North America Railway Hall of Fame v. Municipal Property Assessment Corp., Region No. 23, 2016 CanLII 14708 (ON ARB) at para. 15.

26The Moving Party argued that the relief requested in the motion was not in the nature of an exemption, but rather in the creation of appeals. This, it argued, is within the Board’s authority “if it appears that there are palpable errors in the assessment roll” pursuant to section 40.1(b) of the Act. The Moving Party further argued that if appeals were created, at that point it would attempt to arrive at settlement with MPAC and the Municipality as it did for its appeals for taxation years subsequent to those at issue in this motion.

27The Board concurs that it has the jurisdiction to grant the relief requested at this point in the proceeding: the creation of appeals, providing that it appears that there are palpable errors pursuant to section 40.1(b) of the Act. The Board finds that whatever might occur in the conduct of those appeals is beyond the scope of this motion and not relevant to this decision.

Palpable Error

28The Act does not, however, explain how the Board should determine if a palpable error exists. This omission has led to extensive discussion in the Board’s jurisprudence which is summarized below and used as the framework in the analysis that follows.

29Underlying this analysis is recognition that section 40.1 of the Act is the only part of the Act which is not subject to a limitation period. It “is an extraordinary remedy to be used sparingly, or the balance of the Act will be undermined,” and is only to be granted “in the clearest of circumstances” (Hopper v. Municipal Property Assessment Corp., Region 15, 2016 CanLII 24421 (ON ARB) at para. 13, citing City of Brockville v. Municipal Property Assessment Corp., 2016 ONSC 5752 (“Brockville”) and Scott v. Municipal Property Assessment Corp., Region No. 15, [2015] O.A.R.B.D. No. 64 (“Scott”)).

30All of the parties to the motion referred to Municipal Property Assessment Corporation, Region 09 v. Chew, 2015 CanLII 78969 (ON ARB) (“Chew”), which provided at para.18 that the Board must consider whether an error is truly inadvertent and unintentional in determining whether an error is palpable. In the same paragraph, that decision noted that the “how and why the purported error comes about may be very relevant” in determining whether an error was inadvertent or unintentional.

31At the same time, a palpable error has to be plain and obvious, and readily or easily perceived (1012419 Ontario Ltd. v. Municipal Property Assessment Corp., Region No. 9, 2009 CarswellOnt 3819 at para. 11, Kinglip Holdings Inc. v. Municipal Property Assessment Corp. Region No. 9, 2015 CarswellOnt 1733 at para. 15 (“Kinglip”) and Jolis Investments Ontario Ltd. v. Municipal Property Assessment Corp. Region No. 14, 2011 CarswellOnt 1822 at para. 10 (“Jolis”)). A palpable error must be of “conspicuous magnitude” and “easy to understand” (Brockville at para. 14 and Scott at para. 34). A palpable error is more than an error in judgment by a party which would be the subject of an appeal (Kinglip at para 15 and Jolis at para. 10).

32The analysis which follows considers the facts in the context of the Board’s jurisprudence above, which the Board finds to be persuasive, in the same order as set out above. In summary and for reference, these considerations are: whether the error alleged is inadvertent or unintentional, how and why the purported error came about, whether the alleged error is plain and obvious or easily perceived, whether the alleged error is of conspicuous magnitude and easy to understand, and, finally, whether the alleged error is more than an error of judgment which would be the subject of an appeal.

Inadvertent and Unintentional

33It is clear that the roll contains errors for the properties in the years in question. Section 41 of the Act acknowledges that the roll may contain errors and that “parties concerned” are nevertheless bound to what it contains notwithstanding those errors. The real question to be determined in this decision however is if those acknowledged errors meet the threshold of being palpable errors.

34The Board in Chew specified that errors must be inadvertent and unintentional to be palpable errors, and the Board finds this requirement to present the most substantial weakness in the Moving Party’s case. This is because some of the appeals that the Moving Party now seeks to create existed previously but were withdrawn.

35There was no evidence before the Board in this motion to explain why those appeals were withdrawn, but the Moving Party (and/or EB Eddy Forest Products which was noted as the appellant) was represented by the same representative in all of the appeals at the time they were withdrawn. The Board does not agree with MPAC that they are res judicata (already decided) or that the principle of issue estoppel applies. This is because to have made such a finding, these appeals would have had to have been decided, as was determined by the Supreme Court of Canada’s decision in Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44 at para. 25. Instead, the appeals were simply withdrawn.

36The Board concurs with MPAC, however, in its reference to Winners Merchants International LP v. Municipal Property Assessment Corporation, Region 13, (2018) O.A.R.B.D. No. 170, paras. 13 and 14, where it was noted that “a party is presumed to know what it is withdrawing and other parties should be able to rely on that presumption.” The Board further noted in that decision that “if appeals can be reopened months or years after they were withdrawn there is no longer any certainty to the litigation.”

37The fact that there were appeals that were withdrawn significantly undermines the Moving Party’s argument that the errors appearing on the roll, which could have been corrected in those appeals, were “inadvertent and unintentional.” The Moving Party knew or ought to have known by the time it made the decision to withdraw those appeals that there were errors in the roll.

How and Why

38The Chew decision also directs the Board to consider “how and why” the errors occurred.

39In two places in its motion material, the Moving Party blames MPAC for the errors. It says at one point that “MPAC’s error in not correctly identifying the (properties) as exempt pursuant to section 3(1)28 of the Act constitutes an oversight that was unintentional, inadvertent or the result of negligence. It was not error caused by an error of judgment.”

40Even if it was the case that MPAC erred in not identifying the properties as exempt and, leaving aside the fact that there were appeals that were withdrawn, MPAC was not obliged to ensure that the Moving Party was paying the GRC. This was confirmed in Ministry of Finance’s response to the Moving Party’s objection dated December 12, 2012 which was that the GRC was “based on voluntary compliance” and that it was the onus of the Moving Party to know its tax obligations.

41In addition, the Moving Party provides no explanation for why this did not become an issue for its other hydro-electric station in Espanola. John McEwen’s affidavit indicates that the portions operating as a hydro-electric generating station were exempt, and that appeals for the 2001, 2002, 2004 and 2005 taxation years were withdrawn starting in 2001. There was no evidence to indicate that the GRC was being paid in 2001 for the Espanola facility. However, the fact there was an exemption in 2001 as well as a withdrawn appeal that same year suggests that the Moving Party was paying the GRC there and ought to have known of its obligations in this case as early as 2001 when the GRC came into force.

Plain and Obvious, Conspicuous Magnitude and Easy to Understand

42The Board is also not persuaded that the errors are plain and obvious in the roll. The Moving Party indicates in its material that it became aware that it was exempt from taxation as a result of the 2001 amendment to the Act in September, 2008 when it entered into Minutes of Settlement for some of the appeals, yet it did not bring this motion until a decade later. The Moving Party explains this by saying that it was pursuing other avenues of relief through two separate complaints to the government offices concerned, not obtaining an answer from one of them until nearly five years later. This then raises the question as to why, if the errors were so plain and obvious on the roll, this motion could not have been brought concurrent to its governmental complaints.

43Further, the argument that the errors are plain and obvious becomes less compelling when considered alongside the Municipality’s evidence that the Moving Party applied for, and obtained, a vacancy rebate for part of 3 Booth Street in 2001, 2002, 2004 and 2005 at which time the Moving Party would have turned its mind to property tax matters for the properties.

44As noted above, section 3(1)28 of the Act provides that hydro-electric generating stations are exempt from taxation “but not any portion of the land, buildings or structures used for any other purposes.” If one was to accept the Moving Party’s evidence that it did not know that the properties were not subject to taxation, the Moving Party obtained some relief in the form of a tax rebate because parts of the properties were vacant land. Only those parts of the property used for hydro-electric generating stations would have qualified for the exemption, not those parts that were vacant. It would not, therefore, have been a simple question of determining that there would be an exemption. It would instead have required an inspection to determine what parts were exempt, something that cannot now occur because of changes to the properties that have happened with the passage of time.

45In the Moving Party’s favour, the Board finds the errors are of conspicuous magnitude simply because of the quantum set out earlier in this decision. They are not, however, easy to understand and cannot now be understood retrospectively. The Board therefore finds that the errors are not plain and obvious as Kinglip and other cases specify they should be for a determination that they are palpable errors.

Error of Judgment

46At para. 15 of Kinglip, the Board restated what factors might make an error palpable: that it be obvious, easily perceived and “not caused by an error in judgment, which can only be rectified by an appeal to the Board.” That decision continues at para. 16 that section 40.1 of the Act “is not intended to supplant the regular process of appeals of value and classification” in the Act.

47It would be difficult in these circumstances to now conclude that the Moving Party did not make an error in judgment in withdrawing its appeals in 2008. In Kinglip, an appellant withdrew some of the appeals it later sought to reinstate on the basis that there were palpable errors on the roll. At para. 36 of that decision, the Board determined that the act of filing and withdrawing appeals meant that the appellant “was alive” to the issues, and that if the errors were plain and obvious that “it would have been caught by the appeals process.” The Board continued that “it goes well beyond the intent of the section and the meaning of ‘palpable error’ to determine that such an error could be undetected and persist for 14 years in these circumstances.”

48In this case, there was a shorter delay of three years between the last taxation year in dispute, 2005, and the time when the Moving Party says the error was discovered in 2009. However, the Moving Party waited another decade before bringing this motion.

49The Board in Kinglip at para. 37 went on to reference 217-225 Richmond Street West Ltd. v. Ontario (Assessment Review Board) (1997), 1997 CanLII 26465 (ON CTGD), [1998] O.J. No. 35 (Div. Ct.), where a taxpayer who had notice of higher assessment received a tax bill that required him to pay substantially more. The taxpayer in that case had notice of the higher assessment, yet decided to focus on the arrears instead. The court in that case determined that he “could not rely on his own carelessness” in prioritizing the arrears over the underlying the assessment.

50There are many questions that the Jetté affidavit does not answer: why the Moving Party appeared to understand its obligations in Espanola but not in Ottawa, whether there was any correspondence from the Moving Party raising the delay issue in the Minister’s decision which took nearly five years to arrive, why the Moving Party preferred to pursue other avenues over a period of 10 years before filing this motion, and why the motion was not filed until April 15, 2019 when Mr. Jetté in his affidavit indicated that he instructed counsel to file this motion “concurrently” to other instructions given on August 10, 2017, more than 20 months earlier.

51In summary, the Board finds there were many errors of judgment that undermine the Moving Party’s position that the roll contains errors that are palpable.

No Palpable Error

52All of this leads the Board to the conclusion that the errors on the roll are not palpable errors. They cannot be said to be inadvertent or unintentional when there were appeals withdrawn, the how and why of their existence was circuitous and complicated, requiring a significant quantity of hearing time and documentation to explain. They are not plain, obvious, easily perceived or easy to understand when there were vacancy rebate applications complicating what part of the lands were actually exempt, and there were errors of judgment by the Moving Party in withdrawing some of the appeals which it now seeks to correct. In only one respect does the caselaw support the Moving Party’s position that there are palpable errors in the roll and this is in respect of the magnitude of the errors. However, the fact that the amount of money in question is significant does not, on its own, make the errors palpable errors.

53The errors described in the motion do not rise to the level of being palpable errors and, for all of the reasons above, the Moving Party’s motion is dismissed.

CONCLUSION

54Domtar Inc.’s motion for an extension of time for bringing appeals and a direction that MPAC be the appellant is dismissed because the errors described in the motion are not palpable errors.

Footnotes

1. 1It was not explained why the named appellant in the appeals for the 2001 and 2002 taxation years was EB Eddy Forest Products and not the Moving Party, when the Moving Party said it owned the properties for all of the years at issue in this motion and MPAC said that the Moving Party purchased the properties in 1998. EB Eddy Forest Products and the Moving Party had the same representative in the appeals, and this was not a live issue in these proceedings.