Bessy Stavrou v. Municipal Property Assessment Corporation, 2019 CanLII 288

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: January 4, 2019

FILE NO.: WR 153797

Assessed Person(s): Bessy Stavrou, Alexandra Stavrou

Appellant(s): Bessy Stavrou

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 23

Respondent(s): Township of Middlesex Centre

Property Location(s): 21497 Wonderland Road North

Municipality(ies): Township of Middlesex Centre

Roll Number(s): 3939-034-050-07700-0000

Appeal Number(s): 3230077 and 3312836

Taxation Year(s): 2017 and 2018

Hearing Event No.: 697301

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

Heard: May 30, 2018 by telephone conference call

APPEARANCES:

Parties	Counsel+/Representative
Bessy Stavrou, Alexandra Stavsou	Peter Stavrou
MPAC	Wayne Williams
Township of Middlesex Centre	No one appeared

DECISION OF THE BOARD DELIVERED BY DAN WEAGANT

INTRODUCTION

1The subject property is a 10 acre parcel immediately north of the City of London boundary. It has two structures, including a 5,000 square foot storage building and a 2,500 square foot garage. The majority of the property is used as farm land for farm purposes and was rented to a tenant farmer over the two years under appeal. There is no dispute about its status as farm land. A portion of the farm land (the most southerly 50 feet, extending from the west boundary to the east boundary) is subject to an easement in favour of an oil pipeline. The remaining portion of the property is considered by MPAC to be vacant Residential land.

2There was no dispute among the parties with respect to the classification of the subject property. The parties agreed that it should be assessed in the Farm property class and the Residential property class.

3The parties disagree as to the value of the farm land portion of the subject property and the amount of the total land area that should be considered farmland. MPAC submitted that 8.25 acres are farmlands used for farm purposes. The Appellant submitted that an oil pipeline easement affects the property’s use and the result is the land area use for farm purposes is actually 8.0 acres.

4The Appellant believes the assessment for the 2017 and 2018 taxation years is too high. MPAC has assessed the subject property at $292,000. The Appellant believes the subject property should have an assessment of $180,000 or thereabouts.

5The Assessment Review Board (the “Board”) must determine two things in these appeals. First the Board must determine the current value of the subject property. Once the current value is determined, the Board must then decide if, when reference is made to the assessments of similar properties in the vicinity, the assessment should be reduced from the current value determined for the subject assessment to be equitable, and if so, the value of the reduced assessment.

DECISION

6The Board finds the current value of the subject property is $275,000 for the 2017 and 2018 taxation years. The Board also finds that there is no evidence to indicate a reduction in this value is necessary for the purposes of equitable assessment.

7Therefore, the Board finds that the assessment of 21497 Wonderland Road North is reduced, from $292,000 to $275,000 for the 2017 and 2018 taxation years, apportioned as follows:

• Residential Property Class: $112,900

• Farm Property Class: $162,100

THE LEGISLATION

8The relevant sections of the Assessment Act (“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.

2. (1) Assessment of Easements – Where an easement is appurtenant to any land, it shall be assessed in connection with and as part of the land at the added value it gives to the land as the dominant tenement, and the assessment of the land that, as the servient tenement, is subject to the easement shall be reduced accordingly

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.

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.

PRELIMINARY MATTERS

Request for Adjournment

9The Appellant initiated the proceeding by requesting an adjournment. His reason was that there had been a recent illness in the family that impacted his ability to prepare adequately for the hearing. The Board denied the request at the hearing, with the following reasons.

10MPAC objected to the adjournment because the request was too late given the length of time the appeal had been active, and that if the Appellant needed more preparation time, he had adequate time to provide appropriate notice of his intention to request the adjournment. MPAC submitted the following as reasons why the motion should be denied:

• the issue at hand was relatively simple and did not require a lot of preparation;

• granting such an adjournment would be unfair to MPAC because it had taken all appropriate steps to attend the hearing in a full state of readiness;

• the only disclosure provided by the Appellant to date were letters dated October 11 2016, December 9, 2016 and December 2013 from the Appellant; and

• MPAC submitted that their disclosure had been submitted to the Appellant and to the Board in accordance with the Rules.

11Before granting an adjournment, the Board must apply Rule 84 of the Board’s Rules of Practice and Procedure (the “Rules”). Rule 84 requires the Board to consider:

(a) The interests of the parties in a full and fair proceeding;

(b) The impact of the adjournment on parties and other persons;

(c) The integrity of the Board’s process, including the Board’s ability to efficiently resolve all appeals filed with the Board within the current four year cycle;

(d) The circumstances giving rise to the need for an adjournment;

(e) The timeliness of the request for the adjournment;

(f) The position of the other parties;

(g) The public interest in the delivery of the Board’s services in a just, timely and cost effective manner; and

(h) Any practice directions issued by the Board.

12Owing to the limited scope of the appeals and the issues at hand, the Board finds that no consideration is needed of points (c), (g) and (h). Whether or not the adjournment is granted has little effect on these considerations.

13This adjournment request was submitted orally, at the hearing. It was therefore not made in a timely manner. The Appellant did not submit the illness referred to in his request was current or chronic in nature, only that it impacted his ability to prepare. On the point of preparation, the only disclosure submitted was correspondence dated nearly two years before the hearing. Any preparation necessary by the Appellant had been completed long ago.

14Both parties have an interest in a full, fair and timely hearing. There is nothing in the submissions to suggest a hearing meeting these criteria could not be held without an adjournment. The Appellant did not declare that he had an immediate need to be excused to attend to anything related to his reason for the adjournment.

15On balance, the Board finds that:

• The Appellant had ample opportunity to make the request earlier, giving MPAC time to respond and consult on alternative dates;

• The Appellant failed to demonstrate that a denial of the request would adversely impact his preparation for the proceeding or his participation on the date set; and

• The inconvenience to MPAC who was prepared for the hearing outweighs the Appellant’s request for more time.

16The request for adjournment is denied.

Motion to have the Assigned Member Recuse Himself

17The Appellant responded to the Board’s decision of the adjournment request by moving to have me recuse myself from the hearing. He submitted that he had appeared before me in the past and that I have not rendered un-biased and fair decisions in those cases. For this reason, he believed there was a reasonable apprehension of bias toward the Appellant in my hearing of this case. The Appellant was not specific regarding past decisions; he simply stated that he was unhappy with my decisions resulting from previous hearings on other properties.

18MPAC submitted that they had no such concern and were satisfied with my hearing the matter as scheduled.

19When considering a motion for recusal, a range of considerations must be made. First, I have to consider the submissions of the parties and weigh those submissions against the requirements of the Board to provide service to the public in a fair, timely, proportional and effective way, based on the evidence at the hearing.

20MPAC has no concern. The Appellant made no specific submission as to why he believes I would not conduct the hearing in accordance with the Board’s Rules.

21Rule 61 sets out the requirements of a party bringing a motion. This rule stipulates that such motions are to be made in writing. The purpose of the motion related to the member presiding. This could not have been known in advance of the date for the hearing, so the Board applied Rule 68, which provides for the making of a motion at the hearing. I heard the motion in accordance with Rule 68 and made my finding at the hearing.

22The Board takes such motions very seriously. Fairness is a cornerstone of effective delivery of justice in the administrative law environment. When parties raise an apprehension of bias, this has the potential of undermining the institutional fairness of the proceeding and in this case, of hearing a specific appeal. The Supreme Court of Canada has framed the question as follows:

what would an informed person, viewing the matter realistically and practically - and having thought the matter through - conclude. Would he think that it is more likely than not that [the decision-maker], whether consciously or unconsciously, would not decide fairly.” Committee for Justice and Liberty et al. v. National Energy Board et al., 1976 CanLII 2 (SCC).

23I need to determine from the submissions of the parties if an informed person would think it more likely than not that I would not decide fairly. Neither Party made submissions on this question. As the moving party, the Appellant submitted no evidence as to whether or not an informed person would think it more than likely that I would not decide fairly. I find that the answer therefore is “no”.

24Accordingly, I find that recusing myself would be unfair to MPAC and, without substantive submissions from the Appellant, I have no reason to do so.

25The motion for me to recuse myself from the proceeding is denied.

Motion to Exclude Documents

26In the spirit of the day, MPAC made a motion of its own. MPAC submitted that the Appellant did not provide proper disclosure for the hearing and that the disclosure made did not conform to the Board’s Rules, specifically the Schedule of Events that applies to every Residential, Farm and Managed Forest appeal.

27MPAC submitted that the three letters that form the documentary evidence of the Appellant were not submitted to the Board as disclosure and they were forwarded to the Board from MPAC as a courtesy to the Appellant. It also submitted that the documents were produced as part of the request for reconsideration process required by s. 39(1) of the Act and are not relevant to the appeal. For these reasons, MPAC sought to have the Appellant’s submission excluded from consideration in the Board’s deliberation of these appeals.

28The Appellant submitted that the information included in the letters was known to MPAC for some time (at least a year and a half prior to the hearing being scheduled) and in any case the assertions included were based on information from MPAC.

29Disclosure and following rules of disclosure are important parts of the hearing preparation stage of appeals. The Rules provide for a fair exchange of information among the parties; allowing the parties to mount an effective case while at the same time, reacting to the case of their adversary with sufficient time to do so.

30I agree with the Appellant. There is nothing new in the content of the documents he relies on for these appeals. The source of the data seems to be MPAC; only the interpretation of facts or data is that of the Appellant. The Appellant’s ensuing perspective is not complex and in any case the content of the letters was known to MPAC in 2016, well ahead of this proceeding. I also find that MPAC was aware of the disclosure issue in advance of the hearing and had the opportunity to make a written motion, in advance.

31The motion to exclude the documents submitted by the Appellant is dismissed. The documents are allowed.

Issue 1: What is the Current Value of the Subject Property?

MPAC’s Evidence

32MPAC’s report described the subject property as a farm property with 8.25 acres of field used for farming and 1.75 acres of residential land, including a garage and a storage building. None of this was contested by the Appellant.

33To arrive at the $292,000 value returned, MPAC used the cost approach for the value of the two buildings present, and added the value of the land based on the direct comparison approach. This approach compared the land values in other sales, and applied those findings to the subject property’s ten acres of land.

34The cost approach arrived at two separate values for the buildings on the property. The garage was valued at $26,769 and was derived from a calculation of such a structure newly built, and then depreciated by an amount to account for age. The storage building was valued the same way with a resulting value of $51,719.

35MPAC submitted that it used MPAC’s Automated Cost Approach, MPAC’s Agricultural Cost Guide and the Residential Cost Manual to determine the replacement cost – new value of the buildings before depreciation was applied. It also employed data from Hanscomb Limited, a recognized firm in providing cost data for a range of building types.

36MPAC applied its own ‘age / life tables’ to determine the appropriate depreciation to apply to the buildings. These tables provide market based depreciation factors for various building types and building ages.

37MPAC’s Cost Approach and analysis were not refuted by the Appellant.

38The valuation report listed five proposed properties that MPAC considered to be comparable to the subject property. These five farm properties sold between June 2012 and August 2016, for prices ranging from $550,000 to $1,585,000. The result of the comparison was a total land value of $214,088 or $21,409 per acre. MPAC based this land value on the median per acre assessed values from their five proposed comparable properties.

Appellant’s Evidence

39The Appellant testified that MPAC’s valuation was too high when compared to four sales of farm properties that had occurred recently. His disclosure included a December 2016 letter, showing the four sale values and the size of each property. By dividing the areas by their sale values, the Appellant determined an average per acre value of $15,818.

40The Appellant further testified that this average value per acre included the value of dwellings and other usable buildings on the four properties, noting that MPAC’s land value alone exceeded this average amount for land and buildings. He submitted that this indicated the value attributed to the subject property was too high as there is no dwelling on the property.

41The Appellant produced four proposed comparable properties of his own, all of which he said were inferior to the subject property. All of these properties include structures substantially older than those on the subject property.

42By using the average value per acre in his analysis, the Appellant arrived at a value of approximately $158,180. He submitted that his opinion of the subject property’s value of $180,000 is therefore reasonable.

Analysis

43The parties took two separate approaches to valuation in this appeal. MPAC used both the cost approach and the direct comparison approach to valuation. The Appellant used only the direct comparison approach.

44MPAC’s direct comparison approach used the sales of five properties to show what the value of the subject land should be. Its approach used the Time Adjusted Sale (“TAS”) values of these five properties to arrive at a market based, per acre land value.

45MPAC’s Cost Approach was used to determine a value of the buildings on the property. It determined the value of these improvements at approximately $78,000, and submitted that their value ought to be attributed to the Residential portion of the property since neither building was used for farm purposes.

46In addressing the dispute, three separate issues arose in determining the current value of the subject property:

• What is the value of the land?;

• What is the value of the buildings?; and

• What is the impact of an oil pipeline easement on the current value?

Land Value

47MPAC’s approach was to calculate the land value of the five sales in their sample by dividing the proportionate value of the land portion of the TAS price. The Board finds this approach to be reasonable in this case, where the building portion of the property value is determined separately. The reason for this approach according to MPAC was that the nature of the buildings was different among the comparable properties used and the subject property. Many of the comparable properties had residences attached, and to use the entire sale prices would have skewed the land value results by the disparity in building values on each property.

48However, once the TAS values were determined, MPAC chose to use the assessed value of the land portion of these properties to derive a median per acre land value. The Board finds this approach to be flawed as the determination of current value required is based on sales, not on assessment.

49The Board disregards MPAC’s Sales 1 and 4. These properties sold in 2012 and are not sufficiently reliable to determine the value of land as of the January 1, 2016 valuation day.

50Data is available to derive a per acre sale value of land. This approach requires the use of TAS sale price of each of MPAC’s Sales 2, 3 and 5. These three properties sold in 2014, 2015 and 2016 and are therefore the best three comparable properties in evidence for determining the current value, as their sales occurred within 18 months of the January 1, 2016 valuation day. In order to derive a reasonable land value for each of the three remaining comparable properties, the Board used the apportioned assessment for each to determine the proportion of the value allotted to land, based on sales. Table A summarizes this approach.

TABLE A

Property / Description	2016 Assessment	Assessment attributed to land / %	TAS Value	Portion of TAS Value attributed to land	TAS Value of land / acre
MPAC #2 – 21538 Burton Ave; 57 acres farmland	$1,075,000	$940,900 / 87.5%	$1,228,455	$1,075,212	$18,863
MPAC #3 – 14081 Eight Mile Road; 46.58 acres farmland	$1,409,000	$795,700 / 56.47%	$1,607,440	$907,764	$19,488
MPAC #5 – 13233 Medway Road; 46.40 acres farmland	$852,000	$708,200 / 83.12%	$1,150,379	$956,219	$20,608
Average value / Acre					$19,653

51When the average value per acre of farmland of the three suitable comparable properties is applied to the subject property of 10 acres, the result is $196,530.

52The Appellant relied on four sales of farm properties. His method of determining the current value of the subject property from these four sales was simplified. The sale prices, unadjusted, were simply dived by the acreage to come up with five per acre land values. The Appellant then multiplied the average by the acreage at the subject property to determine its current value. A summary of this approach appears in Table B.

TABLE B

Comparable Property	Sale Price	Acreage	Sale Price / Acre
13233 Medway Road	$700,000	54	$12,963
21900 Wonderland Road North	$812,500	56.53	$14,373
14081 Eight Mile Road	$900,000	52	$17,308
12218 Medway Road	$950,000	51	$18,627
Average price / acre			$15,818

53None of these sale values were adjusted for changes to value over time. The Appellant’s disclosure, originally produced in December 2013, show’s these sale values, but does not attribute sale dates to them. By the date of the document however, it is safe to assume the sales occurred prior to the date of the document. The Appellant confirmed that each of the sales had occurred ‘recently’.

54The Board prefers the approach taken by MPAC for two reasons. Firstly, MPAC uses TAS values to approximate values as of the statutory January 1 2016 valuation date, whereas the Appellant uses unadjusted sales from 2013 or earlier. Secondly, MPAC separated the land values from the building values. The Appellant considered overall sale values as being applicable to the subject property despite the presence of dwellings and other ‘usable’ buildings on the comparable property sales.

55MPAC most effectively addressed the impact of time on property values and the distinction between comparable properties and the subject property with respect to buildings and dwellings.

56The Board finds that the current value of the farmland portion of the property is 8.25 acres multiplied by the average time adjusted value of farmland per acre ($19,653) of the most comparable properties in evidence for a value of $162,137 ($162,100 rounded).

Residential Land and Buildings

57The Appellant relies on his four sales to indicate the value of all the features on the subject property, summarizing his case by applying the average value per acre of four sales that took place prior to 2013. This average of $15,818 applied to the 10 acres at the subject property results in a value of $158,180, including all land and buildings. In his submissions, the Appellant specifically stipulated that the market for such properties would suggest a total value of the subject property of $180,000.

58MPAC applied the cost approach to the buildings on the property to arrive at their value, owing to discrepancies among building components of the comparable properties in evidence and the subject property. Using this approach it arrived at a value for the buildings of $78,489. This total was made up of $ 26,769 for the 2,500 square foot garage and $51,719 for the 5,000 square foot storage building. The methods and results of this calculation were not refuted by the Appellant. The Appellant’s response was to only to confirm his belief that the correct current value was “approximately $180,000” or “$180,000 to $200,000” and that the value of the residential lands is included in the land values reflected by the sales of his four comparable properties. The Board finds MPAC’s approach to be reasonable and accepts its results.

59MPAC used the residential land value data from their five comparable sales to determine the land value of the 1.75 acres left over once the 8.25 acres attributable to farm land had been accounted for. By this method, MPAC arrived at a residential land value of $42,167, equivalent to $24,095 per acre.

60The Board prefers MPAC’s approach, as it was based on accepted methods of evaluation, and was based on the time adjusted sales of five properties in the area of the subject property. The total residential apportionment found by MPAC was $120,656. While the conceptual path to the residential land value is clear, MPAC provided no data to support the $24,095 per acre. The Board therefore prefers the value determined for the farmland value above to apply to the entire property. $19,653 x 1.75 = $34,393.

The Easement

61The Appellant testified that the southerly 50 feet of the subject property is subject to an easement in favour of an oil company that operates a pipeline in the vicinity. He submits that the presence of the easement devalues of the subject property because it affects its development potential.

62MPAC confirmed the existence of the easement and testified that during visual inspection, the land was being farmed right to the south limit. It was MPAC’s understanding that the easement restricts building locations and that normal farming operations over the easement are acceptable. MPAC submitted further that a building permit had been issued, after the January 1 2016 valuation day, indicating that contrary to the Appellant’s submission, there is no impact to development potential as a result of this easement. MPAC submitted finally that the highest and best use is farming, with a residence, and the facts support that the easement does not encumber this use.

63Without documentary evidence or specific testimony, the Appellant stood by his position. He did not offer an amount by which he believed the property’s current value should be reduced because of the presence of this easement.

64The Board is required, by s. 9 of the Act to consider the easement in terms of its value added to the dominant land, with a corresponding reduction in value from the servient tenement. In this case the dominant tenement was undefined. Neither Party submitted evidence of its nature, or the value that should be attributed to it. Therefore there is no evidence to support a reduction in value from the servient (subject) land.

65In summary, the Board finds the current value is:

• Land value - $196,530

• Building value - $78,489

• Total - $275,019 ($275,000, rounded)

66The Board further finds that this value is apportioned as follows:

• Farm Property Class: $162,100 (8.25 Acres)

• Residential Property Class: $112,900 (comprised of building value of $78,500 and 1.75 acres land value of $34,400, both rounded)

Issue 2: Should the Current Value Determined be Reduced for the Purpose of Equitable Assessment, when the Assessments of Similar Properties in the Vicinity are Considered?

67The Appellant did not submit any documentary evidence or testimony with respect to whether or not the current value of the subject property reflected an equitable assessment.

68MPAC submitted an equity study that compared the assessments of 30 properties to their sale prices. These 30 properties according to MPAC are all in the vicinity of the subject property (in Middlesex County) and were sold as farm land. According to MPAC the study indicates that similar properties in the vicinity of the subject property are assessed at approximately 103% of their time adjusted sale value (or, current value); indicating that no downward adjustment to the current value of the subject property is necessary for it to reflect an equitable assessment.

69The Appellant did not refute MPAC’s findings.

70The Board finds that there is no evidence to suggest a reduction in the current value is necessary for it to reflect equitable assessment.

DECISION

71The Board finds the current value of the subject property is $275,000 for the 2017 and 2018 taxation years. The Board also finds that there is no evidence to indicate a reduction in this value is necessary for the purposes of equitable assessment.

72Therefore, the Board finds that the assessment of 21497 Wonderland Road North is reduced, from $292,000 to $275,000 for the 2017 and 2018 taxation years, apportioned as follows:

• Residential Property Class: $112,900

• Farm Property Class: $162,100