Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: April 01, 2019

FILE NO.: 158098

Assessed Person(s): T. I.

Appellant(s): T. I.

Respondent(s): City of Toronto

Property Location(s): Address Withheld

Municipality(ies): City of Toronto

Roll Number(s): Roll Number Withheld

Appeal Number(s): 3323459

Taxation Year(s): 2017

Hearing Event No.: 708569

Legislative Authority: Section 323.(1)(e) of the City of Toronto Act, 2006, S.O. 2006, c. 11, Sched. A, as amended

Heard: December 18, 2018 in Toronto, Ontario

APPEARANCES:

Parties

Counsel⁺/Representative

T. I.

Self-represented

City of Toronto

Jared Wehrle⁺ and Luis Verastegui

DECISION OF THE BOARD DELIVERED BY MARLENE CASHIN AND JEAN-PAUL PILON

INTRODUCTION

1This matter involves an application to the Assessment Review Board (“Board”) to cancel, reduce or refund, all or part of the taxes levied on the subject property identified above, for the taxation year 2017, pursuant to s. 323.(1)(e) of the City of Toronto Act, 2006, S.O. 2006, c. 11, Sched. A (“Act”).

2T. I. (“Applicant”) represented himself at the hearing of the matter. He provided relevant medical and financial information, answered questions put to him by the Respondent and the Board, and made submissions.

3Jared Wehrle, Counsel, appeared on behalf of the City of Toronto (“City”) to contest the application. Luis Verastegui, a Revenue Analyst with the City, appeared as a witness for the City.

ISSUE

4The issue before the Board is whether the Board should cancel, reduce, or refund all or part of the taxes levied on the subject property for the taxation year 2017, because the Applicant was unable to pay taxes due to sickness or extreme poverty.

DECISION

5Based on all the evidence before it, the Board finds that the Applicant was unable to pay his taxes because of sickness or extreme poverty as contemplated by the Act. A refund of the full amount of taxes owing for the taxation year 2017 is granted.

Discussion, Analysis and Findings

6Section 323.(1)(e) of the Act states as follows:

323 (1) Upon application to the city treasurer made in accordance with this section, the City may cancel, reduce or refund all or part of taxes levied on land in the year in respect of which the application is made if,

(e) the applicant is unable to pay taxes because of sickness or extreme poverty;

7The test under this section of the Act refers to whether an applicant is unable to pay his or her property taxes because of “sickness” or “extreme poverty.” If it is found that there is an inability to pay some or all of the property taxes, the applicant must then demonstrate that the inability to pay is because of either sickness or extreme poverty.

Evidence

8When asked by the Board Members if he was making the claim that he was unable to pay his taxes because he was sick or because he was in extreme poverty, the Applicant replied that his sickness has caused him to not be able to work and that being unable to work has caused him to live in a situation of extreme poverty. The Board heard evidence related to both sickness and to extreme poverty during the hearing. The Applicant was first asked to outline his income and expenses, and then his assets and liabilities, for the 2017 taxation year in his testimony.

9The Applicant provided evidence that he is currently supporting himself with basic needs and shelter payments from the Ontario Disability Support Program (“ODSP”) as a result of his illnesses. He has been receiving ODSP benefits since 2016. A medical report from his doctor confirms that he has Panic Disorder, Major Depressive Disorder, Persistent Depressive Disorder, and Insomnia (the Insomnia is yet to be fully diagnosed, as Sleep Apnea has not been ruled out). He is on several medications, and at the time of the medical report, was participating in a Day Hospital Psychiatric Program daily for three weeks.

10The Applicant testified that before the onset of his illness he worked as a Chef at a hotel. He stated that his illness began in 2012, and he last worked in 2013. He testified that he was hospitalized for approximately one year at that time. Under cross-examination by Mr. Wehrle, the Applicant testified that a case that he had initiated with the Human Rights Tribunal in 2012 resulted in no payment to him as he abandoned the case and did not attend the hearing due to his illness.

11The evidence before the Board on the Applicant’s monthly income of $1,151 was uncontested. Similarly, the parties agreed on the Applicant’s approximate monthly expenses of $1,168, which included payment in full of the Applicant’s property taxes on the subject property for 2017 in the amount of $2,325 The evidence showed that the Applicant’s total monthly income less his total estimated monthly expenses resulted in a net total of -$17 per month.

12Regarding the Applicant’s assets and liabilities, the Board was provided with evidence relating to a Chequing Account showing an amount of $1,151 dollars credited to the account each month from ODSP, and withdrawal of virtually the same amount in total each month for: credit card charges; a $400 loan payment to the Applicant’s brother; pre-authorized debit payments to Toronto Hydro and Enbridge; and a $200 cash withdrawal to pay $100 in child support and cover miscellaneous expenses. In other words, after deducting these monthly liabilities and expenses from the Applicant’s monthly income, the Applicant is left with essentially no net income.

13The Applicant provided an RRSP savings account statement for 2017, which shows no deposits or withdrawals for the year, and a closing balance of $0.01. The Applicant testified that the RRSP funds were withdrawn when he bought his house, and there have been no funds in the account since that time. The $0.01 is kept in the account to keep it open. The Applicant also provided a 2017 bank Asset Summary showing ownership of 2,500 shares, which he bought for approximately $4,000 in 2001. The Asset Summary shows that the shares now have a market value of $0.20.

14The only other asset owned by the Applicant is a house (taxes for which are the subject of this application). The subject property is a single-family, one-storey detached house built in 1945. It has three bedrooms, two bathrooms, and a total area of 924 square feet. The Applicant lives in the house. His daughter also lives in the home on a non-full time, but regular, basis since her parents’ divorce in 2004 or 2005.

15The City submitted evidence that the assessed value of the subject property in 2017 was $429,000. The City submitted however, that for determining the Applicant’s assets and equity in the property, the Board should use a market value amount, and it provided evidence regarding market value.

16The Applicant disagreed with using a market value amount, and submitted pictures showing his leaking ceiling and roof. The City did not contest the evidence about the leaking ceiling and roof. He testified that in addition to the leaks, the fact that the house contains Urea Formaldehyde Foam Insulation (“UFFI”), would probably cause the market value of the house to be much reduced. However, the Applicant did not propose an alternate amount at which the property should be valued, nor did he provide any other evidence in this regard.

17The Board sees no reason to depart from its usual practice in these types of applications; using MPAC’s assessed value of the property. Based on the evidence, the Board finds that the total value of the Applicant’s assets (disregarding the negligible amounts related to the chequing account, RRSP account, and shares Asset Summary) is $429,000.

18Regarding the Applicant’s liabilities, the agreed evidence is that there is no mortgage on the subject property, but that the Applicant owes an amount of approximately $154,800 to his brother, who loaned him $200,000 to pay off the mortgage in 2008, when the Applicant was facing foreclosure on the property. Since that time, the Applicant has been paying his brother $400 monthly, with the exception of a period in 2012-2013 when the Applicant was hospitalized. The Applicant provided a declaration document that he prepared himself and had commissioned in 2008 at his brother’s request, setting out his understanding of the loan agreement with his brother. The declaration addresses conditions of the loan agreement between the brothers, including repayment terms that would come into effect: upon the sale of the Applicant’s house, his death, and/or failure to repay the monthly amount for more than three consecutive months.

19Although there is a credit card, the uncontested evidence is that the card is used to buy groceries and building supplies monthly, and that the Applicant rarely carries a balance from month to month. The building supplies are related to leaks in the roof of the house, which the Applicant says he has to repair frequently, as there is UFFI in the ceiling of the house and it is dangerous to human health. The Board observes that the credit card amounts related to groceries are extremely low for any one-month period, and accepts that those related to building supplies were necessary and not frivolous expenditures.

20Having found that the Applicant’s assets in 2017 totaled approximately $429,000 (house), and his liabilities totaled approximately $154,800 (loan payable to brother), the Board finds that the Applicant was left with a net total of $274, 200 in assets, solely in the form of equity in the Applicant’s property. As found in paragraph 11, the Applicant has no net income.

Submissions

21The City took no position on whether or not “sickness” exists in this case. The City submits that although it is sympathetic to the Applicant’s situation, he has not proven an inability to pay his taxes in 2017. The City reminds the Board that “this is not a social benefits program”, and further submits that the Applicant could have leveraged his equity in his property to enable him to pay the taxes, through such actions as borrowing the money or renting out rooms in his house. As an alternate submission, the City says that the Applicant’s brother has an interest in the property as a result of the loan agreement between the Applicant and his brother, and that the brother is also responsible for paying the property taxes. The City asks that the application be dismissed.

22The Applicant says that he has done everything that he can to try to manage his debts and living expenses. He notes that he has no house insurance and cannot afford much-needed permanent repairs to the roof of his house. He submits that although he approached one bank for a mortgage loan but was denied, he understands that no bank wants to provide a mortgage to a person who is not working and is receiving ODSP benefits. He added that he has tried to get a reverse mortgage, as suggested by the City, but was told that he must be 55 years of age to get that type of mortgage, and as he is only 50 years old, he does not qualify. The City did not challenge this evidence from the Applicant. The Applicant submits that his sickness is “not a luxury or a choice for me”. Rather, he says, he has done exactly what he thinks he should have done when he prioritized paying his taxes and paying his other bills and depriving himself of basic life necessities in order to do so. He submits that he is proud of his house and has done everything he can to maintain it. Regarding his brother, and the City’s suggestion that his brother has a legal interest in the subject property and should be asked to pay the taxes, the Applicant says that he and his brother lead separate lives and his brother is not aware of this application. He said that having to ask for a loan from his brother to save his house “added to my agony”, and asked, “[w]ho would give me a loan to pay taxes?”

23The Applicant submits that had he not paid his property taxes he would have been able to consider paying for home insurance, a telephone, internet service, and the home roof repairs that are very badly needed. He says that he paid his taxes because if he did not, he would not be able to apply for other tax relief from the City such as from the Tax Increase Cancellation Program, and that he was taking every step he could to reduce his tax debt. He requests a full refund of his taxes paid.

Findings

24The Board notes that many applicants in this type of appeal are both sick and living in extreme poverty despite the wording of the Act, which says a person may be unable to pay his or her taxes because of sickness or extreme poverty. Based on the credible, persuasive and uncontested evidence provided by the Applicant in this case, the Board finds that the Applicant is sick, and was sick during the taxation year 2017. Based on the evidence, the financial situation of the Applicant also supports a finding that the Applicant lived in “extreme poverty” in 2017.

25For the reasons provided below, the Board finds that upon applying a contextual analysis, the Applicant was unable to pay his 2017 property taxes, notwithstanding the fact that he did, in fact, pay his 2017 property taxes.

26The Board notes that s. 323 of the Act specifically provides for the refund of taxes if the Applicant was unable to pay his taxes because of sickness or extreme poverty. This means that the payment of taxes does not preclude the Applicant from receiving relief under the Act as long as the Applicant is otherwise entitled to the relief.

27The Board has found that the Applicant has no net income, and accepts the Applicant’s evidence that he is not able to draw upon the equity in his house, which is effectively his sole asset. The Applicant paid his taxes, was up to date on loan payments to his brother and his child support payments, but spent little on food, and virtually nothing on clothing or any of the other necessities of life. The Board notes that minimal roof repairs to maintain a basic safe living environment could also be found to be a basic necessity. The Board notes that the Applicant does not have insurance on his home, and does not have a home phone, internet service, or cell phone service. These are reasonable basic living expenditures for a homeowner, in particular one with a child living in his home on a non-full time, but regular basis.

28The Board does not accept the City’s submission that the Applicant’s brother has any interest in the property as a result of the loan agreement between them, or that the Applicant’s brother has any responsibility to pay the Applicant’s property taxes. Instead, the Board finds that the Applicant is the only adult living at the subject property, the only person on title to the subject property, and there are no liens or other encumbrances registered against the property by the Applicant’s brother or any other person or organization. The Board finds that the Applicant was the sole person responsible for paying the 2017 taxes of the subject property.

29The question before the Board was whether taxes should be refunded, not whether they should be cancelled or reduced. With this in mind, the City argued the Board should consider whether the Applicant was able to provide for the basic necessities of life after paying his taxes in deciding whether or not to grant a refund. The Board agrees that this is an appropriate way to approach the question of inability to pay taxes, where taxes have already been paid. If the Board finds in a case, that having paid his or her taxes, an applicant was left unable to pay for the basic necessities of living, a finding that an applicant was unable to pay taxes is a reasonable one where there is no inappropriate discretionary spending.

30The Board finds that there was no discretionary spending by the Applicant. In fact, the Board finds that despite the Applicant’s very frugal and conscientious spending, the Applicant was unable to provide for the basic necessities of living after he paid his property taxes. The Board finds that the Applicant was therefore unable to pay his 2017 property taxes, and that this inability to pay was due to sickness and extreme poverty.

CONCLUSION

31The issue before the Board in this case is whether the Applicant should be refunded property taxes for the 2017 taxation year because of an inability to pay resulting from sickness or extreme poverty.

32Taxes were paid for the 2017 taxation year. However, for the reasons outlined above, the Board finds that the Applicant was, in fact, unable to pay those taxes because he prioritized their payment over basic necessities of life. The Board also finds that the evidence supports the Applicant’s position that this inability to pay taxes was because of sickness and extreme poverty on a balance of probabilities.

33In conclusion, having made the findings set out above, the Board makes an order refunding the Applicant property taxes for the year 2017 in the amount of $2,325. The application is granted.