F.E.J.B. and M.B. v. City of Mississauga, 2019 CanLII 59502

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

June 25, 2019

FILE NO.:

RD 2019M18

Assessed Person(s):

F.E.J.B. and M.B.

Appellant(s):

F.E.J.B. and M.B.

Respondent(s):

City of Mississauga

Property Location(s):

Withheld

Municipality:

City of Mississauga

Roll Number(s):

Withheld

Appeal Number(s):

3319165

Taxation Year(s):

2017

Hearing Event No.:

703672

Legislative Authority:

Section 357(1)(d.1) of the Municipal Act, 2001, S.O. 2001, c.25.

Request for:

A review of the Board’s Decision WR 155899 issued on October 12, 2018

Heard:

November 2, 2018 by written submission

Parties

Representative

Submissions

F.E.J.B. and M.B.

Self-represented

Requester

City of Mississauga

Sean Doyle

Received

DECISION DELIVERED BY PAUL MULDOON AND ORDER OF THE BOARD

INTRODUCTION

1F.E.J.B. (“Requester”) seeks a review of the decision of the Assessment Review Board (“Board”) with respect to F.E.J.B. v. Mississauga (City), 2018 CanLII 96173 (ON ARB) (“Decision”) which denied an application for tax relief due to sickness and extreme poverty.

2The background to this Request for Review is as follows. The Requester is the sole owner of a custom-built large detached home with four-bedrooms, four bathrooms, a finished basement, and garage (“Subject Property”). The Requester became the sole occupant of the Subject Property when her mother passed away in November 2016.

3The Subject Property was constructed at the discretion of the Requester and her late mother between 2009 and 2012 on a lot that was previously occupied by a smaller house built in 1942. This 1942 dwelling was occupied by the Requester and her mother before they had it demolished in 2009 in order to build the Subject Property.

4The Subject Property was assessed at a current value of $1,362,000 resulting in $10,810 owed for property taxes for the 2017 taxation year. Around the time of assessment, the Requester owed a substantial amount of property tax arrears for the Subject Property for the 2012 to 2016 taxation years. In total, the Requester had over $79,574.46 ($79,600 rounded) of outstanding taxes owed for the 2012 to 2017 taxation years, including interest and penalties. The City of Mississauga (“City”) registered the arrears for collection, and the Requester’s bank subsequently drew from her existing line of credit to pay outstanding property taxes to the City. The bank then requested the immediate repayment of $79,600 from the Requester.

5The Requester filed an application with the City seeking to have the 2017 property taxes refunded pursuant to s. 375(1)(d.1) of the Municipal Act, 2001, S.O. 2001, c. 25 (“Act”), which reads:

Cancellation, reduction, refund of taxes

357 (1) Upon application to the treasurer of a local municipality made in accordance with this section, the local municipality 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,

(d.1) the applicant is unable to pay taxes because of sickness or extreme poverty;

6Under this provision, an applicant may request the cancellation, reduction, or refund of all or part of the municipal taxes levied on the property for the year in which the application is made where an applicant is unable to pay all or part of their property taxes due to sickness or extreme poverty.

7The Requester’s application was heard on September 19, 2018. The Requester and the City both had the opportunity to make submissions to the Board. After hearing the evidence, the Presiding Member held that the Requester met the threshold for sickness; however she did not meet the threshold for extreme poverty and was able to pay her 2017 property taxes notwithstanding being sick.

8The Requester argues that the Presiding Member made significant errors of fact such that the Board would have likely reached a different conclusion and asks that the Board cancel its Decision and grant the refund of the taxes paid for the Subject Property for 2017 taxation year, equaling $10,810. The Board requested response submissions from the City and reply submissions from the Requester.

9For the following reasons, the Request for Review is denied.

RELEVANT RULES

10The Board’s Rules of Practice and Procedure (the “Rules”):

Request for Review

120. A party may request a review of any final decision of the Board, other than a decision pursuant to Rule 122, by filing a request in writing no more than 30 days after the decision was issued, including:

(a) a copy of the decision to be reviewed;

(b) the written reasons for the decision, as set out in Rule 112;

(c) the reasons for the request, addressing the factors set out in Rule 121;

(d) notice of any appeals or applications for judicial review that have been filed in relation to the decision;

(e) proof of service on all other parties to the proceeding;

(f) the remedy or relief sought; and

(g) the fee specified by the Board.

Grounds for Review

121. A request for review will not be granted unless the Board is satisfied that:

(a) the Board acted outside its jurisdiction or violated the rules of natural justice or procedural fairness;

(b) the Board made a significant error of law or fact such that the Board would likely have reached a different decision;

(c) the Board heard false or misleading evidence from a party or witness, which was discovered only after the hearing and would have affected the result;

(d) there is new evidence that could not have reasonably been obtained earlier and would have affected the result; or

(e) any of the situations in Rule 122 exist.

Review Order

123. Upon consideration of a request for review, or on its own initiative, the Board may:

(a) dismiss the request;

(b) reinstate the appeal, with or without conditions; or

(c) after providing all parties an opportunity to make submissions,

i. confirm, vary, or cancel the decision,

ii. order a rehearing on all or part of the matter, or

iii. order a motion to decide the review.

ISSUES

11The Requester relies on Rule 121(b). The Requester submits that the Board made several errors of fact, and had these errors not been made, the Board would have likely found that she did not have the ability to pay the taxes levied on the Subject Property for the 2017 taxation year.

12Although not submitted as a ground for review, the Requester’s submissions present concerns with respect to her opportunity to be heard and respond to comments made about her discretionary spending and potential financial resources. The Board will therefore include Rule 121(a) in its analysis and consider whether the Board violated the principles of natural justice in the proceeding.

DISCUSSION, ANALYSIS AND FINDINGS

Requester’s Submissions

13The Requester first submits that the Presiding Member erred in their understanding of the timeline of events, stressing that her property taxes were collected from her line of credit in 2018, not in 2017. The Requester suggests that the Board was required to find that she had an ability to pay her taxes in the same year for which the application is made.

14Second, the Requester submits the Presiding Member erred by not adequately considering that she was required to pay a lump sum of $79,600 and that no partial payments would be accepted. In other words, the Decision should have assessed her ability to pay the full amount owed ($79,600), rather than her ability to pay $10,810 levied for the 2017 taxation year. The Requester provides a letter from the City setting out no partial payments would be accepted once the Tax Arrears Certificate is registered against the Subject Property.

15Third, the Requester contends that the taxes levied for the 2012 and 2013 taxation years were initially paid; however, the taxes were based on the assessment of the former dwelling that occupied the lot. The assessments were subsequently amended to reflect the newly constructed Subject Property, which resulted in additional taxes owed for the 2012 and 2013 taxation years. The Requester submits she was unaware that there were outstanding taxes on the Subject Property for the 2012 and 2013 taxation years until November 2016.

16The remaining errors alleged relate to the Presiding Member’s analysis and commentary related to the Requester’s discretionary expenses and financial resources. Namely, the Requester argues the Board erred in the Decision by:

• Attempting to substantiate her ability to pay her 2017 tax by calculating her net worth at $925,435.70, and finding that the property was “free and clear” of a mortgage when it was not;
• Commenting on her pet care expenses and not providing her with an opportunity to respond;
• Assuming that she could rent out some of the space in the Subject Property to earn additional income;
• Inquiring if she was ever married; and,
• Assuming that the terms of a reverse mortgage would be conducive to her current situation and future welfare.

17These errors are echoed in the Requester’s reply submissions.

City’s Submissions

18The City’s representative, Sean Doyle, made brief submissions that the Requester has not met the threshold for review under Rule 121(b). The City submits that there is considerable equity in the Subject Property regardless of whether the property is “mortgage free” and therefore it is not an error of fact that would have likely altered the outcome. The City further submits that the Requester ignored the income generating opportunity of taking on tenants; however, he neglected to respond to the Requester’s claim that the City informed her she is not permitted to have tenants. Finally, the City argues that the Requester brought up new information in her Request for Review that was not presented at the hearing. Since the information suggests it was available at the time of the hearing, Mr. Doyle submits it should not be considered upon Review.

Analysis and Findings

19With respect to the first two errors submitted by the Requester, the Board is not satisfied the Requester identified a significant error in fact or law. The Decision reflects that the Presiding Member was award of the timeline of events and the requirement that the tax arrears be paid in full. At paragraph 11 of the Decision, the Board acknowledged that the Requester owed approximately $79,600 in property tax arrears, including penalties and interest, and acknowledges that the full amount was collected from the Requester's existing line of credit in full in 2018.

20With respect to the third error listed, the Board does not find that the reason for the 2012 to 2013 tax arrears does not amount to a significant error or law, nor would it likely have altered the outcome of the Decision. The reason for the taxes owed for the 2012 and 2013 taxation years were not pertinent to the outcome of the Decision and the Board was not required to provide further explanation as to why there were outstanding property taxes for those years in particular.

21The alleged errors relating to the Decision’s analysis of the Requester’s discretionary spending and ability to pay does not meet the threshold for review for reasons explained below. However, before addressing the Requester’s submissions on these issues, the Board finds it is necessary to clarify the test for relief under s. 357(1)(d.1) of the Act.

Clarifying the Test under s. 357(1)(d.1) of the Municipal Act—The Two Stage Analysis of “Inability to Pay” and whether the Inability is due to “Sickness” or “Extreme Poverty”

22The Decision applied the following test to analyze whether relief should be granted, (i) whether sickness or extreme poverty exists, and if so, (ii) whether there is an inability to pay all or part of the property taxes levied for the year in which the application is made. This framework for relief is applied in a number of decisions of the Board, and although it is not incorrect, there are weaknesses in framing the test this way. Namely, pursuant to s. 357(1)(d.1) of the Act, an inability to pay property taxes must be due to sickness or extreme poverty. However, the test as applied does not explicitly set out that there must be a causal connection between the sickness or extreme poverty and the applicant’s ability to pay.

23As such, the Board finds that the framework for analysis should be adjusted as follows. If the Board finds there is an ability to pay, the application fails and there is no need to consider the second branch of analysis. However, if the applicant is able to demonstrate an inability to pay part or all of their property taxes, the Board must then determine whether this inability to pay was due to extreme poverty or sickness.

24A second point worth clarifying is the distinction between “extreme poverty” and an ability to pay. While the Board understands that an inability to pay will often overlap with considerations of “extreme poverty”, the terms are distinctly set out by the Legislature in the provision and should not be interpreted as having the same or an interchangeable threshold. Going forward, the framework sets out that the Board should make a distinct finding on the applicant’s ability to pay before turning to the second branch of the test, that is, whether this inability to pay is due to sickness or extreme poverty.

Analysis—whether the principles of natural justice were violated and whether the Decision significantly erred in its assessment of the Requester’s ability to pay

25Returning to the analysis of the Request for Review, while the Board agrees the Decision could have explored the circumstances of the Requester’s situation more fully, the Board is not satisfied the Presiding Member violated the principles of natural justice. Discretionary spending and potential financial resources are necessary considerations of Board in weighing applications for tax relief and the Requester had the opportunity to make both oral and written submissions speaking to these issues. Further, questions about marital status are related to understanding the finances of the applicant. In any event, the Board has taken full contemplation of the Requester’s submissions in this Request for Review in an effort to cure concerns relating to natural justice.

26The Board accepts the Requester’s submissions on the necessity of certain discretionary expenses and the viability of financial resources. Namely, the Board accepts that the Requester provided reasonable explanations for the pet care expenses, and may not have realistically been able to rent out part of the Subject Property or access the available equity in the Subject Property. However, the Board is not satisfied that the issues raised by the Requester amount to significant errors that would have likely altered the outcome of the Decision with respect to the Requester’s ability to pay.

27In M. M. U. v Toronto (City), 2015 CanLII 46826 (ON ARB) (“M.M.U.”), the Board held that an applicant seeking relief from property taxes on compassionate grounds required to show that, “every reasonable effort has been made to pay all or part of the taxes” and that the Applicant’s use of available funds “demonstrated sufficient sensitivity to managing his household expenses in order to avoid falling short on his property tax obligation.”

28The Requester largely relies on the existence of unpaid property taxes, amounting to over $79,600 in arrears, as the main factor impeding her ability to pay. The Requester does not provide reasons as to why the taxes were not paid during 2014 to 2016 taxation years, nor why she failed to follow up on the amended assessment of the Subject Property for the 2012 and 2013 years. The payment of property taxes remains one of the foremost obligations of all home owners contemplated under the Act, and the forced collection of unpaid taxes from previous years is not a valid reason to be entitled for tax relief, nor is it consistent with the criteria set out in M.M.U.

29Even if the Board were to find the arrears and debts incurred met the threshold of not having the ability to pay their 2017 property taxes, the Board is not satisfied this likely would have altered the outcome of the Decision since the inability to pay alone is not sufficient. As explained above, where the Board finds an inability to pay exists, the Applicant is then required to demonstrate this inability to pay was due to either sickness or extreme poverty. The Requester submitted that she was unable to pay her 2017 taxes largely because of significant debt accrued in the process of building the Subject Property, as well as the existence of $79,600 in property tax arrears. The Board finds that the Requester has not established in the evidence submitted that these debts or the inability to pay are attributable to the Requester’s medical leave that commenced in July 2017. Therefore, even though the Decision contains a finding of sickness, the Board is not satisfied that the Requester established that this sickness is the reason for the Requester’s inability to pay her 2017 taxes.

30The Board also finds that the Requester’s circumstances do not amount to a level of “extreme poverty”. In E.D. v. City of Toronto, WR 128986 (unreported) the Board interpreted “extreme poverty” as having no resources available “to provide for the basic necessities of living”. While the Board recognized the Requester has a significant amount of debt, the Requester did not demonstrate that she is unable to afford the basic necessities of life which is a required criteria for establishing extreme poverty. As such, the Board is unable to find that any inability to pay is due to extreme poverty.

31For the reasons set out above, the Board is not satisfied the Decision significantly erred such that the Board would have likely reached a different decision. The Board also finds that the principles of natural justice were not violated in this proceeding.

ORDER

32The Request for Review is denied.