Bela Acres Holding Inc. v. City of Toronto, 2019 CanLII 64631

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

July 10, 2019

FILE NO.:

RD 2019M19

Assessed Person(s):

Bela Acres Holding Inc.

Appellant(s):

Bela Acres Holding Inc.

Respondent(s):

City of Toronto

Property Location(s):

61 Hoyle Avenue

Municipality(ies):

City of Toronto

Roll Number(s):

1904-103-770-02600-0000

Appeal Number(s):

3274356

Taxation Year(s):

2017

Legislative Authority:

Rule 120 of the Assessment Review Board Rules of Practice and Procedure

Request for:

A review of the Board’s Decision DM 155293, issued on December 17, 2018

Heard:

In writing

Parties

Counsel^+^/Representative

Submissions

City of Toronto

Jennifer Boyczuk^+^

Requester

Bela Acres Holding Inc.

John Ciccone

Received

DECISION DELIVERED BY PAUL MULDOON AND ORDER OF THE BOARD

INTRODUCTION

1The City of Toronto (“City”) filed a written Request for Review with the Assessment Review Board (“Board”) respecting the Decision of Vice-Chair Scott McAnsh issued on December 17, 2018, DM 155293 (“Decision”). This Request for Review was filed with the Board on January 7, 2019. The City also filed for leave to appeal of this Decision from the Divisional Court pursuant to s. 43.1 of the Assessment Act R.S.O. 1990, c. 31.

2The Decision concerns a motion brought by the City requesting that the Board dismiss an application brought pursuant to s. 323(1)(e) of the City of Toronto Act, 2001, S.O. 2006, c. 11 (“Act”). Under s. 323(1)(e) of the Act, 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:

Cancellation, reduction, refund of taxes

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;

3The background to this Request for Review is as follows. Bela Acres Holding Inc. (“Bela Acres”) was the registered owner of 61 Hoyle Avenue (“Subject Property”) from 2003 until June 25, 2018. The Subject Property is classified in the commercial tax class and was purchased to be used as a music studio, with the commercial activity being carried on by a different company Absolute Productions Inc. John Ciccone is the sole owner and Director of both Bela Acres and Absolute Productions Inc. On October 20, 2017, Mr. Ciccone filed an application under s. 323(1)(e) on behalf of Bela Acres requesting relief from property taxes for the 2017 year due to sickness or extreme poverty.

4In response to the application, the City brought a motion requesting the Board dismiss the application on the basis that a corporation cannot claim relief under s. 323(1)(e) of the Act, since a corporation cannot experience sickness or extreme poverty.

5Mr. Ciccone argued that the City’s motion was overly technical, and that the Board should not consider whether a corporation is entitled to relief, rather, the Board should consider him as the applicant seeking relief since he has sufficient interest in the property under s. 323(2). It is unclear why Mr. Ciccone did not bring the application himself rather than on behalf of his corporation, Bela Acres.

6The Decision undertook a statutory interpretation of s. 323(1)(e) and 323(2) of the Act, which largely focused on two qualifying terms of the Act; the use of “person” in s. 323(2); and “extreme poverty” in s. 323(1)(e). The analysis concluded that there was nothing in the Act to indicate that the Legislature intended to exclude corporations from applying for tax relief under s. 323(1)(e) of the Legislation Act, 2006, S.O. 2006, c. 21 Sch. F (“Legislation Act, 2006”), which defines a corporation as a “person”. Further, while a corporation cannot be sick it is possible for a corporation to experience “extreme poverty”. The Decision therefore denied the City’s motion seeking to dismiss Bela Acres’ application.

7In this Request for Review, the City requests that the Board cancel its Decision and grant the City’s motion to dismiss Bela Acres’ application on the basis that Bela Acres, as a corporation, is not entitled to relief under s. 323(1)(e) of the Act.

8In addition to the materials submitted by the City in this Request for Review, the Board invited and received response submissions from Bela Acres’ representative, Mr. Ciccone. The Board also allowed for reply submissions from the City if necessary, although none were received.

9After reviewing the submissions of the parties, the City’s Request for Review is granted and Bela Acres’ application under s. 323(1)(e) is dismissed.

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 first issue to be determined is whether the Decision is sufficiently final to warrant a Review as required under Rule 120.

12The City relies on Rule 121(b) in its Request; therefore, the second issue to be determined is whether the Decision made a significant error of law or fact such that the Board would likely have reached a different decision.

DISCUSSION, ANALYSIS AND FINDINGS

Issue No. 1 – Whether the Decision is Final

13The City argues the Decision is final since it determined a substantive right of a party, namely, that Bela Acres as a corporation is entitled to bring an application for tax relief under s. 323(1)(e) of the Act. Further, once determined, Bela Acres will proceed as the applicant and the issues raised in the Decision cannot be revisited by the City at the hearing of the application. The City relies on the Divisional Court’s reasons in Roosma v. Ford Motor Co. of Canada Ltd., 1988 CanLII 5633 (ON HCJDC), [1988] O.J. No. 3114 (at para. 35); and, Ontario Human Rights Commission v Ontario Teachers' Federation, 1994 CanLII 10578 (ON CTGD), [1994] OJ No 1585, 19 OR (3d) 371, 73 OAC 383, 28 Admin LR (2d) 28, 94 CLLC para.17,031 at 16355 , 49 ACWS (3d) 548, 1994 CarswellOnt 1023 (at para. 9) (“Tomen”). In Tomen, the Divisional Court concluded:

[A] decision will be considered final where that decision has the effect of finally determining the real matter in dispute between the parties, or a central issue raised between the parties.

14Mr. Ciccone’s submissions made on behalf of Bela Acres did not speak to the issue of the finality of the Decision.

15The Board finds that this Decision is sufficiently final to warrant a review as contemplated under Rule 120. This finding is consistent with the threshold for finality set out in the common law since the Decision determined a central issue that may be determinative of the proceedings.

Issue No. 2 – Whether the Decision made a significant error or errors of law or fact such that the Board would likely have reached a different decision.

16To meet the threshold for review under Rule 121(b), the Requester must satisfy the Board that: (i) the Board made a significant error of fact or law; and, (ii) had the error not been made, the Board likely would have reached a different decision.

The City’s Submissions

17The City argues the Decision made two overarching errors of law, which, had they not been made, the Board would have likely granted the City’s motion. First, the City submits the Board erred in its application of the modern principles of statutory interpretation in its interpretation of s. 323(1)(e) and s. 323(2) of the Act. Second, the City submits the Board erred by departing from its past findings that a corporation is not entitled to apply for relief due to sickness or extreme poverty without providing sufficient reasons. The submissions are summarized in greater detail in the paragraphs that follow.

18The City submits that the Board failed to read the words of s. 323(1)(e) of the Act in their ordinary sense. Specifically, the Board’s interpretation of “poverty” at para. 17 of the Decision provides no identifiable source and is inconsistent with the ordinary and grammatical sense of the word. To support this submission, the City relies on the definition of the word “poverty” provided by Black’s Law Dictionary (10^th^ ed. 2014):

1. The condition of being indigent, the scarcity of the means of subsistence

2. Dearth of something desirable.

3. A level of income below the threshold considered necessary to achieve a sufficient standard of living.

19The City further submits the Board erred by failing to consider the words of s. 323(1)(e) of the Act in their entire context. Relying on a previous decision of the Board, A.M. v Toronto (City), 2016 CanLII 42756 (ON ARB), the City submits that s. 323(1)(e) of the Act is consistently interpreted by the Board as a two-part test. This test requires that the Board determine there is an inability to pay property taxes, and that the inability to pay is due to reasons of extreme poverty or sickness. Further to this, the City submits that two grounds for relief, sickness or extreme poverty, is a significant indicator from the Legislature that applicants seeking relief under s. 323(1)(e) must be capable of experiencing either condition.

20With respect to the interpretation of “person”, the City submits that although s. 87 of the Legislation Act, 2006 defines “person” to include a corporation, s. 47 of the Legislation Act, 2006 provides that this definition does not apply where, “(a) contrary intention appears, or, (b) its application would give to a term or provision a meaning that is inconsistent with the context”. The City argues that the Board’s interpretation of the term “person” under s. 323(2) is inconsistent with the context of s. 323(1)(e) of the Act and therefore s. 87 does not apply.

21Finally, with respect to modern principles of interpretation, the City submits the Board’s finding that corporations are entitled to apply for relief under s. 323(1)(e) produces absurd consequences contrary to the principle set out in Rizzo & Rizzo Shoes Ltd (Re), 1998 CanLII 837 (SCC), [1998] 1 SCR 27, [1998] 1 RCS 27, [1998] SCJ No 2, [1998] ACS no 2 (“Rizzo and Rizzo”). Specifically, at para. 27, the Supreme Court notes, “it is a well-established principle of statutory interpretation that the legislature does not intend to produce absurd consequences.”

22In support of this submissions, the City argues s. 323(1)(e) and the threshold for extreme poverty cannot be meaningfully or practically applied to a corporation. The City submits that difficulties paying expenses and corporate deficits cannot amount to the same threshold as lacking the resources to provide for the “basic necessities of living”. In the alternative, the City submits the Board’s own reasons in paragraph 15 of the Decision find that a corporation only has one basic necessity, namely, annual filing fees. Annual filing fees for federally incorporated companies range from $20.00 to $40.00 under the Canadian Business Corporations Act, R.S.C. 1985, c. C-44. The City argues it would therefore be an absurd consequence if deficits exceeding $40.00 resulted in corporations being able to claim relief from paying property taxes.

23Further, the City submits that the Decision was inconsistent with its previously held threshold of “extreme poverty”. The City states that the Board consistently interpreted “extreme poverty” as having no resources available “to provide for the basic necessities of living”, citing E.D. v. City of Toronto, WR 128986 (unreported) at para. 25. To further support this submission, the City cites MMU v Toronto (City), [2015] OARBD No. 204; and, FM v Mississauga (City), [2016] OARBD No 94. The City submits that a corporation, while benefitting from the status as a natural person, does not have a “life” to support nor does it have “basic necessities of living”.

24With respect to the Decision’s departure from past decisions on the same issue, the City acknowledges that the Decision was not persuaded by a previous decision in which the Board rejected a corporate applicant from seeking tax relief under s. 323(1)(e) of the Act, Sumin Auto Ltd. v. City of Toronto, WR 121685 (unreported). The City relies on a decision of the Board, 174257 Canada Inc v Ottawa (City), [2002] OARBD No 617, 44 OMBR 442. In this decision, the Board found that although a “person” may include a corporation, once the provision is considered in context, relief from taxes due to extreme poverty or sickness is limited to individuals. The City submits that although these decisions are not binding, they are nevertheless persuasive and the Decision erred by not sufficiently justify its departure from these previous findings.

Bela Acres’ Submissions

25The Board requested that Bela Acres provide response submissions to the City’s Request for Review. In response, Mr. Ciccone, stated in a brief email to the Board that he agreed with the Decision of the Board, disagreed with the submissions of City, and had no further submissions to add.

Findings

26In order to clarify its analysis, the Board will first provide a summary of the principles of interpretation as they pertain to tax legislation. This summary will be followed by the Board’s findings as they relate to the Decision and the City’s Request for Review.

Principles of Interpreting Tax Legislation

27As explained at para. 7 of the Decision, the modern principles of statutory interpretation were set out by the Supreme Court in Rizzo and Rizzo, supra:

[T]here is only one principle or approach; namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.

28While these principles apply to all legislation, the common law provides a particular approach on how these principles are applied when interpreting tax legislation.

29In particular, due to the characteristic detail and precision of many tax provisions, the courts have stressed that greater emphasis should be placed on the ordinary meaning of the text of the provision when interpreting tax legislation. As summarized at para. 21 to 42 of Placer Dome Canada Ltd v Ontario (Minister of Finance), [2006] SCJ No 20, 2006 SCC 20, 2006 CSC 20, [2006] ACS no 20, [2006] 1 SCR 715, [2006] 1 RCS 715, 266 DLR (4th) 513, 348 NR 148, JE 2006-1100, 210 OAC 342, 2006 DTC 6532, 147 ACWS (3d) 914, 2006 CarswellOnt 3113, 2006 CarswellOnt 3112, the common law sets out the first step in interpreting tax legislation is to consider the plain and ordinary meaning of the words of the provision in dispute.

30However, where the words of a statute give rise to more than one plausible interpretation, the ordinary meaning of the text will play a lesser role and greater consideration will be given to the context of the provision and the purpose of the Act. In other words, where the ordinary meaning of the text is not clear, the ambiguity may be resolved by looking to the context of the provision, the scheme of the Act, the object of the Act, and the intention of the Legislature.

31The Supreme Court further clarified that there is no automatic presumption in favour the taxpayer when interpreting tax legislation. As a general rule, when resolving the interpretation of an ambiguous tax provision, it must be demonstrably clear that the entity that stands to benefit from a provision clearly falls within the intent of the Legislature.

The Decision

32The Decision begins with term “person” found in s. 323(2) of the Act since it is the provision identifying who may make applications under s. 323(1):

(2) An application may only be made by the owner of the land or by another person who,

(a) has an interest in the land as shown on the records of the appropriate land registry office and the sheriff’s office;

(b) is a tenant, occupant or other person in possession of the land; or

(c) is the spouse of the owner or other person described in clause (a) or (b).

33The Decision relied on the meaning of “person” set out in the Legislation Act, 2006, which includes corporations, and found that the ordinary meaning of “person” in s. 323(2) therefore included corporations. Despite some apparent ambiguities in the provision, the Decision did not consider how “person” in s. 323(2) relates to the intention of the Legislature with respect to the underlying objective and context of s. 323(1)(e) of the Act.

34The Decision then turned to s. 323(1)(e) of the Act and considered the ordinary meaning of “extreme poverty” in relation to the inability to pay taxes:

14Clause 323(1)(e) requires that the applicant be unable to pay taxes. This Board has repeatedly held that the ability to pay threshold requires an applicant to “demonstrate that [it] is unable to meet the basic necessities of living such as housing, food, heating, hydro, water and clothing and at the same time meet their tax obligations,” see A.M. v Toronto (City), 2016 CanLII 42756 (ON ARB) (“A.M.”) at paragraph 29. […].

15The only basic necessities of living for a corporation are the annual filing fees. There is nothing else required in order to keep a corporation “alive” or able to continue its existence. That is a very low threshold. This means that nearly any money that a corporation has is money available to pay taxes. There could, perhaps, be other arguments on what a corporation needs to survive. I would not want to limit how a corporation may attempt to prove that it cannot pay taxes, but I do not accept Toronto’s submission that a corporation cannot have an inability to pay taxes.

17Poverty can be defined as “the state or condition of having little or no money, goods, or means of support.” Corporations can possess goods, so likely can experience poverty. In A.M. this Board held, at paragraph 29, that extreme poverty relief is “is only when it can be unequivocally demonstrated by evidence, that the individual is unable to meet the basic needs and have no other means of paying his property taxes.” As noted above, basic needs for a corporation may be more limited than for an individual, but there is a still a threshold on which this Board can determine when a corporate applicant is in extreme poverty.

35The Decision did not point to any source to discuss how the term “poverty” can relate to a corporation. The Board agrees with the City’s submissions that a corporation’s basic necessities, that is, annual filing fees, is not analogous to living in a state of extreme poverty. Even a corporate debt cannot be compared to a state of extreme poverty. It is simply implausible to suggest that “extreme poverty” can practically be applied to a corporation.

36Further, the Decision did not reconcile how the application of this provision to corporations is consistent with the greater context of the Act and the objective of the Legislature. For instance, in considering the term “sickness” in s. 323(1)(e), the Decision recognized that a corporation cannot be sick, but did not adequately consider how “sickness” related to the objective of the provision or the intent of the Legislature. Simply put, where ambiguity exists, the words of the provision must be read within their entire context harmoniously with the objective of the Act and the intention of the Legislature.

37The Board also finds that Decision erred by misplacing a presumption in favour of the taxpayer, Bela Acres. As a general rule, it must be demonstrably clear that the entity that stands to benefit from a provision clearly falls within the intent of the Legislature. The Decision erred by reversing this presumption and holding that there must be explicit wording or a “strong indication” that the Legislature intended to excluded corporations from benefiting from s. 323(1)(e).

38The Board finds the Decision erred in its interpretation of s. 323(1)(e) and s. 323(2) by departing from the principles of statutory interpretation and their application to tax legislation in particular. The Board is satisfied that these errors amount significant errors of law, that had the errors not been made, the Decision likely would have likely reached a different conclusion.

ORDER

39The Request for Review is granted, and Bela Acres’ application under s. 323(1)(e) of the Act is dismissed.