Merivale-Gilmour Manor Ltd. v. Municipal Property Assessment Corporation, 2019 CanLII 72769

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: August 01, 2019

FILE NO.: DM 161644

Moving Party(ies): Merivale-Gilmour Manor Ltd.

Respondent(s): Municipal Property Assessment Corporation (“MPAC”), Region 03

Respondent(s): City of Ottawa

Property Location(s): 1220 Merivale Road

Municipality(ies): City of Ottawa

Roll Number(s): 0614-084-802-17200-0000

Appeal Number(s): 3218250, 3289586 and 3348056

Taxation Year(s): 2017, 2018 and 2019

Hearing Event No.: 717766

Legislative Authority: Rule 73 of the Assessment Review Board’s Rules of Practice and Procedure

Heard: June 27, 2019 by written submission

Parties

Counsel⁺/Representative

Submissions

Merivale-Gilmour Manor Ltd.

George Cameron-Caluori

Moving Party

Municipal Property Assessment Corporation

Donald G. Mitchell*

Received

City of Ottawa

Lindsay Hinch*

Received

DISPOSITION OF THE BOARD DELIVERED BY JEAN-PAUL PILON

DISPOSITION OF MOTION

1This written motion decision pertains to the request of Merivale-Gilmour Manor Ltd. (the “Moving Party”) to withdraw its appeals, a request that is objected to by MPAC and the City of Ottawa (the “City”).

2The Moving Party frames its motion as requiring answers to the following three questions:

a. Does the Assessment Review Board (the “Board”) have jurisdiction to refuse the withdrawal of the appeals?;

b. Do the Board’s Rules of Practice and Procedure (the “Rules”) allow for a party in the general proceeding stream to give notice of an intention to seek a higher assessment than returned by MPAC? If not, is Rule 72(a) restricting the right to withdraw from an appeal applicable in general proceedings?; and

c. Can a Notice of Higher Assessment (“NOHA”) be issued absent a physical or legal change as provided for in the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”)?

3For the reasons that follow, the Board finds that the answer to all three questions is yes: that the Board has jurisdiction to refuse the withdrawal of the appeals, that the Rules allow for a party in the general stream to give notice of an intention to seek a higher assessment than returned by MPAC, and that such a notice can be issued absent any physical or legal change in a property.

4As a result, the Moving Party’s request to withdraw its appeals is denied.

REASONS FOR DISPOSITION OF MOTION

Background

5The Moving Party appealed the annual assessment of this multi-residential building pursuant to s. 40 of the Act for the 2017 taxation year. The Moving Party was deemed to have brought the same appeal in respect of the property for the 2018 and 2019 taxation years pursuant to subsection 40(26) of the Act.

6MPAC returned a current value assessment of $20,436,000 of the property for the 2017 taxation year.

7After receiving the Moving Party’s Statement of Issues (“SOI”), the City determined that the property had sold in 2017 for $30,000,000, well above the current value assessment of $20,436,000. As a result, the City indicated in its Response to Statement of Issues (“RSOI”) that it took the position that the current value of the property was $30,000,000.

8MPAC initially served a notice of an intention to seek a higher assessment, which the Moving Party refers to in its material as a “NOHA”, on the other parties, but the City did not. Instead, the City took the position that its indication in the RSOI was sufficient notice of its intention to seek a higher assessment. MPAC no longer believes that notice was necessary and is now aligned with the City as to the means by which it also notified the Moving Party of its new position on value.

9On May 7, 2019, the Moving Party wrote to the Board to say that it wanted to withdraw its appeals and said it did not have the consent of MPAC or the City. As a result, Board staff did not proceed with the withdrawal, and the Moving Party filed this motion.

The Board’s Rules of Practice and Procedure

10Rule 32 provides that all proceedings are general proceedings, unless the Board specifies a proceeding as a summary proceeding. This proceeding is a general proceeding and is subject to the Schedule of Events for General Proceedings set out in Schedule “A” to the Rules.

11Rule 73 provides that:

An appellant may seek an order from the Board, by motion, to withdraw and appeal that is prohibited by Rule 72 and the Board may:

(a) grant the request to withdraw, with or without conditions; or

(b) refuse to grant the request to withdraw and

i. proceed immediately to hear the appeal, or

ii. adjourn the proceeding.

12Rule 72 referred to in Rule 73 provides that:

An appellant may withdraw an appeal, with notice to the other parties to the appeal and the Board, unless:

(a) Another party has given notice pursuant to these Rules of its intention to request a higher assessment or higher tax rate property class; or

(b) a hearing event has commenced.

13The relief requested in the motion is that the Moving Party be allowed to withdraw its appeals.

14Rule 40 provides as follows:

A party to a summary proceeding must give notice to the Board, and all other parties to a summary proceeding, within 30 days of the day set in Rule 33 as the start of a proceeding, that the party intends to raise with the Board:

(c) A higher assessment than that returned by MPAC.

15MPAC and the City rely on Rule 38(7) which provides that:

Statements of issues and responses must contain:

(7) If the issue is a higher assessment than that returned by MPAC:

(a) the basis on which a higher assessment is sought; and

(b) list of all facts, legal grounds and documents that the party relies on in support of its position.

Issues 1 & 2: Jurisdiction to Refuse the Withdrawal of this Appeal and Notices of Intention to Seek a Higher Assessment

Arguments

16The Moving Party’s first two questions are intertwined and considered together in this decision.

17Rule 72 provides that an appellant can withdraw an appeal unless another party has given notice that they intend to seek a higher assessment than that returned by MPAC. The Moving Party argues that neither MPAC nor the City were entitled to give notice of an intention to seek a higher assessment for these appeals because these appeals are in the general stream, not the summary stream, to which Rule 40 applies. It therefore argues that the Board lacks the jurisdiction to prohibit the withdrawal under Rule 73.

18The City and MPAC argue that they were entitled to give notice of their intention to seek a higher assessment in their statements of issues and responses pursuant to Rule 38(7). This Rule, in their submission, provides for the notice contemplated in Rule 72(a). Therefore, they say the powers in Rule 73 come into play including the ability to refuse to allow for the withdrawal in Rule 73(b)ii.

19The Moving Party first argues in its written submission that the Board only has the authority to exercise the powers which were granted to it by statute.

20The Statutory Powers Procedure Act, R.S.O. 1990, c. S.22 (“SPPA”) specifically provides that the Board can make rules, as the Board has, and that it can determine its own procedures. At the outset, the Board finds that these rules can include processes and procedures through which a party can withdraw appeals.

21The Moving Party further argues that the notice contemplated by Rule 72(a) is a “Special Notice”, the heading to Rule 40, and that the Board determined in TKS Holdings Inc. v Municipal Property Assessment Corporation Region No. 03, 2015 CanLII 32542 (ON ARB)(“TKS Holdings”) that rules requiring Special Notices require “strict interpretation.”

22Specifically, the Moving Party argues that if Rule 40 had been intended to apply to general proceedings and not just summary proceedings, the Rule would have said so. The Moving Party argues that the Board is required to follow its own Rules and that a strict interpretation of the Rules is required where every word and phrase is to have meaning.

23Overall, MPAC and the City view the issue differently. They take the position that the Board does, in fact, have the jurisdiction to refuse the withdrawal pursuant to Rule 73(b). They oppose the Moving Party’s position that Rules 72 and 73 can only apply to summary appeals because the notice in Rule 72(2) of an intention to seek a higher assessment can be included in an SOI or an RSOI, which then permits the Board to refuse the withdrawal pursuant to Rule 73(b).

24The City also addresses the issue of prejudice in its submission. It cites 20 Norelco KS Inc. v. Municipal Property Assessment Corporation, Region No. 9, [2013] O.D.R.B.D. No. 12 75 OMBR 208, 2013 CarswellOnt 377 (“Norelco”) where in similar circumstances the Board determined that it had the obligation to balance fairness between the parties. The court in that case also found that allowing the requested withdrawal would result in a substantial underassessment of the property to the prejudice of other taxpayers in the municipality.

25In its Reply, the Moving Party says that Rule 38(7) does not create a right to issue a notice of higher assessment, but only specifies the evidence to be filed. Alternatively, the Moving Party argues that Rule 38(7) is ambiguous, pointing to correspondence attached to the City’s affidavit requesting guidance from Board staff as to how to proceed. It says any ambiguity in tax statutes must be determined in favour of the taxpayer and that “the Rules provide for Special Notices because something more is contemplated where specific rights of a taxpayer are being extinguished.”

Decision on Issues 1 & 2

26Rule 72 effectively prohibits the withdrawal of an appeal where another party has given notice of an intention to seek a higher assessment without consideration of Rule 73. That Rule permits the Board in such circumstances to grant the request to withdraw, with or without conditions, or refuse the request to withdraw and either proceed immediately to hear the appeal or adjourn the proceedings. In this case, the Board chooses the latter option, to adjourn the proceedings to allow for the parties to continue to follow the Schedule of Events which will be extended, as explained at the end of this decision.

27The crux of the Moving Party’s position is essentially that the Board lacks the jurisdiction to prevent the withdrawal of the appeals. According to the Moving Party, this is because there is no process by which a party in the general stream can seek a higher assessment as exists in the summary stream pursuant to Rule 40.

28The Board finds this cannot be the case because of the structural differences between summary and general proceedings set out in the Rules.

29Schedule “B” to the Rules sets out the Schedule of Events for summary proceedings. The summary stream contemplates many fewer events, the exchange of disclosure, a mandatory meeting not involving the Board, a request for a hearing and the submission of evidence, all to take place within 14 weeks of the assigned commencement date.

30Schedule A”” to the Rules for general proceedings, on the other hand, sets out the significantly longer Schedule of Events spanning a period of up to 104 weeks from the commencement date. Included in this scheme are extensive processes allowing for documentary disclosure, inspections, narrowing of issues, settlement conferences and ultimately a hearing. It is set up to address issues more likely to arise in more complex appeals before the Board.

31In both streams, the Rules provide for notice to the other parties when one party is seeking a higher assessment, but the process for providing such notice is different. In the summary stream, the notice provision is set out in Rule 40 which sets out how and when such notice is to be provided.

32It is logical that a specific provision like Rule 40 would exist because of the much shorter life of an appeal in the summary stream, with far fewer mechanisms available for disclosure, issue determination and discussion than the general stream. In the general stream, however, there is no specific notice (or “Special Notice” as the term is used in the heading to Rule 40) requirement, nor is there any need for one. Rather, it is an issue that is to be included in an SOI or an RSOI as is made clear in Rule 38(7). It is in that context that the party seeking a higher assessment gets to raise it. Once it is raised as an issue, the Board’s authority to grant or deny the request to withdraw an appeal in Rules 72 and 73 comes into play.

33There is no confusion, ambiguity or tautology in this conclusion as argued by the Moving Party. It is a plain reading of the Rules which provide that notice of an intention to seek a higher assessment can be contained in a party’s statements of issues and response.

34The Moving Party attributes meaning to the term “Special Notice” which, like the term “notice”, is not defined in the Rules. The Moving Party refers in its material to notice that a party seeking a higher increase as a “Notice of Higher Assessment” or “NOHA”. In fact, the only appearance of the term “Special Notices” in the Rules is in the heading to Rule 40 with reference to a party seeking a higher assessment than returned by MPAC.

35The Moving Party says that “the Board has noted that when considering the Rules government Special Notices a strict interpretation is required,” citing by footnote the TKS Holdings Inc. decision but not a paragraph. That was certainly a submission before the Board, where the appellant’s representative in that case argued that “Board’s Rules give weight to the concept of ‘special notice’ by providing circumstances where a party is required to give detailed notice of specific argument it intends to rely upon a hearing” in paragraph 32. The old Rules in force in that decision also used the term “Special Notice” in a more detailed version of Rule 40 applicable to all appeals, not some appeals as in the current Rules.

36The issue in that case, however, was compliance with the Board’s old rules of practice and procedure in serving the more comprehensive notice that those rules required. Those rules do not apply in this case, and there is no foundation for the statement that any stricter interpretation is required when the term “Special Notices” is used.

37In fact, the Board finds the use of the term “Special Notices” in the heading to Rule 40 in the current Rules to be unimportant, and that its insertion was for the purpose of ease of reference. A notice is exactly that: notification to others, where the notice can take different forms in the two streams provided for in the Rules. As noted above, it is consistent that the Rules would provide for a more comprehensive requirement in Rule 40 because the summary stream is so much more simplified. There is still notification or notice in the general stream, only it appears in a different form because of the more comprehensive nature of the process.

38The City filed a notice with the Board which the Moving Party points out they were not entitled to do. The Board concurs to the extent that such a notice was not a requirement, where both parties appeared to have been confused as to their necessity (on the part of the City) and their application (where MPAC cited Rule 40 on theirs). Moreover, some confusion is not surprising in a novel situation that had apparently not arisen for either party in the new regime established by the Rules. Nothing prevented the responding parties from notifying the Board in some form of the fact a higher assessment was being sought. In fact, a sensible reason for doing so might have been, as MPAC pointed out in its reply, in case the appellant attempted to withdraw the appeals as occurred here.

39The Moving Party does not contest that another party can seek a higher assessment in summary proceedings, because that right is set out in Rule 40. There is no reason the same possibility would have been intentionally excluded from the Rules applying to proceedings in the general stream, and it is specifically provided for in Rule 38(7). Unlike in Rule 40 applying to summary proceedings, notice in the general stream is not given by way of service of a specific form but, instead, it is provided through its inclusion in the ROI or RSOI.

40Only the City addressed the issue of prejudice in its submission. Evidence of a sale at a significantly higher price than the assessment could, if accepted at a hearing, raise substantial doubt as to the correctness of the assessment of the property. As a result, allowing the Moving Party to withdraw at this stage in the proceeding might result in significant prejudice to the other taxpayers in the City, as would have been the case in Norelco which had similar facts. The City also points out that the Moving Party in this case could not be prejudiced by the imposition of a correct assessment.

41The answer to the Moving Party’s first question is therefore yes, that the Board can refuse the withdrawal of the appeals pursuant to Rules 72 and 73. The answer to the Moving Party’s second question is that the Rules can be interpreted to allow a party to a general proceeding to give notice of an intention to seek a higher assessment than that returned by MPAC.

Issue 3: Notices of Higher Assessment in the Absence of a Physical or Legal Change

42The Moving Party argues that “an interpretation of the Rules that would allow MPAC to issue a NOHA absent a physical or legal change pursuant to the Act would be absurd” where MPAC could issue such a notice in every appeal to “effectively assume control of the proceedings.” It points to the Board’s decision in Toronto (City) v. MPAC, 2013 ONSC 6137 (“Toronto (City)”) which provides that “the jurisdiction of the Board to alter the assessment does not exceed the powers that MPAC would have had in the first instance.”

43The Toronto (City) decision involved two properties that had been tax exempt and that were severed, where the severed portion then became subject to property tax. The questions determined by the court were relevant to MPAC’s power to alter the current value of the property which became taxable on an omitted or supplementary assessment, and whether, on appeal, that assessment could be altered if there had been no physical change to the property. The court in that case decided both questions in the negative.

44The Toronto (City) case is distinguishable from this one because the context was different. Its conclusions are inapplicable to the circumstances before the Board in this case.

45In that case, the appeals in question were from supplementary and omitted assessments, not an annual assessment as was the case here, and the questions to be determined in that case set out in paragraph 4 specifically made reference to supplementary or omitted assessments. The first question was whether, when MPAC returns an omitted or supplementary assessment “to change the tax status of a property from exempt to taxable, it can also alter the property’s current value if there has been no physical change to the property?” The second question was whether on appeal of such a supplementary or omitted assessment, the Board could “alter the property’s current value if there has been no physical change to the property?”

46Both questions addressed the powers of MPAC and the Board on appeals of supplementary and omitted assessments, where in this case the Board is addressing an annual assessment returned pursuant to section 36(1) of the Act. Section 36(1) of the Act provides that “except as provided in section 32 (corrections), 33 (omissions) and 34 (supplementary), assessments of land under this Act shall be made annually at any time between January 1 and the second Tuesday following December 1, 2006.” The exceptions in s. 36(1) are consistent with the court’s decision in Toronto (City) which determined that it is not open to the Board or MPAC to seek a higher value assessment in the specific circumstances it considered.

47The Board concurs with MPAC’s submission in this case that “the whole purpose of an appeal is to allow the Board to determine the correct current value and change the assessment if required.” The court in Toronto (City) determined at paragraph 64 that “MPAC has no jurisdiction to amend the current value under s. 33(3) or 34(1)(b)(i) in the absence of a physical change to the property” and that “the same is true for the (Board)”. It did not hold that to be the case in an annual assessment and appeal, nor would it have been logical or consistent for it to have done so.

48As a result, the answer to the Moving Party’s third question is yes, that notice of a higher assessment can be issued absent a physical or legal change on an annual assessment, as is the situation before the Board in this case.

49Finally, prior to the issuance of this decision, the Board received a request from the Moving Party to extend time for the mandatory meeting which was to take place on or before July 23, 2019 in the Schedule of Events. The Board at that time determined that the Schedule of Events would be suspended pending the determination of this motion, and that a decision would be included in this one as to how the appeals should proceed.

50Rule 73(b) provides two options: that the Board can immediately hear the appeal or adjourn the proceeding. Imposing former option would be illogical where the appeals are still at an early stage in the Schedule of Events. Although the Rules do not explain the context in which proceedings would be adjourned when a motion to withdraw is denied, it makes sense to think of it as an adjournment of the process after determination of the motion pending the next step in the Schedule of Events. That next event is the mandatory meeting, and the Moving Party indicated that it could take place six weeks after the date of this decision.

51Therefore, the Schedule of Events is to resume, where the date for the mandatory meeting is to be extended six weeks after the date of this decision. Further events in the Schedule of Events will follow from that timeline.

CONCLUSION

52Merivale-Gilmour Manor Ltd.’s motion to withdraw its appeals is denied.

53The Schedule of Events is to be amended to show that the mandatory meeting that was to take place on or before July 23, 2019 should instead take place six weeks after the date of this decision. The remaining events in the Schedule of Events are to be adjusted accordingly.