Ronald Robert Trimble and Carol May Diane Trimble v. Municipal Property Assessment Corporation, Region 15, 2019 CanLII 86387

Assessment Review Board

ISSUE DATE: September 10, 2019

FILE NO.: WR 160350

Assessed Person(s): Ronald Robert Trimble and Carol May Diane Trimble

Appellant(s): Ronald Robert Trimble and Carol May Diane Trimble

Respondent(s): Municipal Property Assessment Corporation ("MPAC") Region 15

Respondent(s): Town of Halton Hills

Property Location(s): 7448 32 Side Road

Municipality(ies): Town of Halton Hills

Roll Number(s): 2415-070-006-34810-0000

Appeal Number(s): 3340564, 3340565 and 3359104

Taxation Year(s): 2017, 2018 and 2019

Hearing Event No.: 713067

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

Heard: April 12, 2019 in Halton Hills, Ontario

APPEARANCES:

Parties	Counsel*/Representative
Ronald Robert Trimble	Robert Baranowski
MPAC	Donald J. Mitchell*
Town of Halton Hills	Naila Punja (observer only)

DECISION OF THE BOARD DELIVERED BY JOANNE LAWS

OVERVIEW

1This is a re-hearing of Trimble v Municipal Property Assessment Corporation, Region 15, 2018 CanLII 65309 (ON ARB), ("65309"), pursuant to Associate Chair, Paul Muldoon's review decision RD 2018M16, Trimble v Municipal Property Assessment Corporation Region 15, 2018 CanLII 116137. The parties agree that the current value is $887,000 for the 2017, 2018 and 2019 taxation years and the only issue in dispute is whether the current value is equitable in accordance with s. 44(3)(b) of the Assessment Act, R.S.O. 1990 c. A. 31 ("Act").

2In his decision, Associate Chair Muldoon ordered this re-hearing on the correct legal test for determining similarity pursuant to clause (44(3)(b) of the Act. He allowed the parties an opportunity to file additional evidence; the inference was that any new evidence would show how the evidence submitted at the first hearing supported the correct legal test.

3During the course of this hearing, Mr. Trimble raised the issue of stratification. MPAC's counsel, Donald J. Mitchell, correctly pointed out that the issue of stratification was addressed by A.C. Muldoon in RD 2018M16.

4At this hearing the parties advised me that the Board did not set out dates for disclosure but that they had completed an exchange of documents prior to this hearing.

5The Subject Property is 7448 32 Side Road in the Town of Halton Hills which includes a single-family residence built in 1979. The home is 3,122 square feet ("sq. ft.") in size and has one-and-one-half storey with 2,124 sq. ft. on the first floor and 998 sq. ft. on the second floor. MPAC has allocated a 7 out of 10 quality of construction. The lot is 10 acres in size, however MPAC has calculated an effective lot size of 3 acres.

6Pursuant to s. 40(11) of the Act, the Town of Halton Hills is a party to this proceeding and its representative, Naila Punja, attended the hearing as an observer. She did not advise the Board of the Town's position on the issue raised in these appeals.

7Section 44.(3)(b) of the Act directs the Board to make an equitable reduction to the current value of the Subject Property if similar lands in the vicinity have been assessed at a lower value. The Appellant take the position that an equitable value is $798,000. MPAC takes the position that an equitable reduction is not required.

8At the completion of the hearing, I reserved my decision. For the reasons that follow, I find that an assessment below current value, at $798,000 is required to ensure that the assessment of the Subject Property is equitable with the assessments of similar lands in the vicinity.

Preliminary Matter

9At the outset of the hearing a request for an adjournment was sought by the Appellant's representative, Robert Baranowski. This request was denied for the following reasons.

10Mr. Mitchell advised me that some inconsistencies were discovered between the first equity report presented by MPAC at the first hearing in 2018 and the equity report prepared for this hearing. The parties agreed that each report was disclosed prior to its respective hearing date.

11Mr. Mitchell explained that since the first hearing in 2018, MPAC's opinion of value as of the January 1, 2016 valuation day has changed for some properties in the vicinity of the Subject Property. As a result, MPAC updated the roll which, in turn, altered its data and this resulted in changes to the equity report prepared for this hearing.

12Mr. Mitchell re-disclosed that first equity report (from the 2018 hearing) to Mr. Baranowski the day before this hearing. Mr. Mitchell sought to submit the first equity report at this hearing and, while Mr. Baranowski did not object to it being submitted as evidence, he said he required an adjournment to review the original equity report and revise his preparation for this hearing. Mr. Mitchell did not object to the adjournment. It should be noted that Mr. Baranowski submitted that first equity report from that initial hearing in his evidence for this hearing. However, this was not observed until later in the hearing.

13The Board's Rule 84 lists the factors to consider before granting an adjournment. These are:

(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.

14The first factor is 'the interests of the parties in a full and fair proceeding'. Both the original equity report and the updated equity report contain correct data based on the date they were created. Because the parties were fully prepared to proceed based on the MPAC's updated equity report and the Appellant presented the original equity report in his evidence for this hearing, a full and fair hearing does not pivot on which report is used.

15The second factor is the impact of the adjournment on the parties and other persons. There is a negative impact on the other parties as well as the Board because each have expended time, effort and costs to prepare for this hearing event.

16The third factor is the integrity of the Board's process, including the Board's ability to efficiently resolve all the appeals file with the Board within the current four-year cycle. Section 36(5) of the Act imposes on the Board an obligation to hear and dispose of all appeals as soon as practicable after the return of the roll. The Board cannot resolve disputes on a timely basis if hearings do not proceed when scheduled. Each delay results in wasted time and resources.

17The fourth factor is the 'circumstances giving rise to the need for an adjournment'. After some discussion and testimony from MPAC's witness, Mr. Johnstone, it is clear the findings of both equity reports are nearly identical, despite the few changes to the data. The Appellant requested the adjournment, stating he required additional time to prepare for the hearing should the original equity report be accepted into evidence, yet he submitted that very same equity report in his own evidence. One may conclude that he was prepared to proceed on the evidence he was presenting.

18The fifth factor is the 'timeliness' of the request for the adjournment. Mr. Baranowski made the request in a timely manner.

19The sixth factor is the position of the other parties. Here, MPAC consents to the adjournment.

20The final relevant factor is the public interest in the delivery of the Board's services in a just, timely and cost-effective manner. It is important that hearings take place when scheduled. Granting the adjournment would result in wasted resources for the other parties and the Board.

21After considering all the factors set out in Rule 84, the only factors supporting an adjournment are that the request was made in a timely manner and MPAC's consent to the adjournment. None of the other factors support granting the adjournment.

22Based on the above, I found no reason to justify an adjournment and denied the request.

Relevant Legislation

23The Act states that:

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.

Issue

24The issue to be determined on these appeals is whether an equitable reduction pursuant to s. 44(3)(b) of the Act is required and, if so, what the amount of this reduction should be.

Discussion, Analysis and Findings

Appellant's Evidence

25The Appellant presented six sale properties in the same homogeneous neighbourhood ("HGNH") as the Subject Property, which MPAC identified as E60. Details of each property was provided. They are a mix of one and two storey residences of various ages and various building and lot sizes.

26The Appellant also submitted a number of pages from MPAC's original Equity Report including the list of properties and time adjustment factors ("TAF") that MPAC relied upon at the initial hearing. The Appellant used the TAFs to estimate the sale values of his six properties as of the January 1, 2016 valuation day.

27On cross examination, the Appellant's representative, Robert Baranowski, acknowledged that four of the six properties are single storey homes whereas the Subject Property has two storeys.

28The Appellant submitted an MPAC document entitled 2012 Reassessment Base Year Residential Valuation Overview ("2012") and an excerpt from MPAC's web site which describes 'HGNH'.

29The Appellant also presented:

a. Page 8 of 10 from an MPAC document entitled 2012 Reassessment Base Year, Residential Valuation Overview ("Overview").

b. An International Association of Assessing Officers' ("IAAO") document entitled IAAO's History, Vision & Mission.

c. An IAAO document entitled Standard on Ratio Studies ("Ratio Studies").

d. An excerpt from MPAC's website describing the term HGNHs. It provides that MPAC divides a municipality into Location Neighbourhoods which are then subdivided into HGNHs based on, in part, natural and political boundaries, similarity of housing stocks, municipal services, physical environments, desirability, marketability and zoning.

Appellant's Submissions

30The Appellant argues that the six properties he presented are similar to the Subject Property because they are all located in the same HGNH of E60. Based on MPAC's description of HGNHs he argues that an equity analysis should be confined within the same HGNH as the property in question. While MPAC does not usually provide sufficient information in their equity analyses to determine similarity on all points of comparison, the Appellant acknowledges that sufficient information was submitted for this hearing. However, he takes the position that HGNHs are the driving force of similarity, which he argues is supported by MPAC's website definition of a HGNH.

31The Appellant agrees that the sample size is important but argues that when determining equity, the Board should only look at properties in the same locational and homogeneous neighbourhoods; these are created by MPAC based on market pockets. With regard to similarity, he argues that the Board doesn't have to use identical properties, but it must know what the differences are in order to weigh the evidence and make a finding. MPAC's equity reports show that the majority of their properties are located in different locational and HGNHs which may indicate they are in different markets.

32He argues that:

• None of the properties submitted were assessed at their market value, none have an assessment to sale ratio ("ASR") of 1.00, which is the only acceptable ASR. Both the IAAO's ASR range of 0.90 to 1.10 and MPAC's target range of 0.95 to 1.05 are unacceptable to the taxpayer, that any variance from 1.00 results in an error in taxes and warrants an adjustment.

• That the IAAO standards are not set out in the Act and that nowhere in the Act is it suggested that any variable from 1.00 is acceptable.

• That the standards used for mass appraisal should not be applied when considering an individual property, that the purpose of equity is to determine whether an individual property owner is discriminated against by the mass appraisal assessment system.

33He further argues that the IAAO is an American organization and it should not have influence in Canada. He acknowledged that MPAC is a member of the IAAO and that the IAAO sets standards to guide its members. However, he argues it does not set standards for individual taxpayers and that the IAAO standards should not have any influence over the taxpayers. He argues that the purpose of the IAAO's Standards on Ratio Studies document is to assist with the mass appraisal of properties, not for determining whether a single property's assessment is correct.

34The Appellant time adjusted the sale values of his six properties using MPAC's TAFs and calculated the average ASR of those six sale properties to be 0.90, rounded, which, he argues, supports an equity adjustment. Applying 0.90 to the current value of $887,000 results in a value of $789,000. He argues that for the purpose of equity, the Subject Property's current value should be reduced to $789,000 for the 2017, 2018 and 2019 taxation years.

35The Appellant referenced a number of decisions where the Board used less than 30 properties in an equity analysis. He argued that while the Board has no obligation to follow its own decisions it should because property owners have a legitimate expectation as to how matters will be determined. However, he also argued that the circumstances of each case may be different and that the Board must weigh the evidence of each case and determine issues such as the number of properties that are appropriate for a particular statistical analysis.

MPAC'S Evidence

36Terence Johnston was called as a witness for MPAC. He testified that he prepared the Equity Analysis Report for this hearing. At this hearing MPAC presented an updated Equity Study, containing 28 of the 30 properties in original Equity Study and included detailed property descriptions, locational maps, updated current values and locational maps for all 30 properties. His search criteria were residential properties with two-storey, single family residences which sold between January 2015 to December 2016 within 11.6 kilometres from the Subject Property. He testified that this report is not the same as the Equity Analysis Report submitted at the initial hearing and that the current values of a number of properties had been 'corrected' over the passage of time.

37Included in the Equity Study submitted for this hearing was one of the Appellant's two-storey properties, 7336 32nd Sideroad. One of the two omitted properties, 251 Main Street North, was the Appellant's second two-storey property. In total, 29 out of 30 properties that MPAC presented at the first hearing in its initial equity report were presented by the parties at this hearing with sufficient details to consider all points of comparison.

38Mr. Mitchell stated that MPAC is relying on its initial equity report which was presented in the Appellant's evidence for this hearing. Mr. Johnston submits that the 30 properties contained in the original equity report are located no more than 10 kilometres from the Subject Property and are all two-storey residential properties. The median ASR is 0.98 with a COD of 8.6.

39In relation to the Subject Property, Mr. Johnston's report included locational maps and property details including building and lot sizes, year built, effective year built (with an indication of why the effective year and actual year build differs), quality of construction, number of storeys, pools, basement area and the age and size of garages. The distances of each property from the Subject Property were also given. The quality of construction ranges from 6, to 7.

40The sales were time adjusted to the January 1, 2016 valuation date. The median ASR is 0.98 with a COD of 8.6.

MPAC's Submissions

41MPAC submits it is relying on the initial Equity Report, a copy of which was submitted by the Appellant. It shows a median ASR of 0.98 with a COD of 8.6. While it relies on a median ASR which eliminates influences of outliers, MPAC notes that the mean ASR is 0.964 which also falls within the parameters of MPAC's internal guideline of acceptable ASRs, 0.95 to 1.05.

42Relying on the evidence submitted at this hearing, MPAC's submits that an equitable reduction of the current value is not required. MPAC takes the position that a median ASR falling between 0.95 and 1.05 indicates that equity has been achieved. MPAC also takes the position that a COD of less than 15 for residential properties implies "good appraisal uniformity among individual properties". MPAC takes the position that the median is the preferred measurement because using the mean may be skewed or heavily influenced by outliers.

43MPAC argues that a larger sampling provides a better indication of the level of appraisal, pointing to Section 6 of the IAAO's Standards on Ratio Studies which provides that "There is a general relationship between statistical reliability and the number of observations in a sample. The larger the sample size, the greater the reliability". MPAC referenced Tse v Municipal Property Assessment Corporation, Region 09, 2018 CanLII 62978 (ON ARB) in which Member Morris preferred a sample size of 30 properties over a sample size of eight properties "in order to be satisfied of a general trend" and in Tyndorf v Municipal Property Assessment Corporation, Region 15, 2019 CanLII 7203 (ON ARB) Member LaRegina preferred a larger sample size over a sample size of two properties.

44MPAC also argues that a median is a more accurate measure than a mean, referring to subsections 5.2 and 5.3.1 of the IAAP's Standards on Ratio Studies. Subsection 5.2 provides that median ratios "are resistant to the influence of outliers" and while the COD is affected by extreme ratios, it is affected to a lesser extent than the coefficient of variation and the mean. Subsection 5.3.1 provides that "The median always divides the data into two equal parts and is less affected by the extreme ratios that the other measures of central tendency. Because of these properties, the median is the generally preferred measure of central tendency for evaluating overall appraisal level, determining reappraisal priorities, or evaluating the need for reappraisal".

45In response to the Appellant's arguments regarding similarity, MPAC argues that all residential properties in the Town of Halton Hills are similar because they are taxed at the same rate. MPAC argues that all of the properties in the equity study they are relying on are located within 10 kilometres from the Subject Property, are residential with two-storey homes and that 30 properties is a reasonable sample size.

Findings on Equity

46Normally, the person who has initiated an action and is asserting a claim bears the burden of proof. In the Act, the only reference to burden of proof is with regard to current value. Subsections 40(17) and (18) provides that the assessment corporation carries the initial burden of proof as to the correctness of the current value. Here the parties agree on the current value and the only issue is whether that current value is equitable. The Act is silent on burden or onus for any other issue, including equity. Accordingly, the person making the claim, in this case the Appellant, has the burden of proving on a balance of probabilities that the current value is inequitable. Based on the evidence presented as a whole, I find that the Appellant fulfilled his onus for the reasons set out below.

47The purpose of the act is to determine the correct current value. Any equitable reduction in the current value results in an incorrect current value. Consequently, an equitable reduction should only be made where there is clear evidence to support that such a reduction is warranted.

48Both parties utilized a level of assessment analysis, comparing assessments to time adjusted sale values. The resulting ASRs provides an indication of whether an equitable adjustment of the current value is required.

49After considering all points of comparison, I find that similar properties are:

a) residential properties

b) located in MPAC's the HGNH of E60

c) with two-storey, single-family residences

d) that have a quality of construction of 6.0 to 7.0.

For the following reasons, I find that these are the best distinguishing features of similar lands in the vicinity.

What is Similar for the Purpose of Equity?

50Clause 44(3)(b) of the Act provides that, in determining whether an adjustment of the current value is required to make it equitable, I must "have reference to the value at which similar lands in the vicinity are assessed". The word 'similar' is not defined in the Act.

51In Municipal Property Assessment Corporation v Loblaw Properties Limited, 2017 ONSC 1299, the Divisional Court contemplated the meaning of 'similar lands' in relation to clause 44(3)(b) of the Act. Referencing Trizec Equities Ltd v Ontario (Regional Assessment Commissioner, Region No 27), [1988] OJ No 182, 27 OAC 203, 37 MPLR 175, 8 ACWS (3D) 399 (Div. Ct.) ("Trizec") it found, at paragraph 25, that "the proper approach to be taken to determining what are "similar lands in the vicinity" is that set out by Saunders J. in Trizec, that is, that all points of comparison must be considered". In Trizec the court also determined that "The board must make a factual finding based on such a consideration. One point of similarity such as use may be, but is not necessarily, determinative. Some similarities may be overridden by other characteristics and some differences may be subordinated".

52The Appellant presented six properties in support of his claim that the current value requires an equitable adjustment. He also submitted a copy of MPAC's original equity study from the first hearing which contained 30 properties. The parties provided comprehensive details for all of these properties with the exception of one, 85 Attwood Avenue. As a result, I have the details of only 29 out of the 30 properties in MPAC's equity study.

53Among the properties submitted, I find that the similar properties are residential land with two-storey single family residence that have a quality of construction of 6 to 7. I disagree with the Appellant that single-storey properties are similar to two or one-and-one-half storey properties.

What is the Vicinity?

54Like the term 'similar', the term 'vicinity' is not defined in the Act. In relation to equity, it is widely accepted that vicinity refers to the appropriate geographical area that will yield meaningful comparable properties. That vicinity could mean an entire municipality or a smaller portion thereof (see Ontario Regional Assessment Commissioner, Region No. 3 v. Graham, 1993 CanLII 8621 (ON CA)). In other words, vicinity has no set parameters, but one ought to stay as close as possible to the Subject Property to find sufficient number of comparable properties.

55MPAC said it focused on two-storey residential sales within the Town of Halton Hills and expanded its search, which includes four HGNHs, to find its preferred sample size of 30 properties.

56The Appellant argues that the only comparable properties are those located in MPAC's HGNH of E60 and that other HGNHs should not be used because they have different market forces. His undisputed evidence is that MPAC creates and defines HGNHs based on its cumulative data which includes market activity. He pointed out that the Town of Halton Hills is an amalgamation of numerous municipalities that likely have different market forces, that these market forces are reflected in MPAC's HGNHs and one should not be used in an equity analysis in another.

57In reviewing the property details in the larger sample of 29 properties, I agree with the Appellant. Using the original equity report with the original current values and sale values, the median ASR of the 29 properties is 0.99, the median and average ASR of the ten properties in E60 is 0.90. Six have ASRs below 1.00 (0.36 to 0.937) two have ASRs at or very near 1.00 (1.00 and 1.01) and only two have ASRs above 1.00 (1.09 and 1.15). The ten properties and their ASRs are: 12494 Highway 25 (0.37), 12698 Fourth Line (0.80), 7 Worden View (0.82), 7336 32nd Sideroad (0.88), 15 Coles Court (0.89),101197 7 Highway (0.94), 9223 Glen Lawrence Road (1.00), 16 Coles Court (1.01), 251 Main Street North (1.09) and 274 25 Highway (1.15).

58In addition, sixteen out of the remaining 19 properties, all of which are located in different HGNHs, have ASRs exceeding MPAC's lower threshold of 0.95. Comparing this data to the data of E60 supports the Appellant's argument that, among two-storey residential properties located within 10 kilometres from the Subject Property, those located in the E60 HGNH constitute a distinct market. In that distinct market, MPAC is tending to underassess similar lands.

59Based on the evidence provided, I find that the vicinity of the Subject Property is MPAC's HGNH of E60.

What is an Appropriate Sample Size for the Purpose of Equity?

60There is no requirement in s. 44(3)(b) of the Act that a particular number of property sales must be used when determining the level of assessment. Both parties argued that the Board has accepted different sample sizes when determining equity and they each referenced Board decisions where, with reasons, larger and smaller sample sizes were preferred. Certainly, a larger sample is preferred for a statistical analysis but only if the properties in that sample are similar lands in the vicinity. The Board must decide the appropriate sample size on a case-by-case basis.

61Based on the above findings, the best indications of equity are: two-storey residential properties with a 6 to 7 quality class located in MPAC's HGNH of E60. There are ten such properties which were submitted by the parties. In this instance, I find that a sample size of ten properties is sufficient.

CONCLUSION

62The best indication of equity is the sample of ten properties located in the HGNH of E60. They are all residential properties, they all have two-storey residences and have quality of construction of 6.0 to 7.0. The median time adjusted ASR of these ten properties is 0.90. Applying this ASR to the current value of $887,000 results in a value of $798,000, rounded.

DECISION

63An equitable reduction of the current value of the Subject Property, pursuant to s. 44.(3)(b) of the Act, is required.

64Accordingly, the assessment is reduced from $887,000 to $798,000 for the 2017, 2018 and 2019 taxation years.