Morellato v. Municipal Property Assessment Corporation, 2019 CanLII 89274

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

September 16, 2019

FILE NO.:

DM 2019M38

Moving Party(ies):

David Brian Morellato Christine Marguerite Morellato

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”) Region No. 32

Respondent(s):

Township of Dorion

Property Location(s):

254 Brunner Road

Municipality(ies):

Township of Dorion

Roll Number(s):

5834-000-001-27400-0000

Appeal Number(s):

3269685, 3340387 and 3368403

Taxation Year(s):

2017, 2018 and 2019

Hearing Event No.:

721764

Legislative Authority:

Section 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended, and Rules 116 to 119 of the Assessment Review Board’s Rules of Practice and Procedure

Heard:

August 9, 2019 by written submission

Parties

Counsel⁺/Representative

Submissions

David Brian Morellato Christine Marguerite Morellato

Self-represented

Moving Party

MPAC

Sarah W. Corman⁺

Received

Township of Dorion

No one appeared

Not Received

DISPOSITION OF THE BOARD DELIVERED BY LESLIE FLEMMING

1David Morellato and Christine Marguerite Morellato (the “Appellants”) appealed to this Board in respect of their annual assessment for 2017, 2018, and 2019 of the 80-acres parcel of land owned by them and identified as 254 Brunner Road. Their appeal was heard on March 15, 2019, in writing, and a decision issued on April 30, 2019. The file number for the decision is WR 159342, and the decision is available on the Canadian Legal Information Institute as Morellato v Municipal Property Assessment Corporation, Region 32, 2019 CanLII 39624 (ON ARB). The Appellants were successful in their appeal in having the assessment of the subject property, a property in the managed forests class, reduced by approximately one-quarter. The Appellants have applied to obtain costs in respect of that appeal.

2Mr. Morellato argues that MPAC opposed the appeal and, in doing so, engaged in frivolous, vexatious and unreasonable conduct, and also acted in bad faith in its dealings with the Appellants. As a result, Mr. Morellato advises that he incurred many hours of lost time spent in preparing his appeal.

3MPAC opposes the motion and argues that cost awards in administrative matters such as Assessment Review Board appeals are seldom available and are used only as a consequence of egregious behaviour and actions carried out in bad faith. In this matter, MPAC submits, the assessor carried out the usual assessment protocol in good faith, without any actions that could be categorized as frivolous, vexatious or unreasonable. MPAC further submits that if costs are awarded, they are awarded to compensate a party for legal costs, or to replace lost income when an individual sacrificed work income in order to prepare his or her case. MPAC notes that this was not the case here because the Appellant is retired and represented himself.

4The Township of Dorion was not involved in the motion.

5For reasons set out below, the motion is denied. No costs are awarded.

REASONS FOR DISPOSITION OF MOTION

6These appeals involved a parcel of largely vacant property in the residential class, which had been approved by the Ministry of Natural Resources and Forestry (“MNRF”) for inclusion in the Managed Forests Tax Incentive Program (“MFTIP”) for the period in question: 2017 through 2019. These appeals were carried out in writing, which means that the parties presented their evidence and arguments in written format to the Board without the benefit of cross-examination. Based on the filed materials, and in accordance with its interpretation of the intricate legislation involving the assessment of managed forests, the Board made a finding of fact that all 80 acres of the subject property belonged in the managed forests class. It is apparent that evidence not before the Board may have led to a slightly different determination had it been presented. However, no application for a review of the decision was received. Instead, the Appellants move for costs.

7The Board’s Rules of Practice and Procedure (“Rule”) provide for costs in certain circumstances, which are contained in Rule 116. The Rule provides:

…particulars of the other party’s conduct that are alleged to be unreasonable, frivolous, vexatious or in bad faith, and the amount requested.

8The Statutory Powers Procedures Act, R.S.O. 1990, c. S.22 (“SPPA”) provides the authority for this Board to issue a costs award. It mandates in s. 17.1(2) that while costs are available, “A tribunal shall not make an order to pay costs under this section unless, (a) the conduct or course of conduct of a party has been unreasonable, frivolous or vexatious or a party has acted in bad faith…”

9The Oxford Dictionary Thesaurus defines three of the terms contained in s. 17.1(2) as follows:

(a) “unreasonable”: 1 – not based on good sense; 2 – beyond the limits of what is acceptable or achievable.

(b) “frivolous”: 1 – not having any serious purpose or value.

(c) “vexatious”: 1 – causing annoyance or worry.

10The term “bad faith” is not defined in a dictionary, and to ascertain its meaning here, we must refer to the interpretation of the term in Ontario assessment law. A recent decision of this Board canvassed the implications of the term “bad faith” in a motion for dismissal. In Municipal Property Assessment Corporation, Region No 7 v Cherry, 2018 CanLII 60392 (ON ARB), at paragraph 15, the Board found that, “Many willful breaches of Board orders will be unreasonable and in bad faith and thus fall within the class of cases eligible for a cost award.” We can conclude from this that the key distinguishing characteristic of “bad faith” is an intention or willfulness.

11In order to be in a position to award costs, the Board must find that one or more of the elements of unreasonableness, frivolity, vexatiousness and bad faith have been demonstrated in the behaviour of a participant to an appeal. As in every decision, the Board must weigh the evidence provided and make its decision on a balance of probabilities. If the behaviour of a party leads the Board to conclude that one or more of the four elements defined above exists, then the Board’s second step is to determine what amount of money would be an appropriate award. The onus to prove that the conduct of another party is unreasonable, frivolous, vexatious or in bad faith rests with the party requesting costs.

The Evidence Presented

12Mr. Morellato objected to several actions or positions taken by MPAC in its response to the Morellato appeals. In summary, they included:

(a) MPAC’s reference to “residential” land under the hydro right-of-way and in reference to the shed built on the property where Mr. Morellato thought the land was clearly unsuited to residential purposes; and

(b) MPAC’s (and MNRF’s) failure to adjust the value of the subject property to take into consideration the hydro right-of-way.

13Mr. Morellato accused MPAC of acting unreasonably, vexatiously and in bad faith in its characterization of the property generally as residential land.

14MPAC responded by pointing out that the materials provided to the Board in the form of the Valuation Report prepared by its Analyst Ed Molcan, set out a managed forest area of 79 acres and one acre of “residential land” in connection with the shed erected by the Appellant. MPAC did not reduce the area of the managed forests portion of the lot in connection with the hydro right-of-way. As Counsel for MPAC noted, any changes in the size of the eligible portion of the property for the MFTIP were made by MNRF. MPAC has no authority to change a property’s enrolment in this tax incentive plan, and MPAC has no authority in respect of the facts associated with the management of the property.

15Counsel for MPAC noted that when the MNRF reduced the eligible acreage of the subject property from 79 acres to 76 acres, the three acres removed defaulted to “residential” land (“RT”) in the normal course.

16Counsel for MPAC submits that the Appellants have provided no evidence of unreasonable, bad faith, frivolous or vexatious conduct by MPAC that would justify the exceptional remedy of a costs award.

Applying the Law to the Facts

17Several other decisions of this Board are of assistance in determining whether the actions of any party included elements of the alleged behavior which could trigger an award of costs.

18One such example is Biskey v Municipal Property Assessment Corporation Region 26, 2016 CanLII 42758 (ON ARB) (“Biskey”). In this case, following a five-day hearing, the Board decided that the Biskey’s property, built on an environmentally contaminated site unbeknownst to the owners of the home, had a current value of zero. The owners sought costs against MPAC, alleging that MPAC’s behaviour had been “simply unreasonable and bordering on being vexatious”.

19The Board Member determined that the length of the hearing was a result of choices made by the Appellants. He determined that “the conduct of MPAC, while perhaps falling short with the benefit of hindsight, was not so egregious as to be sanctioned by an award of costs against it.” The Member went on to note that a difference of opinion as to the impact of the environmental contamination in that case is not the same as the unacceptable behaviour set out in the Board’s Rules and the SPPA.

20Another helpful decision of this Board is the decision of Associate Chair Muldoon in Scrimgeour v. Municipal Property Assessment Corp Region 24, [2015] O.A.R.B.D. No 193, 2015 CarswellOnt 10564, 85 OMBR 65 (Board File WRC 2015M1) (“Scrimgeour”). The Board Member in the Biskey decision relied on the decision issued in Scrimgeour, calling it “the most applicable guide to the Board in deciding whether or not to exercise its discretion to make a cost award against MPAC as requested by the Appellants.”

21In Scrimgeour, following an initial decision of the Board respecting the current value of the subject property, MPAC and the Appellant negotiated and settled on a reduced amount. In the end, the residential property in question was assessed at $738,000 less than the original assessment – an admittedly “considerable difference” from the starting assessment. This was the result of an initial Board decision, followed by a review of that decision along with independent negotiations between the parties. However, when the Appellant moved for costs in the cause, the Board did not grant the motion, finding that there was no evidence to suggest that MPAC “had acted in bad faith, or acted in a way that would offend the basic principles of fairness and due process.”

22There are other similar decisions, some of which were included by MPAC in their materials in response to this motion. However, these two Board decisions are most instructive in determining how the Board’s Rules in respect of costs are to be applied. Since the Scrimgeour and Biskey decisions were issued, the Rule has been modified and simplified. The old Rule 137 contained examples of unacceptable behavior that could trigger a cost consequence. The revised Rules 116 and 119 simply state the types of behavior (unreasonable, frivolous, vexatious or in bad faith) that may trigger a cost award. The Board Member in deciding a motion for costs must determine whether or not any of these descriptors match the conduct of any of the parties.

23In this case, there is no evidence tying the conduct of MPAC to unacceptable behavior. As noted in Scrimgeour, making an error in judgement or making changes to one’s position do not constitute unreasonable behavior. Any behavior exhibited by MPAC employees in the course of these appeals, and described by the Appellants, does not constitute intentional acts of bad faith. The Board’s finding that MPAC had not met the burden of proof in the appeal was not a finding that MPAC had done anything in bad faith or unreasonably.

24An important fact for the Appellants to understand is that the subject property would be classified as “residential property” whether or not it was suitable for building a residence and whether it was affected by a hydro right-of-way. The change in property class from residential property to managed forests occurred when the Appellants applied for and were granted eligibility under the MFTIP. Eligibility for the subject property for the tax incentive program is not MPAC’s decision to make. Should the subject property no longer meet MFTIP eligibility rules as decided by MNRF, it will revert to the residential class once more. MPAC was assessing the property using the proper classifications: managed forests and residential land. A dispute as to how much property belonged in each classification is an issue for the Board to decide, which it did on the evidence available. The presence of this type of issue in managed forests assessment appeals is quite common, and clearly does not point to any unreasonable or unacceptable conduct by MPAC. It points to a difference of opinion and nothing more.

CONCLUSION

25Having concluded that the moving party has provided insufficient evidence of bad faith, vexatious, frivolous or unreasonable conduct, the motion will be dismissed. There is no need for the Board to decide the proper amount of costs as costs will not be awarded.