Pure Industrial Real Estate Trust v. Municipal Property Assessment Corporation Region 15, 2020 CanLII 103476

Tribunals Ontario Tribunaux décisionnels Ontario Assessment Review Board Commission de révision de l’évaluation foncière

ISSUE DATE: December 24, 2020

FILE NO.: DM 167598

Assessed Person(s): Piret (86 Pillsworth) Holding

Appellant(s): Pure Industrial Real Estate Trust

Respondent(s): Municipal Property Assessment Corporation Region 15

Respondent(s): Town of Caledon

Property Location(s): 86 Pillsworth Road

Municipality(ies): Town of Caledon

Roll Number(s): 2124-010-003-16826-0000

Appeal Number(s): 3304825, 3359505 and 3407031

Taxation Year(s): 2018, 2019 and 2020

Hearing Event No.: 735878 and 736171

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

APPEARANCES:

Parties Counsel/Representative*

Pure Industrial Real Estate Trust and Piret (86 Pillsworth) Holding David G. Fleet*

Municipal Property Assessment Corporation Donald G. Mitchell*

Town of Caledon Victoria Gowans

REQUEST FOR: Directions and Production

HEARD: September 29, 2020 and October 5, 2020 by video conference

ADJUDICATOR(S): Vincent Stabile, Member

MOTION DECISION

OVERVIEW

1Pure Industrial Real Estate Trust and Piret (86 Pillsworth) Holding (“Piret”) are the owners of the subject property comprising 27.20 acres of land improved by a building area of 627,164 square feet. The building was built in 2009 and is used as a distribution centre.

2For the 2017, 2018, 2019 and 2020 taxation years, the Municipal Property Assessment Corporation (“MPAC”) returned the assessment value at $54,020,000 based on the cost approach to value.

3Piret appealed the assessment pursuant to s. 40 of the Assessment Act (Act), as being too high.

4The Assessment Review Board (“Board”) set a schedule of events with a commencement date of November 15, 2017.

5Pleadings were exchanged. On January 10, 2020, MPAC delivered an Amended Statement of Response within which it gave notice pursuant to Rule 38(7) of the Board’s Rules of Practice and Procedure (“Rules”) that MPAC was seeking to increase the 2016 Current Value Assessment (“CVA”) from $54,020,000 to $59,300,000.

6On March 25, 2020 a Settlement Conference was held. No issue was resolved. The parties agreed to a hearing commencing September 29, 2020.

7On August 5, 2020 a Case Conference was held, at the request of the parties, to deal with the format of the hearing and disclosure issues. An Order was issued providing for a further Case Conference to be held at the commencement of the hearing (September 29, 2020) for the parties to “make submissions on any outstanding disclosure requests or other preliminary matters…”.

8The Appellant filed a Motion, returnable September 29, 2020, seeking an Order respecting the following relief:

(a) Constraining MPAC from seeking an increase of the current value assessment of the subject property as of January 1, 2016 beyond $54,020,000 as returned on the Roll, for the taxation years 2017, 2018, 2019 and 2020.

(b) Directing MPAC to disclose confidential, proprietary and actual income information used by MPAC to determine current value pursuant to s. 53 (2) of the Act.

(c) Directing the Town of Caledon to produce all documentation analysis and calculations used to determine current value.

(d) Authorizing the Board to record and make available to the parties an electronic video-conference record of the hearing.

DISPOSITION OF MOTION

9The relief sought in paragraph [8] (b), (c) and (d) were disposed of on consent as follows:

(b) MPAC agreed to provide the confidential information requested. A total of 13 documents were identified by oral evidence from Tamara Spasojevic, under oath to comply with s. 53 (2) of the Act. Those documents were marked Exhibit “A” and sealed by my Order pursuant to Rule 43. Leave was also given to both parties to continue to exchange documents, expert reports in particular, as they became available, until October 16, 2020, acting reasonably and in any event subject to the Board’s discretion for any date thereafter. I have already extended the date on condition that the hearing would resume on November 2, 2020, as scheduled.

(c) The Town of Caledon undertook to produce the documents requested forthwith.

(d) The Board would not make available a record of the hearing. However, the Appellant was at liberty to arrange for a Certified Court Reporter to record the hearing at its own expense pursuant to Rule 109. The Appellant made those arrangements.

10The request to constrain MPAC from seeking an increased assessment was fully argued with submissions from the Appellant and MPAC. The Appellant did not seek similar relief as against the Town of Caledon. Although the representative was present, no material was filed and no submissions were received on behalf of the Town of Caledon.

11Mr. Fleet, counsel for the Appellant and Mr. Mitchell, counsel for MPAC both filed briefs of authorities with summaries of their respective submissions.

ANALYSIS

Issue 1 - Authority of the Board and or MPAC to increase the CVA as returned on the Roll

14Mr. Fleet reviewed the case law and submitted that the common thread of judicial thinking was a balancing act in achieving fairness and equity for the taxpayer while also ensuring that it shares its fair share of the tax burden. I agree with this general proposition.

15Mr. Fleet paid particular attention to Citipark v. Ontario (Regional Assessment Commissioner, No.3) 1995 CarswellOnt 6876, a decision of the Ontario Municipal Board (“OMB”). A hearing before the OMB had been set for 1993. A month before the hearing the Regional Assessment Commissioner (“RAC”) served notice by letter that it was seeking a 50% increase retroactively to 1988, (6) years.

16Citipark moved before the OMB for an order constraining RAC from seeking a higher assessment. In a very lengthy decision, the OMB granted the Order sought. The OMB exercised its discretion pursuant to s. 44(1) of the Act in not “reopening the whole question of the assessment”.

17The operative phrase in s. 44(1) of the Act that the Board “may reopen the whole question of the assessment” and is therefore discretionary.

18There is no reference by the OMB to what we now have as s. 44(3) of the Act which states that: “the Board shall determine the current value of the land”. This language is mandatory. There is no discretion here.

19Citipark was decided under previous legislation, as submitted by Mr. Mitchell. Aside from general principles of fairness and equity, I refuse to follow the OMB decision to constrain.

20On the jurisdictional issue, I believe that s. 44(3) provides a full answer. It mandates the Board to determine the correct current value and is not limited to any specific valuation approach. It starts fresh, without reference to the value returned on the Roll.

21Moreover, the Divisional Court in Municipal Property Assessment Corporation v. Zarichansky, 2020 ONSC 1124, also relied on by Mr. Mitchell, reviewed the legislative scheme of the Act and noted that “MPAC is initially tasked with determining the current value of the property. However, where the taxpayer appeals to the Board, it is up to the Board to make that determination.” (See para. 40). It is the starting point in the appeal process. The Court also stated that “The Board is an adjudicative tribunal and it cannot abdicate its statutory duty to determine the current value of a property pursuant to s. 44(3)… of the Act”. (See para. 32)

Issue 2 - Unfairness and prejudice to the Appellant

22Mr. Fleet submitted that it is unfair to the taxpayer to be tasked to argue a different appeal, if MPAC is permitted to start from ‘scratch’ and re-design its case.

23Although I appreciate this submission, this is not a novel argument. There are risks in any litigation. As aptly stated in HLS York Developments Ltd and Metro Ontario Inc. v MPAC Region 9 (DM 135687) at para. 38 referring to 1259868:

when an appeal is filed against an assessment, the appellant takes the chance that MPAC may seek to have the Board consider an increase in the current value. To find otherwise would mean that an appellant who faces no downside risk of an upside move in the value, has the real litigation advantage……s.44.(1) that presents taxpayers with the prospect that any time you challenge that your assessment is too high, you run the risk that in fact your assessment may be too low.

24To fulfill its statutory duty to determine current value, the Board depends on the parties to present cogent and reliable evidence. The Board does not dictate any specific approach to value. Further, the Board does not undertake its own research for evidence. The parties however acknowledge that there are three acceptable approaches: cost approach; income approach and direct sales approach.

25On appeal MPAC has the onus of proving the correct current value, based on evidence, notwithstanding the value returned on the Roll.

26It seems to me that constraining any of the parties from introducing evidence to support a different current value from the value returned on the Roll would in fact limit evidence for the Board to consider. I do not believe this is the intent of the legislation.

Issue 3 - MPAC’s failure to abide by the Board’s Rules

27In respect to the complaint that MPAC failed to abide by the Rules of the Board, it appears that neither party abided strictly to the schedule of events set by the Board. A summary of the pertinent timeline is helpful:

(i) January 10, 2020 – MPAC served the notice seeking an increase in the assessment.

(ii) March 25, 2020 – a Settlement Conference was held and the parties agreed to commence the hearing on September 29, 2020.

(iii) August 5, 2020 – a Case Conference was held by way of Motion, on consent.

(iv) September 29, 2020 – a further Case Conference was held.

CONCLUSION

28All parties have been given extensions by the Board to produce expert reports upon which they intend to rely. I do not believe that the failure by any of the parties to strictly abide by the Board’s Rules has resulted in such prejudice as to negatively affect any of the parties from adequately addressing issues in respect to current value and equity at the hearing.

29I conclude that, this is not an appropriate case to constrain MPAC from seeking an increased assessment; the Notice of Increase was validly served and there is no prejudice to the Appellant in permitting these appeals being heard on the merits.

ORDER

30The Board orders that the request is denied.