Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: March 23, 2020

FILE NO.: WR 162642R

REPLACEMENT ISSUE DATE: April 06, 2020

Assessed Person: T.I.

Applicant: T.I.

Respondent: City of Toronto

Property Location: Withheld

Municipality: City of Toronto

Roll Number: Withheld

Appeal Number(s): 3368964

Taxation Year(s): 2018

Hearing Event No.: 722781

Legislative Authority: Section 323(1)(e) of the City of Toronto Act, S.O. 2006, c. 11 Schedule A

APPEARANCES:

Parties T.I.

Representative Self-represented

Parties City of Toronto

Representative Graham Thomson, Melanie Shankar

HEARD: July 31, 2019, and September 26, 2019 in person

ADJUDICATOR(S): Caroline King, Vice-Chair

DECISION

OVERVIEW

1T.I. (the “Applicant”) applied to the City of Toronto (the “City”) to have his 2018 property taxes reduced, cancelled or refunded, because he was unable to pay his property taxes due either to sickness or extreme poverty, pursuant to s. 323(1)(e) of the City of Toronto Act, S.O. 2006, c. 11, Schedule A (the “Act”).

2The City passed a by-law delegating its authority to determine such applications to the Assessment Review Board (the “Board”) under s. 357(11) of the Act.

3The Applicant sought a refund of property taxes for the 2018 taxation year. The net property taxes levied on the Applicant’s property for the 2018 taxation year were $2,325.35. These taxes were paid in full. The remedy requested in this application was a refund of the taxes paid.

Issues for the Hearing

4The Board must determine whether the Applicant’s 2018 property taxes should be refunded because of his inability to pay due to sickness or extreme poverty. This requires the Board to determine:

1. if the Applicant was unable to pay his 2018 property taxes;
2. if the Board determines he was unable to pay the property taxes, the Board must then determine if the reason he was unable to pay was due to either sickness or extreme poverty; and
3. if the Board determines that he was unable to pay because of sickness or extreme poverty, the Board must then decide on the amount of the taxes levied to be cancelled, reduced or refunded.

RESULT

5The Board finds that the Applicant was:

1. unable to pay his 2018 property taxes;
2. unable to pay his taxes because of sickness; and
3. that the amount of taxes to be refunded to the Applicant is $2,325.35.

ANALYSIS

Issue 1 - Was the Applicant able to pay the Property Taxes levied in 2018? Background

6The Applicant is the sole adult living on the property relevant to his application. The Applicant’s source of income is limited to ODSP and a small loan which the Applicant took out to assist in the payment of taxes.

Areas of Agreement

7At the conclusion of the hearing, neither the financial information, nor the Applicant’s medical condition were contested.

8The City agreed that the Applicant’s:

1. approximate incoming monthly revenue was $1,241;
2. approximate monthly expenses were $1,217;
3. approximate monthly amount left over after expenses was $24;
4. discretionary spending of $18 per month was very modest; and,
5. RRSP and stocks were of such negligible value that they had no value.

9It was also not disputed that the Applicant did not spend any money on a home phone line, internet, cable television, vitamins (which the Applicant said assist in regulating his moods), eating out, clothing, car, recreation/leisure, medication and antibiotics.

10It was not disputed that the Applicant’s approximate monthly expense for food was limited to $200.

11It was not disputed that throughout the 2018 taxation year, the Applicant had severe depression, anxiety and panic attacks, and that the Applicant was hospitalized. It was also not disputed that in 2018, the Applicant was not able to work due to his sickness.

12It was not disputed that the Applicant’s property was assessed at $429,000 as of January 1, 2016.

13The City agreed that the Applicant’s house was in a poor state of repair.

14The City did not contest the Applicant’s evidence that his house did not have a watertight envelope, that it had roof, siding and mould issues, and that it was generally dilapidated.

15It was not disputed that the Applicant had problems with his furnace.

16No evidence was introduced to dispute that the Applicant would not have qualified for a reverse mortgage due to his age and personal circumstances.

Areas of Disagreement - Value of Applicant’s Property, Inability to Pay Due to Sickness

17The correct value to be attributed to the Applicant’s property and the related impact on the Applicant’s ability to pay was contested.

18Whether the Applicant’s evidence established that his inability to pay his property taxes was due to sickness was also contested.

How Should the Value of the Applicant’s Property be Calculated?

19The parties disagreed about how the value of the Applicant’s property should be calculated.

20The City argued that the Board should calculate the property’s fair market value for the applicable tax year. The Applicant, on the other hand, argued that the Board’s established method of using the assessed value placed on the roll should be used.

21The City argued the appropriate value for the property during the applicable taxation year was approximately $597,828 and not the assessed value returned on the roll. The City asserted that the Municipal Property Assessment Corporation (“MPAC”) routinely under assesses the true market value of real property. In addition, it argued that in the two years that passed from the valuation date, real estate in general had increased in value.

22The City provided what it claimed to be comparable properties as evidence to support its position, but the Applicant challenged that evidence. He argued that he could not determine whether any of the properties that the City proposed as comparable were truly comparable to his dilapidated house without knowing the condition of those properties. The Applicant further argued that this kind of application should not open a new stream of legal inquiry. Instead, he argued that the assessed value of the property on the roll was a more reliable and reasonable measure.

23The City’s evidence did not include a formal assessment report prepared by a qualified assessor.

24The City submitted that the Board should not rely upon the assessed value of the property, but rather that it should accept the 2018 fair market value of the property based on the comparable property evidence submitted by the City. This, the City argued, would increase the value of the total assets at the Applicant’s disposal, which would then result in an increased ability to pay his taxes.

25I am not persuaded that the Board should depart from its practice of relying on the assessed value of the property on the roll. If the City’s perspective is that MPAC systematically undervalues properties, then it is open to the City to appeal the assessed value of properties. This is especially the case here where the City might have reasonably anticipated that this would be an issue at the hearing when the Applicant had previously applied for tax refunds.

26Disputes about the correct current value of a property in Ontario can be brought before the Board to be resolved by parties including the City. That kind of an appeal has a prescribed litigation path under the Assessment Act which involves consideration of evidence including formal expert evaluation reports.

27Further, that kind of appeal requires evidence from MPAC, which has the broadest access to Ontario property valuation information. MPAC bears the burden of proof as to the correctness of current value for Ontario properties in those appeals.

28MPAC, however, is not a statutory party to this kind of application or appeal.

29To have to carry out an analogous process and evidentiary review to determine the correct current value of a property is not appropriate or proportionate to any determination of whether there is an inability to pay due to sickness or extreme poverty. This is especially true when the parties have access to the attributed current value of the property returned on the property tax roll which could have been challenged separately.

30In addition, I find that the City’s evidence on the value of the property is not reliable, particularly due to the unusually poor condition of the Applicant’s house. This is because the City presented inadequate information to determine if the City’s proposed comparable properties were indeed comparable to the Applicant’s property. In fact, the City did not know which, if any, of their proposed comparable properties were in a similarly poor condition.

31I find the value of the Applicant’s property to be relied upon for the purposes of this 2018 application was the last value returned on the roll: $439,000. I accept the evidence presented that the Applicant had an unsecured $150,000 loan against his property and that there was no mortgage or other encumbrance against the property.

Consideration of Equity in Inability to Pay Applications Due to Sickness or Extreme Poverty

32Equity in a property was considered in a Board review decision, A.P. v Toronto (City), 2019 CanLII 3422 (ON ARB). In paragraph 17 of that decision, the previous Associate Chair Paul Muldoon noted that the Board’s jurisprudence on the impact equity in property would have in inability to pay applications was not clear. He wrote that whether equity was considered or not, “neither position can be said to be wrong in law.”

33In this case, the Applicant’s evidence that he was not able to access the equity in his property was not challenged by any other evidence. It was the best evidence before me on this point, and it was plausible given the Applicant’s general circumstances and age. I find that the Applicant was not able to access the equity in his property. I do not find that equity plays a determining role in this case when he was not able to utilize any of that equity to pay his 2018 property taxes.

Issue 2 - Determination that the Applicant’s Inability to Pay Was Due to Sickness

34The Applicant testified that during the 2018 taxation year, he struggled and was in extreme distress because of his health concerns. Further, because of his ill health, he testified he could not work to increase his income.

35The Applicant testified that he did not pay bills late because he could not afford to pay interest on outstanding amounts.

36The Applicant testified that because of his limited income, he could not afford to carry out even the most basic repairs to his house. As a result, he could not rent out any part of the house. The Applicant argued that if he did rent out any portion of the house, he might be liable to a tenant for failing to maintain the house. He testified this was a potential liability he could ill afford.

37Finally, the Applicant testified that he could not cope with having a tenant in his house because of his sickness which was medically diagnosed.

38Many of the cases submitted by the City do not articulate the test recently stated in A.P. v Toronto (City), 2019 CanLII 3422 (ON ARB) (“A.P.”), and confirmed in F.E.J.B. v Mississauga (City), 2019 CanLII 59502 (ON ARB). In paragraph 12 of A.P., the correct framing of the test is stated as follows:

The test in clause 323 (1)(e) first requires that an applicant prove an inability to pay taxes. It is only once that is proven that the reason for the inability to pay should be considered. Relief can only be granted if the reason that the taxes cannot be paid is either sickness or extreme poverty. There is no need to prove both sickness and extreme poverty…

39I find this is the test to be applied in this case.

40The City submitted cases that discussed applicants’ obligations to pay property taxes. They determined that applicants should explore every reasonable opportunity available so that the property taxes could be paid. These cases included cases which cite M. M. U. v Toronto (City), 2015 CanLII 46826 (ON ARB), which says at paragraph 21 that “… [an applicant] is required to show that every reasonable effort has been made to pay all or part of the taxes…” [emphasis added].

Chronic Illnesses Are Not Excluded From Qualifying

41The City submitted that applicants with chronic illnesses cannot be successful in this kind of application. It further argued that ownership of the property was not sustainable for the Applicant, and that the Applicant had a net monthly surplus of approximately $24. In support of this position, the City cited G. E. B v Municipal Property Assessment Corporation, Region 18, 2017 CanLII 11479 (ON ARB) (“G.E.B.”). That case determined that requests for relief in applications like these should not be granted automatically and that it is open for applicants to apply in successive years. That case also determined that each application is considered de novo (anew) on its merits, each time an application is made by the same party for relief.

42I disagree with the City’s argument that those with chronic illnesses are excluded from receiving relief. There is no language in the legislation disqualifying those suffering from chronic illnesses from relief.

43The Board is a creature of statute and its authority to decide cases flows from the statute. It cannot go beyond its authority set out in statute to read in language which is not there.

44Therefore, I do not find G.E.B. to be persuasive, and find that even if the Applicant has a chronic sickness, the Applicant has the right to apply for relief every year.

45I do agree with the City, however, that every year the Applicant brings an application, that application must be considered on its merits on evidence for that specific year.

46Determining whether an applicant has an ability to pay requires a contextual analysis and consideration as to whether that person has exhausted every reasonable effort to pay taxes.

47The City submitted that the Applicant should have rented out a portion of his house to generate revenue from which to pay his taxes. Where the condition of the house is poor and an applicant cannot afford to remedy serious issues of disrepair because of his illness, I am not satisfied it is reasonable to require the Applicant to rent out a portion of his house to mitigate his financial position.

48Likewise, I find that the Applicant’s medically diagnosed issues with severe anxiety, panic attacks, and depression should be taken into account in determining whether it would be reasonable to expect him to share his personal living space with another individual. I find that it would be unreasonable to require the Applicant to share his personal living space with an unrelated and unknown third party given these diagnosed medical issues.

49The City argued there was no connection between the Applicant’s sickness and his inability to pay his property taxes. The City asserted that the Applicant’s illness had no impact on his principal source of revenue, ODSP, so the fact that the Applicant was hospitalized did not have a negative impact on the Applicant’s revenue stream. If I accepted the City’s submissions, this would mean that all those receiving ODSP would be, in effect, barred from qualifying for this kind of relief. I disagree with the City’s submissions on this point.

50The Applicant paid his property taxes and had a monthly net surplus of approximately $24. However, I find that he was unable to pay his 2018 property taxes as the surplus was minimal, as was his spending in 2018, and that he went without many of the basic necessities of life, including medication, and in addition could not pay for repairs to provide a watertight exterior “envelope” to the house.

Issue 3 - Amount of Refund

51In determining the amount of property taxes to be refunded, I have considered the approximate value of the collective cost of the basic necessities of life the Applicant went without, to the quantum of taxes paid. In these calculations, I considered that the cost to remedy such deficiencies would have been significant.

52In this case, the quantum of taxes paid was less than the approximate value of the basic necessities of life the Applicant went without, therefore a full refund of the property taxes paid is ordered.

CONCLUSION

53Based on the evidence before me, I find that the Applicant was unable to pay his 2018 property taxes despite his extremely careful and scrupulous management of his finances. The Applicant demonstrated that he made every reasonable effort to pay his property taxes, indeed the Applicant exceeded what was reasonable as he went without many of the basic necessities of life including medication.

54I find that the Applicant’s inability to pay was due to his sickness. As a result of this sickness, he was not able to work and was limited to the very low revenue stream provided by his ODSP payments. He therefore lacked the ability to pay his 2018 property taxes.

55As I have found that the Applicant was unable to pay his 2018 property taxes due to sickness, it is not required that I make a finding regarding extreme poverty.

56The 2018 property taxes, in the amount of $2,325.35, are cancelled and are to be refunded to the Applicant forthwith.