Spiliotopoulos v. Municipal Property Assessment Corporation Region 15, 2020 CanLII 30641

Assessment Review Board Commission de révision de l’évaluation foncière

ISSUE DATE: April 22, 2020 FILE NO.: RD 2020M04 Assessed Person(s): Peter Spiliotopoulos, Angelik Spiliotopoulos Appellant(s): Peter Spiliotopoulos Respondent(s): Municipal Property Assessment Corporation Region 15 Respondent(s): City of Mississauga Property Location(s): 5144 Elmridge Drive Municipality(ies): City of Mississauga Roll Number(s): 2105-040-159-09000-0000 Appeal Number(s): 3340580 and 3360166 Taxation Year(s): 2018 and 2019 Hearing Event No.: 720567 Legislative Authority: Rule 123 of the Assessment Review Board’s Rules of Practice and Procedure

Parties	Representative
Peter Spiliotopoulos	Robert Baranowski
Municipal Property Assessment Corporation	Submissions not requested
City of Mississauga	Submissions not requested

REQUEST FOR: A review of the Board’s Decision WR 162542 issued on December 13, 2019 HEARD: In writing ADJUDICATOR: Dirk VanderBent, Vice-Chair

DECISION

OVERVIEW

1On January 13, 2020, the Appellant, Peter Spiliotopoulos, filed a written Request for Review with the Assessment Review Board (the “Board”) respecting Spiliotopoulos v Municipal Property Assessment Corporation, Region 15, 2019 CanLII 12022 (ON ARB), a decision issued by the hearing member (the “Member”) on December 13, 2019 (the “Decision”). The Decision relates to the property located at 5144 Elmridge Drive, Mississauga, which is a residential property (the “Subject Property”).

Background

2The background relevant to this Request for Review is as follows. The Municipal Property Assessment Corporation (“MPAC”) conducted a general reassessment of the current value of the Subject Property pursuant to the provisions of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”). This general reassessment applies to the current assessment cycle (2017 to 2020 taxation years). MPAC assessed the current value at $1,371,000.

3At the hearing, MPAC adduced into evidence a Property Valuation Report and an Equity Study, both prepared by Maria Covello, who is employed by MPAC as a property valuation analyst. The Appellant was represented by Robert Baranowski, who did not file any evidence. Instead, Mr. Baranowski, through his testimony, provided submissions based on, and in response to, the evidence filed by MPAC.

4Based on the data analysis in her Property Valuation Report and Equity Study, Ms. Covello concluded that the correct current value of the Subject Property is $1,509,000. Applying a 0.936 equitable reduction factor to this amount results in an adjusted value of $1,412,000. As MPAC's assessed value of $1,371,000 is lower, MPAC submitted that the Board should accept $1,371,000 as the adjusted value. The Member accepted this submission.

5In his Request for Review, the Appellant confirms that, at the hearing, he agreed with MPAC's position that the equitable reduction factor should be 0.936. However, he argues that this reduction factor should be applied to the $1,371,000 value accepted by the Member. Consequently, the Appellant asserts that the adjusted value the Member should have accepted is $1,283,000.

6At the hearing, the Appellant filed case law in support of his submissions, and the Member then permitted MPAC to provide written submissions and case law in response. However, the Member did not expressly address this case law in the Decision.

7The Board has reviewed the Request for Review and finds that the issues raised can be addressed without further submissions from the other parties to the appeal proceeding.

Issues for the Review

8In his Request for Review, the Appellant requests that the Board cancel the Decision and issue an order reducing the correct current value from $1,371,000 to $1,283,000, or, alternatively, order a rehearing by another Board Member. In overview, the Appellant cites two grounds in support of his request:

1. The Member erred in fact in stating at para. 37 of the Decision that the Appellant believes that MPAC's valuation analyst is a ‘witness of opinion’ and not a ‘witness of fact’; and

2. The Member erred in failing to reduce the accepted correct current value ($1,371,000) by applying the 0.936 equitable reduction factor.

RESULT

9For the reasons that follow, the Request for Review is dismissed.

ANALYSIS

Legal Test

10In considering whether to grant a Request for Review submitted pursuant to Rule 120, the test to be applied is whether the requester has established any of the grounds set out in Rule 121 of the Board’s Rules of Practice and Procedure (the “Rules”):

Request for Review

120. A party may request a review of any final decision of the Board, other than a decision pursuant to Rule 122, by filing a request in writing no more than 30 days after the decision was issued, including:

(a) a copy of the decision to be reviewed;

(b) the written reasons for the decision, as set out in Rule 112;

(c) the reasons for the request, addressing the factors set out in Rule 121;

(d) notice of any appeals or applications for judicial review that have been filed in relation to the decision;

(e) proof of service on all other parties to the proceeding;

(f) the remedy or relief sought; and

(g) the fee specified by the Board.

Grounds for Review

121. A request for review will not be granted unless the Board is satisfied that:

(a) the Board acted outside its jurisdiction or violated the rules of natural justice or procedural fairness;

(b) the Board made a significant error of law or fact such that the Board would likely have reached a different decision;

(c) the Board heard false or misleading evidence from a party or witness, which was discovered only after the hearing and would have affected the result;

(d) there is new evidence that could not have reasonably been obtained earlier and would have affected the result; or

(e) any of the situations in Rule 122 exist.

Review Order

123. Upon consideration of a request for review, or on its own initiative, the Board may:

(a) dismiss the request;

(b) reinstate the appeal, with or without conditions; or

(c) after providing all parties an opportunity to make submissions,

i. confirm, vary, or cancel the decision,

ii. order a rehearing on all or part of the matter, or

iii. order a motion to decide the review.

Ground 1 - The Member erred in fact in stating at para. 37 of the Decision that the Appellant believes that MPAC's valuation analyst is a ‘witness of opinion’ and not a ‘witness of fact’

Submissions

11The Appellant submits that MPAC’s property valuation analyst, Ms. Covello, is a witness of fact and was presented by MPAC to serve as a witness as fact. As such, her evidence should be fact based as opposed to opinion based. The Appellant emphasizes that, in her reports, Ms. Covello repeatedly states that the material presented is her opinion with respect to the value.

12The Appellant also submits that, MPAC has the burden of proving that the current value as set out in the Notice of Assessment and Request for Reconsideration letter is factually correct. The Appellant asserts that no such evidence was ever provided to the Board during the proceedings.

Findings on Ground 1

13The Board has difficulty understanding the Appellant’s submissions. MPAC's property valuation analyst was called to give opinion evidence respecting the correct current value of the Subject Property. A property valuation is based on both a quantitative analysis (consideration of factual evidence) as well as qualitative analysis of relevant factual information (opinion evidence). The Appellant has not established that MPAC's witness is restricted to be a ‘witness of fact’. Therefore, the Board does not accept the Appellant’s submission that the Member made an error of either fact or law in accepting MPAC's evidence.

Ground 2 - The Member erred in failing to reduce the accepted correct current value ($1,371,000) by applying the 0.936 equitable reduction factor

Submissions

14The Appellant states that, rather than proving and substantiating its assessment as to the current value as set out in its Notice of Assessment, MPAC relied on the opinion of its property valuation analyst to support MPAC's position that the correct current value of the land is actually $1,509,000. The Appellant submits that MPAC does not have the statutory authority to change its own assessments without due process (Notice of Assessment Change or Notice of Increase). The Appellant argues that, by allowing MPAC to change their own assessment during the appeal, the Member put the Appellant at a significant disadvantage. The Appellant maintains that: “This indulgence that the Board Member afforded to MPAC cannot be squared with the Appellant's legitimate expectations and rights, breached the principles of procedural fairness, and led to an incorrect outcome.”

15The Appellant submits that the Member failed to properly consider and assess the submissions and authorities provided by the Appellant and by failing to provide any, or alternatively, adequate written reasons as to why he did not accept the authorities that were presented to him at the hearing. The Appellant submits that this constitutes a breach of procedural fairness.

16As noted above, the Appellant argues that the Member should have applied the 0.936 equitable reduction adjustment to $1,371,000 value accepted by the Member. Therefore, the Appellant argues that the Member, in not doing so, ignored the parties’ agreement that the 0.936 reduction value should be applied, and, in effect, substituted his own opinion that MPAC's Equity Study does not support an equitable reduction. In doing so, the Appellant submits that this is an error of law and violates the principles of natural justice, and the “principle of "Legitimate Expectations" flowing out of Board's decisions.”

17In further support of his submission, the Appellant relies on the Ontario Divisional Court’s finding in Marathon Realty Co v Ontario (Regional Assessment Commissioner, Region No 7), [1979] OJ No 1090, at para. 33, which states that the Board is required to hear and determine the case on the evidence adduced, and not act on its own expertise to substitute its own unsupported opinions for those expressed in evidence.

Findings on Ground 2

18Regarding the question of whether MPAC is permitted to submit a correct current value that is higher than MPAC's assessed value, the Board, in Merivale-Gilmour Manor Ltd. v Municipal Property Assessment Corporation, Region 03, 2020 CanLII 28326 (ON ARB), a Request for Review Decision, addressed this issue at para. 29 where the Board stated:

In addressing this issue, the Board notes that Merivale’s submission does not refer to s. 44(1) of the Act, which provides that, upon an appeal on any ground against an assessment, the Board may reopen the whole question of the assessment. Additionally, s. 44(3)(a) of the Act requires that the Board determine the correct current value of the land. Therefore, it is clear that the Board’s jurisdiction, when adjudicating an appeal under s. 40 of the Act, is not restricted to only considering whether the current value of a property is lower than the value assessed by MPAC. The Board must also consider whether the current value is the same as MPAC's assessed value or higher. …

19The Board adopts this analysis in this case. In making this finding, the Board has considered the case law submitted by the Appellant at the hearing in support of his submission:

• Edmonton East (Capilano) Shopping Centres Limited v. Edmonton (City), 2013 ABQB 526

• Canada vs. Scheller, 1975 CanLII 2231 (FC), [1976] 1 F.C. 480

• Les Immeubles B.P. Ltee v Ville d’Anjou et al., [1978] J.Q. 278

20The Board has reviewed each of these decisions in detail and has considered the submissions provided by MPAC in response. The Board concludes it is unnecessary, in this decision, to include a detailed review of these three cases. In summary, in each of these cases, the statutory regime applied by the Court, did not include provisions similar to s. 44(1) and s. 44(3)(a) of the Act, and, therefore, the findings in these decisions are not applicable to this appeal proceeding.

21Regarding the Appellant’s submission that the Member committed a breach of procedural fairness by failing to properly consider this case law, the Board first notes that the Member’s failure to discuss the Appellant’s submissions in his written Decision, does not mean that he did not consider them. To the contrary, the Member requested written submissions from MPAC in response to the Appellant’s case law. This indicates that the Member did consider the case law and submissions provided by both parties. It is clear that the Member’s decision reflects an acceptance of MPAC's position based on its submissions and the case law it provided. Therefore, the Decision clearly outlines the Member’s finding in respect of these submissions, notwithstanding that he did not include a detailed discussion of the case law in his Decision. Consequently, the Board finds that the Appellant has not established that the Member violated rules of natural justice or procedural fairness.

22The Board now turns to the Appellant’s argument that the Member, having accepted MPAC's position that the correct current value should be $1,371,000, should have adjusted this value by the agreed 0.936 equitable reduction factor.

23In order to address this argument, it is necessary to review first principles.

24Section 44(3)(b) of the Act states:

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,

(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.

25This subsection directs the Board to reduce the correct current value of the Subject Property if similar lands in the vicinity have been assessed at a lower value (“equitable reduction”). The purpose of this provision is to fairly distribute the municipal tax burden according to the value of the property possessed by each ratepayer. Therefore, this subsection requires that the Board compare the correct current value of the Subject Property to the assessed values of similar properties in the vicinity. If the Board is satisfied that the similar properties are assessed at lower values, then the correct current value must be reduced.

26Typically, many similar properties in the vicinity will not have been the subject of a market sale. In order to determine their assessed values, MPAC uses a statistical mass appraisal method which predicts the current value of the property based on a sample of properties where market sales have occurred. MPAC then selects this predicted value as MPAC’s assessment of current value of the property (i.e. MPAC's assessed value). If the mass appraisal method has undervalued the assessed values of these similar properties, then an equitable reduction of the current value of the Subject Property may be required.

27An Assessment to Sales Ratio (“ASR”) analysis is commonly used to determine if an equitable reduction is required. In this method, MPAC selects a number of similar properties that have been the subject of market sales. For each of these properties, its assessed value is compared to its sale value, which is mathematically expressed as a ratio. If the assessed value is the same as the sale value, the ASR is equal to 1. If the assessed value is less than the sale value, the ASR value is less than 1. A representative ASR value for all the selected properties is chosen (typically, the median or the mean of all the ASR values). If this representative ASR falls within a range that is close to 1 [MPAC utilizes a range from 0.95 to 1.05], then this indicates that the similar properties in the vicinity have not been under-assessed. Therefore, as the similar properties have been fairly assessed, this means that the owner of the Subject Property is not required to assume a disproportionate share of the tax burden.

28Where it appears that other similar properties in the vicinity are under-assessed (i.e. the representative ASR is less than 0.95), this indicates that an equitable reduction is required. The pivotal question then is: What should the quantum of the reduction be? When the ASR analysis method is used, the usual practice is to use the representative ASR as the reduction factor. For example, if the representative ASR value is 0.85, then it is accepted that the current value as determined by the Board, should be changed to a value that is 85% of the current value. In other words, the current value is reduced by 15%.

29However, it is important to note that s. 44(3)(b) does not direct that the Board must use a specific method to determine whether an equitable reduction is required, nor, if it is required, the specific quantum of the reduction. This is a determination based on equity, and, therefore, all relevant factors must be considered. The Board also notes that the intent of the Act is that each property should be assessed at its correct current value. Applying an equitable reduction will result in an incorrect current value. Therefore, an equitable reduction should only be applied in circumstances where it is clearly warranted.

30In this regard, the Board notes that the mass appraisal method is used to determine MPAC’s assessed value of all the properties located in the vicinity of a Subject Property, which includes the Subject Property. Consequently, if it is observed that MPAC's mass appraisal method has understated the assessed values of similar properties, then the same can be said for MPAC's assessed value of the Subject Property. As stated in R. J. Dodge Enterprises Ltd. v. Municipal Property Assessment Corporation [2012] O.A.R.B.D, at para. 29.

…because the assessment as returned for the subject property and the assessments as returned for the similar properties are all derived from the same valuation model it is reasonable, on a balance of probabilities, to presume that the assessment as returned for the subject property has already received the benefit of an under assessment by the valuation model.

The conclusion is that an equitable reduction should not be applied to MPAC’s assessed value of the Subject Property because the reduction is inherently included in its assessed value. If an equitable reduction were to be applied to this assessed value, this would, in effect, incorrectly apply the reduction a second time. Consequently, an equitable reduction will not be applied if the Board accepts that the correct current value is the assessed value determined by MPAC using its mass appraisal method.

31The Board notes that the above conclusions are also supported by the following Board Decisions, all of which were included in MPAC's response to the Appellant’s submissions:

• Elmhurst Holdings Limited/Sun Life Assurance/ Vanderclay Development Co Ltd v. Municipal Property Assessment Corporation [2008] O.A.R.B.D., at pages 6 and 7

• Municipal Property Assessment Corporation v. Buijs [2011] O.A.R.B.D., pages 6 and 7

• Pusatari v. Municipal Property Assessment Corporation [2012] O.A.R.B.D. WR 113986, para. 10

32In this case, the evidence is clear that, if the Board had accepted Ms. Covello’s opinion that the Subject Property’s market value is $1,509,000, it would have been necessary to apply the 0.936 equitable reduction to this value to arrive at an adjusted current value of $1,412,000. However, the Member accepted MPAC's submission that he should find the correct current value is not higher than MPAC's assessed value. Therefore, it became unnecessary to further adjust this value by applying the equitable reduction factor. For this reason, the Board does not accept the Appellant’s submission that the Member substituted his own expertise to reject the parties’ agreement respecting the equitable reduction factor.

33In making the above finding, the Board observes that, while the Member’s conclusion is correct, the wording of the Decision unfortunately does not properly describe his analysis. At para. 44 of the Decision, he states:

[44] The Board determines that an equitable adjustment is not required in this instance. MPAC’s position is that equity is not an issue and the analysis suggest that the Subject Property is within the acceptable range. The Appellant’s position that an adjustment is warranted is without supporting evidence. Therefore the Board is not persuaded to make any adjustment, particularly given the fact that the Appellant is relying on MPAC’s Equity Study which does not support an adjustment.

The problem with this wording, is that it suggests that MPAC's Equity Study does not support that an adjustment may be required, whereas the Decision indicates that the parties agreed that the equitable reduction factor is 0.936 which is below the 0.95 lower limit. While the Board accepts that a more accurate description was warranted, the Board is, nonetheless, satisfied that, based on the analysis and findings above, the Member did not make a significant error of law or fact such that the Board would likely have reached a different decision.

ORDER

34The Appellant’s Request for Review is dismissed.