Inderpaul Singh Chandhoke v. Municipal Property Assessment Corporation Region 09, 2021 CanLII 19608

Tribunals Ontario

Tribunaux décisionnels Ontario

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: March 10, 2021

FILE NO.: WR 169042

Assessed Person(s): Inderpaul Singh Chandhoke

Appellant(s): Inderpaul Singh Chandhoke

Respondent(s): Municipal Property Assessment Corporation Region 09

Respondent(s): City of Toronto

Property Location(s): 2670 Islington Avenue

Municipality(ies): City of Toronto

Roll Number(s): 1919-043-190-06500-0000

Appeal Number(s): 3274978, 3299982, 3350333 and 3402044

Taxation Year(s): 2017, 2018, 2019 and 2020

Hearing Event No.: 737371

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

APPEARANCES:

Parties

Representative

Inderpaul Singh Chandhoke

Self-represented

Municipal Property Assessment Corporation

Daniel Leduc

City of Toronto

No one appeared

HEARD: March 2, 2021 by telephone conference call

ADJUDICATOR(S): Jean-Paul Pilon, Member

DECISION

OVERVIEW

1Inderpaul Singh Chandoke (the “Appellant”) was the owner of a property at 2670 Islington Avenue in Toronto (the “Subject Property”). The Appellant appealed the assessment of Subject Property for the 2017 taxation year, and further appeals for the 2018, 2019 and 2020 taxation years were deemed pursuant to section 40(26) of the Assessment Act, 2006 (the “Act”). The City of Toronto (the “Municipality”) did not participate in these appeals.

2The Appellant did not dispute the current value assessment of the Subject Property returned by the Municipal Property Assessment Corporation (“MPAC”) for these taxation years of $941,000, which is confirmed in this decision on consent. The only issue for the Assessment Review Board (the “Board”) to determine in these appeals is the classification or the classifications and apportionment for the Subject Property. MPAC’s position was that the returned classification of the Subject Property in the commercial property class should be confirmed. The Appellant argued that the correct classification of the entire Subject Property was the residential property class.

3Section 40(17) of the Act provides that “where value is a ground of appeal, the burden of proof as to the correctness of the current value of the land rests with the assessment corporation.” As a result, the parties at the hearing further agreed that since classification was the ground of appeal in these appeals and not value, that it was the Appellant and not MPAC that had the burden of proof in this proceeding.

Background

4The Subject Property is a two-story building in the west end of Toronto. Each of the basement, first floor and second floor of the Subject Property have an approximate area of 1,010 square feet, for a total of 3,030 square feet of interior space. There was no mention of any exterior portion of the Subject Property in the parties’ written material or at the hearing.

5The Appellant, a lawyer, purchased the Subject Property in 2001 which at the time was an entirely residential dwelling, intending to operate a law practice there. In order to do that and at the Appellant’s request, the Municipality passed By-Law No. 137-2012, which allowed “a professional office within the existing detached house” as an additional permitted use of the Subject Property. In 2018, the Appellant wanted to convert the entire Subject Property back to residential use, but he was told that residential use was already permitted pursuant to para. 320-58 of the Etobicoke Zoning Code.

6In other words, for the years at issue in these appeals, the zoning by-law permitted both residential and commercial uses.

7The Appellant testified that the Subject Property was renovated in 2016. As a result of those renovations, the first floor included two offices, two washrooms (one of which was accessible), a boardroom, a reception area and a lobby. The Appellant testified the second floor was renovated to include several bedrooms, a roughed-in kitchen, closet space, a full bathroom and a partial bathroom, and that he had always intended that floor to be used for residential purposes. He further testified that the basement was to be used for storage by the residential occupants, and that it included a roughed in full kitchen also for use by the residential occupants of the second floor.

8As to the actual occupancy of Subject Property, the Appellant testified that a lawyer who occupied the first floor office also lived on the second floor from September, 2018 to April or May of 2019, and that a tenant rented the second floor in January to April, 2020 for the purpose of renting it on Airbnb.

9The Appellant sold the Subject Property on June 2, 2020.

10MPAC’s witness at the hearing was its Property Valuation Analyst James Twist. He testified that he had not inspected the Subject Property and relied on the notes of a former MPAC employee who had inspected it on May 19, 2016. Those notes were not in evidence at the hearing.

11Mr. Twist testified that those notes confirmed that the first floor was office space and that the second floor was “consistent with an office.” He said those notes indicated that there was no shower on the second floor where the Appellant had testified there was one. Mr. Twist further testified that the notes said that the portion of the second floor that the Appellant described as a kitchen was, in fact, a lunch area that was “not a proper kitchen area to accommodate a residential tenant.” The witness further testified that he thought the Subject Property was accurately reflected in a real estate sales brochure in MPAC’s evidence which depicted the entirety of the Subject Property as commercial. The Appellant, however, testified that publication inaccurately depicted the actual use of the Subject Property and that it was created for marketing purposes in order to sell the Subject Property, which he had attempted to do several times.

Analysis

12As noted above, the single issue to be determined by the Board is the classification of the Subject Property. The Appellant argued the entirety of the Subject Property should be in the residential property class, while MPAC argued that it should be in the commercial property class.

13Real property can be designated to more than one class. For the reasons that follow, the Board finds that the second floor and basement should be designated in the residential property class, with the remainder of the Subject Property designated in the commercial property class.

First Floor

14The simplest determination to be made in this decision is that relating to the first floor of the Subject Property, where the Board determines that it should be designated in the commercial property class. This is because the Appellant’s testimony at the hearing was that the first floor was always used or intended to be used as commercial office space during the taxation years in issue. The Appellant also testified, however, that his intention changed in 2018 when he approached the Municipality a second time thinking he had to request a reversion of the zoning of the Subject Property to residential. However, it was also his evidence that the first floor was used by commercial tenants in 2018, 2019 and 2020.

15In view of that evidence, there is no reason that the first floor of the Subject Property should be designated in the residential property class.

Second Floor and Basement

16As to the remainder of the Subject Property, the Board refers to Ontario Regulation 282/98 (the “Regulation”) which sets out classes of real property. In the relevant portions to this decision, the residential property class is defined in section 3(1)1.i. of the Regulation as “land used for residential purposes that is... land that does not have seven or more self-contained units.” Section 5(1)1. of the Regulation provides that “the commercial property class consists of …land and vacant land that is not included in any other property class.”

Second Floor

17The Appellant’s evidence was that he always intended the second floor to be residential and that it was occupied by residential tenants for some of the time in the taxation years under appeal. MPAC’s witness testified that the MPAC employee who was not present at the hearing and whose notes were not in evidence had written that the second floor resembled office space when it was inspected. Mr. Twist further opined that the observations in those notes bore a strong resemblance to the Appellant’s promotional material showing the Subject Property as commercial office.

18The Appellant argued that the Board should place substantial weight on the zoning of the Subject Property which permitted residential use, however and as noted above, the zoning by-law also allowed for commercial use. More significantly, the Board applies the Ontario Superior Court’s decision in Ontario Property Assessment Corp. v. Praxair Canada Inc., [2002] O.J. No. 121 at par. 20, that “classification must be determined with due regard to the function of the portion under consideration (and) cannot be based solely on the zoning of the portion except where prescribed specifically.” In other words, zoning alone is not determinative of classification.

19There were no submissions by the parties as to how the Board should go about determining the correct classification of the rest of the Subject Property beyond what the provisions of the Regulation set out above. Walker and Grad, in their Ontario Property Tax Assessment Handbook, 2d ed. (Toronto: Carswell, 2017) at 1-33, summarized a plausible test that the Board adopts here in the absence of submissions from the parties otherwise. It was taken from a British Columbia Court of Appeal decision, British Columbia (Assessor of Area No.10 – Burnaby/New Westminster) v. Intracorp Developments Ltd., [2000] B.C.J. No. 368 (“Intracorp”).

20The court in that decision considered how to determine when a property is “used for residential purposes,” which was analogous to the question to be determined here. In their summary, Walker and Grad wrote that:

The court based its decision “on the degree of commitment” and set out a number of factors which should be considered, including the following:

1. The various legal instruments attached to or applicable to the land;

2. Relevant features of the actual construction; and

3. Substantial indication that the owner is using the land for another purpose.

21On the first factor to be determined above, the only evidence of legal instruments attached to the land were the two zoning by-laws which permit both uses in question. Since both potential uses were permitted, that factor is not of assistance in this determination.

22On the second factor, the testimony before the Board was divergent as to the actual features of the second floor. MPAC’s indirect evidence was that it was set up as office space, but the Appellant testified that it was a residential unit. While the Appellant’s evidence on this point might have been self-serving, the Board prefers his evidence because the Subject Property was his. MPAC’s employee who inspected it, on the other hand, was not at the hearing, nor were her notes in evidence, and she could not be cross-examined on what I was told her observations were. The Board’s determination on this second factor therefore supports the position of the Appellant.

23On the third question above, the Appellant’s evidence was that the second floor had been used by residential tenants for some of the relevant time in question. There was no evidence, let alone any “substantial indication,” that the Appellant had been using that part of the Subject Property for any purpose other than for residential purposes, when it was noted above that the Appellant had the burden of proof. The Board’s determination of this factor also supports the position of the Appellant.

24As a result, and in the absence of any submissions from the parties at the hearing as to any other test that should be applied, the Board finds the entirety of the second floor was used and was intended to be used when vacant for residential purposes. Therefore, the Board determines it should be in the residential property class.

Basement

25MPAC’s witness testified that the Subject Property has a total area of 2,032 square feet, but at the hearing it was determined that this was excluding the basement. There was a suggestion from MPAC at the conclusion of the hearing that the basement might somehow be of lesser value than the first and second floor space, but there was no further explanation as to how that would be calculated, whatever its classification. As a result, the Board finds that the basement should be considered in the same manner as the first and second floors of the Subject Property.

26The Appellant testified that the basement was primarily a storage area to be used by residential occupants of the second floor, and that it was accessible from a common staircase that accessed all floors of the building. He also testified that the basement included another and more complete roughed in kitchen that was also intended for the of the residential tenants of the second floor. Unlike the kitchenettes on the first and second floor, that basement kitchen space was not delineated on the real estate plans included in the Appellant’s promotional material that MPAC relied upon at the hearing. Its dimensions were unknown.

27The only evidence from MPAC on the basement was contained in its written report describing it as open space primarily used for storage and including a “one powder room bathroom” and a “kitchenette”. More significantly, MPAC presented no evidence to contest the Appellant’s testimony as to the intended use of the basement.

28The relevant parts of the test in the Intracorp decision above are the second and third factors relating to the “relevant features of the actual construction” and “substantial indication” of use for a purpose other than residential, since the issue of zoning is the same.

29On the second question, the Appellant testified the kitchen in the basement was more substantial than the one on the second floor to explain why the residential occupants of the second floor would use it rather than the commercial occupants of the first floor who had a kitchenette of their own. He also testified that the open storage area in the basement was intended for use by the residential occupants. This evidence was not refuted at the hearing and, at least as far as the kitchen in the basement were concerned, supported the Appellant’s position of classification of that space as residential.

30There was also no evidence of any other use of any use or intended use of the basement by anyone other than the residential tenants. Therefore, the evidence before the Board also supported the Appellant’s position on classification.

31As a result, the Board finds that the basement should also be in the residential property class.

CONCLUSION

32Each floor of the Subject Property was approximately 1,010 square feet according to the floor plans, for a total of 3,030 square feet. Above it was determined that the Appellant met his burden of proof in demonstrating that two-thirds, or the second floor and basement of the Subject Property should be in the residential property class, with the remaining first floor in the commercial property class. Where the parties agreed that the correct current value of the Subject Property was $941,000, the Board finds that $627,333 or $627,000 rounded, should be in the residential property class, and $313,667 or $314,000 should be in the commercial property class.

ORDER

33The assessment of the Subject Property at 1067 Islington Avenue is $941,000, which the Board apportions as follows:

• $314,000 in the commercial property class; and
• $627,000 in the residential property class.