George Glenson McLachlan v. Municipal Property Assessment Corporation Region 04, 2021 CanLII 51701

Tribunals Ontario

Tribunaux décisionnels Ontario

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: June 08, 2021

FILE NO.: WR 170544

Assessed Person(s): George Glenson McLachlan and Patricia Mabel McLachlan

Appellant(s): George Glenson McLachlan

Respondent(s): Municipal Property Assessment Corporation Region 04

Respondent(s): Township of McNab-Braeside

Property Location(s): 5 Peggs Lane

Municipality(ies): Township of McNab-Braeside

Roll Number(s): 4701-001-030-25910-0000

Appeal Number(s): 3386467, 3397719 and 3439940

Taxation Year(s): 2019, 2020 and 2021

Hearing Event No.: 743864

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

APPEARANCES:

Parties

Representative

George Glenson McLachlan

Roy Wood

Municipal Property Assessment Corporation

Rox-Anne Poulain

Township of McNab-Braeside

No one appeared

HEARD: May 3, 2021 by telephone conference call

ADJUDICATOR(S): Subuola Awoleri, Member

DECISION

OVERVIEW

1George Glenson McLachlan (the “Appellant”), the owner of 5 Peggs Lane (the “Subject Property”), appealed the 2019 assessment of the Subject Property to the Assessment Review Board (the “Board”) under s. 40 of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”) on the ground that the assessment is too high. Pursuant to s. 40(26) of the Act, the Appellant is deemed to have brought the same appeal in respect of the 2020 and 2021 taxation years.

2The Appellant argued that the Subject Property is not a waterfront property and the current value assessment (“CVA”) should be $405,500. The Municipal Property Assessment Corporation (“MPAC”) submitted that the Subject Property is a waterfront property and the Board should confirm the assessment as returned at $527,000.

Interim Decision

3These appeals came before the Board for a hearing on January 26, 2021, in McLachlan v Municipal Property Assessment Corporation, Region 04, 2021 CanLII 22014 (ON ARB) (“McLachlan”). During the hearing, Roy Wood, the Appellant’s representative argued that the Subject Property was incorrectly assessed as a waterfront property. He testified that the cliff on the Subject Property is a severe obstacle to access the water and there is no access to the water due to the height and shape of the cliff, which is approximately 100 feet (“ft”) high and has a sheer vertical drop to the water. MPAC argued that it made a downward adjustment of $49,000 for the cliff and that the Subject Property is a waterfront property.

4The Board determined that the Subject Property is incorrectly assessed by MPAC as a waterfront property. The Board further determined that the OPG shoreline (a property owned by Ontario Power Generating), lying between the Subject Property and the Madawaska River is not a marketable and assessable feature of the location of the Subject Property. The Board further determined that the Appellant need not own the OPG shoreline but should have unrestricted access and enjoy current and ongoing use of it to access the water, which he did not have. The Board was unable to determine the current value of the Subject Property, as the evidence furnished by the parties was insufficient to make this determination.

5The parties have now provided further evidence for the Board to make its findings on the correct current value of the Subject Property.

Issues for the Hearing

6The issues to be determined are:

1. What is the correct current value of the Subject Property for the 2019, 2020 and 2021 taxation years?

2. Should there be an equitable reduction of the current value pursuant to s. 44(3)(b) of the Act, and, if so, what should the amount of this reduction be?

Result

7The Board finds that the correct current value of the Subject Property is $485,000 (rounded) for the 2019, 2020 and 2021 taxation years.

8The Board finds that there is no evidence to support a conclusion that the Subject Property requires a reduction in its determined current value in order to make it equitable with the assessment of similar properties in the vicinity.

9The Board reduces the assessment of the Subject Property from $527,000 to $485,000 (rounded) for the 2019, 2020 and 2021 taxation years.

ANALYSIS

Description of the Subject Property

10MPAC assessed the Subject Property as a one storey single-family detached dwelling located on water, built in 2018, located in the Township of McNab-Braeside. It has a lot with 135 ft of effective frontage, an effective site area of 1.55 acres and actual site area of 1.9 acres. It has a total building area of 1,782 square feet (“sq. ft.”), with construction quality of 6.5 and a basement area of 1,546 sq. ft. of which 1,100 sq. ft. is finished. It has an attached garage and a shed.

Issue 1 - What is the correct current value of the Subject Property for the 2019, 2020 and 2021 taxation years?

11In accordance with s. 44(3)(a) of the Act, the first mandate of the Board is to determine “the current value of the land”. Section 1 of the Act defines current value as “the amount of money the fee simple, if unencumbered, would realize if sold at arm’s length by a willing seller to a willing buyer”. That is, for the 2019, 2020 and 2021 taxation years, the Board must determine what the Subject Property would have sold for in an arm’s length transaction on the January 1, 2016 valuation day set by the Act.

12The best evidence the Board can receive of current value is an arm’s length and market-tested sale of the Subject Property on the valuation date or close to it or arm’s length and market-tested sales of comparable properties located nearby, as close as possible to the legislated valuation date of January 1, 2016.

13The Board finds the current value of the Subject Property for the 2019, 2020 and 2021 taxation years to be $485,000 (rounded).

MPAC’s Proposed Comparable Properties

14MPAC presented the Board with eight proposed comparable property sales. Five of these sales were waterfront properties and three were non-waterfront properties. The details of MPAC’s proposed comparable property sales are provided in Table 1 below.

Table 1

Address

Assessment $

Sale Date & Sale Amt. ($)

Time/ Adjusted Sale ($)

Building/ Size (sq. ft.)

Lot Size (Acres)

Year Built/ #of Floors

Waterfront/ Access to Water

Quality of Construction

Subject Property

5 Peggs Lane

527,000

N/A

N/A

1,782

1.9

2018/ 1 storey

Non-waterfront [as determined by Board]/ no access to water

6.5

Sale 1

1538 McLachlan Road

596,000

August 2013 (549,900) September 2015 (430,000)

561,495

2,669

1.06

2002/ 2 storey

Waterfront access to water

7.0

Sale 2

829 Flat Rapids Road

681,000

September 2016 (673,000)

646,635

2,557

7.5

2005/ 1 storey

Waterfront access to water

7.5

Sale 3

90A Mitchell Lane

425,000

November 2017 (588,000)

534,268

1,872

1.0

1995/ 1 ¼ storey

Waterfront access to water

6.5

Sale 4

1803 Calabogie Road

453,000

December 2020 (690,000)

444,552

2,219

1.36

2003/ 1 ¾ storey

Waterfront access to water

6.5

Sale 5

1777 Calabogie Road

399,000

December 2020 (695,000)

447,774

1,622

3.81

1860/ 1974/ 1 ½ storey

Waterfront access to water

5.5

Sale 6

1217 Gillian Road

415,000

September 2017 (450,000) August 2018 (490,000)

446,932 475,948

1,746

5.98

2015/ 1 storey

Non-waterfront

7.0

Sale 7

16 Hazelwood Drive

487,000

February 2016 (536,150)

535,245

2,015

1.84

2014/ 1 storey

Non-waterfront

7.0

Sale 8

21 Hazelwood Drive

435,000

February 2016 (435,000)

434,266

2,521

2.15

2008/ 1 storey

Non-waterfront

7.0

Waterfront Properties

15The Board finds that MPAC’s five proposed comparable waterfront properties -Sales 1 to 5 are not comparable to the Subject Property.

16MPAC submitted that as a result of its disagreement with the Board’s Interim Decision, where the Board determined that the Subject Property is incorrectly assessed as a waterfront property, it presented five proposed comparable waterfront properties. Tina Jamieson, MPAC’s witness testified stating, “I consider Sale 1 and 3 both very similar to the subject when taking the cliff into consideration”. The Board notes that Ms. Jamieson testified that she did not conduct an on-site inspection of all MPAC’s proposed comparable property sales. MPAC submitted that it used the time-adjusted sale prices of property Sales 1 and 3 to arrive at a median value of $601,173. Furthermore, MPAC submitted that using the time-adjusted sale price of Sale 3, which it considers as the best sale similar to the Subject Property, provides a value of $534,268. MPAC argued that this shows that the Subject Property has been fairly assessed and the Board should confirm the assessment as returned at $527,000.

17MPAC further provided in its additional evidence that:

In the interim decision the board determined since the property does not have use of the waterfront MPAC should provide comparables of non-waterfront properties. MPAC disagrees with this approach. MPAC has provided waterfront properties that do not have use of the waterfront and are noted as having a cliff, similar to the subject property” [emphasis added]

18However, during the hearing, MPAC admitted that this statement is inaccurate. Ms. Jamieson admitted that these proposed comparable waterfront property Sales 1 to 5 are not similar to the Subject Property. She added that these comparable sales all have access to the water and the cliff topography on some of them are different from that on the Subject Property. She testified that in response to MPAC’s additional evidence served on the Appellant, the Appellant provided pictures of MPAC’s waterfront properties which clearly reveals that these properties have access to the water and the cliff on some of the properties is different from the cliff on the Subject Property, which prevents access to the water.

19Specifically, MPAC referred to a neighbouring property; comparable property Sale 1 – 1538 McLachlan Road as a similar property, with a similar cliff, and the current owner installed stairs on the cliff to access the water. The Appellant’s pictures of this property and the stairs on the cliff shows that this cliff is not similar to the Subject Property. It is walkable although it is extremely steep, while it is impossible to walk on the cliff on the Subject Property, which is approximately 100 ft high and has a sheer vertical drop to the water. In addition, the Appellant provided an email from the current owner of comparable property Sale 1, Jeremiah Gillet, who also confirmed that the cliff on his property is not comparable to the cliff on the Subject Property. MPAC did not object to this.

20MPAC advised the Board that its additional evidence was prepared before the Appellant’s response with pictures of MPAC’s waterfront properties and due to COVID-19, MPAC was unable to inspect its proposed comparable property sales. The Board notes that MPAC conducted an on-site inspection of the Subject Property and is aware of the Appellant’s inability to access the water due to the nature of the cliff on the Subject Property.

21To determine the current value of the Subject Property, in accordance with the Act, the Board needs to determine what the Subject Property would sell for in a market transaction on the valuation date of January 1, 2016. In making this determination, the Board will use the sale of similar properties. MPAC’s property Sales 1 to 5 have access to the water and by MPAC’s admission these properties are not similar to the Subject Property. Labelling the Subject Property as a waterfront property without any benefit to the Appellant or a potential buyer does not make it a waterfront property as a willing buyer will also not enjoy the benefit of access to the water. This will be accounted for in the purchase price.

22In addition, only MPAC’s proposed comparable waterfront property Sale 2 sold within the shoulder years of the valuation date of January 1, 2016. The Board considers the sales of properties that sold within the shoulder years from the valuation date of January 1, 2016, which is 12 months on either side of the valuation date. Proposed comparable property Sale 1 sold twice in 2013 and 2015. MPAC provided the time-adjusted sale price for the 2013 sale (which is too far removed from the valuation date), without providing the Board with the time adjustment factor it used to time adjust the sale price. MPAC advised the Board that the 2015 sale of proposed comparable property Sale 1 was not a valid sale. The Board finds that MPAC’s proposed comparable property Sale 2 is superior to the Subject Property. It has a larger lot size of 7.5 acres, with a larger structure of 2,557 sq. ft., a higher quality class of 7.5 and an outdoor pool.

23Ms. Jamieson further testified that she has assessed similar properties in the vicinity of the Subject Property with the same type of cliff, and property owners installed stairs on the cliff. Ms. Jamieson did not present any corroborating evidence to support her testimony.

24In support of its argument, MPAC referred the Board to its prior decisions in; Down v. Municipal Property Assessment Corp., Region No. 26, [2004] O.A.R.B.D. No. 350 (“Down”) and Tierney v. Municipal Property Assessment Corp. Region No. 25, [2015] O.A.R.B.D. No. 17 (“Tierney”). This panel is not bound by these prior decisions and finds that these decisions are not relevant to this appeal.

25Pursuant to the decision in Down, MPAC argued that the use of waterfront is fluid and can change. Therefore, MPAC concluded that the Appellant can install steps to access the water just like the neighbouring property. In accordance with the prior decisions of the Board cited in McLachlan, the use and access to the OPG Shoreline lying between the Subject Property and the water is pertinent to its designation as a waterfront property. It is impossible for the Appellant to access the OPG Shoreline due to the cliff present on the Subject Property. MPAC further admitted that the cliff on the neighbouring property is not similar to the cliff on the Subject Property. In Down, the appellant testified that the property was incorrectly categorized as a lakefront property, when it is an indirect lakefront property. The appellant did not testify that there was no access to the water, but that the use of the beach by the general public “by access from an adjacent right-of-way interferes with the use and enjoyment of the subject property”. Moreover, in this decision MPAC provided sales of lakefront properties in similar situation as the subject property to justify its assessment. This is not the situation in the present appeal.

26The decision in Tierney does not support MPAC’s position. MPAC argued that the Board in Tierney did not change the designation of the property to non-waterfront but relied on similar properties subject to the same market conditions. MPAC argued that it presented comparable waterfront properties subject to the same market conditions as the Subject Property. In making a determination on current value, the Board in Tierney relied on a similar property on the same street, which is also unable to safely access the Galop Canal. In the present appeal, MPAC is relying on the neighbouring property, which did not sell within the shoulder years of the valuation date and by MPAC’s admission is not similar to the Subject Property, has access to the water, while the Subject Property does not have access or a view of the water.

27The Board is unable to determine the current value of the Subject Property based on MPAC’s proposed comparable waterfront property Sales 1 to 5. A willing buyer will not pay the same price for the Subject Property and these proposed comparable waterfront properties. Moreover, these properties sold outside the shoulder years of the valuation date, excluding proposed comparable property Sale 2, which is determined to be superior to the Subject Property.

Non-Waterfront Properties (MPAC and Appellant’s Proposed Comparable Property Sales)

28The Board finds that the best evidence to find the current value of the Subject Property is 16 Hazelwood Drive and 21 Hazelwood Drive (MPAC’s proposed comparable property Sales 7 and 8, Appellant’s proposed comparable property Sales 4 and 5).

29MPAC submitted that its non-waterfront comparable property Sales 6, 7 and 8 are not comparable to the Subject Property and should not be used to determine the current value of the Subject Property. MPAC indicated it was presenting three non-waterfront properties in compliance with the Board’s Interim Decision. However, MPAC submitted that using the time-adjusted sale prices of comparable Sales 6 and 7, which it considers similar to the Subject Property in size, interior details, year built and design, provides a median value of $475,948. MPAC further submitted that the sales of waterfront properties are higher than non-waterfront properties, therefore the Board should confirm the assessment as returned at $527,000.

30The Appellant presented eight non-waterfront properties. Only seven of these properties had a sale. The Appellant used the median and the average of the CVA’s of the eight properties at $406,000 and $405,000 to provide an average value of $405,500, which he submitted should be the current value of the Subject Property. The Board finds that this is an incorrect methodology in arriving at the current value of the Subject Property, as this method is not reliable since it does not rely on market sales. Where an assessed value is used rather than market sales to determine current value, the result may be an incorrect current value pursuant to the definition of current value in the Act.

31The Board finds that the Subject Property and the non-waterfront properties have one thing in common: no access to water as of the valuation date of January 1, 2016. Furthermore, as determined in McLachlan, as of the state and condition dates of the Subject Property for the 2019, 2020 and 2021 taxation years, which were December 11, 2018, December 10, 2019 and December 8, 2020, the Subject Property did not have access to the water and there was no stairway installed on the cliff. The Subject Property does not enjoy a view of the water as testified by the Appellant and admitted by MPAC. Therefore, in determining the correct current value of the Subject Property, the Board reviewed MPAC and the Appellant’s non-waterfront comparable property sales. The Board did not use MPAC’s Sale 6 and the Appellant’s Sales 1, 2, 3, 6, and 7, as these sales were too far removed from the valuation date of January 1, 2016. These sales have a sales range from September 2017 to March 2021. The Board did not review the Appellant’s proposed comparable property 8, since it did not sell.

32MPAC’s comparable property Sale 7 and 8 (16 Hazelwood Drive and 21 Hazelwood Drive) and the Appellant’s comparable property Sales 4 and 5, are the same properties, which both sold in February 2016.

33Comparable property Sale 7 - 16 Hazelwood Drive has a one-storey structure like the Subject Property and was built in 2014, making this property four years older than the Subject Property. It sold on February 12, 2016 for $536,150 and has a time-adjusted sale price of $535,245. It has a higher quality class of 7.0, with three bedrooms and three bathrooms like the Subject Property. Its site area of 1.84 acres is within the range of the Subject Property’s site area of 1.9 acres. This property has a walkout basement of 2,015 sq. ft. of which 1,200 sq. ft. is finished. This is comparable to the Subject Property, which also has a walkout basement of 1,546 sq. ft. with a similar finished area of 1,100 sq. ft. MPAC also acknowledged that it has similar features with the Subject Property, but it is inferior due to its age. The Board finds that the age is accounted for in its higher quality of construction and larger building area. The Board determines that this property is relatively comparable to the Subject Property, in terms of its structure, site area, number of bedrooms and bathrooms and the size of its finished basement.

34Comparable property Sale 8 - 21 Hazelwood Drive is also a one-storey building like the Subject Property and was built in 2008. It sold on February 2, 2016 for $435,000 with a time-adjusted sale price of $434,266. This property is 10 years older than the Subject Property. MPAC submitted that due to its age it is inferior to the Subject Property although it has similar features. The Appellant submitted that this property is similar to the Subject Property due to some similar features. Although it is 10 years older, its age is accounted for in its larger site area of 2.15 acres and larger structure of 2,521 sq. ft. The Board finds that this property is relatively comparable to the Subject Property due to the same number of bathrooms (3), building structure, air conditioner, fireplace and it also has a finished basement of 1,557 sq. ft.

Finding on Current Value

35The average time-adjusted sale price of comparable property Sales 7 and 8 at $535,245 and $434,266 provides a value of $484,755. The Board finds that the correct current value of the Subject property is $485,000 (rounded).

Issue 2 - Whether there should be an equitable reduction of the current value pursuant to [s. 44(3)](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html)(b) of the [Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html), and, if so, what the amount of this reduction should be.

36Section 44(3)(b) of the Act directs that after determining current value, the Board shall 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.

37The goal of the Act is to determine the correct current value of properties. Any equitable reduction in the current value results in an incorrect current value. Consequently, an equitable reduction should only be made where there is clear evidence to support that such a reduction is warranted. In this regard, the burden of proof rests with the party that alleges that it would be inequitable to assess the Subject Property at its current value, and in this appeal is the Appellant. The Appellant has to establish, on a balance of probabilities, that an equitable reduction is required.

38The Appellant did not raise this issue and he did not present any evidence on the appropriate reduction based on equity.

39The Board finds that there is no evidence provided by the parties to support a reduction in the current value of the Subject Property, in order to make it equitable with the assessment of similar properties in the vicinity.

40The Board determines that the correct current value of the Subject Property is $485,000 (rounded) with no equitable adjustment necessary.

CONCLUSION

41The Board determines that the current value of the Subject Property is $485,000 for the 2019, 2020 and 2021 taxation years.

ORDER

42The Board orders that the assessment of the Subject Property is reduced from $527,000 to $485,000 (rounded) for the 2019, 2020 and 2021 taxation years.