Tribunals Ontario

Assessment Review Board

Issue Date: July 21, 2021 File No.: WR 172145 Assessed Person(s): Peter Allwyn Lobo; Werrel Pauline D’Souza Appellant(s): Peter Lobo; Werrel D’Souza Respondent(s): Municipal Property Assessment Corporation Region 09 Respondent(s): City of Toronto Property Location(s): 65 St. Mary Street Unit 2903 Municipality(ies): City of Toronto Roll Number(s): 1904-068-350-03777-0000 Appeal Number(s): 3432486 and 3442145 Taxation Year(s): 2020 and 2021 Hearing Event No.: 747976 Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31

Appearances

Parties	Representative
Peter Allwyn Lobo	Self-represented
Werrel Pauline D’Souza	Peter Allwyn Lobo
Municipal Property Assessment Corporation	Ryan De Sousa
City of Toronto	No one appeared

Heard: June 29, 2021 by telephone conference call Adjudicator(s): Joanne Laws, Member

Decision

Overview

1For the 2020 and 2021 taxation years, the Municipal Property Assessment Corporation (“MPAC”) returned an assessed value of $528,000 for Unit 2903 at 65 St. Mary Street in the City of Toronto (the “Subject Property”). Peter Lobo representing himself and Werrel Pauline D’Souza (the “Appellants”) filed an appeal with the Assessment Review Board (the “Board”), taking the position that the assessed value is too high and that the current value should be similar to the purchase price of $404,048.

2MPAC’s position is that the assessment as returned is the correct current value.

Background

[3] The Appellants’ evidence is that: a. They entered into a purchase and sale agreement with the builder in 2008. b. The builder terminated that agreement. c. A new purchase and sale agreement occurred no later than 2011 and it closed in July 2016. d. The sale price was $404,048.

4Mr. Lobo testified the purchase price included the cost of upgrades, development charges, all appliances, all window coverings, one parking space, one locker and the real estate commission paid by the builder/developer.

Issues for the Hearing

[5] At issue in this proceeding is:

1. Whether minutes of settlement with the Federal Government determined the Subject Property’s current value in accordance with s. 1(1) of the Assessment Act, R.S.O. 1990, c. A.31 (“Act”)?
2. What is the Subject Property’s current value?
3. Whether an equity reduction of the current value should be made?

Result

6The Subject Property’s current value is $528,000 in the residential property class.

7The Board also finds that there is no evidence before it to support a reduction in this value when reference is made to the assessments of similar lands in the vicinity.

8Accordingly, the assessment of $528,000 is confirmed for the 2020 and 2021 taxation years.

Analysis

Description of Subject Property

9The Subject Property is a condominium unit located at the corner of Bay Street and St. Mary Street in the City of Toronto. Its size is 611 sq. ft. with one bedroom and one bathroom. In addition, there is one parking space and one locker.

Issue 1 – Whether Minutes of Settlement with the Canada Revenue Agency (“CRA”) and the Department of Justice Canada determine the current value of the Subject Property?

10The Appellants argued that executed minutes of settlement with the Tax Court of Canada, made as a result of a complaint to CRA has determined the Subject Property’s current value in accordance with the Act.

11After purchasing the Subject Property in 2016, the Appellants sought a tax rebate under the CRA’s Goods and Services Tax/Harmonized Sales Tax New Residential Rental Property Rebate program (the “rebate program”). The Parties explained that the rebate program provides tax rebates for eligible properties if the owner rents the property for a period of at least one year and if the “fair market value” does not exceed $450,000.

12The Appellants’ evidence is that the CRA denied their application under the rebate program and they appealed the CRA decision which resulted in Minutes of Settlement with the Department of Justice Canada. The documents submitted into evidence do not indicate a determination of the “fair market value” or the criteria used to determine that value.

13Mr. Lobo testified that the fair market value set out in the Minutes of Settlement was the purchase price of $404,048 as of July 2016. He argued that the Assessment Review Board is subordinate to a federal court and, therefore, its decisions are binding on this Board.

Findings on Issue 1

14The Board agrees that a decision from a higher court could engage the principle of vertical stare decisis. However, no evidence was presented that a decision was rendered by a higher court, only that Minutes of Settlement were executed. Further, had a decision been rendered on the fair market value, no evidence was presented that the criteria used to determine that value is the same as a determination of current value as defined in s.1(1) of the Act.

15The Board finds that the Minutes of Settlement do not assist the Board in determining the current value of the Subject Property.

Issue 2 – What is the Current Value?

16The Parties agreed that 65 St. Mary Street and 1080 Bay Street are in the same condominium complex and MPAC argued that the two buildings are comparable.

17Ryan DeSousa, representing MPAC, presented six sales of condominiums located in these two buildings. MPAC took the position that the six sales are similar to the Subject Property and support the assessed value of $528,000. MPAC has allocated a value of $40,000 for a parking space and $4,000 for a locker.

18MPAC took the position that properties purchased directly from the builder are not reliable in determining current value because such sales may include incentives and taxes that are not included in open market resale properties.

19The Appellants argued that the purchase price reflects the current value as defined in s. 1 of the Act, that it was an arm’s length sale by a willing seller to a willing buyer. The Appellants further argued that because they took possession in 2016 the purchase price reflects the current value as of the legislated January 1, 2016 valuation date.

20The Appellants submitted into evidence the transfer deed and the Tarion Certificate in support of the sale value which shows that the “price paid by us including all extras” was $402,213,57.

[21] In support of this value the Appellants submitted into evidence the following three builder sales in support of the sale price being the current value. Mr. Lobo testified they are located in 65 St. Mary Street and are identical to the Subject Property:

• Unit 3 Level 33 Sale Price $397,147 date of Sale October 12th, 2016
• Unit 3 Level 17 Sale Price $395,424 date of Sale July 6th, 2016
• Unit 3 Level 11 Sale Price $394,077 date of Sale August 25th, 2016

22Regarding MPAC’s six sale properties, Mr. Lobo testified that the Subject Property has an obstructed view due to a building on St. Joseph Street. He argued that MPAC’s sale properties #4, 5 and 6 have unobstructed views and, therefore, they are superior to the Subject Property.

Findings on Issue 2

23Section 1(1) of the Act defines current value as: “in relation to land, 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”. Section 19.2(1)4. provides that the valuation date for 2020 and 2021 is January 1, 2016.

24There is no dispute that the purchase price of $404,048 is a builder sale. As noted above, Mr. Lobo testified he purchased the Subject Property directly from the builder for that price, that the purchase and sale agreement was entered into in 2011 and closed in 2016, and that the purchase price included development charges, upgrades, appliances, window coverings, real estate commission, one parking unit and one locker unit.

[25] Regarding builder sales, the Board generally agrees with the findings in Roitman v. Municipal Property Assessment Corp. Region No. 9, [2013] O.A.R.B.D. No. 138: “Unless there is no other evidence available, the Board is generally reluctant to accept builder’s sales as indicators of current value. Arguments against the use of builder’s sales are plentiful; those sales are often distorted by builder’s incentives such as low rate of financing, upgrades, appliance packages and other inducements (for instance, in this case the Appellant stated that the subject property was a model suite and the purchase included the furnishings). This result in too many uncertainties about the total consideration paid; and the ability to accurately identify exactly how much money was paid to complete the purchase. Another concern with builder’s sale is that there is often a significant time lapse between the entering into the original agreement of purchase and the sale closing”.

26Based on the list of incentives or inclusions in the sale, and the time lapse of five years between entering into the purchase and sale agreement and the closing date, the Board finds that, on a balance of probabilities, the purchase price does not reflect the Subject Property’s current value. Therefore, the Board disregards the builder sale.

27Further, the Board does not find that the Appellants’ three sales are helpful in determining the Subject Property’s current value because they too are builder sales. The Appellants provided no evidence of the incentives or time lapse between the sales’ agreement and closing dates or whether they included parking or storage.

28The best evidence of the Subject Property’s current value is the property sales submitted by MPAC. They are not builder sales but re-sales and, therefore, better reflect the current value as defined by the Act. Mr. DeSousa used the bracketing technique to support his conclusion that the Subject Property’s correct value is $528,000. The scheme of the bracketing technique is that superior properties would sell for more than the Subject Property, inferior properties would sell for less and similar properties would reflect the Subject Property’s correct current value.

29Other than obstructed views, the Appellants provided no evidence that 1080 Bay Street and 65 St. Mary Street are different. The evidence is that they are both part of the same condominium complex. Based on the above, I will consider sales from both but will also consider Mr. Lobo’s testimony regarding obstructed views.

30MPAC’s Sale 1, Unit 2506, 65 St. Mary Street, is located on a similar floor level and has a parking space and locker. It has a southern exposure towards Lake Ontario while the Subject Property’s is western. It is slightly larger (648 sq. ft. compared to the Subject Property’s 611 sq. ft.) but abuts a garbage chute and elevator. Based on the unit size and on Mr. Lobo’s testimony that the western exposure is inferior, I find that this unit is, on balance, superior to the Subject Property. As a result, the Board finds that the Subject Property’s current value would be less than this unit’s time-adjusted sale price of $574,000.

31MPAC’s Sales 2 and 3, Units 409 at 1080 Bay Street and 2008 at 65 St. Mary Street are, on balance, inferior to the Subject Property. Neither have a locker or parking space and the units are smaller (592 sq. ft.). As a result, the Board finds that the Subject Property’s current value would be higher than their time-adjusted sale prices of $441,951 and $493,108, respectively.

32MPAC’s Sale 4, Unit 2603, 1080 Bay Street, is identical to the Subject Property in unit size and because it has both a locker and a parking space. The Appellants argued that it is superior to the Subject Property because it has a southern and unobstructed view of Lake Ontario. Based on the superior view, the Board finds that the Subject Property would sell for less than the time-adjusted sale price of $593,000.

33MPAC’s Sale 5, Unit 1205, 1080 Bay Street, is larger than the Subject Property (648 sq. ft. compared to the Subject Property’s 611 sq. ft.) but similar in that it has both a parking space and a locker. It is inferior due to abutting a garbage chute and elevator. The Appellants argued that it is superior to the Subject Property because it has an unobstructed western view of Queen’s Park and green space. Based on the superior view and unit size, the Board finds that the Subject Property would sell for less than the time-adjusted sale price of $605,000.

34MPAC’s Sale 6, Unit 1606, 1080 Bay Street is, on balance, similar to the Subject Property. It has a larger unit at 648 sq. ft. and the unobstructed western exposure affords a superior view. However, it does not have a parking space or locker and it abuts a garbage chute and elevator. It has a time-adjusted sale value of $564,000. The Board finds that, on balance, the Subject Property would sell for a similar value.

35Based on the above analysis, the Subject Property’s current value would be more than $493,000, the highest time-adjusted sale value of the inferior properties, but less than $574,000, the lowest value of the superior units. The most similar unit sold for $564,000. This is the current value of the Subject Property.

Issue 3 – Whether the current value determined requires a reduction for it to be an equitable assessment when reference is made to the assessments of similar properties in the vicinity?

36The Appellants did not advance a position on the question of equitable assessment. MPAC produced an equity analysis report in the normal course of disclosure. That report found that no adjustment to the current value was necessary for the purpose of an equitable assessment.

Findings on Issue 3

37The Board finds that there is no evidence to support a reduction of the current value determined when reference is made to the assessments of similar lands in the vicinity.

Conclusion

38Although the evidence indicates that the correct current value of the Subject Property is $564,000, rounded, no party has served a notice to seek a higher assessment. MPAC took the position that the assessment as returned of $528,000 should be confirmed. Accordingly, the Board will not increase the assessed value beyond the returned value of $528,000 for the 2020 and 2021 taxation years. The Board also finds that no adjustment is required for the purpose of an equitable assessment.

Order

39The Board affirms the assessment of Unit 2903 at 65 St. Mary Street as $528,000 in the residential property class for the 2020 and 2021 taxation years.