Tribunals Ontario

Assessment Review Board

ISSUE DATE: March 31, 2022

FILE NO.: RD 19-033AA

AMENDED INTERIM REVIEW DECISION ISSUED ON: May 06, 2022

Assessed Person(s): Brigide Lortie and Yvon Couvrette

Appellant(s): Brigide Lortie and Yvon Couvrette

Respondent(s): Municipal Property Assessment Corporation Region 01

Respondent(s): The Nation Municipality

Property Location(s): 523 Concession Road 1

Municipality(ies): The Nation Municipality

Roll Number(s): 0212-012-001-01490-0000

Appeal Number(s): 3286556 and 3288777

Taxation Year(s): 2017 and 2018

Legislative Authority: Rules 101-103 of the Assessment Review Board’s Rules of Practice and Procedure

Parties / Counsel/Representative*

Brigide Lortie and Yvon Couvrette: No one appeared

Municipal Property Assessment Corporation: Don Mitchell*

The Nation Municipality: No one appeared

REQUEST FOR: A review of the Board’s Decision WR 156642 issued on April 16, 2019

HEARD: In writing

ADJUDICATOR(S): Dirk VanderBent, Vice-Chair

AMENDED INTERIM REVIEW DECISION

In accordance with Rule 99 of the Assessment Review Board’s Rules of Practice and Procedure, effective April 1 2021, related to the correction of minor errors and in accordance with Rule 21.1 of the Statutory Powers and Procedure Act regarding the correction of errors, this Amended Interim Review Decision is issued to correct error(s) in the Interim Review Decision regarding minor corrections to paragraphs [1], [88] and [90]. The amendments have been underlined for ease of reference. There are no other changes in this Amended Interim Review Decision.

OVERVIEW

1On May 15, 2019, the Municipal Property Assessment Corporation (“MPAC”), filed a Request for Review with the Assessment Review Board (the “Board”) respecting Lortie v Municipal Property Assessment Corporation, Region 01, 2019 CanLII 34541 (ON ARB), a decision issued on April 16, 2019 (“Decision”). In this Review Proceeding, the Board requested submissions from all the parties, but only MPAC has provided submissions.

THE DECISION

Background

2The Decision relates to the property located at 523 Concession Road 1, The Nation Municipality (“Subject Property”). The following is a brief synopsis of the property’s characteristics, the appeal, an explanation of the issues raised at the hearing and the Hearing Panel’s findings in respect of these issues.

3Brigide Lortie and Yvon Couvrette, the Owners of the Subject Property filed an appeal in respect of the 2017 and 2018 taxation years, pursuant to s. 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended (the “Act”). The property is approximately 35 acres in size, which has been improved with a residential dwelling and a barn. At paragraph 7, the Decision states that the parties agree that 19 acres are farmable (described as “Farmable Land”) and 16 acres, which consist mostly of a wooded area, low quality soil or rock, and/or brush, are not (described as Non-Farmable Land). The barn is located on the Non-Farmable Land.

4Under municipal taxation legislation, the quantum of municipal taxes payable is calculated in accordance with the following formula:

[property value] x [applicable tax rate, expressed as percentage]

The applicable tax rate is based on land classification. The Act, through a regulation, defines the land classes, and prescribes the qualification criteria for each class, which are based primarily on land use. Therefore, these two components, a property’s value and its classification each have an impact on the quantum of municipal taxes payable.

5It is also important to note that, as a factual matter, different parcels of land within the boundaries of a property may be subject to different uses, and, therefore, each parcel may be valued separately. In such cases, these values are then added together to arrive at one value for the entire property.

Appeal of Current Value

6In this case, the Owners asserted that MPAC's assessment of the current value of the Subject Property is too high.

7As will be discussed in greater detail below, the Act provides that, when valuing lands that qualify as “farm lands”, MPAC cannot consider sales of land and buildings to persons whose principal occupation is other than farming.

8The Subject Property is a case in point. As noted above, part of the land is improved by a residential dwelling. MPAC's position at the hearing was that the land on which the residence is situated plus one contiguous acre does not qualify as farm lands. If this is correct, then MPAC, when valuing this part of the property, can consider sales of comparable lands and buildings to persons whose principal occupation is other than farming. Depending on the sales data obtained, this could result in a higher value for the residence than would otherwise be the case if MPAC was restricted to considering only sales of lands and buildings to persons whose principal occupation is farming.

9In addition to the dispute regarding the value of the residence, the Owners took the position that the remainder of the Subject Property also qualified as farm land. MPAC agreed that the Farmable Land did qualify as farm land, but maintained that the Non-Farmable Land did not.

10The Municipality did not participate in the hearing. In summary, the positions of the Owners and MPAC respecting the value of the Subject Property, expressed in rounded numbers, were as follows:

OWNERS

$77,000 (Farmable Land)

$300,000 (Residence and Non-Farmable Land including the barn)

$377,000 TOTAL

MPAC

$310,000 (Residence and Non-Farmable Land)

$88,000 (Farmable Land)

$25,000 (Barn)

$423,000 TOTAL

Appeal of Classification

11In addition to determining the value of property, MPAC is also responsible for determining a property’s land classification.

12As noted above, the municipal tax rates vary depending on land classification. Two of the prescribed land classifications are the Residential Property Class and the Farm Property Class. As will be described in greater detail later in this Review Decision, some lands which fall within the Farm Property Class qualify for a farm property tax rate reduction. Therefore, the determination of the correct classification will also impact the amount of municipal taxes to be levied on the Owners in this case.

13Regarding the issue of the correct land classification, paragraph 2 of the Decision, states:

The main issue raised by the Appellants is the proper classification of the Property. The Appellants claim that the Property is in the farm property class whereas MPAC’s position is that the Property should be classified partly in the farm property class and partly in the residential property class.”

14However, at paragraph 14 of the Decision, the Hearing Panel pointed out that the Board does not have jurisdiction to determine whether the Subject Property should be classified in the Farm Property Class.

The Decision

15The Hearing Panel found that the entire Subject Property qualified as farm land. In reaching this conclusion, the Hearing Panel relied on a previous decision of the Board in Delta Bingo Inc. v Municipal Property Assessment Corporation, Region No. 18, 2013 CanLII 104841 (ON ARB) (“Delta Bingo”). While the Hearing Panel considered Delta Bingo in its deliberations, this decision was not referenced by the parties in their submissions at the hearing, and the Hearing Panel did not request supplementary submissions from the parties regarding Delta Bingo before they issued the Decision.

16Regarding the determination of current value, in overview, the Hearing Panel found that the valuation evidence and analysis provided by each of the parties was inadequate. For this reason, the Hearing Panel adopted a different approach, noting that the Owners purchased the Subject Property on August 13, 2013 for $400,000. The Hearing Panel found that, although this sale occurred two years and four months prior to the January 1, 2016 valuation day, it was, nonetheless, the best evidence of the current value of the Subject Property on the valuation day.

17In summarizing its findings on whether lands on the Subject Property qualify as “farm lands” and on the classification issue, the Hearing Panel, at paragraph 79, stated its final conclusion:

79Subsection 19(5) applies to all of the land and buildings on the Property. As part of the Property was previously classified in the farm property class, there is no need to refer this matter to AFRAAT. Accordingly, on the issue of classification, there is no apportionment and the entire Property is in the farm property class.

To explain the reference to apportionment, a property may consist of two or more parcels of land, each falling into a different property class. In such cases, it is necessary to assign a value to each parcel. The sum of the values for all parcels is the total value of the property. Regarding the statement made respecting a referral to AFRAAT (the Agriculture, Food and Rural Affairs Appeal Tribunal), the Board explains this process in greater detail below.

RELEVANT RULES

18In considering whether to grant a Request for Review submitted pursuant to Rule 101 of the Board’s Rules of Practice and Procedure (the “Rules”), the test to be applied is whether the requester has established any of the grounds set out in Rule 102 which states:

Grounds for Review

102. 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; or

d) there is new evidence that could not have reasonably been obtained earlier and have affected the result.

19The Board’ powers in considering a request for review are set out in Rule 103 which states:

Review Order

103. Upon considering a request for review, or on its own initiative, the Board may:

a) dismiss the request; or

b) after providing all parties an opportunity to make submissions:

(i) confirm, vary, or cancel the decision; or

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

ISSUES

20In its Request for Review, MPAC requests that the Board cancel the Decision and order a rehearing by another Board Member. In overview, MPAC cites three grounds in support of its request:

1. The Hearing Panel violated the rules of natural justice and procedural fairness by relying on Delta Bingo without giving the parties an opportunity to make submissions on this decision;

2. The Hearing Panel acted outside its jurisdiction by determining that the Subject Property be classified in the Farm Property Class; and

3. The Hearing Panel unreasonably concluded that subsection 19(5) applies to the residence and 16.28 acres of "non-farmable lands".

21The Board notes that it is important to clarify the use of the term “classification”. As is discussed greater detail below, s. 19(5) of the Act is a finding made in respect of the determination of current value. Under this section, lands must qualify as farm lands. “Classification” refers to the determination of a property’s classification which is a separate and distinct issue. The provisions of O.Reg. 282/98 (“General Regulation”) govern property classification. Each property class is defined by specific requirements which must be satisfied. As discussed in greater detail below, two property classes, the Residential Property Class and the Farm Property Class, both contain a provision in which the qualification under s. 19(5) is one of the criteria that must be met. Therefore, it is a misleading to state that land is classified under s. 19(5) of the Act. The wording of the Act and the General Regulation reinforce this interpretation. When referencing s. 19(5) of the Act, both the Act and the General Regulation use the term “farm lands”, whereas, when referring to property classification, the General Regulation uses the term “farmlands”. Therefore, the correct terminology is whether land “qualifies as farm lands under s. 19(5)” and whether land “can be classified in the Residential Property Class or the Farm Property Class”.

22Based on the grounds cited by MPAC, the specific issues to be addressed are:

1. Did the Hearing Panel err in law in qualifying the Non-Farmable Land as farm lands pursuant to s. 19(5) of the Act?

2. Did the Hearing Panel err in law in qualifying the residence as farm lands pursuant to s. 19(5) of the Act?

3. Did the Hearing Panel err in law when it classified the entire Subject Property in the Farm Property Class?

4. Did the Hearing Panel violate the rules of natural justice and procedural fairness by relying on Delta Bingo without giving the parties an opportunity to make submissions on this decision?

5. If the Board finds that there is an error of law or a denial of natural justice, what order should the Board make under Rule 103?

RESULT

23The Board finds that the Hearing Panel erred in law in finding: (i) that the residence and Non-Farmable Land qualified as farm lands under s. 19(5); and (ii) in making a determination respecting land classification. The Board further finds that the Hearing Panel did not violate the rules of natural justice and procedural fairness. The Board concludes that it is unnecessary to order a re-hearing, and instead will amend the Decision. If there is still an issue as to whether any part of the Subject Property should be classified in the Farm Property Class, this issue will be referred to AFRAAT for adjudication.

ANALYSIS

Overview of the Applicable Legislation

24The relevant provisions of the Act are:

Section 3(1)19:

Forestry purposes

19. One acre used for forestry purposes for every ten acres of the farm in any one municipality or in non-municipal territory under a single ownership but not more than twenty acres in all, and, where the total acreage consists of more than one separately assessed parcel, the assessment corporation shall treat all the parcels as one parcel for the purpose of determining the exemptions under this paragraph and shall apportion the exemption to each parcel in the ratio of the acreage of each parcel used or partly used for forestry purposes to the total acreage of all parcels used or partly used for forestry purposes.

Section 19:

Assessment based on current value

19 (1) The assessment of land shall be based on its current value.

Farm lands and buildings

(5) For the purposes of determining the current value of farm lands used only for farm purposes by the owner or used only for farm purposes by a tenant of the owner and buildings thereon used solely for farm purposes, including the residence of the owner or tenant and of the owner’s or tenant’s employees and their families on the farm lands,

a) consideration shall be given to the current value of the lands and buildings for farm purposes only;

b) consideration shall not be given to sales of lands and buildings to persons whose principal occupation is other than farming; and

c) the Minister may, by regulation, define “farm lands” and “farm purposes”. [emphasis added]

Land and buildings to be valued as farms

(5.0.1) Land or buildings or both, as prescribed by the Minister, shall be valued as described under subsection (5).

Where owner dies or retires

(5.1) Where the owner of farm lands entitled to the benefit of subsection (5) dies or retires, the current value of the lands and buildings in respect of which subsection (5) applies shall be determined in the manner provided in subsection (5) for the period the lands are held by the owner after his or her retirement or held by his or her estate after his or her death, but in no case beyond the two years immediately following the owner’s death or retirement unless the lands are occupied by the surviving spouse of the deceased owner or by the retired owner.

Section 19.3

Classification day

19.3 The day as of which land shall be classified for a taxation year is June 30 of the previous year.

25The relevant provisions of O.Reg. 282/98 are:

Residential Property Class

3. (1) The residential property class consists of the following:

4. Land used for residential purposes that is:

i. land that does not have seven or more self-contained units, …

2. Land not used for residential purposes that is,

i. farm land to which subsection 19 (5) of the Act applies for the taxation year for which the land is being classified, other than land in the farm property class or land prescribed under section 44, … [emphasis added]

Farm Property Class

8. (1) The farm property class consists of land determined in accordance with this section and section 8.1 to be farmland.

(2) Land used for farming, including outbuildings is farmland for a taxation year if the following requirements are satisfied:

1. A farming business, within the meaning of the Farm Registration and Farm Organizations Funding Act, 1993, is carried out on the land.

2. Subsection 19 (5) of the Act applies to the land for the taxation year but the land is not land to which section 44 applies.

… [emphasis added]

(5.5) For 2011 and subsequent taxation years, land that is used as temporary housing for on-farm labourers is included in the farm property class if the following conditions are satisfied:

1. The housing is situated on land to which subsection 19 (5) of the Act applies and which is included in the farm property class.

2. The housing is not occupied on a year-round basis.

PART V

DISPUTES RELATING TO THE FARM PROPERTY CLASS

Definitions

29. In this Part,

“Administrator” means, …

(b) AgriCorp, if the Minister of Agriculture, Food and Rural Affairs has appointed it as the Administrator under section 29.1 …

“Tribunal” means the Agriculture, Food and Rural Affairs Appeal Tribunal. (“Tribunal”) …

Appeals under Section 40 of the Act

31. The following apply with respect to an appeal under subsection 40 (1) of the Act that raises an issue as to whether land should be classified as land in the farm property class:

32. If the applicability of subsection 19 (5) of the Act to the land is in issue, the Assessment Review Board shall determine that issue and, if necessary as a result of that determination, redetermine the current value of the land. The application of subsection 19 (5) of the Act shall be deemed to be in issue if the current value of the land was not determined in accordance with that subsection.

33. If, after the determination under paragraph 1, there is still an issue as to whether the land should be classified as land in the farm property class, the Assessment Review Board shall refer the issue to the Tribunal.

34. The Tribunal shall hold a hearing to determine whether the land should be classified as land in the farm property class. Upon determining the issue, the Tribunal shall give the parties, the assessment corporation and the Assessment Review Board a copy of its decision.

35. The Assessment Review Board shall determine any remaining issues in accordance with section 40 of the Act.

Issue 1: Did the Hearing Panel err in law in qualifying the Non-Farmable Land as farm land pursuant to s.19(5) of the Act?

Findings in the Decision

26The Decision sets out the test that the Hearing Panel applied in determining the meaning of “farm lands used only for farm purposes”. At paragraphs 26 and 27 the Decision states:

26The real issues under subsection 19(5) are whether the lands are “farm lands used only for farm purposes” and whether the buildings on the farm lands are “used solely for farm purposes”. Neither party submitted any previous cases that considered subsection 19(5). However, the meaning of “farm lands used only for farm purposes” was considered by a panel of this Board in Delta Bingo Inc. v. Municipal Property Assessment Corporation, Region No. 18, 2013 CanLII 104841 (ON ARB) (‘Delta Bingo’). After reviewing numerous authorities on point, the Board concluded as follows at paragraph 36:

…the law as it currently stands holds that there are two elements to the determination of whether lands can qualify as “farm lands used only for farm purposes.” The Court of Appeal has approved the proposition that while the use of the lands for farming remains a predominant determinant, other factors such as those listed must be considered in order to characterize lands as farm lands in the first instance.

27The “other factors” to consider are listed in point form at paragraph 35 of Delta Bingo as follows: whether the lands have the physical characteristics of a farm, whether they involve a bona fide farmer, soil capacity, surrounding uses, and history of uses.

27At paragraph 36, the Decision states that “ …if the [Non-Farmable Land] is not used by the tenant to support its farming of the Farmable Land, then it is not used at all.”

28In specifically addressing the Non-Farmable Land, the Hearing Panel, at paragraphs 40 and 41 referred to the findings made in Delta Bingo at paragraphs 76 to 78. In overview, the Hearing Panel in Delta Bingo found that 3 acres of land that were not capable of being cultivated because “it was low and wet or had trees on it, or supported the farm use by drainage.” The Hearing Panel in Delta Bingo found that these lands, nevertheless, qualified as farm lands, citing several prior decisions to support this finding.

29The Hearing Panel in this case, relied on the above finding in Delta Bingo, stating, at paragraph 41:

41We adopt these reasons as our own. The parties agree that the Non-Farmable Land is not cultivable because of the wooded, rocky areas and lack of soil quality. The decisions referred to in Delta Bingo support a finding that the Non-Farmable Land should not be carved off for assessment purposes. The entire 35 acres is leased to the tenant farmer who has exclusive use of these lands. The Non-Farmable Land is not used for any other purpose. We do not interpret subsection 19(5) to require that 100%of the farm lands be used only for farm purposes. This is especially the case where, as here, the land is not put to any other use and is in the tenant farmer’s control. Further, farm lands are not generally 100% farmable or used for farm purposes. There are ancillary lands that are not used at all or that support the farming activity. These lands are caught within the parameters of subsection 19(5).

Submissions

30MPAC's asserts that the Non-Farmable Land does not qualify as farm lands, noting that it is not disputed that this land is not farmable. MPAC submits that the Hearing Panel erred in its interpretation of Delta Bingo. MPAC observes that, after finding that the quality of the soil and its capability to support crops is a prime consideration, the Hearing Panel in this case interpreted the words "farm lands" to mean lands that are "currently capable of being used for farm purposes". MPAC argues that, according to the meaning established in Delta Bingo (paragraphs 49, 69-70), the 16.28 acres of Non‑Farmable Land is not farm lands within the meaning of s. 19(5) because they are not "currently capable of being used for farm purposes."

31MPAC also asserts that the Non-Farmable Land is not used for farm purposes. MPAC submits that the Board erred in finding that the entire 16.28 acres of Non-Farmable Land is used for farm purposes because they are leased to a tenant farmer and are used to support the farming activity. MPAC maintains that, apart from the use of the barn and some unspecified area used to access the Farmable Land, there is no evidence that the balance of the Non-Farmable Land is used to support the farming activity. Rather, the Board found that most of the Non-Farmable Land "is not put to any use".

32MPAC notes that the Hearing Panel relied on paragraphs 76 - 78 of the Delta Bingo decision and the cases referred to therein. MPAC submits that, in those cases, the lands were either found to support the farming activities elsewhere on the parcel or the characterization of the lands as farm lands was not in issue. MPAC argues that, in this case the Board did not have evidence to positively conclude that the Non-Farmable Land is used for farm purposes. The Board could only say "if the land is not used by the tenant to support its farming of the Farmable Land, then it is not used at all".

33MPAC also submits that the Hearing Panel in this case further misapprehended the reasons in Delta Bingo by failing to have reference to paragraph 79 of that decision wherein the Hearing Panel in Delta Bingo found that 5 acres of farmable land that was not cultivated was not used for farm purposes. MPAC argues that, if s. 19(5) does not apply to farmable lands that are not used, then it does not make sense that it applies to non-farmable lands that are not used.

Findings on Issue 1

Statutory Interpretation of the meaning of “farm lands used only for farm purposes”

34In addressing the interpretation of this term, it is necessary to consider the overall purpose of s. 19(5). The Board first observes that s. 19(5) expressly states that this section is “For the purposes of determining the current value of farm lands…” (emphasis added).

35Under the Act, current value must be determined as of a specific valuation day. The Act does prescribe how some aspects of specific types of property are to be valued, but, generally, the Act is not based on any specific assessment methodology. Therefore, property appraisal theory is employed to determine current value. Appraisal theory requires that a property be valued based on its Highest and Best Use. In some cases, a property’s current use as farming will not be its the Highest and Best Use. The purpose of s. 19(5) of the Act, therefore, is to expressly direct that the current value of farm lands used only for farm purposes are to be assessed based on their use as farm lands, irrespective of the fact that this may not be their Highest and Best Use. The import of this analysis is that s. 19(5) constitutes an exception to the standard approach used in determining current value. As a matter of statutory interpretation, statutory exceptions generally should be narrowly construed, as they are a departure from the overall purpose of the legislation. In summary, when interpreting s. 19(5), the words of this section are to be given their natural and ordinary meaning in light of the context and purpose of the Act as a whole. A narrow interpretation of s. 19(5) is consistent with that approach.

36In Slough Estates Canada Limited v. Regional Assessment Commissioner, Region No. 15, 2000 CanLII 5705 (ON CA) (“Slough”), issued on April 6, 2000, the Ontario Court of Appeal addressed what was then s.19(3) of the Act, which mirrors s. 19(5) of the current Act. The Court stated, at paragraph 20:

Finally, the ordinary meaning of s. 19(3) appears to be consistent with the policy of the legislature. In several decisions, the Board has recognized that the policy underlying s.19(3) is to maintain farm land in production as long as possible, … [emphasis added]

The Board notes that its interpretation above is consistent with this policy. The policy does not extend to lands that are not in production. This indicates that s. 19(5) is to be restricted to only those lands that are farm lands used only for farmed purposes. Therefore, the wording of s. 19(5) is to be narrowly construed in order to exclude lands that are not being used for farming.

Does “farm lands used only for farm purposes” include one qualification criteria or two?

37In Delta Bingo, the Hearing Panel addressed the question whether “use for farming” is a single qualification requirement. The Hearing Panel noted that, if this was so, there would be no need for s. 19(5) to use the word “farm” before the word “lands” in the phrase “farm lands used only for farm purposes.” The Hearing Panel observed that this contradicted a principle of statutory interpretation, known as the presumption against surplusage, which directs that a section is not to be interpreted in a manner that results in any part of the wording serving no purpose, thereby making it ‘surplus’ language. The Hearing Panel in Delta Bingo observed that it was intuitively somewhat difficult to envision why lands might be characterized as “farm lands” that are not actually used for farming (paragraph 21). After reviewing case law, Slough in particular, the Hearing Panel concluded that there are two criteria. However, the Hearing Panel did not explain what each of these criteria are. Instead, the Hearing Panel stated, at paragraph 36 (which is quoted in the Decision):

The Court of Appeal has approved the proposition that while the use of the lands for farming remains a predominant determinant, other factors such as those listed must be considered in order to characterize lands as “farm lands” in the first instance.

38The question whether ‘use’ is a separate mandatory determinant or only a predominant determinant is discussed below in the section entitled “used only for farm purposes”. On the question of whether there are two criteria, the Board finds that the approach adopted in Delta Bingo overly complicates the interpretation. As discussed below, the Board agrees that “farm lands” are lands that are used for farming. The second criteria, “used only for farm purposes”, based on the natural and ordinary meaning of these words, simply requires that the lands cannot also be used for any other purpose. The Board further notes that this requirement, in itself, reinforces that s. 19(5) of the Act is, be narrowly interpreted.

39In conclusion, on plain reading of this provision, there are two separate and distinct criteria: (i) ‘farm lands’ and (ii) ‘used only for farm purposes’. The Board will address each criteria in turn.

Farm lands

40There is no definition of ‘farm lands’ in the Act. Pursuant to s. 19(5) (c) the Minister by regulation may define “farm lands” and “farm purposes”, but has not done so. The fact the term has not been defined in the Act may speak to the fact that the parameters of the term ‘farm lands’ cannot be precisely defined. Consequently, the scope of this term must be interpreted in the context of the circumstances of each individual case. The Board notes that this is the approach taken by the Ontario Court of Appeal in Slough (described in greater detail below).

41However, on plain reading of s. 19(5), there is general consensus in prior Board decisions that ‘farm lands’ are lands used for farming. Farming is not an inherent feature of the land, i.e. the earth located within the boundaries of the land. Instead, it is an activity which occurs on the land and, therefore, it is a use of the land. The common definition of farming is that it is an activity undertaken by a person to grow crops or raise livestock for the purpose of producing food or other products, either for the consumption of other persons or as component of the farming activity itself (for example, growing hay as food for livestock being raised on the property).

42In determining whether a farming activity takes place on a property, the Decision, at paragraph 27 refers to a non-exhaustive list of factors which can be considered, these factors being identified in Delta Bingo based on its review of Slough. The Board paraphrases these factors as follows:

(a) Physical characteristics of the land, including soil capability, if the activity is raising crops;

(b) Use of surrounding lands, to the extent that activities in the immediate vicinity suggest that the land on the property will support a farming activity;

(c) The history of the use of the property, to the extent that a past history of farming activity suggests that a farming activity is taking place as of the applicable valuation day;

(d) whether the activities are undertaken with a legitimate intention to “farm”, as opposed to activities intended to create an appearance of farming, for purposes of obtaining favourable tax treatment.

In addition to these factors, it may also be necessary to consider the scale of the farming activity, i.e. whether the activity is too limited to indicate that farming is taking place (for an example of this factor, see McArthur v Municipal Property Assessment Corporation, Region 28, 2021 CanLII 26724 (ON ARB), where the issue was the number of beehives required in order that the activity of producing honey could be considered a farming activity).

43However, in Delta Bingo, the Hearing Panel, at paragraph 64, expressly found that there were two additional mandatory “common sense” criteria which must be met, in order for land to qualify as “farm lands”:

i. the land must have historically been farmed at some time in the past; and

ii. the historically farmed land must never have been converted to any other use.

The Decision does not reference these additional criteria. However, in this Review, MPAC has challenged the Hearing Panel’s finding that the Non-Farmable Land qualifies as “farm lands”. Therefore, in determining whether the Hearing Panel’s finding constitutes an error in law, the Board must consider whether these criteria are relevant factors and whether it is mandatory that these criteria be satisfied in order for land to qualify as farm lands used only for farm purposes.

In order to qualify as farm lands, is a prior history of uninterrupted farm use a relevant and mandatory requirement?

44As the analysis of the Hearing Panel in Delta Bingo is based on their interpretation of the analysis and findings in Slough, it is necessary for the Board to describe Slough in some detail.

45In Slough, the lands in question were zoned to permit industrial and commercial uses, and agricultural use was not permitted. The lands had been acquired by the owner for purposes of development, but until there was a market for this use of the land, the lands were farmed. The assessing authority initially determined that the lands qualified as farm lands, which was upheld by the Ontario Municipal Board (“OMB”) (which at that time heard assessment appeals). The municipality appealed the OMB decision, arguing that s. 19(3) of the Assessment Act in force at the time (equivalent to the current s. 19(5) ), did not envisage a use that was not permitted by law. The headnote to the Slough decision provides a succinct summary of the Court’s disposition:

Section 19(3) of the Act should be given its ordinary meaning. The ordinary meaning of the text of s. 19(3) is that if the lands are "farm lands used only for farm purposes", market value is to be ascertained without regard to sales of lands to persons whose principal occupation is not farming. Rather, the market value is to be determined solely by consideration of the land's value for farming purposes. As the Board noted, s-s. (3) operates as an exception to the general principle in s-s. (2) that market value is to be determined by what the land might be expected to sell for on an open market by a willing seller to a willing buyer. The focus of s. 19(3) is on the use of the land, a factual issue, not its zoning, a legal issue. If the land has the relevant characteristic, its market value must be determined in accordance with the methodology prescribed by s. 19(3). There was a basis upon which the Board could reasonably find that the lands in question fell within "farm lands used only for farm purposes".

46In addressing the history of use of a property as factor to be considered, the Hearing Panel in Delta Bingo stated:

61The Court of Appeal in Slough, supra, approvingly referred twice to a reference

of County Court Judge Sweet in Roman Catholic, supra, who commented on

considerations such as zoning, surrounding land use, and the general nature of the

locality as considerations. Refuting the hypothesis that farm use is the sole

determinant, the learned judge employed the technique of reductio ad absurdum in

suggesting an extreme example:

Certainly common sense would impel an assessor not to treat as farm

lands, a parcel of vacant land at the corner of King and Yonge Street, in

Toronto or at the corner of King and James Street in Hamilton, merely

because the owner, for whatever reason, may have decided to plant it in

tomatoes.

63The Board considers it instructive to determine just what it is about a vegetable

garden at Yonge and King being considered farm land that is so absurd and offensive to

common sense. Two factors come immediately to mind:

(i) The land at Yonge and King was never farm lands, or if it was, that era is well beyond living memory.

(ii) A field of tomatoes at Yonge and King would be a clear and obvious change of use from the intensely non-agricultural permitted uses that have spanned decades, if not centuries.

64The Board derives two common sense criteria to avoid such an absurdity. To be

considered “farm lands”:

(i) lands must have historically been farmed at some time in the past; and

(ii) those historically farmed lands have never been converted to any other use.

The Board observes that, while the Hearing Panel in Delta Bingo decided to undertake their own analysis of the County Court decision, the fact is that this County Court decision was referenced by the Court of Appeal in Slough. It must be remembered that the question addressed in Slough was whether land could qualify as farm lands under s. 19 of the Act if this use was not permitted under municipal land use by-laws. At paragraph 30 of the Slough decision, the Court of Appeal cited with approval a statement made in the County Court decision, which stated:

It would be my view that there could possibly be cases where permitted use, zoning and use of surrounding lands and the general nature of the locality would be factors in determining whether or not a parcel of land is farm land within the meaning of the legislation. Certainly common sense would impel an assessor not to treat as farm lands, a parcel of vacant land at the corner of King and Yonge Sts. In Toronto or at the corner of King and James Sts. in Hamilton, merely because the owner, for whatever reason, may have decided to plant it in tomatoes. However, this is a far cry from the situation existing here. [emphasis added]

It is also important to note that, in Slough, the properties under appeal were zoned for industrial and commercial uses, and it was conceded that farming was not a legal use. However, the Court Appeal nonetheless upheld the decision that the properties qualified as farm lands.

47Hence, it is clear that the only finding endorsed by the Court of Appeal is that, when determining whether land qualifies as farm lands under s. 19(5), “the permitted use, zoning and use of surrounding lands and the general nature of the locality” are simply factors that may be considered when determining whether land qualifies as farm lands under s. 19(5) of the Act. Therefore, these are discretionary factors to be considered on a case by case basis. As such, there is nothing in this finding to justify an extrapolation that s. 19(5) imposes absolute requirements that a property must have been historically farmed in the past and never converted to any other use.

48In further support of the above conclusion, the Board notes that, in Slough, at paragraph 13, the Court of Appeal described principles of statutory interpretation noting that, even where the ordinary meaning of legislative text appears clear, the purpose and scheme of the legislation must be considered. The Court further noted that an interpretation may modify or reject the ordinary meaning, but such interpretation must be plausible, i.e. it must still be an interpretation the words are capable of bearing. In applying these principles here, the Board observes that there is nothing in the wording of s. 19(5) which suggests that a prior history of uninterrupted farm use is a mandatory requirement. Furthermore, as previously noted, s. 19(5) addresses the determination of current value, which, under the scheme of the Act, is assessed as of a fixed valuation day. Therefore, it is clear that the determination of whether land qualifies as farm lands, is based only on the land’s use as of the applicable valuation day, not a prior history of uninterrupted use. The prior history of use is relevant only to the extent that it suggests that farming activities occurred on a property as of the applicable valuation day.

49For these reasons, the Board does not accept that a prior history of uninterrupted farm use is a mandatory requirement in order for land to qualify as farm lands under s. 19(5).

Used only for farm purposes

50Section 19(5) makes it clear that not only must an activity constitute farming, but, in addition, the land must be used only for farm purposes. It is not disputed that parcels of land within a property may be used differently. Therefore, even if a parcel of land could be used for a farming activity, it does not qualify as farm lands under s. 19(5), if, as of the applicable valuation day, the land was not used for purposes of the farming activity. A corollary of this requirement is that land which may, in the past, have qualified as ‘farm lands used only for farm purposes’, will cease to qualify in the future if no farming activity is being undertaken as of the applicable valuation day.

51The above interpretation is reinforced by s. 19(5.1) which addresses the circumstances where a property owner retires or dies. In such circumstances, the use of the land for the farming activity on the land may cease. Therefore, in order to avoid this consequence, the Act expressly provides that the qualification under s. 19(5) continues to apply, even though the land is not, in fact, being used for farming purposes.

52In summary, if a parcel of land is not actually used for farm purposes, and only for farm purposes, it cannot qualify as farm lands used only for farm purposes, even it is accepted that a farming activity can take place on the land. The requirement that the land be used only for farm purposes is a separate and determinative requirement. A corollary of this conclusion is that, if the land is not used for any farming purposes, there is no need to inquire whether a farming activity can take place on the land.

53The Board notes that the above conclusion is not the interpretation adopted by the Hearing Panel in this case. As described above, the Hearing Panel, at paragraph 26 of the Decision, adopted the conclusion in Delta Bingo, finding that, while the use of the lands for farming remains a predominant determinant, other factors, such as those listed, must be considered in order to characterize lands as farm lands in the first instance. In other words, in reaching their conclusion that the Non-Farmable Land did qualify as farm lands under s. 19(5), the Hearing Panel considered that the requirement that the land must be used only for farm purposes, while important, is not a separate and determinative factor. As the Board has not adopted this interpretation, it is necessary to consider the basis for Hearing Panel’s conclusion.

54In reaching their conclusion, the Hearing Panel adopted the finding in Delta Bingo, at paragraph 36, which states that “The Court of Appeal has approved the proposition that while the use of the lands for farming remains a predominant determinant, other factors such as those listed must be considered in order to characterize lands as farm lands in the first instance.” At paragraph 54, the Hearing Panel in Delta Bingo repeated this finding, stating:

54The Board has already determined that farm use alone is not conclusive, however it must be considered a major factor, particularly where lands had been farmed historically, and other considerations are met.

55The Board concludes that the finding in Delta Bingo mischaracterizes two important aspects of the Court’s decision in Slough.

56First, at paragraph 9 of the Decision, the Court provided a summary of the decision made by the OMB, stating:

This finding of fact required a consideration of the "functional use as well as the physical attributes of the lands" based on evidence as to the types of activities carried out on the lands, the physical characteristics of the land, the characteristics of the tenant or owner, the purpose of the activities and the timing of the activities. It recognized that a "peripheral" use of land only tenuously associated with farming was not sufficient to satisfy the use requirement. [emphasis added]

The decision in Delta Bingo, the Hearing Panel adopted only some of the factors cited in the OMB decision, failing to refer to the important qualification that the OMB “recognized that a "peripheral" use of land only tenuously associated with farming was not sufficient to satisfy the use requirement.”

57Also, when it came to the issue of whether the lands in question qualified as farm lands, the Court, at paragraph 19, stated:

…In the first place, the lands are under commercial cultivation over a substantial acreage as I find. By any reasonable test of lexicography or common sense, these are farm lands and that is all that need be said.

Therefore, it is clear that the Hearing Panel in Delta Bingo did not expressly comment on the factors to be considered when determining when lands qualify as farm lands.

58Second, it is important to note that the Court never stated that the use of land was only a “predominant determinant” to be considered along with the factors cited in the OMB decision, as opposed to being a separate and determinative requirement. To the contrary, on the facts of the case before the Court, there was no suggestion that any of the properties under appeal contained parcels of land that were not used for farming. Therefore, as the issue of use was not before the Court, the Court never addressed this issue, let alone the question of whether use is only a predominant factor.

59Apart from the misinterpretation of the decision in Slough, the Board notes that the interpretation in Delta Bingo, endorsed by the Hearing Panel in this case, extends the definition of farm lands to land which has not been used for farm purposes, even though this does not conform to the wording of the s. 19(5). Therefore, in order to support their conclusion, the Hearing Panels in the Decision and Delta Bingo have broadly construed the meaning of s. 19(5) to support their interpretation, which is contrary to the principle of statutory interpretation which requires that this section must be narrowly construed.

60For these reasons, the Board finds that conclusion in Delta Bingo is not supported by a persuasive interpretive analysis. Consequently, the Hearing Panel’s conclusion that use of the land was not a determinative factor is an error of law. However, this finding does not automatically mean that the Non-Farmable Land does not qualify as farm land because there were no specific activities undertaken on the land. The definition in s. 19(5) states “farm lands used only for farm purposes” [emphasis added].

61The term “farm purposes” is not defined in the Act or the General Regulation. However, as this is part of the wording of s. 19(5), it should be narrowly construed. The term “purposes” is generic, which suggests that components of a farm activity may be distributed across different parcels of land on a property. More specifically, there may circumstances where the characteristics of one parcel of land on a property, where no activities take place, nonetheless supports the use of another parcel which qualifies as farm lands used for farm purposes. In such circumstances, maintaining the “supporting” characteristics of the parcel can be characterized as a use of the parcel.

62An example is found in Kightley v. Municipal Property Assessment Corporation, Region No. 23, [2012] O.A.R.B.D. No. 162, 73 OMBR 13, where the Hearing Member found that a parcel of land, which was forested, supported a farming use on another parcel of the land because it served the purpose of preventing soil erosion and helping maintain water levels. However, this is not a good example, because s. 3(1)19 the Act, has already addressed the valuation of forested areas of farm properties, prescribing a formula to exempt forest areas from taxation. Apart from this, a determination whether one parcel of land where no activity takes place, nonetheless qualifies land as used for farm purposes, is an evidentiary finding. Because the term “purposes” must be narrowly construed, this evidentiary finding must be supported by cogent and persuasive evidence. It cannot be simply assumed to be the case, or characterized as being a question of statutory interpretation, based on speculation respecting underlying legislative policy. The Board’s interpretation is reinforced by the finding of the OMB reported in Slough, which has been cited above: “It recognized that a "peripheral" use of land only tenuously associated with farming was not sufficient to satisfy the use requirement.”

63The Board now turns to MPAC's submission that Delta Bingo makes contradictory findings.

64The Board first notes that, in support of its finding that the Non-Farmable Land qualified as farm lands, the Hearing Panel relied on the finding set out at paragraphs 76 to 78 of Delta Bingo. The Hearing Panel in Delta Bingo found that a three acre parcel of land was not capable of being cultivated because it was low and wet or had trees on it. The Hearing Panel also stated that it “supported the farm use by drainage”. However, the decision does not cite the evidence on which the Board relied to support this conclusion. Therefore, it is unclear whether the evidence of this peripheral use was sufficient to satisfy the use requirement.

65At paragraph 78, the Hearing Panel in Delta Bingo stated that:

The use of this acreage is related to the farming activities of Mr. Muileboom who made legitimate attempts to cultivate as much of it as possible, and had succeeded in 2012 to make maximal usage of the lands.

Therefore, it appears that the Hearing Panel accepted that the three acres qualified as farm lands because attempts had been made to cultivate this land. Earlier in the Delta Bingo decision, the Hearing Panel observed, at paragraph 18:

While harvesting a crop is certainly a strong indicator of a farming activity, the Board finds that it is not determinative, given the vagaries of the agricultural business and the influence of weather.

However, the decision is unclear when cultivation activities occurred on this parcel.

66MPAC has pointed out that in paragraph 79 of Delta Bingo, the Hearing Panel found that a five acre parcel of land was clearly farmable, but it was not used because the farmer was not aware that the parcel was part of the property. Therefore, the Hearing Panel concluded that this five acre parcel did not qualify as farm lands. MPAC argues that this result contradicts the finding respecting the three acre parcel (discussed above).

67Respecting the three acre parcel, it is unclear whether it could be found to either have been used for farming purposes or, alternatively, supported the farming activities on another parcel. Therefore, the Board is unable to determine if the findings respecting these two parcels contradict one another. However, the Board observes that this part of the Delta Bingo decision underscores that a determination as to whether a parcel of land qualifies as farm land is a case specific determination. Therefore, the fact that a parcel of land was qualified as farm land in another case, is not determinative.

68Turning to the facts pertaining to this case, the Decision, at paragraph 36, confirmed that if the Non-Farmable Land “is not used by the tenant to support its farming of the Farmable Land, then it is not used at all.” Consequently, the only way the Non-Farmable Land could qualify as farm lands used only for farm purposes, is if there is cogent and persuasive evidence that it supports the farming activity on the Farmable Lands. The Decision cites no such evidence, let alone cogent evidence. The only evidence respecting the Non-Farmable Land is the statement in paragraph 41 of the Decision that “The parties agree that the Non-Farmable Land is not cultivable because of the wooded, rocky areas and lack of soil quality.”

69Respecting the Hearing Panels’ consideration that the Non-Farmable Land provides access to the Farmable Land, the Board finds that this is peripheral use of Non-Farmable land. While it may not be considered tenuous, only the land actually used for access could qualify, and the Decision cites no evidence that the area used was significant in scale. More importantly, the Decision cites no evidence that such “access land” was used to provide access only for farm purposes.

70Respecting the Hearing Panels’ consideration that the tenant farmer had leased both the Farmable Land and Non-Farmable Land, and, therefore, has exclusive use of the lands, the Board observes that the issue is not whether the tenant can use the lands, the issue is whether the tenant does use the lands. The plain and ordinary wording of s. 19(5) is clear. The requirement that the land be used for farming purposes applies to both the owner and any tenant on the land.

71In summary, it is clear that there is no evidentiary basis on which the Hearing Panel could conclude that the Non-Farmable Land supports the farming activity on the Farmable Lands. Therefore, in reaching this conclusion the Hearing Panel made an error of law.

72In arriving at this conclusion, the Board has considered the Hearing Panel’s observation, in paragraph 39 of the Decision, that they reviewed photographs of the neighbouring lands which have similar swaths of wooded land as the Subject Property that do not appear to be farmable, further noting that those neighbouring lands remain in the Farm Property Class. In addressing this finding, the Board first observes that the Hearing Panel only assumed that the lands are not farmable. They cite no evidence, one way or the other to confirm whether they are farmable. Furthermore, this evidence does not indicate the extent to which these wooded lands support farming activity on other lands or are located within areas of land where farming activities occur. In the case of the Subject Property, it is not disputed that the soil quality on the Non-Farmable Land on which the wooded areas are located, does not support farming. Also, as previously stated, each case must be determined on its own merits. For these reasons, the Board finds that this evidence cannot be assumed to be conclusive of whether the Non-Farmable Lands on the Subject Property support the farming activity on the Farmable Lands. Furthermore, this is just one factor to be considered. Therefore, the Board finds that, in and of itself, this evidence is not cogent and persuasive evidence that the Non-Farmable Land supports farming activities on the Farmable Land.

73At paragraph 41 of the Decision, the Hearing Panel relied on the several decisions, which were cited in Delta Bingo, in support of their conclusion that use is not a determinative factor. In this regard, the Board has reviewed, in detail, each of the decisions cited in Delta Bingo on which the Hearing Panel relied, as stated at paragraph 40 of the Decision. The Board accepts MPAC's submission that, in each of these decisions, the lands were either found to support the farming activities elsewhere on the property or the qualification of the lands as farm lands was not in issue.

74At paragraph 41, the Hearing Panel also states:

We do not interpret subsection 19(5) to require that 100% of the farm lands be used only for farm purposes.

As noted above, the Board had found that this is not a correct interpretation of s. 19(5). The Hearing Panel also states:

There are ancillary lands that are not used at all or that support the farming activity. These lands are caught within the parameters of subsection 19(5).

The Board observes that the introduction of the concept of “ancillary” lands, is overly broad and does not fall within the plain and ordinary meaning of s. 19(5). The correct statement is that, under s. 19(5), land on which no farming activity occurs, but supports farming activity on other land, may qualify as farm land, provided that it is not a peripheral use that is only tenuously associated with farming.

75Lastly, the Board observes that the Decision, at paragraph 37, confirms that the barn is located on the Non-Farmable Land. This barn is used by the tenant farmer to store farm equipment. Therefore, under s. 19(5) of the Act, the Barn and the land on which it is situated does qualify as farm lands.

Summary

76Based on the above analysis and findings, the Board concludes that, with the exception of the barn and the land on which it situated, the Hearing Panel erred in law in finding that the Non-Farmable Land qualifies as farm lands under s. 19(5) of the Act.

Issue 2: Did the Hearing Panel err in law in qualifying the residence as farm land pursuant to s.19(5) of the Act?

Findings in the Decision

77In overview, the Hearing Panel found that a residence qualifies as farm lands as long as the residence is on farm lands. Their analysis in support of this finding is stated at paragraphs 45 and 46 of the Decision:

45The wording of this subsection suggests that the buildings, including the residence, must be used solely for farm purposes. However, this interpretation defies logic. A residence is, by definition, somewhere where people gather, eat, and sleep. It cannot be used solely for farm purposes.

46We find that a more contextual interpretation of this subsection relies on what we believe to be the Legislature’s intent that a residence of the owner or tenant and of the owner’s or tenant’s employees and their families be valued according to subsection 19(5) as long as the residence is on the farm lands. That is the case here.

Submissions

78MPAC submits that Hearing Panel’s finding that the residence is farm land used only for farm purposes is not supported by the evidence or the language of s. 19(5). MPAC emphasizes that the Owners are not farmers and do not farm the land, and that they live in the residence. MPAC states that the Decision appears to indicate that the residence is not part of the lands leased to the tenant farmer, and that it is not part of the farming operations. Therefore, MPAC asserts that the residence is the Appellants' home and is not used for farming purposes.

79MPAC argues that the Hearing Panel failed to interpret s. 19(5) in accordance with the plain language of this subsection. MPAC submits s. 19(5) requires that the land and buildings be used for farm purposes by the owner or a tenant of the owner. In this regard, MPAC re‑iterates its submission that neither the Owners nor the tenant farmer use the residence for farm purposes.

80MPAC notes that the Hearing Panel purports to adopt a "contextual interpretation" regarding legislative intent leading the Hearing Panel to conclude that a residence on farm lands is always valued according to s. 19(5). MPAC submits that other assessment tribunals, considering that the purpose of s. 19(5) is to encourage and maintain the use of arable land, have held that s. 19(5) applies to the residence if occupied by the person who is actively engaged in the operation of the farm. In support of this submission, MPAC cites three cases as examples:

• Merry v. Regional Assessment Commissioner, Region No. 15, [1995] O.M.B.D. No. 1205 - house leased to non-farmer tenant does not qualify as farm land (“Merry”);

• Cryderman v. Regional Assessment Commissioner, Region No. 14, (18 September 1978) (O.M.B.) [unreported] - 88 acres assessed as farm – house occupied by owner for residential purposes and one acre around the house were assessed as residential land; and

• Re Mashinter and Regional Assessment Commissioner, Region No. 14 (6 September 1977), (Ont. Co.Ct.) [unreported] - residence occupied by owner not actively engaged in farming not valued as farm lands.

81MPAC submits that even if the residence is correctly valued under s. 19(5), the Board erred by not confirming the residential property classification. The land is used for residential purposes and it contains less than seven self-contained units. MPAC submits that s. 3(1)1(i) of the General Regulation (definition of the Residential Property Class) applies. MPAC states that a farm residence and associated land are never classified in the Farm Property Class even if s. 19(5) applies to the land.

Findings on Issue 2

82The Board notes that the Hearing Panel’s finding broadly construes s. 19(5), concluding, in effect finding that the Legislature’s intention is to deem that a residence located on a property which includes farm lands will also qualify as farm lands used only for farm purposes. However, this interpretation runs counter to the plain and ordinary meaning of the wording of this section, i.e “farm lands… used solely for farm purposes” which includes “the residence of the owner or tenant…” . It is perhaps trite to observe, that Legislature, in expressly including a residence in s. 19(5), understood what the use of a residence entails. To hold that a residence will always qualify as farm lands, makes the “used solely for farm purposes” requirement redundant as it relates to a residence, which runs contrary to principles of statutory interpretation. Had the Legislature intended that a residence will always qualify as farm lands, s. 19(5) would have simply have stated that residences qualify as farm lands. In this regard, the Board notes that s. 19(5.0.1) expressly provides that the Minister may prescribe lands that are to be valued as farm lands. The Board observes that the Minister has done so in other circumstances, in ss. 44, 44.1 and 44.2 of the General Regulation. None of these provisions address residences.

83Another difficulty with the Hearing Panel’s interpretation, is that is it makes an assumption that there can be no circumstances where a residence could be considered to be used solely for farm purposes. A previous decision suggests otherwise. In Merry, there was a discussion of circumstances where a tenant or employee of a property owner, who conducts farm operations, may, as condition of such tenancy or employment, occupy a residence on the property.

84In this regard, the Board notes that s. 8(5.5) of the General Regulation also indicates that the Hearing Panel’s assumption is incorrect. As is discussed in greater detail below, s. 8(2) sets the criteria for land to be classified in the Farm Property Class. Section 8(5.5) expressly states that land used as temporary housing for on-farm labourers can be included in the Farm Property Class, “if the housing is situated on the land to which subsection 19(5) of the Act applies and which is included in the farm property class”. Therefore, s. 8(5.5) contemplates that a residence can qualify as farm lands used solely for farm purposes.

85Based on the above analysis, the Board finds that the Hearing Panel misinterpreted s. 19(5) as it relates to residences, which is an error of law.

86In applying the correct interpretation, the undisputed evidence is that the Owners occupy the residence as their home, independent of any farming operation which occurs on the Subject Property. As such, the residence is not used for any farm purposes, let alone, solely for farm purposes. Consequently, the Board finds that the Hearing Panel erred in law in concluding that the residence qualifies as farm lands under s. 19(5) of the Act.

Issue 3: Did the Hearing Panel err in law when it classified the entire Subject Property in the Farm Property Class?

Overview of the classification regime

87Pursuant to s.19.3, land is classified annually as of June 30 of the previous year.

88Where land (including the building) is used for residential purposes, it falls within the Residential Property Class (General Regulation - s. 3(1) 1(i)). Under s. 3(1) 2, land not used for residential purposes, which qualifies as farm lands under s. 19(5), is classified in the Residential Property Class unless special exceptions under s. 44 of the General Regulation apply. (These special exemptions are lands and buildings which the Minister, pursuant to s. 19(5.0.1) prescribes as being farm lands under s. 19(5) ). Therefore, where the special exceptions do not apply, a finding that that land qualifies as farm lands, by operation of law, automatically determines that the land is classified in the Residential Property Class. In this sense, the “default” classification for “farm lands” is the Residential Property Class.

89However, the General Regulation (s. 8 and s. 8.1) provides for a Farm Property Class. There are a number of criteria that must be met in order for land to fall within this property class. One of these criteria is that the land must qualify as farm lands under s. 19(5) of the Act (General Regulation s. 8(2) 2).

90As noted earlier, the purpose of s .19(5) is to determine the current value of farm lands, and, therefore the valuation day is the valuation day specified in the Act. Section 19(5) does not address classification. However, the above referenced subsections in both the Residential and Farm Property classes expressly require that, for purposes of classification, s. 19(5) must apply to the land for the taxation year. Therefore, for purposes of determining land classification, these subsections expressly direct that the lands must annually qualify as farm lands used only for farm purposes, as of the classification day prescribed in s. 19.3.

91The benefit of classification in the Farm Property Class, is that it qualifies the owner of the land for Ontario’s Farm Property Class Tax Rate Program. This program provides that the farmland will be taxed at 25 per cent of the municipality’s residential tax class rate, subject to one important exception - under the Program, the farm residence and one acre of surrounding land does not qualify for the tax rate reduction.

92Therefore, as a practical matter, if a residence is found to qualify as farm lands under s. 19.5, it is moot whether the residence is classified in the Residential Property Class or the Farm Property Class, as the full residential tax rate will apply in both cases. However, there may be other benefits associated with the Farm Property Class.

93Section 40(1) of the Act, which governs appeals to the Board, provides the bases on which an appeal may be filed, which includes whether the classification of land is correct. Therefore, under this section, the Board has the jurisdiction to adjudicate disputes regarding classification. However, Part V of the General Regulation, entitled “Disputes Relating to the Farm Property Class”, expressly limits the Board’s jurisdiction to determine whether farm lands fall within the Farm Property Class. Section 31 of the General Regulation provides that:

1. Where the application of s.19(5) of the Act is in issue, i.e. if the current value of land was not determined in accordance with the requirements set out in 19(5), the Board must first determine this issue; and

2. If there is still an issue whether the land should be classified in the Farm Property Class, this issue must be determined by AFRAAT, not the Board.

The Board notes that an issue can only exist if the parties disagree on whether the land should be classified in the Farm Property class.

94In summary, if the Board is required to determine whether lands are farm lands, the Board must first make this determination, and then enquire if there is still an issue whether the land falls within the Farm Property Class. If so, the Board has no jurisdiction to determine the classification issue. Instead, it must be referred to AFRAAT for adjudication.

Findings in the Decision

95At paragraph 2 of the Decision the Hearing Panel stated:

The main issue raised by the Appellants is the proper classification of the Property. The Appellants claim that the Property is in the farm property class whereas MPAC’s position is that the Property should be classified partly in the farm property class and partly in the residential property class.

96At paragraph 4 of the Decision the Hearing Panel stated “…we do not have the authority to determine that a property belongs in the farm property class.” At paragraphs 14 to 16 the Hearing Panel then outlined the requirements set out in s. 31 1 and 2 of the General Regulation.

97At paragraph 79 of the Decision, the Hearing Panel then stated its conclusion:

79Subsection 19(5) applies to all of the land and buildings on the Property. As part of the Property was previously classified in the farm property class, there is no need to refer this matter to AFRAAT. Accordingly, on the issue of classification, there is no apportionment and the entire Property is in the farm property class. [emphasis added]

Submissions

98MPAC states that the Hearing Panel correctly noted that it does not have the authority to determine that a property belongs in the farm property class. However, notwithstanding that finding, the Hearing Panel determined that the entire Property should be classified in the Farm Property Class. MPAC submits that, in doing so, the Hearing Panel acted outside its jurisdiction, asserting that the Board ought to have referred the matter to AFRAAT.

99MPAC states that, even if the Hearing Panel acted within its jurisdiction, it erred in classifying the residence and 1 acre of surrounding land in the Farm Property Class. MPAC asserts that the Hearing Panel appears to have confused the qualification of farm lands under s. 19(5) of the Act for valuation purposes, with classification under the General Regulation. MPAC states that s. 19(5) applies for the "purposes of determining the current value of farm lands".

100MPAC further maintains that land used for residential purposes that has less than seven self-contained units is always in the Residential Property Class and that land not used for residential purposes, which is valued under s. 19(5) of the Act, is in the Residential Property Class unless it is in the Farm Property Class. In this regard, MPAC further submits that a manifestation of legislative intent may be found in s. 8(5.5) of the General Regulation which excludes temporary housing for on-farm labourers from the farm property class if the housing is occupied on a year-round basis.

Findings on Issue 3

101The Board first notes that paragraph 8 of the Decision confirms that MPAC's general reassessment of the Subject Property classified the residence plus one acre, the barn, and the Non-Farmable Land in the Residential Property Class, and the Farmable Land in the Farm Property Class.

102The Board observes the Hearing Panel’s finding that the residence and the Non-Farmable Property qualify as farm lands under s. 19(5), will by default, place these parcels of land in the Residential Property Class. However, the Hearing Panel’s finding does not resolve the dispute between the parties as to whether these lands should be classified in the Farm Property Class. Consequently, s. 31 of the General Regulation clearly applies. Even though the Hearing Panel found that they did not have jurisdiction to determine this classification issue, they then proceeded to find that the entire Subject Property should be classified in the Farm Property Class. Apart from the fact that the Decision makes contradictory findings, the Board finds that the Hearing Panel’s finding on classification clearly constitutes an error of law because the Hearing Panel was without jurisdiction to make this finding.

103In arriving at this conclusion, the Board has considered the Hearing Panel’s statement that “As part of the property was previously classified in the farm property class, there is no need to refer this matter to AFRAAT.” The Hearing Panel did not provide its rationale for this conclusion. The Board notes that, under s. 8 of the Regulation, apart from the requirement that the lands qualify as farm lands used only for farm purposes, the other criteria relate to whether “a farming business within the meaning of the Farm Registration and Farm Organizations Funding Act, 1993, is carried out on the land”, the nature of the ownership of land, and the annual gross income generated by the farming business. The Board surmises that the Hearing Panel, in pointing out that a part of the Subject Property was previously classified in the Farm Property Class, may have assumed that AFRAAT had already determined that the Subject Property satisfied these additional criteria. Consequently, the Hearing Panel may have concluded that it was clear that the entire Subject Property would be classified in the Farm Property Class, and, for this reason, it would be unnecessary to refer the classification issue to AFRAAT. However, as stated above, the issue of classification was in dispute. Therefore, however clear it may have appeared that the lands could be classified in the Farm Property Class, the Hearing Panel did not have jurisdiction to make this determination.

Issue 4: Did the Hearing Panel violate the rules of natural justice and procedural fairness by relying on Delta Bingo without giving the parties an opportunity to make submissions on this decision?

Submissions

104MPAC submits that, on an appeal, the Board is limited by s. 40(19) of the Act to consider only the information submitted by the parties to make its determination. MPAC asserts that the Board cannot conduct any independent investigations. MPAC argues that there is no principle more fundamental to administrative law than that of audi alteram partem, a rule of natural justice that parties be given adequate notice and opportunity to be heard. In support of this submission, MPAC relies on Marsales v Municipal Property Assessment Corp, Region No 19, [2001] O.A.R.B.D. No. 1153, 43 OMBR 86 ) at p. 90.

105MPAC also relies on a Review Decision of the Board in Pilon v Municipal Property Assessment Corporation, Region 31, 2020 CanLII 66087 (ON ARB) (“Pilon”), arguing that, in this decision, the Board found that the failure to provide the parties an opportunity to provide submissions in respect of a decision on which adjudicator relied, constituted an error of law.

Findings on Issue 4

106The Board first observes that an adjudicator’s consideration and reliance on any prior tribunal or court decision is properly characterized as applying the law. It is not, as MPAC submits, “information”. Use of this term obfuscates the distinction between law and evidence. In Marsales, the Board, at the hearing, accepted into evidence, a report adduced by the appellant which had not been previously disclosed to MPAC. Furthermore, the author of the report was not adduced as witness, so MPAC had no opportunity to cross-examine the author on the report. Therefore, Marsales addressed the issue of procedural unfairness in respect of an evidentiary finding, not a consideration of the applicable law. As such, Marsales is not relevant to the circumstances before the Board in this Review Proceeding.

107Regarding Pilon, MPAC's relies on the Board’s conclusion stated at paragraph 14:

CONCLUSION

14I find that MPAC has met the criteria in Rule 121. The Board must ensure a property is assessed at the correct current value. In this Decision, the Board erred in law by not setting a current value for the Subject Property that it knew not to be current, and furthermore relied on the Patry Enterprises decision to set the current value assessment at the last uncontested assessment without giving the parties an opportunity to make submissions on case law they did not introduce. [emphasis added]

In this conclusion, the Board addressed two matters: (i) setting a current value that was not current; and (ii) the reliance on the Patry Enterprises decision without first giving the parties an opportunity to make submissions regarding this decision. MPAC's submission appears to interpret this conclusion as a finding that both matters constituted an error in law. However, the Board finds that MPAC's interpretation is incorrect.

108In any request for review, if the Board finds that there has been error of law, the Board must then determine, after providing the parties an opportunity to make submissions, whether it should confirm, vary, or cancel the decision under review, or, alternatively, order a rehearing. In Pilon, it is important to emphasize that the Board decided to order a re-hearing, so it was incumbent on the Board to provide its reason for doing so. In this context, the use of the word “furthermore” in the stated conclusion is determinative. The Board found that only the matter of setting an incorrect current value was an error of law. The Board furthermore observed that the parties had not been able to make submissions on the Patry Enterprises decision at the hearing, this observation being cited as support for the Board’s finding on the separate issue of whether a re-hearing should be ordered.

109Regarding MPAC's assertion that the parties were denied the right to be heard, the parties were afforded time to prepare their case, and the Board held a hearing in the proceeding. There is no suggestion that a party was unaware of the issues in dispute. It is incumbent on a party, when preparing and presenting its case, to cite the applicable law. Also, there is no suggestion that the parties were denied the opportunity to make submissions. The Board further observes that, if a party believes an adjudicator mis-interpreted a decision, or relied on an irrelevant decision, then the party may challenge the decision either by requesting that the Board review the decision, as MPAC has done in this case, or, by applying to court for relief by way of appeal or request for judicial review. Therefore, a party is given the right to be heard, notwithstanding that the Board has considered a decision that was not cited by the parties in their submissions made at the hearing.

110For these reasons, the Board finds that the Hearing Panel’s decision not to request supplementary submissions is neither an error of law nor a denial of natural justice and procedural fairness.

Issue 5: If the Board finds that there is an error of law or a denial of natural justice, what order should the Board make under Rule 103?

Submissions

111MPAC submits that the Board should cancel the Decision and order a rehearing by another Board Member.

Findings on Issue 5

112In deciding whether to order a rehearing, the Board notes that MPAC has not challenged the Hearing Panel’s finding that the correct current value of the Subject Property is $400,000, as opposed to the position adopted by MPAC at the hearing that this value should be $423,000 (“MPAC's Position”).

113The Board’s findings in this Interim Review Decision, only change the Hearing Panel’s finding that the Non-Farmable Land (with the exception of the barn) and the residence do not qualify as farm lands. Therefore, the only issue to be addressed is the apportionment of the total current value $400,000 to each of the four component parcels of land on the Subject Property. In this regard, this Review Decision mirrors the qualification of the parcels of land as set out in MPAC's Position. Therefore, the Board finds that it is sufficient to maintain the same relative percentage distribution of total value across the four parcels as set out in MPAC's Position, and apply this percentage distribution to the $400,000 current value. Therefore, the result is:

$292,000 (Residence and Non-Farmable Land)

$84,000 (Farmable Land)

$24,000 (Barn)

$400,000 TOTAL

114In light of these circumstances the Board finds that it is unnecessary to order a re-hearing. Instead, the Board’s Order will vary the Decision to correct the farm land qualifications, and provide for the above stated apportionment of values for the Subject Property.

115The only other matter to address is the application of s. 31 of the General Regulation. In this case, the Board has determined that the only parcel of land that can qualify as farm lands used only for purposes is the Farmable Land. The conclusion in the Decision, at paragraph 79, states “As part of the property was previously classified in the farm property class, there is no need to refer this matter to AFRAAT.” As the Decision does not expressly identify that the “part of the property” is the Farmable Land, the Decision is unclear on this point. Therefore, it is unclear whether there is still an issue as to whether the Farmable Land should be classified as land in the Farm Property Class.

116The Board has upheld the Hearing Panel’s finding that the barn qualifies as farm lands used for farm purposes. However, the Decision is also unclear whether there is still an issue regarding whether the barn should be classified in the Farm Property Class.

117Regarding the residence and the Non-Farmable Land, the Board is amending the Decision to indicate that they do not qualify as farm lands. In light of this change, the Board cannot assume what the Owners’ position will be, as they did not provide submissions in this Request for Review. Therefore, it is also unclear if classification of the residence and the Non-Farmable Land is still in issue.

118Based on the above analysis, the Board will provide the parties with an opportunity to consult with one another and then advise the Board if classification is still an issue respecting any of the above-referenced parcels of land. If there is a dispute, the matter will be referred to AFRAAT as required under s. 31 2 of the General Regulation. If the parties do not respond within 30 days of the issuance of this Review Decision, then the Board will find that there is no issue and proceed to amend the Decision.

ORDER

119The Board orders that the Decision be varied as follows:

a. The residence and the Non-Farmable Land on the Subject Property do not qualify as farm lands under s. 19(5).

b. The apportionment of the total value of the Subject Property is as follows:

$292,000 (Residence and Non-Farmable Land)

$84,000 (Farmable Land)

$24,000 (Barn)

$400,000 TOTAL

120Within 30 days of the issuance of this Review Decision, the parties are directed to consult with one another and then advise the Board if classification of any part of the Subject Property in the Farm Property Class is still in issue. If no response is received, the Board will find that there is no issue, and the Board will proceed to amend the Decision. If the Parties advise that there is still an issue, the Board will refer the issue to AFRAAT.