National Car Rental (Canada) Inc. v. Municipal Property Assessment Corporation Region 15, 2022 CanLII 53352

Tribunals Ontario

Tribunaux décisionnels Ontario

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

June 21, 2022

FILE NO.:

DM 177142

Assessed Person(s):

National Car Rental (Canada) Inc., Aviscar Inc., Budget Car Inc., Dollar Thrifty Auto Group Canada Inc., and Hertz Canada Limited

Appellant(s):

National Car Rental (Canada) Inc., Aviscar Inc., Budget Car Inc., Dollar Thrifty Auto Group Canada Inc., and Hertz Canada Limited

Respondent(s):

Municipal Property Assessment Corporation Region 15

Respondent(s):

City of Mississauga

Property Location(s):

0 Airport Road, Terminal 1

Municipality(ies):

City of Mississauga

Roll Number(s):

2105-050-113-60091-0000, 2105-050-113-60092-0000, 2105-050-113-60093-0000, 2105-050-113-60094-0000 and 2105-050-113-60095-0000

Appeal Number(s):

See Schedule A

Taxation Year(s):

2017-2022

Hearing Event No.:

763270

Legislative Authority:

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

APPEARANCES:

Parties

Counsel

National Car Rental (Canada) Inc., Aviscar Inc., Budget Car Inc., Dollar Thrifty Auto Group Canada Inc. and Hertz Canada Limited

Lauren Lackie

Municipal Property Assessment Corporation

Donald G. Mitchell

City of Mississauga

Brad Teichman

REQUEST FOR:

Schedule separate appeal proceeding for 2021 taxation year

HEARD:

March 11, 2022 in writing

ADJUDICATOR(S):

Dirk VanderBent, Vice-Chair

MOTION DECISION

OVERVIEW

1Pursuant to s. 40 of the Assessment Act, S.O. 1990, c. A.31 (the “Act”), appeals for the 2017 taxation year were filed by the owners (the “Appellants”) of five properties located at the Pearson International Airport (the “Subject Properties”) which are occupied by car rental businesses.

2As will be described in greater detail below, the Act requires that the Municipal Property Assessment Corporation (“MPAC”) conduct a general reassessment, once every four years, to update the current value of all properties in Ontario (“General Reassessment Value”). Section 19.2(1) prescribes a single valuation day for determining this value which will apply to several taxation years (commonly described as an ‘assessment cycle’). In this case, the valuation day specified for the 2017 to 2020 taxation years is January 1, 2016.

3However, s. 19.2(5) also authorizes the Minister of Finance to prescribe a valuation day that is different from the valuation day prescribed in s. 19.2(1). Pursuant to O. Reg. 186/20, the Minister of Finance has set January 1, 2016 as the valuation day for the 2021 to 2023 taxation years. In effect, therefore, the assessment cycle is extended to include seven taxation years from 2017 to 2023. For the Subject Properties, pursuant to the deeming provision in s. 40(26), there are now deemed appeals for the 2018 to 2022 taxation years, in addition to the original 2017 appeals. These appeal proceedings are currently before the Assessment Review Board (the “Board”), as they have not yet been adjudicated by the Board or resolved by agreement of the parties.

4It is not disputed that MPAC has valued the Subject Properties as income producing properties. The Appellants assert that disruptions caused by the COVID-19 pandemic, together with associated government restrictions, which the Board collectively refers to as “the COVID-19 Impact”, have resulted in a significant reduction of the income earned by the Subject Properties during the 2020 calendar year, which, in turn, could reduce their values assessed as of the date for the return of the Assessment Roll, i.e. December 15, 2020 for the 2021 taxation year. The Appellants assert this constitutes a change in the ‘state and condition’ of the Subject Properties, and, therefore, the current value of the Subject Properties to be reported on the Assessment Roll for the 2021 taxation year should be reassessed as of December 15, 2020, which they describe as the ‘state and condition’ date. As noted above, they argue that the current value of the Subject Properties determined by such reassessment will be lower than the current value reported on the Assessment Roll for previous taxation years.

5MPAC and the City of Mississauga (the “Municipality”) adopt the ‘state and condition’ terminology, which appears to suggest that, in some circumstances, the current value of the Subject Properties could be reassessed on the ‘state and condition date’. However, MPAC maintains that such circumstances do not include a change in ‘market conditions’. Because MPAC characterizes the COVID-19 Impact as a change in ‘market conditions’, it is MPAC’s position that the current value of each of the Subject Properties remains the General Reassessment Value determined by MPAC as of the January 1, 2016 valuation day.

6Based on their argument described above, the Appellants brought an earlier motion requesting that the Board order that their appeals for the 2021 taxation year be heard separately from the appeal proceedings for the 2017 to 2020 taxation years. More specifically, they requested that the Board assign a separate Commencement Date and Schedule of Events to hear their appeals for the 2021 taxation year. MPAC and the Municipality opposed the request. This prior motion was adjudicated by the Board in a decision released on January 24, 2022 (see National Car Rental (Canada) Inc. v Municipal Property Assessment Corporation, Region 15, 2022 CanLII 5439 (ON ARB) ) (“DM 174642”).

7In DM 174642, the Hearing Member did not address the main dispute respecting the ‘state and condition’ valuation day issue. Although the parties, in their submissions, did not rely on Rule 87 of the Board’s Rules of Practice and Procedure (the “Rules”), the Hearing Member applied this Rule, which provides that the Board may separate proceedings heard together at any time when, in its opinion, any of the following criteria have been met: the proceedings have become unduly complicated, delayed or repetitive, or a party is unduly prejudiced. The Hearing Member expressed the opinion that the Appellants had not established any of these criteria, and so the Hearing Member denied the request to order that the appeals for the 2021 taxation year be heard separately. However, the Hearing Member, also found, at paragraph 20, that “it remains open to the Appellants to exercise options pursuant to the Rules to be permitted to raise the state and condition issue, including bringing a motion to alter the due dates in the Schedule of Events pursuant to Rule 40.”

8Rule 40 provides that the Board may grant a request to extend a due date in the Schedule of Events, which includes the date for serving a Statement of Issues. However, Rule 40 also provides that the Board will only grant such extensions in exceptional circumstances.

9Consequently, the Appellants have brought the current Motion, under Rule 40, to request that the Board amend the Schedule of Events to change the Statement of Issues service date and all subsequent dates so that the Appellants may raise the ‘state and condition’ issue related to the COVID-19 Impact on the current value of the Subject Properties for the 2021 taxation year. They submit that this ‘state and condition’ issue was not contemplated as part of their original Statement of Issues served in these appeal proceedings, and, because it is a new issue, they have brought this Motion. They further maintain that the COVID-19 emergency constitutes exceptional circumstances which warrants an extension of the due dates under the Schedule of Events for serving their Statement of Issues.

10In response, MPAC and the Municipality jointly oppose the Appellants’ request for the following reasons:

a) They state that the Appellants' Motion is an abuse of process, arguing that the Appellants are seeking the same relief sought and denied by the Board in DM 174642.

b) They submit that the Board should dismiss the current Motion for the reasons given in paragraph 24 of DM 174642, i.e. that the Appellants failed to request the relief sought in a timely manner and there are no exceptional circumstances.

c) They submit that the evidence the Appellants seek to adduce is irrelevant and, therefore, it would be improper for the Board to consider post “Valuation Day” market changes.

11The Board directed that the issues, evidence, and submissions provided in the earlier Motion would be considered in this current Motion, because they are relevant to the issues raised by the parties in this current Motion. The Board also afforded the parties an opportunity to file additional supplementary evidence and submissions. MPAC and the Municipality have filed a joint supplementary response to the Appellants’ supplementary submission.

12The purpose of this Motion Decision is to address this current Motion. As will be described in greater detail below, the crux of the dispute raised in this Motion is this: Does the legal regime imposed by the Act require that the value of a property must be reassessed annually?

Result

13The Board finds that, in this case, the applicable valuation day to determine the current value of the Subject Properties for the 2021 taxation year is January 1, 2016. Therefore, the Board denies the Appellants’ request that the Board amend the Schedule of Events to change the Statement of Issues service date and all subsequent due dates in the Schedule of Events.

ISSUES

14As will be discussed in greater detail below, the Appellants argue that a property’s current value may change if its ‘state and condition’ changes, and that a property’s ‘state and condition’, however this term is defined, must be determined as of the date specified in the Act for the return of the Assessment Roll. As the Assessment Roll is returned on an annual basis, the net effect of this argument is that a property’s current value must be reassessed on an annual basis in order to determine whether a ‘change in state and condition’ has occurred which would require a change in the General Reassessment Value.

15Accordingly, there are two issues to be addressed in this Motion:

1. Does the legal regime imposed by the Act require that the current value of a property be reassessed annually?

2. If so, should the Appellants be granted an extension of the due date for serving an amended Statement of Issues, to allow them to raise the issue that the correct current value of the Subject Properties for the 2021 taxation year is different from the correct current value they have claimed for the 2017 to 2020 taxation years?

ANALYSIS

Issue 1: Does the legal regime imposed by the Act require that the current value of a property be reassessed annually?

Submissions

16While the Board has reviewed and considered all of the parties’ submissions, it is unnecessary to report all of them in detail for purposes of this Motion Decision. The main arguments raised by the parties have been succinctly summarized below. MPAC and the Municipality have made joint submissions. For ease of reference, the Board will refer to them as MPAC's submissions. Furthermore, for purposes of this Motion Decision, the Board assumes that the income of the Subject Properties has been reduced in 2020 due to the COVID-19 emergency, but makes no findings in this regard.

17The Appellants rely on s. 36 of the Act which provides that “assessments of land under this Act shall be made annually between January 1 and the second Tuesday following December 1”. They note that the latest date for returning the assessment for the 2021 taxation year is December 15, 2020, and they describe this date as the ‘state and condition date’. They argue that the values of the Subject Properties for the 2021 taxation year should be assessed as of this ‘state and condition date’. They assert that the ‘state and condition’ of the Subject Properties on this ‘state and condition date’ is different from their ‘state and condition’ for the previous taxation year (this date being December 10, 2019).

18As noted above, the Appellants further argue that due to the change in ‘state and condition’ of the Subject Properties, the values of the Subject Properties, determined as of the December 15, 2020 ‘state and condition date’, should be reduced for the 2021 taxation year. Accordingly, the Appellants bring this Motion requesting that they be permitted to amend their Statement of Issues.

19In support of their position, the Appellants cite several decisions which the Board discusses in detail below.

20In response, MPAC and the Municipality assert that any loss or perceived loss in the value of lands resulting from the COVID-19 pandemic relates to changes in the market. They submit that a change in ‘state and condition’ does not include a reduction in property value due to changing market conditions. They maintain that pursuant to s. 19.2 of the Act, the values of the Subject Properties are fixed as of the January 1, 2016 valuation day, which applies to all taxation years in the assessment cycle. They submit, therefore, that market changes which occur after this date cannot be considered when determining the current values of the Subject Properties for the 2021 taxation year. They argue that to hold otherwise would defeat the purpose of a fixed legislated valuation day. In support of their position, they also cite several decisions which the Board discusses in detail below.

Findings on Issue 1

Introduction

21The Board first observes that the issue raised in this Motion raises questions regarding the fundamental legislative scheme and purpose of the Act. Therefore, the Board will first address the principles of legislative interpretation to be applied, followed by a discussion of the purpose of the Act, which, in turn, requires a discussion of the main components of property value, i.e. ‘current value’ and ‘valuation day’, and the legislative regime under Act.

22In support of their position that the Act requires that current value be reassessed annually, the Appellants cite previous Board decisions that primarily rely on interpretations of s. 32 and s. 36 of the Act. For this reason, the Board will first provide its interpretation of the provisions of the Act, focussing on these two sections in particular. In this context, the Board examines the question whether the application of ‘state and condition’ and ‘market value’ concepts referenced by the parties are contemplated by the legislative provisions of the Act. Then, the Board, having considered the decisions cited by the parties, will state its conclusion regarding the correct legislative interpretation of the Act.

23As there are a significant number of decisions cited by the parties, the Board’s analysis of these decisions is provided in a separate section following the Board’s statutory interpretation of the relevant provisions of the Act.

24Finally, the Board will then apply its findings on the interpretation of the Act to the circumstances of this case.

Interpreting the Act

25In Municipal Property Assessment Corp v BCE Place Ltd, 2009 CanLII 50862 (Ont. Div. Ct.), aff'd 2010 ONCA 672, the Divisional Court outlined the correct approach to statutory interpretation of taxation statutes. At paragraph 66, the Court stated:

66The following guides are to be used to assist in interpreting a taxing statute:

(i) The interpretation of tax legislation should follow the ordinary rules of interpretation;

(ii) (a) A legislative provision should be given a strict or liberal interpretation depending on the purpose underlying it, and that purpose must be identified in light of the context of the statute, its objective and the legislative intent: this is the teleological approach;

(b) The teleological approach will favour the taxpayer or the tax department depending solely on the legislative provision in question, and not on the existence of predetermined presumptions.

(iii) Substance should be given precedence over form to the extent that this is consistent with the wording and objective of the statute.

(iv) Only a reasonable doubt, not resolved by the ordinary rules of interpretation, will be settled by recourse to the residual presumption in favour of the taxpayer. [Emphasis added.]

As the parties’ submissions refer to the term ‘state and condition’, the Board further observes that, when interpreting a section in the Act, the Board must consider only the wording of a section as it appears in the Act, not the words or phrases which someone uses to describe the section. The Act must be interpreted in a manner that is consistent with the legislative intent as expressed in the actual wording of each section of the Act.

26Rules of statutory interpretation require that the Board’s interpretation must give meaning and purpose to every section of the Act. All sections must also be interpreted harmoniously in a manner consistent with the overarching purpose of the Act. In other words, the Board cannot interpret one section of the Act in a manner that would make another section meaningless (i.e. serve no purpose) or redundant (i.e. duplicates the effect and purpose of another section), nor can the Board interpret a section in a manner which results in one section directly contradicting another section of the Act.

27Furthermore, the Board must give effect to what the Act says, not what the Board thinks it should say. In that regard, the Board refers to a decision cited by MPAC made by the Nova Scotia Court of Appeal in respect of the Nova Scotia Assessment Act described below as Wandlyn. At page 15 of this decision, the Court stated: “We cannot change the Act nor interpret it in a manner that is inconsistent with the legislative intent expressed in the words of the relevant sections.”

28Finally, the Board notes that in 1609830 Ontario Limited v. Municipal Property Assessment Corporation, Region No. 9, 2008 CanLII 47726 (ON SCDC), the Ontario Divisional Court stated, at paragraph 14:

The individual sections of the Assessment Act are inter-dependant [sic], and must be read in context and purpose of entire Act, which is to regulate the orderly and fair collection of public taxes based upon an accurate assessment roll. [Emphasis added.]

The Purpose of the Act

29The overarching purpose of the Act is to regulate some of the aspects of municipal taxation. Consequently, the Board must consider the legislative regime governing taxation, which is set out, not only in the Act itself, but in companion legislation - the Municipal Act, 2001, S.O. 2001, c. 25 (“Municipal Act”) and the City of Toronto Act, 2006, S.O. 2006, c. 11, Sched. A (“COTA”) (collectively referred to as “Municipal Legislation”).

30Municipal Legislation provides that the amount of the municipal property tax levied on a property owner is calculated by applying a specific tax rate, (based on a property’s classification) expressed as a percentage of the assessed value of a property. Therefore, in overview, the Act establishes the legislative regime to determine: (i) the value of the property; (ii) its classification; and (iii) the specific days on which both property value and classification are to be determined. The Act also prescribes other relevant information, primarily factual in nature, such as property description and ownership, which must be included on the Assessment Roll that is provided to the municipality.

31From a policy perspective, the Board observes that the Legislature could choose from a number of viable options when designing the taxation system. The provisions of the Act and Municipal Legislation establish the regime that the Legislature has decided to apply in Ontario.

32The Act, through Regulation, regulates some components of property valuation methodology for specific types of properties. However, the Act, itself, is not based on any specific property valuation methodology. As stated by the Ontario Divisional Court in a decision described below as Inmet – Div. Ct., at paragraph 14:

Neither the new Act nor the old specify the valuation principles by which value should be determined. Consequently, there are no legislated guidelines setting out specific valuation concepts.

33Therefore, as noted above, the primary purpose of the Act is to prescribe when the property value and classification are to be determined for the purpose of calculating and levying municipal property taxes. In this context, the Legislature can require that one property value, determined as of a single valuation day, must be used to calculate taxes to be levied for all the years in an assessment cycle, even though a property’s value may vary from year to year within an assessment cycle.

34Therefore, when interpreting the sections of the Act that govern when a property is to be valued for the purpose of calculating municipal property taxes, the Board cannot make presumptions based on property valuation theory. It is the wording of the sections themselves which must govern this determination.

Current Value and Valuation Day

35As property values can change over time, an opinion of a property’s value must be expressed as its value at a specific point in time. Therefore, in appraisal theory, property valuation utilizes two main concepts: (i) the property’s value; and (ii) the effective date for determining the value. (See The Appraisal of Real Estate, 3^rd Canadian Edition (British Columbia: The Appraisal Institute of Canada, 2010) (“The Appraisal of Real Estate”), pg. 7.2). As discussed below, the Act implements these two components.

36Section 3.6 of Canadian Uniform Standards of Professional Appraisal Practice, Appraisal Institute of Canada, January 1, 2020, (“CUSPAP”), defines “Assessed Value” as “A value set on real estate and personal property by a government as a basis for levying taxes. Assessed value is typically defined by statutes and regulations in each respective Province.” Consequently, appraisal theory, itself, recognizes that the legislation determines how and when a property is to be valued for purposes of municipal taxation.

Property Value

37In appraisal theory, there are several definitions of the meaning of value, depending on the purpose of the valuation. For municipal taxation purposes, s. 1 of the Act defines value as current value. It states:

current value means, 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;

For purposes of this Motion Decision a reference to ‘current value’ means “current value” as defined in the Act.

38CUSPAP, section 3.20, states that the effective date is “The date at which the analyses, opinions and conclusions” apply. The effective date is more commonly described as the valuation day. Therefore, when determining value, all applicable valuation concepts are applied as of the valuation day. A property’s value cannot be determined by choosing different valuation days for individual valuation concepts employed to determine a property’s value.

Effective Date

39In Ontario, the Act applies the appraisal theory concept of the effective date for determining a property’s value. The definition of current value underscores that a property’s value must be determined as of a single valuation day, this day being the day on which a sale of the property notionally occurs. Furthermore, s. 19.2 of the Act expressly refers to a valuation day for determining current value.

40However, it is important to observe that the definition of current value does not make any reference to the valuation day as of which current value is to be determined. The applicable valuation day is prescribed in separate provisions of the Act.

‘State and Condition’ and ‘Market Changes’

41The Appellants maintain that the current value of a property can be reassessed in any of the taxation years in an assessment cycle if there has been a change in the property’s ‘state and condition’ following the general reassessment. MPAC agrees in part.

42Before turning to MPAC's position on this issue, it necessary to reiterate that the Act requires that the value of property be reassessed once every four years (described as the general reassessment) and that this value i.e. the General Reassessment Value, will be used to calculate municipal taxes payable for each of the four taxation years in an assessment cycle. The Act further specifies the valuation day for the general reassessment. The specific legislative provisions are described below.

43The Board observes that the process of determining whether there has been a change in a property’s ‘state and condition’ requires an evaluation of the property as of the ‘state and condition date’ as compared to its ‘state and condition’ either as of the general reassessment valuation day, or, as the Appellants state, as of the previous taxation year. If there is such a change, then MPAC would be required to complete a valuation analysis to determine the quantum of the current value. However, based on Board decisions cited by the parties, described below as General Motors and Claireville, the determination of a property’s ‘state and condition’ of the property is based on one valuation day (the ‘state and condition’ date), but the determination of the quantum of current value is determined as of the general reassessment valuation day prescribed by s. 19.2 of the Act.

44There is no provision in the Act to suggest that MPAC's obligation to undertake such an analysis only arises when a property owner or some other person suggests that there has been a ‘change in state and condition’ or raises this as an issue in an appeal proceeding before the Board. Furthermore, the Board notes that a ‘change in state or condition’ (however this term is defined) could occur in any taxation year in the assessment cycle. Consequently, the assertion that the Act provides that a property’s current value can be reassessed if there has been a ‘change in state and condition’, in effect, means that the Act permits that a property’s current value can be reassessed on an annual basis.

45Turning to MPAC's position, MPAC only agrees that if there has been a ‘change in state and condition’ a property’s current value may be reassessed, but not if the change is due only to a change in ‘market conditions’.

46Therefore, in making their submissions, the parties rely on what the Board describes as a ‘state and condition’ paradigm, as well as the term ‘market changes’. As the dispute among the parties raises questions regarding the meaning and scope of these terms, the Board must interpret these terms in the context of the legislative provisions of the Act.

47The Board begins its interpretation by observing that the Act does not define or use the term ‘state and condition’.

48In making the above statement, the Board acknowledges that the term ‘a change to the state or condition of land’ appears in O. Reg. 282/98 (the “General Regulation”), in the Part entitled “ADJUSTMENTS UNDER SECTION 19.1 OF THE ACT”. To explain further, s. 19.1 of the Act provides for eligible increases (described as “phase ins”) when the General Reassessment Value for an assessment cycle is higher than the General Reassessment Value for the previous assessment cycle. However, these sections of the General Regulation, s. 48, and ss. 48.1 to 48.5, do not regulate the valuation day for determining current value.

49Any regulation made by the Minister of Finance, pursuant to s. 2(2)(h) of the Act, respecting the valuation day for determining current value, is found in the section of the General Regulation entitled: “DIFFERENT VALUATION DAYS FOR THE PURPOSES OF SECTION 19.2 OF THE ACT”. The current section is s. 48.6, which does not refer to ‘state or condition’.

50The Board further notes that the General Regulation, itself, does not provide a definition for ‘state or condition’.

51The Board has also considered that the Act makes no reference to the ‘state’ of a property. A change in a property’s “state” (however this term is defined), may include a change in a property’s physical condition, use, zoning, or ‘market conditions’ (however this term may be defined), but these are all factors which relate to forming an opinion of current value. As such, they are not relevant when determining the applicable valuation day on which current value is to be assessed. In other words, the valuation day is chosen first, independent of the subsequent determination of the quantum of current value.

52Furthermore, the Board emphasizes that the Act does not provide that more than one valuation day may be considered when forming an opinion as to current value, i.e. some aspects of current value may be determined as of one valuation day, while other aspects of the current value are determined as of a different valuation day.

53Regarding ‘market conditions’, this term is not defined or used in the Act or the General Regulation. Furthermore, the Board notes that the parties have not provided the Board with a definition of ‘change in market conditions’. Instead, the parties rely on the analyses in several prior Board decisions which may be loosely described as applying a ‘state and condition’ or ‘change in market conditions’ analysis. However, the Board has reviewed these decisions below, concluding that the analyses in these decisions either are not supported by the legislative provisions of the Act, or rely on interpretations of prior Board or Court decisions that are unsubstantiated.

54The Board observes that there is nothing in the legislative provisions of the Act to suggest that the legislative regime imposes a different valuation day, depending on factors relevant to forming an opinion of current value. In this regard, the Board notes that MPAC, in support of its submission, has cited a decision of the Nova Scotia Court of Appeal, described below as Wandlyn. However, for reasons described below, the Board finds that the findings in Wandlyn were made in the context of a different legislative regime, and, therefore, this decision provides no persuasive assistance in interpreting the provisions of the Act, as it relates to the application of a ‘state and condition’ paradigm.

55In response to MPAC's argument regarding ‘market changes’, the Appellants argue that the regulatory restrictions imposed due to the COVID-19 emergency significantly impacted the ‘state and condition’ of the Subject Properties for the 2021 taxation year. They describe these as “detrimental conditions”, which, under appraisal theory cited by the Appellants, is an “impairment” which must be considered when valuing properties using the income approach. Consequently, the Appellants do not agree that the change which has occurred in this case is due to a “market trend” or “market change”. The Appellants further emphasize that MPAC and the Municipality admit that a change in “legal status or use” constitutes a change in ‘state and condition’. The Appellants submit that the Subject Properties were impacted by a change in “legal status or use”, arguing that the government restrictions essentially stopped international travel and limited domestic travel, resulting in Pearson International Airport’s use being severely restrained, which, in turn, significantly reduced the car rental income of the Subject Properties.

56In response, MPAC asserts that COVID-19 is not a ‘detrimental condition’ because the COVID-19 Impact does not relate to the characteristics of the property, and because the COVID-19 restrictions are only temporary. MPAC, therefore, concludes that any loss or perceived loss in the value of the Subject Properties resulting from the pandemic relates to changes in the market.

57At this point, the Board must ‘take a step back’ to observe how far the above discourse has drifted from the interpretation of the actual provisions of the Act itself. Rather than applying the definition of current value and considering the actual provisions in the Act which govern the applicable valuation day for determining current value, the Board is being asked to draw fine distinctions on what constitutes ‘a change in state and condition’, what constitutes a ‘market trend’ or ‘market change’, and to evaluate the scope of appraisal concepts such as the impact of “detrimental conditions” as these may apply to the determination of the applicable valuation day for determining current value, when none of these terms are used in the Act, and there are no clear definitions for these terms. In this regard, the Board re-iterates the statement of the Nova Scotia Court of Appeal in Wandlyn: “We cannot change the Act nor interpret it in a manner that is inconsistent with the legislative intent expressed in the words of the relevant sections.”

58In reviewing the Board decisions cited by the parties, the terms ‘state and condition’ or ‘market change’ are used either in arguments advanced by a party, or by the Board, but these decisions provide no clear definition of these terms. ‘State and condition’ appears to be a label which loosely refers to sections of the Act which, it is argued, do permit changes to the General Reassessment Value subsequent to the general reassessment valuation day prescribed in the Act. However, as noted above, it is contrary to principles of statutory interpretation to interpret a description of a section or sections of the Act, instead of the actual wording of the sections themselves.

59The Board further observes that employing the ‘state and condition’ and ‘market change’ paradigms as the applicable legal test does not appear to establish clear criteria which the Board can consider and apply, nor, as discussed below, does it appear that it would always produce consistent conclusions. In this regard, the Board observes that fairness in the administration of the taxation system requires an interpretation of the Act that produces consistent results.

60In conclusion, therefore, the Board observes that the ‘state and condition’ paradigm does not provide any clear guidance in determining the correct applicable valuation day for determining current value. Furthermore, the Board re-iterates that, while these terms, as well as the concept of ‘detrimental conditions’, may have special meaning in the context of property valuation theory, the legislative scheme of the Act is not based on any specific property valuation methodology.

61In summary, the above observations demonstrate that the terms ‘change in state and condition’ and ‘market change’ provide no clear criteria to determine when a property’s current value can be reassessed after the prescribed valuation day for the general reassessment. In this regard, the Board notes that the Appellants have cited a decision of the British Columbia Supreme Court, described below as Trizec, in which the Court, at paragraph 27, observed that: “The words ‘state and condition’ hide more than they reveal.”

62For these reasons, the Board does not accept that the ‘state and condition’ and ‘market change’ paradigms are of any assistance in determining the issue before the Board in this Motion. Instead, the Board must look to the provisions of the Act itself.

Questions to be addressed in this Motion

63In applying the provisions of the Act, clearly, the correct way to address Issue 1 is to ask two questions:

1. Could the COVID-19 Impact affect the current value of each of the Properties, as this term is defined in the Act?

2. Under the Act, what is the correct valuation day for determining the current value of each of the Properties for the 2021 taxation year?

64Regarding the first question, the analysis is relatively straight forward. From a valuation perspective, it is not disputed that the Subject Properties are income producing properties, and, therefore, their value is based, at least in part, on the net income they generate. Therefore, assuming that the income of these Subject Properties has been reduced due to the COVID-19 Impact, the question is: Would a willing buyer pay less to purchase the Subject Properties? As this is an evidentiary matter that must be addressed at a hearing, it is unnecessary for the Board to answer this question. The issue in this Motion, is whether there is an arguable issue that a sale of these Subject Properties would transact at a lower value because of the COVID-19 Impact. The Board finds that the Appellants have outlined a plausible case that it could, and, consequently, it is an arguable issue.

65The above analysis disposes of the first question, but not the second. On the undisputed facts, the COVID-19 Impact could only affect the current values of the Subject Properties in 2020 and subsequent years. Therefore, in advancing the issue regarding the current value of the Subject Properties, the Appellants assert that the applicable valuation day for determining current value is the date for the return of the Assessment Roll for the 2020 taxation year. As noted above, MPAC and the Municipality disagree. Therefore, the answer to the second question will be determinative of the issue raised in this Motion.

66The Board’s analysis of this question follows below. The Appellants have cited decisions in support of their position that the Act allows for an annual reassessment of the current value of a property. In overview, the analyses in these decisions rely primarily on interpretations of s. 32 and s. 36 of the Act. Obviously, this position directly contradicts s. 19.2 of the Act. For this reason, the Board will first consider s. 19.2 and s. 36 of the Act, followed by consideration of other provisions of the Act that allow for changes to the General Reassessment Value, which includes s. 32 of the Act. The Board will then consider whether the requirement to annually assess classification could indicate that s. 36 similarly imposes a requirement to annually reassess a property’s current value.

67In conducting its legislative analysis, the Board has considered the decisions cited by the parties, and, in a separate section in this Motion Decision, provides its detailed analysis of these decisions, together with the Board’s conclusions as to whether the Board should adopt and apply any of the findings made in these decisions.

The Legislative Regime prescribed under s. 19.2 of the Act

68The term ‘general reassessment’ is defined in s. 1(1) of the Act, which states:

In this Act,

“general reassessment” means the updating of assessments as a result of the application of a new valuation day under subsection 19.2 (1);

69Section 19.2 states:

Valuation Days

19.2 (1) Subject to subsection (5), the day as of which land is valued for a taxation year is determined as follows:

4. For the period consisting of the four taxation years from 2017 to 2020, land is valued as of January 1, 2016.

70The Board finds that the wording of s. 19.2 is unequivocal. It stipulates that, for purposes for municipal taxation, a property’s value, for each of four consecutive taxation years in the assessment cycle, is based on one value, that being the value of the property on the specified valuation date (in this case January 1, 2016), i.e. the General Reassessment Value. This conclusion is reinforced by the definition of “general reassessment”, which, in effect, requires that MPAC must update the assessment of a property when s. 19.2 applies a new valuation day. This section expressly provides that a property’s value, which has been determined by MPAC in the general reassessment, is not reassessed for each of the taxation years in the assessment cycle. A reassessment occurs only when there is a general reassessment.

71However, the Act does provide that this value can subsequently be adjusted in certain circumstances, which are discussed below. In this regard, it is important to note the distinction that current value may change under two distinct circumstances: (i) where the valuation day for determining current value changes, and, consequently the quantum of current value must be reassessed; and (ii) where the valuation day for determining current value does not change, but the quantum of current value is to be adjusted to correct an error or omission in the original assessment of current value, or upon review by the Board in an appeal proceeding.

72The above interpretation is also reinforced by the observation that, had the Legislature intended that a property’s value be reassessed on an annual basis, then the Legislature would have expressly said so. In this regard, the Board notes that, regarding a property’s classification, the Legislature has expressly provided that classification must be reassessed on an annual basis. Section 19.3 states:

Classification day

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

Therefore, the Legislature clearly considered whether, for purposes of municipal taxation, a property’s value should be reassessed annually, and has chosen not to adopt this approach.

73The Board also refers to s. 32(4) of the Act which states:

Change in methodology

(4) The following rules apply if, as a result of an amendment to this Act or the regulations, the method of determining the assessed value of land is changed:

1. The assessment corporation shall make any assessment necessary to change the assessed value. …

If the Act is interpreted to require an annual reassessment of property value, then any change in assessment methodology would be automatically considered when conducting the annual reassessment. Consequently, s. 32(4) would not be required. Therefore, an interpretation that an annual reassessment is required, would render s. 32(4) redundant, which would contravene the principle of statutory interpretation that each section of a statute must be interpreted to have its own meaning and purpose.

74In reaching this conclusion, the Board has also considered the definition of the term ‘current value’, as “current” could suggest a present valuation day, as opposed to a date in the past. The Board observes that, although the term is current value, the definition of this term does not include a reference to a valuation day. Therefore, there is nothing in the definition of current value to indicate, one way or the other, what the valuation day should be. Section 19.2 specifies a valuation day that precedes the date for the return of the Assessment Roll prescribed by s. 36 of the Act. Therefore, to the extent that the word ‘current’ is understood to mean “the present day”, the Board observes that there is nothing current about current value. Consequently, the use of the word ‘current’ in current value is somewhat of a misnomer.

The Legislative Regime prescribed under s. 36(1) of the Act

75Section 36(1) of the Act states:

Assessment

36 (1) Except as provided in section 32, 33 or 34, assessments of land under this Act shall be made annually at any time between January 1 and the second Tuesday following December 1.

As noted above, the substantive question that the Board must address is whether s. 36 of the Act requires an annual reassessment of a property’s current value, and, if so, how are s. 19.2 and s. 36 of the Act to be read harmoniously with one another and with the overarching purpose of the Act?

76Some of the Board decisions cited by the Appellants interpret the phrase “…assessments of land shall be made annually” to mean that the current value of a property must be reassessed on an annual basis. In other words, these decisions consider that “assessments of land” means to ‘assess the current value of the property’.

77Therefore, the Board must determine how s. 36(1) is to be interpreted, i.e. what is the meaning of the phrase “assessments of land shall be made annually”?

Interpretation of the term “assessment” in s. 36(1)

78Although the main purpose of the Act is to govern ‘assessments’, the terms ‘assess’ and ‘assessment’ are not defined in the Act. Therefore, the meaning of these terms must be derived by interpretating and comparing the sections of the Act where these terms are used.

79In the context of the provisions of the Act, ‘assess’ means the act of forming an opinion as to a property’s current value or classification, as well as the act of obtaining other relevant factual information which a municipality requires in order to levy taxes. An ‘assessment’ is the information obtained from the act of assessing.

80What, then, constitutes an ‘assessment’ under the Act? The answer to this question is found in s. 14(1) of the Act which states:

Assessment Roll Contents

14 (1) The assessment corporation shall prepare an Assessment Roll for each municipality, for each locality and for non-municipal territory and the Assessment Roll shall contain the following information as well as the information required under subsections (1.1) and (1.2):

1. The name and surnames, in full, if they can be ascertained, of all persons who are liable to assessment in the municipality or in the non-municipal territory, as the case may be.

2. The amount assessable against each person who is liable to assessment, opposite the person’s name.

3. A description of each property sufficient to identify it.

4. The number of acres, or other measures showing the extent of the land.

5. The current value of the land.

6. The value of the land liable to taxation.

7. The value of land exempt from taxation.

8. The classification of the land.

9. Such other information as may be prescribed by the Minister.

The Board finds that s. 14, particularly the title “Assessment Roll Contents” [emphasis added] clearly indicates that an ‘assessment’ is a compilation of the necessary property information which a municipality requires in order to levy municipal property taxes as directed in Municipal Legislation.

81The Board’s conclusion in this regard is reinforced by s. 31 of the Act which states:

Notice of assessment

31 (1) If there is a change in any information described in subsection 14 (1), (1.1) or (1.2) in respect of a parcel of land and the change is not reflected in the last assessment roll as returned, the assessment corporation shall deliver to every person described in subsection 14 (1) who is affected by the change a notice, in a form approved by the Minister, showing,

(a) the person’s assessment and the current value of the parcel of land;

(a.1) the classification of the parcel of land;

(b) the person’s school support, if applicable; and

(c) such other particulars as are directed by the Minister to be shown in the notice,

[Emphasis added.]

82This section underscores that the current value of a property is but one piece of information, i.e. one thing to be reported on the assessment roll. Therefore, in s. 31 and s. 36 there are no directions to undertake the act of forming an opinion as to current value.

83In further support of this conclusion, the Board further notes that, while the term “assessment” is not defined in the Act, it is defined in Municipal Legislation. Section 306 of the Municipal Act (s. 277 of COTA) states: “‘assessment’ means the assessment for real property made under the Assessment Act according to the last returned Assessment Roll” [emphasis added].

84It is also important to note that the Act does not define the phrase “assessed value”. However, where the Act specifically references the value of a property, the Act uses the term “assessed value” or current value (see sections 14(1)5, 17.1(1), 19(2.1.1),19.0.1(1), 32(4) and 40.1). The sections of the General Regulation make numerous references to “the assessed value of the land”, but do not provide a definition of this term. Therefore, when interpreting the Act or the General Regulation, the term “assessment” is not synonymous with “assessed value”. Instead, a property’s “assessed value” is the current value to be reported on the Assessment Roll, which is but one aspect of the information which comprises an “assessment” of the property as prescribed by s. 14 of the Act.

85Turning to the wording of s. 36(1), which states “…assessments of land under this Act shall be made annually…”, there is no reference in s. 36 to “assessing” a property’s value. The title of s. 36 and the wording of this section expressly refer to the Assessment Roll. Therefore, the Board finds that ‘making an assessment of land’ means that MPAC is to provide a municipality with all the information prescribed under s. 14 of the Act. Section 36(1) simply requires that this information is to be reported to a municipality on an annual basis (described in the Act as the “return of the Assessment Roll”).

Purpose of the s. 36 requirement for an annual assessment

86In reaching the above conclusion, the Board has also considered the following question. If s. 19.2 of the Act provides that the same valuation day for determining a property’s current value is to be applied to each of the taxation years in an assessment cycle, then why does s. 36 require that assessments be made annually?

87The Board has previously noted that the purpose of making assessments under the Act is to provide a municipality with the information that it requires to levy municipal property taxes. Under Municipal Legislation, municipalities are statutorily required to prepare an annual budget (see s. 290 of the Municipal Act, cited below). A municipality cannot prepare its budget if the municipality cannot calculate the tax revenues to be generated by levying municipal property taxes. Therefore, in order to satisfy its statutory obligation to prepare an annual budget, a municipality must have the information prescribed by s. 14 of the Act. Consequently, this information must be “returned” on the Assessment Roll on an annual basis.

Reporting correct information on the Assessment Roll

88It is axiomatic that the assessment of a property should be based on correct information. There can be errors in information reported on the Assessment Roll for any given taxation year, errors which may be discovered at any time. Changes to a property’s characteristics may also occur over time, such as a change in property ownership, which will have the effect of turning what was previously correct information into incorrect information. Therefore, it is necessary to specify a specific point in time to review whether the information required under s. 14(1) of the Act, which has been reported on the Assessment Roll for the previous taxation year, is still correct. Section 36 expressly establishes that correcting information on the Assessment Roll, i.e. updating the information reported for the previous taxation year, is to be done on an annual basis, no later than the second Tuesday in the month of December of the year preceding the taxation year.

89The date of the return of the Assessment Roll is the critical date. Any changes in the information which occur after this date will not be changed on the Assessment Roll for the taxation year (see the decision of the Ontario Court of Appeal described below as Williams).

Correct current value to be reported on the Assessment Roll

90It is also important to emphasize that updating any incorrect or outdated information on the Assessment Roll as of the date fixed for the return of the Assessment Roll, is not the same thing as updating an opinion of a property’s value. If a property’s value has been determined in accordance with the requirements of the Act, more specifically, on the correct valuation day, then that value is the correct value which must be reported on the Assessment Roll.

91In this regard, the Board emphasizes that, of all the classes of information set out in s. 14, the Act only requires that a property’s current value and its classification must be determined as of a specific valuation day prescribed by the Act. In Jack Walker and Jerry Grad, Ontario Property Tax Assessment Handbook, 2^nd ed. (Canada Law Book), at section 1:90, the authors, in addressing the assessment made under s. 36 of the Act, state: “The date of the assessment must be differentiated from the day as of which the property is valued and the date at which the property is classified.”

92In further support of this conclusion, the Board observes that, if s. 36 required that a property’s value be reassessed annually, there would be no need for the Act to specify that assessments must be updated every four years. Therefore, such an interpretation would, in effect, render redundant both the definition of general reassessment and s. 19.2 of the Act.

93The Board also observes that if s. 36(1) required that MPAC mandatorily annually reassess a property value, this would require that MPAC annually reassess the values of all five million properties in Ontario. The resource implications of such an interpretation are significant, to say the least. If the Legislature had intended such a result, it would have provided a clear and express statement to this effect. Such wording is not present in s. 36. To the contrary, s. 19.2 makes it clear that the reassessment of properties on this scale is to be conducted only once every four years.

94In making the above observation, the Board has considered that the parties’ submissions focus on conducting a reassessment only if there has been a change in the ‘state and condition’ of the property which impacts current value. However, the Board notes that, in order to do so, MPAC must conduct an assessment to identify whether there has been a change in ‘state and condition’, and, if so, form an opinion as to whether the current value has changed. This process, itself, constitutes a reassessment of current value, even if the final conclusion is that there has been no change in current value.

95Finally, the Board observes that, while the Appellants assert that the current value for the 2021 taxation year should be reduced through an annual reassessment of the Subject Properties, they make no mention of the potential for an increase in current value for any of the previous taxation years in the assessment cycle. Property values change over time. The value of the Subject Properties can also increase. Assuming s. 36 did require an annual update of property value, there is nothing in s. 36 to suggest that a reassessment of current value would only be required if the property value is reduced.

Conclusion

96In conclusion, the purpose of s. 36 is to require that MPAC annually provide municipalities with property assessments, where each property assessment is the compilation of the required information prescribed under s. 14 of the Act. In this context, there is nothing in the wording of s. 36 to suggest that this section permits a property’s assessed value, i.e. current value, to be reassessed on an annual basis, and such an interpretation would render the definition of “general reassessment” and s. 19.2 of the Act redundant. The Board finds that its interpretation of the wording of s. 36 does not contradict s. 19.2 of the Act and, furthermore, is harmonious with the other sections of the Act, as well as the overall legislative scheme and purpose of the Act. It is also harmonious with Municipal Legislation.

Changes to the General Reassessment Value

97Although the Board has found that making an assessment pursuant to s. 36 of the Act, in and of itself, does not permit MPAC to change the General Reassessment Value of a property for any of the taxation years in an assessment cycle, the question remains whether any other provision of the Act may authorize MPAC to do so? The answer is that there are some sections of the Act which do provide such authorization, which the Board addresses below. The additional question to be answered is whether any of these provisions indicate that the current value of a property must be annually reassessed.

The Board’s jurisdiction on appeal

98The Board first turns to its authority to change the assessed value on appeal. In an appeal proceeding under s. 40(1) of the Act, the Board has the jurisdiction to determine the correct current value of a property for the taxation year under appeal. While s. 40 of the Act permits a person to annually file an appeal for each taxation year in an assessment cycle, this section makes no reference whatsoever to the applicable valuation day on which current value is to be determined. Because s. 40 does not grant the Board jurisdiction to select the valuation day, the Board must apply the valuation day prescribed in the Act.

99The powers of the Board on appeal are set out in sections 44 and 45 of the Act, which state:

Assessment may be open upon appeal

44 (1) Upon an appeal on any ground against an assessment, the Assessment Review Board or court, as the case may be, may reopen the whole question of the assessment so that omissions from, or errors in the Assessment Roll may be corrected, and the amount for which the assessment should be made, and the person or persons who should be assessed therefor may be placed upon the roll, and if necessary the Assessment Roll, even if returned as finally revised, may be opened so as to make it correct in accordance with the findings made on appeal.

Powers and functions of Assessment Review Board

45 Upon an appeal with respect to an assessment, the Assessment Review Board may review the assessment and, for the purpose of the review, has all the powers and functions of the assessment corporation in making an assessment, determination or decision under this Act, and any assessment, determination or decision made on review by the Assessment Review Board shall be deemed to be an assessment, determination or decision of the assessment corporation and has the same force and effect.

These sections clearly provide that the Board has the same jurisdiction under the Act as MPAC to make changes to a property’s General Reassessment Value. Therefore, if MPAC does not have the authority under the Act to change a property’s General Reassessment Value, then neither does the Board in a s. 40 appeal proceeding (see the decision of the Ontario Divisional Court in Toronto (City) v Municipal Property Assessment Corp, 2013 ONSC 6137 (“Toronto City”) at paragraph 51).

100The above conclusion is subject to one exception. The Board also has the jurisdiction, in certain circumstances, to change the General Reassessment Value when correcting palpable errors on the Assessment Roll, pursuant to s. 40.1 of the Act. However, this section does not provide the Board with the jurisdiction to select the valuation day for determining the quantum of the current value. The Board must apply the valuation day prescribed by the Act.

Sections of the Act which authorize changing the General Reassessment Value

101Turning to MPAC's authority to amend the General Reassessment Value, the Board first observes that the Act does not provide MPAC with a general authority to change the information to be returned on the annual Assessment Roll at any time that MPAC may choose to do so. More importantly, the Act does not provide MPAC with the authority to select the valuation day on which to determine a property’s current value or classification. Instead, MPAC may only make changes to the General Reassessment Value of a property, when authorized by the Act to do so. There are four sections in the Act which provide this authority:

• Section 32 - Correction of errors, etc., in Assessment Roll

• Section 33 - Change re land omitted from tax roll

• Section 34 - Supplementary assessments to be added to tax roll

• Section 39.1(9) and (10) – Alteration of the Assessment Roll in a Reconsideration of Assessment (where MPAC and the property owner agree to a settlement).

The Board will address each section in turn.

Section 32 of the Act

102The relevant provisions of s. 32 are:

Correction of errors, etc., in Assessment Roll

32 (1) Despite the delivery of any notice provided for under this Act, the assessment corporation at any time before the time fixed for the return of the Assessment Roll may correct any defect, error, omission or misstatement in any assessment and alter the roll accordingly.

Same, factual error only

(1.1) Despite the delivery of any notice provided for under this Act, for 2009 and subsequent taxation years, the assessment corporation may, at any time during the taxation year, correct any error in the assessment or classification of a property that has resulted from incorrect factual information about the property, and not from a change in opinion as to current value, and the following rules apply: …

103The Board begins its analysis by first observing that the clear purpose of s. 32 is to correct errors in an assessment. In this context, the error can be in respect of any of the information to be reported on the Assessment Roll as required by s. 14 of the Act. As previously discussed, a change in a property’s information after return of the Assessment Roll can have the effect of turning what was previously correct information into incorrect information. However, this does not make the Assessment Roll, as returned, incorrect.

104Regarding current value, changes in the information upon which MPAC relied to form its opinion of current value as of the general reassessment valuation day, which occur after the valuation day, cannot be characterized as an error in the determination of the current value as of the that general reassessment valuation day. As stated by the Supreme Court of Canada in Sun Life Assurance Co. of Canada v. Montreal (City), 1950 CanLII 29 (SCC), [1950] S.C.R. 220 (“Sun Life’) at page 788, when valuing a property for purposes of municipal assessment, “there is no room for hypothesis as regards the future of the property”.

105MPAC may correct the quantum of the current value where there has been an error in the information upon which MPAC relied to form its opinion of current value on the general reassessment valuation day. The Board notes that this interpretation has been adopted in two prior Board decisions that have been cited by the Appellants (described below as Ritchie and Reininghaus). However, the valuation day for determining the quantum of current value does not change.

106The above analysis confirms that s. 32 does not prescribe the day on which land is to be valued. Therefore, for purposes of this Motion, this confirms that s. 32 does not indicate that the current value of a property may be reassessed on an annual basis.

107In summary, where there is no error in the general assessment conducted as of the applicable valuation day, and there have been no subsequent reassessments authorized by other sections of the Act, the correct current value to be reported on the Assessment Roll for each taxation year in the assessment cycle is the General Reassessment Value. Section 32 does not stand as authority that the current value of a property may be annually reassessed.

Section 33 of the Act

108Section 33 states:

Change re land omitted from tax roll

33 (1) The following rules apply if land liable to assessment has been in whole or in part omitted from the tax roll for the current year or for all or part of either or both of the last two preceding years, and no taxes have been levied for the assessment omitted:

1. The assessment corporation shall make any assessment necessary to correct the omission. …

Change re incorrect exemption from tax

(3) The following rules apply if land liable to taxation has been entered on the tax roll for the current year or for all or part of either or both of the last two preceding years as exempt from taxation, and no taxes have been levied on that land:

1. The assessment corporation shall make any assessment necessary to correct the omission. . . .

109Section 33 applies where land liable to assessment has been omitted from the Assessment Roll, or if land is incorrectly shown to be exempt from taxation. As discussed below, s. 34 addresses circumstances where land that formerly qualified for exemption under the provisions of the Act, subsequently ceases to qualify.

110Section 33(1) applies in circumstances which may occur after the general reassessment, for example, where two property parcels are combined into one, or one property is converted to a number of condominium properties. These “new” properties are not reflected on the Assessment Roll. As they did not exist at the time of the general reassessment, their current value must be newly assessed at the time they are created. Therefore, in this instance, current value is assessed as of a different valuation day following the General Reassessment valuation day. However, this does not qualify as reassessing the current value of a property that was assessed in the general reassessment.

111Regarding s. 33(3), the Board first observes that s. 14(1) requires that MPAC must show the current value of a property on the Assessment Roll even though it is exempt from taxation. Where the land is incorrectly described on the Assessment Roll as exempt, s. 33 does not authorize MPAC to reassess the current value of the property at the time the omission is corrected (see Toronto (City) v. Municipal Property Assessment Corp., 2013 ONSC 6137, 2013 CarswellOnt 13617, 14 M.P.L.R. (5th) 183) (“Toronto (City)”, a decision of the Divisional Court). Therefore, this is an instance where property valued as of the General Reassessment Valuation Day prescribed under s. 19.2 is not reassessed. The Board observes that, if s. 36 is interpreted as permitting an annual reassessment of current value, this would contradict the Court’s finding in Toronto (City).

112In summary, in light of the above observations, it is clear that s. 33 does not stand as authority that the current value of a property must be annually reassessed.

Section 34 of the Act

113As noted above, while s. 32 can provide for an amendment to the General Reassessment Value as of the valuation day prescribed by s. 19.2 of the Act, and s. 33 allows for a new assessment of current value for land that has been omitted from the Assessment Roll, neither of these sections provide for a reassessment of current value where changes to the property occur after the general reassessment. Section 34 is an important section of the Act, because it expressly addresses the extent to which current value can be reassessed after the general reassessment. Therefore, s. 34 prescribes the legislative regime which must be applied, not the ‘state and condition’ paradigm advocated by the parties.

114Section 34 of the Act states:

Supplementary assessments to be added to tax roll

34 (1) If, after notices of assessment have been given under section 31 and before the last day of the taxation year for which taxes are levied on the assessment referred to in the notices,

(a) an increase in value occurs which results from the erection, alteration, enlargement or improvement of any building, structure, machinery, equipment or fixture or any portion thereof that commences to be used for any purpose;

(b) land or a portion of land ceases,

(i) to be exempt from taxation,

(ii) to be farm lands the current value of which is determined in accordance with subsection 19 (5),

(iii) to be conservation land the current value of which is determined under subsection 19 (5.2),

(iii.1) to be land in the managed forests property class the current value of which is determined under subsection 19 (5.2) or (5.2.1),

(iv) to be land the current value of which is based on current use under regulations made under subsection 19 (2), or

(v) to be classified in a subclass of real property; . . .

the assessor may make the further assessment that may be necessary to reflect the change, …

Supplementary classification

(2) If, during the taxation year or the period after June 30 in the preceding taxation year, a change event, within the meaning of subsection (2.2), occurs that would change the class or subclass of real property that a parcel of land or a part of such a parcel is in, the assessor may change the classification accordingly, and, upon receiving notice of the change, the clerk of the municipality or, in the case of land in non-municipal territory, the Minister, shall enter it on the tax roll and the tax levied for the taxation year shall be determined in accordance with the new classification. …

“change event”

(2.2) For the purposes of subsections (2) and (2.1),

“change event” includes,

(a) a change in the use of all or part of the parcel of land,

(b) an act or omission that results in all or part of the parcel of land ceasing to be in a class or subclass of real property, and

(c) the opting, by a council of a single or upper tier municipality, to have a class or subclass of real property apply or cease to apply within the municipality.

[Emphasis added.]

115In reviewing this section, the Board first observes that s. 34 draws a clear distinction between the reassessment of current value and the reassessment of property classification. It also clearly confirms that a change in a property’s use is relevant only to the reassessment of a property’s classification. In the following discussion, for ease of reference, “the erection, alteration, enlargement or improvement of any building, structure, machinery, equipment or fixture or any portion thereof” is described as an ‘improvement’.

116Regarding the reassessment of current value, the wording of s. 34(1)(a) is unequivocal. Such reassessment can only occur where the change that has occurred is an improvement to the property. The additional overlapping qualifiers that the improvement: (i) “commences to be used”; and (ii) is “used for any purpose” are both significant. The first qualifier indicates that the valuation day on which to reassess current value is the day that the improvement commences to be used.

117The second requirement that the improvement be “used for any purpose”, requires some additional context. Under the Act, a property’s classification is based on a property specific use, e.g. residential, industrial, etc. Therefore, the qualifier “used for any purpose” intentionally does not refer to a specific use. This indicates that the term “used” in s. 34(1)(a) does not refer to “a change in the use of all or part of the parcel of land” which, under s. 34(2) and (2.2), is a “change event” which applies when reassessing a property’s classification.

118Of course, the third qualifier is that the current value may only be changed on the Assessment Roll, if the improvement results in an increase in current value.

119Turning to s. 34(1)(b), this section addresses a number of circumstances where a property or a portion which has a special status, loses that status. For purposes of this Motion Decision, it is sufficient to discuss only s. 34(1)(b) (i), i.e. where land ceases to be exempt from taxation. The Board first observes that s. 33 addresses the circumstance where the tax exemption status is incorrect, whereas s. 34(1)(b) (i) addresses the circumstance where the tax exemption status was correct, but, due to a change in circumstances, subsequently ceases. As discussed above in respect of s. 33, the question arises whether the current value of the exempt land can be reassessed at the time the exemption ceases. In Toronto City, which has been cited above, the Divisional Court also addressed s. 34(1)(b) (i), finding that this section also does not authorize MPAC to reassess the current value of the property at the time tax exemption status ceases.

120Turning now to s. 34(2) of the Act, this section clearly addresses classification, and, by defining the term “change event” expressly addresses what constitutes a change to property for classification purposes after the general reassessment. Section 34(2)(a) provides that a “change event” includes a change in a property’s use. Therefore, s. 34 expressly provides that a change in a property’s use after the general reassessment can only result in a change in a property’s classification, not a change in the property’s “current value.”

121In summary, s. 34 only authorizes a reassessment of current value: (i) where land is improved such that the current value is increased under s. 34(1)(a); or (ii) in some of the specific circumstances described in s. 34(1)(b). In enacting s. 34, the Legislature has clearly turned its mind to the circumstances where there has been a change in a property’s characteristics following a general reassessment which would require a reassessment of current value. Clearly, s. 34 makes no provision for an annual reassessment of current value.

Section 39.1 of the Act

122Section 39.1 provides that, for each taxation year, a property owner may request that MPAC reconsider its determination of the current value of a property, and if MPAC agrees that the value may be changed, then, pursuant to s. 39(9) and (10), MPAC must advise the municipality of the assessment and the municipality must alter the Assessment Roll.

123However, s. 39.1 does not alter the applicable valuation day for determining current value. Any settlement between MPAC and the property owner respecting the General Reassessment Value must be in respect of the current value of the property on the applicable valuation day prescribed by the Act. The fact that a property owner may choose the taxation year in which the property owner will make the request, or file an appeal with the Board, does not obviate this requirement. Therefore, this section does not stand as authority that the current value of a property must be annually reassessed.

Conclusion

124The above analysis underscores that sections 32, 33, 34, 39.1, 40, and 40.1 of the Act provide a comprehensive scheme for making amendments to a property’s current value on the Assessment Roll after the general reassessment.

125The Board re-iterates that current value may change under two circumstances: (i) where the valuation day for determining current value changes, and, consequently the quantum of current value must be reassessed; and (ii) where the valuation day for determining current value does not change, but the quantum of current value is to be adjusted to correct an error or omission in the original assessment of current value, or upon review in a Board appeal proceeding. Therefore, while the quantum of current value may change pursuant to sections 32, 33, 34, 39.1, 40, and 40.1 of the Act, the selection of the valuation day used to determine the quantum of current value, is only prescribed under s. 19.2, s. 33, and s. 34 of the Act.

126When the Act is considered in this context, it is clear that the purpose of s. 36 is solely to update the information on the Assessment Roll, which, of course, includes more information than just the current value.

127In reaching the above conclusion, the Board has also considered that that s. 36(1) states: “Except as provided in section 32, 33 or 34, assessments of land under this Act shall be made annually …” [emphasis added]. As discussed above, sections 32, 33, and 34 permit MPAC to make changes to the Assessment Roll during a taxation year. As Section 36(1) provides that changes to the Assessment Roll are to be made once, annually, s. 36(1) simply recognizes that subsequent changes to the Assessment Roll may also be made as provided in sections 32, 33, or 34 of the Act.

128Because the Act expressly provides for a comprehensive legislative regime for making changes to current value after the general reassessment, this indicates that it is unnecessary to impose an interpretative gloss on the wording of the legislation by adopting and applying a ‘state and condition’ paradigm.

129In summary, sections 32, 33, 34, 39.1, 40, and 40.1 of the Act provide a comprehensive scheme for making amendments to a property’s General Reassessment Value on the Assessment Roll. However, only s. 33 and s. 34 provide that current value may be determined based on a valuation day which follows the general reassessment valuation day prescribe by s. 19.2 of the Act. Section 36 does not allow for an annual reassessment of current value, nor is it necessary to impose an interpretative gloss on the wording of the legislation by adopting and applying a ‘state and condition’ paradigm.

130The Board recognizes that this result may seem counter-intuitive, particularly in cases where an income-generating or manufacturing property faces a financial downturn in its operations during the assessment cycle. In such cases, an owner, for different valuation purposes, may well decide to redetermine the value of its property as of the date of the financial downturn. However, the Board reiterates that the purpose of the Act is to play its part in the regulation of municipal taxation. The Legislature can be presumed to have understood that such financial downturns may occur, or, for that matter, that financial upturns could also occur. In enacting the above-referenced provisions, the Legislature, nevertheless, has clearly decided to maintain the General Reassessment Value of a property as the value to be used by a municipality when determining the quantum of taxes to be levied for each of the taxation years in the assessment cycle, subject to any change in the General Reassessment Value authorized by the sections of the Act as described above.

131In reaching the above conclusion, the Board has also considered whether the requirement in s. 19.3 of the Act that a property’s classification must be assessed on an annual basis, could indicate that s. 36 does require that current value must similarly be reassessed on an annual basis. The Board now turns to this question.

Does the requirement to annually assess a property’s classification suggest that a property’s “current value” must similarly be reassessed on an annual basis?

132As noted above, pursuant s. 19.2 and s. 19.3, a property's General Reassessment Value applies to multiple years in an assessment cycle, whereas a property's classification is assessed annually. As the classification of the Subject Properties is not disputed, it is not an issue that the Board must address in this Motion. However, because the Board has indicated that s. 19.2 and s. 36 of the Act must be interpreted harmoniously with other provisions of the Act, the Board has considered whether the requirement to annually assess classification could indicate that s. 36 similarly imposes a requirement to annually reassess a property’s current value.

133In addressing this question, the Board must consider the legislative regime governing taxation, which is set out, not only in the Act itself, but in the companion Municipal Legislation as well. In this regard, the Board has considered the following provisions of Parts VII and VIII of the Municipal Act:

Yearly budget, local municipalities

290 (1) For each year, a local municipality shall, in the year or the immediately preceding year, prepare and adopt a budget including estimates of all sums required during the year for the purposes of the municipality, …

Definitions

306 In this Part,

“assessment” means the assessment for real property made under the Assessment Act according to the last returned Assessment Roll;

“general reassessment” means the updating of assessments in a year in respect of which a new valuation date, as specified under subsection 19.2 (1) of the Assessment Act, applies;

Taxes to be levied equally

307 (1) All taxes shall, unless expressly provided otherwise, be levied upon the whole of the assessment for real property or other assessments made under the Assessment Act according to the amounts assessed and not upon one or more kinds of property or assessment or in different proportions.

General local municipality levies

312(2) For purposes of raising the general local municipality levy, a local municipality shall, each year, pass a by-law levying a separate tax rate, as specified in the by-law, on the assessment in each property class in the local municipality rateable for local municipality purposes.

Assessment for general local municipality levy purposes

312(3) For the purposes of subsection (2), the assessment in each property class includes any adjustments made under section 32, 33, 34, 39.1 or 40 of the Assessment Act to the assessments on the assessment roll as returned for the taxation year if the adjustments are made on the tax roll before,

(a) the by-law mentioned in subsection (2) is passed for the taxation year, if the local municipality is a single-tier municipality; or

(b) the by-law mentioned in subsection 311 (2) is passed for the taxation year, if the local municipality is a lower-tier municipality.

134In overview, the legislative regime imposed by these provisions is as follows. A municipality cannot change a property's assessed value or its classification, as returned on the Assessment Roll by MPAC. Therefore, in order to raise sufficient tax revenues to meet its annual budget requirement, the Municipal Act authorizes a municipality to set the tax rates that will apply to each property class. However, the Municipal Act does not permit a municipality to set tax rates based on a property's assessed value.

135Property classification is based on a property's use, which can change over time. Therefore, because tax rates are based only on property classification, it is important, for purposes of preparing an annual budget, that a property's classification be accurately identified on an annual basis.

136The implications of this analysis are two-fold. First, in the context of levying taxes to fund a municipality's annual budget, it is beneficial to update the property classification on an annual basis, as this directly impacts the amount of taxes a municipality may levy. Second, there is nothing in the Municipal Act to suggest that the assessed value of properties must similarly be updated on an annual basis.

137It is also important to note that s. 312(3) of the Municipal Act (s. 277 of COTA) expressly recognizes that assessments on the Assessment Roll may be adjusted pursuant to sections 32, 33, 34, 39.1 or 40 of the Act. It is particularly noteworthy that s. 312(3) and s. 277 do not include a reference to s. 36 of the Act. If the Legislature had intended that s. 36 of the Act provides for an annual reassessment of current value, then s. 213(3) and s. 277 would have included s. 36 in the list of sections that make an adjustment to the assessment on the Assessment Roll.

138The Board, therefore, concludes that the requirement to annually assess classification does not indicate that s. 36 similarly imposes a requirement to annually reassess a property’s current value.

Analysis of decisions cited by the Appellant

139The Board has reviewed the Board and Court decisions on which the Appellants rely in support of their contention that a property’s current value must be assessed annually. The Board has also reviewed the relevant cases cited in these decisions. Upon a thorough review of these decisions, the Board finds that none of them provide a statutory interpretation of the provisions of the Act which supports this contention. The Board will address each decision in turn.

Williams v. Regimbal, 1935 CanLII 91 (ON CA), 1935 CarswellOnt 13, [1935] 2 D.L.R. 283; [1935] O.R. 199 (Ont. C.A.), a decision of the Ontario Court of appeal issued February 28, 1935 (“Williams”)

140The Board begins with the Williams decision cited earlier in this Decision, in which the Court addressed the circumstance where the ownership of the property changed after the date for the return of the Assessment Roll. At paragraph 8, the Court of Appeal stated:

The date of the return of the Assessment Roll is the critical date. If at that date property has changed hands, so that the roll does not correctly state the ownership, this may properly be the subject either of an appeal or of a rectification of the roll under sec. 56, but where a change takes place in the ownership of the property after the date when the roll was returned, this could not be said to be an error in the roll. There can be no appeal, nor does the section relating to the correction of errors apply.

There must be some finality to the assessment roll and the date it is fixed when it is certified and returned to the clerk is the date that governs. Any changes that take place after that date in the ownership of the property must be ignored in the assessment for that year at least. If every change of ownership had to be varied by change of the assessment roll, there would be no finality.

Therefore, this decision only stands as authority for the finding that the point in time for determining the accuracy of the information to be reported on the Assessment Roll, is the date for the return of the Assessment Roll.

141Consequently, any changes in a property’s information that require a correction be made to the Assessment Roll, must have occurred on or before the date of the return of the Assessment Roll. For ease of reference, the Board refers to this finding as the “Williams Principle”. However, this decision does not state, or even suggest, that a property’s current value must be reassessed annually. In this regard, the Board notes that the Court did not make reference to a section equivalent to s. 19.2 of the Act. Furthermore, the issue of the current value of the property was not before the Court. The change in Williams, was a change of ownership.

142The Board observes that Williams was cited with approval in Scollard Developments Inc. v. Regional Assessment Commissioner, Region No. 9 (1992), 34 ACWS (3d) 378, a decision of the Ontario Court of Justice (General Division) issued on June 18, 1992 (“Scollard”). Under the provisions of the Assessment Act in force at the time, the value of residential units as rental units versus condominium units depended on whether they were owner or renter occupied. The Court was not asked to determine current value, nor did it refer to a section equivalent to s. 19.2 of the Act. The Court, in applying Williams ruled that the date for making the determination of the nature of the occupancy for the taxation year was the date of the return of the Assessment Roll, stating than any subsequent change in occupancy status after that date, could not be used to impugn the correctness of the assessment.

General Motors of Canada Limited v Municipal Property Assessment Corporation, Region No. 27, 2017 CanLII 3664 (ON ARB), issued on January 27, 2017 (“General Motors”)

143This is a Board decision that addresses the determination of the correct current value of an automotive assembly plant, when the plant was operating in the 2009 and 2010 taxation years, and then ceased operations in the subsequent years, finally being sold in 2014. In overview, the Hearing Panel found one current value of the property for the 2009 and 2010 taxation years, and a different current value for the remaining two years in the assessment cycle. The Hearing Panel approached its decision by annually assessing the value of the property for each taxation year in the assessment cycle. The Panel’s rationale for doing so is set out in the following paragraphs of this decision:

5Section 44(3)(a) of the Act requires us to “determine the current value of the land.” Current value is defined in section 1 as “the amount of money the fee simple, if unencumbered, would realize if sold at arm’s length by a willing seller to a willing buyer.” That is, for each taxation year, we must determine what the Plant would have sold for in an arm’s length transaction on the valuation day set pursuant to s. 19.2 of the Act, which is January 1, 2008 for the 2009, 2010, 2011 and 2012 taxation years and January 1, 2012 for the 2013 and 2014 taxation years. [Emphasis added.]

State and Condition

11Property is assessed each year as it was when the tax roll was returned to the municipality. The roll must be returned by the second Tuesday following December 1 of the previous year, so the state of the property on that date is determinative of the assessment. For the taxation years before us, the state and condition date is December 9, 2008 for the 2009 taxation year, December 15, 2009 for the 2010 taxation year, December 14, 2010 for the 2011 taxation year, December 13, 2011 for the 2012 taxation year, December 11, 2012 for the 2013 taxation year, and December 10, 2013 for the 2014 taxation year. The assessment for each year is determined by the status of the Plant on the state and condition date, see Bowater Canadian Forest Products Inc. v. Municipal Property Assessment Corp, Region 32 [2015 CarswellOnt 10218 (Ont. Assess. Review Bd.)], 2015 CanLII 38435, ("Resolute") at para 24.

12The state and condition date rule in Ontario flows from the decision of the Ontario Court of Appeal in Williams v. Regimbal, 1935 CanLII 91 (ON CA), [1935] O.R. 199 (Ont. C.A.), which directed that changes that take place after the day the roll is returned should be ignored. The Divisional Court of Ontario confirmed that rule in Municipal Property Assessment Corp. v. Inmet Mining Corp. (2002), 2002 CanLII 7325 (ON SCDC), 163 O.A.C. 59, [2002] O.J. No. 3540 (Ont. Div. Ct.) ["Inmet"]. In Inmet, the property before the Board had suspended its operations on the roll return date, and closed just over two months later. The Board held that the closure could not be considered for the year in which operations were suspended, which was confirmed by the Divisional Court. The Ontario Municipal Board ("OMB") applied the rule in Gilbey Canada Inc. v. Ontario Regional Assessment Commissioner, Region No. 12 (1996), 33 O.M.B.R. 323 (O.M.B.) ["Gilbey"] where the factory was announced to be closing in August 1990 and closed permanently on December 20, 1990, two days after the roll had closed. The OMB found that because it operated on the roll return date, it should be assessed as operating for the subsequent taxation year.

13GM argues that the state and condition date only applies to legal or physical changes to the Plant and that there were none here. We disagree. State and condition is not only concerned with the physical and legal status of a property. The jurisprudence is clear that use is also an issue to be considered fixed at the roll return date. That is apparent from the findings in Inmet and Gilbey, where the legal and physical status of the properties did not change, only their use changed, but the valuation implications were significant.

Highest and Best Use

15The value of the Plant is impacted by how the market would perceive its most profitable use at any given time. This is the valuation principle known as highest and best use. A property is to be valued at what the market would view as the most productive use of the land because that is how it is most likely to transact. For assessment purposes the highest and best use of a property is tied to its state and condition. A highest and best use assessment is appropriate for each taxation year because the highest and best use of a property will change over time, see Toronto Airways Ltd. v. Municipal Property Assessment Corp., Region No. 14 [2014] O.A.R.B.D. No. 500, (WR 126007) (“Toronto Airways”) at para. 37. [Emphasis added.]

144Regarding paragraph 5, the Hearing Panel stated that the Board must determine the current value of the property for each taxation year, albeit on the valuation date prescribed by s. 19.2 of the Act. This appears to misstate the requirement set out in s. 19.2. The Act does not require that MPAC or the Board determine a property’s current value for each taxation year in the assessment cycle, as the current value determined in the General Reassessment Value is the current value to be reported on the Assessment Roll for each of the four taxation years in the assessment cycle (absent any changes made pursuant to sections 32, 33, or 34 of the Act).

145The Hearing Panel found that the current value of the automobile plant for the first two taxation years of the assessment cycle, 2009 and 2010, in which the plant operated, was correctly determined by applying the Cost appraisal approach valued as of the general reassessment valuation day. For the remaining two taxation years, 2011 and 2012, the Hearing Panel valued the plant on the basis that it was not operating, and determined that the quantum of the current value should be based on the sale price when then plant was sold in 2014. However, based on the evidence adduced, the Hearing Panel found that the sale price in 2014 reflected the sale price as of the general reassessment day. Consequently, the Hearing Panel assessed the plant as of two valuation days, the ‘state and condition’ day (i.e. the taxation year) and the general reassessment day. The Board discusses the application of two valuation days under the Claireville and Claireville – Div. Ct. decisions cited below.

146The Board notes that the Hearing Panel’s observations made in paragraph 12, only confirm the Williams Principle. In paragraph 13, the Hearing Panel shifts from the application of the Williams Principle to a discussion of ‘state and condition’, finding that that a change in a property’s use requires that the value of the property must be reassessed. Then, at paragraph 15, the Hearing Panel states a conclusion that a Highest and Best Use assessment is “appropriate” because a property’s Highest and Best Use changes over time. In this regard, the Board notes that Highest and Best Use is an appraisal concept applied when determining the quantum of current value. As discussed earlier in this Motion Decision, the valuation day is chosen first, independent of the subsequent determination of the quantum of current value, i.e. independent of appraisal concepts considered when determining the quantum of current value.

147The Board, below, has reviewed the cases cited as authority by the Hearing Panel in support of the above finding, concluding that none of these cases provides any probative analysis to suggest that a property’s current value must be reassessed annually. The Board also notes that the Hearing Panel’s analysis does not address the contradiction between their conclusion and the clear wording of s. 19.2 of the Act. Therefore, the Board finds that this decision is of no assistance in determining the issue before the Board in this Motion.

Resolute FP Canada Inc. v Thunder Bay (City), 2015 CanLII 38435 (ON ARB) issued on July 3, 2015 ("Resolute")

148This decision addressed the current value of a paper mill for the 2009 to 2012 taxation years, where the applicable general reassessment valuation day was January 1, 2008. The decision indicates that the financial success of the mill had declined in prior years. The decision did not provide a description of the circumstances of the paper mill as they existed on the January 1, 2008 valuation day. It does describe that the paper mill was not operating at a profit when, in 2009, two of its paper producing machines were shut down, and the mill went into creditor protection under the Companies' Creditors Arrangement Act, RSC 1985, c. C-36. This action led to the development of a reconfiguration plan for operations at the mill that was implemented in the 2011 and 2012 taxation years, which the Hearing Panel, at paragraph 29, found was:

…very likely the highest utility of the installed capacity at the mill. We accept that it was a discoverable configuration throughout the assessment period and would have been considered by many theoretical buyers. Thus, the utility that a purchaser would have paid no more to achieve was the utility achieved through the plan that saved the mill.

149Both the paper mill owner and MPAC argued that the current value of the property for all taxation years should be determined based on the reconfiguration plan, arguing that condition of the paper mill in the 2009 and 2010 should be ignored. The Municipality argued that the current value of the paper mill for each taxation year should be determined based on the actual operations undertaken in the taxation year. The Hearing Panel accepted MPAC's ultimate position, but not on the basis that condition of the paper mill for 2009 and 2010 should be ignored. Instead, the panel found that, in the circumstances of this case, the reconfiguration plan represented the paper mill’s Highest and Best Use for all four taxation years.

150In reviewing this decision, the Board notes that, although the Hearing Panel acknowledged that the Act provided that the valuation day for determining current value for these taxation years was January 1, 2008, the Hearing Panel made no further reference to this valuation day. Instead, at paragraphs 24, 25 and 27 the Hearing Panel stated:

State and Condition

24Section 36.(1) of the Act, and its predecessor, have been interpreted to apply in a strict manner. In Williams v. Regimbal, 1935 CanLII 91 (ON CA), [1935] O.R. 199 the Court of Appeal fixed the date of return of the Assessment Roll, stating “any changes that take place after that date in the ownership of the property must be ignored in the assessment for that year at least.” In Gilbey Canada Inc. v. Regional Assessment Commissioner, Region No. 12 (1996), 33 O.M.B.R. 323 (“Gilbey”) the Ontario Municipal Board (“OMB”) applied Williams v. Regimbal in holding that “the assessment of real property is determined by the situation and facts as they were at the time of the return of the roll.” In that case the property was a distillery that was announced to be closing in August 1990. It closed on December 20, 1990 and the roll had closed on December 18, 1990. The OMB found that because the distillery had operated on the roll return date, it should be assessed as a distillery for the subsequent taxation year. Similarly, in Inmet Mining Corp. v. Municipal Property Assessment Corp, Region No. 32, [2001] O.A.R.B.D. No. 1006, a differently constituted panel of this Board held that the roll return date is “when a ‘snapshot’ of use and occupation may be taken for use in the determination of an assessment”. That case also dealt with a closure shortly after the condition date. The Board’s decision in Inmet was upheld by the Divisional Court, (2002) 2002 CanLII 7325 (ON SCDC), 163 O.A.C. 59.

25This jurisprudence makes it clear that the use and ownership of a property are fixed as they are at the date the tax roll is returned for the next taxation year. The use of the mill was always as a pulp and paper mill and the ownership of the mill was consistent throughout the assessment period. However, the evidence before us is that the configuration of the mill has an impact on value and thus the snapshot must not only be of the use, which did not change, but of the configuration of that use. That is, we must determine the general operation of the mill on each condition date.

27Notwithstanding this evidence, Resolute and MPAC urge us to treat the mill for all four years as though it was configured as it was for the 2011 and 2012 condition dates. That is, they urge us to ignore the condition of the mill on the 2009 and 2010 condition dates. They state that the plan that saved the mill is the highest and best use of the mill and should therefore be the configuration on which it is valued. We cannot accept this position. “Highest and best use” is an assessment valuation principle requiring a great deal of market evidence to prove. State and condition, on the other hand, is a factual finding. The highest and best use of a property does not necessarily have any bearing on its state and condition. …

151In addressing this analysis, the Board first notes that, as in General Motors, the observations made in paragraph 24, only confirm the Williams Principle. However, in paragraph 25, the Hearing Panel then shifts from the application of the Williams Principle.

152Regarding the statement in paragraph 25 that “use” is fixed as of the date for the return of the Assessment Roll, the Board first notes that, in Williams, the Court made no reference to the “use” of a property. As for the return of the Assessment Roll, the Board observes that s. 14 of the Act, which prescribes the information to be reported on the Assessment Roll, does not expressly refer to “use”. The concept of “use” is a valuation concept considered when forming an opinion as to current value. The current value to be reported on the Assessment Roll is the value determined as of the applicable valuation day prescribed in the Act. The Act does not provide that if the use of the property changes, the valuation day for determining current value must change. Therefore, the Hearing Panel’s findings simply assume that the current value must be reassessed if there is a change in use following the general reassessment valuation day. The Hearing Panel provides no interpretative analysis to support this conclusion. Furthermore, the Board notes that the Hearing Panel did not provide any analysis to address the fact that their finding directly contradicts the express provisions of s. 19.2 of the Act.

153In reaching its conclusion that it cannot rely on the analysis in Resolute, the Board has considered the following. The action of forming an opinion as to current value as of a specific valuation day may occur after the valuation day. Therefore, as an evidentiary matter, evidence of a property’s post-valuation day circumstances can be available, which may be relevant to the determination of a property’s current value on the general reassessment valuation day. For example, where property is being valued using a comparable sales analysis, sales of properties both before and after the day can be relevant, but appraisal theory requires that the sale values be time-adjusted to the valuation day. However, it is clear that the applicable valuation day remains the valuation day prescribed by the Act.

154Therefore, in Resolute, given the apparent volatility of the paper mill’s income and mill operations, which presumably existed as of the January 1, 2008 general reassessment valuation day, it may well have been appropriate to consider that the reconfiguration plan reflected the paper mill’s Highest and Best Use as of the general reassessment valuation day. However, in this decision, the Hearing Panel clearly did not make a determination of Highest and Best Use as of this applicable valuation day.

155In summary, the analysis in this decision does not provide any probative interpretative analysis to support the conclusion that a property’s current value can be reassessed on an annual basis. Therefore, the Board concludes that this decision is of no assistance in determining the issue before the Board in this Motion.

Municipal Property Assessment Corp v Inmet Mining Corp, 2002 CanLII 7325 (ON SCDC), [2002] OJ No 3540, 163 OAC 59, 116 ACWS (3d) 485, 44 OMBR 271, (Ont. Div. Ct.), issued on July 31, 2002 ("Inmet – Div. Ct.")

156In order to understand this decision, it is necessary to first review the original Board decision, Inmet Mining Corp v. Municipal Property Assessment Corp., Region No. 32, [2001] O.A.R.B.D. No. 1006, issued on October 16, 2001 ("Inmet").

157In Inmet, the main issue in dispute was the quantum of allowances for obsolescence, which is an assessment methodology concept that can be considered when forming an opinion of current value. At paragraph 19, the Hearing Member noted: “It is clear to this Member that recent amendments to the Act have changed significantly the manner in which, under normal circumstances, assessment values are to be determined by OPAC and this Board.” In this decision, the Hearing Member found that different allowances applied to each of the three taxation years under appeal, resulting in a different assessed value for each taxation year. The Hearing Member first cited the Williams Principle, and then, at paragraphs 24 and 28, states:

24 And by the provisions of section 19.2 that [current value] is the value as of June 30, 1996 for the three years under appeal.

28 Thus, under normal circumstances, with the removal of the provisions relating to equity in the amended Act, and a far greater emphasis on current value, the Board concludes that it was the intention of the Legislature, in passing these amendments, that the provisions of subsection 19(1) [assessment of land shall be based on its current value] are dominant. The job of OPAC and this Board is to seek correct current value wherever possible. Current value is that which the property, unencumbered, is likely to attract on the open market.

158In reviewing this decision, the Board observes that, while the Hearing Member acknowledged the requirements of s. 19.2, he did not apply this section. While the Board recognizes that it is important to determine the correct current value, that is not the issue before the Board in this Motion.

159As the Board has previously stated, if MPAC does not have the authority under the Act to change a property’s value, then neither does the Board. Therefore, to the extent that paragraph 28 suggests that the express requirements set out in s. 19.2 of the Act can be disregarded, the Board respectfully disagrees. It is important to note that the jurisdiction of the Board, as an administrative tribunal, is restricted to the authority granted to it under its enabling legislation. Under this legislation, the Board does not have jurisdiction to make a policy decision to apply a legislative scheme that is not prescribed by the Act. Furthermore, the Board notes that, in paragraph 28, the Hearing Member does not provide any statutory interpretation to explain how an emphasis on determining the correct current value can displace the express requirement in s. 19.2 of the Act which prescribes the valuation day to be applied. The Board also reiterates its earlier observation that the definition of ‘current value’ makes no reference to a valuation day.

160As noted above, Inmet Mining Corp appealed the Board’s Decision, alleging five errors of law, none of which relate to the issue of the application of s. 19.2 of the Act. Consequently, the issue of the applicable valuation day was not before the Divisional Court. Therefore, neither the decision of the Hearing Panel nor the Court are of assistance in determining the issue before the Board in this Motion.

Gilbey Canada Inc. v. Ontario Regional Assessment Commissioner, Region No. 12, 1996 CarswellOnt 5840, 33 O.M.B.R. 323, issued on January 18, 1996 (“Gilbey”)

161This decision was cited in General Motors. Under applicable legislation in force in 1996, an appeal of a Board decision was to the Ontario Municipal Board (“OMB”). In this OMB appeal decision, there is no reference to the specific legislative regime under the Assessment Act in force at that time. This decision clearly applies the Williams Principle. However, the Board notes that General Motors only cites Gilbey as authority for applying the Williams Principle. Gilbey was not cited as authority for anything else. For these reasons, the Board finds this decision of no assistance in determining the issue before the Board in this Motion Hearing.

Toronto Airways Ltd. v. Municipal Property Assessment Corp., Region 14 2014 CarswellOnt 15057, a decision of the Board issued on October 28, 2014 (“Toronto Airways”)

162This decision was cited in General Motors. It addressed an appeal by the owner for the 2012 taxation year respecting airport lands. The valuation day specified in s. 19.2 is January 1, 2008. For a number of years, the Greater Toronto Airport Authority provided an operating subsidy to Buttonville Airport. In 2008 the Appellants were informed that the subsidy would end in 2009. Consequently, a partial interest in one parcel of the land, described as the Airport Parcel, was sold in late 2010 for redevelopment purposes. When MPAC became aware of this transaction, it increased the assessed value of the Airport Parcel by approximately 100%. MPAC maintained that that this value change was based on MPAC’s opinion that the Highest and Best Use of the land had changed from an airport to urban development land.

163The owner asserted that the correct current value was the General Reassessment Value, i.e. the current value determined as of the valuation day specified in s. 19.2. The owner argued that MPAC was prohibited from changing this value without a physical or legal change to the property. In response, MPAC argued that it is permitted to change its opinion of value each year when the Assessment Roll is returned. MPAC maintained that “the exclusion of ‘a change in opinion as to current value’ from changes after close of the roll in s. 32(1.1) implies that changes in opinion as to current value is included in “defect, error, omission or misstatement” set out in s. 32(1)”.

164At paragraph 11, the Hearing Panel found “…MPAC is not prohibited from changing its opinion of value when it annually returns an assessment.” The Hearing Panel began its analysis in support of this conclusion, citing the relevant legislation as s. 19.2, s. 36(1), and sections 32-34.

165At paragraphs 18 and 19, the Hearing Panel states:

18 Valuation days are set out in s. 19.2.(1)2 of the Act, which states that "for the period consisting of the four taxation years from 2009 to 2012, land is valued as of January 1, 2008." This section creates a four year cycle between valuation days.

19Despite this four-year valuation base year, s. 36.(1) of the Act requires assessments to be made annually and s. 36.(2) requires that the assessment roll be returned to the municipality “not later than the second Tuesday following December 1 in the year in which the assessment is made.” [Emphasis added.]

166The Board first notes that the Hearing Panel’s finding in paragraph 19 is only a statement of the Hearing Panel’s conclusion. However, the Hearing Panel acknowledges that its interpretation of s. 36 is in spite of s. 19.2, not consistent with it.

167The Hearing Panel’s analysis in support of its interpretation is found at paragraph 25, which states:

25 This Board has considered the proper interpretation of s. 32, and the legality of mid-cycle assessment changes, in two decisions: Reininghaus v. Municipal Property Assessment Corp., Region No. 15 (2013), 77 O.M.B.R. 485 (Ont. Assess.Review Bd.) ("Reininghaus") and Ritchie v. Municipal Property Assessment Corp., Region No. 15 (2013), 76 O.M.B.R. 125(Ont. Assess. Review Bd.) [“Ritchie”]. In both instances the Board concluded that the Act permits a new assessment each taxation year and that s. 32 cannot be read in a limited manner. In Reininghaus Member Wyger held, at para. 19: "It makes eminent sense to allow MPAC to correct an assessment for practically any reason prior to the roll being fixed." We agree. Section 32 must be read as a whole and by clarifying in s. 32.(1.1) that "a change in opinion as to current value" was not a change permitted after the return of the roll, the legislature has made its intention clear that an opinion of value is a valid correction pursuant to s. 32(1). This is further supported by the requirement in s. 36.(1) that an assessment be returned each year. Assessing property requires an assessor to form an opinion on the value of that property. Thus, in requiring an assessment to be returned each year, the legislature left it open to MPAC to change its opinion of value each taxation year. [Emphasis added.]

168In reviewing this analysis, the Board first observes that the Hearing Panel correctly observed that a change in opinion of value can be corrected under s. 32 (1). However, the Hearing Panel does not address the issue of the correct valuation day for determining whether there is an error that must be corrected. In referencing the “legality of mid-cycle assessment changes”, the Hearing Panel appears to have assumed that this refers to a mid-cycle valuation day for determining current value. However, s. 32(1) and s. 32(1.1) only refer to the taxation years in which an error in an “assessment” can be corrected. As discussed earlier in this Motion Decision, s. 32(1) does not address the valuation day for determining current value, nor, as the Board has found, does it expressly or implicitly indicate that a change in circumstances subsequent to the applicable valuation day can constitute an error in the assessment of value as of the applicable valuation day.

169The Hearing Panel relies on Reininghaus and Ritchie as authority for its finding that “the Act permits a new assessment each taxation year”. However, the Board, below, has reviewed each of these decisions, finding that neither of them states this conclusion. Furthermore, the Board notes that the Hearing Panel provided no legislative interpretation to account for the fact their conclusion directly contradicts the requirement set out in s. 19.2 that land must be valued as of the applicable valuation day, nor did the Hearing Panel consider that their interpretation of s. 32(1) or s. 36 renders s. 19.2 redundant.

170Regarding the Hearing Panel’s observation that s. 36(1) requires “an assessor” to “form an opinion on the value of the property”, the Board notes that the Hearing Panel has provided no legislative interpretation to support this conclusion. The Board has already found that s. 36 requires that MPAC report the correct information to be reported on the Assessment Roll as of the date prescribed for the return of the roll.

171For these reasons, the Board concludes that it cannot rely on the analysis in Toronto Airways when determining the issue before the Board in this Motion.

Ritchie v. Municipal Property Assessment Corporation, Region 15, [2013] OARBD No 66, 76 OMBR 125, 2013 CarswellOnt 3879, a decision of the Board issued on March 28, 2013 (“Ritchie”)

172In Ritchie, the owner filed an appeal for the 2009 taxation year. As this appeal was not resolved prior to 2012, deemed appeals were created for the 2010 to 2012 taxation years. The parties negotiated a settlement of current value of 2009 to 2011. Subsequent to this settlement, MPAC discovered that, when it conducted the general reassessment (the s. 19.2 valuation day being January 1, 2008), its records, at that time, did not include reference to two additions made to the building on the property in 2003 and 2004. MPAC determined that this error impacted its opinion of the correct current value on the valuation day, and consequently issued a correction of the General Reassessment Value for the 2012 taxation year pursuant to s .32(1) of the Act. The owner’ representative argued that MPAC had no authority to apply s. 32(1) of the Act to remedy an error in factual information. The Hearing Member noted that it had some difficulty in understanding the owner’s argument, ultimately finding that the ability to make corrections under s. 32(1) and s. 32(1.1) is consistent with the scheme of the Act.

173This decision makes no reference to s. 19.2, but it is clear, as stated above, that the errors being corrected were in respect of the property’s description as it existed on the valuation day prescribed by s. 19.2. The only reference in Ritchie regarding whether the Act permits a new assessment each taxation year, is found in paragraph 21, which only reports MPAC's argument “… that every annual assessment is a separate and independent process or transaction which must be carried out in accordance with the facts as they exist at the time of making the assessment.” The Board notes that the Hearing Panel in Ritchie did not adopt this argument. Furthermore, this argument must not be taken out of context. The argument was made in response to the owner’s argument that MPAC did not have authority under s. 32(1) to correct an error.

174For these reasons, the Board concludes that this decision does not stand as authority for the proposition that the Act provides for an annual reassessment of current value.

Reininghaus v. Municipal Property Assessment Corp., Region No. 15 2013 CarswellOnt 3528 [2013] O.A.R.B.D. No. 65, 77 O.M.B.R. 485 (“Reininghaus”)

175In Reininghaus, MPAC issued a correction of the current value for the 2012 taxation year, pursuant to s. 32 of the Act, because, in conducting an inspection of the subject property, MPAC discovered errors in information on which MPAC had relied when MPAC conducted its general reassessment. The owner’s representative (who was the same person who acted as the owner’s representative in Ritchie), argued that MPAC did not have the authority to change the current value under s. 32(1). At paragraph 18, MPAC argued that it had full authority under s. 32(1) to “correct any defect, error, omission or misstatement in any assessment”, and that this broad power was available to MPAC up to the roll close each year. The Hearing Panel accepted this argument stating at paragraph 19:

. . . I find that the legislative intent of the addition of s. 32(1.1) was to set different conditions for corrections pre-roll return and post- roll return. It makes eminent sense to allow MPAC to correct an assessment for practically any reason prior to the roll being fixed. It makes equal sense that during the taxation year, such corrections as an increase in value be restricted to factual information, and not allowing the assessor to change his/her mind on the opinion of value. MPAC is stuck with the opinion of value, and cannot initiate a correction unless it is based on a factual error. . . . [Emphasis added.]

176This finding clearly only refers to the authority to correct an error. This finding does not state that current value must be reassessed annually. The statement that an assessment may be corrected “for practically any reason prior to the roll being fixed”, cannot be interpreted to mean that that an assessment may be changed even though there has been no “defect, error, omission or misstatement”, as this is an express requirement of s. 32(1) of the Act. Furthermore, the Board observes that the Hearing Panel, other than citing s. 19(2) as relevant legislation, did not expressly refer to s. 19.2 in its analysis. However, on the facts in this decision, it was unnecessary to do so, as the errors were clearly in respect of MPAC's understanding of the property’s characteristics as they existed on the general reassessment valuation day prescribed by s. 19.2 of the Act.

177For these reasons, the Board concludes that this decision also does not stand as authority for the proposition that the Act provides for an annual reassessment of current value.

Lenndorff Canadian Holdings Ltd. v. Ontario Regional Assessment Commissioner, Region No. 23, 1988 CarswellOnt 3489, 22 O.M.B.R. 157, a decision of the Ontario Municipal Board issued on November 9, 1988 (“Lenndorff”)

178The Appellants submit that the assessed person in Lenndorff successfully argued that changes in the retail market conditions in the City of London, which led to falling rents and increased vacancies, warranted an adjustment of the assessment of a shopping mall.

179In addressing this submission, the Board observes that, while this was the result, the issue in the decision, stated at page 2, was the degree to which the assessment should be reduced to make it equitable with the assessment of similar real property in the area. The valuation day for determining the property value was not in issue. The Board further notes that this decision was made under a prior version of the Assessment Act. There is no indication that the legislative regime in force at the time was the same as the legislative regime in force under the current Act, as there is no reference to a section that is equivalent to s. 19.2 of the current Act. For these reasons, the Board concludes that it cannot rely on the analysis in this decision when determining the issue before the Board in this Motion.

Non-Profit Seniors Housing of Kenora v Municipal Property Assessment Corporation, Region 32, 2015 CanLII 58800 (ON ARB), a decision of the Board issued on September 18, 2015 (“Kenora”)

180In Kenora, the property owner of an apartment building converted it to condominium units. Upon discovering that this change had the effect of increasing the value of the units, the property owner then proceeded to de-register the condominium units. The de-registration took effect on February 17, 2015. The Owner acknowledged that, as of, December 2014, the date of the return of the Assessment Roll for the 2015 taxation year, the Assessment Roll correctly recorded the properties’ legal status as condominium units, but argued that MPAC could issue a supplementary assessment under s. 34(1)(b)(v) of the Act.

181The Hearing Panel cited Williams, Gilbey, Inmet, and Scollard, in concluding that the return of the Assessment Roll “is a firm cutoff date” (see, paragraph 12). The Hearing Panel further concluded that MPAC lacked the statutory authority to issue a supplementary assessment under s. 34. The Hearing Panel also expressly confirmed that the current value of the condominium properties was not in dispute.

182The Board observes that Kenora only affirms the Williams Principle. The Hearing Panel did not reference s. 19.2 as the issue of current value was not in dispute. Therefore, the Board finds that this decision is of no assistance in determining the issue before the Board in this Motion Hearing.

Daralea Holdings Inc. v. Municipal Property Assessment Corporation, Region No. 15, [2013] O.A.R.B.D. No. 26, a decision of the Board issued on February 5, 2013 (“Daralea”)

183Daralea is a decision of the Board respecting appeals under s. 40 of the Act for the 2009 to 2012 assessment cycle regarding a shopping centre property. Due to a variation in vacancy rates, the Hearing Member found that MPAC's assessed value, determined in the general reassessment, should be reduced to one value for the 2009 and 2010 taxation years, and a different value for the 2011 and 2012 taxation years. Therefore, in effect, the Hearing Member applied a different valuation day for these latter two years of the assessment cycle.

184Although the Hearing Member cites s. 19.2 of the Act in the section of the decision entitled “The Legislation”, the Hearing Member did not address s. 19.2 in his analysis. Consequently, this decision provides no analysis to support a finding that the Act provides for an annual reassessment of current value.

Claireville Holdings Limited v. Municipal Property Assessment Corporation, Region 9, 2021 CanLII 26729 (ON ARB), a decision of the Board issued on March 26, 2021 (“Claireville”)

185Claireville is decision of the Board respecting appeals under s. 40 of the Act for the 2012 and 2016 assessment cycles respecting three properties collectively considered as one. The main issue in this proceeding was whether the properties should be assessed as a land assembly, where their Highest and Best Use was based on their development potential as high-rise development, as opposed to their existing use as income producing commercial buildings. Property classification was not in issue. This decision confirms that “Highest and Best Use” is a valuation methodology concept which is applied when determining the current value of a property, and as such, Highest and Best Use is determined as of the applicable valuation day for determining current value.

186The Hearing Member stated that the value of the properties should be assessed on an annual basis. The following are the relevant paragraphs of the decision setting out the rationale for this conclusion:

Annual Assessment

13Section 36(1) of the Act requires land to be assessed annually. Section 36(2)prescribes that the annual Assessment Roll be returned to the municipality no later than the second Tuesday following December 1 of that year.

Valuation Day

15Section 19.2(1) paragraph 3 of the Act requires that the day as of which the current value of land is valued, for the four taxation years from 2013 to 2016, is January1, 2012. Section 19.2(1) paragraph 4 of the Act requires that the day as of which the current value of land is valued, for the four taxation years from 2017 to 2020, is January1, 2016.

State and Condition Date

17Annual assessments are based on the state and condition of the land, on the Assessment Roll return date, in the December immediately preceding any given taxation year. This is referred to as that taxation year’s state and condition date. (See Simmatis v Municipal Property Assessment Corporation Region 06 2017 CanLII 39816 (ON ARB) at paragraph 15).

18The Assessment Review Board (“Board”) agrees with MPAC counsel’s submission that the “state and condition” of land includes its development potential.

19Whether land has development potential value in excess of the value of its existing use is determined by appraisal methodology applying Highest and Best Use analysis.

20The Highest and Best Use of the subject property on the state and condition date indicates the best approach to the valuation for the corresponding taxation year. (See General Motors of Canada Limited v Municipal Property Assessment Corporation, Region No. 27, 2017 CanLII 3664 (ON ARB) (paragraphs10-13) (“General Motors”).)

21The assessor’s task is to determine, annually, at the state and condition date, the Highest and Best Use of the land assessed, then establish the correct value of such annual determination by reference to the valuation of land of similar Highest and Best Use on the legislated valuation day.

187In paragraph 21, the Hearing Member states that Highest and Best Use of the Subject Property is to be determined annually. The result is that the Hearing Member finds that the current value must be reassessed annually, and, to the extent that Highest and Best Use of the Subject Property could change from one taxation year to the next, so could the current value of the property. However, the Hearing Member then indicates that the determination of the quantum of the current value is to be determined by considering the value of lands “of similar Highest and Best Use”, as of the valuation day prescribed by s. 19.2 of the Act, as stated in General Motors.

188This analysis is problematic for two reasons. First, it requires that the analyses, opinions and conclusions to be applied when forming an opinion of a property’s value, must include consideration of two valuation days - the annual return date of the Assessment Roll to determine Highest and Best Use, and the valuation day prescribed by s. 19.2 to ascertain the quantum of current value based on comparable properties. This approach does not comply with the Act, which, as discussed earlier, requires that a property be valued as of a single valuation day, nor is it consistent with general property appraisal theory. Second, while the Hearing Member cites s. 19.2 of the Act, the Hearing Panel’s analysis does not address the fact that s. 19.2 of the Act requires that land be valued only once and that this is the current value to be reported for each taxation year in the assessment cycle.

189In the end, the Hearing Member found that, for all taxation years under appeal, the Highest and Best Use of the properties was their existing use as of the applicable valuation day prescribed by s. 19.2 of the Act. Therefore, he concluded that the correct current value, determined as of the valuation day, was to be applied to all taxation years in the assessment cycle. Nonetheless, the stated approach in determining current value is to reassess current value on an annual basis.

190The Board also observes that Claireville does not support MPAC's position in this Motion Hearing that a property’s current value may be reassessed if there has been a ‘change in state and condition’, but not if the change is due only to a change in ‘market conditions’. In Claireville, the parties did not dispute that the property could be annually reassessed based on a change in its Highest and Best Use. The decision in Claireville refers to The Appraisal of Real Estate, confirming that the determination of Highest and Best Use must be based on a market/marketability analysis (see chapters 7 and 12). Therefore, this confirms that a ‘change in state and condition’ can be due to a change in ‘market conditions’. The Board notes that this is another example of how the ‘state and condition’ paradigm does not appear to establish clear criteria which the Board can consider and apply.

191Regarding the Hearing Member’s statement at paragraph 17, this statement is simply an affirmation of the Williams Principle. The Hearing Member relies on Simmatis v Municipal Property Assessment Corporation Region 06, 2017 CanLII 39816 (ON ARB), a decision of the Board issued on June 21, 2017 (“Simmatis”). The Board has reviewed the Simmatis decision. It only confirms the Williams Principle. Consequently, the Hearing Member in Claireville does not provide any additional interpretative analysis beyond what has been stated in General Motors.

192In addition to the above review of the analysis in Claireville, the Board observes that the same Hearing Member appears to have adopted the opposite conclusion in Newcombe v Municipal Property Assessment Corporation, Region 04, 2020 CanLII 26216 (ON ARB), issued on March 31, 2020 (“Newcombe”), a decision cited by MPAC. In Newcombe, the Appellant owner of a residential property argued that flooding which occurred in 2017 and 2019, should be considered when determining the correct General Reassessment Value as of the January 1, 2016 valuation day. At paragraphs 27 to 30, the Hearing Member stated:

27It is important to understand that the assessment is made based on the state and condition of the lot on the roll return date (see General Motors of Canada Limited v Municipal Property Assessment Corporation, Region No. 27, 2017 CanLII 3664 (ON ARB), paras. 11-12), but with market values of the statutory valuation day of January 1, 2016.

28Pursuant to s. 36(2) of the Act, the roll return date for the 2017 taxation year was the second Tuesday of December 2016.

29On January 1, 2016, on Mr. Newcombe’s evidence, there had never been floods such as those experienced in the springs of 2017 and 2019. On that day, based on past history, buyers and sellers would have discounted the flooding risk as more theoretical than real.

30To consider changes in valuation day market perceptions of risks, as a result of the realization of risks occurring after the valuation day, defeats the purpose of a fixed valuation day. It is market perception at the valuation day that counts. [Emphasis added.]

The Hearing Member then corrected the General Reassessment Value based on the January 1, 2016 valuation day, ruling that it applied to all the taxation years under appeal for the assessment cycle.

193The Board observes that, in Claireville, the Hearing Member concluded that one ‘state and condition’ factor which affects current value, i.e. Highest and Best Use, should be reassessed annually, while in Newcombe, the Hearing Member concluded that another ‘state and condition’ factor affecting current value, i.e. flood risk potential, should not. Therefore, this is an example which demonstrates that the application of the ‘state and condition’ paradigm produces inconsistent results.

194For these reasons, the Board concludes that Claireville provides no probative analysis to support a finding that the Act provides for an annual reassessment of current value.

Municipal Property Assessment Corporation v. Claireville Holdings Limited, [2022 ONSC 3293](https://www.minicounsel.ca/odc/2022/3293) issued on June 3, 2022 ("Claireville – Div. Ct.")

195MPAC appealed the Board’s decision in Claireville. The Divisional Court upheld the Board’s decision. The Court’s reasons are brief. The findings relevant to this Motion Hearing are set out in paragraphs 27 to 29:

27Annual assessments are done so that changes in assessment can be made when there is a change in the state or condition of the property. If there is no change in the state or condition of the property, the assessed value would be expected to remain unchanged until current value is reassessed for a new four-year cycle.

28Read in context, what the Board said was this: In determining the assessed value of a property when returning the assessment roll, the assessor must necessarily turn his or her mind to whether there has been a change to the state or condition of the property that affects its HBU. If there has been such a change, a new assessed value must be established for that HBU effective on the applicable valuation date prescribed in s.19.2.

29I see no legal error in the reasoning of the Board

196In considering this decision, the Board first observes that, as noted earlier in this Motion Decision, the 'state and condition' paradigm is based on the assumption that current value must be assessed on an annual basis. As stated in General Motors, the ‘state and condition’ paradigm requires that the determination of current value in an annual reassessment requires consideration of two different valuation days.

197The Divisional Court's reasons indicate that the parties did not ask the Court to decide whether the Act supports the application of a 'state and condition' paradigm when determining current value. Therefore, the Court’s findings must be considered in this context.

198As the application of the ‘state and condition’ paradigm was not before by the Divisional Court, the Court did not engage in a detailed analysis of the relevant inter‑dependent provisions of the Act, nor was it necessary for the Divisional Court to review the prior Board decisions which have been cited in this Motion Hearing in support of the assertion that the Act allows for the application of a 'state and condition' paradigm.

199The Board further notes that Divisional Court did not provide a definition of 'state and condition' or 'change in state and condition'. The issue raised for the Divisional Court's consideration focused only on the Highest and Best Use of the properties under appeal. In this regard, the Board has already noted that Highest and Best Use is an appraisal theory concept. The term ‘Highest and Best Use’ is not defined or used in the Act or the General Regulation. Thus, Claireville – Div. Ct. does not address the specific issue before the Board in this Motion Hearing or provide guidance on how the 'state and condition' paradigm should be interpreted and applied. The decisions reviewed by the Board in this Motion Decision demonstrate the varied circumstances in which a party may claim that a property's current value should or should not be reassessed after the general reassessment, and, as has been discussed, the application of the 'state and condition' paradigm does not always produce consistent results.

200Turning to the question of whether the Act requires an annual reassessment of current value, the Board notes that the parties accepted that s. 36 does permit an annual reassessment. Therefore, this issue was also not considered by the Divisional Court.

201The Board now turns to the assertion that more than one valuation day must be considered when forming an opinion as to current value.

202As noted earlier in this Motion Decision, the Act recognizes that “current value” as defined in the Act, will be determined by 'forming an opinion as to value'. The Board has long recognized that accepted property appraisal theory must be applied when forming such an opinion. Therefore, appraisal theory must be considered when interpreting the requirements of the Act. In this regard, the Board also notes that s. 16(b) of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22 provides that the Board may “take notice of any generally recognized scientific or technical facts, information or opinions within its specialized knowledge.”

203The Appraisal of Real Estate states that the relationships which create value are complex. Value will change as changes occur in several inter-dependent economic factors which interact in the marketplace to influence the relationship of supply and demand (see page 2.0). Considering two valuation days when forming an opinion as to current value, in effect, requires consideration of the status of the marketplace at two different points in time. As noted earlier in this Motion Decision, The Appraisal of Real Estate requires that current value be determined as of one effective date.

204The Board observes that the decision in Claireville did not consider the above requirements of appraisal theory, nor is this addressed in the Divisional Court's decision.

205While it is beyond the scope of this Motion Decision to engage in a detailed analysis of property appraisal theory, such theory recognizes that a property's value is derived from the status of the marketplace at the time a property is valued. Any deviation from this approach could render the appraiser's opinion of value unreliable.

206The circumstances before the Board in this Motion Hearing also indicate that the application of the ‘state and condition’ paradigm is untenable. The Appellants argue that the ‘change in state and condition’ is the reduction in net operating income, in the context of the marketplace as it existed in the 2020 taxation year. However, following Claireville and General Motors, the quantum of the current value must be calculated based on the January 1, 2016 valuation day. Using the Income appraisal approach, current value is determined by multiplying net operating income by a capitalization rate that is derived from sales of comparable income-producing properties which occurred in the marketplace as it existed on the valuation day. The problem, here, is that properties, which were sold in the marketplace as it existed at one point in time, may not be comparable to a property as it existed in the marketplace at a different point in time. In this case, the marketplace as it existed on January 1, 2016, was very different from the marketplace as it existed in 2020. The Board observes that a similar difficulty arises where the change in question is a change in Highest and Best Use, i.e. where Highest and Best Use is determined based on the marketplace as it existed at one point in time, but the quantum of current value must be determined based on the marketplace as it existed at an earlier point in time.

207Respecting the above observation, the Board refers again to the decision of the Supreme Court of Canada in Sun Life. In Sun Life, the applicable legal regime provided for municipal valuation every three years, “with certain provisions for modification if certain events happen, such as alteration, improvement, fire, etc.” (see page 224). The Court then addressed the scope of the assessment to be undertaken. The Court’s finding remains applicable to the circumstances in this Motion Hearing. At pages 224 and 255, the Court stated:

. . . The assessor should not look at past or subsequent or potential values. His valuation must be based on conditions as he finds them at the date of the assessment. In particular, in the present case, there was no ground for considering any other condition, as no suggestion of any kind appears in the record that there was, throughout the period of assessment, a prospect of any change.

The Sun Life property as it stood at the time of the valuation in question, was occupied about sixty percent by the company itself for its own purposes and about forty per cent by tenants. That is how the assessors found the property at the time they made their valuation and that is the only aspect of the property that they had to take into consideration. If some material change took place during the three year period following the valuation, the charter of the City of Montreal provided for a fresh valuation taking into account those changes. Again, at the end of the three years, if the situation had been modified there was then the opportunity to modify the evaluation accordingly. But, for the valuation which had to be made and which is now the subject of the litigation, the property had to be taken as it stood then and as it was used and occupied.

[Emphasis added.]

The Board observes that the Court’s finding clearly does not support consideration of two valuation days when determining current value.

208In addition, the Board further observes that neither the decision of the Hearing Member nor the Divisional Court provided any interpretation of the sections of the Act to indicate that the Act, itself, provides that current value may be assessed using two different valuation days.

209The Board also notes that, in Claireville, the analysis and opinion of current value advanced by the appellants’ appraisal expert was based on one effective day, i.e. the general reassessment valuation day. The Hearing Member accepted this appraiser’s opinion as the correct current value of the subject properties, finding that this was the current value for all taxation years in the assessment cycle. Consequently, neither the Hearing Member nor the Divisional Court were required to address the evidentiary problems inherent in assessing current value as of two valuation days.

210For these reasons, the Board concludes that the findings of the Divisional Court are not determinative of the issues which the Board must address in this Motion Decision.

Trizec Equities Ltd v British Columbia (Assessor of Area No 9), [1985] BCJ No 32, 28 MPLR 286, 30 ACWS (2d) 139 (“Trizec”)

211This decision addressed the issue of whether, under the British Columbia Assessment Act in force at the time (the “BC Act”), a change in average vacancy rate is a “state and condition” that must be taken into account in determining the “actual value” of the property under appeal.

212In determining whether this decision is applicable to a decision made under the Ontario’s current Act, it is important to emphasize two aspects of the BC Act. First, the BC Act defined the term “actual value”, which expressly referred to “state and condition”. Second, the legislative regime under the BC Act expressly provided for an annual reassessment of “actual value”.

213As such, the Board cannot rely on the findings in this case, as the legislative provisions considered and applied by the Court are different from the legislative provisions under the Ontario Act. Consequently, this decision is of no assistance in determining the issue before the Board in this Motion Hearing.

Peel Condominium No 57 et al and Regional Assessment Commissioner, Assessment Region No 15 et al (1984), 1984 CanLII 1973 (ON HCJ), 47 OR (2d) 466, 11 DLR (4th) 627, a decision of the Ontario Divisional Court issued on September 6, 1984 (“Peel”)

214This decision addressed a former version of the Ontario Assessment Act in force at the time, more specifically, a section of the Act which required that the assessing authority could alter the value of the assessment if, in the assessor’s opinion, the assessor’s opinion of value is inequitable with respect to the assessment of similar real property in the vicinity. Therefore, this decision addressed the question of equitable reduction, not the determination of current value or the correct valuation day for determining current value.

215Regarding the issue of the correct valuation day, it is also important to emphasize that the former version of the Act allowed for an annual reassessment of current value.

216As such, the Board cannot rely on the findings in this case, as the decision did not address the correct valuation day to determine current value, and the legislative provisions considered and applied by the Court are different from the legislative provisions under Ontario’s Act. Consequently, this decision is of no assistance in determining the issue before the Board in this Motion Hearing.

Summary

217Because the requirement set out in s. 19.2 of the Act is clear and unequivocal, the assertion that either s. 36(1) or s. 32 of the Act can override s. 19.2 to require an annual reassessment of current value, must be supported by a cogent and persuasive interpretative analysis of the Act. For the reasons stated above, none of the decisions cited provide such analysis. Consequently, the Board finds that none of the decisions cited by the Appellants stand as persuasive authority that, under the Act, the current value of a property must be reassessed annually.

218The Board further notes that the vast majority of decisions issued by the Board adopt the interpretation that the valuation day for determining current value for each taxation year in an assessment cycle is the valuation day prescribed by s. 19.2 of the Act, and that changes affecting the property which occur after the general reassessment valuation day cannot be considered when determining current value. This includes two Board decisions cited by MPAC which the Board has reviewed but not summarized in this Motion Decision:

• Sargent v. Municipal Property Assessment Corp. Region No. 02, [2011] O.A.R.B.D. No. 138 (“Sargent”)

• Prosser v. Municipal Property Assessment Corp. Region No 09, [2007] O.A.R.B.D No. 580 (“Prosser”)

Therefore, the Board observes that the Board decisions cited by the Appellants are inconsistent with the Board’s established jurisprudence on this issue.

Analysis of decisions cited by MPAC

219The Board first notes that, in its reply submissions, MPAC has also cited and relied on General Motors. As noted above, MPAC also relies on Sargent and Prosser, and Wandlyn. The Board now proceeds with its review of the decision in Wandlyn.

Nova Scotia (Director of Assessment) v. Wandlyn Inns Ltd., 1996 NSCA 80, issued on April 11, 1996 (“Wandlyn”)

220Under the Assessment Act R.S.N.S. 1989 c. 23, in force at the time (the “Nova Scotia Act”), the Director of Assessment was authorized to prescribe a past date as a valuation day for determining a property’s value for municipal taxation purposes. The Court described this as a “base date” (Wandlyn, page 3). At pages 6 and 7 of Wandlyn, the Court stated:

The introduction of the base date was made necessary by the current practice of assessing commercial properties on a three-year cycle for reasons of economy and convenience. In a reassessment year, all factors affecting the value of a property are taken into account, including the state of the market as well as the state of the property. Assessment Rolls are updated in off years between reassessments only by considering changes to the physical state of the property such as additions or demolitions, and market trends are ignored. Values remain those of the reassessment year, or base date.

221The Court recorded the relevant provisions of the Nova Scotia Assessment Act in force at the time (the “Nova Scotia Act”):

Valuation

The valuation of the property is governed by section 42 (1) of the Assessment Act which states:

42 (1) All property shall be assessed at its market value, such value being the amount which in the opinion of the assessor would be paid if it were sold on a date prescribed by the Director in the open market by a willing seller to a willing buyer, but in forming his opinion the assessor shall have regard to the assessment of other properties in the municipality so as to ensure that taxation falls in a uniform manner upon all residential and resource property and in a uniform manner upon all commercial property.

Subsections 42 (2) and (3) provide:

(2) The Director may from time to time prescribe a past date as a base for the determination of the market value of a property for the purposes of subsection (1).

(3) Notwithstanding subsections (1) and (2), the assessment of a property shall reflect its state as of the date referred to in subsection (2) of Section 52.

Section 52 (2) prescribes that:

52 (2) The assessment shown on the roll shall be the assessment that reflects the state of the property as it existed on the first day of December immediately preceding the filing of the roll."

[Emphasis added.]

222Subsequent to the assessment of Mr. Wandlyn’s property as of the “base date”, his property suffered a significant decrease in market value. For this reason, Mr. Wandlyn appealed the assessment.

223The Court, nonetheless, rejected this interpretation, stating at page 14:

In my opinion the Legislature in enacting s. 52(2) by use of the phrase "state of the property" intended that the Director of Assessment, in assessing property in the off year, …, reflect only changes in the physical condition of the property and not changes in market value arising out of other than physical changes. To interpret the section as reflecting market value due to other than physical changes as of the "state date" would nullify the provision of s. 42(1) which mandates that the Director assess property at market value at a date prescribed by the Director; . . .

The Court went on to state that, that s. 52(2) must mean something, and to interpret it otherwise, would “… destroy the base date concept of the assessment legislation …”, further stating that “In enacting s. 52(2) the Legislature could not have intended such a result.”

224In its review of this decision, the Board first observes that the Nova Scotia Act is similar to the regime in Ontario’s Act, in that they both apply a single valuation day for determining a property’s value for several taxation years. However, that is where the similarity ends. Section 42(1) expressly defines the value of the property as “market value” and s. 52(2) expressly provides that the assessment on the roll “be the assessment that reflects the state of the property” [emphasis added]. In contrast, as previously noted, Ontario’s Act, in particular, s. 36(1), does not refer to “market value” or the ‘state of the property’. In addition, the wording in s. 52(2) of the Nova Scotia Act, i.e. that the assessment on the roll should “reflect the state of the property”, appears to indicate that the Nova Scotia Act required that the “market value” of a property be annually assessed. For these reasons, the Board finds that the analysis in Wandlyn does not support a conclusion that the statutory provisions of Ontario’s Act apply a ‘state and condition’ legislative regime, in which a property’s value must be annually reassessed.

225However, the Court’s finding in Wandlyn does reinforce that, in a legislative regime which prescribes a ‘fixed’ valuation day for determining a property’s value, the return of the assessment on the assessment roll does not mean that the valuation day for determining the current value of a property must be the date the Assessment Roll is returned. In this regard, the Court made the following observations at pages 14 and 15:

A reading of s. 42(1) of the Act as a whole satisfies me that the duty on the Director to ensure that taxation falls in a uniform manner upon commercial property in the municipality relates to the Director "forming his opinion" of market value of the property at the date prescribed by the Director pursuant to s. 42(2), in this case, January 1st, 1988 and not uniformity of taxation in years subsequent to the base date year.

Assuming that the Director, in a re-assessment year, has properly performed his duty under s. 42(1), all assessable property will have been valued as of the base date at market value so that changes in market value in subsequent years due to market conditions, as opposed to physical changes in the property should not affect uniformity of taxation to any significant extent,

226Regarding the impact on the property owner, the Court, at pages 14, and 15 made the following observations:

The base date/state date method of assessment is such that a taxpayer in a deflationary market is stuck for a period of years with assessment based on market value at a past date. Conversely, in a rising market the taxpayer may have the benefit of a lower assessment in relation to market value in subsequent years. The tax rate set in the off years will be fixed by the municipality based on its financial needs and the assessments of the property in the municipality by the Director irrespective of whether the assessments are above or below current market value.

Unfortunately, Wandlyn's property has suffered a significant decrease in market value. That is one of the deficiencies in this method of assessment but that is what the Legislature has put in place. We cannot change the Act nor interpret it in a manner that is inconsistent with the legislative intent as expressed in the words of the relevant sections.

227The Board notes that these observations apply equally to the legislative regime under Ontario’s Act. However, the Board makes an additional observation that one advantage of the ‘base date’ regime may be that it stabilizes, to a significant degree, the amount of tax to be levied over the four taxation years in an assessment cycle. This financial predictability would assist both the taxpayer and the municipality in planning and managing their financial affairs.

228The Board further notes that there may be other sound economic policy reasons to explain why the Ontario Legislature has enacted the current regulatory regime embodied in the Act. Whether the Legislature has chosen the best regime may be the subject of policy debate. However, that is not for the Board to decide. The Board’s jurisdiction, on an appeal, is to interpret and apply the legislation as written.

Conclusion Summary

229The Board repeats its conclusion stated above: Sections 32, 33, 34, 39.1, 40, and 40.1 of the Act provide a comprehensive scheme for making amendments to a property’s General Reassessment Value on the Assessment Roll. However, only s. 33 and s. 34 provide that current value may be determined based on a valuation day which follows the general reassessment valuation day prescribed by s. 19.2 of the Act. Section 36 does not allow for an annual reassessment of current value, nor is it necessary to impose an interpretative gloss on the wording of the legislation by adopting and applying a ‘state and condition’ paradigm.

Application of the Act’s Legislative Regime to the circumstances before the Board in this Motion

230In light of the Board’s analyses and findings above, the current value of the Subject Properties for the 2021 taxation year will be the General Reassessment Value, unless the Appellants have demonstrated that this value can be changed pursuant to sections 32, 33, or 34 of the Act. The circumstances of the Subject Properties for the 2021 taxation year do not indicate that any of these sections apply.

231Regarding s. 32, the Appellants rely solely on a reduction of the income generated by these properties that only occurred in 2020. Obviously, information which was correct on January 1, 2016, may no longer be correct for 2021. However, the Appellants do not, in any way, suggest that this change in information indicates that MPAC relied on incorrect information when MPAC conducted its general reassessment of the current value of the Subject Properties as of the January 1, 2016 valuation day. For this reason, the Board finds that s. 32 of the Act does not apply to the circumstances described by the Appellants in this Motion.

232There is no suggestion that there has been a s. 33 omission in this case, and s. 34 clearly doesn’t apply because there has been no improvement to the Subject Properties (and, in any event, an amendment can only be made if current value has increased). Therefore, the Board finds that the applicable valuation day for the 2021 taxation year is January 1, 2016. As the current values of the Subject Properties as of this valuation day are already under appeal, there is no new issue to be addressed respecting the current values for the 2021 taxation year.

Issue 2: Should the Appellants be granted an extension of the due date for serving an amended Statement of Issues, to allow them to raise the issue that the correct current value of the Subject Properties for the 2021 taxation year is different from the correct current value they have claimed for the 2017 to 2020 taxation years?

Findings on Issue 2

233As the Board has found that the Appellants have not raised a new issue for the 2021 taxation year, an extension of the due date for serving an amended Statement of Issues is not required. Therefore, it is unnecessary for the Board to address Issue 2.

ORDER

234The Appellant’s Motion is dismissed.