Tribunals Ontario

Tribunaux décisionnels Ontario

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: August 22, 2022

FILE NO.: DM 179494

Assessed Person(s): Bayshore Shopping Centre Limited/KS Bayshore Inc./Ivanhoe Cambridge, Knoxx Church Trustees, London Life Insurance Company, Mississauga Entertainment Holdings Inc., CSH Regency Inc., CF/Realty Holdings Inc., 2308808 Ontario Inc., Ivanhoe Cambridge I Inc. and HOOPP Realty Inc.

Applicant/Appellant(s): KS Bayshore Inc., Hudson’s Bay Company, The Canada Life Assurance Company, Mississauga Entertainment Holdings Inc., CSH Regency Inc., 2308808 Ontario Inc., Ivanhoe Cambridge I Inc., and HOOPP Realty Inc.

Respondent(s): City of Ottawa, City of Toronto, City of Mississauga, City of Hamilton, City of Kitchener, City of Waterloo, and City of North Bay

Municipality(ies): City of Ottawa, City of Toronto, City of Mississauga, City of Hamilton, City of Kitchener, City of Waterloo, and City of North Bay

Property Location(s): See Schedule A attached

Roll Number(s): See Schedule A attached

Appeal Number(s): See Schedule A attached

Taxation Year(s): 2020

Hearing Event No.: 766667

Legislative Authority: Section 323 of the City of Toronto Act, 2006, S.O. 2006, c. 11, Sched. A and s. 357 of the Municipal Act, 2001, S.O. 2001, c. 25

APPEARANCES:

Parties

Counsel/Representative*

Hudson’s Bay Company

Stephen Longo and Alex Pletsch

KS Bayshore Inc. The Canada Life Assurance Company, Mississauga Entertainment Holdings Inc., CSH Regency Inc., 2308808 Ontario Inc., Ivanhoe Cambridge I Inc., and HOOPP Realty Inc

Tara Piurko and Eric Sherkin

Parties

Counsel/Representative*

City of Ottawa

Greg Powell*

City of Toronto

Angus Mackay

City of Mississauga

John L O’Kane

City of Hamilton

John L O’Kane

City of Kitchener

John L O’Kane

City of Waterloo

Cynthia B. Kuehl and Lucy Sun

City of North Bay

John L O’Kane

Participants

Counsel/Representative*

City of Vaughan

Jaroslaw Wowk*

City of Pembroke

Donald G. Mitchell

Town of Aurora

No submissions received

Northeastern Manitoulin and the Islands

No submissions received

REQUEST FOR: Legislative Interpretation

HEARD: June 7, 2022 in writing

ADJUDICATOR(S): Dirk VanderBent, Vice-Chair

MOTION DECISION

OVERVIEW

1Section 357(1)(d)(ii) of the Municipal Act, 2001, S.O. 2001, c. 25 (“Municipal Act”) provides that a municipality may cancel, reduce or refund taxes levied on land if a building on the land was “was damaged by fire, demolition or otherwise so as to render it substantially unusable for the purposes for which it was used immediately prior to the damage”. Section 323(1)(d) of the City of Toronto Act, 2006, S.O. 2006, c. 11, Sched. A, (“COTA”) which applies to the City of Toronto, mirrors s. 357(1)(d). For purposes of this Motion Decision, a reference to s. 357(1)(d) of the Municipal Act includes a reference to s. 323(1)(d) of COTA, and a reference to s. 357 of the Municipal Act also includes a reference to s. 323 of COTA.

2A number of property owners/tenants across the province have filed applications/appeals with the Assessment Review Board (the “Board”) pursuant to s. 357 of the Municipal Act, on the basis that the legal and governmental restrictions implemented in response to the COVID-19 pandemic, “damaged” the properties within the meaning of s. 357(1)(d)(ii). The various municipalities, in which these properties are located, disagree that s. 357(1)(d)(ii) can be interpreted to include this type of damage. Representatives for both the property owner/tenants and the various municipalities have requested that the Board provide a preliminary ruling on the correct legal interpretation of s. 357(1)(d)(ii). The Board agreed to this request, as it is the most efficient way for the Board to process the applications/appeals that have been filed with the Board.

3In accordance with this request, the Board directed that the property owners/tenants bring a Motion in respect of the nine properties described in the above Title of Proceedings (the “Subject Properties”). The owners/tenants of these nine properties are collectively referred to as the “Moving Parties”. The municipalities in which these nine properties are situated are Respondents to this Motion. Based on Board procedure, all the other municipalities could not automatically participate in this Motion Hearing as they are not parties to these nine application/appeal proceedings. For this reason, the Board directed that these other municipalities advise whether they wished to participate in this Motion Hearing. Four municipalities indicated that they did wish to participate, so the Board ordered that they be added as participants for the purpose of providing response submissions. Of these four, only the City of Vaughan and the City of Pembroke have provided submissions. For ease of reference the Board collectively refers to all the municipalities who have provided a response submission as the “Municipalities”.

RESULT

4Respecting the interpretation of s. 357(1)(d)(ii) the Board makes the following findings:

1. Section 357(1)(d)(ii) applies only to a physical building on the land. Therefore, the word “damage” requires that the building be physically damaged.

2. The interpretation of the general words “or otherwise” is restricted to the limited class of physical causes indicated by the specific items listed in this section, i.e. “fire” and “demolition”.

3. A finding whether a building has been damaged is prerequisite to a finding whether such damage has rendered the building substantially unusable for the purposes for which it was used immediately prior to the damage. Therefore, damage to a building cannot be inferred from a change in its use.

4. The fact that a building is not used, does not, in and of itself, indicate that a building is unusable.

In applying the above interpretation of s. 357(1)(d)(ii) to the circumstances described by the Moving Parties in this Motion Hearing, the Board interprets that “damage” does not include ‘legislative damage’ as this term has been described by the Moving Parties.

PARTIES’ REQUEST

5In order to better understand the parties’ request made in this Motion Hearing, it is necessary to provide an overview of the main submissions of the parties as it relates to s. 357(1)(d)(ii) which states:

Cancellation, reduction, refund of taxes

357 (1) Upon application to the treasurer of a local municipality made in accordance with this section, the local municipality may cancel, reduce or refund all or part of taxes levied on land in the year in respect of which the application is made if,

(d) during the year or during the preceding year after the return of the assessment roll, a building on the land,

(i) was razed by fire, demolition or otherwise, or

(ii) was damaged by fire, demolition or otherwise so as to render it substantially unusable for the purposes for which it was used immediately prior to the damage;

6The Moving Parties submit:

1. The legally mandated closures and restrictions implemented in response to the COVID-19 pandemic have detrimentally impacted the ability of income-producing properties to generate income since at least March 2020, including shopping centres, retail stores, hotels, entertainment complexes, office buildings and retirement homes. In some cases, income generation has been entirely prevented for significant periods of time.

2. The Subject Properties are assessed (and therefore taxed) based on their ability to generate income. Properties not assessed on the income approach are not before the Board, and not relevant to this Motion.

3. Any damage that renders these income-producing properties unusable for their income production purpose will result in lost profitability and a reduced market value.

4. The issue on this Motion is not whether the Subject Properties were economically damaged, nor whether that economic damage rendered them substantially unusable. Economic damage is not the damage being claimed by the Moving Parties as having rendered the Subject Properties substantially unusable. Instead, economic damage is evidence of the effect of the legislative damage on the usability of the Subject Properties.

7In response, the Municipalities submit:

1. The requirement that a building be “damaged by fire, demolition or otherwise” covers only physical damage. A vacancy which results from a government order but without physical damage does not meet this requirement.

2. The damage must render the building “substantially unusable” for its original purpose. Therefore, the damage must significantly impact the use of the building. In this case, the impact is either that the owner/tenant had to conduct business operations on a limited basis or that the business operations became economically unviable. Such impacts do not significantly impact the use of the building.

8Although the Moving Parties’ submissions focus on what they describe as the legislative damage on the usability of the Subject Properties, it is not disputed that s. 357(1)(d)(ii) is restricted to buildings on the property. Therefore, s. 357(1)(d)(ii) provides relief only in respect of damage to a building which renders the building substantially unusable for the purposes for which it was used immediately prior to the damage.

9While the Board has reviewed all the parties’ submissions in detail, for purposes of this Motion Decision the Board provides a synopsis of only the most salient submissions.

ANALYSIS and findings

Introduction

10The Board’s analysis and findings are organized as follows. The Board will first review the applicable general principles of statutory interpretation, followed by analysis of the application of a specific principle of statutory interpretation known as ejusdem generis. The Board will then examine the words “damage” and “unusable” in s. 357(1)(d)(ii).

11Rather than listing the parties’ submission in a separate section, the Board, in providing its analysis, will reference the parties’ submissions as required.

Principles of Statutory Interpretation

12As the issue raised in the Motion requires a statutory interpretation of s. 357(1)(d)(ii), it is necessary for the Board to apply the relevant principles of statutory interpretation.

(i) The Ordinary Rule of Statutory Interpretation

13The parties acknowledge that the ordinary rule of statutory interpretation is that "the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament" (see Bell ExpressVu Limited Partnership v. Rex, [2002] 2 S.C.R. 559, 2002 SCC 42 at para. 26).

(ii) Presumptions

14In Québec (Communauté urbaine) v. Corp. Notre-Dame de Bon-Secours, 1994 CanLII 58 (SCC), [1994] 3 S.C.R. 3, the Supreme Court of Canada stated:

The rules … may be summarized as follows:

• The interpretation of tax legislation should follow the ordinary rules of interpretation;

• 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;

• 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;

• Substance should be given precedence over form to the extent that this is consistent with the wording and objective of the statute;

• 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.

15Furthermore, in Placer Dome Canada Ltd. v. Ontario (Minister of Finance), 2006 SCC 20, [2006] 1 S.C.R. 715 at para. 24, the Supreme Court of Canada also stated:

Although there is a residual presumption in favour of the taxpayer, it is residual only and applies in the exceptional case where application of the ordinary principles of interpretation does not resolve the issue: Notre-Dame de Bon-Secours, at p. 19. Any doubt about the meaning of a taxation statute must be reasonable, and no recourse to the presumption lies unless the usual rules of interpretation have been applied, to no avail, in an attempt to discern the meaning of the provision at issue.

16The Moving Parties submit the courts have recognized that s. 357 demonstrates the remedial nature of this legislation. In support of this submission, they rely on the decision of the Supreme Court of Canada in Wilkes v. Interlake Tissue Mills Co. Ltd., 1969 CanLII 9 (SCC), [1970] SCR 441 (“Wilkes”) at page 446:

This is a remedial section which empowers a court of revision to do essential justice to a taxpayer who has been overcharged by reason of any “gross or manifest error”, or who has suffered a loss

17While the Board accepts that s. 357 is a remedial section, the Board also observes that the Wilkes decision addressed a claim for a refund on the basis that the taxpayer was overcharged due to a gross or manifest error, not on the basis that a building had been damaged so as to render it substantially unusable.

18The Moving Parties further submit that s. 357 has evolved to provide “essential justice” to the taxpayer. In support of this submission, they cite a decision of the Board in Canadian Property Holdings (Ontario) Inc. v Municipal Property Assessment Corporation, Region 15, 2017 CanLII 78332 (ON ARB) (“Canadian Property”). In addressing this submission, the Board notes that, at paragraph 9 of this decision, the Hearing Member states that s. 357 provides “ ‘essential justice’ to the taxpayer, who must fall within the ‘exonerating’ provision for the discretionary relief sought.” (emphasis added).

19The Moving Parties correctly observe that the words in s. 357(1)(d)(ii), “damage” and “or otherwise” are not defined in the Municipal Act, so they have referred to dictionary definitions to aid in the interpretation of these words. However, the Municipalities cite Giglio v Peters, 2009 ONCA 681 at para. 19, where the Court of Appeal stated:

As with any question of statutory interpretation, context and legislative purpose are paramount considerations. In the well-known and often quoted words of the late Professor John Willis, “words, like people, take their colour from their surroundings” (“Statute Interpretation in a Nutshell” (1938), 16 Can. Bar. Rev. 1 at 6). Neither a dictionary meaning of a word nor the meaning of that word in a different statutory context is determinative.

20In summary, while s. 357(1)(d)(ii) is remedial in nature, the Moving Parties must satisfy the requirements set out in this section, where its words must be read in their grammatical and ordinary sense harmoniously with the scheme of the Municipal Act, the object of the Municipal Act, and the intention of the legislature. Although there is a residual presumption in favour of the taxpayer, it only applies in the exceptional case where application of the ordinary principles of interpretation does not resolve any ambiguity in the meaning of this section.

Application of the Statutory Maxim ‘ejusdem generis’

21Ruth Sullivan, The Construction of Statutes, 7th Ed. (“Sullivan”) is a well-recognized authority regarding the law related to statutory interpretation. Chapter 8, Part 2, entitled “Textual Analysis and the Maxims of Interpretation”, section 8.05 describes the legal maxims of statutory interpretation:

Because some features of legislation appear over and over again, the inferences relating to them also tend to recur. A number of recurring inferences have been elevated to the status of maxims and given Latin names, including noscitur a sociis (associated words), ejusdem generis (limited class) and expressio unius est exclusio alterius (implied exclusion).

Noscitur a sociis and ejusdem generis are useful because of the frequent reliance on “word strings” in common law drafting. Instead of using a general or abstract term, the drafter attempts to be more precise by setting out a series of specific and concrete terms. In responding to this detail, interpreters rely on the presumptions of economical expression and no tautology. They assume that the drafter chose the particular string of words because a single word would not do and that each word is there for a reason. The challenge is to identify what that reason is.

Arguably, there are drawbacks to assigning names to the inferences of which the maxims are comprised, especially Latin names. It tends to obscure the reasoning process involved in drawing inferences and it gives undue emphasis to the features of the text on which these particular inferences are based. In fact all features of a text contribute to meaning and any one of them can be potentially important in given circumstances. To attach names to some obscures the existence and importance of others; it does not facilitate an accurate appreciation of what goes on in interpretation.

22In section 8.06, Sullivan states:

Strength of the maxims

While words must always be read in context, determining the impact of a given context on the meaning of a disputed word or phrase is a matter of judgment that must be exercised on a case by case basis, taking into account all relevant sources of legislative meaning.

23In section 8.06, Sullivan describes the associated words rule (noscitur a sociis) as follows:

The associated words rule is properly invoked when two or more terms linked by “and” or “or” serve an analogous grammatical and logical function within a provision. This parallelism invites the reader to look for a common feature among the terms. This feature is then relied on to resolve ambiguity or limit the scope of the terms.7 Often the terms are restricted to the scope of their broadest common denominator. As Martin J.A. explained in R. v. Goulis:

When two or more words which are susceptible of analogous meanings are coupled together they are understood to be used in their cognate sense. They take their colour from each other, the meaning of the more general being restricted to a sense analogous to the less general.

24In section 8.07, Sullivan describes the limited class rule (ejusdem generis) as follows:

In National Bank of Greece (Canada) v. Katsikonouris, La Forest J. explained the limited class rule as follows:

Whatever the particular document one is construing, when one finds a clause that sets out a list of specific words followed by a general term, it will normally be appropriate to limit the general term to the genus of the narrow enumeration that precedes it.

Requirements of limited class argument

For a limited class inference to arise several conditions must be present. First, there must be an identifiable class to which each item in the list of specific items belongs. Second, the class inferred from the list of specific items must be narrower in scope than the general words that follow the list. Finally, the class inferred from the list of specific items must have something, apart from those items, to apply to. Otherwise the general words would add nothing to the provision, contrary to the presumption against tautology.

25In light of the parties’ submissions, the second requirement, which is described in Sullivan as the “Scope of Class” is of particular relevance to the interpretation issue before the Board in this Motion Hearing. As stated in Sullivan, the list of the specific words must have a common denominator that narrows the scope of the general term. If not, the maxim of ejusdem generis does not apply.

26Sullivan also addresses the circumstance where the list of specific items only comprises one item (described as “A list of one”). As noted in Sullivan:

Unless other specifics are listed, there is little basis for identifying the common features required to define a limited class. The longer the list of specifics, the easier it is to detect the presence of such features, if there are any to detect.

27Finally, Sullivan speaks to the strength of the ejusdem generis maxim, stating:

The courts often caution that the limited class rule is not a rule of law. It is merely an application of the contextual principle, which may serve as a starting point for analysis but should not be considered conclusive.

Even though the conditions for applying the rule are present, it may be inappropriate to do so given the legislature’s purpose, other features of the context or some overriding principle or policy.

A court may also refuse to apply the limited class rule where it discerns a reason for the list of specific items other than a desire to limit the subsequent general words.

28Turning to this specific case, the Moving Parties submit that this maxim does not apply to s. 357(1)(d)(ii) because it contains only two specific items (fire and demolition), arguing that this maxim provides no assistance where there are only two words in a class. However, as the Municipalities have pointed out in their submissions, the Moving Parties cite no authority in support of this assertion.

29In addressing this submission, the Board emphasizes that Sullivan indicates that the test is to determine whether the specific items in s. 357(1)(d)(ii) are sufficient to identify common features necessary to define a limited class. There is no mandatory minimum number of specific items which must be present in order to make this determination. The Board observes that the grammatical structure of s. 357(1)(d)(ii) meets the requirements of the maxim. It lists two specific items (“was damaged by fire, demolition”) followed by general words which follow the specific list (“or otherwise”).

30The Board finds that these specific items identify a common feature, being the type of cause of the damage to a building. In reaching this conclusion, the Board notes that Sullivan indicates that the Board must consider all relevant sources of legislative meaning. In this regard, the Board observes that s. 357(1)(d)(ii) does not refer to damage to “land” or “property”. This section specifically restricts the application of s. 357(1)(d) to a “building on the land”. This is consistent with the definition of “land” in s.1 of the Municipal Act (“land” includes buildings). A building is a physical thing, not an intangible concept such as its market value. Therefore, in s. 357(1)(d)(ii), “damage” is in respect of a physical thing. When considered in this context, the specific list clearly describes a limited class of the types of causes of damage to a building. As the Municipalities have pointed out in their submissions, this conclusion is further reinforced by the wording of s. 357(13) which states:

Taxes restored

357(13) The council or the Assessment Review Board may restore to the tax roll all or any part of the taxes for a year that it reduced, cancelled or refunded as a result of an application in respect of a building under clause (1) (d) if it is satisfied that during the year the building has been reconstructed or repaired and is capable of being used for the purposes for which it was used immediately before it was destroyed or damaged. [emphasis added]

The Board finds that the reference to reconstruction or repair of the physical building clearly supports the Board’s interpretation that specific items listed in s. 357(1)(d)(ii) describe a limited class of the types of events that can cause physical damage to a building.

31Furthermore, the Municipalities have also referenced s. 357(1)(d)(i) which includes a building that “was razed by fire, demolition or otherwise”, stating that the term “razed” means a complete physical destruction, and submitting that this could only be applied to a change in the physical state of a building, “as it would be difficult to imagine how a building could be “razed” economically”. The Board accepts that the term “razed” cannot be interpreted another way.

32Based on the above analysis, applying the maxim of ejusdem generis, the Board concludes that “damage”, as this word is used in s. 357(1)(d)(ii), must be physical damage to a building.

33However, the above conclusion does not finally dispose of the interpretation issue raised by the Moving Parties. As noted above, Sullivan indicates that the Board may decline to apply the limited class rule where it discerns a reason for the list of specific items other than a desire to limit the subsequent general words. In this regard, Sullivan references a court decision respecting patent rights where the legislative provision provided that a restraining order could be issued where threats were made “by circulars, advertisements or otherwise”. The Board notes that this court decision is relevant to the interpretation issue before the Board in this Motion Hearing, considering that the general wording “or otherwise” is also used in s. 357(1)(d)(ii).

34Sullivan indicates that the Court found that the purpose of the legislative provision was to ensure that the threat of patent actions could not be used as a tool of intimidation. In considering this purpose, the Court concluded that, if the term “otherwise” was restricted by the limited class indicated by the specific items (circulars and advertisements), much of the purpose of the legislative provision would be lost. Therefore, Sullivan points out that there is a common drafting dilemma where the legislative drafter may be tempted to include specific illustrations or examples along with general words, to ensure the language of the legislative provision, which is intended to be general, is sufficiently specific to prevent too narrow an interpretation of the provision.

35To summarize the above observations made in Sullivan, the Board observes that, in order to discern whether a list of specific items should not be interpreted as limiting the subsequent general words, the Board must consider the purpose of the legislative provision. Accordingly, in order to determine whether the general term “or otherwise” should not be restricted to the limited class of physical damage, the Board must ascertain the legislative purpose of s. 357(1)(d)(ii), considered in the context of the overall purpose of the Municipal Act. In this context, the Board first addresses two submissions made by the parties.

36First, the Moving Parties submit that the use of the words “or otherwise” which follow “…damaged by fire, demolition…” suggests that Parliament did not intend to limit the method by which a building on land could be damaged. They argue that, to the contrary, the lack of qualifying language shows that the words “or otherwise” permit relief for taxpayers whose properties have suffered from a wide variety of damage beyond strictly physical damage. Therefore, the Moving Parties maintain that the damage sustained by the Subject Properties due to the legal and governmental restrictions implemented in response to the COVID-19 pandemic falls within the eligibility criteria of s. 357(1)(d)(ii). They argue that the share of the property taxes that would be due if not for the restrictions imposed, cannot be sustained for the Subject Properties based on this damage.

37The Municipalities disagree, but the basis of their submission is that the maxim of ejusdem generis does apply and, therefore, the damage to the building must be restricted to physical damage. In this regard, they cite the Jack Walker and Jerry Grad Ontario Property Tax Assessment Handbook, 2nd Ed. (Thomson Reuters, 2021), (the “Assessment Handbook”), section 10:13.50 which states:

§ 10:13.50 Impact of COVID-19 on s. 357(1)(d)

Small businesses have been severely impacted by the pandemic. Either through legislative direction or self-protection the business premises have been closed and unusable or substantially unusable for the purposes for which they were used immediately prior to the damage.

Is it possible to interpret under subparas. (i) or (ii) the word "otherwise" as including the pandemic and thus entitling the owner to a rebate?

The answer to the question revolves around the principles of statutory interpretation of the clause, specifically can the word "otherwise" be interpreted to include changes caused by factors other than razing or damaging by fire or demolition.

There are two principles of statutory interpretation that would be applied to the question:

(i) the maxim "ejusdem qeneris" the general term, must be interpreted narrowly to include only items that are of the same class as the specifically listed items and the general term "otherwise", must be related to specific items "fire, demolition", and

(ii) the maxim "noscitur a sociis", the meaning, know a thing by its associates. For the purposes of this section, damage done to a building by something akin to structured damage not economic harm.

Structural damage could be caused by earthquakes, floods, landslides and explosions but that would not include lockouts, recessions, depression or disease.

In addressing this submission, the Board observes that, while the Assessment Handbook is recognized by the Board as an authoritative text on assessment law in Ontario, and such texts may include the author’s opinions, the above opinion is not supported by reference to any specific Board or Court decisions. As such, it simply constitutes an expression of the authors’ views on the interpretation issue the Board must address in this Motion Hearing. Consequently, the Board is not bound by these views, but the Board does accept that they lend some credence to the submissions made by the Municipalities.

38The Municipalities also rely on a Memorandum issued by Allan Doheny, Assistant Deputy Minister, Provincial Local Finance Division of the Ministry of Finance, dated April 26, 2021 (the “Memorandum”), in which the Ministry of Finance indicated that municipalities in the Province sought the Ministry’s clarification regarding the meaning and intent of s. 357(1)(d) of the Municipal Act and s. 323(1)(d) of the COTA. The Ministry’s response states:

We understand that questions are being raised by your member municipalities as to whether these provisions would encompass business closures for part of a tax year due to public health orders resulting from COVID-19.

While it is the responsibility of each local municipality to interpret and administer these sections for itself, it is the Ministry’s view that sections 357(1)(d) and 323(1)(d) are not intended to provide relief in a situation where a property has not been physically damaged or demolished.

39The Municipalities submit that the Ministry of Finance is specifically responsible for supporting the legislature’s taxation policy and the administration of the Acts. They state that, if there was any statutory ambiguity about the intent of s. 357(1)(d)(ii) of the Act, it was removed when the Ministry published its opinion in the Memorandum. For this reason, the Municipalities maintain that the Memorandum should be granted the greatest of deference, because it is unambiguously clear and speaks directly to the issue raised in this Motion Hearing.

40The Municipalities further submit that, in resolving ambiguity about the meaning of a tax provision, it is well established that the administrative practice and interpretations adopted by a government ministry are important factors to be considered. In support of this submission, they cite a decision of the Supreme Court of Canada in Harel v. Deputy Minister of Revenue (Quebec), 1977 CanLII 10 (SCC), [1978] 1 S.C.R. 851 (“Harel”).

41Harel involved the interpretation of the Province of Quebec’s Provincial Income Tax Act (the “Provincial Act”). The Court found that this legislation was closely modelled on the federal Act, noting that, at the time the Provincial Act was enacted, there had been an administrative interpretation of the federal Act which had a bearing on the interpretation issue before the Court. At the third page of the decision, the Court stated: “Consequently, when [the Provincial Act] was adopted, the administrative interpretation of the federal Act gave it a colour that the provincial legislator could not ignore.” Consequently, the Board notes that the Court accepted the administrative interpretation as evidence of the provincial legislature’s intention in enacting the Provincial Act. The Board observes that is not the case here, where the administrative view of the Ministry of Finance was issued after the enactment of the Municipal Act. For this reason, the Board concludes that it cannot rely on the Memorandum as an indication of the Legislature’s intent in enacting s. 357(1)(d)(ii). Apart from this, the Board notes that the Memorandum itself states that each municipality is responsible to interpret s. 357(1)(d) for itself. Therefore, the Memorandum does not express a final conclusive view of the issue the Board must address in this Motion Hearing.

42Turning now to the purpose of the Municipal Act, s. 2 which states:

Purposes

Municipalities are created by the Province of Ontario to be responsible and accountable governments with respect to matters within their jurisdiction and each municipality is given powers and duties under this Act and many other Acts for the purpose of providing good government with respect to those matters.

Section 8, which addresses general municipal powers, states:

Scope of powers

8 (1) The powers of a municipality under this or any other Act shall be interpreted broadly so as to confer broad authority on the municipality to enable the municipality to govern its affairs as it considers appropriate and to enhance the municipality’s ability to respond to municipal issues.

Although the wording of s. 2 of COTA, is not identical to the wording of s. 2 of the Municipal Act, s. 2 of COTA conveys the same intent and, in addition, expressly states several things the City must be able to do in order to provide good government, one of which is to “Determine the appropriate levels of municipal spending and municipal taxation for the City.” (emphasis added).

43The overall object of the Municipal Act and COTA is to regulate the organizational structure of a municipality, as well as the administrative functions a municipality is required to perform. As this is a broad mandate, the Municipal Act is a complex statute that is divided into several Parts which govern specific aspects of municipal administration. Part VIII – MUNICIPAL TAXATION requires that taxes are to be levied, and Part X – TAX COLLECTION requires that the taxes are to be collected. In this regard, the Board observes that the collection of taxes is not at the discretion of a municipality, it is mandatory. Section 340(1) of the Municipal Act (and Part XIII - s. 305 COTA) requires that the treasurer must prepare a tax roll, and s. 340(4) provides that the treasurer shall collect the taxes.

44Accordingly, the clear purpose of Part X of the Municipal Act, which includes s. 357(1)(d)(ii), is to collect taxes. As such, the provisions of s. 357(1), which effectively provide an exemption from the collection of taxes, are clear exceptions to this purpose.

45Part X only provides for a narrow range of circumstances in which a taxpayer may be exempt from paying taxes. The structure of s. 357(1) itself reinforces this conclusion. This section only permits the cancellation, reduction or refund of taxes in specific circumstances which are narrowly defined. This observation also applies to other sections in Part X of the Municipal Act. Cancellations, reductions or rebates are only permitted under specific sections in Part X, such as s. 361- Rebates for Charities and s. 364 – Vacant Unit Rebate. In this regard, the Board also re-iterates the finding in Canadian Property that the taxpayer must fall within the exonerating provision to obtain the discretional relief.

46As s. 357(1)(d)(ii) is one of the narrow range of circumstances in which a taxpayer may be exempt from paying taxes, it is clear that the application of the ejusdem generis maxim is consistent with the purpose of legislation. Therefore, it is entirely reasonable to interpret the general words “or otherwise” as referring to a limited class of the types of events which can cause physical damage to a building.

47The Moving Parties have argued that to interpret the general words “or otherwise” as being restricted by a limited class, renders the general words redundant, i.e. if the damage is restricted to fire and demolition, then there would be no need for the additional term “or otherwise”. They describe this as a tautology. The Board does not accept this submission. Fire and demolition are but two types of events which cause damage to a building. The general words “or otherwise” clearly allow for other types of events that would similarly result in damage to a building, such as the events described in the Assessment Handbook - earthquakes, floods, landslides and explosions. Another example is the damage caused to a meat packing building when a freezer was turned off (discussed in greater detail in a decision described below as 810277).

48In summary, the Board finds that the application of the ejusdem generis maxim in interpreting s. 357(1)(d)(ii) is entirely consistent with the wording and purpose of this section and the objective of both the Municipal Act and COTA.

Damage versus Usability

49As the Board has found that s. 357(1)(d)(ii) is restricted to physical events that cause damage to a building, the Board now turns to the Moving Parties’ submissions that legislative damage on the usability of the Subject Properties meets this criteria.

50The Moving Parties observe that the Subject Properties are all income-producing properties and were each valued using the income approach to valuation for the 2020 taxation year. As an income-producing property’s ability to earn revenue is directly tied to its current value, they submit, therefore, that a building is damaged, within the meaning of s. 357(1)(d)(ii), when it becomes unable to generate income in the same capacity as it did prior to the event causing the damage. Accordingly, the Moving Parties submit that the Subject Properties were damaged by the COVID-19 restrictions, rendering them substantially unusable for the purposes for which they were used immediately before the damage.

51The Moving Parties state that the evidence shows that the Subject Properties were substantially unusable for their prior purposes following the legislative damage that befell them in 2020. They argue that, while these properties could perhaps be used as storage or fulfillment centres or as vacant spaces, these properties could not substantially be used for the same purpose for which they were used immediately prior to the damage.

52The Moving Parties maintain that they have in no way suggested that a building is ‘damaged’ when revenues are lost, nor have they extended the meaning of “building” beyond its logical parameters, as has been submitted by the Municipalities. Instead, the Moving Parties submit that the Subject Properties were damaged by legal restrictions so as to render them substantially unusable for the purposes for which they were used immediately prior to the damage.

53In addressing the Moving Parties’ submissions, the Board first observes that their submissions have referred to a property. Neither the Municipal Act nor the Assessment Act, R.S.O. 1990, c. A.31 (the “Assessment Act”) define the term “property”, although the Assessment Act (s. 1 definition) provides that “land”, “real property” and “real estate” all include buildings. Thus, the definition of “land” in the Municipal Act (which includes buildings) coincides with the definition of “land’ and “real property” under the Assessment Act. The point here is that both definitions draw the distinction that a building is a separate component of “land” or “real property” and, as has been stated above, s. 357(1)(d)(ii) is restricted to damage to a building.

54Furthermore, under the Municipal Act, a municipality has no authority to change the assessed value reported on the Assessment Roll, and s. 304(1) provides that the tax roll is based on the Assessment Roll. Therefore, the Municipal Act does not authorize a municipality to independently adjust the tax roll based on the circumstance raised by the Moving Parties, i.e. where the appraised value of the Subject Properties may have been reduced due to the COVID-19 restrictions. Regarding the relief available under s. 357(1)(d)(ii), this relief is expressly restricted to damage to buildings. It does not refer to changes in the assessed value of a property reported on the Assessment Roll, nor would it need to. If the assessed value on the Assessment Roll changes, then, by definition, the tax roll, which is based on the Assessment Roll, would reflect the change.

55Turning to the question of damage, the Moving Parties have indicated that the Subject Properties were damaged by the COVID-19 restrictions, which rendered them substantially unusable for the purposes for which they were used immediately before the damage.

56At paragraphs 16 and 17 they describe the harm caused by the COVID-19 restrictions, stating:

16In response to the COVID-19 pandemic, the Government of Canada and the Province of Ontario enacted several regulations to control the spread of the virus, including federal orders to prevent foreign nationals in the United States from entering Canada for tourism purposes, and legally mandated business closures and restrictions. These restrictions were established starting in March 2020 and remained in force in various forms throughout the 2020 taxation year.

17The legally mandated closures and restrictions have detrimentally impacted the ability of income-producing properties to generate income since at least March 2020, including shopping centres, retail stores, hotels, entertainment complexes, office buildings and retirement homes. In some cases, income generation has been entirely prevented for significant periods of time.

The Board first notes that there is no reference to damage to the buildings on the Subject Properties. Furthermore, the Board observes that this does not fully describe the type of damage they are claiming.

57The more detailed characterization of the basis for their requested relief is provided in paragraph 30 of the Moving Parties’ submissions, which states:

The Sections [s.357(1)(d)(ii)] are intended to relieve taxpayers from the full burden of their property taxes when damage renders their property substantially unusable. The Moving Parties were obligated to comply with regulatory restrictions imposed by the government in response to the COVID-19 pandemic, the impact of which rendered the Subject Properties substantially unusable for the purposes for which they were used immediately prior to the pandemic. (emphasis added)

58Therefore, it is clear that the damage to the buildings claimed by the Moving Parties is the impact of legislative controls on their ability to use their properties in the same manner as they had been used before the pandemic.

59In addressing this claim, the Board first observes that “damage” and “use” are separate and distinct concepts. The problem with the Moving Parties’ claim is that s. 357(1)(d)(ii) does not state that a building must be made substantially unusable so as to render it damaged. Instead, it states the opposite - the building must be damaged so as to render it substantially unusable. Consequently, damage cannot be inferred from the nature of the use of the building. Unless there is evidence of damage, s.357(1)(d)(ii) cannot apply.

60In this regard, the Board also notes that there is a clear distinction between a building that is unusable, i.e. cannot be used, and a building that is not being used. Based on the factual summary provided in the submissions, there is no indication that, at any time during the taxation year in question, the buildings on the Subject Properties were unusable, i.e. could not have been used in the same manner as they had been used prior to the imposition of the COVID-19 regulatory restrictions. Instead, the factual summary provided only indicates that the owners/tenants of the income producing properties referenced by the Moving Parties simply did not use the buildings to the same extent as they did prior to the COVID-19 restrictions, because, unfortunately, they were either prohibited from conducting their commercial services, or did not need to use their properties due to reduced demand for their commercial services. In this regard, the factual summary does not claim that the regulatory restrictions altered the physical structure of their buildings or prohibited the owners/tenants from accessing or using the buildings in the same manner as they had been used. To the contrary, the Moving Parties have acknowledged that they could continue to access and utilize their buildings. In other words, the COVID-19 regulations interfered with their ability to conduct their commercial businesses, not their ability to use their buildings.

61In summary, damage to a building cannot be inferred from a change in its use, and the term “unusable” requires that the building cannot be used, not that the owner/tenant simply did not use it.

62In making the above findings, the Board confirms that the parties’ request in this motion is only for the Board to provide its interpretation of the requirements of s. 357(1)(d)(ii). The Board makes no evidentiary rulings. Any observations based on the factual summary provided in this submission are made solely for the purpose of explaining the Board’s legislative interpretation of this section.

63In reaching the above conclusion, the Board has considered a decision of the Ontario Municipal Board (“OMB”) cited by the Moving Parties: 810277 Ontario Ltd. v. Ontario (Assessment Review Board) 1995 CarswellOnt 5229, [1995] O.M.B.D. No. 359, 32 O.M.B.R. 49 (“810277”). When the decision was issued, the legal regime in force at the time provided that an appeal of a Board decision would be heard by the OMB. In 810277, a meat processing plant was damaged when freezing facilities were turned off, with the result that part of the floor collapsed. The Hearing Panel of the Board denied the plant owner’s application for a reduction in municipal taxes levied, and the owner appealed. The wording of the applicable section of the Municipal Act in force at the time mirrors s. 357(1)(d)(ii). The OMB adopted the finding in Wilkes that this section is remedial and allows for essential justice. However, the OMB Member also noted that s. 357(1)(d)(ii) is discretionary, and that the claimant “should be brought squarely within the exonerating provision” (see paragraph 10).

64Regarding the “damage” requirement, the Board observes that the OMB agreed that the building had been damaged. At paragraph 11, the OMB found that “the phrase ‘otherwise’ in the provision would have application in these circumstances”. In this regard, the Board observes that the damage to the plant was clearly physical.

65Respecting the phrase “substantially unusable”, the Moving Parties point out that, at paragraph 13, the OMB indicates that the property owner must satisfactorily demonstrate that “from an operational, physical, economic or regulatory standpoint these facilities could not be utilized for the slaughter and meat processing purposes.” (emphasis added). Therefore, the Board notes that the reference to the term ‘regulatory’ relates to ‘usability’ of the building, not the ‘damage’ to the building. Consequently, this OMB decision does not support the Moving Parties’ submission that the word “damage” in s. 357(1)(d)(ii), can include ‘legislative damage’ as this term has been described by the Moving Parties.

SUMMARY

66Respecting the interpretation of s. 357(1)(d)(ii) the Board makes the following findings:

1. Section 357(1)(d)(ii) applies only to a physical building on the land. Therefore, the word “damage” requires that the building be physically damaged.

2. The interpretation of the general words “or otherwise” is restricted to the limited class of physical causes indicated by the specific items listed in this section, i.e. “fire” and “demolition”.

3. A finding whether a building has been damaged is prerequisite to a finding whether such damage has rendered the building substantially unusable for the purposes for which it was used immediately prior to the damage. Therefore, damage to a building cannot be inferred from a change in its use.

4. The fact that a building is not used, does not, in and of itself, indicate that a building is unusable.

67In applying the above interpretation of s. 357(1)(d)(ii) to the circumstances cited by the Moving Parties in this Motion Hearing, the Board interprets that “damage” does not include “legislative damage” as this term has been described by the Moving Parties.

NEXT STEPS

68The Moving Parties have a requested that the Board schedule a case management conference to determine the resumption of the Schedule of Events for the s. 357(1)(d)(ii) appeal proceedings before the Board. The Board will not schedule a case conference at this time but will advise the parties in due course regarding when the Schedule of Events for these appeal proceedings will resume.