Marlene Margaret Ainsley Estate v. Municipal Property Assessment Corporation Region 15, 2022 CanLII 9921

Tribunals Ontario

Tribunaux décisionnels Ontario

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

February 11, 2022

FILE NO.:

WR 175696

Assessed Person(s):

Marlene Margaret Ainsley Estate

Appellant(s):

Rick Ainsley (Executor); Marlene Margaret Ainsley Estate

Respondent(s):

Municipal Property Assessment Corporation Region 15

Respondent(s):

Town of Caledon

Property Location(s):

8260 Mayfield Road

Municipality(ies):

Town of Caledon

Roll Number(s):

2124-010-007-01500-0000

Appeal Number(s):

3424560 and 3445203

Taxation Year(s):

2020 and 2021

Hearing Event No.:

753564, 757064

Legislative Authority:

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

APPEARANCES:

Parties

Representative

Rick Ainsley (Executor); Marlene Margaret Ainsley Estate

Rick Ainsley

Municipal Property Assessment Corporation

Curtis Nielsen

Town of Caledon

No one appeared

HEARD:

September 28, 2021 and December 14, 2021 by telephone conference call

ADJUDICATOR(S):

Pierre R. Lavigne, Member

DECISION

OVERVIEW

1Rick Ainsley (Executor); Marlene Margaret Ainsley Estate (the “Appellant”) appeals the property assessment for the 2020 taxation year because it is too high. He submits that the constriction of a stream on the property immediately adjacent to the Subject Property has altered his drainage resulting in flooding and a persistent high water table. This has caused collapse of, and structural damage to buildings on the Subject Property. He claims that the soil instability has made the Subject Property unsaleable and of no current value. He also seeks repayment of back taxes paid because of past higher assessments.

2The Subject Property is a one storey detached residential dwelling of 1,706 square feet (“sq. ft.”) constructed in 1964. It is situated on a 4.95-acre parcel with an effective frontage of 201.53 feet and an effective depth of 1,069.95 feet. The house is located on one acre closest to Mayfield Road. The remaining 3.95 acres are in an environmental protection zone containing a stream and a large pond half-way down this long lot. From the photographs the pond is about 80% of the lot width. The municipal address is 8260 Mayfield Road in the Town of Caledon in the Regional Municipality of Peel.

3This appeal is made under s. 40(1) of the Assessment Act, R.S.O. 1990, c. A.31 (“Act”). The assessment for taxation in 2020 was $115,000. The Municipal Property Assessment Corporation’s (“MPAC’s”) submission was that the correct current value of the Subject Property is $421,000. Notwithstanding this submission, MPAC is not seeking a higher value than the $115,000 assessment returned. Pursuant to s. 40(26) of the Act a further appeal was deemed for the 2021 taxation year.

Issues for the Hearing

4At issue in this proceeding is:

A determination of the correct current value of the Subject Property.
Whether an equity reduction in the current value should be made pursuant to s. 44 (3)(b) of the Act?
Whether the Assessment Review Board (“Board”) may reduce prior assessments and order the re-payment of taxes levied.

Result

5For the reasons that follow the Board finds that the correct current value of the Subject Property is $56,500. The Board makes no further adjustment on account of equity. The Board has no jurisdiction to change assessments for prior years when these were not appealed or to order the refund of back taxes levied on these prior assessments.

Procedural History

6This matter was initially heard on September 28, 2021. Upon conclusion of the hearing, the Board determined that more evidence was necessary to determine the current value. The Board directed the parties to provide any available evidence of the cost of demolition of structures and remediation. The hearing was reconvened on December 14, 2021 to hear this additional evidence and submissions on current value.

ANALYSIS

Issue 1 – What is the correct current value of the Subject Property.

The Governing Statutory Provisions

7 Section 19(1) of the Act provides that “the assessment of land shall be based on its current value.”

8 Section 1(1) of the Act defines current value as follows:

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;

9 Section 19.2 of the Act stipulates that January 1, 2016 is the day as of which land shall be valued for the 2017 to 2020 taxation years. Section 48.6 of O. Reg. 282/98 extended this valuation day to the 2021 taxation year.

10 Section 40(17) of the Act places the burden of proof as to the correctness of the current value upon MPAC unless non-cooperation is pleaded and established, in which case the burden of proof is on the Appellant pursuant to s. 40(18).

11 Section 44(3)(a) of the Act requires the Board to determine the current value of the land.

12 Section 44(3)(b) of the Act requires the Board to reduce the assessment, if the assessment based on the correct current value is inequitable when compared to the assessment of similar lands in the vicinity.

MPAC’s Position

Valuation by Direct Comparison

13Mr. William Cottingham, a property valuation analyst, testified on behalf of MPAC. He elected to use the direct comparison approach to determine value. He indicated in his report that:

“the direct comparison approach estimates the current value of a Subject Property by adjusting the sale price of other sold properties for differences in property characteristics between the Subject Property and other sold properties. Sold properties with features considered to be inferior to the Subject Property require an upward adjustment to their sales prices. Sold properties with features considered superior to the Subject Property require a downward adjustment to their sale prices.”

14He was of the view that the value of the property was in the land and that the house did not contribute any further value above the land value. In his view a buyer would purchase for demolition and construction of a new dwelling.

15Mr. Cottingham was of the view that only the one acre closest to Mayfield Road, upon which was constructed the existing residence, was usable for the construction of a new structure. The back 3.95 acres were under environmental protection and were surplus land. Accordingly, he valued the Subject Property as a one-acre residential building lot.

16For his value analysis he identified four detached dwelling property sales having occurred within the year of the valuation day. These are detailed in the following Table.

MPAC Comparable Sales for Improved (built upon) Properties

Subject Property

Property 1

Property 2

Property 3

Property 4

Roll Number

212401000701500

212401000309900

212401000702200

212401000400400

212401000416800

Address

8260 MAYFIELD RD

12045 COLERAINE DR

8036 MAYFIELD RD

12089 HUMBER STATION RD

12202 HUMBER STATION RD

Neighbourhood

C20 – 45

101 – 59

C20 - 45

Property Code & Desc.

(301) Single – Family Detached (Not ON

Distance in km

0.6905

0.6418

0.6218

0.8325

Valuation

Current Value Assessment

$114,000

$538,000

$595,000

$764,000

$590,000

Sale

Sale Date

20151030

20160429

20150909

20150629

Sale Amount

$520,000

$605,000

$1,070,000

$612,000

Time Adjusted Sale Amount

$541,184

$573,567

$1,132,038

$681,344

Site

Effective Site Area (Acres)

4.95

0.52

0.99

2.5

0.5

Actual Site Area (Acres)

4.95

0.52

2.4

0.5

Residential Structure

Structure Code & Desc.

(301) Single Family Detached

Year Built

1964

1959

1960

1967

Effective Year Built

1964

1959

1960

1967

Structure Code Qualifier

Quality of Construction

6.5

Full Storeys

1 Storey

Split level

No Split

Bedrooms

Baths

1.5

Fire Places

Air Conditioning

Heating Type

Forced Air

Drive Way

Unspecified/Not Applicable

Separate Or Private Driveway

Unspecified/Not Applicable

Building Total Area (SF)

1,706

1,155

1,305

1,633

1,200

First Floor Area (SF)

Second Floor Area (SF)

Upper Floor Area (3^rd and above) (SF)

Basement Type

Recreation Room – Average Quality

Basement Area (SF)

1,367

1,155

1,305

1831

1,200

Finished Basement Area (SF)

575

660

624

Basement Height

7.5

Modifications

17Mr. Cottingham used Property 1 to arrive at his opinion of value of $541,000. No explanation was provided why he chose this sale as the best indication of value.

18He also provided the value of four vacant land sales in the vicinity to demonstrate that vacant land values were higher than improved (built upon) values. This supported his view that the structures did not add substantial value. These sales are detailed in the following Table:

MPAC – Vacant Land Sales

Subject Property

Property 1

Property 2

Property 3

Property 4

Roll Number

212401000701500

212401000323700

211012000315602

21101000315901

211001200038400

Address

8260 MAYFIELD RD

12592 COLERAINE DR

68 MARYSFIELD DR

56 MARYSFIELD DR

5193 COUNTRYSIDE DR

Neighbourhood

C20 – 45

B33 – 102

B90 - 108

Property Code & Desc.

(301) Single – Family Detached (Not ON Water)

(100) Vacant Residential Land Not On Water

Distance in km

1.8453

1.792

1.9461

1.7763

Valuation

Current Value Assessment

$114,000

$312,000

$611,000

$2,300,000

$800,000

Sale

Sale Date

20160727

20160517

20160720

20160629

Sale Amount

$650,000

$665,000

$685,000

$4,110,000

Time Adjusted Sale Amount

$589,956

$621,228

$621,723

$3,784,120

Site

Effective Site Area (Acres)

4.95

0.5

1.0

Actual Site Area (Acres)

4.95

0.5

1.0

10.09

19It was Mr. Cottingham’s view that land purchased for the purpose of demolishing existing structures to construct new ones is of less value than equivalent vacant land, as the cost of demolition must be accounted for.

20At the reconvened hearing of December 14, 2021, Mr. Cottingham estimated the cost to demolish the existing structure at $45,0000. MPAC presented no evidence of the cost of remediation.

MPAC Conservation Land Sale

21Mr. Cottingham testified that when a property has no utility, he will look to conservation land sales as an indication of value. He identified a sale of conservation land in December 2017 of three parcels totaling 13.9 acres for a time adjusted price of $285,480 or $20,538.13 per acre.

22In the returned assessment of $115,000 Mr. Cottingham had used the conservation land value applied to the acreage of the Subject Property to produce a value of $101,664. It was his view that the Subject Property had some utility because the house continued to be used for residential purposes. Accordingly, he had increased the assessment to $115,000 to give some value to the residential use. No explanation was provided the explain how the increase to $115,000 was arrived at.

23In final submissions, MPAC’s representative urged the Board to find a correct current value of $421,000, being Mr. Cottingham’s opinion of value by direct comparison of $541,000 adjusted downward by $120,000, the lowest cost of structural repairs provided by the Appellant.

Appellant’s Position

24The Appellant presented no evidence from sales of comparable properties to determine value. His position was that the property could not be sold because of persistent damage to soil stability, a high water table, and structural damage to the residence. This damage rendered the property uninsurable and therefore unsellable.

25As a result of the damage to the property, the Appellant’s homeowner’s insurance coverage was cancelled. Mr. Ainsley provided copy of a May 24, 2012 letter from insurance brokers Marsh and McLennan advising that the Dominion of Canada Homeowner’s Insurance policy would be cancelled effective June 11, 2012 for reason of “unacceptable risk”. The property has been uninsurable since then.

26The Appellant then retained the services of Dianne Saxe, an environmental lawyer, to investigate potential remedies against his neighbours for the damages to this property. Ms. Saxe retained the services of Watters Environmental Group Inc., an environmental engineering management firm, to investigate the effect of activities at the neighbouring properties on the Subject Property.

27The May 23, 2013 Watters Report Executive Summary found that Illegal infilling on the two properties to the west of the Ainsley property has resulted in the following effects:

Constriction of the flow of a creek which runs through the area causing the river to burst its banks and alter its course;
The area surrounding a pond within the Ainsley property, has now become marshland, where previously it was dry land;
Surface water from the Ainsley Property used to drain towards Site B, but given the increased ground elevation as a result of infilling, it is now unable to do so, resulting in surface water being retained beneath the residential building; and,
The elevation of groundwater beneath the Ainsley Property and restricted run-off from the property has resulted in significant foundation damage.

28The Appellant also had the Subject Property inspected by MPAC. In a March 17, 2015 letter, reporting on a July 2014 inspection, Joseph McFadden, the Manager of Valuation and customer relations, confirmed that the house had numerous cracks in the foundation that were getting larger over time. Furthermore, a detached garage was in total ruin. Mr. McFadden confirmed that “MPAC currently attributes no value to these structures because of the damage cited above.”

29A letter dated March 20, 2015, from Terraprobe, Consulting Environmental Engineers, confirmed that the well water had bacteria in excess of acceptable standards and should not be consumed.

30The Appellant testified that the above conditions continue to this day, with the addition that a mold problem has now developed.

31Mr. Ainsley testified that the damage to the Subject Property arose from dumping on the properties immediately to the west of his property since at least 2004. These neighbouring properties total approximately 10 acres. The dumping has been of earth fill, construction waste, and garbage. The garbage has attracted rats to the dump and the Subject Property. There is open air burning of the garbage. He testified that over the years, thousands of dump truck loads have been delivered to the site at all hours of the day and night.

32A stream runs through the Ainsley property and drains towards the westerly dump site. A dirt road was constructed to access the back of the dump. An inadequate culvert was constructed over the stream resulting in persistent upstream flooding on the Subject Property and a rise in the water table. This has made the one acre of land, upon which the house is situated, boggy. This undermined the foundations, causing the collapse of a detached garage, and structural damage to the house. It has also polluted his well, rendering the water unfit for consumption. He produced photographs of a well on his property showing a water level visible at or very near the ground level highlighting the high water table.

33The Appellant also detailed his extensive, and unfortunately futile, attempts to have governmental authorities at all levels stop the dumping or remedy the flooding of the Subject Property.

34At the reconvened hearing of December 14, 2021, the Appellant produced estimates of $120,000 to $200,000 for remediation work. No estimate was firm. Mr. Ainsley indicated that it had been difficult obtaining any estimates. He had solicited about half a dozen firms, but most did not want to get involved because it might subject them to risk of litigation with the neighbours. No estimates were provided for accessory consulting, surveying, permitting, test holes, or other related costs. No written estimate was provided for hook up to municipal water, though Mr. Ainsley testified he had a verbal quote of $25,000.

35In response to the estimated cost of remediation work, MPAC indicated that these estimates were not relevant to its valuation, as they were based on expenses directed at saving the structure; whereas in MPAC’s valuation approach, these expenses would not be necessary as the buildings would be demolished for a new structure. In Mr. Cottingham’s words: “The remedial plan is focused on saving the existing house. A new owner, building a new house, would not be facing the same problems. A new owner would have different options.” He also remarked that the estimate would have had to be adjusted backward to 2016 value.

36The Appellant testified that any attempt to sell the property would require that he disclose the flooding, unstable soil, the un-insurability, and the uncertain costs of remediation. The dump next door would be obvious to any potential purchaser.

Findings on Issue 1

37The Board’s purpose is to determine the equitable assessment of the Subject Property at the valuation day. It has not heard evidence from the neighbours or any of the government authorities. Out of fairness to the owners or occupants of the neighboring property and the various government authorities, the Board will make no conclusion on whether the neighbouring operations are illegal or the response of governmental authorities to Mr. Ainsley’s attempts to enlist their assistance. The Board’s observations are from the parties’ evidence as to the state and condition of the Subject Property.

38The Appellant’s position is that the property has no value because of the soil’s instability. This has caused the collapse of a detached garage and major structural damage to the house making it uninsurable. Costs of repair would be extensive and uncertain. There is no evidence that repairs would be long lasting or that any house could be insured again.

39The Board has found that in a similar case, that un-insurability of the residence affects the marketability of a property. In Biskey v Municipal Property Assessment Corporation, Region 26, 2016 CanLII 4414 (ON ARB) (“Biskey 2016”) at para. 116, in dealing with an uninsurable property, built upon a contaminated site off-gassing methane, the Board asked the following question:

“Would a potential buyer, if accurately informed about the condition of the Subject Property offer to purchase this property? Would such a purchaser demand a discount of what he or she would otherwise pay to accept the risks and difficulties of dealing with the history of contamination from the previous uses of the site and the difficulties and uncertainties of living with the methane off-gassing? Or would the purchaser simply look elsewhere?”

40In Biskey 2016, the Board concluded the risks of owning the subject site would be so great that potential purchaser would decline to make any offer to buy the property and reduced the current value to $0.

41This decision was confirmed on review in Biskey v Municipal Property Assessment Corporation, Region 26, 2017 CanLII 21096 (ON ARB) (“Biskey 2017”).

42The Board agrees with the Appellant that an informed buyer, aware of the flooding, high water table, structural issues, uncertain repair costs, uncertain insurability and the dump next door, would look elsewhere and decline to make an offer for the property as an existing residence.

43This does not necessarily mean the Subject Property is worth nothing. If MPAC establishes that there is potential for a sale for a purpose other than to keep and repair the existing house or build a new structure, there may be some value.

44MPAC’s valuation theory was that the property has value because the existing house could be demolished, and a new residence constructed.

Valuation for demolition and new construction

45For such a new structure use MPAC sought to value the Subject Property as a one-acre building lot by comparing it to sales of land, either vacant or with existing older residences that could be demolished.

46MPAC’s valuation opinion was based on Property Sale 1 of the improved (built upon) sales. This sale had a time adjusted sale price of $541,000. The time adjustments were not disputed by the Appellant. The Board finds that this sale is not comparable to the Subject Property because it was for a one-half acre lot, therefore, not comparable to the Subject’s one-acre area.

47For reasons explained below, the Board rejects MPAC’s other building lot sale values as comparable to the Subject Property. They are not comparable because MPAC has not adjusted downward their unimpaired value to account for the major soil and locational deficiencies of the Subject Property. MPAC’s evidence is therefore insufficient to support its opinion of current value of $541,000.

Unimpaired value

48In addition to the one-half acre sale, rejected above, MPAC suggested three one-acre sales, comparable in area to the Subject Property.

49Vacant Property Sale #2, a one-acre site with an existing residence at 8036 Mayfield Road, sold for a time adjusted price of $573,567.

50Vacant Property Sales #2 and #3, each of one acre, sold for rounded time adjusted prices of $621,000. As vacant properties, they were superior to the Subject as they did not require the expense of demolition. As Mr. Cottingham indicated in his report: “Sold properties with features considered superior to the Subject Property require a downward adjustment to their sale prices”.

51Property 4 was no longer vacant land. It had been improved. Its 2016 sale, as improved, not an indication of value of vacant land.

52The evidence by MPAC was that the cost of demolition for the Subject Property was $45,000. Accordingly, adjusting the vacant land sales downward by this amount produces an average price, adjusted for demolition costs, of $575,500. ($573,567+($621,228-$45,000) +($621,723-$45,000) /3=$575,506).

53$575,000 is the value of one-acre building lots, superior in quality because they were unimpaired by the negative features of the Subject Property.

Impaired value

54Mr. Cottingham’s explanation of the direct comparison valuation approach stated that “sold properties with features considered superior to the Subject Property require a downward adjustment to their sale prices.”

55The three suggested comparable one-acre building lot sales are superior to the Subject Property as they had no stability or high water table deficiencies. A downward adjustment of the unimpaired value of the comparable sales was required to make them comparable to the Subject Property.

56MPAC correctly indicated that Mr. Ainsley’s estimate of the cost to cure of $120,000 or more was not a proper downward adjustment, because such costs would not be required if the existing house was demolished. Mr. Cottingham’s testimony stated that: “The remedial plan is focused on saving the existing house. A new owner building a new house would not be facing the same problems. A new owner would have different options”.

57“Different options”, which were not specified by Mr. Cottingham, would necessarily require alternate engineering solutions to overcome the major soil deficiencies of the Subject Property sufficient to construct an insurable new structure.

58No evidence was provided by MPAC to describe the nature of, or additional expense of, the work necessary to cure the soil instability or the type and additional cost of foundations necessary to prevent structural damage to a new residence. The estimated cost of these solutions was necessary for a downward adjustment to the value of the otherwise unimpaired comparable sales. The failure by MPAC to provide evidence quantifying this major downward adjustment to the unimpaired value renders the unimpaired building lot value an unreliable indication of value.

59The three suggested comparable one-acre sales are also superior because they are not next to a property creating adverse locational characteristics. The Subject Property however is immediately adjacent to 10 acres used for the dumping of earth fill, construction waste and garbage. Quite apart from any damage to soil stability or the high water table of the Subject Property, the adjacent property is unsightly, noisy, with intense traffic, that produces smoke, and a vermin problem. These adverse locational characteristics require some downward adjustment. MPAC has not considered or calculated a further downward adjustment to the unimpaired values of the otherwise comparable sales.

60The Board also rejects the unimpaired building lot value as an indication of value because MPAC has not persuaded the Board that an informed buyer would purchase a building lot with uncertain soil stabilization or foundation costs, uncertain insurability, and that was next to a dump. To paraphrase the decision in Biskey 2016 above, I find it likely that a potential purchaser of a building lot for a new structure would look elsewhere and not make an offer to purchase the Subject Property for this purpose.

61The Board must nevertheless examine the other evidence tendered to see if a determination of current value can be made.

Valuation for conservation use

62The back 3.95 acres of the Subject Property has a large pond and a stream and was zoned for environmental protection. The stream constriction on the neighbouring property has transformed the remaining one acre upon which the existing house is situated into a near wetland.

63MPAC, in making the returned assessment of $115,000, had used the conservation land value of $20,538.13 per acre, applied to the 4.95 acres of the Subject Property, to indicate a partial current value of $101,663. MPAC had increased this amount to $115,000 because the property was being used as a residence, therefore still had some added utility.

64The Board finds that the best indication of value is derived from the sale of the conservation land. The Board disagrees with the attribution of any additional value for utility. Current Value is determined by the amount the land would sell for, not the use value to an owner who does not sell. Nor would the existing residential use be of any utility to a purchaser who bought the Subject Property as conservation land.

65MPAC’s suggested comparable conservation land sale is also superior, as conservation land, to the Subject Property. A sale for conservation purposes would have to be adjusted downward for the cost of demolition, because it is more likely than not, that a purchaser for conservation purposes would demolish the house rather than incur uncertain estimated costs of repair in excess of the purchase price.

66The Board finds that the 2016 current value of the Subject Property is $56,500 (rounded). This current value is arrived at by applying the $20,538 per acre conservation land rate to the 4.95 acres (=$101,664) and subtracting the $45,000 demolition cost.

Issue 2 – Is an equitable reduction pursuant to s. 43(3)(b) of the Act required?

67The Appellant presented no evidence that similar properties were assessed inequitably.

68MPAC produced an equity report demonstrating that the level of assessment for similar properties in the vicinity was 0.965. This demonstrated that similar properties in the vicinity are assessed, on average, at 96.5% of their correct current values. This demonstrates that there is no significant underassessment of similar properties requiring an equitable adjustment.

Findings on Issue 2

69The Board finds that no further adjustment to the correct current value is required to make the assessment equitable with similar properties in the vicinity.

Issue 3 - Repayment of back taxes

70With respect to the Appellant’s request that the Board order the repayment of back taxes, the Board has no jurisdiction to make such an order, or to correct assessments where no appeal was made of the prior assessments.

71The effect of s. 41 of the Act is that past assessments that have not been appealed are closed, despite any past errors in assessment. The Board is bound by this Statute.

ORDER

72The Board orders that the assessment for the taxation years 2020 be reduced from $115,000 to $56,500 and the assessment for the 2021 taxation year be reduced from $114,000 to $56,500.

"Pierre R. Lavigne"

PIERRE R. LAVIGNE

MEMBER

Assessment Review Board

Website: www.tribunalsontario.ca/arb