Tribunals Ontario Tribunaux décisionnels Ontario

Assessment Review Board Commission de révision de l’évaluation foncière

ISSUE DATE: December 11, 2023

FILE NO.: DM 185292

Assessed Person(s): 2070649 ONTARIO INC.

Appellant(s): 2070649 ONTARIO INC.; Sheppard Bogert Developments Limited

Respondent(s): Municipal Property Assessment Corporation Region 09

Respondent(s): City of Toronto

Property Location(s): 4828 Yonge Street

Municipality(ies): City of Toronto

Roll Number(s): 1908-072-010-00800-0000

Appeal Number(s): 3464325, 3487236, 3511916 and 3511407

Taxation Year(s): 2021, 2022 and 2023

Hearing Event No.: 782693

Legislative Authority: Rule 5 of the Assessment Review Board’s Rules of Practice and Procedure

Parties Counsel/Representatives*

2070649 ONTARIO INC and Sheppard Bogert Developments Limited Stephen Longo*

Municipal Property Assessment Corporation Wellannie Mintsoulis

City of Toronto Barry Henaut

REQUEST FOR: Suspension of an Issue Estoppel Motion Hearing

HEARD: October 23, 2023 in writing

ADJUDICATOR(S): Dirk VanderBent, Vice-Chair

MOTION DECISION

OVERVIEW

The Subject Appeals

12070649 ONTARIO INC. (the “Appellant”) is the owner of the property located at 4828 Yonge Street (the “Subject Property”). The Appellant filed an appeal of the assessment of the Subject Property with the Assessment Review Board (the “Board”) pursuant to s. 40 of the Assessment Act, S.O. 1990, c. A.31 (the “Act”) for the 2021 taxation year. Due to the passage of time, deemed appeals were created for the assessments for the 2022 and 2023 taxation years pursuant to s. 40(26) of the Act (all appeals together, the “2021 to 2023 Appeals”).

2In the 2021 to 2023 Appeals, the Appellant argues that the current value of the Subject Property is too high, and, therefore, incorrect.

3The Municipal Property Assessment Corporation (“MPAC”) and the City of Toronto are responding to the 2021 to 2023 Appeals.

Earlier Appeals

4The Appellant previously filed an appeal with the Board relating to the assessment of the Subject Property for the 2017 taxation year. Appeals were deemed for the 2018 to 2020 taxation years (these earlier appeals together, the “2017 to 2020 Appeals”).

5The 2017 to 2020 Appeals were resolved on consent of the parties, so the Board did not conduct a hearing of those appeals. As requested by the parties, the Board issued a decision for each taxation year under appeal, in accordance with written minutes of settlement that were filed with the Board.

MPAC Files a Motion for Issue Estoppel

6In the 2021 to 2023 Appeals, MPAC filed a motion asserting that the issue raised by the Appellant – correctness of current value – was finally resolved in the 2017 to 2020 Appeals, and, therefore, the Board should apply the legal doctrine of issue estoppel and dismiss the 2021 to 2023 Appeals (“MPAC’s Estoppel Motion”).

7The Appellant opposed MPAC’s Estoppel Motion.

8On consent of the parties, the Board suspended the Schedule of Events in the 2021 to 2023 Appeals and scheduled a written hearing of MPAC’s Estoppel Motion.

The Appellant Requests a Suspension

9The Appellant subsequently submitted a request to the Board to cancel the timetable set for the written hearing of MPAC’s Estoppel Motion and maintain the suspension of the Schedule of Events (the “Appellant’s Suspension Request”).

10The basis for the Appellant’s Suspension Request is that the Ontario Divisional Court, in Manulife v. Municipal Property Assessment Corporation et al, 2023 ONSC 4705 (“Leave Decision”), granted leave to appeal Manulife Ontario Property Portfolio Inc. v Municipal Property Assessment Corporation, 2023 CanLII 39085 (ON ARB), 2023 CanLII 13877 (ON ARB) (“Manulife”).

11In Manulife, the property owner appealed its property assessment for the 2017 to 2020 taxation years. These appeals were resolved by the parties without a hearing on the merits. The parties filed written minutes of settlement with the Board, and the Board issued decisions in accordance with these minutes of settlement.

12The property owner in Manulife subsequently filed an appeal of its property assessment for the 2021 taxation year, and appeals were deemed for the 2022 and 2023 taxation years. The property owner’s sole claim was for an equitable adjustment of the current value of the Subject Property. MPAC brought a motion to dismiss on the ground that that the property owner’s claim had been resolved in the 2017 to 2020 appeals that had been settled between the parties and, therefore, the doctrine of issue estoppel applied. The Board granted MPAC’s motion and dismissed the property owner’s 2021 to 2023 appeals in Manulife.

13The Appellant argues that the findings in the Leave Decision will be relevant to the Board’s determination of MPAC’s Estoppel Motion, stating that they provide insight respecting the issues to be addressed in the appeal hearing. For this reason, the Appellant argues that MPAC’s Estoppel Motion should be suspended until a final determination of the Manulife appeal is made by the Divisional Court. As of the date of this Motion Decision, the Divisional Court has not yet adjudicated the Manulife appeal.

14MPAC and the City of Toronto have advised the Board that they take no position on the Appellant’s Suspension Request.

15The purpose of this Motion Decision is to decide whether the Board should grant the Appellant’s Suspension Request and to provide reasons for its disposition.

ISSUES

16The sole issue to be addressed in this Motion Decision is whether the Appellant’s Suspension Request should be granted.

RESULT

17The Board denies the Appellant’s Suspension Request.

ANALYSIS

The Appellant’s Submissions

18The Appellant argues that its Suspension Request should be granted so that the parties will have the benefit of the Divisional Court’s final decision in the Manulife appeal before proceeding further with MPAC’s Estoppel Motion.

19The Appellant asserts that the Leave Decision opens the entirety of the Board’s decision in Manulife. The Appellant submits, therefore, that any aspect of the Board ruling on issue estoppel could be reviewed by the Divisional Court on appeal. The Appellant submits that, for this reason alone, it would be appropriate for the Board to decline to consider MPAC’s Estoppel Motion until the guidance of the Divisional Court is received.

20The Appellant submits that the Leave Decision raises a concern as to whether a prior settlement, absent a hearing on the merits, constitutes issue estoppel because, among other things, the absence of a hearing means that it is unknown as to how the current value was reached between the parties. The Appellant submits that the key submissions in MPAC’s Estoppel Motion have all been put into question by the Leave Decision.

21The following paragraphs from the Leave Decision are relevant to the Appellant’s submissions:

25The purpose of issue estoppel is to prevent the re-litigation of issues that have already been decided. The three-part test to apply issue estoppel is as follows:

1. Has the same question been decided?

2. Was the decision said to create the estoppel final?

3. Were the parties to the decision the same parties as those to the proceedings in which the estoppel is raised? …

26There is no question that the Minutes of Settlement pertaining to the 2017-2020 taxation years were final and that the parties are the same. The challenge lies with the first leg of the test – has the same issue already been decided? Manulife submits that the answer is no, and that the prior settlement does not apply to the 2021 and 2022 taxation years. MPAC and Ottawa take the opposite position and submit that there was an agreement to the current value as of the statutory valuation date (January 1, 2016), which applies to subsequent years unless there has been a change to the state and condition of the property. It is agreed that no such change has occurred.

27The case of Wabi Iron & Steel Corp. v. Municipal Property Assessment Corp., Region No. 29 (2005), 2005 CanLII 3984 (ON SCDC), 250 D.L.R. (4th) 370 (Ont. Div. Ct.), was referred to extensively in submissions. In Wabi Iron, a property owner appealed a decision of the Board that applied issue estoppel to prevent the owner from challenging the current value of its property where the Board had previously heard and disposed of an appeal related to earlier years within the same assessment cycle.

28Unlike Wabi Iron, in this case, there was no hearing on the merits. Rather, discrete Minutes were entered into for each taxation year under appeal at the time. The issue of an equitable adjustment was raised in the prior appeals, but never litigated. It is unknown how the agreed upon current value was reached or whether an equitable adjustment was made for the 2017-2020 taxation years. Although I appreciate that consent orders can form the grounds for issue estoppel in some cases, I am not convinced that this is one of them.

29If there had been a hearing on the merits with respect to the current value assessment for the 2017-2020 taxation years, with a resulting decision that addressed whether an equitable adjustment was applied, I might have reached a different conclusion.

30Manulife is not trying to renege from its settlement in relation to the 2017-2020 taxation years. Had it done so, I would not hesitate to find that the Board properly applied the doctrine of issue estoppel with respect to the years subject to the settlement. Manulife simply seeks to exercise its statutory right to appeal the current value assessments for 2021 and 2022.

31One would have thought that if it was the intention of the parties to resolve future tax years within the extended four-year cycle, they would have clearly set that out in the Minutes. In this case, the opposite occurred as the Minutes clearly state that they are to apply to only the taxation years under appeal.

Applicable Rules

22The Board’s Rules of Practice and Procedure (the “Rules”) do not directly address suspending a proceeding. However, Rule 5 provides that “[w]here these rules are silent on any issue, the Board may make whatever procedural orders or directions are required to effectively resolve an appeal or adjudicate a proceeding.”

Factors to Consider

23The Board first observes that it is not bound to adjourn an appeal proceeding because there is an appeal of a different Board decision pending before the Divisional Court. However, where the Divisional Court issues a final decision on an appeal from a Board decision, its final rulings on the applicable law and the interpretation of the Act and its regulations are binding on the Board’s determination of subsequent appeals.

24From a practical perspective, if the Board issues a decision in a Board proceeding when the same issues are before the Divisional Court in a separate appeal, one of the parties to that decision may seek leave to appeal to the Divisional Court in order to preserve their right to rely on the Divisional Court’s final finding once it is made. This could lead to further appeals before the Divisional Court.

25In support of its Suspension Request, the Appellant relies on the findings in the Leave Decision. Therefore, the Board must consider the likelihood that these findings could indicate that the final decision of the Divisional Court would impact the Board’s adjudication of MPAC’s Estoppel Motion. If it appears unlikely, there may be insufficient grounds to adjourn the hearing of MPAC’s Estoppel Motion.

Relevance of the Leave Decision to MPAC’s Estoppel Motion

26As a starting point, the findings in the Leave Decision do not constitute a final determination of the issues that will be raised in the Manulife appeal before the Divisional Court. A party who seeks to appeal a Board decision must first seek leave of the Divisional Court to proceed with its appeal. To obtain leave to appeal, the party must satisfy the Court that there is good reason to doubt the correctness of the decision under appeal. Therefore, in the Leave Decision, the Divisional Court did not make a substantive determination of the issues on appeal – its finding was that there was a good reason to doubt that the Board’s decision in Manulife was correct. This distinction is important because the Divisional Court judges who hear the Manulife appeal are not bound to apply the findings in the Leave Decision.

27It is also incumbent on the Board to consider whether there are any limitations apparent in the Leave Decision which would suggest that the final findings of the Divisional Court would not likely impact the Board’s adjudication of MPAC's Estoppel Motion.

Scope of the Leave Decision

28The Board begins its analysis by observing that the legal doctrine of issue estoppel is a discretional remedy that has two components. First, the adjudicator must decide if the three criteria to establish issue estoppel have been established. Second, if issue estoppel is established, the adjudicator must then decide whether to exercise the discretion to order that issue estoppel will be applied, based on the circumstances of the case.

29The Leave Decision indicates that, of the three criteria necessary to establish that issue estoppel applies, the only criterium in dispute is whether the same question has been decided.

30Therefore, the specific question addressed in the Leave Decision is whether the Manulife decision addressed the question of whether current value should be reduced pursuant to s. 44(3)(b) of the Act, i.e. whether an equitable adjustment is required.

31More specifically, the reason the Divisional Court decided to grant leave to appeal is found in the Leave Decision statement that it is unknown whether an equitable adjustment was made in the 2017 to 2020 Appeals (see paragraph 28). This observation is reinforced by the statement, in paragraph 29, that "If there had been a hearing on the merits … with a resulting decision that addressed whether an equitable adjustment was applied…." (emphasis added), the Court “might have reached a different conclusion.”.

32Accordingly, if it is “unknown” whether the issue of equitable adjustment was addressed, then it cannot be concluded that this question was decided in the prior proceeding.

33The Divisional Court’s statements in paragraph 30 of the Leave Decision that Manulife was not trying to renege from the settlement of the 2017 to 2020 Appeals, and that it has a statutory right to appeal the current value assessments in the 2021 to 2023 Appeals, are observations made in support of the above-described finding.

34If the Leave Decision’s finding can be characterized as a general finding that the doctrine of issue estoppel cannot be considered where a decision in a prior proceeding was resolved on consent without a hearing on the merits, this would be a principle of general application that, if approved by the Divisional Court in its final disposition of the appeal, could apply to MPAC’s Estoppel Motion.

35However, the Board finds that this is not an accurate characterization of the Leave Decision’s finding. The Leave Decision does not expressly state this. Instead, as noted above, the Leave Decision is based on a case specific issue of whether the question of equitable adjustment was determined in the prior Manulife Board decision.

Additional Concerns

36The Board has four other concerns which, when considered together, make it unlikely that the findings in the Leave Decision indicate that the final decision of the Divisional Court in the Manulife appeal would impact the Board’s adjudication of MPAC’s Estoppel Motion.

1 - Application of issue estoppel to consent orders

37At paragraph 28, the Leave Decision states that “… consent orders can form the grounds for issue estoppel….”, but adds the qualifier “in some cases”.

38The Ontario Superior Court in Spadacini-Kelava v. Kelava, 2020 ONSC 7907 (“Spadacini”), at paragraph 106 (4) confirms that “Issue estoppel applies with equal effect to consent judgments ….”, citing other decisions including a decision of the Supreme Court of Canada in Hardy Lumber Co. v. Pickerel River Improvement Co. (1898), 1898 CanLII 16 (SCC), 29 S.C.R. 211. There is no indication in Spadacini that there are any limitations or qualifiers on such application.

2 - Annual right of appeal

39This concern relates to the Leave Decision’s reference to the annual right of appeal. Clearly, the subsections of s. 40 of the Act provide for a statutory right to file an appeal on an annual basis. The application of the doctrine of issue estoppel requires that there must be a prior proceeding in which a question was raised and decided, and a subsequent proceeding where the same question is raised again. In applying the doctrine of issue estoppel, the probative issue is not whether there has been a subsequent appeal filed with the Board. It is whether the subsequent proceeding raises a question that has already been determined in the prior proceeding.

3 - Intention of the parties to resolve future tax years

40As noted above, the Leave Decision, at paragraph 31, states that, had the parties intended to resolve future tax years in the assessment cycle, they would have clearly indicated this in the minutes of settlement. However, this statement is at odds with the regulatory regime under the Act.

41Once the quantum of “current value”, as this term is defined in the Act, is determined for a taxation year, the Act provides that this value will continue to apply to all future years in the assessment cycle, unless a specific provision of the Act requires a redetermination of current value.

42Accordingly, minutes of settlement do not need to address future taxation years, as the current value as determined in the minutes of settlement will apply to the future taxations in the assessment cycle by operation of statute.

43When considered in this context, an annual right of appeal, in and of itself, is not determinative of the issue before the Divisional Court, i.e. whether the question of equitable adjustment was addressed in the prior proceeding. Furthermore, for purposes of this Decision, it does not support the view that a prior settlement of an appeal cannot be the basis for determining whether the same question was decided in the prior proceeding. To the contrary, it reinforces that issue estoppel applies once current value has been determined in a prior proceeding, irrespective of whether the determination was based on a settlement or a hearing on the merits.

4 - Whether the question of equitable adjustment was addressed is unknown

44At paragraph 28, the Leave Decision states “It is unknown … whether an equitable adjustment was made for the 2017-2020 taxation years.” However, the Leave Decision provides no explanation or analysis to explain this statement.

45In overview, when determining the value at which the land will be assessed, it is mandatory that the Board consider whether equitable adjustment is required. Therefore, a Board decision which determines the current value of a property necessarily addresses the question of equitable adjustment, irrespective of whether the decision is issued in accordance with minutes of settlement or a hearing on the merits.

46The statutory basis for the above statement is found in the following provisions of the Act.

47The term ‘current value’ is defined in s. 1(1) of the Act, which states:

In this Act,

“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;

48Section 19 of the Act states:

Assessment based on current value

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

49Section 40(1) of the Act states:

Appeal to Assessment Review Board

40 (1) Any person, including a municipality, a school board or, in the case of land in non-municipal territory, the Minister, may appeal in writing to the Assessment Review Board,

(a) on the basis that,

(i) the current value of the person’s land or another person’s land is incorrect,

(ii) the person or another person was wrongly placed on or omitted from the assessment roll,

(iii) the person or another person was wrongly placed on or omitted from the roll in respect of school support,

(iv) the classification of the person’s land or another person’s land is incorrect, or

(v) for land, portions of which are in different classes of real property, the determination of the share of the value of the land that is attributable to each class is incorrect; or

(b) on such other basis as the Minister may prescribe.

50Section 44(3) of the Act states:

Same, 2009 and subsequent years

(3) For 2009 and subsequent taxation years, in determining the value at which any land shall be assessed, the Board shall,

(a) determine the current value of the land; and

(b) have reference to the value at which similar lands in the vicinity are assessed and adjust the assessment of the land to make it equitable with that of similar lands in the vicinity if such an adjustment would result in a reduction of the assessment of the land.

51In addressing these statutory provisions, the Board first observes that, because the assessment of land is based on its current value, the provision in s. 44(3) - “… in determining the value at which any land shall be assessed….”, perforce refers to a determination of current value.

52The Board further observes that, under s. 44(3), it is mandatory that the Board make the determination of current value in accordance with subsections (a) and (b), because it states that “… the Board shall, …”, not may (emphasis added).

53Furthermore, both determinations required under subsections (a) and (b) must be made, as s. 44(3) uses the conjunction “and”, not “or” between these subsections. Consequently, in determining the current value, the Board must first determine the current value of the land as defined in s. 1 of the Act, and then apply any required adjustment to this value, in accordance with the direction set out in subsection (b).

54Consequently, a Board decision determining the quantum of the current value of the land must include any required equitable adjustment.

55Turning to s. 40(1)(a), the Board has cited this section because it sets out the permitted grounds for an appeal. This section underscores that the only ground of appeal regarding an assessed value is 40(1)(a)(i), specifically, that the current value is incorrect. Equitable adjustment under s. 44(3)(b) is not a separate ground of appeal. Although s. 40(1)(b) provides that the Minister may prescribe other bases for an appeal, the Minister has not, in fact, done so. The import of this provision is that the Board can only determine and apply an equitable adjustment under s. 44(3)(b) if the Board is required to determine current value. In turn, the Board is only required to determine current value if the appeal includes correctness of current value as a ground of appeal, and the appellant is not otherwise estopped from raising correctness of current value in the appeal proceeding.

56The Board now turns to the following hypothetical example. Assume that, in an appeal of current value under s. 40(1)(a)(i), the parties agree only on the quantum of the current value of the property as defined in s. 1 of the Act. In other words, they wish to exclude settlement of the question of whether an equitable adjustment of current value is required under s. 44(3)(b). Assume further that the parties prepare and file written minutes of settlement to this effect, and request that the Board issue a decision in accordance with these minutes of settlement. The question is: Could the Board issue a decision in accordance with such minutes of settlement?

57The answer is unequivocally no, because s. 44(3)(b) of the Act requires that, when determining current value as defined in s. 1 of the Act, the Board must also determine if an equitable adjustment to this value is required and, if so, make this adjustment before issuing a decision that will then be reported to the municipality. From a purposive perspective, to do otherwise would result in the municipality relying on one quantum of current value when calculating taxes payable for a taxation year, only to be required to change this calculation if a subsequent Board decision is issued which makes an equitable adjustment to current value. This, no doubt, is the reason why the Legislature has made it mandatory that the Board simultaneously determine both current value and any equitable adjustment to this value.

58It follows, therefore, that, in the above hypothetical example, although the parties may decide that they want to exclude the issue of equitable adjustment from their settlement, the Board could not, and would not, issue a decision which excludes consideration of an equitable adjustment, because doing so would be in contravention of the mandatory requirement under s. 44(3) of the Act to determine whether an equitable adjustment is required.

59In summary, the inescapable conclusion is that any decision issued by the Board that determines current value, will always include a determination of the question as to whether an equitable adjustment is required.

60Turning to the specifics of Manulife, the question remains whether the minutes of settlement stated that their agreement excluded a settlement of the question of equitable reduction. As the written minutes of settlement filed by the parties are part of the adjudicative record for that motion hearing, the Board may take notice of these minutes.

61Separate minutes of settlement were filed for each of the 2017 to 2020 taxation years. Each of these minutes of settlement contains the following agreement:

2. The parties certify that the Minutes of Settlement herein refer only to matters that are properly before the Assessment Review Board and that same contains all information which the parties wish the Board to incorporate into its order. [Emphasis added.]

As stated above, in an appeal respecting current value, the issue of whether an equitable adjustment is required is properly before the Board because s. 44(3)(b) mandates that the Board determine whether there should be an equitable adjustment. Therefore, there is nothing in the minutes of settlement in Manulife to suggest that the question of equitable adjustment was not addressed.

62In light of the above analysis, there is no apparent basis for the observation made in the Leave Decision that it is unknown whether an equitable adjustment was made for the 2017-2020 taxation years. In further support of this conclusion, the Board observes that the Leave Decision does not include a discussion of the above-described legislative regime imposed by the Act.

Conclusion

63The Board restates its earlier finding that it must consider the likelihood that the Leave Decision could impact the Board’s adjudication of MPAC's Estoppel Motion. If it appears that it would be unlikely, there is less justification to suspend the hearing of MPAC’s Estoppel Motion.

64Based on the above analysis and findings, the Board concludes that it is unlikely that the findings in the Leave Decision indicate that the final decision of the Divisional Court would impact the Board’s adjudication of MPAC’s Estoppel Motion. For this reason, the Board finds that there is insufficient justification to adjourn the hearing of MPAC's Issue Estoppel Motion.

ORDER

65The Appellant’s Suspension Request is denied.

66The hearing of MPAC’s Estoppel Motion will proceed in accordance with the directions for hearing the motion already issued by the Board. Should any of the parties require an extension of the filing due dates for the motion or submissions, they must submit a request via an Expedited Board Direction Form within five business days of the issuance date of this Decision.

67Any current suspension of the Schedule of Events pending the Board’s determination of MPAC's Estoppel Motion will remain in effect until further order of the Board.