Tribunals Ontario
Tribunaux décisionnels Ontario
Assessment Review Board
Commission de révision de l’évaluation foncière
ISSUE DATE: December 13, 2023
Assessed Person(s): D F Knechtel Enterprises Corp.
Appellant(s): D F Knechtel Enterprises Corp.
Respondent(s): Municipal Property Assessment Corporation Region 20
Respondent(s): City of Brantford
Property Location(s): 1200 Clarence Street South
Municipality(ies): City of Brantford
Roll Number(s): 2906-050-001-01100-0000
Taxation Year(s): 2017 to 2022
Hearing Event No.: 782688
Legislative Authority: Section 40.1(b) of the Assessment Act, R.S.O. 1990, c. A.31
| Parties | Representative |
|---|---|
| D F Knechtel Enterprises Corp. | Jonas Perov |
| Municipal Property Assessment Corporation | Tom Elliott |
| City of Brantford | Geoff Daley |
REQUEST FOR: An order extending the time for bringing appeals and directing the assessment corporation to be the Appellant pursuant to s. 40.1(b) of the Assessment Act
HEARD: November 17, 2023 in writing
ADJUDICATOR(S): Carly Stringer, Member
MOTION DECISION
OVERVIEW
The Nature of this Request
1D F Knechtel Enterprises Corp (the “Property Owner”) is asking the Assessment Review Board (the “Board”) for an extension of time to bring assessment appeals for the 2017 to 2022 taxation years for 1200 Clarence Street South in the City of Brantford, Ontario (the “Subject Property”) pursuant to s. 40.1(b) of the Assessment Act R.S.O. 1990, c.A.31 (the “Act”).1 The Property Owner argues that there are palpable errors in the assessment roll and the Board should extend the time for bringing these appeals.
2Both the Municipal Property Assessment Corporation (“MPAC”) and the City of Brantford (the “City”) oppose the request. Neither one takes a position on whether there are palpable errors in the assessment roll; however, both submit that the Board should not exercise its discretion to extend time for bringing appeals.
Result
3The Board finds that there is a palpable error in the assessment roll and finds that it is appropriate to exercise its discretion to extend the time for bringing appeals for the 2017 to 2022 taxation years.
4Therefore, the Board grants the request; extends the time for bringing appeals relating to the assessment of the Subject Property for the 2017 to 2022 taxation years; and directs MPAC to be the Appellant.
BACKGROUND
The Subject Property
5The Property Owner provided the following uncontested evidence regarding the Subject Property:
a. The Subject Property used to be improved with a 20,998 square foot (“sq. ft.”) building.
b. On March 8, 2014, the building suffered a partial collapse. This led to most of the building being demolished in 2014. What remained of the building was unfit for occupancy during 2014 and 2015.
c. In November 2014, a building permit was issued to reconstruct 3,500 sq. ft. of the original building. This work was performed in 2016 by the Property Owner.
d. Since 2016, the total area for the building has been 3,500 sq. ft.
Assessment of the Subject Property
6MPAC provided the following uncontested evidence regarding assessment of the Subject Property:
a. For the 2014 to 2022 taxation years, MPAC assessed the Subject Property as having a building with a total floor area of 20,998 sq. ft.
b. On or around April 17, 2014, the Property Owner told MPAC that the building suffered a partial collapse. MPAC explained to the Property Owner how to file an application with the City for the cancellation, reduction or refund of taxes pursuant to s. 357 of the Municipal Act.
c. The Property Owner subsequently filed a s. 357 application with the City. In light of this application, MPAC conducted an exterior inspection of the site and revised the value of the building to $0 for the 2014 taxation year. This resulted in a reduction in the assessed value from $581,000 to $273,000, reflecting only the land value. MPAC did not otherwise alter its records in relation to the building size of 20,998 sq. ft.
d. The City granted the Property Owner’s tax relief application for 2014.
e. On or around February 27, 2015, the Property Owner told MPAC that the majority of the building at the Subject Property had been demolished; that roughly 3,600 sq. ft. remained; and that a building permit had been issued by the City to reconstruct this section of the building.
f. MPAC updated its records to reflect a $0 value for the building for the 2015 and 2016 taxation years, resulting in a current value assessment of $273,000 for these years. MPAC did not otherwise update its records to alter the building size of 20,998 sq. ft.
g. MPAC conducted a general reassessment for the January 1, 2016 statutory valuation date based on the original total floor area of the building of 20,998 sq. ft. No adjustment was made to reflect a revised value for the building due to demolition. The current value reflected in the 2017 to 2022 assessments was $470,000, based in part on a 20,998 sq. ft. building rather than the actual 3,500 sq. ft.
h. The Property Owner appealed its assessment for the 2023 taxation year pursuant to s. 40 of the Act, and filed applications with the City for the cancellation, reduction or refund of taxes due to gross or manifest error in the preparation of the assessment roll pursuant to s. 358 of the Municipal Act for the 2020 to 2022 taxation years.
i. In light of these tax applications and the Property Owner’s 2023 appeal, MPAC inspected the Subject Property again and confirmed that the building is roughly 3,500 sq. ft. in size.
Alleged Errors
7The Property Owner says that the square footage of the building on the Subject Property has been 3,500 square feet since 2016, but MPAC has been erroneously valuing it as if it were 20,998 square feet.
ISSUES
8The Act provides for the correction of palpable errors in the assessment roll. The applicable statutory framework is set out in s. 40.1 of the Act:
40.1 Correction of errors. – If it appears that there are palpable errors in the assessment roll,
(a) if no alteration of assessed values or classification of land is involved, the Board may correct the roll; and
(b) if alteration of assessed values or classification of land is involved, the Board may extend the time for bringing the appeals and direct the assessment corporation to be the appellant.
9Therefore, if the correction of a palpable error involves alteration of assessed values or classification, the Board has the discretion to extend the time for bringing an appeal to correct the error.
10In this case, the error alleged by the Property Owner engages s. 40(b) of the Act, as it would involve alteration of assessed values. Therefore, there are two issues the Board must determine:
Does it appear that there are palpable errors in the assessment roll for the applicable taxation years?
If the answer to Issue 1 is “yes”, should the Board extend time for bringing appeals for the applicable taxation years?
ANALYSIS
Issue 1 - Does it appear that there are palpable errors in the assessment roll for the applicable taxation years?
Applicable Law
11The first step of the analysis requires that there appears to be an error in the assessment roll, and the error must be “palpable”: see 388210 Ontario Limited v Municipal Property Assessment Corporation Region 15, 2023 CanLII 64028 (ON ARB) (“0 Centre Street”) at paragraph 132.
12In determining whether there appears to be an error in the assessment roll, an “error” is a “matter of fact, and like any other fact, can be proved based on circumstantial evidence”: 0 Centre Street at paragraph 132.
13The sole test is “whether it is a factual error of conspicuous magnitude; plain, evident, obvious, and easy to understand”: 0 Centre Street at paragraph 132.
Submissions of the Parties
14The Property Owner submits that there is an error in the roll for all applicable taxation years, in that MPAC erroneously used a total floor area of 20,998 sq. ft. to arrive at a total building value which comprises a portion of the Subject Property’s overall current value assessment. The Property Owner submits this is a factual error of conspicuous magnitude and it would be plain, evident, obvious, and easy to understand this error.
15Neither MPAC nor the City take a position on whether there is a palpable error in the assessment roll.
Findings on Issue 1
16Based on the uncontested evidence provided by the Property Owner, the Board finds that the building on the Subject Property was approximately 3,500 sq. ft. for all applicable years. It was not 20,998 sq. ft. The Board finds that this is a factual error of conspicuous magnitude and it would be plain, evidence, obvious, and easy for anyone to understand this error. The Board finds this is a palpable error.
Issue 2 - Should the Board extend time for bringing appeals for the applicable taxation years?
Applicable Law
17Section 40.1(b) of the Act provides that the Board “may” extend the time for bringing appeals where it appears that there are palpable errors in the assessment roll. Accordingly, the power to extend the time for bringing appeals to correct a palpable error is discretionary.
18In determining whether to exercise its discretion, the Board aims to achieve a balanced approach, “considering all relevant factors and weighing timing, finality, and fairness with the objective of correctness of the assessment roll”: 0 Centre Street at paragraph 158. The Board should weigh “any form of prejudice to each of the parties, and systemic prejudice to the administration of the municipal taxation system”: 0 Centre Street at paragraph 158.
Submissions of the Parties
19The Property Owner submits that the circumstances weigh in favour of the Board exercising discretion to extend time for bringing appeals. The Property Owner submits that he has overpaid in taxes for the 2014 to 2022 years as a result of MPAC significantly overstating the total building area, and he would be prejudiced if the palpable error went uncorrected and the resulting overpayment in taxes was permitted to stand. The Property Owner also submits that there is no prejudice to any other party as a result of correcting the palpable error, or as a result of the delay caused by addressing the palpable error.
20MPAC submits that the Board should not exercise its discretion to extend time because the Property Owner has not entered any evidence to explain why it did not file a Request for Reconsideration or appeal on the Subject Property for the applicable taxation years, particularly the 2017 to 2022 taxation years when the assessed value increased. MPAC submits it would be inconsistent with case law and the Assessment Act to allow late appeals where the Property Owner received notice of the assessed values and took no steps. MPAC submits that if the Property Owner had taken steps to challenge the assessed value in the applicable years, MPAC would have conducted an inspection and corrected its records. MPAC submits that the Property Owner was aware of the building renovations in 2016 and did not pursue any avenues to fix the square footage in its assessments until 2023.
21MPAC further submits that there is no prejudice for the 2014 to 2016 taxation years because the tax application was granted in 2014, and $0 was attributed to the building for 2015 and 2016. MPAC submits that the City would be prejudiced if nine years of tax appeals were opened all at once, and this weighs against the Board exercising its discretion.
22The City submits that the Board should not exercise its discretion because the Property Owner has not provided evidence of prejudice; the Property Owner did not bring appeals in a timely manner and the delay created prejudice for the City; the Property Owner provided no explanation as to why the error was not identified or correction sought for more than six years; and the City will suffer prejudice. The City provided uncontested affidavit evidence regarding the negative impact of unbudgeted adjustments on the City’s operating budget and cost to deliver services. Specifically, the City provided evidence that if the appeals are allowed, the City will be required to refund approximately $33,796.74 in unbudgeted funds - more if the assessed value is decreased on appeal. The City’s uncontested evidence shows that its cost to deliver core services will increase, and the cost increase will have to be absorbed by an increase in property taxes, debt financing, or reduction in other services.
23The City also submits that this case is quite similar on the facts to Mike Dean Butcher Limited v Clarence-Rockland (City), 2023 CanLII 95292 (ON ARB) (“Mike Butcher”), where the Board declined to exercise discretion. In that case, the applicant was aware of a change in the property and did not notify MPAC. Further, the applicant did not provide evidence of prejudice. The City submits these circumstances are similar to the Property Owner’s case.
24In reply submissions, the Property Owner submits that the building demolition was brought to MPAC’s attention in 2014 and building permits were obtained from the City in 2016. For these reasons, the Property Owner submits that both MPAC and the City were aware of the change to the Subject Property and the Property Owner took steps to correct the square footage reflected on the roll as soon as the damage occurred in 2014.
25In reply, the Property Owner also provided a table setting out the estimated overpayment in taxes resulting from the error in the roll. It calculated an overpayment of $38,537 for the 2017 to 2022 taxation years.
Findings on Issue 2
26The Board has considered the factors enumerated in 0 Centre Street, and notes as follows:
a. The Property Owner has only provided submissions, not evidence, regarding the quantum of taxes it overpaid because of the palpable error. That said, the City provided detailed evidence of the Property Owner’s tax bills for the applicable years. For this reason, there is sufficient evidence for the Board to find that the Property Owner overpaid, and the City received in error, over $30,000 in taxes due to the palpable error. There is no evidence of accumulated arrears or late payment charges due to the error. Therefore, the Board finds there is financial prejudice to the Property Owner if the Board does not exercise its discretion to extend time for these appeals.
b. With respect to delay in applying to correct the error, there is no evidence of efforts by the Property Owner to pursue appeals between 2017 and 2022, nor is there an explanation for this delay. That said, the relevant consideration is not whether the Property Owner failed to file a s. 40 appeal on time – “it is whether any of the parties have been prejudiced by the delay in correcting the palpable error”: see 0 Centre Street at paragraph 4(iii) iii. The Board finds that there is clear evidence of prejudice to the City caused by the Property Owner’s delay, particularly if the Board exercises its discretion to extend time and the error is corrected, in that the City may have to address over $30,000 in unbudgeted funds.
c. With respect to conduct of the parties, it “must be conduct that causally contributed to the error being made”: see 0 Centre Street at paragraph 122. Here, the Property Owner provided evidence that it had full knowledge of the change in building square footage and was, in fact, responsible for the renovations. However, the Board considers this fact balanced against the fact that both the Property Owner and MPAC provided evidence that the Property Owner promptly brought this change in square footage to MPAC’s attention. This is not a circumstance like Mike Butcher where the Property Owner’s conduct contributed to the error being made and MPAC had no idea that the building had changed. In this case, the information was clearly brought to MPAC’s attention, on more than one occasion, and MPAC did not update its system accordingly. MPAC was well aware that the building significantly reduced in size, after conducting an inspection and changing the valuation for the 2014 to 2016 taxation years. The Board must consider the conduct of all parties, and finds that MPAC has not sufficiently explained its failure to properly update its records despite ample opportunity to do so. For these reasons, the Board finds that this is not an instance where the conduct of the Property Owner weighs against the Board exercising its discretion.
27In all of the circumstances, including evidence of prejudice to both the City and the Property Owner, giving due consideration to timing, finality, and fairness balanced with the objective of correctness of the assessment roll, the Board finds that it will exercise its discretion to extend time to bring an appeal to correct the palpable error in the assessment roll for the taxation years in question.
CONCLUSION
28The Board finds that there is a palpable error in the assessment roll and finds that it is appropriate to exercise its discretion to extend the time for bringing appeals for the 2017 to 2022 taxation years.
ORDER
29The Board orders as follows:
a. The Board extends the time for bringing appeals of the assessments of the Subject Property for the 2017 to 2022 taxation years.
b. The Board directs that MPAC be the Appellant.
c. The appeals shall be filed within 30 days of this decision being issued.
d. The appeals may only address valuation issues resulting from the correction of the palpable errors.