Tribunals Ontario

Tribunaux décisionnels Ontario

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

February 24, 2023

FILE NO.:

DM 182942

Assessed Person(s):

Manulife Ontario Property Portfolio Inc.

Appellant(s):

Manulife Ontario Property Portfolio Inc.

Respondent(s):

Municipal Property Assessment Corporation

Respondent(s):

City of Ottawa

Property Location(s):

220 Laurier Avenue West

Municipality(ies):

City of Ottawa

Roll Number(s):

0641-041-801-07000-0000

Appeal Number(s):

3505374, 3467301 and 3486341

Taxation Year(s):

2021 and 2022

Hearing Event No.:

778169

Legislative Authority:

Sections 32 and 40 of the Assessment Act, R.S.O. 1990, c. A.31

Parties

Representative/Counsel*

Manulife Ontario Property Portfolio Inc.

Tara Piurko* and Jesse White*

Municipal Property Assessment Corporation

Laura Kelleher

City of Ottawa

Angela Severson*

REQUEST FOR:

An order for issue estoppel or abuse of process

An order that the value of the Subject Property for the 2021 and 2022 taxation years is $20,067,000

An order suspending the Schedule of Events

HEARD:

January 5, 2023 in writing

ADJUDICATOR(S):

Carly Stringer, Member

MOTION DECISION

OVERVIEW

1Manulife Ontario Property Portfolio Inc. (the “Appellant”) is appealing the 2021 property assessment of a large office building at 220 Laurier Avenue West in the City of Ottawa (the “Subject Property”). Pursuant to s. 40(26) of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”), the Assessment Review Board (the “Board”) has deemed an appeal for the 2022 taxation year (the 2021 and 2022 appeals, together, “the Subject Appeals”).

2The Appellant previously appealed the assessment of the Subject Property for the 2017 taxation year pursuant to s. 40 of the Act, and the Board deemed appeals for the 2018 to 2020 taxation years pursuant to s. 40(26) of the Act (the “2017 to 2020 appeals”). The Appellant, the Municipal Property Assessment Corporation (“MPAC”) and the City of Ottawa (the “City”) were parties to these 2017 to 2020 appeals (the Appellant, MPAC and the City together, the “Parties”). For these 2017 to 2020 appeals, the Parties entered into Minutes of Settlement, agreeing to a current value assessment (“CVA”) of $20,067,000 for the January 1, 2016 statutory valuation date. The Parties advised the Board of their settlement, and the Board issued Decisions Nos. 2831780, 2831781, 2831782 and 2831783 (the “2017 to 2020 Decisions”), reducing the CVA from $23,555,000 to $20,067,000 as of January 1, 2016 for the 2017 to 2020 appeals.

3MPAC is responding to the Subject Appeals. MPAC has brought this motion asking the Board to:

a. order that the Appellant is estopped from raising the CVA of the Subject Property as of January 1, 2016 for the 2021 and 2022 taxation years because the 2016 CVA was finally determined by the Board to be $20,067,000; or, in the alternative, an order that relitigating the 2016 CVA in the absence of a change to the Subject Property constitutes an abuse of process;

b. confirm that the 2016 CVA for the Subject Property for the 2021 and 2022 taxation years is $20,067,000; and

c. suspend the Schedule of Events that applies to these proceedings.

4MPAC argues that the issue of current value of the Subject Property for the 2021 and 2022 taxation years, which have the same valuation date of January 1, 2016, was determined by the Board in the 2017 to 2020 Decisions; that the Parties are the same; and that the 2017 to 2020 Decisions are final. Therefore, MPAC submits, the Appellant should be estopped from arguing the 2016 CVA.

5The City is also responding to the Subject Appeals. The City supports MPAC’s motion, and further requests dismissal of the Subject Appeals.

6For the reasons described below, the Appellant opposes the motion. The Appellant disagrees that issue estoppel applies or, alternatively, asks the Board to exercise its discretion not to apply it.

Result

7For the reasons that follow, the Board grants MPAC’s motion.

ISSUES

8The issues to be determined on this motion are:

1. Does issue estoppel apply?

2. Should the Board exercise its discretion and decline to apply issue estoppel?

3. Does abuse of process apply?

BACKGROUND

Relevant Legislation

9Section 44(3) of the Assessment Act provides that:

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.

The Subject Appeals

10MPAC returned an assessment of $23,555,000 for the Subject Property for the 2021 taxation year. MPAC later issued a correction pursuant to s. 32 of the Act on the basis of the 2017 to 2020 Decisions, resulting in an assessment of $20,067,000 for the 2021 taxation year.

11The Appellant’s evidence is that after the 2017 to 2020 appeals were resolved, it observed that the assessments of many properties in downtown Ottawa were reduced following assessment appeals before the Board. The Appellant states that it determined an Assessment to Sale Ratio (“ASR”) equity adjustment of 63.85% was the median rate being applied to comparable properties. The Appellant states that, at the time of resolution of the 2017 to 2020 appeals, the assessments of the vast majority of comparable properties had not yet been reduced to reflect that ASR.

12The Appellant subsequently filed the 2021 appeal, and the 2022 appeal was deemed. In the Subject Appeals, the Appellant seeks a CVA of $13,053,000 (rounded). The Appellant has pleaded that the CVA of $20,067,000 is inequitable compared to the assessments of similar lands in the vicinity of the Subject Property.

ANALYSIS

Issue 1 – Does issue estoppel apply?

Applicable Law

13Issue estoppel prevents re-litigating issues that have already been judicially decided: see Smith v Municipal Property Assessment Corporation, Region No. 23, 2018 CanLII 35052 (ON ARB) at paragraph 16. In essence, issue estoppel “prevent[s] the waste of time and money and the frustration of having to re-litigate an issue which has already been decided by a court or tribunal of competent jurisdiction”: MPAC v. Hyde, 2013 CarswellOnt 66 at paragraph 18.

14The three criteria that must be met for issue estoppel to apply are well-established, as articulated by the Board in Wabi Iron & Steel Corp. v. Municipal Property Assessment Corp., Region No. 29, [2002] O.A.R.B.D. No. 219 at paragraph 26, upheld at the Divisional Court in Wabi Iron & Steel Corp. v Municipal Property Assessment Corp., Region No. 29, 2005 CanLII 3984 (ON SCDC) (“Wabi Iron”), and confirmed in numerous subsequent decisions of this Board:

i. the same question has been decided;

ii. the decision said to create the estoppel was final; and

iii. the parties to the decision were the same parties as those to the proceedings in which the estoppel is raised.

Submissions of the Parties

15MPAC and the City submit that the three requirements of issue estoppel are met in this case.

16The Appellant has provided extensive submissions relating to its annual right of appeal. The Appellant submits that the Subject Appeals were brought pursuant to its annual right to challenge its annual assessment, and it is therefore entitled to a full and fair hearing on the merits.

17The Appellant further submits that issue estoppel does not apply in this case. The Appellant’s submissions are summarized as follows:

a. Settlement of the 2017 to 2020 appeals was specific to those taxation years and did not restrict the Appellant’s right to appeal later taxation years. Since the Parties resolved only the 2017 to 2020 appeals, the question of whether the 2021 and 2022 assessments are correct and equitable has yet to be determined, and the Appellant cannot be estopped from raising these issues in these appeal proceedings.

b. The question or issue that was previously decided must be a decision on the merits. This precondition is not satisfied here as the 2017 to 2020 appeals were settled and the Board did not hear any evidence or conduct a full and fair hearing on the merits.

c. The key issue raised in the Subject Appeals is whether the 2021 and 2022 assessments are equitable compared to the assessments of similar properties in the vicinity, which was not addressed in the 2017 to 2020 appeals. This issue could not have been adjudicated as any changes to the assessments of similar properties which occurred after the settlement could not have been known at the time the parties entered into the settlement. The Appellant submits that after it resolved the 2017 to 2020 appeals, MPAC updated the assessments of similar properties in the vicinity. Consequently, the Appellant maintains that the assessments of the Subject Property for the 2021 and 2022 taxation years are inequitable. The Appellant submits that this is a new issue that could only be properly raised after the circumstances causing the inequity arose.

d. The Board has a statutory obligation to determine whether the assessment is equitable.

Findings on Issue 1

18With respect to the Appellant’s submission that its annual right to appeal its assessment precludes the application of issue estoppel, the Board notes the Divisional Court confirmed in Wabi Iron, supra at paragraph 18 that applying issue estoppel does not “negate the right of the taxpayer to litigate the assessment” as there is a “continuing right to challenge the current value on the basis of evidence of a change in the property.” Therefore, the Board does not accept the Appellant’s submission that issue estoppel cannot apply because there is an annual right to appeal.

19Nor does the Board accept the Appellant’s submission that the first prong of the issue estoppel test requires that the previous question be adjudicated following a full hearing. There is no such requirement; issue estoppel can apply to proceedings resolved between parties through consent judgments: R. v. Dieckmann, 2017 ONCA 575 at paragraph 35; Spadacini-Kelava v. Kelava, 2020 ONSC 7907 at paragraph 106; First Capital Holdings (Ontario) Corporation v Municipal Property Assessment Corporation, Region 09, 2022 CanLII 56354 (ON ARB) (“First Capital Holdings”) at paragraph 27(c).

20The Board finds that the three requirements of issue estoppel are met in this case, for the following reasons:

i. The same question was decided

21The Supreme Court of Canada has stated that “[issue] estoppel extends to the material facts and the conclusions of law or mixed fact and law (‘the questions’) that were necessarily (even if not explicitly) determined in the earlier proceedings”: Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44 (“Danyluk”) at paragraph 24. See also First Capital Holdings, supra at paragraph 41.

22The Board finds that the question in the 2017 to 2020 appeals is the assessed value of the Subject Property as of the valuation date of January 1, 2016. In accordance with s. 44(3) of the Act, this included i) a determination of the current value of the land, and ii) an adjustment to 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.

23In the 2017 to 2020 appeals, the Appellant pleaded in its Statement of Issues that i) the current value was incorrect, and ii) that the current value was inequitable as compared to the assessments of similar properties in the vicinity.

24In the Subject Appeals, the Appellant disputes the value of the Subject Property as of the valuation date of January 1, 2016. The Appellant agrees that the current value is $20,067,000 as of January 1, 2016, but argues that this value is inequitable with the assessments of similar properties in the vicinity.

25This is the same issue the Appellant put forward in the 2017 to 2020 appeals. For this reason, the Board finds that the question to be decided in the Subject Appeals has already been decided - namely, the current value assessment of the Subject Property on January 1, 2016. The Board finds that the first requirement of the test for issue estoppel is satisfied.

ii. Was the decision final?

26The Board finds that the 2017 to 2020 Decisions were issued following Minutes of Settlement executed by all Parties. The 2017 to 2020 Decisions have not been reviewed or appealed. Accordingly, the Board finds that the 2017 to 2020 Decisions are final.

27The Board finds that the second requirement of the test for issue estoppel is satisfied.

iii. Are the parties the same?

28The Board finds that MPAC, the Appellant and the City were parties to the 2017 to 2020 appeals. The Board also finds that MPAC, the Appellant and the City are parties to the Subject Appeals.

29The Board finds that the third requirement of the test for issue estoppel is satisfied.

iv. Conclusion

30The Board finds that the three requirements of the test for issue estoppel are satisfied.

Issue 2 – Should the Board exercise its discretion and decline to apply issue estoppel?

Applicable Law

31The Supreme Court of Canada has confirmed that “[t]he rules governing issue estoppel should not be mechanically applied. The underlying purpose is to balance the public interest in the finality of litigation with the public interest in ensuring that justice is done on the facts of a particular case”: see Danyluk, supra at paragraph 33. Therefore, even where the requirements to apply issue estoppel are met, the Board must ask itself, as a matter of discretion, whether issue estoppel ought to be applied: Danyluk, supra at paragraph 33. See also Municipal Property Assessment Corporation, Region No. 9 v Pussar, 2017 CanLII 72907 (ON ARB) at paragraph 9; Municipal Property Assessment Corporation Region 25 v McMillan, 2015 CanLII 78769 (ON ARB) at paragraph 19.

32The list of factors that the Board may take into account when deciding whether and how to exercise its discretion is open, and “[t]he objective is to ensure that the operation of issue estoppel promotes the orderly administration of justice but not at the cost of real injustice in the particular case”: Danyluk, supra at paragraph 67. See also Canadian Niagara Hotels Inc. v Municipal Property Assessment Corporation, Region 18, 2022 CanLII 54916 (ON ARB) at paragraph 23.

Submissions of the Parties

33MPAC submits that it is in the interest of justice to apply issue estoppel to the Subject Appeals. MPAC provided evidence that when it agrees to settle an assessment appeal, it does so on the belief that the agreement will apply to all of the taxation years in that particular assessment cycle, absent a change to the Subject Property. It also provided evidence that when it agreed to settle the 2017 to 2020 appeals, it believed that the current value issues would not be revisited or reviewed again for this assessment cycle.

34MPAC submits that allowing the Subject Appeals to proceed would frustrate the principle of finality in assessment; would prejudice MPAC, the City of Ottawa and the Board by forcing them to expend resources on a dispute that has been resolved; deprive the City of assessment certainty and stability; and create uncertainty through the possibility of inconsistent Board decisions. MPAC further submits that it would discourage settlements early in the assessment cycle, and create an untenable system of permitting repeated appeals following settlement of a property’s CVA.

35The majority of the Appellant’s submissions focused on its argument that issue estoppel does not apply. That said, the Appellant does submit that the Board should not apply the discretionary doctrine as it would create an injustice in this case.

Findings on Issue 2

36The Board finds that no injustice would result from applying issue estoppel in these circumstances, after considering the following factors:

a. The 2017 to 2020 Decisions were rendered following a dispute resolution process between the parties. No appeals or requests for review were sought, despite being available to the parties.

b. The Appellant does not allege a change in the Subject Property, nor does it allege an incorrect current value. Instead, it is the Appellant’s position on equitable adjustment that has changed, based on evidence the Appellant says it observed after the 2017 to 2020 appeals were resolved. The Board finds this is not a circumstance that creates injustice – s. 44(3)(b) of the Act only comes into play after the Board makes a determination regarding current value.

c. The underlying purpose of issue estoppel is to balance the public interest in the finality of litigation with the public interest in ensuring that justice is done on the facts of a particular case: see Danyluk at paragraph 33. The Board has found there is no injustice in this case; however, there is a significant public interest in the finality of assessment to achieve a stable and reliable tax base; the finality of settlement agreements; and avoiding duplicative litigation and undue resources on issues that have already been resolved.

37Based on the above analysis, the Board concludes that it should not exercise its discretion to decline to apply issue estoppel in this case.

CONCLUSION

38The Board finds that issue estoppel applies and will not exercise its discretion to decline to apply it in the circumstances of this case. Consequently, the Appellant is estopped from raising the issue of the Subject Property’s current value as of January 1, 2016 in the 2021 and 2022 appeals.

39Given the Board’s findings in relation to the equitable doctrine of estoppel, it is unnecessary to consider the Parties’ submissions in relation to abuse of process.

ORDER

40Since the Subject Property’s current value as of January 1, 2016 is the only issue in the 2021 and 2022 appeals, the Board orders that the 2017 to 2020 Decisions apply to the Appellant’s appeals. The Board orders that the current value of $20,067,000 be confirmed for the 2021 and 2022 appeals.