Tribunals Ontario
Tribunaux décisionnels Ontario
Assessment Review Board
Commission de révision de l’évaluation foncière
ISSUE DATE:
April 12, 2023
FILE NO.:
WR 183342
Assessed Person(s):
Terry Sterling Dixon
Appellant(s):
Jason Lionel Patry
Respondent(s):
Municipal Property Assessment Corporation Region 02
Respondent(s):
Township of Leeds and the Thousand Islands
Property Location(s):
697 Units A and B 1000 Island Pky
Municipality(ies):
Township of Leeds and the Thousand Islands
Roll Number(s):
0812-812-025-27402-0000
Appeal Number(s):
3491964
Taxation Year(s):
2016
Hearing Event No.:
777996
Legislative Authority:
Section 40 of the Assessment Act, R.S.O. 1990, c. A.31
APPEARANCES:
Parties
Counsel
Jason Lionel Patry
Roberto Aburto and Michelle Cicchino
Municipal Property Assessment Corporation
Melissa VanBerkum
Township of Leeds and the Thousand Islands
No one appeared
HEARD:
February 14, 2023 by video conference call
ADJUDICATOR(S):
Subuola Awoleri, Member and Paul Brennan, Member
DECISION
OVERVIEW
1Jason Lionel Patry (the “Appellant”), owner of 697 Units A and B 1000 Island Parkway (the “Subject Property”), appealed the assessment of the Subject Property for the 2016 taxation year to the Assessment Review Board (the “Board”) under s. 40 of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”) on the ground that the assessment is too high.
2The Appellant argued that the current value of the Subject Property should be $6,700,000, with a further 17% downward adjustment to $5,561,000 to make the current value equitable with the assessment of similar properties in the vicinity.
3The Municipal Property Assessment Corporation (“MPAC”) argued that the correct current value of the Subject Property is its sale price, which sold April 27, 2012, for $13,000,000, four months after the valuation day of January 1, 2012. MPAC submits that based on market evidence, the current value assessment (“CVA”) of the Subject Property at $12,818,000 in the residential tax class is reasonable and requests the Board confirm the CVA of the Subject Property at $12,818,000, without any equity adjustment for the 2016 taxation year.
BACKGROUND
4The 2008 CVA of the Subject Property was $9,518,000. This assessment was not appealed by the former owner, Terry Sterling Dixon (now deceased).
5Mr. Dixon sold the Subject Property on April 27, 2012, to CN-CA Cultural Centre Inc., (“CN-CA Cultural Centre”) an offshore Chinese developer for the amount of $13,000,000. The details of this sale will be discussed later in this Decision. CN-CA Cultural Centre also purchased the nearby Eagle Point Winery (“Winery”), owned by Mr. Dixon for $2,700,000. On the same day, a charge was registered in favour of Mr. Dixon from CN-CA Cultural Centre, through a Vendor Take Back Mortgage (“VTB”).
6On October 15, 2014, through an order of foreclosure, by the Superior Court of Justice, the ownership of the Subject Property and the Winery reverted to Mr. Dixon.
7On May 16, 2016, the Appellant purchased the Subject Property, without the Winery, from Mr. Dixon for the total consideration of $7,050,000.
8The 2012 CVA of $12,818,000 for taxation years 2013, 2014 and 2015, are not the subject of this appeal.
9Mr. Dixon originally filed an appeal for the 2016 taxation year, which was withdrawn on April 27, 2018, but later re-instated by motion filed with the Board by the Appellant. Mr. Dixon subsequently filed an affidavit with the Board requesting a re-instatement of the 2016 appeal indicating that it was withdrawn by him in error. The Board granted Mr. Dixon’s request to re-instate the 2016 appeal adding the Appellant as a party to the 2016 appeal proceeding. See Dixon v. Municipal Property Assessment Corporation, Region 02, 2022 CanLII 32876 (ON ARB).
Issues for the Hearing
10The issues to be determined are:
What is the correct current value of the Subject Property for the 2016 taxation year?
Should there be an equitable reduction of the current value pursuant to s. 44(3)(b) of the Act, and, if so, what the amount of this reduction should be?
Result
11The Board determines the correct current value of the Subject Property for the 2016 taxation year to be $13,000,000.
12The Board finds that this assessment at current value is equitable with the assessments of similar lands in the vicinity, and therefore no further reduction is required to achieve equity.
ANALYSIS
Description of the Subject Property
13The Subject Property is a Single-Family Detached on Water. It has a lot with 1,600 feet (“ft.”) of waterfrontage for an effective frontage of 1,000 ft. and 999.90 ft. of effective depth for an effective site area of 13.17 acres. The Subject Property is a two-story custom detached single-family dwelling with a walk out basement. It was built in 2003 with a quality of construction of 10.0. It has a total building area of 9,534 square feet (“sq. ft.”), a basement area of 5,561 sq. ft., with a finished basement apartment of 924 sq. ft. The Subject Property has a secondary structure; a coach house apartment, over a three-car detached garage. It was built in 2008 with a total building area of 2,527 sq. ft. The Subject Property has a 625 sq. ft. outdoor pool, built in 2003, and a 294 sq. ft. shed.
Issue 1 - What is the correct current value of the Subject Property for the 2016 taxation year?
14In accordance with s. 44(3)(a) of the Act, the first mandate of the Board is to determine “the current value of the land”. Section 1 of the Act defines current value as “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”. That is, for the 2016 taxation year, the Board must determine what the Subject Property would have sold for in an arm’s length transaction on the January 1, 2012 valuation day set by the Act.
15The best evidence the Board can receive of current value is an arm’s length and market-tested sale of the Subject Property on the valuation day or close to it. If no such transaction took place, the next best measure of current value is arm’s length and market-tested sales of comparable properties located nearby, as close as possible to the legislated valuation day of January 1, 2012.
16In this appeal, the Subject Property sold on April 27, 2012. MPAC submits that this valid sale is the best indication of the current value of the Subject Property for the 2016 taxation year. The Appellant argued that the 2012 sale of the Subject Property does not truly reflect a clean market value.
17The Board finds that the best evidence to establish the current value of the Subject Property for the 2016 taxation year, is the valid arm’s length sale of the Subject Property on April 27, 2012, which occurred four months from the valuation day of January 1, 2012.
Sale of the Subject Property - April 27, 2012
18It is an established practice that the valid arm’s length market tested sale of a property provides the best evidence to establish its current value based on the definition of current value in the Act. In 1906661 Ontario Inc. v. Municipal Property Assessment Corporation Region 15, 2015 CanLII 66513 (ON ARB) (“1906661 Ontario Inc.”), the Board referred to the decision in Pyke v. Municipal Assessment Corp., Region No. 7 [2006] O.A.R.B.D. No. 215, at para. 24 (“Pyke”):
….in this case Member J. Wyger states “… while the Board may agree with the assessor in suspecting that the complainant obtained a good deal, it requires more substantial evidence to refute the presumption that the sale is the best evidence”.
19In other words, an arm’s length sale of the Subject Property close to the valuation date is generally considered to be persuasive evidence of current value, absent evidence to the contrary. In 1906661 Ontario Inc., the Board determined at para. 25 that:
…the Board is of the view, a view which is well established in appraisal practice and jurisprudence, that if there is a sale of the subject property, this evidence is of primary importance and provided certain criteria are met, it is the most reliable evidence of a property’s current value. If the sale of the subject is valid, the Board takes the position that there is no need to look beyond this evidence and resort to other estimating methods for determining current value. Therefore, the Board will first consider the evidence related to the sale of the subject property. Only if the Board is unable to rely on this evidence, other estimating methodologies need to be considered. The key issue is whether the sale of the subject property meets the validity criteria of the Act.
20In line with the definition of current value in the Act, during cross-examination, the Appellant admitted that the parties to the 2012 sale of the Subject Property were unrelated, there was no evidence that the sale was not listed in the market, Mr. Dixon was not under duress to sell, and the purchaser was not coerced into buying.
21In accordance with s. 40(17) of the Act, MPAC bears the onus to prove the correctness of the current value, MPAC submits that the sale of the Subject Property is the best evidence to establish the current value. The Appellant disagrees with MPAC. The Appellant must provide substantial evidence to prove that the 2012 sale of the Subject Property is not the best evidence to establish its current value.
22The Board notes that while the Appellant disagrees that the 2012 sale of the Subject Property is the best evidence to establish its current value, the Appellant presented this sale as a proposed comparable sale in its analysis to determine the current value of the Subject Property. The Appellant made some adjustments to this sale which will be discussed later in this Decision. However, the Appellant has not argued that this sale is invalid or non-arm’s length.
23The Board will now address the issues the Appellant presented against using the 2012 sale of the Subject Property to establish the current value for the 2016 taxation year:
The 2012 Sale Includes the Sale of the Winery
24The parties agree that the sale of the Subject Property included a 1.99-acre non-waterfront lot with an assessed value of $40,500, for a total value of $13,000,000. MPAC argued that the sale of the Subject Property was predominantly for $13,000,000, since the value of the non-waterfront lot is not substantial. The parties further agree that the sale of the Winery was for the amount of $2,700,000. However, the Appellant argued that this sale of the Subject Property for $13,000,000 included the sale of the Winery although the Subject Property and the Winery were registered separately.
25MPAC presented into evidence, a parcel register with PIN # LT 44216-0323, which showed that there was a transfer of the Subject Property from Mr. Dixon to CN-CA Cultural Centre, with registration # LE45642. Listed on the same parcel register was a charge from CN-CA Cultural Centre to Mr. Dixon with registration # LE45644. None of the parties provided the Board with the Agreement of Purchase and Sale for the Subject Property. The land transfer tax registration presented into evidence by MPAC reveals that the Subject Property was conveyed for a consideration of $13,000,000. The Winery was listed in another land transfer tax registration for a consideration of $2,700,000.
26The Appellant presented the Board with the registered charge, registered as LE45644, which further revealed that CN-CA Cultural Centre used the Subject Property, the Winery and other parts of the Winery as collateral for the mortgage.
27The Board finds that the Appellant did not present any evidence to suggest that the 2012 purchase price of the Subject Property was inflated because it included the Winery. The Appellant admitted under cross-examination that the Subject Property was originally listed for $18,000,000 but sold for $13,000,000.
28The Appellant further argued that the newspaper article presented into evidence by MPAC, reveals that the Subject Property and the Winery were sold together. This newspaper article titled “Du Zhongyi buys Eagle Point Estates” written by Susan W. Smith, posted March 13, 2012, states:
The 15-acre-waterfront property was listed, recently, on TI Life’s properties page at $18 million.
Included in the purchase is the 600-acre Eagle Point Winery and Vineyard…
29Accordingly, the Appellant argued that although the land transfer tax registration shows that the Winery sold for $2,700,000, this was included in the sale price of the Subject Property even though they were both registered separately.
30The newspaper article did not state that included in the purchase price is the 600-acre Eagle Point Winery. The parties agree that the Subject Property and the Winery were sold on the same day April 27, 2012 to CN-CA Cultural Centre. This reveals that Mr. Dixon sold the Subject Property and the Winery to CN-CA Cultural Centre. In fact, the Appellant’s expert witness, Anthony Capordelis admitted that he was retained in 2017 prior to the death of Mr. Dixon, who died April 4, 2022, and yet the Appellant did not present any evidence to corroborate his argument that the sale price of the Subject Property included the Winery.
31The evidence before the Board is that the Subject Property sold for $13,000,000 and the land transfer tax registration reveals that the purchase price for the Winery at $2,700,000, is different from the purchase price of the Subject Property at $13,000,000. This shows, without any further contradicting evidence from the Appellant, that it sold separately. The Board cannot accept the Appellant’s assertion that the purchase price for the Subject Property at $13,000,000, includes the Winery, without presenting any corroborating evidence to this effect.
32Moreover, the Appellant included this sale in its current value analysis and did not make any adjustment to the purchase price based on this argument. If the purchase price were inflated due to the sale of the Winery being included in it, one would expect such an adjustment to be made.
The Vendor Take Back Mortgage (VTB) Impacted the Purchase Price
33The 2012 purchase of the Subject Property was financed through a VTB in favour of Mr. Dixon. The land transfer tax registration presented by MPAC reveals that CN-CA Cultural Centre paid Mr. Dixon $1,500,000 in cash and took out a VTB in the amount of $11,500,000. The interest rate for the VTB was at 3.5% for a 15-month term.
34The Appellant argued that the VTB is not typical of the market. The Appellant further added that the mortgage was 88% of the purchase price and that this amount would typically require multiple mortgages due to the inherent risk of the amount, and the risk of an offshore purchaser.
35MPAC argued that CN-CA Cultural Centre’s equity contribution towards the acquisition amount was 85%, which is consistent with commercial banking requirements on residential mortgages. MPAC further argued that the interest rate on the mortgage was in keeping with the lending rates as of 2012. MPAC provided the source of this information as: “Bank of Canada Department of Monetary Financial Analysis: “Bank of Canada average April 2012 mortgage rate was 4.36% based on 5-year term variable rate of 3.0%”. The actual article was not presented to the Board.
36In Samuels v. Municipal Property Assessment Corp. Region 9 [2015] O.A.R.B.D. No. 200 at para. 19(iii), the Board determined that:
…The particular terms of each VTB must be looked at individually in order to determine whether it distorts the sale price, either positively or negatively, from the actual market…
37The Appellant argued that this was not a typical VTB, that the purchaser paid higher than what should have been paid, and to further prove this, was the foreclosure that happened right after the sale. MPAC’s expert witness, James Van Winckle, admitted during cross-examination that he does not have the expertise to determine if the interest or terms of the VTB were within the average standard rates; however, based on his experience, he looked at the interest rate and the down payment paid and concluded that it was not atypical. The Appellant further directed Mr. Van Winckle to the charge terms attached to the VTB which he admitted was not reviewed by him. The Appellant also did not present any evidence to show the Board that the VTB was not typical of the market as of the time of purchase.
38The Board finds that apart from the viva voce evidence provided by the expert witnesses, the parties did not provide corroborating evidence to show that the VTB was typical or atypical of the market. The Appellant argued that to show that the VTB was not typical of market, there was a foreclosure immediately after the sale. The Board further determines that there was no evidence presented by the Appellant to verify the assertion that the foreclosure occurred due to the terms of the VTB.
39The Board finds that it is more probable than not that the VTB was typical of the market as the Board finds that there was nothing in the terms of the VTB indicating that the sale price was distorted from the actual market. The Appellant did not provide any evidence to show otherwise, other than a foreclosure that occurred in October 2014.
Purchaser was an Offshore Chinese Industrialist
40The Appellant argued that since the purchase of the Subject Property was not made by a local purchaser, the purchase price may have been inflated since the purchaser did not have full knowledge of the market. The Board finds that the purchaser was duly represented by a law firm in Ottawa and should have understood the nature, terms and circumstances of the transaction.
41The Appellant argued that the history of the property may also have impacted the purchase price. The Appellant again referred to the foreclosure that occurred in October 2014. The Appellant also argued that on May 16, 2016, he purchased the Subject Property without the Winery from Mr. Dixon for a total consideration of $7,050,000. The Appellant noted the disparity in this sale price with that of the 2012 purchase price for $13,000,000. There was no evidence presented on why it sold without the Winery.
42The Board finds that these facts have no effect on the 2012 sale of the Subject Property. The parties admitted that the Subject Property was listed for four years for $18,000,000 before it sold in 2012 for $13,000,000. None of the parties disputed that it was an arm’s length sale. It sold to a willing buyer from a willing seller in accordance with the definition of current value provided in the Act.
Motivation for Sale
43The Appellant argued that CN-CA Cultural Centre, was motivated by a multi-property purchase, plans for a subdivision on the accompanying Winery property and the use of the property, which the Appellant submits had an impact on the purchase price. The Appellant presented no evidence in support of these arguments, other than the uncorroborated testimony of his expert witness.
Portfolio Sale
44The Appellant argued that the Subject Property was part of the portfolio sale, which inflated the purchase price.
45The Appellant presented the Board with one of its prior decisions; 2252203 Ontario Inc. v. Municipal Property Assessment Corp., Region No. 9, 2013 CarswellOnt 9436 (“2252203 Ontario Inc.”), where the Board referred to the decision in 1246253 Ontario Ltd. v. Municipal Property Assessment Corp., Region No. 19, [2012] O.A.R.B.D. No. 232 (Ont. Assess. Review Bd.) where Member Birnie decided that “a portfolio sale is not a reliable indicator of current value”.
46In 2252203 Ontario Inc., the appellant argued that the sale of the subject properties should be used to determine their current value, arguing that MPAC’s comparable properties are not similar with the subject property. The appellant filed as evidence an agreement of purchase and sale of the subject properties which were 2 units of a commercial condominium. The purchase consisted of a total of 16 units, which included the subject properties. Based on the total sale price of the 16 units, the appellant derived the assessment of the two units (the subject properties). The Board determined that the sale of the subject property was a portfolio sale comprising of 16 units and used MPAC’s comparable sales to determine the correct current value of the subject property. The Board determined at para. 31:
The Board rejects the sale of the property of which the subject units 59 and 60 are an integral part thereof for the following reasons:
a portfolio sale will not produce current value of individual units according to Mr. Samuels' uncontradicted evidence
the sale occurred in 2010, far removed from the January 1, 2008 valuation day
the configuration of the units such as internal, external or size is not accounted for
47The facts in 2252203 Ontario Inc. are distinguishable from this appeal. In this appeal the Appellant did not provide the Board with any agreement of purchase and sale to determine that it was a portfolio sale. However, the Board has the undisputed land transfer tax registration to determine what was sold and the purchase price. The Appellant did not furnish the Board with any evidence to indicate it was a portfolio sale other than stating that the newspaper article presented by MPAC indicates that the Subject Property sale included the Winery.
48The evidence before the Board is the abstract of title which reveals that the Subject Property was transferred to CN-CA Cultural Centre, and there was a charge registered in favour of Mr. Dixon. There are two documents that show that the Subject Property was sold for $13,000,000 and the Winery for $2,700,000. The registered charge also reveals that the Subject Property, Winery and other parts of the Winery were used as a collateral for the mortgage. This is the best evidence before the Board. This evidence establishes that the Subject Property and the Winery were sold individually, not as a portfolio.
The Parties’ Proposed Comparable Property Sales
49The Board reviewed the proposed comparable property sales presented by the parties to determine a range of current value for the Subject Property.
50The Board notes that the parties admitted that the Subject Property is a unique property. The parties referred to it as a “unicorn” property and there is a lack of comparable property sales within the vicinity of the Subject Property. Consequently, the parties had to expand to other vicinities to obtain properties that were somewhat comparable to the Subject Property.
51MPAC and the Appellant presented the 2012 sale of the Subject Property as part of their proposed comparable property sales. Apart from this property sale, the Board finds that all the proposed comparable property sales presented by MPAC and the Appellant are not comparable with the Subject Property.
MPAC’s Proposed Comparable Property Sales
52MPAC presented five proposed comparable property sales, including the 2012 sale of the Subject Property, to show that the current value assessment of the Subject property at $12,818,000 falls within the range of sales and therefore the CVA is reasonable and correct. The details of MPAC’s five proposed comparable property sales are attached to this Decision as Attachment 1.
53MPAC provided the Board with a time adjustment analysis, even though it did not time adjust its proposed comparable property sales to show what they would have sold for on the valuation day.
54The Board finds that MPAC’s Sales B – E are not comparable with the Subject Property. MPAC’s Sale A is the 2012 sale of the Subject Property which the Board determines to be the best evidence to determine the current value of the Subject Property.
Sale B
55This property is located in Oakville, which is a superior location compared to the location of the Subject Property. It sold May 2012 for $16,000,000. Mr. Van Winckle admitted during cross-examination that Oakville is a commuter town for downtown Toronto while the Subject Property is far from downtown Toronto and this may have an effect on its value. It was built in 2007, newer than the Subject Property. Its total building area is 10,693 sq. ft., which is 1,159 sq. ft. larger than the Subject Property, although its lot size is 12.6 acres smaller than the Subject Property. The finished basement apartment is 4,870 sq. ft. larger than the Subject Property. The Board finds that MPAC’s Sale B is superior to the Subject Property and not comparable with it.
Sale C
56The Appellant also included this proposed comparable property sale, in its current value analysis. This property is located in The Township of Oro-Medonte. It has an effective frontage of 334.77 ft., which is 675.23 ft. smaller than the Subject Property. It has a similar effective depth of 999.99 ft. for an effective site area of 9.63 acres. It was built in 2005, with an effective year built of 2009. It has the same quality of construction of 10.0 as the Subject Property. Its total building area of 7,373 sq. ft. is 2,161 sq. ft. smaller than the Subject Property. It is a one-storey structure with a one-half partial structure, which is different from the Subject Property’s two-storey structure. The finished basement area of 5,056 sq. ft. is 4,132 sq. ft. larger than the Subject Property.
57This property also has a secondary structure; a boathouse with a residence above it, built in 2005, with a structure area of 2,108 sq. ft. This property also has detached and attached garages, an outdoor pool as has the Subject Property. It also has a tennis court.
58The Board finds that this property is inferior to the Subject Property due to its smaller waterfrontage and building size. Its one-and-half-storey structure is different from the Subject Property, which is a two-storey structure. The sale of the Subject Property would not transact in the same way in the market like this property sale due to its inferior features and different structure.
59This property sold October 2010 for $13,500,000, which is almost similar to the 2012 sale of the Subject Property for $13,000,000. This sale is 15 months from the valuation day of January 1, 2012, and it is outside the shoulder years of the valuation day, which is one year on either side of the valuation day. Neither of the parties time adjusted this sale price to what it could have sold for on the valuation day. Therefore, the Board would disregard this sale, as the further a sale is from the valuation day, the less it reflects the market.
Sale D
60This property sale is located in Muskoka Lakes. It sold June 2012 for the purchase price of $6,000,000. It has a site area of 2.34 acres, which is 10.83 acres smaller than the Subject Property. Its frontage is 441.88 ft. which is 1,158.12 ft. smaller than the Subject Property. It has an effective year built of 2008, with a lower quality of construction of 9.0. Its total building area of 6,083 sq. ft. is 3,451 sq. ft. smaller than the Subject Property. It has five bedrooms, while the Subject Property has 6 bedrooms. Its basement area of 3,967 sq. ft, is 1,594 sq. ft. smaller than the Subject Property although the finished basement area is 1,988 sq. ft. larger than the Subject Property. This property also has a secondary structure - a detached garage with a residence above it, with a structure area of 1,736 sq. ft. This property does not have an outdoor pool.
61During cross-examination, Mr. Van Winckle admitted that if the Subject Property’s location was changed to Muskoka, its value would be slightly higher. This property sale has a smaller site area and building area, a lower quality of construction and a smaller basement area. It does not have an attached garage or an outdoor pool like the Subject Property. The Board finds that MPAC’s Sale D is inferior to the Subject Property and therefore not comparable with it.
Sale E
62This property sold in October 2011 for the amount of $5,350,000. It has a lot area of 2.38 acres, which is 10.79 acres smaller than the Subject Property. It was built in 2000, which is three years older than the Subject Property. It has a lower quality of construction of 9.0. It has 4 bedrooms, compared with the Subject Property with 6 bedrooms. This property is a one-storey building with a total building area of 4,266 sq. ft. with no basement area. The Board finds that this property is inferior and not comparable with the Subject Property, due to its inferior features and its structure being a one-storey building.
The Appellant’s Proposed Comparable Property Sales
63The Appellant presented the Board with nine proposed comparable property sales including the 2012 sale of the Subject Property. The details of the Appellant’s property sales are attached to this Decision as Attachment 2.
64The Appellant made various adjustments to these property sales in order to make them comparable with the Subject Property. Mr. Capordelis, the Appellant’s expert witness admitted during cross-examination that there are no empirical quantifications to the adjustments made to the proposed comparable sales. The Appellant made upward and downward adjustments to the comparable property sales for building sites, site area, finished basement, quality of construction, location, marketing conditions, motivation, etc. An upward adjustment is made if the Appellant is of the view that the comparable feature is inferior to the Subject Property and a downward adjustment is made if the comparable feature is superior to the Subject Property.
65The Appellant did not present any evidence to quantify these adjustments. Without any quantification of the adjustments, these adjustments would be arbitrary. The Board requires evidence to quantify or measure the impact of any unique situation against the current value of the Subject Property. The Board cannot speculate or arbitrarily calculate an impact to the Appellant’s assessed current value. Accordingly, the Board would disregard the Appellant’s arbitrary adjustments made to the proposed comparable property sales as the Board cannot make any adjustment without quantitative evidence.
66In the Appellant’s conclusion of current value, the Appellant provided a summary of additional transactions of waterfront properties within the Subject Property’s vicinity showing the sale price per square foot gross living area ranged from $288.44 to $801.72. The Appellant submits that these transactions and listings show the state of the real estate market in the Subject Property’s area between 2010 and 2013.
67The Board finds that these waterfront properties are not comparable with the Subject Property due to their inferior sizes. Two of these properties did not sell and the remaining three sold outside the shoulder years of the valuation day.
68The Appellant also provided a chart of immediate waterfront properties to the east and west of the Subject Property that have assessed values as of January 2012 ranging from $357,000 to $2,101,116 and as of January 2016 ranging from $397,000 to $3,389,000.
69The legislative mandate of the Board is to determine the correct current value of the Subject Property. The Board finds that the assessed values of these properties would not assist the Board in this determination in line with the definition of current value in the Act. While assessed values of other properties may be relevant to the Board’s equity analysis, the Board’s determination of the correct current value of the Subject Property requires evidence of the value of the comparable properties. A sale price is evidence of value, but an assessed value is not, as properties may be over- or under-assessed.
70The Appellant submits that the 2012 sale of the Subject Property is an outlier when compared to all the transactions, including its comparable sales, due to the motivation of the buyer, beneficial financing, and the fact that in two and a half years there was a judgement of foreclosure, and it was later sold for $7,050,000 in 2016. Therefore, the Board should give the 2012 sale less weight.
71The Appellant concluded that the appropriate price per square foot for the Subject Property should be in the range of $700 to $800 per sq. ft. of gross living area above grade to yield a value range of $6,675,000 to $7,625,000. The Appellant submits that based on his arguments against using the 2012 sale of the Subject Property, the specific attributes of the Subject Property and the existing real estate market conditions, the correct current value of the Subject Property should be $6,700,000.
72The Appellant further submits that all its proposed comparable property sales required extensive adjustments due to the size and features of each comparable property and the fact that there is a limited market for the Subject Property in Eastern Ontario. The Appellant concluded that the superior value of the Subject Property is impacted by its association with inferior properties within its vicinity.
73The Board finds that due to the uniqueness of the Subject Property, its valid arm’s length sale four months from the valuation day should be used to determine its correct current value.
74The Board further finds that the Appellant’s proposed comparable property sales 1, 2, 5, 6, and 9 are too far removed from the valuation day. These properties sold in 2010 and 2013, which are outside the shoulder years of the valuation day.
Sale 3
75This property sold in August 2012 for $1,185,000. It has a building area of 3,824 sq. ft. built in 2002, with a site area of 8.40 acres and it has a finished basement. The Appellant made various upward adjustments to this property for location, building and lot sizes, basement, quality of construction etc.
76The Board finds that this property is inferior to the Subject Property due to its building size, it does not have a secondary structure, the Board does not have the details of its basement size to compare to the Subject Property. Moreover, the adjustments made by the Appellant were not quantified. The Board determines that this property is inferior and not comparable with the Subject Property.
Sale 4
77This is the 2012 sale of the Subject Property. The Appellant did not indicate that this sale is invalid or non-arm’s length. The Appellant made downward adjustments to this sale for financing, motivation, and site area. These adjustments were not quantified. The Board has determined that this sale represents the best evidence to establish the correct current value of the Subject Property.
Sale 7
78This property sold July 10, 2012, for $4,250,000. It has a building total area of 3,110 sq. ft. and site area of 2.26 acres. The waterfront size is 190 ft. The Board finds that this property is inferior to the Subject Property in terms of its building and site areas and therefore, not comparable with the Subject Property.
Sale 8
79This property sold June 16, 2011, for the amount of $5,000,000. The total building area is 4,683 sq. ft., the site area is 4.29 acres and it has a partially finished basement. The Board finds that this property is inferior to the Subject Property and not comparable with the Subject Property due to its inferior features.
Finding on Current Value
80The Board finds that the 2012 sale of the Subject Property is the best evidence to establish the current value of the Subject Property for the 2016 taxation year. This sale occurred on April 27, 2012, for the amount of $13,000,000, four months from the valuation day. MPAC did not apply a time adjustment factor to this purchase price to show what the sale price would have been on the valuation day of January 1, 2012.
81In Sundararaj v. Municipal Property Assessment Corporation, Region 03, 2018 CanLII 104619 at para. 11, the Board determined that:
…time adjustment should never replace sales that took place close to the valuation day. There is no better snapshot of how a housing market is behaving on a particular day than sales in that market near that day. Time adjustments should only be relied upon when no better evidence is available.
82The 2012 sale of the Subject Property took place only four months from the valuation day, therefore a time adjustment to the sale price is not necessary. See Jay Patry Enterprises LLC v. Municipal Property Assessment Corporation, Region 05, 2022 CanLII 9922 (ON ARB) at para. 38.
83The Board finds that the 2012 sale of the Subject Property is the best available evidence of current value. As it was uncontested that this sale was an arm’s length transaction, the Board can infer that the sale was for market value; the evidence and argument presented with respect to the details of the sale do not establish otherwise. Neither party has presented any other sale of a property that is comparable to the Subject Property close in time to the valuation day.
84The Board therefore determines that the correct current value of the Subject Property is $13,000,000 for the 2016 taxation year.
Issue 2 - Whether there should be an equitable reduction of the current value pursuant to [s. 44(3)](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html)(b) of the [Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html), and, if so, what the amount of this reduction should be.
85Section 44(3)(b) of the Act directs that after determining current value,
the Board shall,
(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.
86The goal of the Act is to determine the correct current value of properties. The application of equity is remedial in nature. Where the Board is of the view that applying the determined correct current value, will result in unfairness if the Subject Property is bearing a corresponding tax burden based on its current value and other similar properties are not.
87The Assessment to Sales Ratio ("ASR") is a tool often used to determine if a reduction in the assessment below current value is required to make an assessment equitable with the assessments of similar lands in the vicinity. The ASR is determined by dividing the assessment as returned by the time-adjusted sale price for a set of similar properties in the vicinity.
MPAC’s Evidence
88MPAC presented the Board with 27 sales of residential properties within 9.49 kilometers of the Subject Property, which sold between January 2011 and December 2012. MPAC submits that these sales are typical, arms-length transactions between willing sellers and willing buyers. Mr. Van Winckle testified that these sales provide a median ASR of 1.02. MPAC submits that its standards indicate that for residential properties, the median ASR should fall between 0.95 and 1.05, which is in line with the International Association of Assessing Officers standards, which state that the median ratio should fall between 0.90 and 1.10. MPAC further submits that similar properties in the vicinity have been assessed accurately and uniformly, consequently there is no need for an equity adjustment.
89MPAC time adjusted these 27 property sales using its time adjustment factor derived from its time adjustment analysis. MPAC, in its evidence, stated that “to study the effect of time on sale prices, assessors generally plot median sale to assessment ratios by sale month. An upward trend indicates inflation, a downward trend indicates deflation, and a horizontal pattern indicates no price change”.
90The Appellant questioned the reliability of MPAC’s time adjustment study, which MPAC applied to its equity analysis and not to its comparable property sales to determine the Subject Property’s current value. MPAC’s time adjustment analysis was based on 360 sales from the Subject Property’s neighbourhood and adjacent neighbourhoods from January 2010 to December 2012 for a period of 36 months. This indicated a 18.65% change in the market.
91The Appellant argued that this study is skewed since MPAC is not relying solely on the same market in which the Subject Property is exposed to, as there could be other factors that impact sales in other vicinities. MPAC admitted that due to the uniqueness of the Subject Property and the fact that the comparable properties it used in the current value analysis are located across the province, it did not time adjust its sales. However, MPAC insisted that this is the reason it is relying on the sale of the Subject Property as the best evidence to establish its current value.
92The Board will not rely on MPAC’s time adjustment analysis, due to the different market exposure of the properties it used to derive the time adjustment factors which as admitted by MPAC, differs from the Subject Property’s market exposure.
93The Appellant argued that in MPAC’s equity analysis, MPAC used sales of properties that are less than $500,000, including one that has an assessment of $82,000 and sold for $80,610, which he argued, are not comparable with the Subject Property and that for equity the properties need to be of the same general nature, character, or function.
Appellant’s Equity Analysis
94The Appellant presented the Board with two charts for its equity analysis but used the first chart to submit that the current value needed an adjustment of 0.83.
95In the Appellant’s first chart, he presented 10 waterfront properties within the vicinity of the Subject Property, with an ASR of 0.83. The range of assessment of these properties is from $420,000 to $912,000 and sale prices range from $520,000 to $950,000. During cross-examination, Mr. Capordelis admitted he used fewer sales in the equity analysis, and he did not recall their proximity to the Subject Property.
96In the Appellant’s second chart, the Appellant provided nine sales that he used to establish the current value range of the Subject Property. These property sales have an ASR of 0.88. The Appellant argued that the purpose of this chart is to show that the proposed comparable property sales used in the second chart, which included properties outside the vicinity of the Subject Property supported the first chart of properties on the St. Lawrence River. During cross-examination, the Appellant admitted that this second chart option was not used to determine the equity adjustment, since these nine property sales are only comparable to the Subject Property and not similar and that it was used as a reference point to support the first chart.
Findings on Equity
97The Act does not stipulate a specific method of determining equity. The Divisional Court in Municipal Property Assessment Corp. v. Schumacher, 2016 ONSC 3239 at para. 18 noted, “Section 44(3)(b) does not specify any particular methodology”.
98The Ontario Divisional Court in Municipal Property Assessment Corp. v. Loblaw Properties Ltd., 2017 ONSC 1299, applying the decision in Trizec Equities Ltd. v. Ontario (Regional Assessment Commissioner, Region No. 27), [1988] O.J. No. 182, stated that "...All points of comparison must be considered...". MPAC has provided evidence of property sales of 27 residential properties within 9.49 kilometers of the Subject Property which sold between January 2011 and December 2012. This selection provides similar properties as the Subject Property, in terms of the location, nature, and use of these properties.
99The Appellant also presented 10 sales of waterfront residential properties which sold between January 2011 and December 2012.
100As stated above, the Act does not dictate the methodology to determine equity. MPAC used the assessed values of the property sales against the time-adjusted sale prices and the Appellant used the assessed values against the original sale prices. The Board has already determined that MPAC’s time adjustment analysis is not reliable. Therefore, the Board would review only the assessed values of the property sales against their original sale prices.
101Regarding the range of sales prices, the Appellant argued that MPAC used a property with an assessment of $82,000, and consequently MPAC’s equity analysis may not be reliable, since it did not use similar properties. The Board finds that the parties did not provide property sales that had assessments close in range to the Subject Property’s assessment of $12,818,000. The Board notes that the parties described the Subject Property as a “unicorn” property within the vicinity, which is unique from all other properties. Consequently, the Board reviewed all the property sales provided by the parties.
102All the Appellant’s 10 property sales used in chart 1 for its equity analysis were included in MPAC’s equity analysis. Therefore, the Board used all MPAC’s 27 property sales to determine whether there should be an adjustment to the current value. The Board finds that these 27 property sales, all within 9.49 kilometers of the Subject Property, all residential properties, typical arm’s length transaction, which sold between January 2011 and December 2012, would provide sufficient evidence in order to determine the general level of assessment of similar lands in the vicinity.
103As the Board determined MPAC’s time adjustment analysis to be unreliable, the Board used the assessed values of the 27 property sales against their original sale prices. All the sales occurred within the shoulder years of the valuation day; therefore, a time adjustment is not necessary.
104The Board finds that the median ASR for the 27 sales is 1.00, which reveals that MPAC has been assessing similar properties in the vicinity at or near their sale prices; therefore, an adjustment to the current value is not necessary. In Empire Realty Co. Ltd. and Assessment Commissioner for Metropolitan Toronto et at., 1968 CanLII 183 (ON CA) the Ontario Court of Appeal addressed equity in assessment by stating that:
... an assessment made at the actual value of lands and buildings in compliance with the provisions of s. 35(1) would be an unequitable assessment if all similar lands in the vicinity were assessed at some percentage of actual value substantially less than one hundred ...
105The Board finds that there is no evidence to support an adjustment to the current value of $13,000,000.
Assessed Value vs. Current Value
106MPAC submits that the Board should confirm the assessment as returned at $12,818,000, although the current value is the 2012 sale price of $13,000,000. Section 19 of the Act provides that the assessment of land shall be based on its current value.
107MPAC provides the assessed values of properties, using its model to make an estimation, since most properties would not have been sold on the valuation day of January 1, 2012. This is what is referred to as the assessed value of the Subject Property, i.e., the value that was entered on the assessment roll.
108The legislative mandate of the Board is to determine the correct current value of the Subject Property. See Lazareva v. Municipal Property Assessment Corporation Region 16, 2022 CanLII 123515 (ON ARB) at para. 40. and Pathak v. Municipal Property Assessment Corporation, Region 15, 2022 CanLII 9920 (ON ARB) at para. 30 and 31.
109Current value is the market value of the Subject Property as defined under s. 1 of the Act. This panel has determined it to be $13,000,000, without any adjustment for equity. This legislative mandate of the Board has further been settled by the Divisional Court in Municipal Property Assessment Corporation v. Zarichansky, 2020 ONSC 1124, which reiterated the Board’s responsibility to determine the correct current value pursuant to section 44(3) of the Act at para. 43 that:
Ultimately, the Board has no authority to fix the value of a property at an amount that it knows does not represent the “current value.” The exception to this is section 44(3), which provides a specific mechanism for reducing the current value in circumstances where it is equitable to do so. However, the starting point for this exercise, as set out in section 44(3)(a), is determining the current value of the property.”
110Consequently, the Board determines that the correct current value of the Subject Property for the 2016 taxation year is $13,000,000 without any equity adjustment.
CONCLUSION
111Although MPAC assessed the Subject Property for the 2016 taxation year to be $12,818,000, the Board finds that the correct current value is $13,000,000 for the 2016 taxation year without any adjustment for equity.
ORDER
112The Board orders that the CVA of the Subject Property be changed from $12,818,000 to $13,000,000 for the 2016 taxation year.
"Subuola Awoleri"
SUBUOLA AWOLERI
MEMBER
"Paul Brennan"
PAUL BRENNAN
MEMBER
Assessment Review Board
Website: www.tribunalsontario.ca/arb
ATTACHMENT 1
MPAC’S PROPOSED COMPARABLE PROPERTY SALES
Subject Property
Sale A
Sale B
Sale C
Sale D
Sale E
08 12 812 025 27402
08 12 812 025 27402
24 01 040 110 01500
43 46 010 007 07010
44 53 020 009 01100
49 03 010 006 00500
697 UNIT A AND B 1000 ISLAND PKY
697 UNIT A AND B 1000 ISLAND PKY
1038 ARGYLE DR
2831 RIDGE RD W
1043 UNIT 14 BOYCE RD
26 SHALLOW WAY
Sale Amt:
$13,000,000
$16,000,000
$13,500,000
$6,000,000
$5,350,000
Sale Date:
2012/04
2012/05
2010/10
2012/06/01
2011/10
Location
Leeds and Thousand Island TWP
Oakville
Oro-Medonte TWP.
Muskoka Lakes TWP.
Seguin TWP.
Sub/Homo- Neighbourhood:
O70
O70
A90
J70
Z10
A10
Data Description
Property Data
Property Data
Difference from Subject
Property Data
Difference from Subject
Property Data
Difference from Subject
Property Data
Difference from Subject
Property Data
Difference from Subject
Site
Effective Frontage
1,000.00
1,000.00
0
130.00
870
324.77
675.23
441.88
558.12
625.00
375
Effective Depth
999.90
999.90
0
220.00
779.9
999.99
-0.09
230.67
769.23
151.00
848.9
Frontage
1,600.00
1,600.00
0
109.25
1490.75
324.77
1275.23
441.88
1158.12
687.00
913
Site Area
13.17
13.17
0
0.66
12.51
9.63
3.54
2.34
10.83
2.42
10.75
Effective Site Area
13.17
13.17
0
0.57
12.6
9.63
3.54
2.34
10.83
2.38
10.79
Hydro
Hydro available
Hydro available
Hydro available
Hydro available
Hydro available
Hydro available
Sanitary
Septic Bed
Septic Bed
Municipal
Septic Bed
Septic Bed
Septic Bed
Water
Lake or River
Lake or River
Municipal
Private Well
Private Well
Lake or River
Driveway
S
S
U
U
S
U
Site Access
Y
Y
Y
Y
S
R
Structure
Structure Code & Description
301 - SINGLE FAMILY DETACHED
301 - SINGLE FAMILY DETACHED
301 - SINGLE FAMILY DETACHED
301 - SINGLE FAMILY DETACHED
301 - SINGLE FAMILY DETACHED
301 - SINGLE FAMILY DETACHED
Year Built
2003
2003
0
2007
-4
2005
-2
2006
-3
2000
3
Effective Year Built
2003
2003
0
2007
-4
2009
-6
2008
-5
2000
3
Quality
10.0
10.0
0
9.0
1
10.0
0
9.0
1
9.0
1
Condition
A
A
A
G
A
A
Renovation Year
2011
2013
Addition Year
2011
Design Type
(N) Not Defined
(N) Not Defined
(N) Not Defined
Central Air
Y
Y
Y
Y
Y
Y
Heat Type
OT
OT
FA
FA
FA
FA
Fireplace Total
5
5
0
9
-4
8
-3
4
1
2
3
Full Baths
7
7
0
7
0
5
2
6
1
3
4
Half Baths
2
2
0
2
0
1
1
1
1
Bedrooms
6
6
0
5
1
5
1
5
1
4
2
Full Storeys
2
2
2
1
2
1
Partial Storey
1/2
1st Floor Area
4,502
4,502
0
5,790
-1288
5,618
-1116
3,704
798
4,266
236
2nd Floor Area
5,032
5,032
0
4,903
129
1,755
3277
2,379
2653
Building Total Area
9,534
9,534
0
10,693
-1159
7,373
2161
6,083
3451
4,266
5268
Basement Area
5,561
5,561
0
6,538
-977
5,618
-57
3,967
1594
0
5561
Basement Finished Area
924
924
0
5,794
-4870
5,056
-4132
2,912
-1988
0
924
Basement Finish Type
Basement apartment
Basement apartment
Basement apartment
Basement apartment
Finished basement
Basement Height
9.0
9.0
0
9.0
0
9.0
0
8.5
0.5
0.0
9
Amenities Code
W
W
S
M
Amenities Points
40
40
0
35
5
85
-45
Porch Code
C
C
M
M
M
M
Total Porch Points
150
150
0
118
32
611
-461
250
-100
160
-10
Secondary Structures
Structure Code & Description
301 – SINGLE FAMILY DETACHED
301 - SINGLE FAMILY DETACHED
116 - ATTACHED GARAGE
110 - BOATHOUSE WITH RES ABOVE
119 - DETACHED GAR WITH RES ABOVE
110 - BOATHOUSE WITH RES ABOVE
Year Built
2008
2008
2007
2005
2006
2000
Structure Area
2,527
2,527
1,019
2,108
1,736
2,288
Structure Code & Description
116 - ATTACHED GARAGE
116 - ATTACHED GARAGE
108 - OUTDOOR POOL
101 - DETACHED GARAGE
116 - ATTACHED GARAGE
Year Built
2008
2008
2007
2005
2000
Structure Area
2,719
2,719
784
1,690
937
Structure Code & Description
101 - DETACHED GARAGE
101 - DETACHED GARAGE
116 - ATTACHED GARAGE
105 - BOATHOUSE
Year Built
2003
2003
2005
2000
Structure Area
1,037
1,037
592
584
Structure Code & Description
108 - OUTDOOR POOL
108 - OUTDOOR POOL
109 - TENNIS COURT
Year Built
2003
2003
2006
Structure Area
625
625
6,900
Structure Code & Description
102 - SHED
102 - SHED
108 - OUTDOOR POOL
Year Built
2003
2003
2011
Structure Area
294
294
440
Data Elements
Abuts Variable(s)
(K) Traffic Pattern - Light
(K) Traffic Pattern - Light
(J) Traffic Pattern-Medium
On Site Variable(s)
(1) Quality Of Site = Excellent (G) Topography - Slight Slope
(1) Quality Of Site = Excellent (G) Topography - Slight Slope
(H) Topography - Steep Slope
(G) Topography - Slight Slope (O) Gravel Road
(4) 51% - 75% Treed (G) Topography - Slight Slope (Z) Quality Of Site = Good
Waterfront Variable(s)
(B) Waterfront - River / Other Watercourse
(D) Shoreline - Rocky
(H) Shoreline - Deep
(O) Exposure - West
(Q) Landscaping - Ret Wall/Gabian Cages
(R) Landscaping - Walkways/Stairs To Shore
(S) Landscaping - Terracing
(T) Permanent Docking
(B) Waterfront - River / Other Watercourse
(D) Shoreline - Rocky
(H) Shoreline – Deep
(O) Exposure - West
(Q) Landscaping - Ret Wall/Gabian Cages
(R) Landscaping - Walkways/Stairs To Shore
(S) Landscaping - Terracing
(T) Permanent Docking
(A) Waterfront - Lake
(A) Waterfront - Lake
(D) Shoreline – Rocky
(H) Shoreline – Deep
(M) Exposure - South
(A) Waterfront - Lake
(O) Exposure - West
(T) Permanent Docking
(A) Waterfront – Lake
(D) Shoreline – Rocky
(N) Exposure – East
(R) Landscaping - Walkways/Stairs To Shore
(S) Landscaping - Terracing
Primary Structure Variable(s)
(A) Premium Roof Finish (Cedar Shakes, Slate, Clay, Tile, Etc.) (B) Basement Walkout (D) Over Built For Neighbourhood (M) More Than One Open Balcony
(A) Premium Roof Finish (Cedar Shakes, Slate, Clay, Tile, Etc.) (B) Basement Walkout (D) Over Built For Neighbourhood (M) More Than One Open Balcony
(B) Basement Walkout (M) More Than One Open Balcony
(A) Premium Roof Finish (Cedar Shakes, Slate, Clay, Tile, Etc.)
(A) Premium Roof Finish (Cedar Shakes, Slate, Clay, Tile, Etc.) (B) Basement Walkout
COMPARABILITY TO SUBJECT
Relatively Comparable
Relatively Comparable
Inferior
Inferior