Assessment Review Board

Tribunals Ontario Tribunaux décisionnels Ontario Assessment Review Board Commission de révision de l’évaluation foncière

ISSUE DATE: May 11, 2023 FILE NO.: WR 183042

Assessed Person(s): Surinder Singh, Jagjit Singh Appellant(s): Surinder Singh, Jagjit Singh Respondent(s): Municipal Property Assessment Corporation Region 15 Respondent(s): City of Mississauga

Property Location(s): 6951 Second Line West Municipality(ies): City of Mississauga Roll Number(s): 2105-040-096-13100-0000 Appeal Number(s): 3484862, 3480755 3488722 and 3512779 Taxation Year(s): 2020, 2021, 2022 and 2023 Hearing Event No.: 777571

Legislative Authority: Sections 33 and 40 of the Assessment Act, R.S.O. 1990, c. A.31

APPEARANCES

Parties	Representative
Surinder Singh, Jagjit Singh	Gurjit J. Grewal
Municipal Property Assessment Corporation	Kristina de Andrade
City of Mississauga	No one appeared

HEARD: December 15, 2022 by telephone conference call

ADJUDICATOR(S): Pierre R. Lavigne, Member

DECISION

OVERVIEW

1The Appellants appeal the correctness of property tax assessments made for the years 2020 to 2023. The principal issues are the correct 2016 value of the land and new residential dwelling constructed in 2020 and whether an equitable adjustment should be made to these values.

Background

2The Appellants are the owners of a detached residential dwelling, newly constructed in 2020. An assessment of $4,742,000 for the omitted value of the new construction was issued in 2021 for the 2021 taxation year. Pursuant to s. 33(1) of the Assessment Act, R.S.O. 1990, c. A.31 (“Act”), which permits retroactive omitted assessments up to two preceding years, an assessment for $4,742,000 was also made for the 2020 taxation year. The 2020 omitted assessment, was effective from November 3, 2020, the date of completion. The subject property’s total land and structure was assessed, pursuant to s. 31 of the Act, at $5,319,000 for the taxation year 2022.

3The Appellants claim that both the omitted assessments for the new construction and the subsequent 2022 total value assessment are incorrect because they are too high and submit that the correct total value assessment should be $4,442,000. The Municipal Property Assessment Corporation (“MPAC”) submits that the correct total value assessment should be $6,451,000. MPAC gave notice that it was seeking higher assessments than originally returned. This notice was not contested.

4These appeals were made under s. 40(1) of the Act. Pursuant to s. 40(26) of the Act, further appeals were deemed to have been made for subsequent taxation years.

Issues for the Hearing

5At issue in this proceeding are:

1. Should the Appellants’ late filed documents be excluded as evidence?
2. A determination of the current value of the subject property for the taxation years 2022 and 2023.
3. A determination of the current value of the omitted assessment for new construction for the taxation years 2020 and 2021.
4. Whether an equity reduction in any of the assessment should be made pursuant to s. 44(3)(b) of the Act?

Result

6The Appellants’ late filed documents are admitted as evidence.

7The subject property’s total value assessment for 2022 and 2023 is $5,715,000.

8The subject property’s omitted assessment for new construction for 2020 and 2021 taxation years is $5,138,000.

9No equity reduction in current value should be made.

PRELIMINARY MATTERS

Issue 1: Should Appellants’ late filed documents be excluded as evidence?

10On December 5, 2022, 10 days before the scheduled hearing date of December 15, 2022, the Appellants’ representative served on MPAC and filed with the Assessment Review Board (“Board”), two spreadsheets identifying six detached residential properties to be used as comparable properties for the purposes of a determination of current value (“the current value spreadsheet”) and five properties to be used determine the equity of the assessment (“the equity spreadsheet”). These documents had been required to be filed by September 12, 2022.

11The spreadsheets in question are the Appellants’ representative’s identification of his suggested comparable sales with descriptions of the properties’ year built, lot sizes, sale date, current value assessments, quality class and calculations of dollar value per square foot of sale price in the case of the current value spreadsheet and assessment per square foot for the determination of equity spreadsheet.

12Also filed with the Board on December 5, 2022, were front elevation photographs of four of the detached residential properties to be used as comparable to determine current value and a front elevation photograph of one property to be used to determine the equity of the assessment.

13On December 6, 2022, the Appellants’ representative submitted a front elevation photograph of two more of the residential properties identified for the determination of current value and two more of the properties identified to determine the equity of the assessment. Other than evidence elicited through cross-examination of MPAC’s expert, the spreadsheets and photographs, are the Appellants’ evidence.

14On December 7, 2022, the Respondent MPAC served and filed an Expedited Board Direction Form (“EBDF”) requesting an Order of the Board that the newly filed documents be excluded as evidence in the scheduled hearing of December 15, 2022. MPAC claimed prejudice on the ground that documents were filed beyond the filing due date of September 12, 2022, prescribed by the Schedule of Events (“SOE”).

15On December 13, 2022, the Vice-Chair dealing with Expedited Board Directions declined to rule on MPAC’s request, deferring the matter to the scheduled hearing.

16At the December 15, 2022 hearing, I asked MPAC whether it required an adjournment to respond to the new evidence. It declined. I indicated to the parties that I would hear the contested evidence and make my decision on admissibility in my reasons. For the reasons that follow it is my decision that these documents are admissible as evidence for consideration by the Board and are not to be excluded.

Background

17This appeal was designated as a summary appeal by the Board pursuant to Rule 37 of the Board’s Rules of Practice and Procedure (“Rules”) and assigned a Summary SOE subject to Rules 38 to 40.

18The parties were required, by the SOE, to engage in a mandatory settlement meeting between themselves before August 29, 2022. MPAC was required, on behalf of all parties, to report to the Board whether the appeal was resolved and if not, request that the Board schedule a hearing and give its preferred dates. On August 30, 2022 MPAC advised the Board and gave its preferred dates. MPAC indicated it attempted to canvas the Appellants’ representative for hearing dates but did not receive a response. Accordingly, the Board scheduled a hearing for November 8, 2022.

19Pursuant to the SOE and Rule 35 the parties were required to file with the Board all documents and submissions on which they will rely at the hearing by September 12, 2022. This includes “all evidence, including expert reports, statements of issues and responses and witness statements.”

20On September 26, 2022, MPAC’s representative emailed the Board, copying the other parties, advising that they were not in receipt of the Appellants’ evidence and inquiring if any had been filed by the Appellants. The Board registry replied the same day, copying all parties, that only a Statement of Issues had been received on June 9, 2022.

21Later in the day on September 26, 2022 the Appellants’ representative did file with the Board, copied to the other parties, a spreadsheet identifying six properties for purposes of the equity analysis. This September 26, 2022 spreadsheet is almost identical to the equity spreadsheet filed on December 5, 2022. It concluded that an equitable assessment would be $4,388,000. The December 5, 2022 equity spreadsheet corrected upward the current value assessment of 34 Cheval Court and concluded that the equitable assessment would be $4,442,000.

22Also on September 26, 2022 the Appellants’ representative requested an adjournment of the November 8, 2022 hearing date. The grounds for this request were that Gurjit J Grewal, the Appellants’ representative, had had significant surgery on September 6, 2022 and that his surgeon had imposed three months of bed rest. The Respondent MPAC had consented to the requested adjournment and on September 29, 2022, a Vice-Chair of the Board granted the adjournment to December 15, 2022.

Submissions on the late filing of documents

23MPAC submits that notwithstanding Mr. Grewal’s September 6, 2022 surgery, he nevertheless submitted comparable properties for the purposes of the equity analysis to the Board on September 26, 2022 in response to MPAC’s inquiry. MPAC further submits that Mr. Grewal “chose not to submit an EBDF for the late evidence submitted on September 26, 2022.” MPAC claimed that the “new” material was “extremely prejudicial”, Appellants’ submissions on late filing.

24The Appellants’ representative submitted that his September 6, 2022 surgery and prescribed three months bed rest were exceptional circumstances.

Analysis

The Rules

25The following Rules of the Board are relevant to the analysis of MPAC’s objection to admissibility as a result of the Appellants’ failure to file the contested documents before the September 12, 2022 filing date.

Disclosure

45. All parties must serve an electronic copy of all relevant documents in their possession, control, or power to all other parties in the proceeding, except for privileged documents, or documents that cannot be disclosed by law.

No Admission

46. The disclosure of a document is not an admission of its relevance or admissibility.

No new document

48. A document, including an expert report, may only be admitted into evidence at a hearing event if it has been served on all other parties and filed with the Board, in accordance with these Rules, unless the Board determines that there are exceptional circumstances.

26The following Rules deal with the interpretation and application of the Rules:

Interpretation of Rules and Powers of the Board

3. These Rules shall be liberally interpreted to ensure the just, most expeditious and least expensive determination of every proceeding.

Proportionality

4. These Rules shall be applied in a manner proportionate to the importance and complexity of the issues in a proceeding and with a view to resolving appeals within the assessment cycle.

Issues Not Addressed in these Rules

5. Where 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.

Technical Objections

6. Substantial compliance with the requirements of these Rules is sufficient.

Failure to Comply with Rules and Orders

7. The Board will determine the appropriate consequences of non-compliance with these Rules.

Were the spreadsheets and photos filed “in accordance with the Rules” as required by Rule 48?

27It is not contested that the spreadsheets and photos filed September 26, December 5th and 6th, 2022 were not filed by the September 12, 2022 due date.

Were there “exceptional circumstances” permitting the admissibility of the documents?

28Exceptional circumstances “means, among other things, something that does not occur regularly, something unusual, or something atypical. (Mississauga (City) v Michalakos, 2018 CanLII 126632 at para. 10 (ON ARB)).

29Once exceptional circumstances are found, the balance of prejudice must be examined to inform the exercise of discretion. (Mississauga (City) v Michalakos, 2018 CanLII 126632 at para. 11 (ON ARB)).

30I find that exceptional circumstances have been made out by the Appellants. Their representative’s significant surgery on September 6, 2022 and his surgeon’s imposed three months on bed rest are unusual matters that impaired Mr. Grewal’s ability to regularly meet his practice obligations. The fact that Mr. Grewal responded the same day to MPAC’s evidence inquiry does not negate the fact that significant surgery and work restriction is exceptional and occurred only six days before the September 12, 2022 due date for document filing.

31The following factors weigh in favour of exclusion of the late filed documents.

1. MPAC only had 10 days to analyse current value spreadsheet.
2. “the Board [and MPAC] must process tens of thousands of appeals within a four-year assessment cycle. To ensure that all appeals are efficiently heard on a timely basis, strict adherence to the Board’s Rules is required. (para. 51, Ottawa (City) v Municipal Property Assessment Corporation, Region 03, 2022 CanLII 106832 (ON ARB)).
3. Mr. Grewal is a Paralegal, licenced by the Law Society of Ontario, operating under the style “Property Tax Consultant” and as such was familiar with the Board’s Rules and his obligations to conform thereto or and he was experienced in seeking consent of opposing parties to support a timely request for extension.
4. MPAC sought an order excluding the evidence as soon as it was aware of Mr. Grewal’s breach of the Rules, thereby putting him on notice that admission of his evidence would be contested.

32The following factors weigh in favour of admission of the late filed documents.

1. The information in the equity spreadsheet, filed on December 5, 2022 had been substantially produced on September 26, 2022, allowing 80 days for analysis. The minor correction did not surprise or prejudice the respondent, it was in the respondent’s favour.
2. The photographs revealed no new information as they were photographs of the residential dwellings taken from street and did not add substantially to the elements of comparison found in the spreadsheets.
3. The evidence sought to be admitted is the bulk of the Appellants’ evidence and its exclusion would severely penalize the Appellants for their representative’s late filing.
4. MPAC did not require an adjournment to respond to the new evidence.
5. While MPAC claimed extreme prejudice, other than the late filing, it provided no additional explanation of how or why it was prejudiced.

33On balance I find that the prejudice to the Appellants outweighs the prejudice to the respondent MPAC. In the presence of established exceptional circumstances and greater prejudice to the Appellants, the documents and photographs are admitted into evidence.

Issue 2: What was the current value of the subject property for the taxation years 2022 and 2023?

Description of Subject Property

34The subject property is a custom built 8,671 square feet (“sq. ft.”), two storey detached dwelling with a 3,794 sq. ft. finished basement, on a 100 feet (“ft.”) by 217.8 ft. lot with an effective lot area of 0.5 acres. The dwelling has eight bedrooms, 12 baths, three fireplaces and an elevator. The quality class assigned by MPAC is 10 out of 10. The quality class is disputed by the Appellants.

35Construction of the dwelling was completed in 2020 on a lot and original building purchased in 2015 in an open market sale for $1,050.000. The original building was demolished for construction of the new dwelling.

The Governing Statutory Scheme

36Section 19(1) of the Act provides that the assessment of land shall be based on its current value. 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.”

37Section 19.2(1) paragraph 4 of the Act fixes the valuation day for the 2020 taxation year at January 1, 2016. Section 48.6 of Ontario Regulation 282/98 fixes the valuation day for the 2021, 2022 and 2023 taxation years at January 1, 2016, as well.

38Pursuant to s. 40(17) of the Act, the onus is on MPAC to prove the correct value of the subject property.

39Section 44(3)(b) of the Act provides for a reduction, if required, of an assessment based on current value to make the assessment equitable.

MPAC’s evidence

40Evan Mendel was called as a witness for MPAC. He is a property valuation analyst with MPAC. He was qualified as an expert witness in the valuation of residential properties based on his experience since 2016. His qualification as an expert was not challenged.

41Mr. Mendel’s expert opinion of value was that the subject property, including both the land and the 2020 new construction, had a January 1, 2016, current value of $6,451,000. He arrived at this opinion by the direct comparison valuation approach: deriving his opinion from an examination of sales of comparable properties at or near the valuation day. In evidence in chief he made two corrections to his valuation report: the property identified below as M 2, 516 Indian Road, was of a quality class 10 instead of 9.5 and it sold in September 2016 for $5,580,000 instead of $3,663,000.

42He limited his search to sales of properties of quality class 9.5 or higher and of comparable sq. footage. In his opinion the quality class, size and age were the dominant drivers of value and the characteristics for search selection. He acknowledged that finding sales of this quality class was a challenge as they are rarely encountered. The only comparable quality class properties he was able to find in the City of Mississauga, that sold within one year of the valuation day, were 13 kms away for property M 1 and 16 kms away for property M 2. He adjusted the sale prices for changes in value over time. The time adjustments were not contested. From these time-adjusted values, he derived an average value per square foot of structure built of $743.97 per sq. ft. He applied this average to the sq. footage of the structure to produce a final opinion of value of $6,451,000.

43For the sake of comparison, I shall list in a single table all property sales submitted by both parties for current value analysis. MPAC’s sales, submitted for comparison, are labelled M 1 and M 2. MPAC’s sale prices are time-adjusted and the effective age has been adjusted for renovations. The Appellants’ sales are labelled A3 to A8. The Appellants provided no time adjustment for his sale prices and no adjusted age.

Prop.	Address	Sale date	Sale Price	Site Area	Effective age	Qual. Class	Built sq. ft	$/sf
Sub	6951 2ND LINE			0.5 ac	2020		8,671
M 1	432 BOB O LINK	2016-10-04	$4,133,960	0.66 ac	2013	10	6,272	659.11
M 2	516 INDIAN RD	2016-09-08	$5,019,390	0.54 ac	2012	10	6,055	828.97
A3	1387 INDIAN RD W	2021-04	$4,650,000	0.38 ac	2015	8.5	7,438	625.18
A4	150 INDIAN VALLEY	2016-05	$2,700,000	0.91 ac	1996	8.5	6,305	428.23
A5	6826 2ND LINE	2016-03	$2,279,000	0.31 ac	2016	8.5	5,514	613.42
A6	1288 INDIAN RD	2016-03	$2,760,000	0.42 ac			8,000	345
A7	797 PARKLAND			0.34 ac			7,000	388.57
A8	27 BELLINI	2017-08	$4,630,000	2.07 ac	2010		11,435	404.90

44The main point of contention between the parties was the quality class and location of the comparable sales.

45Mr. Mendel’s evidence was that the following features, documented in his report and demonstrated by the 63 interior photographs and the 11 exterior photographs appended to his expert report, justify his opinion that the construction quality is of the highest quality class: 10 out of 10.

a. Crown-molded stepped-ceiling leading to skylight (over foyer). b. Elevator. c. Speakers built into ceiling throughout entire house. d. High quality panel walls throughout main floor, open spaces on 2nd floor, and on all support columns throughout entire house. e. Lights built into walls along staircases (and in driveway). f. Multiple hidden doors leading to bathroom/closets/furnace room. g. High ceilings throughout house (12 ft throughout, 28 feet in foyer). h. Oversized high-quality doors throughout entire house. i. Several coffered ceilings throughout house. j. Crown molding throughout entire house. k. Custom built-in features in all rooms. l. Baseboard vacuum system in kitchen. m. Servery includes a 2nd built-in stove, fridge, dishwasher and sink. n. All bedrooms are oversized, including seating area, en-suite bathroom and large/ walk-in closets. o. Panelled feature walls in multiple rooms. p. Wet bar and gym in basement. q. Two laundry rooms. r. Cut-outs surrounding windows to allow for additional natural light. s. 12 bathrooms.

46With respect to his comparable sale M 1, Mr. Mendel indicated this is also a custom-built house. Though it had an indoor pool, his opinion was this advantage was offset by the corner lot location and the slightly older age.

47With respect to his comparable sale M 2, Mr. Mendel indicated this was a custom house built in 1996 but that due to renovations it had an effective age of 2012. While it had a pool and a larger lot, in his opinion these advantages were offset by a smaller structure size and older effective age.

48Mr. Mendel was extensively cross-examined by the Appellants’ representative and nothing in this examination modified his opinion that the subject property was properly in the quality class 10.

49Mr. Mendel also testified in cross-examination that the subject had more value because of newness and greater floor area. He felt his proposed comparable could serve as a floor to value.

50In answering a question from the Board on the effect on value of a difference in quality class using an assumption of a quality class of 8.5, Mr. Mandel answered he could not give a definitive opinion without a search for comparable properties, but that based on his experience the correct current value as built would be over $5,000,000.

Appellants’ evidence

51The Appellants relied principally on his proposed comparable sales A3 to A8 described above. They provided no direct evidence to dispute Mr. Mendel’s opinion that the quality class was 10.

52In cross-examination, Mr. Grewal acknowledged that his sales A6 and A7 were taken from the MLS listings and that he did not have the year built or the quality class for those properties. He also acknowledged that there is large difference in comparability between the subject property and his comparable property A8.

MPAC submissions on current value

53MPAC’s submissions focused on quality class, submitting that quality class could not be determined by external front elevation photographs and that there was no evidence the quality class of MPAC’s submitted sales were less than quality class 10.

Appellants’ submissions on current value

54Mr. Grewal submitted that his client appealed because he had the highest assessment on the street. He also submitted that MPAC’s sales were not comparable because they were too far from the subject property.

Analysis

55I find that the predominant elements of comparison in this case are the quality class, size and age. I find that the subject property is of quality class 10. Mr. Mendel’s expert evidence was that the exceptional amenities and finishes justified a rating of Quality Class 10. Notwithstanding extensive cross-examination Mr. Mendel made no concessions permitting a finding of a lower quality class. The Appellants provided no expert evidence to counter Mr. Mendel’s evidence of Quality Class 10.

56On that basis, I accept MPAC’s proposed sales M 1 and M 2 as comparable. When a dwelling is a rare combination of features, sales in close proximity to the subject’s location that are within the Board’s usual period of comparability of one year from the valuation day, will be difficult to find. In these circumstances the immediate neighbourhood is not an absolute limiting factor in the search for comparable properties.

57Mr. Grewal indicates that the prime complaint of the owner is that his property is the highest assessed property on the street. This is not a reason to reduce the current value if the subject property is the most valuable on a street of dwellings with no standard age, quality or size. The evidence was that it is a neighbourhood in transition with older dwelling purchased for demolition and construction of new substantial improvements, as was the case with the subject property.

58The Board rejects the Appellants’ submitted sales as comparable for the following reasons:

a) None of the Appellants’ suggested comparable is of a quality class 10 or nearly 10. b) Sales A6, A7 and A8 have no quality class description at all. c) Sales A6 and A7 have no year built compared to the new construction of the subject property. d) Sales A7 and A8 are more than one year out from the valuation day and outside the usual period of comparability retained by the Board.

59The Board retains MPAC’s sales M 1 and M 2 as comparable sales. Notwithstanding this finding, the Board prefers the $659.11 per sq. ft. indication of value from sale M 1 because both the subject property and M 1 can be considered newly built in relation to the valuation day of January 1, 2016. Sale M 2 provides a less reliable indication of value because it was originally constructed in 1996. Though there is evidence that M 2 was extensively renovated in 2015 leading to an assertion that its effective age had been improved to an effective year built of 2012, there was no evidence to substantiate this improvement in year built. I find that property M 1, built in 2013 is a relatively new build when compared to the valuation day of January 1, 2016 and would be a closer comparable to the subject property.

60Applying the M 1 indication of value of $659.11 per sq. ft to the built area of the residence of 8,671 sq. ft produces a correct current value of $5,715,142 rounded to $5,715,000. The Board finds $5,715,000 to be the correct current value of the land and newly built structure as of the January 1, 2016.

Issue 3: A determination of the additional assessment for the taxation years 2020, 2021

61The 2020 and 2021 omitted assessment for the improvements (the newly erected dwelling) was $4,742,000. The combined returned assessment for 2022 was $5,319,000. I have found that the correct total returned assessment for 2022 is $5,715,000, $396,000 more than the returned assessment for 2022. In the absence of evidence of the original 2020 assessment, it is inferred that this additional value is attributable to the newly erected structure. Accordingly, the correct current value of the 2020 and 2021 omitted assessment is $5,138,000 ($4,742,000 + $396,000).

Issue 4: Whether an equity reduction in the assessment should be made for any of the years in question?

62Mr. Mendel relied upon an equity analysis report for the subject property. He analyzed equity by means of an Assessment to Sales Ratio (“ASR”) study, where the assessment of similar properties in the vicinity are divided by their adjusted sale prices. This is evidence of whether the similar properties in the vicinity are generally over or under assessed in relation to sale prices.

63If similar properties in the vicinity are under-assessed, the Appellants are entitled, pursuant to s. 44(3)(b) of the Act, to a reduction in assessment equivalent to any under-assessment of similar properties in the vicinity.

64Similarity for equity purposes is broader than that which may be applied in selecting comparable properties for the determination of current value. Properties only need to be of the same general nature, character or function as the subject property.

65MPAC’s ASR study included 28 detached residential dwelling properties within 0.47 kms of the subject property, plus the two current value comparables M 1 and M 2 which were 16 and 13 kms from the subject property. The study showed a level of assessment of 95% of time-adjusted sale prices, within the target range of 95% to 105% demonstrates that similar properties in the vicinity are not generally under assessed.

66The Appellants’ equity analysis consisted of five properties which included his current value comparable A6, A7 and 3 other properties. The Appellants calculated the value of assessment per sq. ft., which ranged from $431.17 to $626.97 with an average of $512.26. They applied this average to the area of the subject property structure of 8,671 sq. ft to produce, in their submission, an equitable assessment of $4,441.806, rounded to $4,442,000.

67I prefer the evidence of Mr. Mendel on the issue of equity because his sample size is larger and his methodology more probative of the issue of equity. His method of analysis compares assessments to time adjusted sale prices to determine if similar properties in the vicinity are over or under assessed.

68The Appellants’ methodology of simply calculating average assessment per sq. ft does not indicate whether the average assessment values represent an underassessment compared to the sale prices. The sample size is also much smaller than that of MPAC and therefore less reliable.

69As the Appellants have not shown under assessment of similar properties in the vicinity compared to the assessment of the subject property or any other ground of inequity, there will be no s. 44(3)(b) equitable adjustment.

CONCLUSION

70The correct current value of the omitted assessments of 2020 and 2021 is $5,138,000. The correct current value assessments for the 2022 and 2023 taxation years are $5,715,000. No equity adjustment pursuant to s. 44(3)(b) is required.

ORDER

71The Board orders that the 2020 and 2021 taxation year omitted assessments are increased from $4,742,000 to $5,138,000.

72The Board orders that the 2022 and 2023 taxation year assessments are increased from $5,319,000 to $5,715,000.