Tribunals Ontario

Tribunaux décisionnels Ontario

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: October 23, 2024

FILE NO.: WR 186942

Assessed Person(s): 2428076 Ontario Inc.

Appellant(s): DIR Properties GP Inc.

Respondent(s): City of Kitchener

Property Location(s): 60 Steckle Place

Municipality(ies): City of Kitchener

Roll Number(s): 3012-040-044-26500-0000

Appeal Number(s): 3506827

Taxation Year(s): 2021

Hearing Event No.: 784581

Legislative Authority: Section 357(8) of the Municipal Act, 2001, S.O. 2001, c. 25

APPEARANCES:

Parties	Counsel/Representative
DIR Properties GP Inc.; 2428076 Ontario Inc.	Victor Guyader
City of Kitchener	Saleh Saleh

HEARD: September 23, 2024 by video conference

ADJUDICATOR(S): Subuola Awoleri, Member

DECISION

OVERVIEW

1DIR Properties GP Inc. (the “Appellant”) is the owner of 60 Steckle Place (the “subject property”). The subject property is an industrial property with an improved area of approximately 100,174 square feet.

2The Appellant filed an application with the City of Kitchener (the “City”) for tax relief under s. 357(1)(g) of the Municipal Act, 2001, S.O. 2001, c. 25, (the “Act”) for the 2021 taxation year, citing that the repairs and/or renovations of the subject property prevented its normal use for a period of at least three months during the year.

3The City did not process the Appellant’s application for tax relief. Subsequently, the Appellant appealed the City’s failure to make a decision under s. 357(8) of the Act to the Assessment Review Board (the “Board”).

Areas of Agreement

4The parties agree that should the Board determine that the subject property is eligible for tax relief, the quantum of relief should be $15,600.

Issues for the Hearing

5The issues to be determined for the 2021 taxation year are:

1. Is the subject property eligible for tax relief under s. 357(1)(g) of the Act?

(a) Do repairs and/or renovations without building permits qualify for tax relief under section 357(1)(g) of the Act?

(b) Were there repairs and/or renovations on the subject property in 2021?

2. If the subject property is eligible for tax relief under s. 357(1)(g) of the Act, what is the quantum of relief?

Result

6For the 2021 taxation year:

1. The subject property is eligible for tax relief under s. 357(1)(g) of the Act.

2. On consent, the taxes are to be refunded in the amount of $15,600.

ANALYSIS

Issue 1 - Is the subject property eligible for tax relief under [s. 357(1)](https://www.canlii.org/en/on/laws/stat/so-2001-c-25/latest/so-2001-c-25.html)(g) of the [Act](https://www.canlii.org/en/on/laws/stat/so-2001-c-25/latest/so-2001-c-25.html)?

7Section 357(1)(g) of the Act provides:

357 (1) Upon application to the treasurer of a local municipality made in accordance with this section, the local municipality may cancel, reduce or refund all or part of taxes levied on land in the year in respect of which the application is made if,

(g) repairs or renovations to the land prevented the normal use of the land for a period of at least three months during the year.

8The Board will first determine the main issues raised by the parties in the determination of the subject property’s eligibility for tax relief under s. 357(1)(g) of the Act.

Issue 1(a) - Do repairs and/or renovations without building permits qualify for tax relief under [section 357(1)](https://www.canlii.org/en/on/laws/stat/so-2001-c-25/latest/so-2001-c-25.html)(g) of the [Act](https://www.canlii.org/en/on/laws/stat/so-2001-c-25/latest/so-2001-c-25.html)?

9Saleh Saleh, Director of Revenue, advocate for the City, submitted that the primary reason the City did not process the Appellant’s application for tax relief was because there was no building permit issued for the work carried out on the subject property during the effective period claimed by the Appellant.

10Faye West, Manager of Taxation and Payment Processing, witness for the City, testified that in addition to her duties, she approves s. 357 applications to ensure that applicants comply with the City’s internal policy and non-compliance would result in a denial of the application. She further added that she reviews the applications to ensure that they were filed within the time frame set by the Act and if the application is under s. 357(1)(g), there must be a building permit attached to it.

11During cross-examination the City’s witness referred the Board to the City’s internal policy, dated May 1, 2023, which she admitted was documented by Mr. Saleh. She acknowledged that although it was dated after the Appellant submitted its s. 357(1)(g) application on February 17, 2022, the City’s standard operating procedure was in place at the time the Appellant made its application and Mr. Saleh documented the internal policy on May 1, 2023. She also admitted that the internal policy was not reviewed by the City’s legal department.

12Victor Guyader, advocate for the Appellant, submitted that the Act is the appropriate authority for s. 357(1)(g) applications and not the City’s internal policy.

Issue 1(a) - Findings

13The modern principle of statutory interpretation is commonly used by the Board in interpreting the Act. The words of a statute must be read "in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament". See 2198806 Ontario Inc. v. Windsor (City), 2021 CanLII 132950 (ON ARB) at para. 22 and Canadian Property Holdings (Ontario) Inc. v. Municipal Property Assessment Corp., Region 15, [2017] O.A.R.B.D. No. 150 at para. 12.

14The ordinary and grammatical interpretation of s. 357(1)(g) is that a taxpayer that demonstrates that repairs or renovation on a property prevented its normal use for at least three months in the year of its application may be eligible for tax relief.

15In Albert/O’Connor Properties v Ottawa (City), 2024 CanLII 29982 (ON ARB) (Albert/O’Connor Properties), the city denied the appellant’s application for tax relief under s. 357(1)(g) of the Act, stating that sufficient information was not received. The City’s witness testified that the appellant did not provide any building permits and undated photographs were provided of renovations of some parts of the property.

16The Board determined at para. 21 that:

… the Board does find that renovations and/or repairs prevented normal use of the Subject Property for at least three months of the 2021 taxation year. In making this finding, the Board relies on the evidence of the Appellant's witness confirming that renovations prevented the Subject Property being used as a hotel for the entire 2021 taxation year. While the Appellant did not provide primary evidence to show the extent of the work performed, the Board is satisfied based on the sworn evidence of the Appellant's witness that renovations and repair were indeed performed at the Subject Property for at least three months of the 2021 taxation year.

17The Act is the legislative authority to determine if the Appellant qualifies for tax relief. A building permit provides some evidence of the scope of the work, but it is not a pre-requisite to grant tax relief. A building permit can be issued by the City and the work not carried out by the applicant. The City’s internal policy may serve as a guide in approving these applications, however, as admitted by the City’s witness, the internal policy does not take precedence over the Act.

18Therefore, the Board finds that repairs and/or renovations without building permits can qualify for tax relief under s. 357(1)(g) of the Act. However, the Board still has to review the evidence adduced by the parties in each appeal to determine if there were repairs and/or renovations that prevented the normal use of the land for at least three months during the year in order for the Appellant to qualify for tax relief.

Issue 1(b) - Were there repairs and/or renovations on the subject property in 2021?

19Under s. 357(10) of the Act, the Board may make any decision the council could have made. The Board has to determine if there were any repairs or renovations on the subject property in 2021 for at least three months, which prevented its normal use, in order to determine its eligibility for tax relief under s. 357(1)(g) of the Act.

20The Appellant’s representative submitted that the Appellant is a real estate investment trust company that owns many warehouse properties across Canada, and it purchased the subject property as vacant on June 15, 2021. He added that the Appellant buys industrial properties and warehouses, and its main objective and purpose is to produce income from these properties and retain the income for its shareholders.

21He referred to the subject property as a “fixer upper” at the time of purchase and on July 15, 2021, the Appellant commenced the plan to repair and renovate the subject property, which was completed in 2022 and leased as a warehouse to a tenant in 2022.

22He directed the Board to a letter dated February 10, 2022 from Dri-Lec Building Services Inc., a contractor, who carried out repairs and renovations on the subject property. In this letter the contractor stated,

Our services commenced on July 15, 2021 and are ongoing. We forecast a project completion date of late May, 2022. During the time of our renovations, the building was and continues to be completely vacant and un-inhabitable due to structural safety issues, floor slab deficiencies, lack of security with damaged and non-operable doors, lack (no operating units) of heat, compromised gas grid system, electrical deficiencies, compromised water supply and drain lines, and no operating sanitary/washroom facilities.

23The Appellant’s representative directed the Board to some undated photographs of the subject property, which show that the subject property was under repairs. He submitted that the work carried out in the photographs was during the effective period from July 15, 2021 to December 31, 2021. He argued that this work needed to commence in order to prepare and get the subject property to a state and condition that would allow the normal use as a warehouse. He added that a building permit was issued April 25, 2022 for interior alteration of the warehouse.

24He submitted that during the effective period the normal use of the subject property as a warehouse was prevented due to the repairs carried out on it.

25During cross-examination, he admitted that the architectural drawings presented into evidence by the Appellant dated November 16, 2021, were unrelated to the work done during the effective period claimed by the Appellant in 2021.

26When asked by the Board he confirmed that the purchase order invoices relating to the work carried out during the effective period were submitted to the City in July 2024 which was an itemization of all the work carried out on the subject property in 2021 and 2022 with dates and descriptions. However, he stated that he was unable to obtain the invoices and itemization for this appeal, as they were received later in the appeal process

27The City’s representative submitted that these invoices were not presented into evidence for this appeal and the photographs presented into evidence are not dated.

28Furthermore, the City’s representative, argued that section 357 of the Act gives the City a discretion to deny tax relief to the Appellant since the Act explicitly provides that “the local municipality may cancel, reduce or refund all or part of taxes levied on land” [emphasis added], therefore tax relief is not guaranteed to the Appellant. He also argued that the Appellant should have applied for a vacancy rebate under s. 364 of the Act, although he advised that this relief has been phased out by the City. He submitted that the Appellant would have qualified under s. 364, even though the City has phased it out, but the Appellant applied under s. 357(1)(g).

Issue 1(b) – Findings

29The Board reviewed the Appellant’s photographs which show that there were repairs and/or renovations carried out on the subject property and the Appellant’s representative submitted that the Appellant confirmed that the photographs were taken between July 15, 2021 and December 31, 2021. This was further corroborated as repairs and/or renovations carried out on the subject property in the contractor’s letter dated February 10, 2022. As determined in Albert/O’Connor Properties, even though the photographs are undated the Board still determined there were repairs and/or renovations on the property, based on the evidence presented at the hearing.

30The normal use for which the Appellant purchased the subject property was as a warehouse, to produce income for its shareholders and not as a vacant property, which use was prevented during the effective period due to the repairs and/or renovations.

31The Board finds that there were repairs and/or renovations carried out on the subject property, which prevented its normal use as a warehouse during the effective period from July 15, 2021 to December 31, 2021. The contractor’s letter detailed the work carried out on the subject property as submitted by the Appellant and the photographs, although undated, show that there were repairs and/or renovations carried out on the subject property during the effective period. The Appellant further presented into evidence an email from the Appellant’s representative to the City dated October 18, 2023, stating the work carried out on the subject property:

Sub-contractors started on site on July 15, 2021.

The first phase and initial services that we started with was site clean up, removal of debris and attached redundant elements, i.e racking etc… Once all the debris and redundant equipment was removed we proceeded to remove redundant equipment attached to the floor and repairs and patching of the warehouse floor slab. Once the floor was repaired and filled, we went onto a full power wash and degreasing of the entire building including the roof deck, walls and floors. This was followed by painting of all surfaces including the roof deck. During this period the building was completely vacant and un-inhabitable due to structural safety issues, floor slab deficiencies, lack of security with damaged and non-operable doors, no operating heating units, compromised gas grid system, electrical deficiencies, compromised water supply and drain lines, and no operating sanitary/washroom facilities. No permits were required for this initial phase of work but still represent a portion of the renovation work…

The Appellant submitted that these repairs were the initial phase to commence the preparation of the subject property for leasing, but still represent part of the renovation work on the subject property.

Findings - Issue 1 - Is the subject property eligible for tax relief under [s. 357(1)](https://www.canlii.org/en/on/laws/stat/so-2001-c-25/latest/so-2001-c-25.html)(g) of the [Act](https://www.canlii.org/en/on/laws/stat/so-2001-c-25/latest/so-2001-c-25.html)?

32The Courts have determined that s. 357 of the Act is a remedial section which provides “essential justice to taxpayers” who come within any of the enumerated exceptions. See Wilkes v. Interlake Tissue Mills Co. Ltd., 1968 CanLII 40 (ON CA) (Wilkes).

33In 810277 Ontario Ltd. v. Regional Assessment Commissioner, [1995] O.M.B.D. No. 359, the Ontario Municipal Board (“OMB”) in its interpretation of s. 440(1)(C)(ii) (now s. 357(1)(d)(ii)) of the Act), also adopted the reasoning of the Ontario Court of Appeal in Wilkes on the purpose of these sections of the Act. It determined at para. 9 that:

… these provisions are designed by the legislature to provide for the necessary safety-valves and individual reliefs in an otherwise mechanistic edifice that generates the necessary source of municipal revenue.

34On the other hand, the OMB provided at paras. 11 and 12 two cautions in the application of these sections:

Firstly, these provisions should not be interpreted as matters of statutory rights flowing to the owners; they are matters for which discretionary reliefs can be given. …

Secondly, the Assessment Review Board or the Board, in exercising its statutory review must ensure that the claimant should be brought squarely within the exonerating provision, to avoid throwing additional taxation burdens on other taxpayers. … A reduction or remission of taxation, however justifiable it may be, would have an effect on the overall taxation. An adjudicator must be most vigilant to opening a floodgate whereby the remission might become a rule instead of an exception.

35Giving due recognition to the remedial nature of the legislation, the provisions in s. 357(1) are exceptions to the mandatory requirement to collect taxes, therefore Part X of the Act only provides for a narrow range of circumstances in which a taxpayer is not required to pay municipal taxes. See Bayshore Shopping Centre Limited/KS Bayshore Inc. v Ottawa (City), 2022 CanLII 78197 (ON ARB) at paras. 43 and 44.

36In 2397146 Ontario Inc. v Brampton (City), 2018 CanLII 37737 (ON ARB), the Board determined at para. 17 that essential justice must be exercised within the limits set in the Act. Specifically, the Board determined that:

… Essential justice must be accomplished within the confines set out in the legislation. There is no broad power to make taxpayers whole. Rather, the legislation sets out how that objective is to be achieved. Subsection 357(1) sets out the grounds of relief, which are broad, but the legislation also sets clear deadlines for applications and appeals. The remedial purpose of the tax refund provisions does not rewrite the legislation.

37Therefore, in carrying out essential justice to the Appellant and ensuring that justice and equity is achieved, the Board must determine if the Appellant falls within the purview of the subsection of the Act for which relief is claimed.

38The City’s exercise of its discretion must be exercised within the confines of the Act. The Appellant did not apply for tax relief under s. 364 of the Act and could not have applied for it, since this section of the Act has been discontinued by the City.

39Having determined that repairs and/or renovations without building permits can qualify for tax relief under s.357(1)(g) of the Act, and that there were repairs and/or renovations on the subject property which prevented its normal use as a warehouse during the effective period from July 15, 2021 to December 31, 2021, the Board finds that the requirements of s. 357(1)(g) of the Act are met by the Appellant and the subject property is eligible for tax relief.

Issue 2 – If the subject property is eligible for tax relief under [s. 357(1)](https://www.canlii.org/en/on/laws/stat/so-2001-c-25/latest/so-2001-c-25.html)(g) of the [Act](https://www.canlii.org/en/on/laws/stat/so-2001-c-25/latest/so-2001-c-25.html) what is the quantum of relief?

40The parties do not disagree on the quantum of tax relief. The Appellant agreed with the City that should the Board determine that the subject property is eligible for tax relief, the amount it is entitled to is $15,600 (rounded).

Issue 2 - Findings

41On consent of the parties, the amount of tax relief the subject property is eligible for is $15,600.

CONCLUSION

42For the 2021 taxation year, there were repairs and/or renovations which prevented the normal use of the subject property as a warehouse for a period of at least three months during the year.

ORDER

43On consent, for the 2021 taxation year, the amount of tax to be refunded is $15,600 for the effective period of July 15, 2021 to December 31, 2021.

"Subuola Awoleri"

SUBUOLA AWOLERI

MEMBER

Assessment Review Board

Website: www.tribunalsontario.ca/arb