Classic '59 Investments Inc. v. Municipal Property Assessment Corporation Region 18, 2024 CanLII 40024

Tribunals Ontario

Tribunaux décisionnels Ontario

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: May 02, 2024

FILE NO.: DM 186092

Assessed Person(s): Classic '59 Investments Inc.

Appellant(s): Classic '59 Investments Inc.

Respondent(s): Municipal Property Assessment Corporation Region 18

Respondent(s): City of Niagara Falls

Property Location(s): 4300 Drummond Road

Municipality(ies): City of Niagara Falls

Roll Number(s): 2725-050-001-04700-0000

Appeal Number(s): 3514255 and 3525850

Taxation Year(s): 2023 and 2024

Hearing Event No.: 783168

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

Parties	Representative
Classic '59 Investments Inc.	Robert Brazzell Damian Bernacik
Municipal Property Assessment Corporation	Brittany Allen
City of Niagara Falls	Submissions not received

REQUEST FOR: An order dismissing the appeals due to issue estoppel or abuse of process

HEARD: February 20, 2024 in writing

ADJUDICATOR(S): Carly Stringer, Member

MOTION DECISION

OVERVIEW

1Classic ‘59 Investments Inc. (the “Appellant”) has appealed the assessment of 4300 Drummond Road in the City of Niagara Falls (the “Subject Property”) for the 2023 taxation year before the Assessment Review Board (the “Board”) pursuant to s. 40 of the Assessment Act (the “Act”). An appeal was deemed for the 2024 taxation year pursuant to s. 40(26) of the Act (the 2023 and 2024 appeals together, the “Subject Appeals”).

2The Subject Property is a shopping plaza. In the Subject Appeals, the Appellant argues that the value reflected on the assessment of the Subject Property is incorrect and inequitable.

3The Municipal Property Assessment Corporation (“MPAC”) is responding to the Subject Appeals. MPAC has brought a motion asking the Board to dismiss the Subject Appeals based on issue estoppel or abuse of process. MPAC’s motion is the subject of this Motion Decision.

4The City of Niagara Falls is a statutory party to the Subject Appeals, but did not provide submissions on this motion.

5The Appellant opposes the motion.

Result

6For the reasons that follow, the Board orders that the Subject Appeals are dismissed.

BACKGROUND

The 2017 to 2022 Appeals

7The Appellant previously appealed the assessment of the Subject Property for the 2017 taxation year on the basis that the current value reflected on the assessment was too high pursuant to s. 40(1) of the Act. Appeals were deemed for the 2018 to 2022 taxation years pursuant to s. 40(26) of the Act (all appeals together, the “2017 to 2022 Appeals”). MPAC and the City of Niagara Falls were respondents to the 2017 to 2022 Appeals, although the City of Niagara Falls did not participate.

8The Appellant and MPAC settled the 2017 to 2022 Appeals and executed Minutes of Settlement. The Appellant and MPAC filed their Minutes of Settlement with the Board and requested that the Board issue decisions in accordance with these Minutes. On August 19, 2022, the Board issued decisions in relation to each of the 2017 to 2022 Appeals, reducing the current value reflected on the assessments from $2,828,000 to $2,794,000 (the “2017 to 2022 Decisions”).

The Subject Appeals

9The assessment of the Subject Property for the 2023 taxation year reflected a current value of $2,794,000 as of January 1, 2016, the same amount reflected in the 2017 to 2022 Decisions.

10The Appellant filed an appeal of this 2023 assessment and, as mentioned above, an appeal was deemed for the 2024 taxation year. These are the Subject Appeals.

11The Appellant served a Statement of Issues (“SOI”) in the Subject Appeals, stating that i) the assessed value of $2,794,000 is too high; ii) that MPAC incorrectly assessed the Subject Property based on 30,100 square feet (“sq. ft.”) of gross leasable area (“GLA”) when it should be 27,772 sq. ft.; and iii) the assessed value is inequitable as compared to the assessments of similar lands in the vicinity. More specifically, the Appellant challenges the fair market rents applied by MPAC in making its assessment. The Appellant states that, when the revised fair market rents are applied to the GLA of 27,772 sq. ft., the revised current value is $2,304,000 (rounded). The Appellant did not provide further particulars with respect to its position that the value is inequitable.

MPAC’s Motion

12MPAC filed a request with the Board to schedule a motion to dismiss the Subject Appeals based on issue estoppel and abuse of process. Namely, MPAC argues that the issue in dispute in the Subject Appeals – namely, the current value assessment of the Subject Property as of January 1, 2016 – was already decided in the 2017 to 2022 Decisions.

13The Appellant opposes MPAC’s request. The City has not provided submissions to the Board.

14The Board scheduled this motion to consider and decide MPAC’s request to dismiss.

PRELIMINARY MATTERS

Compliance With the Schedule of Events

Submissions

15The Appellant argues that this motion for issue estoppel should be dismissed because MPAC did not comply with the Board’s Rules of Practice and Procedure (the “Rules”) and the Schedule of Events. Specifically, the Appellant submits that MPAC was required to submit its Statement of Response (“SOR”) on or before December 5, 2023, but it did not in fact serve its SOR until January 14, 2024. The Appellant submits that Rule 49 requires that issue estoppel be identified in a party’s SOR, and therefore MPAC was required to serve an SOR in accordance with the SOE if it wants to raise issue estoppel.

Findings

16The Board does not accept the Appellant’s submissions in this regard. The Board relies on the uncontested evidence that demonstrates the following timeline of events:

a. On November 13, 2023, MPAC emailed the Appellant and advised of MPAC’s position that issue estoppel applies. MPAC stated that the Subject Appeals should be withdrawn by the Appellant, otherwise MPAC would bring a motion for issue estoppel. The Appellant did not respond to this email.

b. On November 23, 2023, MPAC emailed the Appellant seeking a response to its November 13, 2023 email. The Appellant did not respond to this email.

c. On November 28, 2023, MPAC emailed the Appellant a draft Expedited Board Direction Form (“EBDF”) requesting that the Board schedule a motion for issue estoppel, and that the SOE be suspended pending disposition of the motion. The Appellant did not respond to this email or the draft EBDF.

d. On December 4, 2023, the day before MPAC’s SOR was due, MPAC filed its EBDF with the Board, asking the Board to schedule a motion for issue estoppel and suspend the SOE. MPAC asked the Board to rule on the SOE suspension immediately, given the SOR deadline of December 5, 2023.

e. The Board did not address MPAC’s EBDF until December 14, 2023. In its disposition, the Board directed that a motion for issue estoppel be scheduled. The Board did not address MPAC’s request to suspend the SOE.

f. On December 20, 2023, MPAC emailed the Board to ask whether the SOE was suspended pending the motion for issue estoppel, as this issue was not addressed in the EBDF disposition of December 14, 2023.

g. On December 21, 2023, the Board ordered that the SOE be suspended pending the motion for issue estoppel.

17Based on this evidence, the Board finds that MPAC communicated its intent to both bring a motion for issue estoppel, and request a suspension of the SOE, well in advance of the deadline to serve its SOR. The Board further finds that MPAC filed its request to the Board in advance of the SOR deadline, and the Board granted the request to suspend the SOE. The timing of the delayed Board response to the SOE suspension request is through no fault of MPAC.

18In these circumstances, and pursuant to Rules 3, 4, 5 and 6, the Board does not accept the Appellant’s argument that this motion for issue estoppel should be dismissed because MPAC did not serve its SOR by December 5, 2023.

ISSUES

19The following issues will be addressed on this motion:

a. Are the preconditions to issue estoppel met in this case?

b. If the preconditions to issue estoppel are met, ought the Board apply issue estoppel, as a matter of discretion?

c. Does abuse of process apply and, if it does, ought the Board apply it?

ANALYSIS

Issue 1 - Are the preconditions to issue estoppel met in this case?

Applicable Law

20The Board has outlined the law of issue estoppel fairly extensively in many recent cases: see Canadian Niagara Hotels Inc. v Municipal Property Assessment Corporation, Region 18, 2022 CanLII 54916 (ON ARB); First Capital Holdings (Ontario) Corporation v Municipal Property Assessment Corporation, Region 09, 2022 CanLII 58354 (ON ARB) (“First Capital”); ARI STC GP Inc. v Toronto (City), 2023 CanLII 116834 (ON ARB) (“ARI STC”); Ivanhoe Cambridge Inc v Oshawa (City), 2023 CanLII 116832 (ON ARB) (“Ivanhoe Cambridge”); and Manulife Ontario Property Portfolio Inc. v Municipal Property Assessment Corporation, 2023 CanLII 39085 (ON ARB), 2023 CanLII 13877 (ON ARB) (“Manulife ”), upheld on appeal Manulife Ontario Property Inc. v. MPAC and Ottawa (City), 2024 ONSC 1047 (“Manulife Div. Ct.”).

21To summarize, the three criteria that must be met for issue estoppel to apply are well-settled: see Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 SCR 460 (“Danyluk”) at paragraphs 54 to 59; First Capital at paragraph 27. The preconditions that must be satisfied are that:

i. the same question has been decided;

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

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

Evidence and Submissions of the Parties

22MPAC submits that the preconditions to issue estoppel are satisfied. Specifically, MPAC submits that:

a. The issues in the Subject Appeals were already agreed upon by the parties, resolved by Minutes of Settlement for the 2017 to 2022 Appeals, and decided by the Board in the 2017 to 2022 Decisions. This satisfies the first requirement of issue estoppel.

b. The 2017 to 2022 Decisions were final, satisfying the second requirement of issue estoppel.

c. The parties to the 2017 to 2022 Appeals, the 2017 to 2022 Decisions, and the Subject Appeals are the same, being the Appellant, MPAC and the City of Niagara Falls. This satisfies the third requirement of issue estoppel.

23The Appellant submits that the first precondition to issue estoppel is not met. Specifically, the Appellant argues that the current value and equity issues raised by the Appellant in the Subject Appeals have not been decided by the Board for the applicable taxation years. The Appellant submits that there is an annual right to appeal an assessment, and the 2017 to 2022 Decisions only addressed the 2017 to 2022 taxation years. The Appellant argues that when the Board issued the 2017 to 2022 Decisions, the assessment roll for 2023 had not yet been returned and, therefore, the Board did not and could not have decided the current value and equity of the 2023 assessment in the 2017 to 2022 Decisions.

Findings on Issue 1

24The Board finds that the preconditions of issue estoppel are satisfied.

25The Board has extensively considered – and rejected – the arguments advanced by the Appellant with respect to the first precondition to issue estoppel. In particular, the arguments that an annual right to appeal precludes a finding that issue estoppel may apply, and that whether the 2023 and 2024 assessments are equitable with the assessments of similar property in the vicinity was not and could not have been adjudicated until MPAC returned the assessments for those years, were rejected in ARI STC at paragraphs 53 to 61; Ivanhoe Cambridge at paragraphs 166 to 172; Manulife and Manulife Div. Ct.

26The Appellant submits that the Board should not follow the reasoning in ARI STC, Ivanhoe Cambridge, Manulife and Manulife Div. Ct. because i) these decisions are currently subject to appeal; and ii) there are appellate court decisions from other provinces that were not considered by the Board in these cases. The Appellant refers to Brandt Properties Ltd. v Sherwood (Rural Municipality), 2023 SKCA 4 at paragraphs 47 and 48, and submits that the Saskatchewan Court of Appeal held in this case that a taxpayer has a “fresh right of appeal” every year. The Appellant further relies on Motor Coach Industries Ltd. v. Winnipeg City Assessor, 1997 CanLII 4337 (MB CA), arguing that the Manitoba Court of Appeal determined that with annual appeal rights and the Board’s obligations to conduct a hearing, the Board must admit all evidence of value regardless of whether a previous Board decided that evidence and issue.

27The Board does not accept the Appellant’s submissions in this regard for the following reasons:

a. While ARI STC, Ivanhoe Cambridge, Manulife and Manulife Div. Ct. may be under appeal, the Board finds that the Appellant has not sufficiently particularized why the Board should doubt the correctness of those decisions, or why the Board should depart from these authorities.

b. With respect to Brandt Properties, the Board notes that Saskatchewan’s assessment legislation explicitly provides that “each [annual] assessment must reflect the facts, conditions and circumstances affecting the property as at January 1 of each year as if those facts, conditions and circumstances existed on the applicable base date”: see The Municipalities Act, SS 2005, c M-36.1, s. 195(4). This is a very different statutory context than Ontario’s Assessment Act, which does not provide for consideration of new “facts, conditions and circumstances” for each taxation year. In these circumstances, it is far from clear that Brandt Properties is applicable. The Board does not accept the Appellant’s submission in this regard.

c. With respect to Motor Coach, the Board is not persuaded that it applies. It is a single case from another jurisdiction that was decided nearly 30 years ago. Ontario’s assessment legislation was not analyzed in Motor Coach. The Board is not satisfied that the Motor Coach case should displace the detailed and thorough statutory analysis undertaken in Ivanhoe Cambridge and ARI STC, and the reasoning in Manulife that was upheld by the Divisional Court in Manulife (Div. Ct.).

28The Board will not repeat the lengthy analysis from ARI STC, First Canadian, and Manulife. However, the Board relies on those cases, specifically their analysis regarding the first precondition to issue estoppel. The Board applies that analysis to the facts of this case in rejecting the Appellant’s submissions.

29On the facts of this case, the Board finds that:

a. The question decided in the 2017 to 2022 Decisions is the value at which the Subject Property shall be assessed as of the valuation day of January 1, 2016. This requires a determination of the current value of the land, which could have included a consideration of the GLA, and whether an equitable adjustment is required. The Board finds that the value as of January 1, 2016 is the same question to be determined in the Subject Appeals, given that s. 48.6 of O. Reg. 282/98 provides that January 1, 2016 is the valuation day for 2023 and 2024 taxation years and s. 44(3) of the Act provides that addressing this question necessarily requires a determination of the current value of the land, and whether an equitable adjustment is required. Therefore, the Board finds that the first precondition of issue estoppel is satisfied.

b. The 2017 to 2022 Decisions were final. The Board finds that the second precondition to issue estoppel is satisfied.

c. Third, the parties to the 2017 to 2022 Appeals are the same as the Subject Appeals. The Board finds that the third precondition to issue estoppel is satisfied.

Issue 2 - If the preconditions to issue estoppel are met, ought the Board apply issue estoppel, as a matter of discretion?

Applicable Law

30The fact that the three preconditions to issue estoppel may be satisfied does not automatically give rise to its application: Danyluk at paragraph 63. The Supreme Court has confirmed “the objective is to ensure that the operation of issue estoppel promotes the orderly administration of justice but not at the cost of real injustice in the particular case”: Danyluk at paragraph 67.

31Therefore, now that the Board has determined that the preconditions to issue estoppel have been met, the Board must ask itself whether it should allow the Appellant to re-litigate the current value of the Subject Property as of January 1, 2016. In doing so, the Board “should stand back and, taking into account the entirety of the circumstances, consider whether application of issue estoppel in the particular case would work an injustice”: Danyluk at paragraph 80.

Evidence and Submissions of the Parties

32The Appellant submits that many factors weigh against the Board applying issue estoppel in this case:

a. The Appellant was not represented by a legal representative in the 2017 to 2022 Appeals.

b. The Appellant understood the 2017 to 2022 Appeals settlement value to be based on MPAC correcting all aspects of its income valuation, particularly the GLA. MPAC did not correct its incorrect GLA.

c. The Appellant thought it could challenge its assessment in 2023 if it settled the 2017 to 2022 Appeals.

d. There is reason to doubt the legal correctness of the 2017 to 2022 Decisions because the City of Niagara Falls did not sign the Minutes of Settlement.

e. There are factual errors in MPAC’s assessment. The assessed value of $2,794,000 is based on an income valuation using a GLA of 31,000 sq. ft. The uncontested evidence is that the GLA is 27,772 sq. ft. This demonstrates an overassessment of 11.62%. Applying issue estoppel in this context would work an injustice.

f. Equity in taxation weighs in favour of the Board exercising its discretion to refuse to apply issue estoppel.

g. The injustice to the Appellant will be exacerbated by each passing year without a general reassessment.

33MPAC submits that issue estoppel applies to rights, questions or facts that were proved or admitted, or that could have been proved or admitted, in the prior proceeding. MPAC submits that the Appellant did not produce evidence of the gross leasable area in the 2017 to 2022 Appeals, nor was such evidence included in the Appellant’s SOI for the Subject Appeals. MPAC submits that there is no suggestion of any impropriety, unfairness, or failure of natural justice in the 2017 to 2022 Decisions beyond that of the Appellant’s own doing.

Findings on Issue 2

34The Board finds that the Appellant has not satisfied it that it should exercise its discretion to decline to apply issue estoppel in this case. The Board finds that fairness and justice is achieved by applying issue estoppel.

35The Board finds that there is no real injustice towards the Appellant. While there may have been an error with respect to the correct GLA, the Appellant has not claimed or provided evidence that it was misled by MPAC with respect to the GLA that would apply for the 2017 to 2022 Appeals, nor does the Appellant claim it was misinformed about the GLA when it settled the 2017 to 2022 Appeals. While MPAC may not have provided a breakdown of the GLA when it resolved the 2017 to 2022 Appeals with the Appellant, it was incumbent on the Appellant to obtain the information it needed prior to reaching a resolution. While the Appellant was not represented by legal counsel at the time, there is no indication that the process leading to the 2017 to 2022 Decisions was anything other than fair.

36For these reasons, the Board will not exercise its discretion to decline to apply issue estoppel in this case.

Issue 3 - Does abuse of process apply and, if it does, ought the Board apply it?

37Since the Board has found that the three preconditions to the application of issue estoppel are satisfied, and that it ought to apply issue estoppel as a matter of discretion, the Board will not consider the arguments in relation to abuse of process.

CONCLUSION

38The Board finds that issue estoppel applies. For the reasons herein, the Board finds that dismissal of the Subject Appeals is appropriate.

ORDER

39The Board orders that the Subject Appeals are dismissed.