Y.J. v. City of Niagara Falls, 2026 CanLII 29001

Tribunals Ontario

Tribunaux décisionnels Ontario

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: March 25, 2026

FILE NO.: RD 25-023

Assessed Person(s): Y.J.; Y.C.

Appellant(s): Y.J.; Y.C.

Respondent(s): City of Niagara Falls

Property Location(s): Address Withheld

Municipality(ies): City of Niagara Falls

Roll Number(s): Roll Number Withheld

Appeal Number(s): 3527670

Taxation Year(s): 2023

Legislative Authority: Rules 101-103 of the Assessment Review Board’s Rules of Practice and Procedure

Parties	Counsel/Representative
Y.J.; Y.C.	Submissions not received
City of Niagara Falls	Zohaib Ahmed

REQUEST FOR: A review of the Board’s Decision WR 188247 issued on July 16, 2025

HEARD: March 3, 2026 in writing

ADJUDICATOR(S): Dirk VanderBent, Vice-Chair

DECISION

INTRODUCTION

1The City of Niagara Falls (the “City”) has filed a written Request for Review with the Assessment Review Board (the “Board”) respecting Y.J v Niagara Falls (City), 2025 CanLII 70999 (ON ARB), a decision issued on July 16, 2025 (“the Decision”).

THE DECISION

2The Decision is in respect of a residential property located in the City (the “Subject Property”). The Subject Property is owned by Y.J.; Y.C., who are husband and wife, (the “Taxpayers”). The Decision addresses an application filed by the Taxpayers with the Assessment Review Board, (the “Board”), in which they requested a cancellation/refund of municipal taxes pursuant to s. 357(1)(d.1) of the Municipal Act, 2001, S.O. 2001, c. 25 (“Inability to Pay”) (the “Act”). The relevant provisions of s. 357 state:

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, …

(d.1) the applicant is unable to pay taxes because of sickness or extreme poverty;

3The Taxpayers’ application is for the 2023 taxation year, on the basis that they are unable to pay any part of their municipal taxes (total $8,307.94) because of the husband’s sickness. The City did not dispute that the Taxpayers’ application meets the sickness criterium. However, the City did dispute that the Taxpayers are unable to pay their municipal taxes.

4In the Decision, the Hearing Member cited the City’s submissions that portions of the Taxpayers’ income were spent on discretionary items, arguing that these funds should have been allocated to paying property taxes.

5The Hearing Member reviewed the Taxpayers’ joint financial circumstances, on the assumption that all non-discretionary expenses referenced by the City (other than the vehicle lease) should be excluded from consideration. Even so, the Hearing Member, having reviewed the Taxpayers’ including income, assets, and liabilities, concluded that the Taxpayers, after payment of all non-discretionary expenses, experience an income shortfall of over $3,000 per month (see paragraph 30).

6The Hearing Member noted that the Taxpayers’ had paid $4,057.48 of the total municipal taxes owing. The Hearing Member ultimately found that the Taxpayers were unable to pay any of the $8,307.94, and, based on this finding, ordered that the total municipal taxes for the 2023 taxation year be cancelled.

THE REQUEST

7Requests for review are governed by Rules 102 and 103 of the Board’s Rules of Practice and Procedure (“Rules”) which state:

102. A request for review will not be granted unless the Board is satisfied that:

(a) the Board acted outside its jurisdiction or violated the rules of natural justice or procedural fairness;

(b) the Board made a significant error of law or fact such that the Board would likely have reached a different decision;

(c) the Board heard false or misleading evidence from a party or witness, which was discovered only after the hearing and would have affected the result; or

(d) there is new evidence that could not have reasonably been obtained earlier and have affected the result.

103. Upon considering a request for review, or on its own initiative, the Board may:

(a) dismiss the request; or

(b) after providing all parties an opportunity to make submissions:

i.confirm, vary, or cancel the decision; or

ii.order a rehearing on all or part of the matter.

8Pursuant to Rule 103, the City requests that the Board vary the Decision to provide that the Taxpayers are required to pay their municipal taxes for the 2023 taxation year in full.

9The Board provided the parties to the Decision with an opportunity to file written submissions with the Board. In response, the City filed submissions with the Board, which are described in greater detail below. The Taxpayer did not.

RESULT

10The City’s Request for Review is granted. The Board orders a rehearing of the entire Application, to be conducted by a different Hearing Panel.

ANALYSIS

11While the Board has considered all of the City’s submissions in detail, the Board, in this Review Decision, provides only a summary of the City’s salient submissions.

12In this case, the City relies on the following grounds in support of its Request for Review.

Ground 1: The Board violated the rules of natural justice or procedural fairness

Background

13It is not disputed there were several adjournments of the application hearing, nor does the City challenge that these adjournments were necessary. There were two Board Members initially assigned to the Hearing Panel, who were both present at the commencement of the hearing on December 5, 2024. The Hearing was adjourned to March 21, 2025, at which time only one of the Hearing Members conducted the Hearing and issued the Decision. On both hearing dates, submissions were heard, cross-examinations were conducted, and evidence was examined.

Submissions

14The City submits that it is entitled to have its case determined by the Hearing Member who heard all of the evidence and submissions. The City maintains that it is unclear whether the Hearing Member who was absent for the March 21, 2025 hearing appearance, had any input into the final decision. The City asserts that no explanation or justification was provided for the change in the Hearing Panel composition, nor was any assurance given that the absent Hearing Member had reviewed the full record. The City also submits that it is unclear whether the absent Hearing Member discussed the matter with the remaining Hearing Member or influenced the Decision. The City submits that this lack of clarity and transparency undermines the fairness and integrity of the decision making process.

15The City states that the requirement for an impartial and properly constituted decision-maker is fundamental to administrative justice. In these circumstances, the City submits that the Decision is procedurally flawed, and therefore invalid, and ought to be reviewed and reversed.

16The Board afforded the parties an opportunity to file further submissions in respect of the City’s Request for Review. The Board specifically requested that the parties provide submissions on a recent amendment to the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22 (“SPPA”), namely, s. 4.4(2) which states:

Incapacity, panel of more than one

(2) In the case of a panel of more than one person, if a member of the panel dies or is unable for any other reason to complete a hearing or to participate in a decision, the remaining member or members may complete the hearing or make a decision. 2024,c. 28, Sched. 25, s. 1.

17The City submits that Section 4.4(2) of the SPPA must be read in light of the duty of procedural fairness, asserting that parties are entitled to a fair hearing and that the denial of a fair hearing renders any decision invalid, regardless of whether the outcome would have been different.

18Furthermore, the City states that the Board did not provide the City with advance notice of the change in the composition of the Hearing Panel, or request the City’s consent to the change, stating that no explanation or justification was provided. Alternatively, the City argues that, even if there is no actual prejudice to the City, the uncertainty about whether, and how, the absent Hearing Member may have influenced the outcome, creates a reasonable apprehension of unfairness amounting to perceived prejudice sufficient to warrant setting aside the Decision.

Findings on Ground 1

19The Board begins by emphasizing that s. 4.4(2) of the SPPA provides that if a member of the panel is unable for any reason to complete a hearing or to participate in a decision, the remaining member or members may complete the hearing or make a decision. Thus, there is no basis for the City’s submission that it is entitled to have its case determined by both Hearing Members who heard all the evidence and submissions. Similarly, there is nothing in the wording of s. 4.4(2) to suggest that the Board requires the City’s consent to a change in the Hearing Panel.

20The Board need not explain why the absent Hearing Member was unable to continue as a Member of the Hearing Panel. The fact is that she was unable to do so, so the Board directed that the remaining Hearing Member conduct the hearing. This particular proceeding had previously adjourned. Therefore, to ensure a timely disposition of this application, it was entirely reasonable to continue the hearing with just the remaining Hearing Member, otherwise a full re-hearing of the application would have been required, which is an inefficient approach. The Board further notes that the remaining Hearing Member was present at all hearing appearances and provided full and complete written reasons for the Decision. On this basis, the Board finds that there is no merit to the City’s position that the conduct of the hearing was procedurally unfair.

21In further support of this finding, the Board accepts that the denial of a right to a fair hearing must always render a decision invalid. However, the City must first establish that there was such a denial. Although the City alleges unfairness, it has not provided any evidence or submission to elucidate what the specific unfairness would be. The City only provides its speculation that the absent Hearing Member may have been influenced the remaining Hearing Member’s decision. The City has provided no evidence or analysis to suggest that the remaining Hearing Member failed to give full consideration to the evidence and submissions of the parties. To the contrary, the Decision addresses all the evidentiary points that the City has raised in this Request for Review.

22Based on the above analysis and findings, the Board finds that the City has not established that the conduct of the hearing violated the rules of natural justice or procedural fairness.

Ground 2: The Board made a significant error of law or fact such that the Board would likely have reached a different decision

The City’s Initial Submissions

23The City submits that the Hearing Member erred in law and in fact by failing to consider the full factual and legal matrix before it, and by disregarding or failing to give proper weight to key submissions and evidence advanced by the City.

24More specifically, the Hearing Member failed to apply the correct legal test because the Hearing Member failed to look at whether the Taxpayers had used every reasonable resource and opportunity to meet their obligation to pay municipal taxes. Furthermore, the City maintains that the Hearing Member failed to explain how the taxpayer’s non-discretionary spending – in particular the payments for patent applications, an expensive tennis club membership for their son, and the ownership and operation of a Mercedes-Benz vehicle – is consistent with an inability to pay the property taxes. The City argues that these discretionary expenses, in and of themselves, show that the Taxpayers had an ability to pay the taxes.

The Intervening Review Decision in M.A.N. v Hamilton (City) ), 2026 CanLII 1376 (ON ARB), 2025 CanLII 128556 (ON ARB)

25After the City filed its Request for Review, the Board issued a Review Decision in M.A.N. v Hamilton (City), 2026 CanLII 1376 (ON ARB), 2025 CanLII 128556 (ON ARB) (the “M.A.N. Decision”). This Review Decision addressed an Inability to Pay application based on the grounds of extreme poverty. In this Review Decision, the Reviewing Member considered prior Board ‘Inability to Pay’ decisions, together with a detailed legislative interpretation of the relevant sections of the Act. As such, the M.A.N. Decision is relevant to the City’s Request for Review. While, in this case, the Decision is based on sickness, not extreme poverty, the ‘unable to pay’ criterium is common to both the M.A.N. Decision and this Review Decision. For this reason, it is necessary to provide an overview of the findings in the M.A.N. Decision.

26The M.A.N. Decision concluded that the term ‘extreme poverty’ refers to an objective standard of the costs of a basic modest standard of living. The Reviewing Member adopted Canada’s Official ‘Poverty Line’ as this objective standard, because Canada’s Official Poverty Line identifies the annual cost of modest basic living necessities. It is based on Statistics Canada’s Market Basket Measure (“MBM”), which measures the cost of shelter, food, clothing, transportation, and other necessities.

27Where a taxpayer family’s net income is less than the applicable Official Poverty Line income, the taxpayer is deemed to be living in poverty. However, as the criterium in s. 357(1)(d.1) is extreme poverty, the income values for ‘extreme poverty’ must be less than the Official Poverty Line values. The Reviewing Member found that the extreme poverty values should be 75% of the Official Poverty Line values, which is consistent with Statistics Canada definition of ‘Deep Income Poverty’. The Reviewing Member defines these income values as Extreme Poverty Income Cut-offs or “EPIC”.

28An objective standard for ‘extreme poverty’ is necessary is to ensure consistent dispositions for each s. 357(1)(d.1) application, as inconsistent dispositions result in unfairness.

29In summary, the M.A.N. Decision establishes an objective determination of the annual cost of the basic necessities of living in the taxation year. It applies irrespective of the taxpayer’s actual expenditures for the year. In other words, the cost of basic necessities of living is not based on a subjective evaluation of: (i) whether a taxpayer’s expenditure constitutes “a basic necessity of living” or (ii) whether the amount of the expenditure is reasonable. In other words, a taxpayer’s actual management of the taxpayer’s financial affairs is not a relevant consideration. Instead, the test to qualify under s. 357(1)(d.1) is an objective test, based only on consideration of net income and equity in any assets which the taxpayer would be able to liquify during the taxation year.

30Based on these findings, the Reviewing Member concluded that the following steps are required, when determining whether a taxpayer is ‘unable to pay’ municipal taxes:

1. Determine the total net income (after income taxes and standard deductions) earned by both the taxpayer and family members residing with the taxpayer.

2. As such income is money available for the taxpayer to spend, this income can be considered when determining whether a taxpayer is able to pay municipal taxes. However, as the purpose of s. 357(1)(d.1) is to confer a financial benefit to taxpayers who are in extreme poverty, payment of the taxpayer’s costs of basic living necessities must take priority over payment of municipal taxes. As described above, these costs are objectively defined as the EPIC. Therefore, the EPIC value is deducted from the taxpayer family’s total net income. For example, if this net income is $35,000, and the applicable EPIC is $30,000, the taxpayer is able to pay $5,000 of the total municipal taxes payable.

3. If the taxpayer family’s total net income is less than the EPIC income, then this means that, after paying the cost of basis living necessities, there is no remaining income that can be used to pay municipal taxes. In this case, it would then be necessary to consider whether the taxpayer owns assets in which the taxpayer has equity which the taxpayer objectively would be able to liquify in order to obtain money to pay municipal taxes.

Example:

Assume:

• municipal taxes are $5,000;

• a taxpayer family’s total net income is $20,000;

• the applicable EPIC value for the cost of basic living necessities is $30,000.

In this case, the taxpayer’s net income is insufficient to pay municipal taxes. There is also a $10,000 shortfall to pay for the cost for basic living necessities.

Now further assume that the taxpayer holds $40,000 in a Tax Free Savings Account, from which the taxpayer can make withdrawals.

The taxpayer can liquidate $10,000 to cover the shortfall of funds to pay for the cost of basic living necessities. This would leave $30,000 in the Tax Free Savings account that is available to pay for municipal taxes. Consequently, the taxpayer would be able to pay the full amount of the municipal taxes.

31Further to the above findings, the M.A.N. Decision also found that, in determining whether the taxpayer is able to pay municipal taxes:

1. Debt payments are not considered when determining current value, because legislative provisions of the Act confirm that municipal taxes are a special lien on the taxpayer’s property, in priority to all other debts except debts to the Crown.

2. In today’s society, a cashflow reserve is necessary to ensure that the taxpayer has sufficient funds available to pay for basic living necessities as they arise. This cashflow reserve is, in and of itself, a basic living necessity. For extreme poverty cases, the quantum of the cashflow reserve is set at 10% of the applicable MBM value. Therefore, a cashflow reserve up to this amount is not considered available to pay for municipal taxes.

3. Taxpayer(s) are not required to sell an asset in order to pay taxes. However, if a taxpayer is able to liquify equity in an asset by borrowing, this amount will be considered when determining whether a taxpayer is able to pay municipal taxes. In some cases, it will be clear that a taxpayer can withdraw equity from assets such as bank accounts, Register Retirement Savings Plans, and Tax Free Savings Accounts. In other cases, for example, equity in the Subject Property, evidence would be required to establish that the taxpayer(s) could obtain a mortgage (or increased mortgage) or a line of credit, secured against the taxpayer’s property.

32In light of the intervening release of the M.A.N. Decision, the Board requested additional submissions from the parties respecting the relevance of this review decision’s application to the City’s Request for Review. More specifically, the Board invited submissions on the question of what the allowable expenditure should be for basic necessities of living, where a s. 357(1)(d.1) application is based on sickness, not extreme poverty. For clarification, the Board stated:

In a s. 357(1)(d.1) application based on sickness, when determining the taxpayer’s annual living expenses that would take priority over payment of municipal taxes, should these expenses be:

(i) All expenses incurred by the taxpayer

(effectively basing the expenses on the standard of living adopted by the taxpayer)

(ii) The Market Basket Measure (“MBM”) Total Costs, Canada’s Official Poverty Line

(effectively basing the expenses on a basic modest standard of living)

(iii) The Extreme Poverty Income Cut-offs (“EPIC”) as defined in the M.A.N.

Review Decision

(effectively basing the expenses on Statistics Canada’s definition of Deep Income Poverty, which is 75% of the MBM Total Costs)

OR

(iv) Some other standard as may be advocated by any of the parties in this request for review proceeding.

The City’s Supplementary Submissions

33The City submits that the approach in the M.A.N. Decision ought to be read in light of previous jurisprudence. The City observes that the Board has consistently held that the taxpayer must show that they have used every available resource and explored reasonable opportunities to pay the property tax bill and that Board must consider whether the [applicant] has exhausted every possible effort to pay taxes. The City argues that it would be contrary to the purpose of the Act not to consider whether all reasonable steps have been taken by the taxpayer to pay taxes. The City asserts that, although the purpose of s. 357(1)(d.1) is remedial, the default is to pay taxes. The City submits, therefore, that it is relevant to consider how a taxpayer got into the financial position where the taxpayer’s income falls below the applicable EPIC income value.

34The City then re-iterates its original submissions, albeit in greater detail:

1. The Taxpayers did not use every resource available to them, nor did they explore all reasonable opportunities to pay the property tax bill.

2. They also did not exhaust every possible effort to pay taxes. Instead of paying their property tax bill, they paid off their credit cards and lines of credit first because the former had a better interest rate. They also maintained international patents, paid for tennis lessons for their child, and rented a Mercedes-Benz when a cheaper alternative was available.

3. The Respondents retained substantial equity in their home and model vehicle yet made no attempt to liquidate, refinance, or reverse mortgage.

4. The Hearing Member did not consider any of these details in its decision.

Findings on Ground 2

Application of the M.A.N. Decision in this case

35The Board begins by noting that the City’s submission does not reject the analysis in the M.A.N. Decision. Instead the City’s argument is that the analysis in the M.A.N. Decision should include a finding that s. 357(1)(d.1) includes an additional requirement that the Board must consider whether the taxpayer has used every available resource and explored reasonable opportunities to pay the property tax bill and exhausted every possible effort to pay taxes (“the Conduct Requirement”).

36In addressing this submission, the Board notes that, as discussed below, the Conduct Requirement was considered and rejected by the Reviewing Member in the M.A.N. Decision. Therefore, it would be inconsistent to incorporate the Conduct Requirement as an additional criterium. Furthermore, the test set out in the M.A.N. Decision does address some aspects of the Conduct Requirement.

37The Board observes that the City’s submission appears to suggest that the Taxpayers did not do enough to maximize their income (“The Taxpayers did not use every resource available to them …”). Furthermore, the Taxpayers spent money on items such as the vehicle lease and tennis lessons, when this money should have been used to pay for municipal taxes.

38The City’s submission touches on three categories of taxpayer conduct: (i) conduct leading to a reduced lower net annual income; (ii) whether a taxpayer is required to borrow money to pay municipal taxes; and (iii) conduct in how the taxpayer spends income. The Board will address each category in turn.

39Regarding the first category, the Board observes that the M.A.N. Decision addressed this question, at paragraph 38, where the Board found:

38Regarding the criteria that “individuals must demonstrate that they have actually taken steps and explored every reasonable opportunity to manage their debts and mitigate their tax responsibility” (“the Conduct Requirement”), the Board finds that s. 357(1)(d.1) does not include consideration of how the taxpayer became poor, nor that a taxpayer must justify their economic status by establishing that they attempted to mitigate their financial situation.

39In support of the above finding, the Board first notes that the wording of s. 357(1)(d.1) makes no reference to how a taxpayer fell into ‘extreme poverty’. It only requires that the taxpayer is in ‘extreme poverty’. Furthermore, the Conduct Requirement is effectively a requirement to ensure enforcement of payment of municipal taxes which contradicts the very purpose of s. 357(1)(d.1) which is to provide relief from enforcement to pay taxes.

40Turning to the second category, the Board observes that the M.A.N. Decision addressed this question, at paragraph 90, where the Board found:

Does Disposable Income include borrowed money?

90In addressing this question, the Board first observes that money received by borrowing is offset by the obligation to repay the amount borrowed. Borrowing only serves to increase the taxpayer’s cashflow; it does not increase the taxpayer’s Disposable Income. Therefore, it is not relevant to the quantification of the taxpayer’s Disposable Income. However, as discussed below, borrowed funds may be relevant to the ‘unable to pay’ qualification criterium.

41Regarding the third category, the Board observes that the M.A.N. Decision addressed this question, at paragraph 40, where the Board found:

40In making this finding, the Board notes that a taxpayer’s financial mismanagement, however that may be defined, does not create an entitlement to relief under s. 357(1)(d.1). As noted above, payment of municipal taxes is a debt that takes priority over all other consumer debts. Furthermore, as is discussed in greater detail below, relief under this section is objectively based solely on consideration of taxpayer’s total disposable income and any equity in assets owned by the taxpayer that the taxpayer is able to liquify. [Emphasis Added]

42Accordingly, applying this test, the Taxpayer’s actual management of their expenditures is not relevant. Instead, as previously stated, the test is objective, based only on taxpayer’s income and equity in assets. For example, the fact that the Taxpayers may have spent disposable income on their existing consumer debts is not relevant. Furthermore, the M.A.N. Decision expressly provides that the Taxpayers are required to liquify equity in their assets, which includes the property being taxed, provided that they are able to do so.

43Based on the above analysis and findings, the Board finds that the test in the M.A.N. Decision respecting the “unable to pay” criterium in s. 357(1)(d.1) applies when the cause of the inability to pay is sickness.

Objective Standard for determining the cost of Living Necessities in s. 357(1)(d.1) application based on sickness

44In light of the above finding, the remaining question is: In a s. 357(1)(d.1) application based on sickness, what should be the total annual cost of necessities of living (“Standard of Living”) that would take priority over payment of municipal taxes? The Board notes that this determination includes consideration of what constitutes ‘a necessity of living’.

45For clarity, the applicable Standard of Living represents an amount of income required to pay for the taxpayer’s total annual cost of living necessities. This amount will be deducted from a taxpayer’s total net income (after deduction of specific adjustments as described in the M.A.N. Decision), to determine whether the taxpayer has a residual amount of income available to pay all or part of municipal taxes. If not, then the Board would be required to consider the taxpayer’s equity in assets as described above.

46Although being afforded the opportunity to do so, neither the Taxpayers nor the City provided submissions directly addressing the three potential options cited by the Board: (i) the Standard of Living adopted by the taxpayer; (ii) the applicable EPIC value; or (iii) the applicable MBM Total Costs.

47The Board will address each option in turn.

Standard of Living adopted by a taxpayer

48The argument in favour of selecting this standard is that, when sickness results in a reduction of the taxpayer’s income, the taxpayer should be able to maintain the standard of living the taxpayer previously enjoyed. Consequently, payment of the total cost of living associated with this standard, including payment of existing debts, would take priority over payment of municipal taxes. For the following reasons, the Board does not accept that this is the Standard of Living contemplated by s. 357(1)(d.1) where the cause of the alleged inability to pay is sickness.

49First, the Board has already found that payment of debts cannot take priority of payment of municipal taxes.

50Secondly, adopting the taxpayer’s Standard of Living can create unfairness in the taxation system. This observation is best explained by an example.

Assume:

• Taxpayer1, previously earned employment income $80,000 per year and previously adopted a standard of living at this level, i.e. the taxpayer “lived up to his/her income’.

• Taxpayer 1 falls sick, and his annual income is reduced to disability insurance income of $50,000.

• Taxpayer 2, is not sick, earns an annual employment income of $50,000 per year, and does not qualify as being in ‘extreme poverty.

• Neither Taxpayer has access to any other funds to pay municipal taxes.

51In this example, Taxpayer 1’s income is now $30,000 less than his $80,000 Standard of Living. As such, Taxpayer 1 does not have residual income to pay municipal taxes and would be relieved from paying municipal taxes under s. 357(1)(d.1). Taxpayer 2 cannot qualify for a reduction in municipal taxes because he is not sick and is not in extreme poverty. Therefore, even though Taxpayers 1 and 2 have the same net income of $50,000 per year, Taxpayer 1 would not be required to pay municipal taxes, whereas Taxpayer 2 would. This arguably creates an apparent unfairness in the taxation system.

52Third, an interpretative analysis of s. 357(1)(d.1) does not support consideration of the taxpayer’s adopted Standard of Living. In this regard, the Board refers to Ruth Sullivan, The Construction of Statutes, 7th Ed. (“Sullivan”), a well-recognized authority on the law related to statutory interpretation. In section 8.06, Sullivan describes the ‘associated words rule’ (noscitur a sociis) as follows:

The associated words rule is properly invoked when two or more terms linked by “and” or “or” serve an analogous grammatical and logical function within a provision. This parallelism invites the reader to look for a common feature among the terms. This feature is then relied on to resolve ambiguity or limit the scope of the terms.⁷ Often the terms are restricted to the scope of their broadest common denominator. As Martin J.A. explained in R. v. Goulis:

When two or more words which are susceptible of analogous meanings are coupled together they are understood to be used in their cognate sense. They take their colour from each other, the meaning of the more general being restricted to a sense analogous to the less general.

53In applying this interpretation principle to s. 357(1)(d.1), the Board observes that the criterium ‘unable to pay’ applies to both ‘sickness’ and ‘extreme poverty’. They are the two prescribed causes of an inability to pay. In applying the ‘associated words rule’ of statutory interpretation described above, the Board concludes that the coupling of the terms ‘sickness’ with ‘extreme poverty’ and ‘unable to pay’, indicates a parallelism where both causes of ‘unable to pay’ relate to financial hardship, i.e. where the taxpayer is unable to pay for the basic living necessities - in other words, a poverty standard. Therefore, it follows that, if a taxpayer who is not sick, must meet a poverty standard, then a taxpayer, who is sick, must do so as well.

54Furthermore, a reduction in a taxpayer’s net income due sickness, in and of itself, does not qualify the taxpayer for a cancellation or reduction of municipal taxes. The sickness must result in an inability to pay. Hence, relief under s. 357(1)(d.1), cannot be interpreted as a form of disability benefit that is automatically payable when a taxpayer becomes sick. As such, there can be no presumption that a taxpayer is entitled to maintain his or her adopted Standard of Living, in priority to the obligation to pay municipal taxes.

55In further support of this conclusion, the Board adopts the analysis in the M.A.N. Decision, at paragraph 115, where the Reviewing Member found:

…Therefore, s. 357(1)(d.1) is not intended to generally prevent the taxpayer from falling into poverty, nor is it aimed specifically aimed at providing financial security in cases where the owner experiences a disruption in income. In this regard, the Board observes that s. 357(1)(d.1) does not refer explicitly or implicitly to employment status. Instead, s. 357(1)(d.1) refers to a specific debt - municipal taxes. Its purpose is to provide only a narrow measure of relief from financial hardship …

Because payment of municipal expenses is a priority, this means that allowable deductible expenses should be as low as possible, because this maximizes the taxpayer’s ability to pay municipal taxes.

56However, such allowable expenses cannot be so low that this would leave the taxpayer in a financial position where a requirement to pay of municipal taxes, would result in an inability to pay for basic living necessities. In such circumstances, the taxpayer would have no choice but to choose survival – i.e. pay for basic living expenses, leaving municipal taxes unpaid – thereby being exposed to the enforcement consequences of such non-payment.

57Consequently, to the extent that the taxpayer enjoyed an adopted Standard of Living that exceeds a poverty standard (i.e. an inability to pay for basic living necessities, the Board cannot consider such adopted Standard of Living when determining whether the taxpayer is ‘unable to pay’ municipal taxes.

58Based on the above analysis and findings, the Board finds that the determination of whether a taxpayer is ‘unable to pay’ cannot be based on the taxpayer’s adopted Standard of Living prior to becoming sick.

59However, the question remains, what should this poverty standard be?

Standard of Living based on the applicable EPIC value

60If the Standard of Living for a s. 357(1)(d.1) application based on sickness is the EPIC level, then the same Standard of Living would apply to both sickness and extreme poverty. If so, there would be no substantive difference between sickness and extreme poverty as causes of ‘unable to pay’. In other words, the taxpayer would always be required to establish extreme poverty in order to qualify for relief under s. 357(1)(d.1). Consequently, this interpretation would render the inclusion of ‘sickness’ in s. 357(1)(d.1) redundant. This would contradict the cannon of statutory interpretation that every term in a section of a statute has been included for a specific purpose. Therefore, a statutory provision cannot be interpreted in manner that would render it meaningless. Stated another way, the Board must interpret s. 357(1)(d.1) on the presumption that the Legislature intended a specific purpose for the inclusion of sickness as a separate and distinct cause of ‘unable to pay’.

61Based on the above analysis, the Board finds that the Standard of Living to be applied cannot be the applicable EPIC value.

Standard of Living based on the applicable MBM Total Costs

62In light of the Board’s findings on options 1 and 2 above, and assuming that a taxpayer’s adopted Standard of Living exceeds a poverty standard, it follows that the applicable Standard of Living must fall between the taxpayer’s adopted Standard of Living and the applicable EPIC level. This conclusion is consistent with s. 357(1)(d.1), which draws a distinction between ‘sickness’ and ‘extreme poverty’ as separate causes of ‘unable to pay’. If ‘sickness’ is different from ‘extreme poverty’, then the poverty standard applicable to ‘sickness’ must also be different.

63As the Board has previously noted, in addressing the purpose of s. 357(1)(d.1), the Reviewing Member in the M.A.N. Decision found that, although this section is not intended to generally prevent the taxpayer from falling into poverty, its main purpose is to provide relief from both financial hardship and the enforcement consequences if the taxpayer does not pay municipal taxes. Therefore, it can equally be said that the purpose of s. 357(1)(d.1) is not to ‘push the taxpayer into poverty’ if the requirement to pay municipal taxes would do so. The Reviewing Member in the M.A.N. Decision, at paragraph 68, found that ‘poverty’ is defined to be Canada’s Official Poverty Line. Therefore, the intent of s. 357(1)(d.1) is not to require payment of municipal taxes if such payment would reduce the taxpayer’s net income below the Official Poverty Line.

64Based on the above analysis, the Board finds that the Standard of Living to be considered is the applicable MBM Total Costs.

Summary

65The Board finds that, in a s. 357(1)(d.1) application based on sickness, the objective Standard of Living cost that would take priority over payment of municipal taxes, is Canada’s Official Poverty Line, i.e. the MBM Total Costs.

Is there a Significant Error of Law in this Case?

The City’s Submissions

66Before turning to the application of the above findings in this case, the Board will first address the City’s submissions. In summary, the Board does not accept that the City’s submissions establish that the Hearing Member made a significant error of law.

67The Hearing Member addressed the City’s submissions at paragraph 30 stating:

The Board finds that, even if it were to rule in the City’s favor with respect to every issue in dispute (apart from its submission that the Applicants should have chosen a less expensive car loan option, as the City adduced no evidence as to what an alternative auto loan payment should be so the Board cannot make a determination on this point) – after all non-discretionary expenses, as highlighted by the City, there is still a shortfall each month of over $3,000.

Thus, when determining whether the Taxpayers are able to pay their municipal taxes, the Hearing Member did exclude consideration of all the expenses to which the City objected. The only exception, is the rental vehicle expense. However, the City’s objection to the consideration of this expense was expressly considered by the Hearing Member and rejected for the reason stated. Regarding the Taxpayers’ property, the Taxpayers provided what appears to be uncontested evidence that they made enquiries regarding increasing the mortgage on their property, but they were advised by their bank that they would likely be unable to do so. They also testified that they would not be able to pay an increase in their monthly mortgage payment if their mortgage was increased.

68In summary, the Board finds that there is no merit to any of the City’s submissions.

The Board’s Analysis

69In summary, the Board has identified two errors of law in the Hearing Member’s findings, which the Board will address in turn.

70The first error of law relates to the Hearing Member’s finding that there is “shortfall each month of over $3,000.” In fairness to the Hearing Member, neither the M.A.N. Decision nor the Board’s findings in this Review Decision were before the Hearing Member at the time she issued the Decision. Nonetheless, the Decision is unclear on the extent to which payment of some debts were considered in her determination that there was a monthly shortfall of $3,000. Moreover, the Board has found that the determination of whether there is an inability to pay, is not based on a subjective test of whether the Taxpayers’ income is insufficient to meet the expenses they have actually incurred. The applicable objective test is whether the Taxpayers have any residual net income after deduction of expenses for necessities of living based on the MBM Total Costs. As such, the Board finds that the approach taken by the Hearing Member constitutes a significant error of law, as the correct legal test was not applied.

71Respecting the second error of law, at paragraph 36 of the Decision, the Hearing Member found that the Taxpayers “were able to pay the portion of their property taxes that they did in fact pay.” However, at paragraph 37 of the Decision, the Hearing Member concluded that the Taxpayers were unable to pay the full amount of their property taxes. This is an obvious unexplained contradiction in findings. Because these contradictory findings directly relate to the fundamental decision to be made in this case, the Board finds that this also constitutes a significant error of law.

If there is an Significant Error of Law, Would the Board Likely have Reached a Different Decision?

72In addressing whether the error of law is such that the Board would likely have reached a different decision (Rule 102 (b) ), the Board first observes that a $3,000 per month shortfall would effectively fix the Taxpayers’ annual costs of basic living necessities (i.e. the cost of their Standard of Living) at $36,000 per year. Based on the evidence and analysis reported in the Decision, the Board finds that there is insufficient information to determine whether this amount would be lower or higher than the applicable MBM Total Value.

73Furthermore, the Board notes that the Decision does not make a final determination of the quantum of Taxpayer’s net income, as there was a dispute whether a personal injury settlement qualifies as income. In this regard, there is no information whether this sum was required to be reported as income on the Taxpayer husband’s income tax return for the 2023 taxation year.

74Turning to assets, the Decision indicates that Taxpayers own a 2015 model vehicle, which presumably is different from the leased Mercedes vehicle. In the M.A.N. Decision, the Reviewing Member found that taxpayers are not required to sell an asset in order to pay municipal taxes. They are only required to borrow money liquidate equity in an asset. Therefore, the question is whether the Taxpayers could borrow money using this chattel as security. This question is not addressed in the Decision.

75The Decision confirms that the Taxpayers had a total year end bank balance of $5,617.46, which the Hearing Member did not consider because this amount was reserved for future monthly expenses. As noted in the M.A.N. Decision, the allowable amount to be excluded from consideration is a cash flow reserve equal to 10% of the applicable MBM Total Cost. As it is unclear what the applicable MBM Total cost would be in this case, the Board cannot ascertain whether the amount of the allowable cashflow reserve would be higher or lower than this year end bank balance.

76Finally, as noted above, there is the conflict in the Hearing Member’s findings as to whether the Taxpayers can pay some or none of the municipal taxes payable.

77In summary, the Board must consider these uncertainties and inconsistency in the Hearing Member’s findings, as well as the error respecting the fundamental legal test to be applied in this case. This leads the Board to conclude that, although the application of the correct legal test may ultimately lead to a finding that the Taxpayers are unable to pay any part of the municipal taxes, it is equally possible that the Taxpayers’ are able to pay at least part of the total municipal taxes payable, however negligible this amount may be. Certainly, the analysis to arrive at a conclusion on this issue will be very different from the analysis undertaken in the Decision. For these reasons, the Board is satisfied that the nature of the errors of law is such that the Board would arrive at a different decision.

78The Board now turns to the disposition to be made under Rule 103. Because the Decision provides insufficient information to determine whether the Taxpayers are unable to pay all or part of their municipal taxes for the 2023 taxation year, the Board finds that it necessary to order a re-hearing of the entire matter. As the Hearing Member is no longer a Member of the Board, the Taxpayers’ application will be re-heard by another Member.

ORDER

79The Request for Review is granted.

80The Board orders a rehearing of the entire application, to be conducted by a different Hearing Panel, subject to the following order respecting evidence.

81In light of the legal test as set out in both the M.A.N. Decision and this Review Decision, the Taxpayers are required to jointly complete a financial information form that will be provided to them by the Board’s Registrar.