Ontario Superior Court of Justice Divisional Court
Court File No. 90/03
Gravely, Chapnik and Swinton JJ.
Counsel:
Chester Gryski, for appellant, Municipal Property Assessment Corp.
Peter Ruby, for respondents, R.M.L. Parking Ltd. and T.S.E. Management Services Inc.
The judgment of the court was delivered by
1Chapnik J.:—The Municipal Property Assessment Corporation ("MPAC") appeals to the Divisional Court from the decision of the Assessment Review Board (the "Board") dated January 24, 2003.
2The Board ordered that the property class of the premises located at 250 Queens Quay West, Toronto, be changed from the Commercial property class to the Residential/Farm property class under Ontario Regulation 282/98 of the Assessment Act, R.S.O. 1990, c. A.31 (the "Act").
3Leave to appeal to the Divisional Court was granted by Order of C. Campbell J. dated September 24, 2004.
OVERVIEW
Overview
4The building in question consists of a four-story parking garage containing spaces for 333 cars plus the necessary aisles to permit the cars to get in and out of each parking spot.
5The property is owned by R.M.L. Parking Ltd. (RML) who leased the land upon which the parking garage is erected from Harbourfront Corporation. Adjacent to the parking garage are three towers, each one containing residential condominium units and run as a separate residential condominium corporation.
6Over a number of years, RML sold licenses to condominium owners to permit them to park their cars in the parking garage. The consideration was a single payment at the time of the grant plus monthly payments including a management fee, based on the operating costs of the parking garage.
7Though all owners of units in the condominium towers do not have a license from RML to park a vehicle in the parking garage and RML is not restricted as to whom it might grant a license, all of the current licensees own units in one of the three nearby condominium towers. A unit owner can assign the parking license to the buyer of his unit or to another unit owner, but if not so transferred, the parking license is automatically revoked upon the sale of the unit.
8RML deals directly with the licensees and the licensees deliver their payments directly to RML. There is no agreement between RML and any of the condominium corporations concerning the operation of the parking garage.
THE LEGISLATIVE FRAMEWORK
The Legislative Framework
9Under section 7 of the Act, the Minister must prescribe a property class for all properties. O. Reg. 282/98 contains the following definitions of residential and commercial property classes:
3.(1) The residential property class consists of the following:
- Land used for residential purposes that is,
i. land that does not have seven or more self-contained units...
- Land not used for residential purposes that is.
i. farm land to which subsection 19(5) of the Act applies for the taxation year for which the land is being classified, other than land in the farm property class or land prescribed under section 44...
(1) The multi-residential property class consists of the following:
Land used for residential purposes that has seven or more self-contained units other than land included in the residential property class under paragraph 1 of subsection 3(1).
Vacant land principally zoned for multi-residential development.
(1) The commercial property class consists of the following:
Land and vacant land that is not included in any other property class.
10It is common ground that there are no "self-contained units" or dwelling places on the subject property.
11The issue before us is whether the Board erred in placing the property in the residential property class.
THE BOARD'S REASONS
The Board's Reasons
12The Board found that, during the taxation years 1998 through 2002, the property's use was clearly established as having been for the exclusive use of the residents in the condominium buildings. In doing so, it found that the property was being used exclusively as residential parking by the tenants of the condominiums by virtue of license agreements entered into between RML and the tenant/licensee until the year 2047. Accordingly, the Board held that the property should be classified by MPAC in the residential rather than the commercial property tax class as it had been previously. The Board's reasons are brief; it states at page 5:
After carefully considering all of the evidence the Board found that the subject property's use was clearly established as having been for the exclusive use of the residents in the condominium buildings.
The Board found that the subject property was being used exclusively as residential parking by the tenants of the condominiums by licensed [sic] agreement until the year 2047 and that this was also the case during the entire taxation years in question.
13We agree with the Appellant that the Board's reasons do not explicitly address the legal issue raised by the parties as to the interpretation of the relevant legislative provisions; specifically, whether or not, on a proper interpretation of the Regulation, there was a requirement that the property include at least one self-contained unit in order to be placed in the residential property tax class. Moreover, the Board did not specifically state that it found the property was "used for residential purposes" within the meaning of the statute. As noted by Mr. Justice C. Campbell in his decision on the Leave Application"in essence, the [Board] did not provide the elaboration to support a conclusion of residential use that is easily understandable'".
THE COURT'S JURISDICTION
The Court's Jurisdiction
14The Divisional Court has jurisdiction to hear an appeal under s. 43.1(1) of the Assessment Act, R.S.O. 1990, c. A.31, as amended, which reads:
(1) An appeal lies from the Assessment Review Board to the Divisional Court, with leave of the Divisional Court, on a question of law.
STANDARD OF REVIEW
Standard of Review
15The Appellant contends that the issue before the Board is one of pure statutory interpretation, engaging a standard of review of correctness: see 1098748 Ontario Ltd v. Ontario Property Assessment Corp., Region No. 11, 2001 40233 (ON SCDC), [2001] O.J. No. 859 (QL), 198 D.L.R. (4th) 139 (Div. Ct.), at paras. 10-11.
16The Respondents, on the other hand, take the position that the question at issue is one of mixed fact and law and is, indeed"more fact oriented than law oriented", attracting a degree of deference and a standard of review of reasonableness.
17In considering the appropriate standard of review to be applied to the Board on questions of mixed fact and law this Court stated in Municipal Property Assessment Corp. v. Minto Developments Inc. (2003), 2 M.P.L.R. (4th) 89, at para. 35:
The exercise required the Board to first make findings of fact and then apply the law (the statutory classifications) to the facts as found. We find this exercise to be a question of mixed law and fact. The construction of a statutory provision is a question of law, but whether a particular matter falls within the statutory provision is a question of fact.
18The question of law in this matter concerns the interpretation of s. 3 of Ontario Regulation 282/98. Given the nature of the issue to be determined, the Board's relative lack of expertise in regard to issues of statutory interpretation and its failure to address the issue in its Reasons, we agree with the Appellant that the appropriate standard of review is one of correctness.
ANALYSIS
Analysis
19The Appellant submits that the phrase "land that is used for residential purposes [...] that does not have seven or more self-contained units" in s. 3(1)1(i), when read in the context of entire section as well as s. 4 and the remainder of the Regulation, must refer to dwelling units and require that the property have at least one self-contained unit.
20We disagree.
21On its face, s 3(1)1(i) contains no requirement that there be at least one self-contained unit on the land. The section clearly includes land with zero to six self-contained units, in the residential property class.
22Section 4(1), on the other hand, the multi-residential class, consists of land used for residential purposes that has seven or more self-contained units. Thus, all lands used for residential purposes are captured by sections 3 and 4 of the Regulation.
23The commercial property class in s. 5(1) consists of land and vacant land that is not included in any other property class. It is sometimes referred to as "the default class".
24On a plain reading of the legislation, the subject property falls under the residential property class in s. 3(1)1(i) as it does not have seven or more self-contained units, provided it is defined as land used for residential purposes. Had the Legislature intended for the section to apply to property that has at least one self-contained unit, it could well have said so.
25It follows that, in our view, in order to come under the residential classification, there is no requirement that there be any dwelling on the property, provided that the purpose to which the land is devoted is residential.
26The Board determined that the parking was for the exclusive use of the residents of the condominium buildings and that, pursuant to the license agreements, it was used exclusively as residential parking by the tenants of the condominiums. The inference gleaned from these findings is that the Board found that the land or property was "used for residential purposes".
27The Appellant argues that the Board erred and applied the wrong test when it made these findings. According to the Appellant, the relevant activities for defining the use of any land are those activities of the person or entity that controls the land; that is, the activities must be characterized from the perspective of the person who owns and controls the land. Since by the terms of the license, the parking area and its operation are "at all times subject to the exclusive control, possession and dominion" of RML (section 5.01) and the parking garage is its business asset, the property is used for business and not for residential purposes.
28The Appellant further contends that the activity of parking cars is not a residential use and cannot become one simply because the owner of the car parked there resides nearby but on a different property. It is common ground that the licensee acquired no real property rights or interest in the land.
29Thus, according to the Appellant, the property does not meet the requirement in s. 3(1) that it constitute "land used for residential purposes", and the property was correctly placed in the commercial property class, as it was prior to the 1997 amendments to the Act.
30The following provisions of the license agreement indicate that the parking licenses were directly linked by contract and physical layout to the licensees' residential condominium units:
The original licensor of the parking spots was the vendor of the residential condominium units and the license fee for the parking spots was paid to the licensor by the unit owners as part of the purchase of their condominium units (preamble and section 1.09);
Condominium unit residents licensed their parking spaces exclusively in order to park vehicles within the licensed space (sections 3.01 and 3.02);
If a condominium unit is transferred in circumstances where the parking license is not simultaneously assigned, the parking license will become "null and void" and be revoked (section 3.04);
A condominium owner can assign the parking license to the buyer of his or her condominium unit or to an existing unit owner (section 6.02);
A condominium unit owner can transfer the right to use the parking spot to a non-owner resident of a unit, but no one else (sections 6.03 and 11.02); and
The license is a "net net net absolutely carefree" license with all property taxes to be paid by the licensees (sections 1.14(a)(ix), 1.23,4.01 and 4.06).
31We agree with the Respondent that all of these provisions indicate that the parking garage is a place to park for the residents of the adjacent condominiums, and nothing more. More specifically, the parking spots and condominium units are tied together, with property taxes ultimately being the responsibility of the condominium unit residents.
32In our view, on an ordinary reading of the Regulation, the word "use" in s. 3(1) refers to the ultimate use of the property, and not its ownership. All of the parking spots were used by the residents of the condominium complex as appurtenant to their living accommodations. The dictionary definition of the word "use" includes "employ (something) for a particular purpose", and "employ or avail oneself of (something) regularly" (Canadian Oxford Dictionary, 2d ed.). It was the lessees who had locks, usage and possession of the parking spots on a daily basis, notwithstanding the ownership by the Appellant.
33We are told that the only case that has considered this portion of the Regulation is the case of Two Sac Self-Storage v. Ontario Property Assessment Corp., Region No. 21 (15 November 2002) 175/01 (Div. Ct.), refusing leave to appeal from the decision of the Assessment Review Board: [2000] O.A.R.B.D. No. 406 (QL).
34The issue in that case was whether the portion of the subject property that included rented storage units should be assessed in the commercial tax class or the residential tax class. The Board held that the tax class with regard to the self-storage units should remain as commercial.
35However, in Two Sac Self-Storage, the Board noted that some of the units rented to individuals for storage "appear to be used in conjunction with a business operated by the lessee, while it appears that many of the units (and probably the majority) are used by individuals, to store articles unrelated to any business". Further, the language contained in the rental agreement there included a provision stating that "the rental space shall not be used for residential purposes...".
36That reflects a very different situation than the one in the instant case where the property was being used exclusively for residential parking spots.
37Both parties also relied on the case of Brimar Developments Ltd. v. Nova Scotia (Director of Assessments) (1991), 1991 2602 (NS CA), 105 N.S.R. (2d) 399 (N.S.S.C.A.D.), which also dealt with storage spaces. In that case, the appellant rented storage spaces on its property to members of the public and suggested that because household goods were stored in the spaces, this constituted residential use of them.
38In rejecting this contention, the Court stated, at para. 26:
There is an obvious distinction between a storage barn or shed on the premises where people live or storage bins in apartment complexes on the one hand, and the spaces leased by the appellant on the other.
39In finding the storage spaces in that case were used solely for the purpose of storage, the Court described the arrangements with respect to them as follows, at para. 27:
Subject only to the requirement that the goods are not dangerous or unlawful, the appellant does not care what is stored in the spaces. They are rented in the course of carrying on the appellant's business in a commercially zoned business park. They are in no way part of or appurtenant to living accommodation. (emphasis added)
40Those factual circumstances make the storage units in that case fundamentally different in nature from the parking spaces in the instant case. If anything, the case law confirms that under s. 3(1)"use" and not ownership is the key requirement; moreover, it is clear from the context of s. 3 that the "use" in issue is referable to use by the ultimate user of the property.
41The parties agree that the parking garage at issue is rather odd, since it is neither public parking nor formally part of a condominium building. The Board looked at the facts and drew the line as to what can be considered residential property within the meaning of the legislation. It follows that this appeal deals with a narrow issue evolving largely from the special factual circumstances that exist here.
42In our view, the Board correctly found that the parking garage was for the exclusive use of the residents of the condominium buildings, and inferentially, that the subject property was "used for residential purposes" within the meaning of the legislation and fell within s. 3(1) of the Regulation. Therefore, we would not interfere with the Board's decision.
43The appeal is dismissed. As agreed, costs are fixed in the all-inclusive sum of $3,000 payable by the Appellant to the Respondent within 30 days.
44Appeal dismissed.