Toth Equity v. Ottawa (City), 2014 ONSC 941

CITATION: Toth Equity v. Ottawa (City), 2014 ONSC 941

DIVISIONAL COURT FILE NO.: 13-1910

DATE: 2014/04/22

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT (OTTAWA)

HACKLAND R.S.J., J. WILSON J. and THORBURN J.

BETWEEN:

TOTH EQUITY LIMITED

Applicant

– and –

THE CITY OF OTTAWA

Respondent

Adam Stephens, Counsel for the Applicant

Benoit M. Duchesne, Counsel for the Respondent

HEARD: January 31, 2014

HACKLAND R.S.J.

Overview

[1] This is a Judicial Review Application brought pursuant to the Judicial Review Procedure Act, R.S.O. 1990, c. J.1, in respect of a decision of the Assessment Review Board (“ARB”) dated March 7, 2013. The Board dismissed Toth Equity Limited’s (“Toth”) appeals to the ARB in respect of municipal taxes levied for the tax years 2003 and 2004 on the basis that the appeals were filed out of time.

Factual Background

[2] This matter has a lengthy procedural history, which includes prior decisions of the Divisional Court and Ontario Court of Appeal.

[3] Toth alleges that the City made gross or manifest errors in calculating the taxes applicable to Toth’s property, Townsgate Shopping Centre, located in the City of Ottawa. The alleged error occurred in 2001 and has an impact on the calculation of taxes for future years.

[4] The alleged error was not discovered until 2005. In that year, assessment appeals pursuant to s. 40 of the Assessment Act, R.S.O. 1990, c. A.31, were settled between the Municipal Property Assessment Corporation and Toth on the basis of a reduced value for the Property. The City’s alleged error was discovered when the taxes calculated to account for the reduced value for the Property resulted in an increase in taxes, rather than the anticipated decrease. The taxes in respect of the 2003, 2004 and 2005 tax years were levied in 2005 following the settlement of these assessment appeals.

[5] As a result of the alleged error, Toth says that the Property has been over-taxed by $405,920.48. This substantive issue has not yet been determined on its merits.

[6] Toth attempted to have the alleged error corrected by the City and ultimately sought judicial review of the City’s refusal to hold a meeting to consider the alleged error. Specifically, Toth took the following steps:

(i) Toth brought an application to the City pursuant to section 334(1) of the Municipal Act, S.O. 2001, c. C-25, for City Council to hold a meeting to consider Toth’s representations and to correct the taxes levied against Toth;

(ii) Toth brought appeals before the ARB pursuant to section 357(8) of the Municipal Act as a result of the City’s failure to hold a meeting and consider Toth’s section 334(1) application;

(iii) Toth brought judicial review proceedings in the Divisional Court against the City for its failure to hold a meeting in response to the section 334(1) application.

The Section 334(1) Application

[7] As noted, Toth made an Application to the Treasurer of the City for a correction of the alleged error for the taxes levied in 2005 pertaining to the 2003, 2004 and 2005 taxation years. This application was made in September of 2005 and was brought pursuant to section 334(1) of the Municipal Act, which states:

Application for cancellation, etc.

334.(1) An application to the treasurer of a local municipality for the cancellation, reduction or refund of taxes levied in the year in respect of which the application is made may be made by a person who was overcharged by reason of a gross or manifest error that is a clerical error, the transposition of figures, a typographical error or similar type of error in the calculation of taxes under this Part.

(underlining added)

The procedure set forth in section 357 of the Act applies to Applications brought pursuant to section 334. Section 357(5) states:

Meeting

(5) On or before September 30 of the year following the year in respect of which the application is made, council shall,

(a) hold a meeting at which the applicants may make representations to council;

(b) notify the applicants of the meeting by mail sent at least 14 days before the meeting; and

(c) make its decision.

[8] Section 357(f) of the Municipal Act gives the municipality the power to reduce or refund taxes if “a person was overcharged due to a gross or manifest error that is clerical or factual in nature, including the transposition of figures, a typographical error or similar error but not an error in judgment in assessing the property.” The timing for applications made under section 334 is set forth in section 357(3) as follows:

Timing

(3) An application under this section must be filed with the treasurer on or before February 28 of the year following the year in respect of which the application is made. 2001, c. 25, s. 357 (3), 12.

The Application was brought prior to February 28 in the year following the year in which the taxes were levied, i.e. prior to February 28, 2006. The Application was in fact brought in September 2005. Notwithstanding this, council refused to hold a meeting to consider Toth’s Application on the basis that it was filed out of time.

Section 357(8) Appeals

[9] On October 16, 2006, Toth filed appeals with the ARB pursuant to section 357(8) of the Municipal Act on the basis of the City’s failure to render a decision in the section 334(1) appeals. Section 357(8) provides:

Where no Decision

(8) If council fails to make its decision by September 30 of the year following the year in which the application is made, an applicant may appeal to the Assessment Review Board by October 21 of the year by filing a notice of appeal with the registrar of the board and the appeal shall be a new hearing.

The appeals were filed by Toth on October 16, 2006, five days before the October 21, 2006 deadline. However, Toth was advised by the ARB that it would not hear the section 357 appeals until City Council made a decision.

Judicial Review Proceedings

[10] On July 7, 2007, Toth commenced a Judicial Review Application against the City alleging that it had a positive duty to hold a meeting and consider its application. The Divisional Court agreed and granted an order of mandamus requiring Ottawa City Council to hold a meeting at which Toth could make representations with respect to the alleged overcharge in the municipal taxes levied in 2005 against the property pertaining to the 2003, 2004 and 2005 taxation years.

[11] Notably, the City argued before the Divisional Court that Toth’s Application for a hearing before City Council was filed late. Although the taxes were levied in 2005, the City took the position that section 357(3) of the Municipal Act required an Application in respect of 2003 taxes to be filed by February 28, 2004, and an Application in respect of 2004 taxes to be filed by February 28, 2005.

[12] The Divisional Court, in a decision dated June 30, 2010, reported at 2010 ONSC 2605, determined that Toth’s Application to the City was timely and rejected the City’s submissions that the applications in respect of the 2003 and 2004 tax years were filed late. Matlow J. for the Divisional Court stated:

[10] On the evidence before us, the applicant’s original application for an opportunity to make representations to Council was made on February 26, 2005. It was made with respect to taxes for years 2003, 2004 and 2005 which were “levied” in 2005. The statutory deadline imposed by s. 357(3) of the Municipal Act for making that Application was, accordingly February 28, 2005. It follows that applicant’s application was made two days before it would have become statute barred.

[13] Unfortunately the dates set out in para. 10 of the Divisional Court’s decision, quoted above, are in error. The original application for a hearing date before City Council was filed in September of 2005 (not February 26, 2005). Accordingly, the section 357(3) limitation (i.e. “on or before February 28 of the year following the year in respect of which the application is made”) is February 28, 2006 (not February 28, 2005).

[14] In any event, it can be discerned that the Divisional Court held that the section 357(3) limitation ran from the point at which the taxes were “levied,” such that given that the taxes were levied in 2005, the period for filing an appeal ended on or before February 28, 2006. On that basis, the Divisional Court held that Toth’s appeals to City Council were not filed out of time.

[15] The City appealed the Divisional Court’s decision to the Court of Appeal. It did not contest the Divisional Court’s finding that Toth’s Applications in respect of 2003 and 2004 were timely. Rather, the City argued before the Court of Appeal that as a result of Toth having remedies available to it at the ARB, Toth was precluded from seeking judicial review. The Court of Appeal, in a judgment dated May 12, 2011, reported at 2011 ONCA 372, agreed that Toth had an available alternative remedy (at the ARB under section 357(8) of the Municipal Act) which it had not exhausted. For this reason, the Court of Appeal accepted the City’s position that judicial review of the City’s decision not to hold a hearing should have been refused.

[16] The timeliness of the filing of the application to the City for the tax reduction was not directly in issue before the Court of Appeal. However, Gillese J.A. stated:

[37] It will be recalled that Toth, in fact, filed notices of appeal with the ARB within the prescribed time frame.

[17] It is Toth’s position that had the Court of Appeal not accepted that Toth’s Application was timely, it could not have concluded, as it did, that Toth had alternative remedies available to it.

[18] Following the decision of the Court of Appeal the matter came before the ARB in September 2012, resulting in the decision that is the subject of this application. The Board concluded that, notwithstanding the decision of the Court of Appeal, it had no jurisdiction to hear the tax appeals for the 2003 and 2004 tax years because they were late filed. In response to Toth’s argument that the Divisional Court had already decided that the appeals were filed on time, i.e. within the statutory period triggered from the date the taxes were levied (2005), Board Member Bourassa stated, at para. 83, “the Board finds that the Divisional Court addressed the timing issue in a summary fashion and may contain factual errors in regard to some stated dates.”

[19] On the substantive issue of whether the appeal period runs from the calendar year to which the taxes relate or the year in which the taxes are levied, the Board adopted what it termed a “strict interpretation.” Member Bourassa stated at para. 82:

[82] Therefore, given the context of the Municipal Act and the legislative intent with respect to the collection of taxes in Park X of the Municipal Act, s. 357.(1)(f) should be given a strict interpretation. To interpret the section otherwise would interfere with the intent of Part X to require municipalities to maintain a tax roll kept on an annual basis and to require taxpayers to make any request for the cancellation, reduction or refund of taxes in a timely fashion. Only the application for the 2005 taxation year was filed within the time limit set out in the statute. Since the City had no jurisdiction over the applications made pursuant to s. 334 and s. 357.(1)(f) for the 2003 and 2004 tax years, therefore, neither does the Board.

[20] Toth’s position is that the ARB erred in law by:

(i) Overturning the binding findings of the Divisional Court and the Court of Appeal that Toth’s Applications to the City had been filed in a timely fashion;

(ii) Misinterpreting sections 334 and 357 of the Municipal Act to require applications to be brought by February 28 of the year following the tax year in question even if the taxes in respect of that year had not yet been levied and the City’s errors had not yet been discovered.

The Issues

[21] The issues for determination by this court are:

1. What is the applicable standard of review in reference to the ARB’s decision holding that:

(a) the ARB was not bound by the decision of the Divisional Court holding that the appeals herein were filed in time because the appeal period ran from the calendar year in which the taxes were levied and,

(b) the proper interpretation of section 357(3) of the Municipal Act is that the appeal period runs from the calendar year to which the taxes relate irrespective of when the taxes are levied?

2. Having regard to the applicable standard of review, did the ARB err in its adjudication of issues (a) and (b)?

Standard of Review

[22] Toth submits that the standard of review applicable to the question of whether the ARB erred in its interpretation of the limitation period in section 357(3) of the Act is correctness. It submits that the question to be decided is a pure question of law and that the ARB was not engaged in interpreting its home statute. Toth further submits that the question of whether the City was entitled to re-litigate before the ARB an issue previously determined in the same proceeding by the Divisional Court is a question of law, attracting the correctness standard.

[23] The respondent’s position is that in accordance with the Supreme Court of Canada’s decision in Dunsmuir v. New Brunswick, 2008 SCC 9, and the Supreme Court’s more recent decision in McLean v. British Columbia (Securities Commission), 2013 SCC 67, the standard of review applicable to the ARB’s decision is reasonableness. The reasonableness standard applies both to the ARB’s reasons for concluding that the statements in the Divisional Court reasons and the Court of Appeal reasons regarding the timing of the filing of the section 357(1) appeals and the section 357(8) appeals were not binding on it, as well as to its interpretation of the statutory time period in section 357 of the Municipal Act. The respondent also points out that there are no decisions dealing with the standard of review specifically applicable to an ARB decision interpreting section 357 of the Municipal Act.

[24] The Supreme Court of Canada recently reviewed the governing principles for judicial review of administrative decisions in McLean. At issue in McLean was a determination made by the B.C. Securities Commission as to when a limitation period would begin to run, which in turn was based on an interpretation of the Commission’s governing statute. The Court of Appeal applied the correctness standard of review to the Commission’s decision on the limitations issue. The Supreme Court concluded that the standard of review was reasonableness.

[25] In McLean, Moldaver J., speaking for the court, re-iterated the general rule or presumption that deference will normally result when a tribunal is interpreting its own statute or statutes closely connected to its function, with which it will have particular familiarity. He noted the court’s decision in Alberta (Information and Privacy Commissioner) v. Alberta Teachers’ Association, 2011 SCC 61, where it was held, at para. 34, that an administrative decision-maker’s interpretation of its home statute or closely connected statutes “should be presumed to be a question of statutory interpretation subject to deference on judicial review.”

[26] Moldaver J. recognized that there are instances in which the question presented falls into an exceptional category warranting “correctness” review. The exceptional category potentially applicable to the present case – the general questions of law exception—was the subject of the following observations by Moldaver J. at paras. 26 to 28:

[26] A second wave – the one which the appellant now rides – focuses on “general questions of law that are both of central importance to the legal system as a whole and outside the adjudicator’s specialized area of expertise” (Canada (Canadian Human Rights Commission) v. Canada (Attorney General), 2011 SCC 53, [2011] 3 S.C.R. 471 (“Mowat”), at para. 22, referring to Dunsmuir, at para. 60); see also Nor-Man Regional Health Authority Inc. v. Manitoba Association of Health Care Professionals, 2011 SCC 59, [2011] 3 S.C.R. 616; Communications, Energy and Paperworkers Union of Canada, Local 30 v. Irving Pulp & Paper, Ltd., 2013 SCC 34. In each of these cases, this Court unanimously found that the question presented did not fall into this exceptional category – and I would do so again here.

[27] The logic underlying the “general question” exception is simple. As Bastarache and LeBel JJ. explained in Dunsmuir, “[b]ecause of their impact on the administration of justice as a whole, such questions require uniform and consistent answers” (para. 60). Or, as LeBel and Cromwell JJ. put it in Mowat, correctness review for such questions “safeguard[s] a basic consistency in the fundamental legal order of our country” (para.22).

[28] Here, the appellant’s arguments in support of her contention that this case falls into the general question category fail for three reasons. First, although I agree that limitation periods, as a conceptual matter, are generally of central importance to the fair administration of justice, it does not follow that the Commission’s interpretation of this limitation period must be reviewed for its correctness. The meaning of “the events” in s. 159 is a nuts-and-bolts question of statutory interpretation confined to a particular context. Indeed, the arguably complex legal doctrines such as discoverability that the appellant says demand correctness review… have been specifically excluded from any application to s. 159. The appellant recognizes this fact elsewhere in her submissions, citing British Columbia Securities Commission v. Bapty, 2006 BCSC 638, at para. 28). Accordingly, there is no question of law of central importance to the legal system as a whole, let alone one that falls outside the Commission’s specialized area of expertise.

[27] I find these observations particularly apposite to the present case. The ARB was interpreting sections 334 and 357 of the Municipal Act which, while not the Board’s home statute, is nevertheless a companion statute with which the Board is expected to be familiar. The presumption of deference clearly applies. The question, then, is whether the limitation interpretation issue addressed by the Board falls within the “general question” of law exception which would warrant a correctness review. In my opinion it does not. Just as in McLean, the limitation issue before the ARB involved a “nuts-and-bolts” question of statutory interpretation confined to a particular context. While there is a discoverability issue here, it is, in my view, not complex nor does it involve a question of law of central importance to the legal system as a whole. I would make the same observation with respect to the other issue addressed by the Board, which was whether the limitation issue had been previously decided by the Divisional Court so as to create an issue estoppel or was otherwise binding on the Board such that the Board should have recognized it.

[28] In summary, applying the analytical framework set out recently by the Supreme Court in McLean, I conclude that the standard of review of the ARB’s decision in this case is reasonableness. Having said that, I have reached the conclusion that the ARB’s decision was not reasonable on either issue for the reasons that follow.

[29] As a general principle it would be an error of law for a tribunal to fail to follow a decision of the Divisional Court on the same point in the same proceeding. In this case the Divisional Court noted in para. 7 of its reasons that the City’s explanation for failing to provide Toth with the requested hearing was that the statutory deadline for making the request had passed. The court later made the observations (in para. 10 of its reasons), quoted previously in para. 12. As noted, the dates appear to be in error and the court’s reasoning as to why the limitation runs from the year in which the taxes are levied is not explained, although “levied” is placed in quotation marks for emphasis.

[30] As explained previously, the City successfully appealed the Divisional Court’s decision to the Court of Appeal. The Court of Appeal allowed the appeal on the basis that Toth had an alternative remedy under the statutory scheme, which was to seek a hearing before the ARB, and therefore judicial review should have been declined. I agree with Toth’s submissions that underlying the Court of Appeal’s finding that there was an alternative remedy was the premise that the original application for a hearing was not out of time. Gillese J.A. stated at para. 37, “[i]t will be recalled that Toth, in fact, filed notices of appeal with the ARB within the prescribed time frame.”

[31] I acknowledge that there is some basis for the City’s argument that the limitation issue was not necessarily decided by the courts prior to the ARB hearing or at least not clearly decided. As noted, before quoting para. 10 of the Divisional Court decision, the ARB member stated: “The Board finds that the Divisional Court addressed the timing issue in a summary fashion and, it would appear that the findings were made in a summary fashion and may contain factual errors in regard to some stated dates.” I take it that the Board member is referring to the date errors that I discussed previously and to the fact that the Divisional Court decision contains no analysis of the limitation argument. There is simply the statement at para. 10 that the application for a hearing before City Council was with respect to taxes for the years 2003, 2004 and 2005 “which were “levied” in 2005.” The word “levied” is in quotation marks in the decision with the implication that the triggering event for the appeal period is when the taxes were levied. In any event, while the Divisional Court’s conclusion on the limitation issue is clear, its reasoning is not.

[32] I also observe that the limitation issue was not argued at the Court of Appeal, nor was it the subject of appeal. Gillese J.A., in the passage quoted from para. 37 of the court’s reasons, refers to Toth having filed “notices of appeal with the ARB within the prescribed timeframe.” This is not a reference to the limitation in issue here, which is the limitation in section 357(3) of the Municipal Act, but is instead a reference to section 357(8) which deals with appeals to the ARB in circumstances where City Council has failed to make a decision. However, it is common ground that in order for the section 357(8) appeal to the ARB to be available there must first have been a section 357(3) appeal to City Council filed in time.

[33] In the circumstances, even if the question of how to interpret the limitation in section 357(3) was inferentially decided by the Divisional Court, this may well be one of the cases in which the court should exercise its undoubted discretion not to apply issue estoppel. Such a discretion has been recognized as being available when required by the interests of justice, see Danyluk v. Ainsworth Technologies, 2001 SCC 44.

[34] I think it is preferable that this application be decided on the central question of whether the ARB’s decision on the limitation issue was reasonable. As noted previously, Board Member Bourassa held that the limitation should be strictly applied, essentially to promote the goals of certainty and finality in tax collection. She stated:

[82] Therefore, given the context of the Municipal Act and the legislative intent with respect to the collection of taxes in Park X of the Municipal Act, s. 357.(1)(f) should be given a strict interpretation. To interpret the section otherwise would interfere with the intent of Part X to require municipalities to maintain a tax roll kept on an annual basis and to require taxpayers to make any request for the cancellation, reduction or refund of taxes in a timely fashion.

[35] In coming to its conclusion, the Board is required to weigh competing policy objectives. On my view of the Board’s reasons, it does not appear that the Board carried out such an analysis. It is, of course, reasonable to consider the goals of finality and certainty in the context of tax collections and in interpreting limitation periods generally. However, it does not appear that the Board considered any of the recognized competing objectives applicable in the circumstances. I refer particularly to the objective of achieving equity in taxation by getting the assessment exercise right so as to ensure the integrity of the tax roll. I respectfully adopt the observations of the Divisional Court in Toronto (City) v. Municipal Property Assessment Corporation, 2013 ONSC 6137, where Molloy J. stated in relation to the Assessment Act:

[30] The primary objective of the Act is to achieve equity in taxation. Equity will result when every parcel of land bears its proportionate and fair share of the tax burden for the community. This principle favours ensuring the correctness of the assessments upon which the tax payable is based. On the other hand, it is also the intention of the legislation to ensure a stable and reliable tax base. This principle favours finality. The principles of equity and finality are often in conflict and each must be weighed in the balance in arriving at the proper interpretation of the legislation. The Divisional Court described this tension in Toronto (City) v. Wolf as follows (at para. 20):

We appreciate that there are competing purposes inherent in the scheme of the Act. To achieve the equitable distribution of the tax burden, there must be mechanisms to correct errors in the assessment roll. At the same time, in fairness to the taxpayer, there must be some finality in the system in order to achieve a stable and reliable tax base. That balance is achieved by the relatively simple, informal right to complain, coupled with a specific and firm limitation period in the governing legislation.

[36] In my view, the ARB should also have embarked on an analysis of the applicable statutory provisions and should not have so readily come to a conclusion that provides a taxpayer with no remedy for erroneous tax calculations not levied until a time when his or her appeal remedies are already out of time.

[37] The Board did not discuss the issue of statutory interpretation. Toth’s application for a refund of municipal taxes paid for the years 2003 and 2004 is contemplated by section 334(1) of the Municipal Act which provides for an application to the treasurer of the municipality to reduce “taxes levied in the year in respect of which the application is made…” The 2003 and 2004 taxes in this case were levied in 2005. The following timing provision governs such applications (section 357(3) of the Municipal Act):

Timing

(3) An application under this section must be filed with a treasurer on or before February 28 of the year following the year in respect of which the application is made. 2001, c. 25, s. 357 (3). (underlining added)

It can be seen that the timing provision is triggered by the making of the application. The application in turn is in respect of taxes levied in the year the application was made (section 334(1)). The interaction of these provisions was not considered by Member Bourassa when she concluded that Toth’s application was out of time.

[38] In summary, while the Board member’s interpretation of the relevant provisions of the Municipal Act is entitled to deference, she erred by failing to articulate and balance the relevant policy considerations and by failing to analyze the issues of statutory interpretation that arise in this case.

[39] I am supported in the conclusion that failure to identify and balance the competing policy objectives is not reasonable, by the recent decision of this court in The Kensington Foundation v. Municipal Property Assessment Corporation, 2013 ONSC 7694. This case involved a decision of the ARB dealing with a calculation error in the tax rolls discovered six years later. The Board had held that it did not have the jurisdiction to overturn the earlier decision. Himel J. speaking for the Court stated:

[17] In our view, the Board erred in not considering the implications of a correction in the assessment; it failed to take into account the important objectives of ensuring the correctness of the assessment upon which the tax is payable while considering the relevant factors of timing, finality and possible prejudice. It failed to engage in a balancing exercise when it held that correctness of the assessment was the only consideration when it conducted the review under Rule 149. As such, the Board committed an error in law; its decision was both incorrect and unreasonable.

[40] Himel J. went on to state at para. 18:

[18] … The relevant jurisprudence has recognized the need to balance questions of timing and fairness with the need for correction and the integrity of the assessment roll: see Municipal Property Assessment Corp. v. Montevallo Developments Ltd., (2009) 2008 69580 (ON SCDC), 305 D.L.R. (4th) 618 (Ont. Div. Ct.), at para. 32; 1609830 Ontario Ltd. V. Municipal Property Assessment Corp., Region No. 9, [2008] O.J. No. 3688 (Div. Ct.), at paras. 22-24; Home Depot Holdings Inc. v. Markham, 2010 ONSC 1466 (Div. Ct.), at para. 17; and Ontario Property Assessment Corp. v. Nelson Steel, (2002) 2001 38751 (ON SC), 57 O.R. (3d) 330 (Div. Ct.), at para. 12. Timing and finality must be weighed with the objective of correctness of the assessment roll in achieving a balanced approach under the legislation: see Toronto (City) v. Municipal Property Assessment Corp., 2013 ONSC 6137 (Div. Ct.).

[41] I am of the opinion that the ARB’s decision in this matter cannot stand because of its failure to articulate and balance the relevant factors which led to its interpretation of the section 357(3) limitation provision and its conclusion that the applicant Toth’s tax appeals were out of time.

Disposition

[42] For the foregoing reasons the decision of the ARB is set aside. The applicant’s application for review of his municipal taxes for the years 2003 and 2004 is remitted to the ARB differently constituted for re-consideration in accordance with these reasons.

[43] Costs of this application fixed in the sum of $16,000.00 inclusive of disbursements and HST are to be paid by the respondent to the applicant.

HACKLAND R.S.J.

THORBURN J.

Released: April 22, 2014

Concurring reasons

[1] I agree that this appeal should be allowed, but arrive at somewhat different conclusions than my colleagues.

[2] I agree with R.S.J. Hackland’s conclusion that the standard of review in this case is reasonableness for the interpretation of the interaction of sections 334 and 357(1)(f) of the Municipal Act to determine the limitation period for filing tax appeals. On the issue of res judicata I conclude that the standard of review of the A.R.B.’s decision whether res judicata applies is correctness (see: Toronto v. CUPE Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77, at paras. 15 and 60; Sihota v. Edmonton, 2013 ABCA 43, 542 A.R. 229, at para. 6; and for a useful discussion, Robertson v. British Columbia, 2013 BCSC 1699, 59 Admin. L.R. (5th) 270, at paras. 57-63.) I agree with Justice Hackland’s ruling that the A.R.B.’s decision was unreasonable but respectfully part company with his conclusions on the two substantive issues raised in the appeal.

[3] First, I conclude that the issue of the limitation period was dealt with explicitly in the Divisional Court, dated June 30, 2010, reported at 2010 ONSC 2605, 72 M.P.L.R. (4th) 287, (the Divisional Court Decision). As well, the issue was dealt with implicitly in the Court of Appeal decision dated May 12, 2011, reported at 2011 ONCA 372, 283 O.A.C. 33, and it was not open to the A.R.B. to reconsider the issue as it was bound to follow the decision of the Divisional Court, as well as the finding of the Court of Appeal.

[4] Second, I conclude that there was only one reasonable interpretation of the limitation period. It was not reasonable for the A.R.B. to interpret the limitation period as having expired prior to the tax payer having notice of the taxes levied. The interpretation is contrary to the plain meaning of the statutory sections in question, and contrary to the principle of limitation periods being premised on notice.

The issue of res judicata

[5] I conclude that it was not open to the A.R.B. to reconsider the issue of the limitation period as the principles of res judicata apply.

[6] The Divisional Court Decision determined that Toth’s Application to the City was timely and rejected the City’s submissions that the applications in respect of the 2003 and 2004 tax years were filed late. The Divisional Court stated:

[10] On the evidence before us, the applicant’s original application for an opportunity to make representations to Council was made on February 26, 2005. It was made with respect to taxes for years 2003, 2004 and 2005 which were “levied” in 2005. The statutory deadline imposed by section 357(3) of the Municipal Act for making that Application was, accordingly February 28, 2005. It follows that applicant’s application was made two days before it would have become statute barred.

[7] The Divisional Court Decision reasons were cursory, and there were errors in the dates specified. The original application for a hearing date before City Council was filed in September of 2005 not February 26, 2005. Accordingly, the section 357(3) limitation of “on or before February 28 of the year following the year in respect of which the application is made” was February 28, 2006 and not February 28, 2005. This error in the date was in fact corrected in the City factum before the Court of Appeal. These errors were obvious to both parties, and do not detract from the conclusion that the application had been made in time for the three taxation years in question.

[8] The Divisional Court held that the section 357(3) limitation ran from the date at which the taxes were “levied,” in 2005, and that the period for filing an appeal for the three taxation years in question ended on or before February 28, 2006. The Divisional Court ordered that the Council of the City hold a meeting pursuant to section 357(5) of the Municipal Act with respect to the taxes levied in 2005 against the property for the taxation years 2003, 2004 and 2005:

[1] Judgment is to issue for an order in the nature of mandamus requiring the Council of the City of Ottawa to hold a meeting pursuant to section 357(5) of the Municipal Act, S.O. 2001 C. 25, at which the applicant may make representations to Council with respect to any overcharge in the taxes levied in 2005 against the property located at 2446-2470 Bank Street, Ottawa, pertaining to the 2003, 2004, 2005 taxation years and applied to subsequent years due to a gross or manifest error that is clerical or factual in nature as set out in section 357(1)(f) of the Municipal Act and requiring the Council to make a decision with respect to the issues raised by the applicant at the meeting with respect to the taxes levied in those years.

[9] The City appealed the Divisional Court Decision. The City did not challenge before the Court of Appeal the finding of the Divisional Court that the appeal for the taxation years 2003, 2004 and 2005 had been brought in time. The City raised the argument that Toth had failed to exhaust an alternative administrative remedy available pursuant to section 357(8) of the Municipal Act, as the A.R.B. was vested with the same powers as the municipal council, and the matter should have proceeded before the A.R.B. before the extraordinary remedy of mandamus was sought. In the context of this decision, Gillese J.A. allowed the appeal, but confirmed that the notices of appeal had been filed in time and required Toth to exhaust the alternative administrative remedy before seeking judicial review. She stated:

[37] It will be recalled that Toth, in fact, filed notices of appeal with the ARB within the prescribed time frame.

[10] I agree with the analysis of Justice Hackland that the reference made by Justice Gillese in her reasons is not a reference to the limitation stipulated in section 357(3) of the Municipal Act, but is instead a reference to section 357(8) which deals with appeals to the A.R.B. in circumstances where City Council has failed to make a decision. However, it is common ground that in order for the section 357(8) appeal to the A.R.B. to be available, there must first have been a section 357(3) appeal to City Council filed in time.

[11] The A.R.B. declined to follow the Divisional Court ruling and concluded, at para. 83, “The Board finds that the Divisional Court addressed the timing issue in a summary fashion and … may contain factual errors in regard to some stated dates.”

[12] The A.R.B. adopted what it termed a “strict interpretation” of the statutory provisions and concluded that the notices of appeal for the taxation years 2003 and 2004 had not been filed in time. Member Bourassa stated at para. 82:

[82] Therefore, given the context of the Municipal Act and the legislative intent with respect to the collection of taxes in Part X of the Municipal Act, s. 357.(1)(f) should be given a strict interpretation. To interpret the section otherwise would interfere with the intent of Part X to require municipalities to maintain a tax roll kept on an annual basis and to require taxpayers to make any request for the cancellation, reduction or refund of taxes in a timely fashion. Only the application for the 2005 taxation year was filed within the time limit set out in the statute. Since the City had no jurisdiction over the applications made pursuant to s. 334 and s. 357.(1)(f) for the 2003 and 2004 tax years, therefore, neither does the Board.

[13] I conclude that brief reasons of the Divisional Court, with a readily identifiable error as to dates do not permit the A.R.B. to ignore this aspect of the decision of the Divisional Court that was not challenged by the City before the Court of Appeal. A decision should not be ignored due to technical mistakes, inconsequential to the reasoning applied in the decision: See: Al. Samarraie v. Canada, 2003 FCT 755, [2003] F.C.J. No. 979, at para. 8; McConnell v. Professional Institute of the Public Service of Canada, 2007 FCA 142, 362 N.R. 30, at paras. 21-22.

[14] Issue estoppel applies in this case. The question of how to interpret the limitation in section 357(3) of the Municipal Act was decided by the Divisional Court, and this aspect of the decision was not challenged by the City before the Court of Appeal.

[15] This is not a case where the court should exercise its discretion not to apply issue estoppel in the interests of justice, see Danyluk v. Ainsworth Technologies, 2001 SCC 44. For nearly ten years Toth has attempted to have the matter of the alleged error addressed by the City and more recently by the A.R.B. for the three taxation years in question. The same alleged error applies to all three taxation years. It would be contrary to the interests of justice not to allow the three appeals raising identical issues to proceed.

The interpretation of the limitation period was not reasonable

[16] The A.R.B. concluded that the issue of over-taxation may be determined for the taxation year 2005, but not for the years 2003 and 2004 based upon its interpretation of the limitation period when considering sections 334(1) and 357(3) of the Municipal Act.

[17] If I am wrong in concluding that res judicata applies and the issue of the alleged error for the three taxation years are to be considered, I find that there is only one reasonable interpretation of the limitation period for filing an appeal when considering sections 334(1) and 357(3) of the Municipal Act. I adopt the approach taken by Karakatsanis, J. in concurring reasons in McLean v. British Columbia (Securities Commission), 2013 SCC 67. She concluded that deference is owed applying the reasonableness standard in the context of an administrative decision interpreting limitation periods in statutes if there are two reasonable interpretations available. Deference does not apply if there is only one reasonable interpretation.

[18] I find that the interpretation of the A.R.B. is not reasonable as first its interpretation conflicts with the plain meaning of the statutory sections, and second, the A.R.B. interprets the limitation period as expiring before the tax payer has notice of the problem and the alleged error in the calculation of the taxes.

[19] The relevant sections provide:

Application for cancellation, etc.

334(1) An application to the treasurer of a local municipality for the cancellation, reduction or refund of taxes levied in the year in respect of which the application is made may be made by a person who was overcharged by reason of a gross or manifest error that is a clerical error, the transposition of figures, a typographical error or similar type of error in the calculation of taxes under this Part.

[Emphasis added]

[20] Section 357(1)(f) of the Municipal Act gives the municipality the power to reduce or refund taxes if “a person was overcharged due to a gross or manifest error that is clerical or factual in nature, including the transposition of figures, a typographical error or similar error but not an error in judgment in assessing the property.”

[21] The limitation for applications made under sections 334 and 357 is set forth in section 357(3) as being on or before February 28 of the year following the year the application is made:

Timing

(3) An application under this section must be filed with the treasurer on or before February 28 of the year following the year in respect of which the application is made.

[22] In this case Toth received notice in May 2005 of the reassessment of the taxes levied for the taxation years 2003, 2004 and 2005, implementing the settlement entered into between Toth and the City in 2005. As a result of the alleged error transposing commercial as compared to shopping centre space, the taxes for the years 2003, 2004 and 2005 in fact increased, although by the terms of the settlement, the assessed value of the property for each of the taxation years was by agreement reduced.

[23] After unsuccessfully attempting to rectify the problem informally, Toth brought its application in September 2005 alleging that it was overcharged by reason of a gross or manifest error that is a clerical error: the transposition of figures of commercial, compared to shopping centre space. The application was brought prior to February 28 in the year following the year in which the taxes were levied, i.e. prior to February 28, 2006.

[24] Notwithstanding the Divisional Court Decision, and the position the City had taken before the Court of Appeal, the City continued its arguments before the A.R.B. that the limitation period for filing the application had expired for the years 2003 and 2004. In its decision based on its interpretation of sections 334 and 357(1)(f) of the Municipal Act, the A.R.B. determined that the City Council had no jurisdiction to hear the applications for the 2003 and 2004 tax years, and therefore the A.R.B. was without jurisdiction.

[25] Toth argues that section 334(1), and section 357(3) when read together confirm that an application may be made for a refund of taxes levied in the year as a result of overcharging caused by a gross or manifest clerical error, including the transposition of figures, for more than one taxation year, so long as the application for a refund is made by February 28 of the year following the year the taxes are levied and the application is made.

[26] The key precipitating event as stipulated in section 334(1) is the taxes being levied.

[27] I conclude that applying the decisions McLean v. British Columbia (Securities Commission), 2013 SCC 67, and The Kensington Foundation v. Municipal Property Assessment Corporation, 2013 ONSC 7694, that there are not two reasonable interpretations of the interaction of section 334(1), and section 357(3) of the Municipal Act that would evoke the principles of deference. I conclude that there is only one reasonable interpretation.

[28] The plain meaning of the statutory sections confirms that Toth’s application was brought in time. There is no limit in section 334(1) that the taxes levied relate only to one taxation year. Tax assessments can be rendered for multiple years. To interpret the limitation period for applications for review to the calendar year that the taxes are levied makes no practical sense.

[29] Further, limitation periods are premised on notice. It is contrary to all principles of fairness and reasonableness to interpret a limitation period to have expired before the taxes are levied, and before the taxpayer has notice of the alleged error in calculation. The principle of notice is evidenced by the discovery rule, provided for in section 5 of the Limitations Act, 2002, S.O. 2002, c. 24, which prevents limitation periods from beginning to run before plaintiffs had knowledge that they could bring an action (see Lindhorst v. Cornwall, 2010 ONSC 3882, 95 R.P.R. (4th) 151, at paras. 24-27).

[30] For these reasons, I conclude that the issue of the alleged error should be considered by the A.R.B. for all three years when the same alleged error was made for the taxation years 2003, 2004 and 2005.

[31] I agree with my colleagues’ disposition with respect to costs.

J.M. WILSON J.

CITATION: Toth Equity v. Ottawa (City), 2014 ONSC 941

DIVISIONAL COURT FILE NO.: 13-1910

DATE: 2014/04/22

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT (OTTAWA)

Hackland R.S.J., J. Wilson J. and Thorburn J.

BETWEEN:

Toth Equity Limited

– and –

The City of Ottawa

REASONS FOR JUDGMENT

Hackland R.S.J.

Released: April 22, 2014