Editor’s note: Corrigendum released on September 07, 2016 and appended to the original decision. The corrections were not integrated in the original reasons.
2016 ONSC 5525
COURT FILE NO.: 15-2134
DATE: 2016/09/01
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
Municipal Property Assessment Corporation
Applicant
– and –
TKS Holdings Inc. and City of Ottawa
Respondents
F.X. Shea, for the Applicant
Stephen Longo, for the Respondent, TKS Holdings Inc.
HEARD: August 18, 2016 (Ottawa)
REASONS FOR Decision
C.T. Hackland J.
[1] The applicant, Municipal Property Assessment Corporation (“MPAC”) seeks leave to appeal to a full panel of Divisional Court from a decision of the Assessment Review Board (“the Board”). In the decision in question, member Walker allowed the respondent, TKS Holdings Inc.’s (the “taxpayer”) motion to exercise the Board’s discretion under Board Rule 3 to cancel an administrative reinstatement of the taxpayer’s appeal of its property assessment. The result of the Board member’s ruling is the appeal of the property assessment will not go ahead to the Board to be decided on its merits.
[2] The respondent taxpayer appealed a 2013 property assessment relating to vacant property it owned on Rideau Street in the City of Ottawa. In the course of preparing to respond to the appeal, MPAC determined that this and similar properties were in fact undervalued in the assessment and MPAC served a “Special Notice Of Request For A Higher Assessment” (“Special Notice”) under Rule 30(1) of the Board’s Rules of Practice and Procedure. In response, the taxpayer purported to withdraw its appeal and the Board ultimately treated the appeal as properly withdrawn. Subsequently, the Board administratively reinstated the appeal, leading to the motion under review which was brought before member Walker.
[3] The Boards’ Rules do not permit a taxpayer to withdraw an appeal (without leave of the Board) once a “Special Notice” requesting a higher assessment is served by any other party to the appeal, as happened here. However, in this case, MPAC served a “Special Notice” seeking a higher assessment, by email. Email service is permitted by the Board rules only if the taxpayer has consented to that form of communication. There was no such consent by the taxpayer’s representative in this case, although it is conceded that the representative actually received the “Special Notice” sent by email. Accordingly, since the “Special Notice” was served in an irregular fashion, it was arguably open to the taxpayer to withdraw its appeal as of right. However, it was also open to the Board member to accept MPAC’s motion to relieve against this technical non-compliance and to confirm the Boards’ administrative reinstatement of the appeal, to be heard on its merits. The Board member declined this relief. As noted, the applicant MPAC seeks leave to appeal from her decision.
[4] The Board member exercised what is undoubtedly her discretion, to not relieve against this service irregularity (i.e. MPAC’s service by email of its “Special Notice”), and to, in effect, confirm the taxpayer’s withdrawal of its appeal. This precluded the matter from going forward to the Board on its merits.
[5] It is well settled that in order for leave to appeal to be granted, this Court must be satisfied that there is reason to doubt the legal correctness of the decision and the proposed appeal must involve a question of law “meriting” the attention of the Divisional Court, see Dryden (City) v. Municipal Property Assessment Corporation, 2016 ONSC 478 at para. 16.
[6] To state the obvious, a discretionary decision by a member of a specialized tribunal as to whether to relieve against a technical non-compliance with its own Board rules, is subject to maximum deference and would virtually never be characterized as a question of law meriting the attention of the Divisional Court. Indeed, this is the respondent taxpayer’s position on this motion for leave. The taxpayer argues that the Board member’s discretionary decision rested on a determination of the relevant facts, a balancing of the prejudice to the parties, and ultimately a decision as to whether the specific circumstances warranted relief from the express requirements of the Board rules.
[7] MPAC argues however that the Board member gave reasons for the exercise of her discretion which were simply wrong in fact and law and which were not directed to matters argued at the hearing, thereby depriving MPAC of the opportunity to answer the Board member’s concerns. In other words, the Board’s decision was not reasonable – it was not an outcome that could be justified on the basis of the evidence or the Board member’s articulation of how she balanced MPAC’s position against the relief sought by the taxpayer.
[8] I agree with MPAC’s position. On the one hand, the Board member had to weigh the highly technical non-compliance here against the public interest in having matters determined on the merits and the public interest in ensuring equitable property assessments for comparable properties in the community. Against this, the Board member was entitled and indeed required to weigh the potential unfairness to the taxpayer of facing the possibility of a potentially greater tax burden arising in the taxpayer’s own appeal against its property assessment.
[9] The Board member stated at para. 50 of her reasons:
On balancing the competing interests of the parties, the Board finds that the highly prejudicial nature of the Notice militates against the Board using its discretionary power to grant MPAC an exception from the requirements of service as provide for in Rule 30(1) and Rule 34(d).
[10] The member continued:
…the Notice is highly prejudicial to the taxpayer in that if the increased assessment sought by MPAC was granted, the taxpayer could face a potentially significant increase in its property tax burden.
[11] It has been observed in many cases that a proper determination on the merits of the assessed value of property cannot constitute “prejudice”. In this respect, the applicant relies on 20 Norelco KS Inc. v. Municipal Property Assessment Corporation, Region No. 9, [2013] O.A.R.B.D. No. 12, which was a motion under Rule 67(a) for leave to withdraw certain appeals. The Board upheld MPAC’s right to rely on Rule 30(1) and held that the “only possible prejudice facing the appellant was a correct assessment while the other taxpayers in the municipality faced significant prejudice should the property be significantly under assessed.”
[12] The Board member appeared to conclude that in allowing the appeal to go forward for determination on the merits, there would be unfairness to the taxpayer in several ways: (a) in reasoning that MPAC did not have a right to rely on Rule 30(1) (the “Special Notice” procedure and advance a case that the assessment was too low; and (b) in making various findings going to MPAC’s bona fides on the basis of matters not argued before her and which were legally and factually incorrect.
[13] In paragraphs 29 and 48 of the decision, the Board member suggests that MPAC cannot assert a claim for an increased assessment in the context of a taxpayer’s appeal against a property assessment or, in the alternative, that to do so is somehow improper. It was not contested before this Court that MPAC had the right to serve its “Special Notice” seeking an increased assessment. The Board jurisprudence is clear that this is so, for example see: Sgambelluri v. Municipal Property Assessment Corp. Region 18, [2015] O.A.R.B.D. No. 206.
[14] The Board member stated that she exercised her discretion having regard to MPAC’s unfair conduct in several respects:
(a) MPAC could have but did not alter the property’s annual assessment for the years 2014 or 2015;
(b) MPAC had other statutory powers in the Act (sections 33 and 34) that it could have but did not utilize to amend the returned assessment; and
(c) The Notice was seemingly a “litigation tactic” because the increased value sought by MPAC was twice the value of the assessment” under appeal by the taxpayer.
[15] MPAC submits that these were not matters argued before the Board member. In point of fact, MPAC did alter the property’s annual assessment for 2015, which was its first opportunity to do so having regard to the assessment cycle. It was also agreed before this Court, that MPAC did not have the statutory power under sections 33 and 34 of the Act to simply amend the returned assessments as the Board member assumed. Further, the “litigation tactic” to be inferred from the fact that the value sought by MPAC was twice the value of the returned assessment was not the subject of any evidence before the hearing and therefore, MPAC had no opportunity to answer the Board member’s suggestion that the requested assessment increase was retaliatory or “tactical”.
[16] In summary, I accept MPAC’s submissions that the Board member’s articulated reasons for the “balancing” of interests between the parties and for the exercise of her discretion, was based on an erroneous view of the operation of the Assessment Act and a lack of procedural fairness in assuming facts which were not argued before her and which were incorrect.
[17] On the issue of whether the matters raised merit the attention of the Divisional Court, MPAC puts its position as follows:
MPAC is a statutory party in every assessment appeal. MPAC’s right to advance a case that an assessment is below current value and to rely on Rule 30(1) is as wide-ranging a legal issue as any issue that could arise under the Act, because it has potential and significant ramifications in every single assessment appeal. The issue also affects the assessment system as a whole, in that it changes the calculus for appellants who must decide whether there is any downside risk for appealing an assessment.
[18] MPAC also notes that the Supreme Court of Canada recently granted leave to appeal in an Alberta case on the issue of whether a municipality (which in Alberta is also the assessor) is prohibited from advancing a case at the Assessment Tribunal that an assessment is below market value and should be corrected; Edmonton (City) v. Edmonton East (Capilano) Shopping Centres Ltd., [2015] S.C.C.A. No. 161.
[19] I respectfully agree that the Board member’s articulation of her reasons for the exercise of her discretion engage important matters of broad application to the operation of the assessment system.
[20] In the unusual circumstances of this case, the Board member has provided, apparently, erroneous reasons for the exercise of her discretion to allow the reinstatement of this appeal and these reasons involve questions of law that are potentially of broad importance to the assessment system. Accordingly, leave to appeal to the Divisional Court is granted. I decline to specify a specific question or issue on which leave to appeal is granted.
[21] Costs of the application for leave to appeal are reserved to the Divisional Court.
Justice Charles T. Hackland
Released: September 1, 2016
2016 ONSC 5525
COURT FILE NO.: 15-2134
DATE: 2016/09/01
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
Municipal Property Assessment Corporation
Applicant
– and –
TKS Holdings Inc. and City of Ottawa
Respondents
REASONS FOR Decision
C.T. Hackland J.
Released: September 1, 2016
2016 ONSC 5525
COURT FILE NO.: 15-2134
DATE: 2016/09/07
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
Municipal Property Assessment Corporation
Applicant
– and –
TKS Holdings Inc. and City of Ottawa
Respondents
F.X. Shea, for the Applicant
Stephen Longo, for the Respondent, TKS Holdings Inc.
HEARD: August 18, 2016 (Ottawa)
Notice of correction - REASONS FOR Decision
Released September 1, 2016
C.T. Hackland J.
[22] Paragraph (20) of the Court’s Reasons for Decision dated September 1, 2016 in this proceeding is amended to replace the word “allow” in line 2 with the word “disallow”. The sentence will now read “…the exercise of her discretion to disallow the reinstatement...”.
Justice Charles T. Hackland
Dated at Ottawa: September 7, 2016
2016 ONSC 5525
COURT FILE NO.: 15-2134
DATE: 2016/09/07
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
Municipal Property Assessment Corporation
Applicant
– and –
TKS Holdings Inc. and City of Ottawa
Respondents
REASONS FOR Decision
C.T. Hackland J.
Released: September 7, 2016