Court File and Parties

2016 ONSC 5752

DIVISIONAL COURT FILE NO.: 347/15

DATE: 20160920

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: THE CORPORATION OF THE CITY OF BROCKVILLE, Applicant/Appellant

AND:

MUNICIPAL PROPERTY ASSESSMENT CORPORATION and THE CORPORATION OF THE TOWNSHIP OF ELIZABETHTOWN-KITLEY, Respondents/ Respondents in Appeal

BEFORE: DAMBROT J.

COUNSEL: Daron L. Earthy, for the Applicant/Appellant

Karey Lunau, for the Respondent/Respondent in Appeal Municipal Property Assessment Corporation

No one appearing for the Respondent/Respondent in Appeal the Corporation of the Township of Elizabethtown-Kitley

HEARD at Toronto: September 12, 2016

ENDORSEMENT

[1] The Corporation of the City of Brockville (“Brockville”) seeks leave to appeal from the decision of the Assessment Review Board (“the Board”) denying Brockville’s motion for an order pursuant to s. 40.1 of the Assessment Act, R.S.O. 1990, c. A.31 (“the Act”) to extend the time for Brockville to appeal certain assessments of a wastewater treatment facility it owns in neighbouring Elizabeth-Kitley Township (“the Township”).

Background

[2] Brockville, as a public body, makes payments in lieu of taxes for non-exempt property it owns in other jurisdictions based on the value of that property as assessed by the Municipal Property Assessment Corporation (“MPAC”). The assessed value of Brockville’s wastewater treatment facility in the Township (“the property”) was $1,271,000 for the 2002 tax year. The property was subsequently reassessed as follows for the tax years 2003 to 2016:

2003 - $4,726,000

2004 and 2005 - $6,238,000

2006 to 2008 - $7,029,000

2009 to 2012 - $7,105,000

2013 to 2016 - $7,500,000 (amended to $3,472,000)

[3] The 2003 tax year assessment constituted a 272% increase over the 2002 tax year assessed value, although no physical changes were made to the property at the time.

[4] MPAC issued an Amended Property Assessment Notice to Brockville in July 2013 that reduced the 2013 tax year assessed value of the property by more than half, from $7,500,000 to $3,472,000. The notice stated, rather obscurely, that the amendment was due to a “correction of factual information.” When Brockville asked MPAC what the cause of the reduction was, it was informed that the height of one of the buildings on the property had been incorrectly entered in MPAC’s costing system as 923 feet rather than the actual 12-foot height of the building. MPAC was entirely responsible for the error. Brockville had previously been unaware of this error. MPAC did not tell Brockville when the error had been made. MPAC did not provide an explanation for the 272% increase over the previous year in the 2003 tax year assessment.

[5] Brockville apparently came to believe (correctly, as it turns out) that MPAC’s error had been made many years earlier, and had resulted in inflated assessments. As a result, Brockville brought its motion for an order pursuant to s. 40.1 of the Act extending time for appealing the assessments back to 2003.

[6] Section 40.1 provides:

Correction of errors

40.1 If it appears that there are palpable errors in the assessment roll,

(a) if no alteration of assessed values or classification of land is involved, the Board may correct the roll; and

(b) if alteration of assessed values or classification of land is involved, the Board may extend the time for bringing appeals and direct the assessment corporation to be the appellant.

[7] Section 40.1 is the only appeal provision of the Act to which no limitation period applies.

[8] The Township did not oppose Brockville’s motion, but MPAC did. Brockville filed evidence on the motion that there was no explanation, other than the error regarding building height, to account for the 272% increase in assessed value in 2003. Although the error had been made by MPAC, and although MPAC knew when the error had first been made, it filed no evidence on the motion and did not disclose when the error had been made. It merely referred to the error, rather oddly, as an alleged error, and took the position in its Notice of Response to Motion, that the motion should be denied because “there are no palpable errors on the assessment rolls” and that, “[i]n the alternative, … Brockville has waited too long to bring this motion.”

[9] It would have been prudent for Brockville to have asked MPAC to disclose when the error was first made. However, not unreasonably, Brockville did not expect that the existence of an error was in issue, only whether or not the error was palpable.

The Reasons of the Board

[10] In reasons issued on June 10, 2015, Board Member McAnsh refused to extend the time for an appeal. He rejected MPAC’s laches argument, as well as an argument based on prejudice, given that the parties were all public bodies. He based his decision entirely on his conclusion that there was an “absence of evidence” of a palpable error.

[11] The Member explained that relief under s. 40.1 is only available “in the clearest of circumstances,” where it is “plain and obvious” that there has been a palpable error, although the error need not be on the face of the roll. It was open to the Board, he said, to look at factual errors behind the roll. The parties take no issue with this understanding of s. 40.1. It is consistent with other decisions of the Board. The Member went on to say that at a minimum, there must be “clear and cogent evidence” of a palpable error. He rejected MPAC’s argument that a palpable error could not be a valuation error.

[12] After briefly reviewing the evidence before him, he stated:

[15] … [The] evidence indicates that there was a significant error in the height of the building on the Property for the 2012 valuation day, which was corrected. The amended property assessment notice provides a reduced value for the 2008 valuation day for phase-in purposes, which Brockville also relies upon. … Mr. Dick states that he believes the error commenced in 2003 because the assessed value greatly increased that year with no physical change to the Property.

[17] … Brockville as the moving party bears the onus of demonstrating a “palpable error” and has failed to do so. Mr. Dick’s belief is not plain and obvious evidence of an error in the roll. Brockville has the ability to gather information which may have substantiated their allegations. I cannot use the extraordinary remedy in s. 40.1 on the basis of Mr. Dick’s belief. Brockville’s motion fails as there is no evidence of an error for the 2003 through 2012 taxation years. [Emphasis added.]

Analysis

[13] It is well settled that the test for leave to appeal a decision of the Assessment Review Board is whether it has been shown that there is some reason to doubt the legal correctness of the decision and whether the appeal involves a question of law meriting the attention of the Divisional Court (see: Via Rail Canada Inc. v. Municipal Property Assessment Corporation, 2015 ONSC 7459, 87 O.M.B.R. 42 (Div. Ct), at para. 16; Junvir Investments Ltd. v. Municipal Property Assessment Corporation, 2014 ONSC 5471, 29 M.P.L.R. (5th) 83 (Div. Ct.), at para. 4; and Dryden (City) v. Municipal Property Assessment Corporation, 2016 ONSC 478, 49 M.P.L.R. (5th) 104 (Div. Ct.), at para. 2).

Has it been shown that there is some reason to doubt the legal correctness of the decision?

[14] I have noted that the Member accepted that a valuation error can be a palpable error within the meaning of s. 40.1 of the Act. In addition, upon a reading of the reasons of the Member as a whole, it appears that he would readily have characterized a valuation error occasioned by MPAC treating a 12-foot building as if it was a 923-foot building as a palpable error. Frankly, I do not understand how it could be otherwise. Once it is accepted that an error need not be on the face of the roll to be palpable, then an error of this magnitude resulting from a simple, straightforward and significant data-entry error falls within the ordinary meaning of the word palpable, which has been adopted by the Board in other cases: “an error of conspicuous magnitude; plain, evident, obvious, and easy to understand.” See for example Scott v. Municipal Property Assessment Corporation, Region 15, 84 O.M.B.R. 120, 2015 CarswellOnt 2298 (O.A.R.B.), at para. 34.

[15] As a result, it is apparent that the only reason the Member refused to extend the time for an appeal was, as he clearly stated, that “there is no evidence of an error for the 2003 through 2012 taxation years.” It is here that the reason to doubt the correctness of the decision arises.

[16] It is certainly true that there was no admission made by MPAC that such an error had been made for the 2003 through 2012 years, but that does not mean that there was “no evidence” of the error throughout that period of time. Like any other fact, the existence of a palpable error can be proved circumstantially. Here the otherwise inexplicable increase in the assessment value in 2003 from $1,271,000 to $4,726,000 and the relatively consistent assessment from then to 2013, coupled with the admission that the assessed value for the 2013 tax year had to be reduced from $7,500,000 to $3,472,000 because of MPAC’s error is “some evidence” that the error dated back to the 2003 tax year. Indeed, to me, it is overwhelming evidence.

[17] The presence or absence of any evidence upon which a decision may be supported is a question of law. The sufficiency of the evidence upon which it is sought to support a decision is one of fact or at best a question of mixed law and fact: The Queen v. Warner, 1960 85 (SCC), [1961] S.C.R. 144, 128 C.C.C. 366. If the Member erroneously concluded that there was no evidence of an error for the 2003 through 2012 taxation years, then he committed an error of law that of necessity deprived him of the opportunity to consider the sufficiency of the evidence. As a result, there is reason to doubt the legal correctness of the decision of the Member. While the granting of an extension of time is discretionary and ordinarily attracts deference, an underlying error of law that deprives the Member of the opportunity to examine the sufficiency of the evidence that should have informed his exercise of discretion disentitles his decision to deference.

[18] I note as well, as I stated above, that the Member said that at a minimum, there must be “clear and cogent evidence” of a palpable error before an extension of time can be granted. Since he was of the view that there was an absence of evidence of a palpable error, he never turned his mind to the sufficiency of the evidence. Nevertheless it is worth noting that a requirement of clear and cogent evidence appears to be a novel formulation of the standard of proof on a motion for an extension of time, intended by the Member to narrow the availability of an extension of time. Before me the parties agreed that the onus of proof on the applicant was the civil standard: proof on a balance of probabilities.

[19] For all of these reasons, I am satisfied that it has been shown that there is reason to doubt the legal correctness of the decision.

Does the appeal involve a question of law meriting the attention of the Divisional Court?

[20] It is undoubtedly true, as I have already stated, that a discretionary decision by a member of a specialized tribunal as to whether to extend the time to appeal is subject to considerable deference and would only exceptionally raise a question of law meriting the attention of the Divisional Court. In my view, this is one of those exceptional cases.

[21] Placing an unduly high onus on an applicant to establish a palpable error in the valuation of a property and denying that applicant the right to rely on circumstantial evidence, particularly in circumstances where the existence and nature of the asserted error is within the knowledge of the respondent, which chooses to stand silent, raises questions of law of sufficient importance to merit the attention of the Divisional Court.

[22] As a result I am satisfied that leave to appeal to the Divisional Court should be granted.

Disposition

[23] Leave to appeal is granted. Costs are reserved to the panel hearing the appeal.

M. DAMBROT J.

Date: September 20, 2016