Court File and Parties
CITATION: Manulife v. Municipal Property Assessment Corporation et al, 2023 ONSC 4705
DIVISIONAL COURT FILE NO.: DC-23-00002781
DATE: 2023/08/16
SUPERIOR COURT OF JUSTICE - ONTARIO
DIVISIONAL COURT
RE: MANULIFE ONTARIO PROPERTY PORTFOLIO (“Manulife”), Applicant
- AND -
MUNICIPAL PROPERTY ASSESSMENT CORPORTATION REGION NO. 3 (“MPAC”) and the CITY OF OTTAWA, Respondents
BEFORE: Justice K. Muszynski
COUNSEL: Eric Sherkin, for the Applicant Allyson Amster, for the Respondent, MPAC Angela Severson, for the Respondent, Ottawa
HEARD: June 20, 2023
RULING ON MOTION TO ADMIT FRESH EVIDENCE / DECISION ON MOTION FOR LEAVE TO APPEAL
MUSZYNSKI, J.
OVERVIEW
[1] Manulife, the owner of a commercial property in Ottawa, disputes the current value assigned to its property by MPAC for 2021 and 2022. Manulife unsuccessfully attempted to appeal the assessments to the Assessment Review Board. The Board held that Manulife was estopped from bringing the appeals due to a settlement entered into between Manulife, MPAC, and the City of Ottawa for 2017, 2018, 2019, and 2020, which years had been the subject of prior appeals. Manulife seeks leave to appeal the decision and have the matter remitted to the Board for determination on the merits.
[2] Manulife further seeks to admit fresh evidence on the motion for leave to appeal. Specifically, Manulife seeks to admit an email exchange between employees of MPAC and the Ministry of Finance that purportedly interprets the precise issue raised in the Board’s decision in the manner favourable to Manulife.
[3] MPAC and Ottawa oppose Manulife’s motion to admit fresh evidence and ask that leave to appeal be denied.
[4] For the reasons that follow, Manulife’s motion for leave to admit fresh evidence is dismissed. The motion for leave to appeal the Board’s decision is granted.
ISSUES
[5] Should Manulife’s motion to admit the email communication into evidence on the motion for leave to appeal be granted?
[6] Should Manulife be granted leave to appeal the decision of the Board denying Manulife an opportunity to appeal the current value assessments for the 2021 and 2022 taxation years based on issue estoppel?
MOTION TO ADMIT FRESH EVIDENCE
[7] Through a freedom of information request to the Ministry of Finance, Manulife recently obtained email communication from April of 2020 between an employee of MPAC and an employee of the Ministry of Finance.
[8] The email is not related to this case, but rather, contains a discussion of the potential implications of extending the regular four-year property tax assessment cycle into a fifth year because of the COVID-19 pandemic. According to Manulife, the email is evidence that MPAC understands that it is obligated to determine the value of property in Ontario on an annual basis and that previous settlements in an assessment cycle do not bind the parties in future taxation years.
[9] It appears that there is no jurisdiction to admit fresh evidence on a motion for leave to appeal to the Divisional Court: see SLMsoft.com Inc. v. Rampart Securities (Trustee of) (2005), 78 O.R. (3d) 521 (Div. Ct.), at paras. 16-39.
[10] Regardless, I would decline to do so because I find that the four-part test for admission of fresh evidence as set out in Palmer v. The Queen has not been met: 1979 8 (SCC), [1980] 1 S.C.R. 759, at p. 775. While I accept that the evidence could not have been obtained previously by the exercise of due diligence and that the evidence is credible, I am not convinced that the evidence is relevant or would have impacted the decision of the Board. The motion to admit fresh evidence is dismissed.
MOTION FOR LEAVE TO APPEAL
[11] An appeal of a decision of the Board lies to the Divisional Court, with leave on questions of law: Assessment Act, R.S.O. 1990, c. A.31, s. 43.1(1) (the “Act”).
[12] MPAC and Ottawa submit that the proposed appeal by Manulife involves an issue of mixed fact and law and, therefore, this Court lacks jurisdiction. I disagree. In my view, the issue is whether the Board misapplied the doctrine of issue estoppel, which is a question of law. I find that this Court has jurisdiction to hear the appeal if leave is granted.
[13] In granting leave to appeal, the Court must be satisfied that:
a. There is reason to doubt the legal correctness of the Board’s decision; and
b. The question is an important question of law: City of Dryden v. Municipal Property Assessment Corporation et al, 2016 ONSC 478, 49 M.P.L.R. (5th) 104, at para. 2, citing Via Rail Canada Inc. v. MCAP, 2015 ONSC 7459, 87 O.M.B.R. 42, at paras. 15-17.
A: There is good reason to doubt the legal correctness of the Board’s decision
[14] There is reason to doubt the correctness of a decision if it is “open to very serious debate”: Exchange Tower v. Municipal Property, 2012 ONSC 415, 97 M.P.L.R. (4th) 200, at paras. 17-18.
[15] Manulife submits that the Board’s decision to apply issue estoppel to the facts in this case constitutes a legal error because the prior settlement only applied to years 2017-2020, MPAC has a statutory obligation to return annual assessments of properties, and the current value assessments returned for 2021 and 2022 result in inequity when compared to like properties in the vicinity.
Ontario’s property taxation regime
[16] The Act requires MPAC to assess all properties in Ontario based on their current values: see s. 19. Section 1 of the Act defines “current value” as “the amount of money the fee simple, if unencumbered, would realize if sold at arm’s length by a willing seller to a willing buyer”.
[17] After determining the current value, the Board is required to “have reference to the value at which similar lands in the vicinity are assessed and adjust the assessment of the land to make it equitable with that of similar lands in the vicinity if such an adjustment would result in a reduction of the assessment of the land”: the Act, s. 44(3)(b). This is often referred to as an equitable adjustment.
[18] Ordinarily, property values are assessed every four years on statutory valuation dates. The current value as of the valuation date is then used as a base for every other year in the four-year cycle, barring any change to the property. The statutory valuation date of January 1, 2016 was intended to apply to taxation years 2017-2020. Due to the COVID-19 pandemic, the cycle was extended through subsequent regulations to apply to the 2021, 2022, and 2023 taxation years.
[19] The Act requires assessments of land to be made annually: see s. 36. Further, the Act provides an annual right of appeal of the most recent assessment returned by MPAC for various reasons, including on the basis that the current value of the property is incorrect: see s. 40(1).
Minutes of Settlement
[20] Manulife previously appealed the current value returned by MPAC for the 2017-2020 taxation years on the basis that it was incorrect and inequitable when compared with similar properties in the vicinity.
[21] The appeals for the 2017-2020 taxation years were resolved by Minutes of Settlement that were filed with the Board in December of 2020 wherein the parties agreed that the current value for the property as of the statutory valuation date (January 1, 2016) was $20,067,000. The Minutes were filed as separate documents for each taxation year under appeal. The Minutes did not reference future taxation years and specifically state the following: “The parties certify that the Minutes of Settlement herein refer only to matters that are properly before the Assessment Review Board”.
[22] After the Minutes were filed, MPAC returned the annual assessment for the property for the 2021 taxation year at $20,067,000, which was the settled current value for the 2017-2020 taxation years as the statutory valuation date remained January 1, 2016, and there were no changes to the property.
[23] On September 23, 2021, Manulife filed an appeal of the 2021 assessment with the Board. The basis of the appeal was that the current value was incorrect because it was inequitable compared to the assessments of similar properties in the vicinity, which had sold for significantly less than the current value returned by MPAC. Since the 2021 appeal had not been resolved as of March 31, 2022, in accordance with s. 40(26) of the Act, there was a deemed appeal for 2022.
[24] In response to a motion by MPAC, on February 24, 2023, the Board issued a decision finding that Manulife was estopped from appealing the current value of the property for the 2021 and 2022 taxation years due to the settlement entered into for the 2017-2020 appeals.
Issue estoppel
[25] The purpose of issue estoppel is to prevent the re-litigation of issues that have already been decided. The three-part test to apply issue estoppel is as follows:
Has the same question been decided?
Was the decision said to create the estoppel final?
Were the parties to the decision the same parties as those to the proceedings in which the estoppel is raised?: Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77, at para. 23.
[26] There is no question that the Minutes of Settlement pertaining to the 2017-2020 taxation years were final and that the parties are the same. The challenge lies with the first leg of the test – has the same issue already been decided? Manulife submits that the answer is no, and that the prior settlement does not apply to the 2021 and 2022 taxation years. MPAC and Ottawa take the opposite position and submit that there was an agreement to the current value as of the statutory valuation date (January 1, 2016), which applies to subsequent years unless there has been a change to the state and condition of the property. It is agreed that no such change has occurred.
[27] The case of Wabi Iron & Steel Corp. v. Municipal Property Assessment Corp., Region No. 29 (2005), 2005 3984 (ON SCDC), 250 D.L.R. (4th) 370 (Ont. Div. Ct.), was referred to extensively in submissions. In Wabi Iron, a property owner appealed a decision of the Board that applied issue estoppel to prevent the owner from challenging the current value of its property where the Board had previously heard and disposed of an appeal related to earlier years within the same assessment cycle.
[28] Unlike Wabi Iron, in this case, there was no hearing on the merits. Rather, discrete Minutes were entered into for each taxation year under appeal at the time. The issue of an equitable adjustment was raised in the prior appeals, but never litigated. It is unknown how the agreed upon current value was reached or whether an equitable adjustment was made for the 2017-2020 taxation years. Although I appreciate that consent orders can form the grounds for issue estoppel in some cases, I am not convinced that this is one of them.
[29] If there had been a hearing on the merits with respect to the current value assessment for the 2017-2020 taxation years, with a resulting decision that addressed whether an equitable adjustment was applied, I might have reached a different conclusion.
[30] Manulife is not trying to renege from its settlement in relation to the 2017-2020 taxation years. Had it done so, I would not hesitate to find that the Board properly applied the doctrine of issue estoppel with respect to the years subject to the settlement. Manulife simply seeks to exercise its statutory right to appeal the current value assessments for 2021 and 2022.
[31] One would have thought that if it was the intention of the parties to resolve future tax years within the extended four-year cycle, they would have clearly set that out in the Minutes. In this case, the opposite occurred as the Minutes clearly state that they are to apply to only the taxation years under appeal.
[32] On this basis, I find that there is good reason to doubt the correctness of the Board’s decision to exercise its discretion to apply issue estoppel.
B: The legal issue is important
[33] The test for leave to appeal requires a moving party to demonstrate both a good reason to doubt the correctness of the impugned decision and the importance of the legal issue.
[34] A legal issue is considered important when it goes beyond the interest of the immediate parties and involves questions of general importance: Sahota v. Sahota, 2015 20903 (Ont. Div. Ct.), at para. 5.
[35] Manulife submits that the issue raised in the proposed appeal is important to all participants in property tax assessment appeals. I agree. The issue may inform how settlement negotiations are conducted and Minutes of Settlement are drafted in the context of municipal property tax assessment appeals.
CONCLUSION
[36] Manulife’s motion to admit fresh evidence is dismissed.
[37] Manulife’s motion for leave to appeal the decision of the Board is granted.
COSTS
[38] The parties have discussed the issue of costs and agreed that the successful side would be entitled to costs of the motion to admit fresh evidence in the amount of $2,500 and the cost of the motion for leave to appeal in the amount of $5,000.
[39] Ottawa and MPAC were successful on the motion to admit fresh evidence. Manulife was successful on the motion for leave to appeal. Accordingly, Ottawa and MPAC shall collectively pay to Manulife costs in the amount of $2,500 on an all-inclusive basis.
MUSZYNSKI, J.
Released: August 16, 2023
CITATION: Manulife v. Municipal Property Assessment Corporation et al, 2023 ONSC 4705
DIVISIONAL COURT FILE NO.: DC-23-00002781
DATE: 2023/08/16
SUPERIOR COURT OF JUSTICE - ONTARIO
DIVISIONAL COURT
RE: MANULIFE ONTARIO PROPERTY PORTFOLIO (“Manulife”)
Applicant
AND
MUNICIPAL PROPERTY ASSESSMENT CORPORTATION REGION NO. 3 (“MPAC”) and the CITY OF OTTAWA
Respondents
BEFORE: Justice K. Muszynski
COUNSEL: Eric Sherkin, for the Applicant Allyson Amster, for the Respondent, MPAC Angela Severson, for the Respondent, Ottawa
HEARD: June 20, 2023
RULING ON MOTION TO ADMIT FRESH EVIDENCE / DECISION ON MOTION FOR LEAVE TO APPEAL
MUSZYNSKI J.
Released: August 16, 2023