Downtown West GPI Ltd. v. Municipal Assessment Corp., Region 9 et al. [Indexed as: Downtown West GPI Ltd. v. Municipal Assessment Corp., Region 9]
86 O.R. (3d) 248
Court of Appeal for Ontario,
Goudge, Borins, Gillese, MacFarland JJ.A. and Cunningham A.C.J.S.C. (ad hoc)
June 13, 2007
Municipal law -- Taxation -- Assessment -- City establishing "frozen assessment listing" for applicant's property in accordance with s. 447.5(4) for 1998 and 1999 -- Applicant served with Notice of Supplementary or Omitted Property Assessment in 2000 -- That notice triggering application of s. 447.10 of Municipal Act -- Property constituting "eligible property" for purposes of municipal taxation pursuant to s. 447.34.1 of Act -- Final assessment of subject property could not be determined under s. 447.10 without applying s. 447.10(2) -- Municipal Act, R.S.O. 1990, c. M.45, ss. 447.5(4), 447.10, 447.34.1.
When dealing with one of the applicant's commercial properties, the City in 1998 and 1999 applied the provisions of Part XXII.1 of the Municipal Act (the "Act") establishing for both years a "frozen assessment listing" ("FAL") in accordance with s. 447.5(4). In 2000, the Municipal Property Assessment Corporation delivered a Notice of Supplementary or Omitted Property Assessment pursuant to s. 33 of the Assessment Act, R.S.O. 1990, c. A.31. That notice triggered the application of s. 447.10 of the Act. The applicant brought an application for a declaration that its property was an "eligible property" pursuant to s. 447.34.1 of the Act. The application was dismissed. The applicant appealed.
Held, the appeal should be allowed.
Any final assessment of the subject property could not be determined under s. 447.10 without applying subsection (2). Subsection (3) applied to determine the increase in "total assessment", which is then used to determine the increase in commercial and business assessment under subsection (2). Nevertheless, subsection (2) applied in completing the task of determining the assessments after the improvements had been made to the property. The Act did not make any sense in this fact situation if s. 447.10(2) was not applied. The three components of the FAL that were in issue could only be changed by using that subsection. The subject property came within the definition of "eligible property" in s. 447.34.1 of the Act, as s. 447.10(2) applied to the property for 1999 and continued to apply for 2000.
APPEAL from the judgment of Belobaba J. of the Superior Court of Justice, dated August 25, 2006, dismissing an application for a declaration that property was "eligible property" pursuant to s. 447.34.1 of the Municipal Act.
Cases referred to Yonge Street Hotels Ltd. v. Municipal Property Assessment Corp., Region No. 9, 2005 14438 (ON CA), [2005] O.J. No. 1741, 197 O.A.C. 11, 9 M.P.L.R. (4th) 179 (C.A.), consd Other cases referred to Placer Dome Canada Ltd. v. Ontario (Minister of Finance), [2006] 1 S.C.R. 715, [2006] S.C.J. No. 20, 2006 SCC 20, 210 O.A.C. 342, 2006 D.T.C. 6532 Statutes referred to Assessment Act, R.S.O. 1990, c. A.31, s. 33 [as am.] Municipal Act, R.S.O. 1990, c. M.45 [rep.], ss. 447.5, 447.10, 447.34.1
Robert A. Spence, for applicant (appellant). Donald G. Mitchell, for respondent (respondents in appeal).
[1] BY THE COURT: -- Downtown West GPI Limited ("Downtown West") appeals from the judgment of Belobaba J. dated August 25, 2006. Before Belobaba J., Downtown West sought a declaration that one of its commercial properties in Toronto was an "eligible property" for the purposes of municipal taxation pursuant to s. 447.34.1 of the Municipal Act, R.S.O. 1990, c. M.45. In his brief reasons, Belobaba J. refused to grant a declaration stating:
But for the decision of the Court of Appeal in Yonge Street Hotels (May 4, 2005) and in particular the statement in para. 12 therein, I would have been inclined to agree with Mr. Spence that the Property herein satisfied the statutory definition of "eligible property" as applied to the facts of this case.
However, I am obviously bound by Yonge Street Hotels.
The application is therefore dismissed. By agreement, costs are fixed in the amount of $3,000 all inclusive, payable by the applicant forthwith.
[2] The application before Belobaba J. was based upon an agreed statement of facts which is attached hereto as Schedule A.
[3] In his reasons, Belobaba J. referred to para. 12 of Yonge Street Hotels Ltd. v. Municipal Property Assessment Corp., Region No. 9, 2005 14438 (ON CA), [2005] O.J. No. 1741, 197 O.A.C. 11 (C.A.), which reads as follows:
In 2000, s. 447.34.1 was enacted to ensure that certain eligible properties were taxed at a level of assessment no higher than that of comparable properties. "Eligible property" is defined in s. 447.34.1 as property to which s. 447.10(2) applies for certain specified years. Section 447.10 provides for adjustments to assessment arising "as a result of the erection, alteration, enlargement or improvement of a building". Section 447.10(3) provides a special rule for increases resulting from the alteration, enlargement, or improvement of a building, but specifically not to the "erection" of a building, leaving increases resulting from the "erection" of a building to be dealt with under s. 447.10(2). Therefore, s. 447.10(3), but not s. 447.10(2), applies to buildings that have been altered, enlarged, or improved. Accordingly, under the definition in s. 447.34.1(16), which is contingent on the applicability of s. 447.10(2), buildings that have been altered, enlarged, or improved would not count as "eligible property" and do not get the benefit of the 2000 amendments.
[4] The issues on appeal are as follows:
(1) What is the proper interpretation of s. 447.34.1(16) of the Municipal Act?
(2) If the Yonge Street Hotels case is otherwise dispositive of this case, was it correctly decided?
Issue 1 -- What is the Proper Interpretation of s. 447.34.1(16) of the Municipal Act?
[5] The appellant argues, because the material provisions of the Municipal Act are part of Ontario's property tax legislation, that the principles of statutory interpretation as enunciated in Placer-Dome Canada Ltd. v. Ontario (Minister of Finance), [2006] 1 S.C.R. 715, [2006] S.C.J. No. 20, 2006 SCC 20, ought to be followed. In his analysis of the issue, LeBel J. considered the general principles of tax statute interpretation. In that regard, paras. 21-24 of that decision are important and are to be applied in the present circumstance.
[6] As noted in the agreed statement of facts, the Municipal Act was amended in 1999 by adding s. 447.34.1 to Part XXII.1. The purpose of these changes to the Municipal Act was to inaugurate a municipal tax regime based upon current value assessment and part of the amendments included provisions covering the transition from the old to the new regime.
[7] When dealing with the subject property, the City of Toronto in 1998 and in 1999 applied the provisions of Part XXII.1 establishing for both years a "frozen assessment listing" ("FAL") in accordance with s. 447.5(4). Section 447.5 reads as follows:
447.5(1) A local municipality shall maintain frozen assessment listings for the 1998, 1999 and 2000 taxation years for the taxation of properties to which this Part applies.
(2) The frozen assessment listing for 1998 shall be based on the assessment role for 1997, as most recently revised, including any assessments made under section 33 of the Assessment Act in respect of 1997, with the changes required under this Part.
(3) The frozen assessment listings for 1999 and 2000 shall be based on the frozen assessment listing for the previous year with the changes required under this Part.
(4) The frozen assessment listing shall include the following for each property to which this Part applies:
Total assessment.
Commercial assessment.
Business assessment.
Vacant commercial assessment.
Non-business assessment.
[8] The problem underlying this appeal arose in 2000 when the Municipal Property Assessment Corporation ("MPAC") delivered a "Notice of Supplementary or Omitted Property Assessment" pursuant to s. 33 of the Assessment Act, R.S.O. 1990, c. A.31. This notice triggered the application of s. 447.10, which provides as follows:
447.10(1) This section sets out the changes to be made to the frozen assessment listing for 1999 or 2000 if the assessment of a property to which this Part applies, as set out in the assessment roll for that year, as most recently revised, increases from the assessment set out in the assessment roll for the previous year as a result of,
(a) an assessment made during the previous year under subsection 33(1) of the Assessment Act, or
(b) an adjustment made on the assessment roll for the year as a result of the erection, alteration, enlargement or improvement of a building, a structure, machinery, equipment or a fixture that occurred during a previous year.
(2) The assessment referred to in subsection 447.5(4), in the frozen assessment listing for the year shall be changed as follows:
The total assessment shall be increased so that it equals the assessment set out in the assessment roll for the year multiplied by a factor prescribed in the regulations unless subsection (3) applies, in which case the total assessment shall be increased by the amount determined under that subsection.
The commercial assessment shall be increased by the same amount the total assessment was increased by under paragraph 1.
The business assessment shall be increased by the increase in the commercial assessment multiplied by the average business rate determined under section 447.13.
(3) If the assessment of the property is increased as a result of the alteration, enlargement or improvement of any building structure, machinery, equipment or fixture or any portion thereof, the total assessment shall be increased under paragraph 1 of subsection (2) by an amount determined in accordance with the following:
Amount = increase in assessment x Frozen assessment ---------------------- Old assessment
Where,
"increase in assessment" means the increase in the assessment on the assessment roll;
"Old assessment" means the assessment on the assessment roll before the increase;
"Frozen assessment" means the total assessment on the frozen assessment listing.
(7) If an assessment for a property that is made in a year under subsection 33(1) of the Assessment Act applies to the year or to either or both or the next two preceding years, the clerk of the municipality shall revise the frozen assessment listing for the year or for the preceding year or years as provided under this section and the taxes that would have been payable if the changes had been made to the frozen assessment listing in the year shall be levied and collected.
(8) If, as a result of more than one supplementary assessment made under section 34 of the Assessment Act after January 1, 1998 in respect of a property described in paragraph 1 of subsection (4), the increase in the assessment on the assessment roll is equal to or greater than 50 per cent of the assessment of the property on the assessment roll prior to any of the supplementary assessments being made, subsection (4) does not apply to the property and the assessment on the frozen assessment listing shall be recalculated under subsection (2) following the supplementary assessment that increases the total assessment of the property on the assessment roll by an amount equal to or greater than 50 per cent of the assessment on the assessment roll.
(9) Subsections (7) and (8) apply to the 1998 and subsequent taxation years.
[9] It is the position of the appellant that s. 447.10 ought to have been applied to the property in the following way.
(a) Because MPAC had issued its Notice of Supplementary or Omitted Assessment under s. 33 of the Assessment Act, subsections 447.10(1) and (7) required the property's FAL to be changed in accordance with the provisions of s. 447.10.
(b) Such changes are mandated by s. 447.10(2). There are three components to the FAL that are covered by this subsection. These are the total assessment, the commercial assessment and the business assessment.
(c) With respect to the total assessment, para. 1 of s. 447.10(2) sets out two possible formulae for calculating the amount of the change. One formula is mandated for all properties, except those under subsection (3), and a second formula deals with properties where subsection (3) applies. Importantly, however, and regardless of which formula one uses, it is s. 447.10(2) that imposes the appropriate change to the total assessment.
(d) As to commercial and business assessments, the appropriate changes are set out in paras. 2 and 3 of s. 447.10(2). These changes are imposed under s. 447.10(2) regardless of which formula is used for changing the total assessment. In other words, s. 447.10(2) must be always applied in order to adjust the commercial and business assessments because s. 447.10(3) is silent about these components of the FAL.
(e) Because the notice under s. 33 of the Assessment Act made changes for both 1999 and 2000 assessments, the rule applied initially for the 1999 calculations ought to be used for the 2000 calculations.
[10] The appellant then says that the next step requires a consideration of s. 447.34.1 of the Municipal Act, which was added to Part XXII.1 in 1999. Clearly, this section was transitional in nature and designed to ensure that "eligible" properties were taxed in 2000 under Part XXII.1 at a level of assessment no higher than that of "comparable properties".
[11] Eligible property is defined in s. 447.34.1(16) of the Act as follows:
"eligible property" means a property to which subsection 447.10(2),
(a) first applied for 1998 or 1999 and continues to apply for 2000, or
(b) applies for 2000 and did not apply for 1999,
and includes such other property as may be prescribed under clause (15)(a);
[12] The appellant argues that the proper interpretation of s. 447.34.1(1) is that the subject property was indeed an "eligible property" in accordance with that section. In 1999, subsection 447.10(2) applied to the property and should continue to apply in 2000. It is the appellant's position that this interpretation gives effect to the grammatical and ordinary sense of the statutory wording, read in context, and that no other interpretation makes sense of the words. We agree. Because no ambiguity exists and because there is precision and clarity in the taxing provision, the provision must be applied. (See Placer Dome, supra.)
[13] Very simply put, any final assessment of the subject property cannot be determined under s. 447.10 without applying subsection (2). Without doubt, in the present case subsection (3) applies to determine the increase in "total assessment" which is then used to determine the increase in commercial and business assessment under subsection (2). Nevertheless, subsection (2) applies in completing the task of determining the assessments after the improvements have been made to the property. In our view, there is no ambiguity. The statute simply does not make any sense in the current fact situation if subsection 447.10(2) is not applied. The three components of the FAL that are in issue can only be changed by using that subsection.
[14] Belobaba J. properly felt himself constrained by Yonge Street Hotels Ltd. v. Municipal Property Assessment Corp., Region No. 9, supra, although one senses his reluctance in coming to the conclusion he did. Nonetheless, for the reasons we have given, we reach the opposite result and would allow the appeal. In doing so, it is important that we make clear the context in which this court commented upon s. 447.34.1 in Yonge Street Hotels.
[15] There, the appellant had purchased the former Westbury Hotel on Yonge Street in Toronto and then stripped everything away but the shell. A construction retrofit was carried out and a new hotel was built within the existing structural element. It was the contention of the appellant that its construction work had amounted to the "erection" of a new building, while MPAC argued that it amounted to an "improvement" of an existing building. The common ground presented to the court in Yonge Street Hotels makes it an entirely different case from the one before us. In a joint submission, the parties in Yonge Street Hotels stated that the hotel in question would only be "an eligible property" if it was erected as a new building, with the result that the dispute centred around what constituted "erection" as opposed to "alteration, enlargement or improvement". Given the joint submission and the common ground of the parties in Yonge Street Hotels, this court was not assisted with the debate about the proper meaning of s. 447.34.1, but rather was presented with an agreed meaning. In that sense, it is unnecessary for us to find that Yonge Street Hotels was incorrectly decided. It was very much restricted to its facts in light of the common ground presented by the parties.
[16] For these reasons, the judgment of Belobaba J. is set aside and judgment is granted as follows:
(1) There will be an order declaring that the property constitutes an "eligible property" within the meaning of s. 447.34.1 of the Municipal Act;
(2) There will be an order directing MPAC to provide a list of comparable properties with respect to the property pursuant to ss. 447.34.1(5) and (6) of the Act;
(3) There will be an order directing the City of Toronto to determine the total assessment for the property as "eligible property";
(4) There will be an order directing the City of Toronto to mail within 30 days to the appellant the list of comparable properties and the determination of the total assessment pursuant to s. 447.34.1(7) of the Act.
[17] The parties have agreed on the matter of costs and the appellant is entitled to the sum of $6,500 all inclusive for its costs to be payable by the respondent forthwith.
Appeal allowed.