COURT FILE NO.: D01-0018
DATE: 2002-09-06
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
MUNICIPAL PROPERTY ASSESSMENT CORPORATION,
Applicant,
- and -
INMET MINING CORPORATION, MINNOVA INC. and SUPERIOR-GREENSTONE DISTRICT SCHOOL BOARD (formerly known as Lake Superior Locality Education)
Respondents
Jack N. M. Jamieson, for the Applicant
Phillip L. Sanford, for the Respondents, Inmet Mining Corporation and Minnova Inc.
HEARD: July 31, 2002, at Thunder Bay, Ontario
Pierce J.
Reasons On Motion For Leave To Appeal To Divisional Court
[1] The applicant seeks leave to appeal the decision of the Assessment Review Board of October 16, 2001 to the Divisional Court.
[2] The disputed assessments which are the subject of that order relate to the taxation years 1998, 1999, and 2000. In its order, the Board reduced the current value assessments of the subject property.
The Test:
[3] An appeal may be taken to the Divisional Court from the Assessment Review Board on a question of law.
[4] If the court granting leave is satisfied that there is good reason to doubt the correctness of the decision and the issue is of sufficient legal importance, then leave to appeal should be granted. The court granting leave is not required to conclude that the decision complained of is wrong or probably wrong. See Regional Assessment Commissioner Region No. 9 v. Templeton Management Limited, et al. [1992] O.J. No. 1343 (Div. Ct.); Toronto (City) v. Toronto (Metropolitan), [1995] O.J. No. 540 (Div. Ct.); Juno Developments (Parry Sound) Ltd. v. Parry Sound (Town), [1997] O.J. No. 976 (Div. Ct.); Sunnybrae Farms Ltd. v. Ontario Egg Producers’ Marketing Board, [1977] O.J. No. 686 (H.C.).
The Background:
[5] The assessed property was a zinc mine located at the end of 30 kilometres of dirt road in northern Ontario. The mine was functional throughout 1998. However, it was announced on December 4, 1998 that mining operations were being “suspended” due to unprofitability.
[6] In reality, the mine’s management did not anticipate resuming operations. But the timing of the announcement, coming as it did before Christmas, was thought to be crushing for the miners and their families; management was attempting to soften the blow.
[7] Lay-off notices were given to all employees on December 4, 1998. An 8 week notice period was provided. In order to occupy the employees, a little mining was carried out into early 1999. Plans to finally close the mine were agreed upon February 15, 1999.
[8] Mine closure arrangements were implemented in the winter of 1999. These measures involved the sealing of the site, removal of buildings and roads, and other shut-down procedures.
[9] By late 1999, only a handful of employees were left on the site, essentially assigned to reclamation tasks. The applicant accepted that the mine was closed as of 2000.
[10] The applicant determined the value for the mine for 1998 taxation was that of an operating mine at the date of the roll return as it was not closed. The applicant took the position that the same value should apply for 1999, given that mining operations were temporarily suspended. It concurred that the assessed value should be reduced for 2000, given that buildings on the site were demolished in 1999.
Errors of Law Alleged by the Applicant:
[11] The applicant submits there were multiple errors of law made by the Board. These include:
determining that statutory amendments to the extent of the Board’s jurisdiction on assessment appeals changed the method of determining value;
considering the declining quantity of ore in arriving at property value when the value of mineral deposits is generally exempt from assessment;
misapplying the concept of economic obsolescence in arriving at value;
adopting opinion evidence of value in the absence of quantified evidence; and
concluding that the applicant accepted the respondent’s quantification of economic obsolescence when it did not offer any evidence of its own, with the Board being relieved from making its own finding based on acceptable evidence.
Discussion:
[12] The Assessment Act which was amended as of January 1, 1998 altered the basis of assessment of lands in Ontario from market value, taking into account equity principles – that is, similar properties should be similarly assessed – to current value. “Current value” is defined in the new Act at section 1:
“ ‘current value’ means, in relation to land, 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”.
[13] Subsection 44(2) of the new Act provides:
“In determining the value at which any land shall be assessed, reference shall be had to the value at which similar lands in the vicinity are assessed.”
[14] Neither the new Act nor the old specify the valuation principles by which value should be determined. Consequently, there are no legislated guidelines setting out specific valuation concepts. In Manufacturer’s Life Insurance Company v. British Columbia (Assessor of Area No. 9 – Vancouver), an unreported decision of The British Columbia Supreme Court dated October 15, 1996, Mr. Justice Melnick stated at paragraph 14:
“It appears to be well-settled that the Board’s choice of appraisal method is a question of fact….The Board’s choice of factors in determining actual value is also a question of fact.”
[15] Melnick J. noted at paragraph 13 of the same decision:
“In deciding whether a finding is unreasonable, the courts should give the Board considerable leeway.”
[16] The courts have deferred to assessment tribunals on the basis of their expertise in the area of assessment. In Toronto Dominion Bank v. British Columbia (Assessor of Area No. 9 – Vancouver), an unreported decision of the British Columbia Supreme Court dated August 3, 1988, the Board applied a capitalization rate substantially lower than the rate advanced by either party through expert opinion. The court, at page 2, noted:
“There is case authority for the proposition that members of tribunals such as this are presumed to have been selected because of knowledge or experience in the field in which they are to operate. There is also case authority to the effect that they may call upon their own knowledge and experience in deciding matters which come before them….Although they must make their decision on the basis of the factual evidence, they are not bound to accept the opinions of witnesses as gospel on matters which are the essence of the decision they are charged with making, for example, on the capitalization rate which market forces would apply. That is a matter of judgment which, provided it is not patently unreasonable, will not be interfered with by the court.”
[17] A similar view was expressed by the Ontario Divisional Court in NSP Investments Ltd. v. Joint Board, Consolidated Hearings Act et al. (March 26, 1990) reported at, 38 O.A.C. page 224. A ground of appeal in that case was that the Board had rejected or ignored uncontradicted expert evidence without making adverse findings of credibility against the witnesses. The Divisional Court concluded that the Board was deemed to have knowledge and expertise such that it could consider the evidence itself. So long as the decision was not patently unreasonable, the Board was entitled to review the evidence and reach its own conclusion.
[18] Whether or not the Board concluded its jurisdiction on assessment appeals altered its approach to value is not the issue. One must determine whether the Board proceeded correctly in determining value. If there is reason to doubt the correctness of the decision in law, then leave to appeal should be granted.
[19] The applicant argues that the Board confused the worth of the mine as an on-going operation, taking into consideration the depletion of ore reserves, with the value of the buildings located at the mine site in arriving at value. The applicant maintains it is the value of buildings only that should be considered. It is submitted the Board’s conclusion is perverse and unreasonable.
[20] With respect, the Board was entitled to consider the mine was at the end of its economic life, and situated in a remote location, in arriving at value for its buildings. These factors had a direct bearing on the minimal return the taxpayer received for the structures upon decommissioning the mine. There was very little market for them where they were located. Where they were located made relocation uneconomic for an arm’s length purchaser. To consider current value without considering the context in which the buildings are situate would, in my view, be an error.
[21] The courts have recognized concepts of functional and economic obsolescence set out in the “Assessment Program Policy Manual” used by assessors (see, for example Ontario (Regional Assessment Commissioner, Region No. 19) v. Dofasco Inc. (1993), 10 O.R.(3d) 741 (Court of Appeal). However, the courts have not accepted a comprehensive definition of economic obsolescence. The Court of Appeal in Dofasco adopted the Divisional Court’s view that the definition contained in the policy manual is not comprehensive. The courts have also held that quantification of obsolescence is a question of fact for the Board.
[22] As the cases establish, the Board may determine whether it accepts opinion evidence in whole, in part, or not at all in reaching its conclusion. It may substitute its own opinion, based on the expertise of the Board. There are few cases in which buildings on a closed mine site are assessed. Therefore an element of judgment necessarily is required. This is not the same as the Board delegating its authority to an expert witness to arrive at its determination of value.
[23] In this case, the Board heard evidence, and drew its conclusions. It was within its jurisdiction to do so. The decision complained of is not patently unreasonable. A differently constituted panel of the Assessment Review Board might draw different conclusions. That alone does not give reason to doubt the correctness of the Board’s decision.
[24] I am not satisfied the applicant has discharged its onus in seeking leave to appeal on a question of law. The motion for leave to appeal is dismissed.
[25] If counsel cannot agree, they may make written submissions with respect to costs, with the responding party to serve and file its submissions within 15 days of the release of these reasons, and the applicant to serve and file responding submissions 10 days thereafter.
Madam Justice H. M. Pierce
Released: September 6, 2002
COURT FILE NO.: D01-0018
DATE: 2002-09-06
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
MUNICIPAL PROPERTY ASSESSMENT CORPORATION
Applicant
- and –
INMET MINING CORPORATION, MINNOVA INC. and SUPERIOR-GREENSTONE DISTRICT SCHOOL BOARD (formerly known as Lake Superior Locality Education)
Respondents
REASONS ON MOTION FOR LEAVE TO APPEAL TO DIVISIONAL COURT
Pierce J.
Released: September 6, 2002