COURT FILE NO.: 545/00
DATE: 20030326
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
LIFESTYLE RETIREMENT COMMUNITIES
J. Bradford Nixon, for the Appellant
Appellant (Assessed Party)
- and -
MUNICIPAL PROPERTY ASSESSMENT CORPORATION AND THE CITY OF TORONTO
F.X. Shea, for the Respondent, Municipal Property Assessment Corporation
Respondents
HEARD: October 23, 2002
Ellen Macdonald J.
REASONS FOR DECISION
[1] The appellant Lifestyle Retirement Communities (“Lifestyle”) brings this motion for leave to appeal a decision of the Assessment Review Board (“the Board”). The decision dated August 30, 2002, confirmed the assessed value of Lifestyle’s two properties located at 1055 and 1057 Don Mills Road, Toronto for the taxation years 1996 and 1997.
[2] Lifestyle brought the matter of the assessed values to the Board on the basis that they were too high. The essence of its challenge is that the Board relied on actual rents that included fees for non-realty services instead of fair market rents. It is Lifestyle’s position that the inclusion of fees for non-realty services overvalues the assessment for the properties in question. Lifestyle’s business is the operation of housing complexes for senior citizens and retirement home facilities. The two properties are two 6-storey multi-residential apartment buildings that contain 142 units. The properties are connected to a retirement home facility, also owned by Lifestyle.
[3] The respondent, the Municipal Property Assessment Corporation (“MPAC”) submits that the Board’s decision was well founded and based on evidence heard by the Board member. The Board was asked to determine the factual issue of the 1996 market value for the properties at 1055 and 1057 Don Mills Road. At the hearing before the Board, Lifestyle took the position at the Board that the market value should be determined using Lifestyle’s estimate of economic rents drawn from comparisons to similar apartment buildings in the vicinity. This approach was rejected by the Board, whose member, Barry Smith delivered written reasons on August 30, 2000. The Board found, as a fact, that Lifestyle’s properties were substantially different from the buildings in the vicinity. It was on this basis that the Board found that Lifestyle had not discharged its onus to demonstrate the assessed value of the subject property was inequitable when compared with similar real property in the vicinity.
[4] The subject properties were originally developed and constructed in conjunction with a third identical building in 1959. It was agreed that in late 1984 and 1985 the properties were emptied of tenants, substantially renovated and then reintroduced to the rental market as seniors’ apartments. In its findings, the Board agreed that the subject properties were identical with 1059 Don Mills Road when they were built but found that the subject properties were substantially renovated and converted to senior apartment buildings in 1985. In addition to the renovations of the buildings, an atrium was constructed enclosing and linking the subject properties together. An enclosed walkway was also added connecting Lifestyle's retirement lodge located on abutting lands at 8 The Donway.
[5] The essence of the dispute giving rise to this application for leave is Lifestyle's objection to the application of the gross income multiplier technique to develop estimated 1996 market values for the properties. This valuation technique requires the estimate of gross income based on typical fair market rents for each unit type. Lifestyle says that this approach produces an inequitable result because the actual rents at the subject properties include fees for personal services as opposed to market rents for real estate only.
[6] The personal services provided to the tenants of the subject properties are not available in other similar apartment buildings in the vicinity. Examples of the services provided to the residents of the subject properties which are included in the rent are as follows:
• Access to health and day services at the adjacent seniors nursery home;
• Nurse on site;
• Each resident can, when ill, receive meals at no costs, from Donway Place for up to one week for each illness;
• Each resident can, receive temporary rehabilitation care at the Donway Place respite centre for 2-6 weeks without vacating or losing their apartment residence;
• Biannual exterior window cleaning;
• Movies;
• Afternoon tea;
• Transportation for weekly shopping and social outings;
• Professional on-site staff administering social programs;
• 24 hour maintenance repair service;
• Bimonthly banking;
• Weekly milk delivery; and,
• Front desk concierge.
[7] In the application, Lifestyle made much of the evidence of Jane Pristach, a registered nurse employed by Lifestyle who manages the day to day operations of the subject properties. She opined that approximately 50% of the monthly fee paid by the tenants was payable in respect of services provided by Lifestyle and therefore was not rent for use or occupation of the apartment building in question. For very good reason, her "opinion" did not persuade the Board.[^1] I do not overlook the fact that Jane Pristach was asked if any analysis had been undertaken to determine the costs of services versus the costs of accommodation at the subject properties. Her response was that she had no knowledge of the existence of any such analysis. On cross-examination, she conceded that Lifestyle was required to delineate the allocation of its rates between services and accommodations for the residents of its retirement lodge adjoining the properties in question. There is no similar obligation on a landlord of a residential apartment.
[8] Assessor Mariano testified that neither Lifestyle nor the prior owner of the subject properties had ever provided information that the amounts charged were not rent received for the apartment units notwithstanding requests for information of this nature. Rent rolls from December 1996 through to December 1999 consistently show high rents for the subject properties’ units. The tenants signed leases for the subject properties’ apartments at the rent stated. Assessor Mariano also testified that after the renovation and conversion of the subject properties to luxury senior apartments in 1996, the landlord was not constrained by rent controls from fixing the rent for these units at the prevailing market rate. No evidence was tendered to show that a portion of the rent payable by the tenants was allotted or apportioned to services.
The Law
[9] The parties agree that a two-part test for granting leave to appeal to the Divisional Court under s. 43.1 of the Assessment Act applies. It is that the moving party must satisfy the court:
(1) that there is good reason to doubt the correctness of the Decision and Order of the Assessment Review Board; and
(2) that the appeal raises a point of law of sufficient importance to merit the attention of the Divisional Court.
[10] I agree with Mr. Shea that this motion for leave to appeal raises questions pertaining to the Board’s finding of fact and that neither of the two tests set out above have been satisfied by Lifestyle. The Board has jurisdiction and authority to hear and determine all questions of law or fact within its jurisdiction. See Assessment Act, R.S.O. 1990, c. A.31 s. 40 (13).
[11] Also of relevance is s. 60(1) of the Assessment Act which provides as follows:
60.—(1) The Assessment Review Board, Ontario Municipal Board or any court, in determining the value at which any real property shall be assessed in any complaint, appeal or proceeding, shall have reference to the value at which similar real property in the vicinity is assessed, and the amount of any assessment of real property shall not be altered unless the Assessment Review Board, Ontario Municipal Board or court is satisfied that the assessment is inequitable with respect to the assessment of similar real property in the vicinity, and in that event the assessment of the real property shall not be altered to any greater extent than is necessary to make the assessment equitable with the assessment of the similar real property.
This section has subsequently been repealed but in 1996 when the Board was considering this matter, s. 60 was the applicable legislation.
[12] I can find nothing in the extensive record to justify Lifestyle's assertion that the Board erred in law by rejecting Lifestyle’s proposed economic rent from properties which the Board found as a fact to be “substantially different” from the subject properties. Nor can I find anything in the record that corroborates Lifestyle’s assertion that the Board ignored relevant evidence. The record also does not support Lifestyle’s contention that the Board erred in law in construing sections 1.19(1), 45 or 60(1) of the Assessment Act. It is well settled that the onus is on the taxpayer to obtain an alteration of an assessment under section 60(1). To discharge this onus, the taxpayer must prove that the assessment is inequitable with respect to the assessment of similar real property in the vicinity. The record demonstrates that the evidence tendered by Lifestyle failed to meet the onus imposed on it by section 60. (1). See Regional Assessment Commissioner, Region No. 19 et al v. Dofasco Inc. (1992), 10 O.R. (3d) 741 (C.A.).
[13] I conclude with one other observation. The totality of the evidence presented at the Board indicated the estimates of 1996 values for assessment purposes in the case of multi-residential buildings was based on typical actual rents. Lifestyle’s expert, John Creswell admitted this fact and conceded that his estimated 1996 values for comparable properties was based on typical actual rents.
[14] For all of the above reasons, I have concluded that this is not a case where leave should be granted. Accordingly, the motion for leave to appeal is dismissed with costs to the respondent. If the parties are unable to agree on quantum and scale of costs, they may make written submissions to me within 30 days of the date of the release of these reasons.
Ellen Macdonald J.
Released: March 26, 2003
COURT FILE NO.: 545/00
DATE: 20030326
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
LIFESTYLE RETIREMENT COMMUNITIES
Appellant (Assessed Party)
- and -
MUNICIPAL PROPERTY ASSESSMENT CORPORATION et al
Respondents
REASONS FOR DECISION
Ellen Macdonald J.
[^1]: I highlight “opinion” because the record refers to Jane Pristach opinion. She was not qualified as an expert with the result that “opinion” is used loosely. Ms. Pristach was obviously advocating the position of her employer.