NEWMARKET COURT FILE NO.: DC-05-078199-00

DATE: 2006/05/25

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

Virginia Mabel Ambler, Elizabeth Merle Ambler, Catherine Margaret Ambler, Swish Maintenance Limited

Michael Bowman, for the Applicants/Moving Parties

Applicants/Moving Parties

• and -

THE MUNICIPAL PROPERTY ASSESSMENT CORPORATION REGION NO. 7 and THE CITY OF PETERBOROUGH

Shawn Douglas, for the Municipal Property Assessment Corporation

Respondents

HEARD: May 10, 2006

REASONS FOR JUDGMENT

JENKINS J.

[1] This is a motion for leave to appeal from the decision and order of the Assessment Review Board.

[2] This issue before the Board is related to the correct property tax class to be applied under O Regulation 282/98 (as amended) to the Assessment Act (the "Regulation) to the lands Municipally known as 2060 Fisher Drive in the City of Peterborough.

[3] In the Decision, the Board, at the request of the Municipal Property Assessment Corporation ("MPAC"), changed the classification of the portion of the Subject Property occupied by Swish Maitnenance Limited from the commerical property class ("Commercial") to the industrial property class ("Industrial").

SUMMARY OF FACTS

[4] The subject property is occupied by Charlotte Products Ltd. ("Charlotte") and Swish Maintenance Limited ("Swish"), which both operate out of the Subject Property. These companies are separately incorporated with share common ownership. They each have separate and valid leases to separate portions of the Subject Property based on the square footage used by each of them.

[5] Charlotte is a manufacturer of liquid cleansing chemicals. Swish is a distributor across Canada of cleaning equipment and supplies.

[6] Charlotte and Swish have been in business at the subject Property for many years. Pursuant to the business tax regime in Ontario, the assessing authority of the time made a distinction between manufacturing (or industrial) rates, and commercial rates.

[7] When the business tax regime was abandoned, the new property tax classes of Commercial and Industrial were enacted. The Subject Property was assessed at approximately 86 percent commercial and 11 percent industrial. For the 2004 and 2005 taxation years, MPAC originally classified the portions of the Subject Property occupied by Swish as commercial and a portion of the Subject Property occupied by Charlotte as Industrial.

[8] At the hearing before the Board, MPAC served a notice of higher assessment, and requested the Board to change the class of the Swiss Portion from commercial to industrial pursuant to subsection 6 (1). They relied on the evidence of Mr. Lindquist, the assessor.

[9] At the hearing, the representative of the applicant acknowledged that the Charlotte Portion should continue to be classified as Industrial, but that the Swish Portion should continue to be classified as Commercial. The applicants relied on evidence that Charlotte and Swish were two separate corporations occupying separate lease premises under separate leases and conducting different tasks and services. The Board determined that the applicant must confirm the industrial classification for the entire subject property based on its interpretation of section 5 of the Regulations.

ISSUES OF THE LAW

[10] In order for leave to be granted from a decision of the Assessment Review Board, the moving party must satisfy the court that:

(a) there is some reason to doubt the correctness of the Board's decision; and

(b) the point of law is of sufficient importance to merit the attention of the Divisional Court.

Municipal Property Assessment Corp. v. Minto Developments Inc., [2002] O.A.R.B.D. No. 253 leave to appeal to Div. Ct. granted, [2003] O.J. No. 404 (QL).

Ontario Property Assessment Corp. v. Praxair Canada Inc., [2001] O.A.R.B.D. No. 110, leave to appeal to Div. Ct. granted, [2001] O.J. No. 2200, (Div. Ct.) (QL).

1098478 Ontario Ltd. v. Ontario Property Assessment Corp. Region No. 11, [1999] O.A.R.B.D. No 129 (2001), leave to appeal to Div. Ct. granted, [2000] O.J. No. 2050 (QL).

[11] I duplicate paragraph 6 (1) of the Regulations:

6 (1) The industrial property class consists of the following:

1. Land used for or in connection with,

i. manufacturing, producing or processing anything,

ii. research or development in connection with manufacturing, producing or processing anything,

iii. storage, by a manufacturer, producer or processor, of anything used or produced in such manufacturing, producing or processing if the storage is at the site where the manufacturing, production or processing takes place,

iv. retail sales, by a manufacturer, producer or processor, of anything produced in such manufacturing, production or processing if the retail sales are at the site where manufacturing, production or processing takes place.

2. Vacant land principally zoned for industrial development.

[12] The applicant argues that the Board's decision contained no analysis or reasons as to how the requirements of subsection 6 (1) were satisfied in the case. They further argued that the Board erred in law in failing to apply a correct meaning to "land". They argue that section 1 of the Assessment Act "land""real property" and "real estate" are defined to include, inter alia"all buildings, or any part of any building...". It has further been held that a leasehold interest can be considered an interest in "land".

[13] The applicant argues that the Board expressly found that Swish was a distributor and not a manufacturer and that the storage at the Swish premises was therefore not by a manufacturer.

STATUTORY INTERPRETATION

[14] While the interpretation of tax legislation should follow the ordinary rules of interpretation, where there is a reasonable doubt not resolved by the ordinary rules of interpretation, there is a residual presumption in favour of the taxpayer. Quebec v. Corp Notre-Dame de Bon-Secours, [1994] 3 S.C.R. 3 at 20, Ontario Property Assessment Corp. v. Praxair Canada (2002), 155 O.A.C. 360 (Div. Ct.) at pages 364-365.

[15] The Divisional Court has further recognized the importance of the impact that Board decisions respecting the interpretation of the Regulation will have on other similar properties throughout Ontario. The Divisional Court has considered it important to intervene in cases where there has been a lack of sufficient analysis leading to the Board's decision.

Municipal Property Assessment Corp. V. Minto Developments Inc., supra,.

Ontario Property Assessment Corp. v. Praxair Canada Inc., [2002] O.A.R.B.D. No. 153 [2001] O.J. No. 2200 (Div. Ct.) (QL), supra.

1098748 Ontario Ltd. v. Ontario Property Assessment Corp., Region No. 11 supra.

THE RESPONDENT

[16] The respondent argues that the A.R.B. member found the subject property consists of one building which was set up to allow a shared use for example, one single lunch room, one file room and one main entrance. It argues that a careful analysis of a Board's decision reveals findings of fact which cannot be the subject matter of a leave to appeal. They further argued that the Assessment Review Board adjudicates complex disputes relating to property, classification and valuation which requires a high degree of expertise and therefore ought to be afforded deference.

[17] It argues that the matters in issue in these proceedings are of no precendential value and do not transcend the specific interest of the present litigants and are not of sufficient importance to merit the attention of the Divisional Court. The respondent argues that the decision of the Board found as a fact that the entire property (including the Swish portion of the building was used for and in connection with manufacturing, therefore no appeal lies to the Divisional Court. Re Ebsco Investments Ltd. and Ebsco Subscription Services Ltd., 11 O.R. (2d) 305 (Ont. C.A.) (1975).

[18] They also argue that it is also evidence from the decision that the Board found that the partnership which owned the land and the tenants Charlotte and Swish had common ownership and were effectively one person. This finding is confirmed by: (1) the common ownership of the property by the three Amblers through the partnership; (2) the common ownership of Swish and Charlotte; (3) the commonality of the Chief Financial Officer for Swish, Charlotte and the Ambler Partnership and (4) the common representation of Swish, Charlotte and the Amblers at the hearing before the Board. The Board's conclusion is also supported by the evidence in the record regarding shared space and the lack of clear physical demarcation in the building. The finding by the Board is a finding of fact from which no appeal lies to this Court.

FINDINGS

[19] I am satisfied there is some reason to doubt the correctness of the Board's decision in the following areas:

(a) It dwelt on a section 5 analysis before dealing with the section 6 analysis. In my view that ought to have been reversed and a different decision may have been made.

(b) It treated the two lessees as being one corporation. This is contrary to well established law on the subject. The fact that the companies had the same directors and officers, does not necessarily clothe them with the same commercial interest.

[20] I am satisfied that this assessment is of sufficient importance to warrant leave to be granted. This is relatively new legislation which requires in my view, Divisional Court jurisprudence.

[21] I may be spoken to on the issue of costs.

Justice J.H. Jenkins

Released: May 25, 2006