COURT FILE NO.: 565/07
DATE: 20081024
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
THEN R.S.J., LEDERMAN AND KARAKATSANIS JJ.
B E T W E E N:
1392290 ONTARIO LIMITED and RIOCAN HOLDINGS LIMITED
Appellants
- and -
CORPORATION OF THE TOWN OF AJAX
Respondent
Phillip Sanford and Sarah Chesworth for the Appellants
Peter Milligan for the Respondent
HEARD at Toronto: September 18, 2008
Karakatsanis J.:
[1] 1392290 Ontario Ltd. and Riocan Holdings Ltd appeal the order of Pattillo J. dated November 6, 2007 dismissing their application for a determination that their land at 270 Kingston Rd. E. was not an “eligible property” for the taxation year 2001, within the meaning of s. 447.70 of the Municipal Act, R.S.O. 1990, c. M. 45 as amended.
[2] Pattillo J. found that the lands were “eligible property” under s. 447.70(21)(c), which included property that was severed or subdivided in 2000. The appellants argue that for the section to apply, the severance must have happened after the definition came into force effective January 1, 2001.
[3] An appeal lies the Divisional Court under ss. 447.70(16)-(17) of the Municipal Act, R.S.O. 1990, c. M. 45, as amended, and s. 46 of the Assessment Act, R.S.O. 1990, c. A. 31. The standard of review is correctness.
[4] For the reasons that follow we find that the land severed in 2000 was “eligible property” for the 2001 taxation year and therefore dismiss the appeal.
The Legislative Regime
[5] Starting in 1997 the Ontario Legislature amended the Assessment Act and the Municipal Act to introduce reforms to the assessment and property taxation system based upon Current Value Assessment. A transitional measure was introduced in 1998 to phase in the annual changes resulting in the capping of some of the tax increases (or decreases) that would otherwise have been payable under full current value assessment. Certain properties, however, were not ‘capped’ because they had a change in status – they were newly created or had new buildings erected or their tax classification was changed. Those lands, defined as “eligible properties”, are subject to a special municipal tax regime under s. 447.70 first introduced in 2000. The purpose of that section is “to ensure that eligible properties are taxed at the same level as comparable properties”. Taxes on “eligible properties” would be the lesser of full municipal tax based on the current value assessment, or the average effective tax rate as up to six comparable properties selected by the Municipal Property Assessment Corporation.
[6] The Budget Measures Act, 2001, S.O. 2001, c. 23, s. 169(4) amended the definition of “eligible property,” found in s. 447.70(21) of the Municipal Act, to read:
"eligible property" means a property,
(a) to which subsection 447.65(8) or 447.68(8) applies,
(b) that ceases to be exempt from taxation for 2001 or thereafter,
(c) that was subdivided or was subject to a severance,
(d) whose classification changes for 2001 or a later year, or
(e) that is prescribed by the Minister of Finance
[7] The Budget Measures Act, 2001 received Royal Assent on December 5, 2001, but it came into force effective January 1, 2001 for the 2001 taxation year. It amended the definition of “eligible property” as first defined in the Continued Protection for Property Taxpayers Act, 2000, S.O. 2000, c. 25, s. 447.40 which included under clause (c) property “that was added to the assessment roll for 2001 or subsequent taxation years as a result of the subdivision or severance of land.” This earlier definition had a brief life and was replaced by the new definition before the determination of 2001 taxes.
[8] For the 2001 taxation year, the comparable property tax regime in s. 447.70 applied to “eligible properties” as well as additional properties identified in s. 447.70(20):
This section also applies for the 2001 taxation year to a property that is subject to this Part and that,
(a) ceased to be exempt from taxation during 1998, 1999, or 2000; or
(b) was reclassified pursuant to an assessment under section 34 of the Assessment Act during 1998, 1999 or 2000 or was classified differently on the assessment roll for taxation in 1999 or 2000 from its classification in 1998 or 1999, respectively.
[9] The issue in this appeal is whether or not a severance that occurred in 2000 was within the contemplation of the legislature when it enacted the amended definition of “eligible properties” in 2001, effective January 1, 2001.
The Lands in Question
[10] The appellants’ property was part of a larger parcel subdivided in 2000. The smaller parcel was conveyed to Home Depot. Prior to the severance the single parcel containing the two parcels was assessed under one taxation roll number. After the severance, the Assessment Roll prepared in late 2000 reflected the two individual parcels. The appellants’ property continued to be enrolled under the same taxation roll number with a changed description, lot size, and value assessment. The parcel conveyed to Home Depot was given a new roll number. These changes to the Assessment Roll in late 2000 were prepared for the 2001 taxation year.
[11] As a result of the severance that occurred in 2000, the Town of Ajax and assessors concluded that the severed lands fell within the definition of “eligible property”. The appellants disagreed, and applied to the Superior Court for a determination of the issue.
Position of the Appellants
[12] The appellants take the position that the absence of an express temporal application in s. 447.70(21)(c) means that the section applies only to lands that were subdivided or severed after the effective date of January 1, 2001. The appellants submit that it would not apply to severances in 2000 and thus lands severed in 2000 would continue under the capping regime with a proportional adjustment.
[13] The appellants submit that the legislature did not intend for severances or subdivisions prior to January 1, 2001 to be included as “eligible property”. They submit that to interpret the use of the past tense in s. 447.70(21)(c) to apply to lands severed in the past without temporal limitation would result in the inclusion of all lands that were ever subdivided, an absurd outcome. Further, if the legislators intended the section to apply to severances from the previous year, before the effective date of the amendment, it would have specified the applicable year as it clearly does in other sub-clauses in the definition section and in the application subsection. The fact that Ontario Regulations 171/01 and 419/02, dealing with the 2001 and 2002 tax years, make adjustments to the 2002 tax year as a result of severances occurring in 2001 or thereafter but do not seek to make adjustments for severances occurring in 2000, is evidence that the legislature did not intend to address severances in 2000. Finally, there is a presumption against applying the legislation retrospectively to severances before the effective date of the legislation if it interferes with vested rights unless there is a clear intention to do so. The submission is that the appellants had vested rights and benefits as part of the continuing ‘capping’ regime of tax protections, which afforded it a real and concrete benefit and therefore the appellants have the advantage of that presumption in the absence of express temporal application in s. 447.70(21)(c).
Analysis
[14] The previous definition of “eligible properties” had included under s. 447.70(21)(c) property “that was added to the assessment roll for 2001 or subsequent taxation years as a result of the subdivision or severance of land.” The appellants accept that under the previous definition of “eligible property”, the ‘child’ parcel (the Home Depot parcel) would have been added to the tax assessment roll for 2001 with a new assessment roll number and would therefore be subject to the comparable tax regime. The appellants submit that under the previous definition, the remaining ‘mother’ parcel would not be “added to the assessment roll for 2001”, presumably because it retained the previous assessment roll number, and would thus continue under the capped transition regime with a proportional adjustment to the valuation.
[15] The Town takes the position that the old definition would have required both parcels to be subject to the comparable tax regime because both parcels were added to the assessment roll for 2001 for the first time as severed parcels with new descriptions, lot sizes, and new value assessments. The decision to retain the same roll number is an administrative matter and there is no principled reason for treating the mother and child parcels differently. The Town submits that the amendment was intended to clarify any ambiguity or argument that the mother would not be subject to the comparable tax regime. If the amendment is interpreted as excluding severances in 2000, it would have the effect of removing from the comparable property tax regime the child parcel severed in 2000 (included under the old definition).
[16] In our view, the position of the Town is persuasive.
[17] We agree with Pattillo J. that section 447.70 determines tax treatment for “eligible properties”, which are properties that have had a change in status, triggering the provisions of the section. Pattillo J. noted that “[s]uch changes in status can only occur prior to or during the tax year in question.”
[18] Although the language in the new definition s. 447.70(21)(c) does not expressly contain a temporal reference, its application to a severance in 2000 is implicit as a result of the necessary operation of the Assessment and Municipal Acts. Municipal taxes are fixed and levied on the assessment returned in the Assessment Roll in the preceding year. Therefore parcels severed in 2000 are added for the first time as new separate parcels to the Assessment Roll returned for the determination of taxes in 2001. By operation of the Assessment Act and Municipal Act, 2001 was the first year taxes could be determined on the appellants’ remaining parcel after the severance and was the first full year the two parcels were independently subject to tax.
[19] Furthermore, the application of the s. 447.70(21)(c) definition to severances in 2000 does not result in its application to all severances in the past. Properties severed in prior years would already have been added to the Assessment Roll in previous years and would have been taxed under the applicable regime under the Municipal Act. See s. 447.70(19): “If an assessment is made under subsection 33(1) of the Assessment Act that relates to a taxation year prior to the year in which the assessment is made, this section applies if the first taxation year to which the assessment applies is 2001 or a subsequent year.”
[20] We agree with Pattillo J. that the inclusion of temporal restrictions in other clauses of the definition section is not determinative. They ensure that those properties whose tax status changed for the 2001 tax year or in subsequent years are taxed as an ‘eligible property’ under the comparable property tax regime. Similarly, s. 447.70(20), which governs the application of s. 447.70, does not extend the definition of ‘eligible property’. It extends the application of the comparable property tax regime to additional properties that had changes in classification or tax exempt status in 1998, 1999, or 2000, after the introduction of the new Current Value Assessment regime.
[21] Although the appellants rely upon the fact that the regulations dealing with s. 447.70 do not deal with severances in 2000, O. Reg. 419/02 deals only with the 2002 tax year and therefore addresses severances occurring in the preceding year 2001 that are added to the assessment roll for 2002. In addressing the 2002 tax year, s. 23(1) of O. Reg. 419/02 states:
…the following properties are deemed to be eligible property for the purpose of section 447.70 of the Act for 2002:
- A parcel of land that is severed from a larger parcel of land or that is a lot in a subdivided parcel of land, if 2002 is the first year for which the parcel is included as a separate parcel on the assessment roll….
This construction is consistent with the application of 2001 taxes to new parcels created by severance in 2000.
[22] The appellants no longer submit that application of s. 447.70(21)(c) to a severance in 2000 for the purpose of determining 2001 taxes would result in a retroactive application of the Municipal Act. It is common ground that the legislation would be retrospective if it changes the tax consequences for 2001 for events that occurred in 2000 and that there is a presumption against applying the legislation retrospectively to severances before the effective date of the legislation if it interferes with vested rights unless the legislative intention is express or “plainly manifested by unavoidable inference”: Dikranian v Quebec (Attorney General), 2005 SCC 73, [2005] 3 S.C.R. 530 at p. 547. In this case, whether or not the appellants enjoyed vested rights within the ‘capping’ regime, the applicability of the definition to severances in 2000 arises by the necessary application of the Municipal Act and is therefore “plainly manifested by unavoidable inference.”
[23] Finally, this interpretation is consistent with the purpose of the Municipal Act and the purpose of section 447.70, which is “…to ensure that eligible properties are taxed at the same level as comparable properties,” in other words to relieve inequities and move properties to fairness relative to each other as part of the transition to full market value taxation.
[24] As a result, we are in agreement with the decision reached by Pattillo J. and the appeal is dismissed.
[25] The parties have agreed that costs of this appeal should be fixed at $5,000 and that costs before Pattillo J should follow. Costs are payable by the Appellant to the Respondent within 30 days.
Karakatsanis J.
Then R.S.J.
Lederman J.
Released: October 24, 2008
COURT FILE NO.: 609/06
DATE: 20081024
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
THEN R.S.J., LEDERMAN AND KARAKATSANIS JJ.
B E T W E E N:
1392290 ONTARIO LIMITED and RIOCAN HOLDINGS LIMITED
Appellants
- and -
CORPORATION OF THE TOWN OF AJAX
Respondent
REASONS FOR JUDGMENT
KARAKATSANIS J.
Released: October 24, 2008