Court File and Parties
DIVISIONAL COURT FILE NO.: 309/20
DATE: 20211008
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
TARTU COLLEGE
Appellant (Moving Party)
– and –
MUNICIPAL PROPERTY ASSESSMENT CORPORATION and THE CITY OF TORONTO
Respondents (Responding Parties)
Richard Minster and Dan Rosman, counsel for the Appellant/Moving Party
Karey Lunau, counsel for the Respondents/Responding Parties
HEARD at Toronto (by videoconference): April 29, 2021
Endorsement
kristjanson j.
[1] This is a motion for leave to appeal from a November 26, 2019 decision of the Assessment Review Board (the “Board”). Tartu College (“Tartu”) is a not-for-profit Estonian cultural organization. It owns and operates a student residence near the University of Toronto. Under the Assessment Act, R.S.O. 1990, c.A.31 and O. Reg. 292/98, properties with seven or more “self-contained units” are placed in the multi-residential property tax class, while residential properties with fewer than seven self-contained units are placed in the residential property tax class. For 47 years Tartu’s student residence was assessed in the residential property class. However, in 2016 the respondent Municipal Property Assessment Corporation (“MPAC”) issued a directive and reclassified 84 student residences in the Province, including the Tartu residence, from the residential property class to the multi-residential property class for the 2017 taxation year. Tartu argues that the Board erred in law by misinterpreting the term “self-contained unit” and that as a result of that error, the Board incorrectly held that Tartu’s student residence belonged in the multi-residential class, with a significantly higher assessment rate.
[2] Section 43.1 (1) of the Assessment Act provides that an appeal lies from the Board to the Divisional Court, with leave of the Divisional Court, on a question of law. As set out in Municipal Property Assessment Corp v Loblaw Properties Ltd, 2016 ONSC 4684 (Div Ct) at para. 4, the two-part test for leave to appeal a decision of the Board is:
(i) There is some reason to doubt the legal correctness of the decision; and
(ii) Whether the appeal involves an important question of law meriting the attention of the Divisional Court.
[3] The statutory interpretation question in issue is the definition of “self-contained unit” as set out in O. Reg. 292/98, sections 3(1) and 4(1):
s.3(1) The residential property class consists of the following: 1. Land used for residential purposes that is, i. land that does not have seven or more self-contained units...
s.4(1) The multi-residential property class consists of the following: 1. Land used for residential purposes that has seven or more self-contained units...
[4] These sections of the Regulation did not change in 2016 and had always been applied in a fashion that led Tartu to be assessed in the residential property class. What did change was a decision of the Board in Oshawa (City) v Municipal Property Assessment Corp, Region 13, [2016] OARBD No 187 ("Oshawa"). In the Oshawa decision, the recognized a number of statutory interpretation issues regarding “self-contained units” as follows:
Does the distinction between the residential and multi-residential classes rely on the legal occupancy arrangements within the building? Does the exclusive use, control and occupation of bedrooms make them “units” that are not self-contained?
Which is the paramount consideration in defining what is a self-contained unit, the physical layout or the nature of the occupancy, or some combination of both?
The statute excludes certain other living arrangements in buildings with more than seven self-contained units from being considered multi-residential. Is this justification to similarly exclude the subject student accommodation?
What is the ordinary meaning of the phrase “Land used for residential purposes that has seven or more self-contained units” and the word “multi-residential”, in context and having regard to the scheme and object of the provision as the legislators might have intended?
[5] Following the release of the Oshawa decision, 81 properties were reclassified by way of directive from MPAC. The Board in the Tartu case defined the key issue as “"Does the Oshawa Decision apply to the facts of this appeal?" in para. 9, and provided the answer in para. 11 as: "The Oshawa Decision is applicable to the facts of this appeal."
[6] Tartu argues that the Board erred in law by “following the wrong law”, that is, by applying the Oshawa decision, which is distinguishable from Tartu. Tartu also argues that the Board erred in law by applying the wrong test or wrong legal standard, by placing exclusive emphasis on the physical layout of the property and disregarding all other factors, including those factors considered in Oshawa. Tartu acknowledges that while the Board reviewed the three criteria - physical layout, legal occupation and operation - in effect the Board accepted that only one criterion mattered, since the Board discounted all but the physical layout as determining the proper property class. This could be an error of law. Tartu argues that in Oshawa and again in this case, the Board erred in law by failing to apply the two-part test to determine what is a self-contained unit, ignoring the threshold question of "who is in exclusive occupation?”, and relying solely on what it held to be the "paramount test" - the physical layout. Tartu argues that this interpretation fails to account for the legal differences between a lease granting exclusive occupation of an entire unit, as was the case in Oshawa, as opposed to the licence created by the Tartu room application. Tartu also argues that the Board failed to read the Act harmoniously with the Regulation, thus failing to account for section 14 of the Assessment Act in its statutory interpretation.
[7] Both Tartu and MPAC refer to competing lines of Board jurisprudence prior to the Oshawa decision.
[8] In my view, the decision raises an issue of statutory interpretation which is a question of law that is of sufficient importance to merit the attention of the Divisional Court. The interpretation of the law and application to the evidence before it by the Board in these circumstances give rise to doubt as to the legal correctness of the decision. This is not to say that the decision is certainly wrong, but only that sufficient doubt has been raised that meets the first branch of the test for leave to appeal.
[9] On the second branch, the issues raised by Tartu are ones which are deserving of attention by the Divisional Court. They engage matters of general interest to taxpayers and municipalities, are applicable to over 80 properties, establish a significant new approach to the definition of self-contained units, and thus go beyond the narrow immediate concerns of the parties.
[10] I am therefore of the opinion that the test for leave has been met in this case. Costs to Tartu in the amount of $5,000 all inclusive, in the discretion of the appeal panel.
Kristjanson J.
Released: October 8, 2021