CITATION: Tartu College v. Municipal Property Assessment Corporation, 2023 ONSC 745

COURT FILE NO.: DC-19-715

DATE: 2023/02/09

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

HACKLAND, MATHESON, AND O’BRIEN JJ.

BETWEEN:

Tartu College

Appellant

– and –

Municipal Property Assessment Corporation and The City of Toronto

Respondents

Richard R. Minster and Dan Rosman, for the Appellant

Karey Lunau, for the Respondent, Municipal Property Assessment Corporation

Valerie Crystal, for the Assessment Review Board

No one appearing for the Respondent, City of Toronto

HEARD: at Toronto on December 15, 2022 (by zoom videoconference)

Reasons for Judgment

hackland j.

Overview

[1] The Appellant Tartu College is a not-for-profit Estonian cultural organization which owns and operates a student residence in downtown Toronto (“the subject property”), which contains 459 bedrooms grouped in 80 suites and houses up to 474 students.

[2] In a decision dated November 26, 2019, the Assessment Review Board (“the ARB”) determined that the subject property should be classified Multi-residential, not Residential, for property tax purposes. The Multi-Residential tax class applies to properties used for residential purposes that have “seven or more self-contained units”. Properties used for residential purposes with less than seven self-contained units are classified “Residential”. The Assessment Act does not define “self-contained units”.

[3] The subject property, as noted, contains 459 bedrooms within 80 suites. The ARB determined that the 80 suites qualify as self-contained units. The Appellant contends that the unit for classification purposes at the subject property is not the suite but the individual bedrooms, which are not self-contained. The Appellant’s submission is since neither the bedrooms nor the suites are ‘self-contained’, the subject property does not qualify as having “seven or more self-contained units” and therefore must be classified as Residential, not Multi-Residential. Properties classified as Residential are normally taxed at a lower rate than Multi-Residential properties.

[4] In the subject property, the students each have their own room for which they have exclusive possession on an individual basis and a lock or keypad to gain entrance. These rooms are grouped into suites. The suites contain 6 bedrooms, two full and one half bathrooms, and a kitchen. The kitchen contains a stove, microwave, kitchen cabinets, a fridge, sink, and a pantry for each student.

[5] Because the students’ individual rooms do not have cooking facilities or bathrooms they are not considered “self-contained units”. The caselaw establishes that self-contained units must be spaces in which the residents have the minimum amenities they need to meet their residential purpose. Accordingly, the issue before the ARB was whether the suites (the students’ rooms together with the bathrooms and cooking area in the suites’ common area) are self-contained units. The parties are agreed this determination requires a consideration of both the occupancy arrangements and of the physical layout of the suites.

Standard of Review/Question of Law

[6] This is a statutory appeal restricted to a question of law only and as such, the standard of review is correctness. The parties agree the test to be applied to determine the boundaries of a classification unit is a question of law. In particular, the test for determining the meaning of “self-contained unit” is a matter of statutory interpretation and is a question of law.

[7] A recent decision of this Court confirmed the application of the correctness standard to appeals from ARB decisions, see Municipal Property Assessment Corporation v Zarichansky, 2020 ONSC 1124 [Div. Ct.], (at para 26).

[8] Importantly, a central finding made by the ARB was that the students in the subject property, as a group, had occupation over the entire suite and the suite is the appropriate classification unit. The Respondent submits, correctly in my view, this is a finding of mixed fact and law and is therefore not subject to appellate review by this court, absent an extricable error of law.

Issues and Analysis

[9] The Appellant submits the ARB made two errors of law:

(1) it wrongly applied and followed a recent ARB decision in a similar but distinguishable case concerning a student residence in Oshawa (“the Oshawa decision”), see Oshawa (City) v Municipal Property Corp, Region 13, [2016] OARBD No. 187;

(2) it applied the wrong legal test in determining whether the subject property included self-contained units, by placing exclusive emphasis on the physical layout of the property and disregarding the requirement to also assess the nature of the students’ occupation of the units, and specifically to determine whether the students were in exclusive occupation of the suite. The Respondent’s position is the students only needed to be found to be “in occupation” of their respective suites and that necessary finding of mixed fact and law was made by the ARB in the present case.

[10] I am unable to give effect to the Appellant’s submissions, for the following reasons.

[11] The parties were agreed before the ARB and before this court that in determining whether the property included self-contained units, the ARB was required to focus on the occupancy arrangements with the students as well as on the physical layout. It is undisputed the ARB carefully considered the physical layout, but the Appellant submits the Board did not assess the occupancy arrangements. Assessing the occupancy arrangements in the present case would necessitate a review of the nature of the occupancy of the common areas of the suites, including the occupancy agreement signed by the students and their obligations and entitlements to the use and maintenance of these areas as well as the control and responsibilities of building management.

[12] The Appellant submits before this court “the threshold question” the ARB needed to decide is who is in exclusive occupation of the unit and then to consider the physical layout, to determine if the unit qualifies as a self-contained unit.

[13] As noted, the ARB determined that the classification units in the building were the suites, not the individual student rooms and importantly, that the suites qualified as self-contained units. The Appellant asserts the ARB did not carry out its obligation to consider the occupancy arrangements pertaining to the students’ use of the suites and instead simply defaulted to considering the lay-out of the premises exclusively. The Board did so, the Appellant suggests, because it wrongly followed the observation of the Board member in the Oshawa decision that the physical layout is the “key determining factor” in identifying a self-contained unit., not the occupancy arrangements.

[14] However, contrary to the Appellant’s submission, a reading of the ARB decision discloses it made these findings after considering both the occupancy and the physical layout tests. I would also observe that the ARB’s actual application of these two tests to the occupancy arrangements and the physical layout of the premises are questions of mixed facts and law, which are not subject to appeal before this court.

[15] The occupancy agreement for the subject property assigned responsibilities to the students in regard to the common areas. It provided “each resident is responsible to keep his/ her suites common areas (kitchen toilets/bathrooms, hallways) neat clean and free of garbage”. The agreement also makes students responsible for damages caused to common areas. Notwithstanding this, one of the Appellant’s primary submissions to the ARB was that it could not be found that the students were in exclusive occupation of the suites because the occupancy agreement permitted the management to enter and clean the common areas of the suite (the kitchen and bathrooms), so the students could not be said to have exclusive occupation of the whole suites (only of their individual bedrooms). The ARB considered and rejected this argument, stating, at para.[77]:

I find that in the Subject Property’s legal document what is being rented is not only the bedroom but also the suite. The four-page rental application incorporates the “use” of the whole suite/premises, as the lease shows that the residents are equally responsible for the common areas, this means the whole suite, not just the bedrooms.

[16] The Appellant drew to the attention of the ARB a number of other considerations and factors pertaining to the occupancy arrangements between the students and building management as well as considerations pertaining to the physical layout of the suites. The ARB’s reasons reflect that all these submissions were considered in arriving at its conclusion that the suites were self- contained units.

[17] In particular, the Appellant’s witness at the ARB hearing presented a table of comparative and contrasting factors between the subject properties physical and occupancy arrangements as compared with the occupancy arrangements and physical layout in the student residence in the Oshawa decision. The Board’s reasons reflect a consideration of all these factors.

[18] I do not accept that the ARB placed exclusive emphasis on the physical layout of the suites or that it reduced the two-part occupation and layout test for determining what qualifies as a self-contained unit, to a single step physical layout test.

[19] A review of the reasons of the ARB, paragraphs 66-84 demonstrates that the ARB applied its prior decision in Oshawa and, as the Board did in Oshawa, gave careful consideration to the three factors that define the control test; the physical layout, legal occupation and the operations of the unit. The ARB held:

[66] I find that the Oshawa Decision provides an in-depth persuasive analysis of the substance of the main issue in this appeal, which is the correct classification of the student residence portion of the Subject Property and the decision applies to the facts of this appeal.

[67] In the Oshawa Decision, the Board examined the exclusive use, control and occupation of the property, the physical layout of the property, the nature of the occupancy, statutory exceptions, and the ordinary meaning and purpose of the Assessment Act in arriving at its decision that the 133 suites are SCU [self-contained units] and the property should be in the multi-residential class. In order to determine, whether the 80 suites in the Subject Property are SCU, pursuant to s. 4.(1) of the O. Reg. 282/98, this panel will review the physical layout of the building, the legal occupancy and the operations (control) of the Appellant. (underlining added)

[20] In the present case the ARB examined the legal document governing the occupation of the premises and made the finding that “what is being rented is not only the bedroom but also the suite” and this includes the use of the whole suite premises, and makes the residents equally responsible for the common areas, not just the bedrooms”. The ARB also observed “this is the nature of the lease in the [ Oshawa decision]… although lengthier and more complex, essentially what is being rented is the same”. It can be seen from these comments by the Board Member in the present case, that the nature of the legal occupation and the operations of the unit were very much a part of the Board’s consideration. In both Oshawa and the present case, the ARB concluded the students as a group had occupation over the entire suite.

[21] The Appellant argues the ARB discounted “all but the physical layout” as determinative of the proper property class and in so doing the Board wrongly followed their prior decision in Oshawa. This submission is based on paras. 85 and 86 of the Board’s decision in the present case:

[85] Member Wyger in the Oshawa Decision further emphasizes that the physical description is the key determining factor in the meaning of a SCU over the occupancy arrangements.

[86] The nature of the occupancy arrangement and the operations of the Appellant does not change the use of the suites as self-contained and the 80 suites are physical spaces in which the residents have what they need to meet their residential purpose.

[22] In my view, what the Board Member is saying here [in para.86] is that in the subject property the suites are self contained units on the basis of a consideration of both the occupancy arrangements and the physical lay-out. Similar findings were made by the Board in the Oshawa decision. The Appellant points to several factual differences between the occupancy arrangements in the student residence in Oshawa in contrast to those in the present property, in support of the submission the ARB should have distinguished and not followed Oshawa. These are findings of mixed fact and law and are not arguments available to the Appellant in the present appeal.

[23] I agree with the Appellant that the statement in Oshawa that “the physical description is the key determining factor” in determining whether a self-contained unit exists, is not an accurate statement of the law if it is being offered as a general proposition rather than an observation pertaining to the residential arrangements which pertained in the Oshawa case. In any given case, it is the obligation of the decision maker to consider both the occupancy arrangements and the physical layout. Which factors will carry more weight will vary in each case and is a fact specific analysis.

[24] For example, in the present case, if the students were required to take their meals downstairs in a cafeteria, instead of in the kitchen area of the suites, these would likely not be considered self contained units, see Amica (Whitby) Inc. v. Municipal Property Assessment Corp. Region No.13 [2011] O.A.R.B.D. No. 283. The same result might be expected if the students were required to use communal washrooms or showers outside the suites or if the accommodation agreement between the students and building management gave the landlord more exclusivity of control of the common areas. The physical layout will be the consideration carrying the greatest weight in some situations, while specific aspects of the occupancy will be of greater importance in other circumstances. Both aspects must always be considered.

[25] The student residences in both Oshawa and the present case have a number of similarities and a number of significant differences. I am satisfied that the ARB in both decisions applied the required analysis based on the occupancy test and the physical layout test, notwithstanding the “key determining factor” observation by the Board member in Oshawa.

[26] The Appellant urges the court to focus on what it perceives as material differences between the occupancy arrangements in the present case in contrast with the student residence in the Oshawa decision, particularly on the matter of collective control or occupation of the common areas of the suites. It may be that on the question of collective control of the suites or other factual distinctions between the student residences in Oshawa and in the present case, there could have been a basis for the ARB to distinguish the Oshawa decision or to make different findings on the issue of self-contained units. These are nonetheless findings of mixed fact and law and are not subject to review by this court.

[27] For the above reasons, this appeal is dismissed.

[28] Costs are awarded in the sum of $5,000 all in, payable by the Appellant to the Respondent, forthwith. The ARB has not sought costs.

Justice Charles Hackland

I agree

Justice Wendy Matheson

I agree

Justice Shaun O’Brien

Date: February 09, 2023

CITATION: Tartu College v. Municipal Property Assessment Corporation, 2023 ONSC 745

COURT FILE NO.: DC-19-715

DATE: 2023/02/09

ONTARIO

SUPERIOR COURT OF JUSTICE

Tartu College

Appellant

– and –

Municipal Property Assessment Corporation and The City of Toronto

Respondents

reasons for judgment

Hackland, Matheson and O’Brien JJ.

Released: February 9, 2023