CITATION: Manulife Ontario Property Inc. v. MPAC and Ottawa (City), 2024 ONSC 1047
DIVISIONAL COURT FILE NO.: DC-23-2781
DATE: 20240220
ONTARIO
SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
E. Stewart, Myers and Leiper, JJ.
BETWEEN:
Manulife Ontario Property Portfolio Inc.
Eric Sherkin and Noah Gordon, for the
Appellant
Appellant
– and –
Municipal Property Assessment Corporation Region No. 3 and The City of Ottawa
Respondents
Matthew Kanter and Allyson Amster, for the Respondent, Municipal Property Assessment Corporation Region No. 3
Karey Lunau, C.S., for the Respondent City
of Ottawa
HEARD: at Ottawa by videoconference,
February 5, 2024
REASONS FOR JUDGMENT
Leiper, J.
[1] Manulife Ontario Property Portfolio Inc. (“Manulife”) appeals, with leave, the decision of the Assessment Review Board dated February 24, 2023 which held it to be estopped from raising the issue of current value of its property at 220 Laurier Avenue West, Ottawa (the “office building”) in its 2021 and 2022 assessment appeals.
[2] Municipal Property Assessment Corporation Region No. 3 (“MPAC”) is responsible for administering municipal property tax assessment of buildings throughout Ontario and assessing
their current value for that purpose under s. 19(1) of the Assessment Act R.S.O. 1990, c. A. 31 (the “Act”).
[3] The Act defines “current value” as “in relation to land, the amount of money, the fee simple, if unencumbered, would realize if sold at arm’s length by a willing seller to a willing buyer.” The parties and these reasons use the acronym CVA for current value assessment, interchangeably with “current value.”
[4] In 2016, in furtherance of its responsibilities pursuant to the Act, MPAC assessed the current value of Manulife’s Ottawa office building at $23,555,000. Manulife appealed this assessment to the Assessment Review Board, as permitted by the Act.
[5] Under the Act properties are assessed each year based on their CVA at the beginning of a term of several years. In 2016, the applicable term was four years.
[6] In December of 2020, Manulife and the Municipal Property Assessment Corporation Region No. 3 (MPAC) signed minutes of settlement which agreed that the CVA of the office building was $20,067,000 as of January 1, 2016, the statutory valuation date. Their agreement fixed the CVA for the four-year property assessment cycle in 2016-2020. Manulife takes no issue with the application of that CVA for that period.
[7] In response to the COVID-19 pandemic, the Government of Ontario extended by regulation the four-year cycle, such that the January 1, 2016 valuation date was extended to apply to assessments for 2021. Successive regulations extended the cycle through to 2024, meaning that the valuation date for all properties in Ontario continues to be January 1, 2016.[^1]
[8] In 2021, MPAC adjusted the CVA of Manulife’s office building from $23,555,000 to
$20,067,000, based on the minutes of settlement in which the parties had agreed to the CVA as of January 1, 2016.
[9] Manulife appealed the 2021 assessment to the Board, arguing that the current value was incorrect because it was inequitable compared to the assessment of similar properties in the vicinity, which had sold for significantly less than the current value. The Board deemed Manulife’s appeal to include the assessment for 2022 as well pursuant to s. 40(26).
[10] MPAC then brought a motion before the Board seeking an order that Manulife is estopped from raising the CVA of the subject property for the 2021-2022 taxation years. MPAC’s submission was that the Board had finally determined the issue of the 2016 CVA when it accepted
the settlement made by the parties and incorporated the settlement into orders. Alternatively, MPAC argued that relitigating the 2016 CVA would be an abuse of process.
[11] The City of Ottawa supported MPAC’s motion and requested that the Board dismiss the 2021-2022 appeals.
[12] The Board granted MPAC’s motion.
[13] Manulife sought leave to appeal the decision pursuant to s. 43.1 of the Act.
[14] Muszynski, J. granted leave to appeal the Board’s decision on August 16, 2023: Manulife
v. Municipal Property Assessment Corporation et al, 2023 ONSC 4705.
Issues on Appeal
[15] Appeals under the Act are limited to questions of law alone. The appellant raises two issues on appeal:
a. The Board erred in law by misapplying the doctrine of issue estoppel to dismiss Manulife’s assessment appeals, and
b. The Board erred in law by failing to fulfill its statutory obligations under the s. 44(3)(b) of the Act which require it to consider whether the assessments under appeal are equitable compared to assessments of similar lands in the vicinity.
Standard of Review
[16] The standard of review for a statutory appeal on a question of law is correctness: Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 SCR 653,
at paras. 17 and 37.
Analysis
Did the Board Misapply the Doctrine of Issue Estoppel?
[17] In its decision, the Board correctly described the test for issue estoppel (at para. 14):
The three criteria that must be met for issue estoppel to apply are well- established, as articulated by the Board in Wabi Iron & Steel Corp. v. Municipal Property Assessment Corp., Region No. 29, [2002] O.A.R.B.D. No. 219 at paragraph 26, upheld at the Divisional Court in Wabi Iron & Steel Corp. v Municipal Property Assessment Corp., Region No. 29, 2005 3984 (ON SCDC) (“Wabi Iron”), and confirmed in numerous subsequent decisions of this Board:
a. the same question has been decided;
b. the decision said to create the estoppel was final; and
c. the parties to the decision were the same parties as those to the proceedings in which the estoppel is raised.
[18] The Board described issue estoppel as a doctrine which prevents wasting time and resources on an issue that has been decided by a court or competent tribunal. It referred to prior decisions on that point including Smith v Municipal Property Assessment Corporation, Region No. 23, 2018 35052 (ON ARB) and MPAC v. Hyde 2013 CarswellOnt 66 at para. 18.
[19] The Board correctly held that issue estoppel can be applied to cases which determine an issue in dispute by way of a consent judgment, citing the decisions in R. v. Dieckmann, 2017 ONCA 575 at paragraph 35; Spadacini-Kelava v. Kelava, 2020 ONSC 7907 at paragraph 106; First Capital Holdings (Ontario) Corporation v Municipal Property Assessment Corporation, Region 09, 2022 56354 (ON ARB) at paragraph 27(c).
[20] The Board considered the Divisional Court’s decision in Wabi Iron & Steel which determined that although a taxpayer has a right to an annual appeal to seek to establish a new CVA based on considerations such as a change in the state or condition of the property, this does not prevent the operation of issue estoppel from applying to the CVA as of the valuation date.
[21] That annual right of appeal is afforded to the taxpayer by virtue of Section 44 of the Act. Pursuant to this section, the Board is directed by s. 44(3)(a) to determine the current value of the land and by s. 44(3)(b) to:
(b) have reference to the value at which similar lands in the vicinity are assessed and adjust the assessment of the land to make it equitable with that of similar lands in the vicinity if such an adjustment would result in a reduction of the assessment of the land.
[22] In Wabi-Iron & Steel, the taxpayer sought to appeal the assessment within the four-year cycle, despite the Board’s prior finding that the CVA for that cycle was determined to be
$1,644,000. The court found that although a taxpayer has annual litigation rights they are not entitled to re-litigate the assessed value as of the valuation date, absent, for example, a change in the state and condition of the property. Hennessy, J wrote:
The application of issue estoppel in this case does not negate the right of the taxpayer to litigate the assessment. The right to complain of assessments in each year is provided for by the Assessment Act. The Board is required to hold a hearing when a complaint is filed. There is a continuing right to challenge the current value on the basis of evidence of a change in the property. (Emphasis added)
In Wabi-Iron & Steel, the Board had determined the CVA for the four-year cycle in an earlier proceeding. Thus the Divisional Court upheld the application of issue estoppel to the issue of the CVA:
The Board carefully considered each of the three criteria and it was reasonable to find that they were met. Consequently the Board reasonably determined that the question of June 30, 1996 value was res judicata and that the appellant should be estopped from raising it on the present complaint.
[23] But as the decision in Wabi-Iron & Steel found, once a decision is made as to the current assessed value as of the valuation date for the four-year cycle, this decision is subject to the doctrine of issue estoppel because the legislation applies the value as of that date for a defined period.
[24] As explained by this court in Municipal Property Assessment Corporation v Claireville Holdings Limited, 2022 ONSC 3293 (Div Ct) at para. 27, leave to appeal to CA granted April 12, 2023:
Annual assessments are done so that changes in assessment can be made when there is a change in the state or condition of the property. If there is no change in the state or condition of the property, the assessed value would be expected to remain unchanged until current value is re-assessed for a new four-year cycle.
[25] Manulife submits that the Board erred in finding that the first prong of the issue estoppel test was met here because the settlement only applied to the four taxation years between 2016 and 2020. Manulife argues that the same issue could not have been decided, because the issue raised by Manulife in its 2021 taxation year appeal only arose after the Minutes were signed in 2020, and before MPAC returned the annual assessments for the 2021 tax year.
[26] This is consistent with what Manulife submitted to the Board on MPAC’s motion to dismiss: at paragraph 23 of Manulife’s written submissions it observes that:
Separate MOS [Minutes of Settlement] were executed for each of the tax years then under appeal. At the time the parties agreed to settle the Previous Appeals, MPAC had not yet assessed the Appellant’s property for the 2021 and 2022 taxation years. It was impossible for the Appellant to exercise its annual right for the 2021 and 2022 taxation years at the time of the previous settlement. No MOS were executed for the 2021 or 2022 taxation years.
[27] Manulife submits that the “issue” for the purpose of the issue estoppel analysis, is “what is the current value of this property for the tax years under appeal?” In its submission, the Board erred in not defining the issue in this way. It was bound to freshly consider both the assessed value
for 2021 and 2022 as well as consider whether the value was equitable with reference to similar lands in the vicinity.
[28] I disagree. At paragraph 22 of its reasons, the Board defined the issue in these terms:
[T]he question in the 2017 to 2020 appeals is the assessed value of the Subject Property as of the valuation date of January 1, 2016. In accordance with s. 44(3) of the Act, this included i) a determination of the current value of the land, and ii) an adjustment to the assessment of the land to make it equitable with that of similar lands in the vicinity, if such an adjustment would result in a reduction of the assessment of the land.
[29] This was not an error in law. The Board was applying the correctly stated legal test to the undisputed facts before it. The regulation which extended the usual four-year cycle into 2021 was enacted before the parties signed the minutes of settlement agreeing to the CVA of the land for the cycle that commenced in 2016. The provincial government extended the application of all valuations as of January 1, 2016 to the 2021 tax year, and subsequently to 2022-2024: Ontario Regulation 282/98: General, s 48.6. This meant that the question of the CVA as of January 1, 2016 continued to govern questions of assessment for tax years beyond 2016-2020. Having agreed to that amount, the parties could be found to be bound by issue estoppel.
[30] Manulife’s appeal of 2016-2020, resolved by the minutes of settlement, necessarily resolved both issues of the assessment and of equity in s. 44 (3) of the Act. The Board properly concluded that Manulife had therefore resolved those issues in agreeing to the CVA as of January 1, 2016 to its property. By approving the settlement it carried out its required duties under s. 44(3) of the Act: see Spadacini-Kelava v. Kelava, 2020 ONSC 7907 at para. 106.
[31] Further, in the appeal to the Board for the 2021-2022 tax years, Manulife was not relying on a change to the “state or condition” of the property, which would have meant a new issue that was not determined by the minutes of settlement. Following the reasoning in Wabi-Iron & Steel, this would have put Manulife in the position of having the right to reopen its assessment.
[32] Manulife did not raise any new issue that had not been resolved already in the minutes of settlement. It raised the equitable adjustment issues that was part of the agreed CVA already. It did not raise any issue concerning the “state or condition” of the premises that might have changed since the settlement was agreed and approved by the Board.
[33] Manulife submits that despite these findings, the Board could have exercised its discretion to hold a hearing and not apply the doctrine of issue estoppel. I am satisfied that it appropriately considered whether to do so and did not err in law in considering and declining to exercise its discretion.
[34] Although the first year of the extension was known, or ought to have been known to the parties when they signed the minutes of settlement, the provincial government had not yet amended
the regulations to further extend the application of the valuation date into 2024. The material suggests that property values may have declined in recent years.
[35] The Board described the purpose of this discretion with reference to the Supreme Court of Canada decision in Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44 at para 33: “The underlying purpose is to balance the public interest in the finality of litigation with the public interest in ensuring that justice is done on the facts of a particular case.”
[36] Manulife cited the principles of equity in taxation citing Toronto (City) v MPAC, 2013 ONSC 6137 at para. 30:
The primary objective of the Act is to achieve equity in taxation. Equity will result when every parcel of land bears its proportionate and fair share of the tax burden for the community. This principle favours ensuring the correctness of the assessments upon which the tax payable is based. On the other hand, it is also the intention of the legislation to ensure a stable and reliable tax base. This principle favours finality. The principles of equity and finality are often in conflict and each must be weighed in the balance in arriving at the proper interpretation of the legislation.
[37] Imposing a “freeze” of the valuation date for the purposes of successive taxation years as of January 1, 2016 could arguably over time erode the logic of a connection between present-day property values, and the 2016 valuation day. It is understandable that property owners would seek to challenge their current assessments which over time could appear less and less “current.” However, the extension of time is a matter of the exercise of the authority of the government. Further, the principle of equity is respected so long as like properties are treated alike. In that sense, all Ontario property owners share in any disconnect between property assessed values of 2016 and those of 2024. The jurisprudence put before us from the ARB is consistent in its application of issue estoppel in similar circumstances: MacAlasdair v Municipal Property Assessment Corporation Region 09, 2023 26330 (ON ARB) at paras 17-19; Purcell v Municipal Property Assessment Corporation, Region 05, 2021 41885 (ON ARB) at para 28; First Capital Holdings (Ontario) Corporation v Municipal Property Assessment Corporation, Region 09, 2022 58354 (ON ARB).
[38] The Board considered the positions of the parties and declined to exercise its discretion. The Board understood the breadth of its discretion and it considered the parties’ submissions on whether to decide the matter based on that discretion. There is nothing in the record to suggest that the Board erred in principle in the exercise of its discretion or that Manulife has been treated inequitably in the Board’s exercise of its discretion.
[39] The Board correctly identified the law of issue estoppel and applied the doctrine to the facts before it. The latter finding is arguably not an issue of law that can be appealed absent an error in principle. I am satisfied that the Board properly considered whether to exercise its discretion not
to apply the doctrine and properly directed itself to the nature of the discretion. It made no error in doing so. I therefore would not give effect to this ground of appeal.
Did the Board fail to fulfill its statutory obligations under the s. 44(3)(b) of the Act to consider whether the assessments under appeal are equitable compared to assessments of similar lands in the vicinity?
[40] Manulife submits that the Board was required to consider anew the issue of whether the assessments for 2021-22 were “equitable compared to assessments of similar lands in the vicinity” The Board erred because it was required do so by statute.
[41] I do not agree. Manulife raised the equitable comparison issue in its “Statement of Issues” filed for the 2017-2020 appeals, arguing that “the assessment of the Subject Property is inequitable, as compared to the assessment of similar lands in the vicinity.” Manulife included a list of similar lands in the vicinity. The parties settled this issue and the Board incorporated an equitable adjustment into the 2017-2020 orders. In doing so, it fulfilled its statutory obligations to determine the CVA of the office building as of January 1, 2016.
[42] For these reasons, the appeal is dismissed.
Conclusion
[43] I dismiss the appeal. By agreement of the parties, costs shall be paid in the all-inclusive amount of $7500 by the appellant to the respondents.
Leiper J.
I agree
I agree
Date of Release: February 20, 2024
E. Stewart J.
Myers J.
Date of Release: February 20, 2024
CITATION: Manulife Ontario Property Inc. v. MPAC and Ottawa (City), 2024 ONSC 1047
DIVISIONAL COURT FILE NO.: DC-23-2781
DATE: 20240220
ONTARIO
SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
E. Stewart, Myers and Leiper, JJ.
BETWEEN:
Manulife Ontario Property Portfolio Inc.
Appellant
-and-
Municipal Property Assessment Corporation Region No. 3 and The City of Ottawa
Respondents
AMENDED REASONS FOR JUDGMENT
Leiper, J.
Date of Release: February 20, 2024
[^1]: Different Valuation Days for the Purposes of Section 19.2 of the Act 48.6 For the purposes of section 19.2 of the Act, January 1, 2016 is prescribed as the day as of which land is valued for the 2021, 2022, 2023 and 2024 taxation years. O. Reg. 186/20, s. 1; O. Reg. 320/21, s. 3; O. Reg. 13/22, s. 3; O. Reg. 261/23, s. 3.