10198447 Canada Inc. v. Municipal Property Assessment Corporation

COURT FILE NO.: DC-22-2693

DATE: 20221202

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: 10198447 Canada Inc., Applicant

AND:

Municipal Property Assessment Corporation, Respondent

AND:

The Corporation of the City of Ottawa, Respondent

BEFORE: Muszynski J.

COUNSEL: Joe Jebreen and Scott McAnsh, for the Moving Party

Allyson Amster and Matthew Kanter, for the Respondent Municipal Property Corporation Angela Severson and Jennifer Pereira, for the Respondent, the Corporation of the City of Ottawa

HEARD: May 18, 2022

REASONS FOR DECISION ON MOTION FOR LEAVE TO APPEAL

[1] 10198447 Canada Inc. (the “Property Owner”) seeks leave of this court to appeal several decisions of the Assessment Review Board (the “Board”) related to the increase in value assigned to the property located at 1509-1531 Merivale Road in the city of Ottawa.

[2] The responding parties, Municipal Property Assessment Corporation Region No. 3 (“MPAC”) and the city of Ottawa (“Ottawa”), oppose the Property Owner’s motion and ask that leave to appeal be denied.

[3] After the hearing of the motion, but prior to the release of this decision, the Property Owner sent correspondence to my attention requesting that I consider additional evidence; specifically, that the parties had recently resolved certain issues as between them. The correspondence was sent without the consent of MPAC or Ottawa.

[4] I convened a case conference on August 12, 2022 to discuss the communication received. On that date, I confirmed that I would not accept the correspondence into evidence without the consent of all parties. In the absence of such consent, I advised that a motion would be required.

[5] The Property Owner brought a motion to admit fresh evidence which was scheduled to be heard on October 3, 2022. All parties filed materials. On September 27, 2022, the Property Owner served a notice of abandonment of the motion.

[6] The parties now await these reasons on the Property Owner’s motion for leave to appeal.

ISSUE

[7] Should the Property Owner be granted leave to appeal the Board’s decisions?

STATUTORY / PROCEDURAL FRAMEWORK

[8] To provide context to the decisions of the Board that the Property Owner seeks leave to appeal, a review of the relevant statutory provisions and the applicable Rules of Practice and Procedure of the Assessment Review Board (the “ARB Rules”) is necessary.[^1]

[9] The authority of the Board is derived from the Assessment Act, R.S.O. 1990, c. A.31, s. 43.1(1). The Statutory Powers Procedure Act, R.S.O. 1990, c. S.22 (the “SPPA”) gives administrative tribunals, including the Board, the authority to make rules governing their practice and procedures so long as those rules are consistent with both the SPPA and the other statutes to which they relate. The Board’s practice and procedures are governed by the ARB Rules.

[10] The following provisions of the ARB Rules, in force from April 1, 2017 until April 1, 2021 are relevant to this motion:

Deemed Consent 39. A party that does not serve a statement of response in a general proceeding on or before the day set out in the schedule of events is deemed not to oppose any future settlement in that proceeding.

Reinstatement by Request for Review 122. Notwithstanding Rule 120, a party to a former proceeding may seek an order from the Board to reinstate an appeal by filing an affidavit with the board, copied to all parties, no more than 30 days after the appeal was dismissed or withdrawn by the Board setting out that: (a) the appeal was withdrawn, removed or dismissed in error; (b) a party failed to appear at a hearing event through no fault of their own; or (c) natural justice or procedural fairness require that the appeal be reinstated.

Review Order 123. Upon consideration of a request for review, or on its own initiative, the Board may: (a) dismiss the request; (b) reinstate the appeal, with or without conditions; or (c) after providing all parties an opportunity to make submission, i. confirm, vary, or cancel the decision, ii. Order a rehearing on all or part of the matter., or iii. Order a motion to decide the review.

[11] The following provision of the ARB Rules, from the amendment in April 1, 2021, is relevant to the Second Amended Review Decision:

Correcting Minor Errors 99. The Board may, on its own initiate or at the request of a party, correct a technical or typographical error, error in calculation or similar minor error made in a decision or order, and may clarify a misstatement, ambiguity or another similar problem.

[12] The following provisions of the SPPA are relevant to this motion:

Liberal construction of Act and rules 2. This Act, and any rule made by a tribunal under subsection 17.1(4) or section 25.1, shall be liberally construed to secure the just, most expeditious and cost-effective determination of every proceeding on its merits.

Waiver of procedural requirement 4(1) Any procedural requirement of this Act, or of another Act or a regulation that applies to a proceeding, may be waived with the consent of the parties and the tribunal.

Same, rules 4(2) Any provision of a tribunal’s rules made under section 25.1 may be waived in accordance with the rules.

Disposition without hearing 4.1 If the parties consent, a proceeding may be disposed of by a decision of the tribunal given without a hearing, unless another Act or a regulation that applies to the proceeding provides otherwise.

Rules 25.1(1) A tribunal may make rules governing the practice and procedure before it.

Application (2) The rules may be of general or particular application.

Consistency with Acts (3) The rules shall be consistent with this Act and with the other Acts to which they relate.

Conflict 32. Unless it is expressly provided in any other Act that its provisions and regulations, rules or by-laws made under it apply despite anything in this Act, the provisions of this Act prevail over the provisions of such other Act and over regulations, rules or by-laws made under such other Act which conflict therewith.

FACTUAL BACKGROUND

[13] The property located at 1509-1531 Merivale Road (the “Property”) in the city of Ottawa is owned by 10198447 Canada Inc.

[14] On April 3, 2018, Ottawa initiated an appeal of the Property’s municipal tax assessment for the 2018 taxation year. Specifically, Ottawa took the position that the MPAC assigned value to the Property of $4,469,000 was too low. Ottawa’s Notice of Appeal was sent to the Property Owner by regular mail.

[15] Over the course of the next 18 months, both Ottawa and MPAC delivered several documents related to Ottawa’s appeal to the Property Owner through regular mail. There is no question that regular mail is a valid method of service under the applicable rules. The Property Owner did not serve a statement of response in accordance with the timeline set out in the schedule of events or engage in the appeal process whatsoever. It is not disputed that the Property Owner received these documents.

[16] On November 25, 2019, MPAC and Ottawa advised the Board that they had settled the appeals and agreed to increase the assessed value of the Property from $4,469,000 to $7,350,000. MPAC and Ottawa reached this resolution without any input or participation by the Property Owner and filed the minutes of settlement with the Board.

[17] The Board issued its original decision on April 24, 2020, which had the impact of increasing the assessed value of the Property in accordance with the minutes of settlement filed (the “Original Decision”). Given the timing of when the appeal was commenced (2018) and when the decision was ultimately issued (2020), the increased assessed value of the Property was deemed to have applied for the years 2018, 2019 and 2020.[^2] The Original Decision did not include any information about how the new assessed value was decided upon other than mentioning “minutes of settlement”.

[18] On May 25, 2020, a legal representative for the Property Owner approached the Board to request a review of the Original Decision pursuant to Rule 122 of the ARB Rules.

[19] On August 21, 2020, the Board denied the Property Owner’s request for review (the “Review Decision”). The Review Decision explains that the Property Owner’s request for review was denied because it was made pursuant to the incorrect rule, that being Rule 122.

[20] In October of 2020, the Property Owner served its original motion materials seeking leave to appeal the Original Decision and the Review Decision to the Divisional Court.

[21] On November 27, 2020, the Board wrote to all parties advising that the Board would be initiating its own review of the Original Decision and the Review Decision and invited submissions by all parties. MPAC, Ottawa, and the Property Owner each made written submission to the Board.

[22] With respect to the Board-initiated review, the Property Owner made the following submissions that relate to this motion for leave to appeal:

a. The Board lacked authority to initiate its own review of the prior decisions in the circumstances of this case.

b. The Board did not have authority to impose ARB Rule 39, which references “deemed consent” to a settlement where a party does not file a statement of response in accordance with the timeline established in the schedule of events, which is inconsistent with s. 4.1 of the SPPA.

c. The Board should cancel the prior decisions and allow the Property Owner to respond to Ottawa’s appeals.

[23] On January 21, 2022, the Board issued a second review decision (the “Second Review Decision”): see 10198447 Canada Inc. v. Municipal Property Assessment Corporation, Region 03, 2022 CanLII 3379 (ON ARB). The Second Review Decision is 63 pages in length and contains the following conclusions that are relevant to this motion for leave for appeal:

a. The Board finds that it has authority to initiate its review of the Original Decision and the Review Decision pursuant to ARB Rule 123.

b. The Board has the authority to impose ARB Rule 39.

c. The request to set aside the prior decisions and allow the Property Owner to respond to the appeals is denied, except for the appeal of the assessed property value for the 2020 taxation year.

[24] After receiving the Second Review Decision, the Property Owner prepared its materials in support of this motion for leave to appeal. However, on April 14, 2022, the Board issued another decision. This time, the Board issued an amended version of its January 21, 2022 decision (the “Amended Second Review Decision”). The Amended Second Review Decision amends the prior decision to “correct a minor error”, which is authorized by ARB Rule 99, in force at the time. Specifically, the Amended Second Review Decision adds the following sentence:

“For this reason, the Board grants the City’s request to withdraw this appeal. Therefore, the Registrar is directed to amend the 2020 Decision to indicate that it has been withdrawn”.

[25] In this motion, the Property Owner seeks leave to appeal:

a. “The Original Decision”, dated April 24, 2020 [Note: this includes Decisions Nos. 2815327, 2815328 and 2815330] – which increased the value assigned to the Property.

b. “The Review Decision”, dated August 21, 2020 – which denied the Property Owner’s request for review of the Original Decision.

c. “The Second Review Decision”, dated January 21, 2022 – which was self-initiated by the Board, reviewed and confirmed the Original Decision on its merits, and confirmed the Review Decision, although it was ultimately amended by the Amended Second Review Decision.

d. “The Amended Second Review Decision”, dated April 14, 2022 – which amended the Second Review Decision to include an additional sentence regarding the 2020 taxation year.

ANALYSIS

[26] An appeal of a decision of the Board lies to the Divisional Court, with leave on questions of law: Assessment Act, s. 43.1(1)

[27] In granting leave to appeal, the Court must be satisfied that:

a. There is reason to doubt the legal correctness of the Board’s decision; and

b. The question is an important question of law: Dryden (City) v. Municipal Property Assessment Corp., 2016 ONSC 478, at para. 2.

[28] There is reason to doubt the correctness of a decision if it is “open to very serious debate”: Exchange Tower Ltd. v. Municipal Property Assessment Corp. Region No. 9, 2012 ONSC 415, at paras. 17-18.

[29] An issue is considered important if it “transcends just the interests of” the moving party or engages “matters of general interest to the public and litigants before the Board and go beyond the narrow immediate concerns of the parties.”: Municipal Property Assessment Corporation v. Loblaw Properties Limited, 2016 ONSC 4684 at para. 25.

[30] The Property Owner has advanced several grounds of appeal, including ones related to the 2020 taxation year. Since 2020 is no longer in issue, I have not specifically addressed those grounds in these reasons. The remaining grounds of appeal advanced by the Property Owner are:

a. The Board had no authority to self-initiate the review of the Review Decision;

b. The Board breached s. 4.1 of the SPPA and common law by relying on ARB Rule 39, which conflicts with the SPPA;

c. The Board erred in not considering the prejudice to the parties in the Second Review Decision / the Amending Second Review Decision;

d. Default proceedings must nonetheless consider the merits of the case, which is not provided for in the current regime and did not occur in this case.

Did the Board have authority to self-initiate the review of the Review Decision?

[31] The first ground of appeal identified by the Property Owner is that the Board incorrectly decided that it had authority to self-initiate the review of the Review Decision, which resulted in the Second Review Decision.

[32] The Board acknowledges that it was the Property Owner’s leave to appeal materials that caused it to initiate a review of the prior decisions pursuant to ARB Rule 123. The Board found that despite the technical rejection of the Property Owner’s request for review, procedural fairness warranted a review of the Original Decision nonetheless. The Board determined that ARB Rule 123 permitted it to self-initiate the review of the prior decisions.

[33] It would seem counter-intuitive for the Property Owner to challenge the Board’s decision to conduct a review that the Property Owner had requested in the first place. The Property Owner, however, submits that the Board’s self-initiated review was in direct response to its motion materials for leave to appeal the prior decisions. After incurring the expense of preparing motion materials, the Board decided to review nonetheless, rendering the original motion materials to be essentially redundant. The Property Owner notes that procedural fairness calls for some finality and certainty, and the Board’s self-initiated review flies in the face of these objectives.

[34] The Property Owner further takes the position that ARB Rule 123 does not allow the Board to initiate its own second review on a second occasion. Essentially, the Property Owner submits that that as there was no active request for review, as the Property Owner’s request for review had already been rejected, there was no basis for the Board to review the prior decisions independently.

[35] ARB Rule 123 provides that, “upon request for review, or on its own initiative” the Board may confirm, vary, or cancel a decision [emphasis added].

[36] I find that there is no reason to doubt the correctness of the decision of the Board to self-initiate a review of the Original Decision and the Review decision. ARB Rule 123 provides the Board with the jurisdiction to initiate a review of a prior decision in the absence of an active review request by another party. The Board did just that in this case to carry out the actual intention of the Property Owner, which was to review the Original Decision on its merits in the first place. Given my finding, there is no need to consider the second prong of the leave to appeal test, namely, the importance of the legal issue. Therefore, there is no basis to grant leave to appeal on this issue.

Did the Board breach s. 4.1 of the SPPA and common law by relying on ARB Rule 39?

[37] Section 4.1 of the SPPA provides that a proceeding may be disposed of by a tribunal without a hearing if the parties consent unless an Act or regulation that applies to the proceeding provides otherwise.

[38] ARB Rule 39 provides that if a party does not serve a statement of response in accordance with the prescribed timelines, it is deemed not to oppose any future settlement in that proceeding.

[39] The Property Owner submits that the ARB Rule 39 conflicts with s. 4.1 of the SPPA in that it allows the Board the power to dispose of a proceeding without a hearing in the absence of the consent of all parties. Specifically, the Property Owner takes that position that where a party is non-responsive, as in this case, s. 4.1 of the SPPA requires the participating parties to nonetheless attend at a hearing before the Board, as opposed to simply filing minutes of settlement.

[40] MPAC and Ottawa take the position that, under ARB Rule 39, a party who does not file materials in accordance with the applicable timetable are deemed to have consented to any future settlement, and therefore there is no conflict with s. 4.1 of the SPPA.

[41] The words “deemed consent” do not appear in ARB Rule 39, but instead appear as a heading immediately above the rule. Although not strictly applicable to the ARB Rules, I am guided by the approach in the Interpretation Act, R.S.O. 1990, c. I.11 at s. 9, which states that headings contained within legislation are there for convenience only and do not form part of the legislation.

[42] The ARB Rules were established under s. 25.1 of the SPPA which permits the Board to create rules to govern its practice and procedure. However, s. 25.1(3) makes it clear that any such rules must be consistent with the SPPA or any other Act to which they relate.

[43] There is a distinction between consent and non-opposition. As a result, I find, a potential conflict between ARB Rule 39 and s. 4.1 of the SPPA. On this basis, I find that there is good reason to doubt the correctness of Board’s Original Decision to dispose of the proceeding without a hearing in the absence of the consent of all parties.

[44] The implication of the potential inconsistency between ARB Rule 39 and s. 4.1 of the SPPA goes beyond the parties involved in this case. I therefore find that the issue is of such importance that it merits the attention of the Divisional Court.

[45] Leave to appeal is granted on this issue.

Did the Board err in not considering the prejudice to the parties in the Second Review Decision / the Amending Second Review Decision?

[46] The Property Owner submits that the Board erred in failing to consider the prejudice to the Property Owner arising from the significant and erroneous increase in assessed property value and the resulting increase in property taxes owing.

[47] In this regard, the Property Owner relies on the case of Kensington Foundation v. Municipal Property Assessment Corporation, Region No. 9, 2013 ONSC 7694 [Kensington]. However, the facts in Kensington are distinguishable from the facts here.

[48] In Kensington, a typo made on the tax roll had the effect of significantly reducing the assessed value of the property in question. Years after the mistake was made, MPAC made the correction and sought to collect years of back taxes owed by the owner. A panel of the Divisional Court held that the Board erred in that case by failing to engage in a balancing exercise wherein the prejudice to the owner was considered:

In our view, the Board erred in not considering the implications of a correction in the assessment; it failed to take into account the important objectives of ensuring the correctness of the assessment upon which the tax is payable while considering the relevant factors of timing, finality and possible prejudice: at para. 17.

[49] MPAC and Ottawa take the position that the prejudice of all parties needs to be considered and that the Board did just that.

[50] In reviewing the substantive decisions of the Board, the Board engaged in a discussion about prejudice but only in the context of addressing whether the process was procedurally fair. The Board did not, however, consider the alleged material prejudice to the Property Owner associated with a higher, and potentially incorrect, assessed property value. Although it is unclear whether consideration of this factor would have resulted in a different outcome, I find that there is some reason to doubt the correctness of the Board’s decisions due to the failure of the Board to consider this particular prejudice as alleged by the Property Owner.

[51] That said, in this instance, I am not convinced that this failure rises to the level of general importance that it would transcend the interest of the parties directly involved in this case. Accordingly, leave to appeal is denied on this issue.

Should default proceedings consider the merits of the case?

[52] This issue raised by the Property Owner is in response to the Board’s comments that it is appropriate to consider ARB Rule 39 in relation to Rule 19 of the Rules of Civil Procedure R.R.O. 1990, Reg. 194 [Rules]. The Board specifically argues that the Rules, which admittedly do not apply in this case, allow for civil default judgment to be obtained against non-participating parties in the absence of supporting evidence in some cases (i.e. in cases involving liquidated damages).

[53] The Property Owner submits, firstly, that the Rules do not apply. However, as they are being relied on by the Board, it is worth noting that: civil default proceedings require the facts must entitle the moving party to judgment; and the Rules contain set aside provisions that are not present in the ARB Rules.

[54] The crux of the Property Owner’s position is that, in the face of a non-participating party, in order to be consistent with the SPPA, a proceeding should culminate in a hearing where the participating parties will have to put forward some evidence so that the merits are considered. In response MPAC and Ottawa rely on s. 2 of the SPPA which permits the ARB Rules, specifically ARB Rule 39 in this case, to be liberally construed to secure the most expeditious and cost-effective determination on its merits.

[55] MPAC and Ottawa focus on the impediments to securing expeditious and cost-effective results should hearings be required in cases with non-participating parties. They cite the chronic delays, high volume, and backlogs that already plague the Board. The Property Owner, on the other hand, emphasizes the importance of a just process and one where there is a determination on the merits.

[56] I find that this issue, to a significant extent, involves the consideration of whether there is an irreconcilable conflict between ARB Rule 39 and s. 4.1 of the SPPA and whether, in absence a party’s consent, a proceeding can be concluded without a hearing. I have already granted leave to appeal on that issue.

CONCLUSION

[57] In the result, I grant leave to appeal to the Divisional Court on the following issue: Did the Board err in disposing of the proceeding without a hearing in the absence of the consent of all statutory parties given s. 4.1 of the SPPA?

COSTS

[58] Counsel have agreed that the unsuccessful party or parties will pay costs to the successful party or parties fixed in the amount of $6,500.00 all inclusive. The Property Owner was granted leave to appeal and, therefore, I find it the successful party. Accordingly, I order that the respondents pay to the Property Owner costs fixed in the amount of $6,500 payable forthwith.

Muszynski J.

Date: December 2, 2022

[^1]: Two versions of the ARB Rules are relevant to these proceedings: the Rules in place effective as of April 1, 2017 (and amended in May 2019), and the revised ARB Rules in force as of April 1, 2021.

[^2]: At the hearing of the motion, the issue of the assessed value of the Property for the 2020 taxation year was addressed and resolved on the basis that the Property Owner had a valid appeal underway before the Board. For this reason, I have not addressed the issue of the 2020 appeals in these reasons.