As a result of legislative changes to Ontario’s property
tax assessment system in 1998, the Municipal Property Assessment
Corporation (“MPAC”) is no longer required to prepare
separate assessments for individual leased premises in
multi-tenanted properties. Rather, these properties are
assessed at their “current value” and a landlord will
receive a valuation summary for the entire property. In a
commercial lease context, the fact that individual assessments are
no longer available has forced landlords and tenants to look to the
terms of their lease to determine appropriate allocation of
property taxes in each instance. Often at issue is whether the
parties can rely on these valuation summaries or
“assessor’s records” as if they were separate
assessments. A number of cases on this topic have ruled that
assessor’s records do not constitute separate
However, in Terrace Manor v. Sobeys1, a
recent trial decision of the Ontario Superior Court, P.J.
Flynn J. held that valuation records produced by MPAC constituted
“official” information for the purposes of the lease
provisions governing the tenant’s tax payment
Sobeys Capital Incorporated (the “Tenant”) leased a
retail grocery store in a plaza owned by Terrace Manor Limited (the
“Landlord”). The lease started in 1993 and
provided that, if no separate assessments were available, the
parties would use “their reasonable and diligent efforts to
have such separate assessments made, or, failing that, to obtain
sufficient official information to determine what such separate
assessments would have been if they had been made”. The
lease went on to provide that the Tenant’s share of realty
taxes would be “determined by the Landlord acting reasonably
and equitably allocating a portion of the Taxes levied, rated,
charged or assessed against the Shopping Centre to the Premises
having regard to the generally accepted method of assessment and
applicable elements utilized by the lawful assessment authority in
arriving at the assessment of similar developments”.
During the first 5 years of the 10 year lease, the Tenant paid
taxes based on the separate assessments received from
MPAC. After the 1998 taxation year, the Landlord argued that
because separate assessments were not available, the Tenant must
pay a proportionate share of the total taxes for the
plaza. The Tenant argued that the valuation records from MPAC
were “official information” such that the parties could
determine what the amount of a separate assessment would have
In finding that the MPAC records constituted “official
information” for the purposes of s. 5.2 of the lease, Flynn
J. noted that the valuation records contained all of the necessary
information to determine how the current value was calculated and
that the records were used for official purposes such as vacancy
rebates and other property tax rebates. He wrote that “[t]he
assessing authority's data is the data relied on by all
municipal taxing authorities to impose taxes and is precisely the
data being contemplated by section 5.2(a) of the
This case was distinguishable from previous cases such as
Zellers3 where the judge found that
assessor’s records do not constitute assessed values for the
purposes of the lease. As Flynn J. points out, the role of
the judge is to determine what the reasonable intentions of the
parties were at the time of making the contract. In this case,
the lease was negotiated in 1993, five years before the law
changed, and specifically contemplated a situation where separate
assessments are not made.
As a takeaway, parties should keep in mind that should a dispute
go to trial, the judge will need to ascertain the reasonable
intention of the parties. The use of clear language in
drafting will facilitate the resolution of such disputes.
1. 2012 ONSC 2657
2. Ibid. at para. 45.
3. Orlando Corp. v. Zellers Inc. (2003) 66 O.R. (3d) 535
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Russell v. Township of Georgian Bay provides a useful reminder of the fact that while municipal officials sometimes appear to hold all of the cards in disputes with home owners, that is not always the case.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).