On March 6, 2015, the Divisional Court of Ontario released its decision in Junvir Investments Ltd. v. Municipal Property Assessment Corporation1and held that the Assessment Review Board (the "Board")2did not err in failing to properly determine the current value of the appellant's property. This case is significant not only for its result, but also because it demonstrates that courts are unwilling to overturn decisions by the Board that have some evidentiary basis, no matter how minimal. In order to succeed on an appeal, property owners must point to some error of law in order to overturn a decision by the Board. This article seeks to identify the potential errors of law that property owners can raise on an appeal.
Founded in 1953, Junvir Investments Ltd. (the "Appellant") is a third-generation family owned corporation that operates an independent grocery store in central Toronto. Between 1995 and 2003, the Appellant acquired the following four properties with the intention of expanding its operations:
- 446 Summerhill Avenue: a 15,000 sq. ft. grocery store building (the "Building"); and
- 444, 442, and 438 Summerhill Avenue: together comprising a 26-car parking lot adjacent to the Building (collectively, the "Subject Properties").
Between 2005 and 2007, the Appellant expanded the Building to approximately 30,000 sq. ft. in order to add additional room for storage, food preparation, shopping, and a kitchen. In 2005, the Municipal Property Assessment Corporation ("MPAC") provided the Appellant with the following Current Value Assessments ("CVA") for the 2006, 2007, and 2008 taxation years3using the cost approach:4
The Appellant and MPAC disagreed on both the nature of the Building and MPAC's choice of properties for comparable sales. The Appellant took the position that the Building had the characteristics of a grocery store and should be valued using the Grocery Store Model ("GSM").5In determining the value of the Building, MPAC applied the income approach using estimates of the Fair Market Rent ("FMR")6of commercial retail buildings. The Appellant, on the other hand, proposed two possible valuation methods for the Building: (i) an income approach using estimates of FMR from grocery stores and supermarkets that it asserted were comparable; or (ii) a CVA FMR of the Building, which it produced by applying the GSM.7
On March 27, 2014, the Board held that the CVA of the Appellant's four properties was $3,661,000.00 for the 2008 taxation year (the "First Decision").8This figure was ultimately reduced to $2,103,000.00 as a result of several factors that negatively affected the Building's value.9
On August 26, 2014, the Board issued an amended decision (the "Amended Decision") to correct a typographical error and mathematical miscalculations. The Amended Decision raised the CVA of the Appellant's four properties to $4,288,000.00 for the 2008 taxation year, although this figure was ultimately reduced to $2,730,000.00 as a result of the above-mentioned negative factors.10In response, the Appellant appealed both the First Decision and the Amended Decision pursuant to section 43.1 of the Assessment Act.11
On appeal, the Appellant argued that the Board had made the following errors of law with respect to the 2008 taxation year:
1. It erred in law in failing to properly determine the current value of the Appellant's properties;
2. It erred in law in failing to reference similar properties in the vicinity; and
3. It acted without jurisdiction when it amended the First Decision and issued the Amended Decision.
Justice Sachs began her decision by examining the standard of review applicable to decisions by the Board. As a general rule, the standard of review applicable to the Board's decision on questions of law is correctness. Taking into account several recent decisions by the Supreme Court of Canada,12Justice Sachs noted that there is a presumption that decisions by tribunals interpreting or applying their home statutes are reviewable on a standard of reasonableness.13
In the present case, Justice Sachs held that a standard of review analysis for the Appellant's first and second issues was unnecessary because they involved issues of procedural fairness. In such a case, the question is not whether the decision was "correct" or "reasonable", but simply whether the procedure used was fair. On the other hand, the third issue raised issues of jurisdiction and was reviewable on a standard of correctness.14
With respect to the first issue, the Appellant took the position that the Board had erroneously based its decision on only two of the comparable properties submitted for consideration. According to the Appellant, the Board erred by ignoring the eight other comparable properties that the Appellant submitted whose values were not challenged. Justice Sachs disagreed with the Appellant's position and noted that their argument "does not raise a question of law".15Crucially, Justice Sachs upheld the Board's decision because:
This is not a case where the Board's conclusion was unsupported by any evidence or where the Board ignored relevant evidence...[s]uch errors could constitute errors of law.16
Justice Sachs took a similar approach in dismissing the Appellant's second issue. Here, Justice Sachs held that the Appellant could not take the position that the Board's decision was wrong because it favoured certain comparable properties over others. It would have been improper for the Divisional Court to overturn a finding of fact by the Board regarding its opinion of the best comparables to use in its analysis.
Consequently, the two properties that the Board selected constituted "an ample evidentiary basis upon which to make this finding".17
On the third issue, Justice Sachs noted that the Board has jurisdiction to correct a typographical or mathematical error under both the Statutory Powers Procedure Act18 and the Board's own Rules of Practice and Procedure.19Notwithstanding that leave was not granted on this issue, the Court held that the Board had jurisdiction to amend the First Decision and the Amended Decision in the manner it did.
As a result of the foregoing, Justice Sachs dismissed the appeal and awarded MPAC $14,500.00 in costs for both the appeal and the motion for leave to appeal.
The Divisional Court of Ontario's decision in Junvir is significant for practitioners of property tax and assessment law for several reasons. It affirms the presumption that the standard of review for the Board's interpretation of the Act is reasonableness. Likewise, it demonstrates that courts will uphold CVAs issued by the Board so long as there is some evidentiary basis to support their decision. Property owners should not assume that they will be successful before the Board or the courts simply because they have amassed a large number of comparable properties in support of their position. Decisions by the Board will be upheld so long as they have considered all of the comparable properties and determined that a property owner's comparables are not sufficiently similar to the property in dispute.
The key lesson from Junvir appears to be that courts are only willing to overturn a decision by the Board if one of the following errors of law has been made: (i) where the Board's conclusion is unsupported by any evidence; (ii) where the Board ignored relevant evidence; or (iii) where the Board misapprehended relevant evidence.20Moving forward, property owners should structure their arguments around these points in order to maximize their likelihood of success on an appeal.
Jamie G. Walker is a Student-at-law at Miller Thomson LLP (2015).
1 Junvir Investments Ltd. v. Municipal Property Assessment Corp., 2015 ONSC 1526.
2 The Assessment Review Board is an independent adjudicative tribunal whose main function is to hear appeals from people who believe that properties are incorrectly assessed or classified. The Board also deals with some property tax appeals.
3 Junvir Investments Ltd. v. Municipal Property Assessment Corp., Region No. 09, 2014 CarswellOnt 3732, at paras. 106-107.
4 A valuation method in which the market price of a property is calculated by adding the cost of the land and the cost of construction, minus depreciation.
5 The GSM is an equation used to predict rents for grocery stores (anchor tenants only) based on negotiated rents.
6 The amount of money that a property would command if it were available for leasing at the present time.
7 Supra note 3, at para. 11.
8 Supra note 3.
10 JUNVIR Investments Ltd. v. Municipal Property Assessment Corp., Region No. 09, 2014 CarswellOnt 11770, at para. 105.
11 Assessment Act, R.S.O. 1990, c. A.31.
12 British Columbia (Securities Commission) v. McLean, 2013 SCC 67 (S.C.C.).
13 Supra note 1, at para. 5.
15 Ibid., at para. 8.
16 Ibid., at para. 8.
17 Ibid., at para. 9.
18 Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, s. 21.1.
19 Assessment Review Board Rules of Practice and Procedure, A.R.B. Rules, r. 130.
20 Para. 8.
Originally published by Taxes & Wealth Management, May 2015.
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.