In the recent decision of the British Columbia Supreme Court in
Victory Motors (Abbotsford) Ltd. v. British Columbia (Assessor of
Area No. 15 – Fraser Valley), the court considered how one
properly assesses, for taxation purposes, the value of a brownfield
The property in question was located in Abbotsford (the
"Property"). Historically it had been operated as a
retail gas station and automobile dealership. This use led to
significant contamination of the soil under the Property, which
spread to neighbouring properties, including a commercial property
across the street. A sale of that commercial property fell through,
after the owners ("Jansen") were unable to obtain a
satisfactory environmental assessment as a result of the
contamination. Jansen subsequently commenced a lawsuit against the
current and former owners of the Property and the oil and gas
companies who had operated the gas station on the Property.
The owner of the Property tried to sell it for $1,200,000, but
found no takers. The property fell into disrepair and property
taxes went into arrears. Eventually Jansen, concerned that not
enough was being done to assist in allocating responsibility to the
oil companies in the lawsuit, arranged to acquire the property
through a share purchase agreement. The purchase price was
Jansen then renovated the existing single-storey structure on
the property, being careful not to undertake any work that would
involve excavation or require a building permit from the City of
Abbotsford. As a result, no environmental assessment or other
environmental work was required. These renovations, costing
$750,000, allowed Jansen to lease out two commercial units on the
property, with the potential to lease a third. The Property was not
on any list of contaminated sites, nor had the Province issued any
Following the renovations, the Property was assessed for tax
purposes at a value of $975,000. A review panel subsequently
reduced this to $500,000. Jansen appealed to the Property
Assessment Appeal Board of British Columbia. Jansen argued the
value of the Property should be closer to what he paid for it and
any assessment should take into account the likely remediation
costs of $1,500,000-2,000,000.
The Property Assessment Appeal Board found the market value of
the property to be $1,080,000, and reinstated the original assessed
value of $975,000. The basis for the Board's decision was
provided by an appraisal report. The appraiser assessed the value
of the property based on "the highest value that could be
achieved without the need to undertake remediation", which he
found to be the property's then current use as a one-storey
multi-tenanted building. Redevelopment into the conventional
highest and best use, as a multi-story structure, was discounted as
it would bring with it the risk that the owner would be required to
remediate the environmental contamination.
The matter was then taken to the British Columbia Supreme Court,
which was asked to rule on several stated questions and review the
ruling of the Property Assessment Appeal Board.
The court overturned the decision of the Board and sent the
matter back to the Board for reconsideration. The court held that
the Board had assessed the value in a manner that gave no
meaningful recognition to the property's brownfield status,
particularly in light of the provisions of the Environmental
Management Act related to the remediation of contaminated sites,
which any buyer would have in mind as a potential economic risk.
Further, the Board ignored the fact that the current owner acquired
the property under circumstances which made the potential economic
risk uniquely acceptable to that owner. The Board accepted a
highest and best use which was of value only to the current owner,
and for which there was no evidence of any market. The Court
concluded that this was an error and the Board should have
considered the evidence of the amount for which the Property sold
This decision demonstrates that the value of a brownfield
property cannot be assessed in a vacuum without consideration of
what the market will be for such a property, and the economic risks
facing any potential buyer of a brownfield property, which will
impact the purchase price.
Ontario's Ministry of the Environment and Climate Change continues to roll out its Climate Change Action Plan with its proposed GHG guide for projects that are subject to the province's Environmental Assessment Act.
The Imperial Oil refinery pled guilty to one offence for discharging a contaminant, coker stabilizer, thermocracked gas, into the natural environment causing an adverse effect and was fined $650,000...
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