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Ontario Tax - Assessment Review Board (ARB). National Car Rental Inc. et al. v Municipal Property Assessment Corp. et al.
In National Car Rental Inc. et al. v Municipal Property Assessment Corp. et al. (Div Court, 2023) the Divisional Court usefully walks through some Assessment Review Board Act and Assessment Act procedures, and some substantive law about valuation dates:[6] The Applicants operate car rental companies at locations that include leased premises at the Pearson International Airport. Sections 18 and 3(1)24 of the Assessment Act require leaseholders of federal airport lands to pay municipal tax as if they were property owners. The Municipal Property Assessment Corporation (“MPAC”) is an independent, municipally funded corporation that determines property assessment values for Ontario properties.
[7] This proceeding is about the assessment of the value of the Pearson premises that is to be applied to the determination of the municipal tax payable by the Applicants for the taxation year of 2021.
[8] Section 19(1) of the Assessment Act requires Ontario property to be assessed on current value. Section 19.2(1), paragraph 4, establishes that the current valuation date for the four taxation years from 2017 to 2020 is January 1, 2016. The taxation period of 2017 to 2020 was extended by regulation to 2017 to 2023. As a result, the current valuation date for the assessment year of 2021 remains January 1, 2016.
[9] The value of a property is assessed as to its state and condition on the current valuation date. The phrase “state and condition” is not defined in the Assessment Act. It has been interpreted to mean the physical situation of the property, inclusive of its development potential. As set out in Claireville Holdings Limited v Municipal Property Assessment Corporation, Region 9, 2021 CanLII 26729 (ON ARB), at para. 21: “The assessor’s task is to determine, annually, at the state and condition date, the highest and best use of the land assessed, then establish the correct value of such annual determination by reference to the valuation of land of similar highest and best use on the legislated valuation day.”
[10] A person or a business may appeal an assessment to the ARB for any of the reasons set out in s. 40 of the Assessment Act, including that the current value of the land is incorrect.
[11] The ARB is an adjudicative tribunal established by the Assessment Review Board Act, R.S.O. 1990, c. A.32. The ARB hears appeals regarding property tax and assessment matters under a variety of statutes. One of the ARB’s functions is to hear appeals under s. 40 of the Assessment Act from property tax assessments performed by MPAC. On appeal, the ARB determines the current value of land according to section 19.2(1) of the Assessment Act. The ARB has the authority to decide all questions of law and fact within its jurisdiction. Decisions are final and binding unless appealed to the Divisional Court under section 43.1 of the Act.
[12] The ARB is provided with broad powers to dispose of appeals. On appeal, the ARB may, pursuant to s. 44(1), “reopen the whole question of the assessment” to ensure that any errors in the assessment roll are corrected. Pursuant to s. 45, the ARB has all the powers and functions of the MPAC in making an assessment, a determination, or a decision on appeal.
[13] An appeal at the ARB proceeds in accordance with the deadlines set out in the Schedule of Events, schedules “A” and “B” to the ARB’s Rules of Practice and Procedure. The ARB assigns a commencement day for each proceeding, and the due dates in the Schedule of Events are timetabled. The Schedule of Events includes deadlines for appellants to serve a Statement of Issues and for respondents to serve a Statement of Response.
[14] Rule 43 sets out the information that parties must include in their Statements of Issues and Response, which includes, if the issue is current value:i. the current value requested and how it is calculated;
ii. a full statement of every issue that the party intends to raise, including identification of comparable property(ies) to be referred to, if any; and
iii. a list of all facts, legal grounds, and documents that the party relies on in support of its position. [15] Pursuant to rule 49, parties may not raise an issue at a hearing that has not been set out in the Statement of Issues or Statement of Response, unless there are exceptional circumstances. Pursuant to rule 40, exceptional circumstances are also required in order to extend a due date in the Schedule of Events.
[16] The Applicants complied with the Schedule of Events set out in their appeal of the MPAC assessment of their properties.
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[23] The ARB found that the Act does not require an annual reassessment, and as a result, changes in the properties’ “state and condition” after January 1, 2016 were not relevant on the appeal before them.
[24] The ARB did not decide on a final basis whether the properties in question suffered a “state and condition” change over the assessment period or whether the pandemic-imposed restrictions resulted in exceptional circumstances. It limited its analysis, at para. 14 of the Decision, to a finding that a “state and condition” change, “however this term is defined, must be determined as of the date specified in the Act for the return of the Assessment Roll and not on an annual basis.” Because the assessment date remained January 1, 2016, they denied the Appellants' request for an extension.
[25] In determining that January 1, 2016 is the date specified by the Act for the valuation of the subject properties for the 2021 taxation year, the ARB concluded, at para. 229, that “Section 36 [of the Assessment Act] does not allow for an annual reassessment of current value, nor is it necessary to impose an interpretative gloss on the wording of the legislation by adopting and applying a ‘state and condition’ paradigm.”
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