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Ontario Tax - Assessment Act - 'Current Value Assessment'. Manulife Ontario Property Inc. v. MPAC and Ottawa (City)
In Manulife Ontario Property Inc. v. MPAC and Ottawa (City) (Div Court, 2023) the Divisional Court considers an administrative [Assessment Review Board (ARB)] application of issue estoppel, here in determining the 'current value assessment' (CVA):[10] MPAC then brought a motion before the Board seeking an order that Manulife is estopped from raising the CVA of the subject property for the 2021-2022 taxation years. MPAC’s submission was that the Board had finally determined the issue of the 2016 CVA when it accepted the settlement made by the parties and incorporated the settlement into orders. Alternatively, MPAC argued that relitigating the 2016 CVA would be an abuse of process.
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Analysis
Did the Board Misapply the Doctrine of Issue Estoppel?
[17] In its decision, the Board correctly described the test for issue estoppel (at para. 14):The three criteria that must be met for issue estoppel to apply are well- established, as articulated by the Board in Wabi Iron & Steel Corp. v. Municipal Property Assessment Corp., Region No. 29, [2002] O.A.R.B.D. No. 219 at paragraph 26, upheld at the Divisional Court in Wabi Iron & Steel Corp. v Municipal Property Assessment Corp., Region No. 29, 2005 CanLII 3984 (ON SCDC) (“Wabi Iron”), and confirmed in numerous subsequent decisions of this Board:a. the same question has been decided;
b. the decision said to create the estoppel was final; and
c. the parties to the decision were the same parties as those to the proceedings in which the estoppel is raised. [18] The Board described issue estoppel as a doctrine which prevents wasting time and resources on an issue that has been decided by a court or competent tribunal. It referred to prior decisions on that point including Smith v Municipal Property Assessment Corporation, Region No. 23, 2018 CanLII 35052 (ON ARB) and MPAC v. Hyde 2013 CarswellOnt 66 at para. 18.
[19] The Board correctly held that issue estoppel can be applied to cases which determine an issue in dispute by way of a consent judgment, citing the decisions in R. v. Dieckmann, 2017 ONCA 575 (CanLII) at paragraph 35; Spadacini-Kelava v. Kelava, 2020 ONSC 7907 (CanLII) at paragraph 106; First Capital Holdings (Ontario) Corporation v Municipal Property Assessment Corporation, Region 09, 2022 CanLII 56354 (ON ARB) at paragraph 27(c).
[20] The Board considered the Divisional Court’s decision in Wabi Iron & Steel which determined that although a taxpayer has a right to an annual appeal to seek to establish a new CVA based on considerations such as a change in the state or condition of the property, this does not prevent the operation of issue estoppel from applying to the CVA as of the valuation date.
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[22] In Wabi-Iron & Steel, the taxpayer sought to appeal the assessment within the four-year cycle, despite the Board’s prior finding that the CVA for that cycle was determined to be $1,644,000. The court found that although a taxpayer has annual litigation rights they are not entitled to re-litigate the assessed value as of the valuation date, absent , for example, a change in the state and condition of the property. Hennessy, J wrote:The application of issue estoppel in this case does not negate the right of the taxpayer to litigate the assessment. The right to complain of assessments in each year is provided for by the Assessment Act. The Board is required to hold a hearing when a complaint is filed. There is a continuing right to challenge the current value on the basis of evidence of a change in the property. (Emphasis added) In Wabi-Iron & Steel, the Board had determined the CVA for the four-year cycle in an earlier proceeding. Thus the Divisional Court upheld the application of issue estoppel to the issue of the CVA:The Board carefully considered each of the three criteria and it was reasonable to find that they were met. Consequently the Board reasonably determined that the question of June 30, 1996 value was res judicata and that the appellant should be estopped from raising it on the present complaint. [23] But as the decision in Wabi-Iron & Steel found, once a decision is made as to the current assessed value as of the valuation date for the four-year cycle, this decision is subject to the doctrine of issue estoppel because the legislation applies the value as of that date for a defined period.
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[33] Manulife submits that despite these findings, the Board could have exercised its discretion to hold a hearing and not apply the doctrine of issue estoppel. I am satisfied that it appropriately considered whether to do so and did not err in law in considering and declining to exercise its discretion.
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[35] The Board described the purpose of this discretion with reference to the Supreme Court of Canada decision in Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44 (CanLII) at para 33: “The underlying purpose is to balance the public interest in the finality of litigation with the public interest in ensuring that justice is done on the facts of a particular case.”
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[39] The Board correctly identified the law of issue estoppel and applied the doctrine to the facts before it. The latter finding is arguably not an issue of law that can be appealed absent an error in principle. I am satisfied that the Board properly considered whether to exercise its discretion not to apply the doctrine and properly directed itself to the nature of the discretion. It made no error in doing so. I therefore would not give effect to this ground of appeal. . Manulife Ontario Property Inc. v. MPAC and Ottawa (City)
In Manulife Ontario Property Inc. v. MPAC and Ottawa (City) (Div Court, 2023) the Divisional Court considers (and dismisses) an appeal from a decision of "the Assessment Review Board ... which held it to be estopped from raising the issue of current value of its property".
In these quotes, the court illustrates a determination of 'current value assessment' (CVA), and appeals therefrom:[2] Municipal Property Assessment Corporation Region No. 3 (“MPAC”) is responsible for administering municipal property tax assessment of buildings throughout Ontario and assessing their current value for that purpose under s. 19(1) of the Assessment Act R.S.O. 1990, c. A. 31 (the “Act”).
[3] The Act defines “current value” as “in relation to land, the amount of money, the fee simple, if unencumbered, would realize if sold at arm’s length by a willing seller to a willing buyer.” The parties and these reasons use the acronym CVA for current value assessment, interchangeably with “current value.”
[4] In 2016, in furtherance of its responsibilities pursuant to the Act, MPAC assessed the current value of Manulife’s Ottawa office building at $23,555,000. Manulife appealed this assessment to the Assessment Review Board, as permitted by the Act.
[5] Under the Act properties are assessed each year based on their CVA at the beginning of a term of several years. In 2016, the applicable term was four years.
[6] In December of 2020, Manulife and the Municipal Property Assessment Corporation Region No. 3 (MPAC) signed minutes of settlement which agreed that the CVA of the office building was $20,067,000 as of January 1, 2016, the statutory valuation date. Their agreement fixed the CVA for the four-year property assessment cycle in 2016-2020. Manulife takes no issue with the application of that CVA for that period.
[7] In response to the COVID-19 pandemic, the government of Ontario extended by regulation the four-year cycle, such that the January 1, 2016 valuation date was extended to apply to assessments for 2021. Successive regulations extended the cycle through to 2024, meaning that the valuation date for all properties in Ontario continues to be January 1, 2016.1
[8] In 2021, MPAC adjusted the CVA of Manulife’s office building from $23,555,000 to $20,067,000, based on the minutes of settlement in which the parties had agreed to the CVA as of January 1, 2016.
[9] Manulife appealed the 2021 assessment to the Board, arguing that the current value was incorrect because it was inequitable compared to the assessment of similar properties in the vicinity, which had sold for significantly less than the current value. The Board deemed Manulife’s appeal to include the assessment for 2022 as well pursuant to s. 40(26).
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[20] The Board considered the Divisional Court’s decision in Wabi Iron & Steel which determined that although a taxpayer has a right to an annual appeal to seek to establish a new CVA based on considerations such as a change in the state or condition of the property, this does not prevent the operation of issue estoppel from applying to the CVA as of the valuation date.
[21] That annual right of appeal is afforded to the taxpayer by virtue of Section 44 of the Act. Pursuant to this section, the Board is directed by s. 44(3)(a) to determine the current value of the land and by s. 44(3)(b) to:(b) have reference to the value at which similar lands in the vicinity are assessed and adjust the assessment of the land to make it equitable with that of similar lands in the vicinity if such an adjustment would result in a reduction of the assessment of the land. ....
[24] As explained by this court in Municipal Property Assessment Corporation v Claireville Holdings Limited, 2022 ONSC 3293 (Div Ct) at para. 27, leave to appeal to CA granted April 12, 2023:Annual assessments are done so that changes in assessment can be made when there is a change in the state or condition of the property. If there is no change in the state or condition of the property, the assessed value would be expected to remain unchanged until current value is re-assessed for a new four-year cycle.
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