Reported as: 2018 SKCA 43
Docket Number: CACV 2867 , CA17154
Court: Court of Appeal
- Municipal Law � Assessment Appeals Committee � Appeal
- Statutes � Interpretation � Cities Act, Section 163, Section 165
Digest: The appellant appealed from the decision of the assessment appeals committee of the Saskatchewan Municipal Board of Revision. The appellant�s non-regulated commercial office building was assessed in 2014 using an income approach. The net rental income stream determined by the assessor was capitalized using a median capitalization rate of 8.6 percent. The rate was calculated using six sales, which included the sale of a one-third interest in an office building the title to which was registered to Saskatchewan Government Insurance (SGI), SaskPen Properties Ltd. (SaskPen) and HDL investments. The relationship was governed by a co-owners� agreement. SGI�s interest in the property was managed by Greystone, which was a major shareholder of SaskPen. Greystone and SaskPen had the same directors and shareholders. In 2009, SGI sold its interest in the building to SaskPen. The price was established by dividing the appraised value by three. The sale occurred without adhering to the terms of the co-owners� agreement. The assessor used this sale in determining the capitalization rate for the assessment. He checked the transfers of titles, conducted a corporate registry search of SGI and SaskPen and examined a copy of the building�s appraisal and of the agreement for purchase. He sent a sales valuation questionnaire (SVQ) to both SGI and SaskPen that requested whether the sale price had been affected by sales between family members. SGI indicated no and SaskPen did not return the form. The assessor concluded that the sale was arm�s length and included the purchase price multiplied by three to establish the capitalization rate and used it to determine the assessed value of the appellant�s properties. The appellant appealed its assessment to the board of revision claiming the assessor erred by including the SGI sale such that the Market Valuation Standard (MVS) had not been achieved. The board considered evidence from the CFO of SGI who testified that SGI had held no discussions with other investors and it and SaskPen agreed to select and rely upon an appraised value. No discount was included despite the fact it was a sale of a partial interest. A senior official of Greystone testified that the sale was considered to be an internal sale. It was noted that the SVQ did not provide an appropriate opportunity to disclose that it was a partial sale or its other characteristics. The assessor testified that he was aware that the sale was of a partial interest but that he had no information at the time of the assessment that it was a non-arm�s length transaction or that additional adjustments may have been required. After receiving further information about the sale though, he did not follow up because he believed it was a valid arm�s length sale. The board found that in light of the information that it had received, the sale was a non-arm�s length transaction between two corporate affiliates that were linked through Greystone and agreed with the appellant that the sale should be removed from the median capitalization rate calculation. In doing so, the MVS would have been achieved. The respondent, the City of Regina, appealed to the committee that then overturned the board�s decision and restored the assessor�s original assessment that included the sale. The committee concluded that the board had made a mistake by excluding the property sale because it had no evidence before it to conclude that SGI and SaskPen were corporate affiliates. The sale met the MVS because it was an arm�s length transaction, cash had been exchanged and the vendor and purchaser were independent and had relied upon a reasonable appraisal. The board should have been satisfied that the assessor exercised diligence and failed to acknowledge his discretion. The appellant appealed the committee�s decision, arguing that it erred by: 1) failing to apply the correct standard of review with respect to the board�s factual findings; 2) finding that whether a sale was arm�s length was within the reasonable discretion of the assessor as opposed to a question to be determined by the board based on the evidence before it; and 3) failing to identify and apply the correct legal test for determining an arm�s length sale.
HELD: The appeal was allowed. The committee�s decision was quashed and the board�s decision affirmed. The court found with respect to the issues that the committee erred: 1) in applying the correctness standard to the board�s decision when it appeared to reweigh the evidence and reach different factual conclusions. Based upon the Legislature�s intention regarding the role of the committee, the court held that the appropriate standard of review to be applied by the committee is reasonableness with respect to the board�s factual findings and to questions of mixed fact and law where...