Municipal Property Assessment Corp. et al. v. BCE Place Ltd. et al., 2010 ONCA 672

• Judge: Rosenberg, Armstrong and Juriansz, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: June 07, 2010
• Jurisdiction: Ontario
• Citations: 2010 ONCA 672;(2010), 268 O.A.C. 258 (CA)

Municipal Prop. v. BCE Place Ltd. (2010), 268 O.A.C. 258 (CA)

MLB headnote and full text

Temp. Cite: [2010] O.A.C. TBEd. OC.022

BCE Place Limited, 1225209 Ontario Limited, National Trust Company, Scotia Realty Limited, First Place Tower Inc., Toronto Dominion Centre, 200 Bay Holding Inc. (appellants) v. Municipal Property Assessment Corporation and City of Toronto (respondents) and Atikokan, Brank, Ear Falls, Goderich, Lambton, Lincoln, Ottawa, Quinte West, Red Lake, Sarnia, South Bruce Peninsula and Windsor (intervenors)

(C51420; 2010 ONCA 672)

Indexed As: Municipal Property Assessment Corp. et al. v. BCE Place Ltd. et al.

Ontario Court of Appeal

Rosenberg, Armstrong and Juriansz, JJ.A.

October 15, 2010.

Summary:

The Municipal Property Assessment Corp. (MPAC) assessed the combined "current value" of six large office complexes in Toronto owned by the Bank Towers (the owners) at almost $5 billion for each of the applicable taxation years. The owners complained that the assessments were too high. The Ontario Assessment Review Board issued an interim decision after it made a final determination on the interpretation of "current value" in s. 1 of the Assessment Act, and particularly the phrase "fee simple, if unencumbered". The Board agreed with the owners' interpretation that a property be assessed as though vacant because commercial leases were always encumbrances, and adopted a valuation methodology based on that interpretation. Both the MPAC and the City of Toronto sought leave to appeal the interim decision.

The Ontario Divisional Court, per Karakatsanis, J., in a decision reported at [2008] O.A.C. Uned. 59, granted leave to appeal on the question whether the Board erred in law in construing the definition of "current value".

The Ontario Divisional Court, in a decision reported at (2009), 253 O.A.C. 28, allowed the appeal. The matter was to be returned to a differently constituted panel of the Board. The Board's interpretation was wrong in law. It did not comply with the legislated text as interpreted in the jurisprudence, and was predicated on valuing the interest of the owner when it was the value of the land that was to be assessed. Nor was the interpretation reasonable or just. The owners appealed.

The Ontario Court of Appeal agreed with the Divisional Court's interpretation of the legislation. The court, however, saw no reason for returning the case to a differently-constituted panel of the Board. Accordingly, the court allowed the appeal only to the extent that the matter be returned to the same panel. In the result, the office towers were to be assessed in accordance with the income approach using market rents and allowing for only a normal vacancy rate.

Administrative Law - Topic 6166

Judicial review - Statutory appeal - Grounds for review - Error of law - Interpretation of statute - [See Real Property Tax - Topic 7003 ].

Administrative Law - Topic 6207

Judicial review - Statutory appeal - Scope or standard of review - Question of law or jurisdiction - [See Real Property Tax - Topic 7003 ].

Municipal Law - Topic 2104

Municipal taxation or levies - General - Legislation - Interpretation - [See Real Property Tax - Topic 3505.2 ].

Real Property Tax - Topic 3505.2

Valuation - General principles - Meaning of "current value" - "Current value" was defined in the Assessment Act (Ont.) as follows: "'Current value' means, 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" - This appeal concerned the proper interpretation of the phrase "fee simple, if unencumbered", as applied to several large bank towers which were income-producing properties - The Divisional Court held that the purpose of the phrase was to arrive at a value calculated without reference to leases at other than market value - It was not, however, to be based on the wholly artificial notion that the buildings were vacant at the time of assessment - In the court's view, the 1997 amendments to the Act codified the dissent (Robins, J.A.) in Nesse Holdings (1986) (Ont. C.A.) - The Ontario Court of Appeal agreed - "The simple amendment instructs the assessor to ignore encumbrances, such as leases that are not at market rents. Where the income approach is taken, the assessor is ... to use market rents rather than actual rents. I do not agree that this minor amendment was intended to accomplish the much more radical task of instructing the assessor to assume that an income-producing property was vacant at the date of assessment" - The court also agreed that the decision in Carsons' Camp (2008) (Ont. C.A.) supported the view that what was to be assessed was the whole value of the land, including the value of market value leases - In the result, the office towers were to be assessed in accordance with the income approach using market rents and allowing for only a normal vacancy rate - See paragraphs 23 to 25.

Real Property Tax - Topic 3576

Valuation - Business property - Rental or income value - Effect of lease - [See Real Property Tax - Topic 3505.2 ].

Real Property Tax - Topic 3584

Valuation - Business property - Rental or income value - Vacancy rate - [See Real Property Tax - Topic 3505.2 ].

Real Property Tax - Topic 3904

Valuation - Particular business properties - Office buildings - [See Real Property Tax - Topic 3505.2 ].

Real Property Tax - Topic 7003

Assessment appeals (incl. complaints) - General principles - Scope of appeal or standard of review - The Ontario Assessment Review Board issued an interim decision after it made a final determination on the interpretation of "current value" in s. 1 of the Assessment Act, particularly the words "fee simple, if unencumbered" - The parties disputed the standard of review on the appeal - The Divisional Court held that the standard of review was correctness - The Ontario Court of Appeal agreed - "[T]he pre-Dunsmuir jurisprudence has already determined the standard of review in a satisfactory manner. In a series of cases, the Divisional Court has found that the standard of review on questions of law is correctness, even where the Board is interpreting its home statute ... And the Divisional Court reached the same conclusion in the post-Dunsmuir decision in Toronto (City) v. Wolf (2008) ... The Divisional Court pointed out in those cases the Board's decisions are not protected by a privative clause and that there is a statutory appeal with leave to the Divisional Court on questions of law ... The Board's own approach to the interpretation issue supports application of a standard of correctness. The Board did not apply any particular specialized expertise, but rather approached the question as would a court" - See paragraph 17.

Real Property Tax - Topic 7224

Assessment appeals (incl. complaints) - Grounds of appeal - Error of law - Method of valuation - [See Real Property Tax - Topic 3505.2 ].

Statutes - Topic 6146

Operation and effect - Effect on earlier statutes - Amendments - Change to the law - [See Real Property Tax - Topic 3505.2 ].

Words and Phrases

Current value - The Ontario Court of Appeal discussed the meaning of the definition of "current value" as found in s. 1 of the Assessment Act, R.S.O. 1990, c. A-31, and used in s. 19(1) of the Act.

Words and Phrases

Fee simple, if unencumbered - The Ontario Court of Appeal discussed the effect of the phrase "fee simple, if unencumbered" as found in the definition of "current value" in s. 1 of the Assessment Act, R.S.O. 1990, c. A-31.

Cases Noticed:

Regional Assessment Commissioner, Region No. 11 v. Nesse Holdings Ltd. et al. (1986), 54 O.R.(2d) 437 (C.A.), consd. [para. 11].

Carsons' Camp Ltd. v. Municipal Property Assessment Corp. et al. (2008), 232 O.A.C. 297; 88 O.R.(3d) 741; 2008 ONCA 17, consd. [para. 11].

New Brunswick (Board of Management) v. Dunsmuir, [2008] 1 S.C.R. 190; 372 N.R. 1; 329 N.B.R.(2d) 1; 844 A.P.R. 1; 2008 SCC 9, appld. [para. 14].

Municipal Property Assessment Corp. v. Minto Developments Inc. (2003), 2 M.P.L.R.(4th) 89 (Ont. Div. Ct.), refd to. [para. 17].

1098748 Ontario Ltd. v. Ontario Property Assessment Corp., Region No. 11 et al. (2001), 143 O.A.C. 121 (Div. Ct.), refd to. [para. 17].

Toronto (City) v. Wolf et al. (2008), 241 O.A.C. 41 (Div. Ct.), refd to. [para. 17].

Cardinal Plaza Ltd. et al. v. Regional Assessment Commissioner, Region No. 19 and Hamilton (City) (1984), 7 O.A.C. 30; 49 O.R.(2d) 161 (C.A.), refd to. [para. 20].

Counsel:

Richard Poole and David G. Fleet, for the appellants, BCE Place Limited, 1225209 Ontario Limited, National Trust Company, Scotia Realty Limited and First Place Tower Inc.;

Jeff G. Cowan, for the appellant, Toronto Dominion Centre;

Phillip L. Sanford and Tara L. Piurko, for the appellant, 200 Bay Holding Inc.;

Susan L. Ungar, Terry Denison and Rodney Gill, for the respondent, City of Toronto;

Carl B. Davis and Donald G. Mitchell, for the respondent, Municipal Property Assessment Corporation;

John L. O'Kane, for the intervenor, Municipalities.

This appeal was heard on June 7, 2010, by Rosenberg, Armstrong and Juriansz, JJ.A., of the Ontario Court of Appeal. In reasons written by Rosenberg, J.A., the Court of Appeal released the following judgment on October 15, 2010.