The Divisional Court in Municipal Property Assessment Corporation v. Zarichansky, 2020 ONSC 1124 (CanLII) stated that the Board must determine current value. For those instances in which the Assessment Review Board (the “Board”) has insufficient evidence to determine current value, the Divisional Court suggested one possible solution at paragraph 44: “There may be cases in which it is appropriate for the Board to require MPAC to obtain additional evidence.” In this blog, we take a deeper look at that proposed solution.
The first thing to explore is the unfairness of such a solution as it pertains to taxpayers before the Board. The Board’s Rules of Practice and Procedure (“Rules”) provide a process for framing the issues and disclosing evidence. Parties are expected to follow those Rules and present their best case. Allowing MPAC to try again when it has failed to discharge its burden makes subsection 40(17) difficult to put into effect.
Further, a taxpayer appellant who fails to bring sufficient evidence before the Board is not allowed to request a second hearing after bringing better evidence. It is not fair to allow MPAC to have a second kick at the can while denying taxpayers that same opportunity, especially when the Legislature has determined that MPAC bears the burden of proving current value.
Asking the parties to return before the Board with sufficient evidence to determine current value also uses up valuable resources and does not provide finality to litigation. The Board is required to spend further resources scheduling and conducting a second hearing because parties failed to provide sufficient evidence to determine current value.
The problems with this approach to dealing with MPAC’s failure to meet its burden are readily apparent in the Board’s decisions in McLachlan v Municipal Property Assessment Corporation, Region 04, 2021 CanLII 22014 (ON ARB) (“McLachlan 1”) and McLachlan v Municipal Property Assessment Corporation, Region 04, 2021 CanLII 51701 (ON ARB) (“McLachlan 2”).
In McLachlan 1, the Board was tasked with determining the current value of a property that MPAC determined was waterfront but that the taxpayer said was not. In detailed reasons, the Board found that MPAC incorrectly assessed the property as a waterfront property. The Board further found that the evidence was insufficient for the Board to make a determination on the correct current value of the property.
Following one of the Divisional Court’s solutions proposed in Zarichansky, the Board adjourned the hearing to allow the parties to provide additional evidence. The Board directed the parties, at paragraph 28, “to submit any additional evidence in support of their comparable sale analysis, where the properties are not waterfront properties.” [emphasis added]
The Board released McLachlan 2 after receiving further evidence and submissions from the parties. However, in McLachlan 2, MPAC submitted that it disagreed with the Board’s decision in McLachlan 1 and presented five proposed comparable waterfront properties. Essentially, MPAC ignored the finding and direction in McLachlan 1 and continued valuing the property as a waterfront property.
In McLachlan 2, MPAC testified that it had assessed similar properties as waterfront but MPAC did not present any corroborating evidence such as comparable sales to support its testimony. The Board again found that the property was not waterfront, after considering MPAC’s comparable properties and submissions.
The taxpayer submitted sales of non-waterfront properties in McLachlan 2. MPAC also presented sales of non-waterfront properties in compliance with McLachlan 1, however MPAC maintained that those properties “are not comparable to the Subject Property and should not be used to determine the current value of the Subject Property”. The Board determined current value based on two properties submitted by both the taxpayer and MPAC.
MPAC did not appeal McLachlan 1 and yet it did not follow the Board’s clear direction that the property is not waterfront. MPAC thought it was acceptable to ignore McLachlan 1 and attempt to relitigate the same issue that was decided in McLachlan 1. This is not only unfair to the taxpayer but a clear waste of resources. The Board had to consider and release decisions dealing with the waterfront issue twice. Second chances on the merits are not generally granted in litigation, and with good reason. That is not a fair solution to MPAC failing to meet its burden of proving current value.