The first part of this blog explored the tension that exists in exemption requests to the Assessment Review Board. The Board declines to decide some appeals dealing with the exemption of land from municipal taxation on the basis that it lacks jurisdiction, yet the Board regularly makes exemption determinations in other circumstances.
In this blog we will explore the reasons why the Board ought to have the power to make exemption determinations.
In Part 1, we summarized the case of Municipal Property Assessment Corporation Region 23 v North American Railway Hall of Fame, 2015 CanLII 43403 (ON ARB), which was upheld on review in North America Railway Hall of Fame v Municipal Property Assessment Corporation Region 23, 2016 CanLII 14708 (ON ARB). In determining that the Board lacked jurisdiction to determine the amount of space that was exempt from taxation, the Board’s review decision relied on three older cases of the Courts: Quance v. Thomas A. Ivey & Sons, Limited, 1950 CanLII 113 (ON CA), Toronto (City) v. Olympia Edward Recreation Club Ltd., 1955 CanLII 11 (SCC), and Re Downtown Churchworkers Association of the Anglican Church of Canada, Diocese of Toronto and Regional Assessment Commissioner, Region No. 07 et al., 1978 CanLII 2166 (ON SCDC).
Quance was an appeal by a greenhouse operator for an exemption from the business tax. The Court of Appeal reviewed a number of older cases which said that assessments that were illegal had to be declared so by the Superior Courts. The Court held that “it is well established by decisions of highest authority that jurisdiction to decide disputed questions of liability to assessment…was vested in the superior Courts of the Province, and not in the bodies having jurisdiction to hear assessment appeals under the provisions of The Assessment Act.”
Olympia was a case about whether the assessment tribunals could decide whether or not a bowling alley in a Toronto building was assessable. The first two tribunals had held that the bowling alley was exempt from municipal taxation and the Ontario Municipal Board and the Court of Appeal had held that there was no jurisdiction to decide that question. The Supreme Court of Canada issued seven sets of reasons and ultimately five of the nine judges found that there was no jurisdiction in the tribunals due to the historic constitutional role of the courts. The four dissenting judges found that the language of the Act permitted the tribunals to decide that question. The issue of the Board’s jurisdiction was far from clear even in 1955.
Finally, Downtown Churchworkers was a case where a charity sought an exemption from the assessment tribunals and Divisional Court held that there was no jurisdiction in the tribunals to make those decisions, relying on Quance and Olympia.
However, the legal framework in which the Assessment Review Board operates has changed considerably since those decisions were released more than 40 years ago. Those cases held that the province could not delegate to the Board the exemption power because liability to taxation was a core of the powers of the Superior Courts.
Modern jurisprudence from the Supreme Court of Canada has held that the core protection of the Superior Courts is more limited. In Ontario v. Criminal Lawyers’ Association of Ontario, 2013 SCC 43 (CanLII), a majority of the Court held that constitutional protection of the power of the Superior Courts could not justify setting the rate of pay for Court appointed counsel. The majority found that the doctrine of a court’s inherent jurisdiction does not operate without limits and, specifically, that “[s]uch inherent and implicit powers are subject to any statutory provisions and must be responsive to the separation of powers that exists among the various players in our constitutional order and the particular institutional capacities that have evolved from that separation”. That more limited modern view of the core power of the Courts suggests that if the legislature chose to give express exemption powers to the Board again, it is unlikely that the legislation would be struck down as it was in Olympia. It is our view that the judicial interpretation of previous, radically different, versions of the Assessment Act are not helpful in interpreting the modern Act.
The structure and powers of the Assessment Review Board have also changed drastically since those decisions. As we canvassed in Part 1 of this blog, the Board regularly makes exemption determinations including cases in which the Board is required to do so by the Legislature. It does not seem justifiable that the Board is empowered to make exemption decisions under the Municipal Act but would lack the jurisdiction to make that same decision under the Assessment Act.
The Board ought to have the power to determine exemptions because the current regime is convoluted and leads to some absurd situations. As noted in our first blog, there is a list of appeal grounds to the Board in subsection 40(1) and a general application to the Superior Court for other matters in section 46. Superior Court cannot hear matters that are listed in 40(1).
Suppose a taxpayer is issued an omitted or supplementary assessment under sections 33 or 34 of the Assessment Act and the taxpayer disputes both the value attributed by MPAC and that MPAC refuses to exempt a portion of the property from taxation. Under the current regime, the taxpayer could submit a request for reconsideration to MPAC on both issues pursuant to section 39.1 of the Assessment Act. But if MPAC disagrees on both points, the taxpayer would need to file an appeal to the Assessment Review Board about value, and a separate application to Superior Court on the exemption question.
This double expenditure does not seem to be justified, especially when parties before the Board can apply for leave to appeal to the Divisional Court on a question of law under section 43.1.
We do not see the policy rationale for giving MPAC both the power to make exemption determinations and review those determinations, but not give that power to the Assessment Review Board, which was established to provide oversight to MPAC’s actions. We also fail to see the policy for requiring taxpayers to seek remedies in two different forums that both relate to their municipal tax bill.
Perhaps an amendment to the Assessment Act to expressly include exemptions is what is needed. However, there are clear indications that older cases from higher courts are no longer applicable and that the current regime allows the Board to make exemption determinations. Although there is a possibility that the Board decides an exemption matter, parties should probably bring their exemption applications to the Superior Court.
NextGenLaw LLP regularly represents clients in Superior Court on applications for exemption from municipal taxation. We can help you determine if a particular property or organization is suitable for exemption. Contact us today.