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Under the Assessment Act, the Municipal Property Assessment Corporation (MPAC) is responsible for determining the current value of properties in Ontario.
Property owners have the right to appeal their assessment to the Assessment Review Board (ARB) if they believe that the value is incorrect.
But an important legal question arises in these appeals:
Who has the burden of proving the correct value, and what happens if that burden is not met?
MPAC’s Role in Determining Current Value
Subsection 19(1) of the Assessment Act requires that property assessments be based on current value, which generally reflects market value.
When an appeal is filed under subsection 40(1), the Board must determine whether that value is correct.
Under subsection 44(3), the ARB is required to determine the correct current value of the property as part of its decision.
MPAC Bears the Burden of Proof
In appeals where the current value is disputed, subsection 40(17) places the burden of proof on MPAC.
This means that MPAC must establish that its assessment reflects the property's current value.
What Happens When There Is Not Enough Evidence?
A key challenge arises when the Board lacks sufficient evidence to determine the current value.
In most legal contexts, if a party with the burden of proof fails to meet that burden, that party loses the issue.
However, property tax appeals raise a unique problem:
The Board is still required by law to determine the current value, even when the evidence is incomplete.
The Jay Patry and Zarichansky (ARB) Decisions
The Assessment Review Board addressed this issue in:
- Jay Patry Enterprises Inc. v MPAC
- Zarichansky v MPAC (ARB)
In those decisions, the Board attempted to create a practical solution.
Where there was insufficient evidence to determine the current value, the Board held that a fair consequence of MPAC failing to meet its burden would be to:
Reduce the assessment to the last uncontested value of the property
This approach aimed to give meaning to MPAC’s statutory burden of proof.
The Divisional Court Rejects This Approach
MPAC appealed the Zarichansky (ARB) decision to the Divisional Court.
In MPAC v Zarichansky (2020), the Court held that:
- The Board must determine the current value in every case, and
- It cannot assign a value it knows is incorrect, even if MPAC fails to meet its burden
The Court concluded that the Board’s approach was not authorized by the statute.
The Tension Between Burden of Proof and Statutory Duty
The Board’s approach in Zarichansky (ARB) attempted to reconcile two competing obligations:
- MPAC has the burden of proving current value, and
- The Board must always determine the current value
The Divisional Court’s decision makes it clear that the duty to determine value takes priority, even if MPAC’s evidence is insufficient.
How Courts Have Interpreted “Burden of Proof”
In Li v MPAC, the Ontario Superior Court explained how the burden of proof operates in this context:
- If the Board can determine a value based on accepted evidence, the burden does not matter
- If the evidence is inconclusive, the party with the burden (MPAC) would normally lose
This reflects the standard approach to burden of proof in most legal proceedings.
What Does It Mean for MPAC to “Lose”?
This raises a fundamental question:
What does it actually mean for MPAC to lose if it fails to meet its burden?
In typical legal proceedings:
- A plaintiff’s claim may be dismissed
- A defendant’s position may fail
- In criminal law, the accused is acquitted
But before the Assessment Review Board, the outcome is less clear because the Board must still assign a value to the property.
The Divisional Court’s Proposed Solutions
The Divisional Court in Zarichansky suggested several possible approaches:
- The Board may require MPAC to produce additional evidence
- The Board may rely on the taxpayer’s evidence if sufficient
- The Board may determine that the previous assessment reflects the current value, if justified
Only the first option raises concern, as it effectively gives MPAC a second opportunity to meet its burden.
Ongoing Uncertainty in ARB Decisions
Following Zarichansky, the role of subsection 40(17) remains unclear.
If MPAC fails to meet its burden, the Board may still be required to:
- Proceed with limited evidence, or
- Allow MPAC additional time to strengthen its case
This creates uncertainty for taxpayers and raises questions about fairness in the appeal process.
Academic Commentary on the Zarichansky Decision
Legal scholars have also commented on the implications of the decision.
Professor Paul Daly of the University of Ottawa noted that the Divisional Court focused heavily on the statutory requirement to determine value, while giving limited consideration to the practical challenges faced by the Board and taxpayers.
This highlights the broader tension between legal interpretation and practical application in property tax appeals.
The Ongoing Debate Around Burden of Proof
The interaction between:
- MPAC’s burden of proof, and
- The Board’s obligation to determine the current value
continues to be a developing area of law.
This post is part of a broader discussion on how these issues affect property tax appeals in Ontario.
Legal Guidance for Property Assessment Appeals
Appeals before the Assessment Review Board often involve complex legal and evidentiary issues, including questions about burden of proof and valuation methodology.
NextGenLaw LLP has experience representing clients in property tax disputes and Assessment Review Board proceedings.
Contact NextGenLaw LLP to discuss your property assessment appeal.