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What (a) Burden?!
Under the scheme of the Assessment Act (the “Act”), MPAC has the obligation to determine the current value of properties in Ontario. Subsection 19(1) states that the assessment of land shall be based on its current value.
Any person may appeal their assessment to the Assessment Review Board (the “Board”) pursuant to subsection 40(1) of the Act on the specific grounds listed in that subsection, including that the current value of the person’s land is incorrect.
In an appeal before the Board, where current value is contested, the Board is required by subsection 44(3) of the Act to determine the correct current value of the land.
However, where value is a ground of appeal, subsection 40(17) of the Act places the burden of proof as to the correctness of the current value of land on the Municipal Property Assessment Corporation (MPAC).
What happens when the Board does not have sufficient evidence to determine current value?
That is the dilemma that the Board attempted to address in the companion decisions of Jay Patry Enterprises Inc. v Municipal Property Assessment Corporation, Region 05, 2018 CanLII 70338 (ON ARB) (“Jay Patry”) and Zarichansky v Municipal Property Assessment Corporation, Region 2, 2018 CanLII 70341 (ON ARB) (“Zarichansky ARB”). We should be clear that both partners of NextGenLaw LLP are former Members of the Board and authored both decisions.
In those decisions, the Board held that when it had sufficient evidence from either MPAC or the taxpayer, it determined the current value (see Jay Patry). When the Board did not have sufficient evidence before it, the Board attempted to set out a framework that resulted in a predictable consequence for MPAC failing to meet its burden. The Board stated that, in those circumstances where there was insufficient evidence to determine current value, a fair consequence for MPAC failing to meet its statutory burden would be to reduce the assessment to the last uncontested assessment of the property.
MPAC sought leave to appeal Zarichansky ARB, which was granted, and the appeal was heard by a panel of the Divisional Court. In Municipal Property Assessment Corporation v. Zarichansky, 2020 ONSC 1124 (CanLII) (“Zarichansky”), the Divisional Court held, at paragraph 41, that the provisions of the Act “make clear that an assessment must be based on the current value of the property. The Board has no power to dodge this responsibility based on a finding that MPAC has not met its burden of proof.”
The Board in Zarichansky ARB was attempting to find a resolution to an appeal for which it had insufficient evidence to perform its statutory mandate of determining current value. The Divisional Court held “It is evident that the Board’s decision in Patry Enterprises was a response to frustration with MPAC’s inadequate evidence. However, the Board’s solution to this problem is not authorized by the statute. Ultimately, the Board has no authority to fix the value of a property at an amount that it knows does not represent the ‘current value’.”
The Board in Zarichansky ARB was attempting to provide meaning to both its requirement to determine current value, in subsection 44(3), and to MPAC having the burden of proof in subsection 40(17). The history and policy reasons for imposing a statutory burden on MPAC are important and will be the subject of our next blog.
Generally, when a party has a statutory or other legal burden, and that burden is not met, that party loses. Indeed, months before the Divisional Court released its decision in Zarichansky, Justice Myers of the Superior Court proposed how burden works under the Act in Li v. Municipal Property Assessment Corporation, 2019 ONSC 5393 (CanLII). In that case, a self-represented party was incorrectly alleging that the Board improperly placed the burden of proof on him because it accepted MPAC’s comparable sales and rejected his comparable sales. However, in addressing this argument, Justice Myers stated: “If the Board can determine a value on the balance of probabilities based on evidence before it that it accepts, then the burden of proof never comes into play. If, however, the evidence is inconclusive and the board is unable to say that a particular value has been proven, then the party with the legal burden to prove the value, in this case MPAC, will lose.”
That is the framework that the Board in Zarichansky ARB attempted to establish.
The problem with the scheme under the Act, is what does “lose” mean? When a party fails to meet its burden in a civil case, it loses on that issue and either its defence fails, or its claim is dismissed. When the prosecution fails to discharge its burden in a criminal case, the prosecution loses, and the accused does not go to jail. Before the Board, if MPAC does not meet its burden, MPAC losing should have some meaning that affects the outcome of a case.
The Divisional Court in Zarichansky did not prescribe what should be done in all circumstances where MPAC has failed to meet its burden. At paragraph 44, the Court states three possibilities: “There may be cases in which it is appropriate for the Board to require MPAC to obtain additional evidence. There may be cases in which the taxpayer’s evidence is sufficient to assess the current value of the property. And there may be cases in which the Board can find that the previous assessed value is justifiably the current value.”
The last two solutions involve situations in which the Board has sufficient evidence to determine a current value and so those situations will not cause the Board difficulty. The first proposed solution gives MPAC, one of three statutory parties, a second chance to satisfy its burden of proving current value. This solution has caused an issue before the Board, and is generally unfair, and will be the subject of another blog in this series.
The effect of the Divisional Court’s decision in Zarichansky is that the role of subsection 40(17) of the Act remains unclear. MPAC losing means that the Board must expend its resources giving MPAC a second chance at proving current value or is left with determining current value with insufficient evidence.
Paul Daly, respected author and professor of administrative law at the University of Ottawa, has commented about the Divisional Court’s Zarichansky decision in his article One Year of Vavilov. Professor Daly writes:
[I]n Municipal Property Assessment Corporation v Zarichansky, Favreau J did not consider in detail the Ontario Assessment Board’s rationale for taking a pro-ratepayer view in situations where MPAC (which assesses properties in Ontario for the purposes of calculating municipal property taxes) has failed to discharge its burden of proof. Rather, Favreau J insisted (on correctness review) that the Board was bound by the terms of its governing statute: my cursory review of the Board’s jurisprudence suggests, however, that it had provided a reasoned basis for its approach; there is little consideration by Favreau J of whether his approach will create difficulties for the Board, MPAC and ratepayers in future cases.
Cases from the Board have shown that the framework in Zarichansky is difficult to work with. This blog forms part of a series of blogs that will look at issues surrounding burden including a review of some cases where insufficient evidence has clashed with an obligation to determine value in every case. In our next blog, we will look at the historical and policy reasons for imposing the burden of proving current value on MPAC.