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NextGenLaw LLP successfully obtained leave from the Divisional Court to appeal from several related decisions of the Assessment Review Board (the “Board”) in 10198447 Canada Inc. v. Municipal Property Assessment Corporation, 2022 ONSC 6807 (CanLII), (the “Leave Decision”). There is a complex procedural history and background to this case, but this blog concentrates on the main legal issue raised in that appeal. The appeal was eventually resolved on consent, setting aside all Board decisions below.
The case concerned the application of section 4.1 of the Statutory Powers Procedure Act, RSO 1990, c S.22 (the “SPPA”) to Board processes. Section 4.1 of the SPPA states: “If the parties consent, a proceeding may be disposed of by a decision of the tribunal given without a hearing, unless another Act or a regulation that applies to the proceeding provides otherwise.”
The only relevant act or regulation that applies to disposing of a Board proceeding without a hearing is the Assessment Review Board Act, RSO 1990, c A.32. Under section 8.2 of the Assessment Review Board Act, the Legislature has specifically contemplated the limited circumstances in which section 4.1 of the SPPA does not apply to the Board. Those circumstances are set out in subsection 8.2(1) and are limited to dismissal motions for a complaint or an appeal that:
- the Board is of the opinion that the proceeding is frivolous or vexatious, is commenced in bad faith or is commenced only for the purpose of delay;
- the Board is of the opinion that the reasons set out in the complaint or appeal do not disclose any apparent statutory ground on which the Board can make a decision; or
- the complainant or appellant has not responded to a request by the Board for further information within the time specified by the Board.
Subsection 8.2(4) states that “Despite the Statutory Powers Procedure Act, the Board may dismiss a complaint or appeal in accordance with this section after holding a hearing or without holding a hearing, as the Board considers appropriate.”
In this case, the Board issued a “consent decision” under then Rule 39 of the Board’s Rules of Practice and Procedure (the “Rules”) based on minutes of settlement signed by MPAC and the City of Ottawa. Therefore, section 8.2 of the Assessment Review Board Act had no application.
The minutes of settlement were entered into without the taxpayer’s consent, yet the Board disposed of the proceeding “on consent” without a hearing, relying on Rule 39. This resulted in a Board decision that purported to change the assessed value of the property from $4,469,000 to $7,350,000 for the 2018, 2019 and 2020 tax years.
Section 4.1 states that the Board requires the consent of all parties to dispose of a proceeding without a hearing. NextGenLaw LLP argued that Rule 39, in effect at the time, was inconsistent with section 4.1 of the SPPA, and contrary to section 25.1(3) of the SPPA, which requires rules to be consistent with the SPPA.
Rule 39 stated: “A party that does not serve a statement of response in a general proceeding on or before the day set out in the schedule of events is deemed not to oppose any future settlement in that proceeding.”
The current Rule 60 is substantially similar, stating: “A party that does not serve a Statement of Response on or before the day set out in the Schedule of Events is deemed not to oppose any future settlement in that proceeding.”
At paragraph 43 of the Leave Decision, Justice Muszynski found “a potential conflict between ARB Rule 39 and s. 4.1 of the SPPA.” The Divisional Court was satisfied that there was reason to doubt the correctness of the Board’s findings that Rule 39 permitted disposition without a hearing without the consent of all parties. Leave was granted on that issue, but because the appeal resolved on consent, there is no decision from a full panel of Divisional Court. The appeal raised legitimate concerns about the Board’s practice around non-participating parties.
Before the Leave Decision, the Board reviewed the decision based on MPAC’s and the City of Ottawa’s consent twice. First, a paralegal sought a review, which was summarily dismissed by the Board Registrar. NextGenLaw LLP was then retained and applied for leave to appeal those decisions, after which the Board elected to review its original decision and the first review decision “on its own initiative.”
In that Second Review Decision (10198447 Canada Inc. v Municipal Property Assessment Corporation, Region 03, 2022 CanLII 3379 (ON ARB)), at paragraph 99, the Board held that section 4.1 of the SPPA, and the requirement for all parties’ consent, was “not the issue in this case”. The Board held that the “issue is whether the Board’s Rules can dispense with the required consent. In this regard, the Board notes that s. 4.1 of the SPPA is silent on this issue.”
However, subsection 25.1(3) of the SPPA states that the Board’s Rules shall be consistent with that Act. Deeming consent for the purposes of disposing of a proceeding is not consistent with the requirement in section 4.1 of the SPPA that proceedings only be disposed of without a hearing if all parties consent.
Is the Board in error in processing minutes of settlement that are not agreed to by all parties? While the Leave Decision does not firmly conclude that the Board is in error, it does indicate that there is a serious issue in light of section 4.1 of the SPPA. The consent order of Divisional Court, which was in fact consented to by all parties, setting aside the Board’s decisions also indicates that there may be an issue with the Board’s reasoning.
This is a powerful ground to raise when a responding party misses the response deadline in a Board proceeding and minutes of settlement are signed without that party’s consent.
The Leave Decision also found, at paragraph 56, that the SPPA issue overlapped with the question “Should default proceedings consider the merits of the case?” The Applicant argued that the Board was effectively applying a process like Superior Court set aside motions and the Board itself drew that analogy in the Second Review Decision, starting at paragraph 100.
Set aside proceedings in Superior Court are, at their core, concerned with the merits. The Court of Appeal stated in Nobosoft Corporation v. No Borders, Inc., 2007 ONCA 444 (CanLII), at paragraph 7: “It is not in the interests of justice to strike pleadings or grant judgments based solely on technical defaults. Rather, the Court will always strive to see that issues between litigants are resolved on their merits whenever that can be done with fairness to the parties.”
The importance of the merits of a case at the tribunal level in Ontario is codified in section 2 of the SPPA: “This Act, and any rule made by a tribunal… shall be liberally construed to secure the just, most expeditious and cost-effective determination of every proceeding on its merits” [emphasis added].
What is concerning is that the Board’s Rules, enacted pursuant to the SPPA, state at Rule 4 that “these Rules shall be liberally interpreted to ensure the just, most expeditious and least expensive determination of every proceeding.” The Rules do not include a consideration of the merits.
The Board refused to consider the merits of the Applicant’s appeals in its various decisions.
The most just and efficient outcome here would have been for the Board to set aside the decisions for the 2018 and 2019 tax years once it found that a timely appeal had been filed for the 2020 tax year. Under the scheme of the Assessment Act, RSO 1990, c A.31, the same issue arises in each of the 2017 through 2023 tax years: what is the likely sale value of the property on January 1, 2016?
Setting aside the decisions, with the live 2020 appeal, would mean that those 2018 and 2019 tax years would be dealt with in the same way as the 2020 and future year appeals. That is how practice generally proceeds before the Board: all appeals with the same statutory valuation date are processed together. That would not prejudice the City or MPAC, who could argue the merits of those appeals at the same time as they were obligated to argue the merits of the 2020 appeal.
However, the Board did not consider the merits. The Leave Decision found that was an issue that could be considered on appeal.
As mentioned above, before the Board’s decisions could be reviewed by a full panel of the Divisional Court on appeal, MPAC and the City of Ottawa consented to an order setting aside all of the Board’s decisions below. MPAC and the City of Ottawa also agreed to lower the assessed value of the property to $5,200,000, the same value that the parties agreed to for the 2020 and subsequent tax years. A copy of the Divisional Court order can be found here.
It is noteworthy that MPAC and the City of Ottawa agreed on a value of $7,350,000 without the consent of the taxpayer. After NextGenLaw became involved, all parties agreed to a value of $5,200,000, more than a $2,000,000 reduction in assessed value.
Do you have a tricky property tax issue? NextGenLaw LLP can help.