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There are some risks that come with filing an appeal with the Ontario Assessment Review Board. Based on the Board’s recent jurisprudence, one risk is that an appellant may end up with a higher assessment at the end of the process, even if that appellant prefers to withdraw its appeal. This can take place if the evidence ends up showing that the likely value of the property is more than its current assessment.
In most litigation contexts the appealing party has the option of withdrawing their appeal if it appears that proceeding is no longer in that party’s interest. There are potential cost consequences to withdrawing in Superior Court, but the courts do not generally force a plaintiff to see through litigation that it no longer sees any merit in. That is not the case before the Board. A defendant in Superior Court can counterclaim against a plaintiff, however such a counterclaim must still be delivered within any limitations periods. Again, that does not seem to be the case before the Board.
The Board’s Rules of Practice and Procedure have provisions that greatly limit the ability of appellants to withdraw their appeal once a municipality or MPAC give notice of a higher assessment.
Rule 27 of the Board’s Rules states that:
27 An appellant may withdraw an appeal unless:
(a) another party has given notice pursuant to these Rules of its intention to request a higher assessment or higher tax rate property class; or
(b) a hearing has commenced.
Rule 29 provides that an appellant “may, by motion, request an order of the Board granting leave to withdraw an appeal.” So an appellant is required to continue with an appeal once a notice of higher assessment has been given, unless the Board grants permission to withdraw.
The Board has issued a series of recent decisions on the notice of higher assessment prohibition that make it seem that an appeal can never be withdrawn once a notice has been given. The Board has rejected all arguments that have been brought before it that permission to withdraw should be granted. It is not clear on what basis a taxpayer could withdraw an appeal once a notice of higher assessment has been given.
The most recent case addressing a motion to withdraw appeals is Grundel Investments Inc. v Municipal Property Assessment Corporation, Region 14, 2021 CanLII 34340 (ON ARB). The appeals there were of a commercial property with an assessment of approximately $10,000,0000. Through the appeal process both MPAC and the City gave notice that they thought the proper assessment was higher. The taxpayer brought a motion seeking leave to withdraw the appeals. While most of its arguments focused on the adequacy of the notice that the City sent, the taxpayer advanced two main arguments on why it should be given permission to withdraw under Rule 29.
First, it argued that if it is not permitted to withdraw when it does not want to proceed with its appeal, the effect is that the City gets to take over the appeal. The argument is, at its core, that it is unfair to let the City have an appeal that it did not file within the statutory time limit. The Board in Grundel rejected that “hijacking” argument, adopting the reasoning in Merivale-Gilmour Manor Ltd. v Municipal Property Assessment Corporation, Region 03, 2020 CanLII 28326 (ON ARB).
Merivale-Gilmour is an important case in the recent withdrawal jurisprudence of the Board. It primarily concerned the form a notice of higher assessment was required to take, with the Board saying the notice can be in a party’s pleadings. On the issue of hijacking an appeal, the Board in Merivale-Gilmour held that there was no issue because section 44(1) of the Assessment Act states that the whole assessment is open on appeal. This was in response to the taxpayer’s argument that the Rule requiring an appeal to continue was inconsistent with the Assessment Act because it effectively removed the limitation periods in the Act. The role that subsection 44(1) plays in the notice of higher assessment regime will be examined in a future blog.
The second main argument on leave to withdraw advanced in Grundel was that the balance of prejudice favoured permitting a withdrawal. The argument was that the City does not suffer any prejudice if the appeal is withdrawn because it chose not to appeal within the allotted time. On the other hand, the taxpayer potentially suffers a significant increase in its tax liability if the withdrawal is denied. The Board rejected that argument, saying, at paragraph 42, that “proceeding with an appeal to determine the correct current value of the Subject Property, in and of itself, does not constitute prejudice to any of the parties to the proceeding.”
There are two issues relating to withdrawals that we believe the Board has not yet provided guidance on. The first is the fundamental unfairness in how owners are treated when compared to other appealing parties, such as municipalities. Section 40(1) of the Assessment Act permits anyone to appeal an assessment. Generally, municipalities and other non-owners will appeal when they believe the assessed value is too low. Owners, on the other hand, will appeal when they believe the assessed value is too high. This fits with the tax goals of each party.
Rule 27 only prohibits the withdrawal of an appeal when notice is given that a party is seeking a higher assessment. If a municipality appeals, the counter argument to its position is evidence or notice that the correct assessment could be lower than the returned assessment. When that evidence comes to light there is no prohibition on the municipality to withdrawing the appeal to avoid that outcome and a taxpayer who did not appeal in time has no remedy. Thus, Rule 27 treats those seeking a lower assessment later in the process, generally owners, fundamentally differently from those seeking a higher assessment after the appeal deadline.
The second issue with the leave to withdraw decisions that we have seen to date is that they do not provide guidance on when leave to withdraw may be granted. In Grundel the Board notes, at para 32, that “Rule 29 does not provide any specific factors or criteria to be considered by the Board when deciding whether to grant leave to withdraw.”
The difficulty for appellants is not knowing what factors will be considered and under what circumstances, if any, the Board will grant a withdrawal under Rule 29 after a notice of higher assessment is given. From the latest Board jurisprudence, it appears that Rule 29 really has no application because an appellant has the right to withdraw under Rule 27 if no notice of higher assessment has been given.
Rule 29 sets out a process for seeking permission, which implies that that permission is capable of being granted. If there is no situation in which one can reasonably anticipate that leave will be granted, there is really no discretion. Discretion must be exercised on an individual basis. While decision makers may take into account guidelines, general policies and rules, or try to decide similar cases in a like manner, a decision maker cannot fetter its discretion in such a way that it mechanically or blindly makes the determination without analyzing the particulars of the case and the relevant criteria. For two examples in which appellate courts have overturned decisions because a decision maker “always” or “never” did something in a discretionary situation, see Canada (Attorney General) v. Georgian College of Applied Arts and Technology, 2003 FCA 199 (CanLII) and S. (M.) v. Alberta (Crimes Compensation Board), 1998 ABCA 138 (CanLII).
We hope that the Board will provide some guidance in future cases on what factors are relevant on a leave to withdraw motion or provide more cases in which leave is granted that future appellants can rely on.
We are a property tax litigation firm that will put forward the strongest arguments possible for you in every situation, including seeking leave to withdraw your appeal. Contact NextGenLaw LLP today to see how we can help.