Successful property tax appeals often hinge on assessment appeal decisions, frequently not broadly published, by the Assessment Appeal Court/Assessment Review Board. The Assessment Acts provide the framework for property tax assessment, including the basis for the assessed value. However there are many different methods of arriving at the assessed value itself. Property Tax Case Law is often useful for illuminating and resolving practical issues of valuation: ultimately the assessed value is simply an opinion, and there a many ways of skinning a cat (metaphorically speaking).
The various provincial Assessment Acts have much in common with each other. Assessment Appeal Case Law in one provincial jurisdiction is therefore often useful precedent for interpreting an Assessment Act in another province. The following property tax appeal cases are catalogued by province:
New Brunswick
March 2006:
New Brunswick Assessment and Planning Appeal Board
N.B. Publishing Company
210 Crown St., Saint John, N.B.
Closed Multi-storey printing plant
Synopsis:
This hearing arose as a result of appeals by the Appellant of its assessment for the 1999 and 2000 taxation years. The value for both years had been set by the Provincial assessing authorities at $2,041,400. The property involved was a purpose-built newspaper publishing facility, constructed in 1963. Since March of 1998, the printing function had been shut down, and at the valuation dates for the 1999 and 2000 assessment years, approximately 60% of the building (comprising the former printing plant) was dormant. The remainder was utilised for offices and distribution.
The hearing was conducted over sixteen days in June of 2003 and January, March, September and December of 2004. One-hundred and seventy-three exhibits were tendered.
Ultimately, the assessment was reduced to $1,702,000. There are a number of noteworthy points made by the Board in its 60-page decision:
The decision was not appealed by either party.
New Brunswick
June 2005:
Court of Appeal of New Brunswick
Food City Limited (now known as Sobey’s Land Holdings Limited)
River Road, Oromocto, N.B.
Inclusion of H.S.T. in Assessed Value
Synopsis:
Food City Limited challenged Service New Brunswick’s insistence that the Harmonised Sales Tax (H.S.T.), a value added tax, should be included in their calculation of the assessed value.
The New Brunswick Assessment Act requires that property be assessed at its market value on a “base date” (January 1st of the assessment year). Service New Brunswick (SNB) calculates the market value of some properties by computing their construction cost, deducting depreciation, and adding the result to the land value. This is a well established technique for ascertaining the value of “specialised property”; real estate that is often built by the occupier to fulfil a specific purpose such as a saw mill, oil refinery . or, as in this case, a large food distribution warehouse and supermarket. SNB uses the Boeckh costing system for this purpose. Even though they had used the Boeckh system since time immemorial they had not realised that the costs so generated, were inclusive of the H.S.T., a “pass through” tax similar to the G.S.T., but levied at 15% instead of 7%. This fact surfaced at the first level of appeal before the Assessment Planning and Appeal Board in 2003. The Board decision observed that “This rather startling revelation came to light when two local agents of the Respondent (Service New Brunswick) advised the Board they were unaware of this”. Once they discovered that their costing figures included H.S.T., SNB did a flip flop and decided that this was the way to go. Since property owners engaged exclusively in commercial activities are entitled to full Input Tax Credits for the H.S.T. they incur, the tax is a “wash”. The Board was plainly outraged by SNB’s tactics and called their policy of including the H.S.T. in the assessed value “an affront to common sense”. Service New Brunswick promptly appealed the Board’s decision.
The New Brunswick Court of Queens Bench heard SNB’s appeal on July 19th 2004. The Judge agreed with the Board and in dismissing Service New Brunswick’s appeal reiterated that “It would be an affront to common sense that the cost of an item could be increased by the amount of a local tax which is rebated to the payer, with an offset of one with the other”. Service New Brunswick’s Director of Assessment, Mr. William Morrison, was in court to hear the decision, which also awarded costs to the Respondent. SNB promptly appealed again, this time to the Court of Appeal of New Brunswick.
The New Brunswick Court of Appeal heard the case on April 26th 2005 and rendered judgement dismissing the appeal (with costs) on June 30th 2005. In its decision the Court noted that “the executive director relies heavily upon Montreal (City) v. Sun Life Assurance of Canada [1952] 2 D.L.R. 81, an oft-cited decision of the Judicial Committee of the Privy Council. In my respectful judgement, that reliance is ill-conceived. Indeed, I see the Board’s assessment as fully in synch with the principles articulated in Montreal (City) v. Sun Life Co. of Canada”.
Service New Brunswick reportedly seriously considered appealing the Court of Appeal’s decision to the Supreme Court of Canada … but then abandoned the idea, no doubt despairing that the world would ever adopt its view of common sense.
New Brunswick
June 2004:
New Brunswick Court of Appeal
Ganong Bros. Ltd.
1 Chocolate Drive, St. Stephen, N.B.
Confectionary and manufacturing Plant
Synopsis:
History of the Case
Ganong Bros. Ltd. appealed the 1993 and 1996 assessments on its candy manufacturing facility in St. Stephen New Brunswick to the New Brunswick Regional Assessment Review Board (now the New Brunswick Assessment and Planning Appeal Board). Ganong was successful in having the assessed value reduced from $5.9 million dollars, to $4.3 and $4.4 million for 1993 and 1996 respectively.
In reducing the assessments, the Board recognized that an allowance for external obsolescence was necessary in arriving at the Real and True Value. The plant had been constructed in 1991 with the financial assistance of both the federal and provincial governments. That assistance totalled almost 50% of the project cost, and it was Ganong’s argument that without it the facility would not have been constructed. With this in mind, Ganong maintained that the amount of the subsidies qualified as external obsolescence.
Armed with its 1993 and 1996 decisions, Ganong then sought a reduction in the 1997-2001 assessed values, which were at $5,900,000. The Director refused to vacate the assessments, and his decision was appealed to the Assessment and Planning Appeal Board. Ganong’s case to the Board rested in issue estoppel: that the 1997-2001 assessments were tied to the 1996 value, and that in the absence of “fresh and compelling evidence”, the subsequent years’ assessments should have been adjusted in accordance with the Board’s previous decision. After conducting a de novo hearing, the Board agreed. The Director successfully appealed, in turn, to the Court of Queen’s Bench, who quashed the Board’s decision and remitted the matter to the Board for reconsideration on the understanding that issue estoppel does not apply to property assessments.
The Decision
The Court remitted the matter back to the Review Board for reconsideration, ruling that it had in fact been presented with new evidence. In support, the Court noted that Ganong’s appraiser had placed a higher value on the property for the subsequent years and, to complicate matters, the Director’s appraiser had valued the property at an amount greater than that set out in the 1997-2001 Notices of Assessment.
In summary, the Court’s conclusions were as follows:
1. That issue estoppel may be invoked in property tax cases where: (1) two or more annual assessments reflect the same value; (2) the earlier assessment has been successfully appealed to the Appeal Board; and (3) the Director does not possess fresh and compelling evidence that would support the imposition of an assessed value greater than the one fixed by the Board on the earlier appeal
2. That government subsidies are a relevant consideration when assessing the market value of real property. The Court did not, however, accept the proposition that the amount of the subsidy should be deducted from the reproduction cost. It preferred the methodology of Ganong’s appraiser, who recognised that the subsidies were a relevant consideration, but arrived his estimated obsolescence from the market.
3. That the Appeal Board is not permitted to arrive at a property value greater than the amount set out in the Notice of Assessment. The Director, in Ganong, had produced an appraisal at the Board hearing in excess of the published assessment.
New Brunswick
May 2002:
New Brunswick Assessment Review Board
Royal Bank Realty Inc.
83-85 Charlotte St., Saint John, N.B.
Office Building
Synopsis:
Royal Bank Realty Inc. appealed a referral decision for the 1998 taxation year. The property the subject of this appeal, was the Royal Bank Building located in the central business district of Saint John. This 61,000 ft.² bank and office building was only four years old at the time of this 1998 appeal. The Royal Bank occupied 37% of the total rentable space and leased their area back to themselves at a market rent. Of the total 24 tenant suites in the building, the Royal Bank occupied six, another ten were vacant and the remainder were leased to five different tenants. The structure was in excellent physical condition and comprised Class A office space and a banking hall.
The Appeal Board reduced the assessment from $4,800,000 to $3,297,000; the most significant reasons for doing so being the following:
1. The Board focused almost entirely on the income (rent) producing ability of the property. Hardly surprising, this was after all investment grade real estate with a Grade A tenant occupying over one third of the space. However the Royal Bank was also the owner and past practice of the Provincial Assessment Authority, Service New Brunswick, had been to focus on the cost of creating a substitute building when the property was largely owner occupied. However in this instance, Service New Brunswick’s views coincided with the appellant and their case rested on the income generating ability of the property.
2. The Board rejected Service New Brunswick’s overall capitalisation rate of 9.5% and substituted 11.0% instead. (The overall capitalisation rate is divided into the annual net operating income to convert it into a capital value, i.e. the assessed value).
3. The Board recognised that tenant inducements, e.g. free rent, were a legitimate expense. They also appear to have accepted that the cost of (free) leaseholds have to be deducted from the cash flow … and then added back as a (depreciated) capital cost for assessment purposes.
4. The Board also accepted that a structural reserve allowance (effectively monies set aside for capital replacement) was a legitimate expense.
5. The Board rejected the rent paid by the Royal Bank to itself and substituted Service New Brunswick’s estimate of market rent.
6. The Board rejected the stabilised long term vacancy allowance tendered by the appellant and substituted instead the actual (greater) vacancy.
New Brunswick
December 2001:
New Brunswick Assessment Review Board
Small Fry Snack Foods Inc.
179 MacLean Ave., Hartland, N.B.
Potato chip and corn snack manufacturing plant
Synopsis:
Small Fry Snack Foods Inc. appealed referral decisions for the taxation years 1999, 2000 and 2001. Their property comprised a purpose built potato chip processing facility built in 1982, with an addition constructed in 1989. Demand for potato chips was such the plant ran 24 hours per day, six days per week. However the market for the plant’s product had shifted from Canada to the United States. The U.S. customers wanted their chips cooked in cottonseed, rather than canola oil, and this created a difficulty because there was room for only one fryer in the Cooker Room, thus requiring that the plant operate three shifts, instead of two. Service New Brunswick, the Provincial Assessment Authority, refused to recognise this deficiency in their assessment.
The Director of Assessment also argued that the vegetable oil storage tanks on the property were assessable because the building was a special purpose structure, and the tanks provided services to the building. In other words the building could not fulfil its designed purpose without the tanks, and as such the latter were assessable as “real estate”.
Both parties in the appeal were required to submit valuation reports. The Board dismissed Service New Brunswick’s report, noting that “this document (it is difficult to call it a report) was full of misinformation, partial information and error”.
The Board determined that, if in fact the vegetable oil storage tanks were part of an integrated system of a special purpose facility, they would indeed be assessable under the rationale set out by the New Brunswick Court of Appeal in the case Director of Assessment & Miramichi Pulp & Paper Inc. 1996 172 NBR (2d) 290. However the Board agreed with Turner Drake that the building was adaptable to more than one use, and that the tanks were part of the manufacturing process, and therefore were not assessable. They made an allowance calculated at 25% of the reproduction cost, to account for the functional deficiency caused by the single fryer constraint.
New Brunswick
November 2001:
New Brunswick Assessment Review Board
N.B. Publishing Company
210 Crown St., Saint John, N.B.
Multi-storey printing plant
Synopsis:
N.B. Publishing Co. appealed the 1998 referral decision reducing the assessment from $2,821,600 to $2,041,400. In essence the appellant’s case rested on the fact that the building was a special purpose property, erected around a huge printing press which had been declared redundant prior to the Assessment “base date”, even though it was still in use on that date. The Assessment Department had taken the position that, since the printing press was still in use on the base date, they could ignore its impending demise, even though it was well known prior to the base date that the printing press was going to be abandoned, and the printing process moved to Moncton.
N.B. Publishing Co. occupied a multi storey industrial building in Saint John constructed in 1963 specifically for the purpose of accommodating a printing press and the related services necessary to publish a newspaper. On November 11th, 1997 the newspaper made public its decision to transfer the printing to Moncton early in 1998. The newspaper was still in operation in the building on January 1st, 1998, the “base date” for valuation purposes for the 1998 assessment year, so the Provincial Assessor ignored the proposed plant closure and assessed the building as though it was not going to take place.
The Board ruled that, since it was known the closure was going to occur prior to the base date, the impact had to be reflected in the assessment. The Board plainly considered the Assessment Department’s position ludicrous and in tones of mounting incredulity observed that the Assessor “believes that the Assessment Act requires him to focus on conditions on January 1st, 1998 no matter what happens, no matter how catastrophic an event takes place on January 2nd, 1998 and, even if you know this event would happen in November of 1997”. The appeal was allowed.
New Brunswick
June 2001:
New Brunswick Assessment Review Board
Baxter Foods Limited
59-113 Millidge Ave., Saint John, N.B.
Dairy
Synopsis:
Baxter Foods Limited appealed a referral decision for the 2000 taxation year. The property the subject of this appeal comprised a dairy and ice cream plant built in different stages over the period 1930 to 1990. The plant was situated in a residential area and was surrounded by houses and a school. Due to the congested nature of the neighbourhood it was difficult to get large trucks in and out of the area, and loading areas. Because the plant had grown like topsy, it was functionally inadequate for its present use and operated at 40% to 60% capacity. In addition part of the plant was multi-storey, and some upper floors were not fully utilised. The plant had recently lost a major contract to supply a supermarket chain. Service New Brunswick, the Provincial Assessment Authority, refused to acknowledge that the functional deficiencies of the plant had a bearing on its assessment … or that the loss of business impacted adversely on the property value. Service New Brunswick argued that such factors were not relevant because they were “only doing a ‘bricks and mortar’ appraisal”.
The Board ruled that “a deduction from value should have been made because of the inefficiencies at the plant and the well-documented problems of unloading and loading at the plant”. They decreed that there should be an allowance (a deduction) of 25% from the Depreciated Cost for functional and economic obsolescence.
New Brunswick
May 2001:
New Brunswick Assessment Review Board
Lounsbury Company Ltd.
275 King Ave., Bathurst, N.B.
Retail store
Synopsis:
This was an appeal of the 1999 taxation year assessment. The land was improved with a four storey commercial building constructed in 1953, some upper floors of which were no longer used. From a retail use viewpoint, the multi-storey structure was obsolete. The owner occupier decided to close the store in 1998 and implemented that decision during 1999. The building was then extensively renovated and leased to N.B. Tel. as a call centre.
The base date for valuation purposes was January 1st 1999. At that point Lounsbury Company Ltd. had decided to close their store but had not communicated this information to the general public. The Board ruled that since Service New Brunswick’s assessor was not aware of the impending closure, it was not appropriate to reflect the fact in the assessment because there was “no compelling evidence of the property being abandoned or demolished by the Appellant as of January 1st, 1999”. The Board dismissed the appeal.
New Brunswick
May 2001:
New Brunswick Assessment Review Board
170754 Canada Inc.
1945 Miramichi Ave., Bathurst, N.B.
Automobile Dealership
Synopsis:
This was an appeal of a 2000 taxation year assessment. The property was improved with a single storey commercial building, erected in 1978, containing the offices, showroom and service area for a General Motors dealership. The premises no longer met GM’s image standards under their GM Image 2000 program and planning was underway to upgrade the building. The renovations were to be undertaken in 2001 at an anticipated cost of $400,000.
The Appellant argued that the proof of the functional obsolescence of the building lay in the significant changes and improvements required by the GM Image 2000 plan. Since a showroom, customer waiting room and drive through service area had to be added, they argued that the former building had significant deficiencies. The Board ruled that there was no evidence to link one with the other.
New Brunswick
March 1999:
New Brunswick Assessment Review Board
Noranda Inc.
Heath Steele, Northumberland County, N.B.
Lead-zinc concentrator mill
Synopsis:
This was an appeal of the 1994, 1995 and 1996 taxation year assessments. The property consisted of two parcels containing 906 acres and 839 acres, improved with a lead-zinc concentrator mill and an array of support facilities for a mine. The facility had been closed in 1984 due to depressed economic conditions and had re-opened again in 1987. An annual expenditure of $2.5 to $3.0 million was required in maintenance to ensure that the ‘B’ mine was de-watered and water treated, irrespective of whether the mine was operating. The mining operation was projected to terminate during the first quarter of 2000, at which point there would be no use for the lead-zinc concentrator mill unless other ore was found in the area. It was anticipated by the owner that the buildings would be torn down in 2001 at a cost of about $2.5 million.
The keys points of issue in this case were, (1) were the foundations for machinery and equipment assessable?, (2) should the estimated life of the ore body be taken into account when ascertaining the deprecation, and value, of the buildings? The Board’s decision essentially ignored the first question but did address the question of the ore body. They ruled that depreciation of the buildings had to be based on the buildings’ normal life, not upon the life of the ore body. The decision was appealed to the Court of Queen’s Bench of New Brunswick: they dismissed the appeal.
New Brunswick
December 1998:
New Brunswick Assessment Review Board
Ganong Brothers Limited
1 Chocolate Drive, St. Stephen, N.B.
Confectionery and Manufacturing Plant
Synopsis:
Ganong Brothers Limited argued that the 1993 and 1996 assessments of $5,868,400 and $5,875,700 were incorrect even though the property had been constructed in 1989 at a cost of $7,281,024. They relied instead upon their expert’s report which valued the property at $4,289,000 (1993) and $4,387,000 (1996). The Assessment Department relied instead on their own appraisals of $6,714,800 (1993) and $6,688,000 (1996).
The substantial divergence of opinion was for the most part, attributable to the “External Depreciation” of $3,361,066 (44.2%) identified in the appellant’s appraisal report. The property had been constructed with significant government funding, without which the appellant testified, the facility would not have been built.
The Board ruled that the subject of government funding was a relevant consideration as to whether (or not) the structure would have been erected (and at what cost), and that the appellant could not be considered as a purchaser at a price based upon the historic cost of the structure. The appeals were allowed.
New Brunswick
February 1998:
New Brunswick Assessment Review Board
Crystal Beverages (1993) Limited
220 Henri Dunant St., Moncton, N.B.
Soft drink bottling and distribution
Synopsis:
Crystal Beverages appealed the 1996 referral register decision confirming its assessment. In essence the appellant’s case hinged on the additional cost of operating the bottling plant due to, (1) inadequate parking and circulation space around the building, coupled with the poor siting of the building on the lot and, (2) inadequacy of the building, in particular the lack of warehousing space which forced the occupier to rent additional off-site storage. The Board allowed the appeal. The Assessment Department tried to discredit the appellant’s expert witness by referring to a “without prejudice” negotiating position presented by the latter prior to the Board hearing in an attempt to reach a settlement. The Board ruled that this tactic was “unwarranted”. The Board also ruled that “asking prices” had no evidentiary value.
New Brunswick
January 1996:
Court of Appeal of New Brunswick – 69/95/CA
Miramichi Pulp and Paper Inc.
Nelson-Miramichi, N.B.
Pulp Mill
Synopsis:
Under the New Brunswick Assessment Act, electrical power distribution systems fall within the definition of “real property” and are assessable. Machinery and equipment does not and is not … so electrical power systems whose sole purpose is to feed process machinery forms part of the equipment, not the real estate, right? Right! Well, sometimes. The Court of Appeal of New Brunswick cast some light on the vexing question of power wiring and its chameleon like qualities in this decision. Although the Appeal Court ruled that the power wiring was part of the real estate, and not the equipment, a careful reading of the decision reveals that this is the exception rather than the rule.
Miramichi Pulp and Paper Inc. operated a Groundwood pulp mill and sawmill in the former village of Nelson-Miramichi. The mill’s electrical system was substantial: “one 138,000 volt substation, one 6,900 volt substation, nine 600 volt substations, forty 600 volt load distribution centres, numerous circuit breaker distribution panels and disconnects and a network of cables located throughout the mill site. The major portion of the Electrical Distribution System is used to operate the Production Equipment at the mills, primarily the Groundwood mill. A small portion of the system is used to service the various buildings”. The portion of the network which provided services to the mill buildings themselves was not at issue, it was clearly assessable, the question of assessability focussed on the remainder of the electrical system since its primary purpose was to feed the processing equipment. The Appeal Court dismissed the Director of Assessment’s arguments that (1) “any electrical power distribution system” meant “all” such equipment, and (2) that the degree of annexation of the power systems made them indivisible from the real estate to which they were affixed. However, the Appeal Court did rule that the power wiring was part of the real estate and therefore assessable because the latter was a mill and unable to function as such without the wiring: “The electrical distribution system of Miramichi Pulp and Paper is part of the realty because it is necessary for the building to function as a mill.”
In essence this decision determines that electrical distribution systems are not assessable provided that their function is to power process machinery; unless the building which houses that process machinery is a special purpose building which could not fulfil its intended use without that electrical distribution system. In the latter event it is assessable.
New Brunswick
February 1995:
New Brunswick Assessment Review Board
Lodgers Riverfront Corp.
239 Woodstock Rd., Fredericton, N.B.
New, full service hotel
Synopsis:
This appeal was concerned with the sum at which the property of the appellant should be assessed for the 1992 taxation year, the base date for which was the 1st January 1992. The appellant appealed from a 1992 Referral Register Decision confirming the assessment at $13,262,200. The property at issue was a seven-storey Sheraton Inn constructed during 1991 at a total cost of $29,504,274. Commencement of operations was the 24th January 1992.
The appellant’s presentation included an expert’s report that valued the property at $6,865,000 utilising the Income Approach. The respondent argued that because no income stream was present at the base date, this approach was not relevant. The report filed in support of the assessment contained only the Cost Approach to value.
The Board ruled that a purchaser entering the marketplace on 1 January 1992 would consider the historical costs, but would also require accurate projections of income and expenses upon which to base their determination of value. The Board ruled that the purchase price would not be the cost price.
The appeal was allowed and the 1992 assessment was set at $6,865,000.
New Brunswick
November 1982:
Court of Queens Bench – Trial Division – S/C/1094/79
Chan Food Products Ltd.
Saint John Industrial Park, N.B.
Food Preparation
Synopsis:
Chan Food Products Limited sought a declaration from the Court that certain walk-in freezers and coolers were not assessable property. The plaintiff argued that the coolers represented structures other than buildings, or alternatively, installations, and in either case were not assessable under the Assessment Act. To support their case, the plaintiff presented evidence that the coolers and freezers could be disassembled, moved from their present location, and reassembled elsewhere. The Court ruled that the purpose of the coolers was to enhance the value of the premises, and that the physical affixing of the freezers and coolers, however minor, made them assessable under the Act.
New Brunswick
May 1978:
New Brunswick Supreme Court – Queens Bench Div. – Topic 1565
J.D. Irving Limited
Thorne Ave., Saint John, N.B.
Wholesale Food Distribution
Synopsis:
J.D. Irving Limited sought a declaration from the Court that a combination walk-in refrigerator/freezer was not assessable property. The Assessment Department argued that the unit, weighing 10,000 lbs., was placed in one spot with the intention that it remain there for the duration of its useful life. The Court ruled that the cooler/freezer unit was no different from a cooler/freezer unit that may be found in one’s home, despite its size, and that the degree of affixation of the unit was irrelevant in applying the exclusion rule. The Court declared that the cooler/freezer unit was not assessable property.
This decision is somewhat inconsistent with the “Chan Food Products Ltd.” case.
Nova Scotia
June 2023:
Nova Scotia Utility and Review Board
Rank Incorporated
9 Washmill Lake Drive, Halifax, and 50 Highfield Park Drive, Dartmouth, N.S.
Jurisdiction of NSAAT to Order Disclosure of Information
Synopsis:
(1) This case was about the jurisdiction of the Nova Scotia Assessment Appeals Tribunal (NSAAT) to order disclosure of information in the custody of the Director of Assessment (Director). Rank Incorporated (Rank), the Respondent in the proceeding before the Board, retained Giselle Kakamousias, B.Comm., DULE, MRICS, AACI, Vice-President, Property Tax Division, Turner Drake & Partners Limited, as an expert to assist in the company’s two commercial property assessment appeals before the NSAAT. Ms. Kakamousias requested information from the Director to assist in her preparation for the appeals. Ultimately, when the parties appeared before the NSAAT, the only outstanding disclosure issue was capitalization rates for sold properties derived by the Director from actual financial information supplied by third parties. This information had been redacted from the Director’s annual Commercial Public Distribution Summary (CPDS).
(2) The NSAAT ordered disclosure of the redacted information pursuant to s.53(8) of the Assessment Act, R.S.N.S. 1989, c. 23 which says the NSAAT “…may require such disclosure and production of documents as is necessary to hear an appeal.” The Director appealed this decision to the Board on the basis that the redactions related to commercial information that was supplied in confidence.
(3) The Director says the release of the information may result in property owners refusing to supply similar information in the future. The Director says the information is not “necessary” for Rank to present its case. The Director seeks to protect the information from disclosure using principles analogous to those found in the Freedom of Information and Protection of Privacy Act, S.N.S.1993, c.5 (FOIPOP) and mirror provisions in the Municipal Government Act, S.N.S. 1998, c.18 (MGA), pointing to a previous NSAAT decision where a similar type of argument was accepted.
(4) The Director contrasts the Assessment Act with restrictions and procedures found in similar legislation in other jurisdictions, as well as the procedures addressing confidential commercial information in the Board Regulatory Rules.
(5) Rank says the information is relevant and necessary for Ms. Kakamousias to prepare her report on the market value of the two commercial properties. Rank further says this is not a FOIPOP application and the analogies advanced by the Director are not relevant and do not support the Director’s position. Rank further relies on s.87A of the Assessment Act, which prohibits the disclosure of personal information without consent unless “…the information was directly used by the Director…or is relevant to determine the assessment of the property to which the appeal relates.” The NSAAT found this provision was not applicable.
The Decision
In ruling in favour of Rank, the Board decision was as follows:
The Board relies on s. 53(8) of the Assessment Act and finds that the redacted information is necessary for Rank to properly present its case. The Board acknowledges the importance placed on the protection of sensitive, confidential, commercial information, by the provisions in the FOIPOP and MGA cited by the Director. While the nature of the commercial information and how it was obtained by the Director provide an important context when interpreting what should be disclosed to an appellant, the MGA is not applicable to the Director and the FOIPOP expressly exempts the application of the FOIPOP where disclosure is ordered by a tribunal as part of the litigation process. It is this type of disclosure process which is the issue before the Board.
The Board finds that Rank might well be able to present a case without the confidential information. That said, where the appellant has the burden of proof, a proper interpretation of the word “necessary” includes information that is relevant, was used by the Director, and is the best available information to assist an expert in providing a full and complete opinion before the NSAAT.
The Board finds that imposing restrictions on the use of the confidential commercial information, like those Ms. Kakamousias had suggested before the NSAAT, creates a reasonable balance between the desire to protect commercial information supplied in confidence to the Director, and the legitimate information needs of an expert witness in preparing a report for use by a tribunal.
The Board therefore directs Ms. Kakamousias to follow the conditions set out in paragraph [49] of this decision as a condition of accessing the confidential information.
The restrictions in paragraph 49 referred to above were as follows:
(1) That all the information the Director has been ordered to disclose will be treated as confidential by Kakamousias and any employees of Turner Drake & Partners Limited assisting her in the preparation of her report, along with any solicitors retained by Rank. No part of the data will be released or divulged to any other party. The confidential information shall only be used for the purpose of the appeals which form the subject matter of this proceeding, and no other purpose.
(2) That Kakamousias must make no reference to the confidential information in her reports unless it is redacted, and any unredacted version must be filed on a confidential basis with the NSAAT, and Rank and Ms. Kakamousias shall not object to an in-camera session if that information is discussed in oral testimony.
(3) That, for greater certainty, the confidential information shall not be disclosed to Rank.
(4) That once all appeal periods related to NSAAT decisions in this matter have expired, each person to whom confidential information has been provided shall return copies of such information to the Director, including any duplicate or electronic copies, and shall destroy all documents, notes and other materials containing or reflecting, directly or indirectly, such confidential information.
(5) As a condition precedent to receiving confidential information, any recipient shall first provide a written undertaking confirming their acceptance of the terms outlined herein.
Nova Scotia
December 2008:
Nova Scotia Court of Appeal
Louise Wolfson
5900 Inglewood Drive, Halifax, N.S.
Uniformity (General Level of Assessment)
Synopsis:
The case involved a single-family dwelling in Halifax’s south end. Ms. Wolfson had appealed her 2005 property assessment to the Regional Assessment Appeal Court (“RAAC”). The RAAC confirmed the assessment, and Ms. Wolfson further appealed to the Nova Scotia Utility and Review Board. Her Notice of Appeal to the Board said her ground of appeal was “Assessment too high” and in particular “Land value too high”.
In Nova Scotia, valuation for assessment purposes is governed by s.42(1) of the Assessment Act. Section 42(1) says that “all property shall be assessed at its market value … but … the assessor shall have regard to the assessment of other properties in the municipality so as to ensure that … taxation falls in a uniform manner upon all residential … property …”.
Uniformity is determined as stated by Chief Justice MacKeigan in Hebb v. Director of Assessment and Town of Lunenburg (1979), 32 N.S.R. (2d) 427 (SCAD) at p 436:
A county court judge in an assessment trial de novo should apply the s. 38 (now 42(1)) rules as directed by Chief Justice Ilsley. He should, I suggest, first ascertain the actual cash value of the property under appeal and determine the ratio of the assessment to that value. He then should determine the ‘general level of assessment’ relative to the actual cash values of properties in the town or municipality generally. To do so he should ascertain on the evidence before him whether the general assessment ratio is what the assessor states it is or whether it is a different ratio. In most cases lack of other evidence may compel him to accept the assessor’s ratio. If the ratio is thus higher, the judge should reduce the appealed assessment to confirm with the general ratio.
In response to Ms. Wolfson’s appeal, the Director of Assessment filed a report stating that “The Level of Assessment for the subject Municipal Unit for the year 2005 is 96.7%”. Before the hearing of the appeal, the Board wrote to counsel for the Director stating:
Wolfson, Louise – 5900 Inglewood Drive, Halifax – Assessment Appeal – AS-06-06
The Board has perused the report of Mr. Terrence E. Naugle dated March 7, 2007. The Board directs the following be filed on or before Wednesday September 12, 2007:
. . .
4. For each of the properties listed in Schedules B and D, please provide the following:
(a) PRC reports;
(b) if the PRC reports do not provide the assessment value from the date of sale, please provide it for the years not disclosed on the PRC reports;
(c) please provide the assessment price/sale price ratio on the date of each sale; and
(d) were each of these sales included in the calculations for the level of assessment for HRM the corresponding taxation years? If not, why not?
5. The Board has previously heard evidence from an Assessor for the Director that although he did not do the analysis for the level of assessment, it was his understanding that the ratios [assessment value/sale price] for all qualified sales (the Board understood this to mean all arm’s length sales excluding those under duress such as tax sales “arm’s length sales”) are plotted on a graph. The person in each area [municipality] responsible for doing the market analysis would then determine the general range on graph within which most of the properties are clustered, like a band of sales around a line. The few outliers that are outside of this general range (above and below this band) are not included in the calculation of general level of assessment. Please advise the Board of the answers to the following questions:
1. Is this how the level of assessment for residential properties for the 2005 taxation year was calculated for HRM? If yes, provide a copy of the plot graph prepared for HRM for 2005.
2. If not, how are “qualified sales” and “outliers” determined? (Attach any written policies)
3. Are all outliers considered unqualified sales?
4. Have the policies for determining “qualified sales” and “outliers” changed since 2005? If yes, provide a copy of the new policies.
5. If the above description is generally correct, what was this general range of ratios for the residential property sales for HRM for the 2005 residential level of assessment? (For example, a range of 5% below and 5% above the line)
6. Why are any outliers excluded from the residential calculation of the level of assessment for HRM in 2005? Include in your comments the relevance and application of the Homco decision.
7. If all outliers were included in the calculation for the level of assessment for the residential properties in HRM for 2005, what would the level be?
8. To further understand how the assessment value is determined by the Director in accordance with s. 42(1) of the Assessment Act, the Board directs the following information to be provided:
(a) what affect does the market oriented cost approach in determining assessment values have on the high market value properties like those in Schedule “B” and “D”, and how does it compare to the sales at the other end of the market value spectrum throughout HRM?
(b) in answering question 8(a), please provide the list of sales in HRM 6 months before and 6 months after the base date of January 1, 2003 for these two ends of the spectrum. As the Board understands the computer system used by the Director can produce the lists of the following information, the Board directs the following be provided to the Board:
(i) for the time period noted above, a list of the assessment /sale price ratios for each of the properties sold throughout HRM having a sale price of $750,000 or more; and a separate list of the ratios for each of the properties sold for $100,000 or less? The information for each sale should include the address, sale date, sale price, assessment value, and ratio.
The Director’s counsel objected to answering the Board’s questions and production of records on the grounds that they were not relevant to the appeal because Ms. Wolfson had not explicitly challenged uniformity. Counsel asserted that the Board did not have the authority to seek answers to question relating to issues not raised by parties to the appeal.
The Board held a preliminary hearing, and later issued a written decision concluding that the Board did have jurisdiction to order production (2008 NSUARB 9). The Director appealed.
The Director’s grounds stated that the property owner, Ms. Wolfson, did not challenge the Director’s treatment of uniformity and the general level of assessment (“GLA”). Accordingly, the Board automatically should have accepted the Director’s treatment of uniformity and the GLA at 96.7%, and no further evidence on those topics was relevant. The Director submitted that, by ordering production of irrelevant evidence on the Board’s own initiative, the Board presumed that the Director’s treatment of uniformity was wrong. This reversed to the Director’s shoulders the onus of proof that should rest on Ms. Wolfson as appellant. The Director’s Notice of Appeal said that the Board Chair exhibited bias. At the hearing in the Court of Appeal, the Director’s counsel said that the bias argument was secondary to the principal submission that the Board had improperly reversed the onus of proof.
The Court of Appeal found that the issue of uniformity had, in fact, been raised by both parties to the appeal- by the Director in her report, and by Ms. Wolfson’s agent at the preliminary Board hearing (at which time he stated that the GLA was at issue any time the assessed value of property was under review, due to the marriage of market value and uniformity under s.42 of the Act).
In summary, the Court found that Board did not request irrelevant information, did not prejudge an issue of the merits, did not reverse the burden of proof and did not exhibit bias. The appeal was dismissed.
Nova Scotia
September 2008:
Supreme Court of Nova Scotia
Romad Developments Ltd.
5 Linden Avenue, Wolfville, N.S.
Income and Expense Questionnaire
Synopsis:
This case involved an eight unit apartment building. Romad had applied for an order to quash a decision of the Regional Assessment Appeal Court dismissing its assessment appeal. At issue was interpretation of Subsection 21(2) of the Assessment Act – which requires a property owner to answer and complete a request by an assessor for relevant information required by him to make a proper assessment of a property, sign it and “return it to the assessor so answered and completed” within thirty days.
In this case, Romad mailed the completed answer by ordinary mail to the assessor at the proper address, but the assessor had no record of receipt. The question was whether this constituted compliance with 21(2). Under Section 23, a person who “neglects, refuses or fails to. . . answer, complete and return the [information]” under s.21 is guilty of an offence under the Act, and loses the entitlement to appeal from the assessment.
Romad submitted that the Act does not require personal service. While the Director must deliver the request for information by registered mail addressed to the person at his/her/its last known address (per s. 20(3)), there is no such requirement in Subsection 21(2), which is silent as to the method of delivery.
Romad’s interpretation was that this silence meant that regular mail was sufficient. It noted that Section 53 of the Act (which provides for the service of Notices of Assessment by the Director on the property owner) permits service to be either in person or by leaving it at the assessed owner’s residence or work, or posting it on the assessed property, or mailing it postage pre-paid (that is, by regular mail) to the assessed owner’s last known address.
Romad argued that the taxpayer suffers a prejudice by a procedure that imposes on the taxpayer a higher standard of service in replying to requests for information than is required of the Director in serving a notice of assessment on the taxpayer.
The Respondent argued that the scheme of the Act is frustrated if all the tax payer had to do was say they put the reply in the mail.
The Court stated that “…if the clear language of Section 53 of the Assessment Act does not impose upon the assessor the obligation of establishing receipt by the taxpayer of an important document such as a notice of assessment, with the adverse concomitant consequences to the tax payer, it is hardly just or equitable to infer such as strict obligation on the taxpayer, in the absence of greater clarity in the wording of Section 21(2)”.
It reached the conclusion that return by ordinary mail conforms to both the intent of the legislation and the ordinary and plain meaning of Subsection 21(2), and that Romad was entitled to have the Regional Assessment Appeal Court hear its appeal.
Nova Scotia
July 2007:
Nova Scotia Utility and Review Board
APL Properties Limited
79 and 81 Lakecrest Drive, Dartmouth, N.S.
Income and Expense Questionnaire
Synopsis:
APL Properties Limited owns two apartment complexes in Dartmouth. Section 20(2) of the Assessment Act permits the Director to request “. . . relevant information required by him in order to make a proper assessment” from any person. The Director of Assessment requested information from APL under the Assessment Act, R.S.N.S. 1989, c. 23, which sets a deadline of 30 days from the date of receipt for provision of such information. In this particular case, the information request was received on the 21st of May.
Responding to such requests was the responsibility of APL’s Senior Property Manager, whose mother was gravely ill. For this reason, APL did not supply the information until the 33rd day. A request for an extension was made both verbally and by e-mail by APL. No response to this request was received from the Director.
The Director asked the Nova Scotia Utility and Review Board to dismiss APL’s appeals (thereby denying APL of any opportunity for a hearing on the merits), because of its failure to file within the 30 day time limit. The principal issue in the proceeding was whether the Appellant’s failure to provide the requested information (under Nova Scotia’s Assessment Act) within 30 days of the date the request was received meant that the Appellant has lost its right of appeal.
The evidence before was that the Director suffered no harm, or even inconvenience, from this late filing — indeed, none of the evidence before the Board indicates that the information was needed by the Director until long after the taxpayer had supplied it.
The Board nevertheless rejected the Appellant’s appeals, finding that Nova Scotia’s Assessment Act prohibited the Board from granting an extension to the Appellant taxpayer. Other findings in the decision are as follows:
• The 30-day time limit excludes the date of receipt (per the Interpretation Act);
• The Director was under no obligation to respond to the Appellant’s request for extension;
• “de minimis non curat lex,” usually translated as “the law does not concern itself with trifles,” or “the law is not concerned with insignificant matters” is not a valid defense.
Nova Scotia
November 2007:
Nova Scotia Court of Appeal
Julia Knickle
103 Dauphinee Road, Second Peninsula, Lunenburg, N.S.
Burden of Proof
Synopsis:
The Knickle case was originally heard by Nova Scotia Utility and Review Board member Dawna Ring, Q.C., in March of 2007.
Original Nova Scotia Utility and Review Board Decision: Watson and Julia Knickle v. Director of Assessment (2007 NSUARB 15)
The case involved a modest, 30-year-old, single family bungalow constructed on a 1.75 acre irregularly-shaped lot with frontage on a mud flat. Access to the property was only available through four adjoining private properties.
The Knickles’ appealed their 2004 assessment of $235,800, being a 60% increase over the 2003 assessment. The Director of Assessment and the Regional Assessment Appeal Court confirmed this value. After filing the Notice of Appeal to the Board, the Regional Manager and Assessor for the area viewed the property, had discussions with the Knickles’, and agreed to a valuation of $194,500. This settlement offer was rejected by Counsel for the Director, and for the hearing before the Board, the Director asserted the 2004 assessed value for the Knickles’ property was $319,000, being a 119% increase over the previous year. The Knickles did not advance an estimated assessment, simply stating in their Notice of Appeal that the land and house values were “unreasonably high”.
The Board heard the evidence of the parties, conducted a view of the property and of the comparables used by the Director in support of her $319,000 assessment, and ultimately reduced the 2007 assessment to $58,190. The 74-page decision reviewed a number of matters, and summarized these as follows:
(a) the object of the Act is to ensure people pay their fair share of their municipal taxes and to that goal are provided easy access to the appeal processes;
(b) the final appeal is to an administrative tribunal;
(c) the jurisdiction of the Board is to inquire into the matter anew and conduct a full investigation (emphasis added);
(d) the Board is to determine the proper assessment value;
(e) the Act does not specifically state who bears the burden of proof;
(f) there are no adversarial parties in the proceedings and all participants have a common goal of determining the assessment value of the property in accordance with the Act’s criteria;
(g) the size of the claim, that is the corresponding taxes, are relatively small for the vast majority of the claims;
(h) the Director has all relevant information and expertise to determine the valuation;
(i) the methods of determining market value or even applying percentage factors to comparable property sales can be complex; and
(j) the costs of retaining expertise is cost prohibitive in most cases.
Probably most notably (and controversially), the Board member stated at Paragraph 211:
“I find that to place the burden of proof upon the lay taxpayer is in conflict with conducting an inquiry and full investigation”.
Director’s Appeal
In the Notice of Appeal, the Director articulated numerous grounds said to reflect error of law or jurisdiction by the Board. These can be summarized as follows, recognizing there is some overlap between issues:
(i) the Board erred in concluding that on an appeal by the taxpayer to the Board from the RAAC the burden of proof does not rest on the appellant to establish on the evidence presented that the Director’s assessment is incorrect;
(ii) the Board erred by misinterpreting the nature of its function in conducting a de novo hearing;
(iii) the Board erred in raising and deciding the issue of the burden of proof on its own motion, without notice to the parties and without inviting or hearing submissions from the parties;
(iv) the Board erred in conducting a valuation of the property in the absence of a supporting evidentiary basis;
(v) the Board exhibited bias and a lack of impartiality in the proceeding by acting as an advocate for the taxpayers.
Court of Appeal Decision
The Court allowed the Director’s appeal, and remitted the matter back to the Board for hearing by a different Board member. The Court found that the Board erred in finding that on an assessment appeal, the appellant bears no burden of proof. It found that there were two aspects to this error:
(i) The Board’s finding is inconsistent with the language of the statute and contrary to established, binding judicial precedent; and
(ii) The issue of the burden of proof was not raised by the Board either during or after the hearing had concluded. It was addressed without any notice to the parties, the Board having decided to raise this fundamental issue.
The Court further found that the Board misinterpreted the concept of a de novo hearing and erred in law in concluding that the nature of the appeal was other than a traditional adjudicative process.
Nova Scotia
October 2006:
Nova Scotia Court of Appeal
Homburg L.P. Management Inc. et al.
1741 Brunswick Street, Halifax, N.S.
356 Windmill Road, Dartmouth, N.S.
Jurisdiction
Synopsis:
The appellant Homburg had made a successful application to the Supreme Court for orders to quash the decision by the Respondent not to process the appeals in respect to the 2004 real property assessment of two income-producing properties at 1741 Brunswick Street and 356 Windmill Road, Halifax Regional Municipality. The Director had appealed to the NSCA to have the decision reversed.
The Director of Assessment said that the respondents did not give a timely reply to a request for financial information made by the Director under the Assessment Act, and that this barred the respondents’ assessment appeals. The respondents disagreed. The issue in the Court of Appeal was whether those procedural questions are for the Regional Assessment Appeal Court (the “RAAC”) preliminary to the assessment appeal, or to the Nova Scotia Supreme Court on a separate application.
Precedent had previously been set in Nova Scotia (Director of Assessment) v. Springwell Properties Ltd. (1993), 119 N.S.R. (2d) 227 (N.S.S.C.-A.D.): in that case, the Appeal Division found that both the Municipal Board (predecessor to the NSUARB) and the RAAC had jurisdiction under Section 23.
In the face of the decision in the Springwell matter, the Court found that “…it is patently unreasonable for Assessment Services to take the position that the Regional Assessment Appeal Court is without jurisdiction to hear the appeal as to whether a party has lost the right of appeal pursuant to s. 23 of the Assessment Act”. It granted the Order.
The Court of Appeal agreed with the Supreme Court, stating that the RAAC has the power to determine a preliminary jurisdictional issue as to whether a valuation appeal should proceed. The Director’s appeal was dismissed.
Nova Scotia
May 2006:
Nova Scotia Court of Appeal
Homco Realty Fund (20) Limited
1741 Brunswick Street, Halifax, N.S.
General Level of Assessment
Synopsis:
The Court dismissed the director’s appeal and upheld the decisions of the Supreme Court (and the Nova Scotia Utility and Review board before it), which had found that uniformity of assessment is achieved by applying the general level of assessment to market value. The court affirmed that the board did not err in law or exceed its jurisdiction by reviewing and amending the calculation of the published level of assessment, reducing it from 98.6% to 91.9%.
The NSCA also dismissed Homco’s costs appeal.
Nova Scotia
July 2006:
Nova Scotia Utility and Review Board
Allan and Ann-Marie Creaser
168 Sunnybrook Road, Lunenburg, N.S.
Disclosure
Synopsis:
This preliminary decision addresses two principal issues:
1. Where the Director restricts the notice of appeal to market value only, can the respondent property owners, who have not cross-appealed, raise uniformity as in issue?
2. If the answer to the first question is “yes”, should the Board order disclosure of certain specific evidence respecting uniformity (and, in particular, information relating to the general level of assessment and the sales from which it is calculated) which has been requested on behalf of the respondent property owners?
In view of the Board, the answer to both these questions was “yes”. It ordered that uniformity may be an issue in the appeal, and that information held by the Director in relation to it (specifically, the calculations used to produce the general level of assessment) must be disclosed.
Nova Scotia
February 2005:
Nova Scotia Utility and Review Board
Homco Realty Fund (20) Limited
1741 Brunswick Street, Halifax, N.S.
General Level of Assessment
Synopsis:
Homco Realty Fund (20) Limited, the owners of a major downtown office building, challenged Service Nova Scotia’s (SNS) calculation of the General Level of Assessment for commercial properties in the Halifax Regional Municipality (HRM). The objective of Homco’s concern was 1741 Brunswick Street, a building situated rather appropriately, opposite Halifax’s Town Clock, an edifice that has held Haligonians accountable since 1803.
The Nova Scotia Assessment Act requires that property be assessed at its market value on a “base date” (January 1st two years preceding the assessment year). However the Act also recognises that Service Nova Scotia may be less than assiduous in its pursuit of this obligation so it also mandates that “taxation must fall in a uniform manner” on properties in the municipality. Provincial case law has established that this uniformity provision must be applied across, rather than within, asset classes in the municipality. So all commercial property has to be assessed uniformly . office buildings cannot be compared solely with other office properties, but must be compared with every commercial assessment in the municipality. This “General Level of Assessment” is calculated by dividing the sum of the assessments, for those properties that have sold within six months of the base date, by the aggregate of their sale prices. If this aggregate assessment to sale price ratio is 80%, then all properties must be assessed at 80% of their market value. If the property is assessed at a higher rate than 80%, the owner and occupiers will pay too much in taxes. Service Nova Scotia calculates the General Level of Assessment, for each municipality, every year. Since sale prices are not public knowledge in Nova Scotia, private taxpayers are unable to calculate the General Level of Assessment because the relevant data is not available to them. They must instead rely on Service Nova Scotia’s calculations. It follows therefore that there is a heavy responsibility on SNS to “get it right” since if they fail to fulfil this responsibility half of the commercial properties will shoulder too high a tax load, and half will pay too little in property and business occupancy taxes.
Homco Realty Fund included, as the main plank of its appeal, the fact that its assessment represented 97% of its market value (the property had been sold shortly after the base date). Other comparable sales were assessed at assessment/sale price ratios of between 55% and 82%. The sole valuation issue before the hearing was that of uniformity of assessment, and the kernel of the disagreement between the taxpayer and SNS lay in the inclusion, or exclusion, of certain sales in the General Level of Assessment calculation. SNS also argued that the General Level of Assessment calculation methodology favoured by case law was incorrect and should be abandoned and replaced by SNS’ “mass appraisal approach”, mathematical Mumbo-jumbo rightly rejected as such by the Board and the Court of Appeal in previous cases but apparently still worshipped by the Assessment Department. The Board again declined to be seduced by this whiff of brimstone, recklessly believing perhaps, that they and the Court of Appeal were still correct and tartly pointing out to Provincial government lawyers Duplak, QC and Grant L.L.B. that there had been no legislative changes since the Court of Appeal last rendered its decision on the matter. SNS also attempted to escalate the appeal to the Supreme Court by arguing that the Utility Board lacked the jurisdiction to hear the case. The Board disagreed.
Service Nova Scotia excluded all properties from its General Level of Assessment calculation whose sale price was determined using discounted cash flow. Since all major investment type properties are valued on this basis, all were excluded from the calculation! The Board determined that SNS’ decision to exclude these sales was based on (1) administrative convenience, and (2) a misinterpretation of a previous court decision (City of Halifax and Revenue Hotels Limited v. Director of Assessment 1988, NSMB-122-85-A). The Board observed that as a result of the foregoing “the assessments of many large and expensive commercial properties in the HRM have been set at values lower than they should have been”. (The collorary of course, is that the other properties have had to pick up this substantial tax shortfall). Service Nova Scotia’s Mr. Musycsyn excluded the sale price of the subject property, 1741 Brunswick Street, even though it sold close to the base date, as evidence of its market value! He also excluded the sale of Purdy’s Wharf, HRM’s trophy office complex and acknowledged that he would have done so even if it had not been sold on a discounted cash flow basis because it was an “outlier” i.e. it was so under-assessed its inclusion in his data would have substantially reduced his General Level of Assessment calculation! The Board referred to this practice as a “systemic error” and observed that “this problem is further aggravated by the Director’s attempt to (in the Board’s view) artificially protect the Director’s claimed general level of assessment by excluding sales of such large transactions” and “while the Director not surprisingly appears to be content with a claimed general level of assessment which is close to 100%, one of the ways the Director achieves this result is to automatically exclude sales which would otherwise lower it”. On another occasion Service Nova Scotia’s Mr. Musycsyn excluded a purchase by the Hospitals of Ontario Pension Plan partly on the grounds that the purchaser was “a pension plan” and a “national purchaser”, causing the Board to observe “the Director appears ready to disqualify any sale involving a REIT or pension fund without further inquiry as to the market circumstances of the sale”. Mr. Musycsyn’s rationale apparently was that REITS and other “national” purchasers were lamentably lacking in sophistication and consequently paid far too much for property … so these sales had to be excluded from his analysis!
The Nova Scotia Utility and Review Board rendered their 118 page decision on February 28th 2005. They allowed Homco’s appeal and determined that SNS’ “general level of assessment is wrong” and calculated it at 91.7% (SNS had insisted it was 98.4%). The Utility Board’s weighty decision, as befitted six days of hearings over a five month period in 2003 and 2004, was thoughtful and carefully reasoned. Service Nova Scotia promptly appealed. The case was heard by the Nova Scotia Court of Appeal (CA 246980) on May 16th 2006. Their decision, rendered on May 26th 2006, dismissed Service Nova Scotia’s appeal.
Nova Scotia
June 2003:
Nova Scotia Utility and Review Board
Hinspergers Poly Industries Limited
80 Blakeney Dr., Truro, N.S.
Polyethylene producer
Synopsis:
Hinspergers Poly Industries Limited filed an appeal of their year 2000 assessment, two days after the expiry of the appeal period. Service Nova Scotia, the Provincial Assessment Authority refused to accept the appeal, on the grounds that it was out of time.
Hinspergers Poly Industries Limited owned a factory located in the Truro Industrial Park. On January 10th 2000, the Director of Assessment mailed an Assessment Notice for the property to Hinspergers’ head office in Mississauga, Ontario. The Assessment Notice went unnoticed for 33 days (the Appeal Period was 21 days, but non-residents of Nova Scotia were permitted a possible 10 day extension by the Assessment Act). The omission was noticed on a Saturday, and the appeal was filed the following Monday. Under the Assessment Act, the Review Board has the power to grant an extension where filing the appeal “has been prevented by absence, illness or other sufficient cause”.
The appeal period has been held, in previous Board decisions, to commence when the Assessment Notice is mailed. Not when it is received. The application for the granting of an extension must be filed within 60 days and the Assessment Act indicates that the relevant evidence must accompany that filing. The Act implies too that the Nova Scotia Assessment Appeal Court hearing must also be conducted within that same time period. Hinspergers complied with this ambitious schedule, only to have their application rejected by the Nova Scotia Regional Assessment Appeal Court.
The Board heard that the Assessment Notice had been overlooked because the small (5 person) administrative staff were overwhelmed by structural changes at the 100 employee company. There were changes at head office involving new telephone and computer systems, and changes in the two factories which involved the polyethylene pipe manufacturing processes themselves. The Board appears to have been particularly impressed by the fact that the error was discovered on a Saturday! They granted Hinspergers Poly Industries Ltd. their extension.
Nova Scotia
November 2001:
Nova Scotia Regional Assessment Appeal Court
Colchester Park Development Society
1540 Plains Rd., Debert, N.S.
Bulk land
Synopsis:
Colchester Park Development Society, an incorporated non-profit body with a mandate to promote economic opportunities in the community, took over the ownership of Canadian Forces Station Debert from the Department of National Defence. The overall acreage obtained by the Society when it acquired this former military station, consisted of 36 acres of residential land, 137 acres of commercial land, and 386 acres of bulk land. The bulk land was unserviced, had not been subdivided and was covered with alders and scrub brush. In 2001, following the acquisition by the Society, Service Nova Scotia, the Provincial Assessment Authority, decided to reclassify the 386 acres of forest land from “resource” to “commercial”. A commercially classified property typically carries about double the tax load of a residentially classified property with the same assessed value (forest land classified as “resource” is taxed at the residential rate).
Service Nova Scotia’s rationale for reclassifying the land from “resource” to “commercial” was that the Society intended to so utilise the land in the future. The Society was actively marketing the developed commercial and residential portions of Colchester Park and operated a web site for that purpose. Service Nova Scotia took the view that the stated intentions of the Society, as evidenced by its articles of incorporation, and the material on its website, demonstrated an intention to use the property for commercial purposes.
The Nova Scotia Regional Assessment Appeal Court rejected Service Nova Scotia’s reclassification, based on the precedent set by the Nova Scotia Court of Appeal decision in the case Eastern Forestry Resources Ltd. v. Director of Assessment (N.S.) et al (1991), 108 N.S.R. (2d) 357. The Appeal Court had ruled that a change in use only occurred when a physical action was undertaken, such that the land ceased to be utilised for its previous exempt use. An intention to use the land for commercial purposes did not meet this change of use test. The Nova Scotia Regional Assessment Appeal Court found in favour of the Colchester Park Development Society. Service Nova Scotia did not appeal the Court’s decision.
Nova Scotia
February 2000:
Nova Scotia Utility and Review Board – AS-97-23b
Edcyn Inc.
5850-54 Sullivan St., Halifax, N.S.
Commercial-owner occupied
Synopsis:
This was an appeal by Edcyn Inc. from a decision of the Regional Assessment Appeal Court dated 11th October 1997, which reduced the 1997 assessment of a commercial property located at 5850-54 Sullivan Street, Halifax, Nova Scotia, from $569,700 to $566,900. The base date for determining the value of the property was 1st January 1995. The Director of Assessment argued that the 1997 assessment should be raised to $618,600.
The Board’s decision reviewed the “Mass Appraisal” reporting approach used by the Assessment Department and ruled against it. Edcyn Inc. provided a traditional “3 approaches” valuation to the Board (prepared by Turner Drake), who accepted this method as the proper one to use for assessment appeals. Their 34 page decision also included findings about the disclosure of experts’ evidence prior to the hearing review. Two of the observations in the decision are:
“In the judgement of the Board, the report submitted by Mr. Pitman (which, again, the Board recognises is the format currently used by the Director), does not meet the requirements of Rule 14.”
“Recognising the Director’s duty with respect to the taxpayers as a whole to ensure uniform assessment across a Municipality, the Director might wish to consider the prudence of attempting to determine actual market value, using a more intensive review than necessarily occurred in the original mass appraisal assessment.”
Nova Scotia
March 1998:
Nova Scotia Utility and Review Board – AS-95-55-59
Maplehurst Properties Limited
Alderney Gate, Dartmouth, N.S.
Office complex
Synopsis:
Maplehurst Properties appealed a decision of the Regional Assessment Appeal Court. The Assessment Department defended the assessment using “mass appraisal” techniques and attempted to justify this approach with statistics showing that the resultant assessments were within an acceptable range. The appellant retained Turner Drake to produce a property specific appraisal. The Board ruled as follows:
1. Non-recoverable Operating Costs – the 15% administration fee and the federal tax on large corporations were both deductible operating expenses.
2. General level of Assessment – this was acceptable as the only test of uniformity. The Assessment Department’s submission on Coefficient of Dispersion and the Price Related Differential were ignored.
3. Structural Reserve – this was disallowed on the grounds that it was not appropriate for a new building.
4. Depreciation of Leaseholds – all leaseholds are depreciated to the base date (1st January 1991) not to the state date (which changes annually).
5. Mass Appraisal Techniques – the Board was critical of the Assessment Department’s attempt to hide behind “mass appraisal techniques” and “Department policy”. It ruled that “valuations provided to the Board relying on Mass Appraisal Techniques are subject to the same test of reliability as information provided by the single property appraisal”.
Nova Scotia
September 1996:
Nova Scotia Court of Appeal – CA-132181
Canada Trustco Mortgage Company
Highfield Park, Dartmouth, N.S.
990 Apartments
Synopsis:
This was an appeal and cross appeal by Canada Trustco and the Assessment Department, together with the Halifax Regional Municipality from the Nova Scotia Utility and Review Board Decisions NSUARB – AS-94-77 to 79 and 115 to 124. Both appeals were dismissed in a unanimous decision. All of the fourteen buildings were erected after the 1st January 1988 base date and by the state date (1st December 1993) economic conditions, primarily high vacancy rates, had profoundly affected the market value of the buildings … not least of which was the adverse impact on vacancy rates of the construction of the subject properties themselves … almost 1,000 units introduced rapidly into a small market. Under their earlier decision (CA-120545) the Court had determined that property had to be assessed at the state date, so declining economic conditions which post dated this date had to be ignored. But what if the decline had been caused by the construction of the properties under appeal? Essentially the Court of Appeal confirmed that the state date assessment had to consider the adverse impact on the vacancy rate resulting from over exuberant construction activity, even though it had occurred after the state date.
Nova Scotia
April 1996:
Nova Scotia Court of Appeal – CA-120545
Wandlyn Inns Limited
Windmill Rd., Dartmouth, N.S.
Motel
Synopsis:
This was an appeal and cross appeal by Wandlyn Inns and the Assessment Department from the Nova Scotia Utility and Review Board Decision NSUARB – AS-93-01. Both appeals were dismissed in a split decision. Essentially the Court of Appeal confirmed that the “state date” provisions of the Assessment Act relate to the “physical condition” of the property only and exclude changes in market value which arise out of factors e.g. decrease in trade, other than physical changes.
Nova Scotia
April 1992:
Nova Scotia Supreme Court – Appeal Division
[1992] N.S.J. No. 169; S.C.A. No. 02568
John A. Doucette (Respondent)
5287-89 Tobin St., Halifax, N.S.
5-unit apartment
Synopsis:
The Appeal Division reversed the decision of the Nova Scotia Municipal Board and increased the assessment on the Respondent’s five-unit apartment building to $315,800. The Board had reduced the assessment from $284,800 to $277,000.
The Respondent, Doucette, had purchased the property in 1987 for $320,000. The base date for the 1990 assessment year was the 1st January 1988. The submission on behalf of Doucette to the Board did not dispute the market value of the property, rather it was centred upon the assessments of certain comparables in the area of the property at issue. The Board focused its attention on those properties in reducing the assessment.
The Director appealed. The Appeal Division ruled that the Board should not have permitted its attention to be diverted from Section 42 (1) of the Assessment Act, which reads:
“Valuation 42 (1) All property shall be assessed at its market value, such value being the amount which in the opinion of the assessor would be paid if it were sold on a date prescribed by the Director in the open market by a willing seller to a willing buyer, but in forming his opinion the assessor shall have regard to the assessment of other properties in the municipality so as to ensure that taxation falls in a uniform manner upon all residential and resource property and in a uniform manner upon all commercial property in the municipality.”
The decision ruled that the Board erred in law in failing to properly apply Section 42(1) of the Act and the case law explaining that Section. It also erred in determining that uniformity did not exist simply by comparing the subject property with a few others in the vicinity. The decision further ruled that the fact that other properties on the same street or in near vicinity were assessed lower in relation to actual cash value than the subject property, was not grounds for altering the assessment of the latter property.
There was no evidence before the Board demonstrating that the assessor erred in assessing properties at 98.7% of market value in order that taxation fall in a uniform manner upon all real property in the municipality. The Court allowed the appeal, put aside the decision of the Board and set the assessment at $315,800 (i.e. $320,000 x 0.987) for the 1990 tax year.
