Wal-Mart Canada Corp. v. Calgary (City), 2013 ABQB 21

Court of Queen ’ s Bench of Alberta Citation: Wal-Mart Canada Corp. v. Calgary (City), 2013 ABQB 21 Date: 20130109 Docket: 1001 16807 Registry: Calgary Between: Wal-Mart Canada Corp. Applicant - and - The City of Calgary and the Assessment Review Board for the City of Calgary and the Minister of Justice and Attorney General for Alberta Respondents _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice C.S. Phillips _______________________________________________________ I.

Introduction [ 1 ] This is an application by Wal-Mart Canada Corp. (“Wal-Mart”) for leave to appeal, and if leave is granted, to proceed with the appeal of the October 12, 2010 decision of the Composite Assessment Review Board (“CARB”) for the City of Calgary. The CARB dismissed Wal-Mart’s complaint about a municipal property tax assessment. This leave to appeal application is brought under

section 470 of the Municipal Government Act , RSA 2000, c M-26 (the “ MGA ”). [ 2 ] For the reasons that follow, I grant Wal-Mart’s application for leave to appeal the CARB decision.

II. Background Facts [ 3 ] Wal-Mart is the anchor tenant in a property in the retail power centre known as South Trail Crossing, located at 4705 −130 Avenue Southeast in Calgary, Alberta (“the Property”). [ 4 ] For the 2010 taxation year, the Assessor of The City of Calgary (the “City”) assessed Wal-Mart’s rental value at $10 per square foot, and its capitalization rate at 7.50%. Wal-Mart complained about this assessment to the CARB. The complaint was heard on September 30, 2010. [ 5 ] At the complaint hearing, Wal-Mart was represented by an agent, AEC International Inc. (“AEC”).

Several other tenants at the Property, who lease separate free standing stores, were also represented in this complaint by the agent Atlus Group Ltd. (“Atlus”). Though Atlus presented argument on behalf of the entire Property at the hearing, it deferred to AEC with respect to Wal-Mart’s complaints. [ 6 ] The agents presented four objectives in the complaint. First, AEC sought a reduction in the rental rate applied to the anchor tenant, Wal-Mart, from $10 per square foot as assessed by the City to $8 per square foot.

The second and third objectives involved a reduction in the rental rate applied to “Box Stores” of different sizes, and the final objective was the correction of a small discrepancy in the area of a London Drugs store, one of the other tenants represented by Atlus. [ 7 ] The CARB released its six-page decision on October 12, 2010 in which it rejected Wal-Mart’s complaints: CARB 1795/2010-P (referred to as the “CARB decision”).

The CARB Decision [ 8 ] In its decision, the CARB identifies the impugned property, sets out the complaints, and outlines the positions of the parties, before providing a decision. [ 9 ] Under the heading “Position of the Parties” in its decision, the CARB refers to the lease analysis of ten free standing big box stores provided by AEC in support of its request for a rent reduction. This analysis showed a face rent range for these stores of $4 to $10 per square foot with an average rent of $7.63 and a median rent of $7.89 per square foot.

AEC also submitted an analysis from the sale of a vacant Wal-Mart building in Edmonton. The building had sold on January 15, 2008 for $15,000,000. The CARB noted that using the City of Edmonton parameters and a capitalization rate of 7.0%, the sale price supported a rental rate of $8.29 per square foot.

AEC had also submitted evidence of a post-facto 2010 sale of a similar sized building to the subject property for which the 2010 assessment was 45% higher than its sale price in 2010. [ 10 ] Additionally, in support of Wal-Mart’s request for an increase in the capitalization rate from 7.50% to 8.00%, AEC provided market surveys by Colliers International and CB Richard Ellis indicating that 2009 capitalization rates for retail power centres fell between 7.15-8.00%.

AEC also provided previous CARB and Municipal Government Board (“MGB”) decisions to support its position. [ 11 ] The CARB then refers to response evidence submitted by the City. The City submitted seven lease comparables with a range of rental values between $9.59 to $15.27 per square foot and an average rent of $12.37 per square foot. The City also provided a table with 35 equity comparables, which were assessed using a rental rate of $10 per square foot.

Thirty-two of these comparables had filed complaints regarding their 2010 assessments, and at the time of hearing the CARB had confirmed 19 of them at $10 per square foot, two had been reduced to $8 per square foot and 11 were outstanding. Finally, the CARB notes that the City submitted a 2010 Power Centre Capitalization Rate

Summary, which consisted of eight sales of properties, ranging from 62,751 square feet to 174,814 square feet, with capitalization rates between 4.31% and 7.67% and a median capitalization rate of 5.81%. The CARB then noted that the City similarly provided a number of CARB and MGB decisions which supported its position.

[ 12 ] After giving this overview of the evidence, the CARB provided its decision, consisting entirely of the following with respect to Wal-Mart’s complaints: The CARB considered the AEC complaint first. The CARB finds that the [City’s] evidence regarding the rental rate is sufficient to indicate that the assessment is fair and equitable. In particular the assessment comparables were considered compelling. The Complainant has failed to demonstrate to the satisfaction of the CARB that $10/sq. ft. is inequitable.

Regarding the cap rate, the [City’s] evidence indicates that the current cap rate of 7.50% is fair and reasonable. The cap rate fits within the range suggested by both CB Richard Ellis and Colliers International. [ 13 ] The CARB granted the second request, by Atlus, for a rent reduction for London Drugs.

In support of this decision, it simply states that “the CARB accepts [Atlus’] evidence that $15/sq. ft. is a fair and equitable rental rate to be applied to this size of store.” [ 14 ] The CARB rejected the third “request for a reduction in the rental rate applied to stores of greater than 6000 sq. ft. and less than 15,000 sq. ft. as insufficient evidence was presented.” The CARB also rejected the fourth “request for a reduction in the area of the London Drugs store as the evidence provided was contradictory and inconclusive.” [ 15 ] The decision does not contain an “analysis” section, and provides the CARB’s complete decision in five short paragraphs, prior to setting out the CARB orders with respect to the assessment revisions. [ 16 ] Wal-Mart now seeks leave to appeal the CARB’s decision.

It raises three grounds for its application: a. The CARB breached procedural fairness in failing to provide any reasons in its decision, or if it did provide reasons, those reasons do not provide reasonable support for the decision reached. b. The CARB ignored the principle of law that a taxpayer is entitled to an assessment that is both at market value or otherwise equitable. c. The CARB ignored or otherwise failed to deal with evidence in its decision. III. Statutory Background [ 17 ] The MGA sets out a complainant’s right to appeal from a CARB decision to the Alberta Court of Queen’s Bench.

Pursuant to section 470(1), “an appeal lies to the Court of Queen’s Bench on a question of law or jurisdiction with respect to a decision of an assessment review board.” [ 18 ] The Court may grant leave to appeal where the judge is of the opinion that: (1) the appeal involves a question of law or jurisdiction; (2) of sufficient importance to merit an appeal; (3) and has a reasonable chance of success: see MGA s. 470(5); see also Associated Developers Ltd. v. Edmonton (City) , 2011 ABQB 592 at para. 34 , [2011] 527 AR 287 [ Associated Developers ]; Globexx Properties Ltd. v.

Edmonton (City) , 2011 ABQB 464 at para. 36 , [2011] 523 AR 204 [ Globexx ]. IV. Issues [ 19 ] In accordance with the MGA , the three issues that must be decided in this application are:

1. Does the appeal raise a question of law or jurisdiction? 2. Is the issue of sufficient importance to merit an appeal? 3. Does the appeal have a reasonable chance of success? [20] Wal-Mart has raised three questions for which leave for appeal has been sought. Each question must meet all three of theabove requirements before it will be granted leave to appeal. VI. Analysis 1. Does the appeal raise a question of law or jurisdiction? [21] Wal-Mart sets out three alleged questions of law, which I repeat here for ease of reference: a.

Did the CARB breach procedural fairness by failing to provide any reasons in its decision, or if it did provide reasons, do thosereasons provide reasonable support for the decision? b. Did the CARB ignore or fail to apply the principle of law that a taxpayer is entitled to an assessment that is both at market value orotherwise equitable? c.

Did the CARB ignore or otherwise fail to deal with evidence in its decision? [22] I deal with the issue of reasons first because if Wal-Mart shows that the CARB provided no reasons for its decision, it will bedifficult, if not impossible for a reviewing court to identify whether the CARB applied the proper test or whether certain evidence wasconsidered. [23] The Supreme Court of Canada has provided that questions of law are “questions about what the correct legal test is”: Canada(Director of Investigation and Research, Competition Act) v.

Southam, (SCC), [1997] 1 SCR 748 at para. 35[Southam]. [24] Additionally, “if a wrong legal principle is used in the application of the law to the facts, or in the exercise of discretion, thereis an error of law”: Atlus Group Ltd. v. Calgary (Composite Assessment Review Board), 2011 ABQB 739 at para. 21, (2012) 528 AR 138[Atlus]. [25] By contrast, the application of the correct legal test to a set of facts involves a question of mixed fact and law: Alberta(Workers’ Compensation Board) v.

Appeals Commission, 2005 ABCA 276 at paras. 21-22, [2005] 371 AR 318 [Alberta (Workers’Compensation Board)], referring to Southam and Housen v.

Nikolaisen, 2002 SCC 33, [2002] 2 SCR 235 [Housen]. [26] A question about the appropriate weight to be assigned to evidence is generally characterized as a question of fact, or aquestion of mixed fact and law, but is not a question of law: Alberta (Workers' Compensation Board) at para. 69; Housen at para. 23. [27] However, if a tribunal fails to consider certain evidence that the legal test requires it to consider, then the decision-maker hasin effect applied the wrong law, and has thus made an error of law: Southam at para. 39. [28] A question of fact is a question about what actually took place between the parties: Southam at para. 35.

[29] With this in mind, I will review each of the alleged errors which Wal-Mart submits the CARB committed. At this stage, I needonly consider whether the issues raise a question of fact, mixed fact and law or one of law or jurisdiction. a. Is the question of whether the CARB breached procedural fairness by failing to provide reasons or failing to providereasonable support for the decision, a question of law? [30] Wal-Mart submits that this issue is comprised of two separate questions: whether the CARB provided any reasons at all, andif it did, whether those reasons provide reasonable support for the decision.

Wal-Mart submits that the CARB decision merely recites theevidence and then states a conclusion, without any analysis or justification for that conclusion. Wal-Mart argues that it is not sufficientfor the CARB to merely declare that it does not accept certain evidence; the CARB must also explain why it does not accept thatevidence. Any taxpayer reading the CARB decision would be unable to discern how the CARB reached its decision. Most importantly,Wal-Mart submits the CARB decision is so limited that it does not permit appellate review to verify if the CARB fulfilled its statutoryobligations.

Wal-Mart’s counsel cites several specific examples to highlight this issue. In particular, he concedes that there are scantreasons with regard to some of Atlus’ complaints, such as Atlus’ request for a rental rate reduction for some of the other tenants at theProperty. On that issue, the CARB explains that “insufficient evidence was presented.” While this explanation is an explanation to a verylimited degree, and arguably may qualify as reasons, Wal-Mart argues that it does not deal with the subject Wal-Mart store nor does itprovide any real analysis of how the CARB reached its decision.

More particularly, Wal-Mart’s counsel points out that while the CARBdecision provides some discussion about the lease analyses put forward by the parties, there is no discussion as to why the CARB wouldreject the rental rates put forward by AEC in favour of the rental rates put forward by the City.

Wal-Mart’s counsel also submits thatthere is no discussion of how the CARB determined which properties were comparable to the subject Wal-Mart property, in order tomake a comparison with respect to assessments. [31] Wal-Mart points out that the CARB has a statutory obligation to provide written reasons for its decision pursuant to section468(1) of the MGA.

In light of this obligation and the absence of any analysis in the decision, Wal-Mart submits that the CARB hastherefore breached procedural fairness by providing what are effectively no reasons at all for its decision, and therefore has made anerror of law. [32] The City argues in response that the CARB does provide reasons for its decision and points to specific references in theCARB decision in support of this submission.

For example, the CARB referred to AEC’s evidence about the sale of a similar sizedbuilding to Wal-Mart’s property as being “post-facto.” Evidence relating to periods outside of specific legislated time frames is generallynot considered by the CARB. Therefore, the City argues that by specifically indicating that the sale was “post-facto,” the CARB showedthat it had considered the evidence that was placed before it and provided a reason for why the evidence was given no weight, namelythe sale’s post-facto status.

Similarly, in summarizing the evidence, the CARB refers to AEC’s evidence of a sale of a vacant Wal-Martbuilding in Edmonton. The City submits that the CARB could have simply referred to this evidence as “a sale of a Wal-Mart.” However,by choosing to provide the additional information that the lot was “vacant” and located “in Edmonton,” another jurisdiction (thereforenot factually similar to the subject Wal-Mart property), the CARB offered insight into the factors that it considered important inassigning weight to this evidence.

The real matter at issue here, argues the City, is how the CARB weighed the evidence before it, notwhether it explained its decision. Accordingly, the City submits that the tribunal’s weighing of evidence is a question of mixed fact andlaw, not one of law. The City therefore argues that this issue does not raise a question of law or jurisdiction and, thus, Wal-Mart cannotbe granted leave to bring this issue to an appeal. [33] A complainant’s right to reasons is an issue of procedural fairness: Baker v. Canada (Minister of Citizenship & Immigration), (SCC), [1999] 2 SCR 817 at para. 43 [Baker].

A breach of a duty of procedural fairness is an error of law:Newfoundland and Labrador Nurses’ Union v. Newfoundland and Labrador (Treasury Board), 2011 SCC 62 at para. 22, [2011] 3 SCR708 [Nurses’ Union]. The parties agreed that a failure to give any reasons at all is an error of law. [34] However, where a tribunal has provided some explanation for its decision, the duty of procedural fairness will be met: Bakerat para. 44. A tribunal’s reasons must nevertheless be sufficient to allow a reviewing court to understand why the tribunal made itsdecision: Nurses’ Union at para.16.

Reasons must at a minimum tell the parties why a decision was made, provide public accountabilityand permit effective appellate review: Calgary (City) v. Alberta (Municipal Government Board), 2012 ABCA 13 at para. 17, [2012] 519AR 259 [Calgary (City)]. While it is not necessary for an administrative tribunal to make a finding on each element leading to its finalconclusion, the tribunal must adequately explain its decision: Nurses Union at para.16.

The Supreme Court of Canada has said that areviewing court should seek to supplement a tribunal’s reasons before it subverts them, but the tribunal’s reasons must, at least inprinciple, support its conclusion: Nurses Union at para. 12. Therefore the adequacy of a tribunal’s reasons also raises a question of law:Atlus at para. 31.

[35] In reviewing the decision as a whole, it is certainly arguable that the CARB does not connect the evidence submitted by theparties to the various conclusions that it reaches. For instance, the CARB does not mention the evidence of tenant inducements, such asarguably the $250,000 construction allowance given to Wal-Mart, and does not provide any clarification as to why there is no mention ofthis allowance. In its brief, the City states in a footnote at the bottom of page 33: The City deals with tenant inducements in a manner such as to maintain equity and consistency.

This was a special case where the agentwas claiming that a $250,000 construction allowance was a tenant inducement. Normally a tenant inducement is money paid to thetenant by the landlord to encourage the tenant to enter into the lease. Here the amount was attributed to the cost of building the store.Without the building being constructed there would not have been a lease. The City did not consider this a tenant inducement. The CARB does not explain what, if any, impact this evidence had on the assessment. If the CARB discounted this evidence, it did notexplain why.

The CARB impliedly favoured the City’s evidence over Wal-Mart’s evidence by finding in the City’s favour, but it doesnot provide any clarification as to why. It simply states that the City’s evidence was “sufficient to indicate that the assessment is fair andequitable.” The decision states that the City’s “assessment comparables were considered compelling,” but there is no explanation forwhy this is the case. While reasons do not have to be perfect or address every point, they must tell the parties why the decision wasmade, and allow the parties, the Court and the public to understand the decision.

Arguably, the decision does not explain how the CARBcame to its conclusions. In my view, Wal-Mart raises a question of law with respect to whether the CARB provided any reasons, orwhether it provided adequate reasons. b. Is the question of whether the CARB ignored or failed to apply the principle of law that a taxpayer is entitled to an assessmentthat is both at market value or otherwise equitable, a question of law? [36] Wal-Mart submits that the CARB failed to apply a longstanding legal principle when determining Wal-Mart’s assessmentvalue.

Namely, Wal-Mart alleges that the CARB overlooked the principle that a taxpayer is entitled to benefit from the lower of theequitable or market value in its assessment. It relies on three Alberta cases in support of this proposition: Strathcona No 20 (County) v.Alberta (Assessment Appeal Board) (1995), 1995 ABCA 165 , 165 AR 300 at para. 8, Lougheed Tomasson Inc. v. Calgary (Cityof), 2000 ABCA 81 at para. 9, 255 AR 179 and Mountain View (County) v. Alberta (Municipal Government Board), 2000 ABQB 594 atparas. 21-22, 272 AR 123 [Mountain View].

More specifically, Wal-Mart argues that the CARB decision does not address the question ofmarket value but is based solely on what the CARB concludes is equitable. Further, Wal-Mart submits that there is no line of analysis onthe equity issue to connect the evidence cited to the conclusion in the CARB decision. At a minimum, the CARB decision shouldindicate that the CARB considered both the market value and equity issues which were raised before it.

Wal-Mart argues that there isnothing to indicate in the CARB decision that the CARB was alive to the issue of market value and equity as it relates to thislongstanding legal principle. [37] The City submits that in order to determine whether this issue raises a question of law, the Court must consider the legislatedmandate for assessments. The MGA requires the CARB to apply the same mass appraisal and standard valuation methods as theAssessor in order to determine a fair and equitable assessed value for a given property: MGA s 467(3).

The City submits that the wordingof the decision, in particular the CARB’s use of the term “fair and equitable” in the decision, indicates that the CARB considered thestatutory test that dictates how it must evaluate that evidence. Therefore, the City submits that Wal-Mart is actually concerned with theCARB’s application of the correct test, not the sufficiency of the reasons.

The application of a legal test to the facts is a question ofmixed fact and law, not one of law, and therefore a question of the application of the law to the facts would not meet this requirement forleave to appeal. [38] In further support of its position, the City points to section 289(2)(

b) of the MGA, which requires that each assessment reflectthe valuation standard set out in the regulations for that property. Additionally, section 293(1)(

a) of the MGA requires that in preparingan assessment, the assessor must, in a “fair and equitable” manner, apply the valuation standards in the regulations. [39] Section 4(1)(

a) of the Matters Relating to Assessment and Taxation Regulation 220/2004 [Regulation] stipulates that thevaluation standard for a parcel of land is its “market value.”

Section 2(

c) of the Regulation further says that market value must reflecttypical market conditions for properties similar to that property. [40] The City argues that these provisions impose a duty upon the assessor to consider both market value, which arises under

section 4(1)(

a) of the Regulation, and equity, in accordance with MGA section 293(1)(

a) and

section 2(

c) of the Regulation. Furthermore,section 467(3) of the MGA requires that an assessment review board not alter any assessment that is fair and equitable, taking intoconsideration the valuation and other standards set out in the Regulations, the procedures set out in the regulations, and the assessmentsof similar property and businesses in the same municipality. [41] By taking all of these provisions together, the City submits that the CARB must have considered both market value andequitable value because it was required to do so by statute.

According to the City, this is evident from the wording of the judgmentwhen the CARB concluded “that the [City’s] evidence regarding the rental rate is sufficient to indicate that the assessment is fair andequitable.

In particular, the assessment comparables were considered compelling.” To elaborate, the City submits that the CARBdemonstrated its consideration of the market value through its reference to the lease comparables in the decision, and it demonstrated itsconsideration of the equitable value through its reference to the assessment comparables in the decision, the latter of which areunderstood by the City to be equity comparables. In

summary, the City is arguing that the CARB’s use of the specific terms contained inthe MGA clearly indicates that the CARB was aware of both market value and equity, and that the CARB made its decision by applyingthe specific evidence presented to it within the parameters of its legislated mandate. [42] While I agree that a failure by the CARB to discuss the legislative standard that it applied in its decision does not itselfamount to an error of law, as noted by Justice Nation in Atlus at paragraph 27, a failure to apply the correct legal test is a question of law:Southam at para.39.

None of the legislative reasoning submitted by the City is contained in the CARB decision. It is clear from thelegislation that both market and equitable value must be considered. However, a legislative requirement to consider certain evidencecannot be evidence on its own that the CARB did apply the correct test. The Court must look to the CARB decision to identify whether itapplied the correct test. In this case, there is nothing in the decision to suggest that the CARB was alive to the issue of market value.

Thisissue is closely connected to the question of whether the CARB provided adequate reasons for its decision. Certainly, it is again arguablethat the CARB, in reaching its decision, may not have applied this purported longstanding legal principle that a taxpayer is entitled to anassessment that is both at market value or otherwise equitable, or if it did so, then not correctly.

This, therefore, raises a question of law. [43] The City also disagrees that the legal principle raised by Wal-Mart, that a taxpayer is entitled to an assessment that is both atmarket value and otherwise equitable and that where those values are in conflict the taxpayer must benefit from the lesser of those twovalues, is in fact a correct legal principle for the CARB to apply in this case. The City contends that Mountain View, a case cited by Wal-Mart as standing for this legal principle, contains an incorrect

interpretation of the proper line of authority. [44] Mountain View refers to the British Columbia case Bramalea Ltd. v. British Columbia (Assessor of Area #09-Vancouver) (1990), (BC CA), 76 DLR (4th) 53 (BCCA) [Bramalea] for the proposition that a taxpayer is entitled to benefit fromthe lesser of the equitable and market value assessments: Mountain View at para. 22. The City submits that Bramalea does not in factstand for this principle and that the case has been incorrectly applied in Alberta courts.

It points to a recent British Columbia SupremeCourt decision in support of this position: Bentall Retail Services et al v. Assessor of Area # 09 - Vancouver, 2006 BCSC 424, [2006]BCWLD 3761 [Bentall Retail]. The City essentially submits that the CARB could not fail to apply a legal principle that it is not requiredto apply, and thus Wal-Mart is actually concerned with the CARB’s application of the MGA to the facts. [45] The proper

interpretation of Bramalea, according to the City, requires the CARB to define a range of values for the actualvalue of a property, as shown by evidence of sales, and a range of values for the equitable value of the property, as shown byassessments of properties similar to the subject Wal-Mart property. The CARB should only make an adjustment to the assessment valuebased on the argument of equity in the event that the equitable range of value lies entirely outside the range of market, or actual, value:Bramalea at para. 28 and Bentall Retail at para. 99.

Thus, if evidence of both the market value and the equitable value of the Property ispresent, as was the case before the CARB, then these ranges of values should be examined relative to one another. The City contendsthat in this case, the market value of the Property lies within the range of equitable values, and therefore no adjustment was required. Therange of market value shown in the City’s comparables was $9.59 and $15.27 per square foot. The market range proposed by AEC wasbetween $4 and $10 per square foot.

The equitable value proposed by AEC was $8 per square foot, however the City contends that thisvalue was not determined using comparables similar to the subject Wal-Mart store. Nevertheless, the City points out (erroneously) thatAEC’s suggested equitable value of $8 fell within the range of market value established by the City’s market comparables of $9.59 and$15.27. Thus the City submits that the CARB did not have to make any adjustment to the assessment under the proper

interpretation ofBramalea. The CARB therefore properly applied the MGA and the CARB did not err by ignoring the principle submitted by Wal-Mart. [46] The City and Wal-Mart disagree over what is the correct legal principle to be applied when the CARB reviews an assessment.This is evident through their respective analysis of the Alberta and British Columbia case law, referenced in detail above. A questionabout what the correct legal principle is, is a clear question of law: Southam at para. 35.

Thus, I am of the view that Wal-Mart has raiseda question of law, namely, what is the correct legal principle for the CARB to apply when reviewing an assessment? c. Is the question of whether the CARB ignored evidence or otherwise failed to deal with evidence, a question of law?

[ 47 ] Wal-Mart also alleges that the CARB ignored evidence before it by failing to consider Wal-Mart’s rebuttal brief. As noted, if a tribunal ignores evidence that it is required to consider, that is an error of law: Southam at para. 39 . [ 48 ] Wal-Mart submits that the CARB makes no reference to the rebuttal submissions in its decision. The rebuttal took issue with, among other things, the City’s lease comparables, the equity comparables, the treatment of tenant inducements, and the capitalization rate analysis. Wal-Mart argues the $250,000 construction allowance that it had received was a tenant inducement.

Wal-Mart points out that tenant inducements can serve to reduce the face rent value of a property, and thus are an important consideration in the determination of the market value of this Property: Calgary (City) v. Canadian Natural Resources Limited , 2010 ABQB 417 at paras. 123-124 , 496 AR 162; Nortel Networks Inc. v. Calgary (City) , 2008 ABCA 370 at para. 18 , 50 MPLR (4th) 167. The CARB must consider the market value of the Property in accordance with sections 4(1)(

a) and 2(

c) of the Regulation . [ 49 ] The City submits that there is nothing to indicate that the CARB ignored evidence that it was required to take into account in this case. Wal-Mart had the opportunity to present its evidence to the CARB and the CARB did not refuse to hear or accept any of Wal- Mart’s evidence. The CARB also indicates in Appendix A to the decision that it did consider the rebuttal evidence. Simply because the CARB does not specifically reference the rebuttal submission or tenant inducements does not mean that this evidence was not considered.

The City contends that the real issue with regard to the evidence was the CARB’s weighing of the evidence. The decision to give little or no weight to one party’s evidence is a question of fact or mixed fact and law, not a question of law: Alberta (Workers ’ Compensation Board) at para. 69 ; Housen at para. 23 .

The City submits that the evidence submitted by Wal-Mart as evidence of a tenant inducement was in fact evidence of a construction allowance, which according to the City, does not affect the rental rate. [ 50 ] While I agree with the City that the question of how a tribunal weighs evidence is not a question of law, in this case, there is no indication that I can discern from my reading of the CARB decision that the CARB actually dealt with or considered the existence of a construction allowance, which Wal-Mart argues is a tenant inducement.

As there is no reference or analysis of this evidence in the CARB decision, I am therefore of the view that the issue of whether the CARB ignored evidence that it was required to consider raises a question of law. 2. Is the issue of sufficient importance to merit an appeal? [ 51 ] This is the least onerous hurdle in the test for leave to appeal: Edmonton (City) v.

Edmonton Composite Assessment Review Board , 2012 ABQB 439 at para. 14 . [ 52 ] In order to determine whether questions are of sufficient importance to merit an appeal, the Court should consider whether the questions have jurisprudential importance: Globexx at para. 61 . The importance of the decision should be determined on an objective basis. The Court is not considering whether the matter is important to the applicant, presumably it is.

Rather the Court must consider whether there is something unsettled about the impugned question, or whether the decision would have wide ranging implications: see Atlus at para. 35; Associated Developers at para. 42 . a.

Is the question of whether the CARB breached procedural fairness by failing to provide any reasons or adequate reasons, a question of sufficient importance to merit an appeal? [ 53 ] As previously noted, Wal-Mart submits that the question of adequacy of reasons is important for public accountability, meaningful appellate review and for allowing the parties to know why the decision was made. [ 54 ] The City contends that the question of whether the CARB gave adequate reasons in this particular case will not provide any jurisprudential guidance.

The CARB provided reasons, and therefore Wal-Mart’s concerns relate to the valuation itself and are therefore fact-driven and will only affect the parties in this matter. [ 55 ] In Atlus , Justice Nation explains that “adequacy of reasons is important for any tribunal and the party effected, so would be a question important enough to merit an appeal”: Atlus at para. 36.

[ 56 ] I have already reviewed the difficulty that arises where a tribunal provides no reasons or inadequate reasons. In my view, the question of what constitutes insufficient reasons in a CARB decision, and to what extent the CARB must address its weighing of evidence in its written decision will be relevant to future CARB decisions. Wal-Mart has therefore raised a question of sufficient importance to merit an appeal because the legislation mandates that the CARB provide written reasons, and without adequate reasons, the parties cannot understand the decision and an appellate court cannot review the decision. b.

Is the question of whether the CARB ignored or failed to apply a principle of law that a taxpayer is entitled to an assessment that is both at market value or otherwise equitable, a question of sufficient importance to merit an appeal? [ 57 ] Wal-Mart alleges that the CARB failed to apply a legal principle that a taxpayer is entitled to an assessment that is both at market value or otherwise equitable, which it is required to apply when reviewing an assessment.

The City argues that Wal-Mart is in fact concerned with the CARB’s weighing of the evidence and any appeal would provide minimal precedential guidance. [ 58 ] However, as I noted previously, the City also contends that Mountain View , a case cited by Wal-Mart as standing for the legal principle allegedly ignored in this case, contains an incorrect

interpretation of the proper line of authority. [ 59 ] The parties have presented two conflicting lines of authority on this. The question of whether or not the CARB is required to consider the dual right to an equitable assessment and an assessment at market value will affect all future complainants, as will the resolution of these conflicting lines of authority. This question undoubtedly raises an issue of sufficient importance to merit an appeal. c.

Is the question of whether the CARB ignored evidence or otherwise failed to deal with evidence, a question of sufficient importance to merit an appeal? [ 60 ] Wal-Mart essentially contends that this question merits an appeal because it will provide guidance to the CARB, assessors and taxpayers regarding the impact of a construction allowance, which it submits is a tenant inducement, on rental value. Wal-Mart submits that this issue is not resolved in the case law as evidenced from earlier MGB decisions, and the discussion in the cases Canadian Natural Resources Limited and Nortel Networks.

In Canadian Natural Resources Limited , involving a judicial review of an MGB decision in respect of a business assessment, Justice McIntyre held that it was reasonable for the MGB to treat tenant inducements as a form of “leasehold improvements.” In Nortel Networks, the Alberta Court of Appeal found that procedural fairness was breached when the CARB failed to require disclosure from the City information relating to property addresses of alleged comparables, sought by Nortel, the taxpayer, who had appealed its 2004 property tax assessment.

In obiter , the decision raises the question of what is the impact of tenant inducements, such as free rent for a portion of the term and contributions for improvements, on the face rental rate.

Clarification of the role of tenant inducements and, in particular, the impact, if any, of construction allowances on rental rates and ultimately the market value of property, and on what constitutes a tenant inducement or a construction allowance for assessment purposes, will provide precedential guidance. [ 61 ] The City submits that this question is of no jurisprudential importance as it is fact-driven and concerns only the question of the valuation of the property, which will affect only the parties in this matter.

Any appeal decision would therefore provide minimal guidance to the CARB. [ 62 ] The question of whether the City considered the evidence submitted by Wal-Mart is clearly of subjective importance to Wal- Mart, because it wants to be assured that the evidence it submitted to the CARB is properly considered.

However, I am of the view that the question is also of sufficient jurisprudential importance to merit an appeal because the question of how evidence of tenant inducements, and in particular, construction allowances should factor into the CARB’s analysis of the market value of a property, and what effect that evidence will have on an assessment, will provide guidance to the taxpayers who receive the benefit of tenant inducements, to the assessors who must consider the impact of the tenant inducements and construction allowances in an assessment, and to the CARB in rendering future decisions.

This question is of sufficient importance to merit an appeal. 3. Does the appeal have a reasonable chance of success? [ 63 ] At the leave to appeal stage, an applicant must only establish that it has a prima facie or arguable case in order to show that

the appeal has a reasonable chance of success: Stiles (Estate of) v. Alberta (Energy and Utilities Board) , 2005 ABCA 229 at para. 19 , 53 Alta LR (4th) 235. [ 64 ] The merits of the appeal are not considered at the application for leave: Atlus at para. 42. [ 65 ] Determining the chances of success for an appeal requires a consideration of the standard of review that would be applied by the Court, should leave be granted: Keephills Aggregate Co. Ltd. v. Parkland (County of) Subdivision and Development Appeal Board , 2003 ABCA 242 at para. 12 , 348 AR 41; 845971 Alberta Ltd. v.

Grande Prairie (Subdivision and Development Appeal Board), 2010 ABCA 135 at para. 8 , [2010] AWLD 2437; Edmonton (City) v. Alberta (City of Edmonton Composite Assessment Review Board) , 2012 ABQB 118 at para. 41 . [ 66 ] Thus, I will consider the standard of review that would apply for each of the remaining issues, and whether Wal-Mart has a reasonable chance of meeting that standard. a.

Does the question of whether the CARB breached procedural fairness by failing to provide any or adequate reasons have a reasonable chance of success? [ 67 ] As earlier mentioned, the MGA requires that the CARB provide written reasons for its decisions: MGA s 468(1). Also as noted, a complainant’s right to reasons is an issue of procedural fairness: Baker at para. 43 .

The parties do not dispute that a breach of procedural fairness will be reviewed on a correctness standard. [ 68 ] However, where some reasons are provided, the question of whether or not those reasons are adequate in justifying the decision will be reviewed on a reasonableness standard: Nurses ’ Union . [ 69 ] A tribunal does not necessarily have to give extensive reasons.

The Supreme Court has provided guidance on the role of the tribunal’s reasons in applying the reasonableness standard, In Nurses ’ Union, Abella J. wrote for a unanimous Supreme Court at paras. 14 and 16 that: [T]he reasons must be read together with the outcome and serve the purpose of showing whether the result falls within a range of possible outcomes. ...

In other words, if the reasons allow the reviewing court to understand why the tribunal made its decision and permit it to determine whether the conclusion is within the range of acceptable outcomes, the Dunsmuir criteria are met. [ 70 ] The City submits that the CARB gave some reasons through its references to the legislation and its acceptance of the City’s evidence over that submitted by AEC on behalf of Wal-Mart.

In particular, the CARB states that the City’s evidence shows that the assessment was “fair and equitable.” This terminology comes from the MGA and therefore the CARB’s use of it is meant to show that the legislation was consulted. Additionally, as previously noted, the CARB referred to AEC’s evidence of the sale of a similar sized building to Wal-Mart’s property as being “ post-facto ” and not simply as a “sale.” The City submits that this indicates that the CARB did consider Wal-Mart’s evidence and explains why this evidence was given no weight.

Similarly, the CARB refers to the sale of a vacant Wal-Mart building in Edmonton. The City submits that the CARB could have simply referred to this evidence as “a sale of a Wal-Mart.” However, by choosing to provide the additional information that the lot was vacant and located in another jurisdiction, the CARB offered insight into the factors that it considered important in weighing the evidence. Furthermore, the City submits that the CARB was open to decisions within a range of possible outcomes throughout the complaint hearing.

The CARB, for instance, impliedly accepted the capitalization rate range suggested in the market surveys by CB Richard Ellis and Colliers International, (which were provided by AEC on behalf of Wal-Mart) when it decided that “the [City’s] evidence indicates that the current cap rate of 7.50% is fair and reasonable.

The cap rate fits within the range suggested by both CB Richard Ellis and Colliers International.” Though the CARB did not accept AEC’s submission that the capitalization rate for Wal-Mart should be adjusted from 7.50% to 8.00%, it does impliedly accept the capitalization rate range submitted by AEC on this point. As noted, the City submits that these reasons must be considered in light of the whole decision to determine whether the reasons were reasonable.

In short, the City argues that although the outcome of the CARB decision was not in favor of Wal-Mart, it was still within the range of possible outcomes. [ 71 ] I agree that it would be inappropriate to expect the CARB to make an explicit finding at each step of its decision-making

process. However, reasons should permit the reviewing court to understand why the decision was made and whether the conclusion falls within the range of reasonable outcomes: Nurses ’ Union at para. 16. Reasons serve three important purposes.

They tell the parties why the decision was made, provide public accountability and permit effective appellate review: Calgary (City) at para. 17. [ 72 ] Upon reviewing the CARB decision, I have determined that Wal-Mart has a reasonable chance of success in demonstrating that the CARB has not provided any explanation for its decision, or if it has provided some reasons, that those reasons do not meet the Dunsmuir criteria. The CARB decision provides no discussion or analysis of the evidence before it other than to imply that it prefers the City’s evidence, as it finds in the City’s favour.

It does not discuss the legislative test that it applied. There is no mention of the evidence of tenant inducements, in particular the $250,000 construction allowance that Wal-Mart received, nor the impact of that evidence on the market value or the reason why that evidence was ignored or discounted. The CARB decision refers to the City’s “assessment comparables” as being compelling. But it does not provide any analysis of how these comparables support the valuation of the Property, nor does it explain why Wal-Mart’s comparables do not affect the assessor’s valuation.

To repeat, though the reasons do not have to be perfect, the Court cannot be left to infer all of the reasons for a decision. In my view, it is certainly arguable that the CARB decision is not transparent nor is it intelligible and therefore Wal-Mart has raised a sufficient challenge to the adequacy of reasons in this case to be granted leave for appeal. b.

Does the question of whether the CARB ignored or failed to apply the proper legal principle have a reasonable chance of success? [ 73 ] If existing jurisprudence has already established the standard of review for a particular type of question addressed by the tribunal, then an exhaustive standard of review analysis is not necessary: Dunsmuir v. New Brunswick , 2008 SCC 9 , [2008] 1 SCR 190 at paras. 57 and 62 . [ 74 ] The Supreme Court has said that matters involving the

interpretation and application of a tribunal’s enabling statute will generally attract deference and should be reviewed on a standard of reasonableness: see e.g. Dunsmuir at para. 54 ; Alberta (Information and Privacy Commissioner) v. Alberta Teachers ’ Association , 2011 SCC 61 , [2011] 3 SCR 654 [ ATA ]. [ 75 ] In Associated Developers , Justice Ross held that the standard of review for the question of whether the CARB applied the correct legal test was reasonableness: Associated Developers at paras. 51-53 . [ 76 ] This case involves the proper

interpretation and application of the MGA in order to determine whether the principle that a taxpayer is entitled to an assessment that is both at market value or otherwise equitable is applicable, when determining the appropriate assessment rate for a municipal property.

Without definitively deciding the matter, I therefore find that the likely standard of review for this issue is reasonableness. [ 77 ] To meet the reasonableness standard, the CARB’s decision-making process must demonstrate “the existence of justification, transparency and intelligibility” and the decision itself must fall “within a range of possible, acceptable outcomes which are defensible in respect of the facts and law”: Dunsmuir at para.. 47. [ 78 ] The City essentially submits that Wal-Mart is not likely to succeed on this issue because the series of legislative requirements outlined previously show that the CARB considered both market and equitable values for the Wal-Mart property.

The City also submits that the cases referred to by Wal-Mart to support the principle that Wal-Mart should benefit from the lower of the market value or equitable value are incorrect.

The City cites the British Columbia case of Bentall Retail to support its submission. [ 79 ] In oral argument the City explained that the CARB’s statement that the City’s evidence regarding the rental rate was “sufficient to indicate that the assessment is fair and equitable” demonstrates that the CARB considered the legislation, and applied the proper legal principles, including an assessment of market value as required under the MGA . [ 80 ] I will repeat the City’s submission here for ease of reference.

The City points to section 289(2)(b), which requires that each assessment reflect the valuation standard set out in the regulations for that property, and to section 293(1)(

a) of the MGA, which requires that in preparing an assessment, the assessor must, in a fair and equitable manner, apply the valuation standards in the regulations.

[ 81 ] Section 4(1)(

a) of the Regulation stipulates that the valuation standard for a parcel of land is its market value.

Section 2(

c) of the Regulation further says that market value must reflect typical market conditions for properties similar to that property. [ 82 ] The City argues that these provisions impose a duty upon the assessor to consider market value and equity, and therefore by reference to the legislation’s terminology, the CARB (which is a board with significant expertise in assessment matters) demonstrated that it did consider these matters.

The CARB demonstrated its consideration of the market value through its reference to the City’s “evidence regarding the rental rate” and it demonstrated its consideration of the equitable value through its statement that “the assessment comparables were considered compelling.” In short, the City argues Wal-Mart has not demonstrated that this ground of appeal has a reasonable chance of success, for the valuation determined by CARB is reasonable as it falls within a range of possible, acceptable outcomes. [ 83 ] The difficulty with the City’s submission is that it is not clear whether the City’s

interpretation of the MGA is the same

interpretation that the CARB applied because, as earlier noted, the CARB provides no analysis in its decision of the evidence before it or how that evidence meets the proper statutory test, other than to imply that it prefers the City’s evidence, as it finds in the City’s favour. It is also not clear whether there has been any

interpretation of the purported legal principle that a taxpayer is entitled to an assessment that is both at market value or otherwise equitable. Both parties have submitted conflicting case law on this point. There is case law in support of Wal-Mart’s submission that the CARB ignored this principle, and thus interpreted the applicable law in a way that falls outside the range of acceptable outcomes. There is competing case law in the City’s favour, though from a different jurisdiction and therefore not binding.

It is for all of these reasons that I have concluded that Wal-Mart has a reasonable chance of success on appeal. Wal-Mart’s arguable case emerges from the Alberta case law. This question can thus move forward to the appeal stage. Further submissions on this issue will be needed from both parties in order to properly decide this matter. c.

Does the question of whether the CARB ignored evidence or otherwise failed to deal with evidence have a reasonable chance of success? [ 84 ] The City contends that this issue actually deals with the valuation of the property and that, given the CARB’s significant expertise in assessment matters, a standard of reasonableness would apply.

The City submits that, when the decision is taken as a whole, it is clear that the CARB considered both its mandate in the MGA and the evidence before it in order to reach its conclusions. [ 85 ] Though Wal-Mart does not explicitly address this point, I am of the view that the reasonable chance of success on this issue is closely tied to Wal-Mart’s reasonable chance of success with regard to the adequacy of the CARB’s reasons.

As earlier noted, the CARB decision does not address the evidence of tenant inducements, and in particular the $250,000 construction allowance, nor does it provide any suggestion that upon consideration of that evidence, the CARB decided to reject Wal-Mart’s evidence on this point. A general mention in an Appendix to the decision that Wal-Mart’s submissions were considered does not, in my view, suffice to conclude that the CARB actually dealt with that evidence.

Furthermore, to repeat, while the CARB decision summarizes the parties’ evidence of comparables, it does not refer to whether these comparables are affected by any of the evidence of tenant inducements and in particular the $250,000 construction allowance. It is for all of these reasons that I conclude that Wal-Mart has a reasonable chance of success in demonstrating that the CARB did not deal with certain evidence before it, because there is no indication in the decision that it was considered. I therefore grant Wal-Mart leave to appeal the CARB’s decision on this question. VII.

Conclusion [ 86 ] For the reasons outlined above, I grant Wal-Mart’s application seeking leave to appeal. [ 87 ] The parties may arrange to address me with regard to costs within 30 days of the date hereof at a time mutually agreeable to all, if they are unable to agree on the matter of costs. Heard on the 14 th day of November, 2012.

Dated at the City of Calgary, Alberta this 9 th day of January, 2013. C.S. Phillips J.C.Q.B.A. Appearances: Brian K. Dell for the Applicant Tina Squire for the Respondent