GSL Chevrolet Cadillac Ltd. v Calgary (City), 2013 ABQB 318

Court of Queen ’ s Bench of Alberta Citation: GSL Chevrolet Cadillac Ltd. v Calgary (City), 2013 ABQB 318 Date: 20130603 Docket: 1101 17240 Registry: Calgary Between: GSL Chevrolet Cadillac Ltd. Applicant - and - The City of Calgary and the Calgary Assessment Review Board Respondents Corrected judgment: A corrigendum was issued on June 5, 2013; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice B.L.

Veldhuis _______________________________________________________ I. Introduction [ 1 ] This application concerns leave to appeal a decision of the Calgary Assessment Review Board (“CARB”), which upheld a property tax assessment conducted by the City of Calgary (“City”) and denied the complaint of the taxpayer GSL Chevrolet Cadillac Ltd. (“GSL”).

[ 2 ] Essentially, GSL believes its 2011 property tax assessment was incorrect because its property lies on contaminated land, and the tax discount offered for this contamination was arbitrary and insufficient. GSL holds the position that, among other things, the CARB erred in approving this arbitrary approach. [ 3 ] The City takes the position that its property tax assessment was conducted properly, on the information available, and that the CARB did not err in any way.

It contests the validity of the grounds of appeal offered by GSL. [ 4 ] The CARB takes no position on the merits of the appeal beyond clarifying the jurisdiction, procedures, and standard of review of CARB decisions. II. Facts and Background [ 5 ] GSL operates an automotive dealership at the west end of downtown Calgary. GSL’s interest in the property tax assessment relates to its relationship as tenant to the landlord General Supplies Co. Ltd. Although legally distinct, because General Supplies Co.

Ltd. was the complainant at the CARB, I will refer to both entities collectively as “GSL” throughout this decision. [ 6 ] The subject property is located at 1720 Bow Trail SW, across from the Greyhound Bus Depot in the community of Sunalta. It is not disputed that it was formerly the location of the Canada Creosote Company. Nor is it disputed that the chemicals used to treat wood on this site left the property environmentally contaminated.

The CARB found as fact that the extent of this contamination on the date of the assessment was unknown. [ 7 ] The subject property’s 2010 Market Value Assessment was $7,560,000. In 2011 it was $11,190,000. For the 2011 assessment the property was given a 30% reduction in value based on “environmental concerns”. [ 8 ] After receiving its 2011 Property Assessment Notice, GSL filed a complaint with the CARB under

section 460 of the Municipal Government Act , RSA 2000, c M-26 (“ MGA ”). There were two issues identified in the complaint: 1) The subject site was contaminated and the assessment did not take this into account; and, 2) The year-over-year near 50% increase in assessed value of the subject property was wrong. The complaint was heard on October 6, 2011 and a written decision was issued November 17, 2011. [ 9 ] Among several preliminary matters was the issue whether or not to accept the complainant’s rebuttal package in evidence.

The CARB ruled that certain documents were excluded from evidence due to non-compliance with the Matters Relating to Assessment Complaints Regulation , Alta Reg 310/2009, s 8(2)(a)(i) (“ MRAC ”). Specifically, these documents could not properly be categorized as rebuttal evidence because they contained new pieces of information that should have been provided in the initial disclosure process. [ 10 ] The CARB dismissed the first issue on the grounds that GSL had failed to show that the assessment did not appropriately take the contamination of the site into account.

Specifically, GSL failed to provide any market or other evidence to indicate a lower property value based on a greater extent of contamination than accounted for by the City. [ 11 ] The second issue was dismissed for similar reasons. The CARB determined GSL had failed to provide evidence to

“demonstrate conclusively” how the assessment was wrong and what the value of the assessment should be. [ 12 ] Following the decision of the CARB, GSL made the following application for leave to appeal to this Court under s. 470 of the MGA . III. Statutory Regime and Standard of Review [ 13 ] An appeal to this Court from an assessment review board is conducted in two phases.

Applicants must first be granted leave to appeal by satisfying the judge hearing the application that the following conditions under s. 470(5) of the MGA have been met: 1) the matter must involve a question of law or jurisdiction; 2) the matter must be of sufficient importance to merit an appeal; and, 3) the matter must have a reasonable chance of success.

Only if the application for leave to appeal is granted will the matter be set for a separate hearing. [ 14 ] The relevant legal principles governing the conduct of an appeal from an assessment review board decision were recently summarized by Michalyshyn J in Edmonton East (Capilano) Shopping Centres Limited (AEC International Inc.) v. Edmonton (City) , 2012 ABQB 445 , 1 MPLR (5th) 38 (“ Capilano ”). At paragraph 13 he stated: In Edmonton (City) v. Edmonton Composite Assessment Review Board , 2012 ABQB 439 it was noted a reading of previously-decided cases revealed certain trends.

Most obviously, leave to appeal is seldom given, at least compared to the often-high number of grounds raised. That appears to be most often the case because grounds for appeal do not raise questions of law or jurisdiction. Leave applications are denied frequently also on the basis of no reasonable chance of success.

Least onerous appears to be the hurdle of showing the issue is of sufficient importance. [ 15 ] Both parties cited the following guidance on questions of law from Altus Group Ltd v Calgary (Composite Assessment Review Board) , 2011 ABQB 739 at para 21 , 528 AR 138, which I accept and may be grouped into three categories: 1) Generally stated, an incorrect statement of the legal standard, or test, or an application of incorrect factors in applying the law to the facts is clearly an error of law. The law must not only be correctly stated, but that correct

interpretation of the law must be applied to the facts, when engaged in applying the law to the facts. 2) Where there is a discretion involved in applying the law to the facts, the application of the discretion is not a question of law, but a question of mixed law and fact. 3) However, if a wrong legal principle is used in the application of the law to the facts, or in the exercise of the discretion, there is an error of law. [ 16 ] Michalyshyn J expanded on the concept of sufficient importance to merit an appeal in the following terms at paragraph 22 of Capilano :

Ross J. at para. 42 of Associated Developers Ltd. v. Edmonton (City) [2011 ABQB 592 , 527 AR 287] suggests that an issue may be of sufficient importance to merit an appeal if it is important for jurisprudential purposes. The importance must be determined on an objective scale, not the subjective importance of the matter to the applicant. Generally there should be something unsettled about the question, or the decision should have wide ranging implications.

The issues should not be merely the correction of a situation fact specific to the one case, without more. [ 17 ] Both parties also accept, and I so find, that the standard of review in this instance is reasonableness. As a specialized tribunal in matters of property value assessment the CARB is to be afforded some deference on appeal.

As stated in Capilano at paragraph 14: The ‘reasonable chance of success’ requirement engages the question of standard of review on questions of law or jurisdiction. “Reasonableness” is the presumed standard of review to be applied in CARB leave applications: Alberta (Information and Privacy Commissioner) v. Alberta Teachers' Association , 2011 SCC 61 at para. 34 . IV.

Grounds of Appeal [ 18 ] GSL has raised the following four issues on this leave to appeal application: 1) the CARB erred in law in excluding certain material presented in rebuttal; 2) the CARB erred in law in approving an arbitrary approach to valuation; 3) the CARB erred in law in holding that in order to challenge the City’s assessment the Applicant must prove that a different value is appropriate; and, 4) the CARB erred in law in ruling that a complainant carried a burden of “conclusive proof”. V.

Ground One: the CARB erred in law in excluding certain material presented in rebuttal [ 19 ] The exclusion of evidence on the basis that it is not rebuttal evidence and therefore not in compliance with statutory disclosure obligations is not, by itself, a question of law. At most, such a categorization of evidence is a mixed question of fact and law, involving the application of a legal standard to the evidence as presented. [ 20 ] GSL did not suggest that the CARB applied the wrong legal test to the characterization of rebuttal evidence.

Indeed, GSL did not even dispute that the excluded documents were new evidence, but rather tried to argue they could not have been included in their initial disclosure package because they did not know on what grounds the City would defend its assessment. This is not an argument disputing a question of law. At best it is an expression of dissatisfaction with the statutory regime. At worst, it is an intentional splitting of the complainant’s case, the very thing the MRAC disclosure provisions are designed to prevent.

Unfortunately for GSL, the disclosure requirements under the MRAC are as clear to me as they were to the CARB. [ 21 ] Regardless, under s. 460(7) of the MGA , the complainant bears the onus of demonstrating what information shown on the assessment is incorrect, explaining how it is incorrect, indicating what the correct information is, and identifying what assessed value the complainant requests. It was always open to GSL to provide all the documents excluded in their rebuttal package during the initial disclosure.

If GSL took issue with the discount given for environmental concerns, it did not need to know how the City intended to defend this number. GSL merely needed to provide sufficient evidence to back their own number. Any failure to do so must be borne by GSL. The only error of law in this circumstance would have been to include this evidence, when the statutory regime clearly prohibited it.

[ 22 ] Even if GSL disputed the legal standard applied by the CARB in characterizing GSL’s rebuttal documents, this is not a matter of any precedential value meriting an appeal. The evidentiary issue of how to characterize rebuttal evidence is settled law. Nor is it a question which has a reasonable chance of success as there is no indication the CARB misunderstood the legal test it was obliged to apply. VI. Ground Two: the CARB erred in law in approving an arbitrary approach to valuation [ 23 ] Whether or not the CARB approved of an arbitrary approach to valuation is a question of law.

First, it is contrary to general legal principles for a reviewing body to endorse arbitrary decision-making. Chief among these principles is the rule of law, which dictates that the law should be applied in a uniform fashion for all. Second, such an approach would be contrary to the statutory regime for property assessments.

Section 6(1) of the Matters Relating to Assessment and Taxation Regulation , Alta Reg 220/2004 (“ MRAT ”), designates the appropriate valuation standard for the subject property to be “market value.” Under s. 2 of the MRAT an assessment of property based on market value must be: 1) prepared using mass appraisal; 2) an estimate of the value of the fee simple estate in the property; and, 3) reflective of typical market conditions for properties similar to that property.

An arbitrary approach to valuation is not endorsed by these provisions. [ 24 ] GSL alleges the City’s approach to its tax discount for environmental concerns was arbitrary because it is unsupported by any evidence. In the view of GSL, this tainted the entire assessment and any other assessment of contaminated land conducted in a similar fashion. If accurate, such an arbitrary approach would have a wide-ranging effect on the assessed values of other similarly contaminated properties throughout Alberta.

The correction of such an arbitrary approach merits an appeal because it would affect property owners and taxpayers beyond GSL. [ 25 ] However, this issue does not enjoy any reasonable prospect of success because it is plainly obvious that the CARB did not approve of an arbitrary approach to valuation and that GSL’s characterization of this issue is really an attempt to re-litigate the merits of their CARB complaint. [ 26 ] GSL contends that the 30% reduction in value for environmental concerns was plucked out of thin air.

The City argues it was a reasonable estimate reached in coordination with other numbers, though the City admitted it was unable to directly support the source of this value. However, the MRAT grants the City some leeway in arriving at its assessment by providing for an “estimate” of the value of the fee simple estate in the property to be made in coordination with the typical market conditions for similar properties. The CARB accepted the City’s methodology as having done that. The CARB further accepted that the City had made a reasonable effort to account for environment concerns.

Conversely, the CARB found that GSL had failed to provide any evidence to show why this discount was incorrect or what the correct value should be. Including an estimate of one factor made in coordination with other indicators does not destroy the reliability of a global assessment; even more so when that global assessment is verified against a second estimate, using an alternative calculation. [ 27 ] Many of GSL’s submissions attacked other aspects of the City’s overall assessment methodology.

Beyond the question of whether or not this methodology complied with the statutory regime, this is not a question of law, but rather a question of what was reasonable given the evidence presented and the expertise of the CARB. It is obvious to conclude the decision of the CARB regarding methodology was reasonable because it was not an endorsement of an arbitrary approach. [ 28 ] GSL argued it could not provide market evidence of the sale of similarly contaminated sites.

This is clearly wrong as the City was able to provide three sales of nearby properties, including the similarly contaminated neighbouring Renfrew Chrysler automotive

dealership. The CARB accepted this as a factual conclusion. [ 29 ] GSL also took issue with the income-based calculation used by the City to verify its cost-approach method. This included the use of “typical rent values” to the exclusion of “actual rent values” as reflected by the particulars of the existing lease and the failure to apply an 18% capitalization rate derived from a 1999 assessment of a contaminated site in Edmonton in order to account for environmental concerns. The CARB rejected the mixing of typical rent values with actual rent values as flawed methodology.

Given the expertise of the CARB and the support offered by other assessment review board decisions which have rejected this approach, this finding was a reasonable one. The rejection of the 18% capitalization rate was based on a finding of fact that the Edmonton site and Edmonton market in 1999 were not comparable to the subject property and Calgary market in 2011. The City contends and the CARB appeared to accept that the environmental concerns discount was accounted for within the 9% capitalization rate granted.

This was also a finding of fact the CARB was entitled to make. [ 30 ] None of these concerns - all of which were rejected by the CARB - demonstrate that the methodology approved of by the CARB was arbitrary, therefore making the decision of the CARB unreasonable. I conclude that this ground of appeal has no reasonable chance of success. VII.

Ground Three: the CARB erred in law in holding that in order to challenge the City ’s assessment the Applicant must prove that a different value is appropriate [ 31 ] The correct burden borne by a party making a property assessment complaint is a question of law. [ 32 ] However, the correct burden in these cases is settled law and does not merit an appeal. Indeed, it is mandated by statute.

Section 460(7) of the MGA states that a complainant must: 1) indicate what information shown on an assessment notice or tax notice is incorrect; 2) explain in what respect that information is incorrect; 3) indicate what the correct information is; and, 4) identify the requested assessed value, if the complaint relates to an assessment. Items 3 and 4 could not be more clear. It is not enough for a complainant to comply with items 1 and 2 only.

Even if GSL had been able to show that the City had used an arbitrary process in its assessment in fulfilment of items 1 and 2, it remained GSL’s burden to fulfill items 3 and 4. [ 33 ] This ground of appeal enjoys no reasonable prospect of success. The CARB correctly stated the burden borne by a party making a property assessment complaint. VIII. Ground Four: the CARB erred in law in ruling that a complainant carried a burden of “conclusive proof ” [ 34 ] The correct standard of proof borne by a party is a question of law. The normal burden of proof in civil cases is a simple balance of probabilities.

This was the applicable standard of proof in this case. [ 35 ] There is nothing unsettled about the standard of proof in these circumstances to warrant an appeal. The standard is

undisputedly the balance of probabilities. Even if a higher and incorrect standard was applied, its correction would have little impact beyond the circumstances of this case. There is no indication that the CARB routinely misunderstands or misapplies the standard of proof in its proceedings. [ 36 ] Further, this ground of appeal has no reasonable chance of success. Even if the wrong standard of proof was applied, there is no indication that this would have changed the outcome of the appeal. The CARB repeatedly concluded as fact that there was no evidence upon which GSL could support an alternative assessed value.

With nothing to support its submissions, GSL’s complaint was doomed to fail regardless of which standard of proof was applied. In any event, it is not clear that the CARB applied a standard other than the balance of probabilities. Read in context, it is possible the reference to conclusive proof was merely an expression of frustration with having been provided no evidence at all. IX. Disposition [ 37 ] All four grounds of appeal are dismissed with costs. Heard on the 22nd day of November, 2012. Dated at the City of Calgary, Alberta this 3 rd day of June, 2013. B.L. Veldhuis JCQBA Appearances: Patrick F.

Mahoney of Lawson Glod Mahoney, Barristers & Solicitors for the applicant GSL Chevrolet Cadillac Ltd. Leila J. Gosselin of the City of Calgary Legal Department for the respondent City of Calgary Shaun Fluker, Barrister & Solicitor for the respondent Calgary Assessment Review Board _______________________________________________________ Corrigendum of the Reasons for Judgment

of The Honourable Madam Justice B.L. Veldhuis _______________________________________________________ The judgment has been changed. The Heard date should read the 22nd day of November, 2012.