Sawridge Business Park Ltd v Leduc (City), 2017 ABQB 247

Court of Queen’s Bench of Alberta Citation: Sawridge Business Park Ltd v Leduc (City), 2017 ABQB 247 Date: 20170404 Docket: 1503 18745 Registry: Edmonton Between: Sawridge Business Park Ltd Applicant - and - The City of Leduc, The Leduc Composite Assessment Review Board, The Minister of Justice and Attorney General of Alberta Respondents _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice D.A. Sulyma _______________________________________________________ Introduction 1 .

This is an Application for leave to appeal an assessment of 17 lots located in a subdivision of Leduc, Alberta. The Applicant appeals the decision of the Leduc Composite Assessment Review Board (“the Board”) dated November 18, 2015 which affirmed a 2015 assessment of the 17 properties.

Facts 2 . For the 2015 tax year, the properties were assessed by the City of Leduc (“the City”) assessor using the direct sales approach with assessments ranging from $464,000 to $1,548,000. On appeal, the Board identified two issues: 1. What is the appropriate value for raw land that should form the basis of the assessment - $74,000 per acre (approximately) as proposed by the Applicant, or $125,000 per acre as assessed by the City, and 2. What is the physical state of the Subject Properties as at the condition date of December 31, 2014? 3 .

A merit hearing was held before the Board on October 25, 2015 and a decision was issued on November 18, 2015. 4 . The evidence submitted by the Applicant in the hearing was that it had entered into a joint venture agreement with a numbered company, whereby the numbered company would obtain 50 percent of the shares of Sawridge Business Park Ltd and a 50 percent interest in the parcels of land. The Applicant also provided the Board with the calculation of profit which a developer would hope to achieve. 5 .

In arguing that the subject properties were not fully serviced, the Applicant stated that as at December 31, 2014: 1) None of the lots were serviced with power, gas or communication networks; 2) The subdivision’s storm-water pond and stormceptor and outfall were not completed; 3) Signage was not completed; 4) Grading and planting was not completed. 6 . The Courts have established that the test for leave in s 470(5) of the Municipal Government Act RSA 2000 c M-26 (as amended)(“ MGA ”) is a three part test, and that all three parts of the test must be satisfied if leave is to be granted.

If the question on which leave is sought is found to be a question of fact or a question of mixed fact and law, the analysis ends and the remaining two parts of the test do not need to be considered.

If however, the question on which leave is sought is found to be a question of law, then the Court must still consider if the question is of sufficient importance to merit an appeal and if the appeal stands a reasonable chance of success: Ruppert v Calgary Assessment Review Board , Calgary)(18 November 2010), 1001-11405 (ABQB), Globexx Properties Ltd v The City of Edmonton , 2011 ABQB 464 ; and Alberta (Municipal Affairs) v TransCanada Keystone Pipeline Limited Partnership , 2011 ABQB 460 . 7 .

The Board considered the evidence filed by both parties, and found that it could place “little weight on the Applicant’s raw land value used to determine the requested reduced assessments of the subject properties” because “the value was derived from a 50 percent share/interest sale to a third party that then became a joint developer of the land that comprises the eighteen properties that are the subjects of this complaint”.

The Board accepted the City’s argument that “the value of the raw land as determined from the sale of a 50 percent interest . . . was not as a result of an arm’s length sales transaction. “In particular, the Board held that it was not persuaded that a value derived from an undocumented sale transaction, that is not supported by sales of similar properties, can represent a proper valuation as mandated by provincial regulation.” 8 .

The Board went on to conclude that the Applicant “provided no market evidence about similar properties to challenge the assessed value determined by the City for the subject properties.” It further stated that it was not persuaded that a value derived from an undocumented sales transaction, that is not supported by sales of similar properties can represent a proper valuation as mandated by Provincial regulation. 9 .

The Board noted that the sale of the 50 percent share interest did not result from being listed on the open market and that no evidence was provided to suggest that the best possible price was obtained for the property. The Board contrasted that to the evidence considered by Justice Acton in 697604 Alberta Ltd v Calgary (City) , 2005 ABQB 512 . 10 . The Board also held that the Applicant had provided no evidence to challenge the City’s position that the subject properties were fully serviced, as sanitary sewer, water mains and paving were installed.

It contrasted that to the City having provided a sworn Affidavit from Mr. Ken White, swearing that the subject properties “were fully serviced with municipal water and sanitary sewer at December 31, 2014 and that, in addition, the roads were paved”. 11 . The Board confirmed the 2015 assessments of the subject properties at the values assessed by the City. 12 . On December 14, 2015, the Applicant filed an application for permission to appeal the Board Decision pursuant to s 470 of the MGA . Leave to Appeal Application 13 .

Section 470(1) of the MGA establishes the right of appeal to the Court of Queen’s Bench on a question of law or jurisdiction from a decision of an Assessment Review Board. 14 . Section 470(5) requires that leave to appeal may be granted: . . . if the judge is of the opinion that the appeal involves a question of law or jurisdiction of sufficient importance to merit an appeal and has a reasonable chance of success.

15. The Supreme Court of Canada in Canada (Director of Investigation & Research, Competition Act) v. Southam Inc., (SCC), [1997] 1 SCR 748 provided an explanation of the distinction between questions of law, questions of fact andquestions of mixed law and fact. It stated at para 35: Briefly stated, questions of law are about what the correct legal test is; questions of fact are questions about what actually took placebetween the parties; and questions of mixed law and fact are questions about whether the facts satisfy the legal tests. 16.

Courts will only grant leave to appeal on clear questions of law or jurisdiction. A pure legal question must be extricated froma question of mixed fact or law. A question of mixed fact and law includes questions involving the application of the statute to specificcircumstances. The Court in TransCanada (supra) found that the

interpretation of the MGA was an issue of mixed fact and law. TheCourt of Appeal denied leave to appeal in Bearspaw Petroleum Ltd v Alberta (Energy and Utilities Board), 2009 ABCA 3 as it held thatthe Appellant was questioning the application of facts to legislation which at best raised a question of mixed fact and law. 17. Further, where a Board interprets legislation with a contextual analysis and an understanding of the market place, that willgenerally be identified an issue of mixed law and fact: Canada Lands Co. CLC Ltd v Alberta (Municipal Government Board), 2006ABQB 293. Proposed Grounds of Appeal 18.

The Applicant here raises the following grounds of Appeal: 1) The Board erred in confirming assessments which did not reflect the characteristics and physical condition of the properties as ofDecember 31, 2014; 2) The Board applied the “wrong legal test” when it accepted the City’s position that the only characteristics and physical conditionsthat are relevant are the presence of sanitary sewers, water mains and roads; 3) The Board erred in law by failing to address the issue of onus or misplaced the burden of proof putting it on the Applicant; 4) The Board erred in law or exceeded its jurisdiction by supporting an arbitrary and unsupported valuation.

Discussion Grounds of Appeal no. 1 - Characteristics and Physical Condition 19. The Applicant takes issue with the Board’s finding that the parcels of land could be assessed as serviced land once sanitarysewers, water mains and road work were installed. 20.

The Applicant’s argument is that the City failed to take into account the characteristics and physical condition of theproperties by ignoring the lack of power, water and communication services; ignoring the fact that a pond, stormceptor and outfall werenot completed; ignoring the fact that signage in the subdivision was not yet installed; and ignoring the fact that the developmentagreement required these items to be completed in the subdivision.

The Applicant submits that the acceptance of the properties as fullyserviced for assessment purposes as contended by the City was the application of an incorrect legal test. 21. The Respondent City replies that the finding that parcels could be assessed as serviced once sewers, water mains and roadwork were completed are findings of fact and the Board had evidence before it on which to rely. I agree. The Respondent further submitsthat the term “characteristics and physical condition” will have different meanings depending on the type of property assessed.

As such,there is no single “legal test to be applied” as the Applicant claims. I agree. 22. Section 289(2) of the MGA states:

(2) Each assessment must reflect (

a) the characteristics and physical condition of the property on December 31 of the year prior to the year in which a tax is imposedunder

Part 10 in respect of the property . . . 23. Property is a defined term which includes a parcel of land, a parcel of land and the improvements to it, or improvementsalone. 24. I note that Justice Jerke of this Court denied leave on the question of whether the CARB in Red Deer failed to consider thecharacteristics and physical condition of the property: Canadian Natural Resources Limited v Red Deer (County), 2015 ABQB 220 25. Similarly, Justice Hawco in ATCO Power Canada Ltd v Special Areas Board, 2014 ABQB 716 came to the sameconclusion.

Both Justices found that the issue of application of s 289(2) was a question of mixed fact and law. The Board here had a dutyto consider all aspects of the evidence, which included the Development Agreement and to determine what land could be consideredserviced land for assessment purposes. This is a factual determination, not a question of law, as the City points out. The characteristics ofa parcel of land could include the size of the parcel, the topography, and the location within the municipality and whether or not the landis serviced.

The term physical condition has more applicability to improvements such as a building. Alternatively, as here, the evidenceof the Board had and accepted was that parcels of land could be assessed as serviced once sewers, water mains and roadwork werecompleted. The decision by the Board on this issue was, at best, a question of mixed fact and law which engages no extricable questionof law or jurisdiction.

Grounds of Appeal no. 2 - Onus and Unsupported Valuation 26 . Here the Applicant submits that the only evidence before the Board was the evidence of the Applicant. The City provided no evidence of the valuation of property in the municipality and the Board erred in stating “the onus rests with the complainant to provide sufficiently compelling evidence on which a change in the assessment can be based and to allow a Board to alter the assessment”. 27 . The Applicant relies on Ross v Edmonton (City) , 2015 ABQB 495 where the Board determined and stated that “Ms.

Ross did not produce enough evidence to prove that the assessment was incorrect” and Justice Shelley’s conclusion that that was an incorrect statement of onus of proof. 28 . The Respondent replies that the Board placed no weight on the evidence adduced by the Applicant here in relation to its valuation of the assessed properties (ie based on an alleged arm’s length transaction and in light of profits to be realized in development). The Board also indicated that no market evidence had been adduced even though the Matters Relating to Assessment and Taxation Regulation require such.

Therefore the real question is whether or not the Applicant discharged its onus, rather than what the onus is per se. 29 . The Respondent submits that the Board found that the Applicant had not brought sufficient evidence to make a prima facie case. A review of the cases it submits, establishes that the onus is on the complainant to provide evidence sufficient to warrant consideration of its claim that the assessment is wrong.

If there is sufficient evidence that could establish that on a balance of probabilities, then the legal burden remains with the complainant but the tactical or evidentiary burden will shift to the respondent municipality. In this case, the evidence presented was the joint venture arrangement and transfer of 50 percent of shares. This was the only evidence put before the Board and therefore in this case, no prima facie case was made and the evidentiary onus shift did not occur. That, it argues, is the proper analysis of the evidence and onus here.

Finally, that this is a finding of fact or at best, a finding of mixed fact and law. That is, this decision does not give rise to any question of law. 30 . The Respondent further submits that even if the question here could be reduced to one of pure question of law regarding the correct onus to apply, that the law is settled and an appeal is not warranted. The Respondent in support of this submission covered thoroughly the evolution of cases in this Court dealing with the issue of onus of proof as resting with a complainant which, it submits, confirms that the law now has been settled.

That settled law recognizes that the legal burden of proof remains with the complainant, but that a tactical or evidentiary burden can then shift to the respondent municipality to adduce evidence which disputes that position and supports the assessment as it is. The Respondent submits that the Board here was correct in finding the Applicant did not discharge its initial and continuous onus of proof so that the evidentiary burden never shifted. This in contrast to findings such as that of Justice Shelley in Ross (supra). 31 .

In my view, the whole of this argument remains one founded on the insufficiencies of the evidence adduced by the Applicant which led the Board to conclude the Applicant had not discharged the primary onus. That is at best a question of mixed fact and law and no question of law can be extricated from this argument. The Board correctly noted that the onus was on the Applicant to prove its case on the balance of probabilities as required by the onus in assessment complaints.

Then, as submitted by the Respondent, the core finding of the Board was the Applicant failed to make a prima facie case that the assessments were incorrect. This is a correct articulation and finding on the issue of burden of proof and onus and cannot therefore be found to be in error. 32 . I further agree with the submission that the Board found as a fact that the Applicant did not discharge its onus by bringing a prima facie case and even if that were found to be a question of law, it would also not stand a reasonable chance of success, as required by the three part test.

Grounds of Appeal no. 3 – Arbitrary and Unsupported Valuation 33 . This argument is connected to the argument made on grounds one and two. I have denied that the Board erred in law or in its consideration of the issue of characteristics and physical condition of the properties. I have determined that the Board properly considered the valuation evidence and process and, accordingly, this ground cannot succeed. 34 . As stated at the beginning of this discussion, the onus is on the Applicant to establish all three parts of the test contained in s 475 of the MGA .

I have concluded that all questions on which leave is sought are questions of fact or of mixed fact and law. Therefore, I do not find it necessary to consider in depth the remaining two parts of the test, save as I briefly have above in relation to the issue of onus of proof. 35 . At the time of hearing this appeal, the law on standard of review of administrative decisions was considered to be as stated by the Alberta Court of Appeal in Edmonton East (Capilano) Shopping Centres Ltd v Edmonton (City) , 2015 ABCA 85 , which determined the standard to be one of correctness.

Since that time, the Supreme Court of Canada dealt with the Court of Appeal’s decision and overturned it, deciding that the applicable standard of review is reasonableness. I do not find that change impacts on the decision I have made here. In this case, the Applicant has failed to identify any questions of law. I agree with the submission of the City that the real issue of this Application is the dissatisfaction with the Board’s finding that the 50 percent share/interest transaction did not meet the definition of a market value sale. This is a finding of fact or of mixed fact and law.

The Application for leave is denied, with costs to the Respondents. Heard on the 29 th of July, 2016. Dated at the City of Edmonton, Alberta this 4 th day of April, 2017.

D.A. Sulyma J.C.Q.B.A. Appearances: Michael R. McKinney, QC of Sawridge Group of Companies for the Applicant Alvin R. Kosak of Brownlee LLP for the Respondent Board Carol M Zukiwski of Reynolds Mirth, Richards & Farmer LLP for the Respondent City of Leduc