Associated Developers Ltd v Edmonton (City), 2017 ABQB 578

Court of Queen’s Bench of Alberta Citation: Associated Developers Ltd v Edmonton (City), 2017 ABQB 578 Date: 20170927 Docket: 1603 02101 Registry: Edmonton Between: Associated Developers Ltd. and Oxford Properties Industrial GP Inc. Applicants - and - City of Edmonton and Edmonton Composite Assessment Review Board Respondents _______________________________________________________ Reasons for Decision of the Honourable Madam Justice D.A.

Sulyma _______________________________________________________ I Introduction [ 1 ] The Applicants seek leave to appeal three decisions of the Edmonton Composite Assessment Review Board (CARB) in relation to three land parcels located within the City of Edmonton. [ 2 ] They do not dispute the assessed value of the subject properties.

However, they submit that assessment value is a function of land use, and the City erred in law by endorsing an assessment that assigns a non-residential assessment classification to farm land based on land use zoning. [ 3 ] The entirety of each property in question is used as farm land. The Applicants take the position that a 3 acre parcel of each property that is required to be valued using the “market value” standard as opposed to the “agricultural use value” standard should be classified as “farm land” rather than “non-residential” under s. 297 of the Municipal Government Act , RSA 2000, c M-26 ( MGA ).

II Background [ 4 ] At the CARB hearings, the parties agreed to present the evidence and argument in relation to a single roll number, and apply those submissions to the two other properties in question. The Review Board issued a decision based on identical legal analyses for each of the three subject properties based on the common submissions.

The parties agree that the factual differences between the properties are not relevant to the application. [ 5 ] Before this Court, the Applicants addressed the CARB’s reasons with respect to Assessment Roll Number 10177247: Oxford Properties Industrial GP Inc as represented by Altus Group v The City of Edmonton , 2015 ECARB 01760. [ 6 ] The property is undeveloped land located within the City of Edmonton. The adjacent property is provided with municipal services, such as water and sewer, and those services may be accessed by the property. The property is zoned as “IB – Industrial Business District”.

The entire property is farmed and has been treated as farm land for many years. [ 7 ] On January 2, 2015, the City provided a property tax assessment notice indicating a value of $5,388,000 as of July 1, 2014. The Assessment indicated that the property’s assessment class was “non residential” and the property use was “undeveloped land (900)”.

The 2015 estimated taxes were $94,289. [ 8 ] Before the CARB, the owner (represented by a third party) submitted that the property was used exclusively for farming operations and ought to be assigned the assessment classification of farm land, and the proper valuation standard for the property is market value for a 3 acre parcel and agricultural land value for the remainder, not market value for the full property as had been calculated in the Assessment. [ 9 ] In response, the City recommended that the assessed value be reduced to $1,813,500 from $5,388,000.

The new assessment value was determined in accordance with s. 4 of the Matters Relating to Assessment and Taxation Regulation ( MRAT ) which values a 3 acre parcel within the property at a valuation standard of market value and the remainder at a valuation standard of agricultural use value. [ 10 ] However, the City also submitted that the assessment classification ought to be split such that the portion of the property that had been assigned a valuation standard of market value be classified as non-residential and the remainder classified as farm land.

The net effect would be to apply a much higher mill rate to the property. [ 11 ] The City reasoned that: the provision in MRAT that addresses the appropriate valuation standard for the property makes reference to treating sections where a different valuation standard is applied as “parcels of land”; the non-residential assessment class in the MGA contemplates lands that may potentially be used for industry and commerce and the property’s zoning would permit those potential land uses; and a failure to change the mill rate would result in an inequity amongst properties with similar use. [ 12 ] In rebuttal, the owner provided evidence it argued established that assessment classification is a function of use as reflected in 13 examples where zoning did not impact the assessment classification. [ 13 ] The City did not dispute that the property was used exclusively for farming, including the portion of the property that the City sought to classify as non-residential. [ 14 ] In its decision, the CARB endorsed the City’s approach to the assessment classification.

V Proposed Grounds of Appeal [ 15 ] The Applicants propose that they be permitted to appeal from the decisions of the CARB on the following issues: A. Did the CARB err in law by failing to apply the correct assessment class as required by the MGA ? B. Did the CARB breach principles of natural justice and the duty to be fair, and err in law, by endorsing an assessment that is inconsistent with past and present practice between similar properties in the same municipality? C. Did the CARB err in law in failing to address the issue of onus and by misapplying the burden of proof?

VI Test for Granting Permission to Appeal [ 16 ] At the time of filing of this application, the test for leave to appeal was set out in s. 470(5) of the MGA . The appeal must: i. involve a question of law or jurisdiction, ii. be of sufficient importance to merit an appeal, and iii. have a reasonable chance of success. [ 17 ] The issue as to whether the matter has a reasonable chance of success is informed by the applicable standard of review: Ross v Edmonton (City) , 2015 ABQB 495 at para 3 .

VII Analysis A Did the CARB err in law by failing to apply the correct assessment class as required by the MGA ? [ 18 ] The Applicants raise the question as to whether the CARB erred by assigning a classification of “non-residential” for a 3 acre parcel of the property notwithstanding that the parties agree the entire property is used for farming operations as defined in the regulations. [ 19 ] This question involves

interpretation of the

definitions in s. 297(4) of the MGA and s. 1(

i) of the MRAT . Section 297(4)(

b) provides that “non-residential” does not include farm land.

The Applicants note that the CARB applied an assessment class of “farm land” to 3 acre parcels in similar circumstances, although the properties in those instances was zoned for agricultural rather than industrial use: Altus Group for Associated Developers Ltd v The City of Edmonton , 2016 ECARB 01025; Altus Group for Capital Management Ltd v The City of Edmonton , 2016 ECARB 01026. [ 20 ] The Applicants submit that the CARB fundamentally erred in law in establishing assessment classification based on land-use zoning, as assessment classes are impacted by land use, not by land use zoning.

In other words, assessment value is a function of the use of land. They submit that the CARB erred in concluding that the valuation standard should have any impact on the assessment classification. They submit that assessment classification is completely independent from property valuation, which must be calculated in accordance with the standards in MRAT .

Section 4 of MRAT is entitled “Valuation Standard for a parcel of land”. [ 21 ] The City argues that this is a question of mixed fact and law as it raises the issue of whether the facts satisfied the legal test. [ 22 ] In my view, this is an extricable question of law, as it relates to

interpretation of legislative provisions and the manner of their application by CARB. [ 23 ] The Applicants submit that misapplication of this assessment class has a far-reaching impact on future taxpayers who own farm land in industrial zones. [ 24 ] The City submits that the issue is only subjectively important to the Applicants. [ 25 ] I disagree. It is reasonable to assume that other landowners may well be in similar situations. Indeed, the same issue was raised by three applicants in Baramy Investments Ltd v Edmonton (City) , 2017 ABQB 450 , [2017] AJ No 752.

I find that the issue is of sufficient importance to merit an appeal. [ 26 ] As for whether the appeal has a reasonable chance of success, an appeal has a "reasonable prospect of success", or amounts to an "arguable" case, if the likelihood of a successful appeal is greater than extremely low: Alberta (Chief Firearms Officer) v Runkle , 2015 ABCA 233 , [2015] AJ No 753 at para 37 . [ 27 ] The standard of review of a CARB decision involving

interpretation of the MGA is presumed to be reasonableness: Edmonton (City) v Edmonton East (Capilano) Shopping Centres Ltd , 2016 SCC 47 , [2016] 2 SCR 293. [ 28 ] The City argues that the CARB’s decision falls within the reasonable range of outcomes, given the facts and the law. [ 29 ] There is no dispute that the lands were used for farming operations. Section 297(4)(

b) arguably provides that “non- residential” does not include farm land. Further, it is arguable that s. 4(3) of MRAT deals with the valuation standard for the 3 acre parcel, and not the assessment classification. [ 30 ] The CARB reasoned that the relevant provisions must be read together. However, despite a lengthy explanation by the City as to how the CARB could reach reasonably its conclusion (the same explanation is set out in considerable detail in Baramy ), it is arguable that the CARB’s reasons do not rationally explain how the s. 297(4)(

b) express exclusion of farm land from “non-residential” is reconciled with its

interpretation of the provisions. Therefore, the case has a reasonable chance of success on a review for reasonableness. [ 31 ] Permission to appeal is granted on the first ground. B Did the CARB breach principles of natural justice and the duty to be fair, and err in law, by endorsing an assessment that is inconsistent with past and present practice between similar properties in the same municipality? [ 32 ] An administrative tribunal is not bound by its previous decisions and is entitled to change its consensus or policy. However, it may be difficult to find diametrically opposed

interpretations of statutory provisions as both being reasonable and therefore the reasonableness standard may not shield an administrative decision from review where it directly conflicts with other decisions by the same body: Altus Group Ltd v Calgary (City) , 2015 ABCA 86 at paras 16 , 31, 599 AR 223. [ 33 ] In my view, this is not a separate ground of appeal, but rather it relates to the first issue as to whether the CARB erred in law and, in particular, whether its different

interpretations of the same statutory provisions are shielded by the reasonableness standard. C Did the CARB err in law in failing to address the issue of onus and in

misapplying the burden of proof? [ 34 ] The appropriate application of the burden of proof is a question of law. The CARB did not discuss the onus in its decision. However, the CARB is entitled to the presumption of regularity regarding its proceedings, and reasonableness applies to review of its application of the burden of proof in the hearing before it: Canapen (Phipps-Mckinnon) Ltd v Edmonton (City) , 2017 ABQB 502 , [2017] AJ No 849 at paras 61-65 and cases cited therein. [ 35 ] This ground is not of sufficient importance to merit an appeal, nor does it have a reasonable chance of success.

X Conclusion [ 36 ] The Applicants have met the test for leave to appeal in relation to the first ground of appeal. XI Costs [ 37 ] If the parties cannot agree on costs, they may speak to costs within 60 days from the date of these Reasons. Heard on the 2 nd day of September, 2016. Dated at the City of Edmonton, Alberta this 27 th day of September, 2017. D.A. Sulyma J.C.Q.B.A. Appearances: David D.

Risling of McLennan Ross LLP for the Applicants Tanya Boutin Of City of Edmonton Law Branch for the Respondent, City of Edmonton Kate Hurlburt Q.C. of Emery Jamieson LLP for the Respondent, Edmonton Composite Assessment Review Board