Pasutto’s Hotels, 2018 ABQB 1030

Court of Queen’s Bench of Alberta Citation: Pasutto’s Hotels

(1984) Ltd v Calgary (City), 2018 ABQB 1030 Date: 20181218 Docket: 1601 11211 Registry: Calgary Between: Pasutto’s Hotels

(1984) Ltd. Applicant - and - The City of Calgary and The City of Calgary Assessment Review Board Respondents _______________________________________________________ Reasons for Decision of the Honourable Mr. Justice C.S. Brooker _______________________________________________________ I. Introduction [ 1 ] The Applicant, Pasutto’s Hotels

(1984) Ltd., applies for leave to appeal a decision of the Calgary Assessment Review Board (the “CARB”) dated July 26, 2016 and numbered CARB 97083P-2016 (the “Decision”). [ 2 ] The Decision pertains to a property located at 221 9 Ave SE (the “Property”) that is being used as a parking lot. Salient characteristics of the Property include that it is bounded on its south edge by railway tracks and that it is alleged to have been contaminated by its prior use as a railway refueling facility. [ 3 ] The City of Calgary (the “City”) assessed the Property as vacant land.

For the 2016 taxation year, the City assessed the Property at $35,320,000. The Applicant appealed that assessment to the CARB. In the Decision, the CARB removed a 5% corner lot adjustment, reducing the assessment to $33,640,000. As will be discussed infra , the CARB declined to reduce the assessment further on the grounds of either the proximity of the railway tracks or the environmental contamination. [ 4 ] The Applicant notes that other assessments of the Property have been reduced by the CARB to a much greater extent.

For the years 2015, 2016 and 2017, the assessments were: 2015: $32,740,000 reduced by the CARB to $19,510,000 2016: $35,320,000 reduced by the CARB to $33,640,000 2017: $29,540,000 reduced by the CARB to $19,700,000.

II. The Legislative Framework [ 5 ] Since the Decision pertains to the 2016 assessment of the Property, it is subject to the provisions of the Municipal Government Act , RSA 2000 c M-26 (the “MGA”) as they were at the relevant time; subsequent amendments to the MGA are not relevant to this application as they were not yet in force. [ 6 ] Accordingly, s. 470(5) of the MGA requires the Applicant to obtain leave to appeal the Decision by satisfying the following test:

i) the appeal is on a question of law or jurisdiction; ii) the issue is of sufficient importance to merit an appeal; and iii) the appeal has a reasonable chance of success. [ 7 ] Other relevant legislative provisions pertain to the manner in which assessments are to be made and to the CARB’s jurisdiction to alter those assessments. [ 8 ] The MGA requires assessments to be prepared in accordance with the valuation standard of market value, which is defined in s. 1(

a) as “the amount that a property ... might be expected to realize if it is sold on the open market by a willing seller to a willing buyer.” [ 9 ] The Matters Relating to Assessment and Taxation Regulation , Alta Reg 220/2004 (“MRAT”) sets out the standards for market value assessments: 2 An assessment based on market value (

a) must be prepared using mass appraisal, (

b) must be an estimate of the value of the fee simple estate in the property, and (

c) must reflect typical market conditions for properties similar to that property. [ 10 ] “Mass appraisal” is defined as “...the process of preparing assessments for a group of properties using standard methods and common data and allowing for statistical testing.” [ 11 ] Finally, the CARB’s review of an assessment is governed by s. 467(3) of the MGA : 467(3) An assessment review board must not alter any assessment that is fair and equitable, taking into consideration (

a) the valuation and other standards set out in the regulations, (

b) the procedures set out in the regulations, and (

c) the assessments of similar property or businesses in the same municipality. III. Issues [ 12 ] The Applicant seeks leave to appeal on the following four questions, which it characterizes as questions of law: 1. Whether the CARB misinterpreted the legislated requirement to assess the market value of the fee simple estate in the Property by disregarding evidence of contamination. 2. Whether the CARB erred in rejecting the Applicant’s evidence of contamination as it was not in the onerous form desired by the assessor and despite having accepted the same evidence the year before. 3.

Whether the CARB failed to apply the proper onus once the Applicant had demonstrated a prima facie case. Specifically: (

a) whether the CARB failed to impose on the City the onus to show that there had been a change in contamination to the Property since 2015; and (

b) whether the CARB failed to apply the common law principle of issue estoppel, with respect to the 2015 Decision, when there was no change in contamination levels at the Property since 2015. 4. Whether the CARB failed to provide adequate reasons for its rejection of evidence presented to it in regards to the negative impact of proximity to railway lines. IV. Analysis [ 13 ] I will examine each of these four questions with reference to the three-part test set out in s. 470(5) of the MGA .

1. Market Value Standard and Evidence of Contamination

i) Question of Law or Jurisdiction [ 14 ] The Applicant asserts that all it need do at this leave to appeal stage is demonstrate that the CARB may have made an error of law or jurisdiction; it cites Associated Developers Ltd v Edmonton (City) , 2011 ABQB 592 at para 6 . [ 15 ] The Applicant argues that while the CARB recognized that market value is the assessment standard and that the Property is contaminated, it nevertheless confirmed an assessment based on uncontaminated land.

The Applicant’s position is that a willing purchaser will always consider contamination in arriving at a purchase price and that, by excluding this factor from its analysis, the CARB failed to apply the market value standard. Failing to apply the proper evaluation standard is an error of law. [ 16 ] The City asserts that the CARB applied the appropriate standard and that its handling of the environmental contamination question is a matter of weighing of the evidence.

The City cites the Court of Appeal’s caution against mischaracterizing issues in Alberta (Workers’ Compensation Board) v Alberta (Workers’ Compensation Board Appeals Commission) , 2005 ABCA 276 at para 19 : The reviewing court must also keep in mind that it is in an applicant’s best interest to characterize a question as one of law or jurisdiction, as those questions generally attract a less deferential standard of review. A nimble drafter may succeed in dressing errors of fact in error- of-law clothing. Simply asserting a question of law or jurisdiction is insufficient.

The reviewing court must identify the true target of the applicant’s attack, determine if it raises a question of law or jurisdiction and gauge whether the issue is arguable... [ 17 ] The City also cited case law indicating that that CARB’s acceptance or rejection of specific evidence does not raise a question of law: Altus Group Ltd v Calgary (Composite Assessment Review Board) , 2011 ABQB 739 ; Canapen (Phipps-Mckinnon) Ltd v Edmonton (City) , 2017 ABQB 502 ; and ARI 5AP GP Inc v Calgary (City) , 2018 ABQB 42 . [ 18 ] I agree with the City that this complaint does not give rise to a question of law or jurisdiction.

I note that the CARB made these comments about the Applicant’s evidence of environmental contamination at paras 31, 36 and 41 of the Decision: [31] The [City] stated that it did not receive information from the [Applicant] as to how environmental contamination affected the market value of the Property. No information was provided as to the extent of the contamination, how long the cleanup might take or a reasonable estimate of cleanup costs. The [City] provided a 2016 Environment site assessment Standard document and a Phase 2 Environmental Site Assessment Standard.

The [City] pointed to the statement in the Phase 2 standard that indicates a Phase 2 ESA may provide a preliminary basis for evaluating for site remedial measures. The [City] stated that to adjust the assessment for a property with environmental contamination it requires the appropriate information to understand how the contamination affects the market value of the property. This documentation has not been received. ... [36] On the issue of the subject property’s market value, the Board considered the market evidence presented by both parties.

The Board reviewed the six sales presented by the [Applicant] and finds the large adjustments (between 50-65%) to be of concern. The adjustments were due to the different locations, land use, parcel characteristics and sizes of the comparables when compared to the subject property. In addition, the combining of the adjustment for the locational and environmental contamination differences into a single adjustment provides the Board with little knowledge of the effect of either of these factors.

The paired sales were offered for several of the adjustments in the appraisal, but the Board found they were either dated or there was issue with one of the sales. The Board places little weight on the accuracy of these adjustments. The Board also finds it unreasonable to compare the subject property with properties so dissimilar, either outside the downtown core or with different land use and influences. ... [41] The Board notes the [Applicant] did not put forth an actual loss in market value to appropriately reflect the effect of the environmental contamination.

The Board was left with a letter from Golder Associates Ltd. regarding remediation of contamination. This letter stated clearly that these were high level estimates only, based on experience, and provided a number of options for initial evaluation purposes. The letter also stated that further investigation/information was required in order to provide a cost estimate for remediation. The costs associated with the letter were estimates and involved a very large range of dollars.

The Board certainly has inadequate information with which to determine a loss in market value to this property. [ 19 ] I conclude that the CARB did apply the appropriate market value assessment standard, but was not satisfied that the Applicant had provided sufficient evidence to justify a reduction in market value resulting from environmental contamination. The CARB did not ignore or disregard the Applicant’s evidence; rather, it was not prepared to put much weight on that evidence. Such weighing of evidence by the CARB is permissible and the Court will not interfere with it.

It is not an error of law. ii) Sufficient Importance [ 20 ] It is common ground that an issue will be of sufficient importance to merit an appeal if it is important for jurisprudential purposes. The Court of Appeal stated in R v Terroco Industries Ltd , 2004 ABCA 159 at paras 18 and 19 that this will be the case if the issue is somehow “novel” or “unsettled” or if it has “wide ranging implications”. [ 21 ] The Applicant argues that its first question goes to the proper

interpretation of the legislative framework and is therefore of interest to all taxpayers. The City’s position is that this question pertains to the CARB’s weighing of the evidence before it and is of importance only to the Applicant. [ 22 ] Clearly, the Applicant seeks a very significant reduction in the assessed value of the Property and that reduction is of substantial importance to it. However, I find that there is nothing about this issue that is novel or unsettled or of jurisprudential

importance. Accordingly, the Applicant has failed to meet this element of the test. iii) Reasonable Chance of Success [ 23 ] The Applicant asserts that, at this leave to appeal stage, it need only show that its case is arguable in the sense that it is not frivolous. It cites Alberta (Chief Firearms Officer) v Runkle , 2015 ABCA 233 at para 37 , but I note that that case was decided under a different statute. [ 24 ] It is clear that this question engages the CARB’s

interpretation of the MGA , its home statute. As such, review of this aspect of the Decision would be on a standard of reasonableness. I have already concluded that the question pertains to the CARB’s weighing of the evidence before it. Its conclusion on the evidence was reasonable. Accordingly, I find that the appeal has no reasonable chance of success and that the Applicant has failed to meet this element of the test for leave to appeal. 2. Rejection of Contamination Evidence [ 25 ] The Applicant’s second question is, in several respects, very similar to the first in that it pertains to the CARB’s handling of the evidence before it respecting environmental contamination.

i) Question of Law or Jurisdiction [ 26 ] The Applicant argues that the CARB rejected its evidence of environmental contamination on the basis that it was not in a particular form. The Applicant asserts that, in failing to adjust the assessed value to account for environmental contamination, the CARB erred in law by upholding an assessment that was neither fair nor equitable. [ 27 ] While the City acknowledges that environmental contamination may be relevant to market value, it states that it is not the only or most important consideration.

Rather, the effect of environmental contamination on market value must be determined on the basis of the evidence before the CARB. The City points out that there is nothing in the legislative framework that mandates a specific methodology for assessing market value. Further, as noted above, the City argues that the CARB did not disregard the Applicant’s evidence, but simply decided to give it little weight. [ 28 ] Again, I agree with the City.

The Applicant refers to the Supreme Court of Canada’s reference in Edmonton (City) v Edmonton East (Capilano) Shopping Centres Ltd , 2016 SC 47 at para 47 to the CARB’s “inquisitorial powers” and to its obligation to determine whether the assessment is fair and equitable. The Applicant argues that the option of reducing the assessment to account for environmental contamination was open to the CARB “based on its inquisitorial nature”.

This is certainly true, but the Applicant’s argument is tantamount to saying that the CARB was not merely empowered, but obliged, to reduce the assessment based on whatever evidence the Applicant put before it. Clearly, this goes too far. The CARB considered the Applicant’s evidence and concluded that it was insufficient to justify reducing the assessment.

The CARB did not err in law in arriving at this conclusion. ii) Sufficient Importance [ 29 ] As with the Applicant’s first question, I find that, notwithstanding its subjective importance to the Applicant, this question raises no novel or unsettled issue that would render it of sufficient importance to merit an appeal. iii) Reasonable Chance of Success [ 30 ] Again, as with the Applicant’s first question, I find that this question pertains to the CARB’s weighing of the evidence before it. That weighing is not a question of law; therefore it is not subject to appeal.

Accordingly, this ground of appeal does not have a reasonable chance of success. 3. Legal Onus and Issue Estoppel [ 31 ] The Applicant also asserts that the CARB mishandled the onus and effectively allowed the City to re-litigate the decision in 2015 to reduce the assessment of the Property on the grounds of environmental contamination.

i) Question of Law or Jurisdiction [ 32 ] As noted above, the assessed value of the Property in 2015 was reduced from $32,740,000 to $19,510,000. The Applicant submits that this reduction was the result of environmental contamination of the Property. It argues that once it had demonstrated a prima facie case that the Property remained contaminated, the onus should have shifted to the City to show that the market value had increased from the previous year.

The Applicant points to this comment from 1544560 Alberta Ltd (Agent of) v Edmonton (City) , 2015 ABQB 520 at para 65 : There is an evidentiary onus on the complainant to raise a prima facie case on the market value of the property. If it does so, the evidentiary burden shifts to the municipality to provide evidence supporting its assessment of market value. [ 33 ] The Applicant also makes a related argument about issue estoppel.

It asserts that “...what the City did was attempt to re- litigate the 2015 assessment without providing any new evidence” and that “...the City should have been estopped from challenging the Applicant’s evidence of the 2015 assessment, barring the provision of any new evidence.” [ 34 ] The Applicant concedes that neither onus nor issue estoppel was addressed before the CARB. Nevertheless, it argues that the

misplacement of onus and the failure to apply issue estoppel are errors of law that are subject to review by this Court. [ 35 ] The Applicant points to cases from New Brunswick and Ontario in support of its position that, absent compelling fresh evidence, the best evidence of a property’s value is an assessment board’s earlier ruling. The Applicant also cites the decisions of the Municipal Government Board and of this Court in Manyluk v City of Calgary , MGB Notice of Decision, No. DL 001/09 and 2012 ABQB 178 .

The City distinguishes these authorities on the basis that New Brunswick and Ontario have different statutory regimes and Manyluk pertained to an application for a vexatious litigation order. [ 36 ] The City’s position is that there was no misplacement of the onus and that the case law makes clear that the ultimate persuasive burden is on the complainant; see Beta Management Inc v Edmonton (City) , 2017 ABQB 571 and St Albert Housing Society v St Albert (Composite Assessment Review Board) , 2017 ABCA 129 .

In Beta Management , the Court held at para 140: If the complainant provides a case to meet, should the municipality wish to respond, it would take up a burden – an evidential burden – to put forward evidence supporting the assessment. I would not say that there is a legal “shifting” of the burden to the municipality, but if the municipality were to do nothing, it would maximize the risk that the board would alter the assessment. (In my view, the municipality takes up a “tactical” burden.) [ 37 ] With respect to the issue estoppel argument, the City notes that property assessment is a legislated, annual process.

It points to case law indicating that stare decisis does not apply to the CARB and that prior board decisions do not form the starting point for subsequent assessments.

In Metrowest Developments Ltd v Calgary (Assessment Review Board) , 2014 ABQB 450 at para 34 , this Court held: Despite the fact that it is preferable if the ARB explains why an assessment is different from one year to the next, when the issue is an assessment decision based on factual evidence before it in any one year, the ARB is not obligated to explain the reason for any difference from the previous year, as it is not bound in any way to the prior year’s assessment or the decisions of a prior ARB on the same property. [ 38 ] Similarly, in Anthem Riverfront Holdings v Calgary (City) , 2017 ABQB 356 at para 47 , this Court held: The City points out that there is no duty for various panels of the CARB to be consistent with one another; see [ Metrowest ].

It argues that such differences of opinion are inherent in the MGA ’s requirements for annual assessment. I agree. Consistency among Board decisions is not to be expected, as stare decisis does not apply to the Board and different panels may weigh evidence differently. Given this, it stands to reason that different panels may arrive at different conclusions. [ 39 ] The City also argues that it is the Applicant’s responsibility to present evidence to support its case and cites Beta Management at para 142: In my opinion, the lack of evidence was the Applicant’s responsibility.

It was not up to the COE or the CARB to fill in the blanks left by the Applicant. The COE or the CARB were not responsible for building the Applicant’s case. The Applicant had the responsibility of going forward with evidence supporting its complaint. The CARB did not wrongly assign a burden to the Applicant. The Applicant failed to provide evidence that was its burden to provide. [ 40 ] This, in my view, is what occurred in this case. To the extent that there can be said to be a shift of onus in these matters, it occurs only if the complainant provides what the Court in Beta Management called a “case to meet”.

Here, the CARB was not satisfied that the Applicant’s evidence was sufficient to provide such a case. [ 41 ] With respect to issue estoppel, the Court of Appeal made these comments about the applicability of stare decisis to administrative tribunals in Altus Group Ltd v Calgary (City) , 2015 ABCA 86 at paras 16 and 31 : Strictly speaking, an administrative tribunal is not bound by its previous decisions or the decisions of its predecessor: Irving Pulp & Paper Ltd v LEP, Local 30 , 2013 SCC 34 , [2013] 2 SCR 458 at para 6 ; Halifax Employers Assn v International Longshoremen’s Assn, Local 269 , 2004 NSCA 101 , 243 DLR (4 th ) 101 at para 82 , leave to appeal to SCC refused, [2004] 334 NR 197 .

Where numerous reasonable

interpretations exist, the administrative tribunal may change its consensus or policy with respect to which one it will adopt. There is no rule of law that an administrative tribunal can never change its policies, nor change its

interpretation of a particular policy, nor change the way that the policy will be applied to particular fact situations: Thompson Brothers (Construction) Ltd v Alberta (Appeals Commission for Alberta Workers’ Compensation) , 2012 ABCA 78 , [2012] AWLD 2212 at para 39 . ... Assuming reasonableness applies as the standard of review of administrative tribunals in the

interpretation of their home statute or closely connected legislation, while an administrative decision maker is unconstrained by the principles of stare decisis and is free to accept any reasonable

interpretation of the applicable legislation, the reasonableness standard does not shield directly conflicting decisions from review by an appellate court. In assessing the reasonableness of statutory

interpretation by the administrative tribunal, the appellate court should have regard to previous precedent supporting a conflicting

interpretation and consider whether both

interpretations can reasonably stand together under principles of statutory

interpretation and the rule of law. [ 42 ] It is important to note, however, that the Court of Appeal’s comments pertained to differing administrative decisions on the

interpretation of the tribunal’s home statute. That is not what is at issue here. Rather, the different decisions as to the assessment of the Property have to do with the CARB’s weighing of the evidence before it in a given year. [ 43 ] The Applicant’s argument amounts to saying that the 2015 assessment is definitive and cannot be disturbed absent compelling evidence from the City. I agree with the City that this is not the proper approach.

The fundamental problem for the Applicant is that it did not provide sufficient evidence to persuade the CARB that a reduction in market value was justified on the basis of environmental contamination. Whether another panel would have been persuaded by the Applicant’s evidence is not relevant. While, at first blush, the substantial difference in the assessments for 2015, 2016 and 2017 might tend to give one pause, the fact remains that each year’s

assessment must be undertaken afresh. Therefore, if the Applicant did not provide sufficient evidence to support a reduction in the assessment for environmental contamination, the CARB acted reasonably in making its decision. In addition, I note that the 2015 board, based on what appears to be the same evidence that was before the CARB in 2016, reduced the assessment of the Property by only $1,000,000 to account for environmental contamination. The 2017 board, while it reduced the assessment considerably, did so without any mention of environmental contamination.

Therefore, the Applicant cannot be heard to say that the disparity in assessments stems solely from the contamination issue. [ 44 ] It is true that the misplacement of an onus or the failure to apply a legal principle such as issue estoppel is an error of law. As I have concluded that neither occurred here, the Applicant has failed to meet this criterion for leave to appeal. ii) & iii) Sufficient Importance and Reasonable Chance of Success [ 45 ] While it is not necessary for me to address these criteria given my conclusion above, I find that that neither is met.

This is a matter of sufficiency of evidence that is not of precedential value and is therefore not of sufficient importance to merit an appeal. Further, as the weighing of the Applicant’s evidence was within the purview of the CARB, I find that this ground of appeal does not have a reasonable chance of success. 4. Adequacy of Reasons [ 46 ] It is common ground that inadequate reasons are not a standalone ground of appeal. Nevertheless, the Applicant argues that the CARB failed to provide sufficient reasons for ignoring the Property’s proximity to railway lines.

The Applicant asserts that “an acknowledgment of the increased development risk” was required and “should have been accompanied by some adjustment to the assessment”. [ 47 ] For its part, the City cites Newfoundland and Labrador Nurses’ Union v Newfoundland and Labrador (Treasury Board) , 2011 SCC 62 for the proposition that inadequacy of reasons is not an error of law.

The City also takes the position that the CARB’s reasons were adequate in any event, noting that the Supreme Court held in Newfoundland that a board’s reasons do not have to include all arguments, statutory provisions, jurisprudence or explicit findings on each constituent element leading to the conclusion. [ 48 ] In my view, the Applicant’s position that consideration of the railway proximity “should have been accompanied by some adjustment” is equivalent to saying that the CARB was obliged to reduce the assessment, regardless of its view of the evidence.

This position is untenable. [ 49 ] My review of the Decision indicates that the CARB did not ignore the Applicant’s evidence with respect to the railway. Rather, it considered that evidence and concluded that it could not rely upon it to justify a reduction in the assessment. The CARB reviewed the Railway Corridor Policy report and the comparable sales proffered by the Applicant, but concluded that the latter were not sufficiently similar to the Property. Therefore, I do not agree with the Applicant that the CARB merely stated its conclusion. This argument is without merit. V.

Conclusion [ 50 ] For the foregoing reasons, the application for leave to appeal the Decision is dismissed. The City shall have its costs. The CARB did not seek costs and I make no award in its favour. Dated at Calgary, Alberta this 18 th day of December, 2018. C.S. Brooker J.C.Q.B.A. Appearances: Tyler Shandro Wilson Laycraft For the Applicant, Pasutto’s Hotels

(1984) Ltd.

Christina I. Lam City of Calgary Law Department For the Respondent, The City of Calgary Shaun Fluker c/o Janke Law Office For the Respondent, The City of Calgary Assessment Review Board