Metropolitan Conference Centre Inc v Calgary (City), 2018 ABQB 983

Court of Queen’s Bench of Alberta Citation: Metropolitan Conference Centre Inc v Calgary (City), 2018 ABQB 983 Date: 20181203 Docket: 1401 11179 Registry: Calgary Between: Metropolitan Conference Centre Inc. Applicant - and - The City of Calgary and The Calgary Local Assessment Review Board Respondents _______________________________________________________ Decision of the Honourable Mr. Justice M. David Gates _______________________________________________________ Overview [ 1 ] The Metropolitan Conference Centre (the “Met Centre”) is located in the Calgary Place Towers. It was originally a movie theatre.

In 1994 it was converted into a conference centre. The Met Centre pays business tax to the City of Calgary (the “City”). [ 2 ] For the purposes of assessment, businesses are grouped into different classes. The City’s 2015 “Business Assessment

Information Package” lists four classes of businesses: recreational, retail, storage and theatre. An assessor determines which class a particular business belongs to, and then assesses it at the typical rental rate for other businesses of that class of a similar quality in the surrounding area. [ 3 ] For the 2011-2013 taxation years, the Met Centre was classified as “theatre”/“public assembly space” and was assessed between $6 and $10 per square foot.

For the 2014 assessment year City assessors classified the premises as “retail” and gave it an “A” or “A-” classification, with an accompanying assessment at $23 per square foot. For the 2015 assessment year, a “retail” classification was again used, with a resultant assessment of $27 per square foot.

As a result of these changing classifications, the Met Centre’s tax assessment increased by approximately 400 percent, from $144,088 in 2013 to $538,203 in 2014 and $639,352 in 2015, despite there being no change in how the premises were being used, or to the property itself. [ 4 ] The Met Centre complained to the Calgary Assessment Review Board (the “CARB”) in the 2014 and 2015 assessment years about this classification. Both Boards confirmed the assessment (LARB 76480B/2014 and LARB 90197B-2015). [ 5 ] In 2016 the premises were again classified as “retail”.

The Applicant again complained, and the 2016 CARB, citing the premises’ characteristics and physical condition, found that it was best described as “public assembly” and reduced the assessment to $12 per square foot. [ 6 ] The Met Centre seeks leave to appeal the 2014 and 2015 CARB decisions. If leave is not granted, the Met Centre seeks judicial review of the decisions based on the same grounds upon which leave is sought. [ 7 ] Following the close of argument, counsel indicated that there were no additional submissions to be made should leave be granted, and that the record was complete.

In fact, the record was incomplete as a number of pages were missing from the City’s 2015 materials. However, as discussed further, below, nothing turns on this fact. As such, essentially the same materials and argument would be relied upon for both the leave application and the appeal. While normally a two-stage process, I find that this is an appropriate instance for the Court to also rule on the merits should leave be granted: Edmonton (City) v Edmonton (City) Composite Assessment Review Board , 2012 ABQB 154 para 17 [ Colliers ].

This approach is also appropriate given that the Applicant is seeking judicial review in the alternative on the same grounds. The Statutory Framework [ 8 ] Business tax assessment is governed by a mixture of provincial acts, regulations and municipal bylaws. The dominant statute is the Municipal Government Act , RSA 2000, c M-26 ( MGA ). Both of the assessments on appeal took place before a December 2016 amendment to the MGA . [ 9 ] The Matters Relating to Assessment and Taxation Regulation , Alta Reg 220/2004 ( MRAT ) sets out assessment standards and procedures for business tax regulation in Alberta.

Section 2 of the MRAT stipulates that "[a]n assessment of property 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." Section 1(1) (

n) of the MGA defines “market value” as the amount that a property might be expected to realize if sold on the open market by a willing seller and a willing buyer. [ 10 ] Calgary passes yearly bylaws governing business tax assessment: MGA s 371(1). Section 374(1) requires these bylaws to specify the method by which business tax will be assessed and imposed.

The method utilized in the assessments in question is a percentage of the “net annual rental value” (“NARV”) of the premises: s 374(1)(b)(i.1). [ 11 ] Bylaw 1M2014, the bylaw under which the 2014 assessment and review was carried out, specifies, at s 4(2) that “business assessments shall be prepared based on one hundred percent of the [NARV] of the Premises occupied or used for the purpose of or in connection with a Business.” [ 12 ] Net Annual Rental Value (NARV), is defined as, “the typical market annual rental value of the premises exclusive of operating costs”: s 3(1)(f). “Premises” is defined in s 3(1)(

i) as “any space occupied or used for the purpose of or in connection with a Business.” Bylaw 1M2015 is essentially identical to the previous year, with an updated assessment date (together, the “Bylaw”). [ 13 ] The statutory scheme highlights that a taxpayer is entitled to have its property assessed fairly and equitably having regard to similar properties, at market value, using mass appraisal: Mountain View (County) v Alberta (Municipal Government Board) , 2000 ABQB 594 at paras 21-22 .

This is provided for in the legislation requiring assessors to “apply the valuation standards set out in the regulations” in a “fair and equitable manner” when conducting assessments: MGA s 293(1). Boards are bound to the same standards that must be adhered to by the assessment authority: MGA s 467(3). Grounds of Appeal [ 14 ] The Applicant seeks leave to appeal (and in the alternative, judicial review) on the following grounds:

a) Did the Board err in applying a hypothetical use to the premises?

b) To uphold an assessment on hypothetical use, is the Board required to first have evidence that the current use is not the highest and best use?

c) If applying hypothetical use was not an error, did the Board err in ignoring or failing to deal with the construction cost of repurposing the premises to such a use, and the impact this would have on rental value?

d) Did the Board err in ignoring or failing to deal with the Met Centre’s evidence of the assessments of similar

properties under the previous public assembly classification?

e) Did the Board err in finding that a new classification (retail) was applicable without a clear understanding of that classification and of why it was supposedly applicable?

f) Did the Board fail to apply the correct legal burden? [ 15 ] During oral argument counsel for the City suggested, and I agree, that the above grounds essentially address the issue of whether the subject space was correctly classified as retail and therefore compared to similar premises. That is, each of the independent grounds put forward by the Applicant contains a nuanced version of this overarching issue. Subsumed in this question is whether the Boards prepared the assessments based upon the NARV of the premises. The question of whether the Board applied the correct legal burden is a stand-alone issue.

Disposition [ 16 ] For the reasons given below, I conclude as follows for each of the impugned decisions. The 2014 Board [ 17 ] The Applicant failed to establish that the question of whether the 2014 Board erred in failing to apply the correct legal burden was one of law, and as such, leave to appeal is denied. Under judicial review, the Applicant failed to establish that the 2014 Board engaged in an incorrect application of the burden of proof. The question of whether the 2014 Board erred by incorrectly classifying the Met Centre as retail is also classified as one of mixed fact and law.

As the Applicant failed to satisfy the criteria in s 470(5) of the MGA , leave to appeal is denied for this question as well. Judicial review was granted for this question. [ 18 ] The 2014 Board unreasonably concluded that the appropriate comparative properties to be used in assessing the Met Centre were retail properties. These comparators were of a much different size, use and type than the Met Centre. The quality of development, at least in relation to the retail properties situated in Calgary Place, was likewise distinct.

The 2014 Board failed to ensure that the Met Centre was grouped with similar properties and in so doing failed to ensure that the assessed rate reflected typical market conditions for similar properties. The Board thus failed to follow its legislated mandate. Its conclusion regarding classification is unreasonable and its decision is quashed and returned back to the CARB for rehearing. The 2015 Board [ 19 ] The Applicant met the three-part test for leave to appeal as set out in s 470(5) of the MGA for both questions raised in relation to the 2015 Board’s decision.

That is, leave was granted for both the question of whether the subject space was correctly classified as retail and therefore compared to similar premises, as well as the question of whether the Board applied the correct legal burden. [ 20 ] The 2015 Board’s reasons are extremely limited. In sum, they acknowledge the need for a definition of “retail” in order to classify the Met Centre for assessment purposes.

Notwithstanding the fact that the Board determined there was insufficient information to determine the question of classification, and that the Applicant put forward some evidence supportive of its claim that the assessment was incorrect, the Board confirmed the initial assessment. [ 21 ] The reasons given by the Board do not disclose how, or if, it considered any of the parties’ evidence of comparables, nor how the evidence before it informed its conclusions as to the appropriate assessment rate.

Nor is there any indication in the Board’s reasons that it adhered to its legislated mandate of ensuring that the valuation standards were applied in a fair and equitable manner. Rather, the reasons suggest that because the Board was unable to determine the question of classification, it simply deferred to the approach taken by the assessor. The 2015 Board’s decision is cancelled and remitted back to the CARB for rehearing. Leave to appeal [ 22 ] The test for leave to appeal is set out in s 470(5) of the MGA (as it then read).

For leave to be granted: 1) the appeal must involve a question of law or jurisdiction; 2) that is of sufficient importance to merit an appeal; and 3) has a reasonable chance of success. [ 23 ] Each ground must satisfy the above criteria in order for leave to be granted. The onus of establishing each part rests with the applicant: Edmonton (City) v Edmonton (City) Composite Review Board , 2012 ABQB 171 para 11 .

a) Is the question of whether the Board erred by incorrectly classifying the Met Centre as retail, and therefore failing to compare it to similar premises, a question of law? [ 24 ] The principles governing the differences between questions of law and questions of mixed law and fact were discussed by our Court of Appeal in Alberta (Workers Compensation Board) v Alberta (Worker’s Compensation Board Appeals Commission) , 2005 ABCA 276 [ Davick ] at para 29 : The concept of inextricable legal error can be difficult to understand. In Housen at para 36, the Supreme Court provided clarification. In

that case the alleging error was a finding of negligence, a question of mixed fact and law. The court noted that when the error in a findingof negligence can be attributed to the application of an incorrect standard, a failure to consider a required element of a legal test or a similarerror in principle, such an error can be characterized as an extricable error of law. However, when the issue on appeal involves a trialjudge’s

interpretation of the evidence as a whole, or the application of the correct legal test to the evidence, there is no extricable error oflaw. [25] The Court in the above case also stated at para 22: ... questions of mixed fact and law involve the application of the legal standard to a set of facts; conversely, errors of law involve anincorrect statement of the legal standard, or a flawed application of the legal test.

An example of the latter occurs when he decision makeronly considers factors A, B, C, but the test also requires factor D to be considered... [26] More recently, in Beta Management Inc v Edmonton (City), 2017 ABQB 571, Renke J further described “mixed” questions atpara 27: ... A determination of mixed law and fact concerns the outcome, result, or decision based on the facts and the law, or more precisely, theapplication of the law to the facts. The determination does not concern the facts or the law themselves. The determination "mixes" orapplies the law to the facts.

The question of whether a decision-maker, in applying the law, came to the correct decision on the facts is not,generally, a question of law. The Applicant’s position [27] The Applicant did not dedicate much of its written or oral argument to the issue of the precise nature of the alleged legal errorscommitted by either Board.

It argues that applying a hypothetical (that the premises could be operated as a retail centre) absent anyevidence that the hypothetical use will be the highest and best use, is the application of an incorrect factor amounting to an error of law.The Applicant takes the position that both Boards erred in applying incorrect factors, rather than considering “similar property orbusiness” within the meaning of s 467 of the MGA. [28] The Applicant submits that the question of whether the Boards ignored or failed to deal with certain evidence is one of law.Specifically, the Applicant alleges that the Boards erred by failing to deal with the construction costs of repurposing the premises to retail.It further alleges that the Boards failed to consider other important evidence, including the “public assembly” comparables it put forward,as well as evidence of its current lease. [29] The Applicant relies on Edward Tawkin Law Professional Corporation v Calgary Assessment Review Board), 2014 ABQB221 at paras 28-29, for the proposition that the possible misapprehension of ‘important’ evidence is a question of law.

To the extent thatEdward Tawkin states that a tribunal errs in law in failing to consider evidence that a legal test requires it to consider, then I agree:Canada (Director of Investigation & Research) v Southam Inc, (SCC), [1997] 1 SCR 748 at para 41. Alternatively, afinding made in the absence of evidence may result in a loss of jurisdiction: Gerard Developments Ltd v Parkland (County), 2010 ABCA52 at para 6. [30] In specific reference to the costs of conversion, the Applicant contends that failing to take such costs into account resulted inthe use of gross, as opposed to net, rental value.

It submits that the use of a gross figure resulted in the Board confirming an assessmentusing a value other than NARV, which is an error of law. The City’s position [31] The City takes the position that the Applicant is attempting to characterize mixed findings of fact and law as extricablequestions of law. The City argues that the question of whether an assessment reflects market value is an issue in all CARB hearings andstates that the determination of this issue necessarily involves the weighing of evidence.

It submits that the Applicant’s true dispute lieswith the Boards’ evaluation of the evidence and related factual findings. [32] The City contends that the appropriate weight to be given to evidence is not a question for which leave may be granted: Wal-Mart Canada Corp v Calgary (City), 2013 ABQB 21 at para 26 [Wal-Mart]. It submits that the impugned decisions are the product of thetribunals hearing and rejecting evidence, or simply preferring the evidence of the City over that of the Applicant. It submits that where theissue involves an

interpretation of the evidence, or the application of legal principles to the evidence, no extricable question of law exists:Davick, para 29. Analysis [33] On first blush, the question of whether either Board erred by incorrectly classifying the Met Centre as retail, and thereforefailed to compare it to similar premises, appears to involve a question of mixed fact and law.

Generally speaking, when a CARB identifiesthe test or standard to be applied, the actual amount owed by a taxpayer is determined by weighing evidence, such as comparableproperties and the condition of the subject property, against that standard. [34] However, the City’s classification of this question as “mixed” necessarily presupposes both the correct identification and use ofthe legislated assessment requirements.

Even though a tribunal identifies a legislated requirement to examine a particular standard or test,that does not mean that it necessarily applied the correct standard. [35] The 2014 decision must be reviewed in order to determine whether the Board failed to deal with evidence that a legal testrequires it to consider, or used incorrect factors in applying the law to the facts, or if it deliberated on and weighed such evidence, butultimately chose to reject it. The 2015 Decision

[ 36 ] While the 2015 Board expressly noted the requirement of applying the NARV methodology (at para 6), there is little else in its decision demonstrating that it actually applied this methodology or otherwise followed its legislated mandate. [ 37 ]

Section 293 of the MGA provides that in preparing an assessment, an assessor must apply valuation and other standards set out in the regulation in a fair and equitable manner. The CARB is bound by the same standard: s 467(3). The City acknowledged that part of ensuring adherence to the legislated assessment requirements is to ensure that the subject premises are grouped with similar premises. [ 38 ] The 2015 Board identified that the subject property was unique and that the chief issue before it was determining whether the premises were “retail” or “public assembly” (para 22).

It noted that the City and the owner (Oxford) defined it as retail, while the Applicant argued it was properly classified as “public assembly/conference centre”. The 2015 Board’s decision does not reveal whether it implemented the s 467(3) requirements of ensuring that an assessment is fair and equitable, taking into account the assessments of similar properties.

Again, while it identified NARV as the appropriate assessment methodology, the Board’s application of the legislated assessment requirements is in question. [ 39 ] It is clear that Board struggled with determining the appropriate class for the Met Centre based on the evidence before it.

However, after noting these difficulties, it simply concluded its reasons by stating that although there was insufficient evidence upon which to determine the appropriate classification, it was confirming the assessor’s retail classification (at paras 28-29). [ 40 ] The appropriateness of utilizing a hypothetical classification for valuation involved assessing evidence put forward by both sides as to which ‘pool’ of properties the Met Centre should be compared to for valuation purposes. Again, the hypothetical being advanced is that the premises could be operated as retail.

The ‘retail’ pool involves the application of a much higher base rate for taxation purposes. [ 41 ] As noted above, part of ensuring adherence to the legislated assessment requirements is to make sure that, in an annual mass appraisal regime, the subject premises is grouped with similar premises. This does not seem to have occurred in 2015. While the 2015 Board appears to have been alive to the issue (presumably its request for a definition of “retail” was made in order to ensure that the Met Centre was properly compared with other similar premises), it then seemingly abandoned this requirement.

The 2015 Board stated that there was simply insufficient information to determine whether the subject property was properly compared to a certain class of (retail) properties, yet proceeded to classify the property as retail in any event. That is, the Board appeared to be aware of the requirement to classify similar properties together under a mass appraisal system, but seemingly ignored such a requirement in this instance.

As such, the legislated requirements for an assessment were identified but may not have been applied. [ 42 ] The question of whether the 2015 Board identified, but misapplied, the appropriate legal standard to the facts before it is a question of law. [ 43 ] I turn now to the question of whether the 2015 Board failed to address specific evidence such as repurposing costs, comparables provided, and the existence of a current lease, and whether such failure amounts to an error in law.

In arguing that the Board erred in this regard, the Applicant relies on Wal-Mart . [ 44 ] In that case, the taxpayer argued that a $250,000 construction allowance amounted to a ‘tenant inducement’. Wal-Mart submitted that tenant inducements can serve to reduce the face rent value of a property, and are therefore an important consideration in determining market value. The City, in that instance, took the position that this amount was attributed to the cost of building the store and was not an inducement.

The Board’s decision made no mention of this allowance and did not explain what, if any, impact this evidence had upon the assessment. [ 45 ] In Wal-Mart , the Court concluded that while the question of how a tribunal weighs evidence is not a question of law, it was impossible to discern how the Board dealt with or considered the existence of the construction allowance.

The Court concluded, at para 50, that: 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. [ 46 ] In 2015, the Met Centre led evidence as to the actual cost of repurposing the Met Centre for retail use.

It relied upon a report prepared by EllisDon, a construction and building services company, stating that it would cost approximately $7.5 million dollars to repurpose the Met Centre to a retail space of the same quality and finish as the rest of Calgary Place. [ 47 ] The parties disagree as to whether the repurposing costs were a relevant consideration for 2015 Board. The Applicant argued that if it was going to be compared to similar retail, “A” classification properties, the actual costs of conversion must be considered.

That is, if the premises were going to be assessed as a typical retail property, the actual costs involved in repurposing a unique space into such a property must be taken into consideration. The Applicant maintained that the costs of repurposing must be considered in order to ascertain the “net” annual rental value of the premises (NARV). [ 48 ] The City argued to the contrary, stating that its calculated typical “leasehold improvement allowance” of $5 per square foot in 2015 adequately accounted for any required alterations, including conversion costs.

The “leasehold improvement allowance” represents a typical value for improving similar space, and is based upon information requested every year from property owners and managers.

The allowance accounts for the difference in finish between other spaces and the subject space. [ 49 ] The 2015 assessment rate was calculated by subtracting $5 per square foot, which the City maintained was the typical allowance for improvements, from the assessed annual rental rate of $32 per square foot, for a total of $27 per square foot. [ 50 ] While the 2015 Board noted the costs proposed in the EllisDon report, it failed to address whether the actual cost of repurposing should be examined in determining market value.

It is unclear from the decision whether the Board rejected the evidence of the actual repurposing costs, thus implicitly determining that the typical $5 fixturing allowance was the appropriate deduction in calculating NARV, or whether it simply ignored the evidence all together. As it is impossible to discern how the Board dealt with this issue, I therefore find that the Applicant has demonstrated that the question of whether the Board properly considered this evidence to be a

question of law, as per Wal-Mart . [ 51 ] I come to a similar conclusion concerning the Board’s use of comparables. During the 2015 hearing, the Met Centre put forward comparables, including the Oliver and Bonacini Meeting and Event Centre (O&B Centre) through correspondence evidencing the use of a lease based on a percentage of gross revenue. The Applicant also relied on theatre information (namely Cineplex) in arguing that as a former theatre, the Met Centre should be classified as “theatre” as opposed to “retail”. The Board made no mention of either comparable premises in its analysis.

Rather, its sole reference to a comparable premises was the Moviedome, a former theatre that had been converted to retail use. Even this evidence appears to have been discounted by the Board given its statement that “...no photographs of the interior finish was [sic] presented”. [ 52 ] The City put forward a number of retail leases, as well as equity information, as comparables. This information was missing from the record (the 2015 record contains 130 of 188 pages.

I note that pages 153 onward consist of legislation and bylaws which are otherwise accessible, meaning that 23 pages of record, including retail lease comparables relied upon by the City, are missing). [ 53 ] While in most cases the absence of lease and equity comparables in an assessment appeal would make a review of the Board’s decision difficult, the current case is distinguishable in two ways. First, the discussion on the record indicates that, as per the former assessment year, the City relied on smaller, retail, premises in compiling its comparables.

Again, it appears as though Ceili’s was the largest retail lease. I note that Winners was also discussed as an example of a larger floor plan. Second, and most important, the Board simply did not discuss any of these comparables in its decision. As such, it is difficult to discern whether the 2015 Board utilized any of the evidence of comparable properties, outside of the Moviedome, in determining whether the Met Centre was being assessed against similar premises.

Whether the CARB failed to consider evidence required to perform a legislated analysis involves a question of law. [ 54 ] For the above reasons, I am satisfied that the Applicant has established that the question of whether the 2015 Board erred by incorrectly classifying the Met Centre as retail, and therefore failing to compare it to similar premises, is a question of law. The 2014 Decision [ 55 ] The 2014 Board does not appear to have erred in a similar fashion.

Rather, the Board expressly noted its requirement to uphold a fair and equitable assessment, as well as the fact that the assessment was to be prepared using the NARV methodology. Unlike the 2015 Board, the 2014 Board appears to have considered these legislated requirements. It notes that the issue before it was whether the Met Centre was incorrectly classified as retail, and whether the assessment was therefore inequitable or not based upon market value.

The 2014 Board concluded that the City’s assessment was based upon the space used by the business using typical market annual rental value. [ 56 ] The determination of an appropriate classification involved an analysis of the physical characteristics of the Met Centre, an analysis of the premises, and a comparison of various other premises located both in and out of the downtown core. The 2014 Board noted the comparables put forward by the Met Centre but rejected them, finding that the Telus Convention Centre (TCC) was a tax-exempt body with a particular Calgary-based mandate.

It also found that the lease in the O&B Centre property was atypical and therefore of limited assistance, as the legislation dictates the use of typical market data in the assessment process. [ 57 ] The question of whether the premises were more appropriately classified as retail or public space engaged an analysis which involved the application of the MGA , the MRAT and the Bylaw to the characteristics and condition of the subject premises in order to determine its market value (using the NARV valuation). Unlike the 2015 Board, the 2014 Board did not simply identify the legislated requirements.

Rather, it looked to the subject property and the comparables provided and analyzed whether it should be assessed as retail, level “A”, given the space, the surrounding space, and the relevant market comparables.

Finally, it relied on the City’s arguments regarding the conversion of the Moviedome to rebut the argument that the Met Centre could not be used for a purpose outside of its current use, such as retail. [ 58 ] The application of a legal standard to a set of facts is a mixed question, and does not satisfy the first branch of the three-part test outlined in s 470(5) of the MGA . [ 59 ] In so finding, I am mindful of the recent caution given by this Court in Beta Management at para 30, that: The Supreme Court warned against conflating disagreement with a result with disagreement about the nature of the legal test applied in Teal Cedar Products Ltd. v.

British Columbia , 2017 SCC 32 (S.C.C.) at para 59 : "The identification of an alleged legal error should be based on the arbitrator's application of the wrong test, not on the fact that one would have applied the appropriate legal test differently;" the conflation "skips the jurisdiction stage and immediately proceeds with a review of the arbitrator's analysis of a mixed question." If the question is, "Did the decision-maker get the test wrong?", then the question is a question of law.

If the question is, "Did the decision- maker come to the right result?", then the question is not a question of law. [...] [ 60 ] I turn now to whether the 2014 Board erred in law in failing to address specific evidence, namely evidence of any repurposing costs, as well as evidence of market comparables. During the 2014 hearing, there was no evidence as to the cost of repurposing the Met Centre to a retail space. The Applicant submitted that the assessor offered no evidence of the costs of repurposing.

It takes the position that the Board’s failure to consider the construction cost associated with repurposing, and the resultant effect on rental value for assessment purposes, was an error in law. [ 61 ] During the 2014 hearing, the City stated that the $23 per square foot rate was based on a typical value of $27 per square foot less a leasehold improvement allowance of $4 per square foot.

In describing this allowance, the assessor gave an example that with certain changes or alterations, a nightclub could move into the subject premises, and that this was where the $4 leasehold improvement allowance would come in: Transcript 2014 hearing, p 67.

The assessor explained to the Board that at $4 per square foot, over a five year period, for example, the Applicant would receive a total deduction of approximately $460,000 from the business assessment. [ 62 ] The assessor agreed that the $4 reduction would not necessarily result in the net effective rent, given that the value was a typical figure and that it was intended to take a shell space into a final product. The Applicant argued that it would likely cost much more than $4 to repurpose the premises, although a dollar figure was not put forward.

[ 63 ] I find the Applicant has failed to demonstrate that the 2014 Board may have erred in law by failing to consider the construction cost of repurposing the Met Centre. While the Board did not expressly deal with the $4 leasehold improvement allowance, it ultimately accepted the City’s $23 figure. There was evidence before the Board that this was the typical allowance to provide for improvements, and was the only numeric figure before the Board on this issue. The suggestion that this figure would have been a greater amount was, in my view, somewhat speculative.

That is, while in 2015 there was concrete evidence that a conversion would have cost more than the lease improvement allowance figure, in 2014, there was merely conjecture on this point. [ 64 ] The 2014 Board appears to have accepted the $4 figure put forward by the assessor, notwithstanding the fact that the Met Centre took the position that this amount was unsatisfactory, or was only applicable in instances where the shell space was already intended for retail use.

I do not think that the Board’s failure to consider speculative evidence as to the cost of repurposing the premises and its effect on rental value amounts to the application of an incorrect standard. [ 65 ] The same analysis applies to the Applicant’s argument that the 2014 Board erred in law by failing to properly deal with its market comparables and in its treatment of the current lease as the best evidence of market value. The record indicates that the Met Centre took the position that the downtown TCC and the O&B Centre in the Hudson’s Bay building were preferable comparables.

The Board rejected both as discussed above. The Board also rejected the current lease as the best evidence of market rental rate, holding that as a dated or stale lease, it was not reflective of market value. The evidence before the Board was that negotiations had been entered into regarding the renewal of the lease in July 2015, but that there was no evidence as to what the typical rent for this space would be. [ 66 ] I agree with the City that the 2014 CARB weighed the evidence before it as concerns the lease improvement allowance, the suggested comparables, and the current lease.

There is no indication that it failed to consider evidence that it was required to consider.

The Applicant has failed to demonstrate that this question meets the first branch of the three-part test under s 470(5) of the MGA , in relation to the 2014 Board reasons. [ 67 ] Given the Applicant’s failure to establish that the first branch of the three-part test under s 470(5) has been met, it is unnecessary to proceed with a further analysis of whether leave to appeal should be granted for the question of whether the 2014 Board erred by incorrectly classifying the Met Centre as retail, and therefore failing to compare it to similar premises.

b) Does the question of whether the Boards erred by failing to apply the correct legal burden raise a question of law? The Applicant’s position [ 68 ] The Applicant contends that the Boards committed an error of law by failing to place the proper onus of proof on the City once the Applicant had provided some evidence that the assessment was incorrect. Specifically, the Applicant points to the evidence indicating that the Met Centre was not operating as a retail premises. It appears that the Applicant made this argument largely in relation to the 2015 Board decision.

The City’s position [ 69 ] The City takes the position that the Applicant either failed to present sufficient evidence to establish a prima facie case that the assessment was in error, or, alternatively, if the onus did shift to the City, that the City provided sufficient and compelling evidence to support the assessments. Analysis [ 70 ] The burden of proof in MGA proceedings regarding tax assessments has been reviewed in numerous cases: see BTC Properties II Ltd v Calgary (City) , 2010 ABQB 719 at para 161 ; aff’d 2012 ABCA 13 .

The applicant has an initial burden to put forth evidence that the assessment was incorrect. The burden then shifts to the respondent to provide evidence to rebut the evidence of the applicant. However, the applicant maintains the ultimate persuasive burden: Eau Claire Market Inc v Calgary (City) , 2015 ABQB 131 at para 31 . [ 71 ] In BTC Properties , Romaine J summarized the law relating to the burden of proof as follows, at para 161: The onus on the parties on an appeal of a tax assessment to the MGB was summarized by the MGB in Imperial Parking Ltd. v. Calgary (City) [2002 CarswellAlta 2300 (Alta. Mun. Gov.

Bd.) ], MGB Order 140/02 as follows at p. 10: ...The ultimate burden of proof or onus rests on the Appellant, at an assessment appeal, to convince the MGB their arguments, facts and evidence are more credible than that of the Respondent. However, if the Applicant leads sufficient evidence at the outset to establish a prima facie case, the evidentiary onus shifts to the Respondent. In order to establish a prima facie case, the Appellant must convince the MGB panel that there is merit to the appeal. The Appellant must establish that it is more probable than not that the assessed value is incorrect or inequitable.

Once the evidentiary onus shift occurs, then the validity of the assessment is in question. In order to rebut the Appellant’s prima facie case, and in order to raise a legitimate inference that the assessment is correct, the Respondent must lead evidence to counter the Appellant's evidence. At the end of the hearing, the MGB considers all the evidence presented and determines which party has established their case on a preponderance of evidence.

In theory this means the party with the strongest case should succeed. [ 72 ] More recently, Renke J in Beta Management , at paras 139-141, adopted a similar approach in relation to the burden of proof concerning MGA appeals. [ 73 ] The law is clear that the issue of whether a tribunal applied an incorrect burden of proof involves a question of law: see Ross v Edmonton (City) , 2016 ABQB 730 at para 4 ; Concord Pacific Alberta Properties Inc v Calgary (City) , 2017 ABQB 138 at para 23 .

However, the issue of whether the Applicant discharged its burden of proof involves a question of mixed fact and law: see Sawridge

Business Park Ltd v Leduc (City) , 2017 ABQB 247 at paras 26-31 . The 2014 Decision [ 74 ] I note that the 2014 Board correctly described the applicable burden of proof: 2014 Decision, para 4. The 2014 Board’s reasons indicate that it understood the error alleged by the Applicant and that it looked at the evidence provided in support of proving that error. It noted the historical use of the properties as well as each parties’ analysis of comparables. It then weighed this evidence and argument in favour of the City.

There is no indication that it misunderstood or misapplied the onus of proof placed upon the parties. The 2014 Board was engaged in applying the law to the facts in determining whether the Applicant discharged its burden of proof. This is a question of mixed fact and law. [ 75 ] Again, because the Applicant has failed to establish that the first branch of the three-part test under s 470(5) has been met for this question, it is unnecessary to proceed with a further analysis of whether leave to appeal should be granted for this question.

The 2015 Decision [ 76 ] It appears that the 2015 Board conceded that the Applicant established a prima facie case that the assessment may have been in error, in that it was unclear whether the property was properly classified as retail as opposed to public assembly. While the Board noted this as the main issue, it ultimately determined that there was insufficient information to determine this issue and adopted the City’s classification. [ 77 ] It is unclear from the 2015 Board’s reasons whether it found that: (

a) the Applicant failed to adduce evidence ultimately establishing that the premises were erroneously classified; (

b) the evidence put forward by the City was considered and accepted, or; (

c) the Applicant had raised a case to meet but the Board simply deferred to the City’s initial position. If the Board deferred to the City’s initial position notwithstanding the fact that the Applicant had discharged its burden, this would indicate that the Board may have failed to apply the correct legal burden, which is a question of law. [ 78 ] To obtain leave, the Applicant must establish that the Board may have erred on a question of law: Concord Pacific , para 13.

Given the almost complete lack of analysis following the identification of a prima facie error regarding classification, I am satisfied that the Applicant has established that the 2015 Board may have erred by misapplying the burden of proof. This question therefore meets the first branch of the three-part test provided for in s 470(5) of the MGA .

c) Are the above questions of law of sufficient importance to merit an appeal The Applicant’s position [ 79 ] The Applicant maintains that the question of incorrect classification, and the subsequent failure to utilize similar comparables, is one that goes beyond the subjective importance to the parties at bar. It submits that the use of a hypothetical in classifying a premises is of interest to any taxpayer who finds themselves faced with a tax bill based upon a hypothetical, as opposed to current, use of a property.

Moreover, it asserts that the question of the applicability of construction allowances in connection with hypothetical uses of space would likewise be objectively important to any taxpayer faced with an assessment based upon hypothetical use where alterations to the premises would be required in order to function in that use. The City’s position [ 80 ] The City contends, on the other hand, that there is nothing novel or unsettled or of jurisprudential value in this dispute. Rather, the issue is simply the assessment authorities’ inherent ability to determine a proper property classification.

Analysis [ 81 ] The law regarding the test of whether a question is sufficiently important was recently summarized in Beta Management , at para 36: For a question to be of "sufficient importance to merit an appeal" the question must not be only "subjectively" important in the sense of being important to an applicant. Rather, the question must be "objectively" important, important to persons other than the applicant alone.

Factors taken into account respecting this test include the jurisprudential value of an appeal, whether the appeal concerns a novel or unsettled issue, and whether the appellate decision would have wide-ranging implications or implications going beyond the dispute between the parties. [...] [ 82 ] I find the question of classification and the use of similar comparables to be of sufficient importance to merit an appeal.

In Edward Tawkin , this Court found that the application of a hypothetical case in the face of the property’s actual use would no doubt affect other taxpayers who have offices in retail areas: para 29. A similar analysis applies here. [ 83 ] In Wal-Mart , this Court found that the question of how evidence of tenant inducements and, in particular, construction allowances, should factor into an analysis of market value and ultimate assessment was one of objective importance to both taxpayers who receive inducements as well as assessors who must consider the impact of an inducement.

Phillips J found that this question was of sufficient importance to merit an appeal: para 62. I agree. [ 84 ] The question of whether the 2015 Board correctly classified the subject property as retail and therefore compared it to similar premises is, in my view, of sufficient importance to merit an appeal.

[ 85 ] The next to the question of whether the 2015 Board erred in misapplying the legal burden. [ 86 ] The case law appears unsettled on the question of whether an alleged failure to apply the correct legal burden is of sufficient importance to merit an appeal. I note that in Beta Management , which was released following oral argument before this Court, Renke J held that jurisprudential issues relating to burden of proof in CARB matters have already been decided, such that an appeal was not merited: see paras 148-149.

Beta , can be distinguished in part on the basis that the taxpayer’s burden of proof argument rested on very particular evidence that was not considered of broad significance. [ 87 ] In the case at bar, the 2015 Board appeared to concede that the Applicant had established a prima facie case that the assessment was in error due to a misclassification. It then found in favour of the City on this point.

While I agree that questions pertaining to the applicable burden are not unsettled or novel questions, the question of whether the CARB is actually applying the correct burden is one of subjective importance to all taxpayers involved in an assessment dispute and has wide-ranging implications going beyond the parties. This was the approach taken recently by this Court in Bankers Hall GP Inc v Calgary (City) (18 May 2018), Calgary 1401-12292 (unreported). I adopt the approach taken by deWit J in that instance and find this question to be of sufficient import to merit an appeal.

d) Does the appeal have a reasonable chance of success? [ 88 ] The third branch of the test under s 470(5) requires the Applicant to establish that it has a reasonable chance of success on appeal. As I have already determined that this is an appropriate instance for hearing both the leave application and the appeal on its merits, the Applicant must ultimately establish more than a reasonable chance of success – it must establish that the 2015 Board’s decision was either unreasonable or incorrect, depending on the applicable standard of review.

An examination of the applicable standard of review is also required should this Court embark upon a judicial review of these issues as an alternate remedy in relation to the Board’s 2014 decision, as discussed below. [ 89 ] The Supreme Court of Canada’s recent decision in Edmonton (City) v Edmonton East (Capilano) Shopping Centres Ltd , 2016 SCC 47 , held that the standard of review for a statutory appeal or judicial review of a CARB decision is presumed to be reasonableness.

Relying on Dunsmuir v New Brunswick , 2008 SCC 9 , Karakatsanis J stated, at para 33, that the rationale for the reasonableness standard is that specialized tribunals have “expertise or field sensitivity to the imperatives and nuances of the legislative regime…”. She held that the standard of reasonableness applies even where appeals are limited to questions of law or jurisdiction for which leave is required: para 34. [ 90 ] The Applicant did not suggest that the presumption of the reasonableness standard had been displaced in this instance. [ 91 ] Reasonableness is a deferential standard.

As such, the issuing tribunal’s decision is not easily disturbed. In Dunsmuir the Supreme Court described this standard, at para 47: Reasonableness is a deferential standard animated by the principle that underlies the development of the two previous standards of reasonableness: certain questions that come before administrative tribunals do not lend themselves to one specific, particular result. Instead, they may give rise to a number of possible, reasonable conclusions . Tribunals have a margin of appreciation within the range of acceptable and rational solutions.

A court conducting a review for reasonableness inquires into the qualities that make a decision reasonable, referring both to the process of articulating the reasons and to outcomes. In judicial review, reasonableness is concerned mostly with the existence of justification, transparency and intelligibility within the decision-making process.

But it is also concerned with whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law . (emphasis added) [ 92 ] The reasonableness standard was further discussed in Canada (Citizenship and Immigration) v Khosa , 2009 SCC 12 para 59 : … Where the reasonableness standard applies, it requires deference.

Reviewing courts cannot substitute their own appreciation of the appropriate solution, but must rather determine if the outcome falls within "a range of possible, acceptable outcomes which are defensible in respect of the facts and law" ( Dunsmuir , at para. 47 ). There might be more than one reasonable outcome.

However, as long as the process and the outcome fit comfortably with the principles of justification, transparency and intelligibility, it is not open to a reviewing court to substitute its own view of a preferable outcome . (emphasis added) [ 93 ] It is against this standard that the Applicant must establish a “reasonable chance of success” on appeal (and, ultimately, that the Board’s decision was unreasonable). Because both the leave and the merits are being heard together, the question of just what a “reasonable chance” entails is not of particular import.

A hearing on the merits determines whether an applicant is successful, not whether it may be so. Should this Court find that the 2015 Board’s decision is unreasonable, the Applicant has necessarily proven that it has met the third branch of the test for leave.

The question of incorrect classification and comparison [ 94 ] The first question for which leave was granted was whether the 2015 Board erred in incorrectly classifying the Met Centre as “retail” and failing to compare it to similar premises. [ 95 ] A review of the 2015 decision on this point must begin with an examination of the adequacy of the Board’s reasons. The adequacy of reasons is not a stand-alone ground for appeal. The Applicant did not suggest otherwise.

However, without adequate reasons, it is difficult for a reviewing court to identify whether certain evidence was considered, and whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the evidence and law. [ 96 ] It is clear that a reviewing court should seek to supplement a tribunal's reasons before it subverts them: Newfoundland and Labrador Nurses' Union v Newfoundland & Labrador (Treasury Board) , 2011 SCC 62 at paras 12-17 .

Courts are required to pay "respectful attention to the reasons offered or which could be offered in support of a decision": Delta Air Lines Inc v Lukács , 2018 SCC 2 , para 12 (emphasis added). A reviewing court must consider the tribunal's decision as a whole, in the context of the underlying record, to determine whether it was reasonable: Agraira v Canada (Minister of Public Safety and Emergency Preparedness , 2013 SCC 36 at para

53 . [ 97 ] Perfection is not the standard: Anthem Riverfront Holdings v Calgary (City) , 2017 ABQB 356 at para 37 . As stated in Construction Labour Relations Assn (Alberta) v Driver Iron Inc , 2012 SCC 65 at para 3 : ...administrative tribunals do not have to consider and comment upon every issue raised by the parties in their reasons. For reviewing courts, the issue remains whether the decision, viewed as a whole in the context of the record, is reasonable (N.L.N.U. v.

Newfoundland & Labrador (Treasury Board) , 2011 SCC 62 , [2011] 3 S.C.R. 708 (S.C.C.)). [ 98 ] It is with these principles in mind that I assess the 2015 Board’s decision against the reasonableness standard described in Dunsmuir and Khosa , above. [ 99 ] The analysis portion of the Board’s reasons total 12 sentences, which I have reproduced below for ease of reference: The dilemma in this instance is deciding whether the subject space is “Retail” or “Public Assembly”. The Owner (Oxford) and the Respondent state that it is retail and the Complainant disagrees.

The subject property is unique, as there is a theatre, projection room, and mezzanine area. The space is open and appears to have tiled floors, ornate ceiling and recessed lighting. Interior walls are a mix of drywall and wood panelling. The Respondent has not visited the property, and the Board recommends that a visit should take place prior to issuing of property tax notices in 2016. To confirm the Class of the Met Centre the Respondent should compare the renovated main floor to the subject space, thereby establishing “Class” for future assessments.

The Moviedome was presented as comparable use to the subject, as it had been renovated and converted to retail use, but no photographs of the interior finish was [sic] presented. The estimate provided by the contractor – Ellis Don – indicates to the Board that the quality within the Met Centre is inferior to the remaining ground floor in Calgary Place. The Board requires a definition of “Retail” that will establish beyond a doubt what is acceptable to all parties. There was insufficient information provided for the Board to confirm whether the property was being used for Retail or Public Assembly space.

The Board confirms the Business Assessment. The position of the parties [ 100 ] The Applicant submits that the 2015 Board’s reasons do not satisfy the Dunsmuir criteria. It maintains that the reasons provide no explanation or analysis of how the Board arrived at its decision. It takes the position that the 2015 Board ignored or improperly excluded evidence and relied on incorrect legal principles, resulting in both an unreasonable analysis and an unreasonable result.

It states that the Board failed to undertake an independent analysis of whether the premises could be properly classified as retail, and simply deferred to, or adopted, the assessor’s position on this point. [ 101 ] The City submits that the reasons, read a whole in the context of the underlying record, satisfy the reasonableness standard. [ 102 ] The City maintains that the Applicant simply failed to adduce sufficient evidence establishing that the assessment was in error and that in considering all of the evidence before it, the Board gave greater weight to that evidence offered by the City.

The City further argues that given the comparables it placed before Board, the Board was entitled to confirm the assessment without determining the exact label to place on the property. The City submits that the Board properly relied upon the evidence it presented in support of the premises being grouped within the property pool of “retail” properties. As such, it asserts that the decision is reasonable.

Analysis [ 103 ] The problem with the City’s line of reasoning is that there in no way to determine what use the Board actually made of most of the evidence before it, including the comparables presented by either the City or the Applicant.

With respect to the evidence offered by the City in support of the assessment, it is impossible to say whether the Board impliedly accepted the evidence put forward by the City when the Board makes no mention of the downtown lease analyses provided for what the City says are comparable properties. [ 104 ] Similar to the approach taken in 2014, in 2015 the City provided evidence in the form of market information, being the rental rates for nearby downtown retail level one (ground floor) and level two (upper floor) properties with an “A” classification.

The assessed rate of $27 per square foot for the Met Place was essentially arrived at by applying the average (weighted mean) value of the lease rates for the properties included in that chart. Again, the 2015 Board made no mention of the City’s downtown lease analysis. [ 105 ] This is particularly problematic as the market information on rental rates was relied upon by the assessor in determining the applicable average lease rate to be used in the NARV calculation. It is unclear how the Board upheld the $27 per square foot assessment absent any consideration of the lease comparables in its reasons.

Again, although the downtown retail level one and two rental rate chart was missing from the 2015 record, the arguments made before the Board indicate that, similar to the 2014 hearing, the lease/rental comparables relied upon by the City were for properties of markedly different sizes in comparison to the Met Centre: 2015 Transcript pp 162-165. The Board engages in no analysis as to how such properties might be viewed as similar to the subject property. [ 106 ] I note that the City also placed equity comparables before the Board.

While this evidence was also missing from the record, it appears as though, similar to 2014, the equity comparables consisted of other retail businesses assessed at $27 per square foot. The City further mentioned Winners as an example of a larger space operating as retail in the downtown core, as well as Costco, a retail space

operating outside of the core. It also presented external photos of the Moviedome evidencing its conversion from a movie theatre to retail space. [ 107 ] Again, it is nearly impossible to ascertain what use the Board made of this evidence. The City suggests that the Board’s reference to the Moviedome indicates a weighing of the evidence. As I read the Board’s decision, its reference to the Moviedome indicates that it was alive to the fact that this property was repurposed. The Board does not, however, appear to place much weight on this evidence given that no interior photos were provided.

Moreover, mere evidence of the conversion of the Moviedome does not establish a basis for upholding an average lease rate of $27 per square foot. [ 108 ] The evidence before the Board included photos of the Met Centre. These photos depicted the premises both in its own right and in comparison to the condition of Calgary Place as a whole. There was additional evidence of instances in which the City alleges the Met Centre was operating as “retail” – such as photos of stampede parties, political rallies and the like.

Again, the Board did not appear to find these photos compelling, given its statement that it was unable to determine a classification for the premises. [ 109 ] During the 2015 hearing, the City relied on the fact that Calgary Place was classified as level “A” retail in support of its submission that the Met Centre was appropriately assessed. For the purpose of comparison, premises are generally grouped into different classes.

According to the City’s Business Assessment Information Package, provided in the Applicant’s materials, level “A” properties refer to a class of property that competes for average tenants and possesses “good to exceptional” attributes: page 134. Properties with a “B” classification typically have average quantitative and qualitative attributes and compete for a wide range of tenants. [ 110 ] In its reasons, the Board questioned whether the evidence established that the Met Centre was of comparable quality and finishing to that of Calgary Place.

Despite this uncertainty, the Board simply affirmed the assessment. [ 111 ] I do note that the Board seemed to accept the City’s evidence that the owner believed the space to be retail, seemingly based on the property profile provided by CREIT, the Canadian Real Estate Investment Trust, which describes the property overview as “Calgary Place, Retail” and lists the Met Centre amongst the major tenants.

While it is debateable whether this profile is meant to be a more general description of the tenants as a whole, as opposed to a targeted description of the Met Centre, the Board’s finding in this regard is entitled to deference. [ 112 ] I turn next to the evidence relied upon by the Applicant. While the Board did mention the EllisDon report as supporting the Applicant’s position that the quality of the Met Centre was inferior when compared to the rest of Calgary Place, it did not address the argument on whether the actual cost of repurposing needed to be accounted for in determining the NARV.

I note that there was significant debate before the Board as to whether the $5 allowance adequately accounted for conversion costs. [ 113 ] The Applicant further relied upon its current lease in arguing that the $27 rate was in error. While it did not suggest that the current step-up rate of $4.50 provided for in the lease represented market value, it argued that it was nonetheless indicative of what the Applicant was paying in rent. It further argued that the renewal rate was to be negotiated based on similarly improved conference and meeting space, as opposed to retail space.

In addition, it relied on the lease in support of its argument that the assessment should be in the $10 per square foot range. Again, no analysis of this evidence was undertaken by the Board. [ 114 ] The Applicant relied heavily on a comparative analysis between the subject property, the Cineplex Odeon and the O&B Centre in arguing that the market rate for the premises should be $15, less a $5 leasehold improvement allowance.

An analysis of theatre space assessments was provided, as was an analysis of the proposed O&B Centre lease using the mid-point figure (again, as the lease provided for a percentage of gross revenue). It is unclear what weight the Board placed on this evidence, if any. [ 115 ] Finally, I note that although the Board grounded its decision on a finding that it did not have a workable definition of “retail”, in actuality, the Applicant’s materials before the Board did have a definition of both “retail” and “conference and event facility” taken from the

definitions contained in Bylaw 1P2007. A further definition of “retail” was provided by the Applicant in the 2015 Business Assessment Information Package as “a space that is utilized designed or intended for typical retail use”. While the Applicant noted these

definitions in argument (2015 Transcript p 69) it is unclear why the Board seemingly chose to disregard them. This is especially puzzling given its finding that such a definition was required. [ 116 ] Whether a tribunal’s decision can be considered reasonable takes into consideration the existence of justification, transparency and intelligibility within the decision making process. In this instance, it is impossible to determine how the 2015 Board reached the conclusion that it did. This is not an instance where the Court is in a position to supplement limited reasons given the record before the tribunal.

Rather, the 2015 Board notes that more information is required to determine the issue, and then determines the issue in any event. [ 117 ] Specifically, the Board provides no justification for how it determined that the initial assessment was arrived at using valuation standards applied in a fair and equitable manner, as required by the legislation. In my view, it does not justify its finding that the initial assessment must be upheld. [ 118 ] The Board engages in no analysis as to how it determined that the $27 per square foot figure represents market value. There is no examination of comparables.

There is no determination of whether the repurposing costs identified in the EllisDon report need to be factored into the “net” determination of the NARV calculation. There is no inquiry into whether or why the different-sized comparables offered by the City were considered similar to the Met Centre. Nor is there any indication of why the comparables relied upon by the Applicant were rejected, or why the existing lease was not considered.

This is problematic as the 2015 Board was required to determine whether the initial assessment reflected the typical market annual rental value of the premises, and yet failed to embark on any analysis as to why or how the $27 figure represented the typical market rental value. [ 119 ] Rather, the Board’s reasons state that on the evidence before it, it was unable to determine the appropriate classification for the property.

If by the Board’s own admission it was unable to satisfy itself that the Met Centre was “retail”, it does not follow that it can then adopt an assessment rate based wholly upon such a classification. [ 120 ] There is no indication of how or why the Board decided as it did. The limited reasons provided lead to the inescapable conclusion because the Board was unable to determine the property classification, it simply deferred to the approach taken by the assessor. This line

of analysis lacks the requirements of justification, transparency and intelligibility discussed in Dunsmuir . [ 121 ] The City cautioned against “parsing” the 2015 Board’s decision and urged this Court to embark upon a review on the entirety of the reasons, read holistically. I agree that decisions must be read contextually and as a whole.

However, I am not persuaded that the Applicant’s challenge to the decision is grounded on an inappropriate parsing of a comment or comments made by the 2015 Board in articulating its reasons. [ 122 ] Rather, a review of the 2015 reasons in their entirety, and in the context of the record, leads to the inescapable conclusion that the Board was unable to ascertain the proper classification based on the evidence before it and simply confirmed the initial assessment. For the reasons given above, this line of reasoning fails to meet the Dunsmuir criteria.

The question of onus [ 123 ] The next question for which leave was granted was whether the 2015 Board erred in misapplying the legal burden as between the parties. The standard of review for this question is reasonableness: Ross at para 3 . [ 124 ] A review of the 2015 Board’s decision indicates that it was alive to the fact that the Applicant had put forward some evidence supportive of its claim that the assessment was incorrect. The 2015 Board states that it requires a definition of “retail” that will clarify the issue for the parties.

It further recommends a physical visit to the premises to establish exactly which class of properties the Met Centre falls under. Clearly such statements are indicative of the Board’s acknowledgment that the evidence adduced by the Met Centre called the accuracy of the initial assessment into question.

Yet despite finding that there was an evidentiary issue respecting the question of whether the property was being used for Retail or Public Assembly space, the Board simply confirmed the assessment. [ 125 ] Again, it is impossible to discern from the limited reasons offered as to whether the Board found that although the Applicant established a prima facie case of an error, the City’s evidence was nonetheless preferable and that the Applicant therefore failed to meet its ultimate burden, or if the Board noted that a prima facie case has been made out, but deferred to the City’s position in any event. [ 126 ] As stated in Ross , at para 4 : ...Ms.

Ross had put forward some evidence that the assessment was incorrect. In such a situation, the evidentiary burden shifted to the City. This shift was not recognized by the Board. This Board was required, by statute and at common law, to provide reasons for its decision to adopt a burden of proof that was different from the legal burden of proof. The Board simply did not, in its decision, address the issue of the legal burden of proof; it did not even provide a conclusory statement about the burden of proof.

Had the Board provided reasons for departing from the correct burden analysis, this court would, of course, have embarked upon a reasonableness assessment. Because the standard of review on appeal is deferential, it is particularly important for the tribunal whose decision is being appealed to give adequate reasons for its decision.

In the absence of reasons by the Board in relation to the legal burden, this reviewing court can only conclude that the Board's departure from a correct legal analysis was unreasonable. [ 127 ] Similarly, as the 2015 Board’s reasons signify a possible departure from the recognized standard, but do not indicate why this approach was taken, they do not satisfy the Dunsmuir criteria of providing justification, transparency and intelligibility in the decision- making process. This is not an instance where the Court is in a position to determine the answers which might have been given, considering the record.

Conclusion regarding the

section 470 appeal [ 128 ] Pursuant to s 470.1 of the MGA , and for the above reasons, I cancel the decision of the 2015 Board and remit it back for rehearing. [ 129 ] As the Applicant failed to satisfy the three-part test in relation to the grounds for appeal before the 2014 Board, leave to appeal on both the question of whether the Board erred in determining that the subject space was correctly identified as retail, and therefore compared to similar premises, and whether the Board erred in applying the correct legal burden, is denied. [ 130 ] However, the Applicant requested that if leave was not granted, these issues be determined on judicial review.

The 2014 Board Decision Is Judicial Review an available remedy? [ 131 ] The parties disagree as to the availability of judicial review on the issues raised by the Applicant. [ 132 ] The Applicant takes the position that it is entitled to judicial review on the basis that it lacks an adequate alternate remedy. That is, because I have found that those grounds for appeal in relation to the 2014 Board decision were properly classified as questions of mixed law and fact, it would have no remedy in the face of what it submits to be an unreasonable decision if judicial review were not available.

The Applicant relies on Associated Developers Ltd v Edmonton (City) , 2011 ABQB 592 , and St Albert Housing Society v St Albert (City) , 2016 ABQB 203 , in support of its argument in this regard. [ 133 ] Conversely, the City takes the position that the jurisprudence on this issue confirms that judicial review of CARB matters is a discretionary remedy that must be limited to rare cases involving special and extraordinary circumstances: 797175 Alberta Ltd v Calgary (City) , 2017 ABQB 18 [ Norcen ].

The City argues that no such circumstances are present in this case. [ 134 ] In Associated Developers , this Court examined whether a leave application to appeal a CARB decision and an application for

judicial review could be heard at the same time. Ross J concluded that judicial review should generally not be heard until the court determines whether the issues raised by the applicant are questions of law or jurisdiction subject to appeal, or questions of fact or mixed fact and law subject to judicial review: para 19. [ 135 ] Ross J held, at para 18 that: Tactically, a party may decide to pursue judicial review in the alternative, in case the Court finds that the issues raised are not questions of law or jurisdiction, but questions of fact or mixed fact and law.

For example, in this case, many of the Applicant's arguments on the merits of the appeal appear to raise questions of fact, not law (see Appellant's Brief, paras. 58-64), and a judicial review argument may be that the CARB made an unreasonable finding of fact based on the evidence. Slatter J in Buckley v. Entz Estate , 2007 ABCA 7 , 401 A.R. 231 (Alta. C.A.) noted that cautious applicants should apply for judicial review and appeal under the same Originating Notice. [ 136 ] Justice Ross went on to examine whether judicial review is available for questions of law or jurisdiction.

She concluded that judicial review on these types of questions may be available in exceptional circumstances, but that the determination of this question is fact-dependent. An example might be where the court has identified a question of law that did not pass the second branch of the three-part test under s 470(5) of the MGA because it was not of objective importance: see paras 20-26. [ 137 ] In St Albert Housing (2016), this Court again examined whether the statutory right of appeal under the MGA precluded an application for judicial review.

In that instance, the applicants argued that because questions regarding the determination of market value are ones of mixed fact and law, they were entitled to bring an application for judicial review, even though the MGA provides a statutory right to appeal on questions of law or jurisdiction. Justice Shelley agreed, finding that judicial review was available. For questions of law and jurisdiction, the right of appeal under the MGA constituted an adequate alternative remedy which must be pursued, absent exceptional circumstances.

While this case was reversed on appeal, the findings with respect to the availability of judicial review were not in issue before the Court of Appeal: 2017 ABCA 129 at para 15 . [ 138 ] Additional cases decided by this Court have determined that judicial review may be available in instances where the statutory appeal procedure does not provide for an alternate remedy: see Precision Drilling Corp v Calgary (City) , 2011 ABQB 503 at para 17 , Edmonton (City) v Edmonton (City) Composite Review Board , 2012 ABQB 118 at para 82 , and St Albert Housing Society v St Albert (City) , 2014 ABQB 556 at paras 38-45 .

A similar analysis was undertaken in Colliers at paras 18-29 .

Interestingly, in Colliers , it was the City who was dissatisfied with the CARB’s finding and who argued that judicial review was available for questions of fact, or mixed questions, and in certain instances for questions of law or jurisdiction for which a s. 470 leave application has been denied due to a lack of sufficient import to merit an appeal. [ 139 ] In Norcen , Hopkins J framed the issue not as whether judicial review on a question of mixed fact and law was precluded , but rather whether the discretion to grant judicial review should be exercised .

In Norcen , the applicant argued that because the CARB’s alleged errors were ones of mixed fact and law, there was no adequate alternate remedy available under the MGA . The City countered that the Applicant’s argument was an attempt to undermine the legislative intent to limit the review of CARB decisions to sufficiently important questions of law or jurisdiction. Similar to the case at bar, the City in Norcen argued that judicial review should be limited to “extremely rare” cases where the statutory test had not been satisfied, but where there were special or extraordinary circumstances.

The City argued that allowing judicial review would disrupt the statutory scheme established by the legislature and would ultimately usurp the fact finding function entrusted to the Board. [ 140 ] The Court in Norcen identified a number of policy factors favouring a decision not to allow judicial review of questions of mixed fact and law in the absence of “extraordinary circumstances”.

It concluded that granting judicial review for questions of fact or questions of mixed fact and law, but denying an appeal for such questions would be irrational, in that it would be easier to review the factual merits of a decision than it would be to appeal on the basis of an alleged error in law or jurisdiction: para 30. [ 141 ] The Court further noted that s 470 of the MGA plays an important gate-keeping function by limiting a taxpayer’s ability to have an assessment board’s decision reviewed, for reasons of both efficiency and judicial economy.

It stressed the “flood-gates” concern given the high number of assessment complaints heard annually, coupled with the voluminous materials filed in such hearings. [ 142 ] Hopkins J ultimately concluded that the Court should not exercise its discretion to allow for judicial review of CARB decisions on questions of mixed fact and law, absent extraordinary circumstances.

I respectfully disagree. [ 143 ] Norcen relies, in part, on Associated Developers for the proposition that judicial review should be limited to “extremely rare” cases where the statutory test has not been satisfied but there are special and extraordinary circumstances: see paras 16 and 20. [ 144 ] I do not read Ross J’s comments in Associated Developers as saying that questions of mixed fact and law should not be granted judicial review absent extraordinary circumstances.

Rather, in my view, she is speaking of narrow questions of law which have low precedential value, but are of serious consequence to the applicant. Her comments speak to a rare instance where judicial review of a legal question might be granted. I do not read them as stating that any question which fails the three-part test under s 470(5) will not be heard on judicial review absent extraordinary circumstances.

It does not appear that this restriction has been read in by subsequent courts which have considered Associated Developers . [ 145 ] The Court in Norcen also relies on Precision Drilling in support of its conclusion. In Precision Drilling , at para 8, McCarthy J discusses the same balancing exercise as is discussed in Norcen . He then goes on to discuss a number of cases where judicial review was denied due to the fact that an adequate remedy was available through an appeal. His commentary at para 16 (reproduced in Norcen ) must be read in this context.

The issues for which judicial review was sought in Precision Drilling were questions of law for which no extraordinary circumstances were found to exist. While McCarthy J denied the application for judicial review on the facts before him, he ultimately found that questions outside of the purview of the statutory appeal provisions were properly the subject of judicial review. [ 146 ] It is clear from a review of Norcen that one of the Court’s paramount concerns was the floodgates argument raised by the City.

The Court stated that there were strong policy reasons, including efficiency and judicial economy, against the Court bypassing the gate- keeping function of s 470 and reviewing the factual merits of assessment board decisions. Norcen was, however, decided on the previous

version of the MGA .

Section 470 of the MGA now provides for judicial review of assessment review board decisions. There is no longer a requirement to obtain leave. Now that a party may apply directly for judicial review under the revised

section 470 , this concern, in my view, is moot. [ 147 ] I am satisfied by the authorities discussed above that judicial review is an appropriate remedy in this instance. Given that the MGA provides for an appeal only on questions of law and jurisdiction, together with my finding that the questions before the 2014 Board are ones of mixed law and fact, the statutory appeal procedure is not an adequate alternate remedy. Given the recent legislative amendments, on a go-forward basis, any floodgate concerns are no longer valid.

The position of the parties [ 148 ] The Applicant takes the position that the 2014 Board decision is unreasonable. It argues that as a conference facility, the Met Centre was not operating as a retail premises. It submits the 2014 Board erred in finding that the property could be assessed as retail and in confirming an assessment on this basis absent evidence that such a use would be viable.

The Applicant says that the 2014 Board misunderstood the nature of a retail classification and misconstrued the evidence before it in finding that it was applicable to the premises. [ 149 ] The City maintains that the 2014 Board decision is reasonable. The City stresses that there is no requirement to base an assessment upon a property’s current use. Rather, an assessment should reflect the value of the space occupied by a business on the date of valuation. It takes the position that the Met Centre is made up of what the market treats as Level 1 and Level 2 retail space, and therefore it was properly included

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