Les Galeries D’Anjou Limitee v Calgary (City), 2018 ABQB 993

Court of Queen’s Bench of Alberta Citation: Les Galeries D’Anjou Limitee v Calgary (City), 2018 ABQB 993 Date: 20181205 Docket: 1801 02056 Registry: Calgary Between: Les Galeries D’Anjou Limitee (as represented by Altus Group) Applicant - and - The City of Calgary and Calgary Assessment Review Board Respondents _______________________________________________________ Reasons for Decision of the Honourable Madam Justice A. L.

Kirker _______________________________________________________ Introduction [ 1 ] Les Galeries D’Anjou Limitee ( D’Anjou ) applied for judicial review of a December 14, 2017 decision of the City of Calgary Assessment Review Board ( CARB ) cited as CARB Order #113722P-2017. The property involved is the Market Mall shopping center located in NW Calgary. The question before this court arises from the CARB’s decision in relation to just one of seven issues it was asked to consider: that is, whether the decision to ascribe value to a partially completed expansion of the Mall was reasonable.

D’Anjou asks that the decision be quashed and the matter be sent back to the CARB for a new hearing because the CARB decision to affirm the City’s position suffers from a lack of transparency, intelligibility and justification and is, in its outcome, unreasonable. [ 2 ] The City asserts that the narrow issue raised by D’Anjou in this application was reasonably dealt with by the CARB, and that

the application should therefore be dismissed. [ 3 ] What follows is my decision. Facts [ 4 ] The facts are straightforward and not in dispute. [ 5 ] The City of Calgary 2017 Property Assessment Notice issued in January, 2017 ascribed an assessment value of $673,140,000 based upon an estimated market value on July 1, 2016 and physical condition of the property on December 31, 2016.

The value was assessed by the City using the Income Approach to value whereby the net operating income is capitalized at a rate of 5.76% to arrive at an estimate of market value for assessment purposes, after deducting related value for exempt tenants. (see para 5 of CARB decision). [ 6 ] On or about March 3, 2017, D’Anjou submitted an Assessment Review Board Complaint challenging the assessment amount on multiple grounds. [ 7 ] The CARB subsequently delivered a Notice of Hearing and the hearing was scheduled to be heard on November 7 and 8, 2017.

On or before September 25 th D’Anjou provided its complaint disclosure as required addressing the issues raised in its complaint. [ 8 ] The City provided its disclosure in October and in that disclosure raised the issue of the partial development of the expansion of Market Mall. The City recommended an increase of the assessment amount from $673,140,000 to $680,880,000, which included the addition of $668,835 to account for the value of the partially completed construction of what was to become the new Sport Check space.

There is no dispute that the City notified D’Anjou about the proposed increase and its basis for it by email in August, 2017, and that the issue was appropriately raised by the City in its response material before the CARB. [ 9 ] In its complaint rebuttal, D’Anjou addressed the partial development issue, including the proposed imposition of the additional value of $668,835 for what it describes as a hole in the ground and partially constructed footings. D’Anjou raised three arguments it now says the CARB failed to fairly and reasonably address: (

a) First, that the grade work and footings alone were of no value; (

b) Second, that the City had not added any additional value for the partial expansion of the Southcentre Mall, a comparable property, in the year its expansion was under construction. Instead, the City captured the value of the expanded development in 2016, the year the work was completed and the new retail space available to lease; and finally that, (

c) Market Mall was due to receive a Phased Tax Program ( PTP ) Rebate of $395,371 that would be unfairly lost if the partial development value was added to the assessment increasing the tax payable by only $11,610. The CARB Decision [ 10 ] On December 19, 2017 the CARB released its decision.

It summarized the positions of the parties in relation to the partial development issue at paragraphs 51 – 59 of the decision, and then concluded with its “findings of fact and reasons for decision” at paragraph 60 as follows: “...the partial development does add value to the subject property and the Respondent [City’s] methodology for determining that additional value is reasonable.

The value of the partial development is $668, 835.” Standard of Review [ 11 ] The parties raised no preliminary objections or procedural matters preventing the merits of D’Anjou’s application for judicial review being heard. [ 12 ] They agree the standard of review is reasonableness. In his recent decision in Federated Co-Operatives Limited v. Wheatland County , 2018 ABQB 637 Justice Eamon reviewed (at paras 80 – 89) the Supreme Court of Canada’s guidance in relation to the application of the reasonableness standard, referring to Newfoundland and Labrador Nurses’ Union v.

Newfoundland and Labrador (Treasury Board) , 2011 SCC 62 ; Edmonton (City) v. Edmonton East (Capilano) Shopping Centres Ltd. , 2016 SCC 47 ; Communications, Energy and Paperworkers Union of Canada, Local 30 v. Irving Pulp and Paper, Ltd. , 2013 SCC 34 ; and, Law Society of British Columbia v. Trinity Western University , 2018 SCC 32 , all of which follow the Dunsmuir analysis: Dunsmuir v. New Brunswick , 2008 SCC 9 .

Justice Eamon nicely summarized the required attitude inherent in the deferential standard as follows (at para 89): …in applying the reasonableness standard, the Court may consider total absences of supporting evidence, failures to address submissions that go to the core of the matter, failures to provide analysis, and failures to address

interpretation of applicable legislation. … [I]nadequacy of reasons alone is not necessarily unreasonableness (and does not constitute procedural unfairness). Every case depends on the Court’s assessment of the alleged omissions, in the context of the required degree of deference, the entirety of the Record and respectful attention to the reasons that could be offered in support of the Board’s conclusions. The Applicant must demonstrate unreasonableness, and the Court must be careful not to lose sight of that requirement and devolve into a reweighing of evidence or parsing the decision as if it were the tribunal of first instance. The CARB’s Alleged Errors

[13] D’Anjou argues that the CARB decision is unreasonable in both process and outcome because the CARB: (

a) lacked evidence to ascribe any value to the partial development of the Market Mall expansion; (

b) ignored evidence going to the heart of D’Anjou’s complaint, including evidence that partial development value was notincluded in the assessed value of a comparable property – that is, Southcentre Mall - in nearly identical circumstances; and, (

c) failed to properly consider principles of equity, particularly the inequity of allowing the City to include a value for the partialdevelopment resulting in the loss of the PTP Rebate. [14] With respect to the issue of the PTP Rebate, D’Anjou agrees that it was beyond the jurisdiction of the CARB under section460.1 of the Municipal Government Act (MGA) to adjudicate whether the property met certain eligibility criteria related to a City-fundedtax relief program. [15] Further, D’Anjou agrees that because the CARB was specifically asked to disregard paragraph 10 of D’Anjou’s rebuttalsummary (which addressed its PTP rebate argument) and all of the evidence in relation thereto, it cannot fairly be said that the CARBfell below the standard of reasonableness in failing to address this aspect of D’Anjou’s inequity argument. [16] D’Anjou maintains that the consequence of losing the PTP Rebate remains relevant in assessing the significance of the CARBdecision from D’Anjou’s perspective. [17] The effect of a decision on the rights, privileges and interests of an affected party is a factor affecting the content of the duty ofprocedural fairness owed in a given circumstance: Baker v.

Canada (Minister of Citizenship and Immigration), (SCC),[1999] 2 SCR 817 at para 25. However, in defining the issues to be decided it is important not to conflate questions of procedural fairnesswith questions about the reasoning or result of the decision.

D’Anjou’s grounds for judicial review focus on the latter; what it says is anunreasonable outcome and the inadequacy of the CARB reasons; it’s lack of “transparency, intelligibility and justification.”Newfoundland and Labrador Nurses’ Union case tells us that issues related to the adequacy of reasons are to be considered within thereasonableness analysis (at paras 20-22).

Was There Evidence to Support the CARB’s Decision in Relation the Value of thePartial Development? [18] There was. [19] Notwithstanding D’Anjou’s submission that there was an absence of evidence to support the value ascribed, the CARB didreceive evidence from the City about the physical condition of the property as at the December 31, 2016 condition date. The BuildingPermit released on July 5, 2016 estimated a total construction value of $4,458,900. Email correspondence from the contractor confirmedhis estimate that the building foundation had been 50-60% completed by the condition date.

The City assessor also provided the CARBwith a chart entitled Percentage Complete Chart which he said was developed for the purposes of determining the value of non-residential properties at various stages of construction using mass appraisal principles. Using the percent complete figures in the chart,the City determined that 60% of the completed foundation equated to 15% of the total construction and then estimated the value of thework that had been done with reference to the building permit total construction cost. [20] D’Anjou did not dispute the physical condition of the property on the condition date.

It submitted only that the grade workand footings, if left in place without further construction, would be of no value. This opinion was expressed by Mr. Hamilton of AltusGroup who gave evidence on behalf of the D’Anjou. [21] The MGA and the Matters Relating to Assessment and Taxation Regulation (MRAT) govern property assessments in Alberta. [22]

Section 289 of the MGA provides: 289(1) Assessments for all property in a municipality, other than designated industrial property, must be prepared by the municipalassessor.

(2) Each assessment must reflect (

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

Part 10 in respect of the property, and (

b) the valuation and other standards set out in the regulations for that property. [23]

Section 293 of the MGA provides that in preparing an assessment, the assessor must, in a fair and equitable manner, apply thevaluation standards and follow the procedures set out in the regulations. [24]

Section 6 of the MRAT states that the valuation standard for a property consisting of a parcel of land and improvements is“market value”. Market value is defined in the MGA as the amount a property “might be expected to realize if it is sold on the openmarket by a willing seller to a willing buyer”. [25]

Section 2 of MRAT provides that assessments based on market value must be: (

a) Prepared using mass appraisal; (

b) Be an estimate of the value of the fee simple estate in the property; and,

(

c) Reflect typical market conditions for properties similar to that property. [26] Mass appraisal is defined in

section 1(

k) of MRAT as “the process of preparing assessments for a group of properties usingstandard methods and common date and allowing for statistical testing.” [27] The City argues that within this statutory framework, the assessor had discretion over what methodology, or approach, wasused to determine a total estimate of the market value of the property, including the added value of the partial development.

The Cityargues that the CARB’s decision to accept the City’s estimated value of the partial development and to add it to the value assessed usingthe income approach was within the range of reasonable outcomes based upon the evidence and submissions it had received. [28] I agree. [29] To paraphrase Justice Yamauchi’s decision in Canada Safeway Ltd. v. Calgary (City), 2016 ABQB 200 (at para 83), it waswithin the assessor’s discretion to use whatever methodology it thought best reflected the circumstances with which it was dealing.

TheCARB was faced with accepting the value the City assessor had estimated or altering the City’s proposed assessment on the basis thatthe partial development added no value at all. The CARB accepted the approach the assessor took and on this issue, the Court must showdeference to the Board’s decision. [30] This brings me to what I see as the central contention in D’Anjou’s complaint: that is the asserted failure by the tribunal toaddress D’Anjou’s submissions in relation to the inequity arising from the City’s recent assessment of a similar – near identical –property, in similar – near identical – circumstances.

Did the Carb Fail to Address Submissions Going to the Heart of the Complaint UnderAdjudication Such That it Can be Said the Tribunal Fell Short of the Standard ofReasonableness? [31] In answering this question I am required to consider the “justification, transparency and intelligibility” of the CARB decision,keeping in mind that reasons are both what is written and what can be understood from the record. At paragraph 18 of Newfoundland andLabrador Nurses’ Union, the Supreme Court of Canada said: Evans J.A. in Canada Post Corp. v.

Public Service Alliance of Canada, 2010 FCA 56 , [2011] 2 F.C.R. 221, explained inreasons upheld by this Court (2011 SCC 57 , [2011] 3 S.C.R. 572) that Dunsmuir seeks to “avoid an unduly formalisticapproach to judicial review” (para. 164). He notes that “perfection is not the standard” and suggests that reviewing courts should askwhether “when read in light of the evidence before it and the nature of its statutory task, the Tribunal’s reasons adequately explain thebases of its decision” (para. 163).

I found the description by the Respondents in their Factum particularly helpful in explaining the natureof the exercise: When reviewing a decision of an administrative body on the reasonableness standard, the guiding principle is deference. Reasons are notto be reviewed in a vacuum – the result is to be looked at in the context of the evidence, the parties’ submissions and the process.Reasons do not have to be perfect. They do not have to be comprehensive. [para. 44] [32] In Alberta (Information and Privacy Commissioner v.

Alberta Teachers’ Association, 2011 SCC 61 (at para 54) and the morerecent Supreme Court of Canada decision in Delta Air Lines Inc. v. Lukacs, 2018 SCC 2 (at paras 23-24), the Court warned thatreviewing courts do not have carte blance to draft reasons for the administrative decision–maker. However, supplementing reasons maybe appropriate where the tribunal’s reasons are either non-existent or insufficient, but the context reveals that the matters must have beendealt with in a certain way: See Bonnybrook Industrial Park Development co. Ltd v.

Canada (National Revenue), 2018 FCA 136, StratasJA dissent (the majority did not address this issue). [33] At paragraphs 58 and 59 of the CARB decision it summarized the evidence it received and the submissions it heard fromD’Anjou about Southcentre during the hearing. It is evident from these paragraphs that the CARB was alive to the similar Southcentreproperty. [34] D’Anjou argues that the CARB failed to demonstrate that it actually took into consideration how the Southcentre property hadbeen assessed in similar circumstances as it was mandated to do by section 467(3)(

c) of the MGA.[1] [35] Section 467(3)(

c) states that “an assessment review board must not alter any assessment that is fair and equitable, taking intoconsideration ... the assessments of similar properties or businesses in the same municipality. [36] The City agrees that a property’s assessment value must be fair and equitable when compared to similar properties within themunicipality, but it argues that assessments are prepared afresh annually and therefore the assessment of the similar Southcentre propertyin previous years was neither binding nor determinative of how the total market value for Market Mall was to be assessed in 2017.

Asstated by Justice Michalyshyn in Globexx Properties Inc v. Edmonton (City) 2012 ABQB 651 at para 18, “...a prior year’s decision doesnot create any kind of ‘starting point’ or ‘base’ for the following year’s assessment”, even for the same property. [37] Further, the City points out that section 291(1) of the MGA requires that improvements[2] under construction be included inassessments. Section 314(2) then requires that supplementary assessments be prepared on a prorated basis once the improvements arecompleted or occupied.

These provisions are part of the statutory framework that makes clear the value of improvements, both partiallyconstructed and complete, is to be included in a property assessment. In other words, estimating the value of the partial development wasnot just a City practice or policy, as D’Anjou suggests, it was statutorily mandated. [38] Mr. Domenie, who provided evidence on behalf of the City, explained that both residential and commercial properties areregularly assessed with partial development values included. He explained in response to a question from the panel that although the

partial development value added to the assessment of the market value of Market Mall was a very small percentage of its total value, it was fair and equitable to include it in the same way partial development values are applied for other properties be they residential homes or commercial buildings. [3] In closing submissions, the City representative advised the CARB that the value of the partial development of the Southcentre Mall ought to have been added to its assessed market value when the construction was underway, but was missed. [4] [ 39 ] In light of all of this, the City urges me to find that the CARB’s reasons are adequate given the nature and context of the tribunal’s task.

It asserts that the CARB’s decision is reasonable and that it is evident the CARB accepted that the Southcentre assessment was not determinative. [ 40 ] In reading the CARB decision alone, it is difficult to discern whether the tribunal followed the line of reasoning presented by the City here.

However, in reviewing the CARB’s decision within the context of the statutory framework and in light of the record of proceedings, I am able to connect the dots in its decision (borrowing the language of Justice Stratas at para 79 of Bonnybrook. ) [ 41 ] Where, as here, it was reasonable to conclude that the City’s proposed assessment reflected the market value of the property, which included the finding that the partial development would be worth something to a willing buyer if the property was sold on the open market, it is evident there was no inequity in the CARB sustaining the City’s assessment notwithstanding that the assessed value of a very similar property – Southcentre – did not include a partial development value and may therefore have been too low in a prior year.

The principles that underlie the assessment process dictated by the MGA and the MRAT, do not require that conflicting decisions between similar properties be resolved by perpetuating deviations from the statutory scheme with assessments that fall below market value, any more than they dictate an assessment in excess of market value if the converse were true: See Mountain View County v. Alberta (Municipal Government Board) , 2000 ABQB 594 .

Conclusion [ 42 ] In conclusion, and notwithstanding what was done with Southcentre Mall assessment in 2015, I find that the CARB’s decision was within the range of acceptable outcomes, and that its reasons, while sparse, can be adequately understood in the context of the record as a whole. [ 43 ] I must therefore dismiss D’Anjou’s application. [ 44 ] The City shall be entitled to its costs to be calculated on Column 1 of

Schedule C of the Alberta Rules of Court . No costs were requested by the CARB. Heard on 30 th day of October, 2018. Dated at the City of Calgary, Alberta this 5 th day of December, 2018 A. L. Kirker J.C.Q.B.A. Appearances: Jerry J. Patterson for the Applicant Henry Chan for the Respondent, City of Calgary Michael Janke

for the Respondent, Calgary Assessment Review Board [1]

Section 467 of the MGA provides that: 467(1) An assessment review board may, with respect to any matter referred to in section 460(5), make a change to an assessment roll or tax roll or decide that no change is required. ...

(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