City of St. John's Appellant And: 10718 Nfld. Inc. Respondent, 2018 NLSC 194

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : St. John's (City) v. 10718 Nfld. Inc. , 2018 NLS C 194 Date : October 1, 2018 Docket : 201701G4141 In The Matter of the Assessment Act, 2006 , S.N.L. 2006, c. A.18.1., as amended And In The Matter of a Judgment of the Assessment Review Court, City of St. John's, NL Between: City of St. John's Appellant And: 10718 Nfld. Inc. Respondent Before: Justice Rosalie McGrath Place of Hearing: St. John’s, Newfoundland and Labrador Date of Hearing: March 29, 2018

Summary: The Court allowed the City’s appeal of a decision of a review commissioner with respect to the assessment of land being developed for

industrial use. The Court found that the commissioner erred in law in his

interpretation and application of sections of the Assessment Act,2006. The decision was vacated and referred back to the commissioner with an opinion from the Court. Appearances: Raman F. Balakrishnan Appearing on behalf of the Appellant Amanda M. Buis Appearing on behalf of the Respondent Authorities Cited: CASES CONSIDERED: Loblaw Properties Ltd. v. Mount Pearl (City), 2017 NLCA 6; Edmonton (City) v. Edmonton East (Capilano)Shopping Centres Ltd., 2016 SCC 47; Dunsmuir v. New Brunswick, 2008 SCC 9; N.L.N.U. v. Newfoundland & Labrador (TreasuryBoard), 2011 SCC 62; Muskrat Falls Employers’ Assn. Inc. v.

Resource Development Trades Council of Newfoundland and Labrador,2015 NLTD(G) 150; Site Energy Services Ltd. v. Wood Buffalo (Regional Municipality), 2015 ABCA 106; 66202 Newfoundland &Labrador Inc. v. Municipal Assessment Agency Inc., 2016 NLTD(G) 91; Newterm Ltd., Re (1988), (NL CA), 13A.C.W.S. (3d) 389, 74 Nfld. & P.E.I.R. 328 (Nfld. S.C. (C.A.)); St. John’s (City) v. St. John’s International Airport Authority, 2017NLCA 21; Loblaw Properties Ltd. v. Mount Pearl (City), 2016 NLTD(G) 30; Labatt Brewing Co. v. St. John’s (City), 2011 NLCA 75;Murphy, Re (1994), (NL SC), 117 Nfld. & P.E.I.R. 243, (Nfld.

S.C. (T.D.)); Fitzpatrick v. Conception Bay South(Town), 2018 NLSC 16 STATUTES CONSIDERED: Assessment Act, 2006, S.N.L. 2006, c. A-18.1 REASONS FOR JUDGMENT McGrath, J.: INTRODUCTION [1] The City of St. John’s (the “City”) has appealed a decision of a commissioner (the “Commissioner”) appointed to hearappeals of assessments under the Assessment Act, 2006, S.N.L. 2006, c. A-18.1(d) (“Assessment Act”). The appeal was from the City’ssupplementary assessment of a parcel of land owned by 10718 Nfld.

Inc. (“10718”) located within a large scale retail, industrial andresidential development known as the Galway/Glencrest Land Development Scheme (the “Galway Development”). The parcel at issueis approximately 34.76 acres, known as Phase I – Glencrest Industrial Park within the Galway Development (the “Parcel”). [2] The Commissioner heard the appeal on April 6, 2017 and gave his written decision on May 11, 2017 in which he assessed theactual value of the Parcel at $7,820,000 with an estimated price per acre of $224,977.

The City filed an appeal of this decision undersection 39 of the Assessment Act, asking that the decision be vacated and referred back to the Commissioner with an opinion from thisCourt. background [3] The City initially assessed the entire Galway Development, located in the northwestern extern of the City, with a base date ofJanuary 1, 2014. The Assessment Act requires the City to assess property at the actual value as at a “base date”, meaning the more recentof January 1, 2005 or January 1 of every third year thereafter.

As at the base date of January 1, 2014, the Galway Development was in araw, undeveloped state.

[ 4 ] Following some development activity, the Galway Development was subjected to a 2016 reassessment roll in which the Galway Development lands were divided into four separate assessment areas. The four assessments were appealed by 10718, with the City agreeing to withdraw them to allow the parties time to review. This resulted in the Galway Development lands being split into parcels representing different use areas, with a further split among use areas for different phases of infrastructure development.

Of relevance to this appeal is that the area known as the Glencrest Industrial Park was identified for industrial use and further separated into three parcels, representing different phases of development. The Parcel represents the first phase of development within these industrial use lands. [ 5 ] Once the lands were broken down into different use areas and phases of development, the City issued notices of supplementary assessments on November 29, 2016. The supplementary assessment for the Parcel was $11,297,000, equating to approximately $325,000 per acre.

Negotiations ensued but a supplementary assessment agreement could not ultimately be reached between the City and 10718 for the Parcel, resulting in 10718 appealing the matter to the Commissioner. [ 6 ] While the parties disagreed before the Commissioner as to whether there ought to have been a supplementary assessment at all before January 1, 2017, the next three-year base date, the Commissioner did not find that the City erred in issuing a supplementary assessment. That issue was not argued on this appeal.

The issue that was raised was whether the Commissioner erred in law or jurisdiction in making his own determination of the assessed value. [ 7 ] At the hearing, 10718 relied upon a valuation report prepared by the Altus Group, as well as submissions from two appraisers with the Altus Group, Neil Hardy and Joanne Slaney.

For its part, the City relied on a spreadsheet of sales of other vacant industrial lots as well as to oral submissions made by a City official. [ 8 ] The Altus Group submitted that it was not appropriate to use the City’s direct comparison approach to determine actual value as there were no true comparables. It submitted that the more appropriate valuation method was to use the discounted cash flow approach. [ 9 ] Mr. Hardy stated to the Commissioner that the Galway Development is a rather unique development because of its size and scope.

As already noted, the development had been broken down into different use and infrastructure development phases, resulting in approximately fifteen different assessments being created from the original one or two. Even within the industrial use area, three different assessments were created for each phase of development with the intention that each phase would then be further sub-developed into smaller lots. With respect to its state of development, as at January 2016, the Parcel had not yet been fully serviced or subdivided.

However, it had been cleared, grubbed and graded with the exception of one 19.04 acre lot that had been cleared and partially grubbed but not fully graded. Mr. Hardy submitted there were no suitable comparables for such a large-scale multi-use and multi-phase development. [ 10 ] 10718 submitted that the actual value should reflect the amount for which the Parcel would be sold on the open market. In such a case, a purchaser would have to take into account that, as of the base date, the entire Parcel would need to be held as a single block for at least three years in order to complete infrastructure.

After subdivision, the land would have to be held for each year or portion thereof until it achieved complete sell out of the lots in the Parcel. 10718 estimated this would take approximately a further five years. Holding costs for these combined eight years, such as property tax, financing interest charges, etc., would need to be taken into account, as would profit margins and a discount to arrive at a net present value as at the effective date.

As such, the discounted cash flow approach was the most appropriate valuation methodology to arrive at the actual value, resulting in a value of $5,660,000, or approximately $136,000 per acre. [ 11 ] The City’s position was that it does not use discounted cash flow valuations to assess actual value, noting that such an approach relies on numerous untested assumptions and speculations.

It felt that this was the least accurate measurement of actual value. [ 12 ] In support of its use of the direct comparison approach, the City used five vacant industrial lots as comparables, three of which were within its municipal boundaries, with the other two located outside the City boundaries but within the greater metropolitan area. The City advised that, while it used these comparables, it made adjustments to recognize that they were significantly smaller lots and there were differences in respect of costs of servicing.

The Commissioner also heard submissions from the parties confirming that none of the comparables used by the City were partially serviced or partially developed lands from such a large development. [ 13 ] While the parties made some comments to the Commissioner on the differences between the Parcel and the comparables put forward by the City, the record reveals that the primary thrust of the argument before the Commissioner was the appropriateness of the proposed valuation methodologies. [ 14 ] After hearing submissions from the parties and considering the material placed before him, the Commissioner rendered his written decision.

To aid in the below analysis of alleged errors in his decision, I have reproduced the portion of the decision in which the Commissioner gave his analysis and decision: I have reviewed the information that the Altus Group and the City Assessment Division have submitted. Before continuing I will address the question from the Altus Group on why there was a reassessment of this property – I will refer to St.

John’s Assessment Act Section 20(1)… Continuing on to the Altus Group appraisal and the DCF approach for the Discount Rate I assumed a range from 7% to 12% giving me a range in values but a mid way value of $6,493,152. I felt the more appropriate rate to be 8% which gave me a valuation of $7,471,200.00.

Reviewing the Respondent’s information I must refer to the Newfoundland Supreme Court Trial Division-Appeal by -Maurice Murphy -- Determination of Fair Market Value - Sun Life Case -- Five ways by which a true market valuation can be reached: (

a) a recent free sale of the property itself where neither the conditions of the property nor the market have since changed; (

b) recent free sales of identical properties in the same neighborhood and market; 0c)(sic) recent free sales of comparable properties; (

d) the price which the revenue producing possibilities of the property will command, and (e0(sic) the depreciated replacement cost. I cannot accept that Sales 1 and 3 in the White Hills Area – East End of the City can be uaed (sic). I will use Sales 2 and 5 in support of my value. The Octagon Industrial Park gave a valuation of $321,396 as a rate per acre. The area shown is 10.89 the subject is 34.76 acres. I feel a large adjustment is necessary for size and location: depth, width, topography and other factors of site analysis. My estimate of price per acre is $224,977. x acreage of 34.76 acres is $7,820,207.00.

Again, referring to the Newfoundland Supreme Court Trail (sic) Division – Maurice Murphy – Determination Of Fair Market Value paragraph 26 and quoting Green J: In my view, as a general proposition all approaches to valuation are In principle, appropriate to be resorted to, both as a means of conducting a “reality check” of the results of one approach by comparison with the results of other approaches, and also as a means, in appropriate cases, of providing a composite or correlated value using all applicable data. In developing an opinion of value I would like to refer to Section 77(3) of the St.

John’s Assessment Act – The Court shall not amend an assessment only on the basis that it is above or below market value, if, measured at the base date, the assessment bears a just and fair relation to the value at which other properties are assessed in the City. Therefore, I feel the property is over assessed and should indicate a value of $7,820,207.00. Accordingly, I confirm the assessed value of $7,820,000.00. issues [ 15 ] The following are the issues identified by the City: 1. What is the standard of review of the decision of the Commissioner on appeal to this Court? 2.

Did the Commissioner err in law or jurisdiction by failing to make a threshold determination that 10718 had satisfied its onus of establishing that the City erred in its assessment of the Parcel? 3. Did the Commissioner err in law or jurisdiction in his valuation of the Parcel? 4. Did the Commissioner err in law or jurisdiction in his

interpretation and application of sections of the Assessment Act requiring him to apply the principle of uniformity? 5. Did the Commissioner err in failing to provide intelligible reasons? ISSUE 1: What is the standard of review of the decision of the Commissioner on appeal to this Court? [ 16 ]

Section 39 of the Assessment Act allows for an appeal to this Court on a question of law or jurisdiction. That

section reads, in relevant part, as follows: 39.

(1) A party aggrieved by a decision of a commissioner may appeal from that decision to a judge of the Trial Division in the judicial centre in which the real property is located upon giving written notice to all parties and to the Trial Division within 30 days after the

mailing or delivery to that person of the decision of the commissioner. …

(3) An appeal of a decision of a commissioner under subsection (1) may be made on a question of law or jurisdiction. …

(5) The court shall either confirm or vacate the decision of the commissioner and where vacated the court shall refer the matter back to the commissioner with the opinion of the court as to the error in law or jurisdiction and the commissioner shall deal with the matter in accordance with that opinion. [ 17 ] In their briefs, both parties identified the Newfoundland and Labrador Court of Appeal decision in Loblaw Properties Ltd. v. Mount Pearl (City) , 2017 NLCA 6 as binding authority on the standard of review on an appeal under

section 39 of the Assessment Act . [ 18 ] In coming to the conclusion that the standard of review on questions of law or jurisdiction was that of correctness, the Court of Appeal referred to the Supreme Court of Canada decision in Edmonton (City) v. Edmonton East (Capilano) Shopping Centres Ltd. , 2016 SCC 47 . At paragraph 24 of that decision, Justice Karakatsanis, writing for the majority, referred to the four categories of issues identified in Dunsmuir v. New Brunswick , 2008 SCC 9 , in which the presumption of the standard of reasonableness on review is rebutted, thereby calling for correctness as the appropriate standard. These categories are: (

i) constitutional questions regarding the division of powers; (ii) issues both of central importance to the legal system as a whole and outside the adjudicator’s specialized area of expertise; (iii) true questions of jurisdiction or vires ; and (iv) issues regarding the jurisdictional lines between two or more competing specialized tribunals. [ 19 ] At paragraph 14 of Loblaw , the Newfoundland and Labrador Court of Appeal found that it could not determine the question of the appropriate standard of review by reference to any of those four categories.

It therefore looked to the context of the legislation to determine whether the presumed standard of reasonableness had been rebutted based on legislative intent to require correctness when questions of law and jurisdiction are reviewed pursuant to

section 39 of the Assessment Act . [ 20 ] In carrying out this contextual analysis, the Court of Appeal referred to paragraph 33 of Edmonton East where Karakatsanis, J. noted that the presumption of reasonableness is grounded in the legislator’s choice to give a specialized tribunal responsibility for administering its statutory provisions and in recognition of the expertise of the tribunal in so doing. Such expertise may arise from the specialization of functions of certain tribunals that have a habitual familiarity with the legislative scheme they administer.

It may also arise from a legislative requirement that tribunal members possess certain qualifications.

The expertise is said to inhere in the tribunal itself at an institutional level, with specialized tribunals being presumed to hold relative expertise in interpreting their legislative mandate and related legislation. [ 21 ] At paragraph 34 of Edmonton East , Karakatsanis, J. also noted that the Supreme Court of Canada has often applied a reasonableness standard on a statutory appeal from an administrative tribunal, even when the appeal clause contained a leave requirement and limited appeals to questions of law or jurisdiction.

In light of this, there is generally no need to engage in a long and detailed contextual analysis. In Edmonton East , following a contextual analysis, the Supreme Court of Canada majority found that the appropriate standard of review of a decision of a local assessment review board in Alberta was one of reasonableness. [ 22 ] However, in carrying out a contextual analysis of the Assessment Act , the Newfoundland and Labrador Court of Appeal in Loblaw differentiated the legislative scheme under consideration in Edmonton East .

In particular, the Court of Appeal noted that, in contrast to the Alberta scheme, there is no board of assessment review commissioners appointed under the Assessment Act . Each municipality appoints its own commissioner by resolution before January 31 in a year and that commissioner can be dismissed by the municipality. The commissioner’s authority is limited to hearing evidence and submissions by the parties where an assessment has been challenged, with no broader investigatory or statutory powers. In essence, no specialized tribunal has been created.

At paragraph 17, the Court of Appeal stated the following in summarizing its reasons for applying the correctness standard: 17 Given the nature of a commissioner's authority and the appointment process, it follows that the work of a particular commissioner does not engage broad policy considerations under the legislation, such as in the case of a board. In these circumstances, an appeal limited under the Act to a question of law or jurisdiction indicates a legislative intention that, to achieve consistency on issues of law, including statutory

interpretation, relevant to municipal taxation assessments requires a standard of review of correctness. [ 23 ] While both counsel agreed on the correctness standard in their briefs, in their oral submissions they submitted that the last ground of appeal, dealing with sufficiency of reasons, should be reviewed based upon a standard of reasonableness. [ 24 ] The leading Supreme Court of Canada case on the adequacy of reasons is the case of N.L.N.U. v. Newfoundland & Labrador (Treasury Board) , 2011 SCC 62 .

At paragraph 14 of that decision, Abella, J., stated that she did not see Dunsmuir as standing for the proposition that the adequacy of reasons is a stand-alone basis for quashing a decision, or as advocating that a reviewing court undertake two discrete analyses — one for the reasons and a separate one for the result. She noted that the reasons must be read together with the outcome and serve the purpose of showing whether the result falls within a range of possible outcomes. [ 25 ] In so finding, at paragraph 11, Abella, J. repeated the following key passages from Dunsmuir that frame the analysis on the

adequacy of reasons: 11 It is worth repeating the key passages in Dunsmuir that frame this analysis: Reasonableness is a deferential standard animated by the principle that underlies the development of the two previous standards ofreasonableness: 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 ofacceptable and rational solutions.

A court conducting a review for reasonableness inquires into the qualities that make a decisionreasonable, referring both to the process of articulating the reasons and to outcomes. In judicial review, reasonableness is concernedmostly with the existence of justification, transparency and intelligibility within the decision making process. But it is also concernedwith whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law. ... What does deference mean in this context?

Deference is both an attitude of the court and a requirement of the law of judicial review. Itdoes not mean that courts are subservient to the determinations of decision makers, or that courts must show blind reverence to theirinterpretations, or that they may be content to pay lip service to the concept of reasonableness review while in fact imposing their ownview. Rather, deference imports respect for the decision-making process of adjudicative bodies with regard to both the facts and the law.The notion of deference "is rooted in

part in respect for governmental decisions to create administrative bodies with delegated powers"....We agree with David Dyzenhaus where he states that the concept of "deference as respect" requires of the courts "not submission but arespectful attention to the reasons offered or which could be offered in support of a decision". [26] In N.L.N.U., the Supreme Court of Canada went on to consider that, in certain circumstances, the duty of procedural fairnesswill require some form of reasons for a decision but that reasons are not always required. [27] In Muskrat Falls Employers’ Assn. Inc. v.

Resource Development Trades Council of Newfoundland and Labrador, 2015NLTD(G) 150, at paragraph 25, Orsborn, J. referred to N.L.N.U. as providing the following instruction to reviewing courts in conductinga reasonableness analysis – the court must determine whether an arbitrator has understood the question raised by the grievance and hasanswered the question raised by the grievance.

If the outcome of the arbitration is within the range of reasonable outcomes, it should beupheld even in the absence of reasons. [28] In the circumstances of the judicial review before Orsborn, J., the arbitrator had provided a written decision. In reviewingthose reasons, Orsborn, J., noted that the arbitrator recited the grievance, the relevant collective agreement provisions and the respectivearguments and gave his conclusion. However, on the face of the award, there was nothing to assist in understanding why the arbitratoraccepted the Union’s argument.

At paragraphs 56 and 57, he noted that while one might think that a reviewing court should be entitledto at least a glimpse into the reasoning process that led to a particular decision, that is not the current state of the law, at least insofar as itrelates to the review of a decision of a labour arbitrator. [29] While I agree that the above represents the state of the law in relation to a review of an issue attracting a reasonablenessstandard of review, I do not agree that the above statements apply, without modification, in respect of a decision of a commissioner underthe Assessment Act. [30] Firstly, in considering the statements of law of Abella, J. and Orsborn, J. referred to above, it must be taken into account thatboth were reviewing decisions in which reasons were provided but the decision under review attracted the presumptive, less deferential,review standard of reasonableness.

In particular, at paragraph 16 of N.L.N.U., Abella, J., stated as follows: 16 Reasons may not include all the arguments, statutory provisions, jurisprudence or other details the reviewing judge would havepreferred, but that does not impugn the validity of either the reasons or the result under a reasonableness analysis. A decision-maker isnot required to make an explicit finding on each constituent element, however subordinate, leading to its final conclusion (S.E.I.U., Local333 v. Nipawin District Staff Nurses Assn. (1973), (SCC), [1975] 1 S.C.R. 382 (S.C.C.), at p. 391).

In other words, ifthe reasons allow the reviewing court to understand why the tribunal made its decision and permit it to determine whether the conclusionis within the range of acceptable outcomes, the Dunsmuir criteria are met. (emphasis added) [31] Secondly, it is significant that, in contrast to many administrative decisions, the Assessment Act statutorily mandates that acommissioner provide written reasons, signaling the importance of the parties’ need to understand why the decision was made. Inparticular, section 37(4) reads as follows:

(4) A commissioner, after hearing from the parties and any witnesses produced, shall decide the matter and shall provide reasons inwriting to the parties to the appeal. [32] The City referred me to a decision of the Alberta Court of Appeal in Site Energy Services Ltd. v. Wood Buffalo (RegionalMunicipality), 2015 ABCA 106, in which Brown, J.A., then sitting as a Justice of the Alberta Court of Appeal, noted that it is arguablyan error of law to give no reasons or reasons that are unintelligible in a case where written reasons are statutorily mandated.

Atparagraph 14, Brown, J.A. stated as follows: 14 Site Energy says that the SDAB gave inadequate reasons for its decision, specifically for not re-categorizing the proposed use asBusiness Support Facility, rather than Industrial Support Facility. Significantly, the complaint is not that the SDAB gave no reasons orreasons that were unintelligible. Were that the case, the proposed appeal would at least arguably involve an error of law, since the SDABmust, under section 687(2) of the Act, give written reasons for its decision.

Rather, the complaint is that the SDAB's reasons did notaddress a particular subject argued in the appeal (re-categorizing the proposed use).

[33] However, again, it is clear from paragraphs 15 and 16 of Site Energy that the overall standard of review of the decision underconsideration was that of reasonableness as opposed to correctness. The court noted that the board’s failure to explain in its reasons whyit did not re-categorize a proposed use of land was only one factor in assessing the “reasonableness” of the decision as opposed to the“correctness” of the decision.

In accordance with N.L.N.U. and Dunsmuir, Brown, J.A. noted that the quality and sufficiency of reasonsis a factor to be taken into account, along with whether the result falls within a range of reasonable outcomes, under a reasonablenessanalysis.

In that case, since the appellant could not articulate why the Board’s refusal to exercise its discretion to re-categorize aproposed use resulted in the decision being outside the range of acceptable outcomes, the omission of reasons for failing to exercise thatdiscretion did not mean the decision was not reasonable. [34] From a review of the above case law, I conclude that the analysis of the adequacy of reasons in a reasonableness reviewfocuses on whether the reasons are sufficient to allow a reviewing court to determine whether the decision falls within a range ofacceptable outcomes.

Where no reasons are provided, a reviewing court can still look at the result and apply its own reasoning analysisto determine whether the result reached is within the range of acceptable outcomes based on the record.

Where reasons are provided, areviewing court may not override the reasons, but can supplement them if required. [35] Further, as noted by the court in Site Energy, even if statutorily required reasons do not address a particular point that wasargued, if it cannot be shown that the failure to give reasons on that point (in that case, a discretionary decision) renders the decisionoutside the range of acceptable outcomes, the absence of reasons on that point will not be grounds for setting aside a decision on thereasonableness standard of review. [36] However, alleged errors of law or jurisdiction made by a Commissioner are to be reviewed based on a correctness standard.

Ifthe questions raised on appeal are those of statutory

interpretation and application of the law as it relates to municipal assessments, thereasons given by the Commissioner must be sufficiently justifiable, transparent and intelligible to allow the reviewing court to determinewhether the decision was correct in respect of law and jurisdiction as opposed to being within a range of reasonable outcomes.

Inaccordance with section 37(4) of the Assessment Act, these reasons must be in writing. [37] In carrying out this review on a standard of correctness, in my view, a degree of deference is still required as the legislature hasexpressly delegated the power to review assessments to a review commissioner appointed by the municipality. The legislation containsno requirement that this individual have legal training.

As such, when considering the adequacy of the written reasons of acommissioner, while respectful attention must be given to them with a view to determining whether a commissioner was correct in lawand jurisdiction, the Court should not be overly critical of the manner in which the reasons are expressed. For example, it is not expectedthat the reasons contain a comprehensive overview of case law. [38] As previously noted, the intelligibility of the Commissioner’s reasons is fundamental to a consideration of all of the abovealleged errors of law or jurisdiction.

Keeping in mind the comments above, I will therefore examine the grounds of appeal and considerhow the alleged deficiencies in the reasons relate to each ground. ISSUE 2: Did the Commissioner err in law or jurisdiction by failing to make a threshold determination that 10718 had satisfied its onusof establishing that the City erred in its assessment of the Parcel? [39] The City’s first substantive ground of appeal is that the Commissioner erred in law or jurisdiction in failing to determinewhether 10718 had met the threshold onus of demonstrating there was an error in the City’s supplementary assessment.

The City reliesupon the decision of Hurley, J., of this Court in 66202 Newfoundland & Labrador Inc. v. Municipal Assessment Agency Inc., 2016NLTD(G) 91 as authority for its position that the onus is on the party appealing before the Commissioner to establish that themunicipality’s valuation should be varied. At paragraph 21 of that decision, Hurley, J. referred to the Court of Appeal decision inNewterm Ltd., Re (1988), (NL CA), 13 A.C.W.S. (3d) 389, 74 Nfld. & P.E.I.R. 328 (Nfld. S.C. (C.A.)).

At paragraph22 of Newterm, Gushue, J.A., writing for the majority, found that an assessment is presumed to be correct unless and until it isdemonstrated to be wrong. [40] The fact that the appellant bears the onus to establish an error in a municipality’s assessment was also confirmed in the 2017decision of the Newfoundland and Labrador Court of Appeal in St. John’s (City) v. St. John’s International Airport Authority, 2017NLCA 21. At paragraph 30, Welsh, J.A. found that once a commissioner concludes that the appellant has not demonstrated an error inthe assessment that should be the end of the matter.

The approach taken in Newterm was also approved by Paquette, J. of this Court inLoblaw Properties Ltd. v. Mount Pearl (City), 2016 NLTD(G) 30, at paragraphs 43 and 44. [41] Hurley, J., at paragraph 21 of 66202, also referred to the decision of the Newfoundland and Labrador Court of Appeal in LabattBrewing Co. v. St.

John’s (City), 2011 NLCA 75, which confirmed that the party disputing an assessment made by an assessment reviewcommissioner also bears the onus of establishing before this Court that a commissioner’s valuation needs to be varied. [42] As such, 10718 bore the onus of establishing before the Commissioner that the City erred in making the valuation set forth inthe supplementary assessment.

If I determine that the Commissioner made such a threshold determination and that such a determinationshould be upheld, the City then has the onus of establishing the Commissioner’s valuation must be varied. [43] 10718 says that a review of the transcript of the hearing before the Commissioner, as well as the written reasons, establishesthat it met that onus. While the Commissioner may not have explicitly so stated, 10718 submits that the Commissioner would not havevaried the assessment if he was not satisfied there was sufficient evidence to meet that onus.

While 10718 acknowledges that theprimary thrust of its argument before the Commissioner was that the discounted cash flow approach should be used to value the property,10718 says there was also sufficient evidence led to show that there were errors in the City’s valuation, even if one were to accept thatthe direct comparison approach could be used. [44] 10718 refers to the report of the Altus Group that was placed before the Commissioner as well as their oral submissions. Counsel for 10718 says the Altus Group highlighted errors made by the City in choosing the comparables for the direct comparisonapproach.

In particular, 10718 says the oral submissions pointed out differences in the comparables’ size, location and availability ofservices.

[45] For its part, the City says that this Court cannot merely infer that the Commissioner was satisfied that 10718 had met its onussimply because the Commissioner altered the supplementary assessment. The decision does not speak to how the City’s assessment wasin error, nor to how 10718 demonstrated to the Commissioner that it was in error.

Further, the City disputes that 10718 adducedevidence demonstrating that the City’s supplementary assessment was in error. [46] I certainly agree that the decision of the Commissioner at no time refers to any party having an obligation to demonstrate thatthe supplementary assessment was in error or any initial obligation on the Commissioner’s part to make such a finding.

While hereferenced both parties’ competing positions with respect to the appropriate valuation approach, he at no time stated that either approachwas in error. [47] However, the Commissioner’s reasons indicate he rejected two properties used by the City as comparables in coming up withhis own value while explicitly accepting two other of the City’s comparables. In particular, at pages 4 to 5 of his decision, he notes: I cannot accept that Sales 1 and 3 in the White Hills Area – East End of the City can be uaed (sic). I will use Sales 2 and 5 in support ofmy value.

The Octagon Industrial Park gave a valuation of $321,396 as a rate per acre. The area shown is 10.89 the subject is 34.76acres. I feel a large adjustment is necessary for size and location: depth, width, topography and other factors of site analysis. Myestimate of price per acre is $224,977 x acreage of 34.76 acres is $7,820,207.00. [48] In the next paragraph, the Commissioner referred to using the two approaches to valuation both as a means of conducting a“reality check” of the two results and also as a means, in appropriate cases, of providing a composite or correlated value.

He then refersto the uniformity principle discussed later in this decision. Without further analysis, he states that he feels the property is over-assessedand should indicate a value at $7,820,207, which is the value he arrived at using the direct comparison approach. He concludes byconfirming an assessed value of $7,820,000, a value that is the same as the value he obtained using the direct comparison approach,rounded to the nearest thousandth. The value he arrived at using his own discount rate for the discounted cash flow approach was$7,472,200.

This suggests that the Commissioner did not in fact use a composite or correlated value. 10718 says the above analysistherefore indicates that the Commissioner accepted the City’s direct comparison approach to valuation but found that the City erred inthe manner in which it used this approach. [49] I accept that the Commissioner’s reasons, while not explicit, could support a finding that he determined the City did not err inusing the direct comparison approach but did err in relying on some of the comparables and in making adjustments.

In particular, thiscould be inferred from his statement that he cannot accept two of the comparables used and the fact that he made a much largeradjustment. This would have allowed him to then embark upon his own assessment of actual value. [50] However, the City says, even if I were to infer from the decision of the Commissioner that he determined there was an error inthe City’s supplementary assessment as a threshold issue, this inference arises from the Commissioner’s analysis of his own assessmentof actual value.

As the City alleged errors in respect of how that value was arrived at, I will review those alleged errors in consideringboth whether there was an error in determining the threshold issue and in coming up with the Commissioner’s own valuation. ISSUE 3: Did the Commissioner err in law or jurisdiction in his valuation of the Parcel? [51] The City submits that the Commissioner erred in law or jurisdiction in coming to his own valuation of the Parcel.

The Cityrefers to sections 17(1) and (2) of the Assessment Act that require an assessor to assess real property at actual value as of the base date. 10718, on the other hand, asserts that the Commissioner did properly apply the law when making his own assessment of the actual valueof the Parcel. 10718 says the Commissioner outlined the positions of the parties, referred to statutory requirements and cited a leadingcase on valuation from this Court. [52] In reviewing the reasons, it is true that the Commissioner referred to the various methods of arriving at actual value as set outby Green, J., then sitting as a Judge of this Court, in Murphy, Re (1994), (NL SC), 117 Nfld. & P.E.I.R. 243, 365A.P.R. 243 (Nfld.

S.C. (T.D.)) in which the Court interpreted sections 49(1) and (2) of the St. John’s Assessment Act, the predecessorlegislation to the Assessment Act. While those sections of the repealed Act had required that property be assessed at market value,section 2(

a) of the current Assessment Act states that “actual value” has the same meaning as market value. As such, the comments inMurphy, Re would continue to apply to a determination of value under the Assessment Act. [53] The Commissioner then proceeds to comment on the two approaches placed before him.

In looking at the approach taken by10718, the Commissioner comments on the discounted cash flow approach but seems to suggest, without giving reasons why, that hewould have used a different discount range, giving him a valuation of $7,471,200. [54] He then goes on to consider the comparables put forward by the City, rejecting two, accepting two others and making noexplicit finding as to whether he relied on the remaining comparable.

After making significant adjustments that he states are based onfactors he identifies, he arrives at a price per acre and an overall value of $7,820,207 (sic, $7,820,201). [55] The Commissioner refers again to the Murphy, Re decision, noting that all approaches to valuation are, in principle, appropriateto be resorted to. They can serve both as a means of conducting a “reality check” of the results of one approach by comparison with theresults of other approaches and also as a means, in appropriate cases, of providing a composite or correlated value using all applicabledata.

However, he ultimately lands on the same value, rounded to the nearest thousandth, that he arrived at using the direct comparisonapproach. [56] The City notes that no reasons are given by the Commissioner to explain (

i) how he came up with the discount rate for thediscounted cash flow approach; (ii) which comparables he included or excluded; (iii) why he included or excluded comparables; and (iv)how he came up with any adjustments he felt were required in respect of comparables. [57] Further, while the Commissioner states that he can use both methods as a reality check against each other, and, in appropriatecases, come up with a correlated or composite value, his reasons do not indicate how or if he reconciled the two approaches and thevalues each produced. He never made any statement that the property is so unique that the use of the direct comparison approach is not

appropriate, nor did he state that the discounted cash flow approach is not an appropriate means of determining actual value. The City says there is therefore no analysis, no reasons and no conclusion given with respect to the primary issue placed before the Commissioner. [ 58 ] As noted by 10718, it could arguably be said that the Commissioner ultimately adopted the direct comparison approach as he stated it was Sales 2 and 5 that he used in support of his actual value. Further, the value he finally used for assessment purposes seems to be using the direct comparison approach, rounded to the nearest thousandth.

However, even if it could be said that he chose the direct comparison approach and determined actual value based on recent free sales of comparable properties, was the Commissioner correct in law in the manner in which he made this valuation? [ 59 ] The Commissioner expressly rejected Sales 1 and 3 as comparables without explaining why.

It may perhaps be implicit in his rejection of these comparables that he excluded them due to their location, noting that they were in the “White Hills Area – East End of the City”, but it would have been preferable to expressly state this and to provide even brief reasons for exclusion.

However, even assuming his reasons for excluding those comparables can be implied, the Commissioner’s reasons are also not clear as to which of the other comparables he may have used and why. [ 60 ] Sales 2 and 5, according to a chart of properties provided to the Commissioner by the City, represented a property at Kenmount Road in the City of St. John’s and a property at Allston Street in the City of Mount Pearl, with rates per acre of $400,649 and $425,675, respectively.

The Octagon Industrial Park property located in the Town of Paradise is referred to by the Commissioner but not noted as being one of the comparables that he relied on. With respect to this latter property, the Commissioner simply states: The Octagon Industrial Park gave a valuation of $321,396 as a rate per acre. The area shown is 10.89 the subject is 34.76 acres. [ 61 ] The Commissioner then proceeds to set out his estimate of price per acre at $224,977, noting a large adjustment was necessary for size, location and other factors.

While he does not state whether he is considering the Octagon Industrial Park property as a comparable, his comparison of the size of the Octagon Industrial Park property (10.889) to the size of the Parcel (34.76) suggests he may have. [ 62 ] The Octagon Industrial Park property had the lowest value per acre of all comparables and was closest to that of the Commissioner’s estimate of actual value, representing exactly 70% of the value of the Octagon Industrial Park property.

On the other hand, the estimated actual value determined by the Commissioner represents a price per acre of 54% of the average of Sales 2 and 5, the comparables expressly accepted by the Commissioner, and whose prices per acre were each in excess of $400,000. [ 63 ] The Commissioner was also not clear as to how he made any adjustment to the values of comparables he may have used.

The Commissioner did state that he felt a large adjustment was necessary for “size and location: depth, width, topography and other factors of site analysis”, but there was little to no information before him in relation to factors other than acreage and location. [ 64 ] In particular, in respect of Sale 2, the only comments on the City’s chart were: Vacant commercial land. Adjacent to Metro Self Storage.

Application in for construction of a new recreational supply building (Coastal Marine). [ 65 ] In respect of Sale 5, the only comments on the City’s chart were as follows: Cleared and rough graded at time of purchase. Purchased by local offshore company. [ 66 ] In respect of Sale 4, the Octagon Industrial Park property on which the Commissioner may or may not have relied, the only comments on the City’s chart were as follows: Purchased by builder (Marco). Level site but was raw land that required grading.

Building to be constructed for offshore company. [ 67 ] It is notable that, at the hearing, the representative of 10718 asserted that the City had undertaken no real comparison approach as it was unable to explain why adjustments had been made for one factor or another. The Commissioner’s analysis similarly reveals that he undertook no real comparison approach. In particular, he identified factors as influencing his adjustment when such factors were not addressed on the record before him. [ 68 ] The City’s written chart provided no information on depth or width for any of Sales 2, 4 or 5.

The information with respect to topography and the site analysis was non-existent for Sale 2 and minimal, at best, for Sales 4 and 5. A review of the transcript also indicates that no oral submissions were made to supplement the information in the chart at the hearing. [ 69 ] The Commissioner did have information with respect to the size of the comparables, with both the City and 10718 agreeing that, using the direct comparison approach, a significant adjustment would have to be made for size.

However, he excluded the lowest and second lowest price per acre comparables, Sales 1 and 3, in carrying out his assessment of actual value. This would mean that the adjustment he made for size and location using the remaining comparables was significantly greater than the adjustment made by the City. However, the Commissioner did not give any reason for increasing the amount of the adjustment the City must have made, thereby failing to identify any error in how the City made adjustments in its supplementary assessment.

Further, there was no evidence or submissions made by either party on the amount of the adjustment required. [ 70 ] Overall, having considered the reasons of the Commissioner in light of the record before him, I find it was an error of law for the Commissioner not to have made a finding and provided reasons as to (

i) which approach he used or how he reconciled the approaches, and (ii) how the City may have erred in both choosing comparables and making adjustments to the prices of comparables. In light of the Commissioner’s failure to specifically identify the threshold issue of error in the City’s assessment, this Court has to look to his reasons for his own valuation to infer a finding on the threshold issue. These inferred reasons are not sufficiently transparent, justifiable or intelligible for the parties to understand whether or how he decided the threshold issue, an issue he was required by law to

decide before embarking on his own valuation. They also do not allow this Court to effectively review the decision on a correctness standard. [ 71 ] Further, even if it could be said the Commissioner was correct in law in making a threshold determination, the above errors in excluding comparables without explanation and making unexplained adjustments are also errors that relate to the Commissioner’s determination of actual value. In addition, in assessing actual value, the Commissioner stated that his adjustments were based on factors for which there was no evidence or documentation on the record before him.

As such, not only are the reasons not sufficiently transparent, justifiable or intelligible to review that decision on a correctness standard, the reasons reveal an error of law in relying on evidence not placed on the record. [ 72 ] The other aspect of the alleged errors made by the Commissioner in coming to his own value is the Commissioner’s failure to apply the principle of uniformity in taxation, to be dealt with under Issue 4 below. Issue 4: Did the Commissioner err in his

interpretation and application of sections of the Assessment Act requiring him to apply the principle of uniformity? [ 73 ] The fourth ground of appeal alleges a failure to apply the principle of uniformity. This principle is set out in both sections 17(3) and 37(1) of the Assessment Act . These sections require that, in making an assessment of value for taxation purposes, consideration must be given to assessments of other properties in the City to ensure taxation falls in a uniform manner. Section 17(3) requires consideration of this principle for all assessments.

Review commissioners are also directed by section 37(1) to apply this principle before amending the amount of an assessment under review. [ 74 ] Section 37(1) of the Assessment Act reads as follows: 37.

(1) A commissioner, after hearing the evidence, shall confirm or amend the assessment appealed against by increasing or decreasing it but the commissioner shall not amend an assessment only on the ground that it is above or below the actual value if the assessment bears a just and fair relation to the value at which other properties are assessed in the city or a municipality . (emphasis added) [ 75 ] While the Commissioner referenced the uniformity principle in his decision, the City asserts that he did not properly consider or apply that principle. The City cites the decision of Faour, J., in Fitzpatrick v.

Conception Bay South (Town) , 2018 NLSC 16 for the principle that it is unreasonable for a commissioner to seemingly adopt the principle of uniformity but then fail to consider the broader issue of whether there was uniformity throughout the municipality generally, and particularly in respect of the properties put before him as comparables. [ 76 ] For its part, 10718 says that the Commissioner did in fact consider section 37(1) but incorrectly cited the

section in his decision as section 77(3). In particular, at page 5 of the decision, the Commissioner states as follows: In developing an opinion of value I would like to refer to Section 77(3) of the St. John’s Assessment Act – The Court shall not amend an assessment only on the basis that it is above or below market value, if, measured at the base date, the assessment bears a just and fair relation to the value at which other properties are assessed in the City. [ 77 ] I note that the reference to the St.

John’s Assessment Act , made in two separate paragraphs in the decision, is incorrect as that Act was the legislation that formerly applied to City assessments but was repealed on January 1, 2007. However, section 77(3) of the former Act contains wording similar to section 37(1) of the Assessment Act , such that it could be said that the Commissioner identified the principle of uniformity of taxation.

However, for the reasons set out below, I agree with the City that a review of the reasons indicates that the Commissioner improperly interpreted section 37(1) and did not carry out any analysis or application of the principle. [ 78 ] Firstly, the words used by the Commissioner indicate that he considered the uniformity principle “in developing an opinion of value”.

However, section 37(1) states that, even if a commissioner determines the City’s assessment is above or below the actual value, the Commissioner must still consider whether the assessment bears a just and fair relation to the value at which other properties are assessed in the City. This consideration of the uniformity principle comes into play after the Commissioner has developed an opinion of actual value that is different from the City’s assessment.

The Commissioner must then consider how the actual value contained in the City’s assessment compares with the assessed value of other properties within the City. [ 79 ] This is because, as noted by Green, C.J. in Murphy, Re , at paragraph 18 , while an assessment should reflect what a property would realize in the open market with a sale by a willing seller to a willing buyer – in other words, market forces apply - that notion is to be tempered with notions of fair and equitable treatment of all taxpayers.

If, for some reason, it is determined the assessed value of other properties in the City are set at a lower amount, applying the uniformity principle, the assessment should reflect the lower value rather than the higher actual value based on market sale prices. [ 80 ] I do recognize that the Commissioner had before him prices of recent property sales. Presumably, the market sale prices of those properties also represented their assessed value.

However, even assuming he used these values in considering the principle of uniformity, his analysis of these comparables in the course of developing an opinion of actual value indicates he could not have carried out a true analysis to ensure uniformity of taxation. [ 81 ] The Commissioner expressly rejected the two East White Hills properties located within the City as comparable properties from which to determine actual value of the other comparables.

Sale 5 was located in the City of Mount Pearl and Sale 4, which may or may not have been used by the Commissioner as a comparable, was located in the Town of Paradise. The Commissioner therefore only had one comparable property in the City against which to address the issue of whether there was uniformity in assessed values throughout the City. That other property was Sale 2, a property located on Kenmount Road. However, there was a substantial difference in the sale price (and presumably assessed value) of that property and what the Commissioner determined to be the Parcel’s assessed

value. [ 82 ] Further, with only one property to consider and a significant difference between its value and the Commissioner’s opinion of actual value of the Parcel, it is not apparent how the Commissioner could have applied the principle of uniformity. The Commissioner also gave no reasons why he may have felt the actual value he assigned met the principle of uniformity. [ 83 ] This is similar to the error made by the commissioner in Fitzpatrick in which the commissioner had only one other property on which he based his decision and his reasons did not indicate how he analyzed the uniformity principle.

At paragraphs 58 and 59 of that decision, Justice Faour noted that the decision of the commissioner was absent any consideration of the principle of uniformity and made no reference to any other evidence that was submitted by the tax payer with respect to whether the assessment bore a just and fair relation to the value at which other properties in the City were assessed. [ 84 ] As noted by Faour, J. in Fitzpatrick , at paragraph 44 , if a commissioner required further evidence to address the issue he was required to consider, he had the authority to seek such information under

section 35 of the Assessment Act . [ 85 ] I find that the Commissioner therefore erred in law in his

interpretation and application of section 37(1) of the Assessment Act . A review of the reasons of the Commissioner reveal he did not properly identify or interpret the legislation he was mandated to apply. The only times that references were made to legislation, the Commissioner cited an Act that had been repealed. He also incorrectly stated that he considered the uniformity

section of that former Act in developing his opinion of value rather than considering whether the City’s assessed value bore a just and fair relation to the assessed value of other properties within the City. Finally, a review of the record and reasons indicates that, even if it could be inferred that the principle was applied, there were errors of law in its application. Issue 5: Did the Commissioner fail to provide intelligible reasons? [ 86 ] The last issue raised was an alleged failure to provide intelligible reasons.

As noted above, a review of the adequacy of reasons is not generally a stand-alone ground of appeal but, rather, must be undertaken in a review of the decision as a whole. I have therefore given respectful attention to the reasons offered when considering each ground of appeal and in conducting an overall review of this decision.

However, I would like to add the following additional comments based upon my review of the decision as a whole. [ 87 ] As previously noted, whether the decision under appeal is being reviewed on a reasonableness or correctness standard, the Court’s primary concern should be the justification, transparency and intelligibility of the decision making process. Where reasons are statutorily mandated, it is because the legislature has determined that procedural fairness dictates that the parties have a right to know why the decision has been made.

Written reasons also allow the Court to conduct a meaningful appellate review. While a person appointed to conduct a review of municipal assessments should not be held to the same standard as that of a judge of a court rendering a written decision, the reasons should still be sufficiently justifiable, transparent and intelligible to meet the two main purposes for which reasons are required. [ 88 ] In the case of a commissioner appointed under the Assessment Act , the Newfoundland and Labrador Court of Appeal has specified the standard of review on issues of law and jurisdiction as that of correctness.

As is evident from the above review, the reasons in this decision, read as a whole, fall short of meeting the objectives of written reasons. They do not allow for meaningful appellate review. They also do not allow the parties to understand why the Commissioner reached the conclusion that he did. Despite the able submissions of counsel, it was not possible for me to glean how or why the Commissioner arrived at his final conclusion.

I expect the parties had the same difficulty. [ 89 ] Further, I would like to note that, even if I were conducing a review on a reasonableness standard, the reasons would not allow me to come to the conclusion that the decision reached was within the range of acceptable outcomes. That is because I cannot override or rewrite the reasons where reasons are provided. In this case, I also cannot look to the record to assist. The Commissioner does not appear to have squarely addressed or adopted the positions taken by either party.

Further, his reasons indicate he relied on factors not placed before him. [ 90 ] Overall, paying respectful attention to the reasons offered, I would have to conclude that the decision does not allow for meaningful appellate review on either a reasonableness or a correctness standard of review. conclusion [ 91 ] In conclusion, I find that the Commissioner erred in law: 1) in failing to make, or making errors in, the threshold finding that the City had erred in its supplementary assessment; 2) in the manner in which he determined the actual value of the Parcel; and 3) in failing to address the principle of uniformity in assessed values throughout the City. [ 92 ] The appeal is therefore allowed.

The decision of the Commissioner is vacated with costs to the City in accordance with column 3 of the Scale of Costs annexed to Rule 55. The matter is referred back to the Commissioner to be dealt with in accordance with the foregoing opinion from the Court. _____________________________ Rosalie McGrath Justice