The Assessor for The City of Winnipeg Date:, 2011 MBCA 110

Citation: The Assessor for The City of Winnipeg Date: 20111222 v. 346 Portage Avenue Inc., 2011 MBCA 110 Docket: AI 10-30-07478 IN THE COURT OF APPEAL OF MANITOBA BETWEEN: ) A. F. Hacault ) for the ApplicantTHE ASSESSOR FOR THE ) CITY OF WINNIPEG ) M. R. Buchart ) for the Respondent (Appellant) Respondent ) ) T. D.

Gisser- and - ) for The Municipal Board ) of Manitoba ) 346 PORTAGE AVENUE INC. ) Chambers motion heard: ) December 15, 2011 (Respondent) Applicant ) ) Decision pronounced: ) December 22, 2011 CHARTIER J.A.1 On November 5, 2010, the Municipal Board of Manitoba (the Board) increased the assessed value of the applicant’s property located at 346 Portage Avenue, Winnipeg. The applicant has moved forleave to appeal the decision of the Board.

It seeks leave on the following three questions:1) Did the Board err in law by incorrectly applying the definition of “value” to the facts before it?2) Did the Board err in law by using theoretical market rents and failing to take into account the actual circumstances affecting the property in the reference year?3) Did the Board err in law or commit jurisdictional error by misconstruing relevant evidence?2 It is well settled that leave to appeal may be granted only on a question of law or jurisdiction and, even then, only if the question has arguable merit and is one of sufficient importance to warrant theattention of this court.

It has also been held that neither the methodology used by the Board to determine assessed value nor its calculation of value is a question of law. See Richmond Six Ltd. et al. v. Winnipeg CityAssessor et al., 2009 MBCA 58 at para. 2, 240 Man.R. (2d) 80; Winnipeg City Assessor et al. v. Lakeview Management Inc. et al., 2004 MBCA 11, 180 Man.R. (2d) 270; Lakeview Management Inc. v. Winnipeg CityAssessor et al., 2004 MBCA 12, 180 Man.R. (2d) 272; Manitoba (Provincial Municipal Assessor) v. Ducks Unlimited Canada, [1998] M.J. No. 547 (QL)(C.A.); and Briarwood Investment Corp. v.

Winnipeg CityAssessor, 2004 MBCA 103, 187 Man.R. (2d) 316.1) Did the Board err in law by incorrectly applying the definition of “value” to the facts before it?3 In this case, the Board had to determine the assessed value of the property. “Value” is a defined term under s. 1(1) of The Municipal Assessment Act, C.C.S.M., c.

M226 (the Act), and means, in respectof property being assessed under the Act, “the amount that the property might reasonably be expected to realize if sold in the open market on the applicable reference date by a willing seller to a willing buyer.” Todetermine the assessed value of property, the assessor must assess the subject property at value (see s. 17(1)).4 The applicant argues that the Board erred in law in its application of the legal definition to the facts before it.

The authorities state that any conclusion reached by applying the correct legal test to a setof facts or any questions about whether the facts satisfy the legal tests raise questions of mixed fact and law, not questions of law (see Housen v. Nikolaisen, 2002 SCC 33 at paras. 26-27,http://www.lexisnexis.com/ca/legal/results/docview/docview.do?docLinkInd=true&risb=21_T5896353365&format=GNBFULL&sort=RELEVANCE&startDocNo=1&resultsUrlKey=29_T5896353368&cisb=22_T5896353367&treeMax=true&treeWidth=0&csi=281150&docNo=1[2002]2 S.C.R. 235, and Canada (Director of Investigation and Research) v.

Southam Inc., (SCC), [1997] 1 S.C.R. 748 at para. 35).5 From the reasons, it is clear that the Board understood the defined term “value” because it correctly incorporated it in the test it used to determine the assessed value of the property. It then chose toassess the value of the property using the income approach methodology, which was one of the approaches suggested by the applicant. As stated above, the chosen methodology and the Board’s calculation of value arenot appealable to this court as neither is a question of law.

In my view, because the Board applied the correct legal definition of “value” to the facts and used the right test to determine assessed value, any alleged error inregard to any conclusion reached would be an error of mixed fact and law, not an error of law alone. 6 As a result, leave to appeal on the first question is denied.2) Did the Board err in law by using theoretical market rents and failing to take into account the actual circumstances affecting the property in the reference year?7 As already stated, the Board selected the income approach as the preferable method to determine the assessed value of the subject property.

It has been long and clearly established that the Board doesnot err when it considers suitable comparables in its income approach analysis. See Edwards Holdings Ltd. v. Manitoba (Provincial Municipal Assessor), [1999] M.J. No. 104 (QL)(C.A.), where Kroft J.A. explained (atpara. 12): Valuation, when using the income approach, involves calculating a net operating income and from that an appropriate capitalization rate.

These rates are normally based on marketplace situations and, accordingly, it iscommon for both assessors and owners to provide evidence to the Board with respect to other properties which will demonstrate such things as rents, expenses, size, location, and age, as well as capitalization rates. [emphasis added] 8 See also more recently, Gendis Realty Inc. v.

Winnipeg City Assessor, 2004 MBCA 123, 190 Man.R. (2d) 127, where Freedman J.A. wrote (at paras. 4–5): The applicant acknowledges that the selection of methodology by the Board in assessing value is a factual and not a legal matter, and that when the Board determines such questions as appropriate vacancy rates,management fees and capitalization rates, it is making factual determinations. At the Board, both parties agreed that the “Income Approach” was the most appropriate method of valuing the Property.

This left only three matters at issue before the Board, namely, market rent, vacancy allowance andcapitalization rate. The Board heard evidence from the City Assessor and the agent for the applicant. Each had an opinion on the disputed matters. [emphasis added] 9 When conducting an analysis using the income approach, the Board will typically consider the net operating income from that property and receive market evidence from other properties with respect torent per square foot, the vacancy rate, management fees, etc. That is what the Board did in this case.

It considered comparables that were “in close proximity to the subject property” (at para. 18). There was nothingtheoretical about the rent chosen; it was based on comparables, which the applicant has not challenged. 10 The reasons also clearly demonstrate that the Board was very much aware of the actual circumstances affecting the property, such as the fact that the skywalk had been temporarily closed and the leasewith the University of Winnipeg had expired, leaving that part of the property vacant. This last fact may explain the high vacancy rate allowance of 15 per cent chosen by the Board.

I note that this allowance is higherthan the 10 per cent rate suggested by the applicant. Without more, it would be wrong to say that the Board did not take the actual circumstances into account.11 In my view, the alleged error submitted by the applicant raises factual determinations which do not raise questions of law. 12 Leave to appeal on the second question is denied.3) Did the Board err in law or commit jurisdictional error by misconstruing relevant evidence? 13 The applicant submits that the Board misconstrued relevant evidence and that this caused it to err in its exercise of discretion.

It argues that, because the Board exercised its discretion in an unreasonablemanner, it committed a jurisdictional error. It points to Baker v. Canada (Minister of Citizenship and Immigration), (SCC), [1999] 2 S.C.R. 817, as its authority for this proposition.14 I have not been persuaded that the Board misconstrued relevant evidence when it said that the income approach provided by the applicant was “handicapped by the apparent inconsistency” between thelease and questionnaire (at para. 22). A fair reading of the reasons shows the Board considered all of the relevant evidence and made findings.

Clearly, the applicant does not agree with some of those findings. Thathowever does not equate to an error of law or give rise to a loss of jurisdiction (see Tuxedo Business Park Inc. v. Winnipeg (City) Assessor, 2006 MBCA 129 at para. 4).15 I see no arguable merit on the applicant’s third question.16 In the result, the request for leave is denied, with costs in favour of the assessor, if sought. J.A.