Gardentree Village Inc. v. Winnipeg Date:, 2012 MBCA 34

Citation: Gardentree Village Inc. v. Winnipeg Date: 20120418 (City) Assessor, 2012 MBCA 34 Docket: AI 10-30-07472 IN THE COURT OF APPEAL OF MANITOBA BETWEEN : GARDENTREE VILLAGE INC. ) J. D. Stefaniuk ) for the Applicant (Appellant) Applicant ) ) T. W. Hewett ) for the Respondent ) - and - ) D. G. Guénette ) for The Municipal Board ) of Manitoba ) ) Chambers motion heard: ASSESSOR FOR THE ) October 13, 2011 CITY OF WINNIPEG ) ) Decision pronounced: (Respondent) Respondent ) April 18, 2012 BEARD J.A. I.

THE ISSUE 1 The applicant, Gardentree Village Inc. (Gardentree), has applied for leave to appeal Order A-10-279 of The Municipal Board of Manitoba (the Board) concerning the assessed value of its apartment buildings at 7 Pipeline Road in Winnipeg (the Property). The underlying issue is whether the Board erred in its

interpretation and application of what is commonly known as the equity provisions of The Municipal Assessment Act , C.C.S.M., c. M226 (the MAA ), which are found in ss. 18 and 60(2) (also found in s. 54(3) regarding an appeal to the Board of Revision). The specific grounds of appeal are as follows: (

i) Did the Board err in holding that, when determining whether the assessed value of a property bears a fair and just relationship to the assessed values of other assessable properties under ss. 18 and 60(2) of the MAA , “assessable properties” means “all assessable properties in the municipality”? (ii) Did the Board err in holding that, when comparing assessed values to determine whether the assessed value of a property bears a fair and just relationship to the assessed values of other assessable properties, the words “assessable properties” in ss. 18 and 60(2) of the MAA mean “properly assessed properties”? (iii) Did the Board err in holding that the assessment at issue must be shown to be an outlier before the Board will consider whether that assessment bears a fair and just relation to the assessed values of other assessable property? (iv) Did the Board so misdirect itself in the application of the appropriate test in respect to the determination of whether the assessed value of a property bears a fair and just relationship to the assessed values of other properties that its conclusions are rendered incorrect or unreasonable? 2 While the Board is not a party to this application, it has filed a brief and was represented by counsel at the hearing.

The essence of its argument deals with the question of this court overturning one of its earlier decisions and the test that a party should have to meet in order to obtain leave to appeal on that basis. It also argued that Gardentree’s third ground of appeal is a question of methodology rather than a question of law. II. THE TEST FOR GRANTING LEAVE TO APPEAL 3 The test for leave to appeal from a decision of the Board is well settled, and I can do no better than to quote from the earlier decision in this matter of Hamilton J.A. (see Gardentree Village Inc. v. Winnipeg (City) Assessor , 2008 MBCA 117 , 50 M.P.L.R.

(4th) 31 (in Chambers) ) (at para. 20): Leave to appeal a decision of the Board may only be granted on a question of law or jurisdiction. See s. 63(1) of the Act . Questions of fact or mixed fact and law do not meet the threshold for leave. For leave to be granted for a question of law, the question must be of some importance to engage the attention of the court and there must be a genuine issue concerning how the Board decided the matter. Methodology used by the Board to determine the assessed value of a property is a question of fact. See Manitoba (Provincial Municipal Assessor) v.

Ducks Unlimited Canada , [1998] M.J. No. 547 (Man. C.A.) [In Chambers] ). 4 This is the test that applies to this application for leave to appeal. III. THE FACTS 5 This matter has a long history involving the setting of the assessed value for the Property for the 2006 tax year. The Assessor for the City of Winnipeg (the Assessor) set the assessed value of the Property for that year at $3,307,000 and Gardentree appealed to the Board of Revision.

It was agreed that the fair market value of the Property in 2003 (which was the reference year for the 2006 tax year) was $3,307,000, but Gardentree argued that, by the operation of the equity provisions, the assessed value should be fixed at a lower amount than the fair market value.

The equity provisions provide that the assessed value of a property is not to be changed where that value “bears a fair and just relation to the assessed values of other assessable property.” The Board of Revision confirmed the assessed value as determined by the Assessor, so Gardentree appealed to the Board, essentially raising the same argument. 6 Gardentree’s position was based upon a statistic used for assessment purposes, being the assessment to sales ratio (the ASR) of .902 that related to the mass appraisal model used by the Assessor to establish the initial 2006 assessments for all apartment properties in Winnipeg.

This ratio reflected the fact that, on average, the assessments of the 151 apartment properties that had sold around the 2003 reference year, which were used to develop the model, were 90.2 per cent of their respective sale prices. 7 Following that hearing, the Board confirmed the assessed value of the Property as determined by the Assessor.

That order, being Order A-06-289, was appealed to this court and leave was granted on two questions, one dealing with the burden of proof on an application to apply the equity provisions of the MAA and the other dealing with the remedies available to the Board. 8 This court held that, where a property owner raises the issue of whether a property has been assessed at an amount that bears a fair and just relation to the assessed values of other assessable properties, the burden of proving such a relation falls on the Assessor.

This court also held that the Board is not limited to a s. 60(3) redo assessment if it determines that the assessed value of the property does not bear a fair and just relation to the assessed values of other assessable properties. The Board was ordered to rehear the appeal in accordance with these principles. (See Gardentree Village Inc. v. Winnipeg City Assessor et al. , 2009 MBCA 79 , 240 Man.R. (2d) 317 .) 9 The Board conducted a rehearing and issued an order on October 29, 2010, again confirming the assessment of the Property as determined by the Assessor.

It is this order, being Order A-10-279, that is the subject of this application. 10 The issue before the Board remained essentially the same – whether the assessed value of the Property at the acknowledged fair market value bore a fair and just relation to the assessed values of other assessable properties. Gardentree objected to the Assessor’s stratification of all properties into two groups of residential/condominiums and income-producing properties for the purpose of developing the assessment models used in this assessment.

This, it argued, resulted in the apartment properties being placed in the latter group that contained many significantly different properties ( i.e. , industrial, retail and office properties), which led to an unjust and unfair assessment for the apartment properties. Gardentree also argued that a grouping that included only apartments still meant that the group included properties that were not sufficiently similar to the Property to permit a comparison that was fair and just.

It argued that the comparison group should have been reduced to those apartments whose characteristics were more like those of the Property. 11 Gardentree argued that the assessed value of the Property should be reduced for the following reasons: - its primary position was that the Property should be assessed at an equivalent assessed value to a group of apartment buildings that Gardentree identified as being similar to the Property, for which the ASR was .82, such that the fair market value should be reduced by 82 per cent; or alternatively - its secondary position was that the Property should be assessed at an equivalent assessed value to all apartment buildings, for which the ASR was .90, such that the market value should be reduced by 90 per cent. 12 The Assessor argued that: - its model, which divided all properties into two groups or strata, satisfied the standards in the Standard on Ratio Studies and, therefore, produced an assessed value for each property that fell within a statistically acceptable range such that properties that were assessed at fair market value would bear a fair and just relation to other assessable properties; and - the Property was assessed equitably when its assessed value was set at its fair market value, with the result that there should be no reduction in the assessed value. 13 The Board found as follows: - the Standard on Ratio Studies was an appropriate guideline for determining the acceptable range of performance standards regarding the various assessment models developed and used by the Assessor (at para. 59); - the sub-models for apartments developed by the Assessor generally met the standards in the Standard on Ratio Studies (at para. 60);

- having generally met those standards, the apartment assessments based on those sub-models were, generally, fair and just inrelation to all other assessable properties (at para. 61); - it could be assumed that most of the assessments determined by mass appraisal were fair and just in relation to other assessableproperties (at para. 61); - because the assessments of apartment properties were generally fair and just in relation to other assessable properties, it was notwarranted to apply an equity ratio of .90 to the subject property (at para. 62); - the use of the ASR’s from the two smaller apartment groups proposed by Gardentree was not appropriate because the groups weretoo small to establish a statistically reliable ASR (at para. 68); - even looking at those groups, there was nothing to suggest that the assessment of the Property at fair market value wassignificantly different than the assessments of the similar properties proposed by Gardentree as comparators (at para. 69); and - the assessment of the Property was not shown to be an outlier – that is, that it was substantially different from the assessments ofother properties (at para. 69).

IV. THE GROUNDS OF APPEAL 1. WHETHER THE BOARD ERRED IN HOLDING THAT “ASSESSABLE PROPERTIES” IN SECTIONS 18 AND 60(2)OF THE MAA MEANS “ALL ASSESSABLE PROPERTIES” The Board’s Decision 14 The Board noted that the

interpretation of the words “other assessable property” in s. 18 of the MAA was of paramountimportance in the arguments on equity raised by Gardentree. The Board set out the text of this

section and s. 60(2), which are as follows: Presumption of validity of assessment 18 Notwithstanding any other provision of this Act, an assessment is presumed to be properly made and the assessed value to befixed at a fair and just amount where the assessed value bears a fair and just relation to the assessed values of other assessable property.

No change by Board if fair and just relation 60(2) The Board shall not change an assessed value where the assessed value bears a fair and just relation to the assessed values of otherassessable property. 15 The Board explained that the Assessor interpreted “other assessable property” to mean “all other assessable property,”while Gardentree interpreted it to mean “some other assessable property,” being a group, category or stratum of “similar or like lands.” 16 The Board noted that, in addition to looking at the wording of the MAA, the Assessor was relying on this court’sdecision in Seabrook Industries Ltd. v.

Winnipeg City Assessor (1997), (MB CA), 115 Man.R. (2d) 63 (inChambers). Philp J.A. found that the principle that “the relationship which must be fair and just, is the relationship between the assessedvalue of a particular property and the assessed values of all other properties in the municipal jurisdiction” (at para. 8). This decision wasconfirmed by a panel of the court. (See (1997), (MB CA), 118 Man.R. (2d) 187.) 17 The Board stated that Gardentree’s position was that the application of the equity provisions had not been dealt with indepth in Seabrook Industries and that this

interpretation was at odds with decisions from other jurisdictions and with the Supreme Courtof Canada’s decision in Morguard Properties Ltd. et al. v. City of Winnipeg et al., (SCC), [1983] 2 S.C.R. 493. 18 The Board then found as follows (at para. 47): The submissions of the parties demonstrate that the case law in Manitoba generally has interpreted other assessable properties as “all”other assessable properties, and in other jurisdictions as “similar” assessable properties based on their particular statutoryprovisions.

The Board agrees that the legislative scheme in Manitoba envisages the consideration of equity in relation to all otherproperties and not to a type or class or sub-stratum of similar properties.

Gardentree’s Position 19 Gardentree’s position before this court is the same as that before the Board, being that the words “other assessableproperties” in ss. 18 and 60(2) of the MAA should be interpreted to mean “like lands” (as per Morguard) or similar or comparableproperties (as per decisions in other jurisdictions). 20 Gardentree argues that Seabrook Industries dealt only with the question of whether leave to appeal should be grantedand is not determinative of the issue of the

interpretation of ss. 18 and 60(2) of the MAA. The Assessor’s Position

21 The Assessor argues that this issue was one of the principal issues before Philp J.A. in Seabrook Industries and was clearly decided by him. He notes that, in that decision, Philp J.A. pointed out that the legislation in other jurisdictions was worded differently than that in Manitoba, such that the decisions from those jurisdictions were of no application in Manitoba. The Assessor also argues that the decision in Morguard is not applicable because the issue that was before the Supreme Court of Canada was not the

interpretation of the words now at issue, and the court did not consider what those words meant. The Assessor takes the position that there is no basis upon which to reconsider or overturn Seabrook Industries . 22 The Assessor’s primary argument, however, is that, while the Board accepted that “other assessable property” in ss. 18 and 60(2) means “all other assessable property,” it did not confine its analysis to whether all other properties in Winnipeg have, on an overall basis, been assessed at or near their respective fair market values.

It also reviewed the extensive evidence that related to the level at which apartment properties in Winnipeg, separate from other properties, had been assessed and concluded that apartments, as a class, had generally been assessed at or near their fair market value. 23 The Assessor argues that the Board went further and reviewed the evidence relating to whether the Property was a member of a particular group of apartments that had been assessed at a level significantly below their fair market value.

The Assessor notes that the Board concluded that the apartments that Gardentree presented as being similar to its Property had, in general, been assessed at close to their fair market values and, as a result, no adjustment was required to the assessed value of the Property.

Thus, he argues that the Board concluded that, even applying the alternate tests proposed by Gardentree, the assessed value of the Property should not be adjusted from its fair market value. 24 The Assessor argues that the Board has substantively considered Gardentree’s position that the assessed value of the Property did not bear a fair and just relation to the assessments of the other, similar properties to which Gardentree referred and has concluded that it did, with the result that a rehearing would not change the outcome because the position and the evidence of Gardentree has already been considered by the Board and a substantive decision has already been made.

Thus, he argues that the issue is not a live issue. Analysis 25 A review of the Board’s reasons shows that it did, in fact, consider whether the assessed value of the Property bore a fair and just relation firstly to all assessable properties and then to the assessable properties identified by Gardentree as being similar to the Property.

On the application of the equity principles to a property, the Board stated as follows (at para. 67): While the Board agrees that generally the assessments will be fair and equitable to other assessments when the standards are met, the Board accepts that this does not necessarily mean that in all circumstances every property meets that condition. The Board is left with the challenge of how to deal with the circumstances of this appeal: the subject property is assessed at market value but the assessment is appealed on equity principles.

The Board must consider whether the assessment of the particular property fits within the general fair and just relation that results from the standards of the Standard on Ratio Studies being met, or whether the assessment is an outlier, as suggested in Step 7, that may need to be adjusted.

The Board is prepared to consider the assessment of a specific property if the assessment of the property can be shown to be an outlier. 26 The Board then analyzed the information and arguments of both the Assessor and Gardentree regarding the two groups of four and seven properties that Gardentree identified as being comparable to the Property. The Board found that the sample sizes of the two groups were too small to establish statistically reliable ASR’s. It stated (at para. 68): …. In the absence of sufficient data, the Board is unable to use the comparable properties as the sole determinate of equity.

The Board notes from [Gardentree’s] chart that, if a larger sample size of 45 properties in good location is used, the ASR is 0.961. This suggests that without sufficient data and an appropriate sample size the results of an ASR analysis are not reliable and should not be used to determine equity. 27 The Board then went on to consider whether the Property was an outlier, that is, different from other apartments.

On that issue, the Board stated (at para. 69): In considering whether the assessment of the subject property is an outlier, the Board compared the time adjusted sales prices, the number of units, and the assessments of the comparable properties to the assessment of the subject property. ….

There is nothing to suggest in this analysis, however, that the subject property’s assessment, at the agreed to market value , is significantly different than the assessments of the similar properties that [Gardentree] considers the best comparable properties. [emphasis added] 28 Thus, the Board undertook the analysis of the properties that Gardentree argued were “similar or like properties” to the Property to determine whether the assessed value of the Property (being also its fair market value) bore a fair and just relation to the assessed values of those specific properties and found that it did.

It found, in the result, that the assessment was not inequitable. Conclusion 29 While not agreeing with Gardentree’s

interpretation of the words “other assessable property” in ss. 18 and 60(2) of the MAA , the Board went on to substantively consider Gardentree’ s position. The result is that a rehearing on the basis argued by Gardentree would not change the outcome because the position and the evidence of Gardentree has already been considered by the Board

and a substantive decision has been made. Thus, although the issue in the first ground of appeal raises a question of law, it is not a liveissue. 30 For this reason, leave must be denied on the first ground of appeal. 2. WHETHER THE BOARD ERRED IN HOLDING THAT THE WORDS “ASSESSABLE PROPERTIES” IN SECTIONS18 AND 60(2) OF THE MAA MEANS “PROPERLY ASSESSED PROPERTIES” The Board’s Decision 31 On this issue, the Board stated as follows (at paras. 48-49): The Board also is mindful of the following passage in Leila Farms Ltd. v. Winnipeg City Assessor (1997), (MBCA), 115 Man.R. (2d) 60 [(C.A.)]: [7] In

summary, the City Assessor submits that: … the Board is first required to determine the value of the property. Having done that, it must then determine whether that value bears afair and just relation to the assessments of other properly-assessed properties, by whatever method it considers appropriate. It is onlyafter this that the assessment may be said to be correct. [8] We agree.

This passage gives guidance to the Board on the two-step process of the equity principle: of first market value, and second equity; andon determining whether the value bears a fair and just relationship to the assessment of other properly-assessed properties. While thereis no dispute about the two-step process, Mr. Newman argues that it does not matter whether other properties are assessed properly.

Theimportant issue is the distribution of the taxes in a fair and just relation to other properties, and not whether the assessments of otherproperties are right or wrong. 32 The only suggestion that any property was not properly assessed was made by Gardentree. The Board noted that, indiscussing what Gardentree considered to be comparable properties, its agent acknowledged that “the assessment of the best comparablewas not appealed because, in his opinion, it was not properly assessed and its assessment was below market value” (at para. 70). TheBoard then stated as follows (at para. 70): ….

While this is not the determining reason for the Board’s decision, the Board is guided by the Court’s decision in Leila Farmswhich directs the Board to determine whether the value of a property bears a fair and just relation to the assessments of other properly-assessed properties. …. 33 The Board then went on to compare the known characteristics of the two groups of seven and four properties putforward by Gardentree for comparison purposes as being similar to the Property and found that they were not sufficiently similar to beconsidered comparable properties for the purpose of dealing with a matter of equity.

The Board did not exclude any properties on thebasis that they were not properly assessed. Gardentree’s Position 34 Gardentree argues that the Board made considerable reference to and placed reliance upon this court’s decision in LeilaFarms Ltd. v. Winnipeg City Assessor (1997), (MB CA), 115 Man.R. (2d) 60. It states that this court in Leila Farmsaccepted the Assessor’s position in that case that the equity provisions of the MAA only allow for a comparison of the taxpayer’sproperty to “properly assessed” properties, meaning those assessed at value.

It argues that Leila Farms was either improperly decided or,alternatively, that subsequent amendments to the MAA make it such that the decision no longer reflects the legislative intent embodied inthe MAA. The Assessor’s Position 35 The Assessor’s position is that the Board undertook a thorough analysis and none of the statistics that the Boardreviewed were rejected on the basis that the underlying assessments were not “properly” done. Further, the Assessor argues that none ofthe apartment assessments were put aside on the basis that they had not been properly done.

As a result, its position is that the issue ofwhether the words “other assessable property” refers to other “properly assessed property” was not a live issue before the Board and didnot affect the Board’s decision, so that leave to appeal should not be granted on this ground. Analysis and Conclusion 36 There was nothing in the Board’s decision to suggest that it made any finding that any properties were not properlyassessed, that any assessments were rejected on the basis that they were not properly done, or that the question of whether an assessmentwas proper was the basis for any of its decisions.

While the Board did reject the two groups of four and seven apartments as comparatorsto the Property, it did so on the basis that they were not sufficiently similar to the Property and not on the basis that they were notproperly assessed. Thus, while this ground of appeal raises a question of law, I find that the question of whether any of the assessmentswere proper was not a live issue before the Board. 37 For this reason, leave to appeal must be denied on the second ground of appeal. 3.

WHETHER THE BOARD ERRED IN HOLDING THAT THE ASSESSMENT MUST BE SHOWN TO BE AN OUTLIERBEFORE THE BOARD WILL CONSIDER WHETHER THAT ASSESSMENT BEARS A FAIR AND JUST RELATION TO

THE ASSESSED VALUES OF OTHER ASSESSABLE PROPERTY The Board’s Decision 38 The Board adopted its findings from its earlier hearing in this matter regarding the method used by the Assessor to arrive at the assessed values for income-producing properties in its reasons in this matter (at para. 6): In Order No. A-06-289 the Board outlines how the Assessment Department relies on models to generate the assessed values, and how the Assessment to Sales Ratio (the “ASR”) is used to verify the accuracy of the models.

The Order also discusses the contents of the document published by the International Association of Assessing Officers (the “IAAO”), the Standard on Ratio Studies . The Board, while not repeating the discussions, notes that the points raised in these discussions also relate to this hearing. 39 Both the Assessor and Gardentree put forward to the Board their arguments as to the methodology to be followed by the Board in determining a claim that an assessment was not equitable, referring, in particular, to the ASR for all properties and for apartments.

The Board outlined the seven-step process followed by the Assessor to apply the Standard on Ratio Studies to develop income models and finalize the assessments, which is set out at paras. 55-57 of the Board’s reasons. One of the most contentious matters between the parties was the size and composition of the group of comparator properties from which to determine whether this Property was assessed on an equitable basis. 40 The Board looked at the assessment from two perspectives.

It first asked the question of whether the model used by the Assessor had produced generally fair results within the class of apartments, and concluded that it had. The Board stated as follows (at paras. 60-62): …. The Board has reviewed the analysis of [the Assessor] and of [Gardentree] as they relate to the technical standards. The Board is satisfied that the standards in the Standard on Ratio Studies generally have been met by the Assessor for the apartment model.

In agreeing that, generally , the apartment model meets the standards in the Standard on Ratio Studies , the Board agrees that, generally , the apartment assessments are fair and just in relation to all other assessable properties. Therefore it can be assumed that most of the assessments determined by mass appraisal in step six of [the Assessor’s] process are fair and just in relation to other assessable properties. In the alternate position, [Gardentree] requests that an equity ratio of 0.90, based on the ASR for the whole class of apartment properties, be applied to the subject property.

The Board does not agree that an equity ratio of 0.90 should be applied when the standards in the Standard on Ratio Studies have been met. The Board is satisfied that, for the alternative position, the Assessor has met the burden of proof. The Board finds, from the evidence and submissions on the alternative position, that the assessments of apartment properties generally are fair and just in relation to other assessable properties.

The Board finds that applying an equity ratio, using an ASR of 0.90, is not warranted. 41 The Board went on to consider Gardentree’s position that the Property should not be compared to all apartments, but to one of two subsets of apartments that it said were similar to the Property and, therefore, more just and equitable as comparators. The Board went on to consider this argument, which it found was addressed in Step 7 of the Assessor’s process. In considering that step, the Board stated as follows (at para. 64): ….

Although the models generally provide value estimates that reflect market value and that are equitable, there are individual properties that may require adjustment. This suggests that there are outliers both in sales used in developing the models and in the estimates of values from the mass appraisal that may not reflect market value and may not be equitable.

It is the Board’s position that, when the standards in the Standard on Ratio Studies have been met, an assessment is fair and just in relation to the assessment of other assessable properties unless the property can be shown to be an outlier. 42 Both the Assessor and Gardentree argued as to how the Board should proceed when determining equity in relation to the assessment of a single property. The Board concluded that it had to proceed as follows (at para. 67): ….

The Board is left with the challenge of how to deal with the circumstances of this appeal: the subject property is assessed at market value but the assessment is appealed on equity principles. The Board must consider whether the assessment of the particular property fits within the general fair and just relation that results from the standards of the Standard on Ratio Studies being met, or whether the assessment is an outlier, as suggested in Step 7, that may need to be adjusted.

The Board is prepared to consider the assessment of a specific property if the assessment of the property can be shown to be an outlier. 43 The Board noted that both the Assessor and Gardentree had provided descriptive information on the apartment properties used by each of them as comparators.

It found that the sample sizes of four and seven properties proposed by Gardentree were too small to establish a statistically reliable ASR, with the result that they could not be used to determine equity. 44 Notwithstanding that conclusion, the Board went on to analyze the data concerning the characteristics of the Property and the comparators proposed by Gardentree to determine whether the Property was an outlier. It concluded as follows (at para. 69): …. There is nothing to suggest in this analysis, however, that the subject property’s assessment, at the agreed to market value, is

significantly different than the assessments of the similar properties that [Gardentree] considers the best comparable properties. 45 Finally, the Board concluded as follows (at para. 71): …. The Board accepts that there may be instances where the assessment of a specific property may be inequitable. For that to occur under the current statute and Manitoba Court decisions, the assessment of the property must be shown to be an outlier that is substantially different from the assessments of other properties.

The Board did not find that the assessment of the subject property is an outlier that is substantially different from the assessment of other properties. 46 The Board then concluded that the Property had an assessment that was fair and just in relation to the assessments of other properties. Gardentree’s Position 47 Gardentree argued that s. 18 dictates a comparison of the Property to similar properties and questioned whether the requirement to demonstrate that a property is an outlier effectively shifts the burden back to the property owner to show that the property is not an outlier.

Counsel for Gardentree argued that, where there are circumstances in which there is a significant difference between the assessed values of the group of properties and the Property, then an adjustment is in order whether or not the property owner demonstrates that the Property is an outlier. 48 Gardentree argued that there is a sufficient difference between the assessed value of the Property and other comparable properties such that an adjustment was warranted.

It was argued that Gardentree should not need to adopt the nomenclature of the Assessor in suggesting that the Property was an outlier to raise the question of equity. The Assessor ’ s Position 49 The Assessor takes the position that the Board did not say that it will only look to see if the equitable provisions of the MAA have been met where the Property had been shown to be an outlier.

Rather, the Board said that, in the circumstances of the present appeal, where the Assessor has proven that the various tests of the Standard on Ratio Studies have been met (and that properties can therefore be expected to be assessed at their respective fair market values and in an equitable manner in relation to each other), it will go on to examine whether the assessed value of the Property is so different from that of other properties that such value may need to be adjusted. 50 The Assessor argued that the examination by the Board as to whether the Property was an outlier was a matter of methodology and, therefore, not an issue on which leave should be granted.

Analysis and Conclusion 51 The method used to assess the value of income-producing properties is extremely complex, involving the gathering of a significant amount of detailed information about the physical characteristics of each property, its location and the related income and expenses. This information is used to develop models which are then verified by comparison to properties that have been sold in and around the time of the assessment.

All of this is done using the various statistical comparators and calculations in the Standard on Ratio Studies and the guidelines of the IAAO to determine whether the models are accurate. Once the models are confirmed to be accurate, they are applied to each property to determine the assessed value. This is explained in the seven-step process provided to the Board by the Assessor. 52 The Assessor took the position that, once the models had been proven to meet the standards, all properties that were assessed in accordance with them would have met the equity test.

Gardentree challenged the method used by the Assessor, arguing that the group of properties used as a comparison was too large and dissimilar from the Property to provide a fair and just comparison. 53 The Board considered both arguments and rejected them, at least in part.

It found as follows: - The apartment model developed by the Assessor met the standards of the Standard on Ratio Studies and, therefore, generally, the apartments that were assessed using that model were assessed fairly and justly in relation to all other assessable properties; however, it rejected the Assessor’s position that this should satisfy, and therefore end, the consideration of equity. - The Board considered Gardentree’s position that an equity ratio of .90 based on the ASR of the whole class of apartments should be applied to calculate the assessed value of the Property.

The Board concluded that the assessments of the apartment properties were fair and just in relation to other assessable properties and applying the equity ratio was not warranted. - The Board then considered Gardentree’s argument that, when the assessment of the Property was compared to that of similar properties, the assessment of the Property should be reduced so that it is equitable.

The Board considered the proposed groupings and found that: - the groupings of four and seven apartments were too small to provide a statistically reliable ASR; - the properties in the two groupings were not sufficiently similar to be used to determine equity; and - those findings notwithstanding, upon making the comparison between those properties and the Property, the Board found that there

was nothing to suggest that the Property’s assessment, at market value, was significantly different from the assessments of the properties in the groups. 54 Contrary to the alleged error that forms this ground of appeal, the Board did not say that the Property had to be shown to be an outlier before it would consider whether the assessment was just and equitable. 55 When one takes a look at the steps taken by the Board in analyzing the assessment of the Property, it is clear that it first undertook an analysis of the assessment carried out by the Assessor and then proceeded to examine the bases on which Gardentree was challenging the assessment.

Having found that the assessment of the Property was just and equitable when compared to other assessable properties, whether that includes all other assessable properties or other apartments, the Board considered and rejected the issues raised by Gardentree.

Only then did it go on to consider the question of whether the assessment of the Property was an outlier, an issue raised by the Board after it had considered the positions of both the Assessor and Gardentree. 56 While an analysis of the Board’s findings does not demonstrate that it erred in the manner alleged by Gardentree, I agree with the Assessor that, in the end, this alleged error is a matter of methodology. The Board analyzed the assessment from several perspectives, including looking at all of the errors raised by Gardentree.

The question of whether the assessment of the Property was an outlier was one of many steps it followed in carrying out its mandate and, as such, was part of the methodology that it applied in analyzing the assessment. I find that this ground of appeal raises a question of fact (methodology), not law or jurisdiction, and, as such, is not a ground on which leave should be granted. (See paras. 3-4 of this decision.) 4.

WHETHER THE BOARD SO MISDIRECTED ITSELF IN THE APPLICATION OF THE APPROPRIATE TEST IN RESPECT TO THE DETERMINATION OF WHETHER THE ASSESSED VALUE OF A PROPERTY BEARS A FAIR AND JUST RELATIONSHIP TO THE ASSESSED VALUES OF OTHER PROPERTIES THAT ITS CONCLUSIONS ARE RENDERED INCORRECT OR UNREASONABLE 57 While this was raised as a ground of appeal in Gardentree’s factum, it was not explained in any detail.

In oral argument, counsel for Gardentree stated as follows: …. … [I]f the Board takes the facts that it has found and applies those facts incorrectly to the law, and in doing that the Board is basing its conclusions on the -- it’s submitted on its

interpretations of the equity provisions of the legislation, which are repeatedly referenced by the Board as indicated, and again I refer to the

section of the Board’s order that I -- the sections rather that I mentioned on page 19 the -- which is the third paragraph where the Board refers to the hurdles that must be overcome regarding all assessable properties and properly assessed properties, and also on the second -- the first full paragraph on page 22, which was discussed earlier. 58 It appears that this ground of appeal alleges that the Board erred by misapplying the facts to the law.

The application of the facts to the law in a civil proceeding is a question of mixed facts and law and is, therefore, not open to appeal in this case. (See paras. 3-4 of this decision.) V. DECISION 59 For the reasons set out above, there is no live issue for appeal related to the questions of law in the first and second grounds of appeal.

The third ground of appeal raises an issue of fact (methodology) of the assessment, which is not a question of law or jurisdiction, and the fourth ground raises issues of mixed fact and law, such that these two grounds do not meet the threshold for leave. 60 The application for leave is therefore dismissed with costs to the Assessor. J.A.