The City of Saskatoon Appellant (Appellant) v. West Coast Reduction Ltd.,, 2019 SKCA 48

Court of Appeal for Saskatchewan Docket: CACV3074 Citation: Saskatoon (City) v West Coast Reduction Ltd. , 2019 SKCA 48 Date: 2019-06-05 Between: The City of Saskatoon Appellant (Appellant) And West Coast Reduction Ltd., Postmedia Network Inc. and Saskatchewan Assessment Management Agency Respondents (Respondents) Before: Richards C.J.S., Caldwell and Leurer JJ.A. Disposition: Appeal dismissed Written reasons by: The Honourable Mr. Justice Caldwell In concurrence: The Honourable Chief Justice Richards The Honourable Mr.

Justice Leurer On Appeal From: AAC 2016-0067, Saskatoon Appeal Heard: October 3, 2018 Counsel: Tyson J. Bull for the Appellant Grant J. Scharfstein, Q.C., and Andrea Rohrke for West Coast Reduction Ltd. No one appearing for Postmedia Network Inc. No one appearing for Saskatchewan Assessment Management Agency Caldwell J.A. I.

Introduction [ 1 ] The City of Saskatoon [City] appeals pursuant to s. 33.1 of The Municipal Board Act , SS 1988-89, c M-23.2 , against a decision of the Assessment Appeals Committee [Committee] of the Saskatchewan Municipal Board in respect of the assessment of a non-regulated property, namely, a 77,099 square foot warehouse [West Coast Warehouse] owned by West Coast Reduction Ltd. [West Coast] and located at 3018 Miners Avenue, Saskatoon ( City of Saskatoon v Various Owners , AAC 2016-0067 (17 April 2017) Assessment Appeals Committee Decisions (2d Qtr) [ 2016 Committee Decision ]). [ 2 ] While the issue in this appeal has considerable background to it, at root, the City submits the Committee erred by failing to find the Board of Revision [Board] had erred in law by taking into consideration the evidence of Brett Marcoux contrary to the prohibition set forth in s. 172(5) of The Cities Act , SS 2002, c C-11.1 .

However, for the reasons that follow, I would dismiss the appeal. II. The Decisions at Issue in this Appeal [ 3 ] This appeal pertains to more than one decision of the Committee and more than one assessment cycle. All parties agreed the 2016 Committee Decision would apply to assessment appeals brought in respect of a number of Saskatoon warehouse properties covering the 2014, 2015 and 2016 assessment cycles. This is because numerous warehouse owners and the City had put common issues in play in each of those assessment cycles.

The common issues relate to the July 2010 sale of a 90,000 square foot warehouse located at 1701 16th Street West, Saskatoon [Fresh Pack Warehouse]. [ 4 ] As such, even though the City has taken an appeal to this Court against the decision in the 2016 Committee Decision , our decision will also affect the assessment appeals covered by the Committee’s decision in City of Saskatoon v Various Owners , AAC 2014-0167 and AAC 2015-0076 (17 April 2017) Assessment Appeals Committee Decision (2d Quarter) [ 2014-2015 Committee Decision ], which itself pertains to numerous Saskatoon warehouse assessment appeals brought in respect of the 2014 and 2015 assessment cycles.

The Committee explained this in its reasons in the 2016 Committee Decision : PRELIMINARY MATTERS: Number of Decisions [6] Paragraphs [7] to [21] of this decision are carried forward from paragraphs [7] to [21] of decision AAC 2014-0167 et al and AAC 2015-0076 et al. [7] Our hearing began with a discussion about the parties’ appeals for 2014, 2015 and 2016. The panel discussed the parties doing their presentations in order of year, starting with 2014. The parties said prior to our hearing they had discussions and already decided the order of their presentations.

The panel was unaware of their discussions and advised the parties to proceed in the way they had decided. [8] We also discussed whether we would write one decision for each appeal year or one decision that encompassed all three appeal years. We told the parties we would make that determination during deliberations.

[9] The issue regarding the sale at 1701 16 th Street West was common to all three appeal years. We decided to write one decision for the 2014 and 2015 appeals and a separate decision for 2016 because there were two additional issues for 2016. [10] The Board carried forward all evidence and argument from the 2014 appeal to the 2015 and 2016 appeals regarding the sale at 1701 16 th Street West, so our decision about the sale for 2014 will also carry forward to 2015 and 2016. III.

Jurisdiction and Standard of Review [ 5 ] An appeal pursuant to s. 33.1 of The Municipal Board Act is limited to questions of law or jurisdiction. In Gary L. Redhead Holdings Ltd. v Swift Current (Rural Municipality) , 2017 SKCA 47 , [2017] 9 WWR 296, Jackson J.A. conducted a comprehensive review of the jurisprudence and the relevant statutes and concluded: [88] On an appeal from the decision of the Committee pursuant to s. 33.1 of The Municipal Board Act , the standard of review is correctness. IV.

Questions of Law or Jurisdiction [ 6 ] In her order of November 14, 2017, Schwann J.A. granted the City leave to appeal on two questions only (at para 33): ... (

a) Did the Committee err by placing greater weight on the evidence of Brett Marcoux about the sale of [the Fresh Pack Warehouse] over the information about this property set out in the SVF [i.e., sales verification form]? (

b) Did the Committee err in failing to consider the effect of s. 172(5) [of The Cities Act , SS 2002, c C-11.1 ] to the evidence before the Board [of Revision]? V. Background A. Statutory Framework [ 7 ] All property in a city is subject to tax assessment ( The Cities Act , s. 164(1) ) under the mass appraisal process ( s. 165(1) ), which involves preparing assessments for a group of properties as of a base date (s. 165(2)) using standard appraisal methods, employing common data and allowing for statistical testing (s. 163(f.3)).

For the purposes of assessment and taxation, property means land or improvements or both (s. 2(1)(aa)). [ 8 ] The dominant and controlling factor in the assessment of property is equity (s. 165(3)). Warehouses are classified as a non- regulated property (ss. 163(f.4) and 163(h.1)) and must be assessed according to the market valuation standard (s. 164.1(2)).

The Legislature has said that “[e]quity in non-regulated property assessments is achieved by applying the market valuation standard so that the assessments bear a fair and just proportion to the market value of similar properties as of the applicable base date” (s. 165(5)). The market valuation standard is defined to mean the standard achieved when the assessed value of property: (

i) is prepared using mass appraisal; (ii) is an estimate of the market value of the estate in fee simple in the property; (iii) reflects typical market conditions for similar properties; and (iv) meets quality assurance standards established by order of the Saskatchewan Assessment Management Agency (s. 163(f.1)). [ 9 ] The Cities Act defines market value as the amount a property should be expected to realise “if the estate in fee simple in the property is sold in a competitive and open market by a willing seller to a willing buyer, each acting prudently and knowledgeably, and assuming that the amount is not affected by undue stimuli” ( s. 163 (f.2)).

In simple terms, the estate in fee simple of a property does not include such things as equipment, inventory, goodwill and other business assets that are not land or improvements. [ 10 ] As the statute suggests, to assess the market value of any particular non-regulated property, an assessor must have common data as at a certain base date about the market values and typical market conditions for other properties that are similar to the subject property.

Furthermore, since equity is the dominant and controlling factor in the assessment process, assessors have a duty to use accurate and current information in the mass appraisal process.

Put another way, if an assessor uses inaccurate or out-of-date information to calculate the market value of a non-regulated property under the mass appraisal process, then the market valuation standard will not have been met and equity will not have been achieved. [ 11 ] Therefore, to ensure that assessors have or can obtain accurate and up-to-date information, the Legislature has given assessors the power to require persons to provide them with information relating to the market value of property: Provision of information to assessor 171

(1) For assessment purposes, the assessor may, at any time, request any information or document that relates to or might relate to the value of any property from any person who owns, uses, occupies, manages or disposes of the property.

(2) Every year, the assessor may request the owner of property to provide information respecting: (

a) the persons who are carrying on business on the property; and

(

b) the nature of the business being carried on.

(3) For the purpose of using a valuation technique or method of appraisal based on the use of income or benefits, an assessor may request from a person mentioned in subsection (1) any information or document that relates to: (

a) the income generated or expected to be generated by any property; and (

b) the expenses incurred or expected to be incurred with respect to any property.

(4) Subject to

section 201, a person who receives a request from an assessor pursuant to subsection (1), (2) or (3) shall, before the expiration of a period set by the assessor of not less than 30 days after the date of receiving the request, provide the assessor with: (

a) all of the requested information and documents relating to or affecting the determination of the value that are in the possession or under the control of the person; and (

b) a written declaration signed by the person stating that the information provided by the person is complete, true and accurate to the best of his or her knowledge.

(4.1) Notwithstanding subsection (1) but subject to subsection (4.3) and

section 201, for the purpose of using a valuation technique or method of appraisal based on the use of income or benefits, every owner of an income-producing property, as defined by order of the agency, shall, on or before June 30 of each year, furnish the assessor with a certified statement showing the following information for the owner’s previous fiscal year respecting that property: (

a) the income generated by the owner’s property; (

b) the expenses incurred with respect to the owner’s property; (

c) any additional information that the agency, by order, may require.

(4.2) The certified statement mentioned in subsection (4.1) must state that the information provided in the statement is complete, true and accurate to the best of the knowledge and belief of the person making the statement.

(4.3) An owner is not required to furnish the certified statement mentioned in subsection (4.1) in relation to his or her property if: (

a) the property is residential property used for social housing; and (

b) the owner receives an ongoing operating subsidy in relation to the property from the city, the Government of Saskatchewan, the Government of Canada or an agency of any of those bodies. …

(10) If a property is sold, when requested by the agency or, if a city carries out its own valuations and revaluations, when requested by the city’s assessor, the vendor and the purchaser shall notify the agency or the assessor, as the case may be, of the purchase and sale in the form prescribed pursuant to The Assessment Management Agency Act .

(11) No action lies or shall be commenced against any person by reason of that person providing any information or document on a request for that information or document pursuant to this section. [ 12 ] As can be seen from these provisions, not only has the Legislature empowered assessors to obtain market value data, but it has imposed under s. 171 a broad statutory duty on property owners and others to provide assessors with the information they need along with a corresponding duty to ensure that any information so provided is “complete, true and accurate” to the best of the knowledge of the person providing it.

This reflects the importance the accuracy and currency of market value data has to the integrity of the mass appraisal process. [ 13 ] The Legislature has also signaled the importance of these statutory duties by making failure to comply with them an offence punishable on

summary conviction under s. 172(2) of The Cities Act . In addition, s. 172 contains a number of economic penalties designed to ensure that property owners and others adhere to their statutory duties under s. 171. The enforcement mechanisms also include the provision at issue in this appeal, namely, s. 172(5). In full, s. 172 reads as follows: Offence and penalty re failure to provide information 172

(1) No person shall: (

a) fail to furnish any information or document required of that person pursuant to

section 171; or (

b) wilfully furnish the assessor with false information.

(2) Every person who contravenes any provision of subsection (1) is guilty of an offence and liable on

summary conviction to a fine of not more than: (a) $5,000 in the case of an individual; and (b) $10,000 in the case of a corporation.

(3) If the owner of a property is convicted of an offence pursuant to this

section and ordered to pay a fine and the owner does not pay the

fine, the fine: (

a) is a debt due to the city; (

b) may be recovered as a debt due to the city or may be added to the taxes of the property for which the information or document was requested but not provided; (

c) is a lien on the land that has priority over all other liens or charges except for those of the Crown; and (

d) is a charge on the goods and chattels of the owner of the land and is recoverable in the same manner as other taxes that are a lien on land.

(4) If a person is convicted of an offence pursuant to this section, the convicting court may, in addition to any fine it may impose, do either or both of the following: (

a) order the convicted person to comply with the provision of

section 171 with respect to which the convicted person was convicted; (

b) make any other order that the court considers necessary or appropriate.

(5) If the person whose assessment is the subject of an appeal or his or her agent seeks to introduce the following evidence at the hearing of the appeal, the board of revision or appeal board shall not take that evidence into consideration in making its determination: (

a) any information or document that was not provided to the assessor as required by

section 171 when it was required to be provided; (

b) any information that is substantially at variance with information provided to the assessor pursuant to

section 171.

(6) Subject to subsection (8), if a person refuses or fails to provide information to the assessor by the date required pursuant to

section 171, or if a person or his or her agent fails or refuses to comply with a request for information or documents pursuant to that section, the board of revision or the appeal board, as the case may be, on the first occasion on which the person appeals the assessment of that property during the revaluation cycle for which the information is required or requested, shall dismiss the person’s appeal with respect to the property to which the information relates.

(7) Subject to subsection (8), if the board of revision or the appeal board, as the case may be, dismisses a person’s appeal pursuant to subsection (6), the board of revision or the appeal board, as the case may be, shall continue to dismiss any assessment appeal brought by that person with respect to the property during the relevant revaluation cycle until the information has been provided to the assessor within the period mentioned in clause (8)(c).

(8) The board of revision or the appeal board, as the case may be, may allow a person’s appeal to proceed if the board of revision or the appeal board, as the case may be, determines that: (

a) a request for information by the assessor pursuant to

section 171 was unreasonable; (

b) the information requested by the assessor was not relevant to the assessment; (

c) the information, although received by the assessor after the time requested or required, was received: (

i) for the first year in a revaluation cycle, at least 18 months before the beginning of the revaluation cycle; or (ii) for all other years, by January 1 of the year before the assessment year; or (

d) through no fault of the owner, the information could not be provided. (9) Subsections (6) to (8) apply whether or not the person has been convicted of an offence pursuant to this section. B.

Jurisprudence [ 14 ] When speaking to ss. 171 and 172 of The Cities Act in Saskatoon (City) v Boardwalk Reit Properties Holdings Ltd. , 2008 SKCA 174 at para 7 , 314 Sask R 290 [ Boardwalk Reit ], Cameron J.A. described the two sections as working together to enable assessors “to gather the information they need to perform their duties.” With respect to s. 172 in particular, Cameron J.A. said that its object was to “buttress this power of the assessor [to obtain market value information] and secure the performance of this duty” (at para 10).

Justice Cameron then said: [11] These provisions [i.e., ss. 171 and 172 ] are vital to the assessment regime. It could not function without them , given the need for municipal tax assessors to determine the fair value of improvements in accordance with the principles, rules and formulas of the Saskatchewan Assessment Manual . … [12] An assessor’s duty to determine and apply an appropriate market adjustment factor in arriving at the fair value of an improvement illustrates, as well as any, the purpose of sections 171 and 172 of the Act and their importance to the assessment regime.

The proper performance of this duty is wholly dependent upon the assessor having access to information regarding property sales. Hence, owners and others in possession of information relating to the value of any property, including information and documents pertaining to the purchase and sale of property, must furnish the assessor with that information pursuant to

section 171. An owner who fails to do so, or who wilfully furnishes the assessor with false information, is guilty of an offence under

section 172. Not only that, should an assessment appeal be taken,

section 172 bars boards of revision, as well as the Assessment Appeals Committee, from considering evidence of information that is substantially at variance with the information provided to the assessor.

(Emphasis added) [ 15 ] Justice Cameron later reaffirmed the importance of sales verification under the mass appraisal process in HDL Investments Inc. v Regina (City) , 2009 SKCA 138 , 343 Sask R 87 [ HDL Investments ], where he said: [30] Picking up on the Committee’s reliance of the sale verification information in arriving at its conclusion, the appellant company submitted that as a matter of law the Committee relied excessively on the sale verification and the information it yielded, ascribing more importance to this information than is warranted by the Assessment Manual or

section 171 of The Cities Act . For the reasons that follow we do not agree. [31] To begin with, the Committee did not misapprehend the importance, generally, of the sale verification process and the information it yields.

The importance lies in the fact municipal assessors are highly dependent on this information in the performance of their assessment duties and are called upon to make a number of decisions largely on the basis of fact that emerges through this process, a process provided for by sections 171 and 172 of The Cities Act . [Reference to Boardwalk Reit , cited above, omitted] [32] Hence, the sale verification information obtained by the Assessor in relation to the sale of the Southland Mall was of considerable importance and merited considerable weight.

This is not to say it was open to either the Board of Revision or the Committee to have regard for the sale verification information to the exclusion of such other information before the Board as was relevant and not excluded from consideration by subsection 172(5) of The Cities Act . However, it must be born in mind that weighing evidence in the context of fact-finding is primarily the province of the fact-finder and, in the absence of the unreasonable, does not generally open the door to interference.

It must also be born in mind that there exists a presumption in favour of the correctness of an assessment and therefore an onus on the appellant to establish that the Assessor erred: Estevan Coal Corporation v. R.M. of Estevan No. 5 , 2000 SKCA 82 , [2000] 8 W.W.R. 474. C. 2013 Reassessment [ 16 ] The matters put at issue in this appeal have their genesis in 2013, when the City assessor reassessed all warehouse properties in Saskatoon using a base date of January 1, 2011.

In the 2013 reassessment, as well as in the 2014, 2015 and 2016 assessment cycles, the City assessor valued warehouses and automotive properties using direct capitalisation of market net operating income. This required the City assessor to establish a rent model and a capitalisation rate model. The rent model and attendant net operating income analysis are not at issue in this appeal.

What is at issue is the capitalisation rate model. [ 17 ] Under the capitalisation rate model, the City assessor analysed the amounts vendors had realised between 2008 and 2010 from sales of 104 non-regulated properties grouped by similar characteristics and comparable locations. On this basis, the City assessor determined the estimated market value of the estate in fee simple of each warehouse property in Saskatoon. The sale of the Fresh Pack Warehouse was one of the 104 sales analysed by the City assessor for this purpose.

To obtain the data necessary for the capitalisation rate model analysis, the City assessor utilised the powers available to assessors under s. 171 of The Cities Act . Using a sales verification form [SVF], the City assessor obtained sales information about each of the 104 sales from or through the person who “owns, uses, occupies, manages or disposes of” the property in question. [ 18 ] Based on the SVF information so obtained, the City assessor identified two variables that affected warehouse property values in Saskatoon: (

i) site coverage, and (ii) building size. Adjusting for these variables, the City assessor first grouped the 104 sales into two categories, namely, those properties with buildings less than 34,150 square feet in area and those with buildings 34,150 square feet in area or more.

The City assessor then further stratified the first category of warehouses by site coverage, identifying three capitalisation rate subcategories [Groups 1–3], none of which were put at issue in this appeal. [ 19 ] However, the second category [Group 4], which comprised nine warehouse sales [Group 4 Sales], was not further stratified as the City assessor saw no observable correlation between site coverage and capitalisation rates. On the basis of the Group 4 Sales, the City assessor determined the capitalisation rate for Group 4 was 8.04%.

The City assessor then statistically tested the reliability of the capitalisation rates for all Groups, achieving a median assessment to sale ratio of 1.00 for Group 4 and 0.999 for all Groups. The West Coast Warehouse directly at issue in this appeal falls into Group 4. [ 20 ] The Fresh Pack Warehouse is one of the nine warehouse properties the City assessor included in the Group 4 Sales array. In July 2010, Fresh Pack Freezers sold that warehouse to Marcoux Bros.

Trucking Ltd. [Marcoux Trucking], triggering the duty under s. 171 to provide the City with details of the sale relevant to the market value of the property and improvements. As explained, this was done through an SVF [Fresh Pack SVF], which was submitted by Dale Booth, then Vice President of Finance for the Yanke Group of Companies [Yanke] (a corporation related in a way not disclosed by the record to Marcoux Trucking). In the Fresh Pack SVF, Mr. Booth declared: (

a) the Fresh Pack Warehouse sale purchase price was $6.5 million; (

b) the sale was not part of a larger transaction with the same vendor; (

c) there were no other factors that may have caused the purchase price to differ from the fair market price; (

d) the purchase price was “a reflection of the fair market value of the property on the sale date”; (

e) the purchase price did not include equipment, supplies, etc.; (

f) the purchase price did not include inventory; and (

g) the purchase price did not include “shares in a partnership, corporation, franchise, or business goodwill, contracts, etc.”

D. 2013 Assessment Appeals – Board and Committee 1. 101196566 Saskatchewan Ltd. v City of Saskatoon , BOR 181-2013 [ 21 ] Following the 2013 reassessment, the Board heard the appeal of 101196566 Saskatchewan Ltd. [101196566], owner of a Group 4 warehouse of over 300,000 square feet. 101196566 had appealed against the reassessment of its property, arguing the market valuation standard had not been achieved because the reassessed value of its warehouse did not reflect its extremely large size, its obsolescence, its high site coverage, its specialised design and its long-term vacancy, among other things. [ 22 ] 101196566 grounded its appeal on a primary assertion that the market valuation standard had not been achieved because the assessed value of its warehouse exceeded the value at which similar properties had been assessed as at the base date.

It pegged the reasons for this failure as “there being no recognition in the calculation of this property’s assessment of the functional and external obsolescence it experiences” as well as a few “technical errors in the calculation of this assessment”. [ 23 ] When adducing evidence in support of its position, 101196566 called Ken Suchan, a commercial realtor, to testify before the Board about the Fresh Pack Warehouse sale and the sale of another warehouse located at 1415 Ontario Avenue, Saskatoon [Ontario Avenue Warehouse], both of which had been included by the City assessor in the Group 4 Sales array.

In its reasons (indexed as 101196566 Saskatchewan Ltd. v City of Saskatoon , BOR 181-2013 (10 September 2013) Board of Revision Decision [ 2013 BOR Decision ]), the Board summarised Mr. Suchan’s testimony in these terms (at 5): The sale of [the Fresh Pack Warehouse], which was used to calculate the CAP rate applied to the subject property, included chattels, in the form of freezer space, and a business. It is the witness’s understanding that the Assessor used an adjusted sale price when using this sale in CAP rate calculations.

Also, this property has good site coverage as the building covers only 20% of the property. (Emphasis added) [ 24 ] 101196566 also called Grace Musyka, a property appraiser, who testified in direct examination to the following about the Fresh Pack Warehouse sale, as summarised in by the Board (at 8): [The Fresh Pack Warehouse], the second largest sale, which has the second lowest CAP rate should not be used in the CAP rate analysis.

It is not an arm’s length sale because the property was sold as part of a business and therefore not exposed, as real estate, to a competitive market place. [ 25 ] Under cross-examination, Ms. Musyka testified to the following, as paraphrased by the Board (at 10): The sale of [the Fresh Pack Warehouse] was reviewed by Colliers, who found that the property had not been advertised for sale, and that the sale included equipment.

The property’s adjusted sale price of $6.5 million is based on the value the purchaser attributed to the real estate. (Emphasis added) [ 26 ] Witnesses for the City also testified before the Board as to the value of the Fresh Pack Warehouse. The Board recorded the direct-examination testimony of Laurie Pilkey, a City assessor, as follows (at 12): Sales Verification Forms, used by the Assessment Department, are completed by the purchaser, and are a sworn legal document.

The appellant has shown no reason why the SVF submitted by the purchaser of [the Fresh Pack Warehouse] should be deemed invalid. … There is no evidence that the sales of [the Fresh Pack Warehouse] or [the Ontario Avenue Warehouse] should be excluded from the sales array. [ 27 ] Under cross-examination, she testified to the following (at 13): [The Fresh Pack Warehouse], as it has an extremely low site coverage for a warehouse of its size, it could be considered an outlier, but there is no compelling reason to treat this sale differently for the purposes of sales analysis or to exclude it from the sales array. [ 28 ] In addressing this evidence, the Board accepted that the Fresh Pack Warehouse sale was “atypical,” but it did not exclude that sale from the Group 4 Sales array.

Rather, the Board accepted 101196566’s argument that Group 4 ought to be stratified into two subgroups, representing smaller and larger Group 4 warehouses. In this regard, the Board wrote (at 16): The Appellant has argued that the sales of [the Ontario Avenue Warehouse] and [the Fresh Pack Warehouse] are not typical of the market place and should not be considered when determining the validity of the current CAP stratification.

The Panel accepts that these properties are atypical. [The Ontario Avenue Warehouse] has been brought to the Board’s attention on multiple occasions, and, as a renovated former dairy, is unique in the marketplace. [The Fresh Pack Warehouse] is a 90,000 ft 2 warehouse with an attached parcel of vacant land; as one would expect, the value of the vacant land has been captured in this transaction by the projection of the second lowest CAP rate of all nine warehouses greater than 34,100 ft 2 [ sic ]. … … For the reasons above, the Panel finds in favour of the Appellant and rules that the subject property shall be valued using a CAP rate of 10.29%.

(Emphasis added) [ 29 ] As I interpret the Board’s decision, 101196566 successfully used Mr. Suchan’s evidence to persuade the Board to subcategorise the Group 4 Sales array. That is, the 2013 BOR Decision stands for the proposition that Group 4 warehouses should be stratified into two subgroups, namely, smaller warehouses (having between 34,150 and 80,000 square feet [Group 4A], with a capitalisation rate of 7.35%) and larger warehouses (having over 80,000 square feet [Group 4B], with a capitalisation rate of 10.29%). 2.

City of Saskatoon v Various c/o Brundson Junor Johnson Appraisals Ltd. , AAC 2013-0301 [ 30 ] The City appealed against the 2013 BOR Decision , objecting to the admission of Mr. Suchan’s evidence and also asserting the Board had erred by finding equity had not been achieved under the 2013 assessment and then by changing the capitalisation rate.

The Committee rejected these arguments ( City of Saskatoon v Various Owners , AAC 2013-0301 and AAC 2013-0300 (16 June 2015) Assessment Appeals Committee Decision (2d Qtr) [ 2013 Committee Decision ]). [ 31 ] Relevant to the issue in this appeal—namely, the exclusion of the Fresh Pack Warehouse sale from the Group 4 Sales array— the Committee wrote: [33] Mr. Hesje [counsel for the appellant property owner] suggested it was “never the intention” of BJJ Appraisals [i.e., the property owner’s agent at the Board hearing] that the sales be removed from the analysis in determining the cap rate.

He pointed to page 12 of A.2 to the Board where BJJ shows the median cap rates and CODs [i.e., coefficients of dispersal] for the two, proposed groupings under the heading “Conclusions to be Drawn”, along with other data. The Committee notes that all nine sales are in use. Mr. Hesje referred to some of the City’s positions as “straw man arguments”. Whatever definition of the phrase Mr.

Hesje intended, the Committee cannot see that the Board misinterpreted BJJ’s basic argument that analysis of the nine cap rate sales showed the Assessor should have considered a split based on size. (Emphasis added) [ 32 ] In concluding their analysis, the Committee wrote: [37] The Committee further notes that the City, although critical of the Board’s decision, failed to prove error in the Board’s analysis and final determination.

None of the City’s positions, indicating where and how the Board was mistaken in its writing of the decision and illustrating errors in BJJ Appraisal’s arguments, point to fatal error in the Board’s conclusion. CONCLUSION: [38] The Committee concurs with the Board that two distinct groupings of cap rate sales emerge for warehouse properties greater than 34,150 square feet and that the cap rate of 10.29% applied to assess the subject property best provides an equitable assessment.

Large warehouse properties (over 80,000 square feet) generally sell for less in the Saskatoon marketplace and therefore should be assessed with a higher cap rate than medium-sized warehouses. [39] The Committee concludes the Board did not make a mistake by finding the assessment of the subject property violated the equity principle and changing the cap rate. (Emphasis added) [ 33 ] No further appeal was taken from the 2013 Committee Decision ; moreover, it is not one of the Committee decisions that are the subject of the appeal now before the Court. E. 2014 Assessment Appeals – Board Level 1.

City of Saskatoon v LID Development Corporation , BOR 52-2014 [ 34 ] Concern over the inclusion of the Fresh Pack Warehouse sale in the Group 4 Sales array next arose in 2014 assessment appeals, where LID Development Corporation took the lead in 16 Group 4 warehouse assessment appeals, including one by Marcoux Trucking in respect of the assessment of the Fresh Pack Warehouse itself. The Board’s decision is indexed as City of Saskatoon v LID Development Corporation , BOR 52-2014 (12 May 2014) [ 2014 BOR Decision ]. [ 35 ] In its assessment appeal, LID Development argued before the Board that (at 10):

a) The subject property receives an 8.04% cap rate which was calculated from warehouse sales with square footage greater than 34,150 ft 2 .

b) The sales of [the Ontario Avenue Warehouse] and [the Fresh Pack Warehouse] are not typical and should not be used in the determination of the validity of the assessment.

c) The sales of [the Ontario Avenue Warehouse] and [the Fresh Pack Warehouse] are atypical and should be removed from the sales sample used to determine the cap rate.

d) The sale of [the Fresh Pack Warehouse] included non-realty value that has not been accounted for in the adjusted sale price relied on by the Assessor.

e) The sales currently used to determine the 8.04% cap rate indicate that a further stratification by size is warranted. The sales should be split into neighbourhoods as 34,150 ft 2 —68,717 ft 2 , and greater than 68,717 ft 2 . The resulting cap rate for the greater than 68,717 ft 2

sales indicates a median cap rate of 12.18%. The three sales used are: 25-33 rd Street E., 1502 Quebec Avenue and 701 – 45 th Street E. [ 36 ] To support its submissions that the Fresh Pack Warehouse sale had included more than just an estate in fee simple, LID Development called Brett Marcoux, the president of Aero Delivery Ltd. [Aero Delivery], to testify before the Board. At the time of the Board hearing, Aero Delivery carried on business as “Fresh Pack Freezers 2010” from premises at the Fresh Pack Warehouse. [ 37 ] In broad terms, Mr.

Marcoux’s testimony called into question the accuracy of information set forth by Mr. Booth in the Fresh Pack SVF. In particular terms, Mr. Marcoux testified that: (

a) the $6.5 million purchase price included what was then known as the “Fresh Pack Potatoes” business, comprised of shares, goodwill and its book of business, as well as equipment, furnishings and 18 employees; (

b) the Fresh Pack Warehouse was not a typical storage warehouse because it contained condensers, compressors, an ice manufacturing plant and unique packaging equipment; (

c) the Fresh Pack Warehouse is under some form of temperature control; and (

d) Mr. Booth was no longer associated with Yanke and had never been an employee of Aero Delivery or Marcoux Trucking. [ 38 ] Under cross-examination, Mr. Marcoux confirmed much of the foregoing testimony, but also stated: (

a) Mr. Booth had not been part of the support staff involved in the Fresh Pack Warehouse sale; (

b) Mr. Booth would not have had authority to sign the Fresh Pack SVF on behalf of Marcoux Trucking, but Mr. Marcoux did not know whether Mr. Booth had signing authority for Marcoux Trucking; (

c) it could be possible that Mr. Booth had spoken with Russel Marcoux, a principal of Yanke and of Marcoux Trucking, about the Fresh Pack Warehouse sale; (

d) he could not estimate the value attributed to non-real estate items acquired in the Fresh Pack Warehouse sale; (

e) he did not have a personal interest in any warehouse properties currently under assessment appeal nor did he have an arm’s length relationship with any of them; and (

f) he was aware that excluding the Fresh Pack Warehouse sale from the capitalisation rate analysis could have tax implications. [ 39 ] In an effort to resolve the conflict between the Fresh Pack SVF and Mr. Marcoux’s testimony, the Board sought, unsuccessfully, to have the City assessor verify the information that had been set out in the Fresh Pack SVF. The Board recorded its efforts in its reasons: [37] The inclusion of [the Fresh Pack Warehouse] as part of the nine sales used within the Sales Group 4 stratification is problematic. The Panel heard conflicting testimony in regards to this sale.

The property in question was purchased by Marcoux Brothers Trucking whose owners are Russell and Bonnie Marcoux. The Appellant’s witness, Mr. Brett Marcoux son of Russell and Bonnie, testified that the purchase included a business, Fresh Pack Potatoes that is now called Fresh Pack Freezers and Fresh Pack Ice Makers. Mr. Marcoux is now the president of these companies as well as Aero Delivery. Mr.

Marcoux further testified that the sale of Fresh Pack Potatoes included the shares of the company, goodwill and the book of business as well as freezing equipment, furnishings and approximately 18 staff members. [38] The Respondent testified that a Sales Verification Form was duly completed and signed by a representative of Marcoux Trucking and it did not raise any “red flags” for the Assessor. The Assessor expects these answers to be truthful and that the best person available is responsible for filling out the form.

Considerable amount of follow up is initiated if any responses appear to require a review or adjustment to the sale price. The Respondent did admit to being misled occasionally by the responses received in other Sales Verification Forms. [39] The witness for the Appellant testified that the individual that signed the Sales Verification form worked for Yanke, a related company to Marcoux Brothers Trucking, but that he was no longer employed by them. [ 40 ] If a sale is not arm’s length or if the information about the sale is questionable then the Assessor will not consider the sale or will adjust it appropriately.

The fact that this particular sale was also questioned in [the 2013 BOR Decision ] without any follow up since then by the Assessor is perplexing. The Panel believes that the sale is a valid arm’s length sale that requires adjusting for chattels and/or other particular items. The Panel is mindful that the Assessor may be reluctant to try to correct the information provided in the Sales Verification Form that is attested to as complete, true and accurate. Any change to the actual amount paid for the property will affect its market cap, its position in the sales array and ultimately the median cap rate.

Nevertheless, the Panel’s concern at this time is to ensure that the assessment is correct, inasmuch as possible. [ 41 ] In order to resolve this issue the Panel asked for the following undertaking from the Assessor: Re: Appeal 52-2014 2700/2750 Faithful Avenue At the hearing for the above property there was conflicting evidence and testimony with regards to the sales verification for the sale of [the Fresh Pack Warehouse], one of the nine sales used in determining the applied CAP.

The Board of Revision requests that the Assessor contact the purchaser of said property in order to review and amend, if necessary, the

responses provided in the original Sales Verification Form, Exhibit C(R)2. Subsequent to this review, the Assessor should provide the Board of Revision with a revised C(R)2 and advise if a change to the 8.04 CAP rate is warranted. A prompt reply would be greatly appreciated. Thank you. [ 42 ] In a follow up email, the Assessor requested that the BOR provide the jurisdiction by which the request for the undertaking is made. A reply quoting

Section 205 of The Cities Act was subsequently forwarded to the Assessor. In a subsequent email response from the Assessor the Respondent went to great lengths to eventually reply that it could not or would not attempt to verify the answers provided in the Sales verification Form, Exhibit C(R)2, on the basis that it was not legal to do so nor did the BOR have the authority under

Section 205 of The Cities Act to make that request. The response from the Assessor ignored the spirit of the request that was to confirm that the information provided in the Sales Verification Form was indeed accurate and reliable. The Assessor did suggest that the purchaser could be contacted however any information provided wold have to be verified to the Assessor’s satisfaction. The implication was that the process could be lengthy. [ 43 ] While the Panel appreciates the legal points made by the Assessor it is not prepared to reopen the appeal to hear legal arguments from either party on this issue.

The BOR is faced with the time constraints of the legislation to deliver its decisions and cannot afford lengthy delays in obtaining the required information to validate the sale of [the Fresh Pack Warehouse].

That the necessary steps to validate the sale were not taken following previous appeals in 2013 that dealt with this very same issue is frustrating for the Panel and especially so when the Respondent admits to occasionally being misled by the responses in other Sales Verification Forms. [ 44 ] As noted by the Assessor, there are previous rulings suggesting that the Panel could ascribe greater weight to the Sales Verification Form rather than the affidavit of a witness. On balance, the Panel finds that the verbal testimony of the Appellant’s witness [Mr.

Marcoux] in this appeal was credible, more so than the unverified responses found in the Sales Verification Form. [ 45 ] The Panel finds that the sale of [the Fresh Pack Warehouse] should be excluded from the sales array used to determine the 8.04% cap rate on the basis that there is irrefutable evidence that the sale, while arm’s length, included a number of chattels and possibly other businesses that should be accounted and adjusted for.

As found in the table below, removal of the sale from the array leaves eight sales with a median cap rate of 8.22%. [Table omitted] (Emphasis added) [40] As such, under the 2014 BOR Decision , the Board found the Fresh Pack SVF was unreliable and excluded the Fresh Pack Warehouse sale from the Group 4 Sales array for the purposes of calculating the capitalisation rate. The Board did not address the further stratification of Group 4, which had been at issue and addressed in the 2013 BOR Decision and the 2013 Committee Decision .

As I read its decision, the adjustment of the capitalisation rate from 8.04% to 8.22% resulted simply from the exclusion of the Fresh Pack Warehouse sale from the Group 4 Sales array. 2. West Coast Reduction Ltd. v City of Saskatoon , BOR 62-2014 [41] As noted, the 2014 BOR Decision applied to all 16 Group 4 warehouse assessment appeals in 2014, which included assessments of the West Coast and Fresh Pack Warehouses.

Most importantly, by agreement among all parties, the evidence and testimony adduced before the Board in the 2014 BOR Decision appeal carried forward to the 2014 assessment appeals in respect of the other Group 4 warehouses. In the appeal now before the Court, this is reflected in the Board’s decision in West Coast Reduction Ltd. v City of Saskatoon , BOR 62-2014 (12 May 2014) [ West Coast BOR Decision ], which quotes directly from the 2014 BOR Decision , including paragraph 45 (quoted above). [42] In the West Coast BOR Decision , the Board summarised its conclusion in these brief terms: [47] In

summary, it is the opinion of the Panel that the cap rate of 8.22% should be used to calculate the subject property’s assessment. DECISION The assessment of the subject property will be recalculated using the cap rate of 8.22%. All other aspects of the appeal are denied. [43] As noted, I take from this that, while the Board excluded the Fresh Pack Warehouse sale from the Group 4 Sales array, it did not further stratify Group 4 into Groups 4A and 4B, as it had done in the 2013 BOR Decision (which had been upheld in the 2013 Committee Decision ).

In terms of dollars, the increase in the capitalisation rate from 8.04% to 8.22%, resulting from the elimination of the Fresh Pack Warehouse sale from the Group 4 Sales array, produced a reduction of $117,700 in the assessed value of the West Coast Warehouse. F. 2015 Assessment Appeals – Board Level [44] In June 2015, the Board heard the appeal in City of Saskatoon v Postmedia Network Inc. , BOR 57-2015 (4 June 2015), where Postmedia acted as the lead appellant challenging the 2015 assessment of Group 4 warehouses.

By agreement, the evidence in this appeal was to be used in five other warehouse assessment appeals. Neither Postmedia nor the City presented any testimony or oral argument at the hearing. The parties instead relied on written submissions and the record in the appeals under the 2014 BOR Decision and under Post Media Network Inc. v City of Saskatoon , 400-2013 (10 June 2013). [45] In the result, the Board excluded the Fresh Pack Warehouse sale from the Group 4 Sales array for the purposes of calculating the capitalisation rate, but the Board did not address further stratification of Group 4 warehouses.

Accordingly, the Board adjusted the capitalisation rate from 8.04% to 8.22%.

G. 2016 Assessment Appeals – Board Level 1. City of Saskatoon v Acklands Grainger Inc., BOR 87-2016 [ 46 ] In June 2016, the Board heard the appeal of Acklands-Grainger Inc., as lead appellant, against the 2016 assessment of Group 4 warehouses. By agreement, the relevant testimony and evidence from this appeal was to be used in 23 other 2016 warehouse assessment appeals. The appellants all alleged the City assessor had erred in determining the capitalisation rate for Group 4 warehouses.

They framed the common issues in this way: [12] This appeal deals with a number of warehouse properties and the issue at hand is what cap rate should be used to value large warehouses.

Initially, the Assessor placed the 9 largest warehouses greater than 34,150 sq. ft. into one group and applied a cap rate of 8.04%. [13] This stratification was appealed by ratepayers in 2013 with the result that the BOR further stratified those sales into two groups with the larger sized group (including the subject property) receiving a cap rate of 10.29%. [14] The Assessor appealed that decision to the AAC which subsequently supported the new stratification.

The Committee was never asked to determine a size break point within the 9 sales because the properties under appeal were over 80,000 sq. ft. while the largest of the smaller sized group was only 48,300 sq. ft. [15] Additionally, and before the AAC decision was rendered [in the appeal against the 2013 Board Decision ], a BOR appeal in 2014 [i.e., the 2014 Board Decision ] concluded that one of the 9 sales must be removed.

In that appeal, further stratification was not addressed when the BOR ordered that the median cap rate be changed from 8.04% to 8.22% based on an array of 8 sales. [16] Two prior decisions have removed a sale from the cap rate analysis and determined that there should be a split between medium and large warehouses.

When both decisions are applied the 5 medium warehouses receive a 7.35% cap rate and the large warehouse group, now reduced by one, receives a cap rate of 12.18%. [17] The chief issue in this appeal is finding a method to determine the delineation between the medium and large warehouses; that is, where the stratification of the 7.35% and 12.18% groupings meet. Where can a line be drawn that has been tested statistically and is not arbitrary? This question was never pursued by either the BOR or the Committee.

The grouping of warehouses over 80,000 sq. ft. is noted in the 2013 decision [i.e., the 2013 Board Decision ] but no analysis was presented to justify such a demarcation point. … [ 47 ] In opposition to this, the City maintained its view that the Fresh Pack Warehouse sale remained a Group 4 Sale for the purposes of calculating the capitalisation rate. The Board summarised the City’s position in this way: [25] The property at 302 Melville [i.e., the Group 4 warehouse at issue in the 2013 Board Decision and 2013 Committee Decision ] is receiving a 10.29 cap rate because that is what the Committee has ordered.

The City of Saskatoon does not agree with that decision and has appealed it; however, until such time as it is overturned the City must comply. In their decision the Committee did not speak to the two properties that the Appellant now wants to remove from the cap rate analysis. [26] One of the sales that the Appellant has removed follows a BOR decision, but that too has been appealed by the City. The Committee has not ruled on that yet but it may order that the sale be put back. [ 48 ] In an attempt to establish a break point for stratifying Group 4 warehouses, Acklands-Grainger called Dr.

Andrei Igorevich Volodin to testify before the Board as an expert in mathematics and statistics. In his testimony, Dr. Volodin’s opined that a break point of either 56,647 square feet or 57,945 square feet would be appropriate, depending on the statistical approach taken. The Board, however, rejected this evidence because the sales array provided to Dr. Volodin had excluded both the Fresh Pack Warehouse sale and the Ontario Avenue Warehouse sale, which undermined the factual premises of his expert opinion.

In particular, the Board found that removal of the Ontario Avenue Warehouse from the sales array was contrary to the 2014 BOR Decision , where the Board had deemed that sale valid. Furthermore, the Board ruled that it could not consider an 80,000 square foot stratification point for Group 4 because that issue had not been identified in the grounds of appeal. [ 49 ] In the result, the Board excluded the Fresh Pack Warehouse sale from the Group 4 sales array in accordance with the 2014 BOR Decision but declined to further stratify Group 4 warehouses.

H. 2014 and 2015 Assessment Appeals – Committee Decision [ 50 ] The Committee issued its reasons in respect of all Group 4 warehouse assessment appeals for both the 2014 and 2015 assessment cycles under its common decision in 2014-2015 Committee Decision . In its decision, the Committee ruled “the Board did not make a mistake when it removed the sale of [the Fresh Pack Warehouse]” (at para 21). In its analysis, the Committee referred to the undertaking the Board had unsuccessfully sought from the City assessor to verify the Fresh Pack SVF and the City’s response to this request.

The Committee then wrote: [18] It is clear the Board gave the City an opportunity to clarify what the Board found was conflicting evidence. The Board’s request was reasonable, especially since it observed the Assessor admitted “to occasionally being misled by the responses in other Sales Verification Forms.” For various reasons, the City did not provide further clarification. [19] Regardless of the City’s reasons, it is important to highlight the Board could have made a ruling without issuing a request to clarify conflicting evidence .

The Board had no obligation to issue the request. [20] The Board had the oral testimony of Mr. Marcoux and the documentary evidence of the sales verification form and the Board

decided Mr. Marcoux’s testimony was more credible. The Board’s authority is not debatable because there is no question the Board determines the “admissibility, relevance and weight of any evidence” (s. 203(1), the Act ). We will not interfere with this finding of fact because it was adequately supported by the evidence before the Board. [21] We find the Board did not make a mistake when it removed the sale of [the Fresh Pack Warehouse]. The City has the onus, on a balance of probabilities, of showing the Board made an error. We find the City did not meet its onus.

CONCLUSION: [22] The Committee dismisses the appeal and upholds the Board’s assessed values in paragraphs [1] and [2] of this decision. (Emphasis in original) I. 2016 Assessment Appeal – Committee Decisions 1. The 2016 Committee Decision , AAC 2016-0067 [ 51 ] In the 2016 Committee Decision , the Committee adopted and reiterated paragraphs 7 to 21 of the 2014-2015 Committee Decision , including its conclusion that the Board had not erred by excluding the Fresh Pack Warehouse sale from the Group 4 Sales array.

The Committee then went on to address a procedural issue arising from the 2015 Board hearing that is not relevant to this appeal. Lastly, the Committee considered the stratification of Group 4, writing: [37] There was no real evidence brought forward at our hearing other than the 2013 record, which dealt with stratification, not with the 80,000 ft 2 size threshold. We are not convinced either party argued the threshold issue at the Board’s 2016 hearing. [38] The appeal to the Board in [the 2013 Committee Decision ] was different.

In that appeal, the Board discussed groupings based on size, but when the City appealed to the Committee, there was no request for the 80,000 ft 2 size threshold. The properties at issue in that appeal were large warehouses significantly greater than 80,000 ft 2 and it was not material to that appeal where, precisely, the threshold lay. The Committee ruled: The Committee concurs with the Board that two distinct groupings of the cap rate sales emerge for warehouse properties greater than 34,150 square feet and that the cap rate of 10.29% applied to assess the subject property best provides an equitable assessment.

Larger warehouse properties (over 80,000 square feet) generally sell for less in the Saskatoon marketplace and therefore should be assessed with a higher cap rate than medium-sized warehouses ([ 2013 Committee Decision ], para 38). [39] Over time, views changed and the parties appear to say there are now three groupings – small, medium and large. The issue in this appeal, which was not explored in the 2013 appeal, is the location of the threshold for distinct cap rates for medium and large warehouses.

The Board did not accept the size break points proposed by the Appellants because it was not satisfied with the statistical evidence in support of these proposed break points. The Board was also not satisfied with the support on the record for 80,000 ft 2 as the appropriate break point. The Board wrote: “[T]he 80,000 sq. ft. size stratification delineation, … does not have statistical support .…” Statistical testing is a requirement of the Act . [40] We find the Board did not make a mistake when it rejected the 80,000 ft 2 size threshold.

The City has the onus, on a balance of probabilities, of showing the Board made a mistake. We find the City did not meet its onus. (Emphasis in original) 2. Various v City of Saskatoon, AAC 2016-0074 [ 52 ] Prior to the appeal hearing in Various Owners v City of Saskatoon , AAC 2016-0074 (25 October 2016) Assessment Appeals Committee Decision (4th Qtr) [ 2016 Settlement Decision ], the parties came to an agreement to change the original assessed values for the 2014 and 2016 assessment cycles and submitted a joint recommendation in that regard to the Committee.

The Committee accepted the recommendation, writing: [8] The Assessor applied the [ 2013 Committee Decision ], which created two cap rate groups for properties with floor area greater than 34,150 ft 2 . The median cap rate for the four sales greater than 80,000 ft 2 located at 25 – 33 rd Street East, 701 – 45 th Street East, 1701 – 16 th Street West, and 1502 Quebec Avenue is 10.29%. The resulting 10.29% cap rate was applied to the properties in the table in paragraph [1]. VI. Analysis [ 53 ] The following analysis addresses the two issues of law identified in the order granting leave to appeal. A.

Did the Committee err in failing to consider the application of s. 172(5) of The Cities Act to the evidence before the Board? [ 54 ] The City asserts that, when the Board accepted the evidence of Mr. Marcoux in the 2014 BOR Decision , it failed to consider s. 172(5) of The Cities Act , which, as noted above, states:

(5) If the person whose assessment is the subject of an appeal or his or her agent seeks to introduce the following evidence at the hearing of the appeal, the board of revision or appeal board shall not take that evidence into consideration in making its determination: (

a) any information or document that was not provided to the assessor as required by

section 171 when it was required to be provided; (

b) any information that is substantially at variance with information provided to the assessor pursuant to

section 171. [ 55 ] In its factum, the City characterises this issue as going “to the heart of the sales verification process” and says the Board’s decision undermines the efficacy of that process. West Coast characterises the matter differently, saying the Board’s decision goes “to the heart of the mass appraisal approach as it relates directly to equity, verification, credibility and fact finding.” Both are correct.

SVFs are the keystone upon which equity in the mass appraisal process for non-regulated property rests and, when the keystone is unreliable, the foundation crumbles and equity falls with it. [ 56 ] However, the actual question in this appeal is less dramatic. It simply asks whether s. 172(5) had application in the circumstances of this case. If so, then the Committee erred in law by failing to find the Board had erred when it took Mr.

Marcoux’s evidence into consideration. [ 57 ] To paraphrase the relevant facts, the Fresh Pack Warehouse sale occurred in July 2010, following which the City sent an SVF to Marcoux Trucking seeking to learn, among other information, the sale price and what had been included in the sale. Mr. Booth completed the Fresh Pack SVF and sent it to the City in January 2011.

The City relied on the Fresh Pack SVF in the 2013 to 2016 assessment cycles, using it in the sales array for large warehouses and, specifically, to determine the capitalization rate for Group 4 properties, namely, warehouses having over 34,150 square feet. However, several taxpayers objected to the inclusion of the Fresh Pack Warehouse sale in the sales array data for Group 4 warehouses. These taxpayers appealed their assessments on this and other grounds.

Ultimately, the Board and, later the Committee, excluded the Fresh Pack Warehouse sale from the sales array data used to calculate the Group 4 capitalization rate. [ 58 ] In the assessment appeal below, West Coast called Mr. Marcoux to give viva voce evidence about the Fresh Pack Warehouse sale, which is summarised earlier in these reasons. In my view, the City has correctly characterised Mr. Marcoux’s evidence as being substantially at variance with the sales information set out in the Fresh Pack SVF. Moreover, it is plainly obvious West Coast adduced Mr.

Marcoux’s testimony for the purpose of contradicting the Fresh Pack SVF. This point is not in dispute. [ 59 ] The City asserts that the municipal tax assessment for the Fresh Pack Warehouse was under appeal in the hearing at which Mr. Marcoux gave his testimony. On this basis, the City says all the criteria of s. 172(5) of The Cities Act were met and, therefore, the Board erred in law because it was barred from considering Mr. Marcoux’s evidence. [ 60 ] Nonetheless, s. 172(5) is not engaged simply because a witness has contradicted an SVF.

To engage the prohibition in s. 172(5), the witness must have a direct tie to the assessment appeal before the Board, namely, the witness must be “the person whose assessment is the subject of an appeal or his or her agent” who seeks to introduce evidence “at the hearing of the appeal”.

On this point, West Coast says Marcoux Trucking was not “a person whose assessment is the subject of an appeal” and therefore, West Coast argues, s. 172(5) was not engaged by the circumstances of this appeal. [ 61 ] From the record, in January 2017, Marcoux Trucking settled with the City all outstanding issues under its 2016 assessment appeal. This was a few months before the Committee heard the appeal from the Board decision (April 2017).

Under its 2016 Settlement Decision (at para 10), the Committee approved the settlement as resolving “all matters of the appeals for the properties listed.” For this reason, West Coast says the decision of the Committee to accept Mr. Marcoux’s evidence was not subject to s. 172(5). [ 62 ] However, at the time the Board heard West Coast’s 2016 assessment appeal, Marcoux Trucking was still one of the appellants that had hitched their assessment appeals to West Coast’s assessment appeal as the “lead appeal”.

That is, if West Coast were to have been successful before the Board, then so too would Marcoux Trucking have been successful in its own 2016 assessment appeal, without the necessity of having its own hearing before the Board or the Committee.

So, it is true Marcoux Trucking no longer had a direct interest in the appeal hearing that occurred before the Committee, but the hearing before the Committee was not the focus of the evidentiary prohibition in s. 172(5), or at least the hearing before the Committee was not its first focus. [ 63 ] The first focus of s. 172(5) is the appeal hearing at which the evidence in question is sought to be introduced. In this case, for the purposes of s. 172(5), that appeal hearing took place before the Board, where Mr. Marcoux testified. For this reason, s. 172(5) would have direct application to the evidence of Mr.

Marcoux in the matter if Mr. Marcoux were “the person whose assessment is the subject of an appeal or his or her agent”. However, on the evidence, Mr. Marcoux is not that person. Logically, that phrase must pertain to the owner of the property in question. [ 64 ] Mr. Marcoux is certainly related to the principals of Marcoux Trucking, being their son. He is also the shareholder and a director of Aero Delivery, which apparently leases the Fresh Pack Warehouse from Marcoux Trucking and which may, if the terms of the lease so provide, be responsible for payment of the municipal tax levied on the leasehold.

But these two relationships do not establish that he was “the person whose assessment is the subject of an appeal or his or her agent”. Indeed, when testifying before the Board, Mr. Marcoux acknowledged he did not have an arm’s length relationship with warehouse property but he also confirmed that he did not have a personal interest in any warehouses where the owner had launched an assessment appeal. Importantly in that regard, when Mr. Marcoux testified, Marcoux Trucking’s assessment appeal was still hitched to West Coast’s lead appeal.

Furthermore, there was no evidence or allegation of an agency relationship between Mr. Marcoux and Marcoux Trucking. [ 65 ] As noted, West Coast observes correctly that s. 172(5) only prohibits the property owner (or its agent) from calling evidence substantially at variance with an SVF provided in respect of its own property in an appeal of the assessment of that property.

The corollary to this, which is consistent with the dominant and controlling factor in mass appraisal, is that a property owner like West Coast must be permitted to challenge the accuracy or correctness of SVFs of other properties used in the calculation of the capitalisation rate for the owner’s property. Accordingly, even though the Board did not address s. 172(5) head on, I am unable to conclude it erred in law when it took Mr. Marcoux’s evidence into consideration.

[66] Although the foregoing conclusion disposes of this ground of appeal, I would still address two of the parties’ other arguments.West Coast also argued there was no error here because the City did not object to Mr. Marcoux’s testimony or raise an objectionpursuant to s. 172(5) in the hearing before the Board. This argument is supported by the fact the Board’s decision does not contain anyreference to s. 172(5). Furthermore, on the record, the City participated in the hearing before the Board by cross-examining Mr.

Marcouxand by presenting argument as to his credibility and the weight to be given to his evidence. On this basis, West Coast says the Board didnot err because it did not consider the issue under s. 172(5) at all.

That is, West Coast argues the Board made no decision that could bereviewed for error by the Committee, acting in its appellate role (Corman Park (Rural Municipality) v 618421 Saskatchewan Ltd., 2018SKCA 29 at paras 56–67, 73 MPLR (5th) 1). [67] This argument trades on the well-known general principle that a party cannot raise new arguments on appeal (see R v Perka, (SCC), [1984] 2 SCR 232 at 240; Luzny v Craik (Town), 2013 SKCA 94, 423 Sask R 116; Linn v Frank, 2014 SKCA87, 442 Sask R 126; Saskatchewan Crop Insurance Corporation v McVeigh, 2018 SKCA 76, [2019] 1 WWR 290; HarvardDevelopments Inc. v Park Manor Condominium Corporation, 2018 SKCA 81, [2019] 2 WWR 227, among others).

However, WestCoast’s argument does not persuade because the allegation of error pertains to the Board’s compliance with its own statutory rules ofprocedure. It is not a new argument alleging on appeal that the City assessor erred in some manner that had not been canvassed beforethe Board. For that reason, none of the fairness concerns that underpin the principle against new arguments on appeal apply.

Anallegation that a board of revision has failed to comply with statutorily-imposed requirements under The Cities Act is always properlybefore the Committee in an appeal. [68] I close by confirming a point of law made by the City in its arguments. The City is clearly correct when it says the Committeeerred in law by justifying the Board’s reliance on Mr. Marcoux’s evidence under s. 203(1) of The Cities Act. Under that provision, aboard of revision may determine the admissibility, relevance and weight of any evidence brought before it.

However, the specificstatutory prohibition on the admission of certain evidence under s. 172(5) cannot be overridden by a general statement of statutoryauthority to admit evidence under s. 203(1)—generalia specialibus non derogant. In straightforward terms, a board of revision is simplynot entitled to disregard an express legislative restriction on the evidence it may consider by pointing to the legislative grant of generalpowers to admit evidence. This error does not, however, undermine the Committee’s overall conclusion that the Board was entitled toaccept Mr.

Marcoux’s evidence. [69] In short, the Committee concluded correctly that the Board had not erred by considering Mr. Marcoux’s testimony. B. Did the Committee err by placing greater weight on the evidence ofMr. Marcoux about the Fresh Pack Warehouse sale over the information set out inthe Fresh Pack SVF? [70] This Court has no jurisdiction to entertain questions of fact in an appeal against a decision of the Committee. To invoke theCourt’s appellate jurisdiction under s. 33.1 of The Municipal Board Act, the grounds of appeal must ask questions of law or ofjurisdiction.

The earlier question—as to whether s. 172(5) applied in the circumstances of this case—is a straightforward question of law.However, the weighing of evidence by a trier of fact gives rise to findings of fact and any challenge to the weight given by a trier of factto evidence gives rise to a question of fact. Nonetheless, a trier of fact may commit an error in the fact-finding process that gives rise to aquestion of law. Justice Cameron described the limited circumstances in which such a question might arise in P.S.S.

Professional SalonServices Inc. v Saskatchewan (Human Rights Commission), 2007 SKCA 149, 302 Sask R 161 [PSS Professional]: [68] It follows, that a tribunal cannot reasonably make a valid finding of fact on the basis of no evidence or irrelevant evidence. Norcan it reasonably make a valid finding of fact in disregard of relevant evidence or upon a mischaracterization of relevant evidence.

To doso is to err in principle or, in other words, to commit an error of law. (In addition to the cases referred to above, see Toneguzzo-Norvell v.Burnaby Hospital, (SCC), [1994] 1 S.C.R. 114 at p. 121; Wade & Forsyth, Administrative Law (7th ed.) (Oxford:Clarendon Press, 1994) at pp. 316-320; Jones & de Villars, Principles of Administrative Law (4th ed.) (Toronto: Thomson Carswell,2004) at pp. 244-43 and 431-436; and Hartwig and Senger v. Wright (Commissioner of Inquiry), et al, 2007 SKCA 74 (Sask C.A)).

Norcan a tribunal reasonably make a valid finding of fact based on an unfounded or irrational inference of fact. [69] The all-important point is that to make a finding of fact on any of these bases is to error in principle by offending the implicitrequirements of the statute, as well as the common law duty of procedural fairness perhaps. To suppose otherwise is to suppose thelegislature intended, in conferring power upon a human rights tribunal to determine facts in controversy much as judges do, to empowerthe tribunal to engage in unfounded, unreasonable, or arbitrary fact-finding.

The fact-finding process, or method by which facts incontroversy are to be determined in this quasi-judicial setting, does not permit of this, either in its statutory or common law conception. [70] Having regard for all of this, it becomes apparent that even though the right of appeal is confined to a question of law, and eventhough the appeal comes down to the tribunal’s findings of fact, the appellant’s case gives rise to a question of law and rests, therefore,on a tenable ground.

It is not as though the question is whether the tribunal’s findings of fact are unreasonable or unsupported by theevidence in the sense of the sufficiency and weight of the evidence. Rather, the question is whether the findings of fact are unreasonablein the sense the tribunal erred in principle by disregarding, overlooking, or mischaracterizing evidence material to its findings of fact. … (Emphasis in original) [71] At root, the City seeks to invalidate the Board’s finding that the Fresh Pack SVF is not reliable and to obtain a decision fromthis Court affirming the reliability of the Fresh Pack SVF.

While I could reframe this second ground of appeal to ask whether the Boardcommitted an error of the type described in PSS Professional when it accepted Mr. Marcoux’s testimony over the evidence of marketvalue in the Fresh Pack SVF, that is not appropriate in the circumstances of this appeal. [72] The reliability of the Fresh Pack SVF has been at issue in Group 4 appeals since the 2013 assessment cycle. The appellant inthe 2013 BOR Decision questioned the accuracy of the Fresh Pack SVF and led evidence before the Board to show that the Fresh Pack

Warehouse sale had included items other than land and improvements. The evidence before the Board at that time included a commercial realtor’s testimony to the effect that the Fresh Pack Warehouse sale had included equipment and a business. In the 2013 BOR Decision , the Board found the Fresh Pack Warehouse sale was “atypical” and had to be discounted for assessment purposes. The City appealed against the Board’s decision, but later abandoned its appeal. [ 73 ] In 2014, the reliability of the Fresh Pack SVF was again at issue before the Board. At that hearing, the agent for the ratepayer called Mr.

Marcoux to provide evidence that the Fresh Pack Warehouse sale had included non-realty items. As noted, the City made no objection to Mr. Marcoux’s evidence nor did it bring s. 172(5) to the attention of the Board. The Board found Mr. Marcoux was credible and that his testimony as to the Fresh Pack Warehouse sale was reliable. Moreover, the evidence Mr. Marcoux provided reinforced the evidence of Mr. Suchan, which had been considered in the 2013 BOR Decision . It reinforced the Board’s concerns as to the accuracy of the Fresh Pack SVF.

The Board specifically indicated its frustration that the City had done nothing to verify the Fresh Pack Warehouse sale information after the 2013 BOR Decision .

In light of this, the Board asked the City to obtain additional information from Marcoux Trucking to confirm or dispel the accuracy of the Fresh Pack SVF, but the City declined to undertake to do so. [ 74 ] While the City has argued that SVFs obtained under s. 171 are integral to the mass appraisal system, it fails to recognise that the integrity of the mass appraisal system itself depends in no small measure on the accuracy of the sales information so obtained.

This is because the dominant and controlling factor in the assessment of property is equity (s. 165(3)) and equity in non-regulated property assessments is achieved by applying the market valuation standard so that assessments bear a fair and just proportion to the market value of similar properties as of the applicable base date.

Axiomatically then, for equity to be achieved, the annual assessment for a non- regulated property must be based on accurate and up-to-date information about the market value of similar properties. [ 75 ] I agree that an assessor is entitled to presume, without any requirement to verify, that an SVF is correct, but it is a rebuttable presumption. Once the assessor becomes aware that there is a reasonable basis for believing an SVF is inaccurate or unreliable—whether that occurs in or outside an assessment appeal—the assessor must either take steps to verify its accuracy or remove it from the sales array.

There is no middle ground if equity is to be achieved. The assessor must make this determination, but it will always be subject to review by the Board if it is raised in an assessment appeal. That is, the Board has the final say on whether an SVF, as a piece of evidence, is sufficiently reliable for use in a market value calculation. [ 76 ] On the procedural history of this matter, it seems clear the City must have been aware since 2013 that the Fresh Pack SVF at least might contain incorrect information about the Fresh Pack Warehouse sale.

The Board was persuaded in the 2013 BOR Decision that the sale was “atypical”, even though I do not interpret its decision as outright rejecting the accuracy of the Fresh Pack SVF. Nonetheless, the 2013 BOR Decision called the Fresh Pack SVF into question. This meant that, if it sought to further rely on the Fresh Pack SVF, the City had to address the frailties in the evidence head on. However, even when the Board invited it to do so, it declined. [ 77 ] In the face of this, the Fresh Pack Warehouse sale was excluded from the Group 4 sales array largely because Mr.

Marcoux’s testimony established that the sale price was not reflective of the fair market value of just the estate in fee simple—the sale involved more than that on his evidence. In this regard, it is incorrect to say the Board preferred Mr. Marcoux’s testimony over the Fresh Pack SVF. All the Board did was find Mr. Marcoux a credible witness and accept his evidence as being reliable, thereby necessarily giving it more weight than the information contained in the Fresh Pack SVF, which had frailties that had gone unaddressed by the City.

These are all matters of fact that do not give rise to questions of law in this Court. [ 78 ] Moreover, even if I were inclined to reframe this as a question of law under PSS Professional , I see no basis for concluding the Board’s findings with regard to Mr.

Marcoux’s evidence and the Fresh Pack SVF were based on no evidence or irrelevant evidence; nor can I reasonably conclude the Board disregarded or mischaracterised relevant evidence in reaching its findings; nor can it be said the Board based its findings on an unfounded or irrational inference of fact. [ 79 ] For these reasons, I conclude the Committee correctly declined to interfere with the Board’s decision to accept Mr. Marcoux’ evidence. VII. Conclusion [ 80 ] The appeal is dismissed with costs to West Coast. “Caldwell J.A.” Caldwell J.A. I concur. “Richards C.J.S.” Richards C.J.S.

I concur. “Leurer J.A.” Leurer J.A.