Terracap Investments (Frontier) Inc. v. Discovery Co-operatives Limited, 2020 SKCA 130

Corrected decision: The text of the original judgment was corrected on November 23, 2020. This document contains the amended text.

Court of Appeal for Saskatchewan Docket: CACV3534 Citation: Terracap Investments (Frontier) Inc. v North Battleford (City) , 2020 SKCA 130 Date: 2020-11-17 Between: Terracap Investments (Frontier) Inc. and Discovery Co-operatives Limited (as represented by Altus Group Limited) Applicants/Prospective Appellants (Respondents) And City of North Battleford (as represented by the Saskatchewan Assessment Management Agency) Respondent/Prospective Respondent (Appellant) Before: Richards C.J.S. (in Chambers) Disposition: Application granted in part On application from: 2019 SKMB 112 , Regina Application heard: September 14, 2020 Counsel: Samuel Edmondson for the Applicants Troy Baril for the Respondent Richards C.J.S.

I. INTRODUCTION [ 1 ] This is an application for leave to appeal brought by Terracap Investments (Frontier) Inc. [Terracap] and Discovery Co- operatives Limited [Discovery] [collectively the “Owners”]. They seek to overturn a decision of the Assessment Appeals Committee of the Saskatchewan Municipal Board [Committee]: North Battleford (City) v Various (Altus) , 2019 SKMB 112 [ Committee Decision ]. [ 2 ] As explained below, the Owners should be granted leave to appeal, albeit on a considerably narrower basis than the one they seek. II. BACKGROUND [ 3 ] The assessed values of five properties are in issue.

One of the properties is an enclosed mall owned by Terracap. The other properties – an enclosed mall and three related pad sites – are owned by Discovery. All of the properties are located in the City of North Battleford. [ 4 ] The key features of the procedural story underpinning the application are as follows: (

a) In 2017, the properties were assessed using the cost approach. The assessor, Cameron Duncan, indicated that he was unable to explore using the income method because he did not have access to the necessary data. (

b) The Saskatchewan Assessment Management Agency [SAMA] became the assessor for 2018. It also employed the cost approach to value the properties. (

c) The Owners appealed the 2018 assessments to the Board of Revision [Board]. The Board referred to a “provincial model” that used the income method of valuation and that it said was employed by SAMA to value malls in smaller cities like Estevan and Moose Jaw.

Noting that SAMA’s Market Value Assessment in Saskatchewan Handbook , ver 3 (Regina: Saskatchewan Assessment Management Agency, 2012) online: “Manuals, Handbooks & Guides”, Saskatchewan Assessment Management Agency [ Handbook ], recommends the use of the income method for the assessment of malls, the Board ordered that “[t]he subject property shall be assessed using the Income approach applying the provincial model established by the appraising agency” (at para 39). (

d) The City appealed to the Committee. The Committee found that the only thing different between the 2017 assessment and the 2018 assessment was that SAMA had replaced Mr. Duncan as the assessor. Relying on s. 165(3.1) of The Cities Act , SS 2002, c C-11.1 , the Committee held that the Board had made what it described as being two “mistakes”. It wrote as follows: [50] Two mistakes in the Board analysis and Altus’ argument are exposed. First, we find a change in the assessment service provider is not a change in “facts, conditions and circumstances affecting the property …” as contemplated by the Act .

This finding is backed by City Centre Equities Inc. v Regina (City) , 2019 SKCA 80 , where the Court stated at paragraph [47]: … I am satisfied that the phrase ‘facts, conditions and circumstances’ as used in South Hill in reference to s. 227 has the same meaning as in s. 165(3.1) .

The implication of this is that the phrase refers to aspects or characteristics of the property itself and factors such as use, location and zoning of the land and improvements as was in the past set out in the Assessment Manual pursuant to The Assessment Management Agency Act . … [51] Second, the Board failed to adequately consider it was open to the Assessor to use the Cost Approach for Retail properties within a jurisdiction. While the Income Approach may be recommended for use for Retail and income-producing properties, it is not a mistake by

the Assessor to choose the Cost Approach in this instance. SAMA’s evidence to the Board was SAMA assumed the role (and the assessment roll) on January, 1 2018, and there was no change to facts, conditions and circumstances affecting the property. Given no substantive change to the evidence before it, the Board ought to have carried forward its decision from 2017 to 2018 to uphold the Cost Approach.

In addition, we confirmed the Board’s 2017 decision and it was not challenged further to the Saskatchewan Court of Appeal, although it was open to Altus to do so. (Emphasis in original) [ 5 ] In the end, the Committee allowed the City’s appeal and reinstated SAMA’s valuations. III.

PROPOSED BASIS OF THE APPEAL [ 6 ] The Owners seek leave to appeal on six “questions” that they have framed as follows in their draft order and draft notice of appeal: • The Committee erred in law by failing to defer to the decision of the [Board] and finding that equity had not been achieved in the subject property assessments; • The Committee erred in law or mixed fact and law when they [ sic ] failed to defer to the decision of the Board that the assessor had made an error of assessment principle and practice in applying the cost approach to the subject property; • The Committee erred in law in defining and applying the principle of equity in mass appraisal assessment; • The Committee incorrectly interpreted the Board’s decision with respect to the reasonableness of the assessor applying the cost approach model and thereby did not apply the appropriate standard of review to the Board’s decision; • The Committee erred in holding that the Board was bound by a previous decision in a previous assessment year; and • The Committee erred in law when they [ sic ] failed to act judicially in exercising their [ sic ] appellate role.

IV. THE FRAMEWORK FOR DECIDING WHETHER TO GRANT LEAVE [ 7 ]

Section 33.1 of the The Municipal Board Act , SS 1988-89, c M-23.2 [ Act ], provides for appeals to this Court, with leave, from a decision of the Committee “on a question of law or on a question concerning the jurisdiction of the board”. Thus, an applicant seeking leave to appeal must identify one or more questions of law or jurisdiction. Otherwise, the Court has no authority to hear the proposed appeal. [ 8 ] Assuming this threshold is crossed, the issue then becomes whether the question or questions of law or jurisdiction should be answered by the Court, i.e., whether leave to appeal should be granted.

The approach to be taken in this regard is a modified version of the one set out in Rothmans, Benson & Hedges Inc. v Saskatchewan , 2002 SKCA 119 , 227 Sask R 121 [ Rothmans ].

It is described as follows in Saskatoon (City) v North Ridge Development Corporation , 2015 SKCA 13 , 451 Sask R 265: [55] … it may be helpful to restate the Rothmans framework emphasizing the core considerations of merit and importance as they relate to an application for leave to appeal under s. 33.1 of The Municipal Board Act : First : Is the proposed appeal of sufficient merit to warrant the attention of the Court of Appeal? • is it prima facie frivolous or vexatious? • is it prima facie destined to fail in any event, having regard to the nature of the issue and the scope of the right of appeal, for instance, or the nature of the adjudicative framework, such as that pertaining to the exercise of discretionary power?

Second : Is the proposed appeal of sufficient importance to the field of practice or the state of the law, or to the administration of justice generally, to warrant determination by the Court of Appeal? • does it materially affect the impugned order or decision? • does it raise a new or controversial or unusual issue? • does it raise a new or uncertain or unsettled point of law? • does it transcend the particular in its implications?

The questions raised under each heading are intended to aid in the assessment of the considerations of sufficient merit and importance, and are not meant to be exhaustive. (Emphasis in original) See also: Deer Lodge Hotels Ltd. v Saskatoon (City) , 2015 SKCA 105 , 467 Sask R 134 [ Deer Lodge ]: [ 9 ] It might be asked whether other aspects of the Rothmans approach should also be modified or adjusted for applications

brought under s. 33.1 of the Act . For example, in assessing the merits of a proposed appeal under that section, should the bar be as low as asking whether the appeal is prima facie frivolous or vexatious or other wise destined to fail? These, however, are not matters to be addressed here. V. ANALYSIS [ 10 ] As noted above, the Owners seek leave to appeal the decision of the Committee, not by proposing questions of law as such, but by identifying six alleged errors in the decision.

In my respectful view, only one of those alleged errors is capable of being framed as a question of law that would be a proper basis for an appeal. Let me explain by offering a brief comment on each of the alleged errors that are problematic: • The Committee erred in law by failing to defer to the decision of the [Board] and finding that equity had not been achieved in the subject property assessments – the difficulty with this point is that neither the Board nor the Committee made any meaningful reference to equity in its decision.

More specifically, when it allowed SAMA’s appeal, the Committee did not purport to be acting on the basis of whether equity had, or had not, been achieved by the Board. It is true, of course, that s. 165(3) of The Cities Act provides that “[t]he dominant and controlling factor in the assessment of property is equity”. However, alleging in the circumstances here that the Committee erred by failing to find that equity had not been achieved amounts to throwing the door open to any and every kind of argument about the integrity of the Committee’s decision-making and the merits of the underlying assessment.

This, of course, risks drifting quickly into questions of fact and mixed fact and law. In short, this issue is far too general to be the basis for a grant of leave and it is rooted only tenuously in the Committee’s actual reasoning. • The Committee erred in law or mixed fact and law when they [sic] failed to defer to the decision of the Board that the assessor had made an error of assessment principle and practice in applying the cost approach to the subject property – the first and most self-evident problem here is that this point is expressed as being one of “law or mixed fact and law”.

It does not come within the scope of s. 33.1 of the Act if it involves a question of mixed fact and law. As noted above, that

section limits rights of appeal to questions of law or jurisdiction. On the other hand, even characterizing what the Committee did here as involving a failure to show deference in a way that might be seen as an error of law, I am again concerned that this is a highly generalized way of trying to attack its decision. The Committee did not just “fail to defer” to the decision of the Board, it took issue with the decision of the Board for what it described as two specific reasons.

As explained below, it is more appropriate to focus on those reasons than it is to obscure what the Committee did by treating its decision as a failure to defer to the Board. • The Committee erred in law in defining and applying the principle of equity in mass appraisal assessment – this point is also problematic. The Committee did not purport to define the principle of equity except by way of a reference to some of the leading authorities, a reference that the Owners do not challenge.

Further, except at a high level of abstraction reflecting the notion that every assessment decision is concerned about equity, the Committee Decision was not about equity. • The Committee incorrectly interpreted the Board’s decision with respect to the reasonableness of the assessor applying the cost approach model and thereby did not apply the appropriate standard of review to the Board’s decision – with respect to this point, the Owners suggest the Committee disregarded what they see as six separate considerations. They include such things as: (

a) SAMA’s ability to request information from property owners; (

b) SAMA being entitled to delay assuming the role of assessor until it had collected information and performed required analyses; (

c) its reasonable expectation that SAMA would perform assessments as per the Handbook or provide a principal basis for doing otherwise; and (

d) the inability of the assessor to obtain information in 2017 as a matter essential to the Board’s 2017 decision. The Committee’s “disregard” for such matters is said to have led to a failure on its part to understand the Board’s decision and a failure to show appropriate deference to the Board and thus to an error of law.

In my respectful view, all of this is too muddy to warrant being seen as yielding or revealing a question of law worthy of attracting leave to appeal. • The Committee erred in law when they [sic] failed to act judicially in exercising their [sic] appellate role – this point is defective because it is extremely general and it is not connected in any concrete way to the Committee’s reasoning.

In the circumstances of this case, it is difficult to see what “failed to act judicially in exercising its appellate role” means other than “generally got it wrong”. [ 11 ] All of that said, and as noted, there is one error alleged by the Owners that cannot be dealt with as summarily as the ones I have just reviewed. I refer to: The Committee erred in holding that the Board was bound by a previous decision in a previous assessment year .

This alleged error involves a question of law that engages directly with, and reflects, the actual basis of the Committee’s decision. [ 12 ] As per the extract from its decision set out above at paragraph 4, the Committee said the Board made two “mistakes”. First, at paragraph 50, the Committee said the change in assessor from 2017 to 2018 was not a change of the sort contemplated by s. 165(3.1) of The Cities Act . That

section reads as follows: 165(3.1) Each assessment must reflect the facts, conditions and circumstances affecting the property as at January 1 of each year as if those facts, conditions and circumstances existed on the applicable base date. [ 13 ] On the surface of its reasoning, the Committee appears to have concluded that, because there was no change in “facts, conditions and circumstances” of the properties from 2017 to 2018, the Board was obliged to maintain the assessed values from 2017.

In other words, it would appear that the Committee interpreted s. 165(3.1) as having the effect of precluding a property owner (and perhaps an assessor) who loses an appeal from successfully pursuing another appeal in a subsequent year even if that subsequent appeal involves the presentation of new evidence or new arguments. The notion appears to be that, if the property itself has not changed, the original assessment must stand in subsequent years. [ 14 ] The real issue therefore – the simplest, most central and most direct issue – raised by the Committee’s decision is whether it erred in its

interpretation of s. 165(3.1) of The Cities Act . In my view, that is a question on which leave to appeal should be granted. It appears, on the face of things, to have sufficient merit to warrant consideration by the Court. Moreover, it is a question of broad and recurring significance in the assessment field. The answer to it will be of ongoing and general assistance to the Committee in its work and, of course, to property owners and assessors as well.

[ 15 ] There is only one complication here and that is what the Committee described as its “second” reason for allowing SAMA’s appeal. This is the idea that, to use the words of the Committee, “the Board failed to adequately consider it was open to [SAMA] to use the Cost Approach for Retail properties within a jurisdiction … it is not a mistake by [SAMA] to choose the Cost Approach in this instance” (at para 51). If that is a freestanding and independent reason for allowing the appeal, the Committee’s decision might be sustainable even if leave was granted on a question concerning the

interpretation of s. 165(3.1) of The Cities Act and that question was answered by the Court in the Owners’ favour.

The concern here is that it would not be appropriate to grant leave on a question of law concerning the meaning of s. 165(3.1) if the answer to that question will have no effect on the bottom line of the Committee’s decision. [ 16 ] However, even though the Committee cast its comments about the use of the cost approach as a “second” error on the part of the Board, it went on to tie its observation on that point directly back into the idea that, as per its reading of s. 165(3.1) , there had been no change in “facts, conditions and circumstances affecting the property”.

Immediately after stating that it had been a mistake for SAMA to have used the cost approach, the Committee said, “Given no substantive change to the evidence before it, the Board ought to have carried forward its decision from 2017 to 2018 to uphold the Cost Approach” (at para 51). In this, the Committee seemed to indicate that it was not an error to use the cost approach again in 2018 because there had been no change in the facts, conditions and circumstances affecting the property from what had been the situation in 2017.

It would appear, therefore, that if the question about s. 165(3.1) of The Cities Act is answered on appeal in the Owners’ favour, the Committee’s “second” reason for its decision may not sustain the result it arrived at. This, of course, is not a matter for me to resolve. It is something that would ultimately have to be addressed and answered by the panel hearing an appeal. However, at a minimum, there seems to be enough credit to this way of seeing the Committee’s reasoning that the so-called second “mistake” that it identified should not stand in the way of granting leave on the s. 165(3.1) issue. VI.

CONCLUSION [ 17 ] As explained above, I am persuaded that the Owners should be granted leave to appeal on the following question: Did the Committee err in its

interpretation of s. 165(3.1) of The Cities Act ? [ 18 ] Costs are reserved to the discretion of the panel that hears this appeal. “Richards C.J.S.” Richards C.J.S.