Walmart Canada Corp. Appellant (Respondent) v. City of Estevan, City of Weyburn, 2021 SKCA 157

Court of Appeal for Saskatchewan Docket: CACV3439 Citation: Walmart Canada Corp. v Estevan (City), 2021 SKCA 157Date: 2021-12-02 Between:Walmart Canada Corp.Appellant (Respondent)AndCity of Estevan, City of Weyburn and Saskatchewan Assessment Management AgencyRespondents (Appellants)Before: Richards C.J.S., Jackson and Barrington-Foote JJ.A.Disposition: Appeal allowedWritten reasons by: The Honourable Chief Justice RichardsIn concurrence: The Honourable Madam Justice Jackson The Honourable Mr.

Justice Barrington-FooteOn appeal from: 2019 SKMB 35 , 2019 SKMB 035, ReginaAppeal heard: October 8, 2021Counsel: Leonard Andrychuk, Q.C., and Allison Graham for the Appellant Dona-Lynn Morley for the Respondents Richards C.J.S. I. INTRODUCTION [1] This is an assessment appeal.

It concerns the “market adjustment factor” [MAF], a variable used to account for certain kinds ofobsolescence and losses or gains in the value of a building when applying what is known as the cost approach for valuing property. [2] A board of revision [Board] determined that Walmart Canada Corp.’s store in Estevan [Building] should be assessed by wayof the cost approach and that, for such purposes, a “neutral” MAF of 1.0 should be employed. It took this approach because, in its view,there were no sales of properties comparable to the Building that could be used to calculate a MAF.

The Saskatchewan AssessmentManagement Agency [SAMA], the assessor, appealed that decision to the Assessment Appeals Committee of the Saskatchewan MunicipalBoard [Committee]. [3] The Committee took no issue with the Board’s conclusion that the cost approach should be used. However, it found that a“neutral” MAF was not acceptable and did not meet the applicable legislative requirements. The Committee remitted the question of theproper assessment for the Building to SAMA to be determined by employing a MAF based on property sales that SAMA had broughtforward.

It did this while indicating that, even though the sales were “not the best in terms of comparability”, a MAF was required andtherefore those sales had to be used (at para 42). [4] As explained below, the Committee erred by proceeding on the understanding that a MAF must be employed when the costapproach is used to determine the assessed value of property. A MAF can be applied only if there are sales of comparable properties toallow for its calculation.

As a result, this matter must be referred back to the Committee in order for it to consider the issue of thecomparability of the properties said by SAMA to be appropriate for developing a MAF. II. RELEVANT ASPECTS OF THE ASSESSMENTFRAMEWORK [5] It may be useful to begin by underlining some of the provisions of The Cities Act, SS 2002, c C-11.1 [Act], that are central tothis appeal. [6] As per ss. 164(1) and 165(1), respectively, all property in a city is subject to assessment and assessments are to be preparedusing only mass appraisal.

Mass appraisal, as provided in s. 163(f.3), means the process of preparing assessments for a group of properties“using standard appraisal methods, employing common data and allowing for statistical testing”. [7]

Section 164.1(2) of the Act provides that the assessment of non-regulated properties, such as the Building, “shall bedetermined according to the market valuation standard” [MVS]. [8] The MVS is defined as follows in s. 163(f.1): (f.1) “market valuation standard” means 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 agency[.] [ 9 ] Section 165(3) indicates that “[t]he dominant and controlling factor in the assessment of property is equity” and s. 165(5) then goes on to set out how equity is realized for a non-regulated property:

(5) Equity 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. [ 10 ] These basic principles are operationalized by SAMA for non-regulated properties through its Market Value Assessment Handbook and its Cost Guide.

A word about the income and cost approaches to valuation provided for in those publications is necessary in order to set the stage for an examination of the particulars of this appeal. [ 11 ] The income approach values a property based on the present worth of its anticipated future income. In broad terms, this requires the assessor to estimate the income that the property will generate over time and to then capitalize that income stream. Capitalization rates are calculated by examining the sale prices and net operating income of properties in a sales array.

The capitalization rate for any particular property is calculated by dividing its net operating income by its sale price. Thus, for example, if the net operating income of a property is $100,000 and it sells for $1,000,000, the capitalization rate for that building is 10% ($100,000 / $1,000,000 = 10%). The assessor determines the median of the individual capitalization rates in the sales array and applies that median to the estimated net operating income of the property in issue to generate an assessed value.

See: CP Reit S Real Estate Limited v Saskatoon (City) , 2021 SKCA 100 at para 6 [ CP Reit ]. [ 12 ] The cost approach to valuation, on the other hand, focusses on bricks and mortar. It is based on the assumption that a purchaser would not pay more to acquire a property than it would pay to buy a similar plot of land and construct a similar building. The Cost Guide sets out how buildings are to be valued using this approach. The process centres around the calculation of replacement cost new less depreciation [RCNLD].

This involves determining the replacement cost of the building and then reducing that amount to account for various factors including physical deterioration and functional obsolescence. The MAF is then applied to adjust the RCNLD. Page 1 of

Chapter 3.10 of the Cost Guide explains the MAF in this way: The market adjustment factor accounts for all economic obsolescence and any loss or gain in value of the building or structure due to any difference in replacement costs and any difference in the amount of physical deterioration or functional obsolescence, that have not already been taken into account. [ 13 ] The precise particulars of how a MAF is determined are not important to the resolution of this appeal.

It is sufficient to note that the Cost Guide permits an assessor to use either a sales comparison method or a comparable neighbourhood method for this purpose. The sales comparison method is the approach that is in issue here. The Cost Guide says, at page 1 of

Chapter 3.10, that the development of a MAF using this approach begins with the identification of “improved properties with comparable buildings or structures that are sales”. [ 14 ] With this brief overview of the framework of assessment principles and techniques bearing on the issues at play in this case, I turn now to the specifics of Walmart’s appeal. III. BACKGROUND [ 15 ] The Building is a “big box” retail store in Estevan. SAMA employed the income approach to establish a valuation of $15,228,800.

To develop the applicable capitalization rate, SAMA used 31 sales from the City of Estevan, the Rural Municipality of Estevan, Weyburn, Yorkton and Moose Jaw. These sales included offices, a spa, a bank, a fast-food restaurant, warehouses and a shed. None were big box retail stores. [ 16 ] Walmart appealed the assessment of the Building to the Board. It was agreed that the appeal would be the lead case for four separate properties, the others being a Walmart store in Weyburn, a Canadian Tire store in Weyburn and a Canadian Tire store in Estevan.

It was understood that the Board’s decision about the Building would apply to all four stores. [ 17 ] Walmart argued that SAMA had erred by using the income approach. It contended that the buildings used to calculate the capitalization rate were not comparable to the Building and, consequently, that the income approach was not appropriate. It submitted that the Building should be assessed using the cost approach, with a “neutral” MAF of 1.0. [ 18 ] In response, SAMA argued that it had properly employed the income approach.

However, as an alternative, it contended that Walmart’s determination of the assessed value using the cost approach involved errors. One of those alleged errors was that the value of the Building had not been adjusted by a MAF. In this regard, SAMA identified and relied on six sales that it set out in appendix K of its brief [Appendix K sales]. Those sales yielded a MAF of 1.01 and an assessed value for the Building of $9,202,500. In reply to this line of argument, Walmart put forward additional information about the Appendix K sales and argued that the properties involved were not comparable to the Building.

They included a retail “supercenter” but also much smaller buildings as well. [ 19 ] The Board allowed Walmart’s appeal. It held that the “subject properties are substantially dissimilar with properties used by [SAMA] to develop an assessment based on the Income approach” (at para 24). As a result, it found that the most appropriate method of assessment was the cost approach.

The Board then went on to say that, as there was “no market evidence to support the use of the Income approach due to lack of comparable properties”, there was also “no market evidence to support a MAF other than the neutral MAF of 1.0 suggested by [Walmart]” (at para 26). [ 20 ] SAMA then launched an appeal to the Committee. Its central position was that the Board had erred by applying the cost approach. It also contended that the MVS required the application of a MAF and that, if the cost approach was used, the Board should

have employed the Appendix K sales for that purpose. By way of a bottom line, SAMA argued that the Committee should endorse the income approach and reinstate the assessed value of the Building as per its original determination under that approach. [ 21 ] The Committee held that the Board had made no reviewable error in deciding to employ the cost approach. However, it found that a “neutral” MAF was not acceptable practice and that the Board’s decision to order the use of a neutral MAF was “contrary to the principles of mass appraisal and does not meet the requirements of the MVS” (at para 26).

In the end, the Committee remitted the assessment back to SAMA with a direction that it perform an analysis based on the cost approach and that, in so doing, it use the Appendix K sales to determine the applicable MAF. By way of conclusion, it wrote, “The Committee acknowledges the sales used are not the best in terms of comparability; however, the six sales used are the only ones available and there is a requirement that a MAF must be established to comply with legislation” (at para 42). IV. ISSUES [ 22 ] Walmart was granted leave to appeal to this Court on two grounds: (

a) Did the Committee err in the

interpretation of s. 163 (f.1) and s. 165(5) of the Act when it found that the MVS requires a MAF to be applied to all properties valued under the cost approach? (

b) Did the Committee err in the

interpretation of s. 163 (f.1) and s. 165(5) of the Act when it found that the MVS and equity are met by applying a MAF to properties that are not comparable to the properties in the MAF group if they are “the only evidence of market conditions”? V. ANALYSIS A. Did the Committee err in its

interpretation of the Act ? [ 23 ] The first question on which leave was granted asks whether the Committee erred in the

interpretation of s. 163 (f.1) and s. 165(5) of the Act when it found that the MVS requires a MAF to be applied to all properties when using the cost approach. [ 24 ] Walmart submits that the Committee erred because, in its view, a MAF can be used only if there are sales of property sufficiently similar to the property in issue to allow for the calculation of a MAF.

It rejects the notion that the cost approach must involve the application of a MAF, regardless of the comparability of the properties underpinning the sales used to develop it. [ 25 ] Notwithstanding the position it took before the Committee, SAMA now acknowledges that a MAF cannot be developed when there are no sales of sufficiently comparable properties to use in calculating it. SAMA accepts that the Committee erred at the level of principle by holding that a MAF must be applied in all situations where the cost approach is employed.

At the same time, SAMA submits there should be only limited situations where it will not be possible to develop a MAF. [ 26 ] I agree with Walmart and SAMA that the Committee erred by proceeding on the basis that the application of a MAF is a mandatory part of the valuation of a property using the cost approach. Let me briefly explain why. [ 27 ] To begin, it is worth noting that the Act itself says nothing about the MAF in any express way. It sets out general assessment principles only and does not descend into the particulars of how an assessed value is to be calculated.

Those particulars are developed through SAMA’s Manual, Handbook, and Cost Guide. That said, two key features of the Act nonetheless point irresistibly to the conclusion that a MAF can be developed only when there are sales of similar properties to use for that purpose. [ 28 ] The first such feature is the definition of MVS, the fundamental underpinning of the notion of equity as it relates to the assessment of non-regulated property.

Section 163(f.1)(iii), quoted above, says the MVS is achieved if, inter alia , the assessed value of a property reflects typical market conditions “for similar properties”. It is readily apparent that this standard cannot be satisfied if a MAF is determined using properties that are not similar. It is unclear why the Committee concluded otherwise. [ 29 ] The second relevant feature of the Act is s. 165(5) , also quoted above.

It provides that equity, the dominant and controlling factor in the assessment of property, is achieved for non-regulated properties by applying the MVS so that assessments bear a fair and just proportion to the market value of “similar properties” as of the base date. It is self-evident that equity, so defined, cannot be achieved if non-similar properties are relied on to calculate a MAF. [ 30 ] I observe, as well, that the requirement of comparability is reflected in the provisions of the Cost Guide that spell out how a MAF is to be calculated.

As noted, the sales comparison method, the approach in issue here, provides in direct terms that the relevant calculation must begin by identifying improved properties “with comparable buildings or structures”. This comes as no surprise given the fundamental role that comparability plays in the assessment regime overall. [ 31 ] I also note that, by virtue of its approach to the valuation of non-regulated “special purpose” properties, SAMA has effectively recognized that the use of a MAF is not always necessary when the cost approach is employed.

Special purpose properties are those with unique physical designs, special construction materials or unusual layouts that restrict their usefulness to the purpose for which they were built. The Special Purpose Properties Valuation Guide recommends, at page 8, that the cost approach should be used for their valuation. In this regard, the Guide, at page 11, directs the calculation of replacement cost new [RCN] and deductions from RCN to account for physical deterioration on the basis of age and the condition of improvements to arrive at RCNLD.

The Guide does indicate that, if present, “typical functional and external obsolescence” should be deducted from RCNLD. The overlap, if any, between what might be covered by this last adjustment, as compared to a MAF adjustment, is perhaps not entirely clear. However, the point for present purposes is that the assessment of special purpose properties does not involve the application of a MAF and yet there is no suggestion that this is somehow inconsistent with the MVS.

[ 32 ] Thus, overall, it is readily apparent that the Committee erred in proceeding as it did. There is no requirement, driven by the terms of the Act or otherwise, that the employment of the cost approach to valuation must involve the application of a MAF. To the contrary, a MAF is to be applied only if there are sales of comparable properties that can be used in its calculation. [ 33 ] In saying all of this, I appreciate, of course, that comparability can be a somewhat challenging concept, one that has its own meaning in the assessment world.

As explained in T N C Mall Property Holdings Inc. v Moose Jaw (City) , 2020 SKCA 99 at para 40 , 451 DLR (4th) 671 [ TNC Mall ], “by definition, comparability is a relative concept. Properties are rarely ‘comparable’ in the sense of being identical. In almost all circumstances, they are simply more or less similar with reference to a variety of relevant characteristics including use, building size, construction style, condition, site size, location and so forth”.

Thus, the operative question is not whether the properties used to calculate a MAF are identical to the building being assessed but, rather, whether they are sufficiently comparable in relevant respects to warrant the development of a MAF. [ 34 ] By way of a closing point on this issue, I note that the Board was of the view that a lack of sales of comparable properties means that a “neutral” MAF of 1.0 should be employed. This is a conceptually flawed way of looking at the situation. A lack of comparable properties means that it is not possible to develop a MAF and hence that there is no MAF at all.

It does not mean that the MAF should be given a value of 1.0. B.

Did the Committee err by finding that non-comparable properties could be used to develop a MAF? [ 35 ] The second question on which leave was granted asks whether the Committee erred when it found that the MVS and equity were realized by applying a MAF to properties that are not comparable to the properties in the MAF group if they are “the only evidence of market conditions”. [ 36 ] This issue arises because, as Walmart reads the Committee’s decision, the Committee ordered that SAMA develop and apply a MAF based on the Appendix K sales even though the properties underlying those sales are not comparable to the Building.

Walmart contends that, because the Committee concluded a MAF had to be applied, it was prepared to direct SAMA to assess the Building using an Appendix K-based MAF, even though the Appendix K sales were not comparable.

For its part, SAMA suggests that the Committee should be understood to have held that the Board acted unreasonably in finding the Appendix K sales to be non-comparable with the result that the Committee did not, in fact, direct the development of a MAF based on non-comparable properties. [ 37 ] In order to sort through these competing arguments, it is necessary to return to the particulars of what both the Board and the Committee decided about the comparability of the properties involved in the Appendix K sales. [ 38 ] The Board, as it will be recalled, was faced with a situation where Walmart had argued that (

a) the assessment performed by SAMA using the income approach should be set aside because the properties involved in the sales used to calculate the capitalization rate were not comparable to the Building, and (

b) the cost approach, with a “neutral” MAF of 1.0 should be employed. In response, SAMA had contended that (

a) the income approach had been properly applied, and (

b) if the cost approach was used, the Appendix K sales should be the basis for developing the MAF.

In reply, Walmart had also put forward submissions to the effect that the Appendix K sales were not comparable to the Building and therefore could not be used to calculate the MAF. [ 39 ] By way of a response to all of this, the Board offered a very terse analysis wherein, in relevant part, it wrote as follows: [24] The Board agrees with the Appellant, as well as previous decisions of the SMB-AAC and SKCA, that the subject properties are substantially dissimilar with properties used by [SAMA] to develop an assessment based on the Income approach.

In the result, and while not necessarily ideal, the Board finds the most appropriate method of assessment is the Cost approach. … [26] As there is no market evidence to support the use of the Income approach due to lack of comparable properties, there would also be no market evidence to support a MAF other than the neutral MAF of 1.0 suggested by the Appellant.

This is consistent with the neutral MAF of 1.0 SAMA currently adopts in their assessment of large industrial properties where there is no market evidence to support the application of a MAF due to the unique nature of the property and lack of evidence from comparable properties. (Emphasis added) [ 40 ] In my view, although the meaning of paragraph 26 is perhaps not especially clear, it must be understood as saying, in effect, that the properties involved in the Appendix K sales were not sufficiently comparable to the Building and hence could not be used to calculate a MAF.

This is because SAMA had expressly addressed the MAF issue in its submissions and had put the Appendix K sales squarely before the Board for the purpose of demonstrating what a properly calculated MAF would look like. For its part, Walmart had taken issue with all of this in a “rebuttal” submission and had advanced various arguments as to why the properties underlying the Appendix K sales were not comparable to the Building and therefore as to why they could not be used to develop a MAF.

Notably, one of the properties used to calculate the MAF had also been used to determine the capitalization rate. [ 41 ] Against the foregoing background, it is difficult to imagine that the Board simply drove past Appendix K or ignored it on the basis that, if the sales used to develop the capitalization rate were not comparable to the Building, it followed that the properties underlying the Appendix K sales being advanced in relation to the MAF issue were somehow ipso facto also not comparable.

In any event, even if the Board can be taken as having done no more than reason that the lack of similarity between the Building and the properties used to develop the capitalization rate somehow meant that the properties used to calculate the MAF were also dissimilar, it nonetheless made a finding about the comparability of the MAF properties. Thus, even though paragraph 26 could have been worded more transparently, I take the Board to have found that the properties underpinning the Appendix K sales were not comparable to the Building.

[ 42 ] All of that noted, this is an appeal from the Committee’s decision and it is therefore necessary to look carefully at how it handled, or did not handle, the comparability issue. As per City Centre Equities Inc. v Regina (City) , 2018 SKCA 43 at paras 98–101 , it was obliged to review the Board’s findings of law and mixed fact and law using the reasonableness standard. [ 43 ] Like the Board’s decision, the Committee’s decision is not entirely clear on this point. The relevant part of its brief analysis is as follows: [42] The Committee allows the appeal for Issue a).

We believe the Board made a mistake in applying a “neutral” MAF of 1.0. Without the application of a properly determined MAF, there is no adjustment to reflect market conditions and meet the requirements of the MVS. We remit the matter to [SAMA] and direct [SAMA] to perform an analysis based on a Cost Approach and use the sales advanced in SAMA’s submission to the Board on page 151 (Appendix K – Global Cost MAF Sales and Statistical Tests).

The Committee acknowledges the sales used are not the best in terms of comparability; however, the six sales used are the only ones available and there is a requirement that a MAF must be established to comply with legislation. (Emphasis added) [ 44 ] I am hard pressed to understand paragraph 42, or the Committee’s decision overall, in the manner suggested by SAMA, i.e., as meaning that the Committee held that the Board had acted unreasonably by finding the properties involved in the Appendix K sales to be not comparable to the Building and had remitted matters for the determination of a MAF on that basis.

Rather, the best reading of paragraph 42 is that the Committee, acting on its determination that a MAF was mandatory, remitted the assessment to SAMA and directed it to proceed on the basis of the only data available – the Appendix K sales. I do not take the Committee to have considered, one way or the other, the question of whether the properties underpinning those sales were sufficiently comparable to the Building to warrant the development of a MAF. For it, comparability was not a live issue. There had to be a MAF. The Appendix K sales were all that was available to determine a MAF – end of story.

Thus, in other words, the Committee simply failed to address the reasonableness of the Board’s conclusion about the comparability of the Building and the properties involved in the Appendix K sales. [ 45 ] Returning to the question on which leave was granted, the Committee did not hold in any direct or express way that the MVS and equity can be realized by applying a MAF derived from non-comparable properties so long as those non-comparable properties are the only ones available.

However, the Committee did proceed as if this is the case because it directed SAMA to develop a MAF based on the Appendix K sales without first considering the reasonableness of the Board’s assessment of the comparability of the properties underpinning those sales and the Building. That was an error of law. [ 46 ] Before concluding on this issue, it is necessary to mention TNC Mall . SAMA relies on that decision to suggest that question of whether the Appendix K sales concern properties that are similar to the Building is effectively or ultimately beside the point.

It argues that, because the Appendix K sales were all that was available for calculating a MAF, they had to be used. In my view, that position represents a misreading of TNC Mall . It is readily distinguishable from the situation at hand. [ 47 ] TNC Mall concerned the valuation of a mall in Moose Jaw. It was assessed using the income approach. The central question before the Court concerned the comparability of the mall and the properties used to determine the applicable capitalization rate.

In addressing that issue, the Court said this: [41] …In sustaining SAMA’s approach to the capitalization rate issue, the Committee did no more than recognize the unavoidable practical reality that, if there are no sales of closely comparable properties to use in calculating a capitalization rate, an assessor must find another option by using other properties. To repeat, SAMA faced a practical dilemma: there were not enough sales of enclosed malls to allow it to calculate a capitalization rate using only such sales.

At the same time, it could not decline to assess the Mall or walk away from the assessment challenge it faced. No one, including TNC, suggests this was an option. As a result, SAMA had to find a way forward and it did so by applying the general commercial property capitalization rate. That rate was calculated by reference to the sales of properties that were obviously different than the Mall but, at the same time, that had more in common with it and were more comparable to it than properties such as those of a residential, recreational or industrial character.

Significantly, TNC does not suggest that there were other kinds of non-mall properties that SAMA could or should have used to determine a capitalization rate for the Mall. [ 48 ] Thus, in TNC Mall , the assessor was obliged to use the sales of properties that were not clearly comparable to the mall to calculate a capitalization rate because a capitalization rate was necessary to the determination of an assessed value and the sales of properties in issue were all that was available. Here, the situation was very different.

As explained above, SAMA did not have to calculate a MAF in order to arrive at an assessed value for the Building. Indeed, it was entitled to apply a MAF only if there were properties sufficiently comparable to the Building to warrant such a calculation. [ 49 ] Thus, to repeat, the Committee erred by directing SAMA to calculate a MAF using the Appendix K sales without first addressing the reasonableness of the Board’s decision about the similarity of the properties underlying those sales and the Building. VI.

THE APPROPRIATE REMEDY [ 50 ] Walmart suggests that, if the Court finds, as I have, that the Committee failed to address the comparability issue, the Court itself should face into the particulars of that question and determine whether the properties involved in the Appendix K sales are sufficiently similar to the Building to warrant the development of a MAF. In this regard, SAMA relies on CP Reit . In that case, the Court found that the Committee had erred in its

interpretation and application of the MVS and had failed to address an issue concerning the similarity of properties used for certain assessments in the City of Saskatoon. Relying on its powers under s. 12(1) of The Court of Appeal Act, 2000 , SS 2000, c C-42.1 , to make any decision that the Committee could have made, the Court then went on to consider the properties in issue and make a finding about their similarity.

It excluded the non-comparable properties from the relevant sales array and made the appropriate reduction in the capitalization rate. [ 51 ] In my view, it would not be appropriate to act on Walmart’s invitation in this case and undertake a consideration of the comparability of the properties underlying the Appendix K sales to the Building. CP Reit is careful to say that the Court “may” exercise

the Committee’s remedial powers under s. 226(1) (

a) of the Act (at para 37). It does not suggest that the Court “must” exercise those powers and it expressly states that, when the Court is “not equipped or prepared for any reason to correct the errors [itself]”, the matter in issue can be remitted to the assessor (at para 37). Also, of course, it could be remitted to the Committee in appropriate circumstances. [ 52 ] In short, CP Reit does not stand for the proposition that the Court should make a practice of undertaking the kinds of analysis that would normally be the responsibility of the Committee (or the assessor as the case might be).

The Act contemplates that the Court should concern itself with questions of law. There will be situations where it can properly choose to go further afield but those are likely to be the exception, not the norm. [ 53 ] I would note, as well, that the decision-making in relation to comparability that the Court undertook in CP Reit was relatively straightforward.

The following excerpts from the discussion about the similarities between the Midtown Plaza and the other properties in issue serves to make the point: [59] …Common sense dictates that an entirely different type of buyer would be interested in acquiring the Midtown Plaza (which sold for an adjusted sales price of $375,491,609) than the local doughnut shop.

Indeed, pointing to the City’s own assessment practices, the Taxpayer observed that, for rent modelling purposes under the SC Guide , City assessors treat the Midtown Plaza as distinct vis-à-vis the four other shopping centres in Saskatoon. [60] …in the 2019 assessment year, a City assessor determined that Midtown Plaza was not similar enough to other enclosed malls in Saskatoon to reliably estimate the [net operating income] of those other malls. … [61] In this case, the Taxpayer’s evidence, which is not in dispute, indicated that Midtown Plaza had 340,878 ft 2 of department store space, 50,465 ft 2 of secondary anchor space, 5,183 ft 2 of food court space, and 239,901 ft 2 of commercial retail space.

The mall’s total leasable area was 637,227 ft 2 in 2013 and 638,234 ft 2 in 2019, not including a 12-story tower with 94,629 ft 2 of office space and an above- and below-ground parking lot. These are physical “value-generating” characteristics that undoubtedly set Midtown Plaza apart from all other shopping centres and all commercial retail properties in Saskatoon, as a City assessor seems to have recognised when assessing it. Strikingly, the mall generated $1,978,792.77 in revenue from the office tower and parking lot in 2013 and $2,930,412.08 in 2019.

No commercial property in the Group 2 Assessment Array has anywhere near that kind of rental income potential from non-retail space. (Emphasis in original) [ 54 ] The situation with respect to the Affinity Head Office, the second property considered by the Court, was perhaps not quite so clear cut but, nonetheless, the Court had little difficulty dealing with the issue of similarity raised by that property.

It found that the physical characteristics of the Affinity Head Office and the head office functions carried out from that property were distinguishing characteristics vis-á-vis standard retail commercial properties. Also, the capitalization rate derived from the Affinity Head Office sale was a clear outlier in the sales group in issue, suggesting that the disparate use of that property as office space was a notable point of dissimilarity.

Significantly, the Court found that the City had not engaged on the comparability issue and had failed to address its burden of establishing that, notwithstanding the prima facie comparability error committed by the assessor in relation to the Affinity Head Office, the assessments in issue nonetheless met the MVS and achieved equity. [ 55 ] Further, in CP Reit , the appellant taxpayer had provided the Court with the calculations, that were unchallenged by SAMA, as to the particulars of what the capitalization rate should be if the comparability analysis unfolded as it had suggested.

In other words, the bottom line of the remedial picture was entirely clear and not in dispute. [ 56 ] The comparability issue in the case at hand focusses, of course, on the six properties that underpin the Appendix K sales. Walmart says those properties are not similar to the Building. It appears to accept that, like the Building, all of them have a commercial retail use but, that concession made, it emphasizes that they are significantly smaller than the Building. The largest is 74,090 square feet as opposed to the 100,748 square feet of the Building but the smallest is only 768 square feet.

Walmart also points to the “rebuttal” submission that it filed with the Board. In this regard, it emphasizes the disparate nature of the properties by describing them as including “an old house converted to office use for a nursery”, a “stripped down ‘Payless Shoe Store’”, and a “small white industrial building”. [ 57 ] For its part, SAMA submits that the properties underlying the Appendix K sales are comparable to the Building in terms of type (commercial retail), age (with the effective year built being 1990 or later), and location (Saskatchewan cities where SAMA performs the assessments).

It says, in effect, that these properties are “sufficiently comparable” to sustain a MAF calculation. SAMA further suggests that property size does not have the significance suggested by Walmart because “the individual MAFs for each property do not go in order of size; the largest property of the six does not have the lowest MAF and the second largest sale doesn’t have the second lowest MAF”. SAMA also points to its statistical testing of the MAF calculated by using the Appendix K sales and says those results are very good.

Finally, SAMA contends there are a number of factual errors in Walmart’s rebuttal material including, for example, a suggestion that a building described by Walmart as being “industrial” is in fact retail. [ 58 ] In my respectful view, the Court should not attempt to sort out the merits of these competing arguments. They fall quintessentially within the scope of the institutional mandate of the Committee. VII. CONCLUSION [ 59 ] Walmart’s appeal is allowed.

The question of the reasonableness of the Board’s finding about the dissimilarity between the Building and the properties underpinning the Appendix K sales is referred back to the Committee. The Committee is to consider that issue in the course of deciding whether it is possible, given the evidence at hand, to develop a MAF, and, if it is possible, the proper value of the MAF. [ 60 ] Walmart is entitled to costs in the usual way.

“Richards C.J.S.” Richards C.J.S. I concur. “Jackson J.A.” Jackson J.A. I concur. “Barrington-Foote J.A.” Barrington-Foote J.A.