Prospect Properties Inc. Appellant (Respondent) v. City of Moose Jaw and Saskatchewan, 2022 SKCA 73

Court of Appeal for Saskatchewan Docket: CACV3757 Citation: Prospect Properties Inc. v Moose Jaw (City) , 2022 SKCA 73 Date: 2022-06-22 Between: Prospect Properties Inc. Appellant (Respondent) And City of Moose Jaw and Saskatchewan Assessment Management Agency Respondents (Appellants) Before: Ottenbreit, Caldwell and Schwann JJ.A. Disposition: Appeal dismissed Written reasons by: The Honourable Mr. Justice Caldwell In concurrence: The Honourable Mr.

Justice Ottenbreit The Honourable Madam Justice Schwann On appeal from: 2020 SKMB 53 Appeal heard: January 18, 2022 Counsel: Nicholas Horlick for the Appellant Troy Baril for the Respondent Caldwell J.A. I. OVERVIEW [ 1 ] Prospect Properties Inc. appeals from the Saskatchewan Municipal Board Assessment Appeals Committee [Committee] decision in Moose Jaw (City) v Various (Altus) , 2020 SKMB 53 [ Committee Decision ] .

The Committee overturned the decision in Prospect Properties Inc. v Moose Jaw (City) (15 October 2019) Moose Jaw, Appeal No 19C0067 (Sask Board of Revision) [ Board Decision ], under which the board of revision for the City of Moose Jaw [Board] had allowed Prospect’s appeal against the 2019 assessment of its hotel under The Cities Act , SS 2002, c C-11.1 , by the Saskatchewan Assessment Management Agency [SAMA]. [ 2 ] Prospect is the lead appellant for 13 owners of hotel properties located in Moose Jaw.

The Board set aside the 2019 assessments finding that SAMA had “used properties that were not compatible to the subject property” when determining the capitalisation rate [Cap Rate] under the income approach to valuation ( Board Decision at para 24).

It found that SAMA’s use of the general commercial property Cap Rate [GCCR] in Moose Jaw, which had been calculated from sales that did not include hotel properties, meant the assessments had failed to meet the market valuation standard and that equity had not been achieved. [ 3 ] Following an appeal by the City of Moose Jaw, the Committee held that the Board Decision was unreasonable. It found that the Board had erred when it concluded that there were sufficient sales of hotels to calculate a Cap Rate.

The Committee also said the Board had erred by failing to review SAMA’s decision to utilise the “ratio comparison method” [RCM] under the “comparable neighbourhood method” [CNM] in its preparation of the 2019 assessments. Lastly, the Committee said the Board had erred by using a Cap Rate that was based on five province-wide hotel sales to reassess the subject hotels because that remedy had not been raised in Prospect’s notice of appeal to the Board. [ 4 ] On April 5, 2021, Ryan-Froslie J.A. granted leave to Prospect to appeal against the Committee Decision on four questions of law: (

a) Did the Committee err in law by misapplying the applicable standard of review to the Board’s findings of fact? (

b) Did the Committee err in law by disregarding relevant evidence or mischaracterizing evidence in its factual determinations? (

c) Did the Committee err in law by overturning the Board’s conclusion that the approach taken by [SAMA] had violated the requirement of comparability such that the assessments did not meet market value standard or achieve equity? (

d) Did the Committee err in law by concluding the Board had no authority to grant the remedy it did? [ 5 ] In answering the first three of these questions, I find no error of law on the part of the Committee. While I conclude that the Committee erred in law when it held that the Board lacked the authority to grant the remedy it had granted, the appeal from the Committee Decision cannot be allowed on that basis. I would, therefore, dismiss the appeal with costs to the City. II. BACKGROUND A. 2019 Assessments [ 6 ] The subject hotel properties are non-regulated properties that SAMA assessed in 2019 using the income approach to valuation.

The Market Value Assessment in Saskatchewan Handbook , ver 3.0 (Regina: SAMA, 2012) [ Handbook ], describes the basic theory for assessing hotels under the income approach in these terms (Ch 11 at 4 [s. 2.2]): Because hotels are developed, bought and sold on the basis of expected income, the income approach to value reflects the manner in which the market views these properties. The theory behind the income approach to value is that a property’s value reflects the present worth of anticipated or forecasted future benefits from the real estate.

As such, the income approach analyses the income and expenses from a hotel attributable to the real estate and converts it into an estimate of current value. Since the income approach applies well in a mass appraisal environment, the following recommendation is made: The income approach is recommended for the valuation of hotel properties for assessment purposes. [ 7 ] Under the income approach, assessors estimate market value based on a property’s net operating income [NOI] and a Cap Rate derived from sales of similar properties (i.e., market value = NOI ÷ Cap Rate).

A Cap Rate is calculated by dividing the NOI of a property that has sold by its sale price (i.e., Cap Rate = NOI ÷ sale price). Assuming NOI is a constant, this means a lower Cap Rate will produce a higher estimate of market value. [ 8 ] In this case, since there were no hotel sales in Moose Jaw in the relevant period, SAMA used the CNM to calculate a Cap Rate to apply in the 2019 assessment of the subject hotels.

Assessors typically employ the CNM to calculate a market adjustment factor [MAF] under the cost approach to valuation, although SAMA has used it to calculate a Cap Rate under the income approach to valuation (see, for example: TNC Mall Property Holdings Inc. v Moose Jaw (City) , 2020 SKCA 99 , 451 DLR (4th) 671 [ TNC Mall ]).

To briefly explain, where an assessor has insufficient sales data from the subject neighbourhood to determine its MAF, the CNM provides one way to extrapolate a MAF for that neighbourhood from sales data of comparable properties in comparable neighbourhoods (see SAMA’s 2019 Cost Guide , ver 1.1 (Regina: SAMA, 2019) Ch 3 at 2 [ s. 3.10 ] [ Cost Guide ]). The Cost Guide identifies two methods for doing this, namely, the “direct comparison method” [DCM] and the RCM.

SAMA chose to use the RCM in this case. [ 9 ] Adapting the RCM to the income approach, assessors calculate the ratio between the GCCR in a comparable neighbourhood and the Cap Rates for comparable properties that have sold in that neighbourhood. They then adjust the GCCR in the subject neighbourhood by multiplying it by that ratio to arrive at a Cap Rate for the comparable properties in the subject neighbourhood.

The idea is that, by comparing ratios based on GCCRs and Cap Rates from comparable sales, the RCM accounts for local differences in market influences, which are not accounted for under the DCM because it would directly compare Cap Rates. [ 10 ] For the 2019 assessments, SAMA identified five sales of hotels in Saskatchewan cities—Melville (2), Melfort (1), Yorkton (1), and Estevan (1).

It stratified those sales into two groups based on whether the general commercial properties in each city had been assessed under the cost approach to valuation (Melville and Melfort) or the income approach to valuation (Yorkton and Estevan). SAMA also grouped the sales in Yorkton and Estevan together due to the comparative size of the cities (over 10,000 in population), their similar GCCRs, and the similarity of their economic conditions.

The two sales in the Yorkton/Estevan neighbourhood produced a mean hotel Cap Rate of 10.66%, which would have been the Cap Rate for hotels in Moose Jaw under the DCM. [ 11 ] SAMA chose to use the RCM over the DCM because, although it found that Yorkton and Estevan were comparable neighbourhoods, it saw differences in the marketplaces for properties in those cities versus Moose Jaw. To SAMA, the differences were manifested through the GCCRs—i.e., Yorkton (8.94%), Estevan (8.40%) and Moose Jaw (6.61%).

In plain language, this means that SAMA chose to use the RCM to reconcile the weaker economic conditions of Yorkton and Estevan with the stronger conditions of Moose Jaw.

SAMA applied the RCM in this way: Yorkton: 8.94% GCCR 10.63% hotel Cap Rate 10.63 ÷ 8.94 = 1.19 ratio of hotel Cap Rate to GCCR Estevan: 8.40% GCCR 10.70% hotel Cap Rate 10.70 ÷ 8.40 = 1.27 ratio of hotel Cap Rate to GCCR Neighbourhood: Yorkton and Estevan (1.19 + 1.27) ÷ 2 = 1.23 mean ratio Moose Jaw: 6.61% GCCR 6.61% x 1.23 = 8.14% Cap Rate for Moose Jaw hotels [ 12 ] When SAMA tested this calculation, it found the assessment model produced an assessment-to-sales ratio of 1.00, with a coefficient of dispersion of less than 13. B.

Appeal to the Board [ 13 ] In its appeal to the Board, Prospect alleged that SAMA had improperly modified the RCM formula set out in the Cost Guide . It argued that SAMA had erred when calculating the Moose Jaw hotel Cap Rate because it had used the Moose Jaw GCCR, which was derived from property sales that did not include properties similar to hotels. Prospect submitted that, by altering the RCM formula, SAMA had decided it would be acceptable to use a single sale from each of Yorkton and Estevan and that this did not allow for statistical testing.

It argued that, in each of these ways, SAMA had failed to satisfy the market valuation standard under The Cities Act . [ 14 ] In support of its arguments, Prospect adduced expert evidence on statistical analysis and mass appraisal, which was to the effect that a GCCR can be used to assess hotels when no hotel sales data exists; however, since there had been five hotel sales in Saskatchewan, those sales should have been used to calculate a hotel Cap Rate for Moose Jaw.

Prospect therefore argued for the application of the DCM instead of the RCM, seeking to have the Cap Rate of 10.66% applied in the assessments of the subject hotels.

[ 15 ] The City, as respondent, contended that SAMA had properly exercised its discretion when choosing to apply the RCM as opposed to the DCM. Moreover, the City argued that Prospect had not established any error in SAMA’s chosen methodology. [ 16 ] The Board allowed Prospect’s appeal, stating: [21] The Board finds the assessor had sufficient sales of hotel properties available to determine a cap rate. It was therefore not necessary to use non-comparable properties in the calculation of the cap rate for hotels. The Assessor used the sales of hotel properties to calculate the NOI.

The cap rate and the NOI should be derived from the same data. [22] In the Board’s view, the Assessor was overzealously creative in their adaptation of the Ratio Comparison Method. It was unnecessary to look beyond the data available in the 5 hotel sales. [23] In looking beyond the available data, the Assessor introduced the general commercial cap rate. No sales of hotels were included in the calculation of the cap rate. The properties were non-comparable. [24] As the assessor used properties that were not comparable to the subject property in determining the cap rate, the MVS has not been met.

As the MVS is a requirement of equity, equity has not been met. [ 17 ] In the result, the Board ordered SAMA to revise its 2019 assessments of hotels in Moose Jaw by using a Cap Rate of 10.63%, which is the median of the five hotel Cap Rates. The City appealed from this result. C. Committee Decision [ 18 ] The Committee summarised its reasons for allowing the City’s appeal against the Board Decision and for restoring the 2019 assessments in these terms: DECISION: [30] The Committee finds:

a) The Board’s reasons and rationale, although brief, were sufficient to allow us to understand how it made the decision it did. However, the decision itself is not reasonable, as the Board believed there were sufficient sales of Hotels, when in fact the evidence was there were no sales of Hotels in Moose Jaw;

b) The Board erred in not accepting SAMA’s use of the RCM; and

c) The Board erred in ordering a CAP Rate based on five sales. [ 19 ] Prospect sought leave to appeal against the Committee Decision . III. ANALYSIS [ 20 ] Prospect was granted leave to raise four questions of law in this appeal. As the first two questions both relate to the evidence and the Board’s findings of fact, I will address them together. A. Did the Committee misapply the reasonableness standard of review when reviewing the Board’s findings of fact?

And, did the Committee disregard relevant evidence or mischaracterise evidence? [ 21 ] By the terms of Ryan-Froslie J.A.’s order granting leave, the first issue in this appeal is whether the Committee erred in law by misapplying the reasonableness standard and thereby improperly interfering with the Board’s findings of fact. The second asks whether the Committee erred in law by disregarding relevant evidence or mischaracterising evidence when making its own findings of fact.

Through its arguments on the second issue, Prospect attempts to persuade this Court that, by disregarding or mischaracterising evidence, the Committee improperly interfered with the Board’s findings of fact. I will, therefore, address these two issues together.

Moreover, when taken together, the two grants of leave implicate the Committee’s consideration of the Board’s application of the law and assessment principles and practises to the facts. [ 22 ] However, given the terms of the leave order, I will not address Prospect’s arguments that the Committee erred when it concluded that the Board had “failed to provide sufficient reasons” and that the Committee reached inconsistent conclusions in that regard ( Committee Decision at para 28). [ 23 ] Nor will I deal with Prospect’s arguments to the effect that the Committee erred by failing to apply the reasonableness standard to the whole of the Board Decision in the manner of a judicial review (see Canada (Minister of Citizenship and Immigration) v Vavilov , 2019 SCC 65 , 441 DLR (4th) 1 [ Vavilov ]).

The Committee is not a court and the Legislature has established an internal appeal regime under The Cities Act to which Vavilov does not apply ( E.-Z. Automotive Ltd. v Regina (City) , 2021 SKCA 109 at para 69 , [2022] 4 WWR 55). Moreover, while Prospect may believe that the Committee erred in the way it adjudicated the appeal before it, the Committee’s choices in this regard are not implicated by the leave order.

Finally, I would note that the Committee correctly identified the standard of reasonableness as applying to questions of fact and to questions of mixed fact and law arising from the City’s appeal against the Board Decision (see Committee Decision at para 26). [ 24 ] Considering its submissions within the confines of the leave order, Prospect contends that the Board’s factual findings address

the arguments Prospect had made and are amply supported by the evidence and, therefore, should not have been interfered with by theCommittee. I take this argument to be an assertion that the Board’s findings of fact—although perhaps not stated in the Board Decision—are imbedded in Prospect’s arguments and the remedy the Board granted. I say that because, at the root of its submissions in this Court,Prospect asserts that the Committee failed to understand the Board Decision and to “verify that it was supported by the evidence”.

Theerror in the application of reasonableness, Prospect argues, is that the Committee failed to locate “[a] line of analysis within the givenreasons that could reasonably lead the [Board] from the evidence before it to the conclusion at which it arrived” (Vavilov at para 102).Aside from the fact that this argument is predicated on concepts of judicial review that are misplaced within the assessment appeal regimeunder The Cities Act, Prospect’s submission does not line up with the record before the Board. [25] In its appeal to the Board, Prospect had argued that the 2019 assessments failed to meet the market valuation standard becausethey had been based on an unreliable methodology—i.e., a modified RCM—and that SAMA had used data from sales of non-comparableproperties to calculate the hotel Cap Rate for Moose Jaw.

It asserted that SAMA had unduly relied on one hotel sale to describe themarketplace for hotels in each of Estevan and Yorkton. On this basis, Prospect attempted to establish that the 8.14% Cap Rate wasunreliable and could not be statistically tested. It asserted that the DCM was the preferrable method and that the Board should apply the10.66% Cap Rate derived directly from the two sales in Yorkton and Estevan. [26] In its decision, the Board acknowledged that Prospect’s expert had never seen the RCM used in the way SAMA had used it.

Itsreasons for overturning the 2019 assessments include that it found there was an insufficient number of hotel sales in Yorkton and Estevanto use the RCM, holding that SAMA should have used the five sales that were available. These are not, however, findings of fact. Nor dothey, strictly speaking, follow directly from what Prospect had argued before the Board. They are conclusions drawn by the Board fromits own application of assessment principles to the facts. [27] The relevant facts were these: (

a) there were no hotel sales in Moose Jaw; and (

b) there were five hotel sales in other cities.Further, it may be inferred from (

a) that the GCCR for Moose Jaw had been derived from property sales that had not included hotelproperties. On this basis, the first issue in this appeal may be answered by simply pointing out that SAMA, the Board, and the Committeeall used these same facts and inferences in their decisions.

That is, the Committee did not interfere with the facts as found by the Board. [28] Prospect has not identified any other specific findings of fact by the Board that were rejected or modified by the Committee.That said, under the second ground, it submits that the Committee improperly “overturn[ed] the Board’s finding of fact that [SAMA had]relied on non-comparable general commercial property sales to come up with the CAP rate”. I do not, however, interpret the CommitteeDecision as interfering with that finding.

The Committee understood that the GCCR for Moose Jaw had been derived from sales that didnot include sales of hotels. It therefore knew that SAMA had used non-comparable properties at one point in its calculation of the 8.14%CAP rate.

In the context of the City’s appeal, the issue for the Committee was whether the Board had erred when it rejected SAMA’s useof the RCM—and the Committee could and did do that without interfering with the Board’s findings of fact. [29] In a related argument, Prospect says the Committee substituted its own finding of fact when it wrote: “We also find SAMA hadused sales of Hotels to establish the ratio and, as a result, SAMA has used comparable sales as contemplated by the RCM” (CommitteeDecision at para 76). Again, I am unconvinced that the Committee’s conclusion interferes with the Board’s findings of fact.

The Board didnot say that hotel sales were not used to establish the ratio. The Board knew that SAMA had used hotel sales from Yorkton and Estevan inits calculations under the RCM.

Moreover, this fact does not contradict or displace the fact that SAMA had also used sales ofnoncomparable properties under the RCM, e.g., to calculate the GCCRs. [30] Although Prospect submits that the Committee failed to see that its arguments before the Board were fully supported by theevidence, that simply means that the Board could have made findings of fact on the basis of that evidence (i.e., about such matters aswhether SAMA had made unfounded factual assumptions, or whether the 8.14% Cap Rate could be statistically tested, etc.). Nonetheless,there are no such findings in the Board Decision itself.

Further, questions as to whether the way in which SAMA had modified the RCMfor use under the income approach to valuation strayed from the guidance in the Cost Guide are about the

interpretation of the law orassessment principles and practises. Prospect implicitly acknowledges this in its factum—saying such questions are “all beside the point”.The real issue, Prospect says under the second ground, is that the Committee misunderstood the Board Decision, which it submits turnedon the fact that SAMA had “violated comparability” regardless of whether its use of the RCM was reasonable. [31] In this regard, Prospect points to several pieces of evidence that it says the Committee disregarded or mischaracterised in theCommittee Decision.

In advancing its appeal under this ground, Prospect relies upon P.S.S. Professional Salon Services Inc. vSaskatchewan (Human Rights Commission), 2007 SKCA 149 at para 68, 302 Sask R 161, leave to appeal to SCC refused, [PSS Professional], where Cameron J.A. wrote: [68] It follows that a tribunal cannot reasonably make a valid finding of fact on the basis of no evidence or irrelevant evidence. Nor canit reasonably make a valid finding of fact in disregard of relevant evidence or upon a mischaracterization of relevant evidence.

To do so isto err in principle or, in other words, to commit an error of law. …Nor can a tribunal reasonably make a valid finding of fact based on anunfounded or irrational inference of fact. (Emphasis in original) [32] Because the Committee is a second-level appeal tribunal that reviews the decisions of boards of revision for error, PSSProfessional would normally have no bearing on whether the Committee had erred in law when carrying out its function.

Boards ofrevision are the factfinders under the statutory appeal regime, not the Committee (see Corman Park (Rural Municipality) v 618421Saskatchewan Ltd., 2018 SKCA 29, 73 MPLR (5th) 1).

However, in this case, the Committee assumed the factfinding functions of a boardof revision because it found the Board had not fulfilled its own role in that regard and, therefore, the principles from PSS Professionalmay apply to some aspects of the Committee Decision. [33] To explain, the Committee correctly approached the City’s appeal from the Board Decision with the object of determiningwhether the Board had unreasonably found error in SAMA’s choice of methodology for preparing the 2019 assessments or in itsapplication of that methodology to the facts.

It framed the issue in this way: “Did the Board err by not accepting the use of the RCM?” (atpara 29). Under that heading, the Committee found that the Board Decision lacked any finding of error on SAMA’s

part in its choice or in

its application of the RCM, writing: ANALYSIS: [44] SAMA takes the position the Board never found the RCM was incorrect. [45] We agree with SAMA on this point. As we have stated in our analysis of Issue a) [i.e., whether the Board had provided sufficient reasons showing where SAMA had erred], the Board found (although in error) there were sufficient sales, and, as a result, dismissed the use of the RCM without ever having addressed the actual use of the RCM. Although the Board may have stated SAMA was being “overzealously creative”, at no time did the Board find an error in SAMA’s use or calculation, as the Board simply dismissed it. [46] Having found the Board erred in Issue

a) and finding the Board did not address the use of the RCM, we will review the evidence and argument as it relates to the use of the RCM and the calculation. [ 34 ] Therefore, as I interpret the Committee Decision , the Committee found the Board had unreasonably set aside the 2019 assessments because it had failed to determine whether SAMA’s choice and use of the RCM was in error. I am not persuaded that the Committee erred in law by interpreting the Board Decision in this way.

The Board certainly thought there was a better way to assess the subject hotels, but it did not state that SAMA’s choice of the RCM was in error and it did not, as the Committee observed, examine SAMA’s application of that methodology in the context at hand. [ 35 ] For that reason, and because it could not remit the matter to the Board to do the analysis ( The Cities Act , s. 226(1) ), the Committee embarked on its own consideration of Prospect’s allegations of error in the 2019 assessments.

This required the Committee to review the evidence and the law and assessment principles and practises that applied in this context to determine whether SAMA had erred. In that inquiry, any findings of fact it had made without respecting the requirements of PSS Professional could give rise to an error of law in this appeal. [ 36 ] In that regard, Prospect alleges that an important misstatement of evidence by the Committee occurred when it wrote, “the Board believed there were sufficient sales of Hotels, when in fact the evidence was there were no sales of Hotels in Moose Jaw” ( Committee Decision at para 30).

It says there is no way the Committee could have concluded that the Board’s finding was in error without misinterpreting the Board’s reasons and the evidence. [ 37 ] I do not, however, accept Prospect’s suggestion that, by this statement, the Committee somehow thought that the Board had found that there had been hotel sales in Moose Jaw. As Prospect acknowledges, it is uncontroverted that there were no sales of hotels in Moose Jaw during the relevant timeframe—that fact drove this assessment appeal.

It is why SAMA had decided to turn to the CNM to extrapolate a Cap Rate for the subject hotels from hotel sales in Yorkton and Estevan. It is why the Moose Jaw GCCR was said to be derived from non-comparable sales. It is at the root of why Prospect alleged that SAMA had erred.

For these reasons, it is incredible to suggest that the Committee found that the Board had misunderstood this fundamental aspect of the assessment appeal. [ 38 ] In another respect, Prospect alleges that the Committee misinterpreted its expert’s evidence regarding the quality and quantity of evidence that would be necessary to support the use of the RCM. Prospect asserts that the Committee took its expert’s evidence out of context by “suggesting that any comparison of [GCCRs] is useful”, but it overstates the matter.

The passage of the expert’s evidence that the Committee interpreted was this: Q Would it not be–in the case here, would it not be—and I think you alluded to this earlier. Would it not be the preferred methodology to look to similar properties, other hotels from these jurisdictions to develop a broader, more provincial value cap rate base on—on those results? A And as—yeah.

I—I mentioned something earlier whereby I would probably start with all hotel sales in Saskatchewan, like, all the hotel sales, and then start looking at the cap rates of those hotel sales because, as mentioned earlier, it’s a simple arithmetic calculation, and look at similar groupings, and then if those groupings sort of fall out, I might also look at the general cap rate in those areas and see if that supports those being grouped because the general cap rate is also fairly similar.

I would—I would—I think that, generally speaking, if the cap rate is strong or weak in a certain community, the cap rate will be strong or weak for the hotel or motel properties as well. One probably leads to another. And so—but I would start with a broader analysis, and, I mean, there’s even some hotel and motel—well, probably not motel properties, but some hotel properties probably sell on an interprovincial basis across to, maybe, Manitoba and Alberta so that it all depends on the size of the community and—and what kind of draws that—those hotels have.

It’s a—it’s a—it can be a broader scope, but I would start provincially and see where it took me with respect to all the sales. [ 39 ] On my reading of this testimony, I cannot say the Committee erred in law by misinterpreting it as “suggest[ing] a comparison of GCCRs may be useful in identifying comparable municipalities” ( Committee Decision at para 52).

While other inferences may be drawn from the evidence, the one drawn by the Committee was certainly open to it. [ 40 ] I do not ignore that Prospect’s expert had testified that the preferred methodology would have been to begin with all of the hotel sales in Saskatchewan to determine if similar sub-groups emerge, which should not contain less than four of five observations. He further opined that one hotel sale in each of Estevan and Yorkton could not have reliably established a relationship between the hotel Cap Rate and GCCR in those cities.

However, the Committee acknowledged that Prospect had adduced expert evidence before the Board to the effect that province-wide hotel sales should be used instead of the two sales in Yorkton and Estevan. It knew that SAMA had, in previous assessment years, used all provincial sales of hotels when assessing the subject hotels. It also understood that the Board had relied on that evidence to grant the remedy in the first-level assessment appeal, which required SAMA to reassess the subject properties using a Cap Rate that must have been based on all five sales.

I am unpersuaded that the Committee misunderstood or mischaracterised any of these points. [ 41 ] I conclude the Committee correctly approached this matter with the object of determining whether Prospect had proven, notwithstanding the Board’s failure to make a finding, that SAMA’s choice of methodology for preparing the 2019 assessments or its

application of that methodology were in error. In this respect, the Committee reviewed, at length, the evidence, the Cost Guide, and thejurisprudence to determine whether SAMA’s choice of assessment methodology and its application of the RCM were unreasonable in thecircumstances. As I will explain shortly, this was the correct standard to apply.

Following its review of the arguments and the evidence,the Committee concluded that SAMA had justified its rationale for employing the CNM—and, within that method, the RCM—in thefactual context of the 2019 assessments. [42] Keeping in mind that Prospect always bore the onus of establishing error in the 2019 assessments, the Committee knew thatProspect had to do more than just show that SAMA had failed to pursue a viable alternative method for assessing hotels in Moose Jaw.

Toestablish error in these circumstances, Prospect had to show that SAMA’s decision to use the RCM was itself unreasonable or that it haderred in its application of the RCM to the facts. Decisions of this nature are often called exercises of assessor discretion and, in an appeal,they give rise to questions of mixed fact and law that are reviewable under the reasonableness standard.

The Committee understood this. [43] As the Committee also seems to have understood, this was not a circumstance where an assessor had thrown a couple of similarsales into a broad mix of non-comparable sales to thereby cast a brief nod towards the requirement of similarity under the market valuationstandard.

This was a case where there had been no similar sales in Moose Jaw and few sales elsewhere in the province and, even then, onlytwo sales in the cities that SAMA had determined were similar to Moose Jaw. [44] On this basis, the Committee found that SAMA’s approach to the 2019 assessments withstood Prospect’s allegations of errorbecause the dearth of sales of similar properties in Moose Jaw meant that SAMA had reason to use the CNM. In so doing, SAMAstratified the five sales it had identified, which left two sales in Yorkton and Estevan.

I accept that Prospect’s expert testified that such astratification should contain no less than four or five observations. I agree that a single sale in each of the two comparable locations hardlyestablishes that SAMA’s analysis was reliable but, in this context, it had no other relatable data. That is, SAMA had to do what it couldwith the sales data that it had within the confines of the market valuation standard and its duty to achieve equity in the assessments.

In thatregard, the Committee found it was not unreasonable for SAMA to have chosen to use the RCM to conform that limited sales data with themarketplace in Moose Jaw. [45] It is trite that the municipal Acts and assessment principles and practises often afford assessors with the discretion to choose acourse of action from among two or more available or viable options. In TNC Mall, Richards C.J.S. explained the measure of discretion anassessor enjoys when faced with weak sales data from within a subject neighbourhood, such as in this case: [37] Could SAMA have used an alternate methodology? Presumably yes.

Perhaps it could have excluded the smallest properties fromthe group of 39 retail property sales and recalculated the capitalization rate on that basis. Perhaps it could have excluded warehouses fromthe group of 39 properties. There are obviously many variations on the theme. However, that is not the point. Assessors are permitted to,and must, exercise a measure of discretion. [38] SAMA, of course, does not enjoy a carte blanche with respect to the exercise of that discretion.

But, discretion is nonetheless “animportant and necessary aspect of the assessment process” (Saskatoon (City) v Walmart Canada Corp., 2018 SKCA 2 at para 116).SAMA, like all assessors, must be shown “an appropriate level of deference” (Harvard at para 28). Here, the record indicates that SAMAproceeded in a way that took into account the requirements of the Act and attempted to satisfy them as much as a very unusual situationallowed.

Thus, in the particular circumstances of this case, the Committee made no error of law by showing a measure of deference toSAMA’s decision about the capitalization rate and in accepting the approach that SAMA had taken to solve the assessment problem that itfaced. [46] While assessors are permitted to make choices, they must do so based on their skill, judgment, knowledge, and experience asapplied in the context of the facts, conditions and circumstances affecting the property in question (Husk v City of Regina (1996), (SK CA), 141 Sask R 74 (CA) at 77; Regina (City) v Laing Property Corp. (1994), (SK CA), 128 Sask R29 (CA) at para 28 [Laing]).

In this sense, an exercise of assessor discretion is an informed, professional judgment as to a reasonablecourse of action in a given set of circumstances. This must be done, of course, in furtherance of the overarching, statutory duty of assessorsto achieve equity with similar properties (The Cities Act, ss. 165(3), 165(5), and 181(3)). [47] It may assist if I recast the Board’s error for explanatory purposes.

The Board erred because it put itself in SAMA’s shoes andasked what decision it would have made, identified that it would have taken a different approach than that taken by SAMA, and, on thatbasis alone, set aside the 2019 assessments. A board of revision should not conduct the assessor’s decision-making afresh or seek todetermine the correct decision or whether there was a better decision to be made. Because the 2019 assessments were presumed to becorrect, the Board was required to direct its mind to whether Prospect had established that SAMA’s rationale for using the RCM wasunreasonable.

Since the Board did not do that, the Committee was forced to embark upon that analysis, but it did so correctly. [48] In general terms, the reasonableness standard requires that boards of revision defer to an assessor’s exercise of discretion whenthe reasons provided by the assessor for that decision are internally coherent and contain a rational chain of analysis that is justified inrelation to the facts, circumstances and conditions affecting the property in question as well as in relation to the law and assessmentprinciples and practises that constrain assessors (see Laing at para 28). [49] In this case, the Board remarked only that SAMA had been “overzealously creative” when it chose to use the RCM.

Thisstatement indicates that the Board had failed to recognise SAMA’s expertise and knowledge of the relevant assessment principles andpractises. The Committee, in contrast, found that SAMA had explained how it had respected the requirements of the law and the CostGuide, including the market valuation standard and the dominant and controlling factor of achieving equity, and had justified its decisionto use the RCM given that there had been no hotel sales in Moose Jaw (see TNC Mall at para 43; Consumers Co-operative RefineriesLimited v Regina (City), 2020 SKCA 111 at paras 98 and 106).

To put a pin in this, even though the Board saw using the RCM as anostensibly puzzling or counterintuitive approach, as the Committee concluded, that does not mean it was an error for the assessor to takethat approach. The Committee found that SAMA’s decision to use the RCM was supported, as it explained, by the Cost Guide, thejurisprudence, and the practical reality of a lack of hotel sales in Moose Jaw.

The RCM was, therefore, a reasonable approach. [50] I find no error in law in the Committee’s conclusion that SAMA had justified its approach to the 2019 assessments in relation tothe factual, legal and assessment constraints engaged in this case. I am, like the Committee, unpersuaded that there were sufficiently

serious shortcomings in SAMA’s reasoning process or in the outcome of it to conclude that its decision to rely on the RCM was unreasonable. [ 51 ] To bring this analysis back to the grounds of appeal, I remain unconvinced that the Committee’s approach to the Board Decision gives rise to errors of law in how it addressed the Board’s findings of fact and the evidence.

At bottom, the issue in this Court is whether the Committee misapplied the standard of reasonableness when reviewing SAMA’s decision to use the RCM, and I conclude it did not. [ 52 ] I would note, in obiter dicta , that assessors must justify any material departure from or inconsistency with their own prior opinions as to what is a fair and equitable assessment, particularly those opinions previously expressed with respect to the same or similar properties.

As this Court has observed, “What is called for in the exercise of [assessor] skill and judgment is the structured formulation of consistent opinions as to fair and equitable value for the purposes of property taxation in the municipality” ( Laing at para 28 ). [ 53 ] I would dismiss these two grounds of appeal. B.

Did the Committee err in law by overturning the Board’s conclusion that the approach taken by SAMA had violated the requirement of comparability such that the assessments did not meet market valuation standard or achieve equity? [ 54 ] Prospect did not strongly advance this ground in its factum, writing only that: 86. The Appellants submit that it is not necessary to exhaustively canvas this Court’s jurisprudence on comparability. It is well- established that assessments that ignore comparable properties and rely on non-comparable properties do not meet the MVS.

It is also well-established that the MVS is a necessary component of equity as defined pursuant to the Act. 87. The Board’s findings that the Hotel Sales are comparable to the Subject Properties, and that general commercial properties are not, leads directly to the conclusion that the MVS is not met. They are matters properly within the Board’s authority to decide, and the Committee must respect those decisions when, as here, they are supported by the evidence.

The Committee erred in overturning them. [ 55 ] As I have found no error of law in the Committee’s decision to overturn the Board Decision under the first two grounds of appeal, this ground of appeal must fail as well. I have concluded that the Committee did not err in its application of the standard of reasonableness to the questions of fact and mixed fact and law that arose in the City’s appeal against the Board Decision . That conclusion fully answers this ground of appeal. C.

Did the Committee err in law by concluding the Board had no authority to grant the remedy it did? [ 56 ] While the fourth ground of appeal is also moot given my conclusions under the earlier grounds, it is important that this Court address the issue it raises because the Committee’s

interpretation of L & L Lawson Enterprises Ltd. v Regina (City) , 2008 SKCA 43 , 310 Sask R 29 [ Lawson ], is incorrect. [ 57 ] Let me state at the outset that this is not a case of the Board exceeding its jurisdiction when it granted a remedy. Provided that it had exercised them in the context of a fair hearing, the Board enjoyed the following powers under The Cities Act : Decisions of board of revision 210

(1) After hearing an appeal, a board of revision or, if the appeal is heard by a panel, the panel may, as the circumstances require and as the board or panel considers just and expedient: (

a) confirm the assessment; or (

b) change the assessment and direct a revision of the assessment roll accordingly: (

i) subject to subsection (3), by increasing or decreasing the assessment of the subject property; (ii) by changing the liability to taxation or the classification of the subject property; or (iii) by changing both the assessed value of the subject property and its liability to taxation or its classification. [ 58 ] Jurisdictionally then, the Board had the power to change the 2019 assessments by decreasing them through the use a 10.63% Cap Rate, as opposed to the 8.14% Cap Rate that SAMA had developed and applied, provided that that issue had been addressed in the appeal hearing in a procedurally fair way.

Let me also state that I do not interpret the Committee Decision as disagreeing with this point. [ 59 ] In its decision, the Committee explained its reasons for setting aside the remedy granted by the Board in this way: [80] In its written submission to the Board and in its oral arguments before the Board, [Prospect] was advocating for the use of two sales, not five.

In fact, [Prospect] was asking for the application of the DCM based on the two sales used to establish a 10.66% CAP Rate for Estevan and Yorkton. [81] The Board’s decision was to use five sales from Hotels across the province and establish a CAP Rate of 10.63% which would have been only applicable in Moose Jaw.

[82] The Court addressed this exact situation in Lawson . In Lawson , the Assessor had stratified the accommodation properties (Hotel and Motel) into two groups. One group was for downtown properties; the other was for outside of downtown.

Even though the property in question was located outside of downtown, the Appellants in Lawson believed the MAF developed for downtown was developed from sales of more comparable properties than the sales used to develop the MAF for outside of downtown. [83] When we rendered our decision, we felt the actual error was stratifying the sales all together, and rather than ordering the MAF the Appellants were asking for, we ordered the development and application of a new MAF which was based on all the sales without any stratification. [84] The Court in Lawson found we had erred in law, as neither party was advocating for that result.

The Court stated at paragraph [21] of Lawson : I agree that the Committee enjoys these powers, and also that they would, in theory, include the remedy imposed by the Committee in this case. However, these powers must nonetheless be exercised in the context of a fair hearing in which the affected parties have a full opportunity to address the issues in argument and evidence.

Where the possibility of a single array of all accommodation properties was at no point raised with the parties by the Committee, and was not a remedy asked for or anticipated in the notice of appeal, the parties have been denied a fair opportunity to answer the position taken by the Committee. It is impossible to say that full argument or further evidence would not have satisfied the Committee that this solution was inappropriate. I agree with the position of the appellants, that the result is that they were denied a fair hearing in the appeal before the Committee in relation to this issue.

This conclusion is supported by this Court’s decision in City of Moose Jaw v. Lloyd Construction (unreported Sask.

C.A., 3 December 1998). [emphasis added by the Committee] [85] The Court went on to conclude at paragraph [43]: In sum, I have found that, in rejecting the Assessor’s sub-stratification of the array of sales and calculating a new MAF on the basis of an array of 11 sales, the Committee acted on a basis that the parties had not been given an opportunity to address and thereby breached the requirements of fair procedure. [emphasis added by the Committee] [86] At our hearing for this appeal, we invited both parties to address this since the law is always before us.

We were concerned, since we were aware the Board order a CAP Rate based on a stratification that was not advocated for, if we did not address this, we, too, may be committing an error of law. [87] We find neither party had a chance to address the possibility of a five-sale stratification. As well, we find the decision of the Board to order a CAP Rate based on five sales was not advocated for by either party.

As a result, as we found in our analysis of Issue a), the Board erred in law when it ordered a CAP Rate based on five sales. [ 60 ] The circumstances of Lawson are, however, distinguishable from those of this case. As can be seen from the extracts quoted by the Committee, Lawson concerned a remedy, which had been granted by the Committee, that the parties had neither advanced nor contemplated. Lawson stands for the proposition that the Committee will overstep its bounds if it undertakes to reassess property on its own theories without first exploring them with the parties.

Although this aspect of procedural fairness applies to boards of revision as well as to the Committee, it has little application on the facts of this case, as I will explain. [ 61 ] In Lawson , Smith J.A. ruled that the Committee had erred because it had de-stratified all hotel and motel properties into one group when the parties had only argued about whether one particular property was a hotel or a motel. Justice Smith found that the remedy granted by the Committee based on that de-stratification had run afoul of the requirements of procedural fairness.

She reached that conclusion because the Committee had taken it upon itself to vary the assessments by calculating and applying an entirely new MAF, without notice to, or input or argument from, the parties. Justice Smith described the issue this way: [12] The Committee was also of the view that the

definitions of hotel and motel relied upon by the appellants and their expert witness were not as distinct as the mere

definitions might imply, for the typical motel was now larger and provided some services other than sleeping rooms and a lobby, and that “rather than a sharp distinction, there is a continuum in hotels and in motels of both improvement sizes and non room services.” [13] For these reasons, the Committee was concerned that it appeared inequitable to have, among accommodation properties, two arrays with MAFs of .30 and .69 respectively, one being 2.3 times higher than the other.

It was of the view that neither party had made a strong case for sub-stratifying the array either on the basis of location or because of the presumed hotel/motel dichotomy. [14] These considerations led the Committee to conclude that the two sales arrays used by the Assessor, and by the Board, were “an unreliable over stratification of the accommodation sales”. It therefore combined the two arrays, finding that the median MAF of the 11 sales was .59, the MAF to be applied to the subject properties. [ 62 ] As is evident, the circumstances of Lawson are not akin to this case.

It is true that Prospect had not asked for a 10.63% Cap Rate as a remedy but it had not asked for any other remedy either. Moreover, the remedy the Board granted could be reasonably anticipated by Prospect’s notice of appeal. In that notice, Prospect claimed that the “incorrect capitalization (cap) rate had been applied to the subject [ sic ]” and, under the supporting facts heading, it had written: d. The subject [ sic ] is valued with an 8.14% cap rate while similar properties are valued with a cap rate of 10.66%. e. Sales of hotels within the Province of Saskatchewan do not reflect a cap rate of 8.14%. f.

The market value of similar properties has not been used to determine the current assessment. [ 63 ] Furthermore, the transcript of the hearing and the submissions of the parties show that there was evidence before the Board about the five hotel sales, establish that SAMA had agreed that those sales would produce a median Cap Rate of 10.63%, and confirm that Prospect had argued that SAMA had erred by failing to calculate a Cap Rate based on (some of) those sales. While Prospect had more

specifically argued for a 10.66% Cap Rate under the DCM based on two of those sales, it cannot be said, in this context, that the possibility of a 10.63% Cap Rate had not arisen in the hearing before the Board.

Moreover, as this dispute was chiefly about whether and how SAMA had erred by using the RCM, thereby failing to have direct resort to the sales Cap Rates, I would be hard-pressed to conclude that SAMA or the City had been denied a fair opportunity to address the remedy the Board had granted in this case. [ 64 ] I therefore conclude that the Committee erred in law when it interpreted Lawson as prohibiting the Board, in the circumstances of this appeal, from granting the remedy it had granted.

The Board had the authority to change the 2019 assessments in the way it did and doing so did not give rise to any unfairness in this case. The Committee erred in law when it concluded otherwise. [ 65 ] While Prospect has met with success under this ground of appeal, nothing flows from that achievement because it has failed to persuade me that the Committee otherwise erred in law when it set aside the Board Decision and reinstated the 2019 assessments. IV. DISPOSITION [ 66 ] I would dismiss this appeal with costs to the City in the usual way. “Caldwell J.A.” Caldwell J.A.

I concur. “Ottenbreit J.A.” Ottenbreit J.A. I concur. “Schwann J.A.” Schwann J.A.