SBLP Town N Country Mall Inc. Appellant (Respondent/Appellant) v. City of Moose Jaw and Saskatchewan, 2023 SKCA 94

Court of Appeal for Saskatchewan Docket: CACV3765 Citation: SBLP Town N Country Mall Inc. v Moose Jaw (City) , 2023 SKCA 94 Date: 2023-08-15 Between: SBLP Town N Country Mall Inc. Appellant (Respondent/Appellant) And City of Moose Jaw and Saskatchewan Assessment Management Agency Respondent (Appellant/Respondent) Before: Caldwell, Leurer and McCreary JJ.A. Disposition: Appeal allowed Written reasons by: The Court On appeal from: 2020 SKMB 56 , Regina Appeal heard: March 13, 2023 Counsel: Leonard Andrychuk, K.C. and Allison Graham for the Appellant Jeff Grubb, K.C. and Shayla Klein for the Respondents The Court I.

OVERVIEW [ 1 ] In this municipal property assessment matter SBLP Town N Country Mall Inc. [SBLP], which owns an enclosed shopping centre [Mall] located in the City of Moose Jaw [City], appeals against the decision of the Assessment Appeals Committee of the Saskatchewan Municipal Board [Committee] in Moose Jaw (City) v SBLP Town N Country Mall Inc. , 2020 SKMB 56 [ Committee Decision ].

In that decision, the Committee overturned two decisions of the City of Moose Jaw Board of Revision [BOR] and reinstated the 2019 and 2020 assessments for the Mall that had been conducted by Saskatchewan Assessment Management Agency [SAMA]. [ 2 ] In SBLP Town N Country Mall Inc. v Moose Jaw (City) , 2022 SKCA 10 , 465 DLR (4th) 675 [ TNC 2022 ], this Court granted SBLP leave to appeal against the Committee Decision on three questions of law: (

a) Did the Committee err in law by applying the incorrect standard of review to the BOR’s findings and substituting its own view of the evidence for that of the BOR? (

b) Did the Committee err in law in its

interpretation and application of this Court’s decision in TNC Mall Property Holdings Inc. v Moose Jaw (City) , 2020 SKCA 99 , 451 DLR (4th) 671 [ TNC 2020 ]? (

c) Did the Committee err in law in its

interpretation and application of this Court’s decision in Saskatoon (City) v Walmart Canada Corp. , 2018 SKCA 2 [ Walmart 2018 ]? [ 3 ] As background to these questions, it should be noted that, while this Court’s decision in TNC 2020 addresses SBLP’s appeals against the 2017 assessment of the Mall, it is engaged here because it settles elements of assessment law and practice related to property comparability.

Walmart 2018 concerns the employment of data about similar properties that has arisen outside the relevant timeframe when determining the assessed value of a property. [ 4 ] The instant appeal pertains to the assessed value of the Mall in 2019 and in 2020. In both years, SAMA assessed its value at $21,089,000 using the income approach. SBLP appealed separately against each assessment on the basis that the Mall was not comparable to the properties SAMA had used to develop the City’s general-commercial capitalisation rate of 6.61% [GC Cap Rate] and that equity had not been achieved.

In each appeal, the BOR found error in SAMA’s approach to the assessment of the Mall and revised its assessed value accordingly. [ 5 ] SAMA appealed to the Committee from the 2019 and 2020 BOR decisions, arguing that the BOR had erred by accepting an unreliable, shopping-centre capitalisation rate of 13.54% [SC Cap Rate] that had been developed from a small number of properties of which some were not comparable to the Mall.

SAMA also submitted that the BOR had incorrectly interpreted Walmart 2018 when time- adjusting two shopping centre sales for inclusion in the development of the SC Cap Rate. [ 6 ] Under the Committee Decision , the Committee allowed SAMA’s appeals, finding that the BOR had erred by accepting the SC Cap Rate because it had been developed from non-comparable properties in non-comparable communities and was based on a small and therefore unreliable number of sales.

The Committee also stated that TNC 2020 was “ultimately determinative” of the appeal and that it was bound to apply this Court’s reasoning in that decision ( Committee Decision at para 33). As well, the Committee held that the BOR had “misapplied the Court’s reasoning in [ Walmart 2018 ] to the different circumstances present in this appeal” (at para 43), noting that its own

interpretation of that decision was consistent with TNC 2020 , where it said this Court had found that three shopping centres were “equally not comparable” to the Mall in “major ways” (at paras 43–44). In the result, the Committee overturned the BOR decisions and reinstated SAMA’s 2019 and 2020 assessments for the Mall. [ 7 ] For the reasons that follow, we allow the appeal, quash the Committee Decision and reinstate the 2019 and 2020 BOR

Decisions. II. ANALYSIS A. Did the Committee err in law by applying the incorrect standard of review to the BOR’s findings and substituting its own view of the evidence for that of the BOR? [ 8 ] In the Committee Decision , the Committee referred to City Centre Equities Inc. v Regina (City) , 2016 SKCA 69 [ City Centre ], and recited the correct standards of review relevant to the errors SAMA alleged were committed by the BOR.

However, as Richards C.J.S. noted for the Court in TNC 2022 when granting leave on this question, it is not enough that the Committee correctly recite the governing standards of review, it must also “faithfully apply those standards” (at para 66; see also: Affinity Holdings Ltd. v Shaunavon (Town) , 2022 SKCA 83 , 474 DLR (4th) 71 [ Affinity ]). The failure to apply the correct standard of review constitutes an error of law. [ 9 ] The Committee is an appellate body that reviews board decisions for the errors that are alleged in a notice of appeal ( Affinity at para 113 ).

Because the appellant bears the burden of establishing error, a board decision is presumptively correct unless and until the appellant can establish an error in it ( Affinity at para 114 ). This means that the Committee must approach each assessment appeal by: (

a) accepting as correct all facts as found by the board of revision unless they have been put in issue by the appellant in the notice of appeal and, if so challenged, unless they are shown to be in error; and (

b) accepting as correct the assessment law and practice identified and applied by the board of revision in its decision unless put in issue by the appellant in the notice of appeal and, if so challenged, unless its is shown to be in error. [ 10 ] When it is reviewing a finding of fact put at issue in a notice of appeal, the Committee must consider whether the appellant has established that the board’s finding is “unreasonable or unsupported by the evidence” ( Affinity at para 123 ).

For a board to make a reasonable finding about a “fact, condition or circumstance” affecting a property, there must be evidence of that fact, condition or circumstance adduced in the hearing before the board that to establish it on a balance of probabilities (see: Affinity at paras 64–74 ). A finding of fact made by a board of revision in an irrational or capricious manner or without regard to the evidence before it is not a reasonable finding.

In Affinity , this Court observed: [125] The reasonableness of a finding of fact will be called into question where a board has misapprehended or failed to account for the evidence adduced before it. A finding of fact will be unreasonable where the Committee is persuaded of that, having considered the civil standard of proof (i.e., balance of probabilities) and having regard for the whole of the evidence bearing upon the matter in dispute.

In simple terms, it is unreasonable for a board to have found on a balance of probabilities that something is a fact if the finding is not supported by the evidence, or the board overlooked relevant evidence or took into account irrelevant evidence when making the finding. [ 11 ] As this suggests, the Committee’s assessment of whether a board’s findings of fact are reasonable requires it to review the evidence, the board’s findings, and its process for making those findings.

In doing so, the Committee must nonetheless refrain from reevaluating the evidence itself and making findings of fact that differ from those found by the board. The Committee does not stand in the shoes of a board of revision. It must not ask itself whether it would have found the same facts as the board or what facts it would have found if it had assessed the evidence afresh ( Affinity at para 113 ). Rather, in the simplest of terms, the Committee must conclude that the board’s finding is unreasonable or unsupported by the evidence adduced before the board.

We would add that not all unreasonable findings of fact require a remedy or permit the Committee to interfere with a board decision. The Committee must be persuaded that, by reason of the error of fact or otherwise, equity has not been achieved with similar properties under the board’s decision before it can intervene ( The Cities Act, SS 2002, c C-11.1 , ss 226(1) and (3)). [ 12 ] In this case, SBLP submits that the Committee disregarded the applicable standards of review that apply to questions of fact and to questions of mixed fact and law.

Its principal submission focuses on the reasonableness standard, which applies to allegations of error of fact or mixed fact and law, where it says the Committee erred by substituting its own view of the evidence for the BOR’s assessment of it. It specifically cites the following paragraph of the Committee Decision as indicative of the Committee’s erroneous approach to the evidence and facts of this matter: [32] Upon consideration, it appears the Board placed great reliance on Mr. Levis’s testimony in determining that SAMA erred in calculating the CAP Rate for the Subject Property.

In our opinion, this approach is difficult to support based on the evidence on the Record and our review of Mr. Levis’s testimony reproduced in the transcript. Mr. Levis testified (Transcript of Proceedings, Volume 1, page 115, lines 20 to 22) that the time adjustment is “… not a really good fit, but, again, I was asked if I could perform a time adjustment in there, and I did.” Mr. Levis’s lack of enthusiasm for the utilization of the time adjustment, indicated by these comments, undermined the Board’s adoption of Mr.

Levis’s CAP Rate calculation. [ 13 ] In our view, the foregoing paragraph plainly establishes that the Committee misapplied the applicable standard of review. Rather than assessing the reasonableness of the BOR’s findings of fact, it reevaluated the evidence of William Levis, the expert witness called by SBLP, who had calculated and testified about the SC Cap Rate. As we read it, paragraph 32 of the Committee Decision is a reassessment of Mr. Levis’ credibility and the reliability of his expert evidence about the SC Cap Rate based on the Committee’s appreciation of his “enthusiasm” for his opinion in that regard.

Pointedly, the Committee did not state that the BOR’s findings about or its reliance on the SC Cap Rate is unreasonable nor did it find that the BOR overlooked relevant evidence or took account of irrelevant evidence when making its findings in that regard. [ 14 ] At best, the Committee concluded that Mr. Levis’ opinion about the time adjustment of shopping centre sales was unreliable by reason of the “not really a good fit” qualification he gave when testifying. However, in the hearings before the BOR, Mr.

Levis had testified that the data scatterplot line of the sale to assessment ratio of the shopping centre sales he had used to calculate the SC Cap Rate

was “not a really good fit” (in the 2020 hearing) and that “the fit is not that great at only 5.9%” (in the 2019 hearing). We do not understand Mr. Levis to have been saying that the time adjustment of the shopping centre sales was not a good fit or that he lacked enthusiasm for using it. [ 15 ] We conclude, therefore, that the Committee reweighed Mr. Levis’ evidence and rejected it without assessing whether the BOR’s findings were unreasonable. Importantly, Mr.

Levis’ evidence was central to the BOR’s reasons for setting aside the original 2019 and 2020 assessments of the Mall and in its calculation of the values it substituted therefor. Upon our review, there was sufficient evidence before the BOR to support its finding with respect to the SC Cap Rate and, therefore, its findings in that regard are not unreasonable. [ 16 ] In short, we agree that the Committee erred in law by applying the incorrect standard of review to the BOR’s findings and substituting its own view of the evidence for that of the BOR. B. Did the Committee err in law in its

interpretation and application of TNC 2020 ? [ 17 ] SBLP first submits that, when addressing the issues of the BOR’s acceptance of the SC Cap Rate and the time adjustment analysis conducted by Mr. Levis, the Committee erred in law because it stated that TNC 2020 was determinative of those issues: [33] Moreover, ultimately determinative of this issue is the Court of Appeal upholding SAMA’s original approach to the CAP Rate calculation, as set out in T N C Mall .

We are bound to apply the Court’s reasoning to the present appeal. [ 18 ] In argument, SAMA submitted that we should infer from the last sentence in paragraph 33 that the Committee concluded that the evidentiary record in the 2019 and 2020 assessment appeals was substantially the same or not substantially different from the 2017 assessment appeal.

However, as we understand the Committee’s statement, it interpreted TNC Mall 2020 as definitively approving the method SAMA had used in 2017 to calculate the assessed value of the Mall, thereby jurisprudentially precluding the use of any other valuation method in later years of the assessment cycle.

Our understanding is reinforced by subsequent comments by the Committee, including at paragraphs 43 and 44 (quoted later in these reasons) and in the following paragraph: [49] Clearly, we are bound by the Court’s finding in the final sentence of paragraph [38] of TNC Mall , that: … in the particular circumstances of this case, the Committee made no error of law by showing a measure of deference to SAMA’s decision about the capitalization rate and in accepting the approach that SAMA had taken to solve the assessment problem that it faced. [ 19 ] We conclude that the Committee’s

interpretation and application of TNC 2020 in the Committee Decision is in error. The decision in TNC 2020 was based on the assessment law and practice engaged by, and the record in, the appeal hearings regarding the 2017 assessment of the Mall. The Committee, boards of revision, assessors and assessment appraisers are bound to apply assessment law and practice as it has been interpreted by this Court. There is no suggestion in this appeal that the assessment law and practice interpreted by this Court in TNC 2020 did not apply to the 2019 and 2020 assessments or did not govern the assessment appeals.

However, the record in each—i.e., the evidence—differed. [ 20 ] The Legislature has established a regime of annual property assessment under The Cities Act in which the assessments “must reflect the facts, conditions and circumstances affecting a property as at January 1 of each year” (s. 165(3.1).

It has granted an annual right of appeal against property assessments ( South Hill Mall Property Holdings Inc. v Prince Albert (City) , 2017 SKCA 52 at para 24 ; City Centre at para 93 ; Brandt Properties Ltd. v Sherwood (Rural Municipality) , 2023 SKCA 4 at paras 47–48 [ Brandt No. 1 ]; and Brandt Properties Ltd. v Sherwood (Rural Municipality) , 2023 SKCA 5 at para 29 [ Brandt No. 2 ]). This means that each appeal for a property will be taken from a different assessment decision based on a different evidentiary record, although much of that record may be identical or similar in each appeal.

Something as small as the passing of a single year affects the age of buildings but may, perhaps, give rise to variance in other conditions and circumstances affecting the property. Not every difference will be relevant but, where there are material differences in the evidentiary record, the facts found by a board of revision may reasonably differ from previous years’ appeals, and the board’s application of the governing assessment law and practice to those facts might reasonably give rise to a different result.

This is one reason why Richards C.J.S. in Brandt No. 1 stated that, “[w]ith some statutory qualifications not relevant here, decisions made with respect to an assessment for a previous year do not automatically determine the result of an appeal in a subsequent year” (at para 48). He made this point somewhat more emphatically in Brandt No. 2, when he said: [28] As suggested by Brandt, the Committee effectively endorsed the Board’s approach.

At paragraph 19 of its decision, the Committee said, “[t]he Board found no significant new evidence or compelling new reason such that it would reverse its decision from previous years. … Based on the record before us, the findings of the Board are reasonable based on the evidence and we will not interfere”. [29] The Committee’s reasoning reveals an error of law. As noted, the assessment appeal for each year is independent of appeals in other years.

As a practical matter, it can of course be expected that, if the assessor takes the same approach in years 1 and 2, and the property owner, on appeal, advances the same evidence and argument in years 1 and 2, the results in both years will be the same. But, for year 2, the issue will always be whether the evidence and argument advanced in relation to that year’s assessment establish assessor error.

It will never be appropriate to approach a year 2 appeal as if the property owner has the burden of overcoming the Board’s or the Committee’s year 1 decision . (Emphasis added) [ 21 ] For these reasons, we reject SAMA’s argument that there is a threshold to be crossed before a board of revision undertaking a review of an assessment in a particular year can deviate from a previous year’s assessment. The question, in each year, is one that must be undertaken based on the evidence presented to the board of revision in that year.

For the same reasons, we cannot accede to SAMA’s argument that we could infer that the Committee found that the records were substantially the same. Moreover, SBLP points out that there were significant differences between the record in the 2017 assessment appeal, which was at issue in TNC 2020 , and the records before the

Committee in the 2019 and 2020 assessment appeals. Most notably, the record in the 2017 assessment appeal did not include evidence thatthe GC Cap Rate properties were not similar to the Mall or a time adjustment analysis of shopping centre sales in Weyburn and Humboldt(TNC 2020 at paras 36, 64–65). In the 2019 and 2020 appeals, SBLP put forward that evidence as well as two alternative methods forassessing the Mall that employed that evidence and that used the SC Cap Rate, which had been derived from it.

In its 2019 decision, theBOR accepted this new evidence when setting aside the 2019 assessment and granted a remedy that was based on the SC Cap Rate. [22] In conclusion, we are satisfied that the Committee erred in law. That error lies not so much in the Committee’s

interpretation ofTNC 2020; it is that the Committee did not decide SAMA’s appeal of the 2019 or 2020 BOR decisions based on the records that werebefore it (Brandt No. 1 and Brandt No. 2). C. Did the Committee err in law in its

interpretation and application ofWalmart 2018? [23] In its 2019 decision, the BOR found error in SAMA’s assessment of the Mall, which it concluded resulted in equity not beingachieved in the assessment. When reassessing the market value of the Mall, the BOR relied on Walmart 2018 to lengthen the timeframefor considering sales of shopping centre properties by pulling in two additional sales, which were used in the calculation of the SC CapRate.

The Committee rejected this use of the time-adjusted sales, writing: [43] Upon review of the parties’ written submissions, we agree with SAMA’s assertion that the Board misapplied the Court’sreasoning in [Walmart 2018] to the different circumstances present in this appeal.

This view is consistent with the Court of Appeal’sanalysis in upholding SAMA’s original CAP Rate calculation of the Subject Property in TNC Mall. [44] As the Court found in TNC Mall, the sales suggested by Altus were equally not comparable to the Subject Property in major ways.The Weyburn Mall was constructed with a four-storey office building on one end where an anchor store would normally be located andwas substantially smaller than the Subject Property. The older Humboldt sale was significantly smaller in that the entire building wasabout half the size of the smallest anchor space in the Subject Property.

The more recent Humboldt mall sale was a sale of a property forre-development (rehabilitation, demolition and new multi-family construction), which was not reflective of a typical mall sale. [24] In Walmart 2018, a city assessor had developed a rent model from property data dating from January 1, 2008, to December 31,2010, because the base date for the assessment was January 1, 2011. In the assessment appeal, the Committee found that the assessor haderred and ordered it to use rents from the period commencing January 1, 2004, i.e., from the previous assessment cycle.

On appeal to thisCourt, the city argued that the Committee had erred by doing so. This Court disagreed in Walmart 2018, holding that the Committee couldconsider expanding the relevant timeframe once it had found error in the assessment, but it was not entitled to use an expanded timeframeto find an error: [45] It is my view that while evidence outside the time frame chosen by the Assessor cannot be adduced to show error, the Committeeis able, upon finding error, to expand the time period the Assessor is required to consider. However, the authority to do so is limited in twoways.

First, there is a cap on the ability to expand the valuation period to include data past the established prescribed date: the SAMABoard Order states that market data occurring or arising after December 31, 2010, shall not be used to determine the assessed value of non-regulated properties for the years 2013 to 2016. Second, this ability is inherently limited by the wording of s. 226(1)(

c) of The Cities Act.When the Committee remits matters, it must be to ensure “(

i) errors in and omissions from the assessment roll are corrected” and “(ii) anaccurate, fair, and equitable assessment for the property is placed on the assessment roll”.

This limits the Committee’s ability to changethe time frame such that any change must be necessary to fulfill its mandate. [25] Importantly, as the Court in Walmart 2018 observed, the Committee’s ability to expand the relevant timeframe—i.e., to haveresort to data from the previous assessment cycle—is restricted to fulfilling its mandate of correcting “errors in and omissions from theassessment roll” and ensuring that “an accurate, fair, and equitable assessment for the property is placed on the assessment roll”.

While themandate of boards of revision is expressed differently from that of the Committee, in our view boards of revision, assessors andassessment appraisers have the same ability to extend the relevant timeframe when that is necessary to achieve equity in the assessment ofproperties. We reach that conclusion because the “dominant and controlling factor” in the assessment regime established under The CitiesAct is the achievement of equity in property assessments (s. 165(3)).

In Consumers Co-operative Refineries Limited v Regina (City), 2020SKCA 111 at para 97, this Court held that, in operative terms, s. 165(3) meant that assessors have “an overarching duty to ensure thatequity has been achieved” and that they must exercise their skill and judgment to achieve “a structured formulation of consistent opinionsas to the application of the valuation standard so that equity is achieved” (see also: Regina (City) v Laing Property Corp. (1994), (SK CA), 128 Sask R 29 (CA)).

With respect to boards of revision, provided that equity has not “been achieved with similarproperties” (s. 210(3)), they may, as “the circumstances require” and as they “consider just and expedient[,] …change the assessment anddirect a revision of the assessment roll accordingly… by increasing or decreasing the assessment of the subject property” (s. 210(1)(b)(i)). [26] In this case, the BOR found that SAMA had erred by using the GC Cap Rate because it was based on sales of properties thatwere not comparable to the Mall and because one sale of the shopping center in Humboldt, which SAMA had excluded fromconsideration, was a valid market value sale (2019 BOR Decision, 2019 SKMB 11 at paras 30–33).

The first error noted meant that usingthe GC Cap Rate to revise the assessed value of the Mall would not achieve equity with similar properties. Having found an error of thatnature, the BOR reflected on the options that were available to it to revise the assessed value of the Mall. In this regard, SBLP hadadduced evidence supporting two alternatives to SAMA’s use of the GC Cap Rate: (

i) by employing the data from shopping centre sales inEstevan and Humboldt, which had occurred within the relevant timeframe, to develop a capitalisation rate; and (ii) by using the data fromthose two sales as well as two other sales of shopping centres that had occurred in the previous assessment cycle (in Weyburn and anearlier sale of the same shopping centre in Humboldt), which produced the SC Cap Rate.

Relying on Walmart 2018, the BOR decided itwas preferable to time-adjust and use the two sales from the previous assessment cycle to thereby create the larger pool of four sales ofsimilar properties from which the SC Cap Rate had been derived. [27] In its submissions to the Committee, SAMA had suggested that adjustments would need to be made to the two previous-cyclesales not only for time but also for location and property type in order to reliably take the two additional sales into account in thecalculation of a capitalisation rate. However, the Committee did not refer to these arguments.

Apart from saying that its rejection of the

BOR’s decision to expand the timeframe is consistent with TNC 2020 (which did not involve an expansion of the timeframe) and remarking that the BOR was faced with “different circumstances” than in Walmart 2018 , the Committee did not explain how the BOR had erred by misapplying Walmart 2018 when including data from the two sales in the previous assessment cycle.

Reviewing the matter ourselves, we recognise that the BOR’s decision to expand the timeframe aligns with the purpose and restrictions identified in Walmart 2018 and we conclude that it was not unreasonable to expand the timeframe in the circumstances of the 2019 and 2020 assessment appeals. [ 28 ] Given the absence of an explanation for its interference with this aspect of the BOR decisions, the Committee must be found to have erred in law in its review of those decisions. III.

CONCLUSION [ 29 ] In its submissions, SBLP proposed that, if this Court should determine that the Committee had erred, then the 2019 and 2020 BOR decisions could be affirmed because the BOR’s findings of fact and its application of assessment law and practice to those facts would ultimately remain undisturbed and, therefore, presumptively correct. It points out that SAMA did not challenge the BOR’s rejection of the GC Cap Rate in its appeal to the Committee; rather, its grounds of appeal were focused on establishing error in the BOR’s use of the SC Cap Rate.

Meaning that, if the Committee Decision is set aside, SAMA has failed to establish error in the BOR decisions. [ 30 ] We are persuaded by SBLP’s arguments in this regard. Given our disposition of the issues under this judgment, the basis upon which the Committee set aside the BOR decisions disappears. The BOR must be understood to have correctly identified the applicable assessment law and practice and to have made no unreasonable findings of fact or of mixed fact and assessment law and practice. [ 31 ] We therefore quash the Committee Decision and reinstate the assessments under the 2019 and 2020 BOR decisions.

SBLP shall have its costs in this appeal and its application for leave to appeal. “Caldwell J.A.” Caldwell J.A. “Leurer J.A.” Leurer J.A. “McCreary J.A.” McCreary J.A.