Court of Appeal for British Columbia

Assessor of Area # 09 - Vancouver

- v. -

Michael Lount

Reasons for Judgment of the Honourable Mr. Justice Finch

                               I

1          The Assessor appeals the judgment of the Supreme Court of British Columbia pronounced 14 June 1994, dismissing his appeal from a decision of the Assessment Appeal Board ("the Board") on 28 January 1994. The Board allowed Mr. Lount's appeal from the 1993 Court of Revision, and ordered that the assessment of his property be reduced from $307,500.00 to $241,000.00. At the request of the Assessor, the Board stated a case for the opinion of the Supreme Court. The questions on which the Board sought the court's opinion were these:

     1.    Did the Assessment Appeal Board err in law in its interpretation of section 44(1)(b) of theAssessment Act, R.S.B.C. 1979, c. 21 as amended?

     2.    Did the Assessment Appeal Board err in law in reducing the actual value by 21% by acting without any evidence or upon a view of the facts which could not reasonably be entertained?

     3.    Did the Assessment Appeal Board err in law in its interpretation of Section 69(2) of theAssessment Act, R.S.B.C. 1979, c. 21 as amended?

     4.    Did the Assessment Appeal Board err in law in finding the actual value to be $241,000.00 when it found the market value to be $305,000.00?

2          The Supreme Court held that questions 1 and 3 should be answered "no", and that questions 2 and 4 were not questions of law, and therefore ought not be answered.

                              II

3          The facts as set out in the stated case are as follows:

     1.    The subject property is residential property located at 2248 West 8th Avenue, in the City of Vancouver. The subject property consists of a frame, residential building built circa 1912 and presently developed to three legal rental units. The zoning is RM-4. The basement suite encompasses 735 sq. ft. with living room, kitchen, one bath and one bedroom. The main floor area of 763 sq. ft. has a living room, kitchen, one bath, and one bedroom; the second floor area of 752 sq. ft. has a living room, dining area, kitchen, one bath, and one bedroom; the third floor area of 370 sq. ft. has two bedrooms. The building is described as being in fair condition, with only minimum maintenance having been done over the years. The total usable floor area is 2,620 sq. ft. The site has no lane access nor access to the site except at the street.

     2.    The appeal before the Assessment Appeal Board was from the 1993 Court of Revision which determined the value for this property to be:

                   Land           $252,000

                   Improvements $ 55,000

                        Total      $307,500

     3.    The issues before the Board were the determination of actual value and whether or not equity should be considered when determining actual value for assessment purposes.

     4.    With respect to the issue of actual value, the Board found that the best evidence to support actual value was provided by the Respondent Assessor (Appellant herein). The Assessor's evidence led to a conclusion of value for the subject property of $305,000.

     5.    On the issue of equity, the Board found that legislative changes since the decision of the B.C. Court of Appeal inAssessor of Area #09 - Vancouver v. Bramalea Limited (Trizec Equities Limited) and T. Eaton Company, Stated Case 277, did not abrogate the principle of equity or fairness in assessment.

     6.    The Board found that the evidence before it reflected a wide disparity between market value (actual value) and assessed value. The Board found that the assessment to sales ratio varied from 46% to 101% (average 79%) and that the average level of assessed values, or market values, or actual values in this part of the municipality was 21% below the level of the real market value indicated for this property. The Board held that equity is achieved by determining actual value in a consistent manner, reflected in the actual values as found by Assessors in the municipality or rural areas. As the Board found assessments in this part of the municipality to be on average 21% below their actual (market) value, it adjusted the indicated market value of $305,000 for the subject property by -21% to reflect a value of $241,000.

     7.    The Board ordered the Assessor to amend the 1993 Roll as follows:

                   Land           $197,600

                   Improvements $ 43,400

                  

                        Total      $241,000

     8.    Attached hereto as Schedule "A" is a copy of the decision of the Board dated January 28, 1994.

4          In dismissing the Assessor's appeal from the Board's decision, the learned Supreme Court judge applied the law as stated by this Court inAssessor of Area #09 - Vancouver v. Bramalea Ltd. (1990), 52 B.C.L.R. (2d) 218, 76 D.L.R. (4th) 53 (C.A.). He held, as did the Board, that amendments to theAssessment Act, enacted afterBramalea was decided, did not remove the Board's powers to apply equitable considerations in deciding "actual value". He said the evidence before the Board disclosed two levels of actual value, and that the Board did not err in choosing to apply the lower of those two values, in order to achieve "consistency" with comparable properties.

5          The Assessor raises the following issues:

     1.    Did the learned judge below err in law by misinterpreting section 44(1)(b) and section 69(1)(2) of theAssessment Act, R.S.B.C. 1979, c. 29 as amended?

     2.    Did the learned judge below err in law in his interpretation of Bill 66 - 1992 which became theAssessment and Property Tax Reform Act, 1992, S.B.C. 1992, c.70?

     3.    Did the learned judge below err in law in finding that question 2 in the Stated Case did not pose a question of law where the question asked whether the Board acted without any evidence or upon a view of the facts which could not be reasonably entertained?

     4.    Did the learned judge below err in law by misinterpreting the Board's decision by finding that the Board did not find that the market value of the property was $305,000.00?

                              III

6          TheAssessment Act, as considered inBramalea read, in part, as follows:

     Powers of Court of Revision

     44. (1) The powers of a Court of Revision constituted under this Act are:

                              ***

          (b) to investigate the assessment roll and the various assessments made in it, whether complained against or not, and subject to subsections (4) and (4.1), to adjudicate on the assessments and complaints so that the assessments shall be fair and equitable and fairly represent actual valueswithin the municipality or rural area;

                              ***

          (4) The assessment of property complained against shall not be varied if the value at which it is assessed bears a fair and just relation to the value at which similar or neighbouring property in the municipality or rural area is assessed.

                              ***

     When board may vary assessment

          69. (1) In an appeal under this Act the board has and may exercise with reference to the subject matter of the appeal, all the powers of the Court of Revision, and without restricting the generality of the foregoing, the board may determine, and make an order accordingly,

              (a) whether or not the land or improvements, or both, have been valued at too high or too low an amount;

              (b) whether or not land or improvements, or both, have been properly classified;

              (c) whether or not an exemption has been properly allowed or disallowed;

              (d) whether or not land or improvements, or both, have been wrongfully entered on or omitted from the assessment roll;

              (e) whether or not the value at which an individual parcel under consideration is assessed bears a fair and just relation to the value at which similar land and improvements are assessed in the municipality or rural area in which it is situated; and

              (f) whether or not the commissioner has erred in failing to approve an application for classification of land as a farm under section 28(1) or in revoking a classification of land as a farm under the regulations.

                                     

                              ***

          (2) Where, on the appeal, the board finds that the assessed value of land and improvements in a municipality or rural area is in excess of assessed value as deter-mined under section 26, it may order a reassessment by the commissioner in all or part of the municipality or rural area, and the reassessment, on approval by the board, shall, subject to section 75, be binding on the municipality or rural area as the case may be.

                                      (emphasis added)

7          TheAssessment Act was amended in 1992 by theAssessment and Property Tax Reform Act, 1992.

8          The comparable part of s. 44, as amended, now reads as follows:

     Powers of Court of Revision

          44. (1) The powers of a Court of Revision constituted under this Act are

                              ***

              (b) to investigate the assessment roll and the various assessments made in it, whether complained against or not, and to adjudicate on the assessments and complaints so that the assessments are at actual value applied in a consistent manner within the municipality or rural area;

                                           (emphasis added)

9          Subsection 44(4) was repealed.

10         Section 69, as amended, now reads as follows:

     When board may vary assessment

          69. (1) In an appeal under this Act the board has and may exercise with reference to the land or improve-ments, or both, in respect of which the appeal is made, all the powers of the Court of Revision, and without restricting the generality of the foregoing, the board may determine, and make an order accordingly,

          (a) whether or not the land or improvements, or both, are assessed at actual value;

          (b) whether or not the land or improvements, or both, have been properly classified;

          (c) whether or not an exemption has been properly allowed or disallowed;

          (d) whether or not the land or improvements, or both, have been wrongfully entered on or omitted from the assessment roll;

          (e) [Repealed 1992-70-20.]

          (f) whether or not the assessor has erred in failing to approve an application for classification of land as a farm under section 28(1), or in revoking a classification of land as a farm under the regulations.

     (1.1)      [Repealed 1992-70-20.]

     (2) On an appeal, the board may order the commissioner to reassess at actual value land and improvements in all or part of a municipality or rural area, whether or not they are the subject of the appeal, if the board finds

          (a) that the assessments in the municipality or rural area, or in part of either of them, are above their actual value, or

          (b) that the assessment appealed against is at actual value but that the assessments of similar land and improvements in the municipality or rural area, or in part of either of them, are below their actual value.

     (3) Notwithstanding section 11(6), the assessor shall enter any reassessments ordered under subsection (2) on a supplementary assessment roll.

11         It will be seen that the words "... shall be fair and equitable and fairly represent ..." found in the old s-s. 44(1)(b) have been deleted, and that the words "... applied in a consistent manner ..." have been added.

12         The amendments to s. 69 are substantial, and include the repeal of s-s. 69(1)(e) which empowered the Board to decide whether the assessment on one property bore "... a fair and just relation ..." to other similar properties in the area.

13         The new s-s. 69(2)(b) appears to empower the Board to order the Assessment Commissioner to reassess any properties, whether they are the subject of an appeal or not, if their assessment is below actual value. Subsection 69(3) requires the Assessor to enter any such reassessment on a supplementary assessment roll, which, by s. 11, would then be subject to review by the next Court of Revision.

                              IV

14         Before the Board, the Assessor argued that the effect of the amendments to s. 44 was that determination of actual, or market value, by itself achieved equity, and that comparisons to other properties on assessment to sales ratios (ASR) were no longer of value.

15         The Board did not accept this argument. It said, at pp. 11-12 of its decision:

     The Board cannot agree that, by amending Section 44(1)(b), the legislative authority has ordained that the principle of equity or fairness is now abrogated. The principle of fairness is reinforced by the words "are at actual value applied in a consistent manner." (Under-lining by the Board).

     The evidence before the Board reflects a wide disparity between market value (actual value) and assessed value. The assessment to sales ratio vary from 46% to 101%. This does not suggest to the Board that assessments are at actual value applied in a consistent manner.

     The Board would suggest that to ignore equity would be to ignore the principles of natural justice. When a property owner can provide evidence to show that, on average, assessed value (or actual values) are 21% below market values, then the Board must consider this. This percentage is based on a small sampling and the Board recognizes that a larger sampling would be desirable, but unfortunately not supplied. The indicated market value for this property, based on the best evidence, is $305,000. This represents the market value in the marketplace. It would also represent the actual value as defined by theAssessment Act, Section 26(1). However, the evidence before the Board is that the average level of assessed values, or market values, or actual values in this part of the municipality is 21% below the level of the real market value indicated for this property. This suggests to the Board that the Assessor has two levels of actual values (or market values) to consider - one at the market place dictated level (top level) as indicated for this property, and the other at a level 21% lower, being applicable to this part of the municipality. Both are purported to indicate actual value. The Board can only conclude, that in the interests of natural justice, the lower level of value should apply which, in turn, provides an assessment which is actual value but applied in a consistent manner. The Board has adjusted the indicated market value by -21% to reflect a value of $240,950, say $241,000.

                             (all emphasis from original)

And, at p. 13:

     ... The Board cannot agree with Mr. Lee that equity is always achieved by determining actual value based on market driven forces and at a level of 100% of those values. It will agree that equity is achieved by determining actual value in a consistent manner, reflected in the actual values as found by Assessors in the municipality or rural areas. The Board recognizes that it is virtually impossible for the Assessment Authority to have all assessments (reflecting actual/market value) at 100% of values dictated by the marketplace.

                                  (emphasis from original)

16         On appeal to the Supreme Court, the learned chambers judge agreed with the conclusions of the Board. He said, at p. 24 of his as yet unreported decision:

          While the new wording is not as expansive as the old, in my opinion its effect is the same. There is no difference of note between "fairly represent actual values within the municipality or rural area" and "actual value applied in a consistent manner within the municipality or rural area." The lack of the words "shall be fair and equitable" again do not represent a substantial change. The words used earlier simply reflect the common law and of course it is still in effect. Further, it would seem that when assessments (assessments and complaints) in a municipality or area are decided or fixed in a consistent manner, they should be fair and equitable as among themselves.

17         He said that the law as pronounced inBramalea (supra) was still applicable, despite the legislative changes. He concluded as follows, at p. 29:

          It seems to me in the final analysis then, that the board simply took the position that it had before it two levels of actual value which might be applied to the subject property, and chose the lower level as the one applied in a consistent (and therefore equitable) manner. And in the circumstances of this case I can see no clear error in the board having done so.

18         He answered questions (1) and (3) in the negative.

                               V

19         This Court inBramalea (supra) restated the common law presumption that taxing authorities were required to deal even-handedly with all taxpayers. All taxpayers within a class must be treated in the same way (p. 223). The Court noted that, under the former legislation, the Board had no power to deal with assessments which were not the subject of an appeal, and therefore had no means of adjusting the assessments of all properties in the class so as to achieve overall equity (p.224). It said there was no single mathematical formula for arriving at "actual value" (p. 225). It said that where the Board was of the view that one owner's property, and other properties in the same class, were all assessed below actual value, it could not "abandon the principle of equity", and increase the assessment on the one property subject of the appeal (p. 226). It said such under-assessments were to be corrected at the Court of Revision stage, where the assessments of all properties in a class could, upon notice, be adjusted (p. 227).

20         The appellant says the 1992 amendments to the Act changed this regime fundamentally. It says the amended s-s. 69(2) specifically empowers the Board to order the commissioner to reassess properties, whether they are the subject of an appeal or not, and that s-s. 69(2)(b) empowers the Board to increase the assessments of properties not subject to appeal, if the Board finds their assessment to be below their actual value.

21         I would agree that the amendment to s-s. 69(2) does give the Board an additional power it did not have at the time ofBramalea; namely, to adjust the assessments of other lands and improvements, and not only the land and improvements under appeal, to achieve over-all equity. However, I can find no basis for the two inferences the Assessor would draw from the amendment. The first is that s-s. 69(2) has become the only mechanism for the Board to use in ensuring "consistency" among actual values of similar properties in the municipality or rural area. The second is that it obliges the Board to order the Commissioner to reassess properties at actual value even if they are not subject to an appeal, if the Board determines that there is an inconsistency of assessments within a class of properties. Subsection 69(2) does not say on its face that it is the only mechanism available to the Board. Nor does use of that mechanism become obligatory, unless and until the Board finds as a fact either that:

     (a) the assessments of lands and improvements in all or part of a municipality or rural area, whether or not the subject of appeal, are above their actual value, or

     (b) the assessment appealed against is at actual value but the assessments of similar land and improvements in all, or part, of the municipality or rural area, are below their actual value.

The Board did not make either of those findings in this case.

22         Moreover, if the Board finds the necessary facts it is not enough, as the Assessor suggests, for it to increase the assessments of only some comparables within the municipality or rural area which are assessed below their actual value. The clear words of s-s. 69(2) require that the Board consider the assessment of every property within a municipality, or part of it.

23         In order to achieve the fundamental purpose of the Act, therefore, the Court of Revision and the Assessment Appeal Board must be empoweredeither to direct the reassessment of a property under appeal, or the reassessment of properties in part or all of the municipality or rural area. If the latter were the only mechanism available to the Board, the taxpayer's right to be treated as all others in the class, and the Board's duty to deal even-handedly with all taxpayers in the same class, would be illusory, and the purpose of the Act defeated.

24         The appellant says that the words in s-s. 69(2) "... the Board may order the commissioner to reassess ..." (my emphasis), are to be interpreted as imposing an obligation on the Board to reassess properties at actual value, even if they are not subject to an appeal. I am unable to accept this proposition. Section 29 of theInterpretation Act says that "may" is to be construed as permissive and empowering. I see nothing in the context of theAssessment Act to suggest that "may" should be given any meaning other than that.

25         The interpretation of s. 69 contended for by the Assessor would lead to unfairness and inconsistency. It would lead to unfairness because properties chosen as comparables by a property owner seeking to have his own assessment reduced, would be subject to the possibility of having their assessment increased without notice to the owners. It could lead to inconsistency, because reassessment in this way would typically affect only a small number of property owners within a class. Reassessment would be undertaken in a haphazard way, depending entirely upon which taxpayers chose to appeal their assessments, what comparables they chose, and what comparables the Assessor chose in responding to those appeals. The stated goal of s-s. 44(1)(b) is to achieve "assessments at actual value applied in a consistent manner". The use of s. 69 in the way suggested by the Assessor would not lead to this result.

26         In my respectful view, the learned chambers judge did not err in his interpretation of s. 44 and s. 69 as amended, and consequently did not err in answering questions numbered 1 and 3 of the stated case in the negative.

27         There was, as the learned chambers judge concluded, evidence upon which the Board could reassess Mr. Lount's property as it did. There is no absolute measure of actual value. Indeed, as was pointed out inBramalea, there may be a range of values within which all values are actual value. Actual value is an opinion as to market value, and there is no mandatory method as the basis for its estimation.

28         I would dismiss the appeal.

                             "The Honourable Mr. Justice Finch"

I AGREE:

"The Honourable Mr. Justice Carrothers"

I AGREE:

"The Honourable Mr. Justice Lambert"