M.C. Lount & Associates Decisions

2. Ross v. Assessor of Area #10

Written Reasons by:
The Honourable Madam Justice Saunders

Concurred in by:
The Honourable Madam Justice Southin
The Honourable Mr. Justice Donald

Reasons for Judgment of the Honourable Madam Justice Saunders:

[1] This appeal concerns a property assessment in which the only characteristic differentiating the subject property from nearby lands is the zoning.

[2] The property in question is owned by the respondents. It comprises three lots in the downtown core of New Westminster, British Columbia. The property is now being used below capacity, including by an autobody business. The lots are zoned C-4, which permits commercial or residential use, or a combination of the two, to a building density of 5.2 square feet for each square foot of land. It is not disputed that the highest and best use of the lots is holding for future development.

[3] Other nearby lots for which the highest and best use is also holding for future development are zoned RM-6. RM-6 zoning permits only residential use to a maximum density of 4.0 square feet for each square foot of land. At least one autobody shop, a competitor of the shop on the subject lands, has premises on land zoned RM-6.

[4] Since 1991 the Assessor has assessed land in the New Westminster downtown core zoned C-4 at a higher square foot value than land zoned RM-6. For the 1998 Assessment Roll the base value of C-4 land was $48 per square foot and of RM-6 land was $45 per square foot.

[5] The subject land was assessed at the C-4 base rate, $48 per square foot, for the 1998 Assessment Roll.

[6] The respondents appealed the assessment to the Assessment Appeal Board, as they had previous assessments. The main issue was the application of the principle of equity in taxation. The respondents contended that the only realistic use for both C-4 and RM-6 land in the downtown core, regardless of zoning, is new residential development, for which there is currently little or no demand. They said, therefore, that there is no justification at this time for a differential in assessments for otherwise similar properties.

[7] The Assessment Appeal Board concluded that the market would differentiate in value C-4 land from RM-6 land, and dismissed the appeal. In doing so, it stated:

[8] The respondents then brought a Stated Case. The chambers judge answered yes to the following two questions:

[9] In reaching his conclusion that the respondents should succeed, the chambers judge said at paras. 21 - 26:

[10] It is from this decision on the Stated Case that the Assessor appeals. The Assessor contends that the chambers judge erred:

[11] The respondents' position may be distilled to two arguments. The first is that the current market for land in this area does not differentiate in value based on the zoning. Secondly, they argue that zoning is not a characteristic of land and does not set value, it merely designates how land may be used. For these reasons the respondents say that the Assessment Appeal Board was wrong, and the chambers judge was correct.

[12] The chambers judge answered affirmatively to two questions: had the Board misapplied the law requiring similar properties to be assessed to ensure equitable taxation, and did the Board act upon a misconception of the law and a view of the facts that could not be reasonably entertained.

[13] Both the Board and the chambers judge correctly stated the broad principle of law relied upon by the respondents, the principle of equity in taxation. Fairness between taxpayers requires similar properties to be assessed equitably. These principles were confirmed by this Court in Vancouver Assessor, Area 9 v. Bramalea Ltd. (1990), 52 B.C.L.R. (2d) 218 (C.A.) and Vancouver Assessor, Area 9 v. Lount (1995), 10 B.C.L.R. (3d) 92 (C.A.).

[14] The issue in this case is the application of that principle to these facts. Can zoning alone create a dissimilarity between properties which should be reflected in their assessments? If so, was it reasonable on the evidence for the Board to conclude there was such a dissimilarity in this case?

[15] Similarity is a spectrum, aptly described by the Assessment Appeal Board in the passages above. Points of similarity and dissimilarity will lead to different value responses from the market. The market value will reflect potential uses of the property, and in this zoning may be a factor. While zoning in itself does not determine the highest and best use of land, it is a factor which the Board may properly consider. While zoning sometimes may overstate the practical uses of the property, or may limit the use of the property (subject to any application to rezone, the risks of which will be reflected in the market price), it may be a factor which influences the market value of the land, and hence its actual value. Zoning, thus, may be a basis on which to assess otherwise similar parcels differently, subject to evidence that this point of dissimilarity is reflected in the market value.

[16] The Board found that lands zoned C-4 and RM-6 in the downtown core of New Westminster have different market value and, based upon this difference, found that the differently zoned properties have different actual values.

[17] In his reasons the chambers judge said:

and:

With respect, these statements overlook the evidence that was before the Board that from 1992 to the date of assessment, C-4 and RM-6 property had a different market value. The Board's decision on this point was not made in an evidentiary vacuum and was one which the evidence could reasonably support. A court is not permitted to interfere in findings of fact reasonably made on the evidence before the Board.

[18] I conclude that the Board did not misapply the law concerning equitability of treatment as between different taxpayers, or misconceive the law. Nor was its decision unreasonable based upon the evidence before it. In my view, the chambers judge erred in his answer to questions 3 and 5 of the Stated Case.

[19] I would allow the appeal.

I AGREE: "The Honourable Madam Justice Southin"

I AGREE: "The Honourable Mr. Justice Donald"

Michael C. Lount, B.A. Sc., AACI, is president of M.C. Lount & Associates Ltd., a leading expert in the field of property tax assessments. Mr. Lount is a 30-year member of the Appraisal Institute of Canada and holds their senior AACI designation. He also holds a Bachelor of Applied Science degree in Civil Engineering from the University of British Columbia. He can be reached at 604-727-7902 or contact us here

Remember, we are an independent company and are not affiliated with the provincial government assessment office - the British Columbia Assessment Authority.