Property Tax

Case Law

The various provincial Assessment Acts have much in common with each other. Case law in one provincial jurisdiction is therefore often useful precedent for interpreting an Assessment Act in another province. The following cases are catalogued by province:

New Brunswick

June 2005:
Court of Appeal of New Brunswick
Food City Limited (now known as Sobey's Land Holdings Limited)
River Road, Oromocto, N.B.
Inclusion of H.S.T. in Assessed Value

Synopsis:
Food City Limited challenged Service New Brunswick's insistence that the Harmonised Sales Tax (H.S.T.), a value added tax, should be included in their calculation of the assessed value.

The New Brunswick Assessment Act requires that property be assessed at its market value on a "base date" (January 1st of the assessment year). Service New Brunswick (SNB) calculates the market value of some properties by computing their construction cost, deducting depreciation, and adding the result to the land value. This is a well established technique for ascertaining the value of "specialised property"; real estate that is often built by the occupier to fulfil a specific purpose such as a saw mill, oil refinery … or, as in this case, a large food distribution warehouse and supermarket. SNB uses the Boeckh costing system for this purpose. Even though they had used the Boeckh system since time immemorial they had not realised that the costs so generated, were inclusive of the H.S.T., a "pass through" tax similar to the G.S.T., but levied at 15% instead of 7%. This fact surfaced at the first level of appeal before the Assessment Planning and Appeal Board in 2003. The Board decision observed that "This rather startling revelation came to light when two local agents of the Respondent (Service New Brunswick) advised the Board they were unaware of this". Once they discovered that their costing figures included H.S.T., SNB did a flip flop and decided that this was the way to go. Since property owners engaged exclusively in commercial activities are entitled to full Input Tax Credits for the H.S.T. they incur, the tax is a "wash". The Board was plainly outraged by SNB's tactics and called their policy of including the H.S.T. in the assessed value "an affront to common sense". Service New Brunswick promptly appealed the Board's decision.

The New Brunswick Court of Queens Bench heard SNB's appeal on July 19th 2004. The Judge agreed with the Board and in dismissing Service New Brunswick's appeal reiterated that "It would be an affront to common sense that the cost of an item could be increased by the amount of a local tax which is rebated to the payer, with an offset of one with the other". Service New Brunswick's Director of Assessment, Mr. William Morrison, was in court to hear the decision, which also awarded costs to the Respondent. SNB promptly appealed again, this time to the Court of Appeal of New Brunswick.

The New Brunswick Court of Appeal heard the case on April 26th 2005 and rendered judgement dismissing the appeal (with costs) on June 30th 2005. In its decision the Court noted that "the executive director relies heavily upon Montreal (City) v. Sun Life Assurance of Canada [1952] 2 D.L.R. 81, an oft-cited decision of the Judicial Committee of the Privy Council. In my respectful judgement, that reliance is ill-conceived. Indeed, I see the Board's assessment as fully in synch with the principles articulated in Montreal (City) v. Sun Life Co. of Canada".

Service New Brunswick reportedly seriously considered appealing the Court of Appeal's decision to the Supreme Court of Canada … but then abandoned the idea, no doubt despairing that the world would ever adopt its view of common sense.

New Brunswick

May 2002:
New Brunswick Assessment Review Board
Royal Bank Realty Inc.
83-85 Charlotte St., Saint John, N.B.
Office Building

Synopsis:
Royal Bank Realty Inc. appealed a referral decision for the 1998 taxation year. The property the subject of this appeal, was the Royal Bank Building located in the central business district of Saint John. This 61,000 ft.² bank and office building was only four years old at the time of this 1998 appeal. The Royal Bank occupied 37% of the total rentable space and leased their area back to themselves at a market rent. Of the total 24 tenant suites in the building, the Royal Bank occupied six, another ten were vacant and the remainder were leased to five different tenants. The structure was in excellent physical condition and comprised Class A office space and a banking hall.

The Appeal Board reduced the assessment from $4,800,000 to $3,297,000; the most significant reasons for doing so being the following:

1. The Board focused almost entirely on the income (rent) producing ability of the property. Hardly surprising, this was after all investment grade real estate with a Grade A tenant occupying over one third of the space. However the Royal Bank was also the owner and past practice of the Provincial Assessment Authority, Service New Brunswick, had been to focus on the cost of creating a substitute building when the property was largely owner occupied. However in this instance, Service New Brunswick's views coincided with the appellant and their case rested on the income generating ability of the property.
   
   
2. The Board rejected Service New Brunswick's overall capitalisation rate of 9.5% and substituted 11.0% instead. (The overall capitalisation rate is divided into the annual net operating income to convert it into a capital value, i.e. the assessed value).
   
   
3. The Board recognised that tenant inducements, e.g. free rent, were a legitimate expense. They also appear to have accepted that the cost of (free) leaseholds have to be deducted from the cash flow … and then added back as a (depreciated) capital cost for assessment purposes.
   
   
4. The Board also accepted that a structural reserve allowance (effectively monies set aside for capital replacement) was a legitimate expense.
   
   
5. The Board rejected the rent paid by the Royal Bank to itself and substituted Service New Brunswick's estimate of market rent.
   
   
6. The Board rejected the stabilised long term vacancy allowance tendered by the appellant and substituted instead the actual (greater) vacancy.

New Brunswick

December 2001:
New Brunswick Assessment Review Board
Small Fry Snack Foods Inc.
179 MacLean Ave., Hartland, N.B.
Potato chip and corn snack manufacturing plant

Synopsis:
Small Fry Snack Foods Inc. appealed referral decisions for the taxation years 1999, 2000 and 2001. Their property comprised a purpose built potato chip processing facility built in 1982, with an addition constructed in 1989. Demand for potato chips was such the plant ran 24 hours per day, six days per week. However the market for the plant's product had shifted from Canada to the United States. The U.S. customers wanted their chips cooked in cottonseed, rather than canola oil, and this created a difficulty because there was room for only one fryer in the Cooker Room, thus requiring that the plant operate three shifts, instead of two. Service New Brunswick, the Provincial Assessment Authority, refused to recognise this deficiency in their assessment.

The Director of Assessment also argued that the vegetable oil storage tanks on the property were assessable because the building was a special purpose structure, and the tanks provided services to the building. In other words the building could not fulfil its designed purpose without the tanks, and as such the latter were assessable as "real estate".

Both parties in the appeal were required to submit valuation reports. The Board dismissed Service New Brunswick's report, noting that "this document (it is difficult to call it a report) was full of misinformation, partial information and error".

The Board determined that, if in fact the vegetable oil storage tanks were part of an integrated system of a special purpose facility, they would indeed be assessable under the rationale set out by the New Brunswick Court of Appeal in the case Director of Assessment & Miramichi Pulp & Paper Inc. 1996 172 NBR (2d) 290. However the Board agreed with Turner Drake that the building was adaptable to more than one use, and that the tanks were part of the manufacturing process, and therefore were not assessable. They made an allowance calculated at 25% of the reproduction cost, to account for the functional deficiency caused by the single fryer constraint.

New Brunswick

November 2001:
New Brunswick Assessment Review Board
N.B. Publishing Company
210 Crown St., Saint John, N.B.
Multi-storey printing plant

Synopsis:
N.B. Publishing Co. appealed the 1998 referral decision reducing the assessment from $2,821,600 to $2,041,400. In essence the appellant's case rested on the fact that the building was a special purpose property, erected around a huge printing press which had been declared redundant prior to the Assessment "base date", even though it was still in use on that date. The Assessment Department had taken the position that, since the printing press was still in use on the base date, they could ignore its impending demise, even though it was well known prior to the base date that the printing press was going to be abandoned, and the printing process moved to Moncton.

N.B. Publishing Co. occupied a multi storey industrial building in Saint John constructed in 1963 specifically for the purpose of accommodating a printing press and the related services necessary to publish a newspaper. On November 11th, 1997 the newspaper made public its decision to transfer the printing to Moncton early in 1998. The newspaper was still in operation in the building on January 1st, 1998, the "base date" for valuation purposes for the 1998 assessment year, so the Provincial Assessor ignored the proposed plant closure and assessed the building as though it was not going to take place.

The Board ruled that, since it was known the closure was going to occur prior to the base date, the impact had to be reflected in the assessment. The Board plainly considered the Assessment Department's position ludicrous and in tones of mounting incredulity observed that the Assessor "believes that the Assessment Act requires him to focus on conditions on January 1st, 1998 no matter what happens, no matter how catastrophic an event takes place on January 2nd, 1998 and, even if you know this event would happen in November of 1997". The appeal was allowed.

New Brunswick

June 2001:
New Brunswick Assessment Review Board
Baxter Foods Limited
59-113 Millidge Ave., Saint John, N.B.
Dairy

Synopsis:
Baxter Foods Limited appealed a referral decision for the 2000 taxation year. The property the subject of this appeal comprised a dairy and ice cream plant built in different stages over the period 1930 to 1990. The plant was situated in a residential area and was surrounded by houses and a school. Due to the congested nature of the neighbourhood it was difficult to get large trucks in and out of the area, and loading areas. Because the plant had grown like topsy, it was functionally inadequate for its present use and operated at 40% to 60% capacity. In addition part of the plant was multi-storey, and some upper floors were not fully utilised. The plant had recently lost a major contract to supply a supermarket chain. Service New Brunswick, the Provincial Assessment Authority, refused to acknowledge that the functional deficiencies of the plant had a bearing on its assessment … or that the loss of business impacted adversely on the property value. Service New Brunswick argued that such factors were not relevant because they were "only doing a 'bricks and mortar' appraisal".

The Board ruled that "a deduction from value should have been made because of the inefficiencies at the plant and the well-documented problems of unloading and loading at the plant". They decreed that there should be an allowance (a deduction) of 25% from the Depreciated Cost for functional and economic obsolescence.

New Brunswick

May 2001:
New Brunswick Assessment Review Board
Lounsbury Company Ltd.
275 King Ave., Bathurst, N.B.
Retail store

Synopsis:
This was an appeal of the 1999 taxation year assessment. The land was improved with a four storey commercial building constructed in 1953, some upper floors of which were no longer used. From a retail use viewpoint, the multi-storey structure was obsolete. The owner occupier decided to close the store in 1998 and implemented that decision during 1999. The building was then extensively renovated and leased to N.B. Tel. as a call centre.

The base date for valuation purposes was January 1st 1999. At that point Lounsbury Company Ltd. had decided to close their store but had not communicated this information to the general public. The Board ruled that since Service New Brunswick's assessor was not aware of the impending closure, it was not appropriate to reflect the fact in the assessment because there was "no compelling evidence of the property being abandoned or demolished by the Appellant as of January 1st, 1999". The Board dismissed the appeal.

New Brunswick

May 2001:
New Brunswick Assessment Review Board
170754 Canada Inc.
1945 Miramichi Ave., Bathurst, N.B.
Automobile Dealership

Synopsis:
This was an appeal of a 2000 taxation year assessment. The property was improved with a single storey commercial building, erected in 1978, containing the offices, showroom and service area for a General Motors dealership. The premises no longer met GM's image standards under their GM Image 2000 program and planning was underway to upgrade the building. The renovations were to be undertaken in 2001 at an anticipated cost of $400,000.

The Appellant argued that the proof of the functional obsolescence of the building lay in the significant changes and improvements required by the GM Image 2000 plan. Since a showroom, customer waiting room and drive through service area had to be added, they argued that the former building had significant deficiencies. The Board ruled that there was no evidence to link one with the other.

New Brunswick

March 1999:
New Brunswick Assessment Review Board
Noranda Inc.
Heath Steele, Northumberland County, N.B.
Lead-zinc concentrator mill

Synopsis:
This was an appeal of the 1994, 1995 and 1996 taxation year assessments. The property consisted of two parcels containing 906 acres and 839 acres, improved with a lead-zinc concentrator mill and an array of support facilities for a mine. The facility had been closed in 1984 due to depressed economic conditions and had re-opened again in 1987. An annual expenditure of $2.5 to $3.0 million was required in maintenance to ensure that the 'B' mine was de-watered and water treated, irrespective of whether the mine was operating. The mining operation was projected to terminate during the first quarter of 2000, at which point there would be no use for the lead-zinc concentrator mill unless other ore was found in the area. It was anticipated by the owner that the buildings would be torn down in 2001 at a cost of about $2.5 million.

The keys points of issue in this case were, (1) were the foundations for machinery and equipment assessable?, (2) should the estimated life of the ore body be taken into account when ascertaining the deprecation, and value, of the buildings? The Board's decision essentially ignored the first question but did address the question of the ore body. They ruled that depreciation of the buildings had to be based on the buildings' normal life, not upon the life of the ore body. The decision was appealed to the Court of Queen's Bench of New Brunswick: they dismissed the appeal.

New Brunswick

December 1998:
New Brunswick Assessment Review Board
Ganong Brothers Limited
1 Chocolate Drive, St. Stephen, N.B.
Confectionery and Manufacturing Plant

Synopsis:
Ganong Brothers Limited argued that the 1993 and 1996 assessments of $5,868,400 and $5,875,700 were incorrect even though the property had been constructed in 1989 at a cost of $7,281,024. They relied instead upon their expert's report which valued the property at $4,289,000 (1993) and $4,387,000 (1996). The Assessment Department relied instead on their own appraisals of $6,714,800 (1993) and $6,688,000 (1996).

The substantial divergence of opinion was for the most part, attributable to the "External Depreciation" of $3,361,066 (44.2%) identified in the appellant's appraisal report. The property had been constructed with significant government funding, without which the appellant testified, the facility would not have been built.

The Board ruled that the subject of government funding was a relevant consideration as to whether (or not) the structure would have been erected (and at what cost), and that the appellant could not be considered as a purchaser at a price based upon the historic cost of the structure. The appeals were allowed.

New Brunswick

February 1998:
New Brunswick Assessment Review Board
Crystal Beverages (1993) Limited
220 Henri Dunant St., Moncton, N.B.
Soft drink bottling and distribution

Synopsis:
Crystal Beverages appealed the 1996 referral register decision confirming its assessment. In essence the appellant's case hinged on the additional cost of operating the bottling plant due to, (1) inadequate parking and circulation space around the building, coupled with the poor siting of the building on the lot and, (2) inadequacy of the building, in particular the lack of warehousing space which forced the occupier to rent additional off-site storage. The Board allowed the appeal. The Assessment Department tried to discredit the appellant's expert witness by referring to a "without prejudice" negotiating position presented by the latter prior to the Board hearing in an attempt to reach a settlement. The Board ruled that this tactic was "unwarranted". The Board also ruled that "asking prices" had no evidentiary value.

New Brunswick

January 1996:
Court of Appeal of New Brunswick - 69/95/CA
Miramichi Pulp and Paper Inc.
Nelson-Miramichi, N.B.
Pulp Mill

Synopsis:
Under the New Brunswick Assessment Act, electrical power distribution systems fall within the definition of "real property" and are assessable. Machinery and equipment does not and is not … so electrical power systems whose sole purpose is to feed process machinery forms part of the equipment, not the real estate, right? Right! Well, sometimes. The Court of Appeal of New Brunswick cast some light on the vexing question of power wiring and its chameleon like qualities in this decision. Although the Appeal Court ruled that the power wiring was part of the real estate, and not the equipment, a careful reading of the decision reveals that this is the exception rather than the rule.

Miramichi Pulp and Paper Inc. operated a Groundwood pulp mill and sawmill in the former village of Nelson-Miramichi. The mill's electrical system was substantial: "one 138,000 volt substation, one 6,900 volt substation, nine 600 volt substations, forty 600 volt load distribution centres, numerous circuit breaker distribution panels and disconnects and a network of cables located throughout the mill site. The major portion of the Electrical Distribution System is used to operate the Production Equipment at the mills, primarily the Groundwood mill. A small portion of the system is used to service the various buildings". The portion of the network which provided services to the mill buildings themselves was not at issue, it was clearly assessable, the question of assessability focussed on the remainder of the electrical system since its primary purpose was to feed the processing equipment. The Appeal Court dismissed the Director of Assessment's arguments that (1) "any electrical power distribution system" meant "all" such equipment, and (2) that the degree of annexation of the power systems made them indivisible from the real estate to which they were affixed. However, the Appeal Court did rule that the power wiring was part of the real estate and therefore assessable because the latter was a mill and unable to function as such without the wiring: "The electrical distribution system of Miramichi Pulp and Paper is part of the realty because it is necessary for the building to function as a mill."

In essence this decision determines that electrical distribution systems are not assessable provided that their function is to power process machinery; unless the building which houses that process machinery is a special purpose building which could not fulfil its intended use without that electrical distribution system. In the latter event it is assessable.

New Brunswick

February 1995:
New Brunswick Assessment Review Board
Lodgers Riverfront Corp.
239 Woodstock Rd., Fredericton, N.B.
New, full service hotel

Synopsis:
This appeal was concerned with the sum at which the property of the appellant should be assessed for the 1992 taxation year, the base date for which was the 1st January 1992. The appellant appealed from a 1992 Referral Register Decision confirming the assessment at $13,262,200. The property at issue was a seven-storey Sheraton Inn constructed during 1991 at a total cost of $29,504,274. Commencement of operations was the 24th January 1992.

The appellant's presentation included an expert's report that valued the property at $6,865,000 utilising the Income Approach. The respondent argued that because no income stream was present at the base date, this approach was not relevant. The report filed in support of the assessment contained only the Cost Approach to value.

The Board ruled that a purchaser entering the marketplace on 1 January 1992 would consider the historical costs, but would also require accurate projections of income and expenses upon which to base their determination of value. The Board ruled that the purchase price would not be the cost price.

The appeal was allowed and the 1992 assessment was set at $6,865,000.

New Brunswick

November 1982:
Court of Queens Bench - Trial Division - S/C/1094/79
Chan Food Products Ltd.
Saint John Industrial Park, N.B.
Food Preparation

Synopsis:
Chan Food Products Limited sought a declaration from the Court that certain walk-in freezers and coolers were not assessable property. The plaintiff argued that the coolers represented structures other than buildings, or alternatively, installations, and in either case were not assessable under the Assessment Act. To support their case, the plaintiff presented evidence that the coolers and freezers could be disassembled, moved from their present location, and reassembled elsewhere. The Court ruled that the purpose of the coolers was to enhance the value of the premises, and that the physical affixing of the freezers and coolers, however minor, made them assessable under the Act.

New Brunswick

May 1978:
New Brunswick Supreme Court - Queens Bench Div. - Topic 1565
J.D. Irving Limited
Thorne Ave., Saint John, N.B.
Wholesale Food Distribution

Synopsis:
J.D. Irving Limited sought a declaration from the Court that a combination walk-in refrigerator/freezer was not assessable property. The Assessment Department argued that the unit, weighing 10,000 lbs., was placed in one spot with the intention that it remain there for the duration of its useful life. The Court ruled that the cooler/freezer unit was no different from a cooler/freezer unit that may be found in one's home, despite its size, and that the degree of affixation of the unit was irrelevant in applying the exclusion rule. The Court declared that the cooler/freezer unit was not assessable property.

This decision is somewhat inconsistent with the "Chan Food Products Ltd." case.

Nova Scotia

February 2005:
Nova Scotia Utility and Review Board
Homco Realty Fund (20) Limited
1741 Brunswick Street, Halifax, N.S.
General Level of Assessment

Synopsis:
Homco Realty Fund (20) Limited, the owners of a major downtown office building, challenged Service Nova Scotia's (SNS) calculation of the General Level of Assessment for commercial properties in the Halifax Regional Municipality (HRM). The objective of Homco's concern was 1741 Brunswick Street, a building situated rather appropriately, opposite Halifax's Town Clock, an edifice that has held Haligonians accountable since 1803.

The Nova Scotia Assessment Act requires that property be assessed at its market value on a "base date" (January 1st two years preceding the assessment year). However the Act also recognises that Service Nova Scotia may be less than assiduous in its pursuit of this obligation so it also mandates that "taxation must fall in a uniform manner" on properties in the municipality. Provincial case law has established that this uniformity provision must be applied across, rather than within, asset classes in the municipality. So all commercial property has to be assessed uniformly … office buildings cannot be compared solely with other office properties, but must be compared with every commercial assessment in the municipality. This "General Level of Assessment" is calculated by dividing the sum of the assessments, for those properties that have sold within six months of the base date, by the aggregate of their sale prices. If this aggregate assessment to sale price ratio is 80%, then all properties must be assessed at 80% of their market value. If the property is assessed at a higher rate than 80%, the owner and occupiers will pay too much in taxes. Service Nova Scotia calculates the General Level of Assessment, for each municipality, every year. Since sale prices are not public knowledge in Nova Scotia, private taxpayers are unable to calculate the General Level of Assessment because the relevant data is not available to them. They must instead rely on Service Nova Scotia's calculations. It follows therefore that there is a heavy responsibility on SNS to "get it right" … since if they fail to fulfil this responsibility half of the commercial properties will shoulder too high a tax load, and half will pay too little in property and business occupancy taxes.

Homco Realty Fund included, as the main plank of its appeal, the fact that its assessment represented 97% of its market value (the property had been sold shortly after the base date). Other comparable sales were assessed at assessment/sale price ratios of between 55% and 82%. The sole valuation issue before the hearing was that of uniformity of assessment, and the kernel of the disagreement between the taxpayer and SNS lay in the inclusion, or exclusion, of certain sales in the General Level of Assessment calculation. SNS also argued that the General Level of Assessment calculation methodology favoured by case law was incorrect and should be abandoned and replaced by SNS' "mass appraisal approach", mathematical Mumbo-jumbo rightly rejected as such by the Board and the Court of Appeal in previous cases but apparently still worshipped by the Assessment Department. The Board again declined to be seduced by this whiff of brimstone, recklessly believing perhaps, that they and the Court of Appeal were still correct and tartly pointing out to Provincial government lawyers Duplak, QC and Grant L.L.B. that there had been no legislative changes since the Court of Appeal last rendered its decision on the matter. SNS also attempted to escalate the appeal to the Supreme Court by arguing that the Utility Board lacked the jurisdiction to hear the case. The Board disagreed.

Service Nova Scotia excluded all properties from its General Level of Assessment calculation whose sale price was determined using discounted cash flow. Since all major investment type properties are valued on this basis, all were excluded from the calculation! The Board determined that SNS' decision to exclude these sales was based on (1) administrative convenience, and (2) a misinterpretation of a previous court decision (City of Halifax and Revenue Hotels Limited v. Director of Assessment 1988, NSMB-122-85-A). The Board observed that as a result of the foregoing "the assessments of many large and expensive commercial properties in the HRM have been set at values lower than they should have been". (The collorary of course, is that the other properties have had to pick up this substantial tax shortfall). Service Nova Scotia's Mr. Musycsyn excluded the sale price of the subject property, 1741 Brunswick Street, even though it sold close to the base date, as evidence of its market value! He also excluded the sale of Purdy's Wharf, HRM's trophy office complex and acknowledged that he would have done so even if it had not been sold on a discounted cash flow basis because it was an "outlier" i.e. it was so under-assessed its inclusion in his data would have substantially reduced his General Level of Assessment calculation! The Board referred to this practice as a "systemic error" and observed that "this problem is further aggravated by the Director's attempt to (in the Board's view) artificially protect the Director's claimed general level of assessment by excluding sales of such large transactions" and "while the Director not surprisingly appears to be content with a claimed general level of assessment which is close to 100%, one of the ways the Director achieves this result is to automatically exclude sales which would otherwise lower it". On another occasion Service Nova Scotia's Mr. Musycsyn excluded a purchase by the Hospitals of Ontario Pension Plan partly on the grounds that the purchaser was "a pension plan" and a "national purchaser", causing the Board to observe "the Director appears ready to disqualify any sale involving a REIT or pension fund without further inquiry as to the market circumstances of the sale". Mr. Musycsyn's rationale apparently was that REITS and other "national" purchasers were lamentably lacking in sophistication and consequently paid far too much for property … so these sales had to be excluded from his analysis!

The Nova Scotia Utility and Review Board rendered their 118 page decision on February 28th 2005. They allowed Homco's appeal and determined that SNS' "general level of assessment is wrong" and calculated it at 91.7% (SNS had insisted it was 98.4%). The Utility Board's weighty decision, as befitted six days of hearings over a five month period in 2003 and 2004, was thoughtful and carefully reasoned. Service Nova Scotia promptly appealed. The case was heard by the Nova Scotia Court of Appeal (CA 246980) on May 16th 2006. Their decision, rendered on May 26th 2006, dismissed Service Nova Scotia's appeal.

Nova Scotia

June 2003:
Nova Scotia Utility and Review Board
Hinspergers Poly Industries Limited
80 Blakeney Dr., Truro, N.S.
Polyethylene producer

Synopsis:
Hinspergers Poly Industries Limited filed an appeal of their year 2000 assessment, two days after the expiry of the appeal period. Service Nova Scotia, the Provincial Assessment Authority refused to accept the appeal, on the grounds that it was out of time.

Hinspergers Poly Industries Limited owned a factory located in the Truro Industrial Park. On January 10th 2000, the Director of Assessment mailed an Assessment Notice for the property to Hinspergers' head office in Mississauga, Ontario. The Assessment Notice went unnoticed for 33 days (the Appeal Period was 21 days, but non-residents of Nova Scotia were permitted a possible 10 day extension by the Assessment Act). The omission was noticed on a Saturday, and the appeal was filed the following Monday. Under the Assessment Act, the Review Board has the power to grant an extension where filing the appeal "has been prevented by absence, illness or other sufficient cause".

The appeal period has been held, in previous Board decisions, to commence when the Assessment Notice is mailed … not when it is received. The application for the granting of an extension must be filed within 60 days and the Assessment Act indicates that the relevant evidence must accompany that filing. The Act implies too that the Nova Scotia Assessment Appeal Court hearing must also be conducted within that same time period. Hinspergers complied with this ambitious schedule, only to have their application rejected by the Nova Scotia Regional Assessment Appeal Court.

The Board heard that the Assessment Notice had been overlooked because the small (5 person) administrative staff were overwhelmed by structural changes at the 100 employee company. There were changes at head office involving new telephone and computer systems, and changes in the two factories which involved the polyethylene pipe manufacturing processes themselves. The Board appears to have been particularly impressed by the fact that the error was discovered on a Saturday! They granted Hinspergers Poly Industries Ltd. their extension.

Nova Scotia

November 2001:
Nova Scotia Regional Assessment Appeal Court
Colchester Park Development Society
1540 Plains Rd., Debert, N.S.
Bulk land

Synopsis:
Colchester Park Development Society, an incorporated non-profit body with a mandate to promote economic opportunities in the community, took over the ownership of Canadian Forces Station Debert from the Department of National Defence. The overall acreage obtained by the Society when it acquired this former military station, consisted of 36 acres of residential land, 137 acres of commercial land, and 386 acres of bulk land. The bulk land was unserviced, had not been subdivided and was covered with alders and scrub brush. In 2001, following the acquisition by the Society, Service Nova Scotia, the Provincial Assessment Authority, decided to reclassify the 386 acres of forest land from "resource" to "commercial". A commercially classified property typically carries about double the tax load of a residentially classified property with the same assessed value (forest land classified as "resource" is taxed at the residential rate).

Service Nova Scotia's rationale for reclassifying the land from "resource" to "commercial" was that the Society intended to so utilise the land in the future. The Society was actively marketing the developed commercial and residential portions of Colchester Park and operated a web site for that purpose. Service Nova Scotia took the view that the stated intentions of the Society, as evidenced by its articles of incorporation, and the material on its website, demonstrated an intention to use the property for commercial purposes.

The Nova Scotia Regional Assessment Appeal Court rejected Service Nova Scotia's reclassification, based on the precedent set by the Nova Scotia Court of Appeal decision in the case Eastern Forestry Resources Ltd. v. Director of Assessment (N.S.) et al (1991), 108 N.S.R. (2d) 357. The Appeal Court had ruled that a change in use only occurred when a physical action was undertaken, such that the land ceased to be utilised for its previous exempt use. An intention to use the land for commercial purposes did not meet this change of use test. The Nova Scotia Regional Assessment Appeal Court found in favour of the Colchester Park Development Society. Service Nova Scotia did not appeal the Court's decision.

Nova Scotia

February 2000:
Nova Scotia Utility and Review Board - AS-97-23b
Edcyn Inc.
5850-54 Sullivan St., Halifax, N.S.
Commercial-owner occupied

Synopsis:
This was an appeal by Edcyn Inc. from a decision of the Regional Assessment Appeal Court dated 11th October 1997, which reduced the 1997 assessment of a commercial property located at 5850-54 Sullivan Street, Halifax, Nova Scotia, from $569,700 to $566,900. The base date for determining the value of the property was 1st January 1995. The Director of Assessment argued that the 1997 assessment should be raised to $618,600.

The Board's decision reviewed the "Mass Appraisal" reporting approach used by the Assessment Department and ruled against it. Edcyn Inc. provided a traditional "3 approaches" valuation to the Board (prepared by Turner Drake), who accepted this method as the proper one to use for assessment appeals. Their 34 page decision also included findings about the disclosure of experts' evidence prior to the hearing review. Two of the observations in the decision are:

"In the judgement of the Board, the report submitted by Mr. Pitman (which, again, the Board recognises is the format currently used by the Director), does not meet the requirements of Rule 14."

"Recognising the Director's duty with respect to the taxpayers as a whole to ensure uniform assessment across a Municipality, the Director might wish to consider the prudence of attempting to determine actual market value, using a more intensive review than necessarily occurred in the original mass appraisal assessment."

Nova Scotia

March 1998:
Nova Scotia Utility and Review Board - AS-95-55-59
Maplehurst Properties Limited
Alderney Gate, Dartmouth, N.S.
Office complex

Synopsis:
Maplehurst Properties appealed a decision of the Regional Assessment Appeal Court. The Assessment Department defended the assessment using "mass appraisal" techniques and attempted to justify this approach with statistics showing that the resultant assessments were within an acceptable range. The appellant retained Turner Drake to produce a property specific appraisal. The Board ruled as follows:

1. Non-recoverable Operating Costs - the 15% administration fee and the federal tax on large corporations were both deductible operating expenses.
   
   
2. General level of Assessment - this was acceptable as the only test of uniformity. The Assessment Department's submission on Coefficient of Dispersion and the Price Related Differential were ignored.
   
   
3. Structural Reserve - this was disallowed on the grounds that it was not appropriate for a new building.
   
   
4. Depreciation of Leaseholds - all leaseholds are depreciated to the base date (1st January 1991) not to the state date (which changes annually).
   
   
5. Mass Appraisal Techniques - the Board was critical of the Assessment Department's attempt to hide behind "mass appraisal techniques" and "Department policy". It ruled that "valuations provided to the Board relying on Mass Appraisal Techniques are subject to the same test of reliability as information provided by the single property appraisal".

Nova Scotia

September 1996:
Nova Scotia Court of Appeal - CA-132181
Canada Trustco Mortgage Company
Highfield Park, Dartmouth, N.S.
990 Apartments

Synopsis:
This was an appeal and cross appeal by Canada Trustco and the Assessment Department, together with the Halifax Regional Municipality from the Nova Scotia Utility and Review Board Decisions NSUARB - AS-94-77 to 79 and 115 to 124. Both appeals were dismissed in a unanimous decision. All of the fourteen buildings were erected after the 1st January 1988 base date and by the state date (1st December 1993) economic conditions, primarily high vacancy rates, had profoundly affected the market value of the buildings … not least of which was the adverse impact on vacancy rates of the construction of the subject properties themselves … almost 1,000 units introduced rapidly into a small market. Under their earlier decision (CA-120545) the Court had determined that property had to be assessed at the state date, so declining economic conditions which post dated this date had to be ignored. But what if the decline had been caused by the construction of the properties under appeal? Essentially the Court of Appeal confirmed that the state date assessment had to consider the adverse impact on the vacancy rate resulting from over exuberant construction activity, even though it had occurred after the state date.

Nova Scotia

April 1996:
Nova Scotia Court of Appeal - CA-120545
Wandlyn Inns Limited
Windmill Rd., Dartmouth, N.S.
Motel

Synopsis:
This was an appeal and cross appeal by Wandlyn Inns and the Assessment Department from the Nova Scotia Utility and Review Board Decision NSUARB - AS-93-01. Both appeals were dismissed in a split decision. Essentially the Court of Appeal confirmed that the "state date" provisions of the Assessment Act relate to the "physical condition" of the property only and exclude changes in market value which arise out of factors e.g. decrease in trade, other than physical changes.

Nova Scotia

April 1992:
Nova Scotia Supreme Court - Appeal Division
[1992] N.S.J. No. 169; S.C.A. No. 02568
John A. Doucette (Respondent)
5287-89 Tobin St., Halifax, N.S.
5-unit apartment

Synopsis:
The Appeal Division reversed the decision of the Nova Scotia Municipal Board and increased the assessment on the Respondent's five-unit apartment building to $315,800. The Board had reduced the assessment from $284,800 to $277,000.

The Respondent, Doucette, had purchased the property in 1987 for $320,000. The base date for the 1990 assessment year was the 1st January 1988. The submission on behalf of Doucette to the Board did not dispute the market value of the property, rather it was centred upon the assessments of certain comparables in the area of the property at issue. The Board focused its attention on those properties in reducing the assessment.

The Director appealed. The Appeal Division ruled that the Board should not have permitted its attention to be diverted from Section 42 (1) of the Assessment Act, which reads:

"Valuation 42 (1) All property shall be assessed at its market value, such value being the amount which in the opinion of the assessor would be paid if it were sold on a date prescribed by the Director in the open market by a willing seller to a willing buyer, but in forming his opinion the assessor shall have regard to the assessment of other properties in the municipality so as to ensure that taxation falls in a uniform manner upon all residential and resource property and in a uniform manner upon all commercial property in the municipality."

The decision ruled that the Board erred in law in failing to properly apply Section 42(1) of the Act and the case law explaining that Section. It also erred in determining that uniformity did not exist simply by comparing the subject property with a few others in the vicinity. The decision further ruled that the fact that other properties on the same street or in near vicinity were assessed lower in relation to actual cash value than the subject property, was not grounds for altering the assessment of the latter property.

There was no evidence before the Board demonstrating that the assessor erred in assessing properties at 98.7% of market value in order that taxation fall in a uniform manner upon all real property in the municipality. The Court allowed the appeal, put aside the decision of the Board and set the assessment at $315,800 (i.e. $320,000 x 0.987) for the 1990 tax year.