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NOVA SCOTIA COURT OF APPEAL Citation: Nova Scotia (Director of Assessment) v. Knickle , 2007 NSCA 104 Date: 20071106 Docket:
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NOVA SCOTIA COURT OF APPEAL
Citation: Nova Scotia (Director of Assessment) v. Knickle,
2007 NSCA 104
Date: 20071106
Docket: CA 279690
Registry: Halifax
Between:
Director of Assessment
Appellant
v.
Watson E. Knickle and Julia A. Knickle
Respondents
Judge:
The Honourable Justice Nancy Bateman
Appeal Heard:
October 9, 2007
Subject:
Residential property assessment appeal.
Summary:
The Knickles’ property assessment jumped substantially from
2003 ($146,500) to 2004 ($235,800). They appealed to the
Regional Assessment Appeal Court which confirmed the new
assessment. On their further appeal to the URB, the Director of
Assessment presented evidence which supported an even higher
value ($319,000). In a lengthy decision the Board rejected the
evidence of value presented by the appraiser on behalf of the
Director. The Board fixed the assessed value at $58,190.
Issue:
Did the Board err in law by finding that neither party bears the
burden of proof in assessment appeals? Did the Board further err
by raising and deciding the burden of proof without notice to the
parties?
Result:
The Board erred at law in concluding that the burden of proof was
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other than on the appellants; in denying the parties natural justice
by raising the issue of the burden of proof without notifying them
that it was a matter in issue; and in conducting the assessment
appeal is other than a traditional adjudicative process. Appeal
allowed and appeal remitted to the URB.
This information sheet does not form part of the court’s judgment. Quotes
must be from the judgment, not this cover sheet. The full court judgment
consists of 18 pages.
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NOVA SCOTIA COURT OF APPEAL
Citation: Nova Scotia (Director of Assessment) v. Knickle,
2007 NSCA 104
Date: 20071106
Docket: CA 279690
Registry: Halifax
Between:
Director of Assessment
Appellant
v.
Watson E. Knickle and Julia A. Knickle
Respondents
Judges:
Bateman, Saunders and Hamilton, JJ.A.
Appeal Heard:
October 9, 2007, in Halifax, Nova Scotia
Held:
Appeal allowed per reasons for judgment of Bateman,
J.A.; Saunders and Hamilton, JJ.A. concurring.
Counsel:
Mark V. Rieksts, for the appellant
respondents in person
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Reasons for judgment:
[1]
This is an appeal by the Director of Assessment (the “Director”) from a
decision of the Nova Scotia Utility and Review Board (the “Board”) dated March
13, 2007. The Board decision is reported as 2007 NSUARB 15. For the reasons
which follow, I would allow the appeal.
BACKGROUND
[2]
The appeal concerns the assessment of property located on Nova Scotia’s
South Shore and owned by the respondents Watson E. Knickle and Julie A.
Knickle. The single family residential dwelling is located at 103 Dauphinee Road,
Second Peninsula, Municipality of Lunenburg.
[3]
In 2003 the assessed value of the property was $145,600. Assessments for
the years 2001 and 2002 were $127,400 and $136,200. The assessed value of a
property for a particular year is meant to reflect its market value on a prescribed
past date (s. 42 of the Assessment Act, R.S.N.S. 1989, c. 23 (the “Act”)). When
notified that the 2004 assessed value was set at $235,800, the Knickles appealed to
the Regional Assessment Appeal Court (“RAAC”). Unsuccessful on that appeal,
they further appealed to the Board.
[4]
After filing that Notice of Appeal, the Knickles met with Jason Brown, the
assessor for Lunenburg County and his supervisor, Mark Peck. The Knickles
reached agreement with Messrs. Brown and Peck that the assessed value would be
set at $194,500. A May 2005 hearing before the Board was adjourned at the
Director’s request, with the possibility of settlement pending. The Board was
subsequently advised that, in the Director’s view, there was no enforceable
agreement on value. The appeal hearing proceeded on April 26, 2006 before
Board member Dawna Ring, Q.C. The question of whether there was, in fact, a
binding agreement was raised by the Knickles before the Board. At the conclusion
of the hearing the Board member requested and received a written submission from
the Director on this issue. The Board ultimately determined that the assessed value
was substantially less than $194,500 and, therefore, concluded that it was not
necessary to decide whether the prior agreement bound the Director.
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[5]
At the hearing the Director relied upon the expert report and oral evidence of
municipal assessor Mary Ellen Hernden, CRA, in support of an assessed value of
$319,000 as well as the evidence it had presented before the RAAC, which
supported the original assessment. Although the assessed value initially proposed
by the Director ($235,800) was confirmed by the RAAC and the Director had not
filed an appeal from that decision, he asked the Board to increase the valuation of
the property to $319,000.
[6]
The Board rejected the evidence of Ms. Hernden and conducted its own
assessment of the property. In a written decision rendered March 13, 2007, the
Board determined that the 2004 assessed value of the Knickle property was
$58,190.
ISSUES ON APPEAL
[7]
In the Notice of Appeal the Director articulated numerous grounds said to
reflect error of law or jurisdiction by the Board. These can be summarized as
follows, recognizing there is some overlap between issues:
(i)
the Board erred in concluding that on an appeal by the taxpayer
to the Board from the RAAC the burden of proof does not rest
on the appellant to establish on the evidence presented that the
Director’s assessment is incorrect;
(ii)
the Board erred by misinterpreting the nature of its function in
conducting a de novo hearing;
(iii) the Board erred in raising and deciding the issue of the burden
of proof on its own motion, without notice to the parties and
without inviting or hearing submissions from the parties;
(iv) the Board erred in conducting a valuation of the property in the
absence of a supporting evidentiary basis;
(v)
the Board exhibited bias and a lack of impartiality in the
proceeding by acting as an advocate for the taxpayers.
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STANDARD OF REVIEW
[8]
In Creager v. Provincial Dental Board (N.S.), 2005 NSCA 9; [2005] N.S.
J. No. 32 (Q.L.)(C.A.) Fichaud, J. A., for this Court, described the process for
identifying the standard of review to be applied to an administrative tribunal’s
decision:
[15] Judicial review of an administrative tribunal's decision involves different
standards of review than those stated by Housen for an appeal from a court's
decision. Under the pragmatic and functional approach, the court analyses the
cumulative effect of four contextual factors: the presence, absence or wording of a
privative clause or statutory appeal; the comparative expertise of the tribunal and
court on the appealed issue; the purpose of the governing legislation; and the
nature of the question, fact, law or mixed. From this, the court selects a standard
of review of correctness, reasonableness, or patent unreasonableness. The
functional and practical approach applies even when there is a statutory right of
appeal: Dr. Q Re, [2003] 1 S.C.R. 226, at paras. 17, 21-25, 33; Ryan v. Law
Society of New Brunswick, [2003] 1 S.C.R. 247, at para. 21. The approach
applies even to pure issues of law, for which the standard of review need not be
correctness. The existence of the statutory right of appeal and whether the issue is
one of law, are merely factors weighed with the others in the process to select the
standard of review: Ryan at paras. 21, 41, 42; Dr. Q at paras. 17, 21-26, 28-30,
33-34.
[9]
I will review the four contextual factors. Dealing first with the privative
clause: The Utility and Review Board Act S.N.S. 1992, c. 11, s. 1, as amended,
(the “URB Act”) provides that the Board may determine all questions of law and
of fact within its jurisdiction (s. 22(2)). Factual findings by the Board within its
jurisdiction are binding and conclusive (s. 26), thus attracting a high level of
deference. An appeal from an order of the Board is expressly permitted on
questions of law or jurisdiction (s. 30(1)). The fact that there is no privative clause
with regard to these issues tends to support a less deferential standard of review
(Logan v. Nova Scotia (Workers' Compensation Appeals Tribunal), 2006
NSCA 88, [2006] N.S.J. No. 297 (Q.L.)(C.A.), at para. 17).
[10] As to the comparative expertise of the tribunal: The Board is comprised of
eight full time members and not more than eight part-time members (URB Act s.
5). The statute does not prescribe particular qualifications for the Board’s
membership. Through the frequency and scope of the appeals that come before it,
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the Board has developed some expertise within the area of property assessments
and assessment appeals (Nova Scotia (Director of Assessment) v. Gatsby’s Bar
and Eatery, 2004 NSCA 56; [2004] N.S.J. No. 145 (Q.L.)(C.A.) at para. 17). An
administrative body called upon to answer a question that falls within its area of
relative expertise will generally be entitled to greater curial deference
(Pushpanathan v. Canada (Minister of Citizenship and Immigration), [1998] 1
S.C.R. 982 at para. 32).
[11] As to the statutory scheme: The Act provides a framework for the
establishment of fair property values. While the Board, acting on assessment
appeals, must be mindful of the interests of various stakeholders including the
government, the individual taxpayer and the general public, appeals come to the
Board as a dispute between two parties - the Municipality, commonly represented
by the Director of Assessment, and the taxpayer. In determining an assessment
appeal the Board in not exercising a broad discretionary power suggestive of
policy-laden purposes (Dr. Q v. College of Physicians and Surgeons of British
Columbia, [2003] 1 S.C.R. 226 at para. 31). The remarks of Cromwell, J.A. in
Logan, supra about the function of the Worker’s Compensation Appeals Tribunal
are equally applicable to that of the Board when adjudicating assessment appeals:
[20] . . . it is a tribunal that in many respects has more in common with the
"judicial paradigm involving a pure lis inter partes determined largely by the
facts before the tribunal" than with tribunals that exercise a broad, policy-laden
jurisdiction: Dr. Q v. College of Physicians and Surgeons of British Columbia,
[2003] 1 S.C.R. 226 at para. 32. This aspect tends towards less rather than more
deference: Dr. Q at para. 31.
(Emphasis added)
[12] Dealing with the nature of the question raised on this appeal: The grounds of
appeal concern the burden of proof and the fact that the Board raised issues of its
own motion and failed to afford the parties an opportunity to address them, made
findings of fact for which there was no evidence and exhibited bias in the conduct
of the proceeding. These are questions of law. While all questions of law are not
reviewed on a correctness standard, where, as here the appeal raises general legal
issues which are not within the tribunal’s core area of expertise, a correctness
standard applies. These are pure legal questions properly within the province of
the judiciary (Logan, supra at para. 26; Creager, supra at para. 19; Barrie
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Public Utilities v. Canadian Cable Television Assn., [2003] 1 S.C.R. 476 at
paras. 12 to 16).
[13] I would conclude that the standard of review on the legal issues discussed
below is one of correctness.
ANALYSIS
[14] As set out above this matter commenced when the Knickles received notice
that the 2004 assessment of their property had increased from $136,200 in 2002 to
$235,800. When the RAAC confirmed that assessment, they appealed to the
Board.
The Burden of Proof
[15] The significant finding of the Board, which, in my respectful view fatally
infected the entire proceeding, is the conclusion that on an assessment appeal to the
Board, the appellant bears no burden of proof.
[16] For the reasons set out below, it is my respectful opinion that the Board’s
error in this regard compromised the proceeding both procedurally and
substantively.
[17] There are two aspects to the error which I will discuss in turn:
(i)
The Board’s finding is inconsistent with the language of the statute
and contrary to established, binding judicial precedent; and
(ii)
The issue of the burden of proof was not raised by the Board either
during or after the hearing had concluded. It was addressed without
any notice to the parties, the Board having decided to raise this
fundamental issue.
[18] The Board’s error derives from its interpretation of s. 87 of the Act which
provides:
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87 (1) The Nova Scotia Utility and Review Board shall inquire into the matter de
novo and shall examine such witnesses and take all such proceedings as are
requisite for a full investigation of the matter.
(2) On the appeal the Board shall have all the powers of the regional assessment
appeal court.
[19] The Board interpreted the statutory direction to “inquire into the matter de
novo” as supplanting the usual rules of law and procedure applicable to a
traditional adjudicative hearing. The Board member wrote:
[135] In my opinion, the Legislative directive for the Board to conduct a full
investigation de novo in assessment appeals displaces the ordinary principles of
burden of proof and technically does not place the onus of proof on either of the
participants before it. It is for the Board to determine the matter after completing
its investigation. In an investigation, the participant with the information and who
has performed the tasks, shares that information first. By having the property
owner bear the burden of proof, having to present their evidence first and be
sufficient to show on a balance of probabilities that the assessment is incorrect
and how it is incorrect does not meet the objects of the Act of making the appeal
process accessible.
. . .
[204] Reading the Board's investigative provisions in the context of the whole Act
and giving it a broad and liberal interpretation in 2006/7, in my opinion the Act
displaces the common law principles respecting the burden of proof and instead
directs the Board to investigate the issues and satisfy itself of the proper
assessment value pursuant to the Act. Neither participant bears the burden of
proof.
(Emphasis added)
[20] The Board was aware that this Court has long held that the burden of proof
is on the appellant in assessment appeals. She wrote:
[129] In 1961, the County Court and the Court of Appeal interpreting the
Assessment Act adopted from H.E. Manning's text, a portion of his general
statements regarding appeals that "in all appeals, the onus, as might be expected,
is upon the appellant", Morash v. The Municipality of Chester (1961), 28
D.L.R.(2d) 428. In 1996 in (Nova Scotia (Director of Assessment) v. Wandlyn
Inns Ltd., [1996] N.S.J. No. 145 (N.S.C.A.) was extended to: "the burden was on
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the taxpayer to prove that the Director's assessment was incorrect and to prove the
extent to which the Director erred".
[130] If I am permitted to interpret the Act as always speaking and taking into
consideration current social norms, including access to justice, I would interpret
the Act as displacing the common law burden of proof. It is unclear when a
Tribunal can reconsider the interpretation of the legislation it administers and take
into consideration the interpretive principle of "always speaking". There were no
cases found on point.
[21] To justify her departure from the common law principle that “he who asserts
must prove” and the clear statements of this Court that the burden of proof falls on
the appellant, the Board opined that the nature of assessment appeals had changed.
This change, she concluded, was evidenced by a number of factors: appeals from
the RAAC, formerly heard in the County Court, were now heard, more informally,
by the Board; the majority of appellants are lay persons; an assessment appeal is
not deciding “the rights between opposing parties”; and the Assessment Act “does
not state that either party has the onus of proof” (Board decision at paras. 178 to
182).
[22] With respect, none of these points nor the expanded reasoning in her written
remarks justify the Board’s conclusion that the burden of proof is other than on an
appellant in an assessment appeal.
[23] As stated above, the decisions of this Court have consistently recognized
that in assessment appeals, as in any appeal, the appellant, whether it be the
Minister or the taxpayer, bears the burden of proof. For example, in Morash v.
Municipality of Chester (1961), 28 D.L.R.(2d) 428 (N.S.S.C.A.D.) this Court
discussed the burden of proof on appeals from the Board of Revision and Appeal
(now the RAAC) to the County Court (now to the Board) under s. 62(1) of the
Assessment Act, R.S.N.S. 1954, c.15, a predecessor to the current s. 87:
62(1) The county court shall inquire into the matter de novo, and examine such
witnesses and take all such proceedings as are requisite for a full investigation of
the matter.
(2) On the appeal the county court shall have all the powers of the court appealed
from.
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[24] There, where the taxpayer had appealed alleging that the assessed value was
too high, Ilsley, C.J. wrote for the Court at pp. 432-33:
. . . The onus in the appeal to the County Court was on the appellant to show that
the amount for which his property was assessed was too high. . . .
[25] Later, in Hebb v. Town of Lunenburg and Director of Assessment,
[1979] N.S.J. No. 576 (Q.L.)(N.S.S.C.A.D.); 32 N.S.R.(2d) 427, on an appeal
pursuant to s. 101 of the Assessment Act, R.S.N.S. 1967, c. 14 (with identical
wording to the 1967 provision), Jones, J.A., dissenting in the result but not as to
the burden of proof, said:
54 In my view a new hearing is necessary. I have already indicated that the
burden of proof in the County Court was upon the appellant, in this case the
Town. It was incumbent upon the assessor to show that the assessment was
uniform in accordance with market values. In giving evidence the assessor should
have demonstrated to the satisfaction of the judge the basis on which he arrived at
a uniform rate. Having done that the evidentiary burden would shift to the
ratepayer to show that the overall assessment was not uniform. This onus cannot
be discharged by merely showing that certain other individual properties are
assessed lower in relation to their actual cash value. I refer to Dreifus v. Royds, 61
S.C.R. 326, and particularly at p. 334.
(Emphasis added)
[26] More recently, in Nova Scotia (Director of Assessment) v. Wandlyn Inns
Ltd., [1996] N.S.J. No. 145 (Q.L.); 150 N.S.R. (2d) 177 (C.A.), by which time
appeals from RAAC were heard, not in the County Court, but by the Board, this
Court again recognized that the burden of proof rests with the appellant. There the
Minister had appealed alleging that the value set by the RAAC was too low. The
taxpayer cross-appealed. In addressing the submission by the cross-appellant
taxpayer that the assessed value of its commercial property was too high in that it
did not adequately take into account the principle of uniformity of assessment,
Freeman, J.A. wrote:
[58] The burden would then be upon the taxpayer to show that taxation for the
current year does not fall on his property in a manner uniform with the taxation
which falls on other commercial properties in the municipality. To discharge this
burden, the taxpayer might bring forward information, which might be
information in his possession not otherwise available to the assessor, either prior
to the state date or at any stage of appeal through to and including the Board
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hearing. The taxpayer would have to show that his property was assessed at a
market value proportionately higher than the market value assessments of other
commercial (or residential) properties in the municipality. . . .
[27] Similarly, Hallett, J.A. in Wandlyn, for himself and Clarke C.J., confirmed
that the burden of proof falls on the appellant:
[74] That aside, Wandlyn did not adduce evidence before the Board as to the
extent to which the value of its property had decreased in relation to the decrease
in value of other commercial property in the municipality. While it did adduce
expert evidence that, the market value on December 1st, 1991, was $900,000 and
this means that Wandlyn's assessment by the Director for the taxation year 1992
was 260% of its market value in 1992, there is no evidence as to how this
compares with the December 1st, 1991, market value of other commercial
property in Dartmouth. The burden was on the taxpayer to prove that the
Director's assessment was incorrect and to prove the extent to which the Director
erred.
(Emphasis added)
[28] This burden of proof has been applied by the Board on assessment appeals
without exception, until the decision under appeal.
[29] As is evident in from the comments reproduced at para 19, above, the Board
here determined that the statutory requirement to conduct the appeal de novo
displaced the usual burden of proof. In this regard, the Board misinterpreted the
statute and fundamentally misconstrued the nature of the proceeding before her. I
repeat her comments:
[135] In my opinion, the Legislative directive for the Board to conduct a full
investigation de novo in assessment appeals displaces the ordinary principles of
burden of proof and technically does not place the onus of proof on either of the
participants before it. . . .
[30] And further:
[182] . . . these appeals are different from a typical civil appeal and different from
the power given in other jurisdictions, such as Ontario. Unlike a typical civil
appeal, the Board is no longer deciding the rights between opposing parties. . . .
the process differs from a typical civil appeal as the Board is to conduct a new
inquiry and full investigation to determine the value as noted above. In an
investigation, the participant with the information and who has completed the
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task, usually presents their information first to provide the background for the
investigation and to provide the ability for all to meaningfully participate in the
process. The Director has that information.
. . .
[208] If the Board has the burden to conduct an investigation and act if the value
does not achieve market value in accordance with the Act, then the Board will
collect and analyze all of the information it needs to determine the matters and
decide whether the valuation meets the criteria of the Act, and if not, change it.
(Emphasis added)
[31] The character of a de novo appeal was discussed by the Supreme Court of
Canada in R. v. Dennis, [1960] S.C.R. 286, where the Court considered a
Criminal Code provision entitling an accused to an appeal by trial de novo.
Ritchie J. wrote, for the Court at pp. 290-91:
. . . the distinction between "an appeal by holding a trial de novo" and an appeal
to the provincial Court of Appeal is that although the object of both is to
determine whether the decision appealed from was right or wrong, in the latter
case the question is whether it was right or wrong having regard to the evidence
upon which it was based, whereas in the former the issue is to be determined
without any reference, except for purposes of cross-examination, to the evidence
called in the Court appealed from and upon a fresh determination based upon
evidence called anew and perhaps accompanied by entirely new evidence.
[32] The nature of a de novo appeal under the Act was accurately described in
Helio Research Re 2006 NSUARB 82 where Board member Cochrane wrote:
29 In considering an appeal under the Assessment Act, the Board must inquire
into the matter de novo: s. 87(1). This means that the Board conducts a whole new
proceeding, in which evidence presented at the R.A.A.C. hearing may be
presented again, or new evidence may be presented which was not seen by the
R.A.A.C. The ultimate decision of the Board is based upon that de novo hearing,
not upon a scrutiny of an R.A.A.C. decision, in the manner of an appellate court
reviewing a decision by a trial court. This is not to say that the Board cannot,
having held its hearing, set an assessment at a level different from that of the
R.A.A.C. -- thus, in effect, reversing the R.A.A.C. decision. It is simply to say
that such Board decisions are made on the basis of the evidence submitted to the
Board, and not as a result of a review of the process followed by the R.A.A.C.
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[33] On a de novo appeal, the Board is not looking for error within the reasons of
the RAAC but is determining from the evidence presented to the Board, whether
that court reached the correct result. This does not alter the fundamental fact that
the burden of proof is on the appellant.
[34] The Board interpreted the statutory direction in s. 87(1) of the Act to
“inquire” as empowering the Board to act in an inquisitorial rather than in a
traditional adjudicative capacity. It is abundantly clear from the language and
content of the Act that an appeal is to be conducted as an adjudicative process
where the decision of the RAAC and of the Board is based upon the evidence
presented by the parties. In outlining the appeal procedure before the RAAC, s. 71
of the Act speaks of “hearings” and “adjournments”. Section 72 provides:
72 (1) The court, after hearing the appellant and any witnesses he produces, and
the respondent and any witnesses he produces, and the assessors, if necessary,
shall determine the matter.
[35] A review of the decisions of this Court leaves no doubt that the process is a
traditional adjudicative one. In Hebb, supra, this Court said:
53 The weight of the evidence was entirely a matter for the County Court Judge.
It was open to him to reject the evidence of the assessor that the general level of
assessment was less than 90% of market value. In coming to that conclusion he
could not use assessments which were not in evidence. . . .
. . .
54 In my view a new hearing is necessary. I have already indicated that the
burden of proof in the County Court was upon the appellant, in this case the
Town. It was incumbent upon the assessor to show that the assessment was
uniform in accordance with market values. In giving evidence the assessor should
have demonstrated to the satisfaction of the judge the basis on which he arrived at
a uniform rate. Having done that the evidentiary burden would shift to the
ratepayer to show that the overall assessment was not uniform. This onus cannot
be discharged by merely showing that certain other individual properties are
assessed lower in relation to their actual cash value. I refer to Dreifus v. Royds, 61
S.C.R. 326, and particularly at p. 334.
(Emphasis added)
(See also Nova Scotia (Director of Assessment) v. T. Eaton Co. [1993] N.S.J.
No. 287 (Q.L.); 124 N.S.R. 92d) 19 (C.A.) at paras. 29 - 30).
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[36] An error respecting the burden of proof is central to the integrity of the
appeal process. In Newterm Ltd. v. St. John's (City), [1991] N.J. No. 261 (Q.L.);
93 Nfld. & P.E.I.R. 49 (Nfld. S.C.T.D.), Steele, J., on a preliminary motion, was
called upon to address the nature and scope of a de novo assessment appeal. There
assessment appeals are heard first by the Assessment Review Court with a further
appeal to the Trial Division. Section 89 of the St. John's Assessment Act, S.N.
1970, c. 39 uses language equivalent to s. 87(1) of the Nova Scotia Act, providing
that on such an appeal:
The Trial Division of the Supreme Court of Newfoundland shall enquire into the
matter de novo and examine such witnesses and take all such proceedings as are
necessary for a full investigation of the matter.
[37] Steele, J. held that, although the taxpayer was the appellant before him, the
burden of proof was on the respondent city to establish the validity of the
assessment. The city appealed. In allowing the appeal on this issue (appeal
decision reported at [1988] N.J. No. 379 (Q.L.); (1989), 74 Nfld. & P.E.I.R. 328)
Gushue J.A., writing for the Court, discussed the importance of the burden of
proof:
[14] The appeal judge here was asked to determine, prior to the
commencement of the trial, how that trial was to proceed. The matter of the extent
of the burden of proof and on which party that burden lay was also raised. He felt
that these points, and in particular the onus of proof issue, warranted the filing of
a written decision. He dealt with those issues in the manner stated above.
[15]
For the purpose of determining whether this Court should entertain the
appeal, it is necessary only to refer to the issue of the extent of the burden of
proof. There is no question that this is an issue of fundamental importance to the
parties which should be determined prior to the hearing. Obviously, the appeal
judge felt likewise because he stayed further proceedings before him pending its
determination on appeal. Further, it is apparent that if the Trial Division hearing
proceeded and an appeal then resulted in disagreement with the judge's
determination of that threshold issue, the parties could be put to the expense of a
new hearing. In the circumstances of this case, the appeal on the point in issue
obviously should be heard now rather than after the inquiry de novo before the
appeal judge.
. . .
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[22]
As to the onus of proof and of leading evidence when the hearing is
conducted by way of hearing de novo, that rests upon the appellant, as it did
before the Review Court and does on any appeal. . . .
[23]
In the present case it is Newterm which disputes before the Trial Division
the assessment as determined by the Review Court. The onus lies upon Newterm
to establish that the valuation should be reduced.
(Emphasis added)
[38] In summary, I would find that the Board erred at law in concluding that the
burden of proof on an assessment appeal did not rest with the appellant and that the
nature of the appeal was other than a traditional adjudicative process.
[39] The second troubling aspect of the Board’s approach to burden of proof was
the fact that this issue was raised without notice to the parties. The principle audi
alteram partem applies - it is a principle of natural justice that parties know the
case to be met. As noted by author Sara Blake in Administrative Law in Canada,
4
th
ed., (Markham: LexisNexis Butterworths, 2006) at p. 38:
A party should not be left in the position of discovering, upon receipt of the
tribunal’s decision, that it turned on a matter on which the party had not made
representations because the party was not aware it was in issue. ...
[40] The Director could not have anticipated that the long settled law on this
point would be revisited and ultimately altered by the Board. That the Board did
not raise this key issue with the parties is a denial of natural justice.
[41] The impact of the Board’s approach to the burden of proof and its
misconception of the nature of the hearing is apparent throughout the decision.
Although the Board purported to determine that neither party bore the burden of
proof, which in itself is error, it would appear that she placed the burden on the
respondent Director. I cite but a few examples:
[182] ... In an investigation, the participant with the information and who has
completed the task, usually presents their information first to provide the
background for the investigation and to provide the ability for all to meaningfully
participate in the process. The Director has that information.
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. . .
[197] Relative to the complexity of the information, if the lay taxpayers have all
of the raw information, concepts of burden of proof, relevant evidence and the
ability to prove their case are difficult. Although some may argue these property
owners could read the decisions of the Courts or Board, if law was that easy to
understand and apply, we would not need lawyers or law schools.
. . .
[198] Both the Director and the Board have the expertise to understand all of
these matters. Many property owners do not. . . .
[199] If a taxpayer must hire an expert to bear the onus of proof, what is the cost
of hiring the expert relative to the size of their claim, being the associated
increased tax expense.
. . .
[209] It also means the lay taxpayers do not have the burden of presenting their
evidence first. Rather, in an investigation the participant who has the information,
has collected and analyzed it, (the Director) would present all of the relevant
information and analysis at the beginning of the inquiry. The Board and both
participants are then better able to address the matters at issue.
[42] Flowing from her misconception of the burden and misunderstanding of the
adjudicative process the Board member neglected to consider whether she had
before her evidence of the market value of the property. Mr. and Mrs. Knickle
testified at the hearing. Their evidence consisted of a recitation of the history of
the proceeding and a description of the features of their property which they felt
reduced its value below that assigned by Ms. Hernden. These deficiencies
included the fact that the property was only accessible by easement; that the
waterfrontage was a mud cove; and that the property was subject to a right-of-way.
[43] The impact of each of these alleged deficiencies on market value had been
addressed in the Hernden report. As previously mentioned, the Board did not
accept the Hernden evidence. In addition to evidence of the appraiser, Hernden,
the Director had tendered the evidence it had presented on the appeal to the RAAC,
which that court had accepted as supporting an assessed value of $235,800. The
Board made no reference to the fact that this evidence was before her.
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[44] Critically, the Knickles did not present any evidence of market value.
Neither did they provide evidence that the alleged deficiencies in the property
would diminish its value to a greater extent than that allowed in the valuations
presented by the Director.
[45] As previously stated, the Board set the assessed value at $58,190. This
decision was based upon its own opinions which were unsupported by evidence.
In Marathon Realty Co. v. Ontario (Regional Assessment Commissioner,
Region No. 7) [1979] O.J. 1090 (Div.Ct.) the board fell into similar error. Craig,
J., writing for the Court, said:
¶ 33 Counsel for the respondent submitted that the Board was entitled to reject
the opinions of all four experts. He relied on the reasons given by the Board; but
relied also upon the submission that the Board is an administrative body acting in
its own field of expertise; and entitled to reject those opinions based upon such
expertise. I do not agree. There are occasions when the Board does function in an
administrative capacity, and where its decisions are purely administrative. See Re
Cloverdale Shopping Centre Ltd. et al., and Township of Etobicoke et al., [1966]
2 O.R. 439 (C.A.) and the cases therein cited. In conducting the hearing of an
assessment appeal it is my opinion that the Board functions in a judicial capacity;
The Assessment Act, s. 57(2); and Peterkin v. Hydro-Electric Power Commission
of Ontario, 12 D.L.R. (2d) 791. It is required to hear and determine the case on
the evidence adduced. No doubt the members of the Board do have a certain
degree of expertise in assessment matters which assists in understanding,
assessing and weighing evidence. In deciding assessment appeals, if the Board
were permitted to act on its own expertise in complex matters and substitute its
unsupported opinions for those expressed in evidence, then the exercise ceases to
be judicial in character. The members of the Board would be their own experts
not subject to cross-examination; their opinions would remain unknown until after
delivery of the decision and therefore not open to contradiction or challenge. The
parties would not know what case had to be met. There is no right of appeal on a
question of fact. It would be quite unacceptable in our adversarial system where
the parties, and not the court, decide what evidence to adduce.
(Emphasis added)
[46] For the above reasons I am satisfied that the Board erred in law in its
conduct of this assessment appeal. Consequently, it is unnecessary to consider the
allegation of bias.
DISPOSITION
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[47] I would allow the appeal and remit this matter to the Board for hearing by
another member to be decided on the evidence to be adduced. As Freeman, J.A.
said in Wandlyn, supra:
[66]
This court is asked to adopt and impose the $900,000 figure to save the
cost and inconvenience of a return to the Board. The actual determination of
value for assessment purposes is a fact-finding exercise beyond the jurisdiction of
this court, which is limited to questions of law and jurisdiction.
[48] In this unfortunate circumstance I would not depart from our usual practice
not to award costs in tribunal appeals (Civil Procedure Rule 62.27).
[49] As this appeal will again be before the Board, should Mr. and Mrs. Knickle
choose to present evidence of market value, they may find helpful the comments of
Board member Cochrane in Re MacLean, 2002 NSUARB 68, [2002]
N.S.U.R.B.D. No. 71(Q.L.):
¶ 37 In general, it seems that typical appeals of assessments by taxpayers are
more likely to succeed if they focus upon the market value of the property in
question. This is not to say that uniformity cannot be pursued, but merely that the
basis upon which an appeal related to uniformity can succeed is limited (see
Doucette, above, paras. 17 and 23, and Re Creighton, below, para. 39). Pursuit of
an appeal on the basis of market value does require that the owner of a property
assemble information about the market value of the property as of the base date.
Market value can be determined by any one of three traditional approaches
(income, cost, and direct comparison), but the market value of single family
houses -- particularly where, as here, there are a number of nearby comparable
houses, and an active market -- is often regarded as more conveniently and
accurately determined on appeal by the direct comparison method. This means, in
essence, obtaining sale prices for comparable properties sold reasonably close to
the base date, which can be very persuasive evidence.
¶ 38 As the Board noted at the hearing (see para. 42, below), the Director has
chosen to place assessed values of properties upon its website, but not sale prices,
so an appellant attempting to gather information on comparable sales must look to
other sources -- meaning personal knowledge, a cooperative real estate agent, or
an appraiser.
¶ 39 In practical terms, it may be that the most efficient way to get the quantity
and quality of information needed for a successful appeal is through a report from
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an appraiser. Reports on residential market value, prepared by qualified
appraisers, are, in general, available for an average house for between $225 and
$300 (not counting any fees payable to an appraiser for appearing at a hearing).
Such reports usually contain detailed base date information respecting
comparable sales, which can be of considerable relevance in establishing market
value. Although not commonly done, appraisers' reports can also, if expanded in
scope, include evidence respecting uniformity: see, for example, Re Creighton,
NSUARB-AS-94-72, [1997] N.S.U.R.B.D. No. 107, in which the opinion of
appraisers engaged by the appellant was accepted in place of the Director's on the
subject of the general level of assessment.
¶ 40 In referring to the possible utility of an appraisal report, the Board does not
mean to imply that an appellant must always obtain an appraisal report in order to
succeed in an appeal. The Board merely observes that such reports may be
available at a relatively low price, and may provide relevant and persuasive
evidence.
Bateman, J.A.
Concurred in:
Saunders, J.A.
Hamilton, J.A.