Docket: LT01003 and LT01004
Order LT02-01

IN THE MATTER of an appeal by Edith J. Brown against the decisions of the Provincial Treasurer with respect to the 2001 assessments of Provincial Property Numbers 787077 and 189795, located in the community of Marie, P.E.I.

BEFORE THE COMMISSION

on Monday, the 24th day of June, 2002

Ginger Breedon, Chair
Maurice Rodgerson, Vice-Chair
Arthur Hudson, Commissioner

Order

Contents

Appearances & Witnesses

Reasons for Order

1. Introduction

2. Discussion & Findings

3. Disposition

Order

Appearances & Witnesses

1.    For Edith J. Brown (the Appellant)

Richard Francis
Edith J. Brown

2.    For the Provincial Treasurer (the Respondent)

Eugene Power

Reasons for Order

1.    Introduction

This is a consolidated appeal to the Island Regulatory and Appeals Commission (the Commission) under subsection 22.(1) of the Real Property Assessment Act, R.S.P.E.I. 1988, Cap. R-4, (the Act) by Edith J. Brown (the Appellant) against the decisions of the Provincial Treasurer (the Respondent) with respect to the 2001 assessment of Provincial Property Numbers 787077 (Appeal #LT01003) and 189795 (Appeal #LT01004), located in the community of Marie.

According to the Respondent's submission (Exhibit R1) property number 787077 is located on the north side of Route 2 [St. Peters Road], and is accessed via the Scully Road.  This site is located in the Brown Subdivision, contains 3.37 acres and measurers approximately 195 feet along Scully Road, by a depth of approximately 754 feet on the North side and 752 feet on the South side. 

The assessment history of property number 787077 is as follows:

YEAR  

ASSESSMENT
1997 $3,000
1998 $3,300
1999 $3,600
2000 $3,900
2001 $18,000 (varied to $15,000 on referral)

According to the Respondent's submission (Exhibit R2) property number 189795 is located on the north side of Route 2 [St. Peters Road], and is accessed via the Scully Road.  This site is located in the Brown Subdivision, contains 2.85 acres and measurers approximately 250 feet along the water of St. Peters Bay.

The assessment history of property number 189795 is as follows:

YEAR  

ASSESSMENT
1997 $3,000
1998 $3,300
1999 $3,600
2000 $3,900
2001 $25,900 (varied to $23,300 on referral)

Exhibits R1 and R2 note that the Brown Subdivision was approved by the Minister of Community and Cultural Affairs on July 15, 1991, for summer cottage use only.

On November 7, 2001, the Appellant filed a Notice of Appeal with the Commission, appealing the 2001 assessment for each property (Exhibits A1 and A2).  The assessment value under appeal is $15,500 for property number 787077 and $23,300 for property number 189795.

Following the filing of these appeals, the Appellant requested that the hearing be held in June 2002 when she anticipated returning to the Province.  The Respondent consented to this request.  After suitable scheduling for the parties, the Commission heard the appeals on June 11, 2002 as a consolidated appeal.

2.    Discussion & Findings

The Appellant

The Appellant reviewed and expanded upon her position contained in Exhibits A1 and A2.  The following points represent a summary of the Appellant's position.

  • The various lots which are in what is now known as the Brown Subdivision have been in the Appellant's family for generations.  The land was granted by the King over 200 years ago to John Webster.  Prior to 1991, the Appellant's mother-in-law had owned the land.  Upon her death, the land was subdivided to allow for the fair allocation of individual parcels to remaining family members.

  • The Appellant has no intention of selling her two parcels or developing them. Neither lot has been improved.

  • The Appellant believes that the Respondent should make a distinction in the calculation of assessment between lots for sale or development, and family lots where there is no intent to sell or develop the lots.  Accordingly, the actual selling prices of lots in a neighbouring subdivision should not be considered by the Respondent when assessing the lots in the Brown Subdivision, and in particular, the two lots which are the subject of this appeal.

For these reasons, the Appellant requests that the Commission vary the assessment of both properties and submits that property number 787077 be reduced to an assessment of approximately $7,000, and property number 189795 be reduced to an assessment of approximately $11,000.

The Respondent

The Respondent referred to the submission contained in Exhibits R1 and R2 in support of the position that the assessments of both properties for 2001 be confirmed by the Commission.  The following is a summary of the Respondent's position.

  • Prior to 2001, the various lots in the Brown Subdivision were assessed at between $2600 and $3900.  In the absence of any local area sales of similar lots, the assessment for each lot had been increased by approximately 10 percent per year during the few years prior to 2001. By 2001, several lots in a nearby subdivision had sold at an average price of $30,212 per waterfront lot.  These sales served to provide a basis for establishing the market value of similar type lots in the local area.  The base value for such a lot was increased to $25,000 following the analysis of sales and assessments of similar properties in the area.

  • Following the establishment of the market value of similar type properties in 2001, property number 189795 was assessed at $25,900.  Upon referral, this assessment was reduced by approximately 10 percent to $23,300.

  • In 2001, based on the market value of similar type lots as referred to above, property number 787077 was assessed at $18,000, as this property has no water frontage.  Following a referral, the assessment of this property was reduced to $15,500.

  • Providing that a property has been assessed at market value and the assessment is uniform with respect to other similar assessments in the Province, the suddenness of an assessment increase cannot be used as a basis for challenging the legality of an assessment.

The Respondent requests that the Commission confirm the 2001 assessments, as varied by referral, of both property number 787077 and 189795, as both properties were uniformly assessed in comparison with other similar properties in the local area and neither property has been assessed in excess of its market value.

The Commission's Findings

After giving careful and full consideration to the evidence presented in this case, and upon a review of the applicable law, it is the decision of the Commission to allow Appeal #LT01003 and to deny Appeal LT01004.  The reasons for the Commission's decisions follow.

The essence of the Appellant's position is that the Commission should distinguish between the assessment calculation of lots for sale or development, and the calculation of the assessment for family lots where there is no intent to sell or develop the lots.  The Appellant submits that, since no intent exists to sell or develop these lots, the actual selling price of equivalent nearby lots should not be considered in calculating the assessed value of the lots that are the subject of this consolidated appeal.  The Appellant has also raised concerns about the appropriateness of such a large increase in the assessment of both lots between the years 2000 and 2001.

The Commission notes that the Act does not provide either the Respondent or the Commission with the discretion to reduce an assessment based on an owner's use or intended use of an assessed property.  The requirement under the Act is to assess the properties at market value.  The only qualification on this requirement is that such assessments must be uniform with other provincial assessments.  The suddenness of an increase in the assessment of a property cannot be used as a basis for challenging the legality of the assessment.  In a nutshell, even a shockingly large increase does not, by itself, justify a reduction in the assessment of the property.

Therefore, the issues which may be considered by the Commission on an appeal under the Act are whether the assessments under appeal are uniform in relation to other assessments and whether the assessments under appeal are at market value. 

The principle of uniformity is clearly reflected in subsection 28.(1) of the Act which reads as follows:

28.(1)  Subject to subsection (2), in any appeal to the Commission, the Minister shall demonstrate the uniformity of the assessment in relation to other assessments. (emphasis added)

The onus is thus placed upon the Respondent Minister to demonstrate that both assessments on this appeal meet the essential principle of uniformity.

The principle of market value is referred to in subsection 3.(2) and defined in paragraph 1.(f) of the Act. Taken together, these provisions reflect the principle of market value for the purposes of the Act and read as follows:

 3.(2)  All real property owned by the crown or any person shall be assessed at its market value, either

(a)     as commercial realty; or
(b)    as non-commercial realty.

 1.(f)  "market value" means the most probable sale price indicated by consideration of the cost of reproduction, the sale price of comparable properties and the value indicated by rentals or anticipated net income; (emphasis added)

The Respondent has presented evidence in Exhibits R1 and R2 in an effort to support the contention that both properties under appeal have been assessed in a uniform manner and at, or below, market value. 

Appeal #LT01003 (parcel number 787077)

With respect to property number 787077, which is clearly an interior lot and was assessed following referral at $15,500, page 9 of Exhibit R1 provides a table which lists the assessments of 5 properties, ranging from $22,800 to $25,000.  Page 10 of Exhibit R1 provides a table which lists the actual sale prices of 13 properties in a nearby subdivision.  The sale prices of these lots vary from $28,000 to $50,000.

However, there is considerable confusion present in Exhibit R1 between the table and text on page 9 and the Geolinc maps on pages 7 and 8.  A close examination of the Geolinc maps on pages 7 and 8 and the Provincial Property Numbers listed on page 9 reveals that the 5 "comparable" lots referred to in the table are actually waterfront lots and not interior lots as stated in the text below the table on page 9.  Page 10 reveals that 12 of the 13 "comparable" lots are, as stated, waterfront lots.

The Commission notes that property number 897728, a 4.38 acre interior lot in the nearby Marwood subdivision, did apparently sell for $30,000 in November 2001.  The assessment for property number 897728 is indicated in the final summary on page 12 as $24,200.  However, this appears to be the only true "comparable" lot, as it is the only actual interior lot considered.  There is no other evidence in Exhibit R1 of assessment valuation or actual selling price for interior lots. The Commission finds that uniformity of assessment cannot be satisfactorily determined, in ordinary circumstances, merely by referring to the actual selling price and assessment of only one truly comparable lot.  While the Respondent appears to have substantially discounted the assessment of property number 787077 in relation to the assessment of neighbouring waterfront properties, the Commission finds that the Respondent has failed to identify uniformity of assessment in regards to this parcel.

As the Respondent has not demonstrated uniformity in the calculation of the assessment of property number 787077, the Commission hereby quashes the assessment of $15,500 for said lot. 

At the hearing, the Respondent stated that, prior to 2001, a yearly 10 percent increase in assessment was applied to each of the Appellant's properties. Given a lack of objective evidence of market value, as the actual selling price of one lot by itself is only a very subjective valuation of similar type and size lots, combined with the fact that uniformity of assessment has not been demonstrated for this parcel, the Commission directs the Respondent to vary the 2001 assessment for property number 787077 to $4,290 – reflecting a 10 percent increase over the 2000 assessment.

The Commission wishes to make it clear to the Appellant that the finding regarding property number 787077 is based solely on the failure to demonstrate uniformity of assessment in the material before the Commission, in other words an error in the information provided by the Respondent rather than an error in the method of assessment calculation.  This Order should not be viewed as a finding that would prevent a change in assessment in the future.

The Commission also wishes to make it clear that there is no evidence of any kind to suggest that the Respondent has acted in bad faith in any way, shape or form.  It appears that the Respondent has simply made an error in preparing the tables contained in R1, quite possibly a word processing error of a "copy and paste" nature arising out of preparing the submissions for both appeals. 

Nonetheless, the wording in subsection 28.(1) of the Act is clear: the Respondent shall demonstrate the uniformity of assessment in relation to other assessments.  The Respondent has failed to do this with respect to property number 787077 and for the reasons stated above, Appeal #LT01003 is allowed.  

Appeal #LT01004 (parcel number 189795)

However, property number 189795 presents a very different matter.  This lot is a waterfront lot, and the properties listed in the tables on pages 9 and 10 of Exhibit R2 are also waterfront lots of a similar or smaller size.  The confusion that existed in Exhibit R1 does not exist in Exhibit R2.

The Commission finds that, in the case of property number 189795, the properties purported by the Respondent as comparable are truly comparable.  There are no inconsistencies between the tables and the Geolinc maps in Exhibit R2.  Given the 15 comparable assessments as noted on page 9 of Exhibit R2 ranging from $22,800 to $25,000, the Commission finds that the Respondent has established uniformity of assessment when assessing property number 189795 at $23,300.  Likewise, the 12 comparable properties, which sold for between $28,000 and $50,000 as noted in the table on page 10 of Exhibit R2 make it crystal clear that the Respondent did not overstate the market value of property number 189795. 

Accordingly, as the Respondent has demonstrated uniformity of assessment and has calculated the market value appropriately, Appeal #LT01004 is denied and the Commission hereby confirms the assessment of property number 189795 at $23,300.

3.    Disposition

An Order will therefore be issued allowing Appeal #LT01003 and directing the Provincial Treasurer to vary the 2001 assessment of property number 787077 to $4,290, and denying Appeal #LT01004.

Order

WHEREAS Edith J. Brown has appealed a decision by the Provincial Treasurer pertaining to the 2001 assessment of Provincial Property Number 787077 (Appeal #LT01003);

AND WHEREAS Edith J. Brown has also appealed a decision by the Provincial Treasurer pertaining to the 2001 assessment of Provincial Property Number 189795 (Appeal #LT01004);

AND WHEREAS the Commission heard both appeals at a public hearing conducted in Charlottetown on June 11, 2002;

AND WHEREAS the Commission has issued its findings in this matter in accordance with the Reasons for Order issued with this Order;

NOW THEREFORE, pursuant to the Island Regulatory and Appeals Commission Act and the Real Property Assessment Act,

IT IS ORDERED THAT

1.  Appeal #LT01003 is allowed, and the Provincial Treasurer is hereby directed to vary the 2001 assessment of Property Number 787077 to $4,290; and

2.  Appeal #LT01004 is hereby denied.

DATED at Charlottetown, Prince Edward Island, this 24th day of June, 2001.

BY THE COMMISSION:

Ginger Breedon, Chair

Maurice Rodgerson, Vice-Chair

Arthur Hudson, Commissioner

NOTICE

Section 12 of the Island Regulatory and Appeals Commission Act reads as follows:

12.    The Commission may, in its absolute discretion, review, rescind or vary any order or decision made by it or rehear any application before deciding it.

Parties to this proceeding seeking a review of the Commission's decision or order in this matter may do so by filing with the Commission, at the earliest date, a written Request for Review, which clearly states the reasons for the review and the nature of the relief sought.

Sections 33 and 34 of the Real Property Assessment Act provide as follows:

33.    Notwithstanding anything in any public or private Act, an appeal lies to the Supreme Court of the province from any order, decision, or award of the Commission, if notice of the appeal is given the other parties within forty-five days after the making of the order, or decisions sought to be appealed from.

34.    The rules and practices of the Supreme Court respecting appeals apply with the necessary changes to any appeal.