The Ontario Divisional Court overturned a ruling of the Ontario Municipal Board and substantially reduced the property assessment for municipal taxation of the residential portion of a mixed-use building in Toronto. The appeals before the Board dealt with the tax years 1993 to 1997. The issue before the Board and the court was the interoperation of section 60(1) of the Assessment Act.
The 17-storey building located at 720 Spadina Avenue in Toronto is owned by 720 Spadina Ltd. Its 12 residential floors are subject to a 999-year lease and sub-leases to individual leaseholders who hold an undivided percentage interest in the lease, as well as occupancy rights to a unit pursuant to a co-ownership agreement. The individual occupants considered themselves to be “co-owners” and had led evidence illustrating that their interest in the 999-year lease was not materially different than the interests that fee simple owners have in their homes.
Section 60(1) required the Board to determine whether the assessment of 720 Spadina was “inequitable with respect to the assessment of similar real property in the vicinity”. The Municipal Board had to determine which properties fell within the definition of similar real property. It found that similar real property was other rental apartment buildings and not single family houses. The Court disagreed for the reason quoted.
The Ontario Municipal Board refused to reduce the assessment on the basis that the co-owners did not own an interest in real property as that term was understood at common-law. However, the Divisional Court reversed this decision and the Board’s importation into the Assessment Act of “arid historical concepts of property law into an area where logic should prevail.” The Divisional Court found that “The Board erred in failing to be persuaded by the numerous similarities between 720 Spadina residential units and other co-ownership arrangements and in adopting a narrow interpretation of the words ‘real property’ in arriving at its decision.” The Ontario Court of Appeal dismissed the assessment authority’s motion for leave to appeal on July 5, 2001.
720 Spadina Ltd. and the individual “co-owners” were represented by Michael Bowman of Osler, Hoskin & Harcourt LLP and the assessment authority was represented by Chester Gryski of Conway Davis Gryski.