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Validity of MPAC’s expanded definition of “current value” for purposes of commercial property tax assessments still up in air, Autumn 2008

The Assessment Act (Ontario) provides that all real property in Ontario is to be assessed on the basis of “current value” defined as “the amount of money the fee simple, if unencumbered, would realize if sold at arm’s length by a willing seller to a willing buyer.” To this end, properties in Ontario will or have received notices of assessment this year that will serve as the basis for municipal property taxation for 2009 to 2012. Two recent decisions have thrown confusion on the meaning of “current value”.

In the Carsons’ Camp Limited and Municipal Property Assessment Corporation decision, at issue were third-party owned trailers that were affixed to an owner’s land, which MPAC had included in determining the “current value” thereof. The Judge of first instance held that the 229 trailers could not be assessed and taxed as land because they did not form part of the “fee simple” of Carson’s property. On appeal, the Ontario Court of Appeal upheld MPAC’s assessment.

In the second decision of BCE Place Limited and Municipal Property Assessment Corporation and City of Toronto, known as the “Bank Towers” case, MPAC in assessing the value of the certain buildings in Toronto again took the position that the definition of “current value” should not be restricted to the fee simple interest of the owner of land but requires that all interests in land be assessed, including all estates, terms, easements and rights in land, including tenants’ interests. The Assessment Review Board disagreed, and held that “current value” meant that only the owner’s interest in real property is to be valued, and that the valuation is to be done as if property is vacant and untenanted.

Both MPAC and the City of Toronto have requested leave to appeal the Board decision to the Divisional Court. It is interesting to note that the Carsons’ Camp decision was discussed in the Bank Towers case, but was distinguished and not followed. Until the matter is dealt with by way of legislative amendment or the decision of a higher Court, the meaning of current value will likely remain the subject of conflicting interpretations resulting in continuing uncertainty.