Reproduced with permiss=
ion of
Canada Law Book. This Dominion Law Report decision is available online in <=
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class=3DSpellE>BestCase
from Canada Law BookCONSOLIDATED SHELTER CORP. LTD. v. RURAL MUNICIPALITY OF FORT GARRY =
Assessme=
nt --
Real property -- Owner of housing units subject to restrictive agreement wi=
th
Crown as to rents chargeable and dividends payable -- Municipality not a pa=
rty
-- Whether restrictive agreement has bearing on assess=
ability
and assessment.
A landowner that has entered into an enforceable restrictive agreement with another person (in this case the Crown) whereby resale of the land is prohibited for a stipulated period, and the rents to be earned and the dividends payable to shareholders are restricted for the period, cannot properly require the municipality which is not a party to the agreement to = take it into consideration in assessing the land for municipal realty tax. This = is not a case where the property can be enjoyed in only a restricted way (as, = for example, property used for railway purposes) and in any event where the taxpayer has created the restriction by its own act without the concurrence= of the municipality, the latter is not obliged to subsidize the property as against other property when both stand on the same footing as to value.
[ C.N.R. et al. v. Vancouver , [1950] 4 D.L.R. 807 , 67 C.R.T.C. 270, [1950] 2 W.W.R. 33= 7; Brandon Packers Ltd. v. City of Brandon (1961), 31 D.L.R. (2d) 418 , 37 W.W.R. 78, d= istd]
APPEAL from a judgment of Smith, J., on certain questions respecting the assessability and assessment of property.
D. A. Bo=
wles ,
for applicant, appellant.
J. D.
The judgment of the Court was delivered by
MILLER, C.J.M.:--The applicant is a Manitoba company, owning and operating a number= of low rental housing units located in the respondent municipality.
[ p. 566 ]
The land on which such units are located is controlled until the year 1999 by an agreement between the applicant and the Crown, by which agreement resale of= the land itself is prohibited, the rents which may be earned by the units are restricted, and the dividends payable to the company shareholders are restricted.
The applicant's land was assessed at an increased figure by the municipality for realty tax for 1964. To this assessment the applicant objected, claiming th= at the restrictive agreement affected the value of the land and that the asses= sor had not taken this into consideration. The contention of the applicant was = not accepted by the Board of Revision and the matter was further appealed to the Municipal Board.
The appeal opened before the Municipal Board on September 23, 1964, and, after = J. G. Smith, an assessor with the Metropolitan Corporation of Greater Winnipeg, gave some evidence, it was made plain to the Municipal Board that the appeal was based mainly on the question of liability to assessment and that there = was a question of law to be decided by the Court. Counsel for the applicant bef= ore the Municipal Board intimated this was his view, and consequently proceedin= gs were suspended while an application by way of originating notice of motion was m= ade under s. 1045 of the Municipal Act , R.S.M. 1954, c. 173, to the Cou= rt of Queen's Bench. The originating notice was commenced on December 18, 1964, and the following two questions were propounded:
(a)
Notwithstanding the provisions of Section 1010(2) of The
Municipal Act, R.S.M. (1954) Cap. 173 and amendments thereto, is the
Applicant's property legally liable to assessment if the assessor fails to =
make
a proper assessment under Section 1010(1) of said Act?
(b)
Does failure of an assessor to take into consideration
restrictive conditions attaching to land user amount to failure to make a
proper assessment?
The matter came on before Smith, J., who answered the first question in the affirmative, and the second in the negative. From those findings an appeal = was taken to this Court under the authority of the Metropolitan Winnipeg Act= , 1960 (Man.), c. 40, s. 71(2), as amended in 1964 [c. 64, s. 1].
The restrictive agreement was not denied. The assessor, Mr. Smith, apparently h= ad not seen the agreement but, according to his evidence before the Municipal Board, had some knowledge of it in that he knew it was a long term restrict= ive agreement and that the amount of rents which could be charged for the prope= rty was restricted. How much consideration he gave to this situation is not cle= ar.
[ p. 567 ]
It seems to me that the restrictions on this property may affect the value of = the land as the land cannot be disposed of and the profits realizable by the company -- or by any company taking over the present company -- are restric= ted below what might be deemed reasonable profits. It would not be an easy vent= ure of which to dispose. When the company entered into this contract it was the= one responsible for the bargain made. It was quite willing to enter into same w= ith the Crown from whom -- or from one of the agencies of the Crown -- money was apparently borrowed to finance the housing scheme in question. Therefore, w= hile the value to the company may be affected by the restriction, it is a matter= of its own making and should not have any effect on the assessed value.
The Rural Municipality of Fort Garry was not a party to the agreement so far as= the evidence discloses, and so counsel advise. What right then have outside par= ties to make an agreement that, by virtue of its restrictions, controls the assessment that can be made of the property involved? This indirectly would force a municipality to subsidize low rental housing units, and would give = to such contractors an advantage over similar housing units in the municipality not covered by such restrictions.
The applicant contended that the real physical value of the lands in question w= ould be affected by the restrictive agreement, and failure to so consider the ef= fect of the restrictive agreement made the assessment a nullity. He referred the Court to Brandon Packers Ltd. v. City of Brandon (1961), 31 D.L.R. (2d) 418 , 37 W.W.R. 78. In that case I did hol= d that the assessment in question was not a legal one. However, I do not think that that finding helps the applicant. He has first to satisfy the Court that th= ere was in effect no legal assessment. He also relied heavily on C.N.R. et a= l. v. Vancouver , [1950] 4 D.L.R. 807 , 67 C.R.T.C. 270, [1950] 2 W.W.R. 33= 7. In the C.N.R. case before the Court of Appeal, the railway successfully objected to the assessment of certain of its land on the basis that the lan= d in question was restricted in its use, both by agreement of the City of Vancou= ver and by the actual needs of railway requirements. It seems to me, however, t= hat the principles which governed the C.N.R. decision do not apply here. After all, there was in the C.N.R. case, presumably, agreement by the City of Vancouver to the establishment of the railway facilities. Moreover,= the railway property could be enjoyed only in a restricted way, namely, for railroad purposes.
If the Rural Municipality of Fort Garry had joined in the agreement, or in some way had been a party to it, then there
[ p. 568 ]
might be some force to a comparison between the present case and the C.N.R. case, supra.
In the instant case the applicant, by its own deed, created the restriction without the concurrence of the municipality and now seeks to force on the municipality an assessment for its properties lower than similarly placed a= nd constructed properties enjoy. In other words, the land owner tries by a restrictive covenant in an agreement to secure lower assessment than his neighbour for land that should in fairness be assessed at the same value. T= hese dwelling houses of the applicant constitute property that normally, were it= not for its restrictive agreement, could be sold and otherwise dealt with in a mercantile market, unlike the railway facilities in the C.N.R. case,= supra .
In my opinion, the applicant in this case -- having failed to secure any agree= ment as to taxation or assessment from the municipality prior to starting the housing venture some 12 years ago -- must be deemed to have taken its chanc= e on the assessment and taxation that its buildings would have to bear.
I think the questions are perhaps a little too broadly framed in order to sec= ure the answers applicable to the particulars of this case.
It is my view that if the assessor makes an illegal assessment -- then there h= as not been one. This, in a general way, answers Q. (a), but I do not believe = in view of my answer to Q. (b) that it is necessary to give any answer to Q. (= a).
It is my opinion that Q. (b) in the circumstances relative to the present appe= al should be answered in the negative.
The appeal should therefore be dismissed with costs, and the matter referred ba= ck to the Municipal Board for completion with advice as to the disposition of = the appeal made by this Court.
Appeal dismissed.
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