





CITATION: Toth Equity
          Limited v. Ottawa (City), 2011 ONCA 372



DATE: 20110512



DOCKET: C52855



COURT OF APPEAL FOR ONTARIO



Sharpe, Gillese and Karakatsanis JJ.A.



BETWEEN



Toth Equity Limited



Applicant/Respondent



and



The City of Ottawa



Respondent/Appellant



Stuart Huxley, for the appellant



Peter A. Milligan and Adam J. Stephens, for the respondent



Heard: March 24, 2011



On appeal from the Order of the Divisional Court (Pierce
          R.S.J., Matlow and Power JJ.) dated June 30, 2010.



Gillese J.A.:



OVERVIEW

[1]

Toth Equity Limited (Toth) owns the Towngate Shopping Centre, a property
    located at 2446-2470 Bank Street, Ottawa.  It claims that the City of Ottawa
    (the City) overcharged it for property taxes on the property in the 2003, 2004
    and 2005 tax years (the Claim).

[2]

By order dated June 30, 2010 (the Order), the Divisional Court issued an
    order in  the nature of
mandamus
, requiring the Ottawa City Council
    (City Council) to hold a meeting pursuant to s. 357(5) of the
Municipal Act,
    2001
, S.O. 2001, c. 25, at which Toth is to be permitted to make
    representations with respect to the Claim.  In addition, it ordered City Council
    to make a decision with respect to the issues that Toth raises at the meeting.

[3]

The City appeals.

[4]

I would allow the appeal.  As I explain below, in my view, the Order
    cannot stand because it (1) conflicts with the legislative scheme established
    by s. 357 of the
Municipal Act, 2001
; and (2) runs contrary to
    established jurisprudence, which requires Toth to exhaust its appeal rights in
    the administrative process before pursuing an application for judicial review.

BACKGROUND IN BRIEF

[5]

The Towngate Shopping Centre is a 100,516 square
    foot shopping centre in Ottawa.  In 2005, Toth complained to the Assessment
    Review Board (the ARB), under s. 40 of the
Assessment Act
, R.S.O. 1990, A.
    31, that the Municipal Property Assessment Corporation (MPAC) assessments for
    the property were too high.

[6]

The s. 40 complaints were disposed of by way of
    a settlement between Toth and MPAC.  As a result of the settlement, the ARB released
    three consent decisions in May of 2005, one for each of the tax years 2003,
    2004 and 2005 (the ARB consent decisions).  The City was not a party to the s. 40
    proceedings, settlement or ARB consent decisions.

[7]

The ARB consent decisions resulted in a
    reduction of the total assessed value of the property.  However, they also led
    to a change in the apportionment of value for the property, with more value being
    placed on the commercial property class and less on the shopping centre class. 
    The commercial property class carries a higher tax rate in Ottawa. 
    Consequently, there was an increase in the property taxes.

[8]

The ARB consent decisions were sent to the City
    so that it could make the necessary tax adjustments.  By letter dated August
    24, 2005, the City advised Toth of the tax increases for the property for 2003,
    2004 and 2005, resulting from the ARB consent decisions.

[9]

According to Toth, the City made an error in
    2001 in calculating the property taxes for the shopping centre and that error
    has had an impact on the calculation of taxes in the years that followed.  It
    says that in calculating the 2001 taxes, the City was required to calculate the
    notional taxes for 2000, the base year.  In calculating the 2000 notional
    taxes, the City had to take into account the changes in apportionment.  Toth
    says the City failed to recalculate the 2000 notional taxes based on those
    changes.  This error allegedly led to errors in the property taxes charged for
    2003, 2004 and 2005.  Toth says that it was overcharged by an amount in excess
    of $400,000 for those years.

[10]

Toth says that it discovered the alleged errors
    in 2005.

[11]

The City contends that the alleged errors are
    the unintended ramifications flowing from the settlement and the ARB consent
    decisions.

[12]

While there was much correspondence between Toth
    and the City, the two key documents are a letter dated September 26, 2005, from
    Toth to the City, and the Citys response to Toth in a letter dated October 18,
    2005.

[13]

In the September 26, 2005 letter, Toth
[1]
applied to the City for
    the cancellation, reduction or refund in taxes resulting from the ARB consent
    decisions in the 2003, 2004 and 2005 taxation years.  It claimed that it had
    been overcharged by reason of a gross or manifest error in the preparation of
    the assessment role.

[14]

Section 357(f) of the
Municipal Act, 2001
,
    gives a municipality the power to reduce or refund taxes if a person was
    overcharged due to a gross or manifest error that is clerical or factual in
    nature.  Pursuant to s. 357(3), an application must be brought before February
    28 of the year following the year in respect of which the application is made.

[15]

The City responded in a letter dated October 18,
    2005.  It advised Toth that the shift in the apportionment from shopping class
    to commercial class tax flowing from the ARB consent decisions led to the
    increase in taxes.  It said that the adjustments that were made followed the
    procedures outlined in the relevant legislation.  As there had been no error in
    calculations, no adjustments could be made as a result of Toths application.

[16]

City Council did not hold a meeting to consider
    Toths application.

[17]

On October 16, 2006, Toth filed appeals in
    respect of the tax matters relating to the 2003, 2004 and 2005 tax years with the
    ARB, on the basis that City Council did not make a decision (the
    non-decision) by September 30, 2006.  What has transpired in relation to
    these appeals is discussed below in the section entitled The requirement to
    exhaust adequate alternative remedies.

[18]

On July 11, 2007, Toth started these proceedings
    in the Divisional Court.  Its basic position was that in failing to hold a
    meeting to consider its application, the City was in breach of its obligation
    under s. 357(5) of the
Municipal Act
,
2001
, because the application
    had been brought within the statutory timelines.

[19]

Toths application for judicial review was heard
    on February 3, 2010, and resulted in the Order.

[20]

In its reasons for decision, the Divisional
    Court stated that the City erred in law by refusing to provide Toth with a
    hearing before City Council and the opportunity to make representations at that
    hearing in respect of its Claim.  It further stated that Toth was not required
    to exhaust other means of obtaining relief before following the procedure that
    it had chosen (i.e. the application for judicial review).

THE ISSUE

[21]

The issue raised by this appeal can be simply
    stated: did the Divisional Court err in making the Order?

THE RELEVANT PARTS OF SECTION 357 OF THE
MUNICIPAL ACT,
    2001

[22]

Section
357 of the
Municipal Act, 2001
, is
    critical to the resolution of this appeal.  The relevant parts of s. 357 read
    as follows:

Cancellation, reduction, refund of taxes

357.  (1)
Upon application to the treasurer
    of a local municipality made in accordance with this section, the local
    municipality may cancel, reduce or refund all or part of taxes levied on land
    in the year in respect of which the application is made if,

...

(f)
a person was overcharged due to a gross
    or manifest error that is clerical or factual in nature, including the
    transposition of figures, a typographical error or similar error but not an
    error in judgment in assessing the property; or

...

Timing

(3)
An application under this section must
    be filed with the treasurer on or before February 28 of the year following the
    year in respect of which the application is made.

...

Meeting

(5)
On or before September 30 of the year
    following the year in respect of which the application is made, council shall,

(a)
hold a meeting at which the
    applicants may make   representations to council;

(b)
notify the applicants of the
    meeting by mail sent at            least 14 days before the meeting; and

(c)
make its decision.

Notice

(6)
Within 14 days after making its
    decision, council shall notify the applicants of the decision and specify the
    last day for appealing the decision.

Appeal

(7)
Within 35 days after council makes its
    decision, an applicant may appeal the decision of council to the Assessment
    Review Board by filing a notice of appeal with the registrar of the board.

Where no decision

(8)
If council fails to make its decision
    by September 30 of the year following the year in respect of which the
    application is made, an applicant may appeal to the Assessment Review Board by
    October 21 of the year by filing a notice of appeal with the registrar of the
    board and the appeal shall be a new hearing.

Notice

(9)
The Assessment Review Board shall
    notify the appellants and the treasurer of the municipality of the hearing by
    mail sent at least 14 days before the hearing.

Decision

(10)
The Assessment Review Board shall hear
    the appeal and may make any decision that council could have made.



Decision final

(17)
A decision of the Assessment Review
    Board is final.

Notice of decision

(18)
The council and the Assessment Review
    Board shall forward a copy of their decisions under this section to the
    assessment corporation but failure to comply with this requirement does not
    invalidate the proceedings taken under this section.

ANALYSIS

[23]

In my view, the Divisional Court erred in law in two
    ways in making the Order.  First, requiring the City to hold a meeting and
    render a decision in respect of the Claim conflicts with the legislative scheme
    established by s. 357 of the
Municipal Act, 2001
.  Second, the Order runs
    contrary to established jurisprudence which requires a person, absent
    exceptional circumstances, to exhaust his or her appeal rights in the
    administrative process before pursuing an application for judicial review.

The legislative scheme established
    by s. 357 of the Municipal Act, 2001

[24]

Sections 357(5) and (8) of the
Municipal
    Act, 2001
, are central to the following analysis.  They are, therefore, set
    out again now for ease of reference.

Meeting

(5)
On or before September 30 of the year
    following the year in respect of which the application is made, council shall,

(a)
hold a meeting at which the
    applicants may make representations to council;

(b)
notify the applicants of the
    meeting by mail sent at least 14 days before the meeting; and

(c)
make its decision.



Where no decision

(8)
If council fails to make its decision
    by September 30 of the year following the year in respect of which the
    application is made, an applicant may appeal to the Assessment Review Board by
    October 21 of the year by filing a notice of appeal with the registrar of the
    board and the appeal shall be a new hearing.

[25]

I accept that reading s. 357(5) alone could lead
    one to conclude that City Council was required to hold a meeting to consider
    Toths complaints on or before September 30 of the year following the year in
    which the application is made.  After all, s. 357(5) provides that council
    shall hold a meeting at which an applicant may make representations.

[26]

However, that reading of s. 357(5) fails to take
    into consideration s. 357(8) of the
Municipal Act, 2001
, which provides
    that if council fails to make a decision by September 30 of the year following
    the year in which the application is made, the applicant may appeal to the
    ARB.

[27]

That is, s. 357(8) expressly contemplates  and
    provides for  the situation in which a municipal council does not make a
    decision in respect of an application.  It creates a scheme so that if council
    does not render a decision, the applicant has the remedy of appealing to the ARB.

[28]

The legislative scheme, read in its entire
    context, logically leads to the conclusion that council is not obliged to hold
    a meeting in respect of every application, despite the use of the word shall
    in s. 357(5).  As noted, s. 357(8) specifically contemplates that a council could
    fail to make a decision by the specified date.  There could be a variety of
    reasons for failing to make the decision, including that no meeting had been held.

[29]

In my view, it was not the legislatures
    intention to require municipal councils to hold a meeting for every application
    that is filed with them.  This means that a municipality would have no ability
    to screen out applications for any reason, including councils determination
    that the application did not meet the requirement of a gross or manifest error
    that was clerical or factual in nature.

[30]

Where a municipal council is unable or unwilling
    to hold a hearing, whether due to refusal, neglect, mistake, inadvertence or scheduling
    difficulties, the legislature has provided the applicant with an appeal right
    to the ARB.  The appeal places the applicant in the same position as it was
    with the municipal council because the ARB may make any decision that council
    could have made (s. 357(10)).  In so doing, the legislature created a statutory
    scheme specifically designed to provide an adequate remedy when a council
    renders no decision in respect of an application.

[31]

The Order is in the nature of
mandamus
.
Mandamus
lies only where, among other things, an applicant for judicial review shows
    that it is owed a legal duty:  see
Karavos v. Toronto and Gillies
,
    [1948] 3 D.L.R. 294 (Ont. C.A.), at para. 4.  For the reasons given, the City
    did not owe Toth a legal duty to hold a hearing in respect of the Claim.

[32]

Accordingly, the Divisional Court erred in law and
    the Order cannot stand.

The Requirement to Exhaust
    Adequate, Alternative Remedies

[33]

The Divisional Court held that even if Toth had
    the right to appeal City Councils non-decision to the ARB, Toth was not
    required to exhaust that right before pursuing its application for judicial
    review.

[34]

With respect, the Divisional Court erred in principle
    in so concluding.  It is an important principle of administrative law that,
    absent exceptional circumstances, a party must exhaust any available adequate
    alternative remedy within the administrative process before pursuing an
    application for judicial review: see
Harelkin v. University of Regina
,
    [1979] 2 S.C.R. 561.

[35]

The Canadian courts have enforced this general
    principle vigorously.  In the recent decision of
C. B. Powell Ltd. v. Canada
    (Border Services Agency)
, 2010 FCA 61, at paras. 31-32, Stratas J.A. of the
    Federal Court of Appeal, usefully describes the principle and its rationale.

[31]     Administrative law
    judgments and textbooks describe this rule in many ways: the doctrine of
    exhaustion, the doctrine of adequate alternative remedies, the doctrine against
    fragmentation or bifurcation of administrative proceedings, the rule against
    interlocutory judicial reviews and the objection against premature judicial reviews. 
    All of these express the same concept: absent exceptional circumstances,
    parties cannot proceed to the court system until the administrative process has
    run its course.  This means that, absent exceptional circumstances, those who
    are dissatisfied with some matter arising in the ongoing administrative process
    must pursue all effective remedies that are available within that process; only
    when the administrative process has finished or when the administrative process
    affords no effective remedy can they proceed to court.  Put another way, absent
    exceptional circumstances, courts should not interfere with ongoing
    administrative processes until after they are completed, or until the available,
    effective remedies are exhausted.

[32]     This prevents fragmentation
    of the administrative process and piecemeal court proceedings, eliminates the
    large costs and delays associated with premature forays to court and avoids the
    waste associated with hearing an interlocutory judicial review when the
    applicant for judicial review may succeed at the end of the administrative
    process anyway Further, only at the end of the administrative process will a
    reviewing court have all of the administrative decision-makers findings; these
    findings may be suffused with expertise, legitimate policy judgments and
    valuable regulatory experience. ..  Finally, this approach is consistent with
    and supports the concept of judicial respect for administrative decision-makers
    who, like judges, have decision-making responsibilities to discharge.  [citations
    omitted]

[36]

B
ecause City Council failed to make a decision
    in relation to Toths application, pursuant to s. 357(8) of the
Municipal
    Act, 2001
, Toth had the right to appeal to the ARB.  For ease of reference,
    I set out s. 357(8) again below:

(8)
If council fails to make its decision
    by September 30 of the year following the year in respect of which the
    application is made, an applicant may appeal to the Assessment Review Board by
    October 21 of the year by filing a notice of appeal with the registrar of the
    board and the appeal shall be a new hearing.

[37]

It will be recalled that Toth, in fact, filed
    notices of appeal with the ARB within the prescribed time frame.

[38]

Neither party contended that there were any
    exceptional circumstances permitting early recourse to the courts.  This is
    appropriate, given that the authorities show that very few circumstances
    qualify as exceptional: see
C.B. Powell
at para. 33.  Consequently, unless
    an appeal to the ARB is an inadequate remedy, Toth was required to exhaust that
    appeal right before proceeding to court by means of a judicial review
    application.

[39]

Accordingly, two questions must be answered.  First,
    is an appeal to the ARB an adequate alternative remedy by which to challenge
    the Citys decision in respect of the tax dispute?  Second, if an appeal to ARB
    is an adequate alternative remedy, did Toth exhaust its appeal rights prior to
    commencing its application for judicial review?

[40]

Is an appeal to the ARB an adequate alternative
    remedy?  In
Canadian Pacific Ltd. v. Matsqui Indian Band
, [1995] 1
    S.C.R. 3, the Supreme Court set out a number of factors that should be
    considered when determining whether a statutory appeal procedure is an adequate
    alternative remedy.  At para. 37, Lamer C.J., writing for a majority of the
    court, states:

[I] conclude that a variety of
    factors should be considered by courts in determining whether they should enter
    into judicial review, or alternatively should require an applicant to proceed
    through a statutory appeal procedure. These factors include: the convenience of
    the alternative remedy, the nature of the error, and the nature of the
    appellate body (i.e., its investigatory, decision-making and remedial
    capacities). I do not believe that the category of factors should be closed, as
    it is for courts in particular circumstances to isolate and balance the factors
    which are relevant.

[41]

Based on a consideration of these factors, in my
    view, there can be no doubt but that an appeal to the ARB is an adequate
    alternative to judicial review.  The ARB is a specialized tribunal with
    expertise and experience in dealing with property tax and assessment matters. 
    As the Divisional Court held in
Municipal Property Assessment Corp. v. Minto
    Developments Inc.
(2003), 2 M.P.L.R. (4th) 89, at paras. 31-34, decisions
    of the ARB are to be afforded deference because of the powers and functions
    vested in it and the high degree of expertise needed to decide the complex
    disputes over property classification that it is called on to adjudicate.  In
    the present case, the alleged errors relate to the assessed value of property
    and the calculation of property taxes, matters squarely within the
    jurisdiction, and specialized expertise of, the ARB.  Moreover, the ARB has
    full remedial powers, as it can make any order that the City Council could have
    made (s. 357(10)).

[42]

Thus, the question becomes, did Toth exhaust its
    appeal right to the ARB?  Toth says that it did.  In its factum, Toth states that
    it attempted to appeal to the ARB but was informed that the ARB lacked jurisdiction
    to hear the appeal.  In making this submission, Toth relies on para. 16 of the
    reply affidavit evidence of Gordon Jones, a Senior Manager in Property Tax Services
    for Deloitte & Touche, in which Mr. Jones says my interpretation of the
    guidance we have received from the ARB is that they will not hear appeals on
    the matter until Council has issued a decision on the application.  There is
    no correspondence (or anything else) from the ARB provided as support for this
    statement.

[43]

The City disputes Toths claim that it exhausted
    its appeal with the ARB.  It acknowledges that Toth commenced appeals in
    respect of the alleged errors.  However, the City says that despite requests to
    Toth for clarification, it has never been given any evidence that Toth attempted
    to pursue the appeals or otherwise revive them.  The City checked the e-status
    of the ARBs appeal files, which indicate that the files have been closed. 
    The record does not contain any explanation for why the files have been
    closed.  Counsel for the City stated that based on Toths submissions at the
    Divisional Court, the files were closed for administrative reasons, which
    suggests that Toth did not prosecute its appeals.  He also noted that while
    there is a statement in Mr. Jones affidavit to the effect that he understood
    that the ARB would not hear the appeals, there is nothing in the record from
    the ARB to this effect and it runs contrary to the ARBs established
    jurisprudence.

[44]

The burden was on Toth to demonstrate that it
    exhausted its appeal right prior to bringing an application for judicial review. 
    Section 357(10) of the
Municipal Act, 2001
, makes it mandatory that the
    ARB hear appeals brought pursuant to s. 357(8).  Various decisions rendered by
    the ARB make it clear that it hears cases in which a municipal council did not
    hold a meeting or make a decision:  see, for example,
Mattamy (Castlemore)
    Ltd. v. Brampton (City)
, [2010] O.A.R.B.D. No. 602.  And, s. 357(18)
    requires the ARB to forward a copy of the decisions they make under s. 357 to
    the assessment corporation.  Accordingly, one would have thought that it would
    have been a simple matter for Toth to have filed the ARBs decisions in respect
    of its appeals, had such decisions been made.  The record contains no such decisions. 
    Instead, the evidence is that the ARB has closed its files on these appeals. 
    The fact that a file has been closed does not mean that a decision was
    rendered.

[45]

At its highest, the evidence is that Toth, in
    reliance on Mr. Jones interpretation of guidance he says that he received from
    the ARB, has failed to pursue its appeals.  In the circumstances, I am not
    prepared to find that Toth has exhausted its right of appeal to the ARB.

[46]

Consequently, in my view, the City is entitled
    to succeed on this appeal on this ground alone.

DELAY AND OTHER MATTERS

[47]

Toth commenced its application for judicial
    review on July 11, 2007, some 21 months after the Citys October 18, 2005
    letter.  The City says that post application, Toth delayed for another
    approximately 30 months.  The City submits that the Divisional Court further
    erred by failing to address the issue of Toths delay in pursuing its
    application for judicial review when deciding whether to grant an order in the
    nature of mandamus.  In light of the conclusions reached above, I find it
    unnecessary to address this issue.

[48]

In addition, the City points to a number of
    alleged factual errors in the reasons of the Divisional Court.  Again, in light
    of the conclusions reached in relation to the first two grounds of appeal, I
    find it unnecessary to deal with the alleged factual errors.

DISPOSITION

[49]

Accordingly, I would allow the appeal and set
    aside the Order.  I would award costs to the City, for the proceedings below
    and the appeal, fixed at $18,720.00, inclusive of disbursements and applicable
    taxes.

RELEASED:

MAY 12 2011                                           E.E.
    Gillese J.A.

EEG                                                            I
    agree Robert Sharpe J.A.

I
    agree Karakatsanis J.A.





[1]
For convenience, I refer to Toth throughout.  However, many actions were taken
    by Deloitte & Touche, the firm that Toth retained to act as its agent in
    respect of assessment matters.


