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The College Plaza Case: Assessing Different Properties Differently

By: Gregory Plester, Partner; and Curtis Auch, Lawyer

In a recent case, the Alberta Court of Appeal showcases how courts will generally approach assessment review board decisions when they are asked to judicially review them. That case is Governors of the University of Alberta v. Edmonton (City), 2022 ABCA 290 (the “College Plaza” case). In the College Plaza case, the Court of Appeal upheld the assessment review board’s decision as reasonable, as the Court of King’s Bench had done. 

The case involved a dispute between the University of Alberta and the City of Edmonton as to the assessed value of College Plaza, an apartment complex at the edge of the University campus. The main issue was whether or not the City should have applied a Rental Ownership Factor to the assessed value of the property. That would have resulted in a 20% downward adjustment in assessed value (and by extension, lower taxes to be paid by the University). The City did not apply the Rental Ownership Factor and the University filed a complaint with the Edmonton Composite Assessment Review Board.

The issue as to whether the Rental Ownership Factor should be applied related to distinctions between the following three types of properties: 

1. Single-titled multi-residential properties or apartment buildings;

2. Condominium multi-residential properties or rental condominiums (where all of the units in the property are owned by the same entity and rented out for income purposes); and

3. Owner-occupied condominiums (a building with multiple condo units, where the units are owner-occupied, and therefore multiple owners are in the same building).

Under the City’s assessment methodology, the Rental Ownership Factor was used to distinguish between property types 2) and 3). The Factor would give a 20% reduction in the assessed value of rental condominiums, as these are generally considered less valuable than owner-occupied condominiums (due to accelerated wear and tear from renters, common property upgrade requirements, certain statutory obligations imposed on a sole owner under the Condominium Property Act, etc.).

College Plaza did not fall into either 2) or 3). As it was a single-titled apartment building, rather than a condominium, it fell into type 1). Despite this, the University argued that the property should receive the benefit of the Rental Ownership Factor, on the basis that it was sufficiently similar to a rental condominium that it would be inequitable if it did not receive the same benefit.

The Board disagreed, and refused to apply the Rental Ownership Factor. In a relatively brief paragraph, it explained that while College Plaza was physically similar to a rental condominium, ownership of each unit of a rental condominium involves different rights and obligations than ownership of a single-titled rental apartment building, such as the requirement for a condominium board and a reserve fund. On this basis, the Board noted that these different types of ownership interests were not comparable for assessment purposes.

The University sought judicial review of this decision, and the Court of King’s Bench, applying the ‘reasonableness’ standard of review, upheld the Board’s decision as reasonable. The University appealed to the Court of Appeal.

The Court of Appeal confirmed that the Board’s decision was reasonable. Citing the Supreme Court of Canada’s decision of Vavilov, 2019 SCC 65, the Court of Appeal discussed two kinds of fundamental flaws that make a decision unreasonable: a failure of rationality in the reasoning process, and an untenable result in light of the factual and legal background. The Court held that neither flaw could be found in the Board’s reasons.

In addition to noting that the case law supported a differential treatment between single-titled apartments and rental condominiums, the Court observed that the Board had addressed the primary argument advanced by the University, and explained why it considered single-titled apartments to be dissimilar to rental condominiums such that they could not be compared for equity purposes. That was sufficient.

While the Court of Appeal acknowledged that the Board’s decision was brief, and that it did not address every argument raised by the University, it noted that per Vavilov, administrative decisions are not to be assessed against a standard of perfection, nor must they necessarily address every argument at issue.

There are a number of useful lessons in this case when considering whether to seek judicial review of an assessment review board decision (or of any other board or tribunal). In particular, the Court of Appeal’s decision shows that: 

• The mere fact that a decision is brief (which ARB decisions – and the decisions of many other boards – often are) does not mean it is unreasonable. A brief decision can still have a coherent chain of reasoning that makes it reasonable, as was the case here. What matters is that there is a clear and coherent rationale for the outcome reached by the board, regardless of the decision’s brevity.
• While a gap in a board’s reasons can render its decision unreasonable (i.e. to the extent it disrupts the chain of reasoning, and makes it impossible to understand why the board reached the decision it did), not everything is necessarily a ‘gap’ in the reasoning. The mere fact that the board does not address a particular argument in its reasons is not a ‘gap’ sufficient to render a decision unreasonable, so long as there is otherwise a coherent rationale that can be followed so as to understand why the board decided the way that it did.

Ultimately, care must be taken when considering judicial review of a board’s decision. An applicant who seeks judicial review must ensure that it can identify a true flaw in the outcome or in the board’s reasoning process that may render the decision unreasonable. As per Vavilov at paragraph 101, an applicant should be able to show either a failure of rationality internal to the reasoning process, or an untenable outcome in light of the relevant factual and legal constraints, if it seeks to show a decision as unreasonable. It is not enough that the board did not address a particular argument in the reasons, or provided reasons that could have been more detailed.

The case provides an important reminder that Alberta’s courts will apply a deferential approach in reviewing assessment review board decisions, and will generally uphold decisions so long as a coherent rationale has been given.