Nova Scotia (Assessment) v. T. Eaton Company Ltd.

Nova Scotia (Assessment) v. T. Eaton Company Ltd. Court Court of Appeal Date 1993-07-19 Citation 1993 NSCA 110 Docket 02787, CA 02785 Judge/Registrar/Adjudicator Chipman, David (Honourable Justice); Hallett, J. Doane (Honourable Justice) (CA); Jones, Malachi C. (Honourable Justice) (CA) Document Type Decision Decision Content C.A. No. 02785 NOVA SCOTIA COURT OF APPEAL Jones, Hallett and Chipman, JJ.A. Cite as: Nova Scotia (Assessment) v. T. Eaton Company Ltd., 1993 NSCA 110 BETWEEN: THE DIRECTOR OF ASSESSMENT ) Randall R. Duplak, Q.C. ) for the Appellant Appellant ) ) - and - ) ) Michael Pugsley and ) Peter A. Milligan ) for the Respondent T. EATON COMPANY LIMITED ) T. Eaton Company Limited and THE CITY OF HALIFAX ) ) Mary Ellen Donovan Respondents ) for the Respondent ) The City of Halifax ) ) ) - and - C.A. No. 02787 BETWEEN: T. EATON COMPANY LIMITED ) Michael Pugsley and ) Peter A. Milligan Appellant ) for the Appellant ) - and - ) Randall R. Duplak, Q.C. ) for the respondent THE DIRECTOR OF ASSESSMENT ) The Director of Assessment and THE CITY OF HALIFAX ) ) Mary Ellen Donovan Respondents ) for the respondent ) The City of Halifax ) ) Appeal Heard: ) May 28, 1993 ) ) Judgment Delivered: ) July 19, 1993 THE COURT: Appeal allowed and cross appeal dismissed with costs to the Director of Assessment per reasons for judgment of Hallett, J.A.; Jones and Chipman, JJ.A. concurring. HALLETT, J.A. This is an appeal by the Director of Assessment and a cross-appeal by T. Eaton Company Limited from a decision of the Municipal Board relating to the business occupancy assessment of Eaton's store in the Halifax Shopping Centre for the years 1987, 1988 and 1989. An appeal to this court lies from a decision of the Municipal Board on a question as to the Board's jurisdiction or upon a question of law (Municipal Board Act, R.S.N.S. 1989, c. 297, s. 34). History of the Proceedings Eaton's has been a tenant in the Halifax Shopping Centre since the early 1960s under the terms of a 100 year lease. The Halifax Shopping Centre is a conventional shopping centre with access to the tenant's premises from common areas in the mall. Pursuant to the provisions of the Assessment Act, R.S.N.S. 1967, c. 14, Eaton's was assessed for business occupancy in the amount of $2,961,200.00 for each of the years 1987, 1988 and 1989. This included an assessment for Eaton's use of the common areas. The assessment for the common areas was made pursuant to s. 7(1)(A) of the Assessment Act, S.N.S. 1986, c. 22, now s. 11(2) of the Assessment Act, R.S.N.S. 1989, c. 23. The sections of the Assessment Act relevant to this appeal and in force at the time of the assessments are numbered ss. 11(1), (2), (4)(c) and 42(1) of the Assessment Act now in force. I will refer to the relevant sections by their current section number. " Business occupancy assessment 11 (1) In addition to any assessment of property under this Act, every person occupying or using any commercial property except (a) forest property; (b) structures other than buildings, not providing shelter for people, plant or moveable property, and all machinery, equipment, apparatus and installations other than those for providing services to buildings, whether or not the same are affixed to land and buildings; (c) property of a municipal water utility, occupied by the utility, shall be assessed for a sum to be called business occupancy assessment. Deemed proportional occupancy (2) Where commercial property is not occupied or used within the meaning of subsection (1) and that property (a) is used as a utility area, common area or public area in respect of or is used ancillary to other commercial property, including another part of the same commercial property; and (b) is not used for parking or, if it is, no fee is charged to persons for the parking by those persons of motor vehicles on that property, the occupiers of the other commercial property are all deemed to proportionately occupy or use that property within the meaning of subsection (1). Computation (4) Business occupancy assessment shall be computed by reference to the assessed value of the property or used as follows: (a) ... (b) ... (c) in a sum equal to fifty per cent of the assessed value for persons occupying or using property for a purpose not mentioned in or excluded from clauses (a) and (b). Valuation 42 (1) All property shall be assessed at its market value, such value being the amount which in the opinion of the assessor would be paid if it were sold on a date prescribed by the Director in the open market by a willing seller to a willing buyer, but in forming his opinion the assessor shall have regard to the assessment of other properties in the municipality so as to ensure that taxation falls in a uniform manner upon all residential and resource property and in a uniform manner upon all commercial property in the municipality. Eaton's appealed the business occupancy assessment respecting the common areas to the Halifax Regional Assessment Appeal Court; it did not appeal the amount ($2,961,200) of the assessment on its premises in the shopping centre. The issue raised on that appeal is stated in the Assessment Appeal Court's decision as follows: " The Appellant makes no argument as to the actual amount of the assessment under appeal. Its contention is that the Appellant is not properly the party which should be assessed this business occupancy, that the landlord of the shopping mall is rather the proper party which should be assessed, and that this court has the appropriate powers to change the party which is assessed this occupancy." Eaton's position was that the common areas should not be assessed to Eaton's but to the owner of the shopping centre. The Assessment Appeal Court decided: " Section 7 (1A) was an amendment to the Assessment Act made in August 1986, which has the effect of directly changing the means of assessing common areas that had been established by the Municipal Board case of November 9, 1984, wherein the Appellant herein appealed its business occupancy assessment for premises at the Mic Mac Mall, which decision was subsequently confirmed by the Supreme Court of Nova Scotia, Appeal Division. In that decision, it was found that, at Page 36, 'there is no statutory provision enabling the Assessor to assess anyone the value of Mall common areas for business occupancy purposes.' The Appellant asserts that the consideration raised in the aforementioned Eaton's case are still relevant, and that the Assessor must still determine who may be the occupant or user of commercial property, even if it be as in this case 'internal common area'. It then asserts that to determine occupancy, a question of control is still determinative, and it further asserts that in this case the Appellant does not control the common area, and therefore is not liable as an occupant. Certainly in the first instance the Assessor must determine whether commercial property is occupied, and if so by whom. Such evidence as there is herein respecting the control of the common area at Halifax Shopping Centre is at best conflicting and inconclusive. Clearly both landlord and tenant, the latter through both its lease and the Tenants Association, have both express and implied rights to the common area and its usage. As the term 'occupant' is defined, in s. 1(ja), neither the landlord nor tenant would precisely qualify as the occupant of the common area. In the absence of any specific evidence to indicate and describe the landlord as 'occupant', a proportionate business occupancy assessment would clearly befall the other tenants, or occupiers, of the commercial property. In this case, the evidence presented to assert that the landlord is the actual occupant of all or part of the common area is at best vague, unsubstantiated and inconclusive. It was suggested that various temporary commercial arrangements were made between the landlord and other non-tenant parties to use portions of the common area, and that this constituted occupancy on the part of the landlord. These types of activities include so-called impulse kiosks, short-term commercial promotions, and various types of promotional activities designed variously to promote the use of the shopping mall. No precise evidence was submitted as to the extent of these activities, the amount of space directed to their use, or the amount of revenue generated to the landlord. In the absence of any such evidence, it is impossible for this court to conclude that the landlord has in fact been an occupant in any specific way of all or a portion of the common area. In the absence of any evidence to show what if any party may be an actual occupant or user of the common areas of this shopping mall, and consequently what party might be assessed under s. 7(1) of the Act, the Appellant is clearly subject as a proportionate occupant or user to an occupancy assessment under s. 7(1A). I therefore find that this appeal must be dismissed." On August 14, 1989, Eaton's appealed that decision to the Municipal Board as permitted by s. 85 of the Assessment Act: " 85. Any person aggrieved by a decision of the assessment appeal court, including the clerk on behalf of the municipality and the Director, may appeal therefrom to the Nova Scotia Municipal Board." Eaton's asserted that the Regional Assessment Appeal Court erred in finding that the owner was not in occupancy of the common areas and therefore erred in assessing Eaton's for business occupancy under s. 7(1)(A) of the Act. On April 26, 1990, four days before the commencement of the hearings before the Municipal Board, Eaton's solicitor advised the Board that it intended to raise "the matter of an appropriate quantum of the business occupancy assessment in the relevant taxation years". Over the objections of counsel for the Director of Assessment, the Municipal Board permitted Eaton's to amend its notice of appeal. Following a number of delays to accommodate preparations to deal with the new issue, the appeal to the Municipal Board was finally heard on January 21-24, 1991, April 21, 1992, and June 26, 1992. The Municipal Board rendered its decision on November 10, 1992. The Board concluded that Eaton's was subject to business occupancy assessment pursuant to s. 11(2) (formerly s. 7(1)(A)) of the Act but that the assessor had improperly calculated the amount of the assessment. The Board stated: " In the Board's opinion the assessor must use a two step process in applying sections 11(1) and 11(2). First he must determine which parts of a commercial property are occupied or used within the meaning of section 11(1) and what the business occupancy assessment is for each occupant or user. If there is any area left over section 11(2) comes into play. The assessor must then determine the proportionate share of this remainder (common areas and parking lots) for each of the users or occupiers identified under section 11(1). The Director of Assessment uses a gross rent multiplier as a factor in determining the business occupancy assessment of tenants. There is no separate calculation of the business occupancy assessment of the demised premises to which their proportionate share of the business occupancy assessment of the common areas is added. Individual tenants pay different rents per square foot. As a result the tenants pay at different rates for their proportionate share of the common areas. There is nothing in section 11(2) of the Assessment Act which suggests that the various tenants should be treated differently with respect to business occupancy assessments attributed to their portion of the common areas. In the Board's opinion this is not the intention of the Assessment Act. The section deems the occupiers of the other commercial property to 'proportionately' occupy the common areas. The Board interprets this to mean that each tenant is to pay business occupancy assessment on the common areas in the same proportion as the tenant occupies space in the premises. It is possible to determine an appropriate amount for the business occupancy assessment of the common areas and to apply it proportionately among all the tenants without regard to the differences in rent. To so determine the assessor must first calculate the real property assessment. He then divides this by the total square footage of the building (rented space, owner's space and common areas) plus the square footage of the parking areas to arrive at a value per square foot of the property. He then multiplies this amount by the square footage of the common areas and the parking lot to obtain the total assessment for the common areas and the parking lots. This amount is then divided by the square footage of all occupied or used space (within the meaning of section 11(1)) to get a value per square foot. Then the assessor calculates the proportional share of each tenant by multiplying the square footage of their demised premises by the value per square foot." The Municipal Board heard and considered extensive evidence led by Eaton's that its store was over valued by the assessors. The Board heard evidence adduced by the Director as to the calculation of Eaton's business occupancy assessment. The Board concluded that the economic rent assigned by the assessor to the store adequately took account of obsolescence and therefore declined to reduce the assessment of the store. The Board, while conscious of the Director's argument that the Board did not have jurisdiction to hear an appeal on an issue not raised before or dealt with by the Regional Assessment Appeal Court, decided the assessment on the store should not be reduced and therefore did not address the issue of jurisdiction. The Board ordered the Director of Assessment to recalculate Eaton's business occupancy assessment for its proportionate share of the common areas and parking lots in the Halifax Shopping Centre for the years 1987, 1988 and 1989 applying the Board's formula. Grounds of Appeal The Director of Assessment's appeal to this court raises two issues: (i) that the Municipal Board erred in allowing Eaton's to appeal the valuation of its store when that issue was not raised before the Regional Assessment Appeal Court; (ii) that the Municipal Board erred in interpreting s. 11(2) of the Assessment Act in ordering the Director of Assessment to calculate business occupancy assessment under s. 11(2) in accordance with the method prescribed by the Board in its decision. The grounds of appeal raised by Eaton's on the appeal to this court can be summarized as follows: (i) that the Board erred in not finding that the common areas were controlled by the owner of the shopping centre and therefore occupied by the owner within the provisions of s. 11(1) of the Act; (ii) that if the Board was correct in assessing Eaton's under s. 11(2) it erred in the method it directed the assessors to use in calculating such assessments; (iii) that the Board failed to take into account obsolescence in deciding to confirm the market value of the Eaton's store as arrived at by the assessors; (iv) that the Board lost its jurisdiction by accepting the assessor's valuation of the store without the original assessor testifying as to how he arrived at such value. The Director of Assessment asserts that the Municipal Board did not have jurisdiction to deal with any matter not raised by Eaton's before the Regional Assessment Appeal Court. The Assessment Act establishes a structured appeal process for taxpayers who wish to dispute assessments made under the Act. Section 62(1) authorizes any person complaining that his property has been over valued to give notice in writing that he appeals from the valuation. Section 63(1) provides that the notice of appeal shall state with particularity the grounds of objection to the assessment. Section 64 provides that the court, for hearing and determination of appeal, shall be the Regional Assessment Appeal Court. Pursuant to s. 74 the Regional Assessment Appeal Court has broad powers to deal with such appeals. Section 85 provides that a taxpayer "aggrieved by a decision" of the Regional Assessment Appeal Court may appeal to the Municipal Board. Section 86(4) provides that the notice of appeal to the Municipal Board shall state with particularity the grounds of the appeal. Pursuant to s. 87 of the Assessment Act the Municipal Board shall inquire into the matter de novo. Sections 87(1) and (2) state as follows: " 87(1) The Nova Scotia Municipal Board shall inquire into the matter de novo and shall examine such witnesses and take all such proceedings as are requisite for a full investigation of the matter. (2) On the appeal the Board shall have all the powers of the regional assessment appeal court." It is argued by the Director of Assessment that "the matter" the Municipal Board shall inquire into de novo pursuant to s. 87 is the issue that was raised before the Regional Assessment Appeal Court as it is the decision relating to that matter which has "aggrieved" the taxpayer and which gives rise to the right of appeal and the jurisdiction of the Municipal Board. The issue of valuation of the store was not raised on the appeal to the Regional Assessment Appeal Court and that court did not render a decision on the valuation of the Eaton's store. The Regional Assessment Appeal Court's decision dealt with the only issue raised by Eaton's; that is, whether the common areas in the Mall ought to have been assessed to the owner of the shopping centre or proportionately among the tenants. While the structured appeal process as provided for in the Assessment Act requires that the matter on appeal to the Municipal Board be dealt with de novo there is nothing in the words of the section that would indicate that the de novo hearing would relate to anything other than the decision of the Regional Assessment Appeal Court. However, the jurisprudence in this Province interpreting similar sections that were in the Assessment Act at a time when the appeal from the Regional Assessment Appeal Court was to a County Court Judge clearly shows that the duty of the Board under the present legislation is to do a full investigation into the assessment to determine if it should be varied (Lunenburg v. Hebb (1979), 10 M.P.L.R. 7 and the cases cited therein). Therefore, Eaton's appeal to the Regional Assessment Appeal Court, while it raised a narrow point, nevertheless put the validity of Eaton's assessment of $2,961,200.00 in issue. Accordingly the Board had jurisdiction to consider any issue relating to the validity of the assessment. I therefore reject the argument of the Director that the Board erred in allowing Eaton's to adduce evidence as to valuation of its leased premises and in dealing with the issue. I agree with the Director of Assessment's position that the Municipal Board misinterpreted s. 11(2) of the Assessment Act. It was acknowledged by all parties and the expert witnesses that the proper method of valuing a shopping centre for assessment purposes pursuant to the Assessment Act is by the income approach. In Sunnyside Shopping Plaza Ltd. v. Zellars (Nova Scotia) Ltd., (1987), 78 N.S.R. (2d) 235 at 239 the income approach was accepted as the proper method of valuing shopping centres. The evidence before the Municipal Board clearly shows that different locations within the shopping centre or different types of tenant operations dictate that the market rent per square foot can vary. The evidence conclusively shows that tenants would not agree to pay rent for leased premises in shopping centres if their employees and their customers did not have access to the common areas. The evidence before the Board does not support its method of valuing the common areas for assessment purposes. David MacDonald, an experienced assessor, testified that the tenant's right of use of common areas is recognized in the rent charged to the tenant for the leased premises. Roy Evans of Eaton's testified that Eaton's would not have agreed to pay the rent for its store without the use of the common areas. Mr. Keith Leonard, who was qualified as an expert in the valuation of shopping centres, when asked if one could separate a value to be placed on a common area quite apart from the value of the leased space said, "I have never done it and I have never known any appraiser to do it". In my opinion, based on evidence before the Board, the market value of each tenant's leased space is properly calculated pursuant to s. 42(1) of the Act on the income approach. The valuation of each tenant's leased space on the income approach includes an amount attributable to its use of the common area. There is evidence to support the position of the Director of Assessment that it is impossible to properly calculate as a separate amount the value of the common areas from the assessed value of a tenant's leased premises. To fairly and uniformly assess tenants in a shopping centre the assessor must calculate the market value of the tenant's leased space to the owner. The valuation of each tenant's leased space on the income approach is the basis for the assessment of business occupancy assessment under s. 11 of the Act. The evidence before the Board would indicate that the method devised by the Municipal Board for assessing common areas was not in accordance with acceptable assessment and appraisal practice. Tenants are properly assessable for the use of the common areas but the acceptable method is to value this use by looking to the annual rent a tenant pays or ought to be paying for the space leased to that tenant which includes the accompanying rights to use of the common areas and multiplied by an appropriate factor acceptable to experienced valuators. This is the approach that was used by the assessor. In my opinion the Board misinterpreted s. 11(2) and the case law relevant to that subsection. In its decision the Board considered the opinion of this court in Director of Assessment v. Eaton (T.) Co. Ltd. et al (1985), 70 N.S.R. (2d) 65. The issue in that assessment appeal was whether Eaton's was an occupier of the common areas in the Mic Mac Mall so as to make it assessable for business occupancy under the Assessment Act in force at that time. This court affirmed the Board's decision that Eaton's was not an occupant or user of the common areas because Eaton's did not have control over the common areas. In 1986, following the decision of this court, the Legislature enacted what is now s. 11(2) of the Assessment Act. The legislative purpose was to remedy the problem created by s. 11(1) of the Act as identified in the Mic Mac Mall decision with respect to assessing tenants of shopping centres for business occupancy assessment. The amendment enables the assessors to take account of the fact that the use of common areas for access to leased premises for staff and invitees of tenants in a shopping centre is a benefit to the tenant for which the tenant should be proportionately assessed with other tenants. With respect to Eaton's premises in the Halifax Shopping Centre which are the subject of this appeal the assessor did not make a separate calculation under s. 11(2) but included it as part of the assessment of the leased premises using the income approach. This approach recognizes the reality that the common areas in a shopping centre have value to the tenants and that the value is incorporated into the tenant's rent which forms the basis of the realty assessment of the shopping centre which is properly done on the income approach as recognized by all authorities. Section 11(2) merely states that the tenants in a shopping centre are "all deemed to proportionally occupy or use" the common areas and are therefore assessable under s. 11(1). The Act does not require that the proportional occupation of the common areas be a proportion of the particular tenant's leased space to the total leased space in the centre. "Proportional" in the Concise Oxford Dictionary, 7th edition is stated to mean: " in due proportion, corresponding in degree or amount". In the same Dictionary proportion is stated to mean: " 1. comparative part, share; comparative relation, ratio, by the same factor. 2. correct relation of one thing to another or between parts of a thing." In The Interpretation of Legislation in Canada. (2d) 1991, Pierre A. Côté makes the point at p. 410 that taxation statutes are no longer subject to a strictly literal construction. They are interpreted the same way as other types of legislation according to the "contextual, teleological or historical approach". Further at p. 411 he points out that the Interpretation Acts invite a judge, when construing a fiscal statute, to assign a meaning to the statute that is consistent with its apparent purpose. Section 9(5) of the Interpretation Act, R.S.N.S. 1989, c. 235 provides that every enactment shall be deemed remedial and interpreted to ensure the attainment of its objects and the court is to consider, among other matters, the occasion and necessity for the enactment, the circumstances existing at the time it was passed and the mischief to be remedied. In Covert v. Minister of Finance (N.S.) , [1980] 2 S.C.R. 774 Dickson J. considered the proper method of interpreting fiscal legislation. The following remarks are relevant in interpreting s. 11(2) of the Act which we have under consideration. He stated at p.807 " Fiscal legislation does not stand in a category by itself. Persons whose conduct a statute seeks to regulate should know in advance what it is that the statute prescribes. A court should ask - what would the words of the statute be reasonably understood to mean by those governed by the statute? Unnatural or artificial constructions are to be avoided. The correct approach, applicable to statutory construction generally, is to construe the legislation with reasonable regard to its object and purpose and to give it such interpretation as best ensures the attainment of such object and purpose. The primary object of a succession duty statute, such as the legislation under consideration, is to capture such amounts for the fiscal coffers as the words of the statutory net can catch. No legislative intention can be assumed other than to collect such tax as the statute imposes, no more and no less. Although a court is entitled, in the case of fiscal legislation as with other enactments, to look to the purpose of the Act as a whole, as well as the particular purpose of a given section, it must still respect the actual words which express the legislative intention." The obvious legislative purpose of enacting what is now s. 11(2) was to enable the value of common areas to be reflected in the assessment for business occupancy to those persons having the use of such areas, although not in control of them. The legislation was a direct response to the decision of this court in the Mic Mac Mall case. In enacting s. 11(2) the Legislature could not have intended that the assessor be required to depart from acceptable methods of assessment for this type of property. While it can be argued that by use of the words "proportionately occupy" in s. 11(2) the Legislature intended that the occupation of the common areas would be based on the comparative size of the tenant's leased space vis-a-vis one another and the entire leasable space in the centre the more pragmatic and in my opinion the better interpretation is that which accords with the object and purpose of the amendment. Such an interpretation dictates that the assessment under s. 11(2) be made on the same basis as the assessment of tenant's leased space; that is the income approach. By so doing, the assessor can arrive at the correct relationship of the tenant's deemed occupancy of the common areas to one another. The benefits of the common areas to each tenant is proportionately recognized in the assessment of the tenant's leased space using the income approach as the value of the common areas are an integral component of the value of the tenant's leased premises just as are the location and the size of the leased premises. The common areas perform a function necessary and integral to the occupation and use of the tenants' leased space just as the roof of the shopping centre, the air conditioning and the heating and electrical systems are necessary to the use of the tenants' space. It makes no sense to require the assessors, having calculated the value of leased premises on the income approach, to then make a further calculation of the value to the tenant of the common areas based on a square footage formula. Apart from the fact that such a determination flies in the face of the income approach it could amount to a form of double taxation which the Legislature could not have intended. The Legislature could not have intended to impose on assessors a duty to assess under s. 11(2) in a way that was not in accord with the object of the amendment nor in accord with acceptable appraisal methods for shopping centres. In my opinion the Board, in failing to consider the purpose of the amendment and in failing to take a more pragmatic approach, erred in its interpretation of s. 11(2) of the Assessment Act by imposing on assessors the requirement to assess common areas in accordance with the formula devised by the Board. Eaton's appeal Eaton's asserts that the Board erred in failing to find on the evidence that the owner of the Halifax Shopping Centre was in occupation of the common areas. With respect, I disagree. The evidence amply supports the Board's conclusion that the owner of the shopping centre does not occupy the common areas within the meaning of s. 11(1) of the Act. For the reasons already set out in this opinion I agree with Eaton's position that the Board misinterpreted s. 11(2) of the Assessment Act in devising the formula but I do not agree with the argument put forward by counsel for Eaton's that the Director of Assessment was required to provide Eaton's with a breakdown of the business occupancy assessment between its leased premises (the store itself) and the common areas. The appellant relies on certain statements in Brimar Developments Ltd. v. Nova Scotia (Director of Assessment) et al. (1991), 105 N.S.R. (2d) 401 in support of its argument. In Brimar this court was faced with determining among other issues if the renters of personal storage space in a storage facility were occupants for the purpose of business occupancy assessment with respect to that space and of the common areas that gave them access to the separate storage space rented and which the renters controlled by having their own locks on the storage space rented. With respect to the assessment for business occupancy in the common areas the court found that the owner's occupation was not "sufficiently exclusive" as to amount to occupation or use under s. 11(1) of the Act. Therefore the renters would be liable for business occupancy assessment pursuant to s. 11(2). The court concluded its reasons with the following: " I believe the common areas are shared areas not unlike those found in shopping centres and in this case, having regard to the Use Agreement there is, as found by the R.A.A.C., a shared occupancy between the appellant's and the Users. The purpose of s. 11(2), where subss. (a) and (b) refer to use and not occupancy was to cover just this type of situation. The application of the section by the assessor may be difficult in practice, but the Legislature shows an intention to break down occupancy or use in a way that recognizes the reality of modern business arrangements. I would therefore apply s. 11(2) which, in my opinion, was designed for circumstances just such as those which existed here. In view of the disposition of the second issue, it is not necessary to deal with the third. I would allow the appeal with respect to the business occupancy assessment of the common areas. It appears from the R.A.A.C. decision that the parties agreed that the R.A.A.C. would, if necessary, determine the valuation of each of the uses of the common area. I would remit this aspect of the matter to the R.A.A.C. to determine the appellant's proportionate occupancy of the common areas and its value for business occupancy purposes. Success being divided I would award no costs on the appeal." Counsel for Eaton's has seized upon two statements in the decision that the common areas in the storage facility were "not unlike those found in shopping centres" and that in enacting s. 11(2) the Legislature intended to "break down occupancy or use in a way that recognizes the reality of modern business arrangements" to support the argument that the assessor was required to provide Eaton's with a breakdown of its assessment. Prior to the 1986 amendment to the Act neither the landlord nor the tenant in a shopping centre could be assessed for business occupancy assessment relating to common areas because neither was in exclusive occupation or control of the common areas in most instances. Therefore, the legislation in place prior to the enactment of s. 11(2) did not accommodate the reality that tenants in a shopping centre had the benefit of the common areas by reason of their right of joint usage. Section 11(2) was obviously designed to enable the burden of taxation respecting common areas to be allocated proportionately between tenants in a shopping centre; s. 11(2) merely recognizes that these common areas have a value proportionate to the tenants occupation and use vis-a-vis one another. The valuation of these common areas is properly calculated by the income approach employed by the assessors as this truly reflects their proportionate occupation of the common areas. In Brimar this court was merely stating that the enactment of s. 11(2) was a recognition by the Legislature of the reality of modern business arrangements; that is, that common areas in shopping centres, or the like, have a value to the tenants that should attract taxation and that the tax should be broken down between the tenants in the shopping centre as this simply recognizes the reality that, as a general rule, no one is in occupation of these areas so as to attract tax under s. 11(1) of the Act. Section 11(2) recognizes that the shared use of common areas in a shopping centre has a value to the respective tenants who are deemed to be in occupation of those common areas and therefore assessable under s. 11(1) for assessment purposes. The Act does not require the assessor to provide a valuation of every component of an assessment of realty parcel by parcel, room by room, component by component. When the assessment is based on the income approach a breakdown of the assessment between the leased space and the common areas does not make sense. In the Brimar case the R.A.A.C. had agreed to do the breakdown so the matter was remitted for that purpose. How the R.A.A.C. planned to do this was not a matter of evidence before the court nor is it clear from the Brimar decision that the income approach was used to assess the rental storage space. Section 11(2) does not dictate precisely how the Director of Assessment is to make the apportionment between tenants. The method of assessing common areas employed by the assessors seems the most reasonable given the acceptance of the income approach to shopping centre valuation. In summary, I reject the position of Eaton's that the decision in Brimar requires the assessor to provide Eaton's with a breakdown of the assessment as between its leased premises and the common areas. Eaton's asserts on this appeal that the Municipal Board's confirmation of the valuation of Eaton's leased premises by the assessor was an error in that, like the assessor, the Municipal Board failed to consider obsolescence. With respect to this issue the Board stated: " Eatons lead considerable evidence respecting the valuation of its store. As part of the evidence the Board took a view of the subject property and a number of other departments stores in the metropolitan area. Eatons argues that the economic rent assigned to its store by the assessor did not take into account functional obsolescence in the store. The Eatons store in the Halifax Shopping Centre is older than most of the other major department stores and does have some evidence of superadequacy. There has been some refurbishment of the store since the date of assessment. After considering all the evidence the Board is satisfied that the economic rent assigned by the assessor to Eatons adequately accounts for all obsolescence. The Board declines to reduce the economic rent." To deal with this issue it is necessary to consider the scope of an appeal to the Board and a subsequent appeal to this court. As previously stated, the Board must make a full investigation of the assessment as provided in the Assessment Act. (Lunenburg v. Hebb, supra) The Municipal Board did a full investigation, hearing evidence from Eaton's and the Director. The Municipal Board rejected Eaton's position that obsolescence was not taken into account by the assessor. Section 34 of the Municipal Board Act, 1989, R.S.N.S., c. 297 limits appeals to the court from a decision of the Municipal Board to questions of jurisdiction or law. On the hearing before the Municipal Board the onus was on Eaton's to show that its assessment was too high. (Morash v. Chester (1961), 28 D.L.R. (2d) 428 at p. 422-3) The Board considered the value of Eaton's premises should not be reduced due to obsolescence. In my opinion this is a question of fact or, at best, of mixed fact and law. Clearly it is not a question of law. The Board had jurisdiction to accept or reject Eaton's opinion evidence and had jurisdiction to decide the issue. There is no indication that the Board adopted some wrong principle or overlooked a governing fact in reaching its decision to uphold the Eaton's business occupancy assessment. (Morash v. Chester, supra, at p. 433) This issue does not raise a question of law or jurisdiction. Although not raised in its notice of appeal to this court Eaton's, in oral argument, asserts that the Board failed to properly exercise its jurisdiction arguing that the Board did not give sufficient reasons for refusing to reduce the assessment. Counsel for Eaton's asserts that without reasons Eaton's does not know if the Board applied wrong principles or overlooked a governing fact. It is relevant to note that s. 41 of the Municipal Board Act, R.S.N.S. 1989, c. 297 imposed a statutory duty on the Municipal Board to give reasons. That section provided: " 41(1) A decision of the Board shall be in writing and shall set forth reasons for the decision (2) A copy of the decision shall be certified and sent to each party and to the Minister of the Clerk." Where there is a statutory requirement to give reasons the failure to do so, according to some authorities can, "vitiates the decision and constitutes an excess of jurisdiction." (Supermarchés Jean Labreque Inc. v. Flamand, [1987] 2 S.C.R. 219). In that case Madame Justice L'Heureux-Dubé made the following statement: " While it is true that, in the absence of legislation to the contrary, neither judicial tribunals nor administrative or quasi-judicial bodies are bound to give reasons for their decisions (Canadian Arsenals Ltd. v. Canadian Labour Relations Board, [1979] 2 F.C. 393 (C.A.); Macdonald v. The Queen, [1977] 2 S.C.R. 665; Northwestern Utilities Ltd. v. City of Edmonton, [1979] 1 S.C.R. 684), when a duty to give reasons is created by legislation it seems, according to certain cases that, the absence of reasons vitiates the decision and constitutes an excess of jurisdiction . . ." In Re Yarmouth Housing Ltd. and Rent Review Commission (1982), 139 D.L.R. (3d) 544 Cooper J.A. of this court made the following statement regarding the sufficiency of reasons in the common law context: " I add also that in my opinion the commission is required to give reasons for its decisions. This question was considered by this court in Re R.D.R. Construction Ltd. and Rent Review Com'n, July 12, 1982, unreported [now reported ante p. 168], with respect to decisions of residential tenancy officers. It was there stated that there was an implied duty on the part of such officers to give reasons for their decisions and reference was made to Norton Tool Co. Ltd. v. Tewson, [1973] 1 W.L.R. 45, and de Smith's Judicial Review of Administrative Act, 4th ed. (1980), at p. 148. In my view the same reasoning applies to decisions of the commission. It should not confine itself merely to a recital of the information before it and its conclusions, but it has a duty to set out why it has rejected the information and evidence produced before it by the applicant. The applicant is entitled to know on what grounds his appeal has been rejected and where, in the opinion of the commission, he has gone wrong." In Administrative Law, 3rd ed. at p. 328 the authors Evans, Janisch, Mullan, Risk make the following statement: " If the decision is challenged on an appeal or an application for judicial review, the court will test the adequacy of the reasons by asking whether, in the light of the issues in dispute, and the arguments and evidence advanced by the parties at the hearing before the tribunal, the tribunal's reasons are sufficient to enable the court effectively to scrutinize the decision. To be balanced against these is the consideration that to require unduly elaborate and punctilious reasons and findings may put unjustifiable burdens upon the tribunal. A requirement to give reasons should not be interpreted in such a way that the extra costs of delayed decision making and the waste involved in encouraging administrative decisions to be challenged on formalistic grounds do not exceed any perceptible improvements in the quality of either the overall standard of administrative justice in the agency's work or the substantive merits of the individual decision. When a tribunal's statement of the reasons for its decision includes findings and the evidence upon which the decision was based, a court may set it aside on the ground that the evidence was inadequate to support the finding and that accordingly there was an error of law on the face of the record of the tribunal's proceeding. Review for errors of fact is considered in chapter 9, but note that the specificity required to satisfy the duty to give reasons may thus have an important bearing on the intensity of the review to which a court may subject the tribunal's decision. Conversely, courts are liable to demand more detailed and specific reasons and findings in respect of an exercise of power that is subject to close judicial review." [emphasis added] The Municipal Board was required to give reasons by the statute. In accordance with the statement of Cooper J.A. in Re Yarmouth Housing Limited and Rent Review Commission (1982) 139 D.L.R. (3d) 544 the reasons have to be sufficient to indicate why the assessment was not reduced. The reasons should be sufficient to allow Eaton's to know if the Municipal Board erred in law or jurisdiction as this would affect the right of appeal to this court. The Appeal Board's reasons which I have quoted herein, although short, nevertheless, clearly show that the Board did not accept Eaton's evidence that the obsolescence of the store warranted a reduction of the assessor's valuation. A decision on that question cannot constitute an error that would be grounds for an appeal to this court as the Board had the right to accept or reject the opinion evidence Eaton's experts. Given that there is only an appeal to this court on a question of law or jurisdiction, I am satisfied the Board met the statutory requirement to give reasons. Eaton's also raised as an issue before this court that the Municipal Board lost its jurisdiction by accepting the valuation of Eaton's leased premises without the original assessor having testified as to how he arrived at such value. Counsel for Eaton's suggests that this is a "prima facie breach of the rules of natural justice". He relies on a statement in Re Scott et al v. Rent Review Commission et al (1977), 81 D.L.R. (3d) 530 in which this court stated at p. 541: " The foregoing cases show that the Courts have uniformly held that an "opportunity to be heard" or an "opportunity to make representations", whether prescribed by statute or by common law, is afforded a person only if the tribunal lets him know the essentials of the evidence on the principal issue it has to decide, so that he may make representations on that issue, if he is able to do so. Here no information on the principal issue before the Commission was made available to the tenants. I must conclude that this constituted a serious jurisdictional error invalidating the Commission's decision." In this matter the Director of Assessment adduced evidence as to how the market rent of $4.75 per square foot assigned to Eaton's space was determined. There is little similarity between the issue being dealt with by the Rent Review Commission in the Scott case and the issue before the Municipal Board in the case we have under consideration. The Director presented the evidence as to how the assessment was calculated. There is no reason to assume that the original assessor reached the exact same result by a different route given that the income approach is considered the appropriate method to value Eaton's premises. Eaton's could have subpoenaed the original assessor but did not do so. Eaton's was given a full opportunity to make representations to the Municipal Board challenging the assessment. There is no evidence of a breach of natural justice and the Board did not lose jurisdiction by the failure of the Director to call the original assessor.. Eaton's also asserts: " that by not "breaking out" the amount of the proportional share of value to the taxpayer with respect to the common areas, the assessor failed to discharge his statutory and common law duties. In addition, there has been a failure by the assessor to discharge his statutory and common law duties by not providing the amount of the assessment of the common areas of the owner and the other tenants to it and the Board. Eaton's respectfully submits that by failing to do so there has been a breach of the duty of fairness and of natural justice. It is submitted that the Board's confirmation of business occupancy assessment with respect to Eaton's deemed proportional occupation or use of common areas without such information being provided to it and to the taxpayer for scrutiny and the right to comment constituted a serious jurisdictional error." In my opinion the assessors were not in a position to give Eaton's the assessments relating to the common areas as such a separate calculation was not done. Neither the decision in Re Scott et al v. Rent Review Commission et al or in D. Porter & Son Ltd. v. Director of Assessment (1985), 31 M.P.L.R. 34 (N.S.C.A.) are relevant as the Director simply did not have the information. As I previously stated the Director was not required by s. 11(2) to provide such a breakdown. Accordingly there was no breach of the duty of fairness by the Board in confirming the business occupancy assessment without such information being provided by the Director of Assessment. In summary, the Director's appeal ought to be allowed and Eaton's appeal dismissed. Eaton's failed before the Municipal Board and in this court. The Director should have the costs of this appeal in the amount of $2,000.00 plus disbursements. Hallett, J.A. Concurred in: Jones, J.A. Chipman, J.A. C.A. No. 02785 & 02787 NOVA SCOTIA COURT OF APPEAL BETWEEN: THE DIRECTOR OF ASSESSMENT ) Appellant ) - and - ) REASONS FOR ) JUDGMENT BY: T. EATON COMPANY LIMITED ) and THE CITY OF HALIFAX ) HALLETT, J.A. ) Respondents ) ) ) - and - BETWEEN: T. EATEN COMPANY LIMITED ) ) Appellant ) ) - and - ) ) THE DIRECTOR OF ASSESSMENT ) and THE CITY OF HALIFAX ) ) Respondents ) ) )