Labatt Brewing Company Limited v. St. John's (City)

Date: 20111128 Docket: 10/68 Citation: Labatt Brewing Company Limited v. St. John’s (City) and Molson Breweries Limited and Molson Canada Limited v. St. John’s (City), 2011 NLCA 75 IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR COURT OF APPEAL BETWEEN: LABATT BREWING COMPANY LIMITED APPELLANT AND: CITY OF ST. JOHN’S RESPONDENT AND Docket: 10/69 BETWEEN: MOLSON BREWERIES LIMITED AND MOLSON CANADA LIMITED APPELLANTS AND: CITY OF ST. JOHN’S RESPONDENT Coram: Rowe, White & Harrington, JJ.A. Court Appealed From: Supreme Court of Newfoundland & Labrador, Trial Division (General), 200801T3556 and 200801T3558 Page: 2 Appeal Heard: November 15, 2010 Judgment Rendered: November 28, 2011 Reasons for Judgment by Harrington, J.A. Concurred in by Rowe and White, JJ.A. Counsel for the Appellants: Michael Crosbie, Q.C. Counsel for the Respondent: Linda Bishop Harrington, J.A.: [1] Two appeals come before this Court arising from separate decisions of a Review Commissioner (Commissioner) dated August 7, 2008 pursuant to the Assessment Act, 2006, SNL 2006, c. A-18.1 (Act), affirming municipal tax assessments of the appellants’ properties. The appellants each own and operate a brewery which was assessed by an assessor for the City of St. John’s (City) under a new classification of special purpose property (SPP). This classification resulted in greatly increased assessed values for the purpose of real property taxation of the appellants’ properties. [2] Before the Commissioner the appellants submitted that the City assessor’s SPP classification of only six commercial properties including their own was discriminatory in relation to other properties which met the statutory definition but had not been so classified. The appellants sought to have their assessments reduced to the market value assessment base which was applied to their properties prior to enactment of the Act. The Commissioner dismissed the appeals. [3] Further statutory appeals to a trial division judge (reviewing judge) by the appellants were dismissed on the basis that (i) the decisions of the Commissioner were not unreasonable; (ii) the principles favouring uniformity and prohibiting discrimination in municipal taxation were not relevant considerations in determining whether the appellants’ SPP assessments should stand; and (iii) if such principles were relevant, such lack of uniformity or discrimination was expressly or impliedly permitted by the wording of the Act. Page: 3 BACKGROUND [4] The reviewing judge set out a concise history of the transition of the tax assessments of the appellants’ breweries from an “actual” or market value assessment base to a substantially increased SPP assessed value under the Act. He wrote as follows: [2] This matter is the latest skirmish in an ongoing battle between the appellants and the City respecting the assessments of their properties for municipal taxes. Each of the appellants operates a brewery in the City producing various brands of beer for the local market. Each of the properties in question was established decades ago by the original owners and subsequently acquired by the appellants. The properties were originally built on the outskirts of the City on hillside locations to take advantage of local streams and to facilitate gravity-fed production techniques apparently necessary for the making of beer at that time. More modern production methods were introduced over the years and the streams were subsumed in the City’s expanding water and sewer infrastructure as gravity was no longer necessary in the production process. [3] However, the appellants were left with production facilities housed in buildings on several different levels dependent on the needs associated with the former gravity-based production process, making them unusual if not unique structures without a great market value, despite their size and income-producing qualities. [4] Prior to the present appeals, the appellants’ properties were assessed under the St. John’s Assessment Act, R.S.N.L. 1990, c. S-1, which required all properties in the city to be assessed at market or actual value, pursuant to the definition of that term contained in that legislation. Disputes over the assessed values ascribed to the appellant’s properties under that legislation gave rise to several successful appeals over the years by the appellants seeking a reduction of the assessed market value of their respective properties on the basis of their limited market value due to their unique design features: [citations omitted]. [5] In 2006, the provincial legislature enacted the Assessment Act, 2006, S.N.L. 2006, c. A-18.1 (hereinafter the “Act, 2006”), subsuming assessments under the St. John’s Assessment Act, to allow for assessment for “special purpose properties” as defined in the new legislation. [6] The appellant Labatt is the owner of premises located on Leslie Street and the appellant Molson is the owner of premises located on Circular Road at Belvedere Street in the City from which they each operate a brewery. Based on the fair market valuations under the former legislation the properties were assessed at $993,000 for Labatt and $602,363 for Molson. Page: 4 [7] In September 2007, following the coming into force of the Act, 2006, the Assessment Division of the City issued a Notice of Assessment to each of the appellants for the year 2008 reassessing their respective properties pursuant to the new special purpose property provisions. The new assessments were: Labatt $6,531,800 and Molson $5,566,500, a very substantial increase in the assessed value of each property. [8] Pursuant to the Act, 2006, the appellants appealed their respective assessments to the Review Commissioner. The grounds of appeal were: 1. THAT the 2008 Notices of Assessment made in the second year of the three year assessment cycle are different from the 2007 Notices of Assessment given in the first year of the three year assessment cycle contrary to the ruling in St. John’s (City) v. Hotel Nfld 82, [citation omitted] and hence the 2008 Notices of Assessment state value amounts that are too high and fail to state that an actual value (i.e. a market value) assessment was made; and consequently because of the foregoing, the assessed values in the amount of 6,531,800 in the 2008 Notices of Assessment are too high and should be reduced as those values are in excess of the actual value (i.e. the market value) of the real property located at 60 Leslie Street; 2. THAT, in the alternative to ground 1 above, if reproduction cost instead of actual value (i.e. market value) is applicable to these assessments (which point is not admitted by the Appellant but rather denied), then the real property located on the land located at, 60 Leslie Street has not been assessed uniformly and equitably with other such real property located in the City of St. John’s and the assessed values in the 2008 Notices of Assessment should be reduced to be uniform and equitable with the assessments of other such real property located in the City of St. John’s; 3. THAT, further or in the alternative to ground 2, if reproduction cost is applicable (which point is not admitted by the Appellant but rather denied), then the assessed values in the amount of 6,531,800 in the 2008 Notices of Assessment are in excess of the reproduction cost of the real property located on the land located at 60 Leslie Street because, amongst other things and without limiting the generality of the foregoing, the costing amount is too high and the amount of physical depreciation applied is too low; and 4. THAT, also further or alternative to ground 2 above, the land located at 60 Leslie Street has been assessed in excess of actual value (i.e. a fair market value). [footnote omitted] [9] At the hearing before the Commissioner appointed pursuant to the Act, 2006, the appellants abandoned the first ground of appeal. The Commissioner, in Page: 5 separate but virtually identical reasons, rejected the appeals and confirmed the respective assessments. It was agreed that the appeals would proceed on the second ground and, if unsuccessful, the appellants would be permitted to come back before the Commissioner to argue the appeal on the basis of grounds 3 and 4, i.e., that if the assessments on the basis of the special purpose property provision were applicable, then the actual assessed value in each case was too high and should be revised downward. APPLICABLE LEGISLATION [5] The relevant provisions of the Act on these appeals state: 2. In this Act (a) “actual value” means that value being the market value of the fee simple interest in the real property; ….. 17. (1) An assessor shall assess real property at actual value. (2) The actual value of the real property under subsection (1) shall be made by determining the actual value of the real property as of the base date. (3) In forming an assessment for the purpose of subsection (1) an assessor shall have regard to the assessment of other properties in the city or municipality being assessed to ensure that the taxation falls in a uniform manner upon the real property that is subject to taxation in the city or municipality. (4) An assessor may assess buildings, structures or portions of them that are in the process of construction, alteration or enlargement at actual value and include the assessment on the next annual assessment roll. 18. (1) In this section (a) “reproduction cost” means the cost, less physical depreciation, required to construct a reasonably identical replacement of the real property using the same or similar materials, construction standards, design and quality of work, calculated on the basis of prevailing prices and on the assumption of normal competency and normal conditions; and (b) “special purpose property” means real property that has a design or lay out or is constructed of special materials or in a manner that restricts its use. Page: 6 (2) Notwithstanding section 17, an assessor shall assess a special purpose property based on the reproduction cost of the special purpose property. (3) Notwithstanding subsection (2), land on which special purpose property is located shall be assessed in accordance with section 17 based on actual value. ..... 35. (1) A commissioner may summon witnesses to attend and give evidence and produce documents at an appeal hearing. (2) A commissioner may administer oaths and take affirmations and may require witnesses to give evidence under oath or by affirmation. ….. (4) For the purpose of holding an inquiry under this Act, a commissioner has all the powers of a commissioner under the Public Inquiries Act . (5) In the conduct of an inquiry or a hearing, a commissioner is not bound by the rules of evidence. ….. 37. (1) A commissioner, after hearing the evidence, shall confirm or amend the assessment appealed against by increasing or decreasing it but the commissioner shall not amend an assessment only on the ground that it is above or below the actual value if the assessment bears a just and fair relation to the value at which other properties are assessed in the city or a municipality. (2) Notwithstanding subsection (1), where a property has been assessed as a special purpose property under section 18, a commissioner, after hearing the evidence, shall confirm the assessment appealed against or amend it by increasing or decreasing it, where the commissioner believes that it is above or below the reproduction cost of the property. (3) A commissioner shall not amend an assessment unless an appeal has been made in accordance with this Act but the commissioner may recommend to an assessor that an existing assessment of real property or of a class of real property or of all properties within a particular area be reviewed. (4) A commissioner, after hearing from the parties and any witnesses produced, shall decide the matter and shall provide reasons in writing to the parties to the appeal. [Underlining in decision appealed.] Page: 7 ….. 39. (1) A party aggrieved by a decision of a commissioner may appeal from that decision to a judge of the Trial Division in the judicial centre in which the real property is located upon giving written notice to all parties and to the Trial Division within 30 days after the mailing or delivery to that person of the decision of the commissioner. (2) The practice and procedure relating to appeals under the Judicature Act, and the Rules of the Supreme Court, 1986 apply to proceedings under this section. (3) An appeal of a decision of a commissioner under subsection (1) may be made on a question of law or jurisdiction. ….. (5) The court shall either confirm or vacate the decision of the commissioner and where vacated the court shall refer the matter back to the commissioner with the opinion of the court as to the error in law or jurisdiction and the commissioner shall deal with the matter in accordance with that opinion. DECISION OF THE TRIAL DIVISION JUDGE - Standard of Review [6] The reviewing judge conducted an analysis of the standard of review based on the guidance from the Supreme Court of Canada in Dunsmuir v. New Brunswick, [2008] 1 S.C.R. 190; 2008 SCC 9. He noted that the reviewing court must first consider whether the courts have decided in previous cases what the standard of review should be. [7] The reviewing judge did not find that such was the case here and proceeded to conduct a contextual analysis to determine the appropriate standard of review under the Act. He would have been aware that the scope of review had been altered from the previous Assessment Act, RSNL 1990, c. A-18, where the review process amounted to a hearing de novo with the reviewing court having wide review authority not only with respect to the validity of the assessment but also with regard to the grant of remedies. [8] In Dunsmuir at para. 64 the Supreme Court set out factors relevant to the analysis which include: (i) the presence or absence of a privative clause; Page: 8 (ii) the purpose of the tribunal as determined by interpretation of the enabling legislation; (iii) the nature of the question at issue; and (iv) the expertise of the tribunal. [9] The reviewing judge noted the absence of a privative clause and commented further at para. 17: … this is not a full right of appeal, as an appeal may only be made on a question of law or jurisdiction and the court may only confirm or vacate the decision and refer the matter back to the commissioner with an opinion as to the error in law or jurisdiction. The court may not substitute its decision for that of the Commissioner. Clearly, on a pure question of general law, the standard of review is correctness: … [Underlining added.] [10] With respect to the purpose of the tribunal, the reviewing judge noted that sections 29 to 39 of the Act set out a comprehensive procedure for an appeal of a notice of assessment which confers on the Commissioner the powers set forth in the Public Inquiries Act, 2006, SNL 2006, c-P – 38.1. [11] He determined that the nature of the issue before the Commissioner was one of mixed fact and law while focusing on the mandate of the Commissioner to hear evidence, assess credibility and determine facts from the evidence. He then concluded that the Commissioner’s mandate in dealing with the appellants’ assessments was to interpret the definition of “special purpose property” and apply it to the facts as determined by the City’s assessor. The reviewing judge concluded that “this determination of the Commissioner is deserving of some deference”. He cited para. 53 of the reasons in Dunsmuir as follows: Where the question is one of fact, discretion or policy, deference will usually apply automatically (Canada (Attorney General) v. Mossop, [1993] 1 S.C.R. 554, at pp. 599-600; Dr. Q, at para. 29; Suresh, at paras. 29-30). We believe that the same standard must apply to the review of questions where the legal and factual issues are intertwined with and cannot be readily separated. [Underlining added by reviewing judge] [12] At para. 21 of his reasons, the reviewing judge also noted that in Dunsmuir at para. 54, the Supreme Court held: Page: 9 … Deference will usually result where a tribunal is interpreting its own statute or statutes closely connected to its function, with which it will have particular familiarity: … [13] The reviewing judge concluded that the role of the Commissioner was to be that of a specialized tribunal to hear tax assessment appeals including those arising from assessments of properties in the province. However, he acknowledged that the Commissioner has no security of tenure, had “somewhat limited authority” and that his decisions are subject to appeal on questions of law and jurisdiction. The reviewing judge commented that since the issues to be determined involved factual findings which are not subject to appeal, this aspect of the process supports a degree of deference. He concluded that the appropriate standard of review was that of reasonableness given that the question to be decided was not a pure question of law. DECISION OF THE COMMISSIONER [14] In his reasons for dismissing the appellants’ initial appeals, the Commissioner wrote: Regarding the issue of uniformity and equality – The Appellant suggested that there are many other properties that have special characteristics and should also have been assessed as special purpose properties or in the absence of doing so those selected for such designation, which includes the subject property are being discriminated against and should be assessed their 2007 value based on market valuation. The definition of special purpose property under the Act is “real property that has a design or a layout or is constructed of special materials or in a manner that restricts its use.” While Counsel for the Appellant named a number of other properties which it asked the Manager of Assessments whether they should or could be considered as Special Purpose properties he did not provide any details of the elements which should be considered to designate a property as a Special Purpose property. There was no agreement that these properties met the criteria for Special Purpose property. In order to be designated as a Special Purpose property one would have to consider each on its individual merits and consider many factors such as whether the property had substantial functional and physical obsolescence; its location (i.e. access for business purposes, etc.), whether it had unique limiting design features and or materials, what is its conversion potential, and is there market data Page: 10 available to support a market analysis. The use of a property alone is not sufficient grounds to classify it as a Special Purpose property. The Court has not been provided with sufficient information on other properties to prove that they should be classified as Special Purpose properties. There was no indication that there was non uniformity amongst those properties which the Respondent has classified as Special Purpose properties and with the subject property. Accordingly, I find there the subject property has been assessed uniformly and equitably. [Underlining added.] [15] At this juncture it is worthy of note that the Commissioner appears to have conducted his review on the basis that the matter of uniformity in the classification and assessment of SPPs is mandated under section 18 of the Act but concluded that there was not sufficient evidence before him to establish that there were more than six special purpose properties involved and that his review was limited to the status of the six SPPs classified by the City’s assessor. [16] However, the reviewing judge took a different approach. He first compared the actual or market value approach with the SPP valuation method mandated by section 18. He found that whilst subsection 17(3) generally mandates that property assessments be based upon the actual or market value having regard to other like properties, he concluded that the language of section 18 of the Act dealing with SPP assessments recognizes: …[A] distinct category of property and imposes on the assessor an obligation to conduct a particular and specialized assessment on each property so categorized, an assessment which is unique to the property in question. [17] He found that the SPP definition coupled with the statutory mandate to assess such property solely on the basis of replacement cost less physical depreciation negated any consideration of the principles of uniformity and equity among the class of SPP owners and thus was of no relevance to the City’s assessor or to the Commissioner. [18] The reviewing judge commented at para. 43: The clear intention of the legislature to differentiate between the assessment between special purpose properties and the assessment of other properties is also reflected in the differing provisions for the review of assessments. … Page: 11 [19] He concluded at para. 47: On a plain reading of the legislation, I conclude that it requires the assessor and the Commissioner to treat each special use property individually and because of its uniqueness not to attempt to compare it to other properties. Simply put, once a property has been classified as a special purpose property, the Act, 2006 requires that it be assessed on a stand-alone basis. The Act does not invite comparisons – indeed it precludes comparisons with other properties. The Act requires the assessor to have ‘tunnel vision’; to focus only on the subject property and on its reproduction cost as defined by the Act. [Underlining added.] [20] The reviewing judge noted that the appellants were not complaining about the SPP classification and assessment of their properties but rather the fact that there were other properties that should have been so classified and assessed but were not. The appellants asserted that the discriminatory actions of the assessor should void their SPP classifications and the consequential assessment values so that their properties would revert to their previous assessed value before the Act came into force on the basis of “actual value” determined on the basis of a replacement cost less depreciation and functional and physical obsolescence. [21] The reviewing judge cited the reasons of the Supreme Court of Canada in Shell Canada Products Ltd. v. Vancouver (City), [1994] 1 S.C.R. 231 at p. 259 where McLachlin J. (as she then was) wrote for the minority: It follows that when it is alleged that a municipality has improperly discriminated against a citizen, the question for the court is whether the discrimination was authorized by the statute from which the municipality draws its powers. If the legislation authorizes the impugned distinction, the rule is not breached: R. v. Sharma, [1993] 1 S.C.R. 650. As my colleague Sopinka J. [speaking for the majority] puts it, '[t]he appropriate question is whether discrimination is expressly or impliedly authorized' (p. 282). Discrimination in the granting of licenses, taxes and municipal privileges is generally viewed as requiring express authorization by the empowering legislation because of the presumption that the legislature intends all citizens to be treated equally on such matters. Therefore, unless the statute clearly provides the contrary, the municipality has no power to discriminate. [footnote omitted] [Underlining in decision appealed.] Page: 12 The reviewing judge acknowledged that the main issue raised by the appellants focused on the fact that many other commercial properties which meet the statutory definition of special purpose property were excluded from the classification and their owners were continuing to benefit from a significantly lower market value assessment base. He concluded that the express language of section 18 read in conjunction with that of subsection 17(3) rendered concerns about uniformity and equity irrelevant (see paras. 40 to 51 of the reasons of the reviewing judge). [22] The reviewing judge then relied on the decision of this Court in Eastern Demolition and Recyclers Ltd. v. Long Harbour and Mount Arlington Heights (Town) (2004), 242 Nfld. & P.E.I.R. 181 (NLCA); 2004 NLCA 70, in support of the principle that if other properties have not been assessed on the appropriate basis mandated by the statute, the validity of the assessment of real property of a complaining taxpayer whose property has been assessed properly and the resulting obligation to pay taxes based on the assessed value are not affected. [23] He ruled that it was unnecessary for the Commissioner to feel obliged to spend “considerable time discussing classification and uniformity and equality”. In his view, the classification of other properties was not an issue. He concluded at para. 64 that the Commissioner “was both reasonable and correct in his conclusion that the assessment of the appellants’ properties as special purpose is valid”. He found that it was within the range of reasonable outcomes arising out of the appeals to the Commissioner and it was a correct interpretation of the legislation based on the facts. ISSUES [24] The issues on this appeal are: (i) Did the reviewing judge err in determining that the appropriate standard of review of the decisions of the Commissioner? (ii) Did the reviewing judge err in deciding that the issues of uniformity and discrimination within the class of special purpose property owners were not relevant to the Commissioner’s disposition of the appeals? (iii) Did the reviewing judge err by placing the burden of proof on the appellants? Page: 13 (iv) What remedy, if any, should the reviewing judge have granted to the Appellants? ANALYSIS - Standard of Review [25] The appellants submit that the reviewing judge erred in determining that the decisions of the Commissioner under the Act are to be reviewed on a standard of reasonableness. The main focus of these appeals is the submission that the Commissioner erred by his failure to find that the City’s assessor discriminated against the appellants and owners in issuing SPP assessment notices under the Act. The reviewing judge held that the Commissioner acted reasonably in interpreting sections 17 and 18 as expressly rendering the issue of discrimination within the class of SPP owners irrelevant. [26] When the City’s assessor issued notices of assessment he assigned SPP classifications to the appellants’ breweries, a third brewery, a soft drink bottling plant, a baked goods factory and a dairy/ice cream products plant. It was fundamental to the assessor’s mandate that he interpret the express language of section 18 of the Act regarding the classification of the appellants’ properties as SPPs. However, in my opinion he was also required to consider whether the legislation expressly negates consideration of issues of uniformity and equity. These considerations, in my view, are matters of law for which there is not only a right of appeal to the Trial Division but also a standard of review of correctness that is applicable. [27] In Dunsmuir, the Supreme Court stated that a standard of review based on correctness applies to questions of general law. At para. 60 Justices Bastarache and LeBel wrote: [60] … courts must also continue to substitute their own view of the correct answer where the question at issue is one of general law “that is both of central importance to the legal system as a whole and outside the adjudicator’s specialized area of expertise” (Toronto (City) v. C.U.P.E., at para. 62, per LeBel J.). Because of their impact on the administration of justice as a whole, such questions require uniform and consistent answers. Such was the case in Toronto (City) v. C.U.P.E., which dealt with complex common law rules and conflicting jurisprudence on the doctrines of res judicata and abuse of process — issues that are at the heart of the administration of justice (see para. 15, per Arbour J.). [Underlining added.] Page: 14 [28] In BCE Place Limited v. Municipal Property Assessment Corporation, 2010 ONCA 672, the Court of Appeal discussed the standard of review regarding municipal assessment appeals in Ontario in the post – Dunsmuir era. At para. 17, Rosenberg J.A., wrote for a unanimous panel: [17] In my view, the pre-Dunsmuir jurisprudence has already determined the standard of review in a satisfactory manner. In a series of cases, the Divisional Court has found that the standard of review on questions of law is correctness, even where the Board is interpreting its home statute. See Municipal Property Assessment Corp. v. Minto Developments Inc. (2003), 2 M.P.L.R. (4th) 89, and 1098748 Ontario Ltd. v. Ontario Property Assessment Corp., Region No. 11 (2001), 143 O.A.C. 121. And the Divisional Court reached the same conclusion in the post-Dunsmuir decision in Toronto (City) v. Wolf, (2008), 241 O.A.C. 41. The Divisional Court pointed out in those cases the Board’s decisions are not protected by a privative clause and that there is a statutory appeal with leave to the Divisional Court on questions of law (s. 43.1 of the Act). [29] In this case, the Commissioner was faced with appeals based upon statutory interpretation and the basic legal principles of uniformity and equality as fundamental considerations under a new two-tiered assessment regime enacted for commercial property taxation in the Province. The Commissioner was deciding a question of law which he considered to be within his jurisdiction which required the interpretation and application of the definitions of “special purpose property” and “reproduction cost” set out in section 18 of the Act. While counsel for the City submitted that the Commissioner possesses special expertise by virtue of having worked for many years in the field of municipal property assessment, this would not justify holding the Commissioner to a reasonable standard regarding interpretation of key assessment provisions when issues of discrimination and lack of uniformity among classes of property owners are under consideration. With respect, I am of the opinion that the proper standard of review of the Commissioner’s as well as the reviewing judge’s interpretation of sections 17 and 18 of the Act in the context of these appeals is correctness. [30] The Commissioner took the position that the only ground of appeal to be decided upon was with respect to the classification of the appellants’ property as special purpose properties. The Commissioner simply concluded at p. 5 of his decision that the appellants had not provided him with “sufficient information on other properties to prove that they should be classified as Special Purpose properties”. He held that there was “… no indication that there was non uniformity amongst those (six) properties Page: 15 which the Respondent has classified as Special Purpose property with the subject (appellants’) property”. He concluded: “…the subject property has been assessed uniformly and equitably”. At this juncture, it is important to note that the Commissioner did not say that the matter of uniformity was not relevant but simply held that there was no absence of uniformity regarding the assessment of the six properties including the appellants and that there was insufficient evidence to establish that other properties ought to have received an SPP classification. [31] In my opinion the Commissioner was addressing a question of mixed fact and law rooted in the interpretation of the statutory definitions of “special purpose property” and “reproduction cost” as to whether the City’s assessor discriminated against the appellants in relation to other commercial property owners whose properties were eligible for a SPP classification and if so classified would have been assessed at a much higher value than was actually the case. The appellants complain that the City’s manager of assessments acknowledged that a number of specific commercial properties would meet the SPP definition in section 18 yet continued to be assessed at lower assessment amounts than the assessed value a “reproduction cost” valuation method mandated for SPPs by section 18 would produce. I am satisfied that eligible SPPs identified by the appellants and confirmed as such by the manager of assessment in the hearing transcript included hotels, funeral homes, horticultural greenhouses, farm properties, fast food outlets, the Telegram newspaper printing plant, bulk storage tank facilities and automotive service centers. [32] Counsel for the City at the hearing of these appeals did not contest these acknowledgements by the assessor. She also acknowledged that the SPP definition in section 18 is difficult to administer by assessors because one needs to consider a number of factors including the potential cost of conversion of a commercial property to another economically viable use when determining whether the property should be assessed on actual or market value or on a SPP “reproduction cost” basis. Physical construction restraints to conversion to other economic viable uses was also acknowledged by the parties before the Commissioner to be an important consideration for classification of SPPs even though it is not explicitly part of the SPP definition found in subsection 18(1)(b) of the Act. (See Hearing Transcript, Appellants’ Appeal Book, Tab 25.) [33] The acknowledgements by the City assessor are in the record required to be maintained by the Commissioner under subsection 32(8) of the Act. Page: 16 The Commissioner erred by dismissing the appellants’ submissions apparently on the basis that there was “no agreement” between the assessor and the appellants notwithstanding the acknowledgements made on the record by the City’s manager of assessments. [34] While the Commissioner appeared to accept the principle that discrimination in the assessment of special purpose property can be relevant on appeals he narrowed that consideration to the six properties identified as such by the assessor and rejected any further consideration of uniformity or equity based on his finding of the absence of sufficient information from the appellants. [35] A standard of review of correctness should have been applied by the reviewing judge when the Commissioner failed to identify the real issue as being whether the assessor had discriminated against the appellants based on evidence before him that a large number of properties meeting the SPP definition had been excluded from that class and assessed at much lower values by the assessor. A standard of reasonableness would have applied to the Commissioner’s finding of fact that the absence of an agreement between the parties meant an absence of evidence regarding the lack of uniformity in the assessment process. [36] The reviewing judge took a different approach by concluding that the express wording of section 18 read in conjunction with subsection 17(3) of the Act rendered the issues of uniformity and discrimination within the class of SPP irrelevant as long as the appellants’ own properties fell within the SPP classification. This determination was on a question of law and not one of mixed fact and law. I am satisfied that the standard of correctness was applicable with respect to the legal interpretations of sections 17 and 18 of the Act on these appeals. [37] Under section 39 of the Act an appeal of the Commissioner on a question of law or jurisdiction is granted and is to be dealt with under the procedure governing appeals under the Judicature Act and the Rules of the Supreme Court, 1986. Under section 39(5) the reviewing judge “shall confirm or vacate the decision of the commissioner and where vacated shall refer the matter back to the Commissioner with the opinion of the court as to the error of law or jurisdiction and the commissioner shall deal with the matter in accordance with that opinion”. The reviewing judge dealt with the appellants’ concerns regarding uniformity and discrimination on the basis that the language of section 18 read together with section 17 is sufficiently Page: 17 clear to permit stand-alone SPP classifications of commercial properties by an assessor under the Act without regard to whether other such properties are being assessed on the same basis. [38] The British Columbia Court of Appeal elaborated upon the common law principle forbidding discrimination within a class of taxpayers in Vancouver Area Assessor, Area No. 9 v. Bramalea Ltd. (1990), 52 B.C.L.R. (2d) 218 (leave to appeal to SCC dismissed [1991] SCCA No. 52) as follows: [12] The second principle on which the system rests, that there be "equity" as between assessed values of similar lands, is likewise found partly in the statute and partly in the common law, the common law being reflected in rules applied by the courts in the interpretation of taxing statutes. [13] More than 100 years ago, in Jonas v. Gilbert (1881), 5 S.C.R. 356, Chief Justice Ritchie laid down the law in Canada concerning the taxpayer's right to equitable treatment in the assessment process. The Chief Justice said (at p. 366): Unless the legislative authority otherwise ordains, everybody having property or doing business in the country is entitled to assume that taxation shall be fair and equal and that no one class of individuals, or one species of property, shall be unequally or unduly assessed. [14] Chief Justice Ritchie emphasized (at p. 365) that "a power to discriminate must be expressly authorized by law and cannot be inferred from general words." It is, of course, apparent that the principle so stated must apply with at least equal force where discrimination might otherwise occur between taxpayers within a class: Re Allen and Mimico (1920), 19 O.W.N. 150; Chapman v. McLeod, [1949] O.W.N. 395. [15] The common law presumption that taxing authorities are required to deal even-handedly with all taxpayers has, if anything, been reinforced by our Assessment Act. [Underlining added.] (See also Vancouver Assessor, Area No. 9 v. Lount (1995), 10 B.C.L.R. (3d) 92 (BCCA) at para. 20.) [39] The issue identified by the reviewing judge was a question of law as to whether the Act expressly authorizes the City’s assessor to assess some properties as SPPs without regard to the inclusion of other properties Page: 18 properly belonging to that class by virtue of statutory language in sections 17 and 18 of the Act. He answered the question in the affirmative. [40] As noted earlier in these reasons, this was a different approach to the assessments than that taken by the Commissioner whose analysis suggested that discriminatory assessments of special purpose property could be considered but mistakenly limited such consideration only with respect to those SPPs identified as such by the assessor. [41] With regard to the standard of review, this Court concludes that the Commissioner was dealing with a question of law regarding the scope of an inquiry into uniformity of assessment of a class of property owners to which a review standard of correctness should have been applied by the reviewing judge. The reviewing judge dealt with another question of law regarding the interpretation of sections 17 and 18 of the Act in terms of the relevance of uniformity at all. For the reasons which follow the Court finds that both the Commissioner and the reviewing judge interpreted sections 17 and 18 of the Act incorrectly. - Were the issues of uniformity and discrimination within the class of special purpose property owners relevant to the appeals? [42] At paras. 40-42 of his decision, the reviewing judge reasoned: [40] … Notwithstanding the requirement in Section 17(3) to assess property at its actual or market value and to "have regard to the assessment of other properties" in the City, "to ensure that the taxation falls in a uniform manner" on all properties, when a property has been classified as special purpose, uniformity and equity in respect of other properties do not apply. [41] Properties which are classified as special purpose properties are assessed on a completely separate basis. The Act creates or recognizes a distinct category of property and imposes on the assessor an obligation to conduct a particular and specialized assessment on each property so categorized, an assessment which is unique to the property in question. [42] Pursuant to Section 18(2) of the Act, 2006, special purpose properties are to be assessed on "the reproduction cost of the special purpose property". There is in Section 18 no equivalent to Section 17(3). There is no mention in that section of comparison of other properties or the requirement for uniformity of taxation. The legislation specifically left out these considerations in respect of special purpose properties… [Underlining in decision appealed.] Page: 19 [43] The express mandate in section 17 of the Act for consideration of the assessment of “other properties” in the assessment of “actual value” or “market value”, and the absence of similar wording in section 18 for the assessment of “reproduction cost” for a SPP was found by the reviewing judge to mean that uniformity and equity are not relevant considerations in the assessment process for special purpose properties. With respect, I believe this is an unduly restrictive interpretation of the statutory language. [44] In my opinion, the Act, by mandating that an SPP be assessed using the reproduction cost method, was simply establishing a single or uniform valuation method (i.e., reproduction cost less physical depreciation) for properties that meet the SPP definition and nothing more. There is no express intention that uniformity or equity need not be a consideration in the manner in which properties are classified by the City’s assessor for inclusion under the SPP category. In my opinion, the matter of uniformity in order to ensure the existence of a non-discriminatory criteria for the identification of SPP owners is still at play. [45] In Benchmark Management Ltd. v. Surrey/White Rock Assessor, Area No. 14, 2010 CarswellBC 3028, the British Columbia Property Assessment Appeal Board noted: [33] The Assessment Act (the "Act") and the common law require that assessments be equitable as between taxpayers. Properties must be equitably assessed in relation to similar properties. The Act specifically refers to equity in relation to actual value, but the Board and Courts have previously held that equity applies to classification as well: 275321 B.C. Ltd. v. Assessor of Area 10 (2000 PAABBC 20015918). [Underlining added.] Properties cannot be classified in a discriminatory fashion. However, this is exactly what has occurred here. I believe that the SPP classification of commercial properties as “special purpose property” by the City’s assessor proceeded on an ad hoc basis due to a lack of clarity in the SPP statutory definition. Subsection 18(1)(b) describes such property as “real property that has a design or layout or is constructed of special materials or in a manner that restricts its use”. Uniqueness of design, layout or materials, type of construction or a combination of these factors appear to be factors which may restrict the usage or purpose of the property. However, there are indications in the definition that physical constraints on future use or Page: 20 prohibitive costs of conversion to viable alternate uses ought also to be considered when the assessor seeks to identify SPPs. [46] In Southam Inc. v. Surrey/White Rock Assessor, Area No. 14, 2003 BCSC 676, affirmed on appeal 2004 BCCA 245, leave to appeal SCC denied [2004] 3 S.C.R.v, Gray J. dealt with a tax dispute over whether the cost approach of valuation was appropriate for what was described as “special use limited market properties”. The property subject to assessment was a taxpayer’s newspaper printing plant. The property had been assessed at $40 million dollars while the taxpayer claimed the property should be assessed at $25 million. [47] The applicable legislation in British Columbia required the assessor to determine “actual value of the land and improvements and enter that value on the assessment roll. “Actual value” is equivalent to “market value”. [48] The Property Assessment Appeal Board confirmed the assessment at $40 million having classified the plant as a “limited-market, special purpose property”. Ironically, the assessor acknowledged here that the Telegram’s newspaper printing plant had not received a SPP classification. [49] Justice Gray wrote that: [20] … A limited-market property is a property that has relatively few potential buyers at a particular time. A special purpose property is one that has unique designs, special construction materials, or lay-outs that restrict the possibilities for conversion. Common examples are houses of worship, museums and schools. [Underlining added.] [50] Here, a valuation method of reproduction cost less physical depreciation is mandated but what properties fall to be assessed on this basis is vaguely defined in subsection 18(1)(b) of the Act. Common sense suggests that special or limited purpose properties would include those which require substantial and prohibitively costly construction work to be converted to an economically viable alternate use. When one considers the design, construction and use of breweries, soft drink bottling plants, the dairy/ice cream products plants and the baked good factories, these properties would clearly be eligible for SPP classification. [51] However, the same may readily be said about movie theatres, horticultural nurseries, funeral homes, fast food outlets, automotive service Page: 21 centres and a newspaper printing plant among others, which are now being assessed on a market basis which allows for a much lower assessment base. While a building housing a fast food outlet may be easily converted into a small office building, depending on suitability factors such as age, location and appropriate zoning, other structures may be impossible to convert from a constructability and cost point of view to an economically alternate use. I believe that the root cause of the inequitable application of the SPP classification here relates to a lack of precision in the statutory definitions in section 18 of the Act which are vague and inherently discriminatory. [52] On these appeals I am satisfied that the appellants have established that the City’s assessor assessed their properties in an arbitrary, inequitable and discriminatory manner by the exclusion of a significant number of properties which the City’s representatives, during the hearing before the Commissioner, acknowledged would or could fit the SPP definition. [53] The reviewing judge incorrectly concluded that the issue of discrimination was irrelevant and the Commissioner erred in failing to look beyond the six properties classified as SPPs and in finding there was no agreement between the parties that there were other SPPs that had not been properly classified as such. [54] The reviewing judge ought to have concluded, by a correct interpretation of the legislation and under the principles of equity, that the issue of discrimination which should have been addressed by the Commissioner was engaged. This ought to have lead to a finding by the reviewing judge that the Commissioner had acted unreasonably. [55] By way of obiter the City’s assessor’s discriminatory classification of SPPs in this case is perhaps understandable given the lack of guidance provided by the Act. The definition of special purpose property in section 18(1)(b) does not provide proper guidance to the assessor. This creates a situation where it is difficult to avoid arbitrariness and resulting discriminatory classifications. A large number of properties could fall under the definition of special purpose property that are not currently so classified. A number of property owners have no real way of determining whether their property will be affected in the future as property assessors are given a free rein to determine which, if any, properties will fall under the definition of “special purpose property”. Page: 22 [56] Such discriminatory classifications could be avoided in the future with greater clarity in the definition of “special purpose property”. By way of comparison, British Columbia has a much more detailed classification scheme. The Assessment Act, RSBC 1996, c. 20, provides for 8 classes of property (as opposed to the normal use/special purpose dichotomy in NL); see subsection 19(14). The class into which the property falls determines the principles used to determine its assessed value. Class 4 represents “Major Industry”. Such property will be so classified if it falls into one of the 15 descriptions listed in subsection 20(1). Some examples of major industry uses include: mining ore or coal; smelting from ore or ore concentrate; manufacturing cement; manufacturing sheet glass or bottles; and building refitting or repairing ships. [57] Ontario similarly lists classes of property; see section 7 of the Assessment Act, RSO 1990, c. A-31. The General Regulation, Ont. Reg. 282/98, sections 5 and 6, sets out the types of properties that are considered commercial or industrial, respectively. The property classification determines the tax rate that will be applied to each property by the municipality. [58] These two schemes (British Columbia and Ontario) provide for greater clarity. For example, the appellants would be hard pressed to argue that they were discriminated against if the Act explicitly listed “breweries” as part of a list of types of property that would be subject to the “reproduction cost” assessment approach. - Onus of Proof [59] The appellants’ notices of appeal from the Commissioner’s decisions asserted that he erred in placing the burden of proof on them regarding the issues of uniformity and discrimination. I do not agree with the submission of appellants’ counsel regarding the burden of proof. The appellants have the burden of proving their claims of lack of uniformity and discrimination received a SPP classification. [60] In Newterm Ltd. v. St. John’s (City) (1988), 74 Nfld. & P.E.I.R. 328 (Nfld. C.A.), this Court confirmed that this type of review from a municipal assessment under the former legislation was in the nature of a new hearing and that the onus remained with an appellant throughout. The Court wrote at paras. 22 and 23: Page: 23 [22] As to the onus of proof and of leading evidence when the hearing is conducted by way of hearing de novo, that rests upon the appellant, as it did before the Review Court and does on any appeal. At that stage, the record with regard to the assessment itself and of the proceedings before the Review Court will presumably be before the appeal judge. No onus lies on the City at the outset. The assessment is presumed to be correct unless and until it is demonstrated to be wrong. However, having heard an appellant's evidence, the City may itself wish to adduce its own evidence in support of its position. [23] In the present case it is Newterm which disputes before the Trial Division the assessment as determined by the Review Court. The onus lies upon Newterm to establish that the valuation should be reduced. [Underlining added.] Subsection 39(2) of the Act expressly provides that the provisions of the Judicature Act and the Rules of the Supreme Court, 1986, apply to appeals to the Trial Division from the Commissioner’s decisions. I am satisfied that the new procedure under the Act does not alter the principle that the onus of proof is upon the appellant. REMEDY [61] The Molson appellants in their amended Notice of Appeal requested that the Commissioner’s decision be vacated and that the $5,566,500 assessed value concerning their property for the 2008 tax year be reduced to the previous assessed value of $602,363 or alternatively, the proceeding be referred back to the Commissioner for further consideration and, in either alternative, that the appellants be awarded the costs of the appeal in both this Court and in the Trial Division. In its Notice of Appeal, the appellant, Labatt Brewing Company, requested that the Commissioner’s decision be vacated and the $6,531,800 assessed value of its property for the 2008 tax year be reduced to the former assessed value of $993,000 or alternatively, that the proceeding be referred back to the Commissioner and, in either alternative, the appellant be awarded the costs of its appeal in this Court and in the Trial Division. [62] The appellants request that the subject matter of these appeals be referred back to the Commissioner with a direction that the appellants’ properties be assessed at market value in order to eliminate the discriminatory manner of their SPP assessments. Page: 24 [63] It should be noted that the Act, unlike its predecessor, narrows the scope of remedies permitted to be granted by the Trial Division on appeals from decisions of the Commissioner. On such an appeal, the reviewing judge under s. 39(5) shall confirm or vacate the Commissioner’s decision and where vacated the court shall refer the matter back to the Commissioner with its opinion as to error of law or jurisdiction and the Commissioner shall deal with the appeal in accordance with the opinion. This Court is satisfied that the reviewing judge ought to have vacated the Commissioner’s decision on the basis that he acted unreasonably by finding that the appellants’ claims of discrimination could not be supported by virtue of the absence of an agreement between the appellants and the City that there were other identifiable special purpose properties that were not so classified notwithstanding the acknowledgements by the City’s manager of assessment during the hearing. The appeals ought to have been referred back to the Commissioner to further deal with their disposition in light of the opinion that discrimination within the SPP classification had been established by the appellants [64] On these appeals, the issue is not the exclusion of certain businesses from taxation altogether but the advantage gained by some property owners whose properties, by admissions of the manager of assessment before the Commissioner, fit the SPP definition but whose continuing market value assessment base is considerably lower than what they would likely be if assessed on the basis of replacement cost less physical depreciation. [65] The facts before the Commissioner here indicated that all three major breweries operating in the City of St. John’s, including those owned and operated by the appellants, have been classified on a SPP basis and are being taxed on a reproduction cost basis as defined in section 18 of the Act. There is no evidence that the appellants have been placed at a competitive disadvantage in the conduct of their operations. [66] However, discrimination in the municipal taxation sense has been established in the manner in which the City is classifying and assessing special purpose properties. As noted above, the root cause is the vague and inherently discriminatory language in the Act defining such property. The Commissioner’s decision ought to have been vacated and the appeals referred back to the Commission for reconsideration based on the opinion that ought to have been rendered by the reviewing judge. It is so ordered. Page: 25 [67] The appellants shall be entitled to costs in this Court and in the Trial Division on Column 5 of the scale of costs. SUMMARY AND DISPOSITON [68] On these appeals: (i) The appropriate standard of review of the appeals to the Trial Division from the Commissioner is correctness regarding the legal issue of whether discrimination in the SPP classification was expressly authorized by the Act; (ii) The Commissioner erred in law finding that the issue of uniformity and equity could only be considered with respect to the six properties classified as special purpose properties and further made an unreasonable finding that the evidence did not establish that other special purpose properties were not so classified and assessed; (iii) The reviewing judge erred by incorrectly interpreting sections 17 and 18 of the Act as expressly authorizing discrimination within the SPP classification; (iv) The reviewing judge ought to have vacated the Commissioner’s decision and referred the appeals back to the Commission with the opinion that the Commissioner was incorrect in narrowing his consideration of discrimination to the six SPPs assessed by the City and acted unreasonably in his finding that the evidence adduced at the hearing did not establish that other eligible SPPs were met so classified and assessed and it is so ordered; (v) The appellants are entitled to a declaration that the current legislative scheme for the classification and identification of special purpose properties under section 18 of the Act is vague and inherently discriminatory; (vi) The burden of proof is on the appellants on their appeals; Page: 26 (vii) The appellants are entitled to costs in this Court and before the Trial Division to be taxed on Column 5 of the scale of costs. _________________________ M.F. Harrington, J.A. I concur: ______________________ M. Rowe, J.A. I concur: _______________________ C.W. White, J.A.