2000 SKCA 87 Docket: 3164 THE COURT OF APPEAL FOR SASKATCHEWAN Coram: Bayda C.J.S., Sherstobitoff Lane JJ.A. RATHCLIFFE HOLDINGS LIMITED and JOSTEN HOLDINGS LIMITED and THE CITY OF SASKATOON COUNSEL: Mr. J. Hesje for the Appellants Mr. W.J. Davern for the Respondent, City of Saskatoon Mr. J. Grubb Ms. K. Richardson for the Respondent, SAMA DISPOSITION: On Appeal From: Assessment Appeals Committee of the Saskatchewan Municipal Board Appeal Heard: October 26 27, 1999 Appeal Allowed: June 29, 2000 Reasons By: The Honourable Mr. Justice Sherstobitoff In Concurrence: The Honourable Chief Justice Bayda The Honourable Mr. Justice Lane SHERSTOBITOFF J.A. [1] This appeal is taken under s. 33.1 of The Municipal Board Act, S.S. 1988-89, c. M-23.2. It is from a decision of the Assessment Appeals Committee of the Saskatchewan Municipal Board. It is one of a series of appeals heard at the same time dealing with the application of a newly introduced market adjustment factor to assessments for municipal tax purposes. [2] The appeal concerns the 1997 assessment, for municipal tax purposes, of shopping centre in Saskatoon called Market Mall. I. MARKET ADJUSTMENT FACTOR (MAF) [3] The issues raised by the appellant in this case respecting the MAF to be used in calculating the assessed value of Market Mall are exactly the same as the issues raised and dealt with in another judgment, issued concurrently with this one, in respect of the assessment of Midtown Plaza in Saskatoon: The Cadillac Fairview Corporation and The T. Eaton Company Ltd. v. City of Saskatoon. This judgment must be read in conjunction with it. [4] Market Mall, situate in southeast Saskatoon, is Saskatchewan's oldest enclosed mall. It was built in 1966 and underwent expansions in 1979, 1982, 1987 and 1992. [5] As with all other fully enclosed shopping centres in Saskatoon, the assessor calculated MAF of 0.94 for Market Mall. If it had been grouped with all other commercial retail buildings in its commercial building neighbourhood, its MAF would have been 0.65. [6] In this case, the appellant only raised two issues as follows:Did the Assessor err in law by misconstruing or misapplying the provisions of the Assessment Manual in determining the market adjustment factor for the Appellants’ properties by:i. using a single sale to calculate the market adjustment factor?ii. creating as a commercial building neighbourhood the grouping of fully enclosed shopping centres which encompassed the entire City of Saskatoon? [7] Each of the issues raised in this case was dealt with in Cadillac Fairview v. Saskatoon. Exactly the same reasoning applies in this case. As result, the appeal must be allowed on the same basis in respect of these grounds of appeal. II. ABNORMAL FUNCTIONAL OBSOLESCENCE [8] There was one ground of appeal that was unique to this case. The order granting leave to appeal stated the issue in this way: Did the Assessment Appeals Committee err in their interpretation of abnormal functional obsolescence as defined in the Manual prepared by the Saskatchewan Assessment Management Agency: i. by concluding that abnormal functional obsolescence does not apply to an add-on type of construction? ii. in concluding that abnormal functional obsolescence is only accounted for if there is an inability of an improvement to perform the function for which it is used? [9] The Saskatchewan Assessment Manual, in Document 2.3.1 summarizes and defines functional obsolescence in this way: Summary This section describes the formulas, rules and principles for determining the amount of abnormal functional obsolescence not accounted for in the replacement cost new less physical deterioration or the market adjustment factor for commercial buildings and structures valued by the replacement cost method. Definition Functional obsolescence is the loss in value from replacement cost new less physical deterioration due to the inability of the building or structure to adequately perform the function for which it is used. Functional obsolescence is caused by changes in demand, design and technology which result in loss in the utility of the building or structure. [10] The appellant had argued before the Board of Revision and before the Assessment Appeals Committee that various expansions of the mall, over the years, to meet the requirements of various new tenants resulted in an excess of non revenue producing common area, and superadequate (and costly) underground parking, and that these things, because they detracted from the economic utility of the premises amounted to abnormal functional obsolescence within the meaning of the manual. [11] The Assessment Appeals Committee said this, in dismissing the appeal: The appellant suggested that Market Mall had an excess of common area that required reduction for functional obsolescence, and that the underground parkade was functionally obsolete. The definition, “caused by changes in demand, design and technology which resulted in loss in the utility”, does not appear to apply to an add on type of construction but rather vintage building when design standards were different and building has seen its day. The appellant suggested that utility is economic utility. The record does not support that view, The appellant and the respondent disagree on the food court and the mini-golf being common area or commercial rental space. On the balance of probability, argument before the Committee leads it to believe that these areas are commercial rental areas as they generate income (directly or indirectly) similar to the balance of the commercial rental units in the facility. The present method of assessing the common area, therefore, is reasonable. The Manual is specific that all normal functional obsolescence is accounted for in the MAF. Abnormal functional obsolescence is accounted for if there is an inability of the improvement to perform the function for which it is used. The hypothesis presented by the appellant and the respondent of the super-adequacy of high ceiling hardly relates to the subject property as an example comparison. The generic sizes of common areas, published in books or texts, are not supported in the Manual. There is no common area size requirement, process or methodology in the Manual. The business decision of building parkade along with the lack of above ground parking are not in the category of abnormal functional obsolescence for the improvement. As an aside, no one gave any reason that there were 11 more stalls built than are required by the bylaw, and the Board was then asked to treat the extras as abnormal functional obsolescence. The Board was not convinced, on the evidence presented before it, that an additional obsolescence was required. Abnormal functional obsolescence is only accounted for if there is an inability of an improvement to perform the function for which it is used. This is major shopping centre performing that function. The Board did not err. This ground of appeal to the Committee fails. [12] The appellant conceded that the question of whether the various expansions resulted in abnormal functional economic obsolescence was question of mixed fact and law, and thus beyond the scope of this appeal. Its argument was confined to whether the committee had erred in law by saying that the definition of functional obsolescence did not apply to an add-on type of construction, or by finding that there must be an inability of an improvement to perform the function for which it is used. [13] Whether the committee was right or wrong in saying what it did in respect of add-on construction is really beside the point, since a careful reading of the decision shows that that was not the ground for the decision. The same may be said in respect of the committee declining to accept the appellant's argument that economic utility should govern, rather than the ability of the improvements to adequately perform the function for which they were used. [14] It is clear that the committee was not satisfied that the appellant had established that there was any excess of non-revenue producing common area, or any accepted standard as to ratio of revenue to non revenue producing areas. Nor was it satisfied that the appellant had established that there was any lack of economic utility in the common areas or underground parkade. Finally, the committee was obviously of the view that the evidence showed that the improvements did adequately perform the function for which they were used which is another way of saying that there was no lack of economic utility. [15] In sum, the decision was arrived at not as a result of any wrong interpretation of the manual, but as a result of the appellant\'s failure to establish to the satisfaction of the committee the facts on which it based its case. Or, to put it another way, it was decided on the evidence or lack thereof. In either case, the decision is beyond our jurisdiction to review. [16] This branch of the appeal must, accordingly, be dismissed. [17] Since success was divided, there shall be no order as to costs. DATED at the City of Regina, in the Province of Saskatchewan, this 29th day of June, A.D. 2000. SHERSTOBITOFF J.A. concur. BAYDA C.J.S.
An appeal under s.33.1 of the Municipal Board Act from a decision of the Assessment Appeals Committee of the Saskatchewan Municipal Board, one in a series of appeals heard at the same time dealing with the application of a newly introduced market adjustment factor (MAF) to assessments for municipal tax purposes. In issue was whether the assessor erred in law by misconstruing or misapplying the provisions of the Assessment Manual in determining the MAF for the appellant's shopping centre properties by using a single sale to calculate the MAF; and by creating as a commercial building neighbourhood the grouping of fully enclosed shopping centres which encompassed the entire city. HELD: 1)The assessment was set aside and the matter was remitted to the assessor to be dealt with according to the manual. Both issues were dealt with in Cadillac Fairview v. Saskatoon (TWL CA00074) and the same reasoning applied. 2)The appellant conceded that the question of whether the various expansions of the shopping centre resulted in abnormal functional economic obsolescence was a question of mixed law and fact and was thus beyond the scope of this appeal. 3)The second branch of the appeal was dismissed. Whether the committee erred in law by saying the definition of functional obsolescence did not apply to an add-on type of construction was beside the point since that was not the ground for the decision. The decision was not the result of any wrong interpretation of the manual but was the result of the appellant's failure to establish to the committee's satisfaction the facts on which it based its case. The decision was therefore beyond the Court of Appeal's jurisdiction to review.  4)There was no order as to costs as success was divided.