Assignment 3 Chapter 3 : Legal framework for assessment Flashcards
The functions as assessor performs can be broadly classified as either judicial (including quasi-judicial) or administrative. Identify which of the following functions is administrative.
- The assessor alters the assessment notice to enhance taxpayer understanding.
- An assessor determines that a certain piece of equipment qualifies for an exemption from taxation because it is used to abate pollution.
- The assessor appeals an assessment because of incorrect inventory; The original assessment was based on land only, but a building has been constructed and now occupies the site.
- None of the above
Answer:
(1) The assessor alters the assessment notice to enhance taxpayer understanding.
Option (1) is administrative because it involves discretion but does not affect the rights or obligations of the taxpayers.
Option (2) is judicial because it affects the taxes paid and involves discretion.
Option (3) is judicial because a decision to bring an error or omission forward to the appropriate court of review involves discretion and affects the taxes paid by the property owner.
Mr. Yon has sold his house and is currently moving out. As he is packing, Mr. Yon comes across his 10’ x14’ metal tool shed in his yard, which is not affixed and simply sit by its own weight on the ground. Mr. Yong personally purchased this tool shed many years ago and wants to know if he can disassemble it and bring it to his new yard. What is the best advice you could offer Mr. Yon?
- Mr. Yon should leave the tool shed because it is a structure and cannot be removed from the premises.
- Mr. Yon should leave the tool shed because the purpose of the toll shed is for the enhancement of the premises
- Mr. Yon should take the tool shed because the shed is attached to the land only by its own weight.
- Mr. Yon should take the tool shed because he bought it personally.
Answer
(3) Mr. Yon should take the tool shed because the shed is attached to the land only by its own weight.
Option (3) is correct because the tool shed is only connected to the land by its own weight and therefore is considered a chattel.
Option (1) is incorrect, as it does not matter if the tool shed is a structure, it
can still be considered a chattel as long as it is not affixed to the ground.
Option (2) is incorrect: if an item fails the first part of the two-part test (degree of affixation), then the second part of the test is inconsequential. Because it has already been determined that the tool shed is not affixed to the land, the purpose of affixation has no bearing.
Option (4) is incorrect because it does not matter who originally purchased the tool shed.
Mary was considering the purchase of a small office building in which to carry on her accounting business. She was concerned about expected increases in property taxes and approached the assessor for assistance.
The assessor informed Mary that “the expected increase in taxes is about 15 percent”.
Behind the counter was a notice stating, in part:
“The employees of this office cannot provide accurate information about expected property tax. Any taxpayer who relies on such advice does so at their own risk.”
Mary purchased the office building and six months later received a tax bill that was double to the previous year’s bill. The assessor was unaware that the municipality had intended to shift the tax load to business property. Mary is forced to relocate.
Given the above scenario, pick out the statement that is TRUE concerning Mary’s legal position.
- Mary may have a claim in negligent misrepresentation against the assessment authority.
- Mary may have a claim in negligent misrepresentation against only the assessor.
- Mary will be unlikely to succeed in a claim in negligent misrepresentation because the assessment office has a disclaimer notice.
- None of the above.
Answer : (1) Mary may have a claim in negligent misrepresentation against the assessment authority.
Option (1) is correct: Mary can initiate an action against the employer for negligent misrepresentation based on vicarious liability.
Option (2) is false because legally Mary can take action against the employer as well.
Option (3) is false because the disclaimer was not properly brought to Mary’s attention. As well, because the disclaimer was behind the counter it is unlikely that it was properly
displayed for Mary to see.
Four elements must be present to initiate an action of negligent misrepresentation against the assessor and the assessor’s employer:
- apparent knowledge – it is reasonable to assume the assessor would be knowledgeable about property taxes;
- wrong advice – the assessor was wrong about the increase in taxes;
- reliance – Mary relied on the assessor’s advice and assumed she would be able to afford the property taxes if she purchased the property;
- damage – Mary had to relocate her business, at some cost and inconvenience, because of the unexpected property tax bill.
The disclaimer will not protect the assessor because it was not brought to Mary’s attention.
Furthermore, the assessor made no effort to ensure the information was correct. He or she was relying on past increases in taxes and could have easily phoned the municipality to check
Judge Cindy Hirotucka is making a ruling which falls under the “Assessment Act” in her province. In order for judge Hirotucka to correctly interpret certain in words in the Act, she could consider and take into account:
- Black’s Law Dictionary’s definitions of certain words.
- the grammatical and ordinary sense of the words.
- that the title and preamble a not a part of the statute that will aid judge Hirotucka.
- that general words are not restricted to the same class as the specific words which precede them.
- A and B
- B only
- B and D
- C and D
Answer : (1) A and B
Statement A is true, as Black’s Law Dictionary can be a useful tool to a Judge interpreting a particular word in a statute.
Statement B is true.
Statement C is false because title and preamble are part of the statute.
Statement D is false as words ARE restricted to the same class as the specific words which precede them.
An appraiser has relied upon the owner’s information with respect to a property. Which of the following statement regarding appraiser’s liability is FALSE?
- If the appraiser did not make a reasonable effort to ensure that the advice was correct, then the appraiser can be held liable.
- To be held liable, it is not necessary to establish that the appraiser knew the advice was incorrect.
- There is a duty to take reasonable care to ensure that information is kept confidential.
- It is necessary that the appraiser intended a particular act to cause harm in order to prove liability.
Answer (4) It is necessary that the appraiser intended a particular act to cause harm in order to prove liability.
Option (4) is the false statement. Intent to cause harm is not necessary to prove someone liable.
Regarding the functions performed by assessors, which statement is TRUE?
- The use of the word “may” in a statute indicates an absolute discretion to determine the matter as the decision maker sees fit
- Whether or not property is assessable can be decided irrevocably by the assessor
- Errors and omissions must be brought forward for correction.
- All of the above
Answer : (3) Errors and omissions must be brought forward for correction.
Option (3) is correct; the assessor has a duty to bring all errors and omissions forward.
Option (1) is false, because the use of the word “may” in a statute does not indicate an absolute discretion to determine the matter as the decision-maker sees fit.
Option (2) is false, because whether or not the property is assessable can be decided irrevocably by the courts not the assessor.
Some assessment jurisdictions operate with legislation that stipulates the basis of valuation to be full market value or a fixed percentage of market value for all classes of property. Many of these jurisdictions also have provisions which direct appeal tribunals and the courts to consider equitable treatment of property owners when reaching their decision on valuation appeals.
Referring to the court’s decision in the Bramalea case, what problems could you use foresee if the appeal tribunals and courts gave priority to equity as opposed to the attainment of full market value, in their decisions?
- Over time, assessments could be lowered to the lowest assessment for the district.
- Assessment staff may tend to err on the side of low assessment to avoid appeals based on equity alone.
- The tax base would be eroded.
- Taxpayers with more funds would be more likely to appeal and succeed; eventually this could create a two-tiered assessment system.
- A and C
- B and D
- A,B, and D
- all of the above
Answer : (4) all of the above
All of the statements are problems associated with pursuit of equity rather than achieving market value.
In certain situations, appraisers may account for the effect that restrictions on use have on a property’s market value, while in other situations they must ignored this restrictions on use. In which one of the following situations would the appraiser take the restriction on use into consideration?
(in answering this, assume the consolidated shelter decision offers the legal precedent to follow)
- An agreement between the owner and the Canada Mortgage and Housing Corporation to restrict rents in return for a favorable mortgage rate.
- A registered easement with the municipality allowing access along the driveway of the property.
- A registered lease between the owner and a tenant who is occupying a workshop on the property.
- The appraiser would ignore restrictions on use in all of the situations above.
Answer (2) A registered easement with the municipality allowing access along the driveway of the property.
Regarding the decision on reached in Metals and Alloys Co Ltd v. Regional Assessment Commissioner, No.31, which statement is TRUE?
- Once an item is determined to be a building, it is possible for it to be machinery as well.
- An integration test should be used to determine whether a structure should be exempt from taxation.
- It should first be decided if the structure is a building and therefore subject to tax.
- If an item that looks like a building is essential to the machine it encloses, it will be considered part of the machine.
Answer :(3) It should first be decided if the structure is a building and therefore subject to tax.
The decision reached in Metals and Alloys Co. Ltd. v. Regional Assessment Commissioner, No. 31 is important because it assists in determining the definition of a building.
A building is taxable whereas machinery and equipment may either not be taxed or may receive favourable tax treatment.
The Court decided that the structure must be considered on its own characteristics: if it looks like a building or is constructed like a building it should be considered a building and therefore be subject to tax. This is true even if the building is essential to the machinery it encloses.
Prior to this decision, an integration test was applied.
The integration test determined whether the process was an integral part of the overall or general process. If it was, it must be machinery. The integration test no longer applies given the decision reached in Metals and Alloys Co. Ltd. which has been affirmed in subsequent decisions.
Option (1) is false because once an item is determined to be a building it is NOT possible for it to be machinery as well.
Option (2) is false because an integration test was in common use before the Metals
and Alloys case.
Option (4) is incorrect because if a structure looks like a building and is constructed
like one, it cannot be considered a machine as well.
Regarding the valuation of property, which of the following statement is FALSE?
- It is inappropriate for the appraiser to add special value to a particular owner. A family who pays a premium for a property formerly in the family contains a special value which should not be included.
- An appraiser may value the land according to its highest and best use and then value the improvements on some other basis, even if total value exceeds the highest and best use value as improved.
- The appraiser has a responsibility to value all of the different interests in a property.
- The appraiser is required to ignore the effect of any restrictions, on use that have been placed there by the owner.
Answer (2) An appraiser may value the land according to its highest and best use and then value the improvements on some other basis, even if total value exceeds the highest and best use value as improved.
Option (2) is a false statement because according to Toronto v. Ontario Jockey Club an assessor may NOT value the land according to its highest a best use and then value the improvements on some other basis.
