2008 BCSC 550 Weyerhaeuser Company Ltd. v. Assessor of Area No. 4

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:	*Weyerhaeuser Company Ltd. v. Assessor of Area No. 04,*
	2008 BCSC 550

Date: 20080502
Docket: L070199
Registry: Vancouver

In the matter of the Assessment Act, R.S.B.C. 1996, c. 20, s. 65
and in the matter of an appeal to the Property Assessment Appeal Board
of British Columbia

Between:

Weyerhaeuser Company Ltd.

Appellant

And:

Assessor of Area No. 04 – Nanaimo Cowichan

Respondent

And in the matter of the Decision of the Board dated
the 12^th day of April 2007 in such appeal

Before: The Honourable Mr. Justice Preston

Reasons for Judgment

Counsel for the Appellant	Barry Gibson, Q.C.
Counsel for the Respondent	John E.D. Savage
Date and Place of Hearing:	October 30, 2007
	Vancouver, B.C.

[1] This is an appeal by way of stated case pursuant to s. 65 of the Assessment Act, R.S.B.C. 1996, c. 20 from the decision of the Property Assessment Appeal Board (the “Board”) dated April 12, 2007, in Weyerhaeuser Company Limited v. Area 04, 2007 PAABBC 20070017 (“Weyerhaeuser”). The appeal concerns a large mixed-use development near Ucluelet B.C. The Board concluded that all of the land within those portions of the development that were the subject of the appeal were to be classified within “Class 6 – business and other”, rather than as “Class 1 – residential” property. The importance of the matter to the owner, Weyerhaeuser, arises from the fact that residential lands attract a lower rate of tax than that imposed on business and other properties.

[2] There is an extensive body of authority on this general issue at the Board level, in this Court, and in the Court of Appeal.

[3] The Assessment Act sets out a classification scheme in the Prescribed Classes of Property Regulation, B.C. Reg. 438/81 and amendments (the “Regulation”). It divides property into nine classes for assessment purposes. Only classes 1(a) and (c) and Class 6 are germane to this case:

Class 1 – residential

1. Class 1 property shall include only

(a) land or improvements, or both, used for residential purposes, including single family residences, duplexes, multi-family residences, apartments, condominiums, manufactured homes, nursing homes, rest homes, summer and seasonal dwellings, bunkhouses, cookhouses and ancillary improvements compatible with and used in conjunction with any of the above …

…

(c) land having no present use and which is neither specifically zoned nor held for business, commercial, forestry or industrial purposes;

Class 6 – business and other

6. Class 6 property shall include all land and improvements not included in Classes 1 to 5 and 7 to 9.

[4] The Board decided, and it is not in issue on this appeal, that the lands in question did not come within the scope of s. 1(a). The issue is whether they come within s. 1(c).

Factual Background

[5] The Weyerhaeuser lands (the “Lands”) include two parcels: one of 78.32 acres and one of 159.13 acres. Both are on the waterfront and face west across the Pacific Ocean.

[6] The state and condition date relevant to the classification of the Lands for the purposes of the 2006 assessment roll was October 31, 2005.

[7] In 2005, before the state and condition date, the Lands were rezoned Comprehensive Development (CD-5) under a zoning bylaw of the District of Ucluelet. The CD-5 zoning allows for a wide variety of uses including hotel, commercial, retail, vacation rental, residential, multi-family, resort condominium and guest houses.

[8] No applications for subdivision approval had been submitted before October 31, 2005, nor had any construction begun on the Lands. The zoning bylaw indicates that the Lands are zoned for a specific comprehensive development comprised of five development areas. The bylaw describes the uses for each development area, the maximum density for each use and the minimum lot size, as well as building and structure specifications and minimum setbacks.

[9] Development Area no. 1 is to contain a hotel, a golf course and some residences. It is not part of this appeal.

[10] The bylaw describes the remaining development areas as follows.

[11] Development Area no. 2 is intended to provide for Tourist Commercial, Guest House, Single Family Residential, Multiple Family Residential, Vacation Rental and Resort Condominium development with a significant park feature.

[12] Development Area no. 3 is intended to provide for Residential, Single Family Residential, Multiple Family Residential, affordable housing, Institutional and Community uses and retail trade and services.

[13] Development Area no. 4 is intended to provides for Tourist Commercial uses and staff accommodation.

[14] Development Area no. 5 is intended to provide for Residential and Resort Condominium development.

[15] The zoning bylaw includes three plans that depict the layout on the Lands with a general description of the uses. According to the zoning bylaw, the Density Plan “outlines the use and density of the entire comprehensive development site”. The Illustrative Land Use Concept Plan is “meant to show scale and potential locations of buildings and structures but may not represent the ultimate location and placement of such”. The Trail Network Plan shows “the approximate location of the Wild Pacific Trail and subsidiary trails on the lands.”

[16] Weyerhaeuser and the District of Ucluelet had identified “area take-offs” for the Lands. These identified approximate sizes of the areas for the various uses. They were not included in the zoning bylaw or as a schedule to a Master Development Agreement between Weyerhaeuser and the District of Ucluelet on September 28, 2005.

The Board’s Decision

[17] The Board defined the issue before it on appeal at para. 2 as follows:

The sole issue on this appeal is classification – whether all or part of the property should be classified as class 1 and not class 6. Although the parties in their submissions refer to both sections 1(a) and 1(c) of the Prescribed Classification of Property Regulation … and cases decided under these sections, this appeal concerns primarily section 1 (c) and its interpretation on the facts here, i.e. whether or not the property has “no present use” and whether it is “neither specifically zoned nor held for business, commercial or industrial purposes”.

[18] The Board found that the Lands were zoned CD-5 at the state and condition date. It reviewed the applicable authorities and determined that the lands were not “used for residential purposes” pursuant to s. 1(a) of the Regulation. It found that the Lands had “no present use” under s. 1(c) of the Regulation, but that as a result of their CD-5 zoning were specifically zoned for “business, commercial or industrial purposes”.

[19] The Board noted that the respondent conceded a limited exception to the principle established in Assessor of Area No. 9 – Vancouver v. Bastion Development Corp. et al (1996), 85 B.C.A.C. 241, 30 B.C.L.R. (3d) 135 (“Bastion”), that lands zoned for comprehensive development were specifically zoned for uses other than residential. The Board stated that the exception existed where “well-defined areas of a parcel are subject to residential use under a CD zoning”. The Board related that exception to P & L Holdings v. Area 01, 2000 PAABBC 19992095 (“P & L”). It noted that P & L related to a circumstance in which “construction was under way on one of the areas of mixed use zoning”.

[20] The Board reviewed the evidence relating to Weyerhaeuser’s commitment to the residential use of specified portions of the Lands and determined at para. 47 that:

… the designation under the zoning bylaw of future residential use does not meet the requirement of certainty for classification purposes. The uses for the Development Areas are described in the Density Plan as intentions.

[21] The Board concluded that the Lands were specifically zoned for commercial use and could not fall into the class 1 – residential classification.

[22] In the alternative, the Board concluded that the Lands were held for development and therefore for “business” purposes under s. 1 (c) of the Regulation. It went on to observe at para. 59:

Once construction begins on the property and the areas of residential use are specifically defined to allow for no changes then the case law supports the classification of these areas as class 1. …

The Law

[23] In Eccom Development Ltd. v. British Columbia (Assessor of Area 9 – Vancouver), [1989] B.C.J. No. 2017 (QL) (C.A.) (“Eccom”), Cumming J.A. dealt with lands in downtown Vancouver, the zoning of which permitted business, commercial, industrial, and residential uses. The land was being held for residential use. Cumming J.A. examined the history of the legislation and determined that s. 1(c) of the Regulation should be interpreted in a restrictive manner. He upheld the chambers judge’s ruling that if the zoning permitted business, commercial or industrial uses, it was “specifically zoned” for that purpose under s. 1(c).

[24] In the chambers judgment in Eccom Development Ltd. v. British Columbia (Assessor of Area No. 9 – Vancouver), [1989] B.C.J. No. 69 (QL) (S.C.), Macdonald J. said of the policy underlying his interpretation of s. 1(c):

The consequence of holding otherwise must be considered. This decision will apply to all vacant land in the Downtown District and the opposite conclusion would invite a rash of less than serious rezoning applications and residential development proposals in an effort to establish that those lands are not held for “business, commercial or industrial purposes.” That result is to be avoided if, on the plain meaning of the words in the regulation, it is open to do so.

[25] On appeal, Cumming J.A. described the policy basis for upholding the chambers judge as follows:

… It is my respectful view that it is not so much the avoidance of a flood of rezoning applications as it is the avoidance of the longterm holding of vacant land (on which other, higher valued uses are permissible) under the pretense of intended residential development that the Regulation is designed to achieve.

[26] In Bosa Development Corp. v. Assessor of Area No. 12 – Coquitlam, (1996), 85 B.C.A.C. 248, 30 B.C.L.R. (3d) 263 (“Bosa (No. 2)”), Esson J.A. dealt with the question of the mischief the section was designed to avoid at para. 33:

If I had to identify a single mischief which s. 1(c) was designed to prevent, I would agree that the object identified by Cumming, J.A., is more probably the correct answer than that identified by Macdonald, J. But it is my respectful view that to attempt to identify a single object or mischief is essentially speculative; that no such identification can be made with sufficient certainty to be a useful aid to interpretation. I further suggest that the object likely was to avoid both the mischief identified by Macdonald J., and that identified by Cumming, J.A.; that it was the broad use of preventing land being classified as “residential” at any stage of development if it is specifically zoned for “business etc. purposes”.

[27] The role of policy considerations is exhausted once the words of the section are construed. The cases that interpret the section make it clear that it is zoning, not intention, that is relevant when determining whether a property is “specifically zoned … for business, commercial or industrial purposes” within s. 1(c) of the Regulation. The interpretation placed on the section in Eccom and Bosa (No. 2) was reiterated in Bastion, a decision released contemporaneously with Bosa (No. 2). The latter case dealt with circumstances in which a development was 76% residential and 24% commercial. In Bastion, the Board concluded that:

… the Board finds that the property has “no present use” and is “held” for residential use within the meaning of section 1(c) of the regulation, is not specifically zoned or held for other uses, but is, in fact, specifically zoned, as to 76% of the property, for residential use.

[28] Section 10 of the Regulation permits differing assessments of portions of a single parcel:

10. Where a property falls into 2 or more prescribed classes, the assessor shall determine the share of the actual value of the property attributable to each class and assess the property according to the proportion each share constitutes of the total value.

[29] Esson J.A. said, in upholding the chambers judge’s rejection of the Board’s reasoning at para. 22:

… In my view, for the reasons stated in Bosa (No. 2), it is premature to apply s. 10 to vacant land which is being held for residential purposes but is not yet being used for such purposes. At the present time, it is, in the language of s. 1(c), land specifically zoned for business purposes.

[30] I respectfully suggest that it is misleading to refer to P & L as an exception to the principle established in Bastion. In P & L, a portion of a multi-use development had been developed for residential use. The building was complete and occupied. An adjacent portion of the parcel was in the process of being developed as a parking garage to provide parking for the residential unit. Construction was “well underway”. The Board recited s. 10 of the Regulation and said:

Classification is based on actual use. For any part of the property to be classified to be classified as residential for the 1998 or 1999 Rolls, that part must have been actually used for residential purposes as of October 31, 1997 or October 31, 1998 within the meaning of section 1(a) of the Regulation, or it must have been land with “no present use” as of either of those dates, and not specifically zoned nor held for business, commercial, forestry or industrial purposes. If vacant land is zoned for mixed use including any of business, commercial, forestry or industrial purposes, it is “specifically zoned” for each of those purposes within the meaning of section 1(c) of the Regulation. (Eccom Development Ltd. v. Assessor of Area #09 – Vancouver, (1989) Stated Case 269 (B.C.C.A.)). If any part of the property does not qualify for Class 01 by application of either section 1(a) or section 1(c) of the Regulation, it must be classified as Class 06. (The other identified uses attracting property Classes 02 to 05 and 07 to 09 have no application to this case.)

The phrase “used for residential purposes” in section 1(a) of the Regulation has recently been considered by the Court of Appeal in Intracorp [Assessor of Area #10 – Burnaby/New Westminster v. Intracorp Developments Ltd., 2000 BCCA 121]. The court confirmed earlier decisions which found that “the phrase does not contemplate holding property for residential purposes”, and that “there must be more than a mere intention to develop the land as residential”. The court found there must be a “commitment to residential use” and that “the commitment must go beyond pre-construction development steps and manifest itself in the actual building of the project”. Once construction of a project has commenced, it will be a question of fact in each case whether the requisite degree of commitment to residential use is manifested. The degree of commitment may be inferred from a number of factors including legal instruments such as zoning and building permits, relevant features of the construction, and any substantial indication the owner is using the land for a non-residential purpose.

[31] The Board concluded as a matter of fact that the portion of the parcel upon which the parking facilities were being constructed was “used for a residential purpose” and was to be classified as Class 1.

[32] The decisions of the courts have been consistent in dealing with land that has “no present use” under s. 1(c) and, when a residential use has, or may have, come into being, shifting the focus of the enquiry to s. 1(a) to determine if the land is “used for residential purposes”. The latter enquiry is a question of fact.

[33] On the facts before the Board from which this appeal is taken, it is common ground that the land has no present use. Accordingly, the focus of the enquiry remains on s. 1(c).

The Standard of Review

[34] Recently, the Supreme Court of Canada in Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] S.C.J. 9 (QL) (“Dunsmuir”) revisited the jurisprudence relating to the standard of review and effectively eliminated the “patently unreasonable” standard.

[35] In Elk Falls Pulp and Paper Limited v. Assessor of Area #06 – Courtenay, 2005 BCSC 1126, 141 A.C.W.S. (3d) 701, Mr. Justice Holmes dealt with the standard of review to be applied to appeals under the Assessment Act. He said at para. 49:

The respondent gave a detailed submission that the applicable standard of review for the Court in deciding whether or not the Board appropriately exercised its discretion in this matter is not the correctness standard, rather it is the more deferential standard of patent unreasonableness, and that alternatively it would be the standard of reasonableness.

[36] He concluded that the standard of review for discretionary decisions was patent unreasonableness, and that for matters of fact, reasonableness. That case must now be read in light of Dunsmuir. In that case, McLachlin C.J. C. said at paras. 32 and 34:

Despite the clear, stable constitutional foundations of the system of judicial review, the operation of judicial review in Canada has been in a constant state of evolution over the years, as courts have attempted to devise approaches to judicial review that are both theoretically sound and effective in practice. Despite efforts to refine and clarify it, the present system has proven to be difficult to implement. The time has arrived to re-examine the Canadian approach to judicial review of administrative decisions and develop a principled frame work that is more coherent and workable.

…

The current approach to judicial review involves three standards of review, which range from correctness, where no deference is shown, to patent unreasonableness, which is most deferential to the decision maker, the standard of reasonableness simpliciter lying, theoretically, in the middle. In our view, it is necessary to reconsider both the number and definitions of the various standards of review, and the analytical process employed to determine which standard applies in a given situation. We conclude that there ought to be two standards of review-correctness and reasonableness.

[37] However, the “patently unreasonable” standard is statutorily enshrined in s. 59 of the Administrative Tribunals Act, S.B.C. 2004, c. 45, which has application to judicial review where the tribunal’s enabling act does not have a privative clause. That section provides that the standard of review in judicial review proceedings on questions of law is correctness, for findings of fact the standard is reasonableness, and for the review of discretionary matters, the standard is patent unreasonableness.

[38] The effect of Dunsmuir on the standard of review in this province is presently before a number of judges of this court. I am satisfied, however, that it is not necessary to decide whether the standard of review of matters of fact or exercise of discretion in the appeal before me is “reasonableness” or “patent unreasonableness”. As is evident below, the decisions of the Board here are sustainable even at the lowest standard of deference on the basis that they were reasonable.

[39] The following questions have been submitted to the Court on this appeal.

Question #1

Did the Board err in law and in fact, or in acting without evidence, when it found in Paragraph 42 of its decision:

The whole of the Weyerhaeuser lands have CD-5 zoning. At some later point in the development specific areas may receive specific residential zoning. For now, the zoning is for a mixed use development which will include some residential use as well as some commercial use.

[40] The evidence before the Board was that the Lands were zoned Comprehensive Development CD-5. The bylaw does not prevent later site-specific zoning. The CD-5 zone permits mixed use development including residential and commercial. The answer to Question #1 is “no”.

Question #2

Did the Board err in law in finding that defined areas in a parcel held for and exclusively zoned for residential purposes are not Class 1 if other parts of the parcel, or the development of which the parcel is part, are zoned for business, industrial or commercial purposes?

[41] There are no defined areas that are exclusively zoned residential. The Lands are zoned Comprehensive Development CD-5. The Board correctly applied the principles in Bosa (No. 2). The answer to Question #2 is “no”.

Question #3

Did the Board err in fact, or in acting without evidence, in finding at Paragraph 48 of its Decision, that the area calculations in the Area Takeoffs are “approximate calculations”?

[42] The Area Takeoffs were not included in the bylaw. There was evidence before the Board that they were subject to change. The evidence of Mr. C.S. Smith, the real estate manager for Weyerhaeuser, was:

Q: And why was that – why was the original schedule “I” with the area takeoffs removed from the master development plan?

A: Two reasons: One, schedule “I” by definition is showing which areas were going to be used for community amenity. So the final version, that’s all it shows because that’s all it’s meant to show. The second reason was the one I reference[d] a few minutes ago, that if the roads moved very slightly then these areas would change very slightly. So SF9.9 might end up at 9.8 or 10.0 and because the lawyer had to me (sic) worried about legal challenges I didn’t want to have anything in the master development agreement that could possibly lead to a challenge.

Q: All right. So it was at your request that schedule “I” was removed and the area takeoffs were removed and it was replaced with one that did not show areas?

A: Except for those two community development areas, yeah.

[43] There was evidence before the Board upon which they could reasonably find that the areas were approximate. In any event, the finding that the areas were approximate was not necessary to their decision. Even if the areas were ascertainable, the application of the cases governing the interpretation of s. 1(c) of the Regulation precluded residential classification. The answer to Question #3 is “no”.

Question #4

Did the Board err in law in failing to determine the appropriate classification of the lands by reference to the intention of the developer and the zoning in place at the state and condition date?

[44] The Board correctly concluded that the Lands were zoned for mixed use development and correctly applied the principles in Bosa (No. 2) in coming to their conclusion that the lands were properly classified as Class 6 – other. In view of its finding that, under the principles in that case, the Lands were “specifically zoned for business, commercial or industrial purposes” and therefore not within s. 1(c), it was not necessary that the Board consider the intention of the developer. The answer to Question #4 is “no”.

Question #5

Did the Board err in law in finding that property held for residential development is held for business purposes?

[45] The Board made this finding in the alternative that they were not correct in determining classification on the basis of the Bosa (No. 2) principles. In view of the answers to Questions 1 – 4, this question is moot. I respectfully decline to answer Question #5.

Question #6

Did the Board err in law in finding that no part of the land could be in Class 1 until “construction begins on the property and the areas of residential use are specifically defined to allow for no changes”?

[46] This statement by the Board is not necessary to its decision. It opines on the outcome of a possible future event. The issue was not before the Board. If the matter comes before the Board at a future date, the issue will fall to be determined on the facts in existence at that time. I respectfully decline to answer Question #6.

[47] The respondent is entitled to its costs under Scale B.

“B.M. Preston J.”
_____________________________
The Honourable Mr. Justice Preston