Brulé,
T.C.J.:—
The
personal
appellants
are
appealing
reassessments
of
their
1982
taxation
year,
while
the
corporate
appellant,
owned
by
Mr.
&
Mrs.
Finkler
is
appealing
reassessments
of
its
1982
and
1983
taxation
years.
The
appeals,
heard
on
common
evidence,
stem
from
the
sale
of
property
and
its
value
as
of
December
31,
1971.
Facts
In
July
of
1967
the
appellants
in
a
joint
venture
acquired
real
property
municipally
known
as
727
King
St.
West
in
the
City
of
Toronto
for
$1,200,000.
From
the
evidence
presented
it
was
the
intention
to
redevelop
the
said
property
constructing
thereon
an
apartment-hotel
complex.
To
this
end
significant
planning
and
development
expenditures
were
made.
On
Valuation
Day,
the
King
Street
Property
was
zoned
"C3
V3".
The
"C3"
designation
sets
out
permitted
land
uses
which,
as
at
Valuation
Day,
included
such
commercial
uses
as
hotels,
retail
stores,
business
offices
and
service
shops;
such
semi-residential
uses
as
apartment-hotels;
as
well
as
various
manufacturing
uses.
The
"V3"
designation
permitted,
as
at
Valuation
Day,
building
density
to
a
maximum
of
seven
times
the
area
of
the
lot.
The
lot
contained
some
195,715.08
square
feet,
being
4.493
acres.
From
the
time
of
purchase
of
the
property,
the
appellant
Mr.
Finkler,
who
had
been
in
the
business
of
land
assembly,
land
development
and
building
for
some
36
years
commenced
a
development
program
for
the
property.
Architects
and
engineers
were
contacted,
soil
tests
were
made
and
advertisements
for
financing
and
for
space
were
made
to
ascertain
interest
in
the
project.
An
architect's
sketch
showing
four
highrise
towers
for
the
site
was
submitted
to
the
Court.
This
sketch
complied
with
the
then
existing
city
bylaws.
In
1968
there
was
an
announcement
of
a
billion
dollar
CN-CP
transportation
complex
to
be
known
as
Metro
City.
The
property
involved
was
very
close
to
the
subject
property.
It
was
hailed
as
the
world's
largest
single
development
and
evidence
was
given
that
this
had
a
positive
effect
on
the
appellants’
plans.
Shortly
after
Valuation
Day
many
things
happened
of
note.
In
February
1972
a
building
permit
was
applied
for,
the
property
being
ready
for
development.
The
cost
of
this,
based
on
value
of
property;
reached
an
amount
of
$137,000.
Many
organizations
including
hotels,
banks
and
other
commercial
endeavours
showed
interest
in
locating
at
the
site
and
also
many
financial
institutions
exhibited
interest
in
the
project.
All
of
this
was
placed
in
evidence
by
way
of
exhibits.
In
1972
there
was
a
lease
agreement
executed
for
the
property
wherein
a
ground
rental
of
$610,000
per
annum
was
set
out.
Certain
conditions
were
contained
in
the
lease
including
the
transfer
to
the
lessee
of
all
plans
and
other
matters
pertaining
to
the
project.
No
explanation
was
given
to
the
Court
why
the
lease
was
not
put
into
effect.
One
other
factor,
while
not
affecting
the
actual
value
of
the
property
as
of
Valuation
Day,
is
of
some
significance.
Early
in
1973
the
City
of
Toronto
amended
the
then
existing
by-law
so
as
to
delete
apartment
hotels
from
the
C3
classification
as
it
applied
to
the
said
lands.
This
caused
litigation
to
ensue
which
prevented
construction
from
proceeding.
For
personal
reasons
set
out
to
the
Court
the
appellants
decided
to
sell
the
development
with
the
result
that
an
offer
was
accepted
in
1982
for
a
total
of
$8,100,000.
Appellant's
Position
An
expert
witness
for
the
appellants,
so
qualified,
presented
a
report
indicating
the
V-Day
value
of
the
property
to
be
$7,535,000.
This
report
was
prepared
in
January,
1982
after
an
offer
had
been
made
for
the
property,
which
offer
was
eventually
accepted.
This
valuation
was
prepared
on
the
basis
of
the
theory
of
"highest
and
best
use”
of
the
property
being
ready
for
redevelopment
as
of
December
31,
1971.
A
market
data
approach
was
used
to
establish
fair
market
value.
A
conclusion
was
reached
that
no
properties
in
the
immediate
vicinity
of
the
appellants’
property
were
either
similar
in
size
or
ready
for
redevelopment.
As
a
result
comparables
were
set
out,
not
for
the
immediate
area
but
what
was
said
to
be
within
the
central
area
boundary
as
described
by
the
City
of
Toronto
Planning
and
Development
Department.
From
these
the
conclusions
as
to
V-Day
value
was
reached.
Minister's
Position
Two
principal
differences
in
the
expert
testimony
given
by
the
representative
of
the
Minister
manifested
themselves.
The
first
was
that
the
"highest
and
best
use"
of
the
property
as
of
V-Day
was
said
to
be
a
continuation
of
the
existing
industrial
use
until
such
time
as
a
redevelopment
was
warranted.
As
of
V-Day
while
it
was
acknowledged
that
the
existing
buildings
on
the
property
did
not
represent
the
maximum
utility
of
the
property,
nevertheless
the
timing
was
too
early
for
a
major
redevelopment.
The
second
variation
in
the
appraisal
report
was
an
analysis
of
properties
sold
during
a
period
close
to
V-Day
and
which
were
in
the
vicinity
of
the
subject
property,
even
though
most
were
much
smaller
in
area.
The
respondent's
appraiser
also
considered
a
V-Day
income
approach
to
value,
but
the
rental
or
income
produced
resulted
in
a
lower
value
than
the
direct
sales
comparison
approach
and
so
was
discarded.
By
analyzing
the
various
sales
and
choosing
a
median
value
the
property
was
said
to
be
worth
$3,036,000
as
of
V-Day.
Analysis
In
order
to
arrive
at
an
estimate
of
market
value,
such
as
at
V-Day,
the
appraiser
may
use
one
or
more
of
three
appraisal
methods,
namely:
(1)
the
comparative
or
market
data
approach;
(2)
the
income
investment
or
economic
approach;
and
(3)
the
cost,
or
contractor's
approach.
The
third
method
was
not
even
considered
by
either
appraiser,
while
the
second
was
only
briefly
touched
on
by
the
respondent's
appraiser
and
discarded.
Both
chose
to
proceed
using
the
first
method.
Upon
hearing
what
was
said
by
both
experts
and
examining
their
reports
I
cannot
accept
either
as
a
definitive
answer
as
to
value.
The
method
used
is
only
reliable
if
there
have
been
a
number
of
sales
of
comparable
properties
in
the
approximate
vicinity
of
the
subject
property.
The
appellants’
expert
used
comparables
of
some
distance
while
the
respondent's
expert
found
sales
in
the
vicinity
but
it
could
hardly
be
said
that
they
were
truly
comparable
to
the
subject
property.
The
"highest
and
best
use"
principle
for
the
property
was
not
agreed
upon
by
the
experts.
The
appellants'
witness
believed
redevelopment
was
imminent
as
of
V-Day
and
evidence
bore
this
out.
For
the
Minister
the
expert
thought
such
redevelopment
was
down
the
road.
Obviously
he
had
not
obtained
information
as
to
what
the
appellants
had
accomplished
from
the
date
of
purchase
of
the
property
to
December
31,
1971.
Great
importance
in
this
case
was
placed
by
the
appellants'
counsel
on
the
events
which
took
place
after
V-Day.
In
general,
retrospective
evidence
is
not
admissible
in
reaching
a
notional
valuation
conclusion.
In
Holt
v.
IRC,
[1953]
2
All
E.R.
1499,
Danckwerts,
J.
said
at
page
1501:
It
is
necessary
to
assume
the
prophetic
vision
of
a
prospective
purchaser
at
the
moment
of
the
death
of
the
deceased,
and
firmly
to
reject
the
wisdom
which
might
be
provided
by
the
knowledge
of
subsequent
events.
In
the
case
of
The
Queen
v.
National
System
of
Baking
of
Alberta
Ltd.,
[1978]
C.T.C.
30;
78
D.T.C.
6018,
Mahoney,
J.
stated
at
page
38
(D.T.C.
6024):
"I
expressly
rejected
the
validity
of
hindsight
as
probative
of
fair
market
value
at
a
given
date
and
took
nothing
that
occurred
after
Valuation
Day
into
account."
While
this
would
appear
to
be
the
general
rule
the
Courts
have
accepted
the
limited
use
of
hindsight
in
cases
where
conditions
have
not
materially
changed
in
the
interim.
Vide:
Joseph
Simard
&
Cie
Ltée
v.
M.N.R.,
[1964]
C.T.C.
461;
64
D.T.C.
5289.
The
case
at
bar
produced
some
interesting
evidence
of
material
events
after
V-Day.
Of
great
significance
is
that
only
two
months
after
V-Day
the
project
was
ready
for
a
building
permit
application.
This
shows
that
all
the
work
in
the
development
of
the
property,
which
obviously
enhanced
its
value,
was
near
fruition.
The
lease
agreement
and
the
dollar
amount
involved
is
important
to
show
the
value
of
the
property.
Even
though
this
never
came
into
being
the
lease
was
close
in
time
to
V-Day.
The
interest
of
outside
parties
is
worthy
of
consideration.
Events
which
took
place
during
the
years
after
V-Day
up
to
the
date
of
the
sale
are
noteworthy
because
they
illustrate
that
the
various
changes
in
city
bylaws
tended
for
a
period
to
frustrate
the
implementation
of
the
project
and
this
in
turn
would
indicate
that
the
value
had
not
perhaps
markedly
increased
from
V-Day
in
early
1972.
All
of
these
factors
after
December
31,
1971
help
to
point
out
the
differences
in
the
two
valuations
of
the
property
presented
to
the
Court
while
not
showing
that
they
had
a
bearing
on
the
V-Day
value.
In
trying
to
account
for
the
differences
in
valuations
in
addition
to
explanations
given
or
omitted
one
must
consider
the
source
of
the
valuations.
In
The
Modern
Law
of
Evidence
by
Adrian
Keane,
1985
edition,
he
said
of
opinion
evidence
at
page
377:
The
danger
is
particularly
acute
in
the
case
of
opinions
expressed
by
expert
witnesses,
of
whom
it
has
been
said,
not
without
some
sarcasm,
“it
is
often
quite
surprising
to
see
with
what
facility
and
to
what
extent,
their
views
can
be
made
to
correspond
with
the
wishes
or
the
interests
of
the
parties
who
call
them".
In
the
case
of
Whitehouse
v.
Jordan,
[1981]
1
W.L.R.
246;
[1981]
1
All
E.R.
267,
at
page
256
[W.L.R.],
Lord
Wilberforce
said:
”.
.
.
expert
evidence
presented
to
the
court
should
be
and
should
be
seen
to
be,
the
independent
product
of
the
expert
uninfluenced
as
to
form
or
content
by
the
exigencies
of
litigation.”
In
situations
such
as
this,
it
is
comforting
to
follow
the
comments
made
by
Mr.
Justice
Walsh,
in
Edna
J.
Bibby
v.
The
Queen,
[1983]
C.T.C.
121;
83
D.T.C.
5148,
at
page
131
(D.T.C.
5157):
While
it
has
frequently
been
held
that
a
Court
should
not,
after
considering
all
the
expert
and
other
evidence
merely
adopt
a
figure
somewhere
between
the
figure
sought
by
the
contending
parties,
it
has
also
been
held
that
the
Court
may,
when
it
does
not
find
the
evidence
of
any
expert
completely
satisfying
or
conclusive,
nor
any
comparable
especially
apt,
form
its
own
opinion
of
valuation,
provided
this
is
always
based
on
the
careful
consideration
of
all
the
conflicting
evidence.
The
figure
so
arrived
at
need
not
be
that
suggested
by
any
expert
or
contended
for
by
the
parties.
With
this
in
mind
and
based
on
all
the
factors
presented,
the
Court
has
reached
the
conclusion
that
the
appellants'
estimate
was
too
high
and
that
the
respondent's
estimate
was
too
low.
The
net
result
then
is
that
the
Court
places
a
value
on
the
property
at
V-Day
of
$6,000,000.
The
matter
will
be
referred
back
to
the
Minister
for
reconsideration
and
reassessment.
The
appellants’
counsel
is
entitled
to
costs.
Appeal
allowed
in
part.
Email this Content