Law Times

PAGE 6 COMMENT Law Times Group Publisher ....... Karen Lorimer Editorial Director ....... Gail J. Cohen Editor .................. Glenn Kauth Staff Writer ............. Robert Todd Staff Writer ....... Michael McKiernan Copy Editor ......... Heather Gardiner CaseLaw Editor ...... Jennifer Wright Art Director .......... Alicia Adamson Account Co-ordinator .... Catherine Giles Electronic Production Specialist ............. Derek Welford Advertising Sales .... Kimberlee Pascoe Sales Co-ordinator ......... Sandy Shutt ©2010 Thomson Reuters Canada Ltd. All rights reserved. No part of this publication may be reprinted or stored in a retrieval system without written permission. The opinions expressed in articles are not necessarily those of the publisher. Information presented is compiled from sources believed to be accurate, however, the publisher assumes no responsibility for errors or omissions. Law Times disclaims any warranty as to the accuracy, completeness or currency of the contents of this publication and disclaims all liability in respect of the results of any action taken or not taken in reliance upon information in this publication. November 1, 2010 • Law Times Law Times Thomson Reuters Canada Ltd. 240 Edward Street, Aurora, ON • L4G 3S9 Tel: 905-841-6481 • Fax: 905-727-0017 www.lawtimesnews.com Publications Mail Agreement Number 40762529 • ISSN 0847-5083 Law Times is published 40 times a year by Thomson Reuters Canada Ltd., 240 Edward St., Aurora, Ont. L4G 3S9 • 905-841-6481. lawtimes@clbmedia.ca CIRCULATIONS & SUBSCRIPTIONS $159.00 + HST per year in Canada (HST Reg. #R121351134) and US$259.00 for foreign addresses. Single copies are $4.00 Circulation inquiries, postal returns and address changes should include a copy of the mailing label(s) and should be sent to Law Times 240 Edward St., Aurora, Ont. L4G 3S9. Return postage guar- anteed. Contact Jacquie Clancy at: jclancy@ clbmedia.ca or Tel: 905-713-4392 • Toll free: 1-888-743-3551 or Fax: 905-841-4357. ADVERTISING Advertising inquiries and materials should be directed to Sales, Law Times, 240 Edward St., Aurora, Ont. L4G 3S9 or call Karen Lorimer at 905-713-4339 klorimer@clbmedia.ca, Kimberlee Pascoe at 905-713-4342 kpascoe@clbmedia.ca, or Sandy Shutt at 905-713-4337 sshutt@clbmedia.ca Law Times is printed on newsprint containing 25-30 per cent post-consumer recycled materials. Please recycle this newspaper. Editorial Obiter Good for lawyers, bad for environment not be so positive for the environment. As noted in Law Times this week (see N "Lawyers called to help in green energy battle," page 10), the prospect of new wind farms represents a growing busi- ness opportunity for lawyers retained by nearby residents opposing them. In some cases, the work may be as simple as ad- vising farmers on contracts signed with wind power companies to put turbines on their land. But in other cases, neigh- bours will be taking up the fight against developments they say have harmful health effects and are a detriment to their property values. ew rules governing appeals of wind energy projects may be good for lawyers but they might Certainly, area residents should have a chance to have their say. But as The Globe and Mail reported last week, the scope of the challenges to wind projects could go even further. That's because new rules aiming to simplify the regulatory process for new projects under the Green Energy Act allow anyone anywhere in the prov- ince to appeal government approval for them before the Environmental Review Tribunal regardless of what local resi- dents have to say. It's a prospect that has Aaron Atcheson, a partner with Miller Thom- son LLP, worried. "The way the [act] is written right now, someone can sit in their house in Toronto and can fire off appeals for something anywhere in the province," Atcheson, who represents the wind power industry, told the Globe. "It just doesn't make any sense to me." Overall, the government's move to stimulate green energy in Ontario is good. That includes the new rules that centralize the approvals process by taking away mu- nicipal decision-making powers. But in Atcheson's view, opening the doors wide open to appeals could put the brakes on those plans, particularly as companies face the costs of fighting them. Opposition to wind power has grown recently due to concerns over issues such as noise and the effects on wildlife. The worries are legitimate, and critics are cer- tainly right to point out that we need more information and studies on the potentially negative health effects caused by wind turbines before allowing compa- nies to develop them in significant num- bers. But the answer to those concerns isn't to tie up the process in legal proceedings and appeals, particularly when the op- position comes from people not directly affected by new projects. If noise is the is- sue, for example, the appeals shouldn't be coming from outside the community. Already, the government has capitu- lated on rules for offshore wind projects in Ontario. That decision, combined with the latest revelations about the appeals process, shows an unfortunate move away from the government's good intentions on green energy. — Glenn Kauth say? I s the bank towers case finally over now that the Ontario Court of Appeal has had its The high-profile case was re- puted to be the longest hearing in Ontario Assessment Review Board history. At the end of that hearing in 2008, the board sided with the owners of Toronto's downtown bank towers, a dozen of the most valuable office build- ings in Canada. In so doing, the board, in one fell swoop, trimmed almost $1.5 billion dollars of otherwise taxable assessed value from the City of Toronto's tax rolls. Its decision caught the attention of municipalities across the prov- ince and beyond with a feared domino effect predicted when other property owners pursued assessment appeals according to the reasoning adopted in the bank towers case. The actual arguments adopted by the board were more sophisti- cated and detailed than it gener- ally received credit for. In addi- tion to a 0.75-per-cent increase in the deemed capitalization rate, the owners of the bank towers ar- gued the assessed value for realty Final chapter for bank towers saga? The tax purposes should exclude the value of both the space leases in the buildings and the leasehold improvements installed and paid for by the tenants. In effect, they asked that the towers be assessed entirely as if they were hypotheti- cally vacant and devoid of any tenants. According to the owners of the buildings, the Assessment Act determines current value based on the concept of "fee simple, if unencumbered," a phrase they say implied that the bank towers had to be assessed as if they were totally vacant. In the owners' view, leases by defini- tion were encumbrances against the fee simple and, under a strict reading of the Assessment Act, the value of these space leases had to be excluded from the bank towers' assessed value for realty tax purposes. The owners also argued that the value of leasehold improve- ments constructed and paid for by the tenants under such space leases as part of their so-called ten- ants' works shouldn't form a part of the value of the bank towers. While leasehold improvements may have increased the in-use Dirt By Jeffrey W. Lem value of the property, almost all of those actually used in the bank towers couldn't then be used by new tenants. The City of Toronto and the Municipal Property Assessment Corp. appealed to the Divisional Court with the support of several Ontario municipalities. Never before had a realty tax assessment case garnered such widespread municipal interest and galvanized treasury departments from across the province, all of which were presumably facing significant rev- enue shortfalls if the board's deci- sion in the bank towers case stood on appeal. The Divisional Court released its decision last August in which it allowed the municipalities' ap- peal and overturned the board's ruling. A unanimous three-judge panel concluded that the taxpay- ers' arguments made "no sense," "undermine the purpose of the www.lawtimesnews.com Assessment Act," and were wrong in law, unacceptable, unreason- able, unjust, and approached the absurd. The Divisional Court ordered the matter returned to the board for reconsideration by a differently constituted panel based on the traditional current value tests, but the owners ap- pealed the ruling to the Court of Appeal before the subsequent reassessment of the taxes took place. Last month, the Court of Appeal released its decision in the case, BCE Place Ltd. v. Municipal Property Assessment Corp. According to the appeal court's reasons, the Divisional Court's interpretation of the Assessment Act was correct. In fact, it adopt- ed a large passage from the Divi- sional Court's reasons in which it concluded that to "value these bank towers on the basis that they are vacant, when all agree that that is an entirely hypotheti- cal scenario, is to significantly un- dervalue them compared to other real property and undermines the purpose of the Assessment Act, to fairly divide the burden of real property taxation." What the Court of Appeal didn't accept, however, was the Divisional Court's insistence that the reassessment file return to a new panel for reconsideration based on the correct definition of current value and fee simple, if unencumbered. After having already taken more than 60 full hearing days, the Court of Ap- peal thought it would be a waste of time to take the matter back to a new panel when the existing panel was otherwise in a position to most efficiently reassess the value of the bank towers. Ironically, had the owners' ar- guments succeeded in the bank towers case, the greatest benefi- ciaries would have been the ten- ants, almost all of whom pay a proportionate share of the build- ing expenses, including realty taxes, on a flow-through basis. It seems as if the bank towers saga, while a valiant and argu- ably quite innovative attempt at lowering occupancy costs by the owners for their respective tenants, might now have seen its final chapter. LT Jeffrey W. Lem is a partner in the real estate group at Davies Ward Phillips & Vineberg LLP. His e-mail address is jlem@dwpv.com.

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