Annual Report - 1998
February 22, 1999
The Honourable Jenny W.C. Kwan
It is my pleasure to present the Annual Report of the Property Assessment Appeal Board for the year ending December 31, 1998, in compliance with section 49 of the Assessment Act.
Chair, Property Assessment Appeal Board
The Property Assessment Appeal Board
1 Board Members
The Property Assessment Appeal Board
The Board’s job is to receive, validate and resolve assessment
appeals filed pursuant to the Assessment Act in a just, consistent,
timely and cost-efficient manner.
• to ensure that the Board has staff of the highest calibre who are qualified, competent and committed to our purpose
• to resolve current year appeals in the current year
• to resolve outstanding pre-1998 appeals by June 30, 2000
• to develop appeal management processes and systems that are predictable, certain, consistent and fair
• to issue timely, high quality and consistent decisions
• to develop a high level of public confidence in the property assessment appeal process
The Property Assessment Appeal Board is a quasi-judicial administrative board, established under the Assessment Act to hear appeals from parties who are dissatisfied with a decision on a complaint made to the Property Assessment Review Panel (formerly the Court of Revision). Parties may appeal assessed value, classification, the granting or withholding of an exemption or any other alleged error in the Assessment Roll, as well as omissions or refusals of the Property Assessment Review Panel to adjudicate a complaint. In addition, the Board is the first level of appeal against Commissioner’s Rates and for appeals under the Forest Land Reserve Act.
The Board’s powers and mandate are set out in Part 5 of the Assessment Act. Under the legislation, the Board comprises a Chair/CEO and at least six members, one or more of whom must be designated as Vice Chairs.
The Assessment Act details the roles and responsibilities of the British Columbia Assessment Authority, the Property Assessment Review Panel and the Property Assessment Appeal Board of BC, with the ultimate goal of establishing an annual assessment roll of real property values throughout the province. Short of an appeal on a point of law to the Supreme Court of BC, the Board is the final step in this process. In addition to the Board’s role of settling assessment disputes through the hearing process, the Board utilizes alternative dispute resolution techniques and processes to effectively resolve appeal issues.
The Board is empowered to adopt rules of practice and procedure, consistent with the Act and the Regulations, for conducting proceedings before it. It may enter on and inspect land or improvements, require production of any records, administer oaths, solemn affirmations or declarations, and require the attendance of any person for the purpose of giving evidence before it. In addition, the Board may make any order it considers necessary to facilitate the just and timely resolution of appeals.
The Board’s legislative mandate is to ensure accuracy of assessments and to ensure that they are at actual value applied in a consistent manner in the municipality or rural area.
Board decisions on questions of fact are final. However, parties may appeal questions of law, by way of stated case, to the Supreme Court of British Columbia, and from there, with leave, to the Court of Appeal and the Supreme Court of Canada.
Any person can appeal any decision of a Review Panel. The person that appeals, the owner of the property, the person who complained to the Review Panel and the Assessor are automatically parties to the appeal. The Board may direct that any other person who may be affected by the appeal may be added as a party, including a local government, the Province or the Commissioner. In addition, the Board may, with or without conditions, permit interested parties to intervene in an appeal.
July 1 of the year prior to the roll year is the date at which all properties in the province are to be valued by BC Assessment, based on the properties’ condition and use as at October 31 following the valuation day. The roll is completed by December 31 and individual assessment notices are mailed out to property owners on January 1. The Review Panels sit for a six-week period ending mid-March in each year. They authenticate the assessment roll, as amended by them, by April 1. Appeals to the Board must be filed by April 30, and must be accompanied by the appeal fees of $30 per property appealed.
The number of appeals that will be filed in a year is dependent on a number of factors, including market volatility during the previous calendar year. The Board typically receives between 1,200 and 1,700 appeals annually. In 1998, 1,555 appeals were filed. During May, the Board processes and registers the appeals, assigning each a file number. As soon as an appeal is filed, the Board commences processes directed at resolution, with the goal that all current year appeals will be resolved before May of the following year when the filing of appeals from the next annual roll commences.
Commencing in July of 1998, the Board implemented a case management regime that ensures the progress of virtually all appeals is managed (by a senior officer of the Board) from inception to resolution. Concurrently, the Board adopted a case flow management system which differentiates among appeals based on complexity, ensuring early identification of all appeals that can benefit from case management. For every appeal, someone is responsible for its fair and speedy resolution.
Case management is carried out largely through the mechanism of appeal management conferences, most often conducted by telephone, but sometimes in person. Board staff schedule appeal management conferences and all parties are required to participate. During these conferences the Board focuses on clarification of issues and employs a variety of case management tools. These include the right to require the preparation of statements of issues, evidence and legal principles, the production of a statement of agreed facts, the exchange of documents and to direct that the parties’ experts confer. When such clarification processes do not generate agreement, the focus shifts to ensuring the parties are properly prepared for hearing, and ensuring that hearing and Board member time is used as efficiently as possible.
The Board can also require the parties to attend a settlement conference to attempt to resolve the appeal. Settlement conferences are conducted in camera on a without prejudice basis. All records of the parties referred to in the conference are returned to them at its conclusion.
Often appeal management and settlement conferences function as a catalyst for further communication between the parties. Even if settlement is not achieved on all matters in dispute, issues are inevitably narrowed.
The Board conducts a hearing on an appeal, generally as the resolution method of last resort. However, matters are scheduled for hearing even though all other processes may not have been exhausted. Typically, the Board schedules an appeal for a date several months in advance and immediately commences case management aimed at resolution. If a hearing is necessary, the Board focuses only on the issues identified during case management.
Because the Board is an administrative tribunal, as opposed to a court, the legislation that creates and vests power in the Board provides for a more informal, user friendly approach to hearings. The Board need not apply the strict rules of evidence, and is free to tailor its processes to the matters and parties before it. However, because the Board determines rights, it is a quasi-judicial tribunal. That means it must strictly apply and staunchly defend the rules of natural justice and procedural fairness, so that the proceedings are fair to both parties. Fairness is occasionally time consuming, often tedious. It might require ensuring that both parties are informed about the process or about their rights prior to hearing. It might mean giving a party an adjournment to consider their rights, or to review new evidence that was not made available to them in time to allow sufficient preparation to answer it. Often the Board’s mandate to resolve appeals in a timely manner comes into conflict with its duty to be fair. The duty to be fair supersedes all other duties and objectives.
The Board is given the power in the Assessment Act to make rules and is given considerable discretion to control the appeal process. The Board is mindful of its duty to exercise that discretion fairly in accordance with the principles of natural justice.
By 1997, it had become clear that the structures and processes employed by the Board no longer supported its primary function: resolution of assessment disputes in a cost-effective and timely manner. Problems began in 1993 when, during a period of rising real estate prices, an annual roll was reintroduced. The Board was not able to process the resulting influx of appeals within the roll year. Consequently, the Board carried a backlog of appeals into 1994 and subsequent years. The situation was exacerbated by a number of other factors:
• Because the same participants were regularly on opposite sides, frictions among them tended to polarize positions, resulting in longer and more adversarial hearings.
• Except for the Chair, the Board comprises exclusively part-time members. Members were not electronically linked to the Board office and member and Board computer systems were often not compatible, so the Board’s ability to systematize procedures was limited. The fact that members were appointed on a part-time basis, and in many cases could not make Board work their first priority, further complicated the scheduling process.
• The Board’s automation systems were outdated and inefficient. Much of the appeal administration and scheduling was done manually.
• Certain classes of properties (for example, utilities and major industrial properties) tend to be "clumped" in a few assessment areas. Since these appeals tend to be complex, the resources of the five or six assessment regions in which they were clumped limited the number of such appeals that could be dealt with in a given time period.
• Delay was a tool consciously used by a number of key players in the appeal community.
Although the Board made some progress in reducing the backlog of outstanding appeals during 1996 and 1997, 1,640 appeals remained unresolved at the end of 1997. Of those, 990 predated 1997, and some dated back to 1987. Included in that number were 311 appeals that the Board could not deal with until legal issues were resolved, through court or other Board decisions. The combined value of properties in the backlog was $21 billion, representing approximately 1.4 billion tax dollars.
Included in the backlog were a number of appeals that had been heard but for which no decision had yet been issued.
The factors listed on the previous page had a negative impact on various parties to an appeal. First, the length of time from the commencement of an appeal to its resolution created uncertainty for the parties involved. Even when there was a hearing, the time the Board took to produce a decision was often too lengthy. Because appeals may be brought on questions of law through three additional levels of adjudication, ending only at the Supreme Court of Canada, it is critical that Board decisions are made and issued in a timely manner.
Second, the backlog of appeals created uncertainty about the local government tax base. Taxes are paid in the year in which the assessment notice is sent even if an appeal is filed. Therefore, if the Board orders a reduction in value or a change in class or exemption, local governments must issue a refund. Some jurisdictions had been required to make large payments for tax refunds several years after the tax year from which they arose.
The delay and rising costs to parties and the Board were unacceptable to property owners, the Assessment Authority, other appellants, agents, counsel, the Board itself and other interested groups and individuals.
The Assessment Act did not contemplate any methods for resolution of appeals apart from oral hearings. Because of the nature of the properties and issues involved, and the appraisal concepts that apply, many appeals are very complex. Often these appeals establish precedents for future rolls, and thus have impacts far beyond the tax dollars represented by the one property under appeal. Such appeals cannot be efficiently or effectively heard without pre-hearing discovery. However, because the legislation did not provide for any pre-hearing procedures to support the hearing process, valuable hearing time was being used for discovery purposes, which increased the length and overall cost of appeals.
The challenges facing the Board were not dissimilar to those facing the courts and other tribunals in British Columbia and other jurisdictions.
In 1997, amidst growing concern over the backlog and dissatisfaction over the expense and delay inherent in the system, a review of the assessment system was initiated. The review recommended that the Board adopt dispute resolution approaches that would ensure effective case management and early communication, initiating a retreat from reliance on expensive and time-consuming oral hearings.
In early 1998, based on the results of the earlier review and with the assistance of the Dispute Resolution Branch of the Ministry of Attorney General, the Chair and Board management formulated a plan for change, framed by the following primary objectives:
• early resolution of pre-1998 appeals without prejudicing the parties’ rights
• resolution of current year appeals in the current year
• effective and efficient use of hearing time
• an established framework, against which Board results would be measured
• effective management of the appeal process
• improved confidence in the Board as an institution
The plan represented a shift in the Board’s philosophy. The focus would now be on the early resolution of appeals rather than adjudication. Hearings would become only one of the options for resolving appeals. The plan was also intended to shift the control of the appeal process back to the Board.
To implement this plan, the Board undertook a number of initiatives:
In the spring of 1998 the Board commenced the process of restructuring with the recruitment, through competition, of four full-time Vice Chairs. Written descriptions of the roles and responsibilities were developed for full- and part-time Board members, which clarified their duties and what skills the Board expected them to have.
The Board adopted a Code of Conduct, Ethics and Professional Responsibilities for its members. The purpose of the Code is to establish rules of conduct governing the professional and ethical responsibilities of Board members. The Code covers the primary areas of member responsibility, namely, conduct of hearings and decision making, as well as the institutional responsibilities of members to colleagues, the Board chair, and the Board itself. The Board is committed to fostering and maintaining the highest standards of professionalism and conduct among its members. The Code establishes the expectations for members in that regard, and provides guidance to members on matters touching their professionalism and conduct.
In June, the Board adopted new Rules of Practice and Procedure that support its case management and promote the early resolution of appeals. The Board consulted with members of the assessment community prior to adopting the new Rules. Following adoption of the Rules, the Board made a number of presentations to groups and individuals who practice before the Board, including members of the Assessment Authority, agents representing taxpayers, and counsel. The purpose of the presentations was to explain the new Rules, the case management approach and the expectations and goals of the Board, and to answer questions. The Board sought and received feedback from many members of the assessment community on the Rules and initiated an annual review of them in November. The Board appreciates the time individuals took to provide input on the Rules. Many comments that the Board received during the review resulted in amendments to the Rules. Other amendments will be considered over time as the Board continues to review its Rules and practices generally.
The Board developed a series of plain language Information Sheets to explain its processes and the new Rules. These were developed to assist all parties filing 1998 appeals. The Board intends to revise, expand and widely publish these Information Sheets over time.
The Board also arranged training to ensure Board members and staff had the necessary skills to implement the new Rules and procedures.
New legislation was enacted in October that enhanced and clarified the Board’s powers to manage appeals and conduct effective dispute resolution. The amendments enable the Board to maintain greater control over the progress of appeals, including enabling it to require parties to engage in dispute resolution processes, such as settlement conferences and appeal management conferences. In addition, the amendments give the Board greater authority to enforce pre-hearing orders and penalize parties who do not comply with the Board’s rules or orders.
The Board initiated new work processes, with the assistance of an external consultant, to support the Board with the application of its new case management regime. As well, Treasury Board approved funding for development of a new appeal management computer system, which will enable Board and staff to more effectively process appeals and will support decision processing.
The Board is accountable for resolving appeals in a timely, efficient, equitable and fair manner while observing the rules of natural justice. The new processes implemented by the Board over the past year were designed with a view to meeting and improving on accountabilities. An emphasis has been placed on resolving the backlog, while coping with current appeals to prevent them from joining the backlog.
The Board is financially responsible for the funds allocated to it and has undertaken to make better use of its available resources. Other than the training and systems capital funding provided to the Board during fiscal 1999 and 2000, the Board expects it will absorb the costs of the above changes within its existing base budget allocation.
The Board evidences its acceptance of its accountabilities in a number of ways, including:
2. quarterly reports to the Minister, setting out the Board’s progress in meeting its objectives
3. development of an Administrative Services Agreement with the Ministry of Municipal Affairs, requiring the Board to comply with government guidelines for financial, human resource, and administrative practices and procedures
The Board’s observations and feedback from the assessment community indicate that most parties have accepted the Board’s new approach. Now, the emphasis of most parties appears to be on the resolution of appeals as early in the appeal process as possible and avoidance of traditional adversarial approaches.
A review of the Board’s statistical reports for 1998 (contained in Appendices 3 through 10) suggests the changes made by the Board have had a number of positive results.
As of December 31, 1998, there were 1,183 outstanding appeals—a 28% reduction from the previous year. The reduction occurred despite the 1,555 new appeals the Board received during 1998. Therefore, the Board completed a total of 2,012 appeals during the year, which is approximately 60% more than were resolved in either of the previous two years.
By the end of December, 1,028 (66%) of the 1998 appeals were completed. The Board was able to complete the majority of its 1998 appeals prior to the start of the next assessment cycle. In the previous year, less than 40% of the 1997 appeals were completed by year end.
The Board was also able to reduce the number of "backlog appeals" (appeals from earlier appeal years) by 60%. Of the 1,648 appeals outstanding on December 31, 1997, 656 remained unresolved by the end of 1998.
The chart (attached to Appendix 3) shows the status of the remaining appeals, which is based on the figures in Appendix 3. On December 31, 1998, 121 appeals were awaiting a Board decision, most of which have now been issued ("Decision in Progress"). The Board could not hear another 173 appeals, as the issues involved will likely be determined by court decisions ("Pending Court/PAAB Decision").
Although the Board still has to deal with the remaining 901 appeals, the Board has subjected all of those to some level of appeal management. Many have been scheduled for a hearing during 1999 (111 appeals), while others have been scheduled for appeal management conferences (130 appeals), which generally results in the scheduling of a hearing. The Board is exploring the issues to be addressed in the remaining appeals, trying to encourage resolution and taking steps toward scheduling them for appeal management conferences and hearings.
The average hearing length was reduced from 1.01 days in 1997 to 0.65 days
in 1998. However, there were two very lengthy hearings held during 1997 (Concord Pacific, Pacific Centre) that affected the figures for that year.
The Board also made progress in reducing the time it takes to issue a decision after it has heard an appeal. In 1998, the average time from hearing to decision was 105.5 days, down slightly from previous years (see Appendix 7). However, the statistics improved significantly during the latter half of 1998 as the new Vice Chairs assumed their duties. From January to June, the Board required an average of 131.9 days to issue a decision. Between July and December, that average was reduced to 86.3 days. Further, 68% of the decisions issued during that period were issued less than 90 days after the hearing. Thirty-eight percent were issued less than 60 days after the hearing.
For every appeal for which the Board conducted a hearing, another 6.4 appeals were resolved without a hearing. For every hearing day held by the Board, 8.3 appeals were resolved. Those figures are almost double the figures from the previous two years.
The chart (at Appendix 6) graphically displays the breakdown of the types of orders made by the Board to complete appeals during 1998. Of the 2,012 completed appeals, 391 were completed by decisions made by the Board after formal hearings. Eighty percent (1,621 appeals) were completed without a formal hearing by "desk orders." Desk orders are generally issued based upon written applications and agreement between by the parties. The desk orders included 981 appeals that were withdrawn by the appellants and 544 that were resolved by agreed changes to the assessments.
Although the Board does not have statistics available yet, many of the appeals resolved by desk orders were the subject of the Board’s new appeal management procedures. In addition, the appeals that have been scheduled for hearing, but are resolved before hearing, are being resolved much earlier than in the past. During the last half of 1998, the Board had virtually no hearings that were cancelled less than two weeks before the scheduled date.
As a result, a larger percentage of appeals are now resolved without losing scheduled hearing time. In a growing number of cases, parties are resolving appeals without Board assistance. An observable phenomenon is that parties now, quite often, work through the appeal management steps on their own, and merely report to the Vice Chair in charge, without the need for active Vice Chair facilitation.
The few appeals that do go to hearing tend to involve complex appraisal issues or are appeals for which a legal decision is required to provide direction for the future. In the latter case, appeal management ensures that the parties are well prepared for hearing such that hearing time is effectively and efficiently used.
A person affected by a decision of the Board may appeal by way of stated case to the Supreme Court on a question of law only (Assessment Act, s. 65(1)). Stated cases must be started within 21 days of receipt of the Board’s decision. The Board is required to prepare the stated case and file it with the Court within a further 21 days. Once the Supreme Court has rendered a decision on the questions of law, a further appeal may be made to the Court of Appeal with leave.
The Board filed 23 stated cases from Board decisions during 1998.
Section 64(1) of the Act permits the Board, on its own initiative or at the request of a party, to file a stated case during the course of the proceedings on a question of law arising during the proceedings. Where a stated case is filed, the Board must suspend its proceedings until the decision of the Court is rendered. The Board filed no stated cases pursuant to section 64(1) of the Act in 1998.
There were no applications during 1998 for judicial review of a decision of the Board under the Judicial Review Procedure Act.
Two decisions were rendered by the Supreme Court early in 1998 relating to the jurisdiction of the Board to award costs against one party to an appeal in favour of another party. The Board had originally interpreted the legislation to not confer that ability. The Supreme Court held in Redwoods Golf Course v. Assessor of Area #15 - Langley/Matsqui/Abbotsford and Assessor of Area #06 v. L.J. Management Ltd., Stated Case 404, that the Board did have jurisdiction under the Assessment Act in force at the time to award inter-party costs. The Court referred the applications for costs back to the Board. The Assessment Act was amended subsequent to this decision being rendered. The Board now not only has jurisdiction to order a party to pay costs to another party, but also to order a party to pay costs to the Board.
The Court of Appeal rendered its decision in 1998 dismissing an application for judicial review by Fletcher Challenge Canada Ltd. of the Commissioner’s Rates for managed forest land. The Board has 91 appeals comprising 8,645 folios from 1989 through 1998 involving managed forest land. The Board has been unable to deal with these appeals pending the outcome of the judicial review. The Board has commenced case management of the appeals and anticipates that the majority of them will be resolved during 1999.
The Board maintains some basic indicators of the cost-effectiveness of its operations. The ability to collect such information is limited by the Board’s computer system and the nature of its work. The first problem should be largely corrected when the Board implements its new Property Assessment Appeal Management System (PAAMS) during 1999. However, even after PAAMS is operational, it will still be difficult to track and maintain accurate indicators of the cost per appeal, as the appeals frequently take considerable time to resolve and it is difficult to track and quantify the numerous actions taken by the Board on an appeal.
The table - Budgeted Expenditures v. Actual (by Fiscal Year) - shows the budgeted and actual Board expenditures for the past four fiscal years and the budgeted and estimated expenditures for 1998/99.
The $255,535 overage for fiscal 1997/98 was primarily for one-time only, capital expenditures to upgrade the Board’s technology and office space. Similarly, the $455,000 overage forecast for this fiscal year was approved by Treasury Board for development of the Board’s new computer system (PAAMS) and for training Board members and staff in the application of the Board’s new appeal management regime, including dispute resolution techniques. Once PAAMS is fully implemented, the Board expects to operate within its current base budget allocation.
The Board’s expenditures are recovered by the Province from the British Columbia Assessment Authority, pursuant to section 17 (5) of the Assessment Act. The Assessment Authority and, as a result, the assessment appeal system (including the Board) are funded, in part, through a levy imposed on properties subject to assessment.
Appendices 9 and 10 provide indicators of the Board’s use of funds during the 1998 calendar year. The chart (attached to Appendix 9, Expenditures – 1) graphically displays the breakdown of calendar 1998 expenditures. As indicated in Appendix 9, the overall cost per completed appeal decreased to $773, from more than $1,000 per completed appeal during each of the previous two calendar years. The cost per desk order issued and the cost per decision issued is lower than in the previous two years, while the cost per hearing day held and cost per appeal heard both increased. This is because the Board heard fewer appeals during the year and resolved more through non-hearing procedures.
The expenditure figures used in Appendix 9 do not include the one-time only expenditures referred to earlier.
Salary and benefit expenditures increased during 1998, while payments for part-time members’ per diems decreased. That was a result of the Board’s addition of five full-time members. The full-time members have taken on work previously performed by the part-time members. The chart (attached to Appendix 10, Per Diems) provides a breakdown of the work performed by part-time members during 1998. They spent approximately 57% of their time hearing appeals and writing decisions. The remainder of their time was spent travelling to and from hearings and preparing for them.
Appendix 10 provides some measures of the outputs achieved for each per diem claimed by part-time members. Members claimed 7.5 days for each appeal heard, which is the same as during 1997. Part-time members worked approximately 11.5 days for every hearing day held during 1998, up from 7.8 days per hearing day in 1997. The increase is probably due to the large reduction in the number of hearing days during 1998. The number of per
diems claimed for each decision issued was almost halved in 1998—down to 5.2 from 10.6 in 1997. The number of days claimed for each appeal completed during the year was reduced from 2.1 in 1997 to 1.0 in 1998.
The Board cannot confirm whether the 1998 results are an anomaly, or a reflection of efficiencies achieved through the implementation of the Board’s new appeal management regime. The remaining backlog appeals may be more complex and less amenable to resolution, requiring more hearings and other Board resources to resolve. As well, the appeals submitted to the Board during 1998 may have been more susceptible to a streamlined approach. The Board could receive a higher volume of appeals in future years and a larger proportion of those appeals may require greater Board effort to achieve resolution.
In 1999, the Board must consolidate its successes from 1998, repeat them, and improve upon them. In 1998, the Board established the management, accountability and operational frameworks necessary to achieve its purpose and stated objectives. As these frameworks will be applied in the context of a full roll year for the first time in 1999, the Board will be alert to any refinements that appear necessary to ensure congruity of purpose, objectives, efforts and results.
In particular, consolidation, repetition and improvement will require:
• that the Board make more extensive and effective use of the case management powers given to the Board under the legislation. Case management is essentially in its infancy. In 1999 the Board will exercise its discretion and authority given in the Act to apply case management techniques and alternative dispute resolution techniques (including the ability to enforce its orders and award costs).
• that for the 1999 appeals, the Board make full use of the technological capacity of the new system to accurately and quickly, as they are received, stream new appeals and assign them to the responsible Vice Chair. The streaming process is the foundation of the case management system.
• that our cost per appeal resolved be reduced through more extensive use of single member panels, shorter hearings, hearings by written submission or telephone, and more effective use of decision writing time. For this to happen the Board needs to improve accessibility and customer service by providing more guidance about what to expect in a hearing and how to prepare for it. Enhanced technology will assist with reducing decision writing time.
• reduction of the average elapsed time between the filing of an appeal and its resolution. This improvement will require that we commence case management immediately after each appeal is streamed and that we aggressively manage it to resolution or hear the matter and issue a decision promptly.
• that the Board’s processes are characterized by consistency of approach, application and outcome. This will be achieved by clear articulation of expectations, and by organized consistency and predictability in case management techniques and approaches without losing sight of the need for the individualized treatment of cases and the requirements of natural justice.
Conference (AMC) Scheduled
Appeal or Appeal
Progress or Decision Pending
Pending Court/PAAB Decision or Pending Precedent
The Board has a number of outstanding appeals involving issues that are before the courts or, in some cases, before the Board in another appeal. Where the Board determines that it would be more cost-effective for the Board and the parties to leave determination of the appeal until after the other court or Board decision, the appeal is put into this classification.