British Columbia v. 1184369 B.C. Ltd., 2024 BCCA 380

The taxpayer (“118”) purchased a bakery business and two properties through a share purchase agreement. A condition precedent to the agreement was that the sellers transfer a 2/3 interest in one of the properties (held by them personally), to one of the corporations being sold. Tax was assessed under the Property Transfer Tax Act (B.C.) (the “PTTA”) in respect of this transfer of real property based on its assessed value as determined by BC Assessment, rather than the lower value inferred by the purchaser from the share purchase agreement. The PTTA imposed its tax based on the property’s fair market value (FMV). The chambers judge set aside the Crown’s pleaded assumption that the value on which the PTTA assessment was based was the property’s FMV, on the basis that this was a statement of mixed fact and law.

In allowing the Crown’s appeal, Skolrood JA referred to his statement in GFL (at para. 60):

I endorse the principle … in Preston that tax assumptions containing statements of mixed fact and law will not be invalidated simply on that basis if the factual underpinnings are clearly stated, there is no dispute about the legal principles and no prejudice results.

He further noted (at para. 37) that Preston had found that “[f]air market value is predominantly factual”, and found that the chambers judge had erred in setting aside the Minister’s assumption of fair market value. The PTTA assessment stood, as 118 had failed to disprove that assumption.

In this regard, after noting that “this Court has held that except in certain limited circumstances, the tax assessed value is not proper evidence of fair market value” (at para. 63), he went on to state that “the courts do not engage in a deep inquiry into the basis for the Minster’s assumptions; instead, the analysis goes to whether the assumption has been successfully disproven on a balance of probabilities” (para. 66), which 118 did not do.

The Crown pleadings in the appeal of the taxpayer (“118”) of a property tax assessment stated an assumption as to the property’s FMV (which had been determined as its assessed value as determined by BC Assessment), rather than the lower value inferred by the purchaser from a related share purchase agreement.

After quoting from a statement in Dosanjh v. Liang, 2015 BCCA 18 that “[t]he basic difficulty with the property assessment as evidence of property value is that the court had no basis on which to evaluate its cogency” and noting that “this Court has held that except in certain limited circumstances, the tax assessed value is not proper evidence of fair market value” (at para. 63), Skolrood JA went on to state that “the courts do not engage in a deep inquiry into the basis for the Minster’s assumptions; instead, the analysis goes to whether the assumption has been successfully disproven on a balance of probabilities” (para. 66), which 118 did not do.