Injustice at the Fort Garry

Opinion

Hey there, time traveller!
This article was published 24/10/2023 (714 days ago), so information in it may no longer be current.

If ever there was an example of legal theft, it is the injustice inflicted by the City of Winnipeg and the province of Manitoba on the late Jack Perrin and his family in relation to their ownership of the Fort Garry Hotel in the 1980s.

I say this because I was counsel involved in some of the litigation.

After the Perrins purchased the hotel for $900,000 in November 1979, the city assessed it at $1,281,990. Twelve years later the Municipal Board, in July 1991, finally reduced the assessment to $163,960. For comparison, the city’s assessment of $1,281,990 required the hotel to have a market value of $9,069,614, or 10 times the amount the Perrins paid for the property.

The actual taxes for the years 1981, 1982 and 1983 based on the city’s assessment totalled $814,589 (approximately $2.3 million today). They were finally reduced to $104,181, an excess taxation for those three years of $710,408.

By the time the correct assessment was established, the Perrins had lost the hotel to the city in a tax sale.

Why did it take so long to establish the correct values? The answer is simple. The Perrins were denied due process. In 1981, both the Court of Queen’s Bench and the Court of Appeal had held that assessments in Winnipeg were frozen at their 1980 amounts; in 1985 the Court of Appeal denied the right to appeal an erroneous Municipal Board decision.

When the Supreme Court of Canada in December 1983 restored the right to appeal assessments, it was too late. As a result the city, having valued the hotel at $9 million, sold it in 1987 for $834,000. After grossly over-assessing and seizing the hotel, the city in my opinion also unjustly enriched itself by $729,819 over the $104,181 that should have been owing.

Former justice minister Kelvin Goertzen wrote to the Perrin family in January 2023.

He had accepted the conclusion of an independent reviewer that, while there was unfairness, the province “did not commit a wrong or create the unfairness that led to the loss of the hotel.” He said that their reviewer, in reaching his conclusion, noted that it was the City of Winnipeg which did the assessment, did the enforcement and incorrectly interpreted provincial legislation as it related to appeals.

I disagree with the reviewer’s conclusion.

It was not the city which determined how legislation was interpreted. It was the courts. The city adopted a view of legislation as it furthered the city’s own interest and, in the absence of clear legislation or intervention by the province, convinced the court that the city’s view was correct.

The fault clearly lay with vague and confusing legislation and with the province’s failure to intervene, as well as with the city imposing a grossly excessive assessment and then arguing that assessments were frozen and that appeals from the Municipal Board on a point of law were prohibited.

In 1981, the City of Winnipeg filed an application for an order of prohibition seeking to freeze assessments in Winnipeg under the provisions of Provincial Bill 100. The Provincial Municipal Assessor (PMA) knew that Bill 100 was never intended to take away the right of Winnipeg taxpayers to appeal assessments; yet he failed in his duty to become involved as an intervenor in the litigation to prevent a fundamental incongruity in Manitoba’s assessment system.

He allowed Manitoba to become the only province in Canada which gave rights of appeal to one set of property owners (those in rural Manitoba) while at the same time and under the same law denying those rights to Winnipeg property owners.

In fact the province made the situation worse when it enacted Bill 33, extending the incongruity to subsequent years until it was corrected by the Supreme Court. In effect, the province co-operated with the city in denying due process to Winnipeg taxpayers.

The Supreme Court decision restored the right of Winnipeg taxpayers to appeal assessments. In reference to confusion in legislation, Justice Estey criticized the drafting of Bill 100. He stated: “Unhappily the expression ‘level of values’… is not defined in either the 1980 Act or the City of Winnipeg Act.”

There was further confusion. In the 1984 Municipal Board decision on the Perrins’ appeal, chairman L.J. Hallgrimson stated: “It is necessary to… determine whether… market value is of relevance…” “There is no definition of the word ‘value’ in The City of Winnipeg Act.” “It is the view of this Board that… valuation based on market is not relevant.”

The Court of Appeal in 1985 denied the Perrin family’s application for leave to appeal the erroneous Municipal Board decision. Justice Philp stated: “notwithstanding the confusion caused by the lack of drafting care, I am satisfied that the intent of the legislature was… a limitation to the right of appeal in assessment matters.”

In 1987 the Court of Appeal in Shapiro confirmed market value as the sole basis for assessments. Underlining vagueness and confusion in the legislation, Justice Philp stated: “Morse, J. said that ‘applications such as this demonstrate anew the dissatisfaction with the basis of real property valuation and assessment in the City of Winnipeg and the need for the legislature to act to resolve the problem… and to give some guidance and direction to the city.’ I would go further and say that neither the province nor the city has acted… with resolute conviction in resolving the very vexed assessment problems.”

In conclusion, in the words of former premier Duff Roblin, the Perrin family were denied natural justice. I echo those words and add that they were denied due process.

Manitoba’s legislation was imprecise, it created confusion and provided the opportunity for the city, with the province’s tacit approval, to wrongly exploit the situation to its own advantage. In short, the taking of the hotel based on an erroneous and grossly excessive assessment which could not be appealed in a timely manner amounted to legal theft.

There is precedent where governments have recognized an injustice and granted relief. The Perrin family sustained profound financial loss and reputational damages for which the province and the city should provide compensation.

Michael J. Mercury, K.C. is a retired lawyer with extensive experience in municipal taxation and was directly involved in some of the cited litigation.