The B.C. Court of Appeal has quashed an effort by Seaspan to overturn an assessment decision that greatly impacts the value of the company’s 16-hectare North Vancouver property for tax purposes.
At issue before the courts was whether an order to clean up the contaminated soil on the industrial site should affect how valuable BC Assessment determines the land to be worth.
The shipbuilding and repair firm purchased the land from pulp and paper producer Domtar in 1965. In 2010, the province’s director of waste management handed down a remediation order for both companies to clean up the contaminated site, which, a court ruling released this month, states would cost an estimated $100 million. About half of that cost has already been incurred by Seaspan and Domtar.
From 2013 to 2019, Seaspan appealed all of its assessments to the province’s Property Assessment Appeal Board, arguing that the costs of implementing the remediation order should be deducted from the tax assessments.
The board agreed and lowered the firm’s assessments for those years. The assessor for the Vancouver Sea to Sky Region and the District of North Vancouver, which would find itself with a large gap in its industrial tax base if the valuation were to be dropped, took the matter to the B.C. Supreme Court.
In 2019, district CAO David Stuart told the North Shore News the municipality had a $10 million liability hanging over its coffers if Seaspan’s and other heavy industrial waterfront property owners’ assessment appeals were successful.
The B.C. Supreme Court sided with the district and the area assessor in 2021, which found that the remediation order actually increases the value of the land because it shields potential purchasers from the liability of the contamination clean-up costs.
Seaspan then brought the case to the B.C. Court of Appeal, arguing the lower court judge had made an error in law.
BC Assessment sets values based on the highest and best use of a land following a hypothetical sale on the open market, taking into account what would be legally permitted on it. While the parties agreed that the environmental contamination itself would be a factor in the hypothetical market value, they disagreed on whether and how province’s order to clean it up should be.
“It follows that a critical distinction must be drawn between whether a restriction on the use of land attaches to the owner’s interest or to the land itself,” Justice David Harris acknowledged in a unanimous decision for the court.
Viewed from the perspective of a hypothetical buyer of the land, the remediation order is a benefit as, under the Environmental Management Act, there are “corresponding legal obligations that can relieve potential purchasers of the obligations to pay for the known costs of remediation, by imposing them on others,” Harris wrote.
“A named party cannot avoid liability under the order by selling or abandoning the contaminated site. Liability continues, even if the property is sold and resold many times after the order is issued,” he wrote.
The assessment board’s failure to recognize that was “a clear error,” Harris noted.
“Importantly, Seaspan’s status, and facts peculiar to it as the actual owner of the property, are not to be considered in the assessment of the market value of the property. Specifically, Seaspan’s status as a responsible party with obligations under the remediation order is irrelevant to the valuation of the fee simple interest,” Harris found.
Seaspan also attempted to argue that the lower court chambers judge’s decision was outside his jurisdiction, which the court of appeal also rejected.
Editor's note: This story has been amended to correct a misspelled name.
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