The Administrative Tribunal of Québec (the “Tribunal”) rendered an important decision in the Indorama matter1 regarding single-use immovables and municipal taxation. In that file, the applicant, Les Entreprises Indorama PTA L.P. (“Indorama”) asked the Tribunal in an incidental motion to interpret sections 18.1 to 18.4 of the Act respecting municipal taxation2 (the “Act”) in connection with the assessment of single-use immovables.
The Tribunal thus had to decide whether the legal framework specific to single-use immovables applies to the parties solely at the stage of the deposit of the roll, or in the context of the proceedings before the Tribunal as well. The Tribunal concluded that exchanges between the parties prior to the contestation of the property value entered on the roll constitute a value ceiling for the municipality and a value floor for the owner, that are binding on the parties before the Tribunal at the stage of judicial proceedings.
Applicable legislative framework
Sections 18.1 to 18.4 of the Act are part of the chapter on the powers and obligations of the assessor, and apply in the specific case of single-use immovables. These sections, which specify the terms for exchanges of information between the municipal assessor and the owner of a single-use immovable, read as follows:
18.1. Before 1 September of the second fiscal year that precedes the first of the fiscal years for which the real estate assessment roll is drawn up, the assessor must give notice by registered mail to the owner of any immovable to which a regulation under paragraph 10 of section 262 applies, stating
(1) that the immovable mentioned in the notice is an immovable to which the regulation applies;
(2) the method of assessment prescribed by the regulation;
(3) the tenor of sections 18.2 to 18.6.
Failing such notification, the method of assessment prescribed by the regulation is not mandatory.
18.2. Before 15 February of the first fiscal year that precedes the first of the fiscal years for which the real estate assessment roll is drawn up, the assessor must communicate by registered mail to the owner to whom the notice under section 18.1 was given,
(1) the cost new of the structures that are part of the immovable, which the assessor determines in accordance with the regulation under paragraph 10 of section 262;
(2) the depreciation the assessor subtracts from that cost new.
The notice must break down the depreciation by specifying, where applicable, any amount resulting from physical deterioration, functional obsolescence or economic obsolescence. It must also state the quantification method used to determine each amount.
18.3. In the case of disagreement concerning information communicated by the assessor pursuant to section 18.2, the owner must, before 1 June of the first fiscal year that precedes the first of the fiscal years for which the real estate assessment roll is drawn up, communicate by registered mail to the assessor the information that is required under section 18.2 and that the owner wishes to have acknowledged.
18.4. Unless the owner has notified disagreement in accordance with section 18.3, only the information communicated by the assessor pursuant to section 18.2 shall be used for the purpose of determining the value of the structures that are part of an immovable in respect of which the method of assessment prescribed by a regulation under paragraph 10 of section 262 is mandatory.
Where the owner has notified disagreement in accordance with section 18.3, the following rules apply for the purpose of determining the value of the structures:
(1) the assessor cannot determine a cost new greater than the cost new that was communicated or subtract an amount less than the amount specified in the breakdown communicated under section 18.2;
(2) the owner cannot have acknowledged a cost new that is less than the cost new communicated or an amount greater than the amount specified in the breakdown.
The first and second paragraphs do not apply where, after the communication required under section 18.2 and referred to in the first paragraph, an event referred to in the second paragraph of section 46 occurs.
The analysis of the Tribunal
Indorama alleges that section 18.4 of the Act creates a ceiling for the respondents, the municipalities of Montreal and Montreal-East, and a floor for Indorama, such that Indorama could not claim a cost new lower than that indicated in its communication pursuant to section 18.2 of the Act, or a higher depreciation. Conversely, still according to Indorama, the respondents could not bring forward a cost new higher than that indicated in the breakdown set out in their communication pursuant to section 18.2 of the Act, or a lower depreciation. Ultimately, this is also the position adopted by the Tribunal in its decision.
In its analysis, the Tribunal first notes the intent of the legislature to find an evaluation method that would limit the number and costs of contestations in this area. It emphasizes that these legislative provisions are in line with the goal of promptness imposed by the Act respecting administrative justice3. The Tribunal also notes that sections 18.1 to 18.4 of the Act are part of the chapter on the powers and obligations of the assessor rather than in the one regarding the preparation and deposit of the assessment roll, which suggests that the framework prescribed by these provisions goes beyond that pertaining solely to the deposit of the assessment roll.
The following excerpt from the decision is particularly illustrative of the Tribunal’s reasoning:
 When the parties, following the communications of information pursuant to sections 18.2 and 18.3 of the Act, do not agree on the depreciated cost, section 138.5.1 gives the owner the possibility of contesting the value entered on the roll directly before the Tribunal, without having to request a prior review. This necessarily implies that it is before the Tribunal that the owner may have its depreciated cost recognized, in accordance with the provisions of section 18.4 of the Act, and conversely, the assessor may not establish a depreciated cost greater than that communicated pursuant to section 18.2 of the Act, which is the value entered on the roll for the building.
 For what would be the use of a communication by the owner pursuant to section 18.3 of the Act if the municipal assessor could deposit the value without taking it into account, and if the parties could then establish values that take no account of the communicated depreciated costs before the Tribunal?
 In light of the interminable debates before the Bureau de révision de l’évaluation foncière du Québec, and then before the Tribunal, regarding immovables of this kind before the introduction of single-use immovables, logic and common sense confirm this legislative goal of obliging the parties to undertake serious work before the deposit of the roll to establish the depreciated cost of single-use immovables and to bind them to the results then communicated, both for the deposit of the roll and the various stages of contestation of the assessment, so as to only allow them to be closer in their respective positions. After such work has been done by the time the roll is filed, it would be counterproductive if the parties could set aside the result before the Tribunal and call everything into question all over again.
 It is obvious that the communications provided for in sections 18.1 to 18.3 of the Act, together with the provisions of sections 16, 18 and 18.5 of the Act, are intended to allow the parties to exchange the necessary information to establish the depreciated cost of the single-use immovable before the roll is filed, such that the cost new and the depreciations communicated by each party are the result of serious work. In this context, the will of the legislature that the range established in section 18.4 of the Act remain a maximum deviation at all stages of the establishment of the value, including before the Tribunal, appears incontestable.
[Emphasis added] [Our translation]
What to take away from the decision of the Tribunal
The Tribunal granted Indorama’s demand and declared that in the context of proceedings, the respondents’ assessor could not establish a cost new higher than that communicated to the applicant, or subtract a depreciation amount greater than that indicated in the breakdown set out in a communication sent pursuant to section 18.2 of the Act. Conversely, the applicant cannot obtain recognition of a cost new lower than that communicated to the respondents, or deduct a depreciation amount greater than that indicated in the breakdown set out in a communication pursuant to section 18.3 of the Act:
 In other words, the Tribunal must decide on the value of a single-use immovable on the basis of the evidence submitted to it by the parties. That evidence must follow the method established by the legislature and respect the upper and lower limits of the range of costs and depreciations that the parties determined prior to the filing of the roll: it must thus conform to the rules applicable to single-use immovables. Nothing however prevents the parties, to the extent they remain within this scope, from submitting any new relevant evidence for determining either the content of the unit of assessment or its value.
[Emphasis added] [Our translation]
This decision reduces the risks and uncertainties for owners of single-use immovables who present a contestation before the Tribunal following the process of exchanging necessary information regarding the cost new and depreciation in order to establish the depreciated cost of a single-use immovable prior to the assessment roll being filed.