Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: July 17, 2018

FILE NO.: DM 149742

Moving Party(ies): Walmart Canada Corporation and Target Canada Corporation

Respondent(s): Municipal Property Assessment Corporation (“MPAC”), Region 01, Metrus Eastern Properties Limited and City of Cornwall

Property Location(s): 2401 SCM Way and Industrial Park Drive

Municipality(ies): City of Cornwall

Roll Number(s): 0402-010-014-01000-0000, 0402-010-015-00507-0000

Appeal Number(s): 2955011, 3002763, 2959767, 2988427, 2988248, 2988429, 3070268, 3143604, 3002612, 3070216 and 3143617

Taxation Year(s): 2013, 2014, 2015 and 2016

Hearing Event No.: 686601

Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

Heard: September 28, 2017 in Toronto, Ontario

APPEARANCES:

Parties

Counsel

Walmart Canada Corporation and Target Canada Corporation

Jeff Cowan

MPAC

Karey Lunau and Calvin Ho

City of Cornwall

Michelle Cicchino

DISPOSITION OF THE BOARD DELIVERED BY LESLIE FLEMMING AND SONIA LIGHT

DISPOSITION OF MOTION

BACKGROUND

1The Appellants move under s. 45 of the Rules of Practice and Procedure (“Rule”) of the Assessment Review Board (“Board”) for disclosure of a variety of documents which are or may be in MPAC’s possession, control or power. The requested disclosure includes the following:

(a) Any documentation respecting the application of the Market Adjustment Factor (“MAF”) or economic obsolescence (“EO”) for large distribution centres;

(b) Details of sales and GRADs for sales in Cornwall of properties bearing codes 510, 520, 430 and 545 during 2010 and 2011;

(c) Details of sales and GRADs (including revised GRADs if assessments have been changed) for sales in Brampton, Mississauga, Vaughan, Pickering, Ajax, Milton and Toronto coded 510, 520, 530, 545;

(d) Details of vacant land sales and GRADS (including revised GRADs if assessments have been changed) for land values applied to the subject properties and industrial property in Cornwall for 2009 – 2014;

(e) A revised 2012 CVA RCN for the subject properties with HST excluded from the costing;

(f) Details of 2008 – 2016 sales and GRADS (including revised GRADs if assessments have been changed) for all warehouses and distribution centre properties in Brampton, Mississauga, Vaughan, Pickering, Ajax, Milton, and Toronto greater than 400,000 square feet.

2An in-person hearing was held; the City of Cornwall was represented as an observer to the proceedings.

3At the hearing, counsel for the Appellants advised the Board that the material requested in (d) and (e) is no longer being pursued as the Appellants have received a sufficient explanation from MPAC. In respect of request (b) (Cornwall Industrial Sales), MPAC has produced sales and GRAD information respecting the comparable sales on which MPAC has relied. In respect of request (f) (Large Industrial Sales) MPAC has produced the sales and GRAD information respecting the comparable sales on which it relies. MPAC has also produced a list of properties coded 530 (warehouse) and 545 (distribution centres) in excess of 400,000 square feet (“sq. ft.”) that sold between 2008 and 2016.

4For the reasons set out below, the motion is denied.

ISSUES

5The issue is whether MPAC should be required to disclose the requested documents pursuant to Rule 45.

DECISION

6The motion is denied.

RELEVANT LEGISLATION

Assessment Act

7Section 40 of the Assessment Act (“Act”) states:

40.(1) Appeal to Assessment Review Board. – Any person, including a municipality, a school board or, in the case of land in non-municipal territory, the Minister, may appeal in writing to the Assessment Review Board,

(a) on the basis that,

(i) the current value of the person’s land or another person’s land is incorrect,

8Section 53 of the Act states:

Disclosure of information

53 (1) A person employed by the assessment corporation, a municipality or a school board is guilty of an offence and on conviction is liable to a fine of not more than $2,000, or to imprisonment for a term of not more than six months, or to both if,

(a) in the course of the person’s duties, he or she acquires or has access to information collected under this Act or to information collected pursuant to an assessment appeal or a proceeding in court involving an assessment matter;

(b) the information is,

(i) proprietary information of a commercial nature prescribed by the Minister relating to an individual property, or

(ii) actual income and expense information on an individual property; and

(c) the person wilfully discloses the information or permits it to be disclosed to any person who is not entitled in the course of their duties to acquire or have access to the information. 2016, c. 37, Sched. 2, s. 2.

Rules of Practice and Procedures (“Rules”)

9Rule 5 states:

Proportionality

5. These Rules shall be applied in a manner proportionate to the importance and complexity of the issues in a proceeding and with a view to resolving appeals within the four year cycle.

10Rule 38 states:

Statement of Issues and Responses

38. Statements of issues and responses must contain:

(1) If the issue is current value:

(a) the current value requested and how it is calculated;

(b) a full statement of every issue that the party intends to raise, including identification of comparable property to be referred to, if any;

(c) a list of all facts, legal grounds and documents that the party relies on in support of its position.

(2) If the issue is the equity of the assessment pursuant to section 44(3)(b) of the Assessment Act:

(a) the assessment requested;

(b) identification of the vicinity claimed by the party;

(c) identification of similar lands in the vicinity to be relied on by the party;

(d) how the party proposes to calculate the adjustment for equity; and

(e) a list of all facts, legal grounds and documents that the party relies on in support of its position.

11Rule 45 states:

45. All parties must provide a copy, in paper or electronic form, of all relevant documents in their possession, control or power to all other parties in the proceeding, except for privileged documents.

Rules of Civil Procedure (Ontario), Reg. 194, Courts of Justice Act 1990

12General

29.2.03 (1) In making a determination as to whether a party or other person must answer a question or produce a document, the court shall consider whether,

(a) the time required for the party or other person to answer the question or produce the document would be unreasonable;

(b) the expense associated with answering the question or producing the document would be unjustified;

(c) requiring the party or other person to answer the question or produce the document would cause him or her undue prejudice;

(d) requiring the party or other person to answer the question or produce the document would unduly interfere with the orderly progress of the action; and

(e) the information or the document is readily available to the party requesting it from another source. O. Reg. 438/08, s. 25.

13Overall Volume of Documents

(2) In addition to the considerations listed in subrule (1), in determining whether to order a party or other person to produce one or more documents, the court shall consider whether such an order would result in an excessive volume of documents required to be produced by the party or other person. O. Reg. 438/08, s. 25.

14Rule 30.1 – Deemed Undertaking

Application

30.1.01 (1) This Rule applies to,

(a) evidence obtained under,

(i) Rule 30 (documentary discovery),

(ii) Rule 31 (examination for discovery),

(iii) Rule 32 (inspection of property),

(iv) Rule 33 (medical examination),

(v) Rule 35 (examination for discovery by written questions); and

(b) information obtained from evidence referred to in clause (a). O. Reg. 61/96, s. 2; O. Reg. 627/98, s. 3.

(2) This Rule does not apply to evidence or information obtained otherwise than under the rules referred to in subrule (1). O. Reg. 61/96, s. 2.

Deemed Undertaking

(3) All parties and their lawyers are deemed to undertake not to use evidence or information to which this Rule applies for any purposes other than those of the proceeding in which the evidence was obtained. O. Reg. 61/96, s. 2; O. Reg. 575/07, s. 4.

Exceptions

(4) Subrule (3) does not prohibit a use to which the person who disclosed the evidence consents. O. Reg. 61/96, s. 2.

(5) Subrule (3) does not prohibit the use, for any purpose, of,

(a) evidence that is filed with the court;

(b) evidence that is given or referred to during a hearing;

(c) information obtained from evidence referred to in clause (a) or (b). O. Reg. 61/96, s. 2.

(6) Subrule (3) does not prohibit the use of evidence obtained in one proceeding, or information obtained from such evidence, to impeach the testimony of a witness in another proceeding. O. Reg. 61/96, s. 2.

(7) Subrule (3) does not prohibit the use of evidence or information in accordance with subrule 31.11 (8) (subsequent action). O. Reg. 61/96, s. 2.

Order that Undertaking does not Apply

(8) If satisfied that the interest of justice outweighs any prejudice that would result to a party who disclosed evidence, the court may order that subrule (3) does not apply to the evidence or to information obtained from it, and may impose such terms and give such directions as are just. O. Reg. 61/96, s. 2; O. Reg. 263/03, s. 3.

REASONS FOR DISPOSITION OF MOTION

15The Board first addresses the test to be applied when determined whether a document should be disclosed pursuant to Rule 45.

16Prior to the implementation of the new rules in 2017, the party seeking an order for the production of documents had to prove that the requested documents had a “semblance of relevance” to the issues in the appeals: Municipal Property Assessment Corp., Region No. 16 v. Champlain Properties Ltd., [2017] O.A.R.B.D. No. 84, para. 9 (“Champlain”).

17However, under Rule 45 of the new Rules, effective April 1, 2017, parties have an obligation to provide a copy of “all relevant documents in their possession, control or power to all other parties in the proceeding, except for privileged documents.” As noted in the aforementioned Board decision, “the standard is now “relevance” and not a “semblance of relevance see Champlain at p. 2.

18Relevance is determined in relation to whether a document is relevant to an issue in dispute. However, this is not the only criteria that the Board will consider when determining whether a document, which may be relevant, should be disclosed. Rule 45, itself, provides an exception for privileged documents. In addition, Rule 5 provides that “These Rules shall be applied in a manner proportionate to the importance and complexity of the issues in a proceeding and with a view to resolving appeals within the four year cycle’. Therefore, the requirement to disclose relevant documents must also be applied in a proportionate manner. Rule 45 does not include specific criteria to assess proportionality. However, the Board finds that the criteria in Rule 29.2.03(1) and (2) of the Rules of Civil Procedure (Ontario) are applicable, namely:

1. the time required for the party or other person to answer the question or produce the document would be unreasonable;

2. the expense associated with answering the question or producing the document would be unjustified;

3. requiring the party or other person to answer the question or produce the document would cause him or her undue prejudice;

4. requiring the party or other person to answer the question or produce the document would unduly interfere with the orderly progress of the action; and

5. the information or the document is readily available to the party requesting it from another source.

6. whether an order for disclosure would result in an excessive volume of documents required to be produced by the party or other person.

The Board observes that this is a non-exhaustive list. There may be other criteria identified on a case by case basis.

19In applying the above criteria, the Board must balance these considerations against relevancy, i.e. the degree to which it appears that the document is relevant to an issue in dispute, and, if so, how probative this evidence may be. The onus to establish that a document should be disclosed pursuant to Rule 45 rests with the party who requests the disclosure.

20In addition to the above, it should also be noted that Rule 45 only requires disclosure of documents in a party’s possession, control, or power. A party is not required to produce new information, or obtain documents that are not within its possession, control, or power.

21The Board now turns to the requests for disclosure made in the Appellants’ Motion. Counsel for the Appellants advised that the subject properties are two distribution centers located in Cornwall. At issue is the current value of the properties for the 2012 base year for the 2013 to 2016 assessment cycle. Of particular importance to the Appellants is MPAC’s application of economic obsolescence (“EO”) adjustments and/or market adjustment factors (“MAFs”) in the 2008 and 2016 cycles, but its failure to apply these kinds of adjustments on any distribution centre and warehouse over 500,000 sq. ft. in the 2012 assessment cycle. Among the documents requested are studies that led to the decision to remove the EO and MAF adjustments, and sales information from distribution centers in urban locations where the same adjustments were made. The Appellants stated: “The economic and/or market adjustment and/or sales studies and their application to the subject properties are meaningless without the sales details and related GRADS” (affidavit of Charles Johnstone, para. 13 of his affidavit sworn August 17, 2017).

22Counsel for MPAC argues that the issue to be determined by the Board at the hearing will be the current value of the subject property. MPAC submits that the model used by MPAC to determine the returned assessment is not the issue and, therefore, the material requested by the Appellants in request (a) is irrelevant to the main issue to be determined by the Board at the hearing.

23In support of this argument, MPAC relies on the Board’s decision DM 32084 (Cogan v. Municipal Property Assessment Corp., Region No. 3 (July 22, 2004 – unreported, at page 5): “It is not the particular model that is to be tested on appeal, rather it is whether the current value of the property is incorrect (subsection 40(1)(a) of the Act.”

24The Board does not accept MPAC’s characterization that the Appellants are seeking disclosure respecting the assessment model itself. The Appellants are clearly requesting data and information that the Appellants say they require to apply the assessment methodology the Appellants consider to be appropriate. Therefore, the Board does not accept MPAC’s submission.

25In paragraphs (b), (c), and (f) of their requests, the Appellants have requested a large number of documents respecting not only warehouses and distribution centres but also properties coded as “heavy industrial” and “standard industrial” that are located in the urban centers of Brampton, Mississauga, Vaughan, Pickering, Ajax, Milton and Toronto. It is not disputed that MPAC has provided such disclosure respecting properties that either MPAC or the Appellants have identified as comparable to the Subject Property. However, the Appellants rely on the opinion of their consultant, Mr. Johnstone (para. 8 of his affidavit sworn August 17, 2017), in asserting that:

It is probable that MPAC relied upon, or should have relied upon, “the available market data” in these municipalities as well as others in reaching its conclusions to remove EO. From MPAC’s response to Walmart’s production request it appears that other warehouse EO analysis files may exist. Given the broad assertion and the limited number of examples MPAC has provided in its responses, it is necessary to test whether the sales provided are representative of an entire class of properties that MPAC is asserting is distinct, and not just selected ones, and for municipalities in the Greater Toronto Area that are adjacent to Milton, Brampton, and Toronto, such as Mississauga and Vaughan.”

On the question of relevancy, MPAC, in response, relies on the opinion of its property valuation specialist, Joe Barbeito, who expresses his view that the requested disclosure is not in respect of comparable properties. On this basis, MPAC’s submits that such broad disclosure is not relevant. However, MPAC provided no further analysis in support of its assertion that disclosure should be made only in respect of comparable properties. MPAC also confirms that it does not have an Economic Analysis study.

26In summary, the parties hold opposing views respecting whether the requested “class” type of disclosure requested by the Appellants is relevant, but little information has been provided to assist the Board in determining which view is correct. In light of Mr. Johnstone’s opinion, the Board is not prepared to find that the requested disclosure is irrelevant. However, at best, the Board finds that, though it may be relevant, it is unclear how probative this evidence may be.

27The Board now turns to consider proportionality. Mr. Barbieto has indicated that the request encompasses sales of 442 properties, which, in MPAC’s estimation, would require approximately 25 to 45 minutes of staff time per property to respond, and that the GRADs to be produced will be several thousands of pages long. MPAC notes that it has relied on just six comparable properties from Cornwall and vicinity to demonstrate current value. In these circumstances, MPAC submits that it would be unfair and largely a waste of resources to require it to provide the extensive information sought by the Appellants respecting properties that MPAC, itself, is not relying on to establish current value.

28In addressing the question of proportionality, the Board first notes that MPAC’s decision to rely on a small number of properties to establish current value, does not mean that the Appellants are required to do the same. The Appellants’ disclosure request is not disproportionate for this reason. However, the onus rests with the Appellants to establish that the requested documents should be disclosed. Considering that the relevancy and probity of the requested documents is not entirely clear, and that responding to this request would require an extensive volume of documents which would take hundreds of hours to produce, the Board concludes that the use of time and resources required to fulfill the disclosure request is disproportionate to the relevance of the information to the subject property and the current appeals. Therefore, the Board denies the Appellants’ request for disclosure of the materials set out (b), (c) and (f).

29The Board now turns to the Appellants’ request for materials set out in (a) which is a general request for any documentation respecting the application of MAF’s or EO for large distribution centres. To some extent, this request covers the more detailed requests made in (b) through (f). MPAC has already confirmed that it does not have an EO study in its possession. For these reasons, the Board finds that no further documents are required to be disclosed in response to this request.

30The Appellants also seek a specific document referred to by the parties as the “Johnstone Document”. According to the supplementary affidavit of Charles Johnstone dated September 28, 2017, the document was produced by MPAC in November, 2016 in relation to a request made by appellants in another appeal proceeding dealing with a distribution centre located in Brampton. However, MPAC’s witness, Raymond Wang, in his response affidavit sworn September 27, 2017, indicates that MPAC did deliver to the Appellants the EO study on which the “Johnstone Document” was based. Consequently, it appears to the Board that MPAC has substantively satisfied this disclosure request. The Board also finds that the relevance of this document to the subject appeal is unclear. The Board is not persuaded by the Appellants’ argument that the Johnstone Document must be relevant and probative respecting the issues raised in the subject appeal simply because this document was disclosed in another appeal proceeding respecting a different distribution centre property where EO was in issue.

CONCLUSION

31In summary, based on the above analysis and findings, the Appellants’ motion is denied.