2465702 Ontario Inc. v. Municipal Property Assessment Corporation, 2019 CanLII 101171

Assessment Review Board / Commission de révision de l’évaluation foncière

ISSUE DATE: October 25, 2019 FILE NO.: DM 160742

Moving Party(ies): 2465702 Ontario Inc. Municipal Property Assessment Corporation ("MPAC")

Respondent(s): 2465702 Ontario Inc. MPAC Region No. 02 The Ontario Lottery Gaming Corporation ("OLG") (as participant)

Respondent(s): Township of Leeds and the Thousand Islands

Property Location(s): 380 County Road 2

Municipality(ies): Township of Leeds and the Thousand Islands

Roll Number(s): 0812-812-020-04401-0000

Appeal Number(s): 3224359, 3288853 and 3345255

Taxation Year(s): 2017, 2018 and 2019

Hearing Event No.: 712367

Legislative Authority: Rule 45 of the Assessment Review Board Rules of Practice and Procedure

Heard: April 1, 2019 by written submission

APPEARANCES:

Parties	Counsel	Submissions
2465702 Ontario Inc.	Stephen Longo Jamie G. Walker	Moving Party
MPAC	Karey Lunau Jennifer A. Barlow	Moving Party
Township of Leeds and the Thousand Islands	John D. Simpson	Received
OLG	Mark R. Blidner	Received

DISPOSITION OF THE BOARD DELIVERED BY DIRK VANDERBENT, ANTHONY LaREGINA AND JEAN-PAUL PILON

INTRODUCTION

1The subject property is a casino located in Gananoque, Ontario ("the Casino").

2OLG is the former owner of the Casino. As part of OLG’s modernization initiative, OLG elected to partner with other persons who would own and operate gaming facilities, but OLG would continue its legally mandated role conducting and managing gaming at the properties. As part of this initiative, on January 11, 2016, OLG entered into a "Casino Operating and Services Agreement", and a "Transition and Asset Purchase Agreement" with Ontario Gaming East Limited Partnership ("Gaming East"), which is the parent company of 2465702 Ontario Inc. (the "Appellant"), the owner of the Casino. OLG continues to conduct and manage gaming at the Casino, but Gaming East owns and operates the facility. Under the terms of their agreements, OLG can re-assume ownership and operation of the Casino in certain circumstances.

3Pursuant to the provisions of the Assessment Act, R.S.O. 1990, c. A.31 (the "Act"), the assessment of land shall be based on its current value. The Act also provides that, for the 2017 to 2020 taxation years, MPAC is required to assess this value as of the valuation date, January 1, 2016 ("current value").

4MPAC has assessed the current value of the Casino at $87,000,000. The Appellant has filed appeals for the 2017 to 2019 taxation years with the Assessment Review Board (the "Board") pursuant to s. 40 of the Act. It is the Appellant’s position that MPAC’s assessment of current value is too high and that the correct current value is $25,300,000.

5In the course of exchanging disclosure pursuant to Rule 45 of the Board’s Rules of Practice and Procedure ("Rules"), MPAC disputes requests for disclosure made by the Appellant, and the Appellant disputes requests for disclosure made by MPAC. Both parties have instituted motions for disclosure, which the Board directed be heard in writing. This Motion Decision addresses these two Disclosure Motions. The Township of Leeds and the Thousand Islands (the "Municipality") has not filed a response to these Motions.

6OLG is not a statutory party to these appeals. However, OLG maintains that some of the disclosure requested is commercially sensitive information related to OLG’s operations. Therefore, OLG requests standing to make submissions on these Motions, and has been granted participant status to act as a respondent in these Disclosure Motions.

LEGISLATION AND RULES

7The Act:

1. current value" means, in relation to land, the amount of money the fee simple, if unencumbered, would realize if sold at arm’s length by a willing seller to a willing buyer.

19.(1) Assessment based on current value. – The assessment of land shall be based on its current value.

19.2(1) Valuation days – Subject to subsection (5), the day as of which land is valued for a taxation year is determined as follows:

3. For each subsequent period consisting of four consecutive taxation years, land is valued as of January 1 of the year preceding the first of those four taxation years.

44.(3) Same, 2009 and subsequent years. – For 2009 and subsequent taxation years, in determining the value at which any land shall be assessed, the Board shall,

(a) determine the current value of the land; and

(b) have reference to the value at which similar lands in the vicinity are assessed and adjust the assessment of the land to make it equitable with that of similar lands in the vicinity if such an adjustment would result in a reduction of the assessment of the land.

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.

Exception

(2) This section does not prevent disclosure of that information,

(a) to the assessment corporation or any authorized employee of the corporation; or

(b) by any person being examined as a witness in an assessment appeal or in a proceeding in court involving an assessment matter.

Information

(3) Subject to subsection (1), the assessment corporation shall make available to the following entities the information sufficient to meet their planning requirements:

1. Every municipality.

2. Every school board.

3. Every board of a local roads area established under the Local Roads Boards Act.

4. Every local services board established under the Northern Services Boards Act.

Purpose

(4) The information provided under subsection (3) shall not be used by the entities set out in that subsection for any other purpose.

Information for tenants

(4.1) Upon request, a tenant is entitled to receive the information maintained by the assessment corporation in respect of a property, or the portion of a property, leased by the tenant and to receive any other information about the property; the tenant is not entitled to receive the information referred to in subsection (1).

Disclosure

(5) Subject to subsection (1) and to any requirement of the Assessment Review Board concerning the disclosure of evidence, the assessment corporation may disclose any information acquired by it and may do so on such terms as it determines.

8The Board’s Rules:

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.

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.

Disclosure

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.

REASONS FOR DISPOSITION OF MOTION

Background

9The Appellant's Statement of Issues indicates that, under OLG’s modernization plan, casinos were divided into geographically determined areas, known as Gaming Bundles, to be sold to service providers following a competitive open procurement process based on tenders received. The Casino is located within the East Gaming Bundle and it is the first sale that OLG has transacted. In its Statement of Issues, the Appellant asserts:

As with the other gaming Bundles, the East Gaming Bundle is divided into three "zones". For example, the Subject Property is located in a "zone" that includes Gananoque, Leeds and the Thousand Islands, Kingston, and the surrounding areas. The right to operate gaming facilities is not tied to any specific real property. Rather, the selected operator may choose any feasible site in each of the three identified "zones". There is therefore no requirement that gaming continue at the Subject Property and no operating "licence" that runs with the specific real property in question. The "licence" runs with the geographic zone, which may change.

10OLG entered into a "Casino Operating and Services Agreement" and a "Transition and Asset Purchase Agreement" with the Appellant's parent company. In its Statement of Response, MPAC says that:

8. The sale did not include all interests in the land. It was part of a complex arrangement that transferred the operation of the Casino to Gaming East but left the management and conduct of the Casino with OLG.

9. The sale was not a market transaction. The sale price was fixed at OLG's book value (depreciated acquisition cost).

11Regarding the method for valuing the Casino, MPAC uses a discounted cash flow ("DCF") approach, where the estimated net income for a property is determined for a fixed period of years, and then each year's income is discounted back to its present value. MPAC asserts that this method is preferred over a capitalization of net income approach where a property's revenues are not stable or are not expected to remain stable; i.e. where a single year's income does not accurately reflect the property's anticipated income stream. MPAC further asserts that all income and expenses for the operation, conduct and management of the Casino must be included in the valuation.

12Regarding the discount rate, both MPAC and the Appellant have used the weighted average cost of capital approach ("WACC"), which MPAC describes in simple terms as being based on the cost of capital from equity and debt.

Issues in Dispute

13In its Statement of Issues, the Appellant maintains that the best indication of the correct current value is the sale price occurring, in this case, virtually on the valuation date. Regarding the East Gaming Bundle transaction, the Appellant further asserts:

19. The closing purchase price for all assets was $37,400,000. The allocated purchase price of the Subject Property was determined to be $25,300,000. Further, at least some of the acquisition price was allocated to intangible assets and non-assessable chattels. KPMG has done a Purchase Price Allocation for the East Bundle that further verifies the arm's length sale price of the Subject Property.

14In this regard, there is a dispute regarding the attribution of real versus intangible property for the purpose of determining value, more specifically, the inclusion of assets in the calculation of "Earnings Before Interest, Tax, Depreciation and Amortization" ("EBITDA"). In its Statement of Issues, the Appellant asserts:

15. In valuing real property, the contribution of the tangible and intangible real property must be extracted from the valuation. The Appellant believes that MPAC's DCF approach does not adequately extract these non-assessable items and wrongly values the "going concern" value of the Subject Property. In this sense, the value returned by MPAC does not conform to the statutory definition of current value in the Act.

In its Statement of Response, MPAC asserts that:

18. It appears that the appellant is relying on an asset allocation done by KPMG for its position that the Casino's EBITDA should be adjusted downward by 55% to remove nonassessable items. However, KPMG's allocation was completed for financial reporting purposes. It separates the working capital, which MPAC has not valued, and the value of the operator's fee from the real property. KPMG also included assessable items (interior finishes and leasehold improvements) in its calculation of personal property. KPMG's allocation is not relevant for purposes of determining the Casino's current value.

15Regarding the WACC, in its Statement of Issues the Appellant states:

24. The purchase price allocation done by KPMG references a WACC in the range of 12- 14.8%.

25. Based on the above, the Appellant states that the appropriate discount rate to be applied is 12.5%.

In its Statement of Response, MPAC asserts that:

The WACC calculation relied upon by the appellant was determined for purposes of arriving at a value for the appellant's operating agreement with OLG. It does not reflect the discount rate for the real property.

16The Appellant's Statement of Issues summarizes its final position:

32. Therefore, the Appellant states that the correct 2016 CVA of the Subject Property is $25,300,000 (the arm's length sale price at the valuation date) but is no greater than $32,580,000 (the corrected DCF valuation).

The Test to be Applied

17The test to be applied has been set out in Walmart Canada Corporation and Target Canada Corporation v Municipal Property Assessment Corporation, Region 01, 2018 CanLII 67789 (ON ARB).

[18] Relevance 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.

[19] In 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.

[20] In 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.

Disclosure Requests Made by the Appellant

18The Appellant has made requests for documents or classes of documents to be produced by MPAC, identified by numbers 1 through 21 (but there is no reference to "Request 3" in the Appellant's materials). The Appellant also requests documents from OLG, numbered 22 through 27. Where a request is not in dispute, or where the Board finds that a document has been provided or does not exist, it is unnecessary for the Board to make an order for disclosure. For this reason, the Board has not provided a detailed description of the requested documents in this Motion Decision.

19Respecting Requests 1, 9, 12, 13, and 21, MPAC, in its response to the Appellant's Motion, asserts that the requested documents do not exist. The Appellant, did not file a reply disputing MPAC's response. Therefore, MPAC's assertions are not disputed. Consequently, a Board order to disclose these documents is not required.

20Respecting Requests 2, 6, 7, 8, 15, 16, 17, and 18, production of these documents is not opposed by either MPAC or OLG. However, in its response to the Appellant's Motion, MPAC asserts that a "s. 53 Order" is required. Therefore, the Board directs MPAC to provide these requested documents pursuant to Rule 45, subject any term required by MPAC pursuant to s. 53.(5) of the Act including the execution of a non-disclosure/confidentiality agreement.

21Respecting Requests 5, 10, 11, 14, and 19, MPAC, in its response to the Appellant's Motion, asserts that the requested documents have been provided. The Appellant did not file a reply disputing MPAC's response. Therefore, the Board finds that the requested documents have been provided. Consequently, a Board order to disclose these documents is not required.

Request 4 – Submissions

22Request 4 is for complete cost valuations undertaken on the Sault Ste. Marie Casino. The Appellant maintains that this request is relevant and proportionate, and asserts that the procurement process for this property is complete. The Appellant indicates that MPAC has provided cost summaries, but not the complete cost valuation, including back up ACS valuation, building drawings, and land value analysis. The Appellant also asserts that, if MPAC did not undertake a DCF model, there must be income information on which the income stream was too difficult to stabilize. Therefore, the Appellant requests all income and expense materials contained in the file.

23The Appellant states that a single valuation approach is not enough to establish and test current value estimates. The Appellant maintains that it requires complete cost materials to "verify assessed value of this property for equity analysis". The Appellant further submits that it requires income and expense information to determine if a DCF income approach can be applied.

24In response, MPAC asserts that cost valuations for the Casino were served with MPAC’s Statement of Response. MPAC also advised that no income valuations were completed for the Sault Ste. Marie Casino. Therefore, MPAC submits that it has fully responded to this request, stating that these materials have previously been provided (cost valuations), or do not exist (income valuations).

25However, MPAC notes that, in its Disclosure Motion, the Appellant is now making an additional disclosure request for the complete cost valuation. Respecting this aspect of the Appellant's request, MPAC asserts that the Appellant "did not plead a cost value" in its Statement of Issues, and "has not plead equity in accordance with the requirements of Rule 38(2) of the Board’s Rules." Furthermore, MPAC indicates that it has described each property and the valuation methodology for each property in its Market Valuation Report previously provided to the Appellant and is publicly available.

26MPAC also relies on the Board’s decision in Bleeman Holdings Ltd. v. Municipal Property Assessment Corp., Region 9, [2017] O.A.R.B.D. No. 5, at paragraph 6. MPAC's submission is that this decision "indicates that the Board’s equity reference requires only a reasonable sample of overall assessed values, and sale values if available, to determine whether similar lands are assessed at a wholly different level of assessment than the level of sales." MPAC further states that in that decision, the Board held that more detailed information is not necessary for the Board to determine whether a correct current value is inequitable.

27MPAC submits that without any explanation as to how the Appellant proposes to calculate its equity adjustment, or why this additional information is required to do so, the Appellant’s request for the "backup ACS valuation, building drawings, and land analysis" over and above the cost valuations already provided does not relate to the issues in dispute, is not necessary, and is also disproportionate.

28Regarding the Appellant’s statement that it requires production of MPAC's valuations for every gaming property in Ontario to plead its position on equity, MPAC notes that there are 24 gaming properties (racetracks and casinos) in Ontario. MPAC states that it has described each property and its valuation methodology for each property in its Market Valuation Report. MPAC submits that, in the absence of any explanation as to how the Appellant proposes to calculate its equity adjustment, the Appellant's request for the valuations is a fishing expedition.

29OLG also objects to the requested disclosure. OLG explains that its modernization project includes a number of competitive procurement processes divided across the province. It says that its Request for Procurement Process documents ("RPP") contain detailed, commercially sensitive information belonging to OLG, which is made available only to qualifying proponents and none of which is in the public domain. OLG explains that it can create and maintain a level playing field for all qualified proponents by ensuring that they all receive the same information and protect against information inequality amongst proponents. OLG submits, therefore, that the release of information concerning the Windsor Bundle may prejudice OLG’s ability (or perceived ability) to create and maintain this level playing field, which may ultimately lead to challenges to the Windsor casino procurement process, as well as a loss of confidence within the bidding community as to the integrity of the Windsor Bundle procurement process. Based on these concerns, OLG objects to disclosure of the documents in Request 4 (other than documents related to the Casino).

Request 4 – Findings

30In order to address the submissions made by MPAC, the Board first turns to a review of the issues raised in the Appellant's Statement of Issues. Both this Statement of Issues, and MPAC's Statement of Response were included in the motion materials filed with the Board.

31Relevant excerpts from the Appellant's Statement of Issues are as follows:

EQUITY

35. The Appellant states that all casinos as identified on p. 14 of MPAC's Market Value Report … are similar real property to the Subject. The Appellant has requested the full valuations for all these similar real properties and the request has been denied at this stage.

36. Subject to disclosure of the valuation information for the identified similar real properties, the Appellant reserves it statutory right to raise equity following Responses received and eventual production of the requested information.

FACTS, LEGAL GROUNDS AND DOCUMENTS THE PARTY RELIES ON

40. Rule 38 requires that an Appellant identifies the facts, legal grounds and documents that it intends to rely on. While at a pleading stage in any litigation it is impossible to definitively identify all of these items the Appellant intends to rely on. However, if there are documents that the Appellant has relied upon or will rely upon, they will be disclosed. The Appellant may also rely on documents and information provided by MPAC and/or the municipality in the course of the production process. The legal grounds on which the Appellant relies are straightforward: the assessment is to reflect both an equitable value and one which is consistent with the price at which a willing seller would transact the property and the price at which it would be purchased.

CONTINUING DISCLOSURE AND RIGHT TO AMEND PLEADINGS

41. As the Statement of Issues aims to plead as many specific issues as possible, it is impossible to foresee all possible matters before complete disclosure has been provided by MPAC and other parties. The Appellant has made requests for additional disclosure but has not received fully comprehensive data from any parties as there is some confusion as to the "ongoing duty of disclosure".

42. Additionally, the Appellant hereby provides notice that the issues set out in this Statement of Issues are accurate as of the date of service. However, due to the detailed nature of the valuation exercise, the information is subject to change based on productions by MPAC and other parties in accordance with Weeks 63-66 and 101-104 of the Schedule of Events for General Proceedings. Furthermore, MPAC has not proved the prima facie correctness of the Assessment.

43. It is the position of the Appellant that a formal amendment to the Statement of Issues is not necessary for changes to the values attributed to the various aspects of the Appellant's approach insofar as the issues in dispute remain constant. The issues being that the value returned by MPAC is incorrect and/or inequitable.

32The Board first notes the Appellant's statement that "it reserves its statutory right to raise equity following responses received" is not consistent with the requirements of Rule 38(2), which requires that the Appellant set out the assessment requested, identification of the vicinity, identification of similar lands, how the party proposes to calculate the adjustment for equity, and a list of all facts, legal grounds and documents that the party relies on in support of its submission. The failure to do so will make it impossible to provide a responding party with a full and fair opportunity to provide its response. Furthermore, to the extent that para. 42 of the Statement of Issues suggests that issues may change upon receipt of "productions," this also is not consistent with Rule 38, or Rule 34 and the Schedule of Events for General Proceedings. An appellant is required to prepare its Statement of Issues within the timeline set out in the Schedule of Events. In this regard, the Board emphasizes that the Schedule of Events also provides an appellant with a right of reply to responses from other parties.

33Simply stated, the Appellant has referenced the issue of equitable reduction pursuant to s. 44(3) of the Act, but has indicated that it requires the requested disclosure in order to fully particularize its position and description of this issue. As the motion before the Board is for disclosure, the Board will address this matter by adjudicating the disclosure request, as opposed to ruling on whether the Appellant has complied with Rule 38.

34The onus rests on the Appellant, as the requesting party, to establish the relevance and proportionality of its disclosure request. For the following reasons, the Board finds that the Appellant has not done so.

35The Board notes that the Appellant's rationale to establish relevance is set out in para. 22 of the affidavit of the Appellant's valuation specialist, Tristan Bock, sworn February 20, 2019: "This information would be relevant in allowing me [sic Mr. Brock] to complete a comparison of all similar properties in the vicinity for purposes of my equity analysis." No further explanation of how the Appellant proposes to calculate the adjustment for equity is provided. However, this statement is further clarified by the Appellant's submission in support of Request 22 (made to OLG):

This information appears to be relied upon to determine the valuation to the MPAC DCF Model methodology and in most cases the valuation for the casinos. In order to undertake an equity analysis, the Appellant needs to determine the correct current value of each comparable casino and requires this information for this purpose.

36The Board first notes that these statements are conclusory, i.e. the Appellant asserts the requested documents are relevant simply because the Appellant says it requires them to conduct its equity analysis. There is no clear explanation of how the Appellant proposes to calculate the adjustment for equity. In this regard, the Board notes that, in determining whether there should be an equitable reduction of the correct current value of a subject property, s. 44.(3)(b) of the Act requires that the Board compare the correct current value of the Subject Property to the assessed value of other similar properties in the vicinity. The assessed value is the value returned by MPAC on the assessment roll, not a value determined by conducting a separate property valuation of "correct current value" for the proposed similar properties. Therefore, it is, at best, unclear, that the requested information is relevant. Alternatively, to the extent that it has some relevance, it is also unclear how probative this evidence would be, which in turn casts doubt on whether it would be proportionate to require this disclosure. For these reasons, the Board finds that the Appellant has failed to provide evidence to establish that Request 4 should be granted. The Board therefore denies Request 4.

37In making this determination, the Board has also considered OLG’s submissions. The Board accepts that OLG has legitimate concerns that the public release of confidential information would negatively impact its request for proposal process respecting the sale of other casinos. However, OLG’s submissions did not speak to whether OLG’s concerns could be addressed through the execution of confidentiality/non-disclosure agreements prohibiting the release of this information to anyone other than the parties to this appeal proceeding. In fact, OLG’s submission states that OLG would request, pursuant to Rule 43, that any of the documents to be filed at hearing event be treated as confidential and not form part of the public record. The Board finds that these measures would be sufficient to address the concern raised by OLG, and therefore, OLG’s concern, in and of itself, would not be a sufficient reason to deny these disclosure requests.

Request 20 – Submissions

38Request 20, made to MPAC, is for general research including newspaper and online articles, and reports concerning gaming.

39The Appellant states that MPAC's Statement of Response indicates that these documents may be relied on during the course of the appeals. The Appellant submits that if MPAC intends to rely to on such documents, that they should be disclosed.

40MPAC acknowledges that its Statement of Response indicates that it may rely on these documents. However, MPAC submits that the requested documents are publicly available, and that it would therefore be disproportionate to require MPAC to produce the documents. MPAC submits that it is also disproportionate to require the disclosure because experts are continually receiving and reviewing data to enhance their expertise and understanding of assessment appraisal.

Request 20 – Findings

41The Board first notes that Rule 38(1) also applies to Statements of Responses. Other than documents which only become available after a Statement of Issues or Responses have been served, a respondent is required to specify the documents that the respondent will, not may, rely on. Furthermore, Rule 38(1) requires identification of specific documents, not reference to general classes of documents. In addition, as provided in the Schedule of Events, all documents to be relied on at the main hearing, must be filed with the Board by the due date set out in the Schedule of Events.

42While the Board understands that the Appellant has requested the documents, because they have been generically referenced in MPAC's Statement of Response, the Board finds that the description of the requested documents lacks sufficient particularity for the Board to determine whether the requested documents are relevant to an issue in dispute. For this reason, Request 20 is denied.

Requests 22 to 27 made to OLG

43Request 22 is a request that OLG provide the complete 2016 current value assessment ("CVA") for each of the income valued casinos, including the inputs to the MPAC DCF Model.

44Requests 23 to 26 are duplicates of the Requests 15 to 18 made to MPAC.

45Request 27, made to OLG, is for any and all other financial information supplied to MPAC covering the time period 2008 – 2014.

Requests 22 to 27 – Findings

46The Board notes that OLG’s status in these Motions is only as a participant, who is entitled to make submissions in response to the Motions for Disclosure made by the Appellant and MPAC. OLG is not a party to this proceeding, and therefore, the Board has no jurisdiction to order OLG to disclose any documents. On this basis alone, the Board cannot grant Requests 22 to 27 made to OLG. Nevertheless, with respect to the information requested, the Board makes the following observations.

47Requests 23 to 26 made to OLG, duplicate Requests 15 to 18 made to MPAC. As the Board has already directed MPAC to provide these requested documents, an order requiring OLG to produce the documents is unnecessary.

48Regarding Request 22, the Appellant submits that it needs this information to determine the correct current value of each comparable casino and requires this information for this purpose. MPAC did not provide a response to this request and OLG opposes this request. The Board assumes that "CVA" refers to current value assessment and in this context, it is MPAC who conducts the CVA. If the Appellant is referring to some other assessment conducted by OLG, the Appellant has failed to adequately describe the documents being requested so that the Board can determine if the requested information is relevant to an issue in dispute. Due to this deficiency Request 22 is denied.

49Regarding Request 27: MPAC did not provide a response to this request. OLG, in its response, also did not specifically address this request. However, the Board notes that the Appellant has failed to adequately describe the documents being requested so that the Board can determine if the requested information is relevant to an issue in dispute. Due to this deficiency, Request 27 is denied.

Disclosure Requests Made by MPAC

50In its Motion, MPAC provided a list of documents numbered 1 through 19 requested from the Appellant, and a separate list of documents numbered 1 to 5 requested from the Municipality. The Board will first address the requests for documents from the Appellant.

51Regarding Requests 1, 4, 10, 11, 12, 13, 16, 18 and 19 MPAC indicates that it is satisfied with the Appellant's response. Consequently, it is unclear to the Board why these requests have been included in MPAC's motion as there is no dispute to be adjudicated.

52Regarding Request 17 (a) through (i), only 17(f) is in dispute.

Request 2 – Submissions

53MPAC's initial Request 2 is for any financial information provided by OLG to Gaming East including, but not limited to, the Casino’s total gaming revenue and the calculation of the operator’s fee for the Casino including any correspondence with OLG.

54In reply to the Appellant's response that the request is too broad and disproportionate, MPAC has narrowed its request to the financial information provided by OLG to the Appellant, specifically, details as to the gaming income and the calculation of the operator’s fee.

55MPAC submits that this information is required for the calculation of the appropriate income and expenses of the Casino, stating that this is essential for the proper calculation of the DCF valuation. MPAC maintains that financial information and compensation flowing between OLG and Gaming East forms the basis for accurate valuation of the correct current value of the Casino. It is MPAC’s position that a request for information provided by OLG to the Appellant, which details the gaming revenue and the operator’s fee, is not too broad and could be identified and provided by the Appellant. MPAC also asserts that these documents speak to the level of control between OLG and the Appellant in terms of responsibilities, obligations and liabilities, which impacts both the sale analysis and the licence to game analysis.

56The Appellant's response is only in regard to the initial request, i.e. that it is far too broad and disproportionate. The Appellant argues that without a more precise reference to the specific documents and information being requested, MPAC's request would result in an excessive volume of documents having to be produced by the Appellant. The Appellant also submits that the request is irrelevant, and that the Board lacks jurisdiction to order the production of privileged and/or confidential information.

57The Appellant also points out that MPAC’s request relates to information provided by OLG. The Appellant asserts that this information may not be disclosed without the consent of OLG. In support of this submission, the Appellant argues that a document is in the possession, power, or control of a party if that party is entitled to obtain the original copy of it and no adverse party is so entitled. The Appellant maintains that it does not have original copies, and has requested but not received them from OLG.

58The Appellant argues that MPAC has mischaracterized the Appellant's position regarding inclusion of the value of the gaming licence issued in accordance with Ontario Regulation 81/12 ("O. Reg. 81/12"), i.e. that the licence should not be included. The Appellant maintains that neither its Statement of Issues or Reply make any reference to O. Reg. 81/12. The Appellant submits, therefore, that any documents or information relating to the gaming licence are irrelevant to the issues in dispute. In reply to this response, MPAC points out that the Appellant takes the position that MPAC's DCF valuation does not adequately extract tangible and intangible real property. MPAC maintains that this additional value represents, at least in part, the licence to game. MPAC submits, therefore, that the question whether the licence to game runs with the real property and should be included in the value of the Casino, remains at issue between the parties.

59OLG’s response indicates that it does not oppose this disclosure request.

Request 2 – Findings

60The Board does not accept that a party is excused from disclosing a document under Rule 45 on the basis that the party only possesses a copy of the original document. The issue is whether the party received the copied document on specific and binding terms that it not be released to another person. Depending on the terms and circumstances, the Board may find that such a document is not in a party’s possession, power, or control. However, in this case, it is unnecessary for the Board to decide this question as OLG has not objected to the provision of these documents. Therefore, in this case, the Board finds that the fact that this document is a copy of an original and is not a bar to disclosure.

61Respecting the licence to game issue, the Board finds that MPAC has provided a reasonable explanation to indicate, at least in terms of the case MPAC would present at a hearing, that the licence to game may be a factor in determining the correct current value of the Casino. Obviously, at this stage in the proceeding, the Board does not need to determine the extent, if any, the licence to game factor will impact the determination of the correct current value of the Casino. This would be determined at the full hearing, should one be required. For purposes of this Motion, the Board need only determine whether the requested disclosure is relevant to an issue to be advanced by one of the parties. Clearly, it is relevant to MPAC’s case as described above.

62Regarding the Appellant's submission that the Board lacks the jurisdiction to order the production of privileged information, the Board notes that Rule 45 expressly provides for this. Therefore, the Appellant may decline to provide a document which it claims is privileged, and if the claim is disputed, the dispute can be adjudicated by the Board. However, nothing in the Appellant's submission indicates that the requested documents are privileged.

63Regarding the Appellant's further argument that the Board lacks jurisdiction to order production of confidential information, the Appellant points to other Board Rules (43, 59, 88 and 95) which the Appellant maintains "speak to the protection afforded to confidential documents and information during the course of hearings, settlement conferences and mediations." However, none of these Rules including Rule 45 provide that the requirement to disclose documents excludes confidential documents. Therefore, the Board does not accept this argument.

64Regarding the Appellant's submission that the request is too broad and disproportionate, the Board first notes that the Appellant has provided only this conclusory statement with no supporting analysis.

65The Board notes that the Appellant did not dispute that the requested financial information provided by OLG to Gaming East is relevant to the issue of the Casino's actual income or income potential, which MPAC has stated is necessary to perform an accurate analysis based on its proposed valuation method, i.e. a discounted cash flow analysis. Although the Appellant asserts that the request lacks specificity, the Board finds that the request is clear in that it relates to documents given by OLG to Gaming East, and that these are financial documents related to the Casino. While this alone may appear to be too broad, MPAC has also clearly specified the relevance of the requested documents, which adds further specificity to the nature of the documents being requested. MPAC has also narrowed its request, making it more specific. For these reasons, the Board does not accept the Appellant's argument that the request is too broad.

66Regarding the argument that the request is not proportionate, the Appellant has provided no supporting evidence regarding the volume of documents or any the resources required to provide the documents. The only information that the Board has before it is that the information was not so voluminous that it could not be provided by OLG to the Appellant in the first place.

67For the above reasons, the Board grants Request 2.

Request 3 – Submissions

68Request 3 is for business or strategic plan(s), financial projections for the Casino, the Zone or the Bundle including any revised or approved plans or projections.

69MPAC states that, according to the terms of the agreements between the Appellant and OLG (the Casino Operating Services Agreement and the Transition and Asset Purchase Agreement), the Appellant is required to submit an annual business plan to OLG each operating year, which is to include a proposed operating budget, business plan and marketing plan. MPAC also states that these plans include information about financial projections for the income of the Casino, as well as plans for revisions/expansions to the Casino. MPAC therefore submits that it requires this information in order to calculate the appropriate income and expenses of the Casino, which is essential for the proper calculation of the DCF valuation.

70The Appellant re-iterates its submission that MPAC's request is irrelevant, too broad and disproportionate, and that the Board lacks jurisdiction to order the production of privileged and/or confidential information. OLG does not oppose MPAC's request.

Request 3 – Findings

71The Board notes that, on its face, it appears that the requested documents would assist in determining cash flow, which pertains to MPAC's proposed DCF valuation methodology. While the Appellant asserts that this information is not relevant, the Appellant has not provided any specific explanation or analysis to support this assertion. For these reasons, the Board accepts that the requested documents are relevant.

72While the Appellant asserts that this disclosure request is too broad and disproportionate, the Appellant has not provided any specific supporting explanation or analysis to support this assertion.

73For these reasons, the Board grants Request 3.

Requests 5 and 6 – Submissions

74Request 5 is for the Casino Operating and Services Agreement. Request 6 is for the Transition and Asset Purchase Agreement.

75MPAC submits that these agreements speak to the licence to game issue, including the level of control and sharing of responsibilities, obligations and liabilities between the Appellant and OLG, which also impacts the value to be attributed to the Casino on that basis. It also speaks to the financial/compensation arrangements between OLG and the Appellant, as well as requirements for operating budgets and business/strategic plans which would impact the DCF calculation.

76The Appellant submits that these documents are not within the power, possession and control of the Appellant and cannot be disclosed without OLG’s consent. If OLG consents to disclosing these items, the Appellant has no objection to disclosing them to MPAC on the basis that MPAC’s requests are relevant and proportional.

77OLG opposes MPAC's requests. It re-iterates its submissions described above in respect of the Appellant's disclosure Requests 4 and 22.

Requests 5 and 6 – Findings

78The Board notes that the requested documents, as described by MPAC, would provide information that would impact the DCF calculation. Neither the Appellant nor OLG dispute that these documents are relevant. For these reasons, the Board accepts that the requested documents are relevant and should be disclosed

79Regarding OLG’s submissions, the Board applies its analysis and findings for the Appellant's disclosure Requests 4 and 22. As the Board has found that MPAC's Requests 5 and 6 should be granted, the Board directs that the parties enter into a mutually agreeable confidentiality/non-disclosure agreement governing the use of these documents, to address the concerns raised by OLG in its submissions. Any dispute in this regard may be returned before the Board for adjudication. If it becomes necessary to file the requested documents with the Board, the Board orders, pursuant to Rule 43, that they be treated as confidential, that they be sealed, and that they not form part of the public record.

Request 7 – Submissions

80MPAC's initial Request 7 is for all documents, including any reporting letters and reporting books concerning the transaction with OLG including the agreements already referenced in Requests 5 and 6, and the transfer of the Casino, including any documents concerning assets not transferred from OLG.

81In response, the Appellant provided its submission that MPAC's request is irrelevant, too broad and disproportionate, and that the Board lacks jurisdiction to order the production of privileged and/or confidential information.

82In reply, MPAC has narrowed its request to a copy of the index to the reporting letter/reporting book concerning the transaction with OLG, to allow MPAC to identify with more specificity any required productions.

83OLG does not oppose MPAC's request.

Request 7 – Findings

84Correspondence included in MPAC's Motion for Disclosure indicates that the Appellant, upon receipt of MPAC's initial request for all documents concerning the transaction with OLG, responded that the request was far too broad and could amount to thousands of pages.

85As MPAC has narrowed its request, it is unclear if the Appellant continues to oppose the request on the grounds that it is too broad and disproportionate. The Board notes that provision of the index will clarify if there are specific relevant documents, and, for this reason, the Board finds that the request for the index itself is relevant.

86For these reasons the Board grants the revised Request 7.

Request 8 – Submissions

87Request 8 is for (i) OLG’s Request for Proposal with respect to the Eastern Ontario Gaming Bundle / Zone / Gaming Bundle 2, and (ii) Gaming East’s submissions to OLG in response to OLG’s Request for Pre-qualification and its Request for Proposal.

88MPAC submits that both OLG’s Request for Proposal and the Appellant’s submissions in response speak to the licence to game issue, including the level of control and sharing of responsibilities, obligations and liabilities between the Appellant and OLG, which also impacts the value to be attributed to the Casino on that basis. MPAC says that it is also expected that the Appellant’s submissions in response to the Request for Proposal would include the business plan and revenue projections which would inform the proper calculation of the DCF valuation.

89The Appellant asserts that OLG’s Request for Proposal is not within the power, possession and control of the Appellant and cannot be disclosed without OLG’s consent. The Appellant states that, if OLG consents to disclosure, the Appellant does not object to disclosing it.

90The Appellant asserts that Gaming East’s submissions are not within the power, possession and control of the Appellant and cannot be disclosed without OLG’s consent. The Appellant states that, if OLG consents to disclosure, the Appellant does not object to disclosing the index to the submissions.

91In reply, MPAC asserts that the requested documents can reasonably be expected to be in the power, possession or control of the Appellant as owner of the Casino and as a subsidiary of Gaming East. These requests are relevant and proportional to the litigation, and ought to be disclosed, either by the Appellant or the OLG, as the case may be.

92OLG opposes MPAC's requests. It re-iterates its submissions described above in respect of the Appellant's disclosure Requests 4 and 22.

Request 8 – Findings

93The submissions of the Appellant and MPAC are not entirely clear. The Appellant's submits that the documents are not within its possession, power, and control, yet the Appellant agrees to the Request for Proposal and the index to Gaming East’s submissions in response to the Request for Proposal, which suggests that the documents are in the physical possession of the Appellant. In its reply to the Appellant's response, MPAC summarizes the Appellant's position as "not within the power, possession or control of the Appellant, but agreeable to disclosure with OLG’s consent." However, the Appellant has only agreed to disclosing the index to the submissions.

94Given the nature of the documents requested, the Board concludes that the documents are in the physical possession of the Appellant or within its power and control as a subsidiary of Gaming East. Therefore, the Appellant's objection to disclosure is that it requires OLG consent to release the documents. As OLG has objected to the disclosure, it is necessary for the Board to adjudicate this dispute.

95The Board first notes that neither the Appellant or OLG dispute the relevance of the requested documents, nor do they assert the request is too broad or disproportionate. The only substantive objections raised are in the submissions made by OLG which have already been addressed by the Board under the Appellant's Requests 4 and 22. For these reasons, the Board grants MPAC's request, subject to the Board’s direction that the parties enter into a mutually agreeable confidentiality/non-disclosure agreement governing the use of these documents, to address the concerns raised by OLG in its submissions. Any dispute in this regard may be returned before the Board for adjudication. If it becomes necessary to file these documents with the Board, the Board orders, pursuant to Rule 43, that they be treated as confidential, be sealed, and not form part of the public record.

96Regarding the Appellant's position that only the index should be disclosed, the Board has not narrowed its finding to only the index. However, the Board directs that the Appellant may first provide MPAC with the index, so that MPAC can identify the documents it wishes to have disclosed.

Request 9 – Submissions

97MPAC’s initial Request 9 is for any internal documents, including documents or information received from third party advisors and the Appellant’s internal working papers, regarding Gaming East’s response to OLG’s request for proposal for the Eastern Gaming Bundle.

98The Appellant submits that the request is too broad and disproportionate and/or irrelevant.

99In its reply to the Appellant's response, MPAC has revised this request to any "internal records supporting the amount of the Appellant's bid."

100MPAC submits that this documentation will speak to the licence to game issue, including the level of control and sharing of responsibilities, obligations and liabilities between the Appellant and OLG, which also impacts the value to be attributed to the Casino on that basis. In addition, it is also expected to include information speaking to the anticipated revenues of the Casino, which would inform the proper calculation of the DCF valuation.

101OLG does not oppose this request.

Request 9 – Findings

102In reviewing MPAC's submission, the Board first finds that MPAC's revised request appears to be less specific that the initial version. The Board also finds that MPAC's submission is speculative in that it provides no supporting explanation as to how such documentation would relate to the licence to game issue. Similarly, MPAC states that it expects the documents will include information "speaking to" anticipated revenues, but does not explain the basis for such expectation, precisely how this information would be relevant, or how probative such forecasts might be.

103The Board also observes that the Appellant's preparation for submitting its bid in the request for proposal process does not govern the actual transaction entered into by the parties. That transaction is governed by the agreements the parties have executed, which are being disclosed. It is this transaction which is relevant to valuation issues in this appeal. Absent a more detailed explanation, the Board finds that it is, at best, unclear whether the requested documents would be relevant to the valuation issues in dispute, or to the extent that they are relevant, that they would provide probative evidence. Given this lack of clarity, and the lack of specificity in the request itself, which only generically refers to "internal records," the Board finds that this request is not proportionate. For these reasons, MPAC's request is denied.

Request 14 – Submissions

104Request 14 is for (i) any operating manuals, agreements, policies or procedures concerning the operation, management or conduct of the Casino, and (ii) any correspondence or discussions with OLG concerning the contents of such documents.

105MPAC submits that this documentation will speak to the licence to game issue, including the level of control and sharing of responsibilities, obligations and liabilities between the Appellant and OLG, which also impacts the value to be attributed to the Casino on that basis.

106The Appellant submits that the request is too broad and disproportionate and/or irrelevant.

107OLG opposes MPAC's requests. It re-iterates its submissions described above in respect of the Appellant's disclosure Requests 4 and 22.

Request 14 – Findings

108The Appellant has not disputed that the documents requested in part (i) would pertain to the sharing of responsibilities and liabilities between the Applicant and OLG. These arrangements may affect the sharing of costs, which would be relevant information to be considered when valuing the Casino. The Appellant has provided no detailed explanation in support of its assertion that the requested is irrelevant. For these reasons, the Board accepts that part (i) of the requested is relevant. As the Appellant has not provided an explanation of why disclosure of these documents would be disproportionate, the Board finds that the request is proportionate.

109The Board finds that relevance of part (ii) of the request is far less clear. The relationship between the Appellant and OLG is governed by the operating manuals, agreement, and policy/procedure documents. The Board finds that MPAC’s explanation is insufficient to indicate that how the requested correspondence or discussions would alter these governing documents. Therefore, the Board finds that the relevance of this request is unclear. To the extent that it is relevant, the Board finds that it is unclear how probative the information in the correspondence/discussions would be. Therefore, the Board finds that it would not be proportionate to order this disclosure. In making this finding, the Board directs that disclosure of the documents in part (i) of the request must include details of any amendments made to any of these documents.

110OLG does not dispute the relevance of the requested documents, nor does it assert the request is too broad or disproportionate. The only objections raised by OLG are the submissions made by OLG which have already been addressed by the Board under the Appellant's Requests 4 and 22.

111For these reasons, the Board grants part (i) of MPAC's request, subject to the Board’s direction that the parties enter into a mutually agreeable confidentiality/non-disclosure agreement governing the use of these documents to address the concerns raised by OLG in its submissions. Any dispute in this regard may be returned before the Board for adjudication. If it becomes necessary to file these agreements with the Board, the Board orders, pursuant to Rule 43, that they be treated as confidential, be sealed, and not form part of the public record.

Request 15 – Submissions

112Request 15 is for any documents with respect to any alleged defaults or breaches of any agreement, operating manual or procedure concerning the operation, management or conduct of the Casino.

113MPAC submits that this documentation will speak to the licence to game issue, including the level of control and sharing of responsibilities, obligations and liabilities between the Appellant and OLG, which also impacts the value to be attributed to the Casino on that basis.

114The Appellant submits that the request is too broad and disproportionate and/or irrelevant. OLG does not oppose the request.

Request 15 – Findings

115The Board observes that MPAC has not explained how any defaults or breaches would affect operations or the ongoing operational agreements or operational manuals and procedures that govern the operations. It is the agreements and operational and procedure manuals which govern the relationship between OLG and the Appellant, and the Board has granted the request that these be disclosed. Absent a more detailed and specific explanation, the Board finds that it is, at best, unclear how the requested documents would have an impact on the Casino’s value as MPAC has alleged. As such, the Board finds that MPAC has failed to meet its burden to establish that the requested documents are relevant. Consequently, the Board denies this request.

Request 17(f) – Submissions

116Request 17(f) is for valuation of certain tangible assets of OLG as of September 30, 2014 prepared by Deloitte LLP as of October 22, 2014 (the "Deloitte Report").

117The materials in the Motion indicates that an accounting firm, KPMG, prepared a document described as a "Purchase Price Allocation Report". The Appellant's Motion materials indicated that this document is "a Purchase Price Allocation for the East Bundle that further verifies the arm’s length sale price of the Subject Property." The Appellant has disclosed the KPMG document. MPAC states that the Appellant is relying on the asset allocation done by KPMG as support for the Appellant's position that "Earnings Before Interest, Tax, and Depreciation" should be adjusted downward. The Motion materials indicate that the Deloitte Report is attached to the KPMG document.

118The Appellant states that it does not oppose disclosure of this document, but the Appellant requires the consent of both OLG and Deloitte LLP to release this document. OLG has not opposed this request.

Request 17(f) – Findings

119Based on the submissions, neither the Appellant or OLG are opposed to the request. The only outstanding question is whether the consent of Deloitte LLP is required as well. The Appellant has provided no explanation why the consent of Deloitte LLP is required. It may be that the Deloitte Report contains a provision that its consent is required before the report can be released to other persons. However, on the evidence before the Board in these Motions, there is no clear evidence that the consent of Deloitte LLP is required, or if it is, that OLG would be unable to secure Deloitte’s consent. As OLG is a participant in this motion, the Board directs that OLG make its best efforts to obtain the consent of Deloitte LLP if such consent is required. Should OLG be unable to obtain Deloitte’s consent, the parties are directed to apply to the Board for further directions.

MPAC's Requests for Disclosure from the Municipality

120MPAC has made five requests from the Municipality:

(1) PILT / tax and MCA payments for the Casino for 2014, 2015, 2016 and 2017 and for each subsequent year until the completion of this litigation;

(2) All documents concerning the permitted land uses for the Casino including Official Plan, zoning, sites specific zoning;

(3) Any documents concerning the compliance with O. Reg. 347/00 and / or O. Reg. 81/12 with respect to the determination of the Municipality as an ‘eligible’ municipality and the authorization for gaming at the Casino;

(4) Any building or site plans for the Casino; and

(5) Any other documents on which the municipality intends to rely.

121The Municipality has not filed a response to MPAC's motion, but it has filed a Statement of Response in this appeal proceeding in which it indicates that:

(1) it does not intend to actively participate in this proceeding;

(2) it is not aware of any relevant disclosure in its possession at this time; and

(3) it will comply with any specific requests for relevant disclosure under Rule 45.

122The Appellant provided no submissions in response to MPAC requests, and, as such, the Appellant has not opposed the requests. The Municipality has not filed any response to this Motion, and, as such, has not disputed the relevance of these requests. However, MPAC has stated that that the requests have been made to the Municipality and no response has been received. This has not been contested by the Municipality. Therefore, the Board finds that, even though the Municipality says in its Statement of Response that it will comply with specific disclosure requests for relevant disclosure under Rule 45, its actions indicate otherwise. Therefore, the Board finds that the Municipality’s failure to respond constitutes no opposition to MPAC’s requests. For these reasons, the Board grants MPAC’s requests. The Board also orders the Municipality to respond to these requests in accordance with the procedural direction set out below.

Procedural Directions

123Regarding MPAC's disclosure requests from the Municipality, the Board directs the Municipality to provide the requested documents, or confirm that it does not have the requested information in its possession, within 30 days of the issuance of this Motion Decision.

124Regarding the Deloitte Report, the Board directs that, within 30 days of the issuance of this Motion Decision, OLG is to determine if Deloitte LLP’s consent to release is required, and if so, to use its best efforts to obtain this consent.

125Regarding all other disclosure requests that are unopposed, or are granted by the Board in this Motion Decision, the Board directs that the disclosing party must provide the requested documents within 30 days of the date of issuance of this Motion Decision.

126The Board directs that the due date for filing the Mandatory Meeting Form with the Board under the Schedule of Events for this appeal proceeding be amended to a date that is 120 days from the date of issuance of this Motion Decision, and that all subsequent due dates under the Schedule of Events be adjusted accordingly.