Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: January 08, 2020

FILE NO.: DM 162992

Moving Party(ies): IKEA Properties Ltd

Respondent(s): City of Toronto

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 09

Property Location(s): 1475-1505 The Queensway

Municipality(ies): City of Toronto

Roll Number(s): 1919-014-060-01450-0000

Appeal Number(s): 3277493, 3277495, 3277497, 3244192, 3296312 and 3350358

Taxation Year(s): 2015, 2016, 2017, 2018 and 2019

Hearing Event No.: 725966

Legislative Authority: Rule 82 of the Assessment Review Board Rules of Practice and Procedure

Heard: November 15, 2019 by written submission

Parties	Counsel	Submissions
IKEA Properties Ltd	David Fleet	Moving Party
City of Toronto	Angus McKay	Received
MPAC	Karey Lunau	Received

DISPOSITION OF THE BOARD DELIVERED BY JEAN-PAUL PILON

DISPOSITION OF MOTION

1IKEA Properties Limited (“IKEA”) is the owner of a large, retail big box store (the “Subject Property”) in the west end of Toronto. It brings this motion in which it seeks the dismissal of appeals brought by the City of Toronto (the “Municipality”). Alternatively, it seeks a revised Schedule of Events that would postpone these appeals pending the resolution of other appeals before the Assessment Review Board (the “Board”) where what is known as the “MPAC Big Box Cost Valuation Methodology” described below has been applied, as well as an order for disclosure from the Municipality.

2For the reasons that follow, this motion is denied.

REASONS FOR DISPOSITION OF MOTION

Background

The Methodology

3The MPAC Big Box Cost Valuation Methodology (the “Methodology”) is described in IKEA’s notice of motion as “a collaborative effort involving a single big box store owner, MPAC and municipalities for 162 stores across Ontario, including a Municipal Working Group, plus additional appeals of other big box properties….to resolve outstanding and prospective assessment appeals” across Ontario.

4The Municipality and IKEA were not involved in the effort to create the Methodology, and the Board’s involvement in this process was limited to monitoring progress.

5Applying the Methodology, MPAC determined a 2016 current value assessment of $49,100,000 for the Subject Property. Satisfied with this, IKEA withdrew its appeals for the Subject Property in June, 2019.

6The Municipality also appealed MPAC’s assessment and the Board assigned a December 15, 2017 commencement date pursuant to Rule 33 of the Board’s Rules of Practice and Procedure (the “Rules”).

7In May, 2018, the Municipality served a statement of issues in which it sought to increase the assessment for the Subject Property from $49,100,000 to $66,921,000. IKEA served a statement of response in October, 2018 which essentially argued that the Municipality had not provided market data to support its position relating to its depreciation analysis.

The Municipality’s Expert Report

8In June, 2019, the Municipality served an amended statement of issues along with an expert report which challenged the Methodology’s depreciation analysis as it applied to the Subject Property. IKEA said that the expert report “contains critical data and opinion drawn from other expert valuations reports” which IKEA did not have. IKEA wrote that “the apparent original source (of this data) is financially sensitive and proprietary data and opinion concerning building costs and property sales considered in respect of the Prior Big Box Appeals.” These were appeals for pre-2017 taxation years that were resolved by the introduction of the Methodology.

9IKEA indicated that there had been no motion brought pursuant to section 53 of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”) to obtain that information from MPAC, and that without access to that information it could not fully defend against the appeals.

10IKEA’s motion material indicated that the Municipality acknowledged “an oversight” in its references, yet the Municipality insisted that IKEA comply with its deadline in the Schedule of Events to serve its expert report. The Municipality then served a revised report that omitted those contested references.

11IKEA argued that even with these amendments “which eliminated some but not all references to critical data and opinion drawn from other expert valuation reports and analysis,” and that the revised report “failed to resolve the substantive procedural prejudice inflicted by the City upon IKEA.”

12IKEA’s position was that the Municipality’s appeals were a collateral attack on the on the Methodology, which evolved in a process to which IKEA and the Municipality were not party. It argued that “it is prejudicial to IKEA and procedurally abusive for the City’s appeals to force IKEA to explain, advance or defend the evidence, analysis and position of the participants in the Prior Big Box Appeal” prior to other appeals in which those participants were involved.

MPAC

13MPAC opposed the relief requested in the motion saying the Board does not have the authority to dismiss appeals in these circumstances. It further argued the Board should not extend time to allow other appeals to be resolved by the Board first.

14MPAC did not oppose an extension of time in the Schedule of Events for the production of expert reports, but it opposed any request relating to disclosure under section 53 of the Act because the documents IKEA wanted were not specified in IKEA’s motion material.

15MPAC noted in its motion material that the Methodology included an analysis of depreciation referred to as the “accelerated depreciation analysis” to which the Municipality did not agree because the sales used in the analysis did not include properties in Toronto.

16On IKEA’s first submission that it would be unfair for this appeal to go before other appeals involving the Methodology, MPAC argued that the commencement date in these appeals was assigned by the Board and that IKEA was aware of, and responded to the Municipality’s depreciation analysis.

17On IKEA’s second submission that these appeals collaterally attack previous appeals, MPAC argued that it remained open for IKEA to contest the depreciation analysis in the Methodology in these appeals.

18On IKEA’s third submission that the Municipality’s experts are tainted, MPAC argued that the information in question should not have been included in the Municipality’s expert report even though it was not confidential and publicly available. MPAC pointed out that even though experts are often privy to information that is privileged, their role is to assist the Board and not the party who retained them. MPAC said that “the expert cannot rely on information that is subject to settlement privilege in forming their opinion, but their knowledge of the privileged information cannot give rise to ‘abuse of process’, nor can it disqualify the expert from providing opinion evidence on another matter.”

19Finally, MPAC argued that IKEA’s affiant Peter Drennan “does not explain why an expert cannot respond to the City’s report, which contains full particulars of the expert’s opinion and the data used to support the opinion.” On the other had, MPAC argued that it would be prejudiced by any delay because of the quantity of appeals it has to address in this assessment cycle.

The Municipality

20In its submission, the Municipality denied that its expert report contained the “sensitive financial information, including analysis, from an expert other than the authors of the City Report” or “inappropriate material” alleged by IKEA. It acknowledged that its expert was sent documents relating to Memoranda of Understanding between MPAC and Canadian Tire and Home Depot containing the depreciation analysis that was used in the Methodology, but not “sensitive financial documentation and information that is specific to any of the 47 big box retail properties that the City appeals including Canadian Tire and Home Depot properties.” It also submitted that “there is no prejudice to IKEA or MPAC arising from the City’s valuation report as the City’s expert did not rely on information, confidential or otherwise unrelated, to the Subject Property.” It did, however, acknowledge referencing those documents but noted that those references were removed in its revised report.

21The Municipality acknowledged that the appeals were, in fact, appeals of the Methodology but specifically its province-wide depreciation rate which, in its view, made “no sense when the economic and real estate market in Toronto is different from the economies of the comparables used in MPAC’s market extraction method.” It denied its appeals were a collateral attack but rather that the appeals challenge the province-wide depreciation rate applied to Toronto big box properties which resulted in an incorrect assessment to the Subject Property. The Municipality further took issue with IKEA’s characterization of the appeals as “abusive prosecution” when the Municipality simply complied with the Schedule of Events assigned to the appeals.

Analysis

The Information in Question

22IKEA’s notice of motion identified the information in question in its motion record as “certain proprietary and confidential information… which apparently includes the opinion of one or more other experts in an undisclosed expert report or analysis that pertains to the (Methodology), but to which IKEA has not had access.”

23This information is identified by tax manager Peter Drennan in IKEA’s affidavit sworn on October 21, 2019 as “critical data and opinion drawn from other expert valuation reports and analysis” not provided to IKEA by the Municipality or by MPAC. However, Ian Tilley, the Municipality’s appraiser who wrote the report which initially referenced the material in question, indicated in his affidavit sworn on October 23, 2019 that his opinion of current value “did not include these documents,” that their initial reference was an oversight and references to those documents were removed from his revised report. In any event, the City’s motion material says that information relied upon in its expert report is either available publicly or has been disclosed to IKEA.

Abuse of Process

24IKEA argued the Municipality’s conduct of the appeals amounted to an abuse of process and should result in the dismissal of the appeals.

25The Board’s jurisdiction to dismiss for abuse of process is set out in section 8.2(1)(a) of the Assessment Review Board Act, R.S.O. 1990, c. A.32 which provides that the Board can dismiss appeals if “the Board is of the opinion that the proceeding is frivolous or vexatious, is commenced in bad faith or is commenced only for the purpose of delay.” The Municipality’s conduct has been neither frivolous nor vexatious when its expert amended its report and where it otherwise complied with the Schedule of Events. There was no suggestion that the expert was in a conflict of interest or acted in bad faith. The evidence before the Board was that it was a mere oversight which was corrected and certainly not meeting the threshold required for the appeals to be dismissed.

Postponement

26The next remedy requested was that these appeals be postponed to allow other unspecified appeals involving the Methodology in Toronto to be heard first. MPAC correctly noted that “someone must go first” and it remains open to IKEA as well as the Municipality to challenge the Methodology. The Board, in the normal course, assigned a commencement date to the appeals and issued a Schedule of Events based on that commencement date as it does for every appeal filed and, outside of the reasons below, this motion presents no reason to deviate from it.

27Rule 82 provides that the Board will not alter any timeline set out in the Schedule of Events other than in exceptional circumstances, but IKEA raised no exceptional circumstances here. However, in view of the delay resulting from this motion and service of the Municipality’s amended report on October 7, 2019, the Board finds that it would be appropriate to allow further time for IKEA to serve its expert report.

Disclosure

28Finally, the third remedy requested is for documentary disclosure however no specific documents to be disclosed were listed in the motion material and therefore no disclosure is ordered.

CONCLUSION

29IKEA Properties Ltd.’s motion to dismiss the City of Toronto’s appeals, or alternatively extend the Schedule of Events pending resolution of other appeals, or in the further alternative require disclosure of documentation, is dismissed.

30In its current form, the Schedule of Events requires respondents to serve on all other parties’ expert reports on or before October 4, 2019. In view of the delay resulting from this motion, that date shall be extended to a date 16 weeks from the date of this decision, with dates following in the Schedule of Events to be adjusted accordingly.