Toyota Motor Manufacturing Canada Inc. v. Municipal Property Assessment Corporation, 2020 CanLII 77938

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

ISSUE DATE: October 15, 2020 FILE NO.: DM 166292

Assessed Person(s): Toyota Motor Manufacturing Canada Inc. Appellant(s): Toyota Motor Manufacturing Canada Inc. Respondent(s): Municipal Property Assessment Corporation Respondent(s): The Corporation of the City of Cambridge

Property Location(s): 1055-1065 Fountain Street North Municipality(ies): City of Cambridge Roll Number(s): 3006-140-022-00700-0000 Appeal Number(s): 3037545, 3037546, 3089866, 3278367, 3278368, 3278370, 3157415, 3278369, 3278371, 3278373, 3278372, 3228872, 3311266, 3310940, 3364868 Taxation Year(s): 2013, 2014, 2015, 2016, 2017, 2018 and 2019 Hearing Event No.: 733773

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

Parties	Counsel
The Corporation of the City of Cambridge	Michael van Bodegom
Toyota Motor Manufacturing Canada Inc.	Jack A. Walker, Q.C., Jamie G. Walker and Lynne Ashton
Municipal Property Assessment Corporation	David Cowling and Mattison Chinneck

REQUEST FOR: An Order for Disclosure HEARD: July 22, 2020 in writing ADJUDICATOR(S): Maureen Helt, Acting Associate Chair

MOTION DECISION

OVERVIEW

1Toyota Motor Manufacturing Canada Inc. (“Toyota”), filed appeals with the Assessment Review Board (“Board”) with respect to the 2012 and 2016 current value assessments (“CVA”) for 1055-1065 Fountain Street North, Cambridge (the “Subject Property”). The Subject Property is a special purpose property.

2A settlement conference was held on September 23, 2019 at which time the issue of disclosure was discussed. A further settlement conference was held on February 19, 2020. The issue of disclosure was still in issue.

3On June 8, 2020 the Respondents, the Municipal Property Assessment Corporation (“MPAC”) and the Corporation of the City of Cambridge (“City”), filed this Motion for Disclosure.

Nature of Motion

4The Respondents filed a Notice of Motion seeking an Order for disclosure pursuant to Rule 45 of the Board’s Rules of Practice and Procedure (“Rules”), compelling Toyota to disclose, to legal counsel and consultants for the Respondents, the documents requested, in exchange for undertakings of confidentiality and non-disclosure, if required, within 10 days of the date of the Order. The information sought includes:

1. Cost data supporting Toyota’s Excess Capital Cost calculation;
2. Cost data supporting Toyota’s Excess Operating Cost calculation;
3. Complete operating cost data from the Cambridge Toyota plant; and
4. Complete operating cost data for the Woodstock Toyota plant.

5Toyota opposes the motion arguing the request is premature, the information sought is not relevant, too generic, or lacks specificity. Toyota further requests if an Order is made for full or partial disclosure, that the parties execute mutually agreeable undertakings of confidentiality and non-disclosure governing the use of these documents within seven days of the issuance of this Decision. The Respondents consent to Toyota’s request for the execution of undertakings and non-disclosure.

Result

6For the reasons that follow, the Respondents’ motion is granted in its entirety except for the request for the production of the expert report prepared in the General Motors (“GM”) litigation. The documents are ordered produced. The expert report that was prepared for GM, requires notice be given to GM and, that GM be given an opportunity to respond to the request, before the Board can determine if it should be produced. The Board further orders that the parties execute mutually agreeable undertakings of confidentiality and non-disclosure governing the use of these documents within seven days of the issuance of this Decision.

ANALYSIS

7The issue in this appeal is the 2012 and 2016 CVAs for the Subject Property. The Respondents submit that Toyota has failed to provide the disclosure requested, including information which, in their submission is integral to the cost approach, which Toyota has relied upon. It is the Respondents’ position that their request for disclosure is tailored narrowly to information and facts relevant to the application of the cost approach.

8In order to determine the question of disclosure it is necessary to first set out the test and general principles regarding disclosure.

Test for Disclosure

9The Board’s Rules:

Proportionality

Rule 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.

Disclosure

Rule 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, or documents that cannot be disclosed by law.

10The Board has explained the test in Walmart Canada Corporation and Target Canada Corporation v Municipal Property Assessment Corporation, Region 01, 2018 CanLII 67789 (ON ARB) at paragraphs 18-20:

[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.

11With respect to the test of relevance Toyota refers the Board to its decision in Municipal Property Assessment Corporation, Region No. 16 v Champlain Properties Limited, 2017 CanLII 38345 (ON ARB). In this decision, the Board determined that the historic onus of “semblance of relevance” had changed to “relevance” and the question became “were the documents sought relevant”.

12Toyota submits that the change from “semblance of relevance” to “relevance” is important and indicates a stricter test. In support of its position Toyota submits that in 449194 Ontario Ltd. v Municipal Assessment Property Corp., Re 2019 CarswellOnt 10710, 7 O.M.T.R. 175 at para. 6, the Board has acknowledged a more restrictive requirement for relevance and not the previous “semblance of relevance” test.

13In reviewing the case-law provided by the parties, and the language of Rule 45, the test for relevance really comes down to whether or not the production of documents requested relates to the issues in dispute. If so, they are relevant.

14In considering the Respondents’ request for disclosure, the Board finds that in order to be relevant there needs to be a clear nexus between the productions sought and the issues in dispute. Consistent with previous Board jurisprudence relevance is the primary consideration in a disclosure request.

15It is after relevance is determined that the question of proportionality is considered, in accordance with Rule 5, namely, whether the disclosure request is proportionate to the importance and complexity of the issues in a proceeding and with a view to resolving appeals within the four-year cycle. For example, if a party is being asked to provide thousands of pages of documents which are relevant to a minor issue in dispute, then it may not be proportional to ask for production. In making this determination it is necessary for the Board to consider the competing interests of non-disclosure and, excessive disclosure which may unreasonably increase the cost in a particular case and delay the final resolution of the matter on its merits. The objective of proportionality is intended to strike a balance between these competing issues.

Documents Requested

16The Respondents are requesting documents related to the excess capital costs, and excess operating costs of the Toyota plant as well as information related to complete operating cost data of the Woodstock and Cambridge plants.

17As set out above, the Subject Property is a special purpose property and the Respondents submit that the Board has previously relied largely on the cost approach in its valuation of other special purpose properties. In its response to the Respondents’ motion, Toyota raises three arguments in its opposition to this motion. These grounds are:

1. the motion is premature as much of the requested material is directly related to the conclusions of Toyota’s expert witnesses and will be produced in expert reports;
2. many of the requests are too generic, lack specificity or are irrelevant for the purposes of the present appeals; and,
3. Toyota has already disclosed a significant amount of the relevant materials that are within its power, possession and control.

18Each of these arguments is considered below in relation to the disclosure requests.

Issue 1 - Is the Motion premature? Disclosure Requests 1, 2, and 7 to 18

19Subsequent to the Settlement Conference held on September 23, 2019, Toyota provided to the Respondents a restricted appraisal report from Duff & Phelps (authored by Tony Wells) and a draft obsolescence report (authored by Mike Tracy of The Agile Group, “TAG”). A large number of the subsequent questions by the Respondents revolve around the positions taken in the draft reports of the experts.

Disclosure Requests 1 and 2

20Toyota alleges that much of the disclosure requested has already been provided or will be provided in its expert reports. In response to disclosure requests 1 and 2, the Respondents request cost data information with respect to Toyota’s excess capital cost calculation and excess operating cost allocation. There is no dispute that excess operating costs and excess capital costs are relevant in the determination of the issues in dispute in this case which the parties agree is the cost approach valuation of the subject property.

21Toyota submits that if the Respondents are referring to the excess capital costs contained in the restricted appraisal report dated December 3, 2019, prepared by the Appellant’s expert, Tony Wells, then the excess capital cost calculation has already been provided since for the purpose of his restricted appraisal report, Mr. Wells adopted MPAC’s excess capital cost calculation set out in MPAC’s responding statement of issues.

22However, if the Respondents are seeking Toyota’s final excess capital cost calculation, Toyota submits it will be set out in the final expert report of Tony Wells, which has yet to be completed.

23The Board finds that any documents in Toyota’s possession which are responsive to the disclosure requests made and are relevant to an issue in dispute must be produced and it is not up to Toyota to put off providing documents in its possession until a final expert report is delivered. As such, the Board finds Toyota’s argument about refusing to disclose on the basis of prematurity without merit.

24With respect to information in the possession of Toyota’s expert relating to a third party, in this case GM, I find that any information in the possession of Toyota’s expert that relates to the operating costs of the General Motors CAMI plant, the Board agrees with Toyota that it cannot release the study referenced by Toyota’s expert in the TAG report without first obtaining permission from GM.

25Therefore, Toyota is ordered to provide the information requested by the Respondents with respect to disclosure requests 1 and 2 related to the model replacement plant but for the production of any third party documents, which in this case includes the study prepared in the General Motors litigation.

Disclosure Requests 7 to 17

26Toyota takes the position that the TAG report was a preliminary document and provided to the Respondents on a without-prejudice basis for the purposes of the Settlement Conference. It had no numbers in it because, at the time the report was prepared, Mr. Tracy’s calculations had not been completed. Toyota therefore took the position on May 8, 2020 that the calculations would be in Mr. Tracy’s final expert report.

27The Respondents submit that if Toyota’s experts are in possession of the relevant documents that have been requested, Toyota should be able to produce those documents.

The response of the Appellant is confounding. If the TAG report was able to arrive at conclusions regarding higher annual operating costs, doing so is based on relevant information that is in the possession or control of the Appellant. Disclosure is an ongoing obligation. The complete information is sought, not only that which the Appellant’s expert has decided to rely upon.

28The Respondents submit that Toyota’s argument for not disclosing on the basis of prematurity is a non-response to the disclosure issue. If the documents are relevant and are in the possession, control or power of Toyota then they should be produced.

29Without full production of those documents, the Respondents submit they will be unable to determine if Toyota is relying on the entirety of the relevant documents in its possession, or only the portion of the documents that is being referred to in its expert reports.

30As set out in the Affidavit of Malcolm Stadig, an accredited appraiser with over 23 years experience in the field of property assessment, filed in support of the Respondents’ motion, at paragraphs 9, 10, 19, 20, 24 and 30:

[9] During the first Settlement Conference, the Appellant’s failure to provide pertinent materials related to the Cost Approach was raised. These materials relate largely to excess operating cost information and materials underlying statements made by the Appellant's experts. This information was clearly within the possession, control or power of the Appellant and was not disclosed.

[10] Based on discussions before the Board, the Appellant agreed to provide this information, including specific cost data which support the statements of the Appellant’s experts, by December 3, 2019, and the Settlement Conference was adjourned to February 19, 2020.

[19] The second Settlement Conference occurred by teleconference on February 19, 2020.

[20] The Board was informed that the disclosure was not provided. The Board agreed that an additional exchange of documents was appropriate to ensure that the best possible information would be before the Board.

[24] I have reviewed the information provided by the Appellant. In my professional opinion, the information that was provided by the Appellant is insufficient. The limited information that was provided is inadequate without providing further information. Further, the Appellant refused to provide the most crucial information requested.

[30] The need for these materials cannot be understated. The Excess Operating Costs and depreciation of the Subject Property are the primary points of contention between the parties. The disclosure of these materials would likely make the hearing of this appeal more stream-lined and efficient, and may even eliminate the need for this lengthy appeal entirely.

31The Board agrees with the position of the Respondents. The requested documents relate largely to excess operating cost information and materials underlying statements made by the Appellant's experts and as such should be disclosed on a timely basis. The Board also notes that as the Appellant’s expert report was originally expected to be produced in early July 2020, it is more likely than not that this material can be provided in a timely manner.

Disclosure Request 18

32The Respondents are asking Toyota to produce any data and information reviewed in determining that a 2% physical depreciation rate per year is appropriate.

33Toyota’s response is that for the purpose of the TAG report the estimated physical depreciation at the Subject Property, was based on a previous study done with respect to physical depreciation at the GM CAMI Plant, a plant of similar age to the Subject Property. Toyota argues that the ultimate determination of physical depreciation will be set out in the final expert report

34The Respondents argue that as Toyota submitted a 2% depreciation it is required to produce the factual basis and related information in support of this claim. The argument made by Toyota that the information will be provided with the expert report is not sufficient to satisfy a party’s obligation to produce documents as set out in Rule 45.

35As such, I do not find merit in Toyota’s refusal to produce the documents on the basis of prematurity and, order production of all documents in Toyota’s possession, control or power in response to disclosure requests 1, 2, 7 to 17 and 18 be produced.

Issue 2 - Are the Respondents’ requests too generic, lack specificity or irrelevant for the purposes of the present appeals? Disclosure Requests 3 and 6

36In considering the issue of the requests being too generic or lack of specificity, Toyota cites several previous Board decisions which stand for the proposition that a generic descriptor is insufficient to adequately particularize information being requested.

37In Tall and Municipal Property Assessment Corp., Region 09, Re 2019 Carswell Ont 8883, para. 26, the Board held that:

If the Board orders a party to provide disclosure, the order must provide a specific and detailed description of the document to be provided, in order that the party providing the document will know what it is required to provide. Therefore, the requesting party must provide a specific description of each requested document, not merely a generic description such as a document title.

Toyota also submitted additional cases to support the requirement for specificity.¹

38The Respondents dispute the claim that the requests are too generic and lack specificity. It is the Respondents’ submission that:

[f]or many of the productions requested, Toyota has made no disclosure at all. It is therefore unreasonable to expect MPAC and Cambridge to provide a specific list of exact documents they are seeking in this Motion. Put another way, since Toyota’s disclosure on the points in issue is so manifestly deficient, MPAC and Cambridge are unable to particularize the requested disclosure with any additional degree of specificity than what has already been provided.

39In addition to the necessary description requirement, Toyota also submits the onus is also upon the party bringing the motion to establish with respect to Rule 5 the proportionality of the request. Toyota then sets out the six criteria for determining proportionality are set out in Rule 29.2 2.03(1) and (2) of the Rules of Civil Procedure as follows:

1. Time to satisfy unreasonable;
2. Expense unjustified;
3. Undue prejudice;
4. Interference with the orderly progress of the action;
5. Information already available from another source; and
6. Excessive volume of documents.

40If any of the above are in existence with respect to the request for production, then the request should be rejected on the basis of proportionality.

41Despite setting out the considerations of proportionality, Toyota fails to advance any arguments in its submissions to support an argument that the disclosure requests are not proportional to the issues in dispute. For this reason, the issue of proportionality is not an issue in this Decision as the Board is not persuaded that the request for production should be denied on a bare claim of proportionality.

42I turn now to the specific requests Toyota claims lack specificity.

Disclosure Request 3

43Toyota submits that the request for “complete operating cost data” is too broad stating that, any actual operating costs Toyota’s experts are relying on were provided to MPAC and the City on May 8, 2020. The balance of Toyota’s excess capital cost calculation will be in Mike Tracy’s final expert report.

44In response the Respondents argue that they are entitled to the information sought submitting that “Toyota is required to provide the information sought in accordance with Rule 45.” Toyota is required to provide “all relevant documents in their possession, control or power to all other parties”.

45The Board finds that the request is in itself broad however, it is not so broad that the Appellant is unable to provide any documents in its possession relating to operating cost data that is relevant for the purpose of determining the valuation using the cost approach.

Disclosure Request 6

46The Respondents request the details of any internal awards won by the Appellant with respect to the Subject Property.

47Toyota submits that the original question asked was not for internal awards but rather awards won by the Subject Property. This question was answered by Toyota on May 8, 2020.

48The request for “any internal awards” is also overly board and lacks sufficient specificity.

49The Respondents submit that the request is not too broad. The request specifically seeks: “Details regarding awards for efficiency”. The Respondents submit that Toyota knows exactly where the Subject Property ranks amongst its global plants in this regard.

50In considering this request the Board finds that documents containing the details of any internal awards for efficiency are relevant in determining the degree of inefficiency claimed by Toyota and as such are ordered to be produced.

Are Disclosure Requests 4 and 5 Irrelevant?

51Toyota also argues that many of the documents are not relevant. Disclosure requests 4 and 5 are for the complete operating cost data for the Woodstock Toyota plant and an explanation of how much of Toyota business enterprise value is attributed to the real property associated with the modern equivalent assets.

52Toyota does not regard the Woodstock facility as being relevant. Toyota’s experts’ position is that this facility is not the modern equivalent plant. Any reference to the Woodstock facility in Toyota’s Reply and Amended Statement of Issues is only with respect to equity, not current value.

53Toyota submits that its experts are not using the Woodstock facility as the “modern equivalent” because at the very least it is not the newest Toyota Light Vehicle Assembly Plant (LVAP). Toyota’s use of Woodstock as similar property is for the purpose of equity, along with the other seven assembly plants so utilized.

54The Respondents submit that while Toyota’s experts may not be of the view that the Woodstock facility is not a “modern equivalent” this is not the opinion of the Respondents’ expert Malcolm Stadig (accredited appraiser) whose opinion is that the Toyota Woodstock facility is the most appropriate point of comparison for determining excess operating costs.

55With respect to the Woodstock plant, the Respondents submit that it is the most recently constructed automotive assembly plant in Ontario and serves as an appropriate comparable in determining excess operating costs.

56The Board is not persuaded by Toyota’s argument that because valuations were completed the requested disclosure is not relevant or necessary. That is not the test for relevance and is contrary to the purpose of disclosure which is to encourage early and complete disclosure of all documents relating to any issue in a proceeding in order to ensure the just most expeditious and least expensive determination of the appeal. If Toyota is in fact in possession of the information requested, then it should be produced as it is relevant.

57With respect to the business enterprise value as requested in disclosure request 5, Toyota argues this information does not exist by plant. Second, Toyota questions the relevance of this request. As it is not using anything relating to business enterprise value in its current value determination for the Subject Property.

58The Respondents believe it does exist and submits the relevance is clear, the business enterprise value is used to determine the appropriate allocation of depreciation. This is an accepted practice.

59The Board agrees with the Respondents that the business enterprise value is relevant in determining the appropriate allocation of depreciation which in turn is relevant to the valuation of the property. As such, should any documents exist which explain how much of the Toyota business enterprise value is attributed to the real property associated with the modern equivalent assets, then they are ordered to be produced.

Issue 3 - Disclosure of Significant Number of Documents Previously

60Toyota’s submission that it has already disclosed a significant amount of relevant materials in its power, possession and control does not serve as any form of shield in preventing full disclosure.

Summary of Findings

61The Board has considered each request and the submissions of the parties with respect to each request.

62Based on the findings set out above, the Board grants the Respondents’ motion in its entirety except for the production of the expert report prepared in the GM CAMI litigation, which is not public, without providing GM an opportunity to make submissions on the issue of disclosure.

ORDER

63Toyota is directed to provide the documents in response to the Respondent’s requests, as set out above, within 14 days of the issuance date of this Decision.

64The disclosure is conditional on legal counsel and consultants and representatives of Toyota and the Respondents executing mutually agreeable undertakings of confidentiality and non-disclosure governing the use of these documents within seven days of the issuance of this Decision.

65The due date in the Schedule of Events for delivery of expert witness reports is amended as are the other procedural dates which were suspended as a result of a Board direction issued to the parties on June 29, 2020 through the Expedited Board Direction Form process. The following dates are ordered:

1. November 6, 2020 - date for exchange of expert reports;
2. November 20, 2020 - date for replies to expert reports
3. November 27, 2020 - date for joint submission by the parties of a Hearing Management Plan;
4. December 4, 2020 - date for a scheduled pre-hearing teleconference
5. The date for the hearing, duration of the hearing, number and scheduling of witnesses and issues in dispute to be confirmed by the Hearing Management Plan. Parties agree that submissions at the conclusion of the hearing will be in writing.

Footnotes

1. 1Saltzman and Municipal Property Assessment Corp., Region 09, Re 2020 CarswellOnt 3519; Nunno and Municipal Property Assessment Corporation, Region 07, Re 2019 CarswellOnt 7433; Municipal Property Assessment Corp. and Kraft Heinz Canada ULC, Re 2020 CarswellOnt 8022.