78 Spadina Avenue Inc. v. Municipal Property Assessment Corporation Region 09, 2021 CanLII 132949

Tribunals Ontario

Tribunaux décisionnels Ontario

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: December 16, 2021

FILE NO.: DM 174492

Assessed Person(s): 78 Spadina Avenue Inc.

Appellant(s): 78 Spadina Avenue Inc.

Respondent(s): Municipal Property Assessment Corporation Region 09

Respondent(s): City of Toronto

Property Location(s): 78 Spadina Avenue

Municipality(ies): City of Toronto

Roll Number(s): 1904-062-350-01700-0000

Appeal Number(s): 3246466, 3260023, 3295217, 3353245, 3401831 and 3442217

Taxation Year(s): 2017, 2018, 2019, 2020 and 2021

Hearing Event No.: 753465

Legislative Authority: Sections 32 and 40 of the Assessment Act, R.S.O. 1990, c. A.31

Parties

Representatives

78 Spadina Avenue Inc.

Paul Grosman

Municipal Property Assessment Corporation

Alyssa Gee

The Corporation of the City of Toronto

Paola Romano

REQUEST FOR: An Order for Disclosure

HEARD: October 15, 2021 in writing

ADJUDICATOR(S): Anthony LaRegina, Member

MOTION DECISION

OVERVIEW

178 Spadina Avenue Inc. (“Appellant”) filed appeals with the Assessment Review Board (“Board”) with respect to the 2016 current value assessment (“CVA”) for 78 Spadina Avenue (“Subject Property”) in the City of Toronto (“City”), Ontario. The Subject Property is currently identified as a property code 480, surface parking lot.

2The CVA was returned at $17,979,000 for the 2017 to 2021 taxation years. The Appellant is requesting a value of $5,614,000 based on the income approach to value.

The Motion

3The Municipal Property Assessment Corporation (“MPAC”), 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 the Appellant to disclose the following documents:

1. A complete copy of the Purchase and Sale Agreement of the Subject Property which sold on April 16, 2012 in a portfolio sale in which the total amount was $31,500,000.

2. The 2012 appraisal developed for the Subject Property.

3. Any other documents outside the appraisal that relate to the development potential of the Subject Property up to and including a financial feasibility analysis.

4. In the alternative to the above noted requests, if a Purchase and Sale Agreement, appraisal, or other documentation including a financial feasibility analysis does not exist, an order made under Rule 47 of the Board’s Rules requiring the Appellant to disclose, no later than 30 days after the order is issued, the following.

A sworn affidavit answering the following questions:

a) What portion of the portfolio sale price of $31,500,000 did the Subject Property sell for?

b) How was the sale price of the Subject Property determined between the parties?

c) Did any appraisals and/or opinions of value impact the determination of the sale price? If so, please explain how they impacted the sale price.

d) What was the potential development noted as for the Subject Property in the 2012 appraisal?

4The issue in this appeal is the 2016 CVA for the Subject Property. MPAC submits that the Appellant has failed to provide the disclosure requested, including information which, in MPAC’s submission, is integral to the income approach, which the Appellant has relied upon to value the property.

5In this motion MPAC argues that its request for the 2012 sale and appraisal of the Subject Property is both proportional and relevant to the 2016 CVA of the Subject Property and therefore requests that the Appellant disclose the supporting documents.

6Both the Appellant and the City did not respond to the motion filed by MPAC.

Result

7For the following reasons, MPAC’s motion is granted and the Appellant will produce within 30 days of the issuance date of this Decision the documentation requested at points 1, 2 and 3 in paragraph 3 above. In the event that these documents are not produced the Appellant is to provide reasons why these documents are not available for disclosure and a sworn affidavit as itemized at point 4 in paragraph 3 above addressing points 1, 2 and 3.

Procedural History

8In the original pleadings for reduction in assessed value, the Appellant asserted in its Statement of Issues (“SOI”) of April 12, 2021 that the Subject Property should be valued based on its current use, a parking lot, using the income approach to value. The Appellant also provided three comparable land sales as part of the direct comparison approach and concluded that the correct current value should be $5,614,000 based on the income approach.

9On July 23, 2021, MPAC sent a production request to the Appellant’s representative requesting the following documents:

1. a copy of any appraisal conducted for the Subject Property;

2. a complete copy of the Purchase and Sale Agreement for the portfolio sale in which the Subject Property sold on April 16, 2012;

3. details of any income cap rate study being relied upon;

4. documentation or information to support the expense and rental income data from the market-place; and

5. copies of any financial feasibility development studies from their client.

10On July 28, 2021, the Appellant’s representative replied to MPAC’s production request stating that the requested documents were either not relevant or did not exist.

11As of September 1, 2021, the Appellant did not provide MPAC with any additional information per MPAC’s request, which has led to this motion.

ANALYSIS

12The general principles and considerations regarding disclosure requests are as follows.

Test for Disclosure

13The Board’s Rules:

Proportionality

4. 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 assessment cycle.

Disclosure

45. All parties must serve an electronic copy 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.

14The 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:

18Relevance is determined in relation to whether a document is relevant to an issue in dispute. However, this is not the only criteria that the Board will consider when determining whether a document, which may be relevant, should be disclosed. Rule 45, itself, provides an exception for privileged documents. In addition, Rule 5 (now rule 4) provides that “These Rules shall be applied in a manner proportionate to the importance and complexity of the issues in a proceeding and with a view to resolving appeals within the four-year cycle’. Therefore, the requirement to disclose relevant documents must also be applied in a proportionate manner. Rule 45 does not include specific criteria to assess proportionality. However, the Board finds that the criteria in Rule 29.2.03(1) and (2) of the Rules of Civil Procedure (Ontario) are applicable, namely:

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

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

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

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

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

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

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

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

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

MPAC’S DISCLOSURE REQUESTS

Request 1 – A complete copy of the Purchase and Sale Agreement of the Subject Property which sold on April 16, 2012 in a portfolio sale in which the total amount was $31,500,000

MPAC’s Submissions

15The Appellant’s representative has stated that the sale was too far removed from the valuation date , was a portfolio sale of four properties and is therefore not relevant to these appeals.

16MPAC submits that when examining the distance of a sale from the valuation date, the Board has ruled in Municipal Property Assessment Corporation Region No. 15 v. Kommatas-Vastis, [2013] O.A.R.B.D. No. 86 (“Kommatas-Vastis”) at paragraph 33 that:

… a sale of a property long removed from the valuation date can be used to determine current value, when there is evidence as to what is happening in the real estate market between the sale date and the valuation day.

17It is MPAC’s position that the party requesting the documents should be provided all relevant information in order to determine whether it will adduce it into evidence. MPAC submits that the Purchase and Sale Agreement is relevant.

18MPAC submits that the Board Member in Kommatas-Vastis continued in paragraph 34 to reference the Massey Combines1 case in which the sale was 33 months after the valuation date and compared it to the present case [Kommatas-Vastis] in which the sale was 41.5 months before the valuation date. The Board found that the sale was still relevant despite being far removed. It is MPAC’s position that the same situation would apply in this case with the sale being 44 months away from the valuation date.

19MPAC submits that portfolio sales are not typically considered to be the best evidence but this does not mean they are not relevant to the appeals. In Soporific Investments Inc. v. Municipal Property Assessment Corp. Region 5, [2015] O.A.R.B.D. No. 290 (“Soporific”) the Board was presented with evidence of the sales of similar properties that were part of a portfolio sale. At paragraph 12, the Board agrees that a portfolio sale is not preferred but elected to put weight on the sale due to limited evidence. Further, at paragraph 14 the Board states: “… I echo my comments in that regard that a non-portfolio sale is better evidence, but this is some evidence of value.”

20It is MPAC’s position that the value the Subject Property sold for in the portfolio sale does provide evidence to be considered in these appeals. Further, it is MPAC’s position that the details in how this price was developed is also relevant to determining correct current value.

21MPAC submits that prior to disregarding a subject sale and the considerations that went into determining the price, MPAC must complete its due diligence and have all the facts and documentation in order to get a full picture of what transpired. The Purchase and Sale Agreement could reflect what portion of the overall sale price the Subject Property encompassed.

22MPAC further submits, the test is whether a document is relevant, not whether the document can be used or relied upon at a hearing. Therefore, it does not matter whether the Subject Property sale is arms-length, a portfolio sale, or otherwise.

23In support of its position, MPAC relies on Grundel Investments Inc. v Municipal Property Assessment Corporation, Region 14, 2021 CanLII 34340 (ON ARB) (“Grundel”), at paragraph 51, where the Board determined that the Purchase and Sale Agreement will provide details of the sale and is clearly relevant to MPAC’s position on how to determine current value and what that current value is.

24MPAC submits that the Appellant has raised the issue of current value and therefore it is MPAC’s position that the Purchase and Sale Agreement, along with the other information requested in paragraph 1 of the motion, is relevant to determining the current value of the Subject Property.

25MPAC submits that the relevance of the Purchase and Sale Agreement is further supported in Grundel at paragraph 49 where the City of Vaughan referred to section 3(a)(i) of the Board’s Disclosure Schedule followed by the Board confirming at paragraph 51 that a Purchase and Sale Agreement is clearly relevant to determine whether the sale of the subject property is the best indicator of value.

26MPAC also relies on Vaughan (City) v Municipal Property Assessment Corporation, Region 14, 2020 CanLII 44350 (ON ARB), at paragraphs 39 and 41, where the Board ordered the disclosure of a Purchase and Sale Agreement because it was determined to be a relevant document when establishing the current value.

27MPAC submits that the Purchase and Sale Agreement should be disclosed because it also identifies and confirms the following information: 1) address and legal description of the property; 2) parties involved in the transaction; 3) sale price; 4) negotiated sale date; 5) closing costs and dates; and 6) special terms or conditions.

28In support of the proportionality of its request MPAC relies upon Grundel at paragraph 58, where the Board found there is no evidence that it would take an inordinate amount of time to produce the Purchase and Sale Agreement, or that production would be costly.

29To further support its request, MPAC relies upon Grundel at paragraphs 59 and 60, where the Board ordered the disclosure of the Purchase and Sale Agreement because it was determined to be proportionate to the issues in dispute.

Request 2 – The 2012 appraisal developed for the Subject Property

MPAC’s Submissions

30According to MPAC, the Appellant’s representative has indicated that there was an appraisal for the Subject Property prepared in 2012, the year the Subject Property sold. The Appellant’s representative has not provided this appraisal as it is the Appellant’s position that this appraisal is not relevant (Exhibit B of the Affidavit of Sarah Moll).

31MPAC submits that the Board’s Disclosure Requirements for General and Summary Proceedings (“Disclosure Guideline”) shows the relevance of internal documents, studies, appraisals and/or opinions of value in Appendix A and B (“Disclosure Schedule”). Specifically, sections 3(a)ii, 3(a)iii, 6(a)xic, 6(a)xv, and 6(a)xvi list appraisals and studies as documents the Appellant should routinely disclose within its SOI.

32MPAC further submits that the Disclosure Schedule states that if property appraisals are prepared for a purpose other than property assessment purposes, only the existence of the appraisals must be confirmed. However, at paragraph 56 in Loblaws Properties Limited v Municipal Property Assessment Corporation, Region 09, 2021 CanLII 10167 (ON ARB) (“Loblaws”), the Board granted a request for the disclosure of appraisals prepared for other purposes. The Board referenced a decision on a previous request in Loblaws at paragraph 39: “Other parties are entitled to receive these documents in order to make their own determination respecting whether they may rely on [them].”

33MPAC points out that the Board also found it was proportionate to order the disclosure in that case.

34MPAC submits the Board furthered its explanation for granting the request for appraisals in paragraph 54 of Loblaws where it stated that the relevance of the information in an appraisal is:

… determined by looking at the relationship between the information provided in a requested document and the issue in dispute, not whether the information in the document will ultimately be admitted into evidence by the Board Member who conducts the hearing.

35MPAC states that, at paragraph 55 of Loblaws, the Board found that the requested appraisals pertained to the properties under appeal, and therefore might include information relevant to the issue in dispute irrespective of whether the appraisals would be relied upon when determining the current value. MPAC further observes that, in Loblaws, at paragraph 55, the Board found that the requesting party is entitled to review relevant information and determine whether they will seek to adduce all or part of it into evidence.

36MPAC argues that the Appellant has suggested that the current use of the Subject Property – a parking lot – is the use it should be valued at. It is MPAC’s position that the Subject Property is not reaching its Highest and Best Use. The 2012 appraisal could indicate the development potential for the Subject Property.

37In support of its request MPAC also relies on Claireville Holdings Limited v Municipal Property Assessment Corporation, Region 9, 2021 CanLII 26729 (ON ARB) (“Claireville”) at paragraph 69, where the Board confirms that MPAC has a statutory onus to prove the elements of a Highest and Best Use argument. It is MPAC’s position that the appraisal created for the Subject Property could be highly probative to make a determination on the Subject Property’s Highest and Best Use. This document could also speak to the Subject Property’s potential use apart from a parking lot.

38MPAC submits that both the Disclosure Schedule and Loblaws emphasize that appraisals are relevant to the appeals. In order to determine the correct current value of the Subject Property, the 2012 appraisal is a critical piece of evidence to ensure MPAC is meeting its onus of determining not only what the correct current value should be but also if the subject is meeting its Highest and Best Use.

39MPAC’s submits that the 2012 appraisal which exists for the Subject Property should be disclosed because it is relevant to the issue of current value raised by the Appellant. Further, whether it was created for financing or for sale transactions, it is of great probative value in resolving the appeals.

40Lastly, MPAC refers to paragraph 55 of Loblaws, where the Board found that the disclosure of appraisals is proportionate as it would not require significant time and resources to locate, copy and deliver the documents.

Request 3 – Any other documentation outside the appraisal that relates to the development potential of the Subject Property up to and including a financial feasibility analysis

MPAC’s Submissions

41MPAC submits that the Appellant has suggested that the current use of the Subject Property – a parking lot – is the use it should be valued at. It is MPAC’s position that the Subject Property is not reaching its Highest and Best Use. Additional documentation that outlines the development potential of the property including any financial feasibility analysis would indicate the development potential for the Subject Property.

42MPAC relies on Claireville at paragraph 69 where the Board confirms that MPAC:

has a statutory onus to prove the elements of a Highest and Best Use argument. It is MPAC’s position that these documents created for the subject property would be highly probative to make a determination on the subject property’s Highest and Best Use – particularly as it relates to the financial feasibility, physical possibility, and legal permissibility of the subject property. These documents would also speak to the subject property’s potential use apart from a parking lot.

43MPAC also relies on First Gulf Don Valley Ltd. v. Municipal Property Assessment Corp., Region No. 9, [2021] O.A.R.B.D. No. 73 (“First Gulf”), where the Board found at paragraph 42 that the request for financial feasibility studies was relevant to the issue of Highest and Best Use since financial feasibility is one of the prongs of the Highest and Best Use analysis.

44MPAC argues that in order to determine the correct current value of the Subject Property, additional documents that outline the development potential and any financial feasibility analysis are critical pieces of evidence to ensure MPAC is meeting its onus of determining not only what the correct current value should be but also if the subject is meeting its Highest and Best Use.

45MPAC submits that the additional documentation and any financial feasibility analysis should be disclosed because it is relevant to the issue of current value raised by the Appellant. Further, whether it was created for financing or for sale transactions, it is of great probative value in resolving the appeals.

46Lastly, MPAC relies on paragraph 45 of First Gulf, where the Board found that the disclosure of a financial feasibility analysis was proportionate to the issues in dispute. The Board further referenced paragraph 38(a)-(c) in that case to state that the other parties would not be prejudiced by having to disclose it.

Request 4 – A sworn affidavit answering the following questions

47In the case that the Purchase and Sale Agreement, internal studies and appraisals, and/or a financial feasibility analysis, as requested do not exist, MPAC makes this request in an attempt to resolve the outstanding issue of the correct 2016 CVA.

48MPAC has requested that the Appellant provide a sworn affidavit answering the following questions:

a) What portion of the portfolio sale price of $31,500,000 did the Subject Property sell for?

b) How was the sale price of the Subject Property determined between the parties?

c) Did any appraisals and/or opinions of value impact the determination of the sale price? If so, please explain how they impacted the sale price.

d) What was the potential development noted as for the Subject Property in the 2012 appraisal?

MPAC’s Submissions

49MPAC requests that in the alternative of receiving the information noted in paragraph 1 of the motion, if the information does not exist, a sworn affidavit from the Appellant answering MPAC’s questions on how the sale price was determined.

50MPAC submits that on page 7 of the Assessment Review Board’s Practice Direction on How to Interpret the Schedule of Events for the General Proceedings, under the heading of “Written Questions”, the direction sets out that in the alternative to seeking the delivery of documents a party may submit written questions to which another party can respond.

51Furthermore, it is MPAC’s position that answering questions in a sworn affidavit would be proportional to the issues and not prejudice the Appellant in any way.

BOARD’S ANALYSIS OF REQUESTS 1, 2, 3 and 4

52As noted above, the Appellant and the City have not made submissions in response to MPAC’s motion and therefore, the Board will rely on the submissions made by MPAC alone.

Disclosure Request 1

53The Board has typically held that the sale of the Subject Property is relevant and an indicator of the current value of the Subject Property.

54In this case, the sale occurred in April 2012 while the valuation date for the years under appeal is January 1, 2016. In this regard the Board agrees with Kommatas-Vastis that the 2012 sale can be used to determine current value of the Subject Property if there is evidence as to what happened in the real-estate market between 2012 and 2016.

55The Board agrees with MPAC that while the sale of the Subject Property is part of a portfolio sale, it does not mean that the 2012 sale is not relevant in establishing the current value of the subject property as of the January 1, 2016 valuation day. MPAC submitted the Soporific decision where the Member relied on the portfolio sale to establish the current value in the absence of any other evidence.

56In addition to the above reasons for disclosing the Agreement of Purchase and Sale the Board also agrees with MPAC that its disclosure may very well provide additional information on what portion of the total value is attributed to the Subject Property.

57Finally, in terms of the proportionality of the request, the Agreement of Purchase and Sale exists and is likely in the possession or within the control of the current owner and therefore, would require very little time or added cost to produce the document. The Board agrees with MPAC that the information would be of probative value to resolving this matter and given that the time and costs of disclosure are likely minimal this document should be disclosed.

58For all the above reasons the Board finds that the disclosure of the 2012 Agreement of Purchase and Sale of the Subject Property is relevant and the request to disclose is proportional and therefore, the Appellant is ordered to produce this document within 30 days of the issuance of this Decision.

Disclosure Request 2

59According to MPAC’s submissions and the Affidavit of Sara Moll the Appellant has indicated that an appraisal of the Subject Property exists and was conducted in 2012.

60The Appellant contends in its SOI that the valuation of the Subject Property should be based on its current use as a parking lot and has utilized the income approach to substantiate the valuation it is seeking of $5,614,000. MPAC submits that the Highest and Best Use of the property is not its current use.

61In the absence of any other submissions from the Appellant, the Board agrees with MPAC that the 2012 appraisal is relevant and may well assist in determining the current value of the Subject Property and provide information to establish the Highest and Best Use and the development potential of the Subject Property. Furthermore, the appraisal may also be helpful in determining what portion of the portfolio sale was attributed to the Subject Property. Finally, the Board agrees with the Loblaws decision that “the requesting party is entitled to review relevant information and determine whether they will seek to adduce all or part of it into evidence”.

62The Board finds that the 2012 appraisal of the Subject Property exists, likely in the control of the current owner and is relevant to establishing the current value of the Subject Property.

63With regards to proportionality, the Board has no submissions from the Appellant to address this issue. According to Sara Moll’s affidavit the document exists and therefore the amount of time and cost to disclose the document will be minimal in comparison to the magnitude of the reduction being sought by the Appellant. The Board therefore orders the disclosure of the 2012 appraisal of the Subject Property within 30 days of the release of this Decision.

Disclosure Request 3

64MPAC has requested any additional documentation outside of the appraisal relating to the development potential of the Subject Property, including financial feasibility studies that would assist in determining the Highest and Best Use, and therefore the valuation of the Subject Property as of 2016.

65In the absence of any submissions by the Appellant, the Board finds that all financial feasibility studies related to the use and valuation of the Subject Property and all other relevant documents in the possession of the Appellant that would assist in establishing the valuation of the Subject Property should be disclosed. The Board agrees with MPAC that the disclosure of these documents would be of great probative value in assisting to resolve these appeals by assisting MPAC’s determination of Highest and Best Use and therefore, the current value of the Subject Property.

66The Board orders the Appellant to disclose within 30 days of the issuance of this Decision any additional documentation outside of the appraisal that relates to the development potential of the Subject Property including any financial feasibility studies that would assist in determining the Highest and Best Use of the Subject Property.

Disclosure Request 4

67The Board has made a disposition with regards to Requests 1, 2 and 3 and expects that the Appellant will disclose these documents within the allotted 30-day period. Should the documents or information requested in points 1, 2 and 3 not be produced, the Board agrees with MPAC’s Request 4 and orders the Appellant to produce within 30 days reasons why it cannot produce Requests 1, 2 and 3 as well as a sworn affidavit answering the following questions:

a) What portion of the portfolio sale price of $31,500 did the Subject Property sell for?

b) How was the 2012 sale price of the Subject Property determined between the parties?

c) Did any appraisals and/or opinions of value impact the determination of the sale price? If so, explain how they impacted the sale price.

d) What was the potential development noted as for the Subject Property in the 2012 appraisal?

ORDER

68The Board Orders the disclosure of MPAC’s Requests 1, 2, and 3 within 30 days of the issuance of this Decision. In the event the Appellant asserts that these requests cannot be fulfilled, the Board orders the Appellant to provide reasons why these documents are not available for disclosure and a sworn affidavit as itemized in Disclosure Request 4 shall be made within 30 days of the issuance of this Decision.

Schedule of Events

69The due dates in the Schedule of Events are amended accordingly in relation to the issue date of this Decision. In the Schedule of Events additional disclosure was to be completed June 10, 2021. Based on the issue date of this Decision 5 months will be added to June 10, 2021. The Board’s Case Coordinator will adjust all other dates in the Schedule of Events accordingly and issue a revised Schedule of Events.