Tribunals Ontario

Assessment Review Board

Issue Date: March 05, 2021 File No.: DM 168597 Assessed Person(s): Ira Needles Developments Limited Appellant(s): Liquor Control Board of Ontario Respondent(s): Municipal Property Assessment Corporation Region 21 Respondent(s): City of Kitchener Property Location(s): 235 Ira Needles Boulevard Municipality(ies): City of Kitchener Roll Number(s): 3012-060-012-05302-0000 Appeal Number(s): 3239412, 3311614, 3364547 and 3408977 Taxation Year(s): 2017, 2018, 2019 and 2020 Hearing Event No.: 741073 Legislative Authority: Rule 41 of the Assessment Review Board’s Rules of Practice and Procedure

Appearances

Parties	Representative
Ira Needles Development Limited and Liquor Control Board of Ontario	Submissions not received
Municipal Property Assessment Corporation	Damian Bernacik and Saman Ghajar-Davalu
City of Kitchener	Greg Demacio

Request For: Motion to Strike Portions of an Expert Report Heard: February 18, 2021 in writing Adjudicator(s): Jean-Paul Pilon, Member

Motion Decision

Overview

1The Liquor Control Board of Ontario (the “LCBO”) is a tenant of a shopping centre at 235 Ira Needles Boulevard in the City of Kitchener. The LCBO appealed its current value assessment for the 2017 taxation year, and further appeals for the 2018, 2019 and 2020 taxation years were deemed pursuant to section 40(26) of the Assessment Act, R.S.O. 1990, c. A. 31 (the “Act”).

2The general stream Schedule of Events assigned to these appeals pursuant to Rule 34 of the Assessment Review Board’s (the “Board”) Rules of Practice and Procedure (the “Rules”) set out the steps that were to be followed by the parties in the course of these appeals. As part of that process, the parties were granted an extended Schedule of Events so that they could obtain expert reports. The dispute addressed in this motion arose from the contents of the City of Kitchener’s (the “Municipality”) expert report.

3In this motion, the Municipal Property Assessment Corporation (“MPAC”) requested an order striking portions of the Municipality’s expert report which raised issues that were not in the Municipality’s Statement of Response. Alternatively, MPAC requested an order restricting the Municipality from raising those issues that were not set out in its Statement of Response at any hearing events. In the further alternative, MPAC requested sufficient time to amend its Statement of Response and time to submit a further report to address those additional issues.

4For its part, the Municipality argued that MPAC lacked standing to bring this motion and that the Board lacked the authority to strike out portions of an expert report. The Municipality further argued that MPAC served its Statement of Response late and effectively had no pleadings in the appeals.

Results

5For the reasons following, the Board first finds that MPAC is a “party” to the appeals as the term is defined in the Rules, and that it was therefore entitled to bring this motion. The Board then grants MPAC’s motion because, in these circumstances, the only live issue in these appeals is fair market rent (“FMR”).

6However, the Board also determines in this decision that MPAC’s Statement of Response was not served in accordance with the Rules because it was served late, and that MPAC did not allege any exceptional circumstances pursuant to Rule 82 to justify the alteration of any timelines.

7As a result, the Board finds that MPAC has no pleadings in these appeals and that it cannot file its Statement of Response or its expert report. The Board also finds that MPAC is deemed not to oppose any future settlement in the proceeding pursuant to Rule 39.

Factual Background

8The Schedule of Events assigned to these appeals had a commencement date of December 17, 2018. Pursuant to that Schedule of Events, the LCBO served its Statement of Issues on MPAC and the Municipality on May 14, 2019.

9Statements of Response were due on November 4, 2019. The Municipality served its Statement of Response on October 29, 2019, but MPAC served its Statement of Response on July 17, 2020 and then amended it on July 22, 2020.

10At the outset, the parties disagreed on a material question of fact on the pleadings that is addressed here. In its notice of motion, MPAC wrote that its Statement of Response only addressed the FMR applied to the LCBO unit because that was the only issue raised in the LCBO’s Statement of Issues and the Municipality’s Statement of Response. In its response to the motion, the Municipality wrote that “nowhere…. does the Appellant (LCBO) indicate that the only issue of concern is FMR.”

11The Board does not agree. This is because at paragraphs 10 and 11 of the LCBO’s Statement of Issues, the LCBO set out the parameters of MPAC’s assessment which included the site area, FMR, the vacancy and expense allowances, the capitalization rate and current value, as well as its own position on each. The only difference between those two sets of parameters, apart from consequent conclusion of current value, was the FMR. As a result, the Board finds that FMR was the only issue pleaded by the LCBO in its Statement of Issues.

12Continuing with the factual background to this motion, the Municipality then served its Statement of Response on the other parties in which it wrote “that the FMR applied to the subject property is appropriate” and that “the assessed value for the LCBO space is appropriate.” In other words, it concurred with those aspects of MPAC’s assessment.

13At that point in the proceedings, expert reports were due because the parties had requested an extended Schedule of Events for that purpose. Expert reports were completed on time, with the exception of the Municipality’s report where parties had agreed to a short delay. The LCBO’s expert report was served first, which only addressed the FMR issue. MPAC’s expert report followed, and it addressed only the same issue. The Municipality’s report that followed, however, addressed other issues, such as capitalization, vacancy allowance and a non-recoverable expense allowance, which then led to this motion filed by MPAC.

Analysis

14There are several issues to be determined in this motion. The first is another preliminary issue raised by the Municipality in which it argued that MPAC did not have standing to bring this motion. Since the Board finds below that MPAC did have such standing to bring this motion, the next and second issue to be determined was one raised by MPAC as to whether the Municipality was entitled to raise issues other than the FMR in its expert report. Finally, the Board addresses the Municipality’s issue regarding late service of MPAC’s Statement of Response, as well as the question as to where that leaves MPAC in these ongoing proceedings.

Issue 1 – MPAC’s Standing to Bring This Motion

15It was not disputed that MPAC’s Statement of Response that was due on October 29, 2019 was not served on the other parties to the appeals until July 17, 2020, and that it was amended on July 22, 2020. The consequences of that tardiness are addressed later in this decision, but prior to that, the question raised by the Municipality to be determined is whether MPAC had any standing to bring this motion. In support of that position, the Municipality pointed out that Rule 82 provided that timelines set out in a Schedule of Events cannot be altered in the absence of exceptional circumstances, and that MPAC had not received consent from the Board or the other parties for that late service.

16The Municipality’s position was that this late filing meant that MPAC had no position on the appeals, which effectively appears to be an argument that MPAC was no longer a party to the appeals. However, the Board finds that Rule 61 provides that “a party” can bring a motion to the Board, and pursuant to Rule 3, the term “party” is defined as “a person entitled by law to be a party.” Section 40(11) of the Act provides that “the assessment corporation” is a party to an appeal, therefore as a party, MPAC was entitled to bring this motion.

Finding on Issue 1

17MPAC is a party to the appeals and therefore had standing to bring this motion.

Issue 2 – Was the Municipality Entitled to Raise Issues Other Than FMR?

18MPAC argued that the Municipality was not entitled to raise issues other than the FMR at this juncture in the proceeding because it violated the Rules, that it was procedurally unfair and that it would cause significant prejudice to MPAC.

19Specifically, MPAC argued that the Municipality was obliged to plead every issue in its Statement of Response pursuant to Rule 38(1)(b), that its Statement of Response could not have been amended without consent or as directed by the Board pursuant to Rule 41, and that the Municipality had not sought to amend it. MPAC also cited Rule 49 which provides that “an issue can only be raised at a hearing event if it has been set out in the statements of issue which have been served, and filed with the Board in accordance with these Rules, unless the Board determines that there are exceptional circumstances.”

20The Municipality’s position was that MPAC was attempting to restrict the evidence of an expert in performing their duty to the Board. It further argued that that person’s evidence would go to the ultimate issue for the Board to determine, which is the correct current value of the property at issue in the appeals. The Municipality also argued that no precedent was before the Board in this motion which would allow the Board to “strike” portions of an expert report.

21The Board finds that the LCBO’s Statement of Issues only raised FMR as an issue as determined above, which was the issue that MPAC addressed in its expert report. It was not then open to the Municipality to raise further issues in its expert report because they were not pleaded in its Statement of Response. This is because Rule 49 states that only issues that been pleaded, and in this case, in the Municipality’s Statement of Response, can be raised at a hearing event unless there are exceptional circumstances, where none were cited.

22The Board therefore concurs with MPAC that it would be contrary to the Rules to allow those issues to be raised now.

23On the question of the remedy to be applied, however, the Municipality cited General Motors of Canada Company v. St. Catharines (City), 2021 CanLII 794 (ON ARB), which determined only that Statements of Issues or Reply could be “struck”, not expert reports. On reply, MPAC cited Municipal Property Assessment Corporation, Region 21 v. Research in Motion, 2015 CanLII 46824 where the Board did strike an expert report but for entirely different reasons where an appellant’s advocate had also drafted the expert report it had intended to rely on at a hearing. MPAC cited a further unreported decision on an Expedited Board Direction Form that was not included with its reply and which the Board should not be required to spend time or resources to locate. The Board instead finds the applicable Rule in these circumstances to be Rule 49, which provides that “an issue can only be raised at a hearing event if it has been set out in the statements of issue and response which have been served…,” which was MPAC’s alternative remedy requested in the motion.

Finding on Issue 2

24The only issue remaining in the proceeding that was pleaded is FMR. As a result, the Municipality is restricted from raising any other issues at a future hearing event.

Issue 3 – The Municipality’s Late Statement of Response

25In its response to the motion, the Municipality noted that MPAC’s Statement of Response was served on July 17, 2020 when it had been due on November 4, 2019, and that no request for an extension of time had been made. In this motion, the Municipality took the consequent position that, as a result, MPAC had no Statement of Response in these appeals.

26MPAC’s position in its reply to the motion was that such a remedy “would effectively leave MPAC without the ability to participate in future hearing events”, that “an extreme remedy of this nature should only be considered in exceptional circumstances”, and that the Municipality had not alleged any prejudice. It argued that the Municipality knew the case to be met and that the Statement of Response was served prior to the date the Municipality’s expert report was due.

27There is no indication in the motion material that the Municipality raised MPAC’s late service prior to its response to the motion, but the Board finds that it is correct that MPAC effectively has no Statement of Response in the appeals. This is because Rule 82, also mentioned above, provides that “the Board will not alter any timeline set out in the schedule of events, other than in exceptional circumstances” and MPAC has not raised any circumstances explaining the late service, let alone exceptional ones. MPAC argued that such a remedy should only be the result of “exceptional circumstances”, but that is a reversal of the question, where it was up to MPAC to allege those “exceptional circumstances” for its lateness. MPAC correctly noted that the Municipality did not allege any prejudice, but the Board finds that it did not have to because the Rules do not require it.

28Therefore, the Board finds that MPAC’s Statement of Response was served late, and no exceptional circumstances to alter or extend timelines was cited pursuant to Rule 82. The Board concurs with the Municipality that there is no Statement of Response in these appeals.

29Rule 39 provides that MPAC is deemed not to oppose any future settlement in the proceeding. Otherwise, the Rules are silent as to what the appropriate remedy should be in these circumstances.

30However, Rule 6 provides that where “the Rules are silent on any issue, the Board may make whatever procedural orders or directions are required to effectively and efficiently adjudicate a proceeding”, and Rule 8 provides that the Board may “determine the appropriate consequences of non-compliance with these Rules.”

Finding on Issue 3

31MPAC’s Statement of Response was served on the Municipality late and timelines were not altered pursuant to Rule 82. As a result, and while MPAC remains a statutory party to the proceedings, the Board finds pursuant to Rules 6 and 8 that MPAC effectively has no position on the appeals and will not be entitled to file its Statement of Response or its expert report. In addition, MPAC is deemed not to oppose any future settlement in these proceedings.

Conclusion

32The Board finds as follows:

a. That MPAC had standing to bring this motion;

b. That the Municipality’s Statement of Response was not amended, and that as a result the only live issue in these appeals is FMR; and

c. That as a result of MPAC’s late service of its Statement of Response, it has no pleadings before the Board in these appeals It cannot, therefore, file its expert report and will be deemed not to oppose any future settlement in these proceedings.

Order

33The Board orders that the only remaining issue in these appeals is fair market rent.

34The Board further orders that MPAC shall not be entitled to file its Statement of Response or Statement of Response or its expert report, and that it will be deemed not to oppose any future settlement in these proceedings.