Tribunals Ontario

Assessment Review Board

ISSUE DATE: June 03, 2021

FILE NO.: DM 169893

Assessed Person(s): Wellings of Corunna Inc.

Appellant(s): Wellings of Corunna Inc.

Respondent(s): Municipal Property Assessment Corporation Region 26

Respondent(s): Township of St. Clair

Property Location(s): 180 Bunker Avenue

Municipality(ies): Township of St. Clair

Roll Number(s): 3805-220-071-14900-0000

Appeal Number(s): 3328478, 3366965, 3410531 and 3448670

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

Hearing Event No.: 742381

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

Parties Counsel/Representative*

Wellings of Corunna Inc. Paula Kalogritsas

Municipal Property Assessment Corporation Michael Radan

Township of St. Clair Philip L. Sanford* Belinda Schubert*

REQUEST FOR: Order excluding a party Order directing current value

HEARD: April 7, 2021 in writing

ADJUDICATOR(S): Carly Stringer, Member

MOTION DECISION

OVERVIEW

1Wellings of Corunna Inc. (the “Appellant”) has brought this motion for an order excluding the Township of St. Clair (the “Township”) as a party to appeal numbers 3328478, 3366965, 3410531 and 3448670 (the “Subject Appeals”) due to non-compliance with the Schedule of Events (“SOE”) and failure to provide a Statement of Response (“SOR”) compliant with Rule 43 (formerly Rule 38) of the Assessment Review Board’s (the “Board”) Rules of Practice and Procedure (the “Rules”). The Appellant also seeks an order confirming a revised 2016 Current Value Assessment (“CVA”) of $19,075,000 for the Subject Appeals.

2The Municipal Property Assessment Corporation (“MPAC”) takes no position on whether or not the Township complied with the SOE. MPAC agrees with the Appellant that the Township’s SOR is not compliant with Rule 43, and requests that the Board confirm the settlement reached between the Appellant and MPAC by directing that the 2016 CVA be reduced to $19,075,000 for the 2018 to 2021 taxation years.

3The Township opposes the motion.

Result

4The Board has carefully considered the evidence, submissions and case law provided by the parties. For the reasons that follow, the Board finds:

a. the Township’s SOR does not comply with Rule 43;

b. the Township requested disclosure outside of the deadline prescribed by the SOE;

c. the appropriate consequences for the Township’s non-compliance with the Rules and the SOE is that the Township will have to comply with Rule 49 if it seeks to raise any new issues at a hearing other than what appears in its original SOR, and the Township will have to comply with Rule 40 if it seeks further disclosure.

BACKGROUND

5The Appellant commenced the Subject Appeals relating to 180 Bunker Avenue in the Township of St. Clair (“Subject Property”). The Township and MPAC are respondents to the Subject Appeals.

6The Board assigned the Subject Appeals a commencement date of September 16, 2019. The following timelines were prescribed in the SOE for the Subject Appeals:

a. Appellant to serve Statement of Issues by February 10, 2020.

b. Respondents to advise if additional disclosure is required by March 2, 2020.

c. Respondents to serve SORs by November 2, 2020.

d. Appellant to serve Reply by November 30, 2020.

7The Appellant provided its Statement of Issues on February 6, 2020.

8On October 28, 2020, MPAC sent an email to the Appellant, copying the Township. In the email, MPAC made a without prejudice settlement offer for a revised 2016 CVA of $19,075,000.

9Later that same day, the Township sent an email to MPAC and the Appellant, thanking MPAC for sending the offer and requesting additional disclosure from the Appellant. The Township noted “[o]nce we receive this information, [the Township] will turn its immediate attention to the documents in an effort to finalize a settlement.”

10Roughly 15 minutes later, the Appellant replied to the Township, refusing to provide disclosure on the basis that any requests for additional disclosure were due by March 2, 2020 and the Township’s request would cause delay past the November 2, 2020 due date for the Township’s SOR.

11The Appellant and MPAC provided the Township an extension to file its SOR until November 9, 2020.

12On November 10, 2020, the Township provided a SOR dated October 28, 2020. In this SOR, the Township states that it “wishes to fully participate in these proceedings.” The Township states in its SOR that the SOR is based on information presently available and is submitted prior to inspection, productions and discovery. The Township expressly reserves the right to amend information, change its position, and amend its response following receipt of productions. In a section of the SOR entitled “Position of the Respondent Municipality” and subtitled “2016 CVA issues”, the Township re-states the Appellant’s positions. Then, in the following subsection entitled “Preliminary Response of the Respondent Municipality,” the Township states:

• The Respondent Municipality will rely on the income approach to value.

• The Respondent Municipality will rely on The Province of Ontario as its vicinity.

• The Respondent suggests that the tax classifications (NT & NX) considered in the assessment return, to be appropriate based on the property use.

• The Respondent has had regard to the 2018 & 2019 rent rolls as supplied in the Appellants SOI.

• The Respondent understands that these types of properties take time to fully lease and integrate into the marketplace and oppose the position that chronic vacancy exists in year one of operation.

• The Respondent intends to review the multi residential market and determine if the vacancy is indeed chronic or just the transition from a new build to normal occupancy.

• The Respondent acknowledges that Wellings Inc. is a large owner operator in the hospitality industry within the Province of Ontario with newer developments and understand that lease up timelines vary and do not relate to chronic vacancy.

13After these statements, the Township repeats its request for disclosure, and provides a list of documents and evidence upon which it may rely at a hearing.

14On November 16, 2020, the Appellant advised MPAC and the Township that it would agree to settle the Subject Appeals based on the value indicated in MPAC’s without prejudice offer from October 28, 2020.

15On November 30, 2020, the Appellant delivered a Reply. Among other submissions, the Reply alleged the Township’s SOR does not indicate the value sought, but instead requests disclosure from the Appellant in order to conduct a valuation analysis. The Appellant further states that the Township’s SOR does not state a requested value or how it was calculated, and therefore fails to meet the criteria of a SOR as per Rule 38(1) (now Rule 43) of the Board’s Rules.

16The Appellant then brought this motion, asking the Board to exclude the Township as a party and direct the CVA for the Subject Appeals be $19,075,00. The Appellant submits two bases for its requests: first, that the Township did not comply with the SOE by failing to request disclosure until October 28, 2020, some eight months past the March 2, 2020 deadline; and second, that the Township’s SOR did not comply with the requirements of Rule 43.

17As part of its response to the Appellant’s motion, the Township served an Amended SOR intended to comply with Rule 43.

ANALYSIS

Issue 1(a) - Was the SOR filed by the Township compliant with Rule 43?

Applicable Law

18Rule 43 sets out the content requirements for Statements of Issues and Responses, which are the pleadings before the Board. The applicable section of Rule 43 provides as follows:

Statements of Issues and Responses must contain:

a. If the issue is current value:

i. the current value requested and how it is calculated;

ii. a full statement of every issue that the party intends to raise, including identification of comparable property(ies) to be referred to, if any; and

iii. a list of all facts, legal grounds and documents that the party relies on in support of its position

19Rule 6 provides that substantial compliance with the requirements of the Rules is sufficient. The parties are not held to a standard of perfection.

Submissions

20The Appellant submits that the Township’s SOR does not comply with Rule 43 because it does not indicate the current value requested or how it is calculated; nor does it include identification of any comparable properties to be relied on.

21MPAC submits that on the plain reading of Rule 43, the Township is not compliant. Specifically, in its SOR, the Township does not state its opinion of value or how it would calculate a value; state any issues it would raise; or outline a list of all facts, legal grounds and documents that it relies on in support of its position.

22The Township submits that its SOR met the standard of substantial compliance required by Rule 7. The Township submits that on a fair reading of the pleading, it is clear that the Township was not persuaded that the Subject Property was suffering from chronic vacancy. The Township submits that its SOR set out the basis on which MPAC had returned its original assessment, and it is a reasonable inference that as of the date of the pleading, the Township’s position was that it opposed any alteration in the assessment and supported the assessment as returned.

23The Township further submits that if the Board does not find it was in substantial compliance, then Rule 44 (formerly Rule 41) gives it the right to amend its pleading at any time prior to the filing date established in the Schedule of Events, without consent of the other parties or direction from the Board. The Township relies on Municipal Property Assessment Corporation v Kraft Heinz Canada ULC, 2020 CanLII 38934 (ON ARB) (“Kraft”) at paragraphs 123-125 as support for this proposition. The Township submits that any deficiency in the Township’s SOR was addressed in the Amended SOR and the Township is accordingly in compliance with the spirit and substance of the Rules.

24In reply, the Appellant submits that the Township does not have a unilateral right to amend its SOR at any time. The Appellant submits that it has not consented to an Amended SOR being submitted more than four months after the service date in the SOE.

Findings on Issue 1(a)

25The Board has carefully reviewed the Township’s SOR. The Board finds that on a plain reading, the Township’s SOR does not state the current value the Township is requesting, nor how that current value is calculated.

26The Board does not accept the Township’s submission that its SOR was substantially compliant with Rule 43. Although the SOR is clear that the Township will use the income approach to value and opposes the Appellant’s position that there is chronic vacancy, the Board finds there is not sufficient information in the SOR to understand the current value being requested by the Township, nor is there enough information to infer that the Township opposed any alteration in the assessment and supported the assessment as returned by MPAC. The purpose of pleadings is to lock the issues in place and ground further work on appeals, while giving the opposing party a fair opportunity to understand the case it must meet and comprehensively prepare its case. The Board finds there is not enough information in the Township’s SOR to serve that function, and in that regard the Board cannot find the SOR substantially compliant with Rule 43.

27With respect to whether Rule 44 affords the Township a right to amend its SOR such that the Township can rely on the Amended SOR to cure any deficiencies in the original, the Board does not accept thar Rule 44 gives the parties the right to amend its pleadings in any circumstance. Rule 44 provides that “Statements of Issues or Responses cannot be amended after the due date for amending these documents set out in the Schedule of Events unless all parties consent, or the Board directs otherwise.” The Schedule of Events only permits limited amendments in circumstances where an appeal does not resolve at the mandatory meeting and additional expert reports are required. The Schedule of Events confirms that any amendments to the Statements of Issues or Response are only “to address any additional evidence or new issues raised in the expert’s reports.” The Schedule of Events does not permit amendments for any other reason. The Board does not accept the Township’s submission that Kraft supports its position regarding a right to amend in any circumstances.

28The Board relies on its statements in General Motors of Canada Company v St. Catharines (City), 2021 CanLII 794 (ON ARB) at paragraphs 23 to 26, particularly paragraph 24:

Parties are expected to provide full and comprehensive statements of issues or response and reply before expert valuation reports are obtained. This is confirmed by Rule 38 which prescribes in detail what statements of issues and response must contain. The Board’s Rules do not provide for exchange of draft or preliminary statements of issues and response, or the inclusion of clauses in a pleading that states that a party reserves a right to amend its pleading at any time. To allow otherwise, would mean that parties could get caught up in a loop of repeated exchange of amended pleadings and related disclosure, with the result that the issues are not finally identified and confirmed on a timely basis.

and paragraph 25:

… the SOE expressly allows for amendments to these pleadings where the parties choose to obtain expert reports. However, the SOE also expressly provides that the only amendments permitted are amendments to address any additional evidence or issues raised in an expert’s report. A party cannot include its own additional “new” issues in its amended pleading.

29In this regard, the Township cannot amend its SOR to cure deficiencies in satisfying the requirements set out in Rule 43. The only amendments permitted are amendments to address additional evidence or issues raised in an expert’s report. The Township has not provided evidence that the amendments proposed are as a result of additional evidence or issues raised in an expert’s report. The Township’s evidence is that the Amended SOR was served in order to comply with Rule 43. Ultimately, it appears the Amended SOR was provided in response to this motion only to address the Appellant’s allegations of non-compliance with Rule 43.

30Moreover, the Board notes the Amended SOR is dated March 17, 2021, and was not provided until the Township submitted it in response to this motion. It was not provided to the parties when the Appellant sought to accept MPAC’s settlement offer on November 16, 2020. In that regard, and for the purposes of this motion, in determining whether the SOR is compliant with Rule 43, the Board is not prepared to accept the Amended SOR.

31Accordingly, the Board finds that the Township’s SOR dated October 28, 2020 is not compliant, substantially or otherwise, with Rule 43.

Issue 1(b) – Was the Township’s Request for Disclosure outside of the timeline prescribed by the Schedule of Events?

Applicable Law

32In accordance with Rule 38, the Board assigns a day on which the SOE will commence for each proceeding. Rule 40 provides that after the commencement day, the Board will not alter any due date set out in the SOE other than in exceptional circumstances.

33The SOE for the Subject Appeals gave March 2, 2020 as the deadline by which the Township should advise the Appellant if any additional disclosure is required.

Submissions

34The Appellant submits that the SOE set a deadline for the Township to request additional disclosure. The Township requested disclosure roughly eight months past that deadline both in its email dated October 28, 2020 and in its SOR. Therefore, the Appellant submits, the Township’s request for additional disclosure was not in compliance with the SOE.

35MPAC does not take a position on this issue.

36The Township submits that it is open to a party to make requests for disclosure past the deadline listed in the SOE. The Township submits that parties routinely request additional productions in their pleadings, and the Board regularly hears motions for disclosure after the period contemplated in the SOE.

Findings on Issue 1(b)

37The parties do not appear to dispute that the SOE set a deadline for disclosure of March 2, 2020, and the Township sought disclosure on October 28, 2020 and in its SOR. In this regard, the Board finds that the Township did request disclosure outside of the deadline established in the SOE.

38Having determined that the Township’s request for disclosure is outside the timeline prescribed by the SOE, and the Township’s SOR does not comply with Rule 43, the Board will now consider the consequences of non-compliance.

Issue 2 – What is the appropriate consequence for the Township’s non-compliance with the Rules and the Schedule of Events?

Applicable Law

39Rule 7 provides that the Board “will determine the appropriate consequences of non-compliance with these Rules.”

40There are several other Rules that inform the Board’s determination of the appropriate consequence for the Township’s non-compliance.

41First, Rules 3 and 4 are generally relevant. Rule 3 provides that the Rules “shall be liberally interpreted to ensure the just, most expeditious and least expensive determination of every proceeding.” Rule 4 provides that the 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.”

42The Rules do not articulate a specific consequence for failure to meet an SOE deadline for a request for additional disclosure. That said, Rule 40 is clear that the Board will not alter any due date set out in the SOE other than in exceptional circumstances. Accordingly, if a party misses a deadline in the SOE and requires an extension of time, it must satisfy the Board that exceptional circumstances exist to warrant that extension.

43Further, the Rules do not dictate a specific consequence for non-compliance with the content requirements of Rule 43. That said, Rule 49 provides as follows:

An issue can only be raised at a hearing event if it has been set out in the Statement of Issues and Response which have been served on all other parties and filed with the Board in accordance with these Rules, unless the Board determines that there are exceptional circumstances.

44Accordingly, unless a party can satisfy the Board that exceptional circumstances exist to permit them to raise a new issue at a hearing, the party is limited to the contents of its pleading.

Submissions

45The Appellant submits that the Township should be excluded as a party to the Subject Appeals, and that the Board should direct that the 2016 CVA for the Subject Property for the 2018 to 2021 taxation years be $19,075,000, per the settlement reached between the Appellant and MPAC.

46MPAC submits that serving a non-compliant SOR has the same effect as not serving an SOR. MPAC submits that the effect of failing to serve a SOR is articulated in Rule 60, which states that “[a] party that does not serve a SOR on or before the day set out in the Schedule of Events is deemed not to oppose any future settlement in that proceeding.” Therefore, MPAC submits, the Township is deemed not to oppose any future settlement in this proceeding, and the Board should direct that the 2016 CVA be reduced to $19,075,000 for the Subject Appeals.

47The Township submits that the Subject Appeals should proceed with an adjustment to the SOE. The Township submits that there is no prejudice by any imperfection in the SOR, nor is there prejudice to the Appellant by the late request for disclosure since the Appellant has exercised its right not to produce the documents.

Findings on Issue 2

Failure to request disclosure within the timelines prescribed in the SOE

48The Board will first determine the appropriate consequence for the Township’s failure to request disclosure on a timely basis.

49Although the Board has found that the Township failed to request disclosure in accordance with the timelines prescribed by the SOE, the Board does not accept the Appellant’s submission that an appropriate consequence for this failure—on its own, or coupled with the Township’s non-compliance with Rule 43—would be to exclude the Township as a party and direct the 2016 CVA be set at $19,075,000. The Township is a statutory party to the Subject Appeals, and to order its exclusion as a party would not be consistent with the Assessment Act (“Act”) or the spirit of the Rules. The Appellant has not provided the Board with authorities supporting its position.

50The Township is correct that, in certain circumstances, parties request disclosure after the deadline in the SOE. However, that is not without consequence. If one party requests disclosure outside the timelines of the SOE, and the other party refuses to disclose on the basis the SOE deadline has passed, the party seeking disclosure must bring a motion asking the Board to alter the due date for disclosure set out in the SOE. Rule 40 is clear that the Board will not alter any due date set out in the SOE other than in exceptional circumstances.

51Therefore, the Rules provide that the general consequence of non-compliance with the SOE is that a party may not get the disclosure they seek, unless they bring a motion and satisfy the Board that there are exceptional circumstances warranting an extension to their deadline for requests for disclosure. This is a reasonable consequence, and the Board finds this applies to the Township’s case.

Failure to Comply with Rule 43

52The Board will now consider the appropriate consequence for the Township’s failure to comply with Rule 43.

53Although the Board has found that the Township failed to comply with the requirements of Rule 43, the Board does not accept the Appellant’s submission that an appropriate consequence is that the Township be excluded as a party from the Subject Appeals and the Board direct the 2016 CVA be $19,075,000. The Township is a statutory party to the Subject Appeals, and exclusion as a party would not be consistent with the Act or the spirit of the Rules. The Appellant has not provided the Board with authorities supporting its position.

54The Board does not accept MPAC’s submission that Rule 60 applies, such that the Township should be deemed not to oppose any settlement in this proceeding. It is worth noting that there are no Minutes of Settlement between MPAC and the Appellant in evidence before the Board. Instead, MPAC is asking the Board to direct the CVA be $19,075,000 on the basis of a settlement reached between MPAC and the Appellant over email between October 28, 2020 and November 16, 2020.

55The Board finds that Rule 60 does not apply to this case. Rule 60 applies where a party “does not serve a SOR on or before the day set out in the Schedule of Events.” Rule 60 does not say “A party that does not serve a Statement of Response in compliance with the Rules.” Ultimately, Rule 60 applies where a SOR is not served by the deadline in the SOE, not where a SOR fails to meet the criteria enumerated in Rule 43. Since the Township did serve a SOR by the deadline in the SOE, Rule 60 does not apply.

56The Board finds the more appropriate consequence for non-compliance with Rule 43 is found in Rule 49. Pursuant to Rule 49, if the Township cannot satisfy the Board that there are exceptional circumstances, the issues it can raise at the hearing will be restricted to the issues articulated the SOR which it has served on the other parties.

CONCLUSION

57The Board finds that the Township failed to comply with the SOE in not filing a timely request for disclosure. The Board finds that Rule 40 provides an appropriate consequence for failure to request disclosure on a timely basis. If the Township seeks further disclosure that the Appellant opposes, the Township must then satisfy the Board there are exceptional circumstances warranting an amendment to the SOE.

58The Board finds that the Township’s SOR fails to meet the requirements of Rule 43. The Board finds that Rule 49 provides an appropriate consequence for failure to comply with Rule 43, and if the Township seeks to raise new issues other than what it has raised in its SOR, the Township will have to satisfy the Board there are exceptional circumstances.

59For these reasons, the Board declines to grant the relief requested by the Appellant.

ORDER

60If the Township wishes to seek further disclosure, and such further disclosure is opposed by the other parties, the Township is required to file a request for an Expedited Board Direction citing Rule 40.

61If the Township seeks to raise any new issues at a hearing other than the issues raised in its SOR, the Township is required to file a request for an Expedited Board Direction citing Rule 40.

62In view of the exceptional circumstances caused by the delay in resolving this motion and pursuant to Rule 40, the Board orders the Schedule of Events for the Subject Appeals will resume, with the following amendments:

a. The due date for the parties to schedule and complete a mandatory settlement meeting to attempt to resolve the appeals among themselves is extended to June 30, 2021.

b. All other subsequent due dates are to be adjusted accordingly.

63The Board’s Case Coordinator will advise the parties of the specific due dates, which may be adjusted slightly due to constraints imposed by the Board’s electronic case management system.