Tribunals Ontario
Tribunaux décisionnels Ontario
Assessment Review Board
Commission de révision de l’évaluation foncière
ISSUE DATE: April 13, 2022
Assessed Person(s): Farhi Holdings Corporation
Appellant(s): Farhi Holdings Corporation
Respondent(s): Municipal Property Assessment Corporation Region 23
Respondent(s): City of London
Property Location(s): 166 -170 Dundas Street
Municipality(ies): City of London
Roll Number(s): 3936-010-010-13700-0000
Appeal Number(s): 3338076, 3366052, 3409899, 3448434 and 3490119
Taxation Year(s): 2018, 2019, 2020, 2021 and 2022
Hearing Event No.: 763874
Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31
Parties
Representative
Farhi Holdings Corporation
Steve Pocrnic
Municipal Property Assessment Corporation
Marissa Cheddi
City of London
No submissions received
REQUEST FOR: An order striking evidence
HEARD: April 11, 2022 in writing
ADJUDICATOR(S): Carly Stringer, Member
MOTION DECISION
OVERVIEW
1The Municipal Property Assessment Corporation (“MPAC”) is responding to appeals brought by Farhi Holdings Corporation (the “Appellant”) relating to 166-170 Dundas Street in the City of London. These appeals are scheduled to be heard by the Assessment Review Board (the “Board”) on April 20, 2022.
2MPAC has brought this pre-hearing motion asking the Board to i) strike portions of the Appellant’s Narrative Retrospective Appraisal Report dated April 6, 2021 (the “Appellant’s Expert Report”) and ii) strike evidence included in the Appellant’s Reply to MPAC’s Valuation Report served on September 7, 2021 (the “Appellant’s Reply Report”). In the alternative, MPAC requests that the Appellant be restricted from raising issues at any hearing event that are not set out in its Statement of Issues (“SOI”). MPAC submits that the Appellant’s Expert Report raises issues not set out in the SOI and the Appellant’s Reply Report contains evidence that had not been previously disclosed by the Appellant.
3The Appellant opposes MPAC’s motion.
4The City of London has not provided submissions on this motion.
Result
5For the reasons that follow, the Board finds that:
a. the Board’s Rules of Practice and Procedure (the “Rules”) do not provide that the Board may “strike” evidence;
b. the Appellant’s SOI does not set out the issues of vacancy allowance and non-recoverable expense allowance and the Appellant did not amend its SOI. There are no exceptional circumstances. Consequently, the Appellant cannot raise the issues of vacancy allowance and non-recoverable expense allowance at the hearing.
c. the 2018 and 2019 Operating Expenses included at pages 10 and 11 of the Appellant’s Reply Report were not served in accordance with the Rules. There are no exceptional circumstances. Consequently, the 2018 and 2019 Operating Expenses at pages 10 and 11 of the Appellant’s Reply Report will not be admitted into evidence at the hearing.
BACKGROUND
6The parties require a timely response to this motion in advance of the hearing on April 20, 2022. Accordingly, rather than a lengthy rehashing of the background and submissions of the parties, the Board will focus this decision on providing a response to MPAC’s request for relief.
ANALYSIS
Applicable Rules
7The Rules do not include a provision to “strike” materials: see General Motors of Canada Company v St. Catharines (City), 2021 CanLII 794 (ON ARB) (“General Motors”) at paragraphs 5, 11 and 14.
8Instead, the Rules provide two mechanisms relating to issues and evidence at a hearing. First, Rule 48 provides that a document may only be admitted into evidence at a hearing if it has been served and filed in accordance with the Rules, unless the Board finds there are exceptional circumstances. Second, Rule 49 provides that an issue can only be raised at a hearing if it has been set out in the Statements of Issues and Response, unless the Board finds there are exceptional circumstances.
9Rule 3 confirms 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.” Finally, parties are not held to a standard of perfection when it comes to compliance with the Rules. Rule 6 provides that substantial compliance with the Rules is sufficient. Rule 7 provides that the Board will determine the appropriate consequences of non-compliance with the Rules.
10On this motion, MPAC requests relief in relation to i) issues not set out in the SOI and ii) documents not served in accordance with the Rules. The Board will address each request in turn.
Issue 1: Issues Not Set Out in the SOI
Findings on Issue 1
11First, MPAC asks the Board to strike portions of the Appellant’s Expert Report on the basis that it addresses issues not set out in the Appellant’s SOI. As noted above, the Rules do not include provisions to “strike” evidence so the Board will not grant this relief.
12That said, if a party seeks to raise an issue at a hearing that has not otherwise been set out in the SOI, Rule 49 is engaged. In this case, MPAC points to vacancy allowance and non-recoverable expense allowance as two new issues that the Appellant seeks to raise that were not set out in the SOI.
13The Board makes the following findings:
a. The Appellant’s SOI does not set out vacancy allowance and non-recoverable expense allowance as issues to be raised at the hearing. Rather, the Appellant’s SOI states the same vacancy allowance and non-recoverable expense allowance as MPAC (40% and 35%, respectively).
b. The Appellant’s Expert Report provides extensive evidence on vacancy, and provides that the vacancy allowance should be 45%. The Appellant’s Expert Report also provides evidence on the non-recoverable expense allowance, and states that it should be 40%. In this way, the Appellant’s Expert Report provides evidence that differs from the Appellant’s position in its SOI. An expert is independent and may provide evidence on an issue that has not been addressed in the statements of issue, response or reply. Accordingly, the expert report can raise issues that are not otherwise reflected in the SOI. However, the Rules require that the Appellant serve an Amended SOI to address any additional evidence or issues raised in an expert’s report. In this instance, the Appellant did not serve an Amended SOI to address the issues of vacancy allowance and non-recoverable expense allowance raised in the Appellant’s Expert Report. Therefore, applying Rule 49, the issues of vacancy allowance and non-recoverable expense allowance cannot be raised at the hearing.
c. In this case, however, the Appellant’s Reply – which was served prior to the Appellant’s Expert Report – does raise vacancy allowance and non-recoverable expense allowance as issues on appeal. This is problematic for several reasons. First, a reply pleading is meant to respond only to new issues raised in a Statement of Response. A party cannot introduce new issues in reply: see General Motors, supra at paragraph 46. Second, the Appellant’s position in Reply is entirely different than its position in its SOI. In the SOI, the Appellant agreed with MPAC’s vacancy allowance of 40% and non-recoverable expense allowance of 35%. In Reply, the Appellant disputes MPAC’s vacancy allowance and non-recoverable expense allowance, and says they should be 45% and 40%, respectively. The Appellant did not retract its position in the SOI. Accordingly, the Appellant has provided two contradictory positions.
d. Rule 49 does not reference issues set out in reply, likely for the reason that a party cannot use reply to introduce new issues. Overall, the problem in this case is that the Appellant took one position on vacancy allowance and non-recoverable expense allowance in its SOI; then took a contradictory position on vacancy allowance and non-recoverable expense allowance in Reply without resiling from or retracting its earlier position; then received expert evidence consistent with its position in Reply; then took no steps to amend its SOI to adopt the expert evidence as its position, or otherwise change its initial position on vacancy allowance and non-recoverable expense allowance. Without an amendment to the SOI to address the contradiction between the SOI and Reply, the Appellant is going into the hearing with two entirely different positions on vacancy allowance and non-recoverable expense allowance.
e. The point of pleadings is “to ensure that each party is given a fair opportunity to understand the case it has to meet and to comprehensively prepare its case for presentation at a hearing”: General Motors, supra at paragraph 49. The Appellant submits that fairness has been achieved because MPAC was aware of the Appellant’s position through the expert report and Reply. The Board does not accept this submission. The Appellant did not amend its pleadings to clarify that it was retracting its SOI position in favour of adopting the expert evidence as its position, or that it would rely solely on its Reply position on vacancy allowance and non-recoverable expense allowance rather than the SOI. This leaves MPAC to guess whether the SOI or Reply properly states the Appellant’s position. It is not up to MPAC to guess which of two different positions the Appellant will take at a hearing. That is not fair. That is the exact situation the Rules are designed to avoid. To permit the Appellant to raise the issues of vacancy allowance and non-recoverable expense allowance would not result in the just, most expeditious and least expensive determination of this proceeding.
f. The Appellant has not provided evidence or submissions regarding exceptional circumstances. The Appellant has not otherwise explained its failure to amend the pleadings. The Appellant has had a representative throughout this proceeding who should be familiar with the Board’s Rules. The Board finds there are no exceptional circumstances that would otherwise permit the Appellant to raise the issues of vacancy allowance and non-recoverable expense allowance at a hearing.
14For these reasons and in accordance with Rules 3, 4, 6, 7 and 49, the Board finds that the Appellant may not raise the issues of vacancy allowance and non-recoverable expense allowance at the hearing of these appeals.
Issue 2 – Documents Not Served in Accordance with the Rules
Findings on Issue 2
15MPAC asks the Board to strike new documents in the Appellant’s Reply Report. MPAC has identified two new documents in the Appellant’s Reply Report, being 2018 and 2019 Operating Expenses at pages 10 and 11. As noted above, the Rules do not include provisions to “strike” evidence so the Board will not grant this relief.
16That said, if a party seeks to admit a document at a hearing that has not been served in accordance with the Rules, Rule 48 is engaged.
17The Board makes the following findings:
a. The Schedule of Events in this proceeding required the Appellant to provide its disclosure by October 9, 2019, and any additional disclosure to support its reply by September 23, 2020;
b. The Appellant did not obtain an order from the Board extending these timelines;
c. The Appellant served the 2018 and 2019 Operating Expenses documents for the first time on September 7, 2021, attaching the documents to its Reply Report;
d. Accordingly, the Appellant did not serve the 2018 and 2019 Operating Expenses documents in accordance with the Rules.
e. The Appellant has not provided evidence or submissions regarding exceptional circumstances, or otherwise provided any explanation as to why these documents were not served until September 7, 2021. The Board finds there are no exceptional circumstances in this case.
f. To permit the Appellant to introduce these new documents at the hearing would not result in the just, most expeditious and least expensive determination of this proceeding.
18For these reasons and in accordance with Rules 3, 4, 6, 7 and 48, the 2018 and 2019 Operating Expenses at pages 10 and 11 of the Appellant’s Reply Report will not be admitted into evidence at the hearing.
ORDER
19The Board orders that:
a. the Appellant may not raise the issues of vacancy allowance and non-recoverable expense allowance at the hearing of these appeals; and
b. the 2018 and 2019 Operating Expenses at pages 10 and 11 of the Appellant’s Reply Report will not be admitted into evidence at the hearing.