Tribunals Ontario
Tribunaux décisionnels Ontario
Assessment Review Board
Commission de révision de l’évaluation foncière
ISSUE DATE: September 06, 2022
Assessed Person(s): Maple Leaf Food Inc. (formerly Mother Jacksons Open Kitchen)
Appellant(s): Maple Leaf Food Inc. (formerly Mother Jacksons Open Kitchen)
Respondent(s): Municipal Property Assessment Corporation Region 13
Respondent(s): Township of Scugog
Property Location(s): 15350 Old Simcoe Road
Municipality(ies): Township of Scugog
Roll Number(s): 1820-020-030-06300-0000
Appeal Number(s): 3249384, 3301045, 3355872, 3402753, 3443402 and 3488051
Taxation Year(s): 2017, 2018, 2019, 2020, 2021 and 2022
Hearing Event No.: 773790 and 773791
Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31
Parties
Counsel
Maple Leaf Food Inc (formerly Mother Jacksons Open Kitchen)
Brad Teichman
Municipal Property Assessment Corporation
Jeffrey E. Feiner
Township of Scugog
Submissions not received
REQUEST FOR:
An order to permit filing additional evidence An order to restrict issues and evidence
HEARD: August 9 and 12, 2022 in writing
ADJUDICATOR(S): Carly Stringer, Member
MOTION DECISION
OVERVIEW
1Maple Leaf Foods Inc. (the “Appellant”) has brought appeals before the Assessment Review Board (the “Board”) of assessments relating to 15350 Old Simcoe Road in the Township of Scugog (the “Subject Property”) for the 2017 to 2022 taxation years.
2The Appellant has brought a motion asking the Board for leave to file a Supplementary Reply Report (“Motion A”).
3The Municipal Property Assessment Corporation (“MPAC”) is responding to the appeals. MPAC takes no position on Motion A, but asks to file an expert report and amended Statement of Response to respond to the issues raised in the Appellant’s Supplementary Reply Report.
4The Appellant consents to MPAC submitting a report that responds to the Supplementary Reply Report. The Appellant has not provided submissions in reply to MPAC’s request to file an amended Statement of Response.
5MPAC has brought a separate motion asking the Board to issue an order preventing the Appellant from raising certain issues and leading certain evidence contained in the Appellant’s Reply Report dated March 25, 2022 (“Motion B”). MPAC is also asking the Board for leave to deliver a sur-reply in relation to four new comparable sales relied on by the Appellant to support its opinion of the underlying land value of the Subject Property, which were raised for the first time in the Reply Report.
6The Appellant consents to MPAC’s request for a sur-reply, but opposes MPAC’s other requests in Motion B.
7The Township of Scugog has not provided the Board with submissions on either motion.
Result
8For the reasons that follow, the Board grants Motion A and allows the Appellant to file its Supplementary Reply Report.
9The Board also grants Motion B. The Appellant is not permitted to raise, and lead evidence in its Reply Report relating to, functional and external obsolescence based on production volumes.
BACKGROUND
10The Subject Property is a food processing plant.
11The Appellant served an expert report on September 27, 2021 in accordance with the Schedule of Events (“SOE”) applicable to these proceedings.
12MPAC served its responding expert report and an amended Statement of Response on January 14, 2022 in accordance with the SOE. In this responding report and amended pleading, MPAC sought an increase in the 2016 current value assessment for all taxation years under appeal.
13The SOE required the Appellant to deliver a reply report, if any, by February 25, 2022. However, the Appellant’s expert’s spouse fell seriously ill, was hospitalized, and eventually passed away on February 25, 2022. Due to these circumstances, MPAC consented to an extension of time for the delivery of the Appellant’s reply report. The Appellant’s expert delivered a reply report on March 25, 2022 (the “Reply Report”).
14In reply to MPAC seeking an increase in the Subject Property’s current value, the Appellant’s expert noted in the Reply Report that any increase in the assessment above the returned assessed value would be inequitable. However, he did not undertake an analysis to support this opinion. The Appellant’s expert provided evidence that this was an oversight attributable to his personal circumstances following the passing of his spouse.
15Subsequently, the Appellant’s expert prepared the Supplementary Reply Report to fully address the issue of an equity adjustment.
ANALYSIS
Motion A: Motion to File Supplementary Reply Report
Applicable Law
16Rule 48 of the Board’s Rules of Practice and Procedure (the “Rules”) 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.
17Rule 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.”
18Finally, Rule 7 provides that the Board will determine the appropriate consequences of non-compliance with the Rules.
Submissions of the Parties
19The Appellant submits that its expert’s failure to undertake an equity analysis in the Reply Report was an oversight attributable to his personal and family circumstances following the passing of his spouse. The Appellant submits that the Supplementary Reply Report addresses the issue of an equity adjustment as proper reply to MPAC’s evidence supporting an increase in the returned assessment. The Appellant submits that the sudden passing of its expert’s spouse and associated changes in his personal and family circumstances constitute exceptional circumstances. The Appellant further submits that this relief would not delay the Board’s determination of the appeals because a hearing date has not been scheduled and the Supplementary Reply Report is complete and ready to be filed.
20MPAC takes no position in relation to the Appellant’s request. That said, MPAC has asked for permission to file an expert report and amended Statement of Response to respond to the issues raised in the Appellant’s Supplementary Reply Report.
Findings
21The Board finds the Supplementary Reply Report has not been served and filed in accordance with the Rules. However, the Board finds that the sudden passing of the Appellant’s expert’s spouse and associated impacts on his personal and family circumstances constitute exceptional circumstances in this case. The Board also takes into account that MPAC consents.
22Having found that there are exceptional circumstances, Rule 48 does not preclude the Appellant from seeking to admit the Supplementary Reply Report into evidence at a hearing.
23Therefore, the Board permits the Appellant to file the Supplementary Reply Report.
24In the circumstances, the Board also grants MPAC’s request for leave to file a sur-reply expert report and amend its Statement of Response to address the issues raised in the Supplementary Reply Report.
Motion B: Motion to Restrict Issues and Evidence in the Reply Report
Applicable Law
25Rules 48 and 49 of the Board’s Rules are relevant to the analysis. Rule 48 has been explained at paragraph 16 above. Rule 49 provides that an issue can only be raised at a hearing event if it has been set out in the Statements of Issues and Response which have been served on all other parties and filed with the Board in accordance with the Rules, unless the Board determines there are exceptional circumstances.
26Rule 43 is also relevant:
- 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.
27Rule 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.”
28Finally, Rule 7 provides that the Board will determine the appropriate consequences of non-compliance with the Rules.
Submissions of the Parties
29MPAC asks the Board to prevent the Appellant from raising issues and leading evidence at the hearing regarding functional and external obsolescence based on production volumes. MPAC submits that the Appellant’s theory was raised for the first time by its expert in the Reply Report and was not set out in the Statement of Issues (“SOI”), while the information purporting to support the Appellant’s theory of functional and external obsolescence due to production volume was not previously disclosed by the Appellant in accordance with the SOE.
30MPAC submits that it is unfair to raise new issues at this late stage, and that MPAC will be prejudiced as it will not be able to put forward the expert evidence of a business valuator to respond.
31MPAC further submits that this information relating to production volume does not constitute permissible reply, as it does not respond directly to items raised for the first time in MPAC’s expert report. MPAC submits that this constitutes improper case-splitting. MPAC submits there are no exceptional circumstances that would permit the Appellant to raise new issues.
32The Appellant submits that the matter of production volume was raised in paragraph 5 of its SOI, which indicates that the facility was operating at less than its capacity. The Appellant submits that production volumes are a function of the capacity of the plant.
33The Appellant further submits that production volume is not an issue; rather, it is evidence to prove the fact of functional and external obsolescence from which the Subject Property suffers. The Appellant submits that the extent of functional and external obsolescence is the issue and production volume is used to measure such obsolescence.
34The Appellant submits that Tab L of the Reply Report sets out the annual production volumes from 2004 to 2021 and was prepared by its expert as part of the Reply Report based on information received from the Appellant. The Appellant submits this document did not exist at the time that disclosure of documents was required, and was created for the purposes of the Reply Report. The Appellant submits this evidence was properly included to reply to comments of MPAC’s expert, in particular in paragraph 80 of MPAC’s expert report which indicates that operational data would be required to demonstrate obsolescence.
Findings
35The Board finds that the Appellant may not advance the issue of, or lead evidence relating to functional and economic obsolescence on the basis of reduced production volume. The Board makes this determination for several reasons.
36First, the Board finds the Appellant has not complied with the Rules. Rule 43 provides that a party’s SOI must provide a full statement of every issue that a party intends to raise, along with a list of all facts, legal grounds, and documents that the party relies on in support of its position. Reading the entire SOI for context, the Appellant has not satisfied those requirements. If, as the Appellant submits on this motion, the extent of functional and external obsolescence is the issue and production volume is used to measure such obsolescence, the Appellant’s SOI does not state as much. At most, paragraph 5 of the SOI provides a general statement of fact that as of January 1, 2017, the subject facility was operating at less than 20% of its capacity; that the facility has never achieved full capacity utilization; and that changes to production line portions of the facility were undertaken in 2019. The SOI does not state that the Appellant intends to raise functional and external obsolescence as issues followed by listing the production volume facts on which it intends to rely in support of those issues. The Appellant has made no effort in the SOI to link production volume to the issue of functional and external obsolescence more generally.
37The 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 of Canada Company v St. Catharines (City), 2021 CanLII 794 (ON ARB) (“General Motors”) at paragraph 49. Rule 43 assists in that function, taking guesswork out of the process. Ultimately, if the Appellant intended to argue that there is functional and external obsolescence, and that reduced production volumes are evidence of that fact, the Appellant did not state as such in the SOI. Accordingly, the Appellant’s SOI does not give MPAC the opportunity to understand and prepare to meet that case.
38Second, even if, as the Appellant asserts, functional and external obsolescence based on reduced production volumes was sufficiently and properly set out in its SOI, the Board will not permit the Appellant to rely on the portions of the Reply Report relating to it on the basis that such evidence is not appropriate on reply. Appellants are permitted reply reports to respond to issues and evidence raised for the first time in respondents’ expert reports. If, as the Appellant asserts, the issue of functional and external obsolescence was included in the SOI and production volume was referenced at paragraph 5 of the SOI as evidence to measure such obsolescence, then that information should have been included in the initial expert report as a basis for an opinion relating to functional and external obsolescence. The Appellant’s expert declined to include this information in his initial report. Instead, he limited the analysis to external obsolescence based on the location of the Subject Property.
39Further, the Board does not accept the Appellant’s submission that this production volume evidence is in reply to paragraphs 75 to 87 of MPAC’s expert report. The Board has reviewed those paragraphs. Paragraphs 75 to 79 relates to functional obsolescence but do not reference production volume. Paragraph 80 criticizes the Appellant’s expert’s adjustment for excess capital and excess operating costs, noting in relation to excess construction that “several years of operational and financial statements would be required to demonstrate increased costs and cost estimates to cure the proposed defect.” The evidence provided by the Appellant’s expert in the Reply Report relating to production volume does not reply to that statement. Paragraphs 81 to 87 do not reference production volume at all.
40The Appellant’s expert has used the Reply Report to opine on how production volumes show the extent of functional and external obsolescence. The problem is that the responding parties have no opportunity to respond to this new information through expert evidence, resulting in prejudice to the responding parties.
41In this instance, the Board finds that the Appellant has not complied with Rule 43, and, in any event, the information in the Reply Report is not proper reply. Accordingly, based on Rules 48 and 49, as well as Rules 3, 4, 5 and 7, the Board orders that the Appellant may not advance argument or lead evidence relating to functional and external obsolescence based on reduced production volumes, including specifically the evidence contained at paragraphs 38, 41, 42 and Tab L of the Reply Report relating to functional and external obsolescence caused by reduced production volumes.
CONCLUSION
42The Board finds that the Appellant has not complied with the Rules in relation to the Supplementary Reply Report. The Board finds there are exceptional circumstances such that the Appellant is not precluded by Rule 48 from seeking to admit the Supplementary Reply Report.
43The Board finds that the Appellant has not complied with the Rules in relation to the Reply Report, nor is the information in the Reply Report relating to production volume as evidence of functional and external obsolescence proper reply evidence. Accordingly, the Board will not permit the Appellant to advance the issue of, or lead evidence relating to, functional and external obsolescence based on production volume.
ORDER
44The Board orders as follows:
a. The Appellant is permitted to file the Supplementary Reply Report. Rule 48 does not preclude the Appellant from seeking to admit it at a hearing.
b. The Appellant is not permitted to raise the issue of, or lead evidence on, functional and external obsolescence based on production volumes, specifically paragraphs 38, 41 and 42 and Tab L of the Reply Report.
c. MPAC is permitted to amend its Statement of Response, as well as prepare, serve and file a sur-reply expert report to address the equity analysis included in the Supplementary Reply Report and the issue of land value in the Reply Report. The parties have not provided the Board with submissions regarding the timelines to be afforded for this additional material. In the absence of such submissions, the Board orders that MPAC must serve and file these materials within four (4) weeks of this decision being issued.
d. The Board will then proceed to schedule the hearing of these appeals.
"Carly Stringer"
CARLY STRINGER
MEMBER
Assessment Review Board
Website: www.tribunalsontario.ca/arb