Tribunals Ontario

Assessment Review Board

Issue Date: May 02, 2023

File No.: DM 183548

Assessed Person(s): CPSP Ajax Nominee Inc.

Appellant(s): Amazon Inc.; CPSP Ajax Nominee Inc.

Respondent(s): Municipal Property Assessment Corporation Region 13; Town of Ajax

Property Location(s): 789 Salem Road North

Municipality(ies): Town of Ajax

Roll Number(s): 1805-020-015-20303-0000

Appeal Number(s): 3483449, 3483450, 3483462, 3483704, 3483705, 3483706, 3488072, 3488182, 3512445 and 3512465

Taxation Year(s): 2021, 2022 and 2023

Hearing Event No.: 778888

Legislative Authority: Sections 34 and 40 of the Assessment Act, R.S.O. 1990, c. A.31

Parties and Counsel/Representative

• CPSP Ajax Nominee Inc.: Submissions not received
• Amazon Inc.: Jack Walker, Jamie G. Walker
• Municipal Property Assessment Corporation: Kailey Langille
• Town of Ajax: Submissions not received

Request For: An Order for Disclosure

Heard: April 5, 2023 in writing

Adjudicator(s): Carly Stringer, Member

Motion Decision

Overview

1The Municipal Property Assessment Corporation ("MPAC") is responding to appeals filed with the Assessment Review Board (the "Board") by Amazon Inc. ("Amazon") and CPSP Ajax Nominee Inc. ("CPSP"). The appeals, brought pursuant to s. 34 and 40 of the Assessment Act (the "Act"), relate to the property assessments of 789 Salem Road North in the Town of Ajax, Ontario (the "Subject Property") for the 2021 taxation year. In accordance with s. 40(26) of the Act, the Board deemed appeals for the 2022 and 2023 taxation years (together, the "Subject Appeals").

2The Subject Property is a 58.21-acre site that includes a 1,587,849 square foot warehouse and distribution centre constructed and completed in August 2021. MPAC issued a supplementary assessment on November 8, 2021 to increase the current value assessment to include the newly built distribution centre and amend the classification of the Subject Property. MPAC valued the Subject Property using the Cost Approach.

3MPAC has brought this motion seeking disclosure. Specifically, MPAC seeks the following disclosure:

1. Disclosure Request No. 1: Actual construction costs to construct the 2021 improvement (sought from Amazon and/or CPSP), including: a. Final Certificate in Construction: a certificate issued by the architect at the end of a construction contract to show the amount of the final payment due to the contractor and to certify that the works have been completed in accordance with the contract. b. Final contract amount document by division and detailed division contract breakdowns c. Construction specifications document: A construction specification is a well-structured, detailed description of the quality, standards, workmanship, materials, and completion of work, which evolves across a project. Specifications are usually prepared by architects, engineers, designers and specifiers. d. A complete set of design and construction drawings, which comprises the following: i. Architectural drawings ii. Structural drawings (including foundations/structural steel-reinforced concrete framing) iii. Mechanical drawings (including HVAC/Plumbing/Fire-Protection) iv. Electrical Drawings e. All hard costs, land, all soft costs, leasing commissions, and development fees, all of which are considered part of the total project construction costs.

2. Disclosure Request No. 2: Actual construction costs of the storage racking system (sought from Amazon).

3. Disclosure Request No. 3: The completion and/or occupancy date for the Guard House facing Rossland Road sought from Amazon and CPSP.

4. Disclosure Request No. 4: Photographs taken at the November 16th inspection sought from Amazon.

4Amazon consents to Disclosure Request Nos. 3 and 4. Amazon asks the Board to deny Disclosure Request Nos. 1 and 2 on the basis that Amazon already provided the material requested; that the information is not relevant; that the amount of time and resources required by Amazon to satisfy the requests is disproportionate and excessive; and that disclosure would be highly prejudicial to Amazon. Alternatively, Amazon asks that if the Board grants Disclosure Request Nos. 1 and 2, it also grant an order requiring that MPAC disclose certain construction cost information.

5Neither CPSP nor the Town of Ajax provided submissions on this motion.

Result

6For the reasons that follow, the Board grants the motion.

Preliminary Matters

Disclosure Request Nos. 3 and 4

7Amazon has consented to provide the material requested as part of Disclosure Request Nos. 3 and 4. MPAC has confirmed that it considers Disclosure Request Nos. 3 and 4 to be resolved.

8Based on the parties' submissions, the Board will make no order in respect of Disclosure Request Nos. 3 and 4.

9Disclosure Request Nos. 1 and 2 remain at issue.

Analysis

Applicable Law

10Rule 45 requires that all parties provide a copy of "...all relevant documents in their possession, control, or power to all other parties in the proceeding, except for privileged documents."

11In determining whether to order disclosure in accordance with Rule 45, the Board applies a two-part test. First, the Board considers whether the information sought is relevant to the issues in dispute. Second, the Board considers whether ordering disclosure is proportionate to the issues in dispute: see Metro Ontario Inc. v Municipal Property Assessment Corporation, Region 13, 2019 CanLII 47974 (ON ARB) ("Metro"), supra at paragraph 11.

12The Board confirmed in Toyota Motor Manufacturing Canada Inc. v Municipal Property Assessment Corporation, 2020 CanLII 77938 (ON ARB) ("Toyota") at paragraph 13 that "the test for relevance really comes down to whether or not the production of documents requested relates to the issues in dispute. If so, they are relevant."

13In consultation with stakeholder representatives, the Board has developed and issued a Guideline entitled Disclosure Requirements for General and Summary Proceedings ("Disclosure Guideline"). This Disclosure Guideline includes a Disclosure Schedule Appendix A and B ("Disclosure Schedule") which sets out a non-exhaustive list of the types of disclosure that are generally accepted as relevant to the various issues that get raised in appeals before the Board.

14Relevance is not the only criteria that the Board will consider when determining whether a document should be disclosed. Rule 4 of the Board's Rules provides "[t]hese 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."

15Therefore, the requirement to disclose relevant documents must also be applied in a proportionate manner. As noted by the Board in Toyota, supra at paragraph 15,

In making this determination it is necessary for the Board to consider the competing interests of non-disclosure and, excessive disclosure which may unreasonably increase the cost in a particular case and delay the final resolution of the matter on its merits.

16Although the Rules do not include specific criteria to assess proportionality, the Board has previously applied the criteria enumerated in Rule 29.2.03(1) and (2) of Ontario's Rules of Civil Procedure: Walmart, supra at paragraph 18. This is considered a non-exhaustive list and other criteria may be considered on a case-by-case basis.

17For each Disclosure Request, the Board will apply the above-noted test for relevance and proportionality

Disclosure Request No. 1: Actual construction costs to construct the 2021 improvement

Submissions

18MPAC submits that the items it requests as part of Disclosure Request No. 1 are standard documents regularly reviewed by experts in determining the current value of a property. MPAC submits that this information is relevant because:

1. Amazon argues that MPAC has overstated costs including the steel framing, roof cover and HVAC assemblies.
2. A "monthly activity summary" states that construction value is estimated at $210,000,000 while MPAC has currently assessed the Subject Property at $135,972,000.
3. Actual construction costs of a newly built distribution centre are directly relevant to the issue of the correct current value assessment and to determining whether all components were costed correctly.

19MPAC further submits that its request is proportionate to the issues in dispute, given the size, complexity, and value of the Subject Property. MPAC further submits that any expense associated with Amazon disclosing relevant documents is outweighed by the amount of time, effort, and resources MPAC has expended to obtain the disclosure. MPAC submits that Amazon would not face prejudice from disclosing the information given it raises construction costs in its Statement of Issues, while MPAC would experience prejudice because its expert has not been provided sufficient disclosure. MPAC states that Amazon has confirmed this information is in its possession and therefore available. Finally, MPAC states that the volume of documents is not excessive considering the size of the property and the nature of this proceedings.

20Amazon submits that the disclosure request should be denied for the following reasons:

1. It has already complied with the request.
2. MPAC has not proved that the information sought is relevant and probative to the issues in dispute.
3. The amount of time and resources required by Amazon to satisfy the requests is disproportionate. Amazon has provided evidence that it would be "difficult and more time-consuming" to respond to the request because its real estate tax manager is based out of Seattle, Washington which is in a different time zone; it would be required to make duplicate copies of each document before transmittal; and it laid off many of the people who were responsible for preparing and organizing construction cost information.
4. Disclosure of the information sought would be highly prejudicial to Amazon and contrary to the Board's jurisprudence that current value cannot be based on actual costs of construction without first being validated against actual market data.

Findings

21The Board does not accept Amazon's submission that it has already provided the information requested. Although MPAC may not have clearly particularized its request for actual costs in the Expedited Board Direction Form requesting this motion, it is not factually accurate to say that Amazon has already provided the items requested as part of Disclosure Request No. 1. Further, even if Amazon has provided some relevant information in its power, possession, and control, that does not serve as a form of shield in preventing full disclosure of relevant documents: see Toyota, supra at paragraph 60. Finally, the Board accepts the evidence from MPAC's expert explaining why and how the information already provided by Amazon is insufficient to draw conclusions respecting the cost of assemblies and components of the 2021 improvement to the Subject Property.

22The Board finds that the items requested as part of Disclosure Request No. 1 are relevant to the issues in dispute, for the following reasons:

1. In its Statement of Issues, Amazon has put the construction costs of the Subject Property in issue by stating that the current value is incorrect due largely to overstated costs of components including steel framing, roof cover and HVAC. The Board is satisfied that MPAC's request for certain documents to confirm the actual construction costs and detailed components of the improvement, specifically the information itemized at paragraph 3(a) herein, is relevant to that issue.
2. MPAC provided evidence from its expert explaining that the items requested as part of Disclosure Request No. 1 would provide the assembly information and detailed component breakdown required to ensure a proper costing. MPAC's expert also provided evidence regarding how he proposes to use this information, including inputting the assembly information into MPAC's Automated Costing System to account for the difference in time between construction and valuation. The Board accepts this evidence. The Board does not accept Amazon's submission that these are conclusory statements – the Board finds that it is a reasonable explanation for the relevance of MPAC's request and the use to which MPAC's expert would put the requested documents, given the issues outlined in Amazon's Statement of Issues.

23The Board finds that MPAC's request is proportionate to the issues in dispute for the following reasons:

1. MPAC has provided a targeted and itemized list of the information it requires as part of Disclosure Request No. 1.
2. Amazon has not provided a specific estimate of the volume of documents, nor has it provided an specific estimate of the time and/or expense associated with producing the information. There is no evidence that an excessive volume of documents would be required to be produced.
3. While it may be "more difficult" for Amazon to manage the disclosure given that it is based out of Seattle and it has laid off some of its workforce in Ajax, this is insufficient to render the request disproportionate.
4. The information should be available to Amazon and/or CPSP, and there is no indication that it is readily available from any other source.
5. There is insufficient evidence that requiring Amazon and/or CPSP to disclose this information would cause undue prejudice.
6. The size, complexity and potential value of the Subject Property are significant.
7. While Amazon has provided evidence from an accredited appraiser and certified assessor contesting the probative value of this information, the Board notes that ordering that a document be disclosed is not an admission of its relevance or admissibility: see Rule 46 of the Board's Rules of Practice and Procedure. Ultimately, there is insufficient evidence to suggest that Amazon would be required to expend disproportionately significant time and resources to locate and deliver these documents.

Disclosure Request No. 2: Actual construction costs of the storage racking system

Submissions

24MPAC submits that this information is relevant because Amazon argues that MPAC's costing is overstated, and that the storage racking system should not be assessed as it is considered personal property. MPAC relies on similar submissions on proportionality as those it made in relation to Disclosure Request No. 1.

25Amazon did not divide its submissions between Disclosure Request Nos. 1 and 2. Therefore, the Board will consider Amazon's submissions on Disclosure Request No. 1 in relation to Disclosure Request No. 2.

Findings

26The Board repeats and relies on its reasoning in relation to Disclosure Request No. 1, and finds that it applies equally to Disclosure Request No. 2, with the addition that the Board finds that Disclosure Request No. 2 is relevant in light of Amazon's Statement of Issues which directly challenges MPAC's assessment of the storage racking system, and MPAC's Statement of Response that revises the improvement value of the Subject Property based on moving the racking from the storage level only.

Disclosure from MPAC

27Amazon takes the position that if the Board grants Disclosure Request Nos. 1 and 2, that Amazon will require disclosure of construction cost information from MPAC relating to 30 properties identified in its Statement of Issues and MPAC's Statement of Response.

28The Board does not grant Amazon's request at this time. At this time, Amazon has not brought a motion for disclosure; has not sufficiently articulated its disclosure request; and has not made submissions regarding why this information is relevant and proportionate to the issues in dispute. If Amazon is of the view it requires additional disclosure from MPAC, it is available to Amazon to request such disclosure and/or, if necessary, bring a separate motion properly articulating its request.

Conclusion

29The Board finds that the items requested as part of Disclosure Request Nos. 1 and 2 are relevant and proportionate to the issues in dispute

Order

30The Board orders that Amazon is required to disclose to MPAC the following documents, to the extent such information is in Amazon's possession, power or control, no later than 30 days from the issuance date of this decision:

1. Actual construction costs to construct the 2021 improvement including: a. Final Certificate in Construction: a certificate issued by the architect at the end of a construction contract to show the amount of the final payment due to the contractor and to certify that the works have been completed in accordance with the contract. b. Final contract amount document by division and detailed division contract breakdowns c. Construction specifications document: A construction specification is a well-structured, detailed description of the quality, standards, workmanship, materials, and completion of work, which evolves across a project. Specifications are usually prepared by architects, engineers, designers and specifiers. d. A complete set of design and construction drawings, which comprises the following: i. Architectural drawings ii. Structural drawings (including foundations/structural steel-reinforced concrete framing) iii. Mechanical drawings (including HVAC/Plumbing/Fire-Protection) iv. Electrical Drawings
2. All hard costs, land, all soft costs, leasing commissions, and development fees, all of which are considered part of the total project construction costs.
3. Actual construction costs of the storage racking system.

31The Board orders that the Schedule of Events is altered to extend the date for the parties to schedule and complete a mandatory settlement meeting from April 14, 2023 to 60 days from the issuance of this decision. All subsequent due dates are to be adjusted accordingly.