Prologis Canada Holding 3 GP ULC v. Municipal Property Assessment Corporation Region 19, 2023 CanLII 421

Tribunals Ontario / Tribunaux décisionnels Ontario

Assessment Review Board / Commission de révision de l’évaluation foncière

ISSUE DATE: January 05, 2023

FILE NO.: DM 182493

Assessed Person: Prologis Canada Holding 3 GP ULC

Appellant: Prologis Canada Holding 3 GP ULC

Respondent: Municipal Property Assessment Corporation Region 19

Respondent: City of Hamilton

Property Location: 1020 Osprey Drive

Municipality: City of Hamilton

Roll Number: 2518-140-410-43400-0000

Appeal Numbers: 3483442, 3483443, 3483457 and 3489666

Taxation Years: 2021 and 2022

Hearing Event No.: 777767

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

Parties

Representative/Counsel*

Prologis Canada Holding 3 GP ULC

Colin Francis

Municipal Property Assessment Corporation

Kailey Langille

City of Hamilton

Damian Bernacik*

REQUEST FOR: An Order for Disclosure

HEARD: December 1, 2022 in writing

ADJUDICATOR: Jean-Paul Pilon, Member

MOTION DECISION

OVERVIEW

1The City of Hamilton (the “Municipality”) is a respondent in appeals to the Assessment Review Board (the “Board”) filed by Prologis Canada Holding 3 GP ULC (the “Appellant”) with respect to the Appellant’s property located at 1020 Osprey Drive in Hamilton (the “Subject Property”) for the 2021 and 2022 taxation years.

2The Municipality filed this motion seeking an order for seven items of disclosure pursuant to Rule 45 of the Board’s Rules of Practice and Procedure (the “Rules”) outlined in Appendix “A” to its notice of motion. In its response to the motion, the Municipal Property Assessment Corporation (“MPAC”) echoed two of those seven requests and did not comment on the remaining five requests. The Appellant opposed all of the requests in the motion.

Results

3On a preliminary point raised by the Appellant, the Board finds that the issues in these appeals may not be limited to those identified by the Appellant in its Statement of Issues (“SOI”).

4All but one of the Municipality’s disclosure requests is granted, including both of MPAC’s requests, with modification on the disclosure of operating expenses and recoverable charges. The disclosure ordered in this decision is to be completed within 30 days of the date of this decision.

5The Schedule of Events (“SOE”) assigned to these appeals is to be extended by at least 60 days.

BACKGROUND

6The Subject Property was described by MPAC as a 45.42 acre site, including a 451,951 square foot distribution centre known as the “Bridgestone Distribution Centre” tenanted by an entity called Bridgestone Toronto Distribution.

7The parties complied with the SOE in exchanging their pleadings as did the Municipality in filing this motion for disclosure.

8In brief, the seven items of disclosure requested were for the following: copies of construction contracts for the distribution centre, a breakdown of the cost of the distribution centre as was communicated in a press release, rent rolls for 2021 and 2022, a copy of all leases for any portion of the distribution centre, a list of operating expenses, a summary of recoverable charges, and an on-site inspection.

9Disclosure requests are considered by the Board with reference to Rule 45. This provides that “all parties must serve an electronic copy of all relevant documents in their possession, control, or power to all other properties in the proceeding, except for privileged documents, or documents that cannot be disclosed by law.”

10In Canadian Niagara Hotels Inc. v Municipal Property Assessment Corporation Region 18, 2022 CanLII 21299 (“Canadian Niagara”) at para. 21, the Board set out a straightforward two-part test to be applied in such requests. The first part of this test determines “whether the information sought is relevant to the issues in dispute.” Then, “second, the Board considers whether ordering disclosure is proportionate to the issues in dispute.”

11On the first part of this test, relevance, the Board refers to para. 13 of its decision in Toyota Motor Manufacturing Canada Inc. v Municipal Property Assessment Corporation, 2020 CanLII 77938. This provides 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.”

12On the second part of this test, proportionality, the Board refers to the criteria set out in para. 18 of its decision in Walmart Canada Corporation and Target Canada Corporation v Municipal Property Assessment Corporation, Region 01, 2018 CanLII 67789 (“Walmart”) which are as follows:

1. the time required for the party or other person to answer the question or produce the document would be unreasonable;

2. the expense associated with answering the question or producing the document would be unjustified;

3. requiring the party or other person to answer the question or produce the document would cause him or her undue prejudice;

4. requiring the party or other person to answer the question or produce the document would unduly interfere with the orderly progress of the action; and (sic)

5. the information or the document is readily available to the party requesting it from another source.

6. whether an order for disclosure would result in an excessive volume of documents required to be produced by the party or other person.

13In addition, the Board issued a Guideline entitled “Disclosure Requirements for General and Summary Proceedings” (the “Disclosure Guideline”) to assist in such requests which is referred to in more detail below. The Disclosure Guideline was described in Simon Halton Hills Holdings Inc. v. Municipal Property Assessment Corporation, Region 15, 2021 CanLII 74737 at para. 33 as “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.”

14There are three issues to be determined in this motion: first, the broad, preliminary point raised by the Appellant on the issues before the Board in these appeals; second, the specific disclosure requests of the Municipality and MPAC; and third, the timing of the next steps set out in the SOE assigned to these appeals.

ANALYSIS

Issue 1 - Bases and Grounds vs Issues

15Prior to considering the specific disclosure requests submitted by the Municipality and MPAC, the Board opines on the more fundamental point raised by the Appellant. This alleged a distinction between the terms “grounds” and “issues” in an argument to limit the scope of the requested disclosure.

16In its response to the motion, the Appellant pointed out that the Municipality stated in its notice of motion that the two issues in dispute in these appeals are current value and equity. The Appellant, however, argued that these are not issues but are instead “bases” and “grounds for appeal”. The Appellant wrote that this is the terminology used in section 40(1)(a)(i) of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”) which provides that a party can appeal “on the basis that … the current value is incorrect.” As to equity, the Appellant referred to the language of section 44(1) of the Act which states that “upon an appeal on any ground against an assessment”, which then lists current value and equity as the grounds upon which an assessment can be appealed.

17The relevance of these terms and disclosure was explained as follows in the Appellant’s submission to show that the disclosure requested could be limitless if the issues in dispute could be stated so broadly:

If issues in dispute were as simple as “current value” and “equity” in which the Moving Party is claiming (sic), then all an Appellant would have to state in its Statement of Issues is that the current value is incorrect or inequitable, and then proceed with an expert report and hearing with a myriad of reasons why, claiming the “current value” is the issue in dispute. The Board does not allow this.

18The single authority grounding this submission was the Board’s recent decision in 2871220 Canada Limited v Municipal Property Assessment Corporation Region 09, 2022 CanLII 101421 (“2871220”). In 2871220 the Board determined that highest and best use and replacement cost new using the cost approach to valuation were not “issues” that had been raised in pleadings. In essence, the Appellant argued that the disclosure requests to which it might be subject should be limited to those specific issues raised in its SOI in these appeals: land rates, depreciation relating to roofing materials, the costing of heaters and the comparable properties to be considered in equity.

19The problem with this argument is that the motion in 2871220 was not a disclosure motion. Instead, it considered late attempts to amend pleadings to address issues that had been raised in expert reports, which is not the situation here. The Board’s reference to the term “issues” in that decision should be interpreted contextually, where, very late in the proceedings, the municipality raised concerns relating to components of the cost approach that had not been raised as items in dispute previously.

20The Appellant in this motion referenced Rule 49 which provides that an issue can only be raised at a hearing event if it has been raised in pleadings. However, Rule 43(a), which says what Statements of Issues and Responses must contain, clearly lists current value as an issue. Also, “if the issue is current value”, Rule 43(a)(ii) provides that “Statements of Issues and Responses must contain…a full statement of every issue that the party intends to raise, including identification of comparable property(ies) to be referred to if any…” This suggests a more liberal interpretation of the term than argued by the Appellant is required. It is also notable that the term “issue” arises only twice in the Act, where neither instance is instructive in these circumstances.

21Another reason that the term “issue” should be construed liberally in disclosure motions is because of the appearance of the term in the standard form SOE very early in the process, immediately after service of an appellant’s SOI. At this point, the dispute between the parties would not have crystallized because the other parties to the appeals would not yet have served their pleadings on the others, where “pleadings lock the issues in place and ground all further work on appeals” (General Motors of Canada Company v St. Catharines (City), 2021 CanLII 794 at para. 26). More specifically, the Board’s “Practice Direction on How to Interpret the Schedule of Events for the General Proceedings (sic)” provides that:

Under Rule 45, a party is required to disclose a relevant document. The term “relevant” means the document must relate to something. In an appeal proceeding this means that it must relate to an issue that is in dispute. Those issues are identified through the parties’ Statements of Issue, Response and Reply… (underlining added)

22As a result and given that all of the pleadings identify issues dispute, it cannot have been the intention of the Rules to limit disclosure to only those issues raised by an appellant in its SOI. The Board finds that the term must be interpreted more broadly than that, especially at this point in the proceedings.

23In short, the Board finds that that the Appellant’s overly literal interpretation of the term “issues” is not correct. Subject to the relevance and proportionality tests described above, the specific requests made by the Municipality in its motion were within the scope of disclosure that could be ordered at this point in the proceedings.

Finding on Issue 1

24The issues in these appeals are not limited to those identified by the Appellant in its SOI.

Issue 2 - The Specific Disclosure Requests

a. Municipality’s Request 1 and MPAC’s Request 2: A copy of all construction contracts for constructing the 451,951 square foot distribution centre completed in 2021

25The Municipality wrote that this disclosure was required to determine the cost to construct the distribution centre and to account for the difference in time between the construction date and the valuation date, arguing this is the “best and most reliable cost valuation evidence.” MPAC, which repeated the Municipality’s request, stated that this disclosure was also necessary for its cost analysis. The Appellant argued that the request was excessive, not proportionate and irrelevant to a current value assessment with a valuation date of January 1, 2016.

26The Board finds disclosure of construction costs to be relevant in these appeals because the Appellant raised specific costing issues with the assessment in its SOI. In addition, the Disclosure Guideline indicates that “particulars relating to recent construction are to be provided” although it does not go so far as to require disclosure of all construction costs. Instead, it says that “if the subject property was constructed within the five years preceding the valuation date, a Construction Cost Questionnaire” appended as Appendix “B” to the Disclosure Guideline is to be disclosed.

27The Disclosure Guideline does not form part of the Act, the regulations made pursuant to the Act or the Rules and, as a result, should only be used for guidance when considering disclosure requests. In addition, it contains no explanation for its time limitations which the Board finds can be disregarded if appropriate. The Board finds that this is a situation in which it would be appropriate to disregard those limitations because MPAC issued Property Assessment Change Notices (“PACNs”) pursuant to section 34 of the Act for the Subject Property in the 2021 taxation year also under appeal to account for the new construction. In addition, the Board finds that the single-paged, unsworn questionnaire attached as Appendix “B” to the Disclosure Guideline would not likely be sufficient in the circumstances where specific costing issues relating to roof membranes and heaters were raised by the Appellant in its SOI.

28The Board therefore finds that this request is relevant to the issues in dispute in the appeals.

29As to the question of proportionality, the affidavit of Victor Guyader sworn November 14, 2022 relied upon by the Appellant and simply stated that “this request is extremely broad” without elaboration. It did not address any of the other questions set out in Walmart.

30As a result, the Board finds that this request is both relevant and proportionate and that this disclosure should be ordered.

b. Municipality’s Request 2: A detailed breakdown of how Bridgestone Canada, Inc. calculated the $65 million cost of the distribution centre communicated in its January 11, 2021 press release

31This request is denied based on the statement in Mr. Guyader’s affidavit that “Bridgestone Canada Inc. is the tenant of the Subject (sic); therefore, this information is not in the Appellant’s possession.”

32If the requested disclosure is not in the Appellant’s possession, control or power, then the Appellant would not be able to produce it. It should not therefore be ordered.

c. Municipality’s Requests 3 to 6: Rent Rolls for 2021 and 2022, copies of leases for the distribution centre, a list of all operating expenses and a summary of recoverable charges

33The Municipality indicated that this disclosure was necessary for its appraiser’s analysis using the income approach. The Appellant opposed this request on the basis that the income approach was not raised in the Appellant’s SOI, that rent rolls for 2020 and 2021 were not relevant, that the Disclosure Guideline would have required this disclosure only for years preceding the valuation date, and that the Municipality would be able to obtain its information through market analysis.

34The Board does not agree. As noted earlier, the pleadings from all the parties define the issues in dispute and the Municipality indicated that it intends to conduct an income approach analysis. Moreover, the Board rejected a similar argument in Canadian Niagara at para. 30 where a municipality argued that the requested disclosure was not relevant because it did not rely on an income approach. The Board determined in those circumstances that “relevance really comes down to whether or not the disclosure of documents relates to the issues in dispute more broadly – not just the issues advanced by the parties seeking disclosure.” This suggests relevance is to be interpreted even more broadly than argued by the Municipality in this motion.

35The Appellant’s further objection on these requests related to timing where it argued that rent rolls for years far removed from the valuation date were not relevant. However, the Board again notes that there were three PACNs issued in 2021 related to the new construction.

36In addition, the Appellant objected on the basis that the Disclosure Guideline only requires disclosure of data for the income approach for years preceding the valuation date, not following it. On this point, the Board repeats its earlier finding that the Disclosure Guideline is only that, a guideline intended to assist in interpretation that is not binding. The Board also notes that those time limitations are unexplained and finds that they do not make sense in the context of these appeals.

37The Appellant raised no issues as to proportionality on these specific requests, although the Board is concerned with the very broad requests for disclosure of “all operating expenses” and “a summary of recoverable charges.” As the request focused on the distribution centre completed in 2021 and the leases for 2021 and 2022, the disclosure of operating expenses and recoverable charges should be limited to those two years.

38The Board finds that these requests are relevant and proportionate and, subject to the limitations above, should be ordered.

d. Municipality’s Request 7 and MPAC’s Request 1: An on-site Inspection

39Finally, the Municipality requested an inspection as a “fundamental source of information” to determine the value of the Subject Property. MPAC made the same request quoting Municipal Property Assessment Corporation, Region No. 16 v Melnikova, 2017 CanLII 81711 at para. 4, “that an inspection can resolve those types of disputes (around physical aspects of a property) in a way no other tool can.”

40Both MPAC and the Appellant noted that an MPAC employee had conducted an inspection previously. However, that was prior to these appeals and the Board accepts that this would not be useful within the context of the specific costing issues raised by the Appellant in these appeals.

41The Board therefore agrees with MPAC that it would be unfair for it to be excluded from an inspection if one was granted to the Municipality. The Board also accepts that MPAC would suffer prejudice if it was not permitted an inspection given its burden of proof set out in section 40(17) of the Act “as to the correctness of the current value of the land.”

Findings on Issue 2

42The Appellant is to disclose: a copy of all construction contracts for constructing the 451,951 square foot distribution centre completed in 2021, rent rolls for 2021 and 2022, copies of leases for the distribution centre, a list of all operating expenses for 2021 and 2022, and a summary of recoverable charges for 2021 and 2022 within 30 days of the date of this decision.

43The Appellant is also to allow for an on-site inspection for the benefit of MPAC and the Municipality within the same 30 days following the date of this decision.

Issue 3 – Extending the SOE

44Only MPAC requested an extension of the SOE, and no party objected. The reasons for this request were to allow for time to conduct the inspection and to review the disclosure to be provided.

45The Board agrees that it would be prejudicial in these circumstances not to extend the SOE, especially given that this motion will have taken time out of the SOE.

46The next event in the SOE was for service of the Appellant’s Statement of Reply and the completion of all disclosure on all other parties on or before December 28, 2022. That date should be extended by 60 days, to February 26, 2023 or a day following to be determined by Board staff to maintain consistency with SOEs in other appeals. All further dates in the SOE should be extended accordingly.

CONCLUSION

47The issues in these appeals may not be limited to those identified by the Appellant in its SOI.

48All but one of the Municipality’s disclosure requests including both of MPAC’s requests are granted with modification as to operating expenses and recoverable charges. These are to be completed within 30 days of the date of this decision.

49The Schedule of Events (“SOE”) is extended by at least 60 days.

ORDER

50The Board orders that within 30 days of the date of this decision, the Appellant shall disclose the following to the Municipality and MPAC:

1. a copy of all construction contracts for constructing the 451,951 square foot distribution centre completed in 2021;

2. rent rolls for 2021 and 2022;

3. a copy of any leases signed for the purposes of leasing any portion of the 451,951 square foot distribution centre (including the lease with Bridgestone);

4. a list of operating expenses for 2021 and 2022; and

5. a summary of recoverable charges for 2021 and 2022.

51The Appellant shall allow for an inspection of the Subject Property within the same 30-day period.

52The SOE is extended by at least 60 days to be determined by Board staff.

53The Municipality’s request for a detailed breakdown of how Bridgestone Canada Inc. calculated the $65 million cost of the distribution centre as communicated in its January 21, 2021 press release is denied.

"Jean-Paul Pilon"

JEAN-PAUL PILON

MEMBER

Assessment Review Board

Website: www.tribunalsontario.ca/arb