Ontario Land Tribunal

Tribunal ontarien de l’aménagement du territoire

ISSUE DATE: December 31, 2021

CASE NO(S).: LC190026

The Ontario Municipal Board (the “OMB”) and the Local Planning Appeal Tribunal (the “LPAT”) is continued under the name Ontario Land Tribunal (the “Tribunal”), and any reference to the Ontario Municipal Board or Board or Local Planning Appeal Tribunal in any publication of the Tribunal is deemed to be a reference to the Tribunal.

PROCEEDING COMMENCED UNDER subsection 26(b) of the Expropriations Act, R.S.O. 1990, c. E.26, as amended

Claimant: Brian Wilson and Jean Wilson

Respondent: City of Kawartha Lakes

Subject: Land Compensation

Property Address/ Description: 629 Highway 36, R.R. 3

Municipality: City of Kawartha Lakes

OLT Case No.: LC190026

OLT File No.: LC190026

OLT Case Name: Wilson v. Kawartha Lakes (City)

PROCEEDING COMMENCED UNDER subsection 9(1) of the Ontario Land Tribunal Act, 2021, S.O. 2021, c. 4, Sched. 6

Motion By: Brian Wilson and Jean Wilson

Purpose of Motion: Request for Determination / Directions

Subject: Land Compensation

Municipality: City of Kawartha Lakes

OLT Case No.: LC190026

OLT File No.: LC190026

OLT Case Name: Wilson v. Kawartha Lakes (City)

Heard: October 15, 2021 by video hearing

APPEARANCES:

Parties

Counsel/Representative*

Brian Wilson and Jean Wilson

B. Evans

City of Kawartha Lakes

D. Koev

DECISION DELIVERED BY WILLIAM R. MIDDLETON AND ORDER OF THE TRIBUNAL

1. Introduction and Background

1This video hearing (“VH”) was scheduled by the Ontario Land Tribunal (“OLT” or “Tribunal”) to hear a motion brought by the Claimants, partly arising out of examinations for discovery of the City’s witness Mr. David Kerr held on July 29, 2021, as further described below in paragraphs [3] and [4] (“Motion”).

2The materials before the Tribunal were the following:

1. Claimants’ Motion Record dated September 27, 2021, comprising 8 tabs and 95 pages (“Motion Record”);

2. Responding Motion Record of the City of Kawartha Lakes (“City”), comprising 2 tabs and 88 pages, including the affidavit of Stephen D’Agostino sworn October 5, 2021 (“Responding Motion Record”);

3. Factum of the Claimants, dated September 27, 2021 comprising 12 pages;

4. Outline of Submissions of Respondent, dated October 22, 2021, comprising 15 pages (Respondents Written Submissions);

5. Claimants’ Further Submissions Regarding the Motion, dated October 27, 2021, comprising 7 pages (Claimants’ Written Submissions);

6. Email correspondence from Respondent’s counsel dated October 27, 2021; and

7. Email correspondence from Claimant’s counsel dated October 28, 2021.

3In the Motion Record, the Claimants sought the following relief:

1. That the City be required to re-attend for examinations and answer all and any questions with respect to the Waste Management Facilities Compensation Policy that has been adopted by the City (“Compensation Policy”);

2. That the City be required to answer any questions about the retainer of the Altus Group (a real estate appraisal firm);

3. That the City be required to disclose any appraisals they have obtained on lands in proximity to the Claimant's property;

4. That the Altus appraisal and the evidence of Grant Uba (an appraiser with the Altus Group) is relevant and admissible in these proceedings;

5. That the only issue in these proceedings is the quantum of compensation payable to the Claimants; and

6. That the City pay to the Claimants their costs for the prior discovery of the City, and of this motion.

4One day before the VH, by correspondence dated October 14, 2021 to the Tribunal, the Claimants’ counsel abandoned the relief described above in points 4 and 5 of paragraph [3] on the basis that: “…as I feel that the tribunal would need a more complete record. This record would include information arising from the questioning regarding the Compensation Policy and the retainer of the Altus Group sought in paragraphs 1 and 2 of our motion.”. Counsel for the Respondent did not specifically object to this late-breaking change of position on the Motion taken by the Claimants’ counsel.

5The Tribunal notes that this proceeding has had a long and interesting history leading up to the Motion. It originated with a Notice of Arbitration (“Notice”) filed on November 18, 2019 which, pursuant to The Compensation Policy and the Expropriations Act, R.S.O. c.36, (“Act”) sought ‘compensation for the diminution in value of’ the lands owned by the Claimants municipally known as 629 Highway 36, R.R.3, Lindsay, Ontario (“Lands”). They claimed $560,000 allegedly arising from a permitted land fill operation adjacent to their property currently owned by the City.

6The City then brought a motion before the Tribunal more than one year ago on September 9, 2020 seeking:

1. direction to determine the validity of the Claim for compensation made by the Claimants, specifically the City seeks a determination as to whether or not the Claim has satisfied the statutory requirements under section 22 (1) of the Expropriation Act, R.S.O. 1990 c. E.25 (“Act”) including the one-year limitation set out in that provision.

2. Direction as to whether or not the Tribunal has the requisite jurisdiction to hear and determine the Claim.

7The OLT issued a Decision on October 5, 2020 (“Previous Motion Decision”) dismissing the City’s September 9, 2020 motion described in paragraph [6] above. However, the OLT explicitly stated at paragraph [53] of the Previous Motion Decision that;

“Absent the Compensation Policy, the Tribunal agrees with the City that the Claim might be statute barred. The Tribunal makes no finding in this regard.”

8The issue of whether ‘settlement privilege’ applied to the retainer of the Altus Group and any appraisals of the Lands (which in turn relates to the apparent subject matter of the Claimants’ relief sought in the Motion as set out in paragraph [3] 2 and 3 above) was also argued by the City’s counsel and received consideration in the Previous Motion Decision. However, in the view of this Tribunal, the settlement privilege issue was not finally determined in the Previous Motion Decision.

9The lengthy background facts relating to the Lands, the City’s land fill operation, the circumstances leading up to the Notice and the Parties’ historical positions relating to the Claimants’ Claim are set out in considerable detail in paragraphs [11] to [52] of the Previous Motion Decision (also made Tab 8 to the Motion Record). In light of this, there is no need for the Tribunal to repeat those details here.

10Since the City did not expropriate the Lands, the sole basis for the Claimants’ action before the OLT would lie under section 1(1)(b) and section 21 under the Act for injurious affection caused by the construction of the City’s landfill operation, not its ongoing use. Under subsection 22 (1) of the Act, such a claim must be initiated within

“…one year after the damage was sustained or after it became known to the person, and, if not so made, the right to compensation is forever barred.”

2. Settlement Privilege Exists Regarding Certain Aspects of the Appraisal

11The City’s counsel in the Responding Motion Record notes that the Claimants’ counsel did not file a fresh affidavit in support of the Motion, relying instead on the same affidavits used and described in the Previous Motion. Counsel for the City filed the affidavit of Mr. D’Agostino sworn October 5th, 2021. Mr. D’Agostino previously had carriage of this file as counsel for the City and is now the managing partner of Thomson Rogers, the law firm acting for the City.

12In his affidavit, Mr. D’Agostino attested that:

1. The Claimants rely upon an appraisal report dated July 22,2019 from Mr. Grant Uba of Altus Group that was jointly commissioned by the City and the Claimants solely for the purposes of settlement arising from discussions in another civil proceeding that is before the Superior Court of Justice ("Appraisal Report"). In addition to raising certain other ‘threshold issues’, the City's Reply filed in that action maintains that the Appraisal Report is subject to settlement privilege and, therefore, is inadmissible. The Parties agreed to jointly retain Mr. Uba to prepare an appraisal report for the purposes of “resolving the dispute between the Claimants and the City regarding the proximity of the Lands to the Landfill and its operation”. In other words, the use and not the construction of the Landfill;

2. At the time of the discussions described in 1. above, the Parties were exploring the possibility of a resolution by way of acquisition. Mr. Uba was instructed to estimate the Property’s market value as if the Landfill did not exist. Mr. Uba was also instructed to estimate diminution to the value of the Property based upon the fact that the Landfill was being operated in close proximity. This required Mr. Uba to conduct his analysis based on the extraordinary assumption that the Property had been expropriated, which it had not;

3. Mr. D’Agostino made it clear to the Claimants that if the Parties could not reach a settlement based on Mr. Uba’s report, the City retained its right to insist that the injurious affection be calculated based on the impact from the construction only and not the use of the Landfill;

4. Paragraph 60 of the Previous Motion Decision states that no offers were made to purchase the Property. This is factually incorrect. A number of offers have been made to acquire the Property. However, none of them have been accepted by the Claimants;

5. The Appraisal Report is marked "Confidential" and was completed on or about July 22, 2019. It does not analyse impacts to the Property owing to the construction activities relating to the Landfill. Screening out the existence of the Landfill, the Report concludes that the market value for the Property on an arbitrary effective date in 2018 was $560,000 ("MV"). Based on the fact that the majority of the other owners within the vicinity of the Landfill elected to sell their properties to the County and/or the City, the Altus Report also concludes that the use of the Landfill in close proximity to the Property resulted in a diminution in value that was equivalent to the MV;

6. On July 22, 2019, at or about the same time that the completed Appraisal Report was delivered, the Claimants’ counsel Mr. Evans inquired whether the City wished to mediate and, if so, requested that someone with authority to settle attend the meditation. This is in keeping with the City's understanding that the Appraisal Report was being undertaken for the purposes of furthering settlement discussions. In the same correspondence, Mr. Evans requested that the City forward $560,000 to the Claimants pursuant to section 2.3.4.2 of The Compensation Policy;

7. On the same date, Mr. D’Agostino responded to Mr. Evans via email marked "without prejudice" in which he indicated as follows:

I think you have misunderstood the policy and the appraisal. Mr. Uba indicated during the call in March that the City would acquire the land for the amount set out in his appraisal given that diminution is 100% of the unimpaired value. If this is the basis for settlement of this aspect and you have a reasonable closing date in mind I would be happy to recommend it to Council;

8. The Tribunal has not previously made a determination with respect to the admissibility of the documents appended hereto as Exhibits D through G of Mr. D’Agostino’s affidavit (without prejudice correspondence between Mr. D’Agostino and Mr. Evans) or the Appraisal Report. Any disclosure provided herein with respect to matters that the City claims are privileged is limited to the within Motion. Such disclosure is provided solely for the purposes of enabling the City to respond to the Claimants' Motion in a sufficiently detailed matter to allow the Tribunal to make an informed determination on the Motion; and

9. To date, the Parties have not been able to reach a settlement agreement on the basis of Mr. Uba’s report.

13Mr. D’Agostino’s affidavit was not before the Tribunal during the Previous Motion. The much earlier affidavit of Brian Wilson (one of the Claimants) sworn July 28, 2020 for the purpose of the Previous Motion, and simply re-filed in the Motion Record for this Motion, actually does not contradict the majority of Mr. D’Agostino’s affidavit evidence. One exception is that while Mr. Wilson concedes there were settlement negotiations between the Parties, he maintains that to his knowledge “…the City never made a settlement offer.”

14For some reason – perhaps in part because he preferred not to file his own responding affidavit - counsel for the Claimants did not file any fresh responding evidence on this Motion. He also chose not to cross-examine Mr. D’Agostino on his affidavit. Despite this, the Claimants’ counsel argued there was no implied or express condition that the Altus Appraisal would not be disclosed to this Tribunal in the event that negotiations failed.

15The failure of the Claimants’ counsel to: (a) file a fresh affidavit squarely contesting the very detailed evidence of Mr. D’Agostino pertaining to settlement negotiations between the Parties and the context for the Appraisal Report; and/or (b) to cross-examine Mr. D’Agostino on his affidavit, leads the Tribunal to draw an adverse inference. The Tribunal is of the view that in these circumstances, the affidavit evidence of Mr. D’Agostino must be considered to be uncontested and unchallenged – although the Tribunal notes the bare argument made by the Claimant’s counsel set out in paragraph [14] above and that it is unsupported by affidavit evidence or testimony.

16The Tribunal agrees with the position taken by the City’s counsel that based on the evidence available at the VH, the Appraisal Report and any questions related to it asked during examinations for discovery in this proceeding, are both irrelevant to the issues to be dealt with at the merits hearing of this case and are properly subject to a ‘settlement privilege’ claim.

17The Tribunal agrees that the Statutory Powers Procedures Act, R.S.O. 1990, c. S. 22 (“SPPA”) applies to OLT hearings. Subsection 15(2)(a) of the SPPA states that:

…nothing is admissible in evidence at a hearing that would be inadmissible in a court by reason of any privilege under the law of evidence.

This includes the settlement privilege claimed here by the City.

18The Tribunal concurs that the applicable test for determining the existence of settlement privilege is as follows, and, further, is satisfied on the evidence tendered at the VH that this test has been met:

(a) A litigious dispute must be in existence or within contemplation;

(b) The communication must be made with the express or implied intention that it would not be disclosed if negotiations failed; and

(c) The purpose of the communication must be to attempt to effect a settlement.

19As pointed out in the Previous Motion Decision, it may be true that the mere marking of correspondence as ‘without prejudice’ may not suffice to ground a claim of settlement privilege. However, the OLT at the Previous Motion did not have the benefit of the affidavit evidence tendered before this Tribunal. This Tribunal is satisfied, particularly in the absence of any responding contrary evidence from the Claimants, that the retainer of Altus Group and Mr. Uba’s resultant Appraisal Report are directly linked to the ongoing but to date unsuccessful settlement negotiations between the Parties’ counsel.

20The Tribunal is also of the opinion that the efforts of Altus Group and the Appraisal Report are ultimately irrelevant to the issue of what, if any, damages for injurious affection of the Lands are related to the construction of the City’s Landfill – i.e. not the use of it which would only be relevant to a claim where the Lands have been expropriated, which has not occurred here.

21Furthermore, it seems to this Tribunal that exploring the matters relating to the Appraisal at discovery is unlikely to assist the Tribunal in determining the merits of the Claim. The only possible germane evidence might be the Appraisal Report’s value conclusions. However, nothing prevented the Claimants’ counsel from retaining his own professional appraiser in the past to conduct whatever valuation exercise he deemed relevant, or even now prior to the merits hearing by filing the requisite expert report(s) in accordance with the Procedural Order in this case and calling the appraiser to testify at the hearing now scheduled for 5 days commencing on May 30, 2022.

3. Settlement Privilege May Not Exist Regarding All Aspects of the Compensation Policy

22The City’s counsel argues that certain aspects of the communications between the Parties concerning the Compensation Policy are also protected by settlement privilege. In short, the Tribunal agrees that any such aspects that relate to the retainer of Altus, the reasons for same and the Appraisal Report itself are subject to a proper claim of settlement privilege, for the same reasons discussed above in Part 2 of this Decision.

23However, in this Decision the Tribunal declines to rule that other communications pertaining to the Compensation Policy are necessarily inadmissible or otherwise precluded from disclosure on the same basis. Unfortunately, no effort was spent by the Claimants’ counsel during the VH to explore the questions asked of the City’s witness and refused at the examinations for discovery on this topic. In addition, no affidavit was filed relating to the contentions made in the Motion Record on this issue. In the Tribunal’s view, these matters are best dealt with by the Tribunal at the merits hearing scheduled to commence in May 2022.

24The Tribunal further agrees with the City’s counsel that in respect of the relief sought on this Motion, counsel for the Claimants’ did not follow the procedure set out in Rule 9 of the Rules of Practice and Procedure. This constitutes an additional reason for the Tribunal not to require the reattendance of Mr. Kerr at discovery to answer further questions about the Compensation Policy. However, subject to the Tribunal’s ruling made above in paragraphs [16] and [19], the issue of what, if any, additional questions related to the Compensation Policy may be properly asked of City witnesses at the merits hearing should be determined by the Tribunal at that time.

4. No Other Rulings Required

25As noted, shortly before the Motion hearing, the Claimants’ counsel withdrew certain claimed relief, as described above in paragraph [4]. As a result, counsel for the City spent considerable time in the Responding Motion Record dealing with the now withdrawn grounds of relief. However, the Tribunal is not required to rule on those matters.

26Following the VH, the Tribunal requested written final submissions from both counsel, as listed in paragraph [2] above. Counsel for the City objected to certain written arguments made by the Claimants’ counsel.

27Counsel for the City has argued through correspondence to the Tribunal:

1. Many of the submissions contained in the Claimants "Further Submissions Regarding the Motion" constitute improper reply; and

2. Some of the submissions represent a significant change in position. We are learning, for the first time, that the Claimants intend to ask the Tribunal to entirely disregard the statutory test for injurious affection when making a determination on the substance of claim (see paragraphs 28 through 31 of the Claimants' Further Submissions). This position is inconsistent with previous statements made by the Claimants' lawyer, in which he acknowledged that the Claimants are only entitled to claim for injurious affection resulting from construction activities related to the landfill. The last-minute change in position is prejudicial to the City. Had the City known the Claimants' position in advance of the motion, it would have sought the Tribunal's further direction and made additional submissions on the point.

28The Tribunal agrees that certain aspects of the written submissions made by Claimants’ counsel probably do not constitute proper Reply argument. However, ultimately in the Tribunal’s view, the Tribunal’s rulings on this Motion do not turn upon those submissions. The arguments made by the Claimants’ counsel and any evidence related to them will need to be dealt with at the hearing of this case in May 2022 and in this Tribunal’s view are not germane to the Motion as presented at the VH.

29Finally, both the Claimants’ counsel and the City’s counsel made submissions on the issue of whether costs ought to be awarded in respect of this Motion. However, after careful review of the submissions of the Parties’ counsel in light of the evidence tendered at the VH, the Tribunal declines to make a costs award at this juncture and is of the view that the costs ought to be determined by the OLT following the May 2022 hearing.

5. Conclusions and Order

30For the reasons stated in Parts 2, 3 and 4 above, the Tribunal dismisses the Claimants’ Motion.

Orders

31The Tribunal Orders that:

(a) The Claimants’ Motion for an Order that the City’s witness Mr. David Kerr reattend at an examination for discovery to answer questions that he refused to answer at his examination held on July 29, 2021 is dismissed;

(b) The evidence of Mr. Kerr and of the City related to the retainer of Mr. Uba of the Altus Group, the reasons for Mr. Uba’s retainer by the City and as to the details of Mr. Uba’s Appraisal Report dated July 22, 2019 is inadmissible before the OLT under subsection 15(2)(a) of the SPPA by reason of settlement privilege;

(c) All other current disputes between the Parties concerning the admissibility of evidence arising from the examinations for discovery in this proceeding or otherwise are reserved for determination by the OLT at the hearing of this case commencing May 30, 2022; and

(d) The costs of this Motion, if any, shall be determined by the OLT at the May 30, 2022 hearing.

“William R. Middleton”

WILLIAM R. MIDDLETON

MEMBER

Ontario Land Tribunal

Website: olt.gov.on.ca Telephone: 416-212-6349 Toll Free: 1-866-448-2248

The Conservation Review Board, the Environmental Review Tribunal, the Local Planning Appeal Tribunal and the Mining and Lands Tribunal are amalgamated and continued as the Ontario Land Tribunal (“Tribunal”). Any reference to the preceding tribunals or the former Ontario Municipal Board is deemed to be a reference to the Tribunal.