Ontario Land Tribunal

Tribunal ontarien de l’aménagement du territoire

ISSUE DATE: February 18, 2022

CASE NO(S).: MM200001

PROCEEDING COMMENCED UNDER subsection 42(10) of the Planning Act, R.S.O. 1990, c. P.13, as amended

Applicant: Rosebay Construction Inc.

Subject: Determination of the value of land

Property Address/Description: 10 Windward Drive

Municipality: Town of Grimsby

OLT Case No.: MM200001

OLT File No.: MM200001

OLT Case Name: Rosebay Construction Inc. v. Grimsby (Town)

PROCEEDING COMMENCED UNDER subsection 12(1) of the Ontario Land Tribunal Act, 2021, S.O. 2021, c. 4, Sched. 6, and Rule 9.1 of the Tribunal’s Rules of Practice and Procedure

Request by: Town of Grimsby

Request for: Motion for Discovery

Heard: February 8, 2022 by video hearing (“VH”)

APPEARANCES:

Parties

Counsel

Town of Grimsby (“Town”)

A. Gajaria / J. Pappas

Rosebay Construction Inc.

R. Cheeseman / S. Fleming

(“Applicant”)

DECISION DELIVERED BY BLAIR S. TAYLOR AND ORDER OF THE TRIBUNAL

INTRODUCTION

1The matter before the Tribunal is a Motion for Discovery by the Town with regard to an application by the Applicant disputing the Town’s determination of the value of land for a cash-in-lieu of parkland payment pursuant to s. 42(10) of the Planning Act (“PA”).

DECISION

2For the reasons set out below, the Motion is wholly dismissed.

BACKGROUND AND CONTEXT

3The Applicant owns the lands known municipally as 10 Windward Drive (“Subject Lands”), which it proposed to develop for a high density mixed-use development.

4In 2017, a Zoning By-law Amendment was approved by the Town. A payment of cash-in-lieu of parkland was directed by the Town.

5In October 2017, the initial Site Plan approval was given, followed by a revised Site Plan approval in May of 2018.

6The Town retained the Antec Appraisal Group to prepare a Narrative Appraisal Report (“Town Appraisal”) of the Subject Lands. The Town Appraisal, dated October 7, 2019, used the Direct Comparison Approach to value the Subject Lands as of September 24, 2019 (assumed to be the day before the building permit was issued), and provided its valuation of $8,435,000.00 (Exhibit 2A, Tab A).

7On December 17, 2019 the initial building permits were issued, but it was on December 19, 2019 that they were released to the Applicant when the Applicant made a payment under protest for the cash-in-lieu of parkland in the amount of $4,287,591.44.

8By letter dated January 6, 2020, counsel for the Applicant applied to the Tribunal, disputing the Town’s valuation and seeking to have the value determined by the Tribunal.

9The Applicant retained its own appraiser, and subsequently the Pocrnic Narrative Retrospective Appraisal Report dated June 30, 2020 was prepared (“Applicant’s Appraisal”) (Exhibit 2A, Tab B). The Applicant’s Appraisal also used the Direct Comparison Approach, but with a valuation date of December 17, 2019 and provided an estimated market value of $4,200,000.00.

10The first hearing event on this matter was set for August 9, 2021 before this Member. In the lead up to that hearing event, the Tribunal received the Town’s Notice of Motion for Discovery, an initial response by the Applicant, a draft Procedural Order and notification that the parties would request that the Tribunal treat the hearing event not as a hearing on the merits, but rather as a Case Management Conference (“CMC”) as had been indicated on the Tribunal’s website.

11As the parties were interested in mediation, at the first CMC, the Tribunal gave direction with regard to Tribunal-led mediation, tabled the Town’s Motion, tabled the draft Procedural Order, and set a second CMC for December 14, 2021.

12At the second CMC, that panel of the Tribunal was advised that Tribunal-led mediation was ongoing, but not successful to date. As it had been about two years since the date of the cash-in-lieu payment, the Applicant requested a hearing date, and the Town agreed that it could be scheduled, but also gave notice of its intent to bring forward its Motion for Discovery.

13The Tribunal directed that the Notice of Motion would be in writing and set a 4 day hearing to commence on July 5, 2022. With the parties having filed their motion materials, the Tribunal was able to provide the parties with a date for oral submissions, which was held on February 8, 2022.

MOTION

14The requested documentation is fully set out in Schedule A to the Motion (Exhibit 1A) and as set out below:

a. Any appraisal or real estate valuation analysis in the possession of Rosebay Construction Inc., including any subsidiaries, related companies or affiliates, have obtained with respect to the Subject Property, including any appraisal or real estate valuation conducted for the purchase of the Subject Property, the financing of the Subject Property with CIBC in 2015, any prospective construction finance lending, including for the mortgage registered in 2019(08/08/19) for $30 million any prospective sales lending;

b. Mortgage terms from 2015 and the value to asset ratio with CIBC and any subsequent registered or unregistered borrowers;

c. Lending terms from the 2019 construction financing and the value to asset ratio any subsequent registered or unregistered borrowers;

d. Any internal communication or external communication with respect to the underlying value of the Subject Property;

e. Any internal or external communication with respect to the approach to value for the Subject Property;

f. Any land residual analysis or pro-forma valuations completed internally or by external consultants for the development of the Subject Property;

g. Marketing materials for the end product sales for finished units in the development;

h. Representations made to any governmental entity, including income taxes with respect to the value of the Subject Property;

i. Any accounting records, including audited financial statements where the Subject Property is accounted for;

j. Any representation to an arm’s length third party with respect to the valuation of the Subject Property;

k. Any correspondence with any brokers or real estate brokers that includes the valuation of the Subject Property;

l. Any internal or external corporate reporting related to the Subject Property [sic] adjusted cost base or valuation;

m. Any internal or external reports considering proximate properties and valuation, including the properties cited in either parties’ appraisal report as “comparable sales”;

n. A full summary of the hard and soft cost construction costs for The Odyssey; and

o. Any other documents as defined in the Rules of Civil Procedure that are relevant to the issue between the parties in this matter.

15The underlying basis for the Motion is found in paragraph 25 of the Motion Record:

The Requested Documentation contains real-world [sic] data that will tend to prove or disprove the appraisal methodology advanced by Rosebay.

16Paragraph 27 makes it clear that the object of this Motion is to allow for a second appraisal to be done by the Town this time using the Residual Land Value methodology that would utilize the data that the Town is seeking from the Applicant.

17The Town submits that the requested production should be ordered as:

a. The Tribunal is entitled to the best evidence from the parties on the sole issue of the value of the Subject Lands;

b. that a Residual Land Value appraisal will serve as a “further check on the Direct Comparable Approach used by Rosebay”;

c. that the Tribunal has ordered production of appraisal reports in parkland disputes (1 Yorkville Inc. v Toronto (City), 2016 CanLII 56915) (“1 Yorkville”);

d. that in the context of expropriation hearings, past appraisal reports have been determined relevant and ordered produced (1739061 Ontario Inc. v Hamilton-Wentworth District School Board, 2019 CanLII 3379);

e. that in the context of assessment appeals, past appraisal reports have been ordered to be produced (Vaughan (City) v. Municipal Property Assessment Corporation, Region 14, 2020 CanLII 44350);

f. that the requested production is necessary to give the Tribunal the best evidence and is not a “fishing expedition” as the Town is not a competitor;

g. that the legislative framework and procedural rules entitle the Town to the requested production as s. 42(10) of the PA “…directs that a parkland dispute should mirror the Tribunal’s process in fulfilling its mandate under the Expropriations Act, which is primarily to determine the value of land;”

h. that Rule 26.16 of the Tribunal’s Rules of Practice and Procedure (“Rules”) for expropriations provides that no Tribunal Order is required for examinations for discovery or documents and that the Rules of Civil Procedure apply unless otherwise ordered;

i. that the Rules of Civil Procedure set out a robust process for disclosure and production of relevant documents; and

j. accordingly, the Town is entitled to such production.

RESPONSE

18The Applicant’s Response confirms that the requested materials have not been provided and that the reason for this is that they are not relevant to the proceeding before the Tribunal.

19The Response references s. 42(6.4) of the PA:

For the purposes of subsections (4.19), (6), (6.0.1) and (6.2), the value of the land shall be determined as of the day before the day the building permit is issued in respect of the development or redevelopment or, if more than one building permit is required for the development or redevelopment, as of the day before the day the first permit is issued. (Emphasis added)

20As the first building permit was issued on or about December 17, 2019, the Response submits that the requested documentation is outside the scope of s. 42(6.4) of the PA, and in addition to being outside the time frame that is relevant, some of the materials such as marketing materials for finished units etc. are entirely irrelevant to the valuation of the Subject Lands as of December 17, 2019.

21The Response also sets out the administrative process by which this matter arose: the Town set out the amount of the cash-in-lieu payment and that figure was “presented” to the Appellant. In order to get the building permit, the Appellant had to pay that amount and, in this case, did so under protest.

22As the cash-in-lieu payment was calculated by the Town, and as the Town provided the Applicant with the Town Appraisal, the Applicant presumes that this was the basis of the valuation set as of September 24, 2019.

23Thus, the Applicant disputes the characterization of the issue before the Tribunal advanced by the Town, and submits that the issue is not how the Applicant conducts its business, but rather how did the Town arrive at a valuation of $8,435,000 for the Subject Lands which is the justification for the cash-in-lieu payment of $4,287,591.44?

24The Response points out that none of the requested documentation was asked for by the Town before the Town arrived at its valuation and presumably that valuation was based on the Town Appraisal. While the argument of the Town is that the requested documentation is critical to the Tribunal’s determination of the value of the Subject Lands, it was obviously not critical to the Town when it made its determination of the valuation of the Subject Lands.

25The Response submits that the matter before the Tribunal is not an expropriation under the Expropriations Act, that the Tribunal’s Rules relating to expropriations do not apply (Rule 26), and that the decision in 1 Yorkville had found that Statements of Claim and Notices of Arbitration are not required for such applications.

26The Response takes umbrage at the Town’s assertion that:

… the conclusions and methodology adopted in these reports (i.e. the requested documents) may more accurately reflect the true value of the Subject Property in the eyes of an arm’s length third party than a report prepared for the sole purpose of reducing the amount of a payment to the Town.

27In that respect, the Response notes that the Applicant’s Appraisal used the same Direct Comparison Approach as the Town Appraisal, that both appraisers would have known (or ought to have known) that they might be called upon as expert witnesses in a hearing before the Tribunal, and then rhetorically poses the question: as to whether the sole purpose of the Town Appraisal was to maximize the amount of payment to the Town?

28Responding to the assertion that ordering the production of the requested documentation would lead to a Residual Land Value analysis that would be a further check on the Direct Comparable Approach utilized by the Appellant’s appraiser, counsel for the Appellant succinctly points out that the Town’s appraiser used the same methodology and how can the Town say that this documentation is now relevant when its own appraiser did not use it in coming to that valuation?

29The Response submits the Town is apparently abandoning its own appraisal in the hope that the Tribunal will order the production of the requested documentation so that the Town can then do a second appraisal, except this time using the Residual Land Value methodology analysis, and that if the Tribunal were to order such production that it would result in both parties going back to square one, engaging new experts to conduct that analysis, which would prejudice the Appellant and result in considerable delay to the proceedings, which have already been set down for a 4 day hearing to commence July 5, 2022.

30Thus, the Response submits that the Tribunal should dismiss this Motion and that the Town should not be allowed at this stage of the proceedings to begin to “fish” for information that would allow it to undertake a brand-new appraisal methodology, at this late stage in the proceeding.

STATUTORY REGIME

31Section 42 of the PA provides for conveyance of land for park purposes as a condition of development or redevelopment. Section 42(6) provides that council may require payment in lieu of the land otherwise required to be conveyed, and as noted above s. 42(6.4) provides that the value of the land shall be determined as of the day before the day the building permit is issued for the development or redevelopment. Section 42(12) states that if there is a dispute on the cash-in-lieu payment, the owner may pay the amount under protest and make an application to the Tribunal within 30 days of the payment.

32Then s. 42(10) provides for the determination of disputes arising:

In the event of a dispute between a municipality and an owner of land on the value of land determined under subsection (6.4), either party may apply to the Tribunal to have the value determined and the Tribunal shall, in accordance as nearly as may be with the Expropriations Act, determine the value of the land and, if a payment has been made under protest under subsection (12), the Tribunal may order that a refund be made to the owner.

33From the Expropriations Act, s. 2(1) provides that where land has been expropriated or injurious affection is caused by a statutory authority, then it is the Expropriations Act that applies.

34Section 25(1) of the Expropriations Act states that where there has been no agreement on compensation with the owner, then the expropriating authority shall within 3 months of the registration of the plan of expropriation serve on the owner an offer of full compensation which s. 25(2) notes shall be based on a report appraising the market value of the lands taken.

35Where no agreement is reached after s. 25 has been complied with, the parties may then proceed to the Board of Negotiation, or alternatively either the owner or the expropriating authority may serve a notice of arbitration and the compensation will be determined by arbitration by the Tribunal.

36From the Ontario Land Tribunal Act, 2021 (“OLTA”), s. 12 states:

The Tribunal shall, in respect of each proceeding, adopt any practices and procedures provided in the rules or that are otherwise available to the Tribunal that, in its opinion, offer the best opportunity for a fair, just and expeditious resolution of the merits of the proceeding.

37From the Tribunal’s Rules, the Tribunal notes that Rule 9 provides that the Tribunal may make an order for discovery for a party to obtain necessary information from another party.

38The Tribunal Rules also have the Part II Rules for expropriations, which commence with Rule 26. Rule 26.1 expressly states: “…This Rule applies to Tribunal proceedings under the Expropriations Act.”

39Rule 26 goes on to provide inter alia for expropriation matters that: a claimant seeking compensation must serve a combined Notice of Arbitration and Statement of Claim (26.6); allow for examinations (26.15); that no Tribunal order is required for examinations for discovery or documents (26.16), for a notice of readiness for hearing; and that the expropriating authority shall arrange at its expense for a verbatim reporter to record all the oral evidence (26.21).

40Rule 26 is unique to expropriation proceedings.

CASH-IN-LIEU PROCESS

41As noted above, the practice with regard to cash-in-lieu of parkland commences with a determination by a municipality that it would prefer to take cash-in-lieu rather than a dedication of part of a development application’s land base.

42Having determined to take cash-in-lieu, the municipality, as the issuance date of a building permit nears, either itself prepares or retains a consultant to prepare a valuation of the development lands as of the day before the first building permit is issued. That valuation is then used to arrive at the quantum of the cash-in-lieu payment to be required from the developer.

43That cash-in-lieu payment quantum is presented by the municipality to the developer. The developer, if it wishes to obtain its building permit to proceed to construction, must either pay the cash-in-lieu in full, or pay it in full under protest so as to avail itself of s. 42(10) of the PA.

JURISPRUDENCE

44Both parties have cited what appears to be the only relevant case for the purposes of this Motion being 1 Yorkville Inc.: a decision based on pre-hearing motions for discovery heard by then Associate Chair Wilson Lee.

45It is important to note the factual basis of 1 Yorkville.

46That pre-hearing arose from four similar motions by landowners/developers:

The reliefs sought by several landowners at these motions are identical in form and substance. They all seek orders from the Board compelling the City to produce to these applicants any appraisal reports, market reviews, and any valuation analysis referenced by the City official setting forth the park levies required and on the basis of which park levies had been exacted and paid. All these requests for disclosure have all been denied by the City. (Emphasis added)

47The decision considered the PA wording in s 42(10) that the Tribunal shall determine the value of the land “…in accordance as nearly as may be with the Expropriations Act”, and found that adherence to expropriation law “as nearly as may be”, was the legislative “doffing of the hat” under the planning regime due to the richness of the jurisprudence under the Expropriations Act where the market value of lands is invariably the only question involved.

481 Yorkville distinguished an expropriation under the Expropriations Act from applicants in a cash-in-lieu dispute under the planning regime, where funds must be paid under protest in order to get their building permits. The decision notes that the relevance of disclosure by the municipality is beyond dispute as these documents are the basis for the demand of payment by the municipality.

49Finally addressing such cash-in-lieu litigation then Associate Chair Lee provided this guidance:

Litigation before the Board must be fair. As much as possible, the hearing should be efficient, quick-witted, and result-driven. Consequently, its pre-hearing procedure should be minimalist, unencumbered by artful dodges and time-consuming jousting. The pre-hearing process should be a means to an end instead of being an end in itself. In other words, they must be designed and marshalled so that it can readily give rise to mediated settlements, if possible, and an efficient and meaningful litigation if necessary. In short, form should always follow the substance instead of the other way around.

COMMENTARY AND ANALYSIS

50It is uncontested that the Tribunal has the jurisdiction to make the requested Order for production.

51The issue before the Tribunal is whether in these circumstances the Tribunal ought to exercise its discretion and issue the Order for Discovery?

52The matter before the Tribunal is an application under s. 42(10) of the PA, arising out of a dispute between the Town and the Applicant as to the valuation of the Subject Lands on the day before the first building permit was issued.

53There has been no expropriation by the Town. Nor is this an assessment appeal.

54The Tribunal concurs with then Associate Chair Lee that the language of s. 42(10) of the PA is the legislative doffing of the hat under the planning regime to the richness of the jurisprudence under the Expropriation Act, where it is de rigueur for the Tribunal to make determinations of valuation.

55That legislative doffing of the hat does not bring this planning matter under the statutory scheme of the Expropriations Act, nor does it import the Tribunal’s Rules in Part II (for expropriations). If such were the case, both the PA and the Tribunal’s Rules would explicitly so provide.

56The request for discovery arose just before the first CMC, and more recently after the second CMC, where a 4 day hearing on the merits was set down commencing July 5, 2022.

57The purported purposes of the request for discovery are to get the best evidence for the Tribunal to make a decision and that would come to the Tribunal via a second appraisal for the Town, this time on a Residual Land Value basis.

58Counsel directed the Tribunal to the Applicant’s Appraisal where at page 30 (Exhibit 2A Tab B) there are five items listed as extraordinary costs associated with the development. Those five items are as follows:

Noise Mitigation

$1,100,000

Waterproofing, Forming, and Tie Back

$ 70,000

Library

$ 20,000

Public Square

$ 100,000

Section 37 of the Planning Act

$ 100,000

Total Estimated Extraordinary Costs

$1,390,000

59It is these costs that counsel for the Town submit illustrate information that is in the hands of the Applicant and not the Town, and that the Tribunal should order the production to create a level playing field.

60Counsel for the Applicant argues that the Town chose its appraiser, its appraiser considered both the Direct Comparison Approach and the Residual Land Value method and chose the Direct Comparison Approach, and that was the basis for the Town’s determination of the cash-in-lieu payment. Counsel points out that effectively the Town is seeking production from his client after the reasoning of its appraisal report has been determined, and had this information been relevant, presumably the Town would have requested it before the appraisal report was prepared.

61While counsel for the Town seeks to rely on 1 Yorkville, the Applicant’s counsel argued that in 1 Yorkville, it was the municipality that had not produced its reasoning for its valuation and the resulting quantum of the cash-in-lieu, and it was the landowners/developers who were seeking to uncover what that reasoning was.

62Counsel for the Applicant claims his client will be prejudiced by such an order of production as: a hearing date has already been set; that the Town will have to retain a new expert to do the Residual Land Value appraisal; that his client will also have to retain a similar expert for the same purpose; and this will all take time and jeopardize the 4 day hearing that has been set for July 5, 2022.

63With regard to the Town’s claim that only the Applicant has access to “extraordinary costs” identified in the Applicant’s Appraisal, the Tribunal disagrees. These costs were either known to the Town or would have been reasonably anticipated by an experienced appraiser, where lands such as the Subject Lands are located in close proximity to a major transportation corridor such as the QEW.

64Firstly, as it relates to the s. 37 PA cost, the Town’s Appraisal contains the April 10, 2018 Town Site Plan report to the Planning and Development Committee. Inter alia that Town Site Plan report specifically mentions a $100,000 s. 37 PA payment to the Town, and makes it a condition of Site Plan approval. Additionally, the Tribunal notes from the Applicant’s Appraisal (Exhibit 2A Tab B page 30) that there was an agreement between the Town and the Applicant to create a future public library at an estimated cost of $20,000, and also an informal agreement between the parties for the construction of a public square.

65With regard to noise mitigation costs, the Town Site Plan report notes that the Applicant submitted an Environmental Noise Impact Study which recommended physical mitigation measures to be implemented on the buildings (air conditioning, window treatments, etc.) and warning clauses, and due to the proximity of the Subject Lands to the QEW, another condition of Site Plan approval was the issuance of a Building and Land User Permit from the Ontario Ministry of Transportation. To an experienced appraiser, such information would be a clear red flag to additional costs.

DECISION

66Section 12(2) of the OLTA provides that the Tribunal shall, in respect of each proceeding, adopt any practices and procedures provided for in the rules or that are otherwise available to the Tribunal, that in its opinion, offer the best opportunity for a fair, just, and expeditious resolution of the merits of the proceedings.

67Were the Tribunal to exercise its discretion and order the requested discovery, would such discovery offer the best opportunity for a fair, just and expeditious resolution of this proceeding?

68To the Tribunal, the answer is no.

69This Motion comes well after the Town had chosen its appraiser, who had produced its appraisal report using the Direct Comparison Approach, that resulted in the Town’s determination of the quantum of the cash-in-lieu. And this Motion comes in the context of a dispute heading to a hearing on the merits set for July 5, 2022. In effect the Motion is a request by the Town to conduct a new appraisal using a new methodology that will use information to be supplied by the Applicant.

70Were the Tribunal to make the requested Order, it would not be fair, not efficient, not quick witted, and not result driven. Such an Order would be prejudicial to the Applicant resulting in further delay with more time-consuming pre-hearing processes, requiring the further retainer of two more appraisers (one for each party), and in all likelihood require the delay of the hearing on the merits of an application that arrived at the Tribunal on January 7, 2020.

71The Tribunal finds that the Town, having made its determination in its choice of appraiser and its determination of the quantum of the cash-in-lieu payment, is not entitled to seek now such discovery after the fact, and the Tribunal will not exercise its discretion to order same which would be prejudicial to the Applicant.

72The Motion is wholly dismissed.

73This is the Order of the Tribunal.

“Blair S. Taylor”

blair s. taylor

MEMBER

Ontario Land Tribunal

Website: www.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.