Ontario Land Tribunal
Tribunal ontarien de l’aménagement du territoire
ISSUE DATE: May 09, 2022
CASE NO(S).: OLT-22-002159 (Formerly LC210014)
PROCEEDING COMMENCED UNDER subsection 26(b) of the Expropriations Act, R.S.O. 1990, c. E.26, as amended
Claimant: Yongehill Developments 11305 Inc.
Respondent: Regional Municipality of York
Description: Determination of compensation
Property Address/ Description: 11305 Yonge Street/ Parcel 123-1, Section 65M2816; Block 123, Plan 65M2816; Town of Richmond Hill, Parcel reserves-2, Section 65M2816; Block 136, Plan 65M2816, Being Reserve; Town of Richmond Hill, Parcel Street Widenings-1, Section 65M2816; Block 126, Plan 65M2816, (Street Widening) stopped and closed by by-law R-1465-2007-060 Resisted as YR1016523; Town of Richmond Hill
Municipality/UT: City of Richmond Hill/ Regional Municipality of York
OLT Case No.: OLT-22-002159
Legacy Case No.: LC210014
OLT Lead Case No.: OLT-22-002159
Legacy Lead Case No.: LC210014
OLT Case Name: Yongehill Developments 11305 Inc. v. York (Regional Municipality)
Heard: April 7, 2022 by video hearing
APPEARANCES:
| Parties | Counsel |
|---|---|
| Yongehill Developments 11305 Inc. (“Claimant”) | S. Spitz/L. Cummings |
| Regional Municipality of York (“Region”) | C. Mak/I. Wong |
DECISION DELIVERED BY BLAIR S. TAYLOR AND ORDER OF THE TRIBUNAL
INTRODUCTION
1The matter before the Tribunal is a Motion for Production arising from the examination of Jack Greenberg.
DECISION
2For the reasons set out below the Tribunal will allow the Motion in part and direct the production of additional materials as set out below.
BACKGROUND
3On or about February 24, 2021, the Claimant filed a Notice of Arbitration and Statement of Claim for damages arising out of the expropriation of a permanent easement and a temporary easement for portions of the vacant property known municipally as 11305 Yonge Street (“Subject Lands”).
4More specifically the claim sought compensation in the amount of $2,061,761.00 based on Injurious Affection in the amount of $455,900.00, and Disturbance Damages in the amount of $1,605,861.00, plus costs and interest.
5The sum sought for Disturbance Damages includes: $562,000.00 for increased development charges that arose from the alleged delay; reimbursement of $28,861.17 paid to York Region Rapid Transit Corporation; and (of note for the purposes of this Motion) $1,015,000.00 for additional interest costs.
6The sum of $1,015,000.00 for the additional interest costs is derived from: the Castle Lane Design Group Inc. (“Castle Lane”) mortgage $310,000.00 ($17,250.00 per month for 18 months) and the DaPaul Management Limited (“DaPaul”) mortgage $705,000.00 ($39,116.67 for 18 months).
CONTEXT
7The Claimant company appears to have been specifically incorporated in 2016 for the sole purpose of developing the Subject Lands, as it has no other real estate assets or development projects.
8The Claimant has two directors: Jack Greenberg and Asma Jinnah. Mr. Greenberg is the corporate secretary. The Claimant has one shareholder which is the Yongehill Partnership of which Mr. Greenberg is a 50% participant.
9Mr. Greenberg is a lawyer practising predominantly in the real estate and corporate field for some 44 years and is self described as having “extensive experience” and has “probably 15 projects in my pipeline currently involving low-rise, high-rise, and mid-rise.”
10On or about March 30, 2016, the Claimant purchased the Subject Lands for $5.2 million with a vendor take back mortgage in the amount of $2,850,000.00 for 3 years at 5.5%.
11Also on or about March 30, 2016, the Claimant secured a second mortgage from DaPaul for 3 years at 10% for the face value of $10 million; however only $4.7 million was advanced at that time.
12DaPaul has Jack Greenberg as its President, General Manager, Secretary, and Treasurer. Mr. Greenberg described himself as: “I’m the shareholder of DaPaul Management Limited.” The mortgage funds advanced appear to come from a number of participants of which Mr. Greenberg is one and he has about a 25% interest.
13On or about February 21, 2018, DaPaul purchased the vendor take back mortgage. While the consideration on the Transfer of Charge indicates $2.00, Mr. Greenberg stated that the mortgage was sold for the face value less a discount which he indicated was in the range of about $10,000.
14Both mortgages held by DaPaul were due on March 30, 2019.
15On March 29, 2019, the Claimant secured a mortgage from Castle Lane for $3,450,000 for 2 years and at 6% interest.
16Mr. Greenberg is the President and Treasurer and one of the two directors for Castle Land, and he described Castle Lane as “my company”, and Castle Lane was again holding this mortgage as trustee for the beneficial owners of the mortgage, the lenders, of which Mr. Greenberg had a 50% interest.
OUTSTANDING PRODUCTION REQUESTS
17The Region’s Reply Factum is Exhibit 4B and it notes that the Claimant has provided additional information and documentation and thus the following requests remain outstanding;
a. Question 229:
b. Question 276:
c. Everything on Schedule B from the Motion Record except 7, 8, 13, which have been produced, and 5, 14, 15, 20, 21, 22, and 23 which have been answered:
d. Everything on Schedule C except 6, and 7 which have been produced, and 11 which has been answered; and
e. Everything on Schedule D except 10 which has been answered.
QUESTION 229
18From Exhibit 3A Question 229 provides:
To advise of the date or dates upon which the Yongehill consultant received the staff comments with respect to the first submission of the development application.
19The Claimant’s answer from Exhibit 3A states:
Comments from City departments and external agencies are dated between September 6, 2017 and December 22, 2017. Comments were provided to Weston by the City via email on various dates including October 6, 2017 and December 22, 2017.
20The Region’s Response was that the Region requested a list of the dates on which Weston received the staff comments, as well as copies of the corresponding emails.
21The Claimant’s Answer was that this was not requested, and any event we have inquired with Weston to see if this information is available and are awaiting a response.
22To the Tribunal it is clear that the Region originally requested dates and that dates were provided; what the Region did not request was copies of the corresponding emails.
23The Tribunal agrees that the undertaking was answered, and also notes that the Claimant has made an inquiry with the consultant and if the emails are found and are relevant, they will be produced.
24This request is denied.
QUESTION 276
25From Exhibit 3A, the Question is:
To determine whether Yongehill’s consultant have plans and materials from the first pre-submission meeting on August 4, 2016 and if they do, provide copies.
26The Claimant’s answer was:
Attached as Tab 4 are;
A Minutes of the Pre-Submission meeting dated August 4, 2016,
B Pre-submission response letter dated August 18, 2016;
C Pre-submission Request Form dated July 27, 2016.
27The Region’s Response was that the document enclosed as Tab 4(c) notes that a Concept Drawing for the proposed development was submitted prior to scheduling the pre-submission meeting. The Region requests a copy of the Concept Drawing.
28The Claimant’s Response was: “refused, overbroad, and not relevant. The question has been answered”.
29The Tribunal finds that the Concept Drawing was part of the plans and materials for the pre-submission meeting, that it is relevant to what was being proposed at that time and will be disclosed to the Region.
30The Tribunal directs production of the Concept Drawing.
DISTURBANCE DAMAGES: MORTGAGE INTEREST
31The Tribunal will now deal with the requested production of the items contained within Schedules B, C, and D from the Motion. They are appended in their original format to this Decision.
32First from the pleadings, the Tribunal notes the following paragraph 46 from the Claimant’s Statement of Claim:
Without the Region’s Expropriation, the Claimant would have been able to advance the Development Application on a shorter time frame, repay or otherwise refinance the mortgage charges sooner, and therefore avoid the additional interest costs incurred over the delay period.
33From the Region’s Reply, the Tribunal notes the following paragraphs 50 and 51 under the heading The Claims for Disturbance Damages:
The authority denies that there is any additional disturbance damage owing to the Claimant for disturbance damages arising from the expropriation and Yonge Street Transit Project over-and-above the compensation already paid for consulting costs incurred as a result of the expropriation and the works.
The Region denies that there has been loss or damage attributable to disturbance and requires the strict proof of any such loss or damage. (Emphasis added)
34Of note is that Schedule B sets out production that is sought from the Claimant, whereas Schedule C sets out production sought from DaPaul, and Schedule D sets out production sought from Castle Lane.
PRODUCTION SOUGHT
35Schedules B, C, and D essentially seek the same types of materials with regard to the DaPaul and Castle Lane mortgages, firstly from the Claimant, secondly from DaPaul, and finally from Castle Lane.
a. Financial statements that the DaPaul and Castle Lane mortgages were given and received (i.e. funds actually dispersed);
b. Whether the financial statements were audited and if so by which auditing firm?
c. Bank account statements showing the transfer of funds and all payments made; and
d. Corporate records where directors’ and officers’ conflicts were disclosed and the DaPaul and Castle Lane mortgages authorized.
36The basis for these requests for production the Region advances is the fact that the Claimant and the two mortgagees do not appear to be dealing at arm’s length as Mr. Greenberg is both a director of the Claimant and a 50% participant in the Yongehill Partnership which is the sole shareholder of the Claimant. With regard to DaPaul, Mr. Greenberg states he is the shareholder and he is also a 25% participant in the group that funds DaPaul. Turning to Castle Lane, Mr. Greenberg describes it as his company, and he is the President and Treasurer, one of the two directors and is about a 50% participant in the group funding Castle Lane.
37There are three issues for consideration by the Tribunal: relevance, prejudice, and disclosure from third parties.
RELEVANCE
38Rule 9.1 of the Tribunal’s Rules of Practice and Procedure (“Rules”) provides that the Tribunal may make an order for discovery of a party, and Rule 26.16 states that the Rules of Civil Procedure apply to expropriation proceedings.
39Rule 30.02 of the Rules of Civil Procedure provides that every document relevant to any matter in issue in an action that is or has been in the possession, control or power of a party shall be disclosed and the courts have held that “relevance” is to be determined by reference to the pleadings, and a document is relevant if it is logically connected to and tending to prove or disprove a matter in issue.
PRODUCTION FROM THIRD PARTIES
40The Rules of Civil Procedure in s. 30.10(1) provide that an order for production from a third party may be made if the document is relevant to a material issue, and that it would be unfair to require the moving party to proceed to trial without having discovery of the document.
COMMENTARY AND ANALYSIS
41A substantive portion of the Claimant’s claim for Disturbance Damages arises from the claim for mortgage interest: namely $1,015,000.00.
42That portion of the claim arises from two sources: the Castle Lane mortgage for $310,000.00 and the DaPaul mortgage for $705,000.00.
43The Region submits that there is an appearance that the Claimant, and Castle Lane and DaPaul are not acting at arm’s length. The Claimant’s Factum in Exhibit 2B at paragraph 6 admits that there are some elements of the relationship between the Claimant and the mortgagees that are not arm’s length.
44As the Region submits and the Supreme Court of Canada has said, when parties are not acting at arm’s length there is no assurance that the transaction will reflect the ordinary commercial dealing between parties acting in their separate issues.
45The Region, as it stipulated in its pleadings, puts the Claimant to the strict proof of its loss and submits that the absence of that proof would be prejudicial to the Region, and a fair hearing would be denied.
46The Claimant submits that it has cooperated with the Region and provided the necessary materials and beyond that production the Region’s request is overboard, imprecise, and the volume of records is expansive and would be arduous to collect.
47The Tribunal will firstly deal with the Claimant for the requested production, and the outstanding production requests.
48For the claim of the Disturbance Damages, the essence of the dispute between the parties is whether mortgage funds and interest payments actually changed hands.
49Were the Claimant dealing with a bank or another financial institution whose business was the provision of funding for development projects, there would be the normal production of bank documentation of such mortgages and the bank’s independent record of payments. In this matter, the mortgagees both have what appears to be a non arm’s length relationship with the Claimant that arises from Mr. Greenberg’s involvement with the Claimant and the two mortgagees.
50The Tribunal notes that there was a nominal consideration of $2 shown on the Transfer of Charge for the vendor take back mortgage purchased by DaPaul. Mr. Greenberg stated that the mortgage was transferred at a discount of about $10,000.00. As the face value of the mortgage was $2,850,000.00 with interest only payments, would not the consideration paid to have the mortgage transferred to DaPaul have been $2,840,000.00 and not $2?
51The Claimant appears to be a single purpose company whose purpose is to foster the development of the Subject Lands. Thus, it would appear that all the corporate information with the Claimant relates to the Subject Lands, and that such documentation should be readily available and not be an arduous process.
52Thus, with the appearance of a non-arm’s length relationship between the Claimant and the two mortgagees, the production of financial statements, bank account statements etc., are relevant and are to be produced.
53The Tribunal notes the obligations placed on directors and officers by the Business Corporations Act to disclose conflicts and thus directs the production of the corporate records as sought from the Claimant.
54Further the Tribunal will order the production of the executed DaPaul mortgage, the executed vendor take back mortgage, the executed agreement extending the Castle Lane mortgage to 2021, the Claimant’s corporate records whereby the DaPaul and Castle Lane mortgages extensions were authorized, and if they do not exist, an explanation why, and the corporate records that authorize the execution of the mortgage postponement agreement that granted Castle Lane priority over DaPaul, and if such records do not exist an explanation why.
55The Tribunal denies the production request for the identity of the partners of the Yongehill Partnership as being not relevant and overreaching.
PREJUDICE
56The Claimant submits that it has appropriately answered the vast majority of the Region’s questions, that many of the Region’s production requests are overbroad and imprecise, that the Region has everything it needs to be able to proceed to a hearing and that further production is not required. Moreover, if the Tribunal were to order such production, it would add to the discovery process, cause added expense, and infringe on the Claimant’s privacy.
57The Region submits that as there is an appearance of a non-arm’s length relationship with the mortgagees, that the Claimant provide the requested information and productions as external assurance to demonstrate the mortgages reflect ordinary commercial dealing between parties acting in their separate interests, and that the failure to provide such production at the discovery stage of the proceedings is necessary to avoid unfairness to the Region by allowing timely review and response to the documentation.
58The Tribunal finds in these circumstances that the prejudice to the Region outweighs the prejudice to the Claimant and that such production is warranted.
THIRD PARTY PRODUCTION
59The Claimant has admitted there are certainly elements of the relationship between the Claimant and the mortgagees (DaPaul and Castle Lane) that are non-arm’s length, and the Tribunal notes that some production from the third parties has already been made.
60In circumstances such as these where there is a claim for disturbance damages caused by an alleged delay, non-arm’s length relationships require an appropriate level of scrutiny.
61The Claimant has produced a ledger of interest payments to the mortgagees, which presumably is based on documentation that is in its possession: i.e. bank account statements and financial statements. What has not been produced however are the actual bank account statements and the financial statements themselves.
62The Tribunal finds that for this claim for Disturbance Damages and more particularly for the mortgage interest claimed for two mortgages to two non-arm’s length companies that those bank account records and those financial statements are relevant to the issue of whether the funds were actually dispersed.
63Further, while a copy of the executed Castle Lane mortgage and its extension from 2021 to 2023 has been provided, the executed DaPaul mortgage agreement has not and neither has the executed agreement extending the Castle Lane mortgage to 2021.
64And while the DaPaul mortgage sets out a payment schedule for interest on the 30th day of each and every month by a series of post dated cheques to be provided annually, the Claimant provided (through its counsel) that interest accrued on the mortgage. There is an apparent discrepancy between the terms of the mortgage and the accrual of interest and hence the DaPaul mortgage agreement is to be produced.
SCHEDULES B, C, AND D
65Thus, the Tribunal orders production of items numbered as: 1, 2, 3, 4, 9, 10, 11, 12,18, and 19 on Schedule B.
66The Tribunal orders production of items numbered: 1, 2, 3, 4, 5, 8, 9, 10, and 12 on Schedule C.
67The Tribunal orders production of all the items on Schedule D except item 10.
COSTS
68The Region in its Reply documentation included an Amended Notice of Motion (Exhibit 4A) which the Claimant only received two days before the motion hearing. That Amended Motion sought an order allowing the Notice of Motion to be amended to include an order that when the costs of the overall action are determined that the Claimant shall not be entitled to the costs incurred in meeting its production obligations and for the costs of this motion.
69The Claimant had no opportunity to formally respond to that request to amend the Notice of Motion.
70In these circumstances the Tribunal will not allow the amendment, but on a without prejudice basis, such that the Region, when costs of the overall action are to be determined, may if it chooses, raise the matter at that time.
SUMMARY/ORDER
71Schedules B, C, and D from the Motion Record are attached herewith and form part of this decision.
72The Motion is allowed in part, and production is to be made for Question 276, and production is to be made for the items listed above from Schedules B, C, and D.
73The production reference above shall be made within 30 days of the date of issuance of this decision.
74Further the Tribunal orders that Mr. Greenberg attend a further examination for discovery, if required, by the Region, to answer any questions arising from the production ordered above.
75I am not seized.
76This is the Order of the Tribunal.
“Blair S. Taylor”
BLAIR S. TAYLOR
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.