Ontario Land Tribunal

Tribunal ontarien de l’aménagement du territoire

ISSUE DATE: June 24, 2022 CASE NO(S).: OLT-22-002406 (Formerly LC200010)

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

Claimant: Obico Rail Yard (GP) Inc. Respondent: City of Toronto Subject: Land Compensation Property Address/Description: Part of Lot 7, Concession 4 Municipality: City of Toronto OLT Case No.: OLT-22-002406 Legacy Case No.: LC200010 OLT Lead Case No.: OLT-22-002406 Legacy Lead Case No.: LC200010 OLT Case Name: Obico Rail Yard (GP) Inc. v. Toronto (City)

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

Motion By: Obico Rail Yard (GP) Inc. Purpose of Motion: Request for Determination / Directions Subject: Land Compensation Municipality: City of Toronto OLT Case No.: OLT-22-002406 Legacy Case No.: LC200010 OLT Lead Case No.: OLT-22-002406 Legacy Lead Case No.: LC200010

Heard: June 1, 2022 by video hearing

APPEARANCES:

Parties	Counsel
Obico Railyard Inc. and Dream Asset Management Inc. (“Obico” / “Dream”)	Christopher Williams, Ajay Gajaria, David Neligan and N. Jane Pepino (in absentia)
City of Toronto (“City”)	Andrew Baker

MEMORANDUM OF ORAL DECISION DELIVERED BY WILLIAM MIDDLETON ON JUNE 1, 2022 AND INTERIM ORDER OF THE TRIBUNAL

Introduction

1This proceeding arises due to Obico’s claims under a Notice of Arbitration and Statement of Claim dated March 18, 2020 (collectively, the “Action”) for inter alia:

…fair and full compensation for the losses and damages it suffered due to the City’s expropriation of the lands municipally known as 30 Newbridge Road and 36 North Queen Street in the City of Toronto…” (The “Subject Property”)

The City, pursuant to its rights under the Expropriations Act, R.S.O. 1990, c. E.26, as amended (the “Act”) on August 31, 2018 expropriated the Subject Property, which is 73.417 acres (29.711 ha) in size, for the purpose of “a subway train storage and maintenance yard facility comprising a car house and overhaul facility for the modernization of Line 2 of the Toronto subway system.

2The Tribunal convened a hearing by videoconference on Wednesday, June 1, 2022 (the “VH”) in respect of the motions brought by each of Obico and the City, both concerning certain questions taken under advisement and questions refused arising from Examinations for Discovery in the Action, conducted of the representatives of Obico and of the City, respectively: Michael Stevenson for the City, whose examination was taken on February 15, 2022 and Tony Medeiros for Obico, who was examined on February 16 and 17, 2022.

3The materials before the Tribunal relevant to the VH consisted of the following:

(i) Motion Record of the City dated May 17, 2022, comprising 468 pages;

(ii) Amended Motion Record of the City dated May 17, 2022 comprising 540 pages;

(iii) Motion Record of Obico, dated May 17, 2022, comprising 600 pages;

(iv) Brief of Authorities of the City of Toronto, dated May 30, 2022, comprising 35 pages;

(v) Brief of Authorities of Obico, dated May 30, 2022, comprising 60 pages; and

(vi) Master Chart of Undertakings, Advisements and Refusals of Mr Stevenson of the City, comprising 8 pages.

4As is often the case with respect to discovery motions in expropriation cases, counsel for the Parties had largely resolved most of the issues raised in their respective motions prior to the VH.

5Counsel for the City and Obico advised the Tribunal that based on their negotiations conducted prior to and following the VH, each have provided a ‘list of agreed matters’ and both are appended hereto together as Attachment A, at the request of counsel for both Parties. Therefore, Attachment A will reflect the issues resolved by the Parties and need not be the subject of a formal Order of the Tribunal.

Obico Motion Dispute

6The single matter remaining in dispute in the Obico motion pertains to ‘Refusal No. 5’, being “To advise what the TTC [i.e. the City] is paying for the HONI lands?”. The HONI Lands refers to a parcel adjacent to the expropriated Subject Property concerning which Obico / Dream had an existing option to purchase. This parcel was described in paragraphs 6 and 7 of the Action as:

…a purchase option to acquire the 7-acre (2.833 ha) property from Ontario Hydro located at the north-east corner of the Subject Property (the “Purchase Option”), providing for a total developable area of 80.4 acres (32.537 ha) at the time of the City’s expropriation… 7. As well, Dream was in discussions with Ontario Hydro to acquire additional lands (approximately 21 acres) adjacent to the Purchase Option lands and the Subject Property to include such lands in a comprehensive development…

7The City has maintained a flat refusal to answer the question briefly described in paragraph [6] above on the basis that it is irrelevant. Counsel for the City also pointed out that the alleged purchase has not taken place and that if and when any transaction of purchase and sale is fully completed, the sale price paid by the City will become a matter of public record. This was a submission by the City’s Counsel only, and there was no evidence filed related to it.

8On the other hand, Obico’s counsel insists that the question is highly relevant since it pertains to Obico’s underlying theory of damages which is based in part on its position that the highest and best use of the Subject Property was as part of a comprehensive multi-parcel development. This was pleaded by Obico in paragraphs 36 and 37 of the Action as follows:

36. Dream submits that the Market Value of the Subject Property as of August 31, 2018, the valuation date, is Two Hundred and Forty Seven Million and Four Hundred Thousand Dollars ($247,400,000.00) or such other amount as may be proven at the arbitration. This value takes into account that the highest and best use of the Subject Property is a mixed use re-development with industrial, office, accessory retail and residential components.

37. The claim for market value based on the highest and best use of the Subject Property represents a conclusion on value as determined by CBRE, an independent appraisal expert firm with supporting expert evidence supplied to CBRE from a number of other firms, including Urban Strategies, an independent planning expert.

9In a discovery dispute motion the role of the Tribunal is not to consider the merits of either the claims set out in Obico’s Action or of the defences of the City as contained in its Reply to Notice of Arbitration and Statement of Claim (the “Reply”). However, the Tribunal notes that in paragraphs 7 and 8 of its Reply, the City pleaded as follows:

MARKET VALUE - HIGHEST AND BEST USE

7. The most significant difference between the Claimant and the City's position on valuation is based on the disagreement over what constitutes the highest and best use of the Subject Property.

8. The Claimant is taking the position that the subject property should be valued as a Mixed Use development site, while the city is very much of the view that it must be valued as an Employment Lands site, which reflects the fact that the site is currently designated for only Employment uses and that the conversion to Mixed Use which includes residential would be virtually impossible and at the very best would require full Municipal Comprehensive Review (MCR).

[emphasis added]

10The relevance of a question posed on examination for discovery is largely determined by reference to the pleadings of the parties in the underlying proceeding – in this case, those of Obico in the Action and the City in its Reply. In the Tribunal’s view, based on the pleadings referenced in paragraphs [6], [8] and [9] above, the question posed by Obico on the examination for discovery of the City’s representative Mr. Stevenson as described in paragraph [6] above is relevant to the damages claims of Obico. It is clearly one key area of dispute between Obico and the City, as in effect conceded in the City’s Reply as described in paragraph [9] above.

11Therefore, the Tribunal will require the City’s representative Mr. Stevenson to reattend for examination to answer this question and any relevant questions arising from his answer.

City Motion Dispute

12The disputes remaining under the City’s motion are as follows:

(i) Question refused by Mr. Medeiros regarding the underlying evidence and accounting of the claim pleaded at para. 41 of the Action for impacts to the Claimant’s existing leasing operations;

(ii) Questions refused by Mr. Medeiros regarding valuation work and the Claimant’s pleading at para. 37 of the Statement of Claim regarding:

the conclusion on value as determined by CBRE, an independent appraisal expert firm with supporting expert evidence supplied to CBRE from a number of other firms, including Urban Strategies, an independent planning expert.;

(iii) Question requesting the details of the “back of the envelope $80m value” calculation referred to in an email enclosed in one of the Claimant’s productions in Schedule A of its Affidavit of Documents.

13In terms of the issue in paragraph [12] (i) above, the City’s counsel points out that Obico makes the following claim in paragraph 41 of the Action:

41. Dream seeks $1,660,000.00 for disturbance damages for the impact that the expropriation had on existing leasing operations on the Subject Property prior to the turnover of possession to the City. Due to the impending expropriation, Dream was unable to maximize its existing interim uses on the Subject Property. While ultimately intending to redevelop the Subject Property, the interim cash-flow from existing operations would defray Dream’s carrying costs. Due to the negative impact of the pending expropriation, many potential tenants were dissuaded from leasing and existing tenants did not renew or required upgrades in order to stay. As a result, the rental rates and percentage of occupancy that Dream had for the period following the public announcement to the transfer of possession were depressed.

14Therefore, the City’s counsel seeks to have an itemized list of the leasing details underlying the claim set out in in paragraph 41 of the Action. In particular, ‘the info that will be given to Obico’s damages expert’ as opposed to having production now of the expert’s opinion (which will be disclosed in due course at a later stage of these proceedings).

15Counsel for Dream argues that the City has provided adequate information on this topic, including key rent rolls and leases. Moreover, it argues that the City has assumed the leases and in some situations renegotiated them. Providing further information would amount to ‘doing the City’s homework’, and in any event the amounts pleaded depend on expert opinion evidence that will be disclosed by Obico at a later juncture. Finally, Obico’s counsel maintains that the City is in effect asking Obico to prepare a new analysis in order to respond to this question.

16The actual question posed by the City’s counsel at the examination of Mr. Medeiros was as follows:

1092. …Okay. Then I would like an itemized list of what you say is your rental losses. So, I want to understand which tenancies existed at the date of acquisition, and then which tenancies existed at the date of possession, what you state would have been the but-for scenario of rental income for that time period, and what you say you have lost. That presumably equates to that figure that is identified in paragraph 41 of your Statement of Claim.

17In the Tribunal’s view, although the question in paragraph [16] above is proper and relevant, its scope is too broad. The Tribunal determines that Mr. Medeiros shall reattend at an examination to answer this question and to provide the ‘itemized list of rental losses’, but only if he or someone else at Dream / Obico had compiled such a list independently prior to the date of preparation of the Action without the involvement or direction of a damages expert retained by Obico in connection with the preparation of the Action or afterwards. Mr. Medeiros and Obico shall not be compelled to produce an entirely new analysis, or an analysis that has been prepared by one of its experts who will later be delivering a witness statement and expert report.

18The Tribunal also determines that Mr. Medeiros shall reattend at an examination to answer the question described in paragraph [12] (iii) above and to provide any document that sets out such details. It is a proper question arising from the Schedule A production by Obico of the email referred to in that same paragraph. However, again, Mr. Medeiros and Obico shall not be compelled to produce an analysis that does not yet exist or which was prepared with the involvement of or at the direction of a damages expert retained by Obico in connection with the preparation of the Action, or any communications to and from such experts – again, for the same reasons set out in paragraph [17] above.

19The Question described at paragraph 12 (ii) above raises an interesting issue relating to the Ontario Rules of Civil Procedure, which by virtue of Rule 26.16 of the Ontario Land Tribunal Rules of Practice and Procedure are relevant on this motion, although not determinative. Obico’s counsel correctly points out that the the Rules of Civil Procedure apply to expropriation proceedings unless the Tribunal on motion orders otherwise

20The City’s counsel argued in the City’s Amended Notice of Motion and at the VH that:

The Claimant has pleaded that its opinion of value has been calculated based on a valuation report by CBRE that was supplemented by other subject matter experts (including Urban Strategies planning consultants). The Claimant refused to produce copies of these reports or answer questions about these reports on the basis that they are subject to litigation privilege. The City takes the position that these are improper claims to privilege given that the documents are pleaded and relied upon by the Claimant and that Rule 30.04(2) entitles the City to inspect any document referred to in a pleading.

21The actual pleading of Obico / Dream in the Action relied on by counsel for the City is:

37. The claim for market value based on the highest and best use of the Subject Property represents a conclusion on value as determined by CBRE, an independent appraisal expert firm with supporting expert evidence supplied to CBRE from a number of other firms, including Urban Strategies, an independent planning expert.

[emphasis added]

22Rule 30.04 of the Rules of Civil Procedure states:

Request to Inspect

30.04 (1) A party who serves on another party a request to inspect documents (Form 30C) is entitled to inspect any document that is not privileged and that is referred to in the other party’s affidavit of documents as being in that party’s possession, control or power. R.R.O. 1990, Reg. 194, r. 30.04 (1).

(2) A request to inspect documents may also be used to obtain the inspection of any document in another party’s possession, control or power that is referred to in the originating process, pleadings or an affidavit served by the other party. R.R.O. 1990, Reg. 194, r. 30.04 (2).

(3) A party on whom a request to inspect documents is served shall forthwith inform the party making the request of a date within five days after the service of the request to inspect documents and of a time between 9:30 a.m. and 4:30 p.m. when the documents may be inspected at the office of the lawyer of the party served, or at some other convenient place, and shall at the time and place named make the documents available for inspection. R.R.O. 1990, Reg. 194, r. 30.04 (3); O. Reg. 575/07, s. 1.

[emphasis added]

23Pursuant to Rule 30.04(5), a court may at any time order production for inspection of documents that are not privileged and that are in the possession, control or power of a party. If a claim of privilege is made, a court may examine the document to determine the validity of that assertion, under Rule 30.04(6).

24Counsel for Dream / Obico argues that the documents sought by the City are protected by ‘litigation privilege’ and that the intention underlying Rule 30.04 is simply inapplicable at this stage of these proceedings. Obico’s counsel asserts that the purpose of this Rule is to enable an opposing party to gain access to information from documents pleaded specifically in order for that party to prepare its own pleading. Thus, he argues that at this stage, 2 years after all pleadings have been delivered, there is no longer this intended purpose to be served. Finally, counsel for Obico maintains that at this late juncture, the Procedural Order in this proceeding must exclusively govern the steps to be taken. He argues that the Procedural Order sets out the required dates for the exchange of expert reports and witness statements by the Parties and in effect ought not to be superseded by the assertion of Rule 30.04 of the Rules of Civil Procedure.

25The Tribunal acknowledges the arguments made by counsel for Obico / Dream but does not find them persuasive. Obico made a decision to plead references to the documents identified in its Action and then delivered non-privileged productions to the City which contained additional related documents from its own consultants. These circumstances do not support a proper claim for litigation privilege, in the Tribunal’s view and it is to be noted that counsel for Obico made this claim for the first time in oral argument and that there was no substantial evidence before the Tribunal on this point. In any event, counsel for the City makes it clear that he does not seek production of any privileged material, including but not limited to privileged email communications.

26Both counsel for the City and for Obico made reference to jurisprudence in support of their positions. Generally, the Tribunal found the analysis of governing principles was usefully set out by Vice Chair Lanthier in Martin v. Kingston 2021 CanLII 48332 (ON LPAT). However, each particular case and set of motions will present different circumstances to be dealt with by the Tribunal.

27In the Tribunal’s view, all such documents described in paragraph [12] (ii) above ought to be produced for inspection. Mr. Medeiros shall reattend at an examination to answer proper questions arising from these documents. However, he shall not be compelled to provide information or documents derived from advice given by, and/or the work product of, Obico’s experts. On this point, Obico’s counsel is correct to point to the Procedural Order which now sets out the process to be followed by both Parties in relation to the exchange of expert reports and witness statements.

28If a dispute arises concerning documents referenced in paragraph [27], then further direction from the Tribunal may be sought as to whether they ought to be produced at this stage. If a privilege claim is made, unless the Parties can reach their own agreement, this may require the Tribunal to inspect those documents in accordance with the process that a court would undertake pursuant to Rule 30.04(6).

ORDER

29The Tribunal Orders as follows:

(i) the City’s representative Mr. Michael Stevenson shall reattend for examination for discovery to answer ‘Refusal No. 5’ from his examination for discovery conducted on February 15, 2022, being “To advise what the TTC [i.e. the City] is paying for the HONI lands?” and any relevant, permissible questions arising from his answer, and to produce all relevant non-privileged documents related thereto;

(ii) the representative of Obico / Dream, Mr. Tony Medeiros shall reattend for examination for discovery to answer the following questions from his examination for discovery conducted on February 16 and February 17, 2022 and to produce for inspection all relevant non-privileged documents related thereto:

(a) Question refused by Mr. Medeiros regarding the underlying evidence and accounting of the claim pleaded at para. 41 of the Statement of Claim of Obico / Dream for impacts to the Claimant’s existing leasing operations;

(b) Questions refused by Mr. Medeiros regarding valuation work and the Claimant’s pleading at para. 37 of the Statement of Claim of Obico / Dream regarding: the conclusion on value as determined by CBRE, an independent appraisal expert firm with supporting expert evidence supplied to CBRE from a number of other firms, including Urban Strategies, an independent planning expert; and

(c) Question requesting the details of the “back of the envelope $80m value” calculation referred to in an email enclosed in one of the Claimant’s productions in Schedule A of its Affidavit of Documents.

(iii) The Order in (ii) above shall not require Mr. Medeiros or Obico / Dream to produce any new analysis or to provide information or documents derived from advice given by, and/or the work product of, any expert witness retained by Obico / Dream in relation to the Statement of Claim or otherwise related to this proceeding.

“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.

ATTACHMENT A

list of agreed matters

At the outset of the undertakings motions, the City confirmed that certain questions included in the City’s Amended Motion Record have been resolved as follows:

Questions Resolved	Basis for Resolution

1. UA149(Q849-51) UA173(Q1102-04) & R3 (Q435) | These questions were resolved through supplemental answers provided by the Claimant.
2. UT77 (Q996-97) & UT79 (Q999) | These questions requested the production of finalized copies of the Claimant’s financial statements from 2016-2019. Copies of unaudited financial statements have been provided for the relevant time period. If audited financial statements exist, the City requests production, but if they do not exist, then the City considers the questions resolved.
3. UT83 (Q1084-85) UT91 (Q1138-39), UT92 (1140), UT94 (Q1142), UT95 (Q1143), & UT96 (Q1144-45) | These questions requested production of the particulars of out-of-pocket expenditures that the Claimant had paid to third party entities. However, the Claimant subsequently clarified no payments to third party entities were being claimed and that the claim to disturbance damages was limited to the time of its own staff. As a result, paragraph 40 of the Statement of Claim should read as follows:
   
   “40. Dream seeks $898,654.00 $662,025.00 for disturbance damages for costs thrown away in planning for development of the Subject Property. The costs thrown away relate to work undertaken by Dream staff~~`, as well as expert consultant and advisory fees expended,`~~ for the intended re-designation and development of the Subject Property.”
   
   On the basis of this clarification to the claim, the City considers these questions resolved.

The following questions remained at issue in respect of the City’s Motion:

Questions in Issue	Subject of the Issue

1. UA172 (Q1092) | Question regarding the underlying evidence and accounting of the claim pleaded at para. 41 of the Statement of Claim for impacts to the Claimant’s existing leasing operations.
2. UT80 (Q 1024-26), UT 81 (Q1027-1029), UT82 (Q1037-1040), UA116(Q218-221), UA130 (Q278), UA131 (Q279), UA152 (Q927-28), UA161 (Q1030-36), UA163 (Q1045-1049, 1051), UA164 (Q1059), UA165 (Q1060), UA166 (Q1063-64), UA174 (Q1118-20), UA177 (Q1147-48), UA178 (Q1149), UA179 (Q1150), & UA180 (Q1151) | Questions regarding valuation work and the Claimant’s pleading at para. 37 of the Statement of Claim regarding “the conclusion on value as determined by CBRE, an independent appraisal expert firm with supporting expert evidence supplied to CBRE from a number of other firms, including Urban Strategies, an independent planning expert.”
3. UA176 (Q1131-34) | Question requesting the details of the “back of the envelope $80m value” calculation referred to in an email enclosed in the Claimant’s Schedule A Production at OBI033750.